Alleged Overbilling of Customers by San Jose Water Company

It is alleged that customers of the water system owned by San Jose Water Company (SJWC) and the Cupertino Municipal Water System, which is leased to SJWC, were overbilled over a period of years. To view if you are in either of these service areas please refer to the water service map.

Upcoming Meetings:

City Council Study Session
Cupertino Community Hall
10350 Torre Avenue
5:00 p.m.
Subject: Factors affecting water rates in Cupertino
Staff Report

Chronology of Events:

May 30, 2017
Twenty-five Saratoga residents (Water Rate Advocates for Transparency, Equity and Sustainability – WRATES) within the San Jose Water Company (SJWC) system submitted a formal complaint to the California Public Utilities Commission (CPUC). The CPUC number issued for the complaint is C.17-06-009 dated June 7, 2017.

June 6, 2017
San Jose Water Company (SJWC) submitted a notice to the California Public Utilities Commission–Water Division (CPUC) requesting permission to implement a refund for the readiness to serve charge (service charge) for the three-year period starting January 1, 2014, and ending December 31, 2016. The refund would be applied to all 200,000-plus metered customers of the SJWC service area, which includes portions of Cupertino. The total amount of the requested refund is $1,794,439. A residential customer with a 3/4-inch meter will receive a one-time credit of $5.70. All other customers would receive credits according to their meter size.

June 7, 2017
San Jose Water Company answers WRATES complaint to the CPUC.

June 23, 2017
The Office of Rate Payer Advocates protested Advice Letter No. 510 and recommended to the CPUC that they reject and conduct a formal hearing.

June 26, 2017
City writes letter to CPUC in support of Office of Rate Payer Advocates letter dated June 23, 2017.

August 7, 2017
CPUC response letter to the City - Dated July 26, 2017.

August 9, 2017
City writes letter to CPUC Administrative Law Judge Karl Bemesderfer requesting that Cupertino residents have the opportunity to comment and participate in the complaint proceedings.

September 13, 2018
CPUC opens a formal investigation into SJWC’s billing practices. An informal Office of Ratepayer Advocates (renamed the Consumer Protection & Enforcement Division - CPED) investigation alleges that for at least 30 years, SJWC has failed to pro-rate its customer bills when a change to its service charge went into effect in the middle of a customer billing cycle. CPED went on to state that the apparent practice of SJWC for more than three decades was to bill its customers the new, increased service charge for the entire billing cycle instead of pro-rating the bill so that customers were only charged the new, increased service charge for the period of time it became effective. In addition, SJWC is alleged to have double-billed its customers when it converted from billing its service charge in advance to billing in arrears. The CPED report recommends that SJWC implement a credit to its customers of approximately $2 million for the January 1, 2014 to December 31, 2016, time period, as well as another $1.9 million to reflect the 1987-2013 time period.  Additionally, CPED calculated that the total amount of double billing when SJWC converted from billing in advance to billing in arrears amounts to nearly $5 million in overcharges. The CPUC Order Instituting Investigation and the CPED staff report can be viewed here. The formal investigation by the CPUC provides a forum to consider evidence and argument on these issues from CPUC staff, SJWC, and other parties to the proceeding. Evidence taken in the proceeding will be the basis for findings, conclusions, and CPUC orders, including whether SJWC should provide refunds to customers as well as whether the company should face additional financial penalties, reparation and other remedies.   

It is unknown how long this investigation will take. When a decision is reached, customers of both the SJWC system and Cupertino Municipal Water System (leased to SJWC) will receive a refund. 

Comments from customers within the water system owned by SJWC (orange area of map) may be directed to:

ALJ Karl Bemesderfer
California Public Utilities Commission Division of Administrative Law Judges
505 Van Ness Avenue, Room 5008
San Francisco, CA 94102-3214. 
(Include complaint no. C.17-06-009 on all correspondence)
Comments from customers within the water system owned by the City of Cupertino (purple area of map) may be directed to:

City of Cupertino
Attn: Roger Lee
Department of Public Works
10300 Torre Avenue, Cupertino, CA 95014, 408.777.3254 or rogerl@cupertino.org.

*Customers of California Water Service Company (green area of map) are not affected by this issue.