State regulators have launched an investigation to determine whether the privately-owned San Jose Water Company over-billed customers for at least three decades.
The California Public Utilities Commission (CPUC) on Friday announced the probe after an initial report indicated that the company failed for 30-plus years to pro-rate invoices when charges increased in the middle of a billing cycle. Customers instead paid the higher rates for the whole cycle.
San Jose Water Co. also double-charged ratepayers by $5 million when transitioning from billing in advance to billing in arrears, according to the state commission.
The formal investigation—which can be tracked online here—will also determine whether San Jose Water refunds its one million customers in the South Bay in addition to paying financial penalties of up to $50,000-a-day per violation to the state.
Already, CPUC staff have recommended that San Jose Water give back $2 million to customers for overcharging them from 2014 to 2016 and another $1.9 million for excessive charges from 1987 to 2013.
The state commission began looking into the over-billing issue a year-and-a-half ago after Saratoga resident Rita Benton and fellow founders of a coalition called Water Rate Advocates for Transparency, Equity and Sustainability (WRATES) identified the excessive charges and lodged a complaint on behalf of 70 customers.
The city of San Jose, one of the company’s biggest customers, joined WRATES in pressuring the state to look into the billing issues.
San Jose Water quickly responded by agreeing to change its billing practices and return $1.8 million to customers for neglecting to pro-rate services charges from 2014 to 2016.
Benton estimates that the company owes a lot more: up to at least $13 million.
San Jose Water officials issued a statement affirming their cooperation with the state and chalking up the billing discrepancies to their interpretation of the rules at the time.
“While our past billing practice was in compliance with the rules as we interpreted them at that time, we also recognize that different interpretations may apply—and have since voluntarily updated our billing policies to reflect a more customer-oriented interpretation,” San Jose Water spokeswoman Jayme Ackemann wrote in a news release.
Eric Thornburg, the company’s new president and CEO, said he’s committed to earning back public trust. “We will continue to do everything that we can to further assist the CPUC on behalf of our customers,” he said.
Meanwhile, WRATES has been pushing back against yet another billing increase. San Jose Water is asking the CPUC for permission to up its rates by another 17. 8 percent over the next three years. An administrative law judge is expected to issue a proposed decision next month on the rate hike.
The CPUC will consider the recommendation before a final vote on Nov. 8.
In a separate matter, the California State Auditor is reviewing the CPUC’s rate-setting practices, a review that came about at behest of state Sen. Scott Wilk (R-Antelope Valley) and Assemblyman Tom Lackey (R-Palmdale).