PUC approves March 2013 WSIP revision after Calaveras cost increases force modest program budget bump

The San Francisco Public Utilities Commission on April 24 approved revisions to the March 2013 Water System Improvement Program (WSIP), adopting a revised program budget of $4,640,000,000 and extending the completion schedule primarily to address cost and schedule impacts at the Calaveras Dam replacement project.

Staff told the commission the WSIP is roughly 72 percent complete by expenditures against the proposed budget and that the program requires a net increase of $54,900,000 to cover negotiated construction change orders, delivery costs and contingencies. Kevin Chang, chair of the Revenue Bond Oversight Committee, said the Calaveras Dam replacement "will cause the overall program to be late and will cause the overall program, to be over budget." The commission voted to approve the package by voice vote; no roll‑call tally was requested in open session.

Why it matters: the Calaveras project produces the largest single change to the WSIP baseline. Staff reported an $88,200,000 increase attributed to differing geologic conditions, replenishment of contingency after negotiated change orders, and extended delivery costs. Emilio Cruz, Assistant General Manager of Infrastructure, described the scale of the engineering work and the tradeoffs: the revised design "envisions moving 3,000,000 cubic yards of soil more than the original design," a change that materially raised costs and schedule. Staff said $32.6 million in savings on other projects partially offset increases elsewhere, leaving the $54.9 million net shortfall.

Program and rate effects: staff explained the requested $54.9 million will be addressed within the water enterprise capital plan and bond issuance schedule and that the change "will not have any further impacts on rates" in the immediate rate cycle because the enterprise will reprogram projects and use savings from lower borrowing costs to absorb some additional expenses. Commissioners pressed staff for a detailed plan describing which capital items would be deferred or reprogrammed and asked that the finance team return with specific cash‑flow adjustments before final reprogramming is implemented.

Oversight and risk management: the Revenue Bond Oversight Committee presented an independent review showing that, if Calaveras were removed from the WSIP baseline, the remainder of the program would be on time and on budget. Chang and oversight staff said the primary risks are challenging geology at a small number of projects and difficult contract relationships that have generated change orders; the committee recommended continued, targeted oversight of delivery and soft costs. Staff told the commission they plan to contain delivery and program costs and to further quantify how schedule changes affect level‑of‑service goals in memos to the Commission and the State.

Public testimony: environmental and watershed stakeholders offered support for the Watershed Environmental Improvement Program and warned against shifting WIP funds to cover other program costs. Multiple speakers urged the commission to preserve WIP funding and to provide clearer, public analyses of the consequences of schedule delays on water supply reliability and environmental mitigation.

What's next: staff will return with the specific cash‑flow and reprogramming plan requested by commissioners and with additional memos addressing recommendations from oversight bodies. The commission approved the WSIP revisions in open session and recorded the motion as "carried" by aye votes.

Ending note: the commission recorded the decision as a programmatic revision to the WSIP, not as abandonment of any WSIP projects; staff said only two projects will extend significantly beyond the mid‑2016 phase‑out of program resources and that the Calaveras schedule will drive later delivery of some benefits.