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San Jose Water Company’s Surcharge Is Wrong

Op-ed by Rishi Kumar

Did you notice that San Jose Water Company’s (SJWC) net income last year was $61.5 million - the highest ever in a hundred years? In the last 11 years, SJWC's net income totals $400M. Highly profitable, but the thirst continues! SJWC wants to apply a surcharge again with Advice Letter 569 based on the 2019 baseline. There are many reasons why this is just wrong:

Why is 2019 the benchmark? Water conservation has been the new norm since 2016. Many households are no longer watering their lawns and have applied extensive & extreme conservation measures since 2016. I don’t know what else can be done to reduce our consumption by 15% from the 2019 level. Perhaps stop showering? This is Silicon Valley, we thrive on data. Can San Jose Water Company provide real time data analytics to its customers to help them manage their bill better? Can they provide them the comparison dashboard which is critical for such a program to work? Or should they suddenly wake up one day and realize that they have just received a bill of thousands of dollars from SJWC? Well, this is exactly what happened in 2016 when ratepayers were blindsided and just not aware of the surcharge even being in effect, let alone the tiered system. What happened then was just wrong and SJWC’s profits ballooned from $22M to $52M in that 2016 drought. After the drastic conservation in 2016 by the ratepayers, SJWC demanded to increase the water rates attributing it to the consumption drop. It is insane for a monopolistic utility to demand a consumption reduction (a.k.a conservation), and then take that reduction as another opportunity to increase the monthly water rates for perpetuity!

The dichotomy of water and high-density housing: Many households have developed (or planning to develop) ADUs, and JDUs on their property based on the new laws and Sacramento’s push to expand housing. I am afraid the 2019 benchmark will not do justice to such situations. Applying the surcharge is much more complicated. With SB-9 and SB-10 having been approved, homeowners of today may have more than one family residing on their lot in the near future. Shouldn't the PUC delay approving the surcharge until San Jose Water Company can create a better, more equitable process, and a realistic consumption model. The model needs to work across these permutations and combinations of water allotments and rationing.

The surcharge duress is flawed: Why are a million customers of SJWC placed under duress with these surcharges? If the PUC commissioners did a walking tour, they would discover lush lawns in communities which are not under similar pressure. Granting this rate increase/use restrictions is discriminatory to SJW customers since other water customers in the State are not being subject to this. A public utility company, as you know, does not have a mission to increase and aggregate profits, nor has it a mission to impose punitive actions against the people it serves. These SJWC surcharges will once again enhance the profitability of the company and could possibly spur enraged people to attend PUC meetings.

Where is the plan? We only see a push!

The Valley Water Commission, comprised of elected leaders from Santa Clara cites (of which I am a part of) voted and requested that the Valley Water Board send a letter to the Metropolitan Transportation Commission (MTC), and Association of Bay Area Governments (ABAG) regarding our concerns about limited water resources and the length of the reconstruction of Anderson Dam, and requesting that the current Regional Housing Needs Allocation (RHNA) requirements be revisited to better balance housing growth and development with sustainable levels of water demand and supply, thereby helping to ensure RHNA requirements are feasible given the available water supply for the planning time period. The Board decided to not follow the recommendation and we respect their decision. But this gives you a sense of the angst that community members and elected leaders are feeling - We are very concerned about this push for housing that will ultimately lead to a spike in our population, with absolutely no plan to address our water crunch. When are we going to review the larger problems of California droughts strategically and the ecosystem of agriculture, almond farmers, urban economies, and marine life? When are we going to push for efficiencies in every aspect in dynamic changes induced by climate changes, population density changes, water demand changes, etc.? When will a comprehensive plan for water reservoir expansion in California be developed? California’s hundred year old system was developed for 10 million people. Today, we have almost a 400% increase in the local population, and our Sierra snowpack depletion is a consequence of significant climate change. Sacramento is pushing for super, high-density housing in our community. Yet, there is no plan for water expansion to accommodate this population influx! How will communities following the Sacramento housing expansion mandate find new sources of water? Will a single family home that splits its lot, and add JDU, ADU - effectively 6 units - be viewed as an apartment complex, and thus the surcharge will no longer apply? Will each unit have their own water meter? Where is the plan?

​​Are we going to do something….anything to avoid the dystopia that Cape Town, South Africa endured in 2018 when the faucets ran dry? Or how about Chennai, India where water trucks were bringing water as the huge population expansion led to rivers drying up?

We ask the PUC to do the right thing and reject this very unreasonable surcharge.