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SFPUC power enterprise warns of steep new costs as Hetch Hetchy tunnel needs major rebuild
Summary
SFPUC staff told a joint LAFCO–SFPUC meeting that a deteriorating mountain tunnel and higher transmission costs could push the power enterprise into a budget shortfall, prompting options including debt issuance, rate changes and pursuit of new customers.
San Francisco Public Utilities Commission staff said on March 3 that the city’s power enterprise faces large unanticipated costs that could erode reserves and force new financing and operational choices.
Assistant General Manager for Power Barbara Hale told the Local Agency Formation Commission and SFPUC commissioners that the Hetch Hetchy system provides about 380.5 megawatts of greenhouse-gas‑free generation to the city but that capital needs have grown sharply. "We have a tunnel ... that is showing signs of deterioration and signs of a major rebuild being necessary to the tune of about $650,000,000," Hale said, describing an engineering finding that expanded the project’s scope and cost.
Hale said that change, together with expected increases in transmission and distribution charges and new reliability-driven projects, raised the SFPUC’s 10‑year capital need by roughly $883 million versus an earlier plan that assumed about $545 million. She identified roughly $16 million a year in added PG&E transmission…
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