James Hunter

Monday, December 5, 2016

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

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