After initial concerns of drought in Connecticut just a few months ago, we have since seen nearly four times the normal amount of precipitation just this month, more than 19 inches of rain has fallen in one of our communities.
We belong to a collaborative that created a plan to protect nearly 1,000 acres of forests in the Santa Cruz Mountains.
The collaborative was awarded a $7.5 million CAL FIRE Grant to fund a plan, which is designed to protect water sources, establish fire resilient ecosystems and promote the long-term sequestration of carbon.
In Connecticut, we're in discussions with six communities about the preservation of more than 100 acres of land as protected open space.
On June 9, Valley Water, our wholesale water supplier declared a water shortage emergency and asked its retailers including San Jose Water to reduce consumption by 15% compared to 2019 usage.
On June 18, we asked the California Public Utilities Commission or CPUC to activate Stage 3 of our water shortage contingency plan, which calls for 15% mandatory conservation.
Connecticut Water will now be able to encourage conservation by charging a higher tariffs for water when residential customers use more than an average of 200 gallons per day.
It still provides for a 15% reduction on the water bill for qualifying customers.
More than $1.1 billion federal will be available to states to pay water and wastewater bills on behalf of low-income residents.
Second quarter revenue was $152 million, a $5 million or 3.4% increase over reported second quarter 2020 revenue of $147.2 million.
Net income for the second quarter was $20.8 million or $0.69 per diluted share.
This compares with $19.7 million or $0.69 per diluted share for the second quarter of 2020.
Diluted earnings per share for the quarter is primarily driven by cumulative rate increases of $0.14 per share, $0.11 per share due to release of the $3 million TWA purchase price holdback and increased usage of $0.05 per share.
These increases were partially offset by an increase in administrative and general expenses of $0.15 per share, a decrease in California surface water production of $0.07 per share and increased production costs of $0.07 per share due to higher customer usage.
Turning to our comparative analysis for the quarter, the $5 million increase in revenue was primarily due to $3.6 million in cumulative rate increases, 1.3 million in increased customer usage and $0.7 million from new customers.
Water production expense increased $2.8 million compared to the second quarter of 2020.
The expense increase includes $1.9 million for the purchase of additional water supply necessary to replace the low volume of California surface water and $1.8 million due to higher customer usage.
These increases were partially offset by a $700,000 decrease in lower average unit water production costs.
As stated in our first quarter earnings call, in 2021, we anticipated producing 2.5 billion gallons of surface water from our California Watershed, which is representative of our 10-year average surface water production and consistent with the volume authorized in our 2019 California general rate case.
For the first half of 2021, we experienced minimal rainfall and produced less than 260 million gallons of surface water.
The incremental cost to supplement this shortfall was approximately $4.6 million per billion gallons.
This replacement cost estimate includes the 9.1% July 1 rate increase implemented by Valley Water.
Other operating expenses increased $5.6 million during the second quarter, primarily due to a $3.6 million increase in general and administrative expenses, a $1.3 million increase in higher maintenance expenses and depreciation expense of $800,000.
Other income includes the $3 million purchase price holdback received from CBRE in the 2021 second quarter upon satisfaction of remaining conditions on the Company's 2017 sale of TWA.
The effective income tax rate for the second quarter was 14% compared to 18% for the second quarter of 2020.
Turning to the first six months of 2021, revenue was $267 million, a 2% increase over the same period last year.
Net income for the first six months of 2021 was $23.4 million or $0.79 per diluted share, compared to $22.1 million or $0.07 per diluted share during the same period a year ago.
Diluted earnings per share for the year was primarily due to rate increases that contributed $0.23 per share, the TWA purchase price holdback that contributed $0.11 per share, non-regulated income of $0.06 per share and tax benefits that contributed $0.05 per share.
These increases were partially offset by an increase in general and administrative expenses of $0.11 per share, a decrease in California surface water production of $0.10 per share, an increased depreciation expense of $0.10 per share and a decreased production cost of $0.06 per share due to lower customer usage.
Our 2021 year-to-date increase in revenue was primarily due to $6.4 million in cumulative rate increases and $1.1 million from new customers.
This increase was partially offset by a decrease in customer usage of $1.5 million, winter storm customer credits in our Texas service area of $800,000 and a decrease in the recognition of certain regulatory mechanisms in Connecticut and Maine of $800,000.
Water production expenses increased $2.6 million in the first half of 2021.
The increase was primarily due to $2.7 million from decreased surface water in California and $1.7 million in higher customer usage.
These increases were partially offset by a $1.5 million decrease in lower average per unit water supply costs.
Other operating expenses increased $7.2 million in the first half of 2021, primarily due to a $2.8 million increase in depreciation expense, $2.8 million in higher general and administrative expenses and $1.4 million in higher maintenance expenses.
Turning to our capital expenditure program, we added $53.4 million in company-funded utility plant in the second quarter of 2021, bringing total funded additions for the first half of the year to a $100.1 million.
We are on track to add approximately $239 million to utility plant in 2021, consistent with our 2021 construction budget.
Our first half 2021 cash flows from operation increased approximately $34.8 million over the same period in 2020.
The increase was primarily due to an increase in collections from accounts receivable and accrued unbilled utility revenue of $15.3 million, payments of amounts previously invoiced and accrued of $7.3 million and an increase due to net changes in balancing and memorandum accounts of $5.7 million.
In addition, we made an upfront payment of $5 million in the prior year in connection with our city of Cupertino service concession agreement that did not recur in the current year and general working capital and net income adjusted for non-cash items increased $1.5 million.
At the end of the quarter, we had $121.5 million available on our bank lines of credit for short-term financing of utility plant additions and operating activities.
The average borrowing rate on the line of credit advances during the first six months of 2021 was approximately 1.39%.
As Jim just mentioned, we've already invested approximately 42% of our planned 2021 capital spending through the end of the second quarter.
We're seeking a modest revenue increase of $6.4 million.
The application also includes an increase in the return on equity from our currently authorized 8.9% to 10.3%, an increase in the equity portion of our capital structure and the proposed decrease in our cost of debt.
The CPUC see continues to process our 2022 to 2024 general rate case application that requests a $435 million capital program and $88 million increase in revenues over three years.
If approved by the CPUC, we anticipate a capital program of approximately $100 million spread over the next four years.
The California Commission also authorized a revenue increase of $17.3 million effective on July 1, 2021 to recover our wholesaler's water rate increase of 9.1%.
About 48 hours ago, the Connecticut PURA approved an increase of $5.2 million in annual revenues, which is an increase of about 5.1%.
The $40 million in capital investments that were removed from this case were done so on the basis of timing, not prudence.
Our next WICA filing is planned now for October 2021 and is expected to include approximately $18 million of completed projects.
The statute allows for filings every six months, up to a 5% increase in the annual surcharge with a 10% cap between general rate cases.
There are other aspects of the decision that were favorable and significant such as the authorization of the capital structure, consisting of 53% equity.
Taking into account the current decision, our forecasted earnings remain within our guidance of $1.85 to $2.05 per share, but are trending toward the lower half of the range.
There has been significant progress on both the construction and the regulatory treatment for Maine Water's $60 million water treatment project.
The new facility along the Saco River will replace its 1884 vintage drinking water treatment plant.
The utilities provide water service to approximately 4,000 people through 1600 service connections in Bandera and Medina counties.
If approved by the Texas Commission, this would be the 14th acquisition for SJWTX since 2006.
Through organic growth and acquisitions, we have more than tripled the number of our service connections to over 21,000.

Summary:
Net income for the second quarter was $20.8 million or $0.69 per diluted share.
This compares with $19.7 million or $0.69 per diluted share for the second quarter of 2020.
Taking into account the current decision, our forecasted earnings remain within our guidance of $1.85 to $2.05 per share, but are trending toward the lower half of the range.