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SFPUC audit and budget updates: open recommendations, franchise fee audits, and surplus water revenues
Summary
SFPUC staff reported 37 audit projects (16 completed) with 29 open recommendations (87% completion rate), highlighted an SSIP pre-construction audit and steps to tighten review of wholesale revenue calculations, and said water revenues are about $50 million above budget while wastewater is ~3.5% above; commissioners pressed for schedules to close long-open audits.
Nancy Hahn, Deputy Chief Financial Officer for Assurance and Internal Controls, presented the Q3 audit and performance report. She said the agency had 37 projects in Q3, 16 completed and 12 in progress; three new audits began this quarter including a PG&E interconnection cost audit and two franchise-fee audits (PG&E and NRG Energy Center franchise-fee reviews). The City Services Auditor completed a highlighted SSIP planning and pre-construction audit and recommended the development of written project-development and risk-management policies and more thorough documented pre-construction reviews; management partially or fully agreed to the recommendations.
Hahn said that as of Q3 there were 29 open audit recommendations and an 87% completion rate overall. Commissioners pressed staff to return with timelines and schedules for closing long-open audits; staff said some items involve other city departments and cyclical processes and committed to follow-up reporting and to provide implementation schedules where needed. A prior wholesale revenue calculation error that had included inappropriate wastewater salaries (the transcript references a $72,000,000 figure in the balancing-account context) was corrected and staff said they have added additional review steps and subject-matter expert checks to prevent recurrence.
Eric Sandler, CFO, presented a quarterly budget status report: positive net results across operations with water revenues about $50 million (roughly 10%) above budget largely due to wholesale sales (revenues to be returned to wholesale customers per contract in subsequent years), wastewater revenues about 3.5% above budget (driven by sewer-service revenue), and power revenues about $19 million (~9.8%) below budget offset by related expense savings. Commissioners asked staff to explore whether surplus wholesale-related revenue presents opportunities to fund conservation or capital activities; staff agreed to follow up by memo.
Commissioners emphasized the need for concrete timelines to bring lingering audit recommendations to closure, especially where audit items affect customer trust in rate-funded capital projects.
