Controller proposes lower increases than Recology for 2026–2028; commission backs Environment Department request for additional impound funding

San Francisco's Refuse Rate Administrator presented an updated refuse rate proposal April 28 that lowers parts of Recology's requested increases for the October 2025–September 2028 rate period and recommends new funding for environmental programs and regulatory controls. The Commission on the Environment then voted to approve a resolution supporting the Environment Department's funding request for the impound account.

What the controller proposed: Jay Liao, refuse rates administrator in the Controller's Office, said Recology had filed a multi‑year rate application and the controller's staff adjusted several of the requested increases. For rate year 2026, Recology proposed an 18.18% increase; the controller's proposal reduced that to 12.59% (a 5.6 percentage‑point reduction). The controller reported that, cumulatively across the three proposed rate years, the administrator's proposal represented roughly $50 million in rate savings compared to Recology's original request and equated to an approximate $2–3 per month reduction for a single‑family household compared with the company's proposal.

Context and prior adjustments: Liao reminded commissioners that a $23 million material error discovered in prior reporting had been rebated to ratepayers and adjusted the prior rate base. He also listed structural cost drivers in the proposed increases, including payroll corrections and effect of Prop M business tax increases on Recology.

New and maintained services: The administrator said the proposed order maintains existing weekly curbside collection and all previously funded environmental programs (organics, reuse, e‑waste, household hazardous waste) and adds several items requested by the Environment Department. New services and investments in the proposal include:

- Free mattress recycling at the transfer station: up to four mattresses per individual per year; estimated diversion of about 375 tons annually and roughly 5,000 additional mattresses collected. - Free wood recycling and reuse program for dimensional lumber and pallets, estimated at about 190 tons diverted annually. - Organics pre‑processing equipment (trommel/packaging equipment) expected to raise recovery rates to an estimated ~85% and recover roughly 17,533 additional tons compared to prior years. - Continued and expanded compost giveaway events, container stickering updates, and outreach/mailer funding to commercial and residential properties.

Trash processing and study funding: Liao said Recology's application included a contingent schedule for a trash processing facility estimated at $35 million; the Controller's Office did not include that contingent capital cost in its recommendation because of insufficient information and risk. Instead, the administrator proposed adding funding for a trash processing pilot and study: staff recommended staged funding to support testing, analysis and procurement planning (the presentation specified approximately $200,000 in early study funding and $400,000 noted by department staff for pilot work in the rate cycle).

Environment Department impound request and commission support: The Environment Department requested approximately $3 million in new impound account funding to support programs the department said were essential to meeting zero‑waste goals (reuse network, enforcement for source separation and edible food donation, repair clinics, comprehensive multilingual outreach, circular economy coordination and toxics reduction). The controller said the department's detailed line‑item submission arrived late in the rate process and the controller was still awaiting a nexus determination from the City Attorney's Office to ensure legal eligibility of specific impound uses. The controller recommended tying some items to fund balance as one‑time costs and leaving several program requests for the rate board to consider after the City Attorney's nexus review.

Commission action: Commissioner Hunter sponsored a resolution urging that the Environment Department be funded adequately to meet zero‑waste mandates and priorities; the commission voted in favor (motion by Commissioner Tompkins; second by Vice President Sullivan). The commission's passed resolution signals support for the department's request as staff and the controller's office continue to reconcile nexus, timing and prioritization issues ahead of the Refuse Rate Board hearing scheduled for May 30.

Regulatory changes and capital planning: The administrator outlined regulatory improvements included in the proposal to increase transparency and cost control: service level agreements documenting Recology obligations; cost‑variance review for variances over 5%; baseline operating metrics for productivity; 10% cost caps on several categories; capital expenditure controls and a balancing account to limit Recology's reasonable profit margin to 9% (excess would flow to the balancing account to reduce future rates). Liao also flagged longer‑term capital risks, including shop consolidation costs and the expense of transitioning to zero‑emission trucks, and estimated larger potential capital needs (controller cited rough ranges: $360 million–$440 million for fleet conversion and $40 million–$103 million for a potential new recycling facility if Pier 90/6 is not viable).