San Francisco Public Utilities Commission Meeting - January 11, 2022

The San Francisco Public Utilities Commission (SFPUC) held a regular meeting on January 11, 2022, via teleconference due to the COVID-19 emergency. The meeting was chaired by President Moran. Key topics included a drought conditions update, results of recent bond sales, a performance audit of the Social Impact Partnership Program, quarterly reports for capital programs, and several consent and regular calendar items. Public comment was heard on multiple agenda items, with speakers addressing drought management, program accountability, and contract concerns.

Consent Calendar

• Items 9a through 9k were approved collectively, with the removal of Item 9f (Contract WD-2729) and Item 9h (Contract WD-2843) for separate consideration. Item 9f was later approved with an amendment correcting a typo in the contract duration.

Public Comments & Testimony

• General Public Comment: Speakers included representatives from the Coalition for San Francisco Neighborhoods (Eileen Bogan), Tuolumne River Trust (Peter Dreckmeyer), and community members. Topics ranged from long-term water vulnerability, drought surcharge optics, LBE program fraud allegations, and calls for renewable energy access.
• Drought Update (Item 7a): David Pilpel recommended submitting the drought monitor later for timeliness. Peter Dreckmeyer noted the SFPUC has ample water storage and urged against alarmism. A caller criticized the agency's focus on human needs at the expense of salmon.
• Bond Sales (Item 7b): David Pilpel asked staff to compare actual interest rates with projections and thanked Rich Morales for his work.
• Social Impact Partnership Audit (Item 7e): Two callers criticized the program, alleging fraud and lack of transparency, with one claiming the audit whitewashed misconduct.
• Wastewater Quarterly Report (Item 7d): A caller questioned cost overruns, linking them to LBE program issues and contractor selection.
• New Commission Business (Item 8): Several callers opposed a proposal to eliminate natural gas appliances, citing feasibility and cost concerns, while others supported electrification.
• Consent Calendar: A caller raised concerns about LBE eligibility for listed subcontractors.
• Item 10-13: David Pilpel requested mapping and environmental review documentation improvements. A representative from the Bay Area Water Supply and Conservation Agency supported the San Bruno MOU.

Discussion Items

• Drought Conditions Update (Item 7a): Assistant General Manager Steve Ritchie reported significant precipitation in late December, with Hetch Hetchy storage 28% above last year. Snowpack is tracking close to 2017 (second wettest year). Water deliveries dropped to 132 MGD. Commissioners discussed the drought surcharge scheduled for April 1, with questions about possibly withdrawing or adjusting it if wet conditions continue. Vice President Jamy suggested reviewing the surcharge timeline and revenue recovery.
• Wastewater and Power Bond Sales Results (Item 7b): Rich Morales presented results. Wastewater bonds (approx. $297M) sold at an aggregate true interest cost of 3.03%. Wastewater notes ($347M) sold at 0.77%. Power bonds ($124M) sold at 2.63%. Commissioners discussed green bond performance; Morales noted green series may have contributed but not definitively in competitive sales.
• Performance Audit of Social Impact Partnership Program (Item 7e): General Manager Dennis Herrera presented the audit's findings (weak internal controls, lack of transparency) and committed to implementing all seven recommendations in 2022. Commissioners praised the response, emphasizing data-driven improvements and best practices. Herrera noted a preliminary review found no disproportionate beneficiaries but pledged further analysis.
• Hetch Hetchy Capital Improvement Program Quarterly Report (Item 7c): Katie Miller reported on changes to reporting format, project status, and the ongoing mountain tunnel shutdown (first of six major shutdowns for construction). 100% of water supply is currently from Bay Area sources. Commissioners commended coordination and COVID safety.
• Wastewater Enterprise Quarterly Report (Item 7d): Stephen Robinson presented updates on major projects. Biosolids forecast increased from $1.68B to $2.37B due to market conditions, supply chain, and schedule changes. Headworks project increased from $619M to $679M. The Southeast Community Center remained on budget and schedule. Commissioners acknowledged challenges and stressed lessons learned.
• New Commission Business (Item 8): Commissioner Harrington proposed studying whether eliminating natural gas appliances in homes (costing $4-5B) could reduce post-earthquake fire risk and GHG emissions, potentially replacing the planned emergency firefighting water system (cost $2-3B). Staff were directed to investigate the idea. Commissioner Maxwell added that state climate funds might be leveraged.
• Item 9f (Contract WD-2729): Susan Howe presented an amendment to accept work and authorize final payment for fish passage facilities in Alameda Creek. A typo in the contract duration was corrected. Approved.
• Items 10-13:
  • Item 10: Approved a no-fee, 10-year right-of-way permit renewal with the National Park Service for radio facilities in Yosemite.
  • Item 11: Approved a MOU with San Bruno for up to $314,500 for an additional 1 MG emergency water storage tank.
  • Item 12: Approved selection of APX Incorporated for power scheduling coordination (up to $136.5M over 5 years). Only one bidder responded; Commissioner Jamy queried the cost increase due to market evolution.
  • Item 13: Approved a MOU with Recreation and Park Department for green infrastructure in McLaren Park, including daylighting half a mile of creek and stormwater reuse for irrigation.

Key Outcomes

• Remote Meetings: Continued for 30 days via adopted resolution (unanimous).
• Consent Calendar: Adopted (items 9a-9e, 9g, 9i-9k) as amended (removing 9f and 9h).
• Contract WD-2729 Amendment: Approved as amended to correct contract duration (5-0).
• Item 10 (Right-of-Way Permit): Approved (5-0).
• Item 11 (San Bruno MOU): Approved (5-0).
• Item 12 (APX Agreement): Approved (5-0).
• Item 13 (McLaren Park MOU): Approved (5-0).
• Social Impact Partnership Audit: All seven recommendations to be implemented in 2022; staff to develop revised policies and report back. No vote required.
• Drought Surcharge: Remains set for April 1; staff to provide updates in February/March for potential reconsideration if wet conditions persist.
• Natural Gas Study: Staff directed to investigate feasibility of eliminating natural gas appliances as alternative to emergency firefighting water system.
• Closed Session: No reportable actions taken.