The San Jose Water Company, which serves one million valley residents including those in Saratoga, has proposed a 44 percent rate increase to be phased in over three years.
The California Public Utilities Commission has reviewed the request and is suggesting that only a one percent rate hike is warranted.
The notice from the 145-year-old water company said the rate increase was needed because of higher operating costs and the need to repair aging pipes, pumps and tanks.
What does San Jose Water Company want to spend the money on?
The SJWC is requesting a $297 million budget for capital funds for infrastructure projects, a $2.7 million increase in staff by 23 new employees and an increase in salaries (particularly for executives).
Ironically, a major reason the SJWC has asked for this large rate increase is in response to consumer’s successful water conservation efforts. Because the water company has fixed costs, when usage is down and SJWC takes in less money those costs are not covered and the burden will be passed on to the consumer.
“Unfortunately conservation means SJWC gets less revenue from their customers and then have to ask for an increase to offset the loss,” said Saratoga Mayor Jill Hunter who is a member of the Santa Clara Valley Water Commission.
What are the CPUC’s issues with this large rate hike?
According to Richard Rauschmeir, a financial examiner for the CPUC’s Division of Rate Payer Advocates there are a number of issues the CPUC has with the rate increase request.
“They have asked for a $297 million capital budget and our findings suggests that they really only need $220 million for the most essential infrastructure improvements,” said Rauschmeir. “Everyone wants a strong infrastructure but a reasonable rate of return on the investment is essential from a checks and balances point of view. We have to ask is this improvement prudent and necessary because we don’t want any ‘gold plated’ projects approved.”
Another reason for the rate increase is that the SJWC would like to hire 23 new staffers, which would add $2.7 million to the budget although the CPUC contends the water company can get by with hiring only three new employees.
In addition, the SJWC would like to increase salaries but is asking for a significantly higher salary increase for their executive staff than for the rank and file or for union members. “We adjusted any salary increases across the board to be equal because there was such a large disparity between what the executives would be increased and the rest of the workers,” Rauschmeir said.
Will the rate hike take place starting in January 2013?
According to Rauschmeir, the next step in the process will be a judge making a ruling on the case within the next six months. At that time the judge may accept the 44 percent hike, the CPUC’s 1 percent hike or come up with an alternative decision. After the judge delivers the decision there will be a 30-day public comment period before the decision is presented to the full commission for a vote. At that time the increase decided upon will come out of a ‘memorandum’ account established to track rates collected after January 1.
How can the public make their feelings known about this rate hike?
There have been a few community meetings but at this point there are no new meetings scheduled. Rauschmeir suggests that anyone who would like to comment on the rate hike can attend CPUC public hearings or email or write directly to the CPUC Public Advisor at email@example.com or CPUC Public Advisor, 505 Van Ness Avenue, Room 2103, San Francisco, CA 94102 and reference case #A12-01-003. Call the CPUC Public Advisor at (866) 849-8390 for more information.
“This is the opportunity for the public to speak up about the increase and to keep vigilant as to when those hearings are,” said Hunter. “Right now SJ Water has the highest rates of any of the water districts in the Santa Clara Water District."
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