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PUC tells supervisors municipal power rates are far below cost; proposes phased increases
Summary
PUC staff told the Budget Committee that municipal rates charged to general‑fund departments have been frozen at 3.75¢/kWh since 2002 while cost of service is 8–9¢/kWh; they proposed a multi‑year rate‑setting package (option to raise rates ~2¢ over two years or a larger 4¢ option) to restore long‑term solvency and enable bond financing for capital and renewables.
At a joint hearing on budget instructions and utilities, San Francisco Public Utilities Commission officials told the Budget and Finance Committee that the enterprise has subsidized general‑fund departments for years and now faces a structural shortfall that threatens capital programs and renewable energy initiatives.
Ed Harrington, PUC general manager, said the municipal power rate charged to many city departments remains 3.75¢ per kilowatt‑hour—the same in effect since about 2002—while a recent rate study placed cost of service at roughly 8–9¢/kWh. Because rates were kept flat, the power enterprise has deferred or cut approximately $220 million from its 10‑year capital program and is projecting a negative fund balance within two years without rate action.
PUC staff outlined two options: a modest option (about $0.02 per kWh over two years, raising the rate to roughly 4.75¢ and then 5.75¢) that would restore structural balance and enable affordable bond financing; and a larger option (around $0.04) that would move closer to cost of service and permit restoration of city‑owned renewables, Go Solar SF and energy‑efficiency programs. Todd Reidstrom, PUC CFO, estimated the two‑penny option would yield roughly $4.5 million in the first year and $9.1 million annualized. Committee members asked staff to coordinate with the mayor's budget office; the PUC said it planned commission action in December and would allow board review in January under the charter veto window.
