PUC Inviting Customers To Offer Opinions on WCMA Surcharge

Understanding Your Bill: Surcharges and Service Charge Changes

WCMA Surcharge Under Consideration; Customers Have Opportunity to Provide Feedback

San Jose Water (SJW) customers will have an opportunity to weigh in on the 2018 Water Conservation Memorandum Account (WCMA) surcharge currently under consideration.

This surcharge, if approved by the California Public Utilities Commission (CPUC), would allow SJW to recover its uncollected fixed costs from 2018.  The majority of costs to operate a water utility are fixed (60%) in order to maintain the water system, and provide safe, reliable, round-the-clock, high-quality, water.  Those operating activities are required regardless of the amount of water consumed.

However, water rates are designed to recover only a portion of those fixed costs through the meter charge.  The remaining portion of the fixed costs as well as the variable costs are recovered through the volumetric charge on your bill. 

Every three years, the CPUC sets the price of each unit of water based on the forecasted total amount of water it projects SJW customers will use.  When usage is lower than what is projected, SJW is unable to recover its fixed operating costs because fewer total units of water are utilized.

SJW discontinued the drought surcharges (penalties) in early 2017, when the water supply outlook began to improve.  Currently, mandatory conservation rules from the State as well as a call for continued conservation from  Valley Water – previously known as the Santa Clara Valley Water District – remain in place.

Customers wishing to offer their feedback on the proposal may do so by mail or email to the CPUC’s Water Division by April 18, 2019 at:

California Public Utilities Commission

Tariff Unit, Water Division

505 Van Ness Avenue – 3rd Floor

San Francisco, CA 94102

water.division@cpuc.ca.gov

On the same date the feedback is submitted to the Water Division, a copy shall be mailed or emailed to us at: 

San Jose Water Company

Regulatory Affairs

110 West Taylor Street

San Jose, CA 95110

regulatoryaffairs@sjwater.com.

To review the public notice mailed out to customers beginning the week of March 25, 2019, please visit the page linked HERE.

Service Charge Increase Seems Higher Than Expected

San Jose Water implemented new water rates approved by the CPUC at the beginning of January. 

As part of the new water rates, older surcharges from Valley Water, which appeared on the customer’s bill as separate line items in 2018, were rolled into the service charge.  Those surcharges included each of Valley Water’s wholesale water rate increases in 2016, 2017 and 2018 and were added to the bill based on the quantity consumed. 

The new water rates reduced the rate for the lowest tier of water usage by 25% and made more modest increases to the other water rate tiers. To offset those reductions, more revenue is being collected in the service charge resulting in their increase. 

This service charge rate changes increase the amount recovered through fixed costs (the service charge) versus variable charges like water consumption.  In the past SJW recovered about 50% of its fixed costs through the service charge.  Remaining fixed costs PLUS the costs to purchase water from Valley Water were then rolled into the tiered rates.

Under the new rate structure SJW is able to recover 67% of our fixed costs via the service charge.  This increased recovery minimizes situations where SJW is unable to collect its fixed operating costs resulting from lower than projected water usage as described above.