SFPUC adopts multi‑year municipal power rate action to steady Hetch Hetchy finances, with directive to prepare transmittal letter and follow-up policy work
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Summary
The commission adopted a multi‑year municipal power rate schedule to address a projected Hetch Hetchy power fund shortfall, choosing a compromise phasing option and directing staff to prepare a transmittal letter to the Board of Supervisors and return with codified rate‑policy language and further planning.
The San Francisco Public Utilities Commission voted to adopt a multi‑year municipal power rate action on December 13 intended to prevent the Hetch Hetchy power fund from dropping into deficit and to restore the fund toward required reserves. Staff presented several options—two pennies per kilowatt‑hour phased over two years, four pennies phased over four years, and a compromise of two pennies spread over four years (a half‑cent per year). The commission approved the substitute package that staff and the mayor’s office had discussed, which spreads increases more gradually over four years.
Staff and the Rate Fairness Board summarized that the Hetch Hetchy power fund was facing a structural shortfall and would run into a negative balance by 2014 without action. The adopted compromise was intended to keep reserves above zero across the planning horizon while avoiding immediate deep cuts to operations, though commissioners and public speakers noted it would not fully restore earlier reductions to energy‑efficiency, GoSolar and city‑owned renewables programs.
The vote followed a lengthy public hearing in which municipal customers (school district, Muni), community groups, the Citizens Advisory Committee and others urged either a stronger commitment to fund efficiency and local renewables or robust plans to ensure that rate increases are paired with investment and programs to retain customers and reduce system costs. David Pilpel and other commenters suggested staff and the commission pencil longer multi‑year scenarios (e.g., 10 years) to show the effects of continual half‑cent increases on capital programs and restoration of prior cuts.
The resolution passed with an amendment directing staff to prepare a transmittal letter to the Board of Supervisors describing the commission’s policy priorities and to return with formal rate‑policy language for commission adoption. Commissioners emphasized that the action is a step toward cost recovery but not the final step; staff will continue to present capital plans, explore opportunities for energy‑efficiency savings and report back on options for financing local projects (including how bond proceeds might leverage city energy investments).
What happens next: Staff will transmit the adopted rate action and the commission’s transmittal letter to the Board of Supervisors, present a final confirmation agreement and capital‑plan details in January budget workshops, and return with a proposed rate policy and any additional financial modeling requested by the commission.
