Services of the San Francisco Public Utilities Commission Fiscal Year 2023-24
Hetch Hetchy Power Tuolumne County Rates
Yee Nwe (Ma Yee) H. Yap
Principal Revenue/Rates Analyst
05.23.2023
Agenda
1. Hetch Hetchy Power Rates Overview
2. Tuolumne Customers Per Lease or Tenant
Agreements
3. FY 2023-24 Power Rates Proposal
4. Public Meeting and Notices
2 Hetch Hetchy Power Rates Overview
• SF City Charter requirement
• rates study at least every five years by independent consultant • 2022 Power Rates Study
• adopted FY 2022-23 and FY 2023-24 rates
• Key outcomes of study
• ensure financial sustainability: program cost of service • modernize and standardize Hetch Hetchy Power rates
• support City’s climate action goals
3 Tuolumne Customers
Per Lease or Tenant Agreements
• Review electric rates per lease
and tenant agreements
• Tuolumne County:
• United States Forest Service
• Partnership to address source
water quality and watershed
protection
• California Department of Fish
and Wildlife (Fish and Game)
• Fish hatchery at Moccasin Creek
• Hetch Hetchy Water and Power
Housing
• SFPUC employees
4 FY 2023-24 Power Rates Proposal
• Tuolumne customers per lease or tenant agreements:
very low total usage of Hetch Hetchy Power
• <755 thousand kilowatt hours in FY 2021-22
• <0.1% of projected volumes system-wide in FY 2023-24
• Consider: path to cost of service, bill impact
• Proposal:
• Increase rates by 50% in FY 2023-24
• Evaluate usage profiles as well as housing attributes and weather-retrofitting to standardize rate structures in near term 5 Customer FY 2022-23 FY 2023-24
US Forest Service $0.05/kWh $0.075/kWh
CA Department of Fish and Wildlife $0.035/kWh $0.0525/kWh Hetch Hetchy Water and Power Housing $0.035/kWh $0.0525/kWh Public Meeting and Notices
6 Date Item
04/28/2023 Rate Fairness Board Meeting
04/21/2023-
05/03/2023
Notice of Public Hearing
• San Francisco Public Library
• SFPUC Website
• Newspaper
05/02/2023 Notice of Public Hearing
• Hetch Hetchy Water and Power Employee Housing
05/03/2023
Notice of Public Hearing
• United States Forest Service
• CA Department of Fish and Wildlife
Thank You
7 AGENDA ITEM
Public Utilities Commission
City and County of San Francisco
DEPARTMENT Financial Services AGENDA NO. 9
MEETING DATE May 23, 2023
APPROVAL:
COMMISSION
SECRETARY Donna Hood
Calendar: Regular Calendar
Project Manager: Yee Nwe (Ma Yee) H Yap
Adopt Hetch Hetchy Power Rates for FY 2023-24 for Tuolumne County Customers Charged per Lease and/or Tenant Agreements
Summary of
Proposed
Commission
Action:
Public Hearing to adopt San Francisco Public Utilities Commission (SFPUC) Power Enterprise schedules of rates for Hetch Hetchy power service to customers in Tuolumne County charged per lease and/or tenant agreements to be effective for meter readings on or after July 1, 2023. This action constitutes the Approval Action for the P roject for the purposes of the California Environmental Quality Act (CEQA) pursuant to San Francisco Administrative Code section 31.04(h) . The Planning Department has determined that this a ction is exempt from the CEQA. If the item is approved, the Commission will rely on that determination to make its decision.
Background: 2022 SFPUC Power Rates Study
As required by the San Francisco Charter Section 8B.125, the SFPUC engaged an independent rate consultant, NewGen Strategies & Solutions, for the 2022 SFPUC Power Rates Study (Study).
The consultant documented the analyses and recommendations from the Study for both Power business lines, Hetch Hetchy Power and CleanPowerSF, in the 2022 Power Rates Study Final Report . On May 24, 2022, the SFPUC C ommission adopted Hetch Hetchy Power Electric Rates and Charges for FY 2022- 23 and FY 2023- 24 in Resolution 22- 0095.
This 2022 power rate adoption focused on almost all retail p ower rates , and it was understood a few power rates required further action in the future. This agenda item seeks to formalize a variety of other SFPUC power rates for services provide d to retail customers in Tuolumne County power service locations , where electricity rates are addressed in lease or tenant agreements.
Agenda Title: Adopt Hetch Hetchy Power Rates for FY 2023-24 for Tuolumne County Customers per Lease and/or Tenant Agreements
Commission Meeting Date: May 23, 2023
Tuolumne County Hetchy Power Lessee/Tenant Utility Rates In addition to providing retail electric service to customers via our electric billing system, Hetch Hetchy Power also provides power utility service to a variety of customers in Tuolumne County under lease and/or tenant agreements. Hetch Hetchy Power provides power utility service and charges for electricity to the following three customer groups in Tuolumne County through such agreements.
United States Forest Service
There are critical Hetch Hetchy Water and Power facilities located within the Stanislaus National Forest of the United States Forest Service in Tuolumne County. The SFPUC entered into the most recent agreement (CS-1401) with the United States Department of Agriculture, Forest Service, Stanislaus National Forest, referred to as the US Forest Service, in June 2022 to continue a cooperative, dedicated effort to address source water quality and watershed protection.
Per the agreement, the SFPUC continues to provide housing for the US Forest Service personnel for several months of the year. Hetch Hetchy Power provides electricity at the Camphouse at Cherry Valley Dam and charges electricity usage to the US Forest Service for those months.
Hetch Hetchy Power currently charges the US Forest Service for electricity at the rate of $0.05 per kilowatt hour, equivalent to the schedule of rates adopted in Resolution 15,095 in 1955 for the sale of electric energy at Moccasin, California except for those occupied by City employees and for school use of the children of such City employees.
Moccasin Hetch Hetchy Water and Power Employee Housing
The SFPUC operates the Hetch Hetchy Water and Power system, from the O’Shaughnessy Dam located on the Tuolumne River in Yosemite National Park to the Bay Area. In Moccasin, the Tuolumne County town where the Hetch Hetchy Water and Power Division is headquartered, the SFPUC houses employees who work for the SFPUC on the Hetch Hetchy Water and Power system in or near Moccasin. Tenants pay rent to the SFPUC for their housing.
Resolution 00-0097 adopted in April 2000 requires all SFPUC housing tenants in Moccasin to pay for metered utilities and other services at rates established by the SFPUC in the resolution “until such time as a ‘weather retrofitting’ program is completed on each unit at which time full market Agenda Title: Adopt Hetch Hetchy Power Rates for FY 2023-24 for Tuolumne County Customers per Lease and/or Tenant Agreements
Commission Meeting Date: May 23, 2023
rates shall be charged.”
A memorandum in November 2006 notified Moccasin tenants of the electricity rate at $0.035 per kilowatt hour, and represents the rate currently charged.
California (CA) Department of Fish and Wildlife
CA Department of Fish and Wildlife, formerly known as CA Department of Fish and Game, is a partner of the United States Fish and Wildlife Service and is a state agency governed by the CA Fish and Game Commission.
The SFPUC signed a 20-year lease with Fish and Game effective July 1952 for the purpose of constructing and maintaining a fish hatchery at Moccasin Creek, extending the lease for additional 20 years effective July 1972 in Resolution 72-0350 and another 20 years effective July 1992 in Resolution 92-0208. From 2012 when the 1992 lease expired until January 2021 when the standard agreement R2040004 was entered , CA Department of Fish and Wildlife had been leasing on a month-to-month basis under the same terms and conditions as the 1992 lease.
In a letter in February 2019, SFPUC Customer Service notified the Department of Fish and Game of its power utility rate change from $0.01 per kilowatt hour to $0.035 per kilowatt hour effective March 2019 per the lease agreement entered on July 1, 1992, which stated: “Lessee shall pay for electrical energy used for domestic purposes at the greater of either the rate of one cent ($0.01) per kilowatt hour or a rate approved by the Public Utilities Commission for similar facilities at Moccasin camp.” Comparable Moccasin residential housing billing rate is $0.035 per kilowatt hour effective 2006, and represents the rate currently charged.
FY 2023-24 Tuolumne County Hetchy Power Lessee/Tenant Utility Rates Proposal
A key outcome of the Study was bringing Hetchy Power retail rates closer to cost-of-service levels starting Fiscal Year 2022-23. To implement this policy, Staff also began reviewing the other Hetchy Power utility rates noted above. To continue the path of bringing all SFPUC power rates closer to cost of service, Staff proposes Hetchy Power electricity rates for the following groups in Tuolumne County to increase by 50% in FY 2023- 24 as follows:
Agenda Title: Adopt Hetch Hetchy Power Rates for FY 2023-24 for Tuolumne County Customers per Lease and/or Tenant Agreements
Commission Meeting Date: May 23, 2023
Tuolumne County Hetchy
Power Customer FY 2022-23 FY 2023-24
US Forest Service $0.05/kWh $0.075/kWh
Moccasin Hetch Hetchy Water
and Power Employee Housing $0.035/kWh $0.0525/kWh
CA Department of Fish and
Wildlife $0.035/kWh $0.0525/kWh
This proposed increase seeks to balance the charter required goal of bringing rates to cost of service while keeping the impact on customers incremental. With proposed FY 2023-24 rates, revenues are projected to total about forty-one thousand dollars from these customers, an increase of approximately fourteen thousand dollars from current effective rates. Staff plans on continuing to propose annual rate changes for these customers to incrementally bring rates to cost of service; FY 2023-24 proposed rates are at about 35% (US Forest Service) and 25% of the cost of service (Moccasin Hetch Hetchy Water and Power Employee Housing and CA Department of Fish and Wildlife) of the FY 2023-24 residential customer class effective rate.
Staff also proposes to keep the current flat dollar-per-kilowatt-hour rate structure in FY 2023-24. Staff will continue to further evaluate these customers’ usage profiles, along with employees’ housing attributes and weather retrofitting, to standardize rate structures in advance of the next Power rate study in 2027.
Public Outreach and Education
SFPUC’s Rate Fairness Board has been the primary public venue to discuss proposed SFPUC rate changes , and staff proposed FY 2023- 24 Tuolumne County Le ssee/Tenant Hetchy power rate changes to Rate Fairness Board on Friday, April 28, 2023. SFPUC Financial Services staff also sent an email notice to Hetch Hetchy Water and Power Division Manager and Business Service Manager on April 21 , 2023 of proposed rates.
Once rates are formally adopted, SFPUC will communicate the rate changes to customers via letter.
Agenda Title: Adopt Hetch Hetchy Power Rates for FY 2023-24 for Tuolumne County Customers per Lease and/or Tenant Agreements
Commission Meeting Date: May 23, 2023
Public Hearing Notice
Pursuant to Charter Section 16.112, a Notice of Public Hearing on the establishment of a schedule of rates was published in the official newspaper on April 26, 27, 28, 30 and May 3, 2023, and posted on the SFPUC website and at the San Francisco Public Library, for a public hearing on May 23, 2023 with possible Commission action on this date.
As a good utility practice, Hetch Hetchy Water and Power Division delivered notices on May 2, 2023 to its tenants of the public hearing on May 23, 2023. In addition, Customer Service Bureau mailed notices on May 3, 2023 to the United States Forest Service and California Department of Fish and Wildlife of the public hearing on May 23, 2023.
If approved by the Commission, these rates and charges will be subject to rejection by the Board of Supervisors (BOS), as provided in Charter section 8B.125, within 30 days following notification to the BOS. Absent BOS rejection, these proposed Tuolumne County Le ssee/Tenant Hetchy Power Utility Rates will become effective July 1, 2023 and will remain effective until revised.
Board of Supervisors Review
Pursuant to Charter Section 8B.125, Commission action adopting rates and charges, including provisions for future perio dic adjustments, is subject to rejection by the BOS within 30 days of submission to the BOS.
Funding and
Costs:
There are no additional costs to adoption of the Hetchy Power Tuolumne County Lessee/Tenant power rates.
Environmental
Review:
On May 8, 2023 the San Francisco Planning Department determined the Project to be statutorily exempt from environmental review under the CEQA section 21080(b)(8) and the CEQA Guidelines s ection 15273 (Rates, Tolls, Fares and Charges) (Case Number 2023- 004022ENV), related to the establishment, modification, structuring, restructuring, or approval of rates, tolls, fares, or other charges . The exemption determination can be found here:
https://sfpuc.sharefile.com/d-secfceb7b1a854cc0a20edf50dde91d1a This action constitutes the Approval Action for the P roject for the purposes of the CEQA pursuant to San Francisco Administrative Code section 31.04(h).
Agenda Title: Adopt Hetch Hetchy Power Rates for FY 2023-24 for Tuolumne County Customers per Lease and/or Tenant Agreements
Commission Meeting Date: May 23, 2023
Result of
Inaction:
A delay or denial in approving this agenda item will result in no Hetchy Power rate changes for various Tuolumne County Le ssee/Tenant agreements as of July 1, 2023, delay bringing all Hetch Hetchy Power rates on a path to cost of service, and lower project ed revenues for the Power Enterprise as of July 1, 2023.
Recommendation: SFPUC staff recommends that the Commission adopt the attached resolution.
PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO: ____________________
WHEREAS, In accordance with Section 8B.125 of the Charter of the City and County of San Francisco, the Commission retained an independent rate consultant, NewGen Strategies & Solutions, to conduct the 2022 SFPUC Power Rates Study; and WHEREAS, The San Francisco Public Utilities Commission staff reviewed the independent rate consultant report and prepared a staff rate proposal based on the consultant recommendations; and
WHEREAS, The General Manager found that power revenues under existing rates were not at cost of service, and recommended adjustments be made to retail rates, excluding agreements executed by the City and a Customer, to bring them closer to cost-of-service levels beginning in Fiscal Year (FY) 2022-23; and
WHEREAS, The Commission adopted FY 2022- 23 and FY 2023- 24 Hetchy Power Tariffs on May 24, 2022; and
WHEREAS, Staff has analyzed Hetch Hetchy Power electric rates established in various agreements with parties in Tuolumne County, specifically the United States Forest Service, Moccasin Hetch Hetchy Water and Power Employee Housing , and California Department of Fish and Wildlife; and
WHEREAS, Staff proposes to increase electricity rates by 50% in FY 2023 -24 for these customers whose prior rates have been set through various agreements to move rates closer to the Charter mandated cost-of-service rate setting; and
WHEREAS, The General Manager finds that power revenues under existing rates for the above parties are not at cost of service, and recom mends adjustments be made to bring them closer to cost-of-service levels beginning in FY 2023-24; and WHEREAS, A Notice of Public Hearing for this proposed rate action was duly provided, and a Public Hearing was held on May 23, 2023, where this proposed action was presented; and WHEREAS, Pursuant to the published notice of the intention of the San Francisco Public Utilities Commission to adopt revised rates to be charged by Hetch Hetchy Power for electric service to the parties listed above in Tuolumne County, a public meeting was held at the Rates Fairness Board meeting on April 28, 2023, where members of the public were given an opportunity to express their views on the process; and
WHEREAS, This Commission hereby finds that adoption of this resolution will establish rates for the purpose of: m eeting operating expenses, including employee wage rates and fringe benefits; purchasing or leasing supplies, equipment, or materials; meeting financial reserve needs and r equirements, obtaining funds for capital projects necessary to maintain service within existing service areas; and obtaining funds necessary to maintain such intra -city transfers as are authorized by the City’s Charter; and
WHEREAS, On May 8, 2023, the San Francisco Planning Department determined the Project to be statutorily exempt from environmental review pursuant to the California Environmental Quality Act (CEQA) section 21080(b)(8) and the CEQA Guidelines section 15273 (Rates, Tolls, Fares, and Charges) (Case Number 2023- 004022ENV), related to the establishment, modification, structuring, restructuring, or approval of rates, tolls, fares, or other charges; now, therefore, be it
RESOLVED, That the following Schedules of Hetch Hetchy Power Electr ic Rates shall apply to the below customers of Hetch Hetchy Power effective Fiscal Year 2023-24:
Customer Schedule FY 2023-24
United States Forest Service UH0047 $0.075/kWh
Moccasin Hetch Hetchy Water
and Power Employee Housing UH0050 $0.0525/kWh
California Department of Fish
and Wildlife UH0044 $0.0525/kWh
I hereby certify that the foregoing resolution was adopted by the Public Utilities Commission at its meeting of May 23, 2023.
______________________________________
Secretary, Public Utilities Commission