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SFPUC adopts modest wholesale water rate increase for FY26, cites smoothing strategy
Summary
The commission approved a 2.3% wholesale water rate increase to $5.80 per CCF for FY 2025–26; staff said the rise reflects revenue‑funded capital, debt service and operating costs and uses a balancing account to smooth future changes.
The San Francisco Public Utilities Commission voted to adopt wholesale water rates for fiscal year 2025–26 that increase the wholesale commodity rate to $5.80 per hundred cubic feet, a 2.3% change from the current rate.
Matthew Freiberg, the PUC’s rates manager, explained the annual rate‑setting methodology: calculate the wholesale revenue requirement (the wholesale share of operating and capital costs), subtract projected fixed revenues, apply the balancing account and divide by projected wholesale sales volumes. Freiberg said the principal drivers of the FY26 increase are increased use of revenue‑funded capital, growth in debt service and rising operating expenses, partially offset by higher wholesale sales volumes and the continued strategic use of a balancing account to smooth rate fluctuations.
Commissioners and the general manager discussed trade‑offs for downward pressure on long‑term rates, including tighter capital spending controls and revisiting the 10‑year capital plan. Vice President Arce raised concerns about projected rate jumps in the late 2020s and offered to participate in budget and capital trade‑off discussions after the presentation.
Tom Smigel representing BOSCA (the Bay Area wholesale customer group) told commissioners BOSCA understands the increase and appreciates staff’s process; BOSCA highlighted the dual mandate of fair price and reliable supply.
Votes at a glance: the commission approved the proposed wholesale rates by unanimous vote.
Why it matters: wholesale rates affect two‑thirds of the regional water sales and feed into retail and wholesale customers’ budgets; smoothing via the balancing account is intended to avoid sharp short‑term swings but trade‑offs may affect long‑term affordability.
Next steps: staff will continue budget and rate‑fairness board presentations and public forums as the PUC refines multi‑year budgets and affordability protections.
