Jose Water Company serves over 1 million people and is responsible for
the supply and distribution of water for domestic and industrial purposes for
portions of the Cities of San Jose and Cupertino, as well as the cities of
Campbell, Los Gatos, Monte Sereno, Saratoga, and unincorporated Santa Clara
On January 5, 2015, the San Jose Water Company
filed an Application
requesting CPUC approval to increase rates for water service over present
Specifically, the proposed rate increase is
driven by these key areas:
San Jose Water proposed the following policy changes:
On July 24, 2015, ORA and San Jose Water Company filed a joint motion requesting CPUC approval of a partial Settlement Agreement, in which the two parties agreed on expenditures related to capital investments (plant additions). See the Comparison Table.
San Jose Water also agreed that it would track its costs for Research, Development and Demonstration Projects, Intervenor Compensation, and Pension expenses.
On August 13, 2015, ORA and San Jose Water Company filed a joint motion requesting CPUC approval of a Supplemental Settlement Agreement, in which San Jose Water agreed not to pursue its request of $442,440 in labor related costs for its affiliate business. However parties agreed that they would not stipulate to the methodology for allocating such costs.
The remaining litigated issues included San Jose Water's requests to:
On April 22, 2016, the CPUC issued a Proposed Decision on San Jose Water's rate case, which would increase San Jose Water rates:
See the Comparison Table illustrating rate impacts in key areas.
The Proposed Decision also resolves the remaining litigated issues by:
On June 9, 2016, the CPUC adopted the Proposed Decision as its Final Decision.
ORA generally supports the CPUC's Proposed Decision as it provides San Jose with sufficient revenues to operate its water service safely and reliably, as well as generally comports with ORA's recommendations for rate increases. ORA commends the Proposed Decision for denying San Jose's request for a full Water Revenue Adjustment Mechanism (WRAM). San Jose's current revenue adjustment mechanism is consistent with promoting water conservation, whereas a full WRAM approach would encourage the utility to seek recovery for all undercollections from its customers, rather than to manage the needs of its system in a more efficient manner.
ORA performed an in-depth review of San Jose
Water's Application and makes the following recommendations for revenue
ORA's analysis shows that San Jose Water has
over-estimated its revenue needs in the areas of Capital Improvement Projects,
Cost of Labor, and Conservation.
ORA’s recommendation for a smaller increase in
service rates is offset by ORA’s recommendation that San Jose Water should use
a lower water consumption forecast, given the Governor’s Order
to significantly increase water conservation. Lower water consumption will
result in the collection of less revenue from customers, which means that San
Jose Water will need additional revenue to cover its fixed costs required to run
its utility operations and reliably serve customers' water needs.
Additionally, ORA is recommending that the cost
of San Jose Water’s Recycled Water retrofit program be spread across 2016-2018
in order to decrease the burden on customers.
While ORA’s overall recommendation is $7.2
million (11.86%) lower than San Jose Water’s request, the impact of the
conservation mandate and the more even distribution of Recycled Water costs
would result in slightly higher increases for 2017 and 2018.
See ORA's April 24, 2015 Testimony
in response to San Jose Water's GRC Application.
See ORA’s February 2, 2014 Protest to
San Jose Water’s GRC Application.
See the CPUC Proceeding docket.
San Jose Water Company GRC