The San Jose Water Company—an investor-owned utility that serves more than a million people in the South Bay—plans to merge with a smaller counterpart on the East Coast. But consumer advocates want regulators to review the pending acquisition of the Connecticut Water Service Company to determine how the $750 million deal will affect customers in Silicon Valley.

Now San Jose city officials are joining the call for greater scrutiny. In a letter up for discussion at Tuesday’s City Council meeting, Mayor Sam Liccardo and council members Don Rocha and Johnny Khamis urge the California Public Utilities Commission to analyze the merger on behalf of ratepayers.

“As the mayor of San Jose, America’s 10th largest city, I have concerns about the proposed ‘merger of equals’ between San Jose Water Group (SJW Group)—the holding company for San Jose Water Company (SJWC), which serves nearly 80 percent of San Jose’s residents and businesses, along with many of our neighboring cities—and Connecticut Water Service Company,” Liccardo writes. “Specifically, I express concerns about potential harms to San Jose’s one million residents, and I request that you require that SJWC and SJW Group file an application for the merger to be reviewed by the California Public Utilities Commission. I seek the commission’s determination of whether this merger serves the public interest prior to allowing the merger to proceed.”

A consumer advocacy group called WRATES (Water Rate Advocates for Transparency, Equity and Sustainability) raised a number of concerns about the proposed merger at a council subcommittee meeting last week. First and foremost, the group believes that the deal will make it more difficult for the CPUC to regulate the water company as revenues earned in San Jose get siphoned off to other subsidiaries or the parent corporation.

Liccardo, Rocha and Khamis say the San Jose utility’s incessant rate increases and past missteps—such as overcharging customers by at least $1.8 million in recent years—beg for additional oversight.

“We appreciate that SJWC’s executives and equity owners may have strong financial incentives to consummate this merger,” Liccardo states in his letter. “SJWC’s customers, however, deserve assurance that the proposed merger with a company 3,000 miles away will provide verifiable benefits to the more than 200,000 families and businesses served by SJWC. Only with the commission’s leadership and objective inquiry can we have assurance that our communities will benefit from the proposed merger, so I respectfully request that the commission exert its jurisdiction over the matter.”

Khamis noted at last week’s Rules and Open Government Committee session that even he, one of the most business-friendly members of the council, understands the need to put the merger under a microscope.

“These are monopolies,” he said, “and when they merge we have even less choice.”

Just last month, a pair of Republican legislators from Southern California requested an audit of the CPUC in response to customer complaints about unsustainable rate increases. The proposal by State Sen. Scott Wilk and Assemblyman Tom Lackey won unanimous approval on May 18 from the California Join Legislative Audit Committee.

“The CPUC has consistently let down the people of this state with its regulatory practices,” Wilk said after the vote. “The current rate-setting process lacks transparency and does not adequately engage the public. This audit will pull back the veil and expose what’s really going on inside the CPUC and what accounts for the skyrocketing water rates customers are experiencing all over the state.”

More from the San Jose City Council agenda for June 5, 2018:

• The council will consider offering a developer a $4.4 million subsidy on an 18-story mixed-use project called Aviato at North San Pedro.

WHAT: City Council meets
WHEN: 1:30pm Tuesday
WHERE: City Hall, 200 E. Santa Clara St., San Jose
INFO: City Clerk, 408.535.1260