WESIP quarterly report: program momentum and potential bid savings, but water revenues fall short

Julie LaBonte, WESIP director, told commissioners the program is moving forward with more projects entering construction and several contracts awarded below engineer estimates. She reported the program total at about $4.59 billion and said early bid results for Bay Division pipeline and tunnel work could yield potential savings on the order of tens of millions of dollars, which would materially offset recently reported cost variances.

KPMG partner Steven Devater presented the independent annual audit and issued an unqualified (clean) opinion, reporting no material weaknesses or significant deficiencies in the SFPUC’s financial statements.

CFO Todd Reedstrom followed with a first‑quarter financial briefing that flagged a sustained decline in water consumption. Reedstrom said per‑capita conservation and economic slowdown have reduced deliveries compared with the peak year; on current trends the water enterprise faces an estimated $21 million revenue shortfall for the fiscal year and cash‑timing pressures on wholesale receipts. He said wastewater faces a smaller projected shortfall but noted unanticipated cleanup costs and overtime tied to flood responses. Reserves and debt‑coverage ratios remain within policy but the shortfalls will affect near‑term discretionary spending decisions and could limit the ability to accelerate certain cash‑funded repair and replacement plans.

Commissioners pressed staff about forecasting methods and the relationship between earned‑value project performance and actual expenditures. Reedstrom and WESIP staff said some apparent underspending reflects timing and invoice accruals, and they expect future reports to fold in confirmed bid savings where appropriate.

Reedstrom also presented options for covering a $1 million general‑fund subsidy that currently supports the PUC’s low‑income assistance program. Staff estimated a retail surcharge to raise $1 million would average about $0.22 per month on a single‑family bill (roughly $0.30 when averaged across all customers), and described the timeline required to place a dedicated surcharge or special tax on the June ballot if commissioners and the board choose that route. Commissioners asked for further analysis and outreach before any decision.

No major policy decisions were taken at the meeting; the commission accepted the audit and the quarterly reports and directed staff to return with more detailed metric and budget analyses in subsequent sessions.