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PUC: Sewer program could push household bills higher; staff shows levers to limit rate shock
Summary
PUC staff presented scenarios for financing the SSIP showing a midrange $6 billion program could raise combined water/wastewater household bills from about $83 toward roughly $250 over the long term without policy choices; staff outlined options to smooth or defer costs.
PUC finance staff presented modeling at the July 27 meeting showing how sequencing, borrowing costs and policy choices affect household utility bills under the proposed Sewer System Improvement Program.
Todd Reedstrom, assistant general manager and CFO, laid out a range of scenarios that combine a planned cash program, additional R&R, and bond‑funded SSIP work. Staff estimated the total SSIP range at $5.6 billion to $6.8 billion over 30 years and illustrated how borrowing at a conservative long‑term rate (5%) or at lower rates (4%) changes the near‑term rate path.
Key numbers: Staff showed a hypothetical combined water and wastewater household bill around $83 today and projected it could grow toward about $250 under a full‑build SSIP scenario out to the program midpoint if all components were accelerated. That projected number depends heavily on borrowing costs, timing and how much of the program is cash‑funded.
Levers to limit rate shock: Reedstrom reviewed policy levers the commission can use to keep increases manageable — temporarily reduce cash‑funded investments (shave $4 million from a given year to reduce a single‑year increase by about one percentage point), delay lower‑priority projects, pursue operating budget reductions, or stage projects to smooth debt issuance. Staff also noted that retiring older bonds will free capacity to borrow for SSIP projects without immediately raising rates.
Borrowing and market context: The PUC emphasized the importance of locking favorable interest rates when available; staff reported record‑low borrowing rates on recent water bond sales and said that refinancing at low rates produced tangible savings for ratepayers. The commission debated acceptable near‑term percentage increases (a small group voiced concern about repeated 10% increases while others favored a clear project‑by‑project rate narrative).
What this means for ratepayers: Commissioners asked for clearer narratives tying specific projects and schedules to the timing and magnitude of proposed rate changes. Staff committed to returning with updated project cost and rate impacts as projects move from LOS endorsement to alternatives analysis and CEQA.
