James Hunter

Tuesday, May 19, 2015

San Jose Water Company Water Rationing 15 June 2015

Updated 05/28/2015

The Mercury News published table showing the water rationing effective 15 June, 2015, for customers of the San Jose Water Company (SJWC). The State Water Resources Control Board adopted a resolution to reduce water consumption by 25%, statewide. This was then used as the basis of a resolution by CPUC and sent to the water utilities, including San Jose Water Company (SJWC).

This is more difficult for SJWC customers to understand, as our SJWC is bimonthly, billing is by two month periods. My water bill (redacted to protect personal info) is used as an example:

Blogger comment: Yes, I also reduced my water consumption by (21-14) = 7,  7/21 =  33% savings over the same period in 2014 and I'm 4 units below the allocation target of 18 units for the 2 month period. I always thought the "Brown is the new Green" was coined by the Governors re-election team. I'm pretty conservative, but he's stepped up to most challenges....................except may be CPUC.  I'd say water under the bridge, but we may not have enough to spare.
  • The penalty charges are also a bit confusing, current rates then in effect apply:
    • 0-3 units (CCF)  -  $3.20706
    • 4-18 units (CCF) - $3.56340
    • 18+ units (CCF)  - $3.91970
  • The 30% difference between your current used units and the monthly 2013 unit average use the applicable additional surcharge:
    • $3.56340 per unit penalty added to the base current per unit charge of $3.56340, you would pay $7.13 per unit
  • All units used above the the applicable monthly 2013 average will pay the base applicable unit charge $3.56340 (currently for units used from 4-18) an added penalty of $7.12680  per unit or apparently $10.69 per unit (CCF).

Q: What are the excess drought surcharges and how are they calculated? A: Most residential customers are billed bi-monthly. You will be charged at the current rate structure for all the units consumed. In addition to the current charges, each unit of water in excess of your allocation target will be charged as follows:

  • Drought Surcharge 1 (DS1): Excess consumption over allocation up to the 2013 monthly average will be charged at $3.56 per unit 
  • Drought Surcharge 2 (DS2): Excess consumption over the 2013 monthly average will be charged at $7.13per unit  
What SJWC is trying to say, you get 70% of the 2013 average month water usage or a minimum of 9 CCF at the current rates for that month (red flag - your price is going up!). If you use more than 9 CCF up to the 2013 average usage you pay the basic current rate per CCF (unit), plus a drought surcharge $3.56 (red flag you will pay $7.12 per CCF or more if the base rate per CCF is higher). If your use exceeds 100% of the 2013 monthly average, you pay the basic current rate per CCF (unit), plus a drought surcharge $7.13 (red flag you will pay $10.69, more if there is a basic rate increase per CCF).

Let's see what we would be paying per acre foot, keep in mind SJWC buys 1 acre foot from Santa Clara Valley Water District for about $875.  1 acre foot of water equals 436.5 CCF: 
$875 one acre foot / 436.5 CCF (acre foot of water) = 
$2.00 CCF (unit) compares with a unit over 100% 
with Drought Surcharge (Penalty) $10.69 or means
an acre foot with all penalties would cost
$10.69 x 436.5 = $4,666.18, if 1% of the homes
use 1 unit more than 100%, it would be 2,000 units
2,000 x $10.69 = $21,380
Blogger's note: I was so surprised I used a different calculator - this is getting to be 
real money and we need to have a very clear statement of where it will go and what it 
will be used for. It will only take 2,000 homes to go over, 100% allocation, by one CCF
(unit) per month to get $21,380. We can see the Drought Surcharge can be a lot of 
buck$. We can also see the markup SCVWD - $875 AF to SJWC $4,666
Now that we have an idea of the penalties that are applied above the average allocation (ration) by month let's look at where the money goes and how it will be used, as indicated in the SJWC FAQ.
Q: What will happen to the drought surcharges?
A: The surcharges will be deposited in a drought account authorized by the California Public Utilities Commission to track lost revenues from conservation. The amount collected will offset future surcharges as a result of conservation efforts.  
Blogger comment: Will it be used to guarantee SJWC gets it's 8.08% profit! I don't think the answer (A:) is thorough and complete? Since ORA is opposed to the annual 2,000 free toilets and installation added conservation option in the new general rate increase, is it possible that SJWC is collecting too much penalties? California Water Systems appears to be using a lower penalty rate and appears to follow the suggested Stage 3 Drought Guideline:

"The proposed Schedule 14.1 further provides that all monies collected by the utility through surcharges or fees shall be booked to the WRAM or a similar memorandum account to offset recovery of lost revenues and that all expenses incurred by the utility to implement Rule 14.1 and Schedule 14.1 that have not been considered in a General Rate Case or other proceeding shall be recoverable by the utility if determined to be reasonable by Commission.
These additional monies shall be accumulated by the utility in a separate memorandum account, for disposition as directed or authorized from time to time by the Commission." 
Oops, SJWC doesn't seem to have a WRAM quite yet, they have requested a WRAM again in the current pending General Rate Case 1501002, but they do have a MCRAMA currently.  SJWC feels because other utilities when Mr. Peevey was the CPUC President got full revenue decoupling from operation/cost WRAMs they should get a WRAM, as well . More in a separate post to this blog soon.

"San Jose Water Company (SJWC) has filed Advice Letter No. 468 (AL 468) with the California Public Utilities Commission (CPUC) requesting authorization to recover the accumulated balance in the Mandatory Conservation Revenue Adjustment Memorandum Account (MCRAMA) of $9,566,814, or approximately 3.4% of authorized revenue. 
Approved, the requested increase would become effective on or about June 15, 2015. The CPUC authorized SJWC to establish a MCRAMA to track the revenue impact of mandatory conservation upon SJWC’s quantity revenue resulting from mandatory conservation instituted by the State of California and the Santa Clara Valley Water District. As directed by the CPUC’s Water Division, the increase will be recovered via a surcharge on the existing quantity rate for a period of 12-months from the date of CPUC approval."
In other words the accrued conservation costs, will show up, in your water bill, starting in June 15, 2015 as a $0.1798 surcharge.  My posting to this blog, "SJWC Rate Increase, June 1, 2015" looks at this increase and the actual cost to you.

Apparently SJWC has spent $9,566,814 on "conservation" as required by the State of California and the Santa Clara Valley Water District. The interested SJWC customer may be interested in reviewing, "Advise Letter 468" (AL 468), it appears that more is included in the $9,566,814 than simply "conservation". The complete text of the Advise Letter 468 is available. please click to view.  While Notices based on Advise Letter 468 seems focused on conservation (that is a lot of blue buckets, pamphlets, customer meetings, lots of aerators, square feet of turf, etc.), but I personally would like to see a breakdown on the actual conservation expenses. Since others numbers indicate the conservation efforts to date don't seem to be very effective. AL 468 seems oriented to collecting the under payments from past years, cleaning up and consolidating accounts to collect balances in various accounts so that the 8.08% CPUC approved profit is achieved and preparing for the implementation of a full revenue decoupling WRAM. Conservation and drought appear to be a fog obscuring the likely purposes.

Collected penalties will be held in an account MCRAMA or worst case in a new WRAM and used to pay conservation related expenses, it's not clearly addressed if there is an amount larger that the the identifiable conservation expenses? I suspect if the conservation costs are covered any left over will be used to insure that the CPUC annual profit currently 8.08% is achieved.

There will be a public hearing I encourage you to attend. SJWC ADVICE LETTER NO. 473, Page 6 :

The Drought Procedures require that “A public hearing shall be help prior to a utility adding
Schedule 14.1 to its tariffs.” SJWC has planned for a public meeting as shown below:
THURSDAY, MAY 28, 2015
7:00 PM
SAN JOSE, CA 95112 

More information about the ROTARY SUMMIT CENTER is available at:

Parking, Evening Rate Enter After 6pm Exit by 6am  $5.00

If you need handicap parking or feel $5.00 parking fee is not appropriate to a public hearing send email to: 

Regulatory Affairs San Jose Water Company
110 West Taylor Street San Jose, CA 95110 
Fax 408.279.7934 

Request "Validation" of your parking ticket to allow you to attend the SJWC public hearing.

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