SJ Public Utility Keeps Some Spending Private

A big Bay Area public utility wants to raise your rates but doesn't want to show you how it's spending some of your money

By Tony Kovaleski, Julie Putnam and Mark Villarreal
|  Thursday, Aug 9, 2012  |  Updated 12:07 PM PDT
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San Jose water company has asked for a 44% rate increase over the next three years, but they've denied NBC Bay Area's records requests to see their travel and entertainment expenses, and it's allowed under the law. Chief Investigative Reporter Tony Kovaleski reports.

San Jose water company has asked for a 44% rate increase over the next three years, but they've denied NBC Bay Area's records requests to see their travel and entertainment expenses, and it's allowed under the law. Chief Investigative Reporter Tony Kovaleski reports.

One of the Bay Area’s largest public utilities wants you to pay more for your water, but is keeping some of its own spending private.

San Jose Water Company is a private, investor-owned company, but acts as a public utility that serves over one million people in the San Jose metropolitan area. It is overseen by the California Public Utilities Commission.

The water company has asked the CPUC to approve a 44-percent rate increase over the next three years, including 21 percent in 2013 alone.

That proposed rate increase prompted the NBC Bay Area Investigative Unit to send this request for records to see how San Jose Water was spending its money.

The request asked the utility to provide all travel, entertainment and expense reports.

It also included requests to review gift purchases and bonuses for its top executives and Board of Directors and receipts for plane tickets, hotels and restaurants.

San Jose Water denied the request for these records, issuing NBC Bay Area this statement which reads, "we are not obligated to provide the requested information and will not be doing so.”

The company also denied a request for a sit-down interview to explain their reasoning. 

 

Click here to view San Jose Water's complete statement.

Under current state law, that privacy is permitted.

Since San Jose Water is a private, investor-owned company, it does not fall under the stipulations of the California Public Records Act. It is an issue one lawmaker is trying to change, because it is also a public utility. 

“They operate in an environment where they have no competition, where they are given a public license to operate, and they are charging the taxpayers, the ratepayers, to cover the cost of operation,” Assemblymember Roger Dickinson (D-Sacramento)said. “They ought to make those kinds of records available.”

Assemblymember Dickinson has proposed a new law requiring more public transparency and more public accountability for public utilities.

“If they want that rate increase, then they need to be prepared to justify it,” Dickinson said. “So they have to make records available that would help the public make that judgment.”

San Jose Water also denied NBC Bay Area's request for an interview.

The Investigative Unit caught up with CEO Richard Roth in downtown San Jose.

NBC Bay Area asked Roth if he would make his company's spending records public, to which he replied, “That’s not going to happen. It's not relevant to the rate increase and because we're a private company and we don't have to. It's the law."

During that same sidewalk interview Roth was asked why San Jose Water wouldn't turn over the documents in the spirit of corporate transparency.

"Because we don't have to Tony," Roth said. "It's our legal right and you're asking us to abrogate that and do something special. There's no reason for what you're asking for."

To view an extended version of the street interview see the raw video below.

“I think really everything ought to be laid out on the table, this is how we are spending our money,” Tina Morrill, a local San Jose Water customer, told NBC Bay Area.

Like thousands, Morrill pays her water bills, and is a big proponent of conservation. She keeps her lawn a light brown color in order to save money and water.

Her message to San Jose Water: “so it is all about conserve, conserve, conserve, so I would say to them, practice what you preach.”

One of the reasons for asking for the increase: consumers are apparently conserving too much water, a response to the conservation campaign pushed by the company.

“At the end of the day, what we’re looking for is reasonableness,” Richard Rauschmeier, a financial analyst for the Division of Ratepayer Advocates, told NBC Bay Area.

The DRA is a state agency independent of the CPUC that reviews the rate-increase applications of public utilities like San Jose Water.

Their mission is to provide the CPUC with recommendations that ensure safe and reliable utility service at the lowest possible cost to the ratepayers.

The DRA looks at the financial records of public utilities and present their own case for what rate increase they believe is fair for ratepayers as you can see in this report.

In the records the DRA reviewed, they found problems with San Jose Water’s proposal.

The agency questioned the public utility’s decision to pay for athletic club memberships, to hand out seven percent raises for executives and the DRA located four million dollars in miscalculations.

The report concluded that instead of a 44-percent raise over three years, San Jose Water should receive an increase of less than 11 percent.

The state’s public utilities commission will make the final decision later this year.


Even though the DRA inspected thousands of financial records from San Jose Water, it admits it has not reviewed or asked to see the detailed records requested by NBC Bay Area Investigative Unit.

When questioned in downtown San Jose, CEO , Richard Roth, maintained, he would not release the records, because current law does not require him to do so.

"It’s our legal right and you’re asking us to abrogate that and do something special,” Roth said, “there’s no reason for what you’re asking for, we’re doing a good job here.”

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