James Hunter

Friday, August 7, 2015

SJWC makes $4,521,058 of NTP&S revenue - unregulated!

SJWC makes $4,521,058 of NTP&S revenue, ratepayers get $674,117 of it!
In the spirit of openness and transparency this is a photo, I took, of the table from an Exhibit available in the SJWC office lobby in San Jose, for GRC 1501002. Interested ratepayers can also "view" the Exhibits, not published online at CPUC offices, in SF.

Blogger comment: Do you think this, access limitation, was done by SJWC on purpose?

The table above shows the SJWC sources of  NTP&S revenue that are either passive 10% (example Homeserv USA share of insurance premiums or active 30% for antenna leases. CPUC stated in their brief to the ALJ Pat Tzen, excerpt from page 11:
"More broadly, many of the employees who worked for NTP&S were in the Operations & Maintenance (“O&M”) and Construction departments.54 Those two departments were two of the three highest overtime cost departments at SJWC. 55 
Of the 12,202 labor hours attributed to NTP&S in 2014, “over 8,000 hours were attributed to various Distribution System employees and a Cross-Connection Inspector. . . . Four positions, not specific employees, were used more than 50% of the time working for NTP&S.” 56 
SJWC’s claim that its NTP&S labor is excess capacity is undermined by the fact that it is seeing significant overtime expenses in departments used for NTP&S, the high rate of usage of certain positions and employees for NTP&S, and the company’s request to hire more people in positions and departments that are highly used for NTP&S. Taken together, SJWC appears to be using employees, ostensibly paid for by ratepayers to provide regulated services, to provide NTP&S. The result is that ratepayers are fundamentally subsidizing the NTP&S provided by SJWC by paying the salaries and benefits of those employees whose time is used to provide NTP&S." 
Since it's likely the significant revenue is derived from the Antenna Leases, typically cell service, that should require a minimum of labor hours from SJWC staff, represents ($289,138), so the remaining dollars are then
57% of the revenue or $384,879. It appears that there seems to be a discrepancy, in the calculations? SJWC indicates that they expend 12,000 man-hours or roughly 6 man years, of excess hours that are used in "unregulated activities". The obvious question since how much does SJWC make from the unregulated activities?   Total revenue $4,54,058 (based on the 5 year average through 2014 above) minus $674,117 allocated for ratepayers. SJWC then made during the period $3,846,941 or if we look at the reported 12,000 excess man-hours we get $320/hour or $641,156 annually per year for each of the 6 excess man years (approximately the yearly pay of SJWC Sr. VP Regulatory Affairs).

This appears to be a great business as long as SJWC really just expends the actual excess man hours that cost $47 and are effectively sold for $320, especially since we the ratepayers bear the majority of the risk as SJWC tries to generate unregulated revenues from existing and new sources. It makes sense to separate regulated and unregulated activities, having them at arms length would seem the best way. Other regulated water utilities have a separate business/corporation.

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