Where Does Dollar Go - $0.38 water supply, $0.22 operating costs, $0.21 system improvements, $0.11 taxes & fees, $0.08 cost of capital

Where Does Your Water Dollar Go?

It might be tempting to look at a water bill and wonder why it’s “so much,” but when we consider our consumption and the work involved in delivering safe water, it’s almost unbelievably affordable. When compared to other daily use products — including gasoline at around $3 a gallon and coffee at close to $16 a gallon — water is easily the most affordable at less than 1 cent a gallon!

This means you can cook, clean, water your garden and count on reliable fire protection for around $3.60 a day, with the average San Jose Water (SJW) bill being $109 a month. That’s approximately 1.5% of the median household income in the San Jose area, and well below what the Environmental Protection Agency considers an affordable water bill.

We use water in so many different ways that it’s easy to forget what goes into the process of bringing water to the tap. However, understanding where tap water comes from and what’s required to keep it flowing may help you understand exactly where your dollar goes.

Finding and Following the Source

San Jose water starts out as snow in the Sierra Nevada Mountains. This snow melts into the Sacramento–San Joaquin River Delta, where it’s taken for treatment and testing by the Santa Clara Valley Water District (SCVWD). When the water is ready to drink, SJW buys what it needs from SCVWD. This purchase makes up the largest single cost contributor to your water bill, amounting to 38 cents out of every dollar, but that’s just the beginning. The cost of the water itself is only part of what contributes to your monthly bill.

Bringing Water to the Tap

SCVWD’s water treatment and testing are critical to ensuring quality drinking water, but the entire infrastructure in San José must also be safe and well maintained to help guarantee that the water remains drinkable as it makes its way through more than 2,500 miles of piping and related equipment in the San José area. So what exactly makes up the remaining 62 cents of every dollar you spend on water each month?

  • Operating costs are at a cost of 21 cents per dollar. To help guarantee that SJW maintains a reliable supply, we start by buying our electricity from a reliable supplier: Pacific Gas and Electric Company (PG&E). Power from PG&E allows us to continue the day-to-day monitoring and operations that ensure a steady water supply. From there, this portion covers administrative activities and routine maintenance of the entire system, including the pipes, hydrants, valves and cisterns that deliver and store the water you use.
  • System improvements take the third place spot at 21 cents per dollar and this portion covers investments in the future of the community, one of the most important things that SJW does for its customers today and tomorrow. To help guarantee a continuous, long-term supply of safe, reliable drinking water, larger investments in the overall infrastructure of our system are required to accommodate system use and future growth. Many major infrastructure improvements from the 1950s through the 1970s are approaching or past end of life and larger repairs/replacements are needed to meet current clean water laws (both the Clean Drinking Water Act and the Safe Drinking Water Act). These improvements allow SJW to maintain uninterrupted delivery while supporting our ever-growing, prosperous economy.
  • Taxes and fees make up a smaller piece of the overall cost at 11 cents per dollar. This portion includes federal, state and local taxes that are assessed on the water and services we provide.
  • Finally, cost of capital rounds out the list by adding 8 cents per dollar. Larger water system improvements can be expensive and sometimes require extra funding. This portion of every dollar covers interest paid on the debt and the return paid on the equity from these investments.

 

Putting It All Together

At the end of the month, SJW generates your bill by adding your usage costs — the cost directly related to the amount of water you use — to the fixed costs associated with ensuring that you always have water available when you need it. In other words, every payment you make allows SJW to continue working to ensure that every drop of water you use is safe, reliable and always there when you need it.

Visit our Rate Information, Cases, + FAQs page for more information.