S.F. Public Utilities Commission rescinds old rates and adopts amended water and wastewater rate resolutions after public objections

The San Francisco Public Utilities Commission on June 7 rescinded its prior rate schedule and adopted revised water and wastewater rate resolutions after staff removed a proposed highest-tier rate and clarified grandfathering and capacity-charge rules.

Commission President Brooks opened the special meeting and staff summarized substantive revisions that had been circulated shortly before the session. Scott McDonald, a commission staff member, told commissioners that the most significant change is elimination of a previously proposed Tier 3 rate: “tier 3 is eliminated.” He said the revised structure would leave a lower Tier 1 (approximately $2.08) and a Tier 2 (about $2.50) for single-family customers and a proposed multifamily uniform rate of $2.47. McDonald estimated removing Tier 3 would reduce revenue by about $1.6 million in the first fiscal year and about $2.4 million the following fiscal year, roughly $4 million across two years.

The resolution also adds a proposed independent rate advocacy office to review rate fairness and suggests financing and payment schedules for developer capacity charges so builders can pay over time rather than in a single lump sum at permit issuance. Staff outlined grandfathering and phase-in rules for the new water capacity charge: applications filed before 01/01/2006 would be exempt; applications filed between 01/01/2006 and 06/07/2007 that receive permits after the effective date would pay 50% of the assessed charge; applicants filing after 06/07/2007 would pay the full charge. The package included a payment schedule the staff described as 5% at application, 45% at permit issuance and the remaining 50% before certificate of occupancy or sale/transfer.

Staff also proposed assessing capacity charges by unit size to reduce perceived inequities: units 500 square feet or smaller would pay roughly half the normal charge, units between 500 and 2,500 square feet would pay the normal rate, units between 2,500 and 5,000 square feet would pay 1.5 times the stated rate and units at or above 5,000 square feet would pay twice the stated rate (the resolution says customers pay whichever calculation yields the lowest charge).

Public commenters pressed the commission for more time and clearer language. Dave Bishow, president of the Westwood Highlands Association, said his community “wholeheartedly rejects any tiered structure rate program” and urged a flat per-gallon rate. Janine New of the San Francisco Apartment Association and representatives of residential builders repeatedly asked for clarity on the proposed pass-through rules and the appropriate base year for calculating allowable pass-throughs. Howard Ash, speaking as vice chair of the Rate Fairness Board (but not representing that board), said the package had not been vetted by the board and described it as “a mishmash” that he would vote down if his board had reviewed it.

Commissioners and the deputy city attorney discussed the legal timing for adopting new rates and options to preserve the commission’s 30-day notice window. To avoid losing the required procedural timeline while still allowing language cleanup, President Brooks proposed a three-step procedural approach: rescind the old rates, adopt the new resolutions as amended, and calendar a follow-up review at the commission’s regular meeting on Tuesday, June 12. The commission voted to insert the discussed amendments, adopt the water and wastewater resolutions as amended and adopt an amendment directing staff not to forward the adopted resolutions to the Board of Supervisors until after the June 12 follow-up.

Commissioners emphasized the final action was a local recommendation and that the Board of Supervisors would have to take any statutory or rent-ordinance changes needed to implement expanded tenant pass-throughs. Scott McDonald and other staff said the pass-through proposals would be advocated to the Board, but that changing the rent ordinance would require board action. The meeting closed after a brief clarification that some interdepartmental transfers shown in interim appropriations reflected reimbursements for services (electricity, steam) rather than permanent subsidies.

The commission ended its special session at 3:53 p.m., directing staff to return with clarified language and to hold the package from transmittal to the Board of Supervisors until after the June 12 meeting to allow public and stakeholder comment and technical cleanup.

Ending: The commission adopted the amended water and wastewater resolutions and set the matter for further review on June 12; the Board of Supervisors will receive the commission’s recommendation only after the commission’s follow-up review.