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.
