Surviving the San Jose Water Company

Many residents in the greater San Jose area, south of San Francisco, California, are angry about a recently proposed and approved municipal water surcharge which, although a small number to be added to each bill, is causing a huge outcry of foul play.

The San Jose Water Company (SJWC) is an investor-owned utility that provides water for the majority of South Bay homes and businesses. It operates, basically, as a monopoly, under the governance of the California Public Utilities Commission (CPUC), which sets the legal rate that the water company can charge its customers, based on estimated future water usage.

California experienced extended droughts during the four-year period between the autumn of 2011 and the autumn of 2015, the driest conditions since people began keeping records in 1895. 2014 and 2015 set the state record for the two hottest years.

High heat was accompanied by rainfall shortages. Reservoirs ran low and dry. In order to encourage customers to use less water, SJWC and other drought-stricken water utility companies upped their rates, with a nod from the CPUC, and launched a public service awareness campaign, strengthened by state mandates, to make do with less H2O.

Bay Area water consumers complied. They took out their thirsty grass lawns and put in drought-resistant xeriscape landscaping instead.

People showered instead of bathing to conserve water. Overall, since the beginning of community water conservation efforts, household water consumption in the San Jose area plunged by about 20 percent.

San Jose resident Richard Saucedo described the hardship:

“We tried the best we could with a family of five. It’s a little tough, but I think we did okay with it.”

Consumer water conservation worked well for SJWC until 2016, which had more rainfall. Residents kept on saving water. In other words, they bought less of it from the water company, for a higher rate.

Now, effective July 1, 2019, SJWC will a new, punitive fee to compensate for customer underconsumption – and many San Jose residents are all steamed up about it.

SJWC sent every customer a letter dated March 29, 2019, saying that the CPUC would allow SJWC to pad their customers’ bills with “a 12-month quantity based surcharge of $0.1960 per ccf on all potable water usage” to make up 2018 revenue loss amounting to a whopping $9,020,346. The problem was that the water company had set its per-gallon price too low for profitability.

To solve SJWC’s big financial headache, customer bills will sport the new surcharge, about $2 per bill, on average.

Jayme Ackemann, speaking for SJWC, blamed the $9 billion revenue shortfall on effective water conservation efforts among local consumers:

“We don’t sell the amount of water that was projected because people are changing their behavior and using less water. And because of that, unfortunately, we can’t cover our costs.”

The new surcharge is the latest in a long list of consumer affronts from the extremely poorly-managed water Santa Clara County monopoly.

Saratoga resident Rita Benton spearheaded a local coalition called the Water Rate Advocates for Transparency, Equity and Sustainability (WRATES). This group “identified the excessive charges and lodged a complaint on behalf of 70 customers.”

The WRATES billing complaints alleged that, “for at least 30 years, San Jose Water failed to pro-rate bills…[and]…allegedly charged customers the new, higher service fee for the entire cycle. The company also allegedly double-billed customers some $5 million when it switched from billing service charges in advance to billing them in arrears.”

The WRATES group’s legal filings against the local water monopoly’s illegal billing practices led to a CPUC inquiry into the water utility which began after it was announced on September 14, 2018, and is currently ongoing.

Sam Liccardo, mayor of San Jose, said:

“We’ve received hundreds of complaints at the city from frustrated residents, and since the city itself is also a customer, you can be assured we’re very interested in the results of this investigation.”

In November 2018, SJWC announced an approved rate increase of 4.55 percent, which went into effect on January 2019. Unhappy customers protested their dissatisfaction over this new expense.

At that time, SJWC assured its customers that this rate increase would reduce future “rate uncertainty” for consumers. The only certainty in Santa Clara County is that water rates are going up, no matter what conscientious residents do.

One San Jose resident spoke out about the hypocrisy inherent to the system:

“You know, we ask our family our kids to be careful with the water usage, and now to hear that we’re gonna have to pay extra for doing that doesn’t seem too fair.”

Benton said that WRATES has issued protest letters in response to SJWC’s latest proposed financial punishment:

“They already increased rates, they’re already getting more than they should be getting, and now they’re claiming it’s because of conservation? That’s ridiculous.”

Bill Hunt is one unhappy local customer who said of SJWC’s apparent attitude behind the rate hike, which was triggered by the very consumer rationing and legislated restrictions the utility had promoted and imposed only a few years before, this way:

“Yeah, we’re going to punish you for doing your duty. You know, making good on the environment and everything? I just don’t get it anymore.”

Hector Mora lives in South Bay and said the bloom is off the rose. Thanks to the water company’s punitive mismanagement, they may reasonably expect some push-back, in the form of non-compliance, from area customers:

“I think some people may not strive as much to conserve as they did probably this time. A lot of people are probably not going to follow instructions.”

It’s easy to understand why these Californians would ignore future instructions from a company which had lied about its rates, committed billing violations, led customers astray about the value of using less water, and then jacked their bills – again.