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Homeserve USA (aka Home Emergency Insurance Solutions, aka HEIS) June 2016

I've noticed a large peak in searches about Homeserve USA (aka Home Emergency Insurance Solutions, aka HEIS). They offer the insurance for the pipe from your water meter (your side) to the pipe connection into your home. Activity peaks generally occur when Homeserve USA does a major advertising mailing. Obviously I'm not on their mail list, so unless I see a peak, in visitors to blog postings about them, I don't know when they're actively selling the insurance..

I've done 7 postings to this blog. It all started when I got a letter from Robert (Bob) Day the SJWC Director of Customer Service. It looked like an "official letter from SJWC", so I read it carefully and realized it was actually a direct mailer marketing piece. I started to pull on the "loose ends" and researched Homeserve USA and found some less than positive accounts and information.

This insurance represents a source of non-regulated revenue to SJWC. If all 220,000 residential rate payers purchased this insurance $15.6 million in premium payments to Homeserve and as I discovered at least 10%, $1.56 million would be paid to SJWC. So, SJWC has a financial incentive to support this program "surprise". How much labor from SJWC employees used? NTP&S (Non-Tariffed Products & Services) was one of the points of "disagreement" in the current General Rate Case (A1601002), because it's hard to determine hours that we pay for get used to do work on NTP&S, so ORA (Office of Ratepayer Advocates) and came up with a compromise, but did not set a precedent.

This is the eighth posting I've done and I hope it encourages buyers, in particular ratepayers of SJWC, to read a bit, do a search on the internet and form their own opinion and make an informed decision.

So far I don't see any significant changes from, what I've documented, in my previous postings:

• Homeserve USA may be getting gas!
• Homeserve USA water pipe insurance, Over 270 visits (25 May to June 25, 2015)
• Homeserve USA (HEIS) and BBB Accreditation and A+ Rating
• Home Emergency Insurance Solutions (HEIS, Homeserve USA) 2015, GRC 1501002
• Homeserve UK fined over $75 million dollars!
• What does Homeserve USA (HEIS) pay SJWC
• HEIS aka Home Emergency Insurance Solutions, aka HomeServe USA?

Drought Surcharges! Your water bill is really going up! San Jose Water Company (SJWC)

On June 15, 2016 posting to the Blog I posed several questions, wondering which SJWC would impose on us (ratepayers). They simply imposed all of them! The following takes a close look at the requests and decisions made by both SJWC and SCVWD, especially what it could cost you. Note, updated 6/27/2016 to include monthly Service Charge for your meter.

The following shows the "base rate" per unit (CCF=100 cubic feet):

New 2016 Rates, effective July 1, 2016, page 8

Now we'll look at the ADV 491, SJWC requested speedy approval, for the Drought Surcharges.:

2016 Drought Surcharges (SJWC), ADV 491 

This creates a relatively complicated formula for calculating what you'll pay SJWC, for a Unit (CCF):

Monthly Drought Allocation 2016

Before I take a look at the actual cost per unit you'll pay there seems to be a calculation in ADV 490 that may mislead ratepayers, of SJWC: 

SJWC Example Ratepayer Monthly Increase, 2016

As the Monthly drought allocation shows, would be incorrect the months Oct., Nov., and Dec. SJWC would be  incorrect, depending on your viewpoint either 50% or 100%. Let's just chalk this up to SJWC fast reaction to "accurately and quickly charge ratepayers", as appropriate under the "rules" and the cart got in front of the horse.

If we take the months July through December 2016, using December in the example, the average ratepayer per SJWC and the Information in ADV 490 and 491: (Apologies, I realized the "Monthly Service Charge" for each meter wasn't included, in the estimate below.) 

(Service Charge per meter $21.21) + (3 units x $4.06) + (9 units x $4.51) + (2 units x $4.51 + 2 x Drought Surcharge)  (1 unit $4.51  +  1 Drought Surcharge) results in ($21.21) + ($12.18) + ($40.59) + ($9.03 + $ 7.12)($4.51 + $7.12) =

$101.76 per month for the average SJWC Ratepayer in December 2016
Merry Christmas!

(includes only service charge, water and penalties, not taxes or other charges included, since Attachment B not included)

Readers should be aware I'm on the Attachment D (Distribution List),  but I did not receive Attachments A, B and C. I'm unable to verify or compare the SJWC the "All surcharge surcharge and bill comparison calculations". I wonder what SJWC meant by "surcharge surcharge"? Since Attachments A, B and C were not attached to my emailed copy, that may be reasonable grounds for a complaint, to CPUC or for some reason they should be considered "confidential, in which case a page should be included saying the attachment is "proprietary or confidential", difficult to prove for someone with no competitors, in the San Jose/Santa Clara market.

I also notice that the SJWC ADV 491 email had the following warning:

Important Notice: This email may contain confidential or proprietary information belonging to SJW Corp. or one of its subsidiaries. If you are not the intended recipient, the sender requests that you immediately inform him or her that you have received it and that you immediately destroy the email. Please note that the use of confidential or proprietary information when you are not the intended recipient may have legal effects. Nothing in the body of this email is intended to be an electronic signature or is intended to create a binding contract.

This may be appropriate in some business situations, but not in an ADV filing with CPUC which should be considered to be a public document. SJWC may with the prior approval redact sensitive data, if they can present adequate justification to the assigned ALJ. In all cases proprietary or confidential, should be clearly identified.

Drought Restrictions 2016, SCVWD Board Meeting, June 14, 2016

I attended the Santa Clara Water District board meeting last night. Based on the State Water Resource Board requirements, SCVWD after discussion approved a continuing 20% reduction, below previous usage, and will advise the 18 retailers in Santa Clara County, of the required mandatory water savings.

Which brings us back to the question what will San Jose Water Company implement? Their choices are one or more of the following:

• A penalty for "excess use - seems to have been there" or will they call it a "drought surcharge - DS"?
• Will the base water allocation be based on a monthly changing amount based on 2013, as before or will they based on a different year? 
• Outside hoses must have closing sprayers
• Water landscape three times a week vs. twice, no run-off into gutter?
• Watering hours restriction, probably?
• Washing vehicles OK, but counts against your allotment of water?

Keep in mind we are still in a drought, while the reservoirs look good, ground water has been seriously depleted. It will take several wet years to catch up on the drought shortages. 

Drought Restrictions 2016?

A little bit of confusion on the part of San Jose Water Company (SJWC) and the actual action by the Board of the Santa Clara Valley Water District (SCVWD) about the restrictions that might apply after June 30, 2016.

In a phone call CPUC, Water Department clarified  that  "Overuse  Rates"  applied  only  to the Mountain District not not to SJWC  and  other utilities ratepayers  in the  valley. Shortly  afterwards  I also  received  an email  from a  SJWC  Director  addressing  the  same  point. Presently  the "Overuse Charge"  is  only  applicable to Santa  Cruz Mountain District, but  stay  tuned,  as   SCVWD Board  meeting  will address these issues tonight, June 14, 2016.           

The story starts with SJWC submitting ADV 488, 489 and 490, to CPUC Water Department, adjusting the current current water rates. Buried in the documents was:

RATES

Quantity Rate Per 100 cu. ft. (Ccf)
Overuse Rates beyond 500 gallons per day limit
Residential Customers with 3/4–inch, 1-inch, 1 1/2-inch or 2-inch meter
For Total Monthly Usage from 0 to 3 Ccf. $4.0366
For Total Monthly Usage from 4 to 18 Ccf. $4.4851
For Total Monthly Usage for 19 to 20 Ccf. $4.9336
For Total Monthly Usage over 20 Ccf. $7.0000
All Other Customers(subject to Special Condition 5) (Note, mountain areas)
For Total Monthly Usage from 0 to 20 Ccf. $4.4851
For Total Monthly Usage over 20 Ccf. $7.0000

https://sjwater.s3.amazonaws.com/files/documents/AL%20490.pdf   Please refer to page 11.

Running a bit late SCVWD scheduled meeting is on Monday, June 13th, the agenda contains references to State Water Resources Board recommendation for conservation. SJWC as usual was very efficient in getting the documentation for monies due to them. Did they jump the gun in their "greed (opinion)" not to miss a cent, keep in mind they want to keep the $8 million tax windfall you paid for because they were not as efficient in notifying CPUC of the effect of the tax changes. It appears there is a double standard regarding our money we pay to them. SJWC is really efficient and somewhat aggressive in collection, see Yelp Rating two stars, keep in mind they get one star for existing. (Bloggers opinion) Oddly enough they don't seem to be as effective in other areas efficient operations, customer service and transparency.

The disturbing issues about this "faux pas" Rate change was published, in the Mercury News, but no reference to "Overuse Rates", also no comparison of rates, before and after, other than a reference to "increase $6.34 per month on the use of 15 CCF or 7.07%". It was also published in an Advise Letter which avoids a public hearing, has a very limited time for ratepayers to submit a complaint and very stringent reasons, for a complaint to be considered:

Blogger is not an attorney, but it appears there is reason to consider items:  3 - omission of reference to  "Overuse Rates", 5 - the  "Overuse Rates" may be inappropriate for an advise letter and 6 - SJWC has not as of June 12th provided information showing that  "Overuse Rates" are not unjust or unreasonable or discriminatory.

There was a similar request in an advise letter in 2013-14, at the start of the drought issues, it seems it was replaced Drought Surcharges 1 and 2. Should SJWC be able to consider anything applied for, but may not be used, approved for future use? Was this a simple oversight since it has been approved and ratepayers simply were not told the decision was made? I'm sure that the SCVWD will after the fact approve  "Overuse Rates", but it certainly looks like a rubber stamp approval, to this blogger.

SJWC $8.08 Million Tax Windfall. or "We got it and don't want to share it with those nasty ratepayers!"

To be fair they didn't specifically say "nasty" ratepayers. It's obvious that SJWC feels they've found a legal loophole that will allow them to keep the $8 million and not credit the ratepayers, any of the windfall tax refund and by the way pay SJWC Management  a bonus, paid for by ratepayers, for increasing the value of their shareholder investment. (Please note, I own 10 shares of SJW stock, so I can attend annual meetings.)

 The link below (finally up after being down about 3 days) is again available:

http://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M162/K358/162358073.PDF

My personal view is this is not a case of retroactive rate-making, this is a simple case of greed. SJWC is protected by lots of rules that guarantee them both a profit and a return on shareholder investments. The "system" is and has been very generous, due to previous years of CPUC tendencies to be supportive of all utilities they are supposed to regulate. There seems to be a failing on the part of SJWC and CPUC (Water Division), in this case. SJWC is proactive in requesting action in a timely manner when their "profits" are endangered, but the $8 million tax windfall was apparently not brought to the attention of CPUC, nor did CPUC raise the issue with SJWC, instead SJWC felt that nothing should be paid back to the ratepayers! If in fact the tax action occurred before the next three rate case cycle. SJWC has roughly 225,000 ratepayers, if a simple distribution was 8 million / 225 K = ~$36 credit per ratepayer, a fair pro rata distribution should be based on actual water usage per ratepayer and no credit to WRAP participants who get rates subsidized by full charge ratepayers.

Another point is the SJWC staffing we are already paying for highly paid executives whose objective and mission is to maximize the water rates we pay, this is somewhat obscured by the NTP&S (Non Tariffed Product & Services) for profit business that should be separated from the tariffed (regulated) portion of SJWC business, really hard to do if the folks are part of the SJWC employees our water bills pay for. SJWC requested 33 new staff positions, in the Proposed Decision (PD) 6 positions are recommended.

It's interesting some the other SJWC issues like WRAM that would establish a Water Rate Adjustment Mechanism, to guarantee their profit, independent of how efficient the SJWC is operated. The goal of SJWC is obviously to have ratepayers bear the burden of their potential inefficiency and as much risk and financial burdens, as possible.

While SJWC is at it let's get the ratepayers to pay our Executive and Managers Bonuses! Who does SJWC actually work for? Surprise the shareholders in theory own the company and the management operates to increase the value of the stock and increase the dividends paid to "surprise" shareholders.

CPUC and especially ORA (Office of Ratepayer Advocates) both should work to insure, in the case of SJWC, safe, reliable water service at a fair and reasonable cost to ratepayers. Sometimes the actual mission can be lost in the rhetoric and previously the suspected close relationships, between utilities and regulators.

San Jose Water Company (SJWC) had a meeting regards the PD (Proposed Decision, GRC A-1501002)

I was not really surprised that SJWC had a meeting with CPUC staff, I was pleasantly surprised that the meeting was published in the CPUC website Proceedings. Except today CPUC seems to be having computer problems, it appears their document database has failed. The list of documents, but not the actual documents are available. It seems this happened on this weekend, as I accessed and read the ORA and SJWC documents on Thursday/Friday. I certainly hope this is a computer failure, otherwise it would be a obvious failure to be open and transparent. Raises an interesting question for CPUC to answer, "Did your document database have a failure?".

SJWC sent to CPUC and had published a Notice of an Ex Parte communication. Palle Jensen (SJWC Sr. VP, Regulatory Affairs) pleaded the SJWC case in opposition of several points in the PD (Proposed Decision).

Click here to view original.

May 20, 2016

NOTICE

San Jose Water Company

SUMMARY: On May 17, 2016, Palle Jensen, Senior Vice President of Regulatory Affairs for San Jose Water Company (SJWC), met with Lester Wong, advisor to Cmmr. Randolph, in San Francisco. Also present was Martin Mattes of Nossaman LLP, attorneys for SJWC. Jensen referred to the Proposed Decision (PD) of Administrative Law Judge Tsen, and addressed the PD’s rejection of SJWC’s request for authorization to implement a revenue-decoupling Water Revenue Adjustment Mechanism (WRAM) and Modified Cost Balancing Account (MCBA). Jensen and Mattes explained that the Monterey-style WRAM is a rate adjustment mechanism but not a revenue adjustment mechanism and that it provides no protection against revenue loss due to sales lower than the forecast level on which rates were based. Jensen addressed the PD’s disallowance of certain elements of SJWC’s estimate of test year payroll expense. Jensen and Mattes briefly referred to the PD’s rejection of SJWC’s proposal for a Health Care Cost Balancing Account, and noted the continuing volatility of health insurance costs and the inability of SJWC to control those costs. Jensen noted the objections of the Office of Ratepayer Advocates (ORA) to the PD’s rejection of ORA’s proposal to require SJWC to create a memorandum account to record certain income tax benefits in past years under recently promulgated Internal Revenue Service regulations. Jensen explained that ORA’s proposal would entail unlawful retroactive ratemaking.

A close review shows SJWC opposes, the same disputed issues that they have for the past year:

• WRAM decouple revenues and profits, a "guaranteeing" SJWC profits, A great deal for SJWC, not a good deal for ratepayers. I seem to miss the point of improving productivity and efficiency, providing clean, reliable water to ratepayers at competitive rate Oops! that's right they don't have a competitor!
•  The following sounds much better than executive and manager bonuses, paid by the ratepayers, buried in the water rate: " disallowance of certain elements of SJWC’s estimate of test year payroll expense" . Bonuses seem to me to be an incentive for above average performance and the question becomes who benefits? Seems the executives and managers should be compensated in stock and salary by the shareholders who benefit from most of the efforts. An example is the Sr. VP of Regulatory Affairs what is his bonus and salary paying him to do? Lower your rates or increase SJWC profits?
• Then we have the " income tax benefits in past years under recently promulgated Internal Revenue Service regulations" any other way you say it, this is the 8 million dollar windfall. This creates an interesting situation: (1) where did the 8 million dollars come from? Obviously from the ratepayers, (2) sounds like we were overcharged, but who should have reported the windfall?, (3) we already water flows down hill and water rates go up-obvious over simplification, (4) several questions should be asked, if the State and Federal tax authorities give back money why can't SJWC? The next question does SJWC have a better statue of limitations than criminals? They note: "ORA’s proposal would entail unlawful retroactive ratemaking." SJWC seems to be getting a three year or less period during which if they can hide it they seem to think they should be able to keep it?

We seem to have created through the lack of CPUC action in past 30 years, to establish a simple concept that is pervasive, in the water companies (publicly owned-stock) that CPUC' charter is to insure safe, reliable water service at the lowest rate for the ratepayers and to regulate the effective monopolies that the water companies are in reality are operated in a reasonably efficient manner in the best interest of the ratepayers. .