Commission Delegates, Ratepayers Suffer
• • • • • • • • • • September 25, 2024 • • • • • • • • • •
The SFPUC (water sewer power) is a City department of about 2800 employees and annual budget on the order of $2.1 billion. It is in the midst of a sewer improvement program of about $8 billion, and seeks to take over the electrical distribution assets in San Francisco of PG&E, which will likely cost perhaps $3 billion. (Price is being set by a state agency.) SFPUC is large, and enlarging. So are your rates.
Rates that you pay have been rising over the last couple of decades at about 8% per year, or three times inflation. This pace is expected to continue indefinitely as the $8 billion sewer work unfolds well into the 2030s. At this level of rising rates, your bill doubles every nine years.
At present, there is no citizen group concerned with rates paid for water, sewer and power. Few attend or comment to the SFPUC Commission. Rates paid affect affordability, including rents. A big election year, when attention is elsewhere...”
What constrains the growth of rates and agency? Not much. In the past, in the late 1990s, when SFPUC's financial shenanigans got to be too much, a rate freeze was imposed by voters. Before long, the City Family had found a workaround. Indeed, SFPUC is the one City agency which no longer needs to go to the voters to issue bond debt. It's got deep pockets, and all City departments know it.
Want to get something special done? Get deep-pocketed SFPUC to finance it. "Community benefits?" Yes, please…at least until corruption erupted. Got a problem with that? Just change the name: now it's "Social Impact Partnering." SFPUC took over care of Lake Merced and emergency fire prep costs. SFPUC is a prize member of the City Family.
A Commission of five (although it's been one short for quite a while) oversees SFPUC, and, in theory, protects the interests of the ratepayers. With a number of exceptions, this Commission meets twice monthly for two or three or so hours. Theoretically, the Commission also appoints the GM (General Manager. But to that the lie was put when Mayor Breed shoved through the current GM, bulldozing aside the process the Commission had set in motion. The care and feeding of the City Family proved paramount.
Lately, the Commission has been asked by staff–and has acquiesced–to delegate some of its responsibilities to the General Manager, now long-time City insider and former City Attorney Dennis Hererra. Contracts under $20 million need not come to the Commission (up from $10 million). Many other changes have been made, including when grants (gifts of public funds) may be made without Commission oversight.
Our City government is such that staff (City employees) usually get their way. Commissioners did express concern over the delegation of authority. But ultimately, no Mayoral appointee wants to be distrustful, or difficult, and true oversight dissolves.
The interest rate paid on bonds SFPUC issues was also brought up at the recent Commission meeting. The agency's bond rating, key to the interest paid, remains the same, but the" outlook" has changed to negative. This is a sign that the AA rating may be reviewed, and may be lowered. If the rating is lowered, that will raise the interest rate and amounts paid. SFPUC has so much bond debt outstanding that payment of interest is a big part of why rates have risen and are rising.
At present, there is no citizen group concerned with rates paid for water, sewer and power. Few attend or comment to the SFPUC Commission. Rates paid affect affordability, including rents. A big election year, when attention is elsewhere, is a perfect time to ask for and receive reduction of Commission oversight, as was recently done.
Unless and until residents organize and step up, expect more and larger rate hikes.
Steve Lawrence is a Westside resident and SF Public Utility Commission stalwart. Feedback: lawrence@westsideobserver.com
September 2024
