James Hunter

Tuesday, July 21, 2015

Why does SJWC really want WRAM (Water Rate Adjustment Mechanism)

San Jose Water Company (SJWC) has tried very hard to justify why they really badly need to fully decouple revenue from sales. This means that the price we pay for water will be adjusted to insure that SJWC gets its CPUC approved profit percentage, presently 8.08%. We find ourselves in a major drought and as the cost of water purchased by SJWC, from SCVWD or pumped from the Santa Clara Valley aquifer our cost of each unit CCF (CCF-100 cubic feet), of water will increase, not including any penalties for water usage above the published monthly rations.

The latest filing (OPENING BRIEF OF SAN JOSE WATER COMPANY, GRC1501002) from SJWC to ALJ Pat Tsen, argues based on many of the same terms as GRC1201001 (General Rate Case 1201003). 

SJWC wants from WRAM (excerpts from 2 and 3, SJWC Opening Brief)
"Revenue Decoupling: In this time of severe drought, public attention is focused on the need for all users to limit water consumption, but Commission policy and state legislators have wisely focused on water conservation as a long-term policy goal. Now is the time for the Commission to enable SJWC to align its business incentives with its conservation goal by implementing a WRAM/MCBA that will decouple utility revenue recovery from water sales. Experience with other water utilities’ WRAM/MCBAs has demonstrated that these mechanism perform as intended if water sales forecasts are realistic. In the present GRC, the Company and ORA have cooperated to develop a sales forecast that properly reflects anticipated customer response to the drought and to drought-related water conservation mandates. In this context, authorization of a WRAM/MCBA as proposed by SJWC will benefit the utility, its customers, and the state’s water conservation goals."
That's a lot of generalizations, especially the undefined "benefit to customers", in the late 1980 ERAMs (Electric Rate Adjustment Mechanism) based upon what we ratepayers have seen a lot of issues (dare we say problems) that related to the potential misuse, of funds collected from ratepayers. SJWC also points out that "other water utilities" have been allowed by CPUC during Mr. Peevey's terms as President, since the other guys got it why can't we have it to? Pointing to the obvious, Mr. Peevey and his replacement are under investigation, by State and Federal Authorities.

So, in the Blogger's opinion let's do something different tell the ratepayers what's in the approval, of the WRAM,  for SJWC and the ratepayers! It sure looks like we would be giving SJWC something for really doing their job, as required already by CPUC!
"WRAM-Related Conservation Programs: With its incentives properly aligned through adoption of a WRAM/MCBA, SJWC seeks to pursue ambitious water conservation programs that will assist customers in achieving the water use reductions envisioned by the Governor’s Executive Order and the implementing regulations of the State Water Board and this Commission. Mandates to cut water use will be better accepted and more effective if they are accompanied by programs that enable residential and business customers to make better, more efficient use of the water they still must use. That is what SJWC’s WRAM-related conservation programs will help its customers to do."
The twisting of the english language to justify what they really want, apparently very badly, is not saying what is really happening or why they SJWC wants the WRAM approved. SJWC increased our required rationing to 30% from 20%, as required by the State Board of Water Resources, based on a request by the SCVWD (Santa Clara Valley Water District) who is a water reseller and does not legally control SJWC a publically owned company. Based on a ground water level decrease which may cause, subsidence, if the water level continues to decrease. The City Council of San Jose jumped on the bandwagon as well. See my blog or go to the SCVWD report to see the graph showing historical ground water levels, in Santa Clara Valley.

The blogger would like to point out that the rationing effects only metered residences, 60% of the SJWC ratepayers, resulting the financial burden being levied in a discriminatory manner, since the other 40% are exempted. SJWC then increased the financial burden, by 50%, on the group already being discriminated against. 

The next question is what are the "SJWCs' WRAM-related conservation programs will help its customers to do". Being a ratepayer I tend to start reading things very closely when effective monopoly companies say they want to help me. The "SJWC’s WRAM-related conservation programs" are shown below and the question asked is how much do they cost me?
  • SJWC requested $12,138,200 increase in projects associated with conservation, based on getting approval for the WRAM, ORA recommends 40.25% reduction and to deny the WRAM and associated conservation expenses. So wants to pay $4 million more and they get the WRAM. Hmm, It's obviously a win-win for SJWC, but it seems to be a lose-lose for us (ratepayers). The question is where does the $4 million per year come from and who really pays for it?
  • Let's see in more detail what the $4.2 million dollars, contingent on WRAM, are:
    -Ultra-High Efficiency Toilet, Showerhead and Aerator Direct Install Program. SJWC proposes to replace, 2,000 per year, old toilets with UHET units, at no charge to ratepayers. Since there's 100,000 or more toilets in the SJWC, so the program would take 50 years as proposed (ignoring population growth). The second issue is how participants are selected? A non-discriminatory selection method of proposed participants? Financially SJWC says in Exhibit E that it would cost them $236,841 revenue annually, if the UEHT toilet replacement is approved it would reduce the cost of water potentially purchased by $157,000 vs. the claimed revenue loss of $236,841 annually. Wow, they didn't teach me that accounting method when I got my BSBA and if I used misleading measurements of gallons, vs. CCF vs. acre foot, as it appears to have been convenient, I would have lost points on my grade.Oh, the cost per toilet installed is estimated at $320 each, so 98% of ratepayers would effectively pay the $640,000 annual cost plus make up the lost SJWC revenue? please tell me I'm wrong. Oh yes, SJWC revenues are guaranteed so ratepayers water rates would be increased.
    -Waterfluence Landscape Budget Program-Home User Water Reports, I thought Santa Clara Valley Water District was responsible for this program? is SJWC going to start paying SCVWD for this service?
    -CII (Commercial, Industrial, Institutional) Survey Program, focused on high volume users Discriminates against small businesses and residential ratepayers who are not included.
    -School Education Kit Program, Single Source (RAP), 100 fifth grade classes, estimated cost $106,200, water savings for SJWC is estimated at $43,000 (43 acre feet at $1000). Where's the $63,000 going?
    -Landscape Education Class Series, a modest cost estimated at $9100 per year, for residential and Landscape contractors, saving estimated at 20% of what? cost savings? How are participants selected? Is there a non-discriminatory method to select participants? or will there be a charge to attend?
It really doesn't appear to me, after reviewing Exhibit E sections referring to additional conservation programs contingent on CPUC approving SJWC be allowed to implement a WRAM/MCBA fully decoupling revenue from sales, that SJWC is actually offering ratepayers any significant benefits. 

The blogger has to wonder whether Exhibit E was not placed online, so ratepayer access was effectively limited and effectively stifle dissent? and prevent or control ratepayer  complaints?

The apparent cost of the conservation programs contingent on the approval seem to be actually covered by the ratepayers, in any case it appears the existing "Monterey Style WRAM" protects SJWC by raising the costs of water to ratepayers, if the drought persists and SCVWD raises rates. 

The SJWC "incentive" doesn't represent an obvious non-discriminatory benefit for ratepayers. I oppose providing SJWC a full decoupling of sales and revenue, using the proposed WRAM/MCBA, as a purported incentive.

Please send email, 
make your opinion heard!

 If you are concerned about these issues, send email to CPUC at: District 5 United eForm eMail  Simply click on the "eForm eMail" and you will get a page to fill out the information and specify the reason for your opposition to the discriminatory nature of SJWC Drought Allocations and continuing requests to de-couple their revenue from the requirement to do business efficiently and your concern about their lack of openness and transparency. 

Please consider pasting the following when you fill in the eForm:
"The contingent extensions of the conservation programs do not seem to provide SJWC Ratepayers specific benefits, of value, in a non-discriminatory manner. Rather the conservation measures are either, offered contingent on CPUC approval, of the WRAM, are already provided by SCVWD, are applicable to specific group of ratepayers (discrimination), are likely really paid for directly or indirectly by us (the customers/ratepayers). I OPPOSE providing SJWC with a WRAM separating revenue and water sales, effectively guaranteeing SJWC profits."
You can also send an email to CPUC Public Advisopublic.advisor@cpuc.ca.gov  The Public Adviser will insure your email will be sent to all the appropriate CPUC staff members.

Other people to drop an email (note) and express your opinion are:
  • Scott Herhold, San Jose Mercury News, sherhold@mercurynews.com
  • Julie Putnam, NBC Channel 5, julie.putnam@nbcuni.com

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