OUR MISSION: To provide our customers with high-quality, efficient and reliable water, power and sewer services in a manner that values environmental and community interests and sustains the resources entrusted to our care.
525 Golden Gate Avenue, 13th Floor
San Francisco, CA 94102
T 415.554.3155
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TTY 415.554.3488
Octo
ber 14, 2022
TO:
Commissioner Newsha Ajami, Vice President
Commissioner Sophie Maxwell
Commissioner Tim Paulson
Commissioner Tony Rivera
THR
OUGH: Dennis Herrera, General Manager
FR
OM: Masood Ordikhani, Assistant General Manager for External Affairs Me
gan Scott, Acting Director, Policy and Government Affairs RE:
Annual Policy & Government Affairs Update – 202 2
Th
e Policy & Government Affairs (PGA) Division of the External Affairs Bureau provides high-quality support across the agency to advance the SFPUC’s policy goals at all levels of government. At the local and regional level, PGA supports enterprise and bureau staff in the development and introduction of legislation that is required to conduct the agency’s core business and further its policy goals. At the state and federal level, PGA works with our lobbyists in Sacramento and Washington, D.C. to monitor and respond to legislation that would impact SFPUC operations and advocate for funding for SFPUC priorities.
Fo
stering positive relationships with policymakers is at the core of our work. We also work to position SFPUC as a thought leader and collaborative partner in advancing innovative and equitable policies and programs related to our operations and priorities.
Th
is memo, while not an exhaustive list of our work, highlights some of PGA’s major accomplishments and the critical policy issues we engaged on during the past year.
2 Local & Regional Policy Priorities
PGA continues to support SFPUC enterprises and bureaus by managing, amending, and tracking a high volume of important legislative items at the local and regional level. The team maintains strong relationships with the Board of Supervisors and the Mayor’s Office, cultivating them as champions of the SFPUC’s work.
Local Legislative Management
PGA manages the development, submission, and successful passage of key SFPUC legislative items before the Board of Supervisors, such as large contracts, California Environmental Quality Act (CEQA) findings, real estate transactions, bond sales, budget releases, and amendments to the San Francisco Administrative Code. In fiscal year 2021- 2022, PGA secured approval for 35 SFPUC legislative items at the Board of Supervisors and tracked over 330 local legislative items relevant to SFPUC enterprises and bureaus. PGA also worked with elected officials and other City departments to make amendments to ensure legislation did not negatively impact the agency.
Rates and Arrearage Relief
After the State and Federal PGA team successfully secured appropriations for utility arrearage relief, the Local PGA team secured Board of Supervisors approval to accept and expend the funds. The SFPUC received over $20 million in relief for water, power, and wastewater ratepayers who had accrued utility debt during the pandemic with additional power arrearage funding expected in early 2023. Additionally, after the Commission approved new Power Enterprise rates in May 2022, the PGA team partnered with Finance and Power to brief the Board of Supervisors and ensure that the new rates were approved.
Wastewater Enterprise Support
PGA recently secured Board of Supervisors approval for a $55 million amendment to the planning and engineering services contract for the Biosolids Digester Facilities Project, the largest project in the Sewer System Improvement Program. Additionally, PGA supports the Wastewater Enterprise by educating and engaging public officials about the agency’s stormwater management programs and efforts, particularly during the wet weather rainy season. PGA serves as the direct link from Wastewater Enterprise to elected officials during emergency flooding situations.
Power Enterprise Support
In 2022, PGA supported the Power Enterprise by securing the passage of a critical amendment to the San Francisco Administrative Code to delegate contracting authority to the General Manager for electricity purchases and sales. This amendment streamlines operations and allows the Power Enterprise to meet regulatory requirements, manage procurement risk, and secure the best possible prices and terms to keep rates affordable
3 and competitive. PGA also secured Board of Supervisors approval for other Power legislation including two long-duration storage agreements, a solar power purchase agreement, a professional services agreement for scheduling coordinator services, and an agreement with the California Independent System Operator.
Biannual Budget Support
After the Commission approved the two-year operating and one-year capital budgets in February 2022, PGA supported Business Services and the General Manager to secure adoption by the Board of Supervisors. PGA helped prepare the presentation, write talking points, and brief Supervisors. PGA also tracked questions during the budget hearing and managed follow-up with committee members. In July, the Board of Supervisors passed, and the Mayor signed, the agency’s operating budget as well as four capital project supplemental appropriations and three capital financing authorization ordinances.
Constituent Requests
PGA serves as the main point of contact for constituent requests from elected officials and their staff. These requests can range from repairing a streetlight to responding to a clogged sewer. In fiscal year 2021-2022, PGA received 123 constituent requests from elected officials. Working with the three enterprises, PGA successfully resolved all constituent requests in a timely and responsive manner.
State Policy Priorities
The 2022 legislative session was a busy year and featured a record $97.5 billion budget surplus. The State Legislature adjourned on August 31st, ending the second year of a two- year session. In 2022, PGA tracked nearly 300 bills, and actively engaged on many high priority issues and bills including:
Arrearages Funding
In 2021, PGA successfully worked with the California Municipal Utilities Association (CMUA) and other stakeholders to advocate for almost $2 billion in relief funds for electric, water, and wastewater utility arrearages. This appropriation covered arrearages accrued between March 2020 and June 15, 2021. Funding for electric arrearages was administered through the California Arrearage Payment Program (CAPP) by the Department of Community Services and Development (CSD). Water and wastewater arrearage funding was administered through the California Water and Wastewater Arrearage Payment Program (CWWAPP) by the State Water Board.
As arrearages continued to accrue after June 2021, PGA successfully advocated through CMUA to expand the coverage period to December 31, 2021 and to secure an additional $1.2 billion statewide for electric arrearages.
4 PGA also advocated to extend the eligibility period for CWWAPP to December 31, 2021, organizing a coalition of 13 water systems in a joint letter to the Governor and Legislative leadership. Unfortunately, this did not come to pass. PGA will continue to advocate for this extension as CWWAPP still has surplus funds remaining.
SB 222 (Dodd) Water and Wastewater Rate Assistance Program SB 222 proposed to create a ratepayer assistance program for water and wastewater customers struggling to pay utility bills. SFPUC supported this bill, and it passed the Legislature but was vetoed by the Governor in September 2022 due to its lack of a dedicated funding source. SFPUC will work closely with key stakeholders in the coming year to develop potential sources of ongoing funds for Low Income Rate Assistance.
AB 2247 (Bloom) Public Database for Perfluoroalkyl and Polyfluoroalkyl Substances (PFAS)
PGA has closely monitored bills that address upstream sources of PFAS for several years.
This bill was sponsored by one of our industry associations, the California Association of Sanitation Agencies (CASA), and would have required product manufacturers to disclose the presence of intentionally-added PFAS in their products. This information would then be made available in a public database. SFPUC supported the bill, and the City adopted a support position at the recommendation of both the SFPUC and the Department of the Environment (SFE). PGA worked with the Mayor’s Office and SFE to advocate for the bill as it passed through the Legislature. Unfortunately, the Governor vetoed the bill, citing its fiscal impact to the State in light of expected cost pressures in the coming years.
SB 1469 (Bradford) Water Corporation Rates
This bill was signed into law by the Governor in September 2022 and will enable water suppliers regulated by the California Public Utilities Commission (CPUC) to submit applications to decouple water sales from revenue. Eligible water corporations would be limited to those who serve more than 10,000 customers and applications may only be submitted as part of these corporations’ triennial general rate case applications, unless otherwise agreed to by the CPUC and corporation. In July 2022, SFPUC joined a support letter from the bill’s sponsor, CalWater. While SFPUC will not be impacted by SB 1469, it is good policy and was sponsored by one of our largest wholesale customers.
AB 1814 (Grayson) Transportation Electrification Funding Access for Community Choice Aggregators
Sponsored by the California Community Choice Association (CalCCA), AB 1814 would have given community choice aggregators (CCAs) such as SFPUC’s CleanPowerSF program the right to apply to the CPUC to administer ratepayer-funded transportation electrification funds in their service territories. Currently, the CPUC interprets existing statute to only allow Investor-Owned Utilities (IOUs) to administer these funds. SFPUC supported the bill,
5 so PGA coordinated with CalCCA and secured a support position from the City. However, AB 1814 faced staunch opposition from the IOUs and organized utility labor leading to the bill’s death in the Assembly Utilities and Energy Committee in March 2022.
AB 1765 (Nazarian) Rate Reduction Bonds
Following PGA’s successful two-year advocacy effort, AB 758 was signed into law in 2021, allowing public electric utilities to issue rate reduction bonds (RRBs), a low-cost financing tool that can save ratepayers money when financing infrastructure improvements, construction, and acquisitions. As AB 758 requires the California Pollution Control Financing Authority (CPCFA) in the Treasurer’s Office to review issuance of the bonds by local agencies, CPCFA became concerned that they did not have the requisite expertise to meet this obligation and requested Assemblymember Nazarian draft legislation assigning this responsibility to another agency. PGA engaged with the Treasurer’s Office and the Legislature to develop a compromise by allowing CPCFA to hire outside counsel to help review issuance of RRBs at the expense of the local agency issuing the bonds. AB 1765 was amended to include this compromise, passed by the Legislature, and signed into law by Governor Newsom in September 2022.
Looking forward, we anticipate an active legislative year in 2023 with the anticipated state budget shortfalls posing significant challenges for any bill that proposes new spending.
The expected turnover of at least 30 new state legislators following the November election (one quarter of the Legislature) will present new opportunities and challenges for our advocacy efforts. The PGA team will continue to champion SFPUC’s state policy and funding priorities in the Legislature and the Administration, with an emphasis on securing funds to help low-income ratepayers with arrears and ongoing rate assistance.
Federal Policy Priorities
This past year PGA advocated for SFPUC priorities through our lobbyists, national trade associations, and staff-led efforts in coordination with our delegation on a wide variety of issues. Most notably the two bills below provided historic levels of funding support for infrastructure. While most of the programs funded by the laws are new and it will take time (in some instances years) for agencies to set up programs and administer funding, PGA is working with SFPUC staff and with our associations to determine how SFPUC projects and priorities may benefit from the law, shape program guidance, and track funding opportunities as they are announced.
H.R. 3684 (DeFazio) Infrastructure Investment and Jobs Act In November 2021, Congress passed, and President Biden signed, the Infrastructure Investment and Jobs Act (also known as the Bipartisan Infrastructure Law) into law. The $1.2 trillion bill is a landmark investment for the nation and included significant funding for water and wastewater infrastructure. For example:
6 • The Clean Water State Revolving Fund (CWSRF) and Drinking Water State Revolving Fund (DWSRF) each received an extra $11.7 billion in funding for low- interest loans and grants on top of annual appropriations. • An additional $15 billion for lead line service replacement was also appropriated for the DWSRF.
Another significant investment is the additional $64 million that was appropriated for the Corps Water Infrastructure Financing Program (CWIFP), which will fund projects to repair aging dams. PGA previously worked with Senator Feinstein to secure the first-ever appropriation of $12 million to CWIFP in 2021. With additional appropriations secured through the regular budget process, CWIFP funds can be leveraged to provide about $7.5 billion in low-interest loans when program applications open next year.
H.R. 5376 (Yarmuth) – Inflation Reduction Act of 2022
In August 2022, Congress passed, and President Biden signed, the Inflation Reduction Act of 2022 (IRA) into law. The IRA is a scaled-down and rebranded version of the Build Back Better Act, which died in December 2021 after Senator Joe Manchin, the decisive vote in an evenly split Senate, opposed the bill based on concerns that it would increase inflation and the national debt. The IRA will invest an unprecedented $437 billion in new federal spending over 10 years, including $369 billion appropriated for energy security and climate change. This funding includes extensions of tax incentives for clean energy technologies and appropriations to 16 federal agencies for programs that will reduce emissions, advance energy innovation, and support environmental justice efforts.
Looking ahead to 2023, PGA will continue to identify new opportunities to advance SFPUC’s federal policy and funding priorities while continuing to work closely with staff across the SFPUC to explore current opportunities resulting from these historic bills.