Board hears SFPUC rate proposal; committee referral ordered for BLA audit after public outcry

The San Francisco Board of Supervisors held a committee-of-the-whole hearing June 13 on proposed retail water and wastewater rates for fiscal years 2024–2026 and the related capacity charges. The San Francisco Public Utilities Commission presented the study behind the proposed increases and the board invited public comment on whether to reject the SFPUC's rate package under the charter.

After presentations from SFPUC staff and a wide public comment period, supervisors directed the Budget and Legislative Analyst (BLA) to perform a management audit of SFPUC rate-setting, contract oversight, and cost controls, and the board referred that audit effort to committee for more detailed review. The hearing on the rates was closed and recorded on the record; board members did not adopt or reject the rate package at the meeting.

Why it matters: SFPUC rates fund a multi-billion-dollar capital program and the agency said roughly 80% of the proposed new revenue will go to capital projects to repair aging water infrastructure, prevent flood damage and modernize wastewater treatment. Supervisors and members of the public raised concerns about outreach, the composition of the rate fairness board, project prioritization, and what a potential credit downgrade would mean for borrowing costs.

What SFPUC presented

SFPUC General Manager Dennis Herrera and staff said the multi-year rate package is required to pay for capital and operating costs, to finance completed and ongoing projects, and to preserve the commission's credit rating. Acting rates administrator Matthew Freiberg summarized the rate study and said that, for an average single-family customer, the combined current monthly bill of about $136 would rise to roughly $149 in fiscal 2024 (about a 9% combined increase) and reach about $174 per month by the end of the proposed period. The staff presentation emphasized the drivers for the increases: capital projects, debt service and escalating operating costs.

SFPUC staff also stressed consumer protections: the commission expanded its customer assistance program, increased the deepest discount tier from 25% to 40% for qualifying low-income households, and created a stormwater credit and grant program to reward property-level green infrastructure that reduces runoff.

Financial risk and consequences cited on the record

SFPUC and its finance team warned that rejecting the rate package could lead to a credit-rating downgrade. Acting deputy CFO Laura Bush and the commission's advisers said a downgrade of even one notch could add roughly 0.31 percentage points in interest cost on an upcoming bond sale and an estimated $22 million in additional interest costs on a single planned water bond transaction, and that future capital projects would therefore cost more.

Supervisors' concerns and the board's response

Supervisor Ahsha Safaie (moved the hearing) summarized constituent concerns: vacancies on the rate fairness board, limited small-business outreach, unanswered questions about specific flood projects such as the Folsom Street project raised by Rainbow Grocery, and the effect of rate increases on other public agencies and nonprofits. Controller Ben Rosenfield and BLA staff said they saw reasons for further scrutiny; BLA's representative said an outside audit of the SFPUC's capital program and contracts would likely be useful.

Public comment

Speakers included environmental groups (Tuolumne River Trust, Sierra Club), small-business advocates (Rainbow Grocery cited flood losses), neighborhood organizations, labor representatives (Building Trades supporting the capital program for jobs), and residents worried about affordability. Many speakers urged an independent audit before adoption; others warned about the economic and local-jobs impacts of delaying capital work.

Board action and next steps

- The board held public comment and "filed" the hearing record on the SFPUC rate package (item 42). Several supervisors urged more review before a final vote. - The board agreed to send item 60 (direction to the BLA to audit SFPUC rate-setting and contract oversight) to committee for a priority audit. BLA staff told the board a review would be useful and cited risks in the capital program and contract performance measures.

What remains unresolved

The SFPUC rate package itself was not adopted or rejected at the June 13 meeting. The commission plans to issue bonds and proceed with elements of its capital program; supervisors have asked for additional analysis and oversight from the BLA, and the board will consider the audit findings and the rates at a future meeting or committee hearing.

Ending

The meeting laid out a clear set of next steps: a BLA audit referred to committee and additional oversight of the SFPUC's capital plan and outreach. The core policy trade-off remains unchanged — expedited capital work to reduce long-term risk versus intensified scrutiny to control costs and protect ratepayers and small businesses from what some called an especially steep series of increases.