San Francisco Public Utilities Commission Meeting - March 22, 2022

The San Francisco Public Utilities Commission (SFPUC) held a regular meeting on Tuesday, March 22, 2022, at City Hall. Commissioners addressed a range of issues including the ongoing drought, water supply reliability, a drought surcharge, capital improvement programs, green infrastructure grants, and a contract authorization for electrical distribution work. The meeting included public testimony from representatives of environmental groups, ratepayers, and community members.

Consent Calendar

• Item 10 (Consent Calendar): The Commission unanimously approved the consent calendar, which included:
  • Acceptance of work performed by Buhler Construction for Golden Gate Avenue Roof Access and Fall Protection.
  • Approval of a 210-day increase to the construction duration contingency for the Mariposa Dry Weather Pump Station Improvements with Western Water Constructors, Inc.

Public Comments & Testimony

• General Public Comment (Item 5):
  • A caller urged the SFPUC to ensure vendors comply with sanctions on Russia, specifically citing Emerson Electric's work with the PUC.
  • A speaker advocated for kitchen electrification, citing electric cooking on Navy submarines, and asked for help with electric vehicle charging infrastructure.
  • A caller offered an indigenous perspective on land stewardship and criticized historical dispossession.
  • Peter Dreckmeier (Tuolumne River Trust) expressed disappointment that a follow-up on drought workshops and vulnerability assessments had not been agendized in five months. He noted that only 578 salmon returned to the Tuolumne River last fall, calling it a crisis. He said the PUC is not prioritizing the issue.
  • David Pilpel reported he was unwell but stated he believes the water quality is excellent and thanked staff.
  • Another caller criticized the PUC for lack of accountability and transparency on community benefits, requesting a meeting with the community benefits manager.
• Item 6 (Communications): A caller supported the water heating system memorandum and non-potable water systems, emphasizing water and energy savings.
• Item 7 (BAWSCA Update): Peter Dreckmeier responded to BAWSCA's presentation, arguing that the 50% rationing figure is based on inflated demand projections (255 MGD vs. current demand) and that the Bay Delta plan is the correct path, not voluntary agreements. He claimed the SFPUC has enough water in storage for 4.5 years.
• Item 8A (Drought Conditions): Peter Dreckmeier noted the SFPUC has enough water in storage to last 4.5 years, questioned the need for a drought surcharge, and argued that conservation does not benefit the Tuolumne River because conserved water is stored behind dams.
• Item 8B (Drought Surcharge): Peter Dreckmeier raised concern that customers will be penalized for conserving water when the agency has ample storage.

Discussion Items

• Item 3 (Hybrid Meeting Renewal): The Commission unanimously adopted renewed findings under state urgency legislation to allow hybrid in-person meetings during the COVID-19 emergency and directed staff to agendize a similar resolution within 30 days.
• Item 4 (Approval of Minutes): The minutes of the March 8, 2022 meeting were approved unanimously.
• Item 6 (Communications): Commissioner Jamy acknowledged the district-scale water reuse and water heating system memos. Steve Ritchie (AGM for Water) responded to a question about homeowner communications on lead pipes, stating the agency provides lead-free faucets and sends notices about continuous water consumption (leaks). Commissioner Maxwell reported receiving such a leak notice and found it effective. Ritchie said the agency is considering developing a mobile app for customer water use data but it has been low priority.
• Item 7 (BAWSCA Update): Nicole Sandkulla (CEO of BAWSCA) presented an update. She highlighted that the SFPUC has a perpetual obligation to provide up to 184 million gallons per day to BAWSCA members, who pay over $270 million annually. She warned that the State Water Board’s Bay Delta plan could force up to 50% rationing for water users during multiple drought years, which she called catastrophic. She urged the SFPUC to resolve Tuolumne River issues through voluntary agreements to avoid legislative intervention. She stated that the governor and state board support voluntary agreements and asked for the Commission’s plan to meet state requirements.
• Item 8 (General Manager’s Report):
  • 8A – Drought Conditions (Steve Ritchie): Ritchie reported that statewide drought persists, Hetch Hetchy Reservoir is likely to fill but the entire storage system is unlikely to fill. The state water board has sent curtailment letters to 2,000 water rights holders. SFPUC’s total demand reduction from January 1 to March 3 was about 7%, with a target of 10% system-wide reduction from FY 2019-20 demand. Summer water use reduction is critical; the goal is to keep demand below 200 million gallons per day. Ritchie noted that Governor Newsom’s call for 15% reduction from calendar 2020 was not well thought out. The agency is coordinating with the rafting community on flow releases. Commissioner Jamy asked about the impact of early snowmelt and reservoir management; Ritchie said they run daily scenarios and expect 10,000 acre-feet of runoff in the coming days. Commissioner Jamy also requested a tutorial on the water bank.
  • 8B – Drought Surcharge Update (Charles Pearl & John Cote): Pearl explained the 5% retail water and wastewater drought surcharge effective April 1, 2022. The surcharge is temporary and intended to be net-neutral if customers conserve. Projected revenue shortfalls: $36 million for water enterprise (9% below budget) and $30 million for wastewater (4% below budget). Cost savings and fund balance will cover part of the gap; the surcharge will offset about $3 million for water and $4 million for wastewater this fiscal year. John Cote described the outreach campaign: a web portal, bill inserts, social media (Facebook, Instagram), Muni bus ads, and multilingual print/radio ads in Chinese, Filipino, and Spanish. Website traffic has more than doubled. Commissioner Jamy requested metrics on effectiveness, including calls to customer service and Google search trends. Commissioner Maxwell asked about monitoring workforce development in the Green Infrastructure Grant Program.
  • 8C – Hetch Hetchy Capital Improvement Program (Katie Miller): Miller reported $134 million spent (24% completion), 10 projects in pre-construction, 7 in construction. The first mountain tunnel shutdown was completed successfully. Key project milestones: Moccasin Dam alternative analysis chose an auxiliary spillway; Tesla Valve House received valves; Mountain Tunnel shaft dug to 70 feet. No new cost variances.
  • 8D – Wastewater Enterprise Quarterly Report (Steve Robinson): Robinson reported 48% completion of the 70-project program ($3.65 billion). Highlights: Ocean Beach sand placement (short-term improvements) with regrading of steep slopes; Taraval sewer segment B awarded. For the Southeast area major projects: biosolids digester bids were at or below estimates; headworks facility is seeing above-ground concrete work; community center is fully enclosed with interior and landscaping underway. Commissioner Jamy asked about digital control and remote access for new facilities; Robinson said the distributed control system (DCS) project is underway to integrate modern technology. Commissioner Maxwell requested that acronyms be spelled out in presentations.
• Item 11 (Sewer Inspection Contract): The Commission approved awarding contract WW675 (5th-18th Upper Larkin Street sewer inspection) to Pipe and Plant Solutions Inc. for approximately $2.2 million. The low bidder (Red Zone Robotics) was deemed non-responsive. Two bids were received; the engineer’s estimate was $2.2 million.
• Item 12 (Green Infrastructure Grant Program): Greg Norby presented modifications to the grant guidelines. Based on previous Commissioner feedback, workforce development will be retained as a ranking criterion (staff had proposed removing it due to low uptake). Staff described proactive outreach and a new competitive cycle that will score applicants based on how many co-benefits they address. Commissioner Maxwell asked about monitoring and ensuring applicants prioritize workforce development; staff committed to communication and performance monitoring.
• Item 13 (State Revolving Fund Loan for Mountain Tunnel): The Commission authorized the General Manager to execute an installment sale agreement for up to $238,218,951 from the Drinking Water State Revolving Fund at an interest rate of approximately 1.1% (half the California GO bond rate). This is expected to save $130 million in ratepayer costs over 30 years. A cost-sharing agreement with the Power Enterprise for $65 million was also approved. Commissioner Maxwell asked about interest payments; Pearl clarified interest begins one year after the first draw.
• Item 14 (Electrical Distribution Contract Negotiation): The Commission authorized the General Manager to negotiate with qualified contractors for contract PW009R (as-needed electrical distribution installation and construction support) after two competitive bids received no responses. Barbara Hale (AGM for Power) cited a workforce shortage for journey-level line workers and difficulty recruiting. Despite modifying general conditions based on contractor feedback, no bids were received. The item allows direct negotiation; any contract award will return to the Commission. Commissioner Paulson voted no, expressing concern about going outside the normal competitive process, though he acknowledged the urgency. The motion passed 3-1.

Key Outcomes

• Approved unanimously (Items 3, 4, 10, 11, 12, 13):
  • Hybrid meeting renewal.
  • March 8 meeting minutes.
  • Consent calendar.
  • Sewer inspection contract award (Pipe and Plant Solutions).
  • Updated Green Infrastructure Grant Program guidelines (retaining workforce development criteria).
  • State Revolving Fund loan for Mountain Tunnel project ($238 million) and cost-sharing with Power Enterprise.
• Approved 3-1 (Item 14): Authorization to negotiate with qualified contractors for as-needed electrical distribution services; Commissioner Paulson opposed.
• Closed Session: The Commission met in closed session regarding litigation on water right curtailments. No action was taken, and discussions were not disclosed.