San Francisco Public Utilities Commission Meeting – November 28, 2023

The San Francisco Public Utilities Commission (SFPUC) held its regular meeting on Tuesday, November 28, 2023, beginning at 9:30 AM. The meeting included a land acknowledgment, approval of prior minutes, reports from the General Manager, a consent calendar, and several major policy items including updates to Level of Service goals for water and power enterprises, adoption of affordability metrics, approval of a revised Integrated Resource Plan for Hetch Hetchy Power, and a Memorandum of Understanding with the San Francisco Airport Commission. All voting items were approved unanimously, with one commissioner recused on a specific item.

Consent Calendar

• Approved the consent calendar (items 6a–6e) by unanimous roll call (4–0). Items included acceptance of work performed under various contracts, award of a job order contract not-to-exceed $5,000,000, and a contract duration extension.

Public Comments & Testimony

• No members of the public provided oral testimony during any of the public comment periods. Written comments were received on item 7 (Water Enterprise Level of Service Goals) and item 12 (Affordability Metrics) and were noted for the record.

Discussion Items

• Green Bond Update (Item 5a): Nikolai Skalarov presented an overview of the SFPUC’s green bond program, noting that the SFPUC was the third largest green bond issuer in the U.S. before 2023, and that 2023 was the largest issuance year to date. He discussed the evolution of certification (self-certification in 2015, later programmatic certification by Climate Bonds Initiative and Sustainalytics), the relatively small U.S. municipal green bond market, and the political backlash against ESG investing. Commissioners asked about the potential for borrower-level certification and the costs/benefits of issuing green bonds. Staff indicated an RFP for new certification services would be issued in spring 2024.
• Quarterly Audit and Performance Review (Item 5b): Audit Director Irella Blackwood reported that as of September 30, 2023, 10 of 30 planned audits (33%) were completed. Physical inventory counts at five bureaus showed a variance of 1.81% ($237,689 out of $13,114,958). Recommendations from previous audits remained open for two audits. Commissioners requested benchmarking against industry norms and suggested including such context in future reports.
• Water Enterprise Level of Service Goals (Item 7): AGM Steve Ritchie presented the amended 2023 goals, which expanded the original 2008 goals (focused on WSIP) to include operations, maintenance, local system issues, and sustainability. New goals address in-city seismic reliability, delivery reliability, water supply restoration timelines, and environmental stewardship. The commission discussed the need to explicitly incorporate climate resilience and equity as overarching principles. The item was approved 4–0.
• Power Enterprise Level of Service Goals (Item 8): AGM Barbara Hale presented the first-ever Level of Service goals for the Power Enterprise, comprising five broad goals and 19 specific objectives with nearly 100 performance metrics. Goals cover power supply, transmission, distribution, city programs, and administration. Commissioners emphasized that climate resilience and equity should be embedded throughout all goals. The item was approved 4–0.
• Water Supply Assessment – Potrero Yard Modernization Project (Item 9): Commissioner Stacy recused herself due to a potential conflict of interest. AGM Ritchie presented the revised water supply assessment reflecting updated housing element numbers. The item was approved 3–0 (Commissioner Stacy recused).
• Water Supply Assessment – 655 4th Street Project (Item 10): Similar routine assessment presented. Approved 4–0.
• Hetch Hetchy Power Integrated Resource Plan (Item 11): Julia O’Geen presented the 2023 update, forecasting that retail sales will grow approximately 5% per year over the next decade, requiring about 150 megawatts of new renewable energy supply by 2033. The analysis considered four load forecast scenarios and three hydroelectric generation scenarios. Commissioners questioned the use of historical data and suggested incorporating more extreme climate scenarios. The plan was approved 4–0.
• Affordability Metrics Policy (Item 12): Financial Planning Director Aaron Corvanova proposed adopting two new metrics: a typical household target (3% of 40th percentile income) and a low-income household target (7% of 20th percentile income, or 5% with discounts). The current median household metric (2.5% of median income) was deemed insufficient. The policy requires reporting and proposing mitigation if targets are projected to be exceeded. The item was approved 4–0.
• Memorandum of Understanding with SFO (Item 13): AGM Hale presented an MOU authorizing up to $50 million for the Airport to manage replacement of two substation transformers, with SFPUC reimbursement. Approved 4–0.
• Closed Session (Item 18): The commission met in closed session to discuss proposed settlement of litigation (Shelly Nguyen v. City and County of San Francisco). The commission voted to assert attorney-client privilege and later voted unanimously to not disclose the closed session discussions. The settlement was recommended for Board of Supervisors approval.

Key Outcomes

• Approved unanimously (4–0): Minutes of November 14, 2023; Consent Calendar; Water Enterprise Level of Service Goals; Power Enterprise Level of Service Goals; Water Supply Assessment for 655 4th Street; Hetch Hetchy Power Integrated Resource Plan; Affordability Metrics Policy; MOU with SFO (up to $50M).
• Approved 3–0 (Commissioner Stacy recused): Water Supply Assessment for Potrero Yard Modernization Project.
• Closed Session: Commission voted to assert attorney-client privilege and not disclose discussions. The settlement of $35,000 for vehicle collision litigation was recommended for approval by the Board of Supervisors.
• Next Steps: Staff will issue an RFP for green bond certification in spring 2024; continue monitoring customer load growth and renewable resource procurement; and develop affordability metrics for the Power Enterprise.