San Jose Water Announces CPUC Decision on WCMA Recovery

San Jose Water, a wholly owned subsidiary of SJW Group (NYSE: SJW), today was denied recovery of its 2018 Water Conservation Memorandum Account (WCMA) balance by the California Public Utilities Commission (CPUC). In making its filing, the company believed the recovery was supported by CPUC and State policies, along with past CPUC decisions approving recoveries for San Jose Water for the years 2014-2017.

The filing relates to an under-collection of revenue as a result of water conservation measures established by the State of California and Valley Water (water resources management agency for Silicon Valley) that were implemented by San Jose Water during the period of January 1, 2018 through December 31, 2018. The conservation efforts resulted in actual sales that were lower than authorized sales. The CPUC decision has determined this revenue is unrecoverable from San Jose Water customers.

“Although we are disappointed with the CPUC’s ruling, we remain committed to conservation programs and our role in protecting the environment. This remains a priority as we continue to invest in infrastructure — which is critical to ensuring reliable water service. Our goal, as always, is to deliver safe, life-sustaining water that protects public health, supports economic development, and provides a high quality of life for our customers,” said Eric W. Thornburg, CEO of San Jose Water.

As previously reported, SJW Group had fully reserved the $9.2 million recorded balance in the 2018 WCMA as of September 30, 2019, and established a $1.5 million reserve against the amounts recorded in the 2019 WCMA account. SJW Group anticipates that future financial results are less likely to be impacted by the situation that necessitated the WCMA filing. San Jose Water’s final decision on its 2018 General Rate Case covering the years 2019 thru 2021 lowered authorized sales to a level that aligns more closely with current actual consumption. In addition, a shift in cost recovery allowing 40% of total revenue to be collected through the fixed charge, provides a realistic opportunity for the company to earn its authorized rate of return.

About SJW Group

SJW Group is the third largest investor-owned pure play water and wastewater utility based on rate base in the United States, providing life-saving and high-quality water service to nearly 1.5 million people. SJW Group's locally led and operated water utilities - San Jose Water Company in California; Connecticut Water Company, Avon Water Company and Heritage Village Water Company in Connecticut; Maine Water Company in Maine; and SJWTX, Inc. (dba Canyon Lake Water Service Company) in Texas - possess the financial strength, operational expertise and technological innovation to safeguard the environment, deliver outstanding service to customers and provide opportunities to employees. SJW Group remains focused on investing in its operations, remaining actively engaged in its local communities and delivering continued sustainable value to its shareholders. For more information about SJW Group, please visit www.sjwgroup.com.