Cost of Capital 2021 header graphic

2021 Cost of Capital Application

San Jose Water’s mission is to provide safe and reliable drinking water to our customers, while supporting the communities we serve.

The effective and consistent delivery of safe water requires significant investment to protect sources of supply, to replace and renew infrastructure, and to enhance water quality and service delivery. A mix of equity and debt is necessary to finance these goals.

Filing

On May 3, 2021, San Jose Water filed Application 21-05-004 with the California Public Utilities Commission (CPUC) to increase rates to establish its authorized Cost of Capital (CoC) for the period of January 1, 2022 through December 31, 2024. For 2022-2024, San Jose Water’s application requests an increase in the rate of return of 8.11% from the current rate of 7.64%. Overall, the proposed changes to the cost of capital would increase San Jose Water’s currently authorized revenues statewide by $6.4 million (1.61%). This rate increase will take effect beginning January 1, 2022.

At this time, we are simply filing the application. We won’t know the exact numbers until late 2021 when the CPUC makes its decision.

What is Cost of Capital (CoC)?

Our mission is to provide safe and reliable drinking water to our customers, while supporting the communities we live, work and serve.

The effective and consistent delivery of safe water requires significant investments to protect sources of supply, to replace and renew infrastructure, and to enhance water quality and service delivery. A mix of equity and debt is necessary to finance these investments.

On May 3, 2021, we filed an Application with the California Public Utilities Commission (CPUC) to adjust our authorized Cost of Capital, more commonly known as the rate of return, for the period of January 1, 2022 through December 31, 2024.  The application proposes:

  • A rate of return of 8.11% from the current rate of 7.64%
  • An increase in San Jose Water’s currently authorized revenues by $6.4 million (1.61%)
  • An effective date of new rates beginning January 1, 2022

At this time, we are simply filing the application. We won’t know the exact numbers until late 2021, when the CPUC is anticipated to make its decision.  

Why is San Jose Water requesting this change to cost of capital?

  • Approximately every three years, the CPUC requires that San Jose Water (and other utilities) file a cost of capital application. This year, we are filing together with three other water utilities: California Water Service, Golden State Water and California American Water. 
  • The cost of capital application determines the cost of financing infrastructure through the allowed return on equity and debt, as well as the ratio of equity and debt.
  • The increased rate of return is critical to our investment in the infrastructure used to provide safe, reliable water to our customers.