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PUC outlines $500M 'fiscal cliff' for power enterprise; staff gives three scenarios and seeks mayoral, BOS engagement
Summary
Staff told the commission that the Hetch Hetchy power enterprise faces a roughly $500 million shortfall driven by capital, transmission and regulatory costs; they presented three scenarios (capital cuts, higher general‑fund rates/subsidies, bonding) and will return with proposals after May 1 mayoral budget.
The San Francisco Public Utilities Commission on April 22 presented a 10‑year financial plan and capital program for Hetch Hetchy and the power enterprise that identifies a projected fiscal shortfall of roughly $500 million if no changes are made.
Todd Richstrom and other staff explained the gap is driven primarily by required capital investments — notably mountain tunnel improvements — and by higher forecasted transmission and distribution costs from PG&E and increased regulatory costs. Staff described three portfolio scenarios that mix capital‑project deferrals/cuts (roughly $179 million of additional capital reductions in one option), higher recoveries from the general fund (reduced discounts to general‑fund customers) and increased bonding. Each scenario would bring the enterprise into positive long‑term balance, but each requires difficult policy choices.
Staff emphasized prior transfers and favorable operating margins are no longer available at previous levels: the agency previously transferred large sums to the general fund in earlier years but now must prioritize reinvestment and reserves. The 9‑month update presented at the meeting showed reserves projected to be materially lower than earlier forecasts (staff estimated a cash‑available portion of roughly $20 million by June 30 under current projections).
Commissioners and staff noted the General Manager and deputy are continuing to negotiate with the Mayor’s Office on interconnection agreements and other revenues; staff will return with a final recommended plan at the May 13 meeting after the Mayor’s May 1 proposed enterprise budgets are released. Staff committed to quarterly updates and to identify tradeoffs and risks for each scenario.
No final action was taken; the commission signaled this will be a major agenda item for the May 13 meeting and requested continued coordination with the Mayor’s Office and capital planning offices.
