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SFPUC adopts 10-year financial plan and two-year budgets, approves rates policy and calendars wholesale-rate hearing
Summary
The commission adopted a revised 10-year financial plan and two-year operating and capital budgets, adopted a rates policy, and set a May 20 hearing for wholesale water contract rates; staff models assume a $50 million wholesale repayment and project a reduced near-term retail rate increase scenario.
The San Francisco Public Utilities Commission on Feb. 14 adopted a revised 10-year financial plan (FY 2012–13 through FY 2021–22), two-year operating and capital budgets (FY 2012–13 and FY 2013–14), approved a rates policy and calendared a public hearing for wholesale water contract rates on May 20, 2012.
Deputy CFO Charles Pearl presented the financial-plan assumptions: a 5% borrowing cost assumption for new debt, a 3% general inflation assumption, and improved water-sales projections that modestly reduced near-term rate pressure. The financial model includes an assumption that wholesale customers will prepay a portion of amounts owed to retail customers; the plan modeled a $50 million repayment in fiscal 2015 but staff noted wholesale customers currently owe about $370 million under the previous contract estimate. Pearl said thriftier borrowing assumptions and modest sales improvements together reduce the projected retail rate pressure in the model (a headline 15% scenario in fiscal 2015, with alternative modeling showing a combined water/sewer increase closer to 6.5% in the staff presentation).
Commissioners and public commenters pressed staff on reserve levels and the durability of assumptions; staff said coverage and reserve policies are met (coverage ratio cited at 1.45 in a low-fund-balance year, above a 1.25 covenant minimum). After questions and public comment, the commission moved and approved the financial plan.
Budget director Leslie Lee (presenting macro budget views) noted the proposed two-year operating and capital budgets total approximately $1.2 billion with most growth tied to capital and debt service; operating budgets increase modestly and the enterprise budgets included position substitutions but no new full-time positions. The commission moved and adopted the two-year operating and capital budgets.
The commission also voted to adopt a rates policy intended to guide the next rate cycle and set a public hearing on May 20, 2012 to consider wholesale water contract rates for FY 2012–13 (with an effective date of July 1, 2012, if adopted after the hearing).
