James Hunter

Thursday, July 23, 2015

Punishing Water Penalties Unconstitutional

"Rejecting the pleas of California officials worried about water conservation, the state Supreme Court on Wednesday left intact a lower court ruling that makes it tougher for cities and water districts to impose punishing higher rates on water wasters. 
In its weekly closed-door conference, the Supreme Court refused to soften the statewide impact of an April appeals court ruling that found the city of San Juan Capistrano's tiered water rates -- common in the Bay Area and elsewhere in California -- were unconstitutional because they charged more for water than it cost the city to provide the service."  excerpt San Jose Mercury News, Howard Mintz, 07/23/2015
We in San Jose have a Municipal Water District, City of San Jose and a Public Utility Company, San Jose Water Company. It's obvious the state Supreme Court ruling applies to the Municipal Water District rates and as the case in San Juan Capistrano, the city San Jose may have to make a refund to its' water customers.

The case is a bit different and I'm sure the legion of Water Lawyers is very happy that we also have many Public Water Companies in California. The structure of reporting, auditing for government water districts is to the city council or county council. These folks sell water to the public - important - get direction from the State Board of Water Resources, who reports to State Governor. San Jose Water Company is a wholly owned subsidiary of SJW Corp. who is "Publicly Traded Stock" company. SJWC reports, audited and requests tariff approvals from CPUC.

This raises interesting questions: 
  • Will San Jose Water Company have to change their tiered tariff structure and the punitive usage penalties currently in effect and approved by CPUC? 
  • CPUC ORA is supposed to be pursuing a CPUC Commission hearing about SJWC discriminatory application of the drought regulations, as they exempt certain classes of ratepayers (I got an email indicating they were from an ORA staff member)?
  • Further will the current tiered tariffs result in refunds to SJWC customers (ratepayers)?
  • The really underlying question is will CPUC apply the state Supreme Courts ruling to regulated Public Water companies (currently 10 class A water utilities) and require they request new tariffs that reflect actual costs of water and remove the punitive penalties, used to affect social change and reduce use of water?
"California may be thirsting for water, but water utilities in the state—and elsewhere—are an overlooked niche that investors should be eyeing for steady earnings growth and dividends that can keep pace with rising bond rates. 
Water utilities have traditionally been regarded as a sleepy stock backwater, churning out dividends for widows and orphans and no more. But that's changing. Analysts say the utilities—though still regulated monopolies—are in growth mode, snapping up acquisitions, forging agreements with friendly regulators and, in some cases, moving into unregulated markets." excerpt from CNBC article 
The statewide question is,  "how friendly the regulators (CPUC and the Division of Water & Audits) are with the 10 class A water utilities"? Remember the quote from the CPUC Director of Water & Audits , "More than 1,000 people sent the PUC protest letters claiming the rules were unfair, said Rami Kahlon, director of the PUC's Division of Water and Audits in San Francisco. Kahlon said the PUC staff denied the protests because it's giving the private water companies it regulates wide latitude crafting the rules, with the main goal being that they hit water conservation targets the state has assigned them.".

Blogger comment: I'm flush with anticipation waiting for the CPUC ruling to drop!

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