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Public Utilities Commission Issues Proposed Decision on Water Company Cost of Capitol Application

Post Date:02/14/2018 5:00 pm

California Public Utilities Commission issues proposed decision regarding San Jose Water Company and California Water Service Company 2018-2020 Cost of Capital Application (Application No. 17-04-001)

On April 3, 2017, San Jose Water Company (SJWC) and California Water Service Company (CWSC) submitted simultaneous filings to the California Public Utilities Commission (CPUC) requesting an increase in their respective cost of capital (COC). COC is how much a corporation is allowed to recover in water rates its return on invested capital. COC is effected by a water companies cost of debt and the proportion of debt to cash reserves. The estimated investor return is effected by debt. Increases or decreases in investor return will cause water rates to increase or decrease. 

The CPUC conducted several public participation hearings on this issue throughout the State. At these hearings over 400 ratepayers attended with over 100 making comments. Cupertino staff and Councilmember Stephen Scharf attending the November 6, 2017, San Jose meeting and made comment. A summary of the COC application is shown in the below Office of Ratepayer Advocates (ORA) table.  To view the ORA webpage click here (  

On February 6, 2018, the CPUC issued its proposed decision accepting the recommendation of the ORA (blue text in table). This proposed decision may or may not result in a rate decrease for water customers because labor, maintenance, and other direct business costs all will be taken into account as part of SJWC and CWSC general rate-making process. It does, however, mean that any requested rate increases could be blunted, making any rise a bit less sharp.This proposed decision is tentatively scheduled to be heard at the CPUC’s March 22, 2018, Business Meeting. The process to comment on this CPUC item and the actual terms of the proposed decision, including some financial analysis too in-depth to put into this document, are online at