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SFPUC weighs interim supply allocations and possible surcharge to keep regional deliveries under 265 MGD
Summary
San Francisco Public Utilities Commission staff outlined two draft interim supply allocation options and a potential environmental enhancement surcharge to enforce a 265 million‑gallon‑per‑day cap through 2018; wholesale customers urged changes to protect contractual guarantees and low‑use cities.
The San Francisco Public Utilities Commission spent the bulk of its meeting reviewing proposed interim supply allocations and the mechanics of an environmental enhancement surcharge intended to keep combined deliveries from the Hetch Hetchy watersheds below 265 million gallons per day through 2018. Assistant General Manager for Water Steve Ritchie and CFO Todd Reestrom presented draft approaches and how a surcharge would be applied.
The presentation reiterated the commission’s 2008 limit of 265 MGD, assigned San Francisco 81 MGD and wholesale customers 184 MGD under the 2009 Water Supply Agreement, and explained that staff has produced two draft allocation methods: one based on customer 2018 purchase projections and a second that incorporates individual supply guarantees (ISGs) with a 10% adjustment for agencies with larger ISGs. Reestrom said mitigation measures that might be required if the cap is exceeded could total about $7 million and that any surcharge would be calculated on actual deliveries and collected the year after deliveries are verified.
Why it matters: The ISA determines which wholesale agencies would face the surcharge if regional deliveries exceed the cap. The allocation method therefore has financial consequences for suburban agencies and raises equity questions for low‑use or low‑income jurisdictions.
Wholesale customers and local officials filled the public comment period. Agencies with perpetual contract rights and conservative planning practices — including Palo Alto, San Jose and Santa Clara representatives — urged approaches that respect existing individual supply guarantees and warned that the second draft would unfairly penalize agencies that have invested in conservation and recycled water. Representatives from East Palo Alto, Daly City and others argued that the draft should protect low per‑capita users and that projected 2018 demands can be uncertain.
Several speakers asked the commission to explore a third option, recommending adjustments such as factoring per‑capita usage into the formula, phasing in any reallocation, or allowing a transfer market among wholesale customers. Ritchie noted transfers are permitted among wholesale customers under the agreement but San Francisco cannot act as a transferee; he also said staff will return to the commission on Dec. 14 with revised materials incorporating feedback.
What the commission directed: Commissioners asked staff to consider per‑capita metrics and to present a revised recommendation for the December meeting; they emphasized that the surcharge is intended as a signal to avoid exceeding the 265 MGD limit and not as a guaranteed revenue stream. No formal allocation or surcharge was adopted at the meeting.
Next steps: Staff will circulate a revised allocation proposal and analysis before the Dec. 14 meeting; the commission will consider any surcharge design as part of the March 2011 rate‑setting process when actual deliveries for the prior year are known.
