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October 19, 2016
San Jose Water Company Rate Review
Procedures and City Authority to Regulate
October 19, 2016
Council Direction
• At its August 17, 2017 meeting the City Council directed staff to
prepare a report on how water rates ...
Key Players
• San Jose Water Company (SJWC)
• Santa Clara Valley Water District (District)
• California Public Utilities C...
Overview of Rate-Setting Process
• Utility Application
• Revenue Requirement
• Rates
• Surcharges
• Review by Public and O...
Factors Affecting SJWC Water Bills
1. Water Rate Increase
2. Drought Surcharges
3. District Rate Increases
Water Rate Increase
• In 2015 SJWC applied for a 12.22% increase in its revenue
requirement and authority to adjust water ...
Drought Surcharge
• In 2015 State of California mandates 25% statewide water
conservation.
• PUC orders private water util...
SJWC Residential Customer Drought Allocations
Month
2013 Average
Monthly Residential
Usage (ccf)
June 15, 2015 –
June 30, ...
ORA Objections to Drought Surcharge
• Surcharge Trigger should not be based on the average usage of all
residential custom...
Santa Clara Valley Water District Rate Increase
• District raised rates by roughly 7% effective July 1, 2016
• PUC rules a...
Options for City
• City has no regulatory authority over SJWC rates.
• Proposition 218 does not apply to private utility r...
Saratoga City Attorney presentation on SJWC rates - 10/19/1026
Saratoga City Attorney presentation on SJWC rates - 10/19/1026
Saratoga City Attorney presentation on SJWC rates - 10/19/1026
Saratoga City Attorney presentation on SJWC rates - 10/19/1026
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Saratoga City Attorney presentation on SJWC rates - 10/19/1026

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This deck was presented by Saratoga city attorney based upon council direction from August 17th 2016

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Saratoga City Attorney presentation on SJWC rates - 10/19/1026

  1. 1. October 19, 2016
  2. 2. San Jose Water Company Rate Review Procedures and City Authority to Regulate October 19, 2016
  3. 3. Council Direction • At its August 17, 2017 meeting the City Council directed staff to prepare a report on how water rates are set and what, if any, jurisdiction the City has regarding rates. • Staff has reviewed: • Laws regarding private utility rate-setting; • State proceedings concerning the recent San Jose Water Company rate increases; • The scope of City jurisdiction regarding water rates; and • Options for the City to influence water rates.
  4. 4. Key Players • San Jose Water Company (SJWC) • Santa Clara Valley Water District (District) • California Public Utilities Commission (PUC) • Office of Ratepayer Advocates (ORA)
  5. 5. Overview of Rate-Setting Process • Utility Application • Revenue Requirement • Rates • Surcharges • Review by Public and ORA • PUC Proceedings • PUC Decision • Requests for Modification/Complaints
  6. 6. Factors Affecting SJWC Water Bills 1. Water Rate Increase 2. Drought Surcharges 3. District Rate Increases
  7. 7. Water Rate Increase • In 2015 SJWC applied for a 12.22% increase in its revenue requirement and authority to adjust water rates. • Following objections from ORA and others PUC approved an 8.6% increase in the revenue requirement. • Decision in June, 2016 was retroactive to January 1. • PUC requires that rates recover 70% of revenue requirement from volume-based charges and 30% from fixed fees.
  8. 8. Drought Surcharge • In 2015 State of California mandates 25% statewide water conservation. • PUC orders private water utilities to file plans to achieve water conservation goals. • San Jose Water files plan for 30% conservation consistent with District water conservation goal. • Plan sets “baseline” based on average usage of all residential customers and sets increasingly higher charges for use above the baseline. • Adjusted for 20% Goal in 2016
  9. 9. SJWC Residential Customer Drought Allocations Month 2013 Average Monthly Residential Usage (ccf) June 15, 2015 – June 30, 2016 Monthly Drought Allocation (ccf) (70% Average Monthly Residential Usage) Effective July 1, 2016 Monthly Drought Allocation (ccf) (80% Average Monthly Residential Usage) Jan 10 9 9 Feb 9 9 9 Mar 9 9 9 Apr 11 9 9 May 14 10 12 Jun 16 11 13 Jul 19 13 16 Aug 19 13 16 Sep 19 13 16 Oct 17 12 14 Nov 17 12 14 Dec 14 10 12 SJWC Drought Surcharges Surcharge (per ccf) Drought Surcharge 1 Excess consumption over Monthly Drought Allocation up to the 2013 Average Monthly Usage $3.5634 Drought Surcharge 2 Excess consumption over the 2013 Average Monthly Usage $7.1268
  10. 10. ORA Objections to Drought Surcharge • Surcharge Trigger should not be based on the average usage of all residential customers but instead on each customer’s past use. • Surcharge should not be limited to residential customers. • PUC rejected both claims and approved SJWC Drought Surcharge Proposal.
  11. 11. Santa Clara Valley Water District Rate Increase • District raised rates by roughly 7% effective July 1, 2016 • PUC rules allow SJWC to pass through all rate increases to customers.
  12. 12. Options for City • City has no regulatory authority over SJWC rates. • Proposition 218 does not apply to private utility rates. • City, like other customers, may appeal past PUC decisions. • City, like other customers, may participate in future PUC proceedings. • City may seek to influence future rates by promoting dialog regarding the 70/30 cost allocation rule.

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