Constructive regulatory decision provides for continued water system investments, minimizes earnings volatility, and recognizes San Jose Water’s efforts towards environmental and social justice goals.
San Jose Water (“the Company”), a wholly-owned subsidiary of SJW Group (NYSE: SJW), announced today that the California Public Utilities Commission (“CPUC”) approved its General Rate Case for the years 2022 through 2024.
The final decision approves the Amended Settlement Agreement between the Public Advocates Office and the Company. It authorizes rates designed to increase revenue approximately $25.1 million or 6.0% for 2022. The 2022 rate increase will become effective on November 1 bills. Rates and revenues for 2023 and 2024 will subsequently be determined based on authorized utility plant investments and the forecasted change in the consumer price index from the preceding year.
The final decision also authorizes San Jose Water to implement a surcharge to recover the revenue difference between interim and final rates for 2022. The authorized 2022 revenue increase, retroactive to January 1 until the implementation of the new rates, will be included in the surcharge.
Key highlights of the decision include:
- A three-year capital budget for utility plant investments of $350 million;
- Greater revenue recovery from the fixed charge;
- Further alignment between actual vs authorized consumption;
- A Full Cost Balancing Account for water supply and energy consumption; and,
- Recovery of $18.2 million from various existing balancing and memorandum accounts.
“We appreciate the CPUC’s approval of our General Rate Case which recognized the continued need to invest in our water system. This is critical to us continuing to provide reliable water service and public health protection to the one million residents of the greater San Jose metropolitan area,” said Andy Gere, President and COO. “We take this responsibility very seriously, and work each and every day to make timely, prudent investments and ensure the delivery of high quality water at affordable rates to our customers and the communities where we live, work and serve.”
Importantly, the final decision recognized San Jose Water’s efforts towards environmental and social justice (ESJ) goals adopted in the CPUC’s February 2019 Environmental and Social Justice Action Plan. Specifically, it acknowledged the Company’s efforts to serve all customers including many who are part of ESJ communities through the:
- Reduction of greenhouse gas emissions through the accelerated electrification of its fleet, green energy generation, and continued optimization of its energy reduction program;
- Replacement of lead service lines;
- Fluoridation of a portion of its groundwater supply serving the most vulnerable populations;
- Investments to improve water quality; and,
- Mitigation of the wildland fuel hazard through its Wildfire Mitigation Plan
In addition, for income eligible customers, SJW offers its CAP program, providing discounts on bills, along with access to the state-funded LIHWAP (Low Income Household Water Assistance Program), administered locally by Sacred Heart Community Services.
To learn more about the General Rate Case head to: https://www.sjwater.com/GRC2022-Year1
About San Jose Water
Founded in 1866, San Jose Water is an investor-owned public utility, and is one of the largest and most technically sophisticated urban water systems in the United States. The company serves over one million people in the greater San Jose metropolitan area. San Jose Water is owned by SJW Group, a publicly traded company listed on the New York Stock Exchange under the symbol SJW. SJW Group also owns: Connecticut Water Company in Connecticut; Maine Water Company in Maine; and SJWTX, Inc. (dba Canyon Lake Water Service Company) in Texas. To learn more about San Jose Water, visit: sjwater.com.
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Some of these forward-looking statements can be identified by the use of forward-looking words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “projects,” “strategy,” or “anticipates,” or the negative of those words or other comparable terminology. These forward looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict. These forward-looking statements involve a number of risks, uncertainties and assumptions including, but not limited to, the following factors: (1) the effect of water, utility, environmental and other governmental policies and regulations, including actions concerning rates, authorized return on equity, authorized capital structures, capital expenditures and other decisions; (2) changes in demand for water and other services; (3) the impact of the Coronavirus (“COVID-19”) pandemic on our business operations and financial results; (4) unanticipated weather conditions and changes in seasonality including those affecting water supply and customer usage; (5) climate change and the effects thereof, including but not limited to, droughts and wildfires; (6) unexpected costs, charges or expenses; (7) our ability to successfully evaluate investments in new business and growth initiatives; (8) contamination of our water supplies and damage or failure of our water equipment and infrastructure; (9) the risk of work stoppages, strikes and other labor-related actions; (10) catastrophic events such as fires, earthquakes, explosions, floods, ice storms, tornadoes, hurricanes, terrorist acts, physical attacks, cyber-attacks, epidemic, or similar occurrences; (11) changes in general economic, political, business and financial market conditions; (12) the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings, changes in interest rates, compliance with regulatory requirements, compliance with the terms and conditions of our outstanding indebtedness, and general market and economic conditions; and (13) legislative and general market and economic developments. The risks, uncertainties and other factors may cause the actual results, performance or achievements of SJW Group to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Results for a quarter are not indicative of results for a full year due to seasonality and other factors. Other factors that may cause actual results, performance or achievements to materially differ are described in SJW Group’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC. Forward-looking statements are not guarantees of performance, and speak only as of the date made. SJW Group undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
VP of Regulatory and Government Affairs