Questions & Answers- 2010 Rate Case
Q: Why is San Jose Water Company (SJWC) proposing a rate increase for 2010?
A: SJWC’s proposed increase of 18 percent reflects significant infrastructure replacement costs as well as escalating operating costs that allow the company to continue providing safe and reliable water service. Safe and reliable water service is essential for maintaining public health, fire fighting capability, and economic prosperity, all things that contribute the quality of life we enjoy.
Q: How old is SJWC’s water system?
A: Much of SJWC’s system was constructed over 50 years ago and has reached the end of its useful life. In order to protect public health and safety, SJWC must make continued investments in the water system rather than waiting until failure occurs.
Q: Can’t SJWC reduce costs instead of raising rates?
A: SJWC works hard to provide the highest quality water service at the lowest possible cost. Water utility costs are escalating rapidly due to increasing infrastructure improvement requirements, more stringent water quality regulations, and increasing staffing costs. A growing population, increasing demand for water supply, decreasing supplies, and an aging infrastructure are challenges facing all water utilities.
Q: How have costs increased compared to past years?
A: Infrastructure replacement costs have more than doubled in the past 5 years. Staffing costs to deal with new Sarbanes-Oxley, Securities and Exchange Commission, and water quality regulations have risen almost 50 percent in the past 5 years. Similarly, benefits and pension costs have risen over 60 percent in the last 5 years.
Q: What has SJWC done to keep rates low?
A: Over the last five years, SJWC’s operating costs (including operations, maintenance, purchased power, and administrative expenses), as a percentage of overall costs, have decreased. The number of customers served per employee has remained relatively stable over the last 20 years. The company’s unaccounted for water (volume loss through leaks, theft, and water quality activities) of less than 7 percent remains one of the industry’s lowest.
Q: Where does my dollar go?
A: Half of every dollar you spend goes to cover costs from the Santa Clara Valley Water District for water supplies (40 cents) and to pay federal, state, and local taxes (10 cents). The remaining 50 cents funds system improvements (17 cents), operating costs (26 cents, and rate of return (8 cents).
Q: How affordable is your water rate?
A: A widely used benchmark for affordability is published by the US Environmental Protection Agency. EPA studies show that annual water bills in the range of 1.5 to 2 percent of median household incomes are considered affordable. SJWC’s current average monthly bill is approximately $55 and this represents just 1 percent of the median household income in Santa Clara Valley.
Q: How can SJWC help customers manage their water bills?
A: SJWC offers a comprehensive water conservation program to help customers use water more efficiently. We have informational brochures and offer free water audits to all customers. A trained water inspector will visit your home and check for leaks, evaluate indoor and outdoor usage, and make recommendations on ways to use water more efficiently. Additionally, SJWC offers a Water Rate Assistance Program (WRAP) for low income customers. The WRAP provides a 15 percent discount on the total water bill to customers who qualify.
Q: What is the process for approving this rate increase?
A: First, it is important to note that this is only a proposed rate increase that will be reviewed by the California Public Utilities Commission (Commission) before a final decision on any increase is rendered. The Commission’s Division of Ratepayer Advocates (DRA) and its staff of engineers, auditors, and other professionals will closely review the application and submit its independent analysis and recommendations for the Commission’s consideration. Evidentiary hearings may be held before an Administrative Law Judge to further present testimony from DRA and SJWC. After hearing all evidence, the Administrative Law Judge will issue a final decision. Once a final decision is rendered, the new rates will be effective January 1, 2010.
Q: Who can I contact to express my concerns or submit public comments?
A: You may contact the Public Advisors Office of the California Public Utilities Commission (Commission). Please contact the Commission at:
California Public Utilities Commission Public Advisor’s Office
Public Advisor's Office
505 Van Ness Avenue
San Francisco, CA 94102
E-mail: public.advisor@cpuc.ca.gov
Phone: 1.866.849.8390 (toll free) or 415.703.2074
Please mention that you are writing about San Jose Water Company’s Application 09-01-009 when contacting the Commission.