San Francisco Public Utilities Commission Meeting - September 28, 2021

The San Francisco Public Utilities Commission (SFPUC) held a virtual meeting on September 28, 2021, presided by President Sophie Maxwell. The meeting covered a wide range of topics including budget and rate proposals, climate programs, drought conditions, audits, contract approvals, and the appointment of a new general manager. Key actions included approval of a revised CleanPowerSF rate-setting methodology, a battery storage contract amendment, an affordable housing interconnection agreement with PG&E, and the employment contract for new General Manager Dennis Herrera.

Consent Calendar

• Approved minutes of September 14, 2021 (5-0).
• Approved item 9a (AECOM electrical engineering services) and item 9c (Ronan Construction work acceptance) (5-0).
• Approved item 9b after severance from consent: a 365-day extension for the Auxiliary Water Supply System Pump Station No. 2 contract, bringing total duration to ~1,800 consecutive days, with no cost change (5-0). Commissioners expressed concern over multiple modifications and presentation clarity.

Public Comments & Testimony

• General public comment: Francisca Constant urged the commission to address salmon deaths and release water to the Tuolumne River, warning of extinction.
• Item 5 (Communications): David Pilpel thanked staff for reports and noted captioning issues.
• Item 6 (BAWSCA): A caller criticized water leaks and lack of reporting on pipeline replacements.
• Item 7a (Audit): A caller condemned the commission for ignoring past investigations and called for true accountability.
• Item 7b (Budget): Two callers: one requested data sharing with universities for youth engagement; another (David Pilpel) asked that presentation slides be posted online for public access.
• Item 9 (Consent): A caller urged severing item 9b; David Pilpel noted minor clerical issues; another alleged nepotism involving AECOM and ex-commissioner relatives.
• Item 10 (GM Contract): David Pilpel recommended salary not exceed $270,000 and reduced severance; another caller criticized the process as preordained.
• Item 12 (Project Pull): David Pilpel noted a typo; Mark Eifram, a program alumnus, spoke in strong support, emphasizing professional development and diversity.
• Item 13 (Battery Storage): A caller supported the investment; another criticized lack of local business enterprise (LBE) participation on the $220M contract; David Pilpel praised staff innovation.
• Item 14 (Rates): A caller (likely Alita Dupree) agreed that a rate increase was necessary to maintain program viability but urged competitiveness; David Pilpel requested a written rate fairness board recommendation and commended staff.

Discussion Items

• Item 5 Communications – Climate Program Update: Commissioner Jami and other commissioners discussed cross-enterprise collaboration. David Bihar, Climate Program Director, reported that the Climate Change Coordination Committee continues work on a climate policy with nine platforms. Commissioner Harrington requested a timeline for implementation.
• Item 5 Communications – Water Supply Conditions: Assistant General Manager Steve Ritchie reported that state curtailments effectively lock the water bank (360,000 acre-feet), reducing usable storage. Staff is preparing a water shortage emergency declaration for the November meeting.
• Item 5g – Capital Improvement Program Quarterly Report: Staff presented three key reporting improvements: budget/schedule trend summary, cost summary table comparing quarterly changes, and project performance summary with 10% cost overrun/schedule delay threshold (gray shading).
• Item 6 – Bay Area Water Supply and Conservation Agency (BAWSCA) Update: CEO Nicole Tancula reported July 2021 total potable water use in the BAWSCA region was 5% less than July 2020 and 20% less than July 2013. Average daily residential use was ~83 gallons per person, up from the prior drought low of 73 gpcd.
• Item 7a – Quarterly Audit and Performance Review: Deputy CFO Charles Pearl reported that of 37 audits planned for FY21, 31 (84%) were completed or underway. A new multi-year audit plan for FY22-24 includes an integrity assessment focused on contracting and procurement controls related to the former general manager's federal charges. Commissioner Moran called for broader business sufficiency assessments of HR, construction contracting, and procurement.
• Item 7b – FY 2022-23 and 2023-24 Budget Introduction: CFO Eric Sandler presented a two-year budget kickoff. Highlights: the combined water/wastewater bill for average single-family homes grew from $62 in 2010 to $151 in 2022 (7.6% CAGR). Proposed retail water and wastewater rate increases: 0% in FY23 and ~6% in FY24, pending a comprehensive rate study. The budget is driven largely by capital investments and CleanPowerSF growth. Staff emphasized affordability, racial equity, and workforce development.
• Item 9b – AWSS Pump Station No. 2 Extension (Consent Calendar): Staff requested a 365-day extension for electrical equipment procurement. Commissioners questioned the need and seven prior modifications. After staff explained field conditions and long lead times, the motion passed 5-0.
• Item 10 – Employment Contract for General Manager: The commission approved a five-year contract for Dennis Herrera, effective November 1, 2021, with a base salary of $395,000 (supported by a salary survey), benefits per MEA MOU, 20 days supplemental management leave, and one-year severance if terminated for convenience. The commission thanked Acting General Manager Michael Carlin for his leadership.
• Item 12 – Project Pull Citywide Internship Program: Approved a $4 million, four-year contract with Japanese Community Youth Council (JCYC) as sole respondent. Program has served 1,500 interns over 26 years.
• Item 13 – CleanPowerSF Battery Storage Amendment: Approved adding battery storage to the existing Blythe solar contract for an additional $83 million over 19 years (total $220M). Benefits include dispatchability, quadrupling resource adequacy capacity, and reducing reliance on fossil fuels. The project supports the 2020 Integrated Resource Plan.
• Item 14 – CleanPowerSF Rate-Setting Methodology: Approved a revision from 5% to 15% above comparable PG&E rates, effective November 1, 2021 through June 30, 2022. Staff explained cost pressures from volatile energy markets and delayed PG&E rate increases. The average residential customer would see about $5/month more (6% on total bill). Staff will launch a digital engagement campaign to underscore the program's green value. The vote was 4-1 (Commissioner Paulson dissented, expressing concern about affordability).
• Item 15 – PG&E Affordable Housing Interconnection Agreement: Authorized the GM to execute a 10-year agreement with PG&E to allow secondary voltage connections for ~20 city-sponsored 100% affordable housing projects (2,100 units, 13 MW). The agreement resolves a dispute over tariff administration and requires Board of Supervisors and FERC approval.

Key Outcomes

• Approved employment contract for Dennis Herrera as General Manager (5-0).
• Approved revised CleanPowerSF rate-setting methodology (4-1).
• Approved battery storage amendment for Blythe solar (5-0).
• Approved PG&E affordable housing interconnection agreement (5-0).
• Approved all Consent Calendar items except 9b was severed and separately approved.
• Approved Project Pull internship contract (5-0).
• Staff to post budget presentation slides online per public request.
• Staff to return in October with a detailed water supply/drought briefing and a water shortage emergency declaration proposal.
• Climate policy implementation timeline to be added to the advance calendar.
• Commission will hold budget hearings in November and December, with adoption targeted for February 2022.