San Francisco Public Utilities Commission Meeting - May 24, 2022

The San Francisco Public Utilities Commission (SFPUC) held a regular meeting on May 24, 2022, at 9:30 AM. The Commission addressed a range of items including drought declarations, power rate adoptions, real estate leases, and routine approvals. All voting items passed unanimously with three commissioners present (President Moran, Commissioner Maxwell, Commissioner Paulson; Vice President Ajami excused).

Consent Calendar

• Item 10a: Approved appointment of Commissioner Newsha Ajami as Alternate Commissioner on the San Joaquin Tributaries Authority Commission.
• Item 10b: Awarded Job Order Contract No. JOC-88 for general engineering construction in four counties, with a total contract amount not-to-exceed $5,000,000.
• Item 10c: Approved a $2,700,000 increase to cost contingency and a 74-calendar-day extension for Contract No. WW-682R (Southeast Community Center).

Public Comments & Testimony

• Peter Dreckmeyer (Tuolumne River Trust): Urged the Commission to improve the advance calendar by including request dates and expected fulfillment dates; noted outstanding requests from November 9, 2021 (environmental metrics) and February 22, 2022 (workshop schedule). Supported Bosca’s request for a water supply security plan.
• Nate Rangel (California Outdoors): Seconded Mr. Dreckmeyer’s comments on the advance calendar.
• Unnamed caller (dayus, former Commissioner Ed Harrington): Noted that 30 years ago the PUC had no debt, but now the PUC’s deputy CFO manages a $6 billion debt portfolio; questioned city liability if the PUC defaults on revenue bonds; urged the PUC to report on the closed meeting with Governor Newsom.
• Jeremy Pollock (San Francisco LAFCO): Requested renewal of the MOU between LAFCO and the PUC, originally established in 2009 for CleanPowerSF oversight.
• Ms. Sancula (Bosca – Bay Area Water Supply and Conservation Agency): Requested a plan to protect the Tuolumne River water supply for 1.8 million residents, 40,000 businesses, and hundreds of communities; asked for urgency and involvement in negotiations with the state.
• Dave Warner (Palo Alto): Noted that at a recent Bosca board meeting, 21 public speakers opposed Bosca’s legal work against the Bay Delta plan and FERC licensing, and the assessment increase to fund litigation passed despite no public support.
• Public comment on item 8C (budget): Peter Dreckmeyer reminded the Commission that a 10% rate increase leads to roughly a 2% demand decrease, and with Bosca rates rising 30% over two years, demand is unlikely to reach Urban Water Management Plan projections.
• Public comment on item 8F (GM report): Peter Dreckmeyer thanked GM Herrera for meetings and welcomed the design drought workshop on August 23. Another caller urged listening to the First People (Ohlone) and including them in dialogues.

Discussion Items

• Item 3 & 4 (Hybrid meeting findings & minutes): Adopted renewed findings for hybrid meetings under state urgency legislation; approved minutes of May 10, 2022. (Unanimous)
• Item 6 (Communications): Commissioner Maxwell asked about creation of green jobs related to OneWaterSF; staff committed to exploring quantification.
• Item 7 (Bosca Update): Ms. Sancula reiterated Bosca’s request for a plan to secure water supply. Commissioners asked no questions.
• Item 8A (Drought Update – Steve Ritchie): As of May 16, 2022, Hetch Hetchy Reservoir held 341,000 acre-feet of storage. Total deliveries peaked at 202 MGD; target is ≤200 MGD to achieve 10% reduction. Snowpack nearly gone; precipitation unlikely for rest of May. Governor Newsom’s meeting on May 23 urged urban water agencies to intensify conservation.
• Item 8B (Quarterly Audit – Irella Blackwood): 33 audits in portfolio; 40% completed, 28% in progress. Phase one of revenue bond audit completed with nine open recommendations, target completion by Dec 31, 2022. New audit bureau director welcomed.
• Item 8C (Quarterly Budget – Laura Bush): Projected operating shortfalls for water ($26.6M), wastewater (negative), and CleanPowerSF ($4M) due to drought conservation, COVID economic recovery, and rising power purchase costs. All policy targets for coverage and reserves still met. CleanPowerSF will report new reserve ratio (target ≥50% of operating costs within three years).
• Item 8D (Water Enterprise CIP – Katie Miller): 36 projects with $2.7B total budget; 34% completion. No new cost variances in Q3. Highlighted Harry Tracy Water Treatment Plant ahead of schedule. Stern Grove Festival restored on time and within $20M budget.
• Item 8E (WISIP – Katie Miller): Program 98% complete; only three projects remain in construction. Calaveras Dam Replacement closed out. Delays due to COVID-related procurement issues (lithium-ion batteries, steel, valves). Corrosion discovered on an old steel pipe at Alameda Creek Recapture Project; redesign required via change order.
• Item 8F (GM Report – Dennis Herrera): Announced reinstitution of Bay Area Water Stewards Program (first Zoom meeting June 2, 2022). Scheduled design drought workshop for August 23, 2022 commission meeting. Commended staff for budget work.
• Items 11 & 12 (Power Rate Public Hearings): Staff proposed adopting CleanPowerSF rates for one year (FY23) with decreases below current rates and below PG&E. Hetch Hetchy Power rates for two years (FY23-24), standardizing rate classes and moving toward cost-of-service. Rate Fairness Board Chair Howard Ash endorsed the proposals. Key changes: moving away from PG&E rate tracking; building reserves; 3 cents/kWh annual increase for general-use municipal customers; retail rates capped at 10% annual increase; all proposed rates lower than PG&E. Approved unanimously (Item 11: 3-0; Item 12: 3-0).
• Item 13 (Hungry Kitchens Lease): Five-year lease for food concession at 1550 Evans Community Center, $8,400/year with 3% annual increases. Selected via RFP; Hungry Kitchens scored 93 out of 100. Approved unanimously.
• Item 14 (Parkmerced Easement Termination): Conditional termination of sewer/water easements to allow development; developer to relocate assets into public right-of-way at no cost to city. Approved unanimously.
• Item 15 (Drought Level 2 Declaration): Adopted system-wide water use reduction of 11% compared to FY2019-2020 baseline, moving from Level 1 (voluntary 10%) to Level 2 (mandatory). Retail (San Francisco) reduction remains 5%; wholesale (Bosca) average ~16% (range 7-35%). Takes effect July 1, 2022. Supported by Bosca. Approved unanimously.
• Item 16 (Credit Facility Agreements): Replaced two expiring credit agreements for wastewater interim funding program ($750M total). Competitive bidding resulted in lower fees (TD Bank at 0.22% and Sumitomo Mitsui at 0.30%). Approved unanimously.
• Item 17 (Contract Amendment CS-109): Time-only extension of 18 months (total 13.5 years) with no cost increase for specialized engineering services on recycled water projects, needed for commissioning delay. Approved unanimously.
• Item 18: Continued to next meeting.

Key Outcomes

• Drought Action (Level 2): Commission declared a system-wide water use reduction of 11% effective July 1, 2022, aligning with state executive order N-7-22. Retail customers face no new restrictions; wholesale customers will receive tiered allocation letters. Next step: issue monthly water budgets by August 15.
• Power Rate Adoptions: Approved CleanPowerSF rates for FY23 (one year) and Hetch Hetchy Power rates for FY23-24 (two years), both incorporating cost-of-service principles. Rates are lower than PG&E equivalents.
• Contracts & Leases: Authorized lease with Hungry Kitchens LLC; approved conditional easement termination at Parkmerced; approved two new credit facilities (TD Bank and Sumitomo Mitsui); extended contract CS-109 for recycled water support.
• Workshop Scheduled: General Manager Herrera announced a design drought workshop will be held on August 23, 2022 during the regular commission meeting.
• Bay Area Water Stewards Program: Reinstated, with first kickoff meeting on June 2, 2022 via Zoom.
• Advanced Calendar Improvements: Commissioners acknowledged public requests for better tracking of outstanding items; staff committed to enhancing the advance calendar.

Adjournment: The meeting adjourned at approximately 12:30 PM.