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PUC auditors issue clean opinions; commissioners focus on budget priorities and power revenue bonds
Summary
KPMG presented unmodified (clean) 2013 audit opinions for the PUC enterprises; commissioners and staff discussed budget priorities, a near‑$1 billion capital plan, planned power revenue bond issuances and detailed SSIP early-implementation projects and outreach.
An independent audit presented by KPMG on Dec. 10 reported clean, unmodified opinions for the San Francisco Public Utilities Commission’s enterprises and no deficiencies under government auditing standards.
Jamie Cabin, a senior manager at KPMG, summarized the 2013 audit and told commissioners the auditors issued unmodified opinions for all three enterprises and reported no instances of noncompliance. "We did issue an unmodified or clean opinion for all 3 enterprises," Cabin said, and she described the audit approach, material account judgments and the use of specialists for actuarial estimates.
Key financial takeaways: KPMG noted a large one-time increase in the Water Enterprise net position of roughly $374 million tied to an early repayment under a settlement agreement, a wastewater increase of about $55 million and an approximate $6 million increase for Hetch Hetchy Water and Power. The auditors also noted the issuance of 2013 Series A and B bonds (about $525 million) used to refund long-term debt.
Budget and bonds: Staff previewed near‑term budget deliberations for January–February, a nearly $1 billion capital plan and proposed use of power revenue bonds to finance major power‑enterprise capital needs. Staff said the 10‑year capital plan assumes about $270 million of power revenue bonds and that a planned issuance of up to $70 million was targeted for August–September 2014 to smooth large capital investments.
Why it matters: Clean audit opinions support the PUC’s fiscal transparency and underpin credit discussions with rating agencies for bond issuance. Commissioners discussed timing, reserve policy and the need to present clear operating and rate assumptions to rating agencies. Several commissioners asked for additional reporting and a workshop on power-enterprise challenges before bond issuance.
Next steps: Staff will return with detailed budget materials in January and February, proposed rate and reserve analyses, and a memo on power-enterprise challenges to inform bonding and rating-agency outreach.
