San Jose Water proposed increases rankle residents

Roughly 1 million people in and around San Jose are facing significant increases to their water bills starting next year, if state regulators approve a local company’s plan.

San Jose Water Company, a for-profit water retailer, is asking the California Public Utilities Commission to allow an increase of the company’s average water rates by about 22% over three years beginning in 2025, according to state consumer advocates. The water company is also seeking approval to add a surcharge to customers’ bills to recoup $23.4 million it claims to have previously spent on unforeseen costs since its last rates hike in 2021.

In a notice mailed to customers, San Jose Water said it’s proposing the rate increases due to “escalating operating expenses” including significant infrastructure replacement requirements and “increasing labor, health care, and other benefits to fulfill the infrastructure replacement.”

Some customers and critics of the water company say the increases are too high, and worry San Jose Water is more interested in taking care of shareholders than ensuring everyday people can afford their water bill.

“San Jose Water acts more like a financial institution, keeping their stock prices up, keeping their dividends up, rather than accommodating their customers,” Patrick Kearns, a San Jose resident and customer of the water company, told San José Spotlight. “The impact is greatest on low-income people, but it affects even the moderate water user.”

Kearns is a member of a local group called Water Rate Advocates for Transparency, Equity and Sustainability, also known as WRATES, which has pushed back on San Jose Water Company’s requests for increases in past years.

John Tang, head of regulatory affairs for San Jose Water, said the company asks for rates it thinks are fair, and the utilities commission has final say over what will be allowed.

“We are asking for what is just and reasonable and not anything more than that,” Tang told San José Spotlight. “This number is going to be scrutinized very very closely.”

Effects could vary

The proposed increases would change fixed connection charges that residents pay monthly for water service, as well as the variable charges that residents pay depending on how much water they use. The effects could vary widely for different customers.

Every San Jose Water customer in 2025 would see a roughly 33% increase in cost for fixed connections, and an additional 4% compounded increase for that charge in 2026 and 2027.

An average residential customer paying $52.97 per month for their connection to the water company at the end of 2023 would pay $70.44 beginning next year under the proposed changes, and $76.51 by 2027.

Because the water company is asking for permission to bill customers the maximum allowable amount for fixed connections, it must reduce some of its variable charges for water use, which are billed for each unit of water a home or business uses — about 748 gallons.

Under the proposed changes, a customer using anywhere from no water to six units of water each month would see an 11.4% reduction in their water use charges in 2025, and people using more than six units up to 12 units each month would see a 4% reduction.

People using more than 12 units of water each month, however, would see an increase of 22.6% on those charges in 2025. All households and businesses would see 4% increases in water usage charges in 2026, and 4.6% increases in 2027.

The surcharge San Jose Water is proposing would charge customers about 55 cents per unit of water on their bill for a year, beginning in 2025.

Tang said it is needed to help recover unforeseen costs from one-off or random events like public safety power shutoffs, or the heat emergencies of past summers where utilities were asked to shed power load from the grid — both situations which cost the water company money.

Troubling trend

But Richard Rauschmeier, program manager of the water branch at the Public Advocate’s Office of the state utilities commission, said his office thinks the trend of water companies using surcharges is growing more common and troubling, often being used to cover a wider range of costs than originally intended.

“Because these are tracking past amounts spent, in fact what they are saying is we want to recover more money for a past amount,” Rauschmeier told San José Spotlight.

Brian Berkeley, a Saratoga resident and customer of the water company, said he is frustrated with San Jose Water’s consistent proposed increases.

“If you consume nothing, your water rates are absolutely going up,” Berkeley told San José Spotlight.

Berkeley noted that SJW Group — San Jose Water’s parent company which also controls three other water companies — is a member of an exclusive club of “dividend king” companies. Dividend kings are publicly traded stocks that have increased dividend payout percentages for shareholders for at least 50 consecutive years, according to Time. Berkeley said there should be a “top to bottom” independent audit of San Jose Water before any increases are approved.

“I don’t understand why the (utilities commission) would allow a company to reap so much profit that they are one of just a few dozen dividend kings,” Berkeley said. He feels the state is ineffectual at reigning in San Jose Water.

The Public Advocate’s Office is expected to file its full analysis of the San Jose Water proposal in April, Rauschmeier said. Anyone looking to follow along with the proceedings can view the proposal’s documents and other information.