SFPUC delays final budget vote after debate over a projected 30% retail rate spike and mitigation options

The San Francisco Public Utilities Commission on Jan. 24 continued its budget deliberations after an hours-long review of a 10-year financial plan that shows a sharp retail rate increase in fiscal 2014–15.

Staff told the commission the driver of the projected 30 percent increase is debt service and capital work tied to the Water System Improvement Program and the Sewer System Improvement Program. "Well, today is a notable day for 1 reason in particular. This will be the first time before you as a commission that we have a balanced capital plan," Assistant General Manager Todd Reitstrom said, describing trade-offs that had closed prior budget gaps.

Commissioners and public commenters pressed staff on options to reduce or smooth the 2014–15 spike including: (1) asking wholesale customers to prepay some or all of outstanding "stranded" capital repayments (staff cited as much as $360 million in potential repayments under the new water agreement); (2) postponing the proposed Modesto Irrigation District water transfer (a placeholder "plug" number of about $1.6 million per year was discussed and staff said the final number will be negotiated); (3) completing anticipated surplus property sales (staff cited sales such as Artichoke Joe's and 7th & Folsom as items that could produce several million dollars); and (4) delaying or scaling back capital projects and some one-time items in the capital plan.

Michael Carlin, deputy general manager, described the Modesto figure as tentative: "That is a plug number right now, and it will be negotiated," he said.

Environmental and river-advocacy groups urged caution about transfers that could affect Tuolumne River flows and said the environmental review is not yet adequate; the Tuolumne River Trust said the baseline in earlier reviews is insufficient and asked the commission to factor conservation gains into any decision about transfers.

Commissioners debated whether to publish the full 30 percent projection in the February financial plan or to show a lower near-term number with clear footnotes explaining realistic mitigation tracks. Several commissioners said publicly displaying an unqualified 30 percent forecast could alarm ratepayers and recommended presenting options and contingencies instead.

Given outstanding uncertainties — particularly whether wholesale agencies will prepay amounts and the final negotiated terms of any water transfer — the commission directed staff to refine assumptions and to present a clearer, optioned financial outlook at the Feb. 14 meeting. The commission formally moved to continue budget consideration to the next regularly scheduled meeting; the motion carried by voice vote.