Water over-billing claims to be investigated

CPUC report: San Jose Water failed to pro-rate bills, double-billed customers

“We’ve received hundreds of complaints at the city from frustrated residents and since the city itself is also a customer, you can be assured we’re very interested in the results of this investigation.”

— San Jose Mayor Sam Liccardo

A state commission will formally consider whether the San Jose Water Company has overbilled customers by millions of dollars for years.

On Friday, the California Public Utilities Commission (CPUC) announced that it had opened an investigation into the company’s billing practices after a staff report suggested that for at least 30 years, San Jose Water failed to pro-rate bills when a change in service charges went into effect in the middle of a billing cycle. Instead of pro-rating the bill, the company allegedly charged customers the new, higher service fee for the entire cycle. The company also allegedly doublebilled customers some $5 million when it switched from billing service charges in advance to billing them in arrears.

“We’ve received hundreds of complaints at the city from frustrated residents,” San Jose Mayor Sam Liccardo said Friday during a phone interview, “and since the city itself is also a customer, you can be assured we’re very interested in the results of this investigation.”

The CPUC will consider whether San Jose Water — a private company that serves more than 1 million residents in the area — should refund customers and whether the company should face financial penalties or a further shift in how it does business to prevent something similar from happening again. Some of the financial penalties could technically be as high as $50,000 per offense, per day.

The informal staff investigation recommends that San Jose Water credit customers about $2 million for the 2014-2016 time frame, and another $1.9 million for 1987-2013. It isn’t clear how that might translate to refunds for individual customers.

The agency began taking a closer look at the water company in the spring of last year after Rita Benton, the co-founder of a group called Water Rate Advocates for Transparency, Equity and Sustainability, filed a billing complaint on behalf of 70 customers. Benton has been vocal in criticizing the company’s practices.

In a September 2017 letter to the CPUC, the water company said it reviewed its practices in response to a January 2017 inquiry from Benton, and said it would start pro-rating service charges

as of that month. The company requested the CPUC’s permission to issue about $1.8 million in refunds to customers for failing to prorate charges from 20142016. But the commission rejected the request, saying it was in the middle of looking into the issue. Ultimately the staff report suggested a higher refund, along with the additional refund for the earlier years.

In an email Friday evening, John Tang, the vice president of regulatory affairs for the water company, pushed back at the notion that San Jose Water had over-billed customers.

“Since first notified about this billing issue, SJW has been cooperatively working with various departments at the California Public Utilities Commission (CPUC) to answer their questions about our billing practice,” he said. “While we believe that our past practice was in compliance with the rules as we interpreted them at that time, we also recognize that different interpretations may apply. To that end, we took immediate action once informed about the billing issue and changed our billing practice as of January 2017 well in advance of any CPUC direction.”

Separately, the California State Auditor announced in May it would look into the CPUC’s process of setting rates for investor-owned utilities that serve water consumers, such as San Jose Water.

Reached Friday afternoon by phone, Benton said she was pleased to learn of the investigation.

“Finally. It’s about time,” she said. “It’s a lengthy process, but at least now we feel like we’re moving forward again.”