James Hunter

Sunday, May 29, 2016

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, 2016NOTICESan Jose Water CompanySUMMARY: 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. . 

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