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SFPUC highlights WESIP progress and approves low-cost green financings amid contractor quality concerns
Summary
The commission received a WESIP progress report showing major construction milestones and approved two low-cost federal green bond financings; public commenters raised welding quality and QA/QC concerns on pipeline work.
Deputy Chief Financial Officer Charles Perle presented two related capital-financing requests at the Oct. 25 San Francisco Public Utilities Commission meeting that together support roughly $14.9 million of green-related projects within PUC enterprises.
Perle said about $8.3 million would be financed with Qualified Energy Conservation Bonds and $6.6 million with Clean Renewable Energy Bonds. He explained the federal interest-subsidy structure — "that 70% interest subsidy brings the overall borrowing costs for these down to under 2%" — and said, if executed promptly, the net borrowing rate could be closer to about 1.2 percent.
Commissioners moved and approved the financing authorization on a voice vote.
Earlier in the meeting, WESIP director Julie LeBonte presented highlights for the Water System Improvement Program: 30 of 35 local projects completed, the local program 77% complete as of Oct. 1, regional projects in construction exceeded $2.5 billion in value, and overall program-level changes produced a $15.8 million reduction in the management reserve leaving a $146 million reserve.
LeBonte also flagged project challenges: groundwater infiltration and fertilizer contamination on the San Joaquin pipeline western segment, soil-disposal issues for the Calaveras Dam replacement that may affect cost and schedule, and a quality issue involving welds on a portion of the new Bay Division pipeline. She said corrective work has begun and an independent expert panel will present findings in January.
Public commenters pushed on that welding and quality-control issue. Ali Al Taha urged independent auditing and said contractor-led QA/QC had failed, citing his prior notices and urging transparency. The commission heard from the Revenue Bond Oversight Committee and other stakeholders who said they would review reports and follow up.
The commission approved the financing requests and accepted the WESIP briefing; no additional approvals or funding adjustments were adopted at the meeting beyond the financing authorization.
