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Proposed Water Rate Service Fee Increase

Post Date:07/10/2017 8:00 am
Notice of Public Hearing - September 5, 2017
Proposed Water Rate Service Fee Increase
At the future Council meeting date to be determined or as soon thereafter as may be heard, the Cupertino City Council will conduct a public hearing regarding proposed increase in rates of water service fees of up to 3.83% proposed. The public hearing is a continuation of the February 21, 2017 public hearing on the same matter.

These rates and charges are administered by San Jose Water Company as the lessee of the system.  Rates apply to residential, commercial, institutional, and industrial customers. Answers to frequently asked questions and a history of prior water rate increases may be viewed at www.cupertino/waterrates.

Reason for the Proposed Increase
The Cupertino Municipal Water System purchases, treats, and delivers an average of 2.9 million gallons of potable water per day to residences and businesses.  The system includes pipelines, pump stations, fire hydrants, storage tanks, wells, and water meters as well as facilities and processes required to comply with all state and federal drinking water standards.  Water rate service fee are set at a level to generate enough revenue to cover the costs of operating and maintaining this system.  The proposed water rate service fee increases are being requested by SJWC to cover the increasing costs of operation.
San Jose Water Company (SJWC) is a Class A water company subject to the jurisdiction of the State of California Public Utilities Commission (CPUC). As the Lessee of a City of Cupertino (City) owned water system, SJWC is also subject to the provisions contained within the Agreement for Lease of Real Property (Water System) between the City and SJWC. Per this agreement, the City’s approval of rates shall not be unreasonably withheld.  In determining reasonableness, the City shall consider all relevant information, including the CPUC approved rates. Pass through increases – such as changes due to increases or decreases in water and power (as well as certain unanticipated changes in volumes) are allowed to be passed through without prior City approval, so long as it is done in a manner substantially similar to that permitted by the CPUC.
The proposed rate increase for water service fees is needed for increased costs of operation and is in response to a December 19, 2016 CPUC authorization to grant SJWC a 3.83% increase in rates for 2017. The supporting document links of the proposed change in rates for water service fees are as follows:

Billing Impacts
The proposed increase of 3.83% to potable water rates and charges are shown on Tables 1, 2, and 3 below.  If the City Council approves the proposed increase, the impact to your bill can be calculated using the proposed meter rates and quantity charges as shown in the sample calculations below.  Utility tax and offset surcharges¹ are not included in the sample calculations and your actual bill will be different. Specific questions can be directed to San Jose Water by calling 408-279-7900 or visiting
Sample Water Bill Calculations Comparing Current and Proposed Rates
Water Bill Amount (without utility tax) = Meter Charge + (Quantity x Rate per HCF)

All quantity based charges include offset surcharges for increases to water production charges.

Residential Example (using Tables 1 and 2):
Residential charges use a three-tiered rate structure, with a higher rate applying as water use exceeds tier breakpoints of 3 HCF and 18 HCF.  In the example below, a resident using 15 HCF will need to calculate the total bill using two of the tiered rates:
Monthly Usage:  15 HCF
Meter Size:  3/4-inch
Current Rate:      $23.98 + (3HCF x $4.0581) + (12HCF x $4.5090) = $90.26
Proposed Rate:$25.02 + (3HCF x $4.2210) + (12HCF x $4.6900) = $93.96

Non-Residential Example (using Tables 1 and 3):
Monthly Usage:  100 HCF
Meter Size:  2-inch
Current Rate:      $127.87 + (100 HCF x $4.5090) = $578.77
Proposed Rate:   $133.41 + (100 HCF x $4.6900) = $602.41

HCF = hundred cubic feet; 1 HCF = 748 gallons

Offset surcharge(due to increase in wholesale water costs) is currently $.4229 per HCF consumed for the 2016 wholesale water rate increase and $0.2447 per HCF for the 2017 wholesale water rate increase.

Table 1: All Customers Monthly Meter Charge

Monthly Meter Charge(based on meter size)          

Meter Size

Current Charges

Proposed Charges


$23.98 $25.02


$23.98 $25.02


$39.94 $41.66


$79.91 $83.36


$127.87 $133.41


$239.75 $250.12


$399.58 $416.87


$799.15 $833.73


$1278.65 $1333.98


$1838.07 $1917.62
Table 2: Residential Monthly Quality Charge(does not include offset surcharge of $.4229 per HCF)
Current Charges 
per HCF
Proposed Charges 
per HCF

Tier 1: 0 to 3 HCF

$4.0581 $4.2210

Tier 2: 3+ to 18 HCF

$4.5090 $4.6900

Tier 3: >18 HCF

$4.9599 $5.1590


Example Monthly Water Bill

$90.26 $93.96

Table 3:  Non-Residential Monthly Quantity Charge(including water production offset surcharges)


Current Charges
per HCF
Proposed Charges
per HCF

 Quantity Rates                       

$4.5090 $4.6900

Additional Information

Additional information about the rate increase, including Frequently Asked Questions (FAQs), the Lease Agreement between the City and San Jose Water Company, and Water Service Area Maps can be found online at Other supporting information from SJWC, including links to FAQ’s may be found at:

Water Service Boundary
water service map

Public Hearing - February 21, 2017

Notice mailed out to Customers of Municipal Water System on 1-6-17



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