San Francisco Public Utilities Commission Meeting – January 24, 2023

The San Francisco Public Utilities Commission (SFPUC) held a hybrid teleconference meeting on January 24, 2023, beginning at 9:45 AM. Vice Chair Sophie Maxwell presided, with Commissioners Paulson, Rivera, and Stacy present (President Ajami excused). The meeting covered drought conditions, hiring process improvements, a major power scheduling contract amendment, and approvals for workspace at the new Southeast Community Center. All votes were unanimous (4-0).

Consent Calendar

• Approved three routine contracts: (1) Award of Contract No. WD-2889, As-Needed Water Service Line Replacements, $26,663,850 to JMB Construction, Inc.; (2) Acceptance of work for Contract No. WW-687, Force Main Rehabilitation at Embarcadero and Jackson, total $7,835,217; (3) Approval of a 365-calendar-day increase to contract duration contingency for Contract No. WW-697, As-Needed Main Sewer Replacement No. 8, with JDB & Sons Construction, Inc.

Public Comments & Testimony

• Drought Update (Item 6a): Peter Drekmeier (Tuolumne River Trust) noted the SFPUC has great water rights and expressed concern that excess water is being released rather than kept for environmental flows. Dave Warner (Palo Alto resident) argued the system had over five years of supply at the drought’s low point and highlighted impacts on Tuolumne salmon. Lindy Higgs (Modesto resident) made an emotional plea for a healthier Tuolumne River.
• Hiring Process (Item 6b): One caller alleged corruption and employee targeting at the SFPUC; Peter Drekmeier thanked Commissioner Maxwell for pursuing the issue and urged that information requests be tracked on the advance calendar.
• Water Supply Assessment (Item 9): Peter Drekmeier repeated a call for a joint workshop between the Planning Department and SFPUC to better align water supply and development decisions.
• General Public Comment (Item 15): Multiple speakers (Paul Wormer, Dave Warner, Elliott Hellman, Aliva Dupree, Jennifer Hagee) urged the Commission to approve a proposed MOU with LAFCO to fund studies on green banking, natural gas decommissioning, battery storage, EV charging, and climate action plan implementation. Dave Warner also criticized General Manager Herrera for not fully participating in Bay Area Water Stewards meetings and requested commissioner attendance.

Discussion Items

Drought Conditions Update (Item 6a) – Steve Ritchie, Assistant GM for Water, presented a brightening water supply picture:

• Hetch Hetchy Reservoir storage at 291,000 acre-feet (capacity 360,000), with heavy snowpack making a fill likely.
• Water bank storage is full; Calaveras Reservoir is full and spilling.
• Statewide, Shasta and Oroville reservoirs have recovered significantly (104% and 87% of average, respectively).
• Precipitation at Hetch Hetchy to date exceeds the 1983 wettest-year record line, but the season is not over.
• Bay Area year-to-date precipitation is 5 inches above average.
• Customer demand remains low; the 11% conservation target is being exceeded.
• Final water supply declarations for wholesale customers will be made in mid-April.

Hiring Process Overview (Item 6b) – Wendy Macy, Chief People Officer, outlined SFPUC’s hiring challenges and reforms:

• Hiring is governed by city charter, Civil Service rules, and DHR. The SFPUC’s average time-to-hire (78 days for permanent civil service) compares favorably to other departments but remains a competitive disadvantage.
• Key internal initiatives: prioritization dashboards, lean process improvements (eliminating redundant steps), and an “Exempt to Permanent” program to transition temporary staff.
• SFPUC is advocating for citywide changes: continuous testing cycles and remote testing options to widen candidate pools and increase equity.
• Retention strategies include flexible hybrid work, exit surveys, and engagement surveys.
• Commissioner Maxwell pressed for more detail on baseline vacancy rates, classification-specific issues, and measurable progress; she asked for a follow-up report in late February.

BAWSCA Report (Item 7) – Nicole Sandkulla, CEO of Bay Area Water Supply and Conservation Agency, presented results of a survey of member agencies’ drought response actions:

• Of 26 agencies, 20 have advanced metering infrastructure; 19 enforce two-day-per-week watering schedules; 24 have rebate and conservation programs.
• Unique actions highlighted: Daly City seeking new recycled water customers; Menlo Park implementing a drought surcharge; San Jose banning high-water-use turf and overhead sprinklers in new construction.
• Sandkulla thanked SFPUC staff for skilled management during recent storms and pledged continued coordination.

Power Scheduling Contract Amendment (Item 13) – Barbara Hale, Assistant GM for Power, requested a $636 million increase to Contract No. PRO.0152 with APX Inc (total not to exceed $895,742,800) to cover higher pass-through payments to the California ISO:

• Higher wholesale electricity prices driven by global factors (Ukraine war, natural gas exports, China reopening, supply chain delays) and regional events (September 2022 heat dome).
• The contract’s capacity was being consumed faster than anticipated; a first amendment (executed Jan. 6, 2023) added $125 million to bridge to this regular approval.
• The requested increase is based on forward price projections for 2023–2024.
• No change to contract scope or duration.
• Commissioners noted the irony of a public power agency facing market volatility; staff explained that Hetch Hetchy benefits from selling surplus power at high prices, while CleanPowerSF may require rate increases later in spring.

Southeast Community Center Leases and Licenses (Items 11 & 12) – Rosanna Russell, Real Estate Director, presented approvals for below-market workspace for nonprofits:

• Item 11 (Licenses): Approved two below-market licenses (month-to-month, 18-month max) for Charity Cultural Services (2 workstations) and Five Keys Schools and Programs (1 workstation) at $437/month each (50% of FMV plus service fee). Also approved an amendment to SFPUC Real Estate Guidelines (Section 4.4.1) to delegate authority to the General Manager to approve future similar market licenses for the Community Hub.
• Item 12 (Leases): Approved five-year below-market leases for Third Street Youth Center and Clinic ($3,804/month), Into Action Incorporated ($4,708/month), and Five Keys Schools and Programs ($4,487/month) for a total of 5,771 rentable square feet on the third floor of the Southeast Community Center. Rents are at 50% of appraised FMV with 3% annual escalations.
• The center is attracting strong demand; staff reported a waiting list for programming and that the building is already active.

Key Outcomes

• Item 3: Unanimously adopted renewed findings for hybrid meetings under COVID-19 urgency legislation.
• Item 4: Minutes of January 10, 2023 approved.
• Item 5: Retirement resolution for Jack Lum (35 years) adopted with appreciation.
• Item 8: Consent Calendar approved (three contracts).
• Item 9: Water Supply Assessment for 395 Third Street approved.
• Item 10: Authorized acceptance and expenditure of state funds ($92,119 for 212 Hetch Hetchy Power accounts; $1,244,798 for CleanPowerSF customers) for COVID-19 arrearage relief under the California Arrearage Payment Program (CAP22). Credits to be applied by February 5, 2023.
• Item 11: Approved two below-market licenses at Southeast Community Center and amended real estate guidelines to delegate future similar approvals to the General Manager.
• Item 12: Approved three below-market leases for nonprofits at Southeast Community Center.
• Item 13: Approved second amendment to Contract PRO.0152 with APX Inc, increasing capacity by $636 million (total $895,742,800) and authorized the General Manager to seek Board of Supervisors approval for the amendment and an increase to the administrative cap under Admin Code Section 2143.
• Item 16: Commissioner Maxwell directed staff to return with a detailed hiring process update in late February; Commissioner Stacy received information about past water supply workshops and the Bay Area Water Stewards meetings.