The for-profit company providing water for six Santa Clara County cities will walk back proposed rate hikes over three years. But watchdogs say the cuts are a sham and residents will still face higher water bills.
San Jose Water Company initially proposed to hike rates by a total of 20% through 2027. A proposed settlement agreement between the company and state Public Advocates Office could slash that to 10%. While that might seem like a win for ratepayers, observers said other increases have taken effect between the time San Jose Water filed its rate hike on Jan. 2 and the settlement proposed on Monday.
San Jose Water’s Jan. 2 proposal aimed to raise average residential rates from $107 to $120 a month in the first year. Rates would now go from $117.91 to $122.94 per month, according to San Jose Water representatives, even if the settlement shrinks the increase. The company serves 1 million customers across San Jose, Cupertino, Campbell, Monte Sereno, Saratoga, Los Gatos and unincorporated parts of Santa Clara County.
“While this rate case was pending, there were other rate changes that had to be reflected as well,” Richard Rauschmeier, program manager of the California Public Utilities Commission’s Public Advocates Office, told San José Spotlight. “The base doesn’t go down, it goes up with those increases. It’s a peculiarity that some jurisdictions are faced with. Here in California, there could be three or four different rate changes occurring all at the same time.”
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Water utilities are required by the state to explain their ongoing costs of providing services every three years. Water companies often take the opportunity to also request rate increases. The state reviews these proposals to ensure fairness.
San Jose Water initially proposed an 11.11% increase in 2025, 3.99% in 2026 and 4.49% in 2027. The proposed agreement modifies that to 3.91% in 2025, 2.55% in 2026 and 2.98% in 2027.
“It’s not a decrease at all,” Patrick Kearns, a member of ratepayer watchdog group Water Rate Advocates for Transparency, Equity and Sustainability, told San José Spotlight.
The group has become an important party in San Jose Water’s general rate case, but has since refused to sign onto the proposed settlement because of the hikes.
“No one is happy when rates increase. San Jose Water employees live in the same San Jose community as our customers and our family water bills are rising, just like yours,” John Tang, SJ Water’s vice president of regulatory affairs and government relations, told San José Spotlight. “When prices increase, it impacts every household, regardless of family income. And for those on a fixed income or economically disadvantaged, the impact can be significant.”
The company’s proposed rate hikes have met opposition, largely in written comments to the utilities commission. Residents argue the for-profit company is more concerned about shareholders than with keeping rates affordable to older adults on fixed incomes and working class families.
Residents across the county are already struggling to keep up and owed San Jose Water a collective $14 million in past due payments between January and March. The company, which services a 140-square-mile area, said that amount is higher than levels seen in pre-pandemic years — a trend utilities are facing nationally.
Tang argued the increase will allow the company to make needed upgrades into the water delivery system.
“For those customers who need financial support, we offer complimentary water check-ups, interest-free payment plans through PromisePay, water conservation materials and a special income-qualified program that provides a 15% discount on the total bill,” Tang said. “We have also secured nearly $17 million in water bill arrearage relief … helping thousands of customers who have fallen behind with their bills. We will continue to look for further opportunities to assist our customers.”
Contact Brandon Pho at brandon@sanjosespotlight.com or @brandonphooo on X, formerly known as Twitter.
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