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Supervisor Peskin to initiate city rate application after controller finds excess profits at Recology
Summary
Supervisor Aaron Peskin announced the city will initiate a professional, controller‑administered rate application to address findings in the controller’s audit that identified tens of millions in excessive profits at Recology and opaque intercompany charges.
Supervisor Aaron Peskin on May 17 announced that the city will initiate, with the mayor’s support, a city‑led rate application to reform San Francisco’s refuse rate‑setting process after a controller’s report identified excessive profits and opaque intercompany charges at Recology.
Peskin said the controller’s integrity report, issued the day before, identified roughly $23.4 million in excessive profits in recent years and highlighted a pattern of complicated intercompany charges that make it difficult for ratepayers and the city to determine the true cost structure. The report also raised questions about past rate filings, property sales funded through ratepayer resources and the lack of transparency in executive compensation and overhead allocations.
Why it matters: Recology is the city’s private waste collection franchise; the board earlier placed a city measure on the June ballot to address rate‑setting. Peskin said moving to a controller‑administered professional rate‑making process would implement recommendations in the controller’s report, require better reporting by Recology, and create mechanisms to return excess revenues to ratepayers.
Details of the initiative announced by Peskin include proposals to: - Put professional rate‑making in the controller’s office; create a balancing account to hold Recology to a fixed profit margin and return excessive revenues to the rate base; - Implement clearer reporting on sources and uses of expenses charged to rates, including intercompany charges, executive compensation and overhead; - Require quarterly and annual reports under penalty of perjury signed by Recology’s CEO and CFO; and - Create rules for property sales funded via ratepayer dollars and strengthen comparative benchmarking.
Peskin credited the controller’s office and city attorney staff for the analysis and said the city will pursue a rate application "for the first time in 90 years" on behalf of ratepayers.
What comes next: Peskin intends to initiate the rate application and work through the budget and regulatory processes to implement controller recommendations; the announcement followed the controller’s public report and is the start of a process that will involve further legal, regulatory and possible administrative steps.
Ending: Peskin framed the action as restoring integrity to a long‑standing system and returning excess revenue to ratepayers.
