Palo Alto commission splits over proposed amendments to San Francisco water agreement and updated Tier 2 allocation plan

The Utilities Advisory Commission debated but did not deliver a majority recommendation on a package of amendments to Palo Altowater contracts with the San Francisco Public Utilities Commission and an updated Tier 2 drought allocation plan negotiated by the Bay Area wholesale customers (Bosca/BOSCA).

Carla Daley, Assistant Director of Utilities Resource Management, told commissioners the package resulted from nearly three years of negotiations among 26 wholesale agencies and the SFPUC and includes three linked components: a reset of minimum purchase quantities (MPQs) for four agencies, a change to Tier 1 allocation mechanics in drought, and an updated Tier 2 drought allocation implementation plan. Daley said the MPQs would be reset at 80% of prior four-year non-drought use, include a one-year drought rebound, and allow the four MPQ agencies to be treated as a family for penalty purposes. "Mountain View has paid more than $11,000,000 in penalties for unused water," Daley said as she explained the rationale for the amendment.

The nut graf: Commissioners split over tradeoffs between regional fairness and transparency from SFPUC. Supporters said the negotiated package reduces penalties on neighboring agencies and encourages alternative local supplies; critics said the commission should withhold a recommendation pending more information about SFPUC planning assumptions and drought-design metrics.

Public comment focused on the SFPUCincluding letters and calls for more data. Peter Dreckmire told the commission he was "appalled" that SFPUC had not answered questions submitted through other channels and urged the commission to continue the item until a Bosca policy committee considered related documents. Dave Deveo and other speakers urged more transparency about SFPUC assumptions and the need to understand drought return periods before permanently changing contract terms.

Votes and motions: A motion by Chair Sharf to recommend city council approve the two WSA amendments and the updated Tier 2 plan resulted in a 3-3 tie on roll call (Commissioners Croft, Sharf and Vice Chair Mater voted yes; Commissioners Metz, Tooker and Gupta voted no). A prior motion by Commissioner Gupta to table the item until a later meeting also failed to obtain a majority. As a result, the commission recorded no majority recommendation; the split will be transmitted to the finance committee and city council for further consideration.

Why it matters: Daley and other staff cautioned that all 26 agencies must approve any change to the WSA for it to take effect; if agencies fail to reach agreement, BOSCA or SFPUC could be the default decision-maker under the contract language. The changes would affect how shortages are allocated among San Francisco retail customers and wholesale partners in a declared shortage of up to 20% and could modestly change Palo Altos cutback obligations under the new Tier 2 formula (examples shown in staff materials: a wholesale 20% cutback maps to a Palo Alto reduction from 16% under the old formula to 18% under the new formula). Staff estimated the MPQ changes could increase regional rates by roughly 0.007to 0.04per CCF (0.13% to 0.72% impact in staff examples).

Commissioner debate: Opponents of immediate endorsement (led by Commissioner Gupta and others) urged waiting for additional information requested from SFPUC about the design drought and planning assumptions; supporters (including Commissioners Mauder and Croft) argued the negotiated package represents substantial concessions by SFPUC and that delaying approval might hand decision leverage to SFPUC if the region cannot coalesce around a compromise.

Ending: The split vote leaves the matter to city policymakers and the Bosca process. Several commissioners said they would individually raise concerns and questions in Bosca meetings and at council-level hearings; staff said the item will proceed to the finance committee and ultimately to city council for review under the usual calendar.