In a recent letter to the Almanac, a reader expressed some concerns about Cal Water's rate case that I would like to address.
First, Cal Water only earns a reasonable, CPUC-approved profit on capital invested in water system infrastructure, and this is a very small part of the customer's total bill. The rest of the water bill is a direct reflection of the actual costs of providing water service.
The writer notes that her bill has increased 146 percent since July of 2006. We do not provide water service to her street, nor do we find her name in our customer data base, so we cannot address her bill specifically. However, the typical customer with a 5/8-inch x 3/4-inch meter uses 22 units of water and has experienced an increase of approximately 64 percent since 2006.
More than two-thirds of this 64 percent increase represents increased charges for wholesale water purchased from the San Francisco Public Utilities Commission (SFPUC). The SFPUC is in the midst of a $5 billion refurbishment and earthquake retrofit of its system. Our purchased water costs will continue to increase until the project is complete. All cities and water agencies on the mid-peninsula purchase water from the SFPUC and have similar rate structures.
Second, the reader asks why bills are increasing despite the fact that usage is decreasing. The inescapable fact is that many of the costs of providing a clean, reliable water supply are fixed regardless of how much water customers use. Cal Water is requesting an increase in per-unit costs to ensure that fixed costs are covered despite sales revenue decreases. Again, this is a challenge faced not just by Cal Water customers, but by water users throughout California.
Third, the reader asks why Cal Water is "increasing payouts" for employee health care and pensions. Actually, Cal Water is not increasing payouts for health care and benefits; rather, the filing asks for recovery of higher costs for the same level of health care and benefits. We believe that we have a responsibility to ensure that benefits are fully funded so that we can meet our commitments to the employees who dedicate their careers serving our customers.
I am proud of the hard-working men and women of Cal Water, who are dedicated to providing high-quality water and excellent service to customers as efficiently as possible. We believe this rate increase is necessary because the costs of providing water service have increased, but the CPUC will review our request for a water increase thoroughly before issuing a decision in late 2013.