SAN JOSE — Monthly water bills are headed higher by more than $3 a month on average under a San Jose Water proposal that’s been approved by state regulators.

“For the average monthly customer, it works out to an increase of $3.67 in their monthly water bills,” said John Tang, a spokesman for SJW Group, the holding company that owns San Jose Water.

The monthly bill for the typical customer is increasing about 3.7 percent after the water division of the state Public Utilities Commission approved the San Jose Water proposal.

San Jose Water serves about 229,000 customers in an area that contains 1 million residents, according to SJW Group’s most recent annual report filed with the Securities and Exchange Commission.

Why are water bills headed higher? San Jose Water was allowed to pass along to its customers a portion of a 9.6 percent increase in wholesale water rates that has been imposed on it by Santa Clara Valley Water District.

“The main reason we raised our rates is to fund infrastructure repair and replacement,” said Darin Taylor, chief financial officer with the Santa Clara Valley Water District. “We have several major projects underway, including the retrofit of Anderson Dam.”

The Anderson Dam retrofit project alone is estimated to cost $450 million.

The service territory of San Jose Water includes about 80 percent of San Jose, as well as Saratoga, Los Gatos, Monte Sereno, Campbell and a portion of Cupertino. (The San Jose areas that the company doesn’t serve include the south side of the Bay Area’s largest city and a section of the east side.)

San Jose Water said it’s facing higher costs totaling $12.4 million that it needs to offset with greater revenue from its retail customers. These include $7.3 million in higher costs for buying wholesale water, $4.9 million in higher ground water charges and $206,000 in higher costs for buying recycled water.

Some customers, however, are unhappy about the rate increases by San Jose Water.

“It’s dismaying that during a drought, when we were conserving, our water bills went up and up and up,” said Saratoga City Councilman Rishi Kumar, who is spearheading efforts to oppose San Jose Water’s push for higher monthly bills and surcharges. “Bills are abnormally high so far in 2017. And San Jose Water is pushing for more rate increases.”

Over the one-year period that ended in March, SJW Group earned $53.1 million on revenue of $347.6 million.

The PUC’s water division, which approved the new higher bills, noted that protests were lodged against the proposal.

“Protests were received from numerous customers of San Jose Water,” Bruce DeBerry, program manager of the PUC’s water division, wrote in a letter to the water company that confirmed the unit’s approval. The full PUC wasn’t required, in this instance, to act on the surcharge request. DeBerry added, “The majority of the protests” described the proposal as “unjust, unreasonable, or discriminatory.”