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
December 10, 2024
TO:
Commissioner Kate Stacy, President
Commissioner Joshua Arce, Vice-President
Commissioner Avni Jamdar
Commissioner Steve Leveroni
THROUGH: Dennis Herrera, General Manager
FROM: Masood Ordikhani, Assistant General Manager for External Affairs Emily Lam, Deputy Assistant General Manager for External Affairs
RE: Annual Policy & Government Affairs Update – 2024
The Policy & Government Affairs (PGA) Division within the External Affairs Bureau is committed to supporting the SFPUC's policy objectives at all government levels.
At the local level, PGA collaborates with agency personnel to develop essential legislation for our core operations. At the state and federal levels, PGA identifies and tracks hundreds of bills each year that affect our operations and works closely with internal and external stakeholders to advocate for our key priorities. PGA also develops and positions SFPUC for funding opportunities, primarily for infrastructure projects and programs.
Our core focus is on building strong relationships with policymakers to effectuate our legislative agenda and position the SFPUC as a leader in innovative and equitable policies related to our work.
This 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
2 transactions, bond sales, budget releases, and amendments to the San Francisco Administrative Code. In Fiscal Year (FY) 2023-2024, PGA secured approval for 34 SFPUC legislative items at the Board of Supervisors and tracked over 175 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. PGA also maintains relationships with policymakers in our regional service area and helps facilitate outreach and resolve issues. In 2025, one of PGA’s key roles will be building relationships with newly elected officials, policymakers, and their respective teams, educating them about the SFPUC’s services and policy priorities, and cultivating them as champions for the agency and its work.
Budget Support
PGA supports the Business Services Bureau by helping to facilitate Board of Supervisors approval for the agency’s biannual budget. PGA helped tell the story of our budget to the Board through formal briefings, informal conversations, written materials, and presentations. The FY 2024-2026 $2 billion operating, and $1.5 billion capital budgets were approved by the Board of Supervisors and the Mayor in July 2024.
Wastewater Enterprise Support
In FY 2023-2024, PGA worked with the Wastewater Enterprise and Infrastructure Bureau to secure Board of Supervisors approval for major contracts including a tunnel engineering consultant for the Folsom Area Stormwater Improvement Project and construction management services for the Southeast Plant. The Board also approved an umbrella MOU with the San Francisco Unified School District for the installation, operation, and maintenance of green infrastructure.
Additionally, PGA supports the Wastewater Enterprise by educating and engaging public officials about the agency’s stormwater management programs and efforts.
PGA serves as the direct link from the Wastewater Enterprise to elected officials during heavy rains and emergency flooding situations.
Power Enterprise Support
In FY 2023-2024, PGA supported the Power Enterprise by securing Board of Supervisors approval for several high-priority pieces of legislation including an increase to the cap on the General Manager’s delegated authority for power sales, securing authorization for bank credit facilities for CleanPowerSF, and an increase to the power and scheduling coordinator contract with the Western Area Power Administration.
PGA also supports the Our City, Our Power campaign to acquire PG&E’s local electrical assets and shift to a full public power system for San Francisco by facilitating outreach to
3 local and regional elected officials and ensuring the campaign maintains its uniform support with San Francisco policymakers. PGA conducted outreach to the San Mateo County Board of Supervisors, the City Council and City Manager of Daly City, and the Brisbane City Council and leadership as well as sustained outreach and engagement with the San Francisco Board of Supervisors.
Water Enterprise Support
In FY 2023–2024, PGA supported the Water Enterprise by securing Board of Supervisors approval for many significant items. Notably, the Board approved a $40 million MOU with the National Park Service for comprehensive management of the watershed in Yosemite. PGA also facilitated supervisor engagement and Board approvals for emergency repairs following water main breaks on Fillmore Street and in Pine Lake Park.
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 2023-2024, PGA received over 170 constituent requests from elected officials. Working closely with the three enterprises, PGA successfully resolved all constituent requests in a timely and responsive manner. PGA is also on the front-line team in any emergency response situation, from main breaks and flooding to sinkholes or power outages, to facilitate communication with policymakers so that they know what actions we are taking in response and so they can communicate with their constituents and relay issues to us.
State Policy Priorities
The 2024 State Legislature faced a $55 billion budget deficit resulting in many bills with associated costs not moving through the legislative process. The Legislature adjourned on August 31, 2024, ending the second year of a two-year session with the Governor signing 1,017 and vetoing 189 bills. PGA tracked nearly 300 bills and worked closely with internal and external stakeholders to advocate for our key priorities including the following bills:
SB 867 (Allen) Climate Bond
PGA worked closely with our associations including the California Municipal Utilities Association (CMUA) and the Association of California Water Agencies (ACWA) to advocate for placing a Climate Bond on the November 2024 ballot. PGA secured a letter from the Mayor of San Francisco in support of the Climate Bond and led an advocacy strategy with the Bay Area Clean Water Agencies (BACWA) to amplify the need for a Climate Bond to state lawmakers. PGA worked with our state advocates to
4 draft language to be included in the bill that would have allocated $400 million to the State Water Resources Control Board (SWRCB) to provide low-interest financing or grants for planning, design, and/or construction of projects that reduce nutrient loading from wastewater treatment facilities to the Bay. PGA also educated our state and federal delegation on the need to fund nutrient reduction projects and encouraged them to support the Climate Bond.
After extensive negotiations over the course of a year and a half, the Legislature passed and the Governor signed on July 7, 2024, a bill to place a $10 billion water, wildfire, drought, and clean energy bond on the November ballot. The bond was approved by a majority of voters in November and will provide a reliable funding stream for infrastructure projects in the coming years. The bond includes several pots of funding that may be valuable to the SFPUC including:
• $50 million for long-duration energy storage, zero-emission distributed energy backup assets, virtual power plants, and demand-side grid support • $325 million for clean energy transmission projects
• $870 million for habitat restoration and protection of wildlife • $415 million for coastal resilience
• $480 million for dam safety
PGA will monitor these funding opportunities and analyze them for eligibility and applicability to the SFPUC. While specific funding for the Bay Area was not included in the legislation, PGA will continue to advocate that the funding sources provided by the bond be directed to address nutrient removal projects. Moving forward, the SFPUC is organizing a coalition of wastewater utilities to advocate for state and federal funding.
SB 1255 (Durazo) Low-Income Ratepayer Assistance (LIRA) During the COVID-19 pandemic, many water and wastewater utility ratepayers fell behind on their payments and PGA led federal and state campaigns to provide $1 billion for statewide arrearage forgiveness. This resulted in securing $39.8 million in funding from the California Water and Wastewater Arrearages Payment Program (CWWAPP) to assist over 15,600 households. While these state and federal funds provided some arrears relief and were critical to avoiding the disconnection of service for San Franciscans in need, the need for ongoing assistance for low-income customers remains a significant equity issue.
Increasingly, affordability of utility bills is a high priority for the Legislature and to mitigate this issue, environmental justice groups have sponsored bills to provide a permanent source of funding for LIRA. In 2024, SB 1255 was introduced to require
5 public water agencies to establish water rate assistance programs funded by charges on ratepayer bills. Due to Proposition 218, public utilities are prohibited from using ratepayer funds to offer a low-income subsidy to ratepayers in need. As such, SB 1255 would have made this charge voluntary by providing ratepayers an option to opt out of the charges. The bill also required agencies to establish charges sufficient to provide a 20 percent bill credit to all ratepayers whose income was at or below 200 percent of the Federal Poverty Level.
SFPUC worked extensively with CMUA and the bill’s proponents and supported the bill. Unfortunately, due to the significant budget deficit, bills with budget impacts such as SB 1255 faced higher hurdles to pass, and SB 1255 was eventually held in the Assembly Appropriations Committee.
Water Rights Bills
During the 2023-24 legislative session, several bills were introduced that would have had substantial impacts on the SFPUC’s water rights. In 2024, some of these bills continued to advance in the second year of the legislative session and new bills were introduced. The SFPUC continued to work closely with ACWA and CMUA to explain to lawmakers 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 was introduced in 2023 and became a 2-year bill when the author chose not to have it heard in the Senate Natural Resources and Water Committee. The bill would have granted the SWRCB the authority to issue interim relief orders to enforce the reasonable use doctrine, water rights, water quality standards, and other provisions of state water law. The bill was intended to address water users who illegally divert water despite a SWRCB action but would have also allowed the SWRCB 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 undermined the ability of the water right holder to seek judicial review of the SWRCB’s action.
In June 2024, the author accepted the language the opposition had proposed in 2023 to limit the bill to increased citations and fines for illegal diversions. As a result, all opposition to the bill was removed and the SFPUC supported the bill as amended. The bill was passed in the Legislature and signed by the Governor.
AB 1337 (Wicks) State Water Resources Control Board: water diversion curtailment This bill was introduced in 2023 and became a two-year bill when the author chose to prevent the bill from being heard in the Senate Natural Resources and Water
6 Committee. The bill would have authorized the SWRCB to issue a curtailment order for any diversion, regardless of the basis of right, when water is not available under the diverter’s priority of right and would have made 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. After extensive meetings with Assemblymember Wicks’ Office, our associations, and other utilities on potential amendments, Assemblymember Wicks ultimately chose not to proceed with the bill.
Anticipating that additional water rights legislation will be proposed, SFPUC will continue to work closely with all stakeholders to educate legislators on how bills will impact our operations in order to protect our reliable and affordable water supply.
Power Bills
During the 2024 legislative year, electric rate affordability was a top priority for the Legislature and the Administration. PGA also continued its engagement on key SFPUC Power priorities including sponsorship of legislation to mitigate delays to the energization of new projects and advocacy against efforts to undermine SFPUC’s ability to ensure the safe use of its utility poles by telecommunications carriers.
Electric Rate Affordability
Electric rate affordability became one of the biggest political issues facing the Legislature and the Administration in 2024 due to significant approved and pending increases for investor-owned utility (IOU) electric bills. In November 2023, the California Public Utilities Commission (CPUC) approved a 10.7 percent rate increase for Pacific Gas and Electric Company (PG&E) and subsequently began reviewing additional PG&E requests for rate increases. Additionally, per the Legislature’s direction in AB 205 (2022), the CPUC began implementation of the Income-Graduated Fixed Charge (IGFC) which some legislators were concerned might raise bills for moderate-income households. As a result, the Legislature began the year by holding informational hearings, and several legislative proposals were introduced to reduce electric rates. In 2024, PGA supported a number of these bills and worked alongside our trade associations, CMUA and the California Community Choice Association (CalCCA), to advocate for electric ratepayer affordability.
AB 2054 (Bauer-Kahan) Energy: employment, gifts, and rates This bill would have required all proposed IOU wildfire mitigation capital spending to include a cost-benefit analysis with at least one credible alternative. The bill also would have prohibited leadership at the CPUC and the CPUC’s Public Advocate’s Office from receiving gifts or accepting employment, for at least one year, from any
7 entity subject to their regulation. SFPUC supported this bill but unfortunately, due to the budget deficit, the bill was held on the Suspense File in the Senate Appropriations Committee.
AB 2329 (Muratsuchi) Energy: California Affordable Decarbonization Authority This bill would have established a Climate Equity Trust Fund and an Affordable Decarbonization Authority to administer the fund. The fund would have provided direct credits on ratepayer bills and reimbursed load-serving entities and publicly- owned utilities such as SFPUC’s CleanPowerSF and Hetch Hetchy Power for eligible costs. Unfortunately, while SFPUC and CMUA supported this bill, the bill was held on the Suspense File in the Assembly Appropriations Committee due to the budget deficit.
On October 30, 2024, the Governor issued an Executive Order aimed at reducing ratepayer bills and setting the stage for further Gubernatorial action in the January 10, 2025 Budget Request. PGA anticipates electric rate affordability will continue to be a priority issue for the Legislature in 2025.
AB 2221 (Carrillo) Broadband Power Design Applications
This bill was sponsored by the telecommunications industry and would have imposed shot clocks on electric publicly-owned utilities and IOUs to approve applications to provide power to broadband pole attachments. SFPUC and CMUA opposed this bill because it would have undermined our ability to ensure the safe use of our utility poles by carriers. SFPUC worked closely with CMUA and a coalition of public utility partners to defeat the bill. The bill was ultimately held on the Suspense File in the Assembly Appropriations Committee.
SB 284 (Wiener) Electricity: energization transparency and efficiency: wholesale distribution service
In 2024, SFPUC continued our sponsorship of a bill authored by Senator Wiener which would have helped to mitigate delays to the energization of new projects. In 2023, PGA worked with the City Attorney’s Office to draft language that would have helped connect new projects, such as affordable housing developments, to the grid faster.
However, the bill did not receive a hearing in its second house policy committee and became a 2-year bill.
In 2024, PGA worked closely with Senator Wiener’s Office to move the bill forward in the Assembly and lobbied all members of the Assembly Utilities and Energy Committee including the Committee Chair. However, Senator Wiener ultimately pulled the bill from the Assembly Utilities and Energy Committee agenda and committed to refining the bill and reintroducing it in 2025.
8 Wastewater Bills
In 2024, the Legislature introduced several bills that would have impacted the SFPUC’s Wastewater Enterprise, including legislation related to wastewater testing, the regulation of per- and polyfluoroalkyl substances (PFAS), and excavations.
AB 3073 (Haney) Wastewater Testing for Illicit Substances This bill would have required the SWRCB to create a program to test for illicit substances in wastewater. The bill would have required local agencies to collect samples to be tested by the State Board. SFPUC facilitated conversations with the author’s office and the California Association of Sanitation Agencies (CASA) to amend the bill to create a pilot program to determine how best to use the collected data.
Ultimately, the bill was held on the Suspense File in the Assembly Appropriations Committee.
Looking ahead to the 2025-2026 legislative session, with 35 new members of the State Legislature taking office, we anticipate next year will again result in hundreds of newly introduced bills related to water, wastewater, and energy. PGA will continue to advocate for the SFPUC’s state policy and funding priorities in the Capitol.
Federal Policy Priorities
In 2024, PGA worked with SFPUC’s lobbyists, national trade associations, and our federal legislative delegation to advocate for SFPUC’s federal priorities. Most notably, PGA advocated for continuing and expanding funding of the U.S. Environmental Protection Agency (EPA) Clean Water and Drinking Water State Revolving Funds (SRFs). In addition, PGA submitted a Water Resources and Development Act (WRDA) request to waive the non-subordination requirements for the 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. PGA shared these requests with our federal delegation and arranged for a briefing to House Transportation and Infrastructure Committee staff to explain how SFPUC’s subordination requests could improve the WIFIA and CWIFP programs. PGA also supported legislation to establish a permanent Low-Income Household Water Assistance Program (LIHWAP) by working closely with the author, Senator Padilla, and his staff to suggest improvements to the legislation to expand eligibility requirements and make the enrollment process easier for applicants. PGA provided letters of support from SFPUC’s General Manager and the Mayor and encouraged federal lawmakers to support the bill. PGA also worked to reduce expenses for customers by working with Congressman Huffman’s Office to draft language to make water conservation rebates exempt from federal taxes. While tax legislation did not move
9 forward in the last legislative session, the incoming Administration plans to move a federal tax package forward in the next Congress. PGA will work with our federal delegation to advocate for inclusion of the water conservation rebates. PGA continues to actively work with SFPUC staff and lobbyists to explore how SFPUC may benefit from federal funding opportunities resulting from the Inflation Reduction Act of 2022.
Water and Wastewater
• Low-Income Household Water Assistance Program (LIHWAP) Establishment Act In February 2024, Senator Padilla introduced S.3830, the LIHWAP Establishment Act. Due to Proposition 218, public utilities like the SFPUC are prohibited from using ratepayer dollars to fund low-income assistance programs. This bill would make LIHWAP a permanent program, which would help mitigate the effects of rising costs on low-income customers. SFPUC supported the bill but without funding appropriated for a permanent program or pilot, it did not pass in 2024. • Water Conservation Rebate Tax Parity Act
In June 2024, Representatives Jared Huffman and John Curtis introduced this bill to eliminate taxes on water conservation rebates, wastewater management rebates, and stormwater management grants. PGA worked with SFPUC’s federal delegation to ensure the inclusion of language to ensure subsidies for projects that prevent or reduce flooding from stormwater are exempted from federal taxes. As a result, this exemption would remove a substantial barrier to SFPUC customers from participating in our Floodwater Management Grant Program. In the absence of a tax vehicle in 2024, the bill did not pass in 2024. • EPA Clean Water and Drinking Water SRFs
PGA worked with SFPUC’s lobbyists and federal delegation to submit programmatic funding requests for FY 2025 to increase State Revolving Fund (SRF) appropriations. PGA requested $3 billion for the Clean Water SRF and $3 billion for the Drinking Water SRF.
The Fiscal Year 2024 House Budget proposed 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 which are estimated to save our ratepayers over $500 million. PGA will continue to work 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 Senators Feinstein and Padilla 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
10 projects. In 2024, PGA continued to advocate for this request by working with Congresswoman Pelosi’s office to submit a similar request to the House and by working in coordination with a coalition of national water associations. PGA has engaged House Transportation and Infrastructure Committee staff and will continue to advocate for this change in 2025.
Power
In August 2022, President Biden signed a historic new investment in clean energy and infrastructure through the Inflation Reduction Act of 2022 (IRA). The landmark law invests $437 billion over 10 years, including $369 billion for energy security and climate change. Following the signing of the IRA, PGA worked with SFPUC staff to explore funding opportunities as they have been announced. The SFPUC ultimately pursued several funding opportunities administered by the EPA:
• EPA Solar For All
In 2023, 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 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. In April 2024, the IBank was awarded $249 million, some of which may be allocated to CCAs. The CPUC is in the process of developing a new program, the Community Renewable Energy (CRE) program, in which CCAs would be able to participate to provide bill credits to low-income customers. CleanPowerSF is engaging on the implementation of the program.
• EPA Clean Communities Investment Accelerator and National Clean Investment Fund
As part of their memorandum of understanding with the SFPUC, the San Francisco Local Agency Formation Commission (LAFCo) is conducting a Financing Study regarding how the City and County of San Francisco (CCSF) can access federal funding available through the EPA Greenhouse Gas Reduction Fund (GGRF) Clean Communities Investment Accelerator (CCIA) and National Clean Investment Fund (NCIF) to capitalize a San Francisco Green Bank. The EPA recently awarded $20 billion to 8 grant recipients for the NCIF and CCIA. If established, the Green Bank would provide low-interest financing to support CCSF priorities, potentially including SFPUC programs. SFPUC has worked with the Mayor’s Office, LAFCo, the
11 Department of the Environment, and the Treasurer-Tax Collector’s Office to position CCSF to be a candidate for funding from CCIA and NCIF grant recipients. • EPA Clean Ports Program
The Port of San Francisco was selected for a $55 million award to support the transition to zero-emission ferry operations. SFPUC supported the Port’s application to the EPA with a letter of commitment detailing the $31 million included in SFPUC’s FY 2025-2034 10-Year Capital Plan for the construction of infrastructure necessary to support Port electrification. PGA will continue to work with SFPUC staff and the Port to provide any additional support necessary as the Port finalizes the grant agreement with the EPA.
• Direct Pay
The IRA included provisions to enable tax-exempt and government entities such as states and local governments to receive a payment equal to the full value of tax credits for building clean energy infrastructure, generating clean electricity, installing electric vehicle charging infrastructure, and purchasing clean vehicles.
The SFPUC is in the process of filing for credits for tax year 2023. While SFPUC intends to continue pursuing tax credits via the Direct Pay mechanism, PGA anticipates that the incoming Administration may attempt to eliminate this provision of the IRA. PGA will continue to work with SFPUC’s lobbyists and our federal delegation to emphasize the importance of Direct Pay to the SFPUC.
Based on the priorities of the incoming Administration, PGA anticipates joining other agencies throughout the country to protect funding opportunities and environmental policy.