SJ Water’s Big Rate Hike Plan Draws Fire

More than a million people in and around San Jose could soon see a large increase in the price of water if a private utility that controls service for 80 percent of the city gets its way.

The San Jose Water Company wants to raise rates by 44 percent over the next three years, bringing the average monthly water bill from $67 to $96 when the final increases go into effect, and overall revenue to just over $47 million.

Although the request went to the California Public Utilities Commission a full year ago, it took editorials, public meetings and community organizing before more than 700 outraged residents fired off petitions to state regulators protesting the rate hike. Some took to Yelp, bringing the water company’s rating down to two stars.

A state watchdog’s 280-page report fueled the fire. The California Division of Ratepayer Advocates called the utility company’s request unreasonable, suggesting instead that they raise fees 10 percent to pay for new infrastructure, rising retirement and operating costs, and a drop in water use because of the public’s conservation efforts.

Plus, the report notes, customers who conserve water shouldn’t be punished just because it cuts into the bottom line—especially when the company has promoted water-saving measures to its customers for decades.

Who knew saving could cost so much?

John Tang, the company’s spokesman, says he can’t remember a time when the public reacted so strongly to a proposed price change. It’s also the first time in his memory that the courts held up a decision this long.

“This is probably the most dramatic increase we’ve proposed,” Tang admits. “But it’s important to remember that this is just a proposal, every rate increase has to be justified. ... The state will decide what’s fair and equitable.”

Every three years, the San Jose Water Company—like hundreds of other public utilities in California—files a request for rate increases with the CPUC. The ratepayer watchdog group analyzes the request and compiles recommendations of its own, usually advising lower rates than those requested. But for decades now, the price of water has consistently ticked up. Almost as consistently, the company’s executives, some of whom already receive half-million dollar salaries, buy up stocks months before those rate increases take effect.

The company has already announced a higher annual dividend for stockholders than expected, and it will release its 2012 full-year and fourth quarter financial results Tuesday, Feb.19.

Market analyst Bryan Murphy explains the conflict of interest that comes with privatized water in a prescient 2010 column for Smallcap Network:

“Though they’re ‘public’ utilities and publicly traded, water utilities are privately managed, and subject to regulations—primarily rate regulations—established by state and regional overseers. Such an arrangement leaves one to wonder how any of these companies could ever make a dime. The reality? Making money, and making more money from one year to the next, has disturbingly not been a problem for many of these organizations.”

Jennifer Wadsworth is a staff writer for San Jose Inside and Metro Newspaper. Email tips to [email protected] or follow her on Twitter at @jennwadsworth.

10 Comments

  1. It is still cheaper than the cable bill.  We just feel because rain is free, somehow water should not be costly. It has to be pumped,treated and available 24/7 . I still think its a bargain.

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  2. Should residents pay 44% more on San Jose Water Company bills? I suppose any company would want a 44% increase in revenue.

    Or should residents pay only the 10% that the state watchdog determined is a reasonable increase?

    Almost 800 residents have submitted a 30-second Online Petition at http://www.district5united.org supporting just a 10% increase to ensure safe and reliable water.

    Learn more about this issue at http://www.district5united.org/ or http://sjwc-rate-increase.blogspot.com/.

  3. water is free, but the companys lobby against people that want to harvest it either to use in garden/drink it, RING A BELL (CHICKENS, GREY WATER)its all big $$$ 400mil for scvwd…. just like hemp 60% better than chemical rayon, but natural things hemp, water are free, i can clean my own water, the crap that comes from the pipes ( IT’S NASTY CHUNKS OF FLOCKULATOR JUNK), and soon ACID FOR 80% OF US, for the 10-12%(kids that drink to much corn syrup)  you know frankensugar,,, to help them, half of there teeth are rotted anyway, so what is floride going to do, teach the kids, stop coke, then after coke its ACID FLORIDE…  that to is money, but it all comes from SCVWD THE GOLDEN SPIGOT WHERE CEO’S, LISTEN TO MANAGERS GIVE RACIST SPEACHES AT RETIREMENT PARTIES…… GOOGLE SCVWD GOLDEN SPIGOT
    JUST LIKE THE AUDIT 2012 SAID SCVWD HAS BIG ISSUE’S WITH THIS RACE THING, it went on to say, they need to get there act together, or it will kill them and many others as they have tons of your money, that instead of going to water, 20% goes to secret deals, lawsuits, equipment…
    so to say they sell all there losses to sj water, who has to make money(and clean or replace those 100yr dowtown pipes) and sell it to you.  So they have 40 public ceo’s etc just at scvwd, with benifits etc, and they hire others who need a few months to get all the benifits. get over 400 mill with benifits, cars, gas, travel, when the minors cannot even go to keep up skills, so then add 400mill(over time with retirement, doc etc.). to the others there that adds, maybe a billion, and they are still underfunded for there, future debt. 
    so water, yes, here there, its money

  4. Dear pgoeltz,

    Water isn’t free. The San Jose Water Company buys it from the Water District. But according to the Division of Ratepayer Advocates, the cost of water is just a pass-through cost. San Jose Water Company isn’t asking for a 44% rate increase due to the cost of water or any increase in the cost of water. It’s for non-water expenses, such as salaries. Learn more at wwww.district5united.org.

  5. Dear ITSjaun
    yes water is free, if you collect it.
    1.  scvwd golden spigot would not pass through all these fee’s, but they waste money 56% pay
    2. FRAUD/WASTE5%
    3.  LAWSUITS 10%
    4.  MAKING RACIAL RETIRMENT VIDEOS BEAU..5%
    3% CREEKS WANT ME TO GO ON NEED PROOF GOOGLE SCVWD GODEN SPIGOT