Resolutions to Adopt:
FY 2023-24 Operating Budget Midcycle changes
FY 2023-24 Capital Budget
10 Year Capital Plan
10 Year Financial Plan
February,14 2023 regular meeting of the Commission
Nancy L. Hom, CFO and AGM of Business Services
1 Agenda
1. Introduction
• Budget Hearings Recap
• Budget Policies and Next Steps
2. Items for adoption today:
Item 8: Mid-cycle changes to Operating budget FY 2023-24 Item 9: 10-Year Capital Plan, FY 2023-24 to FY 2032-33
Item 10: Capital budget, FY 2023-24
• Capital financing authorization, FY 2023-24
Item 11: 10-Year Financial Plan, FY 2023-24 to FY 2032-33 2 Recap: of Budget Hearings
• 2 public hearings
• December 13, 2022 (presentation at regular meeting)
• January 30, 2023 (special 4-hour meeting)
• Priorities, challenges, approach and budget
information provided for each enterprise, with
focus on capital plan
• Public input provided at each hearing; meets
Admin code section 3.3 obligations
3 Policies That Guide Financial Planning
• Set guidelines for rate-setting and budgeting decisions • Approved by Commission and reviewed periodically
4 Fund Balance Reserve
Policy
•Sets minimum reserves as a %
of operating expenses or “days
cash on hand”
•Provides cushion of reserves
for emergencies
Debt Service Coverage
Policy
•Ensures sufficient revenues to
pay debt service
•Meets bond indenture
requirements
Capital Financing Policy
•Guides balance between
revenue-funded and debt-
funded projects
Affordability Level of
Service
•Sets maximum bill as a % of
average household income
•Limits rate increases above set
level
•Water/wastewater only
Ratepayer Assurance
Policy
•Requires prudent use of ratepayer
funds and transparency in
budgeting and rate-setting
processes
•Sets priorities for establishing rates
and charges
Technology Policy
•Guides technology use and
adoption to ensure ratepayer
benefit
Asset Management
Policy
•Guides infrastructure
investments to maximize asset
value while meeting level of
service and performance goals
Next Steps
5 FY 2023-24 Operating and Capital Budget:
• Budget submittal to Mayor’s Office – February 22
• Mayor’s Office review – February to April
• Capital Planning Committee Review - March
• Board of Supervisors review – June
• New Fiscal Year begins – July 1
Financial Plan
• Water/Wastewater and CleanPowerSF Rate Adoption- May
Services of the San Francisco Public Utilities Commission Item 8: Mid-cycle Changes to
Operating Budget FY 2023-24
6 -
300
600
900
1,200
1,500
1,800
2,100
FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24
Capital Uses Purchase of Power
Labor Non Labor
Services of SFPUC Bureaus Services of other Departments Programmatic Projects General Reserve Contribition
Budget Overview
7 1,652
1,785
1,4311,412
1,504
$ Millions
Water
$674.6 M
38%
Wastewater
$426.2 M
24%
Hetchy Water
and Power
$315.0 M
17%
CleanPowerSF
$369.6 M
21%
FY 2023-24
$1,785 Million
Budget Overview
8 FY 2023-24
$1,785 Million
Sale of Water
38%
Sewer Service
Charges
23%
Sale of Electricity
32%
Sale of Natural Gas & Steam
1%
Other Non-Op Revenues
3%
Federal Interest
Subsidy
1%
Fund Balance
2%
Capital Uses
32%
Purchase of
Power
26%
Labor
15%
Non Labor
8%
Services of SFPUC Bureaus
7%
Services of other
Departments
5%
Programmatic Projects
3%
General Reserve Contribition
4%
Midcycle Operating Budget Changes
List of major changes from original FY 2023-24 budget
9 $
Sources
Updated revenue projection 81,742,366
Change in use of fund balance 12,714,036
Total 94,456,402
Uses
Increases in power purchase costs 123,732,848
Debt Service savings (27,663,422)
Savings in Revenue Funded Capital (14,247,884)
Recycled Water Plant 1,750,000
Workorder changes 1,511,365
Other changes 510,544
Change in General Reserve contribution 8,862,951
Total 94,456,402
Services of the San Francisco Public Utilities Commission Item 9: 10-Year Capital Plan
FY 2023-24 to FY 2032-33
10 Capital Planning Approach
• Prior capital plan was partially unfunded, with a one-year FY 2022-23 Capital Budget adopted
• This year’s goal: develop balanced FY 2023-24 capital budget and balanced 10-Year Capital Plan meeting agency’s needs, focusing on:
• Ratepayer affordability
• Capital is largest and growing share of operating costs • Rate projection: increase in combined Water/Wastewater bill of 90% over next 10 years
• Deliverability
• Align plan to actual spending capacity
• Reduce unspent balances
11 Capital Plan Process
12 Spring
2022
• Launched Capital Planning and Delivery Program
• Budget process preparation and review of financial plans Summer
2022
• Analysis of past spending vs budget
• Issued Budget Instructions
Fall 2022
• Deliverability reviews
• Meetings of Executive Steering Committee and Capital Oversight Group Winter
2022/3
• Finalization of Plan and approval by GM, written report (new for this year) completed • Commission Hearings (Dec 13 and Jan 30) and adoption (today) Future
• FY2023-24 Budget goes into effect July 1, 2023
• Capital Planning and Delivery Program ongoing - update around June 2023 Balancing the Plan
• $8.8 Billion, balanced capital plan, 11% reduction from $9.9 Billion last year • Represents the many hard choices we made as an agency to constrain capital spending:
• Carefully reviewing construction schedules and adjusting for realistic deliverability • Planning for use of unspent prior appropriations before requesting new funds • Reducing costs in the out years to offset cost increases and investment needs in near term • Diligent project prioritization process, including risk assessment • Taking into account regulatory risks that may necessitate major additional unforeseen costs • We have made great strides in this cycle, ongoing multi year project to improve capital planning and delivery 13 $million Last Year: Uses This Year: Uses Difference
Water 2,127.9 2,263.9 136.0
Wastewater 6,127.0 4,879.3 (1,247.6)
Hetchy-Water 974.4 976.9 2.5
Hetchy-Power 611.0 595.5 (15.5)
CleanPowerSF 64.5 73.0 8.5
Total 9,905.0 8,788.7 (1,116.2)
Proposed 10-Year Capital Plan
14 $million FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 Total Uses
Water 290.0 437.3 443.7 337.4 245.4 118.2 85.3 83.7 80.4 142.6 2,263.9 Wastewater 985.5 894.5 818.4 521.1 353.6 280.5 232.6 214.7 253.2 325.2 4,879.4 Hetchy Water 85.9 155.6 152.6 141.6 94.6 99.6 100.0 57.5 47.4 42.3 976.9 Hetchy Power 21.5 77.7 92.7 89.1 81.5 55.0 48.8 46.1 43.1 40.0 595.5 Clean
PowerSF 1.6 2.9 3.0 3.0 3.1 3.3 8.9 18.1 26.3 2.8 73.0
Total Uses 1,384.5 1,568.1 1,510.3 1,092.2 778.2 556.5 475.6 420.2 450.3 552.9 8,788.7 Sources
Revenue
Funded* 154.3 217.7 230.5 222.1 216.3 234.6 241.2 237.5 256.4 225.1 2,235.6 Debt Funded 1,230.2 1,350.4 1,279.8 870.1 561.9 322.0 234.4 182.7 193.9 327.7 6,553.1 Total Sources 1,384.5 1,568.1 1,510.3 1,092.2 778.2 556.5 475.6 420.2 450.3 552.9 8,788.7 *25% revenue funding
Proposed 10-Year Capital Plan
15 10-Year Capital Plan: $8.8 Billion
0 200
400
600
800
1,000
1,200
1,400
1,600
1,800
FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 Water Wastewater Hetchy Water Hetchy Power CleanPowerSF $ Millions
Wastewater Capital Plan - Key Projects
Biosolids Digester Facilities Project $1.0 B
Alemany Area Improvements $269.4 M
Folsom Area Improvements $249.5 M
Green Infrastructure $162.8 M
RnR Collection System $1.3 B
16 Water Capital Plan - Key Projects
Regional Water
SVWTP Ozone $189.4 M
SVWTP Short Term Improvements $54.7 M
Millbrae Yard $224.1 M
Local Water
Pipeline Replacement $474.9 M
New CDD Headquarters $343.6 M
Automated Meters $39.8 M
17 Hetch Hetchy Water Capital Plan – Key projects
San Joaquin Pipeline Repairs $111.9 M
Mountain Tunnel $68 M
Moccasin & Kirkwood Upgrades $38.2 M
18 Power Capital Plan - Key Projects
Power
• Retail distribution $276.4 M
• Redevelopment $176.4 M
• Streetlights $37.2 M
CleanPowerSF
• Local Renewal Program $48.8 M
• DAC Solar Program $12.2 M
19 Future Capital Spending
20 Forward looking chart showing prior unspent appropriations, 10 Year Plan and post FY 33 amounts
2,043
3,217
7,708
Services of the San Francisco Public Utilities Commission Item 10: Capital Budget
FY 2023-24
Including Capital Financing Authorization, FY 2023-24
21 FY 2023-24 Capital Budget
22 $million FY 23-24
Capital Budget
Water 290.0
Wastewater 985.5
Hetchy-Water 85.9
Hetchy-Local
Power 21.5
CleanPowerSF 1.6
Total 1,384.5
Water
21%
Wastewater
71%
Hetchy
Water
6%
Hetchy Power 2% CleanPowerSF
0%
+ financing costs of $217.1 M for
a total budget of $1,601.6 M
Capital Financing Authorizations
• Requests Board
authorization to issue
debt associated with
capital budget
• Includes the bond
amount, cost of debt
issuance and
capitalized interest
23 $million Bond
amount
Financing
cost Total
Wastewater 890.2 157.1 1,047.3
Water 305.1 53.9 359.0
Power 34.9 6.1 41.0
Total 1,230.2 217.1 1,447.3
FY 2023-24 Capital Financing Authorization
FY 2023-24 Capital Budget Key Projects
Wastewater
SEP Biosolids Project $535.8 M
Treasure Island $111.7 M
RnR Collection Systems $89.1 M
Power
Alternative Transmission
Project $7.6 M
CleanPowerSF
Local Renewable Program $.08 M
24 Regional Water
SVWTP Ozone $99.3 M
Local Water
Pipeline Replacement $54.6 M
Hetchy Water
Mountain Tunnel (Water/Joint) $40.8 M
Services of the San Francisco Public Utilities Commission Item 11: 10-Year Financial Plan
FY 2023-24 to FY 2032-33
25 10-Year Financial Plan Background
• Updated annually on a rolling basis, as required by SF Charter
• Plans are complex Excel-based financial models
• Forecast revenues, expenses, and rates
• Confirm compliance with all financial policies
• Inputs from Capital Finance, Budget, Power Risk Management, and Water Resources Planning
• Accompanying written report details assumptions and key takeaways
26 Proposed Plans Meet All Financial Policies
27 Metric Policy
Requirements Water Wastewater Hetch Hetchy
Power CleanPowerSF
Avg. Single Family
Residential Bill
(Water & WW)
Max. 2.5%
median
household inc.
1.5% - 2.0% n/a n/a
Fund Balance as a
% of Operating
Expenses
Minimum 25%
and if >68%
note plan
39% - 81% 45 - 94% 28% - 63% n/a
Days Cash on Hand
(CleanPowerSF)
Minimum 150
and target 180 n/a n/a n/a 112 - 239
Current Debt
Service Coverage
Minimum
1.10x 1.11x - 1.24x 1.41x - 2.28x 1.23x - 3.89x n/a
Indenture Debt
Service Coverage
Minimum
1.35x 1.51x - 2.00x 1.77x - 3.90x 4.37x - 25.29x n/a
Revenue-Funded %
of Capital Plan
Minimum 15-
30% 23% 27% 17% 100%
Near-Term Rate Increases
Enterprise FY
2023-24
FY
2024-25
FY
2025-26
10-Year
Annual
Avg.
Retail Water 5.0% 5.0% 5.0% 3.9%
Wholesale Water 11.6% 0.0% 0.0% 2.5%
Wastewater 9.0% 9.0% 9.0% 8.5%
Hetch Hetchy
Power 14.0% 10.0% 9.0% 6.7%
CleanPowerSF
Generation 15.0% 0.0% 0.0% 1.1%
28 • Hetch Hetchy Power rates
were approved in May 2022
• Other rates will be brought to
the Commission in May
• Wholesale water rates
updated annually per
contract
• Three years of retail water
and wastewater rates will
be proposed from ongoing
2023 rate study
• CleanPowerSF rates are
currently being adopted
annually to respond to
power market price volatility
Hetch Hetchy Power rates shown are for retail, non-municipal customers CleanPowerSF rate increase is only the generation portion of the bill; the FY 2023-24 increase in the total bill, including PG&E delivery charges, is approximately 5% Expense Assumptions
Operating Expenses
• Base of FY 2023-24
proposed budget
• Assume savings based on
historic spending levels
(water/wastewater only)
• Reduces operating
expenses ~2-4%
• Inflationary growth afterward
• 4.4% on fringe benefits
• 3% elsewhere
Capital Financing
• Interim financing with
commercial paper
• Revenue bonds refund
commercial paper
• 5% interest rate
• 30 year amortization
• Level debt service
• Federal and state low-cost
loans (WIFIA and SRF)
incorporated only if executed
29 Mitigating Risk of Volume Forecast Uncertainty
30 • More frequent rate
updates
• Automatic adjustments
such as drought
surcharge
• Considering increasing
fixed charges in
wastewater rate study
• Population and job
gr
owth from current
levels
• Declining per capita
usage
• Delays in construction
and r
ecovery from
shocks (drought,
pandemic)
Conservative
Growth
Assumptions
Safeguards
for the
Unexpected
Financial
Sustainability
Water & Wastewater Sales Recovery by FY 2025-26
31 • Pandemic recovery to
“new normal” with
lingering impact by FY
2023-24
• Drought ends FY
2023-24, recovery
over two years
• Long- term trends from
planning documents
• Price elasticity
• Conservation
• Job & population
growth
• Wastewater volumes
are based on retail
water
Wastewater Expenses More than Double
32 • Average annual
growth: 7.5%
• Capital is the driver
• Sizeable
revenue-funded
capital program
throughout
• Huge increase in
capital costs
translates into
higher debt
service costs
Wastewater Capital Plans Financially Challenging
• Revenue-funding vs. debt-
funding has tradeoffs
• CIP is 27% revenue-
funded (highest of any
Enterprise)
• Approx. $4.1B in bonds to
be issued in next 10 years
• Current strategies to
mitigate impact of borrowing
• Short debt strategies
• Refinancing existing debt
• Securing low-cost Federal
and State financing
• Can’t avoid costs unless
projects are cut
33 Projected Water & Wastewater Rate Increases
34 Fiscal Year Water Rate
Increase
Wastewater
Rate Increase
Combined
Bill Increase
FYE 2018 7.0% 11.0% 9.2%
FYE 2019 7.8% 5.9% 6.8%
FYE 2020 8.3% 7.0% 7.6%
FYE 2021 7.8% 8.0% 7.9%
FYE 2022 7.9% 8.0% 8.0%
FYE 2023 0.0% 0.0% 0.0%
FYE 2024 5.0% 9.0% 7.2%
FYE 2025 5.0% 9.0% 7.2%
FYE 2026 5.0% 9.0% 7.3%
FYE 2027 4.0% 10.0% 7.5%
FYE 2028 4.0% 10.0% 7.6%
FYE 2029 4.0% 10.0% 7.7%
FYE 2030 4.0% 9.0% 7.1%
FYE 2031 3.0% 9.0% 6.8%
FYE 2032 3.0% 5.0% 4.3%
FYE 2033 3.0% 5.0% 4.3%
HistoricProjected Combined Water/Wastewater Bill:
• 10 Year Growth: 90% (6.6% annually)
• 20 Year Growth: 164% (5% annually)
Hetch Hetchy Growing Customer Base
35 • Current customer
recovery from
pandemic at
different times
based on economic
outlook
• 4% annual growth
reflects new
customers in
redevelopment and
infill areas
• Conservative
adjustments
incorporated
Purchased Power Supply & Delivery Expenses Skyrocketing • Huge increases and volatility in power
markets driving up costs immensely
• New “Wholesale Distribution Tariff”
(WDT3) methodology increases
interconnection costs for Hetchy
customers
• Spent significant extra time this year
modelling different expenditures
• Proposed budgets assume higher end of
forecasts
• Also increased budgeted contingency to
account for risk of fluctuations beyond
what we assumed
36 2018-2022: Day-Ahead Settlement NP-15 LMP prices
2023-2024 (*): Average of Platts NP-15 forward price curves from 12/12/2022 to 1/11/2023 $38 $36 $32
$52
$74
$112
$88
$0
$20
$40
$60
$80
$100
$120
2018 2019 2020 2021 2022 2023* 2024*
Annual NP-15 prices ($/MWh)
Annual Actual and Projected Energy
Price per MWh
Hetch Hetchy Power Expenses
37 • Average annual
growth: 6.4%
• Power Supply &
Delivery steady at
39%, but was only
22% in FY 2020-21
• Debt service
increasing from
almost nothing to
13% of annual
expenses
CleanPowerSF Expenses Steady
38 10% 10%
89%
89%
$303.5
$337.0 $318.1
$350.2 $362.9 $366.4 $370.4 $377.2 $388.4 $399.7 $378.3 $-
$100
$200
$300
$400
FYE
2023
FYE
2024
FYE
2025
FYE
2026
FYE
2027
FYE
2028
FYE
2029
FYE
2030
FYE
2031
FYE
2032
FYE
2033
Millions
O&M Expenses Power Supply Revenue-Funded Projects
• Average
annual
growth: 2.2%
• Driven by
power supply
costs, and
subject to
resulting risks
Power Rate Increases
39 • Both programs facing short-term
increases that drop down in outer years
• Responding to increasing supply costs
• CleanPowerSF needs to build up reserves
• Hetch Hetchy’s longer-term trajectory
driven by capital spending
• CleanPowerSF’s flat trajectory subject to
change if power markets increase further
Program Hetch Hetchy
Power
CleanPowerSF
Generation
FYE 2024 14.0% 15.0%
FYE 2025 10.0% 0.0%
FYE 2026 9.0% 0.0%
FYE 2027 8.5% 0.0%
FYE 2028 7.0% -1.0%
FYE 2029 6.0% -1.0%
FYE 3030 4.0% -1.0%
FYE 2031 3.0% 0.0%
FYE 2032 3.0% 0.0%
FYE 2033 3.0% 0.0%
10-Year
Average 6.7% 1.1%
• Hetch Hetchy Power rates shown are for retail, non-m unicipal customers
• Hetch Hetchy FY 2023-2 4 rates were approved in May 2022 • CleanPowerSF rate increase is only the generation portion of the bill; t
he FY 2023-24 increase in the total bill, including PG&E delivery charges, is approximately 5%
Services of the San Francisco Public Utilities Commission Questions?
40 AGENDA ITEM
Public Utilities Commission
City and County of San Francisco
DEPARTMENT: Business Services AGENDA NO. 8
MEETING DATE: February 14, 2023
Adopt the Amendment to the FY 2023-24 SFPUC Operating & Programmatic Project Budgets (San Francisco Administrative Code Section 3.3(c)) : Regular Calendar
Manager: Laura Busch
Summary of
Proposed
Commission Action:
Public Hearing to consider and possible action to amend the FY 2023-24 San Francisco Public Utilities Commission Operating Budget including the Revenue Transfer for Capital in the amount of $1,785,419,481; a nd Biennial Programmatic Project Budget in the amount of $57,207,941.
Background &
Description: Budget Development
On February 8, 2022, by Resolution No. 22-0029, the San Francisco Public Utilities Commission (SFPUC) approved the FY 2022-23 and FY 2023-24 biennial operating and programmatic projects budget in the amount of (1) $1,651,537,786 for FY 2022-23 and $1,690,963,079 for FY 2023-24 for the operating budget, including revenue transfers for capital; and (2) $56,813,441 for FY 2022-23 and $56,107,941 for FY 2023-24 for the programmatic budget.
The fixed biennial budget was developed during the fall of 2021. In August 2021, the Acting SFPUC General Manager issued budget development instructions including guidance on budgetary growth and position requests for FY 2022- 23 and FY 2023-24 . The executive teams reviewed the proposals an d provided feedback through a series of Budget Steering Committee meetings in November 2021, and General Manager review and approval occurred during additional meetings in December 2021.
Because the SFPUC is currently operating under a fixed two-year budget it is proposing only critical changes to move forward in this FY 2023-24 Mid-Cycle budget amendment.
To comply with Charter Section 9.101 and the City’s Budget submittal schedule, the Commission-approved FY 2023-24 budget amendment must be submitted to the Mayor and Controller by February 21, 2023 for incorporation into the Mayor’s proposed budget and consideration by the Board of Supervisors. The SFPUC is scheduled to present the proposed changes to the biennial budget to the Board of Supervisors in June 2023.
Summary of Changes to FY 2023-24 Budget
The proposed change to the original FY 2023-24 operating budget and revenue transfer for capital budget is $94,456,402, resulting in a total revised FY 2023-24 budget of $1,785,419,481.
Sources:
Changes to funding sources from the original FY 2023-24 adopted budget include:
• A net increase in water sales of $8.4 million. Retail water revenues decreased by $15.4 million from prior budget due to revised rate increase of 5% instead of 7% shown in the original budget. This is offset by an increase of $23.1 million in wholesale revenues driven primarily by higher volumes. Water will be shifting from a use of Fund Balance to contributing $6.9 million to Fund Balance.
• Wastewater revenues assume a 9% rate increase – same as the prior budget – and minor volume adjustments, resulting in minimal change to the budget. Wastewater will be shifting from a use of Fund Balance to contributing $25.2 million to Fund Balance due to cost savings outlined in the next sections.
• Hetch Hetchy Power retail revenues are updated to reflect more conservative volume assumptions and assumed delays in projects.
Combined with the correction of the original budget being set too high due to the timing of the Rate Study adoption, this represents a $42.1 million reduction in retail sales, offset by a $8.1 million increase to wholesale revenues. Hetchy will be increasing its use of Fund Balance by $35.7 million.
• CleanPowerSF revenues are updated to reflect the revised rate proposal of 15% increase, as compared to a 9-18% decrease in the original budget, depending on the customer class. This increase of $89.3 million in revenues is needed to offset a corresponding $67.6 million
increase in power supply costs in the current volatile market.
CleanPowerSF will be increasing its contribution to Fund Balance by $23.1 million.
Uses:
Changes to the FY 2023-24 operating budget uses include:
• $27.7 million reduction in debt service due to reliance on WFIA funds rather than issuing new debt, 2022 debt service refunding transactions, and updated capital construction schedules delaying debt service payments.
Offset by the following increases:
• $123.7million increase in purchase of power due the growth of energy prices and the cost of transmission and distribution • $1.8 million increase to fund the maintenance and operations of the new Recycled Water Treatment Facility, due to come online in 2023.
• $1.5 million increase to work orders including the City Attorney and Department of Public Works to pay for required interdepartmental services.
• Lastly, an increase in contributions to Fund Balance for Water, Wastewater, and CleanPowerSF make up the balance.
Capital Revenue Transfers support enterprise pay-go or revenue funded capital of $132,691,774 for FY 2023-24. The proposed change reflects a $14,247,884 reduction and includes the following:
• A shift in funding source from revenue to debt in Water and Wastewater
• A shift of $1.5 million from the operating to capital budget in Hetchy Power
• A decrease in CleanPowerSF due to slower spending
Original Final
Operating FY 2023-24 Change FY 2023-24
Water Enterprise $ 675,129,357 (525,617) 674,603,740
Wastewater Enterprise 431,679,623 (5,435,945) 426,243,678 Hetchy Power 209,358,293 11,046,304 220,404,597
Hetchy Water 94,543,834 69,458 94,613,292
CleanPowerSF 280,251,972 89,302,202 369,554,174
Subtotal $ 1,690,963,079 $ 94,456,402 $ 1,785,419,481
External Affairs $ 8,406,698 25,642 8,432,340
General Manager 34,968,188 516,599 35,484,787
Business Services 88,513,956 178,122 88,692,078
Bureau Recoveries (131,888,842) (720,363) (132,604,667) Infrastructure 101,964,914 321,658 102,286,572 Project Recoveries,
Infrastructure (101,964,914) (321,658) (102,286,572) Total SFPUC $ 1,690,963,079 - $ 1,785,419,481
Capital Revenue
Transfer
Original
FY 2023-24
Change Final
FY 2023-24
Water Enterprise $ 48,856,658 (3,277,000) 45,579,658 Wastewater Enterprise 93,048,000 (11,709,884) 81,338,116 Hetchy Power 2,847,000 2,168,000 5,015,000 CleanPowerSF 2,188,000 (1,429,000) 759,000 Subtotal $ 146,939,658 (14,247,884) 132,691,774
Summary of Two-Year Programmatic Project Budget
The proposed increases to the FY 2023-24 programmatic projects budget total $1.1 million. Programmatic Projects are annually appropriated projects that support annual, recurring projects, including watershed protection, community benefits, and the operation of 525 Golden Gate Avenue. The proposed programmatic project budget is increasing by $1,100,000 in the Water Enterprise to consolidate the maintenance budget of the Alameda Watershed Center from the Operating Budget. This is a net neutral change to the overall budget.
Original Final
Programmatic Projects FY 2023-24 Change FY 2023-24
Water Enterprise $ 33,266,186 1,100,000 $ 34,366,186
Wastewater Enterprise 8,386,551 8,386,551
Hetchy Power 6,498,204 6,498,204
Hetchy Water 7,807,000 7,807,000
CleanPowerSF 150,000 . 150,000 Total $ 56,107,941 1,100,000 $ 57,207,941
Adherence to Commission Policies
The proposed budget changes and final proposed budget are aligned with the following relevant policies:
• City and County of San Francisco budget policies and legislation • Capital Financing Policy
• Debt Service Coverage policy
• Fund Balance Reserve policy
• Technology Policy
Result of Inaction: Not approving this item would delay the timely submittal of the SFPUC Operating and Programmatic Budgets to the Controller and Mayor.
Budget & Costs: Total Change Operating Budget*:
FY 2023-24: $94,456,402 increase to $1,785,419,481
Total Change to Capital Revenue Transfer:
FY 2023-24: $14,247,884 decrease to $132,691,774
Total Change to Programmatic Budget:
FY 2023-24: $1,100,000 increase to $57,207,941
* Includes Capital Revenue Transfer and Programmatic
Environmental
Review:
This action does not constitute a project under the California Environmental Quality Act (CEQA) Guidelines Sections 15060(c) and 15378(b)(4), because adoption of the Operating Budget involves creation of a government funding mechanism or other fiscal activities and does not involve any commitment to any specific project which may result in a potentially significant impact on the environment. The SFPUC will consider approval of projects to be fu nded through this Operating Budget only after completing any environmental review required by CEQA, Administrative Code Chapter 31, and Proposition E (approved by the voters in 2002 for Water and Wastewater projects).
Recommendation: SFPUC staff recommends that the Commission adopt the attached resolution.
APPROVAL:
COMMISSION
SECRETARY
Donna Hood
PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO.
WHEREAS, During public hearings on December 13, 2022 and January 30, 2023, the San Francisco Public Utilities Commission (SFPUC) General Manager and staff presented budget priorities for proposed mid- cycle amendments to the FY 2023- 24 Operating and Programmatic Project Budgets for the SFPUC; and
WHEREAS, The FY 2023- 24 Operating and Programmatic Project Budgets for each Enterprise and Bureau were approved by the Mayor on July 27, 2022; and
WHEREAS, The SFPUC must submit its mid -cycle changes to the FY 2023-24 Operating and Programmatic Project Budgets for approv al by the Mayor and the Board of Supervisors, as provided under Charter Section 9.101; and WHEREAS, This action does not constitute a project under the California Environmental Quality Act (CEQA) Guidelines Sections 15060(c) and 15378(b)(4), because adoption of the Operating Budget involves creation of a government funding mechanism or other fiscal activities and does not involve any commitment to any sp ecific project which may result in a potentially significant impact on the environment; and the SFPUC will consider approval of projects to be funded through this Operating Budget only after completing any environmental review required by CEQA, Administrative Code Chapter 31, and Proposition E (approved by the voters in 2002 for Water and Wastewater projects); now, therefore, be it RESOLVED, This Commission hereby approves amendments to the FY 20 23-24 Operating Budgets, including the revenue transfer for capital, as follows:
Original Final
Operating FY 2023-24 Changes FY 2023-24
Water Enterprise $ 675,129,357 (525,617) 674,603,740
Wastewater Enterprise 431,679,623 (5,435,945) 426,243,678 Hetchy Power 209,358,293 11,046,304 220,404,597
Hetchy Water 94,543,834 69,458 94,613,292
CleanPowerSF 280,251,972 89,302,202 369,554,174
Subtotal $ 1,690,963,079 $ 94,456,402 $ 1,785,419,481
External Affairs $ 8,406,698 25,642 8,432,340
General Manager 34,968,188 516,599 35,484,787
Business Services 88,513,956 178,122 88,692,078
Bureau Recoveries (131,888,842) (720,363) (132,604,667) Infrastructure 101,964,914 321,658 102,286,572 Project Recoveries,
Infrastructure (101,964,914) (321,658) (102,286,572) Total SFPUC $ 1,690,963,079 - $ 1,785,419,481
Capital Revenue
Transfer
Original
FY 2023-24
Changes Final
FY 2023-24
Water Enterprise $ 48,856,658 (3,277,000) 45,579,658 Wastewater Enterprise 93,048,000 (11,709,884) 81,338,116 Hetchy Power 2,847,000 2,168,000 5,015,000 CleanPowerSF 2,188,000 (1,429,000) 759,000 Subtotal $ 146,939,658 (14,247,884) 132,691,774
; and, be it,
FURTHER RESOLVED, That this Commission hereby approves the mid-cycle changes to the FY 2023-24 Programmatic Project Budgets summarized as follows:
Original Final
Programmatic Projects FY 2023-24 Change FY 2023-24
Water Enterprise $ 33,266,186 1,100,000 $ 34,366,186
Wastewater Enterprise 8,386,551 8,386,551
Hetchy Power 6,498,204 6,498,204
Hetchy Water 7,807,000 7,807,000
CleanPowerSF 150,000 . 150,000 Total $ 56,107,941 1,100,000 $ 57,207,941
; and, be it
FURTHER RESOLVED, That this Commission authorizes the Gene ral Manager to submit the above referenced mid-cycle amendments to the FY 2023-24 Operating and Programmatic Budgets to the Mayor and the Board of Supervisors for approval; and be it
FURTHER RESOLVED, That the General Manager is authorized to make further technical adjustments to these approved amounts as may be necessary or upon further direction from the Commission, the Mayor or the Board of Supervisors; and be it
FURTHER RESOLVED, That the General Manager is authorized to adjust salaries in conformance with amendments to the Annual Salary Ordinance and mandatory fringe benefits as provided in the Controller's instructions; and be it
FURTHER RESOLVED, That the SFPUC proposed budgets shall be filed with the Controller in conformance with the provisions of the San Francisco Charter Article IX and Administrative Code Chapter 3. Copies of the approved budget are on file in the office of the Commission Secretary; and be it
FURTHER RESOLVED, That, as required by the Commission- adopted Ratepayer Assurance Policy of 2017, the Commission finds that the SFPUC’s budget increases for FY 2023-24 are not greater than the projected inflation rate over the next two fiscal years . The cost increases that exceed inflation are power supply costs and related expenses, which are driven by market prices, and needed new costs as described to meet Level of Service goals.
I hereby certify that the foregoing resolution was adopted by the Public Utilities Commission at its meeting of February 14, 2023.
Secretary, Public Utilities Commission