San Francisco Public Utilities Commission Meeting - May 14, 2024

The San Francisco Public Utilities Commission (SFPUC) held a regular meeting on May 14, 2024, beginning at 9:30 AM. The commission approved a consent calendar, adopted new wholesale water rates (8.8% increase), approved power rate increases for Hetch Hetchy Power (12%) and CleanPowerSF (8.5%), awarded a major construction contract for the Sunol Valley Water Treatment Plant Ozonation project ($234.8 million), and extended several service contracts. The meeting also included a report from the Revenue Bond Oversight Committee, public comments on infrastructure issues, and closed session discussions on a settlement.

Consent Calendar

• Item 7 was approved unanimously (4-0). Commissioner Stacy pulled items 7C and 7G for commentary: 7C (contract to compensate for lost electrical engineers) – noted two of four engineers replaced; 7G (pre-apprenticeship training program) – reported successful hiring of program graduates by contractors. Commissioner Ajami pulled item 7D (contract increase for co-generation engine project) and questioned the 50% budget increase. Staff explained delays due to COVID and new PG&E requirements. The consent calendar included items A–H.

Public Comments & Testimony

• General Public Comment (Item 4): Jennifer Vitaru and Ashley Westinger, both Marina residents, criticized the SFPUC for lack of response to the Pierce Street outfall closure and resulting flooding during storms on October 24, 2021, and December 31, 2022. They requested a public hearing and cited an EPA lawsuit over sewage incursions.
• Item 6 (Revenue Bond Oversight Committee Report): No public comment.
• Item 7 (Consent Calendar): No public comment.
• Item 8 (Sunol Valley Ozonation Contract): Nicole Kula, CEO of the Bay Area Water Supply and Conservation Agency, spoke in support of the staff recommendation.
• Item 12 (Wholesale Water Rates): Two callers: a representative of wholesale customers expressed support for the rate-setting process; Peter Greckmeyer, policy director for the Tuolumne River Trust, expressed concern about rising rates and deferred maintenance, urging a review of the alternative water supply plan.
• Items 13 & 14 (Power Rates): JP Rappagnani, representing Sutro Power (an employee-owned solar firm), asked about revival of the GoSolar SF program and expansion of solar incentives. No further public comment.

Discussion Items

• Revenue Bond Oversight Committee Annual Report (Item 6): Chair Ruben Holliber presented the report covering July 2022–June 2023. Highlights: audit of six revenue bonds (~$1 billion) with two material findings and three recommendations; ongoing monitoring of bond sales; visits to Oceanside Treatment Plant and Hetch Hetchy Regional Water System. Committee is conducting its third audit (expected fall 2024) and exploring future audit topics, including technology implementation. The committee is set to sunset at the end of 2024 unless extended by the Board of Supervisors.
• Sunol Valley Water Treatment Plant Ozonation Contract (Item 8): Project manager Brian DeSorra presented the request to award a $234,782,000 contract to J.F. Shea Construction, Inc. (lowest bidder). The engineers' estimate was $193 million; the 28% increase was attributed to a small pool of qualified contractors, material price uncertainty, and project complexity. Staff recommended against rebidding due to likely escalation costs. The contract includes social impact partnership program requirements and Buy America provisions. Approved unanimously.
• CleanPowerSF Billing Contract Amendment (Item 9): Andrew Bevington requested a $2.5 million increase and 6-month extension with Calpine Energy Solutions to ensure continuity of billing and data management services while an RFP for a new contract is issued. Commissioner Ajami asked about vendor lock-in and data transferability. Approved unanimously.
• VIP Power Line Corp. Contract Increase (Item 10): Danny Fung requested a $4.6 million cost contingency increase and 1,022-day duration extension for as-needed electrical distribution services. The contract supports the Power Enterprise due to a shortage of skilled workers (11 of 14 high-voltage line worker positions vacant). Approved unanimously.
• Kubra Data Transfer Contract Amendment (Item 11): Deedra Andris requested a $365,000 increase and 1-year extension for electronic bill payment services, as the RFP process will not be completed by August 2024. Commissioner Ajami asked about in-house capability; staff explained the need for external vendor due to regulatory requirements. Approved unanimously.
• Wholesale Water Rates for FY2024-2025 (Item 12): Rates manager Matthew Freiburg presented the proposed 8.8% volumetric rate increase (to $5.67 per CCF). Key drivers: low retail water sales, rebounding wholesale usage, a $29 million balancing account owed by wholesale customers, and increased capital spending. The monthly service charge methodology was updated for the first time since 2009–10. The rate is governed by the Water Supply Agreement. Approved 3-0 (President Paulson absent for vote).
• Power Enterprise Rates: Hetch Hetchy Power and CleanPowerSF (Items 13 & 14): Financial Planning Director Aaron Corvineau presented a combined hearing. CleanPowerSF: 8.5% overall revenue increase (with cost-of-service allocation varying by customer class). Hetch Hetchy Power: 12% flat increase across all rate schedules. Drivers included rising power supply costs, regulatory requirements, and the need to meet debt service coverage targets (1.1x) and reserve targets (180 days cash on hand for CleanPowerSF). Rate design changes included standardizing low-income discounts to 30% and consolidating enterprise and retail rates. Both items were approved separately: Item 13 (Hetch Hetchy) 3-0, Item 14 (CleanPowerSF) 3-0.
• Commissioner-Initiated Items (Item 16): Commissioner Stacy requested a public hearing on the alternative water supply plan at the June 11, 2024 meeting or later. Commissioner Ajami requested a return of regular water supply condition updates (previously given by Mr. Ritchie) and noted unexpectedly high demand in 2024.

Key Outcomes

• Approved Minutes of April 23, 2024 (4-0).
• Consent Calendar (Items 7A–7H) approved unanimously (4-0).
• Awarded Contract WD-2897 to J.F. Shea Construction for Sunol Valley Water Treatment Plant Ozonation (4-0).
• Approved Amendment No. 4 to Contract CS-247(R) with Calpine Energy Solutions, increasing amount by $2.5 million and extending duration by 6 months (4-0).
• Approved cost and duration contingency increases for Contract PW-009R with VIP Power Line Corp. ($4.6 million, 1,022 days) (4-0).
• Approved Amendment No. 4 to Contract CS-310 with Kubra Data Transfer, increasing amount by $365,000 and extending 1 year (4-0).
• Adopted Wholesale Water Rates for FY2024-2025 (8.8% increase, effective July 1, 2024) (3-0).
• Adopted Hetch Hetchy Power Rates (12% increase, effective July 1, 2024) (3-0).
• Adopted CleanPowerSF Rates (8.5% overall revenue increase, effective July 1, 2024) (3-0).
• Closed Session: Commission approved a settlement for an unlitigated claim from a water pipeline break (Fillmore and Green Streets, September 10, 2023) via roll call (3-0). Motion not to disclose closed session discussions passed (3-0).
• Next Steps: Staff to schedule a public hearing on alternative water supply; water supply condition updates to be reinstated.