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
F 415.554.3161
TTY 415.554.3488
Octo
ber 31, 2023
TO:
Commissioner Tim Paulson, President
Commissioner Anthony Rivera, Vice-Pr esident
Commissioner Newsha Ajami
Commissioner Sophie Maxwell
Commissioner Kate Stacy
THR
OUGH: Dennis Herrera, General Manager
FR
OM: Masood Ordikhani, Assistant General Manager for External Affairs Em
ily Lam, Deputy Assistant General Manager for External Affairs RE:
Annual Policy & Government Affairs Update – 2023
Th
e Policy & Government Affairs (PGA) Division within the External Affairs Bureau is committed to supporting the SFPUC's policy objectives at all government levels.
Lo
cally and regionally, PGA collaborates with agency personnel to develop essential legislation for our core operations. At the state and federal levels, we work closely with lobbyists in Sacramento and Washington, D.C. to monitor and respond to legislation affecting SFPUC operations and advocate for funding.
Ou
r core focus is on building strong relationships with policymakers and positioning the SFPUC as a leader in innovative and equitable policies related to our work.
Th
is memo provides a snapshot of some of PGA's major accomplishments and key policy engagements from the past year.
Local & Regional Policy Priorities
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, real estate transactions, bond sales, budget releases, and amendments to the San Francisco
Administrative Code. In Fiscal Year (FY) 2022-2023, PGA secured approval for 27 SFPUC legislative items at the Board of Supervisors and tracked over 200 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
From February to June 2023, PGA collaborated with the Finance and Communications teams to conduct in-depth stakeholder outreach for the Water and Wastewater rates packages. PGA also directly contributed to the agency’s efforts to mitigate the impact of the rate action for our most vulnerable customers. After the State and Federal PGA team successfully advocated for and secured appropriations for utility arrearage relief, the Local PGA team secured Board of Supervisors approval to accept and expend the California Arrearage Payment Program funds. The SFPUC received $1.2 million for power customers this year, bringing the total to over $21.2 million in relief for water, power, and wastewater ratepayers who had accrued utility debt since the start of the pandemic. PGA also engaged the Board of Supervisors to help spread the word about the recent improvements to the Customer Assistance Program.
Wastewater Enterprise Support
In FY 2022 – 2023, PGA worked with the Wastewater Enterprise and Infrastructure Bureau to secure Board of Supervisors approval for major contracts including consultant program management services supporting the Wastewater Capital Improvement Program, a tunnel engineering consultant for the Folsom Area Stormwater Improvement Project, and construction management services for the Southeast Plant. Additionally, PGA supported the Wastewater Enterprise by educating and engaging public officials about the agency’s stormwater management programs and efforts, particularly during the very rainy 2022/2023 wet weather season. PGA serves as the direct link from the Wastewater Enterprise to elected officials during emergency flooding situations.
Power Enterprise Support
In FY 2022 – 2023, PGA supported the Power Enterprise by securing Board of Supervisors approval for several high-priority pieces of legislation including updated master license agreements allowing wireless telecommunications antennae and equipment on SFMTA and SFPUC poles and a major contract amendment to the contract for scheduling coordinator services that allows the SFPUC to conduct wholesale electricity transactions and use the grid operated by the California Independent System Operator.
Water Enterprise Support
In FY 2022 – 2023, PGA supported the Water Enterprise by securing Board of Supervisors approval for many significant items. Notably, the board approved a professional services agreement to move forward with the design for the new City Distribution Division (CDD) headquarters at 2000 Marin Street. This is a critical project for CDD since their existing headquarters has exceeded its useful life and is overcrowded. PGA also facilitated the approval of the emergency contract to repair the road failures on Cherry Lake Road and Hetch Hetchy Road, which were damaged by the extreme winter storms in early 2023.
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 FY 2022/2023, PGA received over 100 constituent requests from elected officials. Working closely with the three enterprises, PGA successfully resolved all constituent requests in a timely and responsive manner.
State Policy Priorities
The 2023 state legislative session was prolific and complicated by a $32 billion state budget deficit. The Legislature adjourned on September 14, 2023, ending the first year of a two-year session with the Governor signing 890 and vetoing 156 bills. PGA tracked nearly 200 bills and worked closely with internal and external stakeholders to advocate for our key priorities including the following:
Arrearages Funding
In 2021, nearly $2 billion in relief funds was designated by the state for electric, water, and wastewater utility arrearages. This appropriation initially covered arrearages accrued between March 2020 and June 15, 2021. Water and wastewater arrearage funding was administered by the State Water Resources Control Board (SWRCB) through the California Water and Wastewater Arrearage Payment Program (CWWAPP). Electric arrearage funding was administered by the California Department of Community Services and Development (CSD) through the California Arrearage Payment Program (CAPP).
While CAPP was extended by the 2022 State Budget to cover eligible arrearages through December 31, 2021, CWWAPP was not extended despite it having hundreds of millions in surplus funds remaining. Because arrearages continued to accrue after the June 15, 2021 eligibility cut off period, PGA convened and led a state wide coalition between utilities and environmental justice groups for an extension to the program. This effort proved successful when the Legislature included an extension for CWWAPP through December 31, 2022 as part of this year’s annual budget process.
This extension unlocked an additional $600 million that utilities can use to forgive customer arrears and reimburse expenditures to low-income customer assistance programs. This money will help tens of thousands of customers across the state avoid shutoffs. PGA will continue to engage in the SWRCB’s planning process for this second round of funding to ensure our ratepayers receive the maximum amount of arrears relief possible. SFPUC should receive approximately $22 million from this round.
Water Rights Bills
During the 2023 legislative session, several bills were introduced that would have had substantial impacts on the SFPUC’s water rights. The SFPUC worked closely with the Association of California Water Agencies (ACWA) and the California Municipal Utilities Association (CMUA) to articulate how these bills would affect an operator’s ability to provide reliable and affordable drinking water to customers.
AB 460 (Bauer-Kahan) State Water Resources Control Board (SWRCB): water rights and usage: interim relief: procedures
This bill would have granted the SWRCB authority to issue an interim relief order to enforce the reasonable use doctrine, water rights, water quality standards, and other provisions of state water law. This bill attempted to address water users who illegally divert water despite a SWRCB enforcement action. However, the bill would have allowed the Board to bring an action to diminish a water right against a water right holder, even if they are lawfully diverting based on that water right. The bill also would have significantly reduced the effectiveness and ability of the water right holder to seek judicial review of the Board’s action. The bill did not advance due to the author choosing not to have the bill heard in the Senate. The bill is now a 2-year bill.
AB 1337 (Wicks) State Water Resources Control Board: water diversion curtailment This bill would have authorized the SWRCB to issue a curtailment order for any diversion, regardless of basis of right, when water is not available under the diverter’s priority of right and makes the failure to comply with a curtailment order a trespass.
The bill also would have expanded the SWRCB’s ability to order curtailments, which is currently limited to declared emergency droughts, by permitting the Board to order curtailment during any year whether or not a drought has been declared. The bill did not advance due to the author choosing not to have the bill heard in the Senate. The bill is now a 2-year bill.
SB 389 (Allen) State Water Resources Control Board: investigation of water right SB 389 proposed to authorize the SWRCB to investigate and ascertain whether a water right is valid. The bill also included a provision allowing the Board to declare a forfeiture of all or part of an existing water right, which could have created significant
water supply uncertainty for water agencies. CMUA and ACWA worked closely with the author to successfully amend the bill to, among other things, remove the concerning forfeiture language. It was signed by the Governor on October 8, 2023.
AB 676 (Bennett) Water: general state policy
This bill intended to codify California’s long-standing policy of prioritizing water for domestic use which California courts have historically applied to address water rights disputes. CMUA worked successfully with the author on amendments to mitigate concerns that the legislation would potentially contradict judicial precedent, add unnecessary confusion, and create unintended consequences for water suppliers. The bill passed the Legislature on September 11, 2023 but was vetoed by the Governor on October 8, 2023.
Power Bills
During the 2023 legislative year, improving electric reliability and mitigating delays to the interconnection of new projects to the electrical grid were top priorities for the Legislature and the Administration.
AB 1373 (Garcia) Energy
AB 1373 was introduced as a policy vehicle for a proposal by the Governor intended to improve electric reliability. SFPUC worked closely with the California Community Choice Association (CalCCA) and CMUA to successfully amend the bill to (1) remove duplicative capacity payments that would have increased rates for our ratepayers, (2) limit the scope of the bill’s proposed Central Procurement Entity (CPE) to only certain long-lead time resources, thereby shielding our ratepayers from higher costs for resources we could otherwise procure affordably, and (3) remove language that would have expanded California Public Utilities Commission (CPUC) jurisdiction over local procurement autonomy thereby limiting our ability to procure affordable power on behalf of our ratepayers. The bill passed the Legislature and was signed by the Governor on October 7, 2023.
AB 965 (Carrillo) Local government: broadband permit applications This bill would have required approval of multiple permits simultaneously, undermining SFPUC’s ability to ensure the safe use of our utility poles by telecommunications carriers through individually assessing each application. SFPUC worked with CMUA to successfully secure an amendment which exempts publicly- owned electric utilities from the bill’s requirements. The bill passed the Legislature with this amendment and was signed by the Governor on October 8, 2023.
SB 284 (Wiener) Public utilities: contracting, interconnection transparency and efficiency, wholesale distribution service
SFPUC sponsored a bill authored by Senator Wiener which would have helped to mitigate electric grid interconnection delays. PGA worked with the City Attorney’s Office to draft language which would have helped connect new projects, such as affordable housing developments, to the grid faster. The bill did not receive a hearing in its second house policy committee. The bill is now a 2-year bill.
Looking ahead to next year, we anticipate 2024 will be another prolific year for water and energy legislation. The State is also considering a climate bond measure which the SFPUC is monitoring closely. PGA will continue to advocate for the SFPUC’s state policy and funding priorities in the development of that measure.
Federal Policy Priorities
In 2023, PGA advocated for SFPUC’s federal priorities on a wide range of issues by engaging our lobbyists, national trade associations, and our federal legislative delegation. Most notably, PGA advocated for continued funding of the U.S.
Environmental Protection Agency’s (EPA) Clean Water and Drinking Water State Revolving Funds (SRFs) and submitted a Water Resources and Development Act (WRDA) request to waive the non-subordination requirements for Water Infrastructure Finance and Innovation Act (WIFIA) and U.S. Army Corps Water Infrastructure Financing Program (CWIFP) loans that would increase the SFPUC’s bonding capacity for infrastructure projects and thereby reduce expenses for our ratepayers. Additionally, PGA continued to work with SFPUC staff and lobbyists to explore how SFPUC projects and priorities could benefit from federal funding opportunities created by the 2021 Bipartisan Infrastructure Law and the Inflation Reduction Act of 2022.
Water and Wastewater
• EPA Clean Water and Drinking Water SRFs
The Fiscal Year 2024 House Budget proposes cutting over $2.5 billion compared to 2021 (pre-earmark) annual federal funding for the Clean Water and Drinking Water SRFs, to less than $100 million annually. Since 2015, SFPUC has executed nine SRF loans estimated to save our ratepayers over $500 million. PGA has worked with our lobbyists and national associations to oppose these cuts and advocate for an increase in SRF funding through the appropriations process.
• WRDA Request for Loan Subordination Waiver
In September 2023, PGA submitted a WRDA application to our federal legislative delegation to allow for a waiver of the current non-subordination requirements for select loans available through WIFIA and CWIFP. This change would help the SFPUC keep rates affordable and free up bonding capacity for infrastructure projects. Our request is pending, and PGA is working with our lobbyists to build a coalition of national water associations to support our request.
Power
In 2021 and 2022, President Biden signed into law historic new investments in clean infrastructure funding. In November 2021, President Biden signed the Infrastructure Investment and Jobs Act (IIJA; also known as the Bipartisan Infrastructure Law), providing $1.2 trillion for water, wastewater, and power infrastructure. Similarly, in August 2022, President Biden signed the Inflation Reduction Act of 2022 (IRA), which invests $437 billion over 10 years, including $369 billion for energy security and climate change.
Following the signing of the IIJA and IRA, PGA worked closely with staff across the SFPUC to explore funding opportunities available as a result of both of these landmark laws. The SFPUC is actively pursuing several funding opportunities administered by the Environmental Protection Agency (EPA) in 2023:
• EPA Solar For All
SFPUC’s community choice aggregator (CCA), CleanPowerSF, worked with a group of CCAs to develop and submit a request to the California Infrastructure and Economic Development Bank (IBank), which applied directly to this $7 billion competitive grant program. The CCAs, including CleanPowerSF, requested $253 million to expand their share of the CPUC’s Disadvantaged Communities Green Tariff (DAC-GT) program by 48.5 MW. CleanPowerSF’s version of DAC-GT, branded SuperGreen Saver, provides 100% solar energy to low-income ratepayers residing in disadvantaged communities while providing a 20% electric bill discount. On October 12, 2023, the California IBank submitted an application to the EPA including a request for $200 million for CPUC programs such as DAC-GT. If the IBank is awarded funding from the EPA, California CCAs including CleanPowerSF may be eligible to receive some of this funding to benefit low-income customers in disadvantaged communities.
• EPA Clean Communities Investment Accelerator and National Clean Investment Fund
The San Francisco Local Agency Formation Commission (LAFCo) is interested in applying for funding from these two opportunities, which collectively provide $20 billion, to capitalize a future Municipal Finance Corporation (MFC). The MFC would contain a Green Bank which could provide low-interest financing to support CCSF priorities, potentially including SFPUC programs.
SFPUC is working with the Mayor’s Office, LAFCo, the Department of the Environment, and the Treasurer Tax Collector’s Office to position CCSF to be a candidate for funding received by entities eligible to apply directly to the EPA, such as the California IBank.
• EPA Clean Ports Program
The Port of San Francisco is planning to apply to this $3 billion funding opportunity to help fund the Northern Waterfront Electrification Project, which builds out SFPUC infrastructure to serve electric load in the project area. The Port is seeking funding for the first phase of the project which has an estimated funding need of $35 million. The EPA anticipates announcing a deadline of April 2024 for applications. SFPUC is coordinating with the Port to provide technical assistance and support in advance of their application.
Looking ahead to 2024, PGA will continue to advance SFPUC’s federal policy priorities while continuing to identify and explore new funding opportunities related to the IIJA and IRA as they are announced.