"Windfall profits" and Water Rate Increases

The good news is my email request to CPUC Public Advisor got a prompt response. In my posting of Wednesday, March 25, 2015:

Public Hearing 3/24/15, transparency will be tested and are there "windfall" profits excerpt:

• Water costs increasing caused by the current drought , "will water costs be passed through to ratepayers, without added charges? I have sent, 03/25/2015, a formal request for clarification to the CPUC Public Advisor's Office on the interpretation of :

• Page 4, (13) Pursuant to Rule 3.2(a)(10), Applicant states that the rate increases proposed in this application do not reflect and pass through to customers only increased costs to Applicant for the services or commodities furnished by it.

Below the CPUC response clarifies that increases in water rates by SCVWD to San Jose Water Company will be, "Water cost increases from SCVWD are pass-through costs with no mark-up by San Jose Water." 

============ CPUC Response to Inquiry =======================

Boothe, James A.	3:29 PM (22 hours ago)
to me

Mr. Hunter,

I am responding to your note to the Commission’s Public Advisor’s Office regarding San Jose Water’s proposed rate increases.  Any cost increases by the SCVWD are in addition to what San Jose Water is requesting in its rate case proceeding.  Water cost increases from SCVWD are pass-through costs with no mark-up by San Jose Water.  As indicated, these requests to increase rates from increased water costs are sought through an Advice Letter.  If you would like to receive a copy of San Jose Water advice letter filings, you can request that your name be added to the service list for these filings by contacting San Jose Water.  Advice letters can be protested.  However, in the case of wholesale water costs from SCVWD, the best means for addressing increased water costs is directly with SCVWD.

Regards,

James Boothe

Division of Water and Audits

California Public Utilities Commission

=====================================================

Note: My thanks to Mr. Boothe for a quick and complete response. His phone number and email were removed to preserve his privacy and the key section of his reply was highlighted in RED. 

While this clarifies how the drought increased water costs will reach the ratepayer and there should be no opportunity for "windfall profits", the question then remains what are the actual water rates going to be? What are water charges likely to be from Santa Clara Valley Water District water, what will be our rates from San Jose Water Company. A post will be up in 2-3 days and address the water rates and transparency questions.

Public Hearing 3/24/15, transparency will be tested and are there "windfall" profits

The following are the notes of my comments at the "Public Participation Hearing Regarding San Jose Water Company General Rate Case Application No. 15-01-002". A copy of the Notes were submitted to the recorder for inclusion in the transcript of the hearing.

The issues are as follows and the current status, as of 3:00 PM, 03/25/2015:

• Access to the Exhibits E through I, "served but not filled". Called SJWC on 3/23 was referred to Supervisor. Callback was received 1 hour later, but was answered by machine. Called back and was advised I would have access to Exhibits at the SJWC main office and the Exhibits were not considered "public" by SJWC. Currently have a call to Customer Service contact for clarification on accessing the documents, 03/25/2015.
• Pending access to Exhibit E, to determine if, "authorize Applicant to establish a Water Revenue Adjustment Mechanism (WRAM) and a Modified Cost Balancing Account (MCBA)", is basically another attempt to get CPUC authorization again, to guaranty SJWC profits.
• Water costs increasing caused by the current drought , "will water costs be passed through to ratepayers, without added charges? I have sent, 03/25/2015, a formal request for clarification to the CPUC Public Advisor's Office on the interpretation of :

• Page 4, (13) Pursuant to Rule 3.2(a)(10), Applicant states that the rate increases proposed in this application do not reflect and pass through to customers only increased costs to Applicant for the services or commodities furnished by it.

•  SJWC GRC A 1501002, contained a reference to HEIS (Home Emergency Insurance Solutions). Information is apparently contained in, "Exhibit E, Chapter 8, and in Exhibit F, Chapter 8, WP 8-19", resolution is pending access to Exhibits E and F.

The following is a copy of the speakers Notes:

Notes: CPUC PPH 3/24/2015 Speaker James Hunter

ALJ Name ___________S. Pat Tsen__________

Commissioner _______Not Present__________

Ladies and Gentlemen

1. The following information isn't online and I have requested a reply from SJWC to
   determine if it’s “publicly available”, it has been noted that the following sections have been “filed but not served”?
   Exhibit E Report on the Results of Operations
   Exhibit F General Rate Case Workpapers
   Exhibit G Capital Budget Project Justifications
   Exhibit H Urban Water Management Plan
   Exhibit I Supplemental Data Request Responses
   Exhibit J Minimum Data Requirements
   
   In the case of Exhibit E and F several items are referenced Application:
   
   Page 13, (31) Applicant requests that the Commission authorize Applicant to establish a Water Revenue Adjustment Mechanism (WRAM) and a Modified Cost Balancing Account (MCBA) as described in Exhibit E, Chapter 19.  
   
   Is this the same request made in the previous Rate Case and denied?
   
   Page 4, (13) Pursuant to Rule 3.2(a)(10), Applicant states that the rate increases proposed in this application do not reflect and pass through to customers only increased costs to Applicant for the services or commodities furnished by it.  
   
   Does this mean that SJWC is requesting a 22% over three years, plus marking up rate increases in the cost of water and well taxes charged by SCVWD? Notification is made by SJWC to CPUC by an “advise letter”, of a rate increase as a result of an increase in the cost of water. Since it’s likely that much of the water re-sold by SJWC will come from SCVWD, it’s a lot harder to change an in place price increase.
   
   Since during the SCVWD Board meeting on 3/10/2015 there was discussion of a rate increase of 20-31%! That would result in a minimum of a 3.5% increase per each added 10% in cost to SJWC, if only actual cost was passed through to us (ratepayers). or a 7-10.5% increase in addition to the pending SJWC requested rate increase. At least one other increase would probably also be made in the near future, the reverse flow project to withdraw banked water at the Semitropic Water Bank in Kern County, could cost $425 per acre foot and SCVWD may as much as 50,000 acre feet, plus the $6 million in costs for the temporary installation. Will result in water at 27,000,000/50,000= $540 per acre foot, not including operation and possible added pumping charges at San Luis Reservoir and the Pacheco Pumping Station.
   
   I’d really appreciate an estimate from SJWC for the three years starting in 2016, what the estimated water rates are for us (ratepayers), taking into account the drought.
   
   Page 9 (i) Non-Tariffed Transactions
   
   “projects are detailed in Exhibit E, Chapter 8, and in Exhibit F, Chapter 8, WP 8-19. These contracts are a lease operation of the City of Cupertino water system, miscellaneous services contract with the City of San Jose, meter testing services, coordination with Home Emergency Solutions to provide customers information regarding optional water service line insurance coverage, as well as leases for antenna space to telecommunication companies on various water facilities. Any revenue generated by non-tariffed offerings is allocated between ratepayers and shareholders in accordance with the methodology adopted“
   
   The Home Emergency Insurance Solutions Insurance have been a long running question, since the last Rate Case. San Jose Water Company has allowed HEIS to mass mail (USPS) in envelopes with the SJWC Logo and lettesr signed by the SJWC Director of Customer Support. Now the reference Exhibit E and F and HEIS, but the details are not available, since they’re in Exhibits E and F.

We need to ask several questions:

• Will SJWC pass-through the actual cost of increased water costs?
  
• Is SJWC attempting to limit public access to information that will disclose information about increases to  your monthly bill? or be considered to be “controversial” by their customers?
  
• Is SJWC attempting to hide the details of their relationship with HEIS? and why?
  
• Is SJWC again attempting to justify a Water Revenue Adjustment Mechanism (WRAM) and a Modified Cost Balancing Account (MCBA), but trying to hide the details? Do they again hope that their profits will be guaranteed?

What did SJWC leave out of their NEW RATE INCREASE 2016? (GRC A15-01-002)

The latest posting of the San Jose Water Company Rate Increase (GRC A15-01-002) seems to be missing a lot of information. Refer to APPLICATION OF SAN JOSE WATER COMPANY FOR AUTHORITY TO INCREASE RATES FOR WATER SERVICE. This appears to me to be an effort on the part of the Applicant to make controversial information difficult for consumers, to get.

Page 3,

(5) The following additional Exhibits are marked as shown, are served with this application, and will be provided to interested parties upon request, but will not be filed:

Exhibit E Report on the Results of Operations

Exhibit F General Rate Case Workpapers

Exhibit G Capital Budget Project Justifications

Exhibit H Urban Water Management Plan

Exhibit I Supplemental Data Request Responses

Exhibit J Minimum Data Requirements 

What the heck does San Jose Water Company mean by "served", but not filed?  Does ORA, ALJ and commisioner get a copy? Or is the intent to limit the access to prevent "excessive" ratepayer objections?

Page 13,

(31) Applicant requests that the Commission authorize Applicant to establish a Water Revenue Adjustment Mechanism (WRAM) and a Modified Cost Balancing Account (MCBA) as described in Exhibit E, Chapter 19. 

During the last General Rate Case, SJWC request for "effectively a guarantee of profitability" was denied. Since SJWC has not published, on their web site and the published application on the CPUC does not include the missing exhibits, it makes it difficult for ratepayers to make an informed decision.

(13) Pursuant to Rule 3.2(a)(10), Applicant states that the rate increases proposed in this application do not reflect and pass through to customers only increased costs to Applicant for the services or commodities furnished by it.

We're in the fourth year of a drought and it's very likely the cost of imported water purchased from the Santa Clara Valley District will significantly increase! Reference the Program to withdraw water from the Semitropic Water Bank, in Kern County north of Bakersfield. This requires raising the water from the subsurface aquiver at the Semitropic Water Bank, which there is a charge for per acre foot. Then 4 pump stations and a siphon at the Dos Amigos Pumping Station, this temporary bypass and reversing the flow is estimated $6 million or more not including operation, raising the water 118 feet., just to get the banked water from Semitropic Bank access to the aqueduct,  to the O'neill/Forebay at San Luis reservoir. Then it has to be raised to the reservoir and again at the Pacheco Pumping Station, before it gets to the pipeline to SCVWD in south Santa Clara County.  The cost per acre foot will likely increase by a factor of 3 or 4 times, does this mean SJWC gets "windfall profits", as a result of the drought, making a profit on the higher cost of water?

Page 9,

projects are detailed in Exhibit E, Chapter 8, and in Exhibit F, Chapter 8, WP 8-19. These contracts are a lease operation of the City of Cupertino water system, miscellaneous services contract with the City of San Jose, meter testing services, coordination with Home Emergency Solutions to provide customers information regarding optional water service line insurance coverage, as well as leases for antenna space to telecommunication companies on various water facilities. Any revenue generated by non-tariffed offerings is allocated between ratepayers and shareholders in accordance with the methodology adopted  

Will we finally find out what SJWC gets from Home Emergency Insurance Solutions, only if they provide copies of the missing Exhibits! What else they don't want ratepayers to know about?

They do provide a method to get a copy, by making an effort, at this time I'm not sure how much effort, but I will find out:

 I strongly urge you email the CPUC Public Advisor about this apparent effort to avoid public disclosure of controversial information, by the Applicant San Jose Water Company

Include Application GRC A15-01-002 IN ALL CORRESPONDENCE

Visit the CPUC Public Advisor web page for more information

CONTACT INFORMATION FOR PUBLIC ADVISOR’S OFFICE

Telephone: 866-849-8390 or 415-703-2074
Email: public.advisor@cpuc.ca.gov
Postal Service: CPUC Public Advisor, 505 Van Ness Avenue, Room 2103, San Francisco, CA 94102

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