San Jose Water Company and Santa Clara Valley Water District drought actions discriminatory?

 

The recent SJWC and SCVWD meeting at the Los Gatos, council chamber was standing room only. The presentation by John Tang, VP SJWC was interrupted by the audience trying to ask questions, only written questions were answered. The written questions were asked, but appeared to be somewhat filtered. About half the audience after a period heckling and booing left as they appeared to see little chance of getting their concerns addressed.

The slide presentation, first slide set the tone, "the ASCE rates the infrastructure of water systems as a D". I talked with John after the meeting and he said that it was for the entire US, I missed that as well as other attendees, probably because of the booing.

We've paid millions in parcel taxes, to SCVWD, as well as rate increases, to SJWC and all we get is basically a failing grade? We see $69 billion (estimated) for a high speed rail connection to Los Angles, how about spending a major part of that on our potholes, bridges and on our water infrastructure?

Angry residents in Saratoga, CA have started a petition, "Outrageous Water Bills?! Let CPUC know that SJWC's unfair billing practices need to STOP!". Please take a moment and signup.

The issues that I have raised as well the group which organized the Los Gatos meeting were actually addressed by SJW/SJWC in a document written in 1992, 24 years ago, by Robert Day, now Director of SJWC Customer service. This document  is available on a San Jose city server at an open public link for my readers convenience a public copy is also on Google for download and viewing and to insure it remains available.

SJWC has not provided :"Water Banking" unused amount of allocations would be saved and applied to your future water bills, avoiding hopefully some of the water penalty charges. We've been told that SJWC can't do that now. It's odd that it was exactly what was proposed 24 years ago, see Appendix B and C that was written in 1992, by SJWC. I also found out that apparently SJWC uses an Oracle utility billing package an SJWC VP stated in a web video that the package was extremely flexible and could handle any envisioned tariff complexity............. this Blogger has to ask, "does SJWC not want to do it rather than can't do it? Bite the bullet SJWC be honest and transparent and tell us the truth". View the video and form your opinion.
 

Dana Drysdale, VP Information Systems, SJWC convinced me that SJWC can do "Water Banking" even 24 years later, did he convince you?

The document written 24 years ago also addresses "Allocations" of water by user, based on a prior year usage, in the case of the document in the Appendix B,C, D the year was 1987, before that drought. Further it divided the year into summer and winter, rather than allocations by month the same for all users. SJWC has also decided that a "one size fits all approach" to water allocations. SJWC also discriminates (Blogger opinion) by not applying the drought allocation to business and industry , as well as apartment buildings.
SJWC places the burden of meeting the conservation requirements on owners of single family dwellings. The fair approach is all water meters should be subject to the same rules. Otherwise this is a clear case of discrimination (bloggers opinion). Reality is simple and fair, you have a meter, you used water during the same period in the year before the drought you must cut your usage by NN%. 

The Kiss Principle at work! (Keep It Simple S@#$%)  (Bloggers suggestion, easy to understand, it's a simple single program, should appeal to SCVWD and SJWC because of simplicity).

Excess water use will be penalized. Allocations should be based on your base year use and your allocation a percentage of periods in the base year.  If you have conserved and have a positive saving balance of banked water units that can be applied in lieu of penalty charges. The penalty will be added to your water bill. The penalty percentage will be determined by the State Water Resources Board based on the severity of the drought. The program would be mandatory for all public and private water utilities. If changes are made all water utilities will comply or be penalized. Continue the program to review written adjustment applications in water use for valid, verifiable cause.

 SJWC is a 100% wholly owned subsidiary of SJW Corp. (symbol SJW). This creates issues in the area of transparency to ratepayers (customers) and the press. We can look at the SEC information that SJW must file and we can look at some of the filings that SJWC makes with CPUC. SJWC has the option of requesting certain information be either not published online or redacted. Our view of many of the decision processes is obfuscated. The California Public information laws are not applicable to CPUC communications with the utilities they are supposed to regulate in the best interest of ratepayers. Theoretically if CPUC adhered to it's defined objectives we might as ratepayers feel we were getting the best service and financial deal we should expect. Something has gone wrong with the regulation of quasi-monopolies like PG&E (Electric & Gas) and likely with the class A water utilities like SJWC. I've attended two public meetings and  each meeting had over 250 irate ratepayers attending who have been really unhappy with the justifications and unreasonable rates. An amazing number of people that turn out to attempt to voice their concerns  to SJWC. This bloggers opinion is that CPUC has been too "constructive" with SJWC and lost sight of who they are supposed to represent, ORA/DRA are advocates for ratepayers and do very well with the limited staff CPUC has allowed them. I doubt it's possible to "claw-back" any of the prior benefits that a constructive regulatory environment, except in obviously outrageous situations like the PG&E gas line fires and nuclear power plant decommissioning (bloggers opinion), what are future efforts to fix the utility system that is taking advantage of the ratepayers for the excessive benefit of management and stockholders? Do we need a oversight committee that can be ratepayers living in the utilities to watch the operations more closely? Governor Brown appointed a new commissioner/president of CPUC over a year ago, when does the honeymoon end and we the ratepayers see some actions, or do we continue to provide a constructive regulatory environment for SJWC and other water utilities? May be the best approach is to buy SJW stock it's been a great investment for me. I bought 10 shares 4 years ago, so I could go to annual meetings, and have doubled my money plus dividends. If enough ratepayers bought 10 shares we can all go to the annual meeting and even possibly elect a board member to represent our interests. A interesting idea ............... sure to cause heartburn, for some readers.

Our water conservation, SJWC profit protection and the apparent "constructive regulatory environment", seems to have been very beneficial for SJW/SJWC finances, rather than ours. The following is a excerpt from Zacks financial report:

The company has reported a positive earnings surprise in two out of the last four quarters, resulting in an average positive surprise of 47.57%.
SJW Corp. offers excellent investment opportunity for investors due to its proven business model and a viable capital program, which drives rate base and earnings growth. The company is benefiting from a constructive regulatory environment, with mechanisms in place to provide protection for sales lost due to the ongoing drought and mandatory water conservation rules.

In June, the California Public Utilities Commission issued the final decision on the 2016 general rate case for San Jose Water Company, SJW Corp.’s wholly owned subsidiary. The final decision authorized rates that will add nearly $25.1 million or 8.6% to revenues in 2016.

Richard Roth the CEO of SJW Corporation was apparently the source of that quote, in his comments on the SJW's (SJW) CEO Richard Roth on Q2 2016 Results - Earnings Call stated, click to view actual Seeking Alpha transcript of the investor conference call::

A constructive regulatory environment with mechanisms in place to provide protection for sales lost due to the drought and related mandatory conservation rules. Strong cash flow as we continue to collect the 2013 and 2014 true-up adjustment resulting from a late decision on San Jose Water Company’s 2012 General Rate Case and a high level of capital investments delivering robust growth and rate base.

Does "constructive regulatory environment" does this mean CPUC didn't represent ratepayers interest in effectively negotiating for the best rate? Was CPUC to easy in allowing capital investments that resulted in more dollars going to the guaranteed SJW Corp. profit from SJWC?

In summary we find that after research, SJWC documents show that a significant percentage of SJWC ratepayers unhappiness and disaffection would have been addressed if SJWC  followed the 1992 drought conservation plan. The relationships CPUC has had with the utilities it was supposed to regulate in the best interests of the ratepayers was probably overly an "constructive regulatory environment". SJWC as we should realize operates in the interests of it's directors and shareholders, but is a monopoly in all but name and avoids being transparent except as required by law. May be time to change some of those laws.
 
Please take a moment and:

Sign the "Outrageous Water Bills" petition at http://www.change.org 

If you have valid grounds for a complaint go to
http://www.sjwfacts.weebly.com  and click on File Complaint

Outrageous Water Bills?! Let CPUC know that SJWC's unfair billing practices need to STOP!

Posted with the permission of  Rita Benton Saratoga, CA

Please attend the meeting with John Tang VP, San Jose Water Company has agreed to participate in a meeting with residents to discuss recent water bills. Staff from the Santa Clara Valley Water District (SCVWD) will also be there. The meeting is scheduled for Monday, November 14 from 6 to 8 p.m. in Los Gatos Town Council Chambers. 110 E. Main Street, Los Gatos, CA 95030.  

In 2012, SJW requested a 44% increase over 2013, 2014 & 2015 from CPUC. This was not approved but, today, with CPUC’s approval of the MANY additional surcharges and rate increases, SJW is now charging 71% more than in 2013 if you are under your allocation. The increase goes up even more drastically if you go over your allocation. ie: 50ccf=128%,  60ccf=155%, 100ccf=208%, 150ccf=237%. These rates are truly outrageous!   (Based on a comparison of 2013 & 2016 Jul/Aug bills. 71% is based on "typical" customer using 15ccf/mo.)
All of California is in this drought together but San Jose Water Company is way out of line with their rates, allocations, surcharges and "true-up" surcharges. Other water companies in the Bay Area are charging their customers much, much less. Neighboring, Great Oaks Water, which services parts of San Jose, is charging their customers 87% LESS than SJW. They also get their water from the Santa Clara Valley Water District (SCVWD), just like SJW, and they are also a for profit, investor-owner, company regulated by the CPUC.
Why has the California Public Utilities Commission (CPUC) approved these extreme rate hikes and surcharges to SJW? This needs to be repealed and SJW should be required to reimburse its customers. 
The CPUC and SJW need to address the following issues and make change.
1 – We are paying the price. SJW is making huge profits because of rate and surcharge increases that SJW requested and CPUC approved. SJW is a for profit company and publicly traded on the NY stock exchange. Their 3rd quarter 2016 revenue was $112.3 million, a 35.4% increase over 3rd quarter 2015. SJWCorp. stock has risen over 73% since January 2016.
Richard Roth, SJW CEO, recently stated, "...[SJW] provides superior service levels and delivers reliable water supplies at a reasonable price." and “the company’s cash flow remains robust…” This is happening on the backs of its customers. SJW is exploiting the drought in California for huge financial gain. Surely, the CPUC can repeal their rate and surcharge decisions.
 2 – Our Rates are Not Reasonable. The California Public Utilities Commission (CPUC) is responsible for ensuring that California’s investor-owned water utilities deliver clean, safe, and reliable water to their customers at reasonable rates. 
We are using considerably less water and our bills are 71% higher than our 2013 bills. Some customers are receiving bills over $2000. These rates are not reasonable.
 3 – Unfair Water Allocations. SJW has allocated the same amount of water for all its customers during drought conditions, excluding apartments, commercial/industrial customers. Water allocations should be based on number in household and lot size. Two people living in a condo are not going to require as much water as a family of 4 living in a single family home on a 10,000 square foot lot. Homeowners and house renters with a water meter, 60% of users, are being held responsible for almost the entire burden of the mandatory drought rationing. SJWC decided to exclude 40% of water users: apartments, commercial/industrial customers. This is discrimination that unfairly places the costs on a unique class of users.
 If we do not use our water allocation for a given month, we do not get to “bank” the extra and save it for a non-rainy day.
4 – SJW Needs to be Transparent. SJW bills are so confusing and difficult to decipher that even their customer service department is unable to explain the math for all the different surcharges.
We were informed that there would be an 8.6% increase but the tier rates reflects a 26% increase. John Tang with SJW stated that this is because they added an additional $0.64 per ccf in surcharges and then added the 8.6% increase to the January rate of $3.21. This brings our new tier rates to $4.05, $4.50 & $4.95. Additional Drought Surcharge rates are DS1-$3.56 & DS2-$7.13 per ccf. This math still does not add up to an 8.6% increase.
SJW also decreased our water allotments per tier. Previously, tier1 was for 0-13 ccf per month and now, tier1 is 0-3 ccf per month, tier2 is 3-18 ccf and tier3 is 18+. The tier rates will not decrease and tier allotments will not  increase when the drought is over.
 5 – SJW Water Data Collection is Imprecise yet our bills are precise to .00001 ccf. SJW currently does not know how much water its customers use during a given month. Their 2 month billing cycles have loose start and end dates yet our water allocations are on a monthly basis.
6 – SJW Employees receive their water Free of Charge and are not subject to Drought Allocation Surcharges. This puts them out of touch with their customers.
In addition to signing this petition, it is very important that EACH and EVERY one of us file a complaint with the CPUC! The more complaints they get, the more we will be heard. www.sjwfacts.weebly.com/file-complaint.html
For further information visit www.sjwfacts.weebly.com

This petition will be delivered to:

• California Public Utilities Commission
  Catherine Sandoval, Commissioner
• California Public Utilities Commission
  Michael Picker, Commissioner-President
• San Jose Water Company
  John Tang, VP Government Relations & Corp. Communications

55 more decision makers...

(Blogger Comment)

Please also view my posts on the excessively expensive water billings, comments on  the SJWC "constructive relationship" with CPUC and the SJW stock price and dividends growth.

SJWC is really green (profits), our yards are brown................

We are at the beginning of the 6th year of drought. Seems odd as I look out my office window at the very light rain falling from a series of storm fronts, at my landscaping and grass. Hopefully some of the dead spots and shrubs will make an effort to turn green again.

Which raises several questions regarding the "financial" performance of SJW Corp. who wholly owns San Jose Water Company. A Yahoo Financial article caught my attention several weeks ago, I encourage readers to read the original article and form their opinion. Click to read.

Several things really drew my attention:

"SJW Corp. offers excellent investment opportunity for investors due to its proven business model and a viable capital program, which drives rate base and earnings growth. The company is benefiting from a constructive regulatory environment, with mechanisms in place to provide protection for sales lost due to the ongoing drought and mandatory water conservation rules."

I wonder what a "constructive regulatory environment" means, to us the ratepayers/customers  We may possibly have seen a "constructive regulatory environment", between CPUC and PG&E and this resulted in enacting more stringent rules for CPUC's relationships with the utilities. Does this also apply to the water utilities?

SJW Corporation stock has about doubled during the drought, in part because their profits are guaranteed by the last two rate cases. Their dividends have increased to shareholders and have had a surprisingly good earnings performance, I'll leave it up to my readers to guess where the money came from, just a pointed hint, "you and I".

"The company has reported a positive earnings surprise in two out of the last four quarters, resulting in an average positive surprise of 47.57%." 

 Based on some of the stock analysts, some indications are the operations could be more efficient compared to peer group of water utilities. Since there was a reference to a "constructive regulatory environment" it worth watching closely to see what this may mean to ratepayers.

My next posting will look at the impact of drought on the water rates and look closely at what ratepayers/customers might do to control their water costs. Meanwhile let's all hope for a wet rain season, but also plan for the drought to continue.

Homeserve USA (aka Home Emergency Insurance Solutions, aka HEIS) June 2016

I've noticed a large peak in searches about Homeserve USA (aka Home Emergency Insurance Solutions, aka HEIS). They offer the insurance for the pipe from your water meter (your side) to the pipe connection into your home. Activity peaks generally occur when Homeserve USA does a major advertising mailing. Obviously I'm not on their mail list, so unless I see a peak, in visitors to blog postings about them, I don't know when they're actively selling the insurance..

I've done 7 postings to this blog. It all started when I got a letter from Robert (Bob) Day the SJWC Director of Customer Service. It looked like an "official letter from SJWC", so I read it carefully and realized it was actually a direct mailer marketing piece. I started to pull on the "loose ends" and researched Homeserve USA and found some less than positive accounts and information.

This insurance represents a source of non-regulated revenue to SJWC. If all 220,000 residential rate payers purchased this insurance $15.6 million in premium payments to Homeserve and as I discovered at least 10%, $1.56 million would be paid to SJWC. So, SJWC has a financial incentive to support this program "surprise". How much labor from SJWC employees used? NTP&S (Non-Tariffed Products & Services) was one of the points of "disagreement" in the current General Rate Case (A1601002), because it's hard to determine hours that we pay for get used to do work on NTP&S, so ORA (Office of Ratepayer Advocates) and came up with a compromise, but did not set a precedent.

This is the eighth posting I've done and I hope it encourages buyers, in particular ratepayers of SJWC, to read a bit, do a search on the internet and form their own opinion and make an informed decision.

So far I don't see any significant changes from, what I've documented, in my previous postings:

• Homeserve USA may be getting gas!
• Homeserve USA water pipe insurance, Over 270 visits (25 May to June 25, 2015)
• Homeserve USA (HEIS) and BBB Accreditation and A+ Rating
• Home Emergency Insurance Solutions (HEIS, Homeserve USA) 2015, GRC 1501002
• Homeserve UK fined over $75 million dollars!
• What does Homeserve USA (HEIS) pay SJWC
• HEIS aka Home Emergency Insurance Solutions, aka HomeServe USA?

Drought Surcharges! Your water bill is really going up! San Jose Water Company (SJWC)

On June 15, 2016 posting to the Blog I posed several questions, wondering which SJWC would impose on us (ratepayers). They simply imposed all of them! The following takes a close look at the requests and decisions made by both SJWC and SCVWD, especially what it could cost you. Note, updated 6/27/2016 to include monthly Service Charge for your meter.

The following shows the "base rate" per unit (CCF=100 cubic feet):

New 2016 Rates, effective July 1, 2016, page 8

Now we'll look at the ADV 491, SJWC requested speedy approval, for the Drought Surcharges.:

2016 Drought Surcharges (SJWC), ADV 491 

This creates a relatively complicated formula for calculating what you'll pay SJWC, for a Unit (CCF):

Monthly Drought Allocation 2016

Before I take a look at the actual cost per unit you'll pay there seems to be a calculation in ADV 490 that may mislead ratepayers, of SJWC: 

SJWC Example Ratepayer Monthly Increase, 2016

As the Monthly drought allocation shows, would be incorrect the months Oct., Nov., and Dec. SJWC would be  incorrect, depending on your viewpoint either 50% or 100%. Let's just chalk this up to SJWC fast reaction to "accurately and quickly charge ratepayers", as appropriate under the "rules" and the cart got in front of the horse.

If we take the months July through December 2016, using December in the example, the average ratepayer per SJWC and the Information in ADV 490 and 491: (Apologies, I realized the "Monthly Service Charge" for each meter wasn't included, in the estimate below.) 

(Service Charge per meter $21.21) + (3 units x $4.06) + (9 units x $4.51) + (2 units x $4.51 + 2 x Drought Surcharge)  (1 unit $4.51  +  1 Drought Surcharge) results in ($21.21) + ($12.18) + ($40.59) + ($9.03 + $ 7.12)($4.51 + $7.12) =

$101.76 per month for the average SJWC Ratepayer in December 2016
Merry Christmas!

(includes only service charge, water and penalties, not taxes or other charges included, since Attachment B not included)

Readers should be aware I'm on the Attachment D (Distribution List),  but I did not receive Attachments A, B and C. I'm unable to verify or compare the SJWC the "All surcharge surcharge and bill comparison calculations". I wonder what SJWC meant by "surcharge surcharge"? Since Attachments A, B and C were not attached to my emailed copy, that may be reasonable grounds for a complaint, to CPUC or for some reason they should be considered "confidential, in which case a page should be included saying the attachment is "proprietary or confidential", difficult to prove for someone with no competitors, in the San Jose/Santa Clara market.

I also notice that the SJWC ADV 491 email had the following warning:

Important Notice: This email may contain confidential or proprietary information belonging to SJW Corp. or one of its subsidiaries. If you are not the intended recipient, the sender requests that you immediately inform him or her that you have received it and that you immediately destroy the email. Please note that the use of confidential or proprietary information when you are not the intended recipient may have legal effects. Nothing in the body of this email is intended to be an electronic signature or is intended to create a binding contract.

This may be appropriate in some business situations, but not in an ADV filing with CPUC which should be considered to be a public document. SJWC may with the prior approval redact sensitive data, if they can present adequate justification to the assigned ALJ. In all cases proprietary or confidential, should be clearly identified.

Drought Restrictions 2016, SCVWD Board Meeting, June 14, 2016

I attended the Santa Clara Water District board meeting last night. Based on the State Water Resource Board requirements, SCVWD after discussion approved a continuing 20% reduction, below previous usage, and will advise the 18 retailers in Santa Clara County, of the required mandatory water savings.

Which brings us back to the question what will San Jose Water Company implement? Their choices are one or more of the following:

• A penalty for "excess use - seems to have been there" or will they call it a "drought surcharge - DS"?
• Will the base water allocation be based on a monthly changing amount based on 2013, as before or will they based on a different year? 
• Outside hoses must have closing sprayers
• Water landscape three times a week vs. twice, no run-off into gutter?
• Watering hours restriction, probably?
• Washing vehicles OK, but counts against your allotment of water?

Keep in mind we are still in a drought, while the reservoirs look good, ground water has been seriously depleted. It will take several wet years to catch up on the drought shortages. 

Drought Restrictions 2016?

A little bit of confusion on the part of San Jose Water Company (SJWC) and the actual action by the Board of the Santa Clara Valley Water District (SCVWD) about the restrictions that might apply after June 30, 2016.

In a phone call CPUC, Water Department clarified  that  "Overuse  Rates"  applied  only  to the Mountain District not not to SJWC  and  other utilities ratepayers  in the  valley. Shortly  afterwards  I also  received  an email  from a  SJWC  Director  addressing  the  same  point. Presently  the "Overuse Charge"  is  only  applicable to Santa  Cruz Mountain District, but  stay  tuned,  as   SCVWD Board  meeting  will address these issues tonight, June 14, 2016.           

The story starts with SJWC submitting ADV 488, 489 and 490, to CPUC Water Department, adjusting the current current water rates. Buried in the documents was:

RATES

Quantity Rate Per 100 cu. ft. (Ccf)
Overuse Rates beyond 500 gallons per day limit
Residential Customers with 3/4–inch, 1-inch, 1 1/2-inch or 2-inch meter
For Total Monthly Usage from 0 to 3 Ccf. $4.0366
For Total Monthly Usage from 4 to 18 Ccf. $4.4851
For Total Monthly Usage for 19 to 20 Ccf. $4.9336
For Total Monthly Usage over 20 Ccf. $7.0000
All Other Customers(subject to Special Condition 5) (Note, mountain areas)
For Total Monthly Usage from 0 to 20 Ccf. $4.4851
For Total Monthly Usage over 20 Ccf. $7.0000

https://sjwater.s3.amazonaws.com/files/documents/AL%20490.pdf   Please refer to page 11.

Running a bit late SCVWD scheduled meeting is on Monday, June 13th, the agenda contains references to State Water Resources Board recommendation for conservation. SJWC as usual was very efficient in getting the documentation for monies due to them. Did they jump the gun in their "greed (opinion)" not to miss a cent, keep in mind they want to keep the $8 million tax windfall you paid for because they were not as efficient in notifying CPUC of the effect of the tax changes. It appears there is a double standard regarding our money we pay to them. SJWC is really efficient and somewhat aggressive in collection, see Yelp Rating two stars, keep in mind they get one star for existing. (Bloggers opinion) Oddly enough they don't seem to be as effective in other areas efficient operations, customer service and transparency.

The disturbing issues about this "faux pas" Rate change was published, in the Mercury News, but no reference to "Overuse Rates", also no comparison of rates, before and after, other than a reference to "increase $6.34 per month on the use of 15 CCF or 7.07%". It was also published in an Advise Letter which avoids a public hearing, has a very limited time for ratepayers to submit a complaint and very stringent reasons, for a complaint to be considered:

Blogger is not an attorney, but it appears there is reason to consider items:  3 - omission of reference to  "Overuse Rates", 5 - the  "Overuse Rates" may be inappropriate for an advise letter and 6 - SJWC has not as of June 12th provided information showing that  "Overuse Rates" are not unjust or unreasonable or discriminatory.

There was a similar request in an advise letter in 2013-14, at the start of the drought issues, it seems it was replaced Drought Surcharges 1 and 2. Should SJWC be able to consider anything applied for, but may not be used, approved for future use? Was this a simple oversight since it has been approved and ratepayers simply were not told the decision was made? I'm sure that the SCVWD will after the fact approve  "Overuse Rates", but it certainly looks like a rubber stamp approval, to this blogger.

SJWC $8.08 Million Tax Windfall. or "We got it and don't want to share it with those nasty ratepayers!"

To be fair they didn't specifically say "nasty" ratepayers. It's obvious that SJWC feels they've found a legal loophole that will allow them to keep the $8 million and not credit the ratepayers, any of the windfall tax refund and by the way pay SJWC Management  a bonus, paid for by ratepayers, for increasing the value of their shareholder investment. (Please note, I own 10 shares of SJW stock, so I can attend annual meetings.)

 The link below (finally up after being down about 3 days) is again available:

http://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M162/K358/162358073.PDF

My personal view is this is not a case of retroactive rate-making, this is a simple case of greed. SJWC is protected by lots of rules that guarantee them both a profit and a return on shareholder investments. The "system" is and has been very generous, due to previous years of CPUC tendencies to be supportive of all utilities they are supposed to regulate. There seems to be a failing on the part of SJWC and CPUC (Water Division), in this case. SJWC is proactive in requesting action in a timely manner when their "profits" are endangered, but the $8 million tax windfall was apparently not brought to the attention of CPUC, nor did CPUC raise the issue with SJWC, instead SJWC felt that nothing should be paid back to the ratepayers! If in fact the tax action occurred before the next three rate case cycle. SJWC has roughly 225,000 ratepayers, if a simple distribution was 8 million / 225 K = ~$36 credit per ratepayer, a fair pro rata distribution should be based on actual water usage per ratepayer and no credit to WRAP participants who get rates subsidized by full charge ratepayers.

Another point is the SJWC staffing we are already paying for highly paid executives whose objective and mission is to maximize the water rates we pay, this is somewhat obscured by the NTP&S (Non Tariffed Product & Services) for profit business that should be separated from the tariffed (regulated) portion of SJWC business, really hard to do if the folks are part of the SJWC employees our water bills pay for. SJWC requested 33 new staff positions, in the Proposed Decision (PD) 6 positions are recommended.

It's interesting some the other SJWC issues like WRAM that would establish a Water Rate Adjustment Mechanism, to guarantee their profit, independent of how efficient the SJWC is operated. The goal of SJWC is obviously to have ratepayers bear the burden of their potential inefficiency and as much risk and financial burdens, as possible.

While SJWC is at it let's get the ratepayers to pay our Executive and Managers Bonuses! Who does SJWC actually work for? Surprise the shareholders in theory own the company and the management operates to increase the value of the stock and increase the dividends paid to "surprise" shareholders.

CPUC and especially ORA (Office of Ratepayer Advocates) both should work to insure, in the case of SJWC, safe, reliable water service at a fair and reasonable cost to ratepayers. Sometimes the actual mission can be lost in the rhetoric and previously the suspected close relationships, between utilities and regulators.

San Jose Water Company (SJWC) had a meeting regards the PD (Proposed Decision, GRC A-1501002)

I was not really surprised that SJWC had a meeting with CPUC staff, I was pleasantly surprised that the meeting was published in the CPUC website Proceedings. Except today CPUC seems to be having computer problems, it appears their document database has failed. The list of documents, but not the actual documents are available. It seems this happened on this weekend, as I accessed and read the ORA and SJWC documents on Thursday/Friday. I certainly hope this is a computer failure, otherwise it would be a obvious failure to be open and transparent. Raises an interesting question for CPUC to answer, "Did your document database have a failure?".

SJWC sent to CPUC and had published a Notice of an Ex Parte communication. Palle Jensen (SJWC Sr. VP, Regulatory Affairs) pleaded the SJWC case in opposition of several points in the PD (Proposed Decision).

Click here to view original.

May 20, 2016

NOTICE

San Jose Water Company

SUMMARY: On May 17, 2016, Palle Jensen, Senior Vice President of Regulatory Affairs for San Jose Water Company (SJWC), met with Lester Wong, advisor to Cmmr. Randolph, in San Francisco. Also present was Martin Mattes of Nossaman LLP, attorneys for SJWC. Jensen referred to the Proposed Decision (PD) of Administrative Law Judge Tsen, and addressed the PD’s rejection of SJWC’s request for authorization to implement a revenue-decoupling Water Revenue Adjustment Mechanism (WRAM) and Modified Cost Balancing Account (MCBA). Jensen and Mattes explained that the Monterey-style WRAM is a rate adjustment mechanism but not a revenue adjustment mechanism and that it provides no protection against revenue loss due to sales lower than the forecast level on which rates were based. Jensen addressed the PD’s disallowance of certain elements of SJWC’s estimate of test year payroll expense. Jensen and Mattes briefly referred to the PD’s rejection of SJWC’s proposal for a Health Care Cost Balancing Account, and noted the continuing volatility of health insurance costs and the inability of SJWC to control those costs. Jensen noted the objections of the Office of Ratepayer Advocates (ORA) to the PD’s rejection of ORA’s proposal to require SJWC to create a memorandum account to record certain income tax benefits in past years under recently promulgated Internal Revenue Service regulations. Jensen explained that ORA’s proposal would entail unlawful retroactive ratemaking.

A close review shows SJWC opposes, the same disputed issues that they have for the past year:

• WRAM decouple revenues and profits, a "guaranteeing" SJWC profits, A great deal for SJWC, not a good deal for ratepayers. I seem to miss the point of improving productivity and efficiency, providing clean, reliable water to ratepayers at competitive rate Oops! that's right they don't have a competitor!
•  The following sounds much better than executive and manager bonuses, paid by the ratepayers, buried in the water rate: " disallowance of certain elements of SJWC’s estimate of test year payroll expense" . Bonuses seem to me to be an incentive for above average performance and the question becomes who benefits? Seems the executives and managers should be compensated in stock and salary by the shareholders who benefit from most of the efforts. An example is the Sr. VP of Regulatory Affairs what is his bonus and salary paying him to do? Lower your rates or increase SJWC profits?
• Then we have the " income tax benefits in past years under recently promulgated Internal Revenue Service regulations" any other way you say it, this is the 8 million dollar windfall. This creates an interesting situation: (1) where did the 8 million dollars come from? Obviously from the ratepayers, (2) sounds like we were overcharged, but who should have reported the windfall?, (3) we already water flows down hill and water rates go up-obvious over simplification, (4) several questions should be asked, if the State and Federal tax authorities give back money why can't SJWC? The next question does SJWC have a better statue of limitations than criminals? They note: "ORA’s proposal would entail unlawful retroactive ratemaking." SJWC seems to be getting a three year or less period during which if they can hide it they seem to think they should be able to keep it?

We seem to have created through the lack of CPUC action in past 30 years, to establish a simple concept that is pervasive, in the water companies (publicly owned-stock) that CPUC' charter is to insure safe, reliable water service at the lowest rate for the ratepayers and to regulate the effective monopolies that the water companies are in reality are operated in a reasonably efficient manner in the best interest of the ratepayers. . 

After many delays SJWC GRC 2016 (General Rate Case ) will go to the CPUC Commission and with several disputed items that San Jose Water Company has not been able to find a compromise with the ORA (Office of Ratepayer Advocates). Below are the list of disagreements 10 months ago, click for the entire attachment.

• Executive and Management bonuses. I have a problem with the SJWC position they represent the interests of their shareholders, not the financial interests of their ratepayers. Why should the ratepayers of SJWC reward the performance of the executives and managers who are in the final analysis represent the financial interests of the stockowners in SJW Corp. Keep in mind SJWC has a Senior VP and a staff to "optimize" the corporation revenues (you may read as "raise our rates" if you choose). (Please note:  I own 10 shares of SJW stock mainly to allow me to attend the annual meetings.)
  
  ORA and the ALJ Tzen Proposed Settlement both appear to have taken positions opposing ratepayers paying for bonuses. Now we see what the Commission approves?
  
• WRAM (Water Rate Adjustment Mechanism) basically separates the profits from the SJWC performance.
  
  ORA and the ALJ Tzen Proposed Settlement both oppose the requirement for providing SJWC with a WRAM.
  
• There's a complex argument going on about the "windfall" of about $8 million dollars that SJWC has gotten as a result changes to the tax laws. The question that SJWC hasn't been willing to compromise on is "who gets the windfall"? Does SJWC get the windfall or does it credited to the ratepayers who actually paid the money originally? SJWC argues that the money should be kept by the corporation, since no one caught the effects on their taxes, or at least said nothing till the "Statue of Limitations was passed-went into the next Rate Case",  and it would be retroactive to before the current General Rate Case........... It appears to me that we paid the money and at a minimum ratepayers should get credits offsetting some of the current drought and other adjustments being applied to our bills from SJWC. It's not very fair to ratepayers to guarantee SJWC profits and also have them take the "tax windfalls" which we actually paid for. This is "not" a crime just an oversight and potentially untimely disclosure, that conveniently is to the detriment of the ratepayer.
  
  The $8 million spread across 250,000 ratepayers bills means that the projected increase over the next year could be reduced from $7.00/month to about $4.50/month. Note: SJWC got to use the money for several years, but let's not be picky about 10% or less............
  
  There is at least hope that moving forward from 2016 the Commission will approve that SJWC and other utilities have the requirement to make losses know to CPUC (they've been very good at this part) and as well SJWC and utilities make "windfall gains" known to CPUC, to allow the ratepayers interests to be protected.
  
  For readers who need bedtime reading, click for the ORA arguments.
• NTP&S (Non-Tariffed Products & Services) this covers the use of SJWC labor hours on things like cell tower rental space and my favorite the Home Emergency Insurance Solutions (aka HEIS) coverage for the water pipe between the SJWC water meter and the external connection to your house. The terms still have been disclosed by SJWC, but it's safe to assume SJWC gets a 10% cut of the monthly premium.
  
  ORA and SJWC apparently reached a non-precedent setting agreement, on the amount of dollar$ during the current rate case. SJWC did a terminator, "ve'll be bachk!". Since there's money involved I'm sure they will raise the issues again.
  
• SJWC requested increase in staffing by roughly 33 positions during the current GRC (2016, 17 18)
  
  ORA opposed the number and it appears the ALJ Tzen shares concerns, the proposal is 6 positions including the three previously added by SJWC.

There are other issues, but these seem to me to be more significant and controversial, at least they were opposed by SJWC. I'll update this when the Commission rules on the GRC A1501002 and we can see if the "Ghost of the Past President lurks in the CPUC chambers".

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 currently contested issues 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, or parts you agree with, when you fill in the eForm or send an email to the CPUC Public Advisor:

"I am concerned about the General Rate Case A1501002 that SJW Corp./SJWC has submitted to CPUC, for approval. I'm concerned about the potential effect this may have on increased future water rates and the continuing practice making access to information by ratepayers difficult. I don't approve ratepayers rates paying bonuses to SJWC Executives who have obligations to the shareholders that approve their pay, which may represent a clear conflict of interest. I also oppose providing a WRAM and separating revenues from expenses and guaranteeing SJWC profits. Reducing SJWC motivation to control expenses."

CPUC Public Advisor public.advisor@cpuc.ca.gov  Reference San Jose Water Company (SJWC) A1508016.The Public Adviser will insure your email will be sent to all the appropriate CPUC staff members and commissioners. 

Other people to drop an email (note) and express your opinion are:

• Scott Herhold, San Jose Mercury News, sherhold@mercurynews.com
• Paul Rodgers, San Jose Mercury News, progers@mercurynews.com
• Julie Putnam, NBC Channel 5, julie.putnam@nbcuni.com