San Francisco Public Utilities Commission Meeting - February 14, 2023

The San Francisco Public Utilities Commission (SFPUC) held a regular meeting on February 14, 2023, at 9:45 AM via teleconference due to the ongoing COVID-19 emergency. President Ajami presided. The commission adopted renewed findings for hybrid meetings, approved minutes, received updates on drought conditions and bond disclosure training, approved a consent calendar, and conducted public hearings to adopt the FY 2023-24 operating budget, 10-year capital plan ($8.79 billion), FY 2023-24 capital budget ($1.6 billion), and 10-year financial plan. Other actions included approving credit facilities and dealer agreements, updating water waste restrictions for construction, and authorizing an amended MOU with Recreation and Parks for Lake Merced management.

Consent Calendar

• Item 6a-h approved unanimously (5-0). Included contract amendments for control systems integration (Item 6a), wastewater/stormwater services (Item 6b), acceptance of work for Auxiliary Water Supply System Pump Station No. 1 improvements (Item 6c), contract contingency increases (Item 6d), award of water main replacement contract (Item 6e), and acceptance of work on other contracts (Items 6f, 6g, 6h).
• Commissioner Rivera praised the pump station project as a “great accomplishment” involving a 100-year-old underground system. Commissioner Paulson noted positive public feedback on neighborhood infrastructure work.

Public Comments & Testimony

• Peter Dreckmeyer (Tuolumne River Trust) urged the commission to revisit the design drought length, stating that climate change will shift snowmelt earlier and that the SFPUC could gain an additional year’s water supply over an 8.5-year period. He also recommended reducing planned alternative water supply volumes to avoid overbuilding.
• Patricia De Costa (public caller) advocated for releasing water for salmon and criticized the commission’s environmental record.
• Dave Warner (Palo Alto resident) commented on bond disclosure, questioning the SFPUC’s debt load ($15.7 billion) and market risk. During general public comment, he thanked commissioners for discussing affordability metrics.
• SPEAK (Sunset Parkside Education and Action Committee) urged the PUC to exercise its option to purchase the solar array on Sunset Reservoir’s North Basin and advocated for thin-film solar on South Basin.
• Nicole Sinko LaBaska (Bay Area Water Supply and Conservation Agency) supported the capital plan for water enterprise but requested earlier engagement in future budget processes.
• Two callers criticized contract cost overruns and lack of transparency on Items 6c and 6d, noting a 30% cost overrun and 8-year delay on Pump Station No. 1.

Discussion Items

• Drought Conditions Update (Item 5a): Steve Ritchie reported that reservoir storage is nearly full (Hetch Hetchy 300,000 acre-feet, Calaveras full), snowpack matches 2017 (second wettest year), and cumulative precipitation is on par with 1983 (wettest year). City water deliveries are below all recent years due to wet weather. Ritchie recommended waiting until mid-April for a final drought declaration decision due to state emergency orders still in place.
• Bond Disclosure Training (Item 5b): Deputy City Attorney Mark Blake and counsel Steven Spitz provided training on federal securities law responsibilities, emphasizing accurate and complete official statements, and the need for a transparent process.
• Budget and Capital Plan Hearings (Items 8-11): CFO Nancy Hamm presented the FY 2023-24 operating budget ($1.785 billion), 10-year capital plan ($8.79 billion), FY 2023-24 capital budget ($1.6 billion), and 10-year financial plan. Key points:
  • The capital plan is 11% lower than last year’s $9.9 billion, achieved through deliverability analysis and prioritization.
  • Wastewater is the largest share ($4.9 billion); water main replacement funding held steady at $475 million, with a shift to risk-based replacement targeting 9-10 miles/year.
  • Combined water/wastewater bill for average household projected to rise 90% over 10 years (from $138/month to $224/month).
  • Power enterprise faces significant cost increases due to market volatility (4x energy prices) and transmission charges.
  • Commissioners stressed the need for aggressive project management, contractor accountability, and attention to affordability metrics. President Ajami noted the 2.5% median household income threshold is outdated and that the PUC is exploring better measures.
• Credit Facilities (Items 12-13): Capital Finance Director Nikolai Sklarov reported that competitive bidding secured lower letter of credit rates from Bank of America (power: 0.29%, wastewater: 0.27%), saving money.
• Water Waste Restrictions (Item 14): Steve Ritchie presented amendments clarifying that recycled water must be used for construction whenever available, with exceptions only if recycled, well, or groundwater is unavailable.
• Lake Merced MOU (Item 16): Ritchie introduced an updated MOU with Recreation and Parks, clarifying responsibilities for recreation and utility access. The PUC will continue lead shot cleanup at the former Pacific Rod and Gun Club site.

Key Outcomes

• Item 3 (Adopt renewed findings for hybrid meetings) passed 4-0 (Commissioner Paulson absent for vote).
• Items 4 (Minutes of Jan 24 and Jan 30) both approved 4-0 (Commissioner Paulson absent for vote).
• Consent Calendar (Item 6) approved 5-0.
• Item 7 (Award contract WW-733) approved 5-0 as amended to correct “cleaning” to “inspection”.
• Items 8-11 (Operating budget amendment, 10-year capital plan, capital budget, and 10-year financial plan) each approved 5-0. The capital budget authorization includes up to $1.447 billion in debt issuance subject to Board of Supervisors approval.
• Items 12-13 (Letter of credit and dealer agreements) approved 5-0.
• Item 14 (Water waste restrictions update) approved 5-0.
• Item 16 (Lake Merced MOU) approved 5-0.
• Item 19 (Items initiated by commissioners): No items were initiated.
• Closed Session: The commission asserted attorney-client privilege (5-0). Commissioner Stacey recused from Item 22 (Bridge Housing settlement) due to conflict. After closed session, the commission announced a recommendation to the Board of Supervisors to approve a settlement of $100,000 for a ruptured water main claim. No other actions were taken.