SAN JOSE -- Customers of San Jose Water Company face a sharp increase in monthly bills following the state Public Utilities Commission's approval Thursday of a long-delayed rate hike.
The decision will result in a 15 percent increase in monthly water bills through the end of this year, with a further unspecified increase planned for 2015, according to John Tang, a spokesman for San Jose Water.
About 1 million residents living in central and west San Jose, a small portion of north San Jose, as well as Saratoga, Campbell, Los Gatos, Monte Sereno and half of Cupertino are affected by the rate increase approved by the five-member PUC.
"We sought the increase because of the need to replace infrastructure," said John Tang, a spokesman for San Jose Water. "We are replacing pumps, tanks, pipes, wells and so forth."
The protracted drought in California wasn't a factor behind the rate increase. San Jose Water had filed a proposal for higher rates in early 2012, but the PUC had delayed its decision. Under Thursday's ruling, the utility will be able to raise about $47 million in additional revenue through the higher rates.
The average monthly water bill for a residential customer of San Jose Water is $70. It was not immediately clear how quickly the new rates will show up in consumers' bills.
"We're not sure what the actual impact on monthly bills will be because we have to collect this retroactively," Tang said.
The rate increase came about in part because customers of San Jose Water have been conserving, which reduces revenue for the utility. The company has fixed costs regardless of water usage, such as the expense of maintaining pipelines and other equipment.
The PUC's Office of Ratepayer Advocates, in a previous filing, protested the concept of raising customers' bills to compensate for revenue losses from conservation efforts.
"Customers who have exercised diligence in achieving conservation should not be penalized for the results of those efforts," Richard Rauschmeier, a project manager for the Office of Ratepayer Advocates, wrote in his filing on the case.
The PUC didn't directly address that complaint but approved a much small rate hike than the utility had requested. Under San Jose Water's original proposal, rates would have risen by a cumulative 40 percent, according to a regulatory filing with the PUC.
San Jose Water customers won't have much of a breather from higher bills, even after the full effects of the higher rates approved on Thursday are in place.
"In accordance with the law, we will be filing a proposal for a new rate increase for the years 2016, 2017 and 2018," Tang said. That proposal is expected to be disclosed in January.
Contact George Avalos at 408-859-5167. Follow him at Twitter.com/georgeavalos.