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
Date: February 11, 2025
To: Kate H. Stacy, President
Joshua Ace, Vice President
Avni Jamdar, Commissioner
Steve Leveroni, Commissioner
Through: Dennis J. Herrera, General Manager
From: Vivian Chen, Deputy Chief Financial Officer
RE: SFPUC Fiscal Year 2023-24 Annual Comprehensive Financial Report and Popular Annual Financial Report
Financial Services is pleased to present the FY 2023-24 Annual Comprehensive Financial Report (ACFR) issued by Macias Gini & O’Connell LLP on December 20, 2024 and the FY 2023-24 Popular Annual Financial Report (PAFR) focusing on SFPUC’s “Organizational Excellence”.
The reports can be found on our public-facing website:
https://www.sfpuc.gov/sites/default/files/about-us/policies-reports/ACFR_FY2024_SFPUC.pdf https://sfpuc.org/about-us/reports/popular-annual-financial-reports
The ACFR describes our financial activities, condition, and services as an organization, inclusive of the Water, Wastewater, and Hetch Hetchy Water & Power & CleanPowerSF audited financial statements. The report includes financial and statistical information, inclusive of ten years of financial and operating indicators and trends, social and economic data, and other metrics of interest to the general public and investors. The Government Finance Officers Association (GFOA) has awarded the SFPUC the prestigious Certificate of Achievement in Financial Reporting annually since 2009.
The PAFR is specifically designed to be readily accessible and easily understandable to the general public and interested parties without a background in public finance. This year’s report highlights our agency’s resiliency, reliability, and stewardship in the delivering of utility services to our customers. The SFPUC has received the GFOA Award for Outstanding Achievement in Popular Annual Financial Reporting annually since 2010. The award recognizes our commitment to transparency and increasing public awareness by providing an overview of our financial condition.
We are looking forward to another year of both prestigious awards for fiscal year 2024.
cc: Ronald P. Flynn, Deputy General Manager
Nancy L. Hom, Assistant General Manager, Business Services & Chief Financial Officer Laura Busch, Deputy Chief Financial Officer
Att: FY 2023-24 Annual Comprehensive Financial Report
FY 2023-24 Popular Annual Financial Report
Annual Comprehensive
Financial Report
Fiscal Years Ended June 30, 2024 and 2023
San Francisco Public Utilities Commission
An Enterprise Department of the City and County of San Francisco, California Sustaining the Resources
Entrusted to Our Care.
The San Francisco Public Utilities Commission
An Enterprise Department of the City and County of
San Francisco, California
Annual Comprehensive Financial Report for the
Fiscal Years Ended
June 30, 2024 and 2023
Prepared by SFPUC Financial Services
Nancy L. Hom
Chief Financial Officer and Assistant General Manager, Business Services
The San Francisco Public Utilities Commission
TABLE OF CONTENTS
Page
Introductory Section (Unaudited) 1–15
General Manager’s Transmittal Letter 2–3
The Reporting Entity 4–5
Mission, Vision and Values and Commission Members 6–7
Structure and Organizational Chart 8
Agency Strategic Plan 9
Enterprise Risk Management Framework 9–10
San Francisco’s Budget Process 11
Operating and Capital Budgets 11–12
Ten-Year Financial Plan 13
Ten-Year Capital Plan 13
Financial Transparency, Reporting and Auditing Process 13 Financial Authority and Policies 14
Accounting Systems, Policies, and Internal Controls 14
Achievement Awards from Government Finance Officers Association 14-15 Financial Section
16–180
Independent Auditor’s Report 17–19
Management’s Discussion and Analysis (Unaudited) 20–63
Basic Financial Statements 64–169
Statements of Net Position – Proprietary Funds 64–65
Statements of Revenues, Expenses, and Changes in Net Position – Proprietary Funds
66 Statements of Cash Flows – Proprietary Funds 67–68
Notes to Basic Financial Statements 69–168
Required Supplementary Information (Unaudited) 169–180
Schedules of the Proportionate Share of the Net Pension (Asset)/Liability
170
Schedules of Employer Contributions - Pension Plan 171–172 Schedules of Changes in Total Pension Liability and Related Ratios – Replacement Benefits Plan
173
Schedules of Changes in Other Postemployment Benefits Liability and Related Ratios - Other Postemployment Healthcare Benefits Plan
174
Page
Schedules of Employer Contributions -
Other Postemployment Healthcare Benefits Plan
175
Supplementary Information (Proprietary Funds)
176–180
Schedule of Changes in Net Position – Dollar and Percentage Change vs. Prior Year
176–177
Schedule of Changes in Revenues, Expenses, and Net Position – Dollar and Percentage Change vs. Prior Year
178
Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards
179–180
Statistical Section (Unaudited)
181–267
Financial Trends 182–212
Comparative Highlights of Revenues and Expenses 183–188 Changes in Net Position 189–200
Summary of Net Position by Component 201–206
Investments in Capital Assets 207–212
Revenue Capacity 213–220
Water, Wastewater, Hetchy Power, and CleanPowerSF Rates History
214–217
Net Revenue and Debt Service Coverage 218–220
Debt Capacity 221–242
Debt Ratings 222
Summary of Debt Outstanding 223–225
History of Outstanding Debt by Type 226–227
Future Principal and Interest Payments for Debt Issues 228–242 Demographic and Economic Information 243–260
City and County of San Francisco Economic and General
Information
244–248
Summary of Accounts by Type of Customer 249–250
Water Accounts and Billings 251
Historical Water Sales 252–254
Wholesale Water Customers 255
Water and Wastewater Accounts, and Billings by Type of Customer 256–257 Historical Hetchy Water Sales 258
Historical Hetchy Power Electric Sales 259
Historical CleanPowerSF Electric Sales 260
Page
Operating Information 261–267
Budgeted Full-Time Equivalent (FTEs) Employees by Division 262 Operating and Capacity Indicators 263–264
Major Water Wholesale, Retail, and Sewer Customer Accounts by Revenue
265
Major Electric Retail and Wholesale Customer Accounts by Revenue 266 Performance Measures 267
Project Team Acknowledgments
268
1 Introductory Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
Introductory Section (Unaudited)
General Manager’s Transmittal Letter
The Reporting Entity
Mission, Vision and Values and Commission Members
Structure and Organizational Chart
Agency Strategic Plan
Enterprise Risk Management Framework
San Francisco’s Budget Process
Operating and Capital Budgets
Ten-Year Financial Plan
Ten-Year Capital Plan
Financial Transparency, Reporting and Auditing Process
Financial Authority and Policies
Accounting Systems, Policies, and Internal Controls
Achievement Awards from Government Finance Officers Association
The San Francisco Public Utilities Commission
An Enterprise Department of the City and County of San Francisco, California 2 Introductory Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
SAN FRANCISCO PUBLIC UTILITIES COMMISSION
General Manager’s Transmittal Letter
December 20, 2024
Dear Customers and Interested Parties,
On behalf of the San Francisco Public Utilities Commission (SFPUC) I am pleased to share our Annual Comprehensive Financial Report for the fiscal years ended June 30, 2024 and 2023.
The SFPUC reliably delivers essential water, power, and sewer services that support the functioning and well-being of San Francisco and the Bay Area. This report highlights our commitment to our core mission and long-term financial strength. We are guided by three key priorities: affordability, responsible management, and investing where it matters.
As part of our commitment to affordability, we secured alternative revenue sources to help manage utility rates, including nearly $14 million in state and federal debt relief and $6 million in low-income assistance for customers who fell behind on their water and sewer bills during the pandemic.
In total, the SFPUC has secured and credited customers with more than $40 million in pandemic related utility bill relief. This includes a second round of CleanPowerSF and Hetch Hetchy Power bill credits and low-income discounts totaling almost $1.3 million, which the SFPUC assigned to customers in early 2023.
Responsible management of our resources is central to our budget and operations. By creating and committing to an environmental justice policy 15 years ago, followed by a comprehensive community benefits policy, we have built trust and established partnerships in historically underserved communities, while improving the quality of life in SFPUC service areas.
City residents worked more than 34% of the total hours on SFPUC construction projects through the end of fiscal year 2024. They also completed 59% of all apprentice hours on the Sewer System Improvement Program, gaining training, trades skills, family-supporting wages, and healthcare and pension benefits. Future construction projects are projected to create another 50,000 jobs over the next 10 years.
The SFPUC is prioritizing infrastructure projects that will have the greatest impact on our community's growth and sustainability, investing where it matters most. One of the most notable projects in our 10- year capital plan is the SFPUC's $1.55 billion commitment to reduce nutrients and protect water quality in San Francisco Bay.
Launching CleanPowerSF eight years ago has helped position the SFPUC as a utility of the future. Now we provide about 75% of San Francisco’s electricity through our CleanPowerSF and Hetch Hetchy Power programs, and we are working to expand public power so that all San Franciscans can benefit.
Our public power is clean, reliable, and affordable, saving customers $170 million in 2023 on electricity bills compared to what they would have otherwise paid to PG&E. We are moving forward on our bid to buy the portion of PG&E’s electricity grid that serves San Francisco. The money to acquire the grid would not come from the City’s budget or taxes. It would be paid over time through electric rates.
3 Introductory Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
While infrastructure forms the backbone of our operations, our people drive our success. The SFPUC is investing in retention, recruitment, and a diverse, equitable, and inclusive workforce.
This investment expands talent development opportunities and also enhances our financial strength, bringing different perspectives to improve problem-solving, encourage new ideas, and serve our diverse customer base.
This year’s report reflects all of this and highlights how we consistently demonstrate resilience, stability, and a strong commitment to continuous improvement and ethical practices.
This Annual Comprehensive Financial Report has been prepared by the SFPUC’s Financial Services Bureau in accordance with the requirements set by the Governmental Accounting Standards Board (GASB). The information provided in this report is based on a comprehensive system of internal processes, and as required, our financial statements were audited by a firm of independent certified accountants. The SFPUC’s management is responsible for the data and information provided, and believes the report is accurate in all respects.
The SFPUC’s auditors Macias Gini & O’Connell LLP have issued an unmodified (clean) audit of our agency’s financial statements as of and for the years ended June 30, 2024 and 2023. This audit provides accountability and transparency of the SFPUC’s financial activities, while reflecting the ethical way our agency operates. A copy of this independent auditor’s report can be found in the financial section of this report.
We thank the Mayor, Board of Supervisors and our Commissioners and staff for their unwavering dedication to serving San Francisco and securing a better and sustainable future for everyone.
Respectfully submitted,
Dennis J. Herrera
General Manager
San Francisco Public Utilities Commission
4 Introductory Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
The Reporting Entity - Profile of the San Francisco Public Utilities Commission
The San Francisco Public Utilities Commission (SFPUC), an enterprise department of the City and County of San Francisco (the City), is responsible for the operation, maintenance, and development of three utility enterprises: Water, Wastewater, and Hetch Hetchy Water and Power and CleanPowerSF. We provide wholesale and retail drinking water to the San Francisco Bay Area, wastewater collection and treatment within San Francisco and three neighboring municipalities, and power to residential and commercial customers and municipal facilities.
Our Business Services, External Affairs, and Infrastructure bureaus provide support and administrative services and are funded through utility rates and charges.
The Water Enterprise operates the Hetch Hetchy Regional Water System (System), a wholesale and retail drinking water supply system that serves 2.7 million customers in Alameda, Santa Clara, San Mateo, and San Francisco counties. The upcountry portion of the System begins with Hetch Hetchy Reservoir in Yosemite National Park. Impounded by O’Shaughnessy Dam, Hetch Hetchy Reservoir water passes through hydroelectric powerhouses before it enters the San Joaquin Pipelines, the Tesla Ultraviolet Treatment Facility, and the Coast Range Tunnel on its journey to the Bay Area.
The Bay Area portion of the System includes water collection, treatment, and transmission facilities from the Alameda East Portal to the wholesale service area and terminal reservoirs in San Francisco. Water storage facilities include watersheds, dams, and reservoirs such as our Calaveras, San Antonio, Crystal Springs, Pilarcitos, and San Andreas. The water treatment facilities are Tesla Ultraviolet Treatment Facility, disinfecting the Hetch Hetchy supply; Sunol Valley Water Treatment Plant, treating the water from the Calaveras and San Antonio supply as well as the stored Hetch Hetchy supply; and Harry Tracy Water Treatment Plant, treating the water from the Crystal Springs and San Andreas supply. The water transmission system in the Bay Area and Peninsula includes the Bay Division, San Andreas, Sunset Supply, and Crystal Springs pipelines. The Bay Area transmission system also includes Irvington Tunnel 1 and Tunnel 2, the Bay Tunnel, and the Crystal Springs Bypass Tunnel.
The Water Enterprise also manages water distribution in the City and the majority of the drinking water is supplied by our system, originates as snowmelt within the 459-square-mile Hetch Hetchy Watershed on the upper Tuolumne River within Yosemite National Park. This high-quality water is transported 167 miles across California solely by gravity. The Hetch Hetchy water supply is augmented with precipitation collected in the reservoirs of the Alameda Creek Watershed in Alameda County, and the Peninsula Watershed in San Mateo County. The Regional Groundwater Storage and Recovery Project, currently under construction, will provide additional dry year water supply to the System for drought management.
Wa
ter Enterprise revenue is based on retail and wholesale water rate payments from customers. Retail rates are set by the SFPUC, while wholesale rates are set by the Commission pursuant to our Water Supply Agreement with our wholesale customers.
The Wastewater Enterprise is responsible for the operation and maintenance of San Francisco’s combined sewer system that collects, treats, and discharges once treated, sanitary sewage (toilet flushing, bathroom and kitchen sinks, showers) and stormwater runoff (rainwater falling on our roofs, sidewalks and streets within San Francisco, parts of Daly City, the Bayshore Sanitary District, Brisbane, Treasure Island, and Yerba Buena Island. This work is crucial for the protection of public health, and for the environmental safety of the San Francisco Bay and Pacific Ocean. Our combined sewer system is unique to coastal California and offers significant environmental benefits because it captures and treats both stormwater (rain runoff) and sanitary sewage from homes and businesses, and these combined flows are referred to as wastewater.
San Francisco wastewater and stormwater flows are treated at three facilities: the Southeast Treatment Plant, the Oceanside Treatment Plant, and the North Point Wet Weather Facility, the last of which is operated only in wet weather. The sewer system currently can handle up to an average of 70 million gallons per day (MGD) in dry weather and can treat up to 575 MGD in wet weather. The Wastewater Enterprise operates pump stations, discharge points, and the massive underground transport/storage structures around the City that have storage capacity up to 200 million gallons.
Enterprises Funds
Water Water
Wastewater Wastewater
Hetch Hetchy
Hetchy Water
Hetchy Power
CleanPowerSF
5 Introductory Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
The Wastewater Enterprise serves both residential and commercial accounts as well as some municipal customers. We operate, clean, inspect, and maintain more than 1,000 miles of sewer pipes. We regularly monitor areas of the San Francisco shoreline for water quality where water recreation is common and provide water quality reports to the public using our 24-hour hotline, website, and e-newsletters.
In a combined sewer system, such as San Francisco’s, managing stormwater is an important priority for the SFPUC and the City. We take a comprehensive approach to managing stormwater and advancing flood resilience across the City. Although no sewer system can handle the heaviest rains, we are pursuing a variety of approaches to improve the City’s flood resilience in the face of increasingly intense rainstorms. The comprehensive RainReadySF Program, which is a combination of planned infrastructure improvements, coordinated City services and innovative programs, provides residents and businesses with the resources they need to reduce the risk of flooding during a major rainstorm.
The Hetch Hetchy Water and Power and CleanPowerSF Enterprise (Hetch Hetchy) comprises of three key components:
(1) Hetch Hetchy Water (Hetchy Water), which operates and maintains the upcountry water and power facilities;
(2) Hetch Hetchy Power (Hetchy Power), responsible for all power utility wholesale and retail transactions and in-City power operations; and
(3) CleanPowerSF, a Community Choice Aggregation (CCA) that provides San Francisco residents and businesses with electricity supply services sourced from new and existing clean energy sources.
Hetchy Water is responsible for operating the Hetch Hetchy Reservoir, the main source of water for the Hetch Hetchy Regional Water System (System) and plays a key role in water delivery in California. Several of the Hetch Hetchy Water facilities are joint assets and are used for both water transmission and power generation and transmission. Operating and capital costs of these facilities are allocated 45% to Hetchy Water and 55% to Hetchy Power. Refer to Water Enterprise for more information on the System.
Hetchy Power is the publicly owned utility for San Francisco. The Hetchy Power System is comprised of transmission lines and some local distribution facilities. It has a generation portfolio that includes three major hydroelectric powerhouses – Holm, Kirkwood, and Moccasin – in the Sierra Nevada mountain range and 28 solar arrays in San Francisco. Hetchy Power revenue is based on retail and wholesale power-rate payments and charges collected from customers. Retail rates are set by the Commission.
Hetchy Power customers include San Francisco International Airport (SFO), libraries, police stations, City Hall, San Francisco Municipal Transportation Agency (SFMTA), San Francisco Port Authority, Treasure Island, Hunter’s Point Shipyard, and the Transbay Transit Center. Hetchy Power also owns, operates, and maintains approximately 60% of the streetlights in the City. Finally, Hetchy Power provides electrical maintenance services, energy efficiency programs, and distributed generation services to our customers.
CleanPowerSF, San Francisco’s CCA program, provides clean electricity supply to residents and businesses in San Francisco. Under this program, CleanPowerSF supplies customers with electricity from renewable sources like solar wind, and hydro power. Pacific Gas & Electric Company (PG&E) delivers the energy via their electrical grid. CleanPowerSF’s Green product features at least 50% California Renewables Portfolio Standard (RPS) certified renewable energy, and its SuperGreen product offers 100% California RPS-certified renewable energy.
CleanPowerSF serves approximately 385,000 customer accounts in San Francisco. Collectively, Hetch Hetchy Power and CleanPowerSF meet more than 70% of the electricity demand in San Francisco with clean power.
6 Introductory Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
Mission, Vision, and Values
The mission of the San Francisco Public Utilities Commission (SFPUC or the Commission) is to provide our customers with high- quality, efficient, and reliable water, power, and wastewater services in a manner that is inclusive of environmental and community interests, and sustains the resources entrusted to the SFPUC’s care.
SFPUC values sustainability as a fundamental business principle, exemplified through the adoption of an agency-wide strategic sustainability plan to ingrain the values of a sustainable future into our agency’s core processes. The SFPUC is a sustainable utility leader, recognized for superior levels in service, value, environmental stewardship and innovation. Most importantly we value our workforce and community as reflected in the core values adopted by our organization.
• Communication: Listen and communicate honestly and openly. • Diversity: Valuing a workforce that reflects all manner of views, experiences, backgrounds, and talents, and recognize it is vital to the SFPUC success.
• Equal Opportunity: Provide opportunities to all staff to contribute and reach their potential. To achieve this, the SFPUC must be a learning organization.
• Excellence: Strive for personal and professional excellence, and recognize exemplary performance by seeking continuous improvement.
• Inclusiveness: Provide access and transparency to stakeholders and community members. • Respect: Understand and appreciate the inherent value of the SFPUC’s staff, customers, and community. • Safety: Take the health and safety of the SFPUC’s employees, customers, and communities seriously. • Service: Focus on customer satisfaction, health, and safety. • Stewardship: Responsibly manage the resources entrusted to the SFPUC’s care. • Teamwork: Support a cooperative work environment; the SFPUC team is strengthened by the diversity and contributions of its members.
• Trust: Act with honesty, integrity, and fairness.
Paulson Commissioner
Commissioner
(July 2021 to January
7 Introductory Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2023
8 Introductory Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
Organizational Chart as of June 2024
Note: AGM is Assistant General Manager, the person who leads an Enterprise or Bureau.
9 Introductory Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
The Agency Strategic Plan is a high-level and future-oriented plan. The purpose is to better align the work of the Water, Wastewater and Hetch Hetchy Enterprises, set a strategic direction and identify key priorities.
The Agency Strategic Plan outlines the mission, vision and values and sets forth 6 priority goals and supporting objectives.
The goals are as follows:
• Reliable service and assets;
• Organizational excellence;
• Effective workforce;
• Financial sustainability;
• Stakeholder and community interest; and
• Environmental stewardship
Each Goal has one or more Executive Champions
who have worked across the Enterprises,
Infrastructure, and the Bureaus to develop
performance measures including target and baseline
metrics. There is a Lead Strategist for each of the six goal area who will carry the vision of their respective goal area will report biannually to the Goal
Champions on progress of achieving the
performance measures consistent with the
target/baseline. At the end of the fiscal year, each
Goal Champion is required to report performance
measured against the target/baseline. More details
of the 2020 SFPUC Strategic plan are
available at https://www.sfpuc.gov/about-us/
policies-
plans/agency-strategic-plan and the Performance
Measures in the Operating Information section of
this report.
Enterprise Risk Management Framework
The SFPUC helps ensure successful implementation of our Mission, Vision, and Values by integrating the principles of Enterprise Risk Management (ERM) into organizational culture and strategic decision making. In planning for our future, the ERM framework promotes a culture where risks are identified, assessed, prioritized, and managed to minimize threats
hindering us from achieving our goals; and to maximize
opportunities benefiting the SFPUC. Accountability and
transparency are promoted through assignment of identified risks to owners, and routine reporting of mitigation status to senior management. The ERM framework is a continuous
process that strengthens organizational structure and culture through communication and awareness. The Risk Management division provides support to the SFPUC’s journey from a traditional risk management approach towards enterprise risk management – emphasizing effective management of the total cost of risk and management of risk for better outcomes.
In fiscal years 2015 and 2016, respectively, the Power
Enterprise adopted and implemented the ISO 31000 standard for Enterprise Risk Management for the Hetchy Power and
CleanPowerSF program. The program enables systematic and proactive identification
and analysis of risks that threaten
business
We support a cooperative
strengthened by diversity.
We focus on customer integrity, and fairness.
satisfaction and innovation.
Inclusiveness
We provide access and
transparency to stakeholders
and community members.
We take the health and safety
of our employees, customers
and communities seriously.
We strive for personal excellence,
recognize exemplary performance,
and seek continuous improvement.
We responsibly manage the
resources entrusted to our
care in a sustainable manner.
We value a diverse workforce
that reflects all manner of views,
experiences, backgrounds and
talents, and recognize it is vital
to our success.
Establish the context
Risk assessment
Risk treatment
Risk evaluation
Risk analysis
Risk identification
Communicate and consult
Monitor and review
10 Introductory Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
objectives before they occur. Proper identification of risks to business objectives ensures mitigation measures can be implemented to reduce the probability of certain risks occurring or reducing negative impact. Other prior applications of ERM at the SFPUC include supporting the Strategic Plan, the Business Services Bureau, Emergency Planning and Security, and other specific PUC programs.
The SFPUC also utilizes other risk tools as part of a comprehensive risk management approach. This includes the SFPUC Purchased Insurance Program, a portfolio of insurance policies acquired to mitigate various liability risks to mission critical assets, operational and financial. Other risk management activities include contractual risk review, project specific risk assessments and advisement for the Infrastructure Project Management Bureau and Contract Management Bureau for construction, professional and general service contracts. SFPUC Risk Management also collaborates with the Office of the Administrator’s City Risk Management for citywide risk management initiatives.
Risk Categories
Strategic
Trends in Economy & Society
Financial
Effect of Market Forces on
Financial Assets or
Liabilities
Operational
People, Processes &
Systems or Controls
Legal/ Regulatory
Effect of Change in Laws
and Regulations
Insurable Hazards
Loss Exposures: Property,
Liability or Personnel
Our property insurance policy
covers select Mission Critical
Power Assets for all risks (e.g. fire,
flood up to $1 million, terrorism,
etc.) excluding specific
catastrophic perils (e.g.
earthquake, tsunami, war, etc.).
We have not purchased Business
Interruption insurance as the
property insurance ‘extra expense’
clause serves a similar purpose.
Overall, the SFPUC’s ERM initiatives are designed to reduce the chances of a negative outcome from occurring, lessen its impact, or transfer financial liabilities away from the organization. These initiatives can also increase opportunities and maximize the benefit from taking advantage of positive outcomes. A combination of these strategies will help lower the total cost of risk for the SFPUC and achieve both short and long-term benefits to our ratepayers.
Stakeholders' interests
Public support/ Ratepayer fatigue
Competing expectations
Economic uncertainty
Long-term planning vs. budget limitations
Negative media coverage
Image and reputation
Bond rating
Debt obligations
Financial reporting
Cash flow/availability
Energy costs
Rate fatigue
HR and personnel risks
Operations disruption (e.g. construction,
utilities failure, procurement)
IT data / infrastructure compromise
Process / execution failure
Environmental
Aging infrastructure
Regulatory non-compliance with EPA,
WECC/NERC, GASB, OSHA,
government pol icy
Compliance with the WSA and WRR
Punitive damages, lawsuits
Construction
Worker injury/illness
Third-party liability
Physical structure damage
Public Officials' liability
Employment liability
11 Introductory Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
San Francisco’s Budget Process
The budget cycle for the biennial July 1 fiscal year budget begins in August and typically ends in July. The two-year fixed budget is prepared, reviewed, enacted by the Board of Supervisors, signed by the Mayor, and implemented by departments and adjusted as necessary during this period. The Board of Supervisors does not adopt a new budget for the second fiscal year of the cycle unless there are significant increases or decreases in revenues or expenditures which then reopen the budget to follow the usual budget process.
The SFPUC’s two-year budget is comprised of two, single-year spending plans, which supports the ongoing mission of the SFPUC to provide its customers with high-quality, efficient, and reliable water, wastewater, and power services in a manner that is inclusive of environmental and community interests, and that sustains the resources entrusted to our care. The budget is a detailed operating plan that identifies estimated costs and results in relation to estimated revenues and represents a process through which policy decisions are deliberated, implemented, and controlled. The budget aligns funding to accomplish our long-term strategic goals and objectives, ensures funding for our operating programs, and purposefully supports the Strategic Plan targeted outcomes to ensure the appropriate application of resources to reach our goals.
Budgeting Basis
The City adopts budgets for all government funds on a budget basis relying on a current financial resources measurement focus and a modified accrual basis of accounting. The modified accrual method is a basis of accounting used with a current financial resources measurement focus. It modifies the accrual basis of accounting in two significant ways: first, revenues are only recognized when they are measurable and available; second, expenditures are recognized in the period in which the SFPUC normally liquidates the related liability rather than when the liability is first incurred, if earlier. The City Charter prohibits expending funds for which there is no legal appropriation.
Accounting Basis
The accounts of the SFPUC Enterprises are organized by proprietary fund type, specifically an enterprise fund.
The activities of the Enterprises are accounted for with a separate set of self-balancing accounts that comprise the Enterprises’ assets, deferred outflows of resources, liabilities, deferred inflows of resources, net position, revenues, and expenses. Enterprise funds account for activities that (1) are financed with debt secured solely by a pledge of the net revenues from fees and charges of the activity; or (2) are required by laws or regulations that the activity’s costs of providing services, including capital costs (such as depreciation or debt service), be recovered with fees and charges, rather than with taxes or similar revenues; or (3) that the pricing policies of the activity establish fees and charges designed to recover its costs, including capital costs.
The financial activities of each Enterprise and the year-end audited financial statements are accounted for on a flow of economic resources measurement focus, using the accrual basis of accounting. Under this method, all assets, deferred outflows of resources, liabilities, and deferred inflows of resources associated with its operations are included on the Statement of Net Position; revenues are recorded when earned, and expenses recorded when liabilities are incurred. The SFPUC Enterprises apply all applicable Governmental Accounting Standards Board (GASB) pronouncements.
Fiscal Year 2025 Operating Budgets
The SFPUC annual budgets, including debt service and cash-funded capital, as well as operating programs total $2.02 billion and $1.69 billion for fiscal years 2025 and 2024, respectively. The operating programs include regular operating costs, maintenance of utility facilities and lands, as well as support services, like management, business services, planning, regulatory compliance, communication, and planned debt service for each of the Enterprises. The budget increase is mainly driven by debt service, purchase of power for the Hetch Hetchy and CleanPowerSF program, and general reserve. The debt service funds the SFPUC’s Capital Improvement Programs for the Water System Improvement Program (WSIP) and the Sewer System Improvement Program (SSIP). The operating budget is financed by both wholesale and retail rates, service charges and non-operating revenues, including rental income and interest earnings. Of the SFPUC fiscal year 2025 $2.02 billion operating budget, the Water Enterprise accounts for $738.5 million to fund the operations and maintenance of the SFPUC’s water system; Wastewater Enterprise’s operating budget of $474.8 million funds the operations and maintenance of the SFPUC’s sewer system. Hetch Hetchy Water and Power’s operating budget of $345.6 million funds the operations and maintenance of the upcountry water and power systems, including Power Enterprise 12 Introductory Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
activities within the City. CleanPowerSF’s operating budget of $464.1 million funds the operations and power purchases. Detailed budget information is available on our website https://sfpuc.gov/about-us/reports/operating-
and-capital-budgets.
Fiscal Year 2025 Capital Budgets
Our capital programs are intended to reconstruct, replace, expand, repair, or improve facilities that are under the SFPUC’s jurisdiction. The capital budgets are coordinated with the Ten-Year Capital Improvement Plan and the Ten-Year Financial Plan. The issuance of revenue bonds, other forms of indebtedness, and the execution of governmental loans are provided under the San Francisco City Charter to finance our capital programs. The repayment of this indebtedness is provided through rates and service charge revenues of the SFPUC that incurs the debt and benefits from the underlying capital improvements. The budget appropriations for capital programs are coordinated with the SFPUC’s Ten-Year Capital and Ten-Year Financial Plans. The SFPUC develops stand-alone supplemental appropriations for our capital program which are coordinated with our operating budget review and approval cycle.
Total approved fiscal year 2025 capital budgets were $1.55 billion, including $456.0 million for the Water Enterprise, $892.5 million for the Wastewater Enterprise, $204.8 million for Hetch Hetchy Water and Power Enterprise and $0.6 million for CleanPowerSF.
The major capital investment for the Water Enterprise includes the Water Treatment Program, which is to provide renewal and replacement programs at the Sunol Valley and Harry Tracy Water Treatment Plant Ozone project.
The Water Transmission Program includes pipeline inspections and repairs, valve replacements and pump station and vault upgrades. The Regional Buildings and Grounds includes major improvements to the Millbrae Yard. Millbrae Campus Improvements include a new laboratory and office building to update the lab facilities and consolidate staff from the Burlingame facility. Water Supply and Storage Program includes upgrades to structures to meet State Division of Safety of Dams requirements, and projects to increase regional water supply diversification and explore alternative methods for expanding water sources. The Water Conveyance/Distribution System Program includes funding to install, replace and renew distribution system pipelines and service connection for over 1,000 miles of drinking water mains in San Francisco. Local Buildings and Grounds Improvements includes the new City Distribution Division (CDD) headquarter at 2000 Marin.
The Wastewater Enterprise’s major capital investment from the Sewer System Improvement Program (SSIP) includes the Treatment Facilities Programs, including the Southeast Plant (SEP) Biosolid Digester Facility, improvement to the liquid treatment at the SEP, the North Point Wet Weather Facility, the North Shore Pump Station, and associated outfalls. New Operations Engineering and Maintenance Buildings project which will provide workshop space for the Trades and Mechanical Maintenance, engineering workspaces and shower and locker facilities for the Plant. SEP Mainstream Nutrient Reduction project is to reduce the amount of nitrogen discharged from the SEP to comply with anticipated future nitrogen-related regulations. The Stormwater Management and Flood Resilience program includes work on flood resilience planning and project implementations.
The Hetch Hetchy Water and Power’s major capital investment includes projects to sustain the reliability of the San Joaquin Pipeline System, generator rehabilitation and power plan system upgrades for the Moccasin Powerhouse. Other projects include, Transmission Lines Clearance Mitigation Project, Cherry Eleanor Pumps upgrade and replacement, Eleanor Dam and Moccasin Penstock Rehabilitations. Moccasin Dam and Reservoir Long Term Improvements will fund the construction of a new concrete spillway and additional flood protection to the Moccasin project facilities. The Transmission and Distribution program is to provide electric service to new City facilities, and redevelopment projects. The San Francisco Airport (SFO) Substation Improvements project will ensure continued power supply to meet the growing demands of the airport. The Distribution Interface Redevelopment Projects include design and construction of new electric distribution system and facilities to various new developments within San Francisco.
The CleanPowerSF major capital investment includes the development of new renewable energy (solar photovoltaic) and battery storage projects on select SFPUC sites. The project has six major phases including:
Planning, Request for Proposals, Construction and Commissioning, Power Purchase Agreements (PPA), Asset Management, and Project Buyout. The initial renewable energy facilities developed under this program would be structured as PPA with third parties that would develop and operate the projects for an initial period. The PPAs would include a buy-out option for the City.
13 Introductory Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
Ten-Year Financial Plan
The SFPUC prepares an annual updated Ten-Year Financial Plan as required by the City and County of San Francisco Charter Section 8B.123. The Ten-Year Financial Plan is a summary of projected revenues, expenditures, fund balances, and financial metrics for each Enterprise over a rolling 10-year period. The Financial Plan projections are based on current Mayor and Commission policies, goals, and objectives. For the Financial plan fiscal year 2025, costs are anticipated to increase for each Enterprise on average from 3.7% to
9.6%, mainly due to capital investments and power supply cost. A key objective is to promote SFPUC’s Strategic Plan goal of Financial Sustainability by estimating future revenue requirements and financial ratios while providing a view of resulting rates changes. Consolidating these key financial indicators into the Financial Plan serves to inform the SFPUC’s long-term planning decisions, such as the biennial operating and capital budgets, long-range capital planning and capital financing strategies.
Ten-Year Capital Plan
The SFPUC prepares an annual updated Ten-Year Capital Plan as required by the City and County of San Francisco Charter Section 3.20. The Capital Plan is to contain a list of projects to be executed during the 10-year planning horizon, including cost estimates and schedules. Both the Ten-Year Financial Plan and Capital Plan, serve as a basis and supporting documentation for the Commission’s capital budget and issuance of revenue bonds and other indebtedness to support the SFPUC capital program.
The SFPUC Ten-Year Capital Plan for fiscal years 2025 through 2034 totals $11.8 billion, represents a 34% increase in total from last fiscal year’s proposed expenditures of $8.8 billion. The increase was accounted for by balancing affordability amongst the growing caseload of projects related to climate change impacts and projects driven by regulatory mandates inducing previously unaccounted for cost pressures. The key projects funded in the Ten-Year Capital Plan includes the completion of the Biosolids Digester Facilities Project, the Southeast Plant Nutrient Reduction project, the Millbrae Yard Campus Improvements, the new City Distribution Division Headquarters, Moccasin Penstock Rehabilitation, stormwater and flood resistance projects, treatment plant improvements, Public Power expansion, repair projects, carbon reduction projects, and replacement of sewer and water mains throughout the system.
Financial Transparency, Reporting and Auditing Process
This report was prepared by SFPUC Financial Services in conformance with the principles and standards for financial reporting set forth by the U.S. Generally Accepted Accounting Principles (GAAP). Recommended guidelines by the Government Finance Officers Association of the United States and Canada were also followed.
The SFPUC’s management is responsible for both the accuracy of the data presented and the completeness and fairness of its presentation, including all disclosures. The existing comprehensive structure on internal controls in the City and SFPUC ensures that the financial statements are free of any material misstatements.
This report is accurate in all material respects, and it is presented in a manner designed to set forth fairly the financial position and the results of operations of the SFPUC. The included disclosures enable the reader to gain a thorough understanding of the SFPUC’s financial activities.
The SFPUC’s financial statements have been audited by Macias Gini & O’Connell LLP, an independent registered public accounting firm. The goal of the independent audit was to provide reasonable assurance that the financial statements of the SFPUC for the fiscal years ended June 30, 2024 and 2023 are fairly presented in conformity with GAAP and are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statements presentation. The independent auditors rendered an unmodified “clean” opinion on the SFPUC’s financial statements for the fiscal year ended June 30, 2024 since 2008. The independent auditor’s report is presented as the first component of the financial section of this report. Management’s Discussion and Analysis (MDA) is presented after the independent auditor’s report, and provides a narrative introduction, overview, and analysis to accompany the basic financial statements. This letter of transmittal is designed to complement MDA and should be read in conjunction with it.
14 Introductory Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
Financial Authority and Policies
The City is a Charter City under the California Constitution, and as a result, the Charter is the guiding document for financial authority and policies for City departments. The SFPUC is the department responsible for the maintenance, operation, and development of the three utility enterprises’: the Water Enterprise, the Wastewater Enterprise, and Hetch Hetchy Water and Power and CleanPowerSF. Each of the SFPUC’s enterprise fund is operated and managed as a separate financial entity and separate enterprise entity. The SFPUC’s financial policies, adopted and updated such as fund balance budgetary reserve and debt service coverage requirements are available on our website https://www.sfpuc.gov/about-us/policies-plans/financial-plans-and-policies. The purpose and source for each of the designated budgetary reserves within its major funds of operating, capital projects, debt service, and trust are included in these guidelines which enable restricting funds for future infrastructure needs, replacement of aging facilities, bond reserves, and various operating reserves to mitigate unexpected occurrences. These budgetary reserves are critical to the SFPUC’s financial strength and high bond ratings. Further, the City has a long-standing practice of recognizing and reserving for known and anticipated liabilities. The City also has established an irrevocable trust for other postemployment benefits (also known as retiree medical) and continues to make the annual required contribution to ensure this future obligation is funded.
Accounting Systems, Policies, and Internal Controls
In developing and maintaining the accounting systems, consideration is given by the administration as to the adequacy of internal controls. Internal controls are designed to provide reasonable, but not absolute, assurance.
The SFPUC’s management is responsible for establishing and maintaining a system of internal controls designed to safeguard the Enterprises’ assets from loss, theft, or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in accordance with GAAP. For the fiscal year ended June 30, 2024, the independent auditors noted no matters involving internal controls over financial reporting that would be considered a material weakness for Water, Wastewater and Hetch Hetchy Water and Power and CleanPowerSF.
The SFPUC’s Finance Services Bureau is responsible for providing comprehensive financial services for the utility enterprises and bureaus, including support for financial accounting and reporting, accounts payable, billing and collection of water, wastewater, and power charges, and other revenues. The SFPUC’s financial statements and records are maintained on an enterprise basis using the accrual method of accounting to ensure the timely matching of revenues against the costs of providing services. Revenues and expenses are recorded in the period in which the revenues are earned, and the expenses are incurred.
Achievement Awards
The Government Finance Officers Association of the United States and Canada (GFOA) awarded the Certificate of Achievement for Excellence in Financial Reporting to the SFPUC for its Annual Comprehensive Financial Report for the fiscal year ended June 30, 2023. This was the 15th consecutive year that the SFPUC has achieved this prestigious award. In order to be awarded the Certificate of Achievement, a government or reporting entity must publish an easily readable and efficiently organized Annual Comprehensive Financial Report. This report must satisfy both GAAP and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current Annual Comprehensive Financial Report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to GFOA to determine its eligibility for another certificate.
15 Introductory Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City and County of San Francisco
Public Utilities Commission
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2023
Executive Director/CEO
16 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
Financial Section
Independent Auditor’s Report
Management’s Discussion and Analysis (Unaudited)
Basic Financial Statements
Statements of Net Position – Proprietary Funds
Statements of Revenues, Expenses, and Changes in Net Position – Proprietary Funds
Statements of Cash Flows – Proprietary Funds
Notes to Basic Financial Statements
Required Supplementary Information (Unaudited)
Schedules of the Proportionate Share of the Net Pension (Asset)/Liability Schedules of Employer Contributions – Pension Plan
Schedules of Changes in Total Pension Liability and Related Ratios – Replacement Benefits Plan
Schedules of Changes in Other Postemployment Benefits Liability and related Ratios - Other Postemployment Healthcare Benefits Plan Schedules of Employer Contributions – Other Postemployment Healthcare Benefits Plan
Supplementary Information (Proprietary Funds)
Schedule of Changes in Net Position – Dollar and Percentage Change vs. Prior Year
Schedule of Changes in Revenues, Expenses, and Net Position – Dollar and Percentage Change vs. Prior Year
Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards
The San Francisco Public Utilities Commission
An Enterprise Department of the City and County of San Francisco, California 17 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024 Independent Auditor’s Report
The San Francisco Public Utilities Commission, the
Honorable Mayor, and the Board of Supervisors of
City and County of San Francisco, California
Opinions
We have audited the financial statements of the business-type activities and each major fund of the San Francisco Public Utilities Commission (SFPUC), as of and for the years ended June 30, 2024 and 2023, and the related notes to the financial statements, which collectively comprise the SFPUC’s basic financial statements as listed in the table of contents.
In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities and each major fund of the SFPUC as of June 30, 2024 and 2023, and the respective changes in financial position and cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States ( Government Auditing Standards). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the SFPUC, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Emphasis of Matter
As discussed in Note 1, the financial statements of the SFPUC are intended to present the financial position, the changes in financial position, and, where applicable, cash flows of only that portion of the business-type activities and each major fund of the City and County of San Francisco, California (City) that is attributable to the transactions of the SFPUC. They do not purport to, and do not, present fairly the financial position of the City, as of June 30, 2024 and 2023, the changes in its financial position, or, where applicable, its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Our opinions are not modified with respect to this matter.
Responsibilities of Management for the Financial Statements The SFPUC’s management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. www.mgocpa.com Macias Gini & O’Connell LLP
2121 N. California Blvd., Suite 750
Walnut Creek, CA 94596
18 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS and Government Auditing Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the SFPUC’S internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, schedules of the proportionate share of the net pension (asset)/liability, schedules of employer contributions – pension plan, schedules of changes in total pension liability and related ratios – replacement benefits plan, schedules of changes in other postemployment benefits liability and related ratios – other postemployment healthcare benefits plan, and schedules of employer contributions – other postemployment healthcare benefit plan, as listed in the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audits of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the SFPUC’s basic financial statements. The schedule of changes in net position – dollar and percentage change vs. prior year and schedule of changes in revenues, expenses, and net position – dollar and percentage change vs. prior year are presented for purposes of additional analysis and are not a 19 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, these schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Information
The SFPUC’s management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 20, 2024 on our consideration of the SFPUC’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the SFPUC’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the SFPUC’s internal control over financial reporting and compliance.
Walnut Creek, California
December 20, 2024
20 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
This section presents management’s analysis of the San Francisco Public Utilities Commission’s (SFPUC or the Commission) financial condition and activities as of and for the years ended June 30, 2024 and 2023.
Management’s Discussion and Analysis (MDA) is intended to serve as an introduction to SFPUC’s financial statements. This information should be read in conjunction with the audited financial statements that follow this section. All dollar amounts, unless otherwise noted, are expressed in thousands of dollars.
The information in this MDA is presented under the following headings:
● Organization and Business
● Overview of the Financial Statements
● Fund Financial Statements
● Financial Analysis
● Capital Assets
● Debt Administration
● Rates and Charges
● Request for Information
Organization and Business
The SFPUC is a department of the City and County of San Francisco (the City) that is responsible for the maintenance, operation, and development of three utility enterprises and five funds. The three utility enter prises include Water, Wastewater, and Hetch Hetchy (Hetchy Water, Hetchy Power and CleanPowerSF).
Water Enterprise
The Water Enterprise collects, transmits, treats, and distributes high quality drinking water to a total population of approximately 2.7 million people, including retail customers in the City and wholesale customers located in San Mateo, Santa Clara, and Alameda Counties. The Water Enterprise collects, transmits, treats, and distributes high quality drinking water to a total population of approximately 2.7 million people, including retail customers in the City and wholesale customers located in San Mateo, Santa Clara, and Alameda Counties. The Water Enterprise sold approximately 174 million gallons of water per day in the year ended June 30, 2024. Approximately 70% of the water delivered by the Water Enterprise is to wholesale customers. Retail customers use the remaining 30% and are primarily San Francisco con sumers, including residential, commercial, industrial, and governmental users.
Wholesale customers include cities, water districts, one private utility, and one non -profit university. Service to these customers is provided pursuant to the 25- year Amended a nd Restated Water Supply Agreement (WSA), commenced on July 1, 2009, which established the basis for determining the costs of wholesale service.
Wastewater Enterprise
The primary responsibility of the Wastewater Enterprise is to protect the public health and the surrounding bay and ocean receiving waters by collecting, transmitting, treating, and discharging storm and sanitary flows generated in the service area. This includes 1,139 miles of combined, sanitary, and storm collection system pipes including:
gravity mains, force mains, culverts, transport storage boxes, and tunnels. San Francisco is the only coastal city in California with a combined sewer system that collects both wastewater and stormwater in the same network of pipes and provides treatment to remove harmful pollutants before discharging into the San Francisco Bay and Pacific Ocean. In addition, the Wastewater Enterprise serves on a contractual basis certain municipal customers located outside of the City limits, including the North San Mateo County Sanitation District No. 3, Bayshore Sanitary District, and the City of Brisbane. The Wastewater Enterprise recovers costs of service through user fees based on the volume and strength of sanitary flow. As of June 30, 2024, the Wastewater Enterprise serves 149,455 residential accounts, which discharge about 15.3 million units of sanitary flow per year (measured in hundreds of cubic feet, or ccf) and 27,643 non-residential accounts, which discharge about 5.6 million ccf per year.
These reflected an increase of 0.02 million discharge units for non -residential accounts due to an increase of 561 accounts and a decrease of 0.12 million discharge units for residential accounts compared to prior year. 21 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Hetchy Water
For efficiency and to streamline the coordination of upcountry water and power operations, Hetchy Water operates upcountry and joint asset facilities, managing resources in an environmentally responsible manner to a high standard of safety and reliability while meeting regulatory requirements. It is responsible for operating the Hetch Hetchy Reservoir, the main source of water for the Hetch Hetchy system. Hetchy Water operates, maintains, and improves water and power faciliti es, smaller dams and reservoirs, water transmission systems, power generation facilities, and power transmission assets, including transmission lines to the Newark substation. Hetchy Water delivers high-quality water from upcountry downhill to the Bay Area while optimizing the resulting generation of clean hydropower as water is transported through the system. It maintains land and properties consistent with public health and neighborhood concerns.
Hetchy Power
The core business of Hetchy Power, as a muni cipal department, is to provide adequate and reliable supplies of electric power to meet the electricity needs of City and County of San Francisco’s customers, and to offer, when available, power for the municipal loads and agricultural pumping demands con sistent with prescribed contractual obligations and federal law. Hetchy Power’s portfolio consists of hydroelectric generation, onsite solar at SFPUC and other City facilities, generation using bio -methane produced at SFPUC wastewater treatment facilities, and third-party purchases. Consistent with its commitment to the development of cleaner and greener power, and to address environmental concerns and community objectives, Hetchy Power continues to evaluate and expand its existing resource base to include additional renewables, distributed generation, demand management, and energy efficiency programs. As part of its mission and core functions, Hetchy Power provides reliable energy services at reasonable cost to customers, with attention to environmental effects and community concerns.
Hetch Hetchy Joint
A portion of Hetch Hetchy’s operating budget, capital program, and assets, provides benefit to both Hetchy Power and Hetchy Water. This is commonly referred to as joint costs and joint assets. Both operating and capital costs that jointly benefit both funds are allocated 55% to Hetchy Power and 45% to Hetchy Water, as has historically been done by the SFPUC.
CleanPowerSF
CleanPowerSF is a community choice aggregation (CCA) program made pos sible by the 2002 passage of California Assembly Bill 117, enabling communities to purchase power on behalf of their residents and businesses and creating competition in power generation services. CleanPowerSF began serving customers with power generation in May 2016. CleanPowerSF’s core business is to provide greener electricity supply to residential and commercial consumers that are retail distribution customers of Pacific Gas and Electric Company (PG&E) in San Francisco. The SFPUC operates CleanPowerSF a s a financially independent service, with the ability to set rates and charges with adequate revenues, and to issue debt to support its operations and future projects, as needed.
CleanPowerSF is discretely presented as a fund of the Enterprise starting fiscal year 2017.
Through CleanPowerSF, SFPUC seeks to achieve several complementary goals, including offering affordable and competitive electricity generation rates, developing and maintaining a diverse electricity resource portfolio that is comprised of r enewable and other clean sources of supply, and providing high -quality customer service. The program serves approximately 385,000 customer accounts and provides San Francisco with an electricity supply from its default “Green” product that is sourced from at least 50% California State Renewables Portfolio Standard (RPS)-eligible resources. Additionally, CleanPowerSF offers “SuperGreen”, a 100% RPS -eligible electricity supply, that is available to customers for a small additional cost. On June 1, 2022, CleanPowerSF opened enrollment for its “SuperGreen Saver” product, which provides eligible low -income ratepayers residing in neighborhoods that meet the State of California’s criteria as Disadvantaged Communities with 100% RPS -eligible electricity at a 20% bill discount.
22 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Overview of the Financial Statements
The Department’s financial statements include the following:
Statements of Net Position present information on the Department’s assets, deferred outflows, liabilities, and deferred inflows as of year-end, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of t he Department is improving or worsening.
While the Statements of Net Position provide information about the nature and amount of resources and obligations at year-end, the Statements of Revenues, Expenses, and Changes in Net Position present the results of the Department’s operations over the course of the fiscal year and information as to how the net position changed during the year. These statements can be used as an indicator of the extent to which the Department has successfully recovered its costs thr ough user fees and other charges. All changes in net position are reported during the period in which the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported in these statements from some items that will result in cash flows in future fiscal periods, such as delayed collection of operating revenues and the expenses of employee earned but unused vacation leave.
The Statements of Cash Flows present changes in cash and cash equivalents resulting from operational, capital financing, non-capital financing, and investing activities. These statements summarize the annual flow of cash receipts and cash payments, without consideration of the timing of the event giving rise to the obligation or receipt, and exclude non-cash accounting measures of depreciation or amortization of assets.
The Notes to Financial Statements provide information that is essential to a full understanding of the financial statements that is not presented on the face of the financial statements.
Fund Financial Statements
The Department has five funds: Water, Wastewater, Hetchy Water, Hetchy Power, and CleanPowerSF.
Financial Analysis
Financial Highlights for Fiscal Year 2024
Department-wide Business Type Activities
● Total assets and deferred outflows of resources exceeded total liabilities and deferred inflows of resources by $3,118,736.
● Total assets exceeded total liabilities by $2,953,133. ● Net position increased by $117,350 or 3.9% during the fiscal year. ● Capital assets, net of accumulated depreciation and amortization, increased by $ 1,055,526 or 9.4% to $12,262,128.
● Operating revenues increased by $63,865 or 3.9% to $1,702,369. ● Operating expenses increased by $289,522 or 23.0% to $1,547,468.
Water
● Total assets and deferred outflows of resources exceeded total liabilities and deferred inflows of resources by $749,648.
● Total assets exceeded total liabilities by $641,038. ● Net position increased by $57,575 or 8.3% during the fiscal year. ● Capital assets, net of accumulated depreciation and amortization increased by $125,515 or 2.2% to $5,778,467. ● Current and other assets increased by $174,613 or 25.3% mainly due to increases of reimbursements receivable relating to the Mountain Tunnel Improvement project for Clean Water State Revolving Funds (SRF) Loans and restricted cash from the issuances of the 2023 Series AB and 2023 Series CD bonds. ● Operating revenues, excluding interest and investment income, and other non-operating revenues, decreased by $14,201 or 2.1% to $676,890.
● Operating expenses increased by $69,103 or 15.0% to $529,356. 23 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Wastewater
● Total assets and deferred outflows of resources exceeded total liabilities and deferred inflows of resources by $1,337,439.
● Total assets exceeded total liabilities by $1,303,260. ● Net position decreased by $61,395 or 4.4% during the year. ● Capital assets, net of accumulated depreciation and amortization, increased by $802,064 or 17.1% to $5,488,410.
● Operating revenues, excluding interest and investment income, and other non-operating revenues, increased by $31,105 or 8.5% to $395,041.
● Operating expenses increased by $200,693 or 76.8% to $462,043.
Hetchy Water
● Total assets and deferred outflows of resources exceeded total liabilities and deferred inflows of resources by $283,257.
● Total assets exceeded total liabilities by $272,975.
● Net position increased by $9,129 or 3.3% during the fiscal year. ● Capital assets, net of accumulated depreciation and amortization, increased by $17,450 or 7.9% to $237,486.
● Operating revenues, excluding interest and investment income, and other non- operating revenues, decreased by $3,205 or 6.1% to $49,492.
● Operating expenses, excluding interest expenses decreased by $6,061 or 12.1% to $43,950.
Hetchy Power
● Total assets and deferred outflows of resources exceeded total liabilities and deferred inflows of resources by $569,902.
● Total assets exceeded total liabilities by $557,336.
● Net position increased by $51,552 or 9.9% during the fiscal year. ● Capital assets, net of accumulated depreciation and amortization, increased by $110,514 or 17.1% to $757,752.
● Operating revenues, excluding interest and investment income, and other non-operating revenues, increased by $10,349 or 5.1% to $214,352.
● Operating expenses, excluding interest expenses, other non -operating expenses, and amortization of premium, discount, and issuance costs, increased by $9,049 or 4.7% to $200,601.
CleanPowerSF
● Total assets and deferred outflows of resources exceeded total liabilities and deferred inflows of resources by $178,490.
● Total assets exceeded total liabilities by $178,524.
● Net position increased by $60,489 or 51.3% during the fiscal year. ● Capital assets, net of accumulated depreciation and amortization, decreased by $17 or 56.7% to $13. ● Operating revenues, excluding interest and investment income, and other non-operating revenues, increased by $39,817 or 12.2% to $366,594.
● Operating expenses, excluding interest expenses increased by $16,738 or 5.7% to $311,518.
Financial Highlights for Fiscal Year 2023
Department-wide Business Type Activities
● Total assets and deferred outflows of resources exceeded total liabilities and deferred inflows of resources by $3,001,386.
● Total assets exceeded total liabilities by $2,853,266. ● Net position increased by $177,611 or 6.3% during the fiscal year. ● Capital assets, net of accumulated depreciation and amorti zation, increased by $745 ,966 or 7.1% to $11,206,602.
● Operating revenues, excluding interest and investment income, and other non-operating revenues, increased by $216,058 or 15.2% to $1,638,504.
● Operating expenses increased by $128,265 or 11.4% to $1,257,946. 24 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Water
● Total assets and deferred outflows of resources exceeded total liabilities and deferred inflows of resources by $692,073.
● Total assets exceeded total liabilities by $565,858.
● Net position increased by $58,646 or 9.3% during the fiscal year. ● Capital assets, net of accumulated depreciation and amortization increased by $30,969 or 0.6% to $5,652,952.
● Current and other assets decreased by $99,872 or 12.6% mainly due to bond principal and interest payments, capital project expenses, and payments for salaries. ● Operating revenues, excluding interest and investment income, and other non-operating revenues, increased by $117,974 or 20.6% to $691,091.
● Operating expenses increased by $58,489 or 14.6% to $460,253.
Wastewater
● Total assets and deferred outflows of resources exceeded total liabilities and deferred inflows of resources by $1,398,834.
● Total assets exceeded total liabilities by $1,385,856. ● Net position increased by $36,167 or 2.7% during the year. ● Capital assets, net of accumulated depreciation and amortization, increased by $635,341 or 15.7% to $4,686,346.
● Operating revenues, excluding interest and investment income, and other non- operating revenues, decreased by $4,946 or 1.3% to $363,936.
● Operating expenses increased by $4,192 or 1.6% to $261,350.
Hetchy Water
● Total assets and deferred outflows of resources exceeded total liabilities and deferred inflows of resources by $274,128.
● Total assets exceeded total liabilities by $269,248.
● Net position increased by $24,946 or 10.0% during the fiscal year. ● Capital ass ets, net of accumulated depreciation and amortization, increased by $18,654 or 9.3% to $220,036.
● Operating revenues, excluding interest and investment income, and other non-operating revenues, increased by $3,385 or 6.9% to $52,697.
● Operating expenses decreased by $2,288 or 4.4% to $50,011.
Hetchy Power
● Total assets and deferred outflows of resources exceeded total liabilities and deferred inflows of resources by $518,350.
● Total assets exceeded total liabilities by $512,386.
● Net position increased by $24,171 or 4.9% during the fiscal year. ● Capital assets, net of accumulated depreciation and amortization, increased by $61,273 or 10.5% to $647,238.
● Operating revenues, excluding interest and investment income, and other non- operating revenues, increased by $30,761 or 17.8% to $204,003.
● Operating expenses, excluding interest expenses, other non- operating expenses, and amortization of premium, discount, and issuance costs, increased by $35,209 or 22.5% to $191,552.
CleanPowerSF
● Total assets and deferred outflows of resources exceeded total liabilities and deferred inflows of resources by $118,001.
● Total assets exceeded total liabilities by $119,918.
● Net position increased by $33,681 or 39.9% during the fiscal year. ● Capital assets, net of accumulated depreciation and amortization, decreased by $271 or 90.0% to $30. ● Operating revenues, excluding interest and investment income, and other non- operating revenues, increased by $68,884 or 26.7% to $326,777.
● Operating expenses, excluding interest expenses increased by $32,663 or 12.5% to $294,780. 25 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Financial Position
Department-wide Business Type Activities
The following table summarizes the department-wide changes in net position. Detailed discussion follows for each proprietary fund.
*Eliminated interfund payables and receivables of $405, $518 and $629 between Wastewater and Hetchy Power for the 525 Golden Gate Avenue Headquarters construction cost in fiscal years 2024, 2023 and 2022, respectively. ^Fiscal years 2022 and 2023 total assets reclassification of right-to-use lease and subscription assets from current and other assets to capital assets.
#Fiscal years 2022 and 2023 net position reclassification of restricted payable and capital related liabilities from restricted for capital projects and/or unrestricted to net investment in capital assets balance updated.
2024 - 2023 2023 - 2022
2024 2023 2022 Change Change
Total assets:
Current and other assets * $ 2,079,998 1,807,747 1,914,886 272,251 (107,139) 12,262,128 11,206,602 10,460,636 1,055,526 745,966
Total assets ^ 14,342,126 13,014,349 12,375,522 1,327,777 638,827 Deferred outflows of resources:
Unamortized loss on refunding of debt 89,186 124,643 139,514 (35,457) (14,871) Pensions 164,907 123,669 93,952 41,238 29,717
Other postemployment benefits 50,876 48,335 53,412 2,541 (5,077) Total deferred outflows of resources 304,969 296,647 286,878 8,322 9,769 Liabilities:
Current liabilities:
Bonds 177,109 164,755 161,596 12,354 3,159
Certificates of participation 4,765 4,576 4,395 189 181 Commercial paper 280,654 — 625,473 280,654 (625,473) State revolving fund loans 5,629 2,526 5,764 3,103 (3,238) Other liabilities * 490,316 454,130 442,802 36,186 11,328 Subtotal current liabilities 958,473 625,987 1,240,030 332,486 (614,043) Long-term liabilities:
Arbitrage rebate payable 9,574 188 — 9,386 188
Bonds 7,791,378 7,473,933 6,825,078 317,445 648,855 Revenue Notes — 349,556 350,356 (349,556) (800)
Certificates of participation 120,210 124,974 129,550 (4,764) (4,576) State revolving fund loans 572,003 479,790 418,656 92,213 61,134 Commercial paper 341,373 487,811 — (146,438) 487,811 922,431 122,357 — 800,074 122,357
Other liabilities * 673,551 496,487 343,311 177,064 153,176 Subtotal long-term liabilities 10,430,520 9,535,096 8,066,951 895,424 1,468,145 Total liabilities:
Arbitrage rebate payable 9,574 188 — 9,386 188
Bonds 7,968,487 7,638,688 6,986,674 329,799 652,014 Revenue Notes — 349,556 350,356 (349,556) (800)
Certificates of participation 124,975 129,550 133,945 (4,575) (4,395) Commercial paper 622,027 487,811 625,473 134,216 (137,662) State revolving fund loans 577,632 482,316 424,420 95,316 57,896 922,431 122,357 — 800,074 122,357
Other liabilities 1,163,867 950,617 786,113 213,250 164,504 Total liabilities 11,388,993 10,161,083 9,306,981 1,227,910 854,102 Deferred inflows of resources:
Unamortized gain on refunding of debt 42,109 11,353 — 30,756 11,353 Leases 37,786 43,011 44,583 (5,225) (1,572)
Pensions 22,598 49,027 445,403 (26,429) (396,376)
Other postemployment benefits 36,873 45,136 41,658 (8,263) 3,478 Total deferred inflows of resources 139,366 148,527 531,644 (9,161) (383,117) Net position:
Net investment in capital assets 2,075,817 2,098,355 2,042,920 (22,538) 55,435 Restricted for debt service 44,724 18,191 20,202 26,533 (2,011) Restricted for capital projects 292,369 142,641 221,647 149,728 (79,006) Restricted for other purposes — — 181,926 — (181,926) Unrestricted 705,826 742,199 357,080 (36,373) 385,119 Total net position# $ 3,118,736 3,001,386 2,823,775 117,350 177,611 Capital assets, net of accumulated
depreciation and amortization
Table 1
Business Type Activities
Comparative Condensed Net Position
June 30, 2024, 2023, and 2022
Water Infrastructure Finance and
Innovation Act (WIFIA) loans
Water Infrastructure Finance and
Innovation Act (WIFIA) loans
26 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
The following table summarizes Water’s changes in net position.
^Fiscal years 2022 and 2023 total assets reclassification of right-to-use lease and subscription assets from current and other assets to capital assets.
#Fiscal years 2022 and 2023 net position reclassification of restricted payable and capital related liabilities from restricted for capital projects and/or unrestricted to net investment in capital assets balance updated. 2024 - 2023 2023 - 2022
2024 2023 2022 Change Change
T
otal assets:
Current and other assets $ 865,690 691,077 790,949 174,613 (99,872) 5,778,467 5,652,952 5,621,983 125,515 30,969
Total assets ^ 6,644,157 6,344,029 6,412,932 300,128 (68,903) Deferred outflows of resources:
Unamortized loss on refunding of debt 89,186 124,635 139,481 (35,449) (14,846) Pensions 93,526 70,101 52,852 23,425 17,249
Other postemployment benefits 29,974 28,616 32,445 1,358 (3,829) Total deferred outflows of resources 212,686 223,352 224,778 (10,666) (1,426) Liabilities:
Current liabilities:
Revenue bonds 138,140 135,095 125,285 3,045 9,810
Certificates of participation 3,402 3,267 3,138 135 129 Commercial paper 190,000 — 206,297 190,000 (206,297) State revolving fund loans — — 3,283 — (3,283)
Other liabilities 148,337 148,547 182,349 (210) (33,802) Subtotal current liabilities 479,879 286,909 520,352 192,970 (233,443) Long-term liabilities:
Arbitrage rebate payable 869 — — 869 —
Revenue bonds 4,826,497 4,575,751 4,735,650 250,746 (159,899) Certificates of participation 85,830 89,232 92,499 (3,402) (3,267) Commercial paper — 371,459 — (371,459) 371,459
State revolving fund loans 259,970 163,627 118,478 96,343 45,149 Other liabilities 350,074 291,193 218,669 58,881 72,524 Subtotal long-term liabilities 5,523,240 5,491,262 5,165,296 31,978 325,966 Total liabilities:
Arbitrage rebate payable 869 — — 869 —
Revenue bonds 4,964,637 4,710,846 4,860,935 253,791 (150,089) Certificates of participation 89,232 92,499 95,637 (3,267) (3,138) Commercial paper 190,000 371,459 206,297 (181,459) 165,162 State revolving fund loans 259,970 163,627 121,761 96,343 41,866 Other liabilities 498,411 439,740 401,018 58,671 38,722 Total liabilities 6,003,119 5,778,171 5,685,648 224,948 92,523 Deferred inflows of resources:
Unamortized gain on refunding of debt 31,854 — — 31,854 — Leases 36,583 41,558 44,583 (4,975) (3,025)
Pensions 13,305 28,504 248,704 (15,199) (220,200)
Other postemployment benefits 22,334 27,075 25,348 (4,741) 1,727 Total deferred inflows of resources 104,076 97,137 318,635 6,939 (221,498) Net position:
Net investment in capital assets 350,430 460,213 512,313 (109,783) (52,100) Restricted for debt service 44,724 14,625 14,671 30,099 (46) Restricted for capital projects 200,632 56,822 17,085 143,810 39,737 Restricted for other purposes — — 100,407 — (100,407) Unrestricted 153,862 160,413 (11,049) (6,551) 171,462 Total net position# $ 749,648 692,073 633, 427 57,575 58,646 Capital assets, net of accumulated
depreciation and amortization
Table 1A
Proprietary Fund – Water
Comparative Condensed Net Position
June 30, 2024, 2023, and 2022
27 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Water Net Position, Fiscal Year 2024
For the period ended June 30, 2024, the Water Enterprise’s assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $749,648. Total net position increased from prior year by $57,575 or
8.3% (see Table 1A). Increases of $289,462 in assets and deferred outflows of resources and increases of $231,887 in liabilities and deferred inflows of resources are described below.
Current and other assets are pr imarily comprised of restricted and unrestricted balances of cash, receivables for water deliveries and services, interest and lease receivables, interfund receivables due from other governmental agencies, prepaids, and inventory.
During the fiscal year 2024, current and other assets increased by $174,613 or 25.3%. The increases included $93,433 for reimbursements receivable from the State Water Resources Control Board (SWRCB) State Revolving Funds Loan relating to the SF Westside R ecycled Water and the Mountain Tunnel Improvement projects, $53,237 in restricted and unrestricted cash and investments mainly due to the issuances of Series 2023 Series AB and 2023 Series CD bonds, $16,069 in Wholesale Balancing Account receivable (see Note 12 for details), $15,531 in charges for services receivable due to more billings than collections and adopted rate increases of 9.7% for wholesale customers and 5.0% for retail customers, $1,264 in interest receivable mainly due to higher interest rates, $505 in notes receivable from the sale of the Balboa Reservoir due to interest accruals, $366 due from other governments for a Federal Emergency Management Agency disaster cost recovery relating to the 2020 Wildfires Santa Clara Fence project, and $275 i n restricted interest and other receivables mainly due to increases in capacity fees. These increases were offset by decreases of $4,567 in leases receivable due to payments received, $1,121 in prepaid expenses of multiple software licensing and membership fees, $366 in inventory due to more issuances than purchases during the fiscal year, and $13 for custom work projects due from the Department of Public Works (DPW).
Capital assets, net of accumulated depreciation and amortization, increased by $125,515 or 2.2% mainly from the San Joaquin Pipeline Valve and Safe Entry Improvement and Mountain Tunnel Improvement projects. The largest portion of the Water Enterprise’s net position of $350,430 or 46.7% represents net investment in capital assets (see Capital Assets section of the MDA for more information), which decreased by $109,783 or 23.9% from prior year’s $460,213. The change was explained by an increase of $235,298 in liabilities mainly from the issuances of 2023 Series AB and 2023 Series CD bonds, and additional State Revolving Funds Loans relating to the Mountain Tunnel Improvement and SF Westside Recycled Water projects, offset by an increase of $125,515 in capital assets mainly from additional assets placed into service.
Deferred outflows of resourc es decreased by $10,666 due to a decrease of $35,449 in unamortized loss on refunding of debt mainly from defeasance of refunding loss by the 2023 Series CD revenue refunding bonds, offset by increases of $23,425 from pensions and $1,358 in OPEB benefits based on actuarial estimates.
Total liabilities increased by $224,948 which was due to increases of $253,791 in outstanding revenue bonds mainly from the issuances of 2023 Series AB revenue bonds and 2023 Series CD revenue refunding bonds, $96,343 in SRF Loans payable due to additional loans relating to the Mountain Tunnel Improvement and SF Westside Recycled Water projects, $37,300 in pensions based on actuarial estimates, $9,700 in OPEB liabilities based on actuarial estimates, $6,442 in interest payable mainly from the issuances of 2023 Series AB revenue bonds and 2023 Series CD revenue refunding bonds, $3,148 in damage claims based on actuarial reports, $2,055 in accrued payroll, vacation and sick leave based on unused leave and a 4.75% cost -of-living adjustment, $1,715 in restricted and unrestricted payables due to higher year end expense accruals for operating activities as compared to prior year, $1,267 in accrued workers’ compensation based on actuarial estimates, $1,073 in unearned revenues mainly for the water utility California state arrearages relief grant received, and $869 in arbitrage rebate payable mainly for the 2023 Series A bonds. These increases were offset by decreases of $181,459 in commercial paper from refunding by the 2023 Series AB re venue bonds, $3,267 in certificates of participation from repayment and amortization of premium, $2,440 payment to San Francisco Municipal Transportation Agency (MTA) for a settlement payable relating to the Van Ness Corridor Transit Improvement project, $ 1,189 in leases liability due to payments in the current year, and $400 in subscription liability from payments in the current year.
Deferred inflows of resources increased by $6,939 due to an increase of $31,854 in unamortized gain on refunding of debt from the issuance of 2023 Series CD revenue refunding bonds, offset by decreases of $15,199 related to 28 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
pensions based on actuarial estimates, $4,975 in leases due to fewer leases, and $4,741 in OPEB benefits based on actuarial estimates.
Water Net Position, Fiscal Year 2023
For the period ended June 30, 2023, the Water Enterprise’s assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $692,073. Total net position increased from prior year by $58,646 or
9.3% (see Table 1A). The increase in net position was the result of a decrease of $128,975 in liabilities and deferred inflows of resources offset by a decrease of $70,329 in assets and deferred outflows of resources.
Current and other assets are primarily comprised of restricted and unrestricted balances of cash, receivables for water deliveries and services, interest and lease receivables, interfund receivables due from other governmental agencies, prepaids, and inventory.
During the fiscal year 2023, current and other assets decreased by $99,872 or 12.6%. The decreases included $100,407 in restricted net pension asset based on actuarial estimates, $45,106 in restricted and unrestricted cash and investments mainly due to debt principal and interest payments, capital projects spending, payments for salaries and goods and services, $6,625 in prepaid expenses of multiple software licensing and membership fees, $2,535 in lease receivable due to lease payments received, $632 in restricted interest and other receivables mainly due to capacity fees, and $63 mainly for custom work projects due from the Department of Public Works (DPW).
These decreases were offset by increases of $28,594 for a reimbursement receivable from the State Water Resources Control Board (SWRCB) State Revolving Funds Loan relating to the Mountain Tunnel Improvement and SF Westside Recycled Water projects, $11,007 in notes receivable from the sale of the Balboa Reservoir, $10,052 in Wholesale Balancing Ac count receivable (see Note 12 for details), $2,249 in interest receivable mainly due to higher interest rates, $2,205 in charges for services receivable mainly due to a 15.9% rate increase for wholesale customers beginning July 1, 2022, and $1,389 in inventory due to more purchases than issuances during the fiscal year.
Capital assets, net of accumulated depreciation and amortization, increased by $30,969 or 0.6% mainly due to Mountain Tunnel Improvement and SF Westside Recycled Water projects. The largest portion of the Water Enterprise’s net position of $460,213 or 66.5% represents net investment in capital assets (see Capital Assets section of the MDA for more information), which decreased by $52,100 or 10.2% from prior year’s $512,313 The change was explained by an increase of $83,069 in liabilities related to capital assets mainly from State Revolving Funds Loan relating to the Mountain Tunnel Improvement and SF Westside Recycled Water projects, offset by a $30,969 increase in capital assets mainly from increased buildings, structures and improvements.
Deferred outflows of resources decreased by $1,426 due to decreases of $14,846 from amortization for unamortized loss on refunding and $3,829 in OPEB obligations based on actuarial estimates, offset by an increase of $17,249 from pensions based on actuarial estimates.
Total liabilities increased by $92,523, which was due to increases of $165,162 in commercial paper from additional principal issuances, $115,343 in pensions based on actuarial reports, $41,866 in SRF loan payable due to additional loans related to the Mountain Tunnel Improvement and SF Westside Recycled Water projects, $15,329 in restricted and unrestricted payables due to higher year end expense accruals for capital projects as compared to prior year, $4,486 in OPEB obligations based on actuarial estimates, $2,440 payable to San Francisco Municipal Transportation Agency for a settlement payable relating to the Van Ness Corridor Transit Improvement project, $1,168 in accrued payroll, vacation and sick leave due to cost of living adjustments and unused leave, $1,147 in lease liability from additional leases, and $762 in workers’ compensation based on actuarial estimates. These increases were offset by decreases of $150,089 in outstanding reven ue bonds from $125,284 in bond repayment, $24,813 in bond premium amortization, offset by $8 in bond discount amortization, $79,150 in the Wholesale Balancing Account liability (see Note 12 for details), $16,444 in general liability based on actuarial report, $5,160 in unearned revenues mainly from lower custom work deposits and reduced Bay Area Water Supply and Conservation Agency (BAWSCA) Bond Surcharges, $3,138 in certificates of participation from $3,124 in principal repayment and $14 in amortization of premium, $848 in subscription liabilities from the implementation of GASB Statement No. 96, SBITAs, and $351 in interest payable from lower outstanding revenue bonds.
Deferred inflows of resources decreased by $221,498 due to decreases of $220,200 related to pensions based on actuarial estimates and $3,025 in leases based on Controller’s Office GASB 87 lease calculations, offset by an 29 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
increase of $1,727 in OPEB obligations based on actuarial estimates.
The following table summarizes Wastewater’s changes in net position.
^Fiscal years 2022 and 2023 total assets reclassification of right-to-use lease and subscription assets from current and other assets to capital assets.
#Fiscal years 2022 and 2023 net position reclassification of restricted payable and capital related liabilities from restricted for capital projects and/or unrestricted to net investment in capital assets balance updated. 2024 - 2023 2023 - 2022
2024 2023 2022 Change Change
Total assets:
Current and other assets $ 577,997 574,446 624,771 3,551 (50,325) 5,488,410 4,686,346 4,051,005 802,064 635,341
Total assets ^ 6,066,407 5,260,792 4,675,776 805,615 585,016 Deferred outflows of resources:
Unamortized loss on refunding of debt — 8 33 (8) (25) Pensions 42,685 32,592 25,369 10,093 7,223
Other postemployment benefits 12,816 11,493 12,898 1,323 (1,405) Total deferred outflows of resources 55,501 44,093 38,300 11,408 5,793 Liabilities:
Current liabilities:
Revenue bonds 35,370 28,070 34,345 7,300 (6,275)
Certificates of participation 900 864 830 36 34
Commercial paper — — 379,157 — (379,157)
State revolving fund loans 5,629 2,526 2,481 3,103 45 Other liabilities 239,840 200,992 165,662 38,848 35,330 Subtotal current liabilities 281,739 232,452 582,475 49,287 (350,023) Long-term liabilities:
Arbitrage rebate payable 8,521 188 — 8,333 188
Revenue bonds 2,649,681 2,708,840 1,896,908 (59,159) 811,932 Revenue notes — 349,556 350,356 (349,556) (800)
Certificates of participation 22,695 23,594 24,458 (899) (864) Commercial paper 341,373 — — 341,373 —
State revolving fund loans 312,033 316,163 300,178 (4,130) 15,985 922,431 122,357 — 800,074 122,357
Other liabilities 224,674 121,786 73,724 102,888 48,062 Subtotal long-term liabilities 4,481,408 3,642,484 2,645,624 838,924 996,860 Total liabilities:
Arbitrage rebate payable 8,521 188 — 8,333 188
Revenue bonds 2,685,051 2,736,910 1,931,253 (51,859) 805,657 Revenue notes — 349,556 350,356 (349,556) (800)
Certificates of participation 23,595 24,458 25,288 (863) (830) Commercial paper 341,373 — 379,157 341,373 (379,157) State revolving fund loans 317,662 318,689 302,659 (1,027) 16,030 922,431 122,357 — 800,074 122,357
Other liabilities 464,514 322,778 239,386 141,736 83,392 Total liabilities 4,763,147 3,874,936 3,228,099 888,211 646,837 Deferred inflows of resources:
Unamortized gain on refunding of debt 10,255 11,353 — (1,098) 11,353 Leases 1,203 1,453 — (250) 1,453
Pensions 4,055 10,023 114,670 (5,968) (104,647)
Other postemployment benefits 5,809 8,286 8,640 (2,477) (354) Total deferred inflows of resources 21,322 31,115 123,310 (9,793) (92,195) Net position:
Net investment in capital assets 1,148,814 1,110,957 1,002,813 37,857 108,144 Restricted for debt service — 3,510 5,391 (3,510) (1,881) Restricted for capital projects 31,782 53,137 204,562 (21,355) (151,425) Restricted for other purposes — — 48,770 — (48,770) Unrestricted 156,843 231,230 101,131 (74,387) 130,099 Total net position# $ 1,337,439 1,398,834 1,362,667 (61,395) 36,167 Water Infrastructure Finance and
Innovation Act (WIFIA) loans
Water Infrastructure Finance and
Innovation Act (WIFIA) loans
Capital assets, net of accumulated
depreciation and amortization
Table 1B
Proprietary Fund – Wastewater
Comparative Condensed Net Position
June 30, 2024, 2023, and 2022
30 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Wastewater Net Position, Fiscal Year 2024
As of June 30, 2024, the Wastewater Enterprise’s assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $1,337,439. The Wastewater Enterprise’s total net position decreased by $61,395 or 4.4% from prior year, comprised of decreases of $74,387 in unrestricted net position, $21,355 in restricted for capital projects, and $3,510 in restricted for debt service offset by an increase of $37,857 in net investment in capital assets. Increases in total assets and deferred outflows of resources of $817,023 and increases of $878,418 in total liabilities and deferred inflows of resources are described below (see Table 1B).
During the fiscal year 2024, current and other assets increased by $3,551 or 0.6%. The increase was du e to an $8,245 rise in charges for services resulting from a $10,835 increase in sewer charges receivable, as there were more billings than collections. This was offset by a $2,590 increase in allowance for doubtful accounts related to sewer charges receivable that were over 120 days old. Other increases included $7,558 in other receivable due to revenue accrual for the upgrades fair share contribution from the Golden State Warriors and the University of California, San Francisco for the Mariposa Project, $1,526 in unrestricted and restricted interest receivable due to higher average annualized interest rate, $458 in restricted and unrestricted cash and investments due to loan proceeds from Water Infrastructure Finance and Innovation Act (WIFIA) loans and co mmercial paper issuances offset by capital project spending and debt service principal and interest payments, $317 increase in inventory as there were more purchases than issuances during the year, $172 increase in capacity charges receivable, net of allowance for doubtful accounts, and $10 increase in custom work receivable. These increases were primarily offset by a $13,942 decrease in receivables from the State Water Resources Control Board (SWRCB), as a result of receipts from reimbursement requests for the Southeast Water Pollution Control Plant New Headworks (Grit) Replacement Project. Other decreases included $440 in prior year prepaid expenses recognized in current year, $212 in lease receivable, $46 in receivable from the Department of Public Works (DPW) for the Mission Bay South Project, $38 prepayments amortizations for the Civic Center Garage lease and the Mariposa Pump Station & Force Project, $32 decrease in Federal interest subsidy receivable, $22 in property rent receivable, and $3 in miscellaneous receivable.
Capital assets, net of accumulated depreciation and amortization, increased by $802,064 or 17.1% reflecting an increase in construction and capital improvement activities. The largest portion of the Wastewater Enterprise’s net position of $1,148,814 or 85.9%, represents net investment in capital assets (see Capital Assets section of the MDA for more information). Deferred outflows of resources increased by $11,408 mainly due to increases in pensions and other postemployment benefits of $10,093 and $1,323, respectively, based on actuarial report, offset by $8 amortization of the 2013 Series A bond refunding loss.
Total liabilities increased by $888,211 or 22.9%. As of June 30, 2024, total outstanding balance of $4,290,112 for revenue bonds, certificates of participation (COP), commercial paper, State Revolving Fund (SRF) loans, and WIFIA loans represented 90.1% of total liabilities, an increase of $738,142 or 20.8%. The increase was mainly due to $800,074 new WIFIA loans (included $7,506 of capitalized interest) for the Biosolids Digester Facilities Project and the Southeast Treatment Plant Improvement Project, $341,373 new issuance of commercial paper, and $1,498 SRF loan capitalized interest for the OSP Digester Gas Utilization Upgrade and SEP New Headworks (Grit) Replacement projects, offset by $347,465 defeasance of 2021 Series AB revenue notes by the WIFIA loans , principal repayments of $28,070 in bonds, $2,525 in SRF loans, and $863 in COP, and $25,880 in revenue bonds and notes premium amortization and defeasance. Other liabilities of $473,035, including arbitrage rebate payable, payables to vendors, contractor s, and other government agencies for goods and services under contractual agreements, increased by $150,069 or 46.5% due to increases of $110,733 in damage claims liability based on actuarial report, $17,750 in net pension liability based on actuarial repo rt, $8,549 in restricted and unrestricted payable to vendors and contractors mainly due to increased capital project spending, $8,333 in arbitrage rebate payable due to actuarial calculation, $4,488 in bond, loan, lease, and subscription interest payable m ainly due to higher outstanding debt principal resulting from the issuance of 2023 Series ABC revenue bonds and commercial paper, $3,166 in unearned revenue mainly due to $1,429 in unspent Federal pass -through grant relating to California Water and Wastewater Arrearages Payment Program (CWWAPP), $1,169 in liens payable, and $652 in customer credit balances due to overpayments, offset by $84 decrease in deposits from Pacific Gas & Electric due to expenses incurred for the Cross Bore Project, $1,929 increase in employee related benefits including vacation, workers’ compensation, and accrued payroll mainly due to actuarial estimates, and 4.75% increase in cost of living adjustment (COLA), and $225 increase in other postemployment benefits obligations based on actuarial report.
The increase in other liabilities were offset by $2,102 in payment of prior year payable that was made in current year to Municipal Transportation Agency for its share of the Walsh Construction Settlement, $1,349 decrease in 31 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
pollution remediation obligation due to payments made for the Yosemite Creek Remediation project, $1,297 in leases due to payments made, $243 decrease in subscription liability, and $113 payment to Hetch Hetchy Power related to the 525 Golden Gate Living Machine System. Deferred inflows of resources decreased by $9,793 due to decreases in pensions and other postemployment benefits of $5,968 and $2,477, respectively, based on actuarial reports, $1,098 in unamortized gain on refunding of debt due to amortization and refund ing gain, and $250 in leases.
Wastewater Net Position, Fiscal Year 2023
For the year ended June 30, 2023, the Wastewater Enterprise’s assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $1,398,834. The Wastewater Enterprise’s total net position increased by $36,167 or 2.7% as a r esult of increases of $108,144 in net investment in capital assets and $130,099 in unrestricted net position offset by decreases of $151,425 in restricted for capital projects, $48,770 in restricted for other purposes, and $1,881 in restricted for debt service (see Table 1B).
During the fiscal year 2023, current and other assets decreased by $50,325 or 8.1%. The decrease was mainly due to $188,853 in receivables from the State Water Resources Control Board (SWRCB) attributed to $207,364 cash receipts from reimbursement requests relating to the Southeast Water Pollution Control Plant (SEP) Biosolids Digester Project, the Southeast Water Pollution Control Plant New Headworks (Grit) Replacement Project, and the Oceanside Plant (OSP) Digester Gas Utilization Upgrade Project, offset by $18,511 aggregate new reimbursement requests for the SEP New Headworks (Grit) Replacement and OSP Digester Gas Utilization Upgrade projects.
Other decreases included $48,770 in restricted net pension asset based on actuarial repor t, $1,014 due from the Treasure Island Development Authority (TIDA) for capacity fees, $241 in capacity charges net of allowance for doubtful accounts as more collection than billings in current year, $228 in receivables for charges for services due to $5,787 increase in allowance for doubtful accounts attributed to increased sewer charges receivable aged over 120 days old offset by $5,559 increase in charges for services due to higher billings, $96 decrease in interfund receivable due to $105 collection of prior year balance from the Academy of Sciences, offset by $9 receivable from the DPW for the Mission Bay South Project, $28 decrease in Federal interest subsidy receivable, $25 decrease in State grant receivable due to receipt of reimbursement for the Baker Beach project, and $7 decrease in custom work receivable. These decreases in current and other assets were offset by increases of $184,889 in restricted and unrestricted cash and investments largely from the issuance proceeds of 2023 Series ABC revenue bonds, $1,682 in interest receivable due to higher interest earnings, $1,457 in lease receivable due to additional GASB Statement No. 87, Leases, $495 increase in prepaid charges due to $1,004 prepaid expenses in the current year such as property rental, software license, and membership fees offset by $471 prior year prepaid expenses recognized in current year and $38 lease prepayments amortizations for the Civic Center Garage and the Mariposa Pump Station & Force, $382 in inventory as there were more purc hases than issuances during the year, $27 in property rent receivable, and $5 in other receivable.
Capital assets, net of accumulated depreciation and amortization, increased by $635,341 or 15.7% reflecting an increase in construction and capital improvem ent activities. The largest portion of the Wastewater Enterprise’s net position of $1,110,957 or 79.4%, represents net investment in capital assets (see Capital Assets section of the MDA for more information). Deferred outflows of resources increased by $5,793 mainly due to $7,223 increase in pensions based on actuarial report offset by $1,405 decrease in other postemployment benefits based on actuarial report, and $25 amortization of the 2013 Series A bonds refunding loss.
Total liabilities increased by $646,837 or 20.0%. As of June 30, 2023, total outstanding balance of $3,551,970 for revenue bonds, revenue notes, certificates of participation (COP), State Revolving Fund (SRF) loans, and Water Infrastructure Finance and Innovation Act (WIFIA) loans repres ented 91.7% of total liabilities, an increase of $563,257 or 18.8%. The increase was mainly due to issuance of 2023 Series ABC and 2022 Series B revenue bonds with an aggregate par value of $974,380 and $137,080, an aggregate premiums of $161,622 and $16,852 from the 2023 Series ABC and 2022 Series B, respectively, to refund principal amount of and interest on commercial paper and portion of certain outstanding revenue bonds and to finance certain capital projects, $177,564 from issuance of commercial paper , $122,357 new WIFIA loan to fund for the Biosolids Digester Facilities Project, and $18,511 additional SRF loans to fund for the SEP New Headworks (Grit) Replacement and OSP Digester Gas Utilization Upgrade projects. These increases were offset by $556,721 refunding of commercial paper, $419,505 refunded principal for revenue bonds series 2013AB and 2018C, debt principal repayments of $34,345 in bonds, $2,481 in SRF, and $826 in COP, $15,494 refunded premium for revenue bonds series 2013AB, and $15,737 in premium amortization. Other liabilities of $322,966, including arbitrage rebate payable, such as 32 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
payables to vendors, contractors, and other government agencies for goods and services under contractual agreements, increased by $83,580 or 34.9% due to increases of $49,549 in net pension liability based on actuarial report, $33,539 in restricted and unrestricted payable to vendors and contractors due to increased vouchers, $6,450 in bond, loan, lease, and subscription interest payable mainly due to higher outstanding debt principal resulting from new debts relating to the issuance of revenue bonds 2023 Series ABC and 2022 Series B bonds, and new WIFIA loan, $2,442 in employee related benefits including vacation, workers’ compensation, and accrued payroll mainly due to actuarial estimates, and 5.25% increase COLA, $2,102 in payable to Municipal Transportation Agency (MTA), and $320 in unearned revenues mainly due to $402 in customer credit balances due to overpayments offset by decreases of $80 in deposits from Pacific Gas & Electric due to expenses incurred for the Cross Bore Project and $2 in liens payable, and $188 in arbitrage rebate payable. The increase in other liabilities was offset by decreases of $7,695 in damage claims liability due to actuarial estimates, $2,341 in lease liability due to lease payment, $515 in subscription liability due to implementation of GASB 96 Subscription-Based Information Technology Arrangements (SBITAs), $260 in pollution remediation obligation, $111 in payable to Hetch Hetchy Power related to the 525 Golden Gate Living Machine System, and $88 in other postemployment benefits obligations based on actuarial report. Deferred inflows of resources decreased by $92,195 mainly due to decreases in pensions and other postemployment benefits by $104,647 and $354, respectively, based on actuarial report, offset by increases in unamortized gain on refunding of debt and leases by $11,353 and $1,453, respectively.
The following table summarizes Hetchy Water’s changes in net position.
^Fiscal years 2022 and 2023 total assets reclassification of right-to-use lease and subscription assets from current and other assets to capital assets.
#Fiscal years 2022 and 2023 net position reclassification of restricted payable and capital related liabilities from restricted for capital projects and/or unrestricted to net investment in capital assets balance updated.
Hetchy Water Net Position, Fiscal Year 2024
Hetchy Water’s net position of $283,257 increased by $9,129 or 3.3% from prior year. Increases in total assets and deferred outflows of resources of $11,239 and increases of $2,110 in total liabilities and deferred inflows of resources are described below (see Table 1C- A). The decrease of $9,225 in current and other assets was attributed to decreases of $10,152 in cash and investments with City Treasury mainly from higher cash paid to suppliers and contractors for goods and services, $59 in due from other governments related to State grant reimbursement for Rim Fire Project, and $22 in inventory due to more issuances than purchases during the fiscal 2024 - 2023 2023 - 2022
2024 2023 2022 Change Change
Total assets:
Current and other assets $ 81,605 90,830 109,691 (9,225) (18,861) 237,486 220,036 201,382 17,450 18,654
Total assets ^ 319,091 310,866 311,073 8,225 (207)
Deferred outflows of resources:
Pensions 11,929 8,858 6,696 3,071 2,162
Other postemployment benefits 3,191 3,248 3,272 (57) (24) Total deferred outflows of resources 15,120 12,106 9,968 3,014 2,138 Liabilities:
Current liabilities 8,198 9,888 17,553 (1,690) (7,665) Long-term liabilities 37,918 31,730 17,095 6,188 14,635 Total liabilities 46,116 41,618 34,648 4,498 6,970
Deferred inflows of resources:
Pensions 1,941 4,142 34,477 (2,201) (30,335)
Other postemployment benefits 2,897 3,084 2,734 (187) 350 Total deferred inflows of resources 4,838 7,226 37,211 (2,388) (29,985) Net position:
Net investment in capital assets 233,276 214,014 194,688 19,262 19,326 Restricted for capital projects 31,330 10,980 — 20,350 10,980 Restricted for other purposes — — 13,912 — (13,912) Unrestricted 18,651 49,134 40,582 (30,483) 8,552
Total net position# $ 283,257 274,128 249,182 9,129 24,946 Proprietary Fund – Hetchy Water
Comparative Condensed Net Position
June 30, 2024, 2023, and 2022
Capital assets, net of accumulated
depreciation and amortization
Table 1C – A
33 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
year. The decreases were offset by increases of $659 in prepaid charges, advances, and other receivables mainl y due to higher prepayments to San Joaquin Tributaries Authority and County of Tuolumne, $283 in interest receivables attributed to higher interest rates, and $66 in charges for services receivables due to higher consumption from Lawrence Livermore National Laboratory.
Capital assets, net of accumulated depreciation and amortization, increased by $17,450 or 7.9% to $237,486 primarily from construction and capital improvement activities for the 2023 March Winter Storm and Mountain Tunnel Improvements Projects. Deferred outflows of resources increased by $3,014 due to an increase of $3,071 in pensions, offset by a decrease of $57 in OPEB based on actuarial reports.
Hetchy Water’s total liabilities increased by $4,498 or 10.8% to $46,116, as explained by increases of $4,985 in net pension liability based on actuarial estimates, $1,362 in OPEB obligations based on actuarial estimates, $468 in employee related benefits due to 4.75% increase in COLA. These increases were offset by decreases of $1,720 in restricted payables due to lower project spending mainly for Mountain Tunnel Improvement Project, $432 in general liability based on actuarial estimates, $80 in subscription liability, $64 in unrestricted payables mainly due to decrease in management consulting services, $16 in lease liability, $4 in unearned revenues, refunds, and other mainly due to decrease in prepaid rent received from tenants, and $1 in interest payable related to SBITAs.
Deferred inflows of resources decreased by $2,388 due to decreases of $2,201 in pensions and $187 in OPEB based on actuarial reports.
Hetchy Water Net Position, Fiscal Year 2023
Hetchy Water’s net position of $274,128 increased by $24,946 or 10.0% resulting from a net decrease of $23,015 in total liabilities and deferred inflows of resources and a net increase of $1,931 in total assets and deferred outflows of resources (see Table 1C -A). The decrease of $18,861 in current and other assets was attributed to decreases of $13,912 in restricted net pension assets based on actuarial report, $6,238 in cash and investments with City Treasury mainly from higher cash paid to suppliers and contractors for goods and services, $129 in prepaid charges, advances, and other receivables due to prepayments made in prior year to California Department of Water Resources for dam fees included in fiscal year 2023, and $70 in charges for services receivables due to lower consumption from Lawrence Livermore National Laboratory. These decreases were offset by increases of $1,211 in State grants rec eivable for the 2018 Moccasin Storm Project related to emergency repairs, $255 in interest receivables attributed to improved fair value of investments and higher interest rates, and $22 in inventory due to more purchases than issuances during the fiscal year.
Capital assets, net of accumulated depreciation and amortization, increased by $18,654 or 9.3% to $220,036 primarily from construction and capital improvement activities for the Mountain Tunnel Improvement Project and San Joaquin Pipeline Valve and Safe Entry Improvement Project. Deferred outflows of resources increased by $2,138 due to an increase of $2,162 in pensions offset by a decrease of $24 in OPEB based on actuarial reports.
Hetchy Water’s total liabilities increased by $6,970 or 20.1% to $41,618, as explained by increases of $14,105 in net pension liability based on actuarial estimates, $667 in OPEB obligations based on actuarial assumptions, $242 in employee related benefits due to 5.25% increase in COLA, $76 in lease liability and $73 in general liability based on actuarial estimates. These increases were offset by decreases of $7,421 in unrestricted payables mainly due to lower license and permit fees to the National Park S ervice, $577 in restricted payables due to lower project spending, $170 in subscription liability per implementation of GASB Statement No. 96, SBITAs , $24 in unearned revenues, refunds, and other mainly due to recognition of grant advance as revenue for the Rim Fire Project, and $1 in interest payable related to SBITAs (see Note 11).
Deferred inflows of resources decreased by $29,985 due to a decrease of $30,335 in pensions offset by an increase of $350 in OPEB based on actuarial reports.
34 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
The following table summarizes Hetchy Power’s changes in net position.
^Fiscal years 2022 and 2023 total assets reclassification of right-to-use lease and subscription assets from current and other assets to capital assets.
#Fiscal years 2022 and 2023 net position reclassification of restricted payable and capital related liabilities from restricted for capital projects and/or unrestricted to net investment in capital assets balance updated.
Hetchy Power Net Position, Fiscal Year 2024
Hetchy Power’s net position of $569,902 increased by $51,552 or 9.9% from prior year. Increases in total assets and deferred outflows of resources of $150,603 and increases of $99,051 in total liabilities and deferred inflows of resources are described below (see Table 1C-B). Increase of $36,405 in current and other assets was attributed to increases of $28,989 in cash and investments mainly due to higher collections from billings attributable to 14.0% average rate increase and cash proceeds from commercial paper, $6,065 in prepaid charges, advances, and other receivables mainly due to prepayments to vendors such as County of Tuolumne for municipal services and additional collateral paid to satisfy the CAISO’s financial security requirements, $4,079 in charges for services 2024 - 2023 2023 - 2022
2024 2023 2022 Change Change
Total assets:
Current and other assets $ 330,411 294,006 260,487 36,405 33,519 757,752 647,238 585,965 110,514 61, 273
Total assets ^ 1,088,163 941,244 846,452 146,919 94,792 Deferred outflows of resources:
Pensions 14,580 10,826 8,183 3,754 2,643
Other postemployment benefits 3,899 3,969 3,999 (70) (30) Total deferred outflows of resources 18,479 14,795 12,182 3,684 2,613 Liabilities:
Current liabilities:
Bonds 3,599 1,590 1,966 2,009 (376)
Certificates of participation 463 445 427 18 18
Commercial paper 90,654 — 40,019 90,654 (40,019)
Other liabilities 55,976 63,355 48,688 (7,379) 14,667 Subtotal current liabilities 150,692 65,390 91,100 85,302 (25,710) Long-term liabilities:
Bonds 315,200 189,342 192,520 125,858 (3,178)
Certificates of participation 11,685 12,148 12,593 (463) (445) Commercial paper — 116,352 — (116,352) 116,352
Arbitrage rebate payable 184 — — 184 —
Other liabilities 53,066 45,626 22,762 7,440 22,864 Subtotal long-term liabilities 380,135 363,468 227,875 16,667 135,593 Total liabilities:
Bonds 318,799 190,932 194,486 127,867 (3,554)
Certificates of participation 12,148 12,593 13,020 (445) (427) Commercial paper 90,654 116,352 40,019 (25,698) 76,333 Arbitrage rebate payable 184 — — 184 —
Other liabilities 109,042 108,981 71,450 61 37,531
Total liabilities 530,827 428,858 318,975 101,969 109,883 Deferred inflows of resources:
Pensions 2,372 5,062 42,138 (2,690) (37,076)
Other postemployment benefits 3,541 3,769 3,342 (228) 427 Total deferred inflows of resources 5,913 8,831 45,480 (2,918) (36,649) Net position:
Net investment in capital assets 343,297 313,171 333,106 30,126 (19,935) Restricted for debt service — 56 140 (56) (84)
Restricted for capital projects 28,625 21,702 — 6,923 21,702 Restricted for other purposes — — 17,004 — (17,004) Unrestricted 197,980 183,421 143,929 14,559 39,492
Total net position# $ 569,902 518,350 494,179 51,552 24,171
Table 1C – B
Proprietary Fund – Hetchy Power
Comparative Condensed Net Position
June 30, 2024, 2023, and 2022
Capital assets, net of accumulated
depreciation and amortization
35 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
receivables mainly due to pending collections from wholesale customers, $1,320 in interest receivables attributed to higher interest rates, and $71 in inventory due to more purchases than issuances during the fiscal year. These increases were offset by decreases of $3,982 in restricted interest and receivables due to refundable deposit received from PG&E, $72 in due from other governments related to State grant reimbursement for Rim Fire Project, and $65 in due from other C ity departments mainly due to repayments for Moscone Renewable Energy Projects.
Capital assets, net of accumulated depreciation and amortization, increased by $110,514 or 17.1% to $757,752 primarily from construction and capital improvement activities for the Cluster 7 Mitigation and Transmission Line Clearance Mitigation Projects. Deferred outflows of resources increased by $3,684 due to an increase of $3,754 in pensions, offset by a decrease of $70 in OPEB based on actuarial reports.
Hetchy Power’s total liabilities of $530,827 increased by $101,969 or 23.8%. As of June 30, 2024, outstanding debt increased by $101,724 due to $131,230 from issuance of 2023 Series A Revenue Bonds and $91,635 from commercial paper issuance, offset by commercial paper repayment of $117,333, bonds and certificates of participation principal repayments of $2,035, and $1,773 in amortization of premium and discount. Other liabilities of $109,042, such as payables to vendors, employees, contractors, and other governm ent agencies for goods and services under contractual agreements, increased by $61 or 0.1%, mainly due to increases of $6,093 in net pension liability based on actuarial estimates, $5,748 in restricted payables to vendors and contractors due to higher year-end expense accruals mainly for the Warnerville Substation Project, $1,663 in OPEB obligations based on actuarial estimates, $1,094 in interest payable mainly due to 2023 Series A Revenue Bonds issuance, $724 in unearned revenues, refunds, and other mainl y due to utility user taxes payable to Alameda county, and $610 in employee related benefits due to 4.75% increase in COLA. These increases were offset by decreases of $11,465 in unrestricted payables mainly due to lower year -end expense accruals for power purchases from APX, Inc. and distribution services from PG&E, $2,376 in general liability based on actuarial estimates, $1,946 in due to other City departments related to claim settlement reimbursement paid to SFMTA, $65 in subscription liability, and $19 in lease liability. Arbitrage rebate payable increased by $184 related to 2021 Series AB and 2023 Series A Revenue Bonds.
Deferred inflows of resources decreased by $2,918 due to decreases of $2,690 in pensions and $228 in OPEB based on actuarial reports.
Hetchy Power Net Position, Fiscal Year 2023
Hetchy Power’s net position of $518,350 increased by $24,171 or 4.9% resulting from an increase of $97,405 in total assets and deferred outflows of resources, offset by a net increase of $73,234 in total liabilities and deferred inflows of resources (see Table 1C-B). Increase of $33,519 in current and other assets was attributed to increases of $47,496 in cash and investments mainly due to higher collections from billings, $2,088 in charges for services receivables mainly due to pending collections from non-work order City departments, $1,302 in interest receivables attributed to improved fair value of investments and higher interest rates, and $348 increase in State grants receivable mainly for the 2018 Moccasin Storm Project related to emergency repairs.
These increases were offset by decreases of $17,004 in restricted net pension assets based on actuarial report, $318 in due from other City departments mainly due to repayments from Moscone Renewable Energy Projects, $182 in prepaid charges, advances, and other receivables mainly due to prepayments made in prior year to California Department of Water Resources for dam fees included in fiscal year 2023, $152 in restricted interest and other receivables mainly due to lower IRS bond interest subsidy accrual, and $59 in inventory due to more issuances than purchases during the fiscal year.
Capital assets, net of accumulated depreciation and amortization, increased by $61,273 or 10.5% to $647,238 primarily from c onstruction and capital improvement activities for the Moccasin Powerhouse Rewind Project and the Bay Corridor Project. Deferred outflows of resources increased by $2,613 due to an increase of $2,643 in pensions offset by a decrease of $30 in OPEB based on actuarial reports.
Hetchy Power’s total liabilities of $428,858 increased by $109,883 or 34.4%. As of June 30, 2023, outstanding debt increased by $72,352 due to $76,333 commercial paper issuance for Hetchy Power facilities, offset by $2,397 from bonds and certificates of participation principal repayments and $1,584 in amortization of premium and discount.
Other liabilities of $108,981, such as payables to vendors, employees, contractors, and other government 36 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
agencies for goods and services under contractual agreements, increased by $37,531 or 52.5%, mainly due to increases of $17,239 in net pension liability based on actuarial estimates, $8,302 in unrestricted payables mainly due to higher power purchases, $5,127 in general liability based on actuarial estimates, $4,060 in restricted payables to vendors and contractors due to higher year -end expense accruals for capital projects mainly for the Winter Storm Projects and Moccasin Powerhouse Projects, $1,566 in due to other City departments mainly for claim settlement reimbursement to SFMTA, $815 in OPEB obligations based on actuarial assumptions, $464 in employee related benefits due to 5.25% increase in COLA, $268 increase in interest payable related to 2021 Series AB revenue bond issued in prior year, and $94 in lease liability. These increases were offset by decreases of $267 in unearned revenues, refunds, and other, and $137 in subscription liability per implementation of GASB Statement No. 96, SBITAs (see Note 11). Decrease of $267 in unearned revenues, refunds, and other was mainly due to $436 deposit refund to developer for custom work project at 1064 Mission Street, $126 in refund for Hunter’s Point construction project, and $43 in grant advance due to recognition of Rim Fire State grant revenue, offset by increases of $170 in prepayments from Distributed Antenna System (DAS) program, and $168 in customer prepayments.
Deferred inflows of resources decreased by $36,649 due to a decrease of $37,076 in pensions offset by an increase of $427 in OPEB based on actuarial reports.
The following table summarizes CleanPowerSF’s changes in net position.
^Fiscal years 2022 and 2023 total assets reclassification of right-to-use lease and subscription assets from current and other assets to capital assets.
CleanPowerSF Net Position, Fiscal Year 2024
CleanPowerSF’s net position of $178,490 increased by $60,489 or 51.3% from prior year. Increases in total assets and deferred outflows of resources of $67,659 and increases of $7,170 in total liabilities and deferred inflows of resources are described below (see Table 1C- C). Increase in current and other assets of $66,794 was due to increases of $61,154 in cash and investments with City Treasury mainly attributed to higher collections from billings, $9,368 in charges for services receivables mainly due to 15.0% average rate increase, and $1,133 in interest receivable attributed to higher interest rates. These increases were offset by a decrease of $4,861 in prepaid charges and other receivables mainly related to $5,000 cash collateral returned from APX, Inc. 2024 - 2023 2023 - 2022
2024 2023 2022 Change Change
Total assets:
Current and other assets $ 224,700 157,906 129,617 66,794 28,289 13 30 301 (
17) (271)
Total assets ^ 224,713 157,936 129,918 66,777 28,018 Deferred outflows of resources:
Pensions 2,187 1,292 852 895 440
Other postemployment benefits 996 1,009 798 (13) 211 Total deferred outflows of resources 3,183 2,301 1,650 882 651 Liabilities:
Current liabilities 38,079 31,461 28,661 6,618 2,800 Long-term liabilities 8,110 6,557 11,579 1,553 (5,022) Total liabilities 46,189 38,018 40,240 8,171 (2,222) Deferred inflows of resources:
Pensions 925 1,296 5,414 (371) (4,118)
Other postemployment benefits 2,292 2,922 1,594 (630) 1,328 Total deferred inflows of resources 3,217 4,218 7,008 (1,001) (2,790) Net position:
Restricted for other purposes — — 1,833 — (1,833)
Unrestricted 178,490 118,001 82,487 60,489 35,514
Total net position $ 178,490 118,001 84,320 60,489 33,681 Proprietary Fund – CleanPowerSF
Comparative Condensed Net Position
June 30, 2024, 2023, and 2022
Capital assets, net of accumulated
depreciation and amortization
Table 1C – C
37 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Capital assets, net of accumulated depreciation and amortization, decreased by $17 or 56.7% to $13 due to decrease in subscription assets. Deferred outflows of resources increased by $882 due to an increase of $895 in pensions, offset by a decrease of $13 in OPEB based on actuarial reports.
Total liabilities increased by $8,171 or 21.5% to $46,189, mainly explained by increases of $4,674 in payables due to higher power purchases, $1,840 in unearned revenues, refunds, and other, $1,439 in net pension liability based on actuarial estimates, $136 in OPEB obligations based on actuarial assumpt ions, and $113 in employee related benefits due to COLA increase. These increases were offset by decreases of $18 in subscription liability and $13 in general liability based on actuarial estimates. Increase of $1,840 in unearned revenues, refunds, and other was mainly due to increases of $1,241 for the Community Food Service Energy Efficiency Program and Disadvantaged Communities Programs from California Public Utilities Commission (CPUC), $651 in net energy metering credits to customers who generated exce ss energy, and $8 in energy tax payable, offset by a decrease of $60 in customer prepayments.
Deferred inflows of resources decreased by $1,001 due to decreases of $630 in OPEB and $371 in pensions based on actuarial reports.
CleanPowerSF Net Position, Fiscal Year 2023
CleanPowerSF’s net position of $118,001 increased by $33,681 or 39.9%, resulting from an increase of $28,669 in total assets and deferred outflows of resources and a decrease of $5,012 in total liabilities and deferred inflows of resources (see Table 1C -C). Increase in current and other assets of $28,289 was due to increases of $42,423 in cash and investments with City Treasury mainly attributed to higher collections from billings and $498 in interest receivable attributed to im proved fair value of investments and higher interest rates. These increases were offset by decrease of $7,078 in charges for services receivables due to $5,485 lower unbilled accrual and $1,593 increase in allowance for uncollectible due to higher aged receivables greater than 120 days. Prepaid charges and other receivables decreased by $5,721, of which $5,463 in lower prepaid for power purchases and $4,258 in prepayments required by PG&E in prior year offset by $4,000 in collateral paid to the California I ndependent System Operator’s (CAISO) to satisfy financial security requirements. Restricted net pension assets decreased by $1,833 based on actuarial report.
Capital assets, net of accumulated depreciation and amortization, decreased by $271 or 90.0% to $30 due to $230 in lease right-to-use assets net of accumulated amortization from lease termination of 544 Golden Gate and $41 in subscription assets net of accumulated amortization per implementation of GASB Statement No. 96, SBITAs.
Deferred outflows of resources increased by $651 due to increases of $440 in pensions and $211 in OPEB based on actuarial reports.
Total liabilities decreased by $2,222 or 5.5% to $38,018, mainly explained by $9,000 cash collateral returned for power purchase agreement, $232 decrease in lease liability related to the lease termination at 544 Golden Gate, $39 decrease in subscription liability per implementation of GASB Statement No. 96, SBITAs, and $1 decrease in interest payable related to SBITAs (See Note 11 ). These decreases were offset by increases of $2,124 in net pension liability based on actuarial estimates, $1,950 in unearned revenues, refunds, and other, $1,789 in OPEB obligations based on actuarial assumptions, $818 in payables mainly due to higher power pur chases, $367 in employee related benefits due to 5.25% increase in COLA, and $2 in general liability based on actuarial estimates.
Increases of $1,950 in unearned revenues, refunds, and other was mainly due to increases of $2,075 received from California P ublic Utilities Commission (CPUC) for the Community Food Service Energy Efficiency Program and Disadvantaged Communities Programs, $64 in customer prepayments, and $5 in energy tax payable, offset by a decrease of $194 in net energy metering credits to retail and commercial customers.
Deferred inflows of resources decreased by $2,790 due to a decrease of $4,118 in pensions offset by an increase of $1,328 in OPEB based on actuarial reports.
38 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Results of Operations
Department-wide Business Type Activities
The following table summarizes the department-wide revenues, expenses, and changes in net position. Detailed discussion follows for each proprietary fund.
The following table summarizes Water’s revenues, expenses, and changes in net position.
2024 - 2023 2023 - 2022
2024 2023 2022 Change Change
Revenues:
Charges for services $ 1,665,162 1,598,926 1,375,765 66,236 223,161 Rents and concessions 9,655 14,387 14,719 (4,732) (332) Other operating revenues 27,552 25,191 31,962 2,361 (6,771) Interest and investment income/(loss) 73,528 18,315 (26,202) 55,213 44, 517 Other non-operating revenues 75,620 67,553 86,326 8,067 (18,773) Total revenues 1,851,517 1,724,372 1,482,570 127,145 241,802 Expenses:
Operating expenses 1,547,468 1,257,946 1,129,681 289,522 128,265 Interest expenses 375,413 319,924 297,068 55,489 22,856 Amortization of premium, discount,
refunding loss, and issuance costs (62,132) (25,942) (18,105) (36,190) (7,837) Non-operating expenses 3,286 2,809 1,938 477 871
Total expenses 1,864,035 1,554,737 1,410,582 309,298 144,155 (12,518) 169,635 71,988 (182,153) 97,647
Capital contributions 130,879 7,992 — 122,887 7,992 Transfers from the City and County of San Francisco 547 20,080 45,036 (19,533) (24,956) Transfers to the City and County of San Francisco (1,558) (20,096) (31,359) 18,538 11,263 Net capital contributions and transfers 129,868 7,976 13,677 121,892 (5,701) Change in net position 117,350 177,611 85,665 (60,261) 91,946 Net position at beginning of year 3,001,386 2,823,775 2,738,110 177,611 85,665 Net position at end of year $ 3,118,736 3,001,386 2,823,775 117,350 177,611 Table 2
Business Type Activities
Comparative Condensed Revenues, Expenses, and Changes in Net Position Years ended June 30, 2024, 2023, and 2022
Change in net position before
transfers and capital contributions
2024 - 2023 2023 - 2022
2024 2023 2022 Change Change
Revenues:
Charges for services $ 650,233 661,241 539,526 (11,008) 121,715 Rents and concessions 8,556 13,282 13,765 (4,726) (483) Other operating revenues 18,101 16,568 19,826 1,533 (3,258) Interest and investment income/(loss) 25,097 11,156 (10,896) 13,941 22,052 Other non-operating revenues 42,071 40,679 41,871 1,392 (1,192) Total revenues 744,058 742,926 604,092 1,132 138,834 Expenses:
Operating expenses 529,356 460,253 401,764 69,103 58,489 Interest expenses 222,055 214,913 213,681 7,142 1,232 Amortization of premium, discount,
refunding loss, and issuance costs (13,825) (9,971) (9,875) (3,854) (96) Non-operating expenses 1,760 1,775 828 (15) 947
Total expenses 739,346 666,970 606,398 72,376 60,572 4,712 75,956 (2,306) (71,244) 78,262
Capital contributions 53,599 2,717 — 50,882 2,717
Transfers from the City and County of San Francisco 505 5 15,035 500 (15,030) Transfers to the City and County of San Francisco (1,241) (20,032) (30,666) 18,791 10,634 Net capital contributions and transfers 52,863 (17,310) (15,631) 70,173 (1,679) Change in net position 57,575 58,646 (17,937) (1,071) 76,583 Net position at beginning of year 692,073 633,427 651,364 58,646 (17,937) Net position at end of year $ 749,648 692,073 633,427 57,575 58,646 Table 2A
Proprietary Fund – Water
Years ended June 30, 2024, 2023, and 2022
Change in net position before
transfers and capital contributions
Comparative Condensed Revenues, Expenses, and Changes in Net Position 39 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Water Results of Operations, Fiscal Year 2024
The Water Enterprise’s total revenues of $744,058 for the year represented an increase of $1,132 or 0.2% from prior year (see Table 2A). Increases included $13,941 from interest and investment income, $1,533 in other operating revenues, and $1,392 in other non- operating revenues. These increases were offset by decreases of $11,008 in charges for services and $4,726 in rents and concessions.
Charges for services were $650,233, a decrease of $11,008 or 1.7%, mainly due to a higher Wholesale Balancing Account adjustment to increase revenues in prior year, offset by adopted rate increases of 9.7% for wholesale customers and 5% for retail customers beginning July 1, 2023. Rents and concessions were $8,556, a decrease of $4,726 or 35.6%, mainly due to funding allocation for low -income customer assistance programs. Other operating revenues were $18,101, an increase of $1,533 or 9.3%, mainly due to increased consumption by other City departments and an adopted rate increase of 5% beginning July 1, 2023. Interest and investment income were $25,097, an increase of $13,941 or 125.0%, mainly due to higher unrealized gains in the current year compared to prior year and higher interest rates. Other non -operating revenues were $42,071, an increase of $1,392 or 3.4%, mainly due to grants for COVID -19 pandemic related water utility arrearages relief and disaster cost recovery for the 2020 Wildfires Santa Clara Fence project.
The Water Enterprise’s total expenses were $739,346, an increase of $72,376 or 10.9%. Operating expenses were $529,356, an increase of $69,103 or 15.0%, resulting from increases of $30,435 in general and administrative expenses mainly due to an increase in judgment and claims expenses based on actuarial estimates, $24,070 in personnel services mainly due to pension expenses based on actuarial estimates, $11,054 in other operating expenses mainly due SF Recycled Water and Mountain Tunnel Improvement projects spending, $3,209 in contractual services mainly for construction expenses, and $3,149 in materials and supplies mainly for water treatment supplies. These increases were offset by decreases of $2,272 for services provided by other departments mainly from lower water assessment fees paid to Hetch Hetchy Water, and $542 in depreciation.
Interest expenses increased by $7,142 compared to prior year, mainly due to the issuances of 2023 Series AB revenue bonds and 2023 Series CD revenue refunding bonds. Amortization of bond premium, discou nt, refunding loss/gain and issuance costs increased by $3,854 due to the issuances of 2023 Series AB revenue bonds and 2023 Series CD revenue refunding bonds. Non -operating expenses decreased by $15 mainly due to higher rebates provided to customers in the prior year.
Capital contributions of $53,599 were received from developers for assets relating mainly to the Treasure Island, Yerba Buena Island, and Pier 70 Development project. Transfer in of $505 from the General Fund included $500 for research on en vironmental impacts in Hunter's Point Shipyard and $5 for the Mayor’s Office’s minimum compensation ordinance. Transfer out of $1,241 included $1,167 to the Arts Commission for the arts enrichment fund, $42 to Hetch Hetchy Water to fund various Mountain Tunnel Improvement projects, and $32 to the Office of the City Administrator for the Water Enterprise’s contribution to the Surety Bond Program.
Water Results of Operations, Fiscal Year 2023
The Water Enterprise’s total revenues of $742,926 for the year represented an increase of $138,834 or 23.0% from prior year (see Table 2A). Increases included $121,715 from charges for services, and $22,052 in interest and investment income. These increases were offset by decreases of $3,258 in other operating revenues, $1,192 in other non-operating revenues, and $483 in rents and concessions.
Charges for services were $661,241, an increase of $121,715 or 22.6% mainly due to an adopted rate increase of
15.9% for wholesale customers and a 5% drought surcharge for retail customers beginning July 1, 2022. Rents and concessions were $13,282, a decrease of $483 or 3.5% mainly due to lease terminations. Other operating revenues were $16,568, a decrease of $3,258 or 16.4% mainly due to decreased consumption by other City departments and fewer capacity fee applications. Interest and investment income was $11,156, an increase of $22,052 or 202.4% due to prior year unrealized losses and higher interest earned on pooled cash. Other non- operating revenues were $40,679, a decrease of $1,192 or 2.8% due to an accrued settlement and water utility arrearages relief grant received in prior year.
The Water Enterprise’s total expenses were $666,970, an increase of $60,572 or 10.0%. Operating expenses were $460,253, an increase of $58,489 or 14.6%, as a result of increases of $52,324 in personnel services mainly due 40 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
to pensions based on actuarial estimates, $6,937 in depreciation from additional capital assets placed into service, $6,603 in services provided by other departments mainly for higher water assessments fees paid to Hetch Hetchy Water, $4,357 in contractual services mainly for custom work and professional and specialized service charges, and increase of $4,327 in materials and supplies mainly for water treatment supplies. These increases were offset by a decrease of $16,059 in general administrative and other expenses mainly from judgment and claims. Interest expenses increased by $1,232, compared to prior year, mainly due to increased commercial paper interest.
Amortization o f bond premium, discount, refunding loss and issuance costs increased by $96 mainly due to amortization of bond refunding loss. Non-operating expenses increased by $947 mainly for youth employment and employment projects.
Transfer in of $5 from the General Fund was for the Mayor’s Office’s minimum compensation ordinance. Transfer out of $20,032 included $20,000 to Hetch Hetchy Water to fund various Mountain Tunnel Improvement projects, and $32 to the Office of the City Administrator for the Water Enterprise’s contribution to the Surety Bond Program.
Capital contribution of $2,717 was received from a developer for assets relating to the Potrero HOPE SF and Sunnydale HOPE SF projects.
The following table summarizes Wastewater’s revenues, expenses, and changes in net position.
Wastewater Results of Operations, Fiscal Year 2024
The Wastewater Enterprise’s total revenues were $444,866, an increase of $68,464 or 18.2% from prior year (see Table 2B). Charges for services increased by $30,360 or 8.6% mainly due to a 9% rate increase adopted on July 1, 2023, offset by a decrease in sanitary flow of 95,679 ccf, or 0.4% from both residential and non -residential customers. Interest and investment income increased by $22,972 or 898.7% mainly due to $10,485 increase in unrealized gain in City Treasury pooled investments, attributed to improved fair value of investment s and a $12,487 increase in interest earned mainly due to higher average cash balances from issuance of WIFIA loans and 2023 Series AB bonds and increase in interest rates. Other non- operating revenues increased by $14,387, primarily due to a $12,104 rise in Federal and State grants received mainly for the CWWAPP and a revenue accrual of $7,558 for the upgrades fair share contribution from the Golden State Warriors and the University of California, San Francisco for the Mariposa Project. This increase was offset by the Monsanto settlement related to water pollution of $5,000 and the $196 Baker Beach grant received in the prior year, as well as decreases of $85 in 2024 - 2023 2023 - 2022
2024 2023 2022 Change Change
Revenues:
Charges for services $ 384,851 354,491 356,041 30,360 (1,550) Rents and concessions 739 822 705 (83) 117
Other operating revenues 9,451 8,623 12,136 828 (3,513) Interest and investment income/(loss) 25,528 2, 556 (7,087) 22,972 9,643 Other non-operating revenues 24,297 9,910 25,454 14,387 (15,544) Total revenues 444,866 376,402 387,249 68,464 (10,847) Expenses:
Operating expenses 462,043 261,350 257,158 200,693 4,192 Interest expenses 138,883 95,520 77,751 43,363 17,769 Amortization of premium,
refunding loss, and issuance costs (47,299) (14,387) (8,422) (32,912) (5,965) Non-operating expenses 505 535 482 (30) 53
Total expenses 554,132 343,018 326,969 211,114 16,049 Change in net position before
transfers and capital contributions (109,266) 33,384 60,280 (142,650) (26,896) Capital contributions 48,080 2,740 — 45,340 2,740
Transfers from the City and County of San Francisco — 75 — (75) 75 Transfers to the City and County of San Francisco (209) (32) (161) ( 177) 129 Net capital contributions and transfers 47,871 2,783 (161) 45,088 2,944 Change in net position (61,395) 36,167 60,119 (97,562) (23,952) Net position at beginning of year 1,398,834 1,362,667 1,302,548 36,167 60,119 Net position at end of year $ 1,337,439 1,398,834 1,362,667 (61,395) 36,167 Table 2B
Proprietary Fund – Wastewater
Years ended June 30, 2024, 2023, and 2022
Comparative Condensed Revenues, Expenses, and Changes in Net Position 41 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Federal interest subsidy and $37 in gains from the sale of assets. Other operating revenues incr eased by $828 or
9.6% mainly due to a $1,643 increase in revenues from other City departments, including Recreation & Park, Zuckerberg San Francisco General Hospital and Trauma Center, and the San Francisco Municipal Transportation Agency. This increase wa s offset by an $815 decrease in capacity fees, driven by a $544 increase in the allowance for doubtful accounts and write- offs, along with a $271 decline in revenue due to lower permits prices and issuance. Rents and concessions decreased by $83 or 10.1% m ainly due to a decrease of $345 from three terminated leases offset by increases in rental income of $189 from tenants with 3.5% consumer price index average rate increase, $70 from short -term conference room rentals at Southeast Community Center and $3 related to leases.
Total expenses were $554,132, reflecting an increase of $211,114 or 61.5% compared to prior year. This was primarily due to increases of $200,693 in operating expenses, $43,363 in interest expenses mainly due to higher bond and WIFIA pri ncipal debt and arbitrage rebate liability, offset by an increase of $32,912 in amortization of premium, refunding loss, and issuance cost and $30 decrease in City grants program expenses due to $195 decrease in expenditures for community based organizatio n services for the Youth Employment & Environment Project, offset by $165 increase in floodwater grant for the UC Wastewater Collection Project. The increase of $200,693 in operating expenses was primarily driven by several factors: a $178,078 rise in gene ral and administrative and other operating expenses largely attributed to judgments and claims expenses based on actuarial report, along with increased project costs associated with the WIFIA Headworks New Grit Removal/Influent Pump and Biosolids Digester projects; a $16,109 increase in personnel services, mainly due to a $15,239 rise related to the GASB 68 pension adjustment and a 4.75% COLA; a $4,683 increase in depreciation and amortization expenses resulting from more assets being placed in service, a $3,108 rise in contractual services primarily due to higher maintenance costs for service equipment at the Southeast Treatment Plant and leasing activities; and a $168 increase in materials and supplies for sewage treatment at the Southeast Treatment Plant, all offset by a $1,453 decrease in expenses for services of other departments mainly in electric services provided by Hetch Hetchy Power at the Southeast Treatment Plant.
Capital contributions of $48,080 were for the Developer Built Infrastructure transferred to capital assets, comprised of $25,923 for the Pier 70 Phase 1, $17,550 for the Treasure Island Stage 1, and $4,607 for the Yerba Buena Island Street Improvements projects. Transfer out of $209 included $177 transfers to Culture and Recreation Fund for art enrichment allocation and $32 to the Office of the City Administrator for the Surety Bond Program.
Wastewater Results of Operations, Fiscal Year 2023
The Wastewater Enterprise’s total revenues were $376,402, a decrease of $10,847 or 2.8% from prior year (see Table 2B). Charges for services decreased by $1,550 or 0.4% mainly due to an increase in allowance for doubtful accounts by $6,885 as there were more sewer charge receivables aging over 120 days, offset by a 5% drought surcharge and a sanitary flow increase of 47,124 ccf or 0.2% from residential and non-residential customers. Other non-operating revenues decreased by $15,544 or 61.1% mainly due to Federal and State grants received in prior year consisting of $9,302 for the customer utility arrearage relief, $8,000 SRF loan principal forgiveness of the SEP Biosolids Digester Facilities and the OSP Digester Gas Handling Utilization Upgrade projects, and $3,409 Baker Beach grant, a decrease of $91 in Federal interest subsidy, a nd $44 refunded federal grant relating to customer utility arrearage relief program, offset by $5,000 Monsanto settlement related to water pollution, $196 Baker Beach grant in current year, and increases of $92 in gain from sale of assets and $14 in miscel laneous revenue. Other operating revenues decreased by $3,513 or 28.9% mainly due to decreases of $3,203 in capacity fees resulting from $3,985 decrease in permits issued offset by $782 decrease in allowance for doubtful accounts, and $310 in other operating revenues to other City departments such as the Recreation & Park, the San Francisco Municipal Transportation Agency, and the Zuckerberg San Francisco General Hospital and Trauma Center. Rents and concessions increased by $117 or 16.6% mainly due to incr eases in rental income of $162 from short -term conference room rentals at Southeast Community Center beginning December 2022, $17 from tenants with 5.3% consumer price index average rate increase, offset by decreases of $59 from three terminated leases in the current year and $3 related to leases due to GASB 87 implementation. Interest and investment income increased by $9,643 or 136.1% mainly due to $4,436 decrease in unrealized loss in City Treasury pooled investments attributed to improved fair value of investments and higher interest rates, an increase of $3,697 in interest earned from pooled cash due to increase in cash balances and higher annualized interest rate, $1,500 increase in interest earned from fiscal agent account due to increase in fiscal agent cash balances and rising interest rates, and $10 interest earned from lease receivable.
42 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Total expenses were $343,018, an increase of $16,049 or 4.9% due to increases of $17,769 in interest expenses mainly due to higher bond principal, $4,192 in operat ing expenses, and $53 increase in City grants program expenses due to increased expenditures for community based organization services such as for the Youth Employment & Environment Project and the UC Wastewater Treatment Project, offset by an increase of $5,965 in amortization of premium, refunding loss, and issuance cost. The increase of $4,192 in operating expenses were mainly due to increases of $26,270 in personnel services due to $21,594 increase in expenses related to GASB 68 pension expense and 5.25 % increase in COLA, $2,462 in materials and supplies due to water sewage treatment supplies for Bayside Operations, $2,205 in contractual services mainly due to higher building and equipment maintenance for sludge removal, vehicle rental, and power utility, $1,354 in services provided by other departments mainly for electricity from Hetch Hetchy Power, water from Water Wastewater Enterprise, and for toxics waste and hazard materials services and cleanup charges related to the UC Wastewater Treatment Project , offset by decreases of $28,033 in general and administrative and other operating expenses mainly due to increased capitalized expenditures to capital assets and a decrease in judgments and claims offset by increased capital project expenses primarily related to SSIP Biosolids Digester Project, New Grit Removal/Influent Pump Project, and Westside Pump Station Reliability Improvement Project and $66 in depreciation and amortization expenses.
Capital contributions of $2,740 were for the Sunnydale HopeSF Developer Project. Net transfers of $43 included transfer in of $75 from the General Fund for the Wastewater Add-backs Master Project offset transfer out of $32 to the Office of the City Administrator for the Surety Bond Program.
The following table summarizes Hetchy Water’s revenues, expenses, and changes in net position.
Hetchy Water Results of Operations, Fiscal Year 2024
Hetchy Water’s total revenues were $53,085, a decrease of $1,930 or 3.5% from prior year’s revenues (see Table 2C-A). Decreases included $3,240 in charges for services and $1,523 in other non- operating revenues, offset by increases of $2,798 in interest and investment income and $35 in rents and concessions.
Charges for services were $49,330, a decrease of $3,240 or 6.2% mainly due to decreased water assessment fees from the Water Enterprise to fund upcountry water -related costs. Interest and investment income was $3,255, an increase of $2,798 mainly due to unrealized gain in City Treasury pooled investments attributed to improved fair value of investments and higher interest rates. Other non- operating revenues were $338, a decrease of $1,523 mainly due to decreases of $1,388 in State grants revenue for the Moccasin Storm Project and Rim Fire Project related to emergency repairs, $239 in Federal grants revenue for the Rim Fire Project, and $2 in net gain from sale 2024 - 2023 2023 - 2022
2024 2023 2022 Change Change
Revenues:
Charges for services $ 49,330 52,570 49,200 (3,240) 3,370 Rents and concessions 162 127 112 35 15
Interest and investment income/(loss) 3,255 457 (2,932) 2,798 3,389 Other non-operating revenues 338 1,861 479 (1,523) 1,382 Total revenues 53,085 55,015 46,859 (1,930) 8,156
Expenses:
Operating expenses 43,950 50,011 52,299 (6,061) (2,288) Interest expenses 3 4 3 (1) 1
Non-operating expenses 45 54 37 (9) 17
Total expenses 43,998 50,069 52,339 (6,071) (2,270)
Change in net position before transfers 9,087 4,946 (5,480) 4,141 10,426 Transfers from the City and County of San Francisco 42 20,000 30,001 (19,958) (10,001) Change in net position 9,129 24,946 24,521 (15,817) 425 Net position at beginning of year 274,128 249,182 224,661 24,946 24,521 Net position at end of year $ 283,257 274,128 249,182 9,129 24,946 Table 2C – A
Proprietary Fund – Hetchy Water
Comparative Condensed Revenues, Expenses, and Changes in Net Position Years ended June 30, 2024, 2023, and 2022
43 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
of fixed assets, offset by increases of $100 settlement revenue mainly for San Joaquin Pipeline Project and $6 miscellaneous revenue. Rents were $162, an increase of $35 mainly due to higher collections from recreational rentals and new leases.
Total operating expenses, excluding interest expenses and other non -operating expenses, were $43,950, a decrease of $6,061 or 12.1%. Decreases included $13,074 in other operating expenses mainly due to lower project spending on the Mountain Tunnel Improvem ent Project, $807 in general and administrative expenses due to lower judgments and claims expenses, and $2 in depreciation and amortization mainly related to fewer subscription assets. These decreases were offset by increases of $6,484 in personnel servic es due to higher pension expenses and 4.75% increase in COLA, $1,079 in contractual services from increased engineering services, $150 in material and supplies from treatment chemicals and hardware expenses, and $109 in services provided by other departments mainly due to higher risk management services.
Other non -operating expenses were $45, a decrease of $9 due to lower payments to community -based organization programs. Interest expenses were $3, a decrease of $1 due to lower interest expenses related t o leases and subscription assets. A transfer in of $42 was received from the Water Enterprise to fund various capital projects.
As a result of the above activities, net position for the year ended June 30, 2024 increased by $9,129 or 3.3% compared to prior year.
Hetchy Water Results of Operations, Fiscal Year 2023
Hetchy Water’s total revenues were $55,015, an increase of $8,156 or 17.4% from prior year’s revenues (see Table 2C-A). Increases included $3,370 in charges for services, $3,389 in interest and investment income, $1,382 in other non-operating revenues, and $15 in rents and concessions.
Charges for services were $52,570, an increase of $3,370 or 6.8% mainly due to increased water assessment fees from the Water Enterprise to fund upcountry wate r-related costs. Interest and investment income was $457, an increase of $3,389 mainly due to decrease in unrealized loss in City Treasury pooled investments attributed to improved fair value of investments and higher interest rates. Other non- operating revenues were $1,861, an increase of $1,382 mainly due to increase of $1,177 in State grants revenue for the 2018 Moccasin Storm Project related to emergency repairs, $200 revenue related to labor settlements, and $9 in overhead charges, offset by decreases of $3 in net gain from sale of fixed assets and $1 in miscellaneous revenue. Rents were $127, an increase of $15 mainly due to higher collections from recreational rentals.
Total operating expenses, excluding interest expenses and other non -operating exp enses, were $50,011, a decrease of $2,288 or 4.4%. Other operating expenses decreased by $7,358 mainly due to lower capital spending on the Mountain Tunnel Improvement Project, offset by increases of $2,788 in personnel services due to higher personnel and fringe benefit costs and 5.25% increase in COLA, $1,451 in general and administrative expenses due to higher fees, licenses, and permit expenses, $281 in contractual services from increased management consulting services, $263 in services provided by other departments mainly due to higher bureau allocations related to accounting services support from the Controller’s Office, $243 in material and supplies from fuel and minor data processing equipment, and $44 in depreciation and amortization mainly related to additional facilities and improvements placed in service.
Other non -operating expenses were $54, an increase of $17 due to higher payments to community -based organization programs. Interest expenses were $4, an increase of $1 mainly due to implementat ion of GASB Statement No. 96, SBITAs . A transfer in of $20,000 was received from the Water Enterprise to fund various Mountain Tunnel Projects.
As a result of the above activities, net position for the year ended June 30, 2023 increased by $24,946 or 10. 0% compared to prior year.
44 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
The following table summarizes Hetchy Power’s revenues, expenses, and changes in net position.
Hetchy Power Results of Operations, Fiscal Year 2024
Hetchy Power’s total revenues were $236,624, an increase of $15,275 or 6.9% from prior year’s revenues (see Table 2C-B). Increases included $10,307 from charges for services, $10,003 from interest and investment income, and $42 from rents and concessions, offset by a decrease of $5,077 from other non-operating revenues.
Charges for services were $214,154, an increase of $10,307 or 5.1%, mainly due to increases of $12,819 in revenue from City departments mainly due to average rate increase and lower allowance for uncollectible, $9,432 in resale of capacity to CleanPowerSF due to excess energy, $2,867 in sales to retail customers from increased consumption, and $1,055 from Treasure Island due to average rate increase, offset by a decrease of $15,866 mainly d ue to wholesale revenue from lower Congestion Revenue Right (CRR) credits from the California Independent System Operator (CAISO). Interest and investment income was $13,744, an increase of $10,003 mainly due to unrealized gain in City Treasury pooled investments attributed to improved fair value of investments and higher interest rates. Rents increased by $42 or 26.9% to $198 mainly due to higher collections from recreational rentals and new leases.
Other non-operating revenues were $8,528, a decrease of $5,077 or 37.3%, mainly due to decreases of $4,449 in revenue received in prior year for the Power System Mitigation Project, $567 in State grants revenue for the Moccasin Storm Project and Rim Fire Project related to emergency repairs, $344 in Federal grants revenue from the Rim Fire Project and California Arrearages Payment Program (CAPP) ended in prior year, $244 in settlement received in prior year due to labor litigation, and $78 in miscellaneous revenue. These decreases were offset by an increase of $605 in Cap and Trade revenue due to increase of 12,157 allowances sold.
Total operating expenses, excluding interest expenses, other non- operating expenses, and amortization of premium, discount, and issuance costs, increased by $9,049 or 4.7% to $200,601. Increases included $14,217 in other operating expenses mainly due to higher project spending for the Winter Storm Projects, $8,875 in personnel services due to higher pension expenses and 4.75% increase in COLA, $2,804 in contractual services for construction contracts and engineering services, and $583 in depreciation and amortization related to additional facilities and improvements placed in service. These increases were offset by decreases of $14,715 in general and administrative expenses due to lower judgments and claims expenses, $1,846 in services provided by other departments mainly due to lower legal service charges from City Attorney’s Office, $708 in purchased electricity and transmission, distribution, and other power costs mainly related to transmission and related CAISO costs, and 2024 - 2023 2023 - 2022
2024 2023 2022 Change Change
Revenues:
Charges for services $ 214,154 203,847 173, 105 10,307 30,742 Rents and concessions 198 156 137 42 19
Interest and investment income/(loss) 13,744 3,741 (4,001) 10,003 7,742 Other non-operating revenues 8,528 13,605 15,763 (5,077) (2,158) Total revenues 236,624 221,349 185,004 15,275 36,345 Expenses:
Operating expenses 200,601 191,552 156,343 9,049 35,209 Interest expenses 14,472 9,486 5,627 4,986 3,859
Amortization of premium, discount,
and issuance costs (1,008) (1,584) 192 576 (1,776)
Non-operating expenses 99 227 591 (128) (364)
Total expenses 214,164 199,681 162,753 14,483 36,928 Change in net position before transfers and contributions 22,460 21,668 22,251 792 (583) Capital contribution 29,200 2,535 — 26,665 2,535
Transfers to the City and County of San Francisco (108) (32) (532) (76) 500 Net capital contributions and transfers 29,092 2,503 (532) 26,589 3,035 Change in net position 51,552 24,171 21,719 27,381 2,452 Net position at beginning of year 518,350 494,179 472,460 24,171 21,719 Net position at end of year $ 569,902 518,350 494,179 51,552 24,171 Table 2C – B
Proprietary Fund – Hetchy Power
Comparative Condensed Revenues, Expenses, and Changes in Net Position Years ended June 30, 2024, 2023, and 2022
45 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
$161 in materials and supplies for electrical supplies.
Interest expenses increased by $4,986 or 52.6% due to higher outstanding bonds from issuance of 2023 Series A Revenue Bonds. Amortization of premium and discount decreased by $576 due to costs of issuance for 2023 Series A Revenue Bonds.
Other non-operating expenses were $99, a decrease of $128 or 56.4% mainly due to lower incentive payments for Electric Vehicle Charge Program. Capital contributions of $29,200 were for assets at Pier 70, Treasure Island, and Yerba Buena Island. Transfer out of $108 included $76 to General Fund for Public Power Expansion Project and $32 to the Office of the City’s Administrator for the Surety Bond Program.
As a result of the above activities, net position for the year ended June 30, 2024 increased by $51,552 or 9.9% compared to prior year.
Hetchy Power Results of Operations, Fiscal Year 2023
Hetchy Power’s total revenues were $221,349, an increase of $36,345 or 19.6% from prior year’s revenues (see Table 2C-B). Increases included $30,742 from charges for services, $7,742 from interest and investment income, and $19 from rents and concessions, offset by a decrease of $2,158 from other non-operating revenues.
Charges for services were $203,847, an increase of $30,742 or 17.8%, mainly due to increases of $19,450 in wholesale revenue from Congestion Revenue Right (CRR) credits from California Independent System Operator (CAISO) and $12,159 in billings from non- work order City departments as a result of increased operation due to easing of COVID-19 restrictions, offset by a decrease of $867 in resale of capacity to CleanPowerSF. Interest and investment income was $3,741, an increase of $7,742 mainly due to decrease in unrealized loss in City Treasury pooled investments attributed to improved fair value of investments and higher interest rates. Rents increased by $19 or 13.9% to $156 mainly due to higher collections from recreational rentals.
Other non-operating revenues were $13,605, a decrease of $2,158 or 13.7%, mainly due to decreases of $3,987 in State and Federal grants revenue from the Rim Fire Project and California Arrearages Payment Program (CAPP) to provide relief for customer unpaid bills, $590 in Low Carbon Fuel Standard credits, $306 Cap and Trade revenue due to decrease of 10,606 allowances sold, $22 in bond interest subsidies from IRS mainly due to lower subsidy for 2015 NCREBs, and $6 in net gain from sale of fixed assets, offset by increases of $2,084 from the Power System Mitigation Project, $244 in settlement revenue, $220 in Distributed Antenna System and miscellaneous revenue, and $205 in overhead charges.
Total operating expenses, excluding interest expenses, other non- operating expenses, and amortization of premium, discount, and issuance costs, increased by $35,209 or 22.5% to $191,552. Increases included $20,406 in purchased electricity and transmission, distribution, and other power costs attributed to volatile and higher pricing in power market, $10,988 in general and administrative expenses due to higher judgments and claims expenses , $4,654 in personnel services due to higher personnel and fringe benefit costs and 5.25% in crease in COLA, $2,421 in services provided by other departments mainly due to higher legal service charges from City Attorney’s Office, $1,360 in contractual services for construction contracts, $342 in materials and supplies for electrical supplies and f uel, and $108 in depreciation and amortization mainly related to additional facilities and improvements placed in service. These increases were offset by a decrease of $5,070 in other operating expenses mainly due to lower capital spending for Bay Corridor Project.
Interest expenses increased by $3,859 or 68.6% due to higher outstanding bonds and commercial paper.
Amortization of premium and discount decreased by $1,776 due to higher costs of issuance for 2021 Series AB revenue bonds in prior year.
Other non-operating expenses were $227, a decrease of $364 or 61.6% mainly due to lower payments for GoSolarSF Incentive Program. Capital contributions of $2,535 were from the Sunnydale and Potrero Hope Projects. Transfer out of $32 to the Office of the City’s Administrator was for the Surety Bond Program.
As a result of the above activities, net position for the year ended June 30, 2023 increased by $24,171 or 4.9% compared to prior year.
46 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
The following table summarizes CleanPowerSF’s revenues, expenses, and changes in net position.
CleanPowerSF Results of Operations, Fiscal Year 2024
CleanPowerSF’s total revenues were $372,884, a $44,204 or 13.4% increase over prior year (see Table 2C-C ).
Charges for services increased by $39,817 or 12.2% mainly due to increases of $38,403 in electricity sales to retail and commercial customers from 15.0% average rate increase and $3,606 in wholesale sales due to excess energy, offset by $2,192 in lower capacity sales to counter parties. Capacity sales are based on availability.
Interest and investment income was $5,904, an increase of $5,499 mainly due to unrealized gain in City Treasury pooled investments attributed to improved fair value of investments and higher interest rates. Other non- operating revenue decreased by $1,112 mainly due to $1,173 decrease in Federal CAPP grants which ended in prior year, offset by an increase of $61 in revenue mainly from Disadvantaged Communities (DAC) Programs.
Total operating expenses, excluding interest expenses and non-operating expenses were $311,518, an increase of $16,738 or 5.7% from prior year. Purchased electricity and transmission, distribution, and other power costs increased by $19,517 due to volatile and increased pricing in power market. Other increases included $490 in services provided by other departments mainly due to higher legal service charges from City Attorney’s Office and $3 in material and supplies mainly for minor data processing equipment. These increases were offset by decreases of $1,413 in personnel services due to lower OPEB obligations based on actuarial reports, $739 in other operating expenses mainly due to recognition of grant expense related to CAPP in prior year, $552 in general and administrative expenses due to lower judgments and claims expenses, $315 in contractual services mainly due to lease termination at 544 Golden Gate, and $253 in depreciation and amortization related to fewer leases and subscription assets. Other non- operating expenses increased by $659 mainly due to rebates for the Electrify My Ride Program. Interest expenses decreased by $1 related to SBITAs.
As a resu lt of the above activities, net position for the year ended June 30, 2024 increased by $60,489 or 51.3% compared to prior year.
CleanPowerSF Results of Operations, Fiscal Year 2023
CleanPowerSF’s total revenues were $328,680, a $69,314 or 26.7% increase over prior year (see Table 2C-C).
Charges for services increased by $68,884 or 26.7% mainly due to $70,629 in electricity sales to retail and commercial customers from increased consumption of 1.1% or 30,441 MWh, offset by $997 in lower capacity sales to Hetchy Power and $748 increase in allowance for uncollectible attributed to lower assistance received from CAPP for eligible customer account arrearages. Interest and investment income was $405, an increase of $1,691 mainly due to decrease in unrealized loss in City Treasury pooled investments attributed to improved fair value of investments and higher interest rates. Other non -operating revenue decreased by $1,261 mainly due to $1,251 decrease in Federal grants received from CAPP and $330 in liquidated damage compensation received from supplier for delay of the Renewable Energy Project in prior year, offset by an increase of $320 in revenue 2024 - 2023 2023 - 2022
2024 2023 2022 Change Change
Revenues:
Charges for services $ 366,594 326,777 257,893 39,817 68,884 Interest and investment income/(loss) 5,904 405 (1,286) 5,499 1,691 Other non-operating revenues 386 1,498 2,759 (1,112) (1,261) Total revenues 372,884 328,680 259,366 44,204 69,314 Expenses:
Operating expenses 311,518 294,780 262,117 16,738 32,663 Interest expenses — 1 6 (1) (5)
Non-operating expenses 877 218 — 659 218
Total expenses 312,395 294,999 262,123 17,396 32,876 Change in net position 60,489 33,681 (2,757) 26,808 36,438 Net position at beginning of year 118,001 84,320 87,077 33,681 (2,757) Net position at end of year $ 178,490 118,001 84,320 60,489 33,681 Table 2C – C
Proprietary Fund – CleanPowerSF
Comparative Condensed Revenues, Expenses, and Changes in Net Position Years ended June 30, 2024, 2023, and 2022
47 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
mainly from Disadvantaged Communities (DAC) Programs.
Total operating expenses, excluding interest expenses were $294,780, an increase of $32,663 or 12.5% from prior year. Purchased electricity and transmission, distribution, and other power costs increased by $25,640 due to volatile and increased pricing in power market, and higher resource adequacy capacity purchases related to compliance requirements from the CPUC. Other increases include $6,568 in personnel services due to higher personnel and fringe benefit costs and 5.25% increase in COLA, $681 in services provided by other departments mainly due to higher bureau allocations related to accounting services support from the Controller’s Office, $112 in other operating expenses mainly due to higher bureau allocations, and $24 in material and suppli es mainly for minor data processing equipment. These increases were offset by decreases of $221 in professional and contractual services mainly from lower management consulting and financial services, $115 in depreciation and amortization due to lease termination for 544 Golden Gate, and $26 in general and administrative due to lower bank fees. Other non- operating expenses increased by $218 in solar rebates for the Inverter Replacement Program. Interest expenses were $1, a decrease of $5 related to lease termination.
As a result of the above activities, net position for the year ended June 30, 2023 increased by $33,681 or 39.9% compared to prior year.
Capital Assets
Department-wide Business Type Activities
The following table summarizes the department-wide changes in capital assets. Detailed discussion follows for each proprietary fund.
The following table summarizes Water’s changes in capital assets.
Water Capital Assets, Fiscal Year 2024
The Water Enterprise has net capital assets of $5,778,467 invested in a broad range of utility capital assets as of June 30, 2024 (see Table 3A). The investment in capital assets includes land, facilities, improvements, water treatment plants, aqueducts, water transmission, distribution mains, water storage facilities, pump stations, water reclamation facilities, machinery, and equipment. The Water Enterprise’s net revenue and long- term debt are used to finance capital investments. Capital assets, net of accumulated depreciation and amortization, increased by $125,515 from the prior year. Facilities, improvements, machinery, and equipment increased by $46,972 2024 - 2023 2023 - 2022
2024 2023 2022 Change Change
Facilities, improvements, machinery, and equipment$ 8,137,674 7, 865,615 7,767,562 272,059 98,053 Intangible assets 32,694 33,816 34,731 (1,122) (915) Land and rights-of-way 163,075 163,075 163,194 — (119) Land Improvements 9,311 6,733 — 2,578 6,733
Construction work in progress 3,915,730 3,130,427 2,485,201 785,303 645,226 Right-to-use lease and subscription assets 3,644 6,936 9,948 (3,292) (3,012) Total $ 12,262,128 11,206,602 10,460,636 1,055,526 745,966 Table 3
Business Type Activities
Capital Assets, Net of Accumulated Depreciation and Amortization As of June 30, 2024, 2023, and 2022
2024 - 2023 2023 - 2022
2024 2023 2022 Change Change
Facilities, improvements, machinery, and equipment$ 5,052,639 5,005,667 5,056,747 46,972 (51,080) Intangible assets 2,657 2,331 3,152 326 (821)
Land and rights-of-way 113,322 113,322 113,441 — (119) Construction work in progress 606,804 526,994 444,254 79,810 82,740 Right-to-use lease and subscription assets 3,045 4,638 4,389 (1,593) 249 Total $ 5,778,467 5,652,952 5,621,983 125,515 30,969 Table 3A
Proprietary Fund – Water
Capital Assets, Net of Accumulated Depreciation and Amortization As of June 30, 2024, 2023, and 2022
48 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
mainly due to additions relating to various Water Main Replacement projects. Intangible assets increased by $326 mainly due to Maximo improvements and Software as a Service Applications additions. Land and rights -of-way was unchanged. Construction work in progress increased by $79,810 mainly from the San Joaquin Pipeline Valve and Safe Entry Improvements and Mountain Tunnel Improvement projects. Right -to-use lease and subscription assets decreased by $1,593 due to fewer leases and subscription assets.
As of June 30, 2024 and 2023, the Water Enterprise had capital commitments of $225,678 and $187,936, respectively.
Major additions to construction work in progress during the year ended June 30, 2024 include the following:
Major depreciable facilities, improvements, intangible assets, machinery, and equipment placed in service, including transfers of completed projects from construction work in progress, during the year ended June 30, 2024 include the following:
See Note 4 for additional information about capital assets.
Water System Improvement Program (WSIP)
The WSIP delivers capital improvements that enhance the Water Enterprise’s ability to provide reliable, affordable, high-quality drinking water to its 27 wholesale customers and regional retail customers in Alameda, Santa Clara, and San Mateo Counties, as well as approximately 800,000 residential customers in San Francisco, in an environmentally sustainable manner. The program is structured to cost-effectively meet water quality requirements and long-term water supply objectives, as well as improve seismic and delivery reliability.
Overall, the $4.8 billion WSIP to upgrade the City of San Francisco’s regional and local drinking water systems is 99% completed with $4.8 billion of project appropriations expended through fiscal year ended June 30, 2024. The program consists of 35 local projects located within San Francisco and 52 regional projects spread over seven
San Joaquin Pipeline Valve and Safe Entry Improvements $ 21,253 Mountain Tunnel Improvements 18,114
New City Distribution Division Headquarters 10,999
2023 March Winter Storm Joint Project 10,622
Lead Component Service Program 10,419
Water Main Replacement - WD-2847 Laidley/Castro to Harper/Bemis/Miguel/Various Side Streets 8,038 College Hill Reservoir Outlet and Pipeline 7,960
New services for water installation 7,195
Water Main Replacement - WD-2859 Taraval Segment B 6,482 Regional Groundwater Storage and Recovery 6,426
Skyline Ridge Trail 6,336
Water Main Replacement - WD-2801 Mariposa to Cesar Chavez/York/Hampshire Streets 6,289 Water Main Replacement - WD-2843 Diamond/27th/28th/Duncan Streets 5,675 Westside Recycled Water Project 5,444
San Andreas Reservoir Road Improvements 5,358
Other project additions individually below $5,000 84,360 Total $ 220,970
Water Main Replacement - WD-2859 Taraval Segment B $ 15,052 Water Main Replacement - WD-2843 Diamond/27th/28th/Duncan Streets 11,814 Water Main Replacement - WD-2847 Laidley/Castro to Harper/Bemis/Miguel/Various Side Streets 10,882 Renewed Water Service Lines 10,419
Harry Tracy Water Treatment Plant Filters No. 1-6 Stainless Steel Underdrains 10,356 Water Main Replacement - WD-2806 Vicente Street/19th to 25th Avenue 9,315 Water Main Replacement - WD-2718 Prospect/Fair/Coso Avenues/Coleridge Street 9,173 Contributed Capital - Yerba Buena Island 1.34 mg Prestressed Concrete Water Storage Tanks 8,770 Contributed Capital - Pier 70 Phase 1 Auxiliary Water Supply System Pipe Network 8,648 New Water Service Facilities 7,195
Auxiliary Water Supply System - Pipeline at Clarendon Avenue 6,871 Contributed Capital - Pier 70 Phase 1 Low Pressure Water Pipe Network 6,789 2023 March Emergency Major Road Repair - Cherry Lake Road 6,679 Potable Emergency Firefighting Water System - Pipeline at 19th Avenue 6,489 Other items individually below $5,000 72,425
Total $ 200,877
49 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
different counties from the Sierra Foothills to San Francisco. As of June 30, 2024, 35 local projects were completed. For regional projects, 48 projects were completed, the Alameda Creek Recapture and Regional Groundwater Storage projects are under construction, the Bioregional Habitat Restoration project is in close -out, and Long-Term Mitigation Endowment project is not applicable as it does not include const ruction. The expected completion date is June 2032. Additional details regarding the WSIP are available at https://sfpuc.gov/construction- contracts/water-infrastructure-improvements.
Water Capital Assets, Fiscal Year 2023
The Water Enterprise has net capital assets of $5,652,952 invested in a broad range of utility capital assets as of June 30, 2023 (see Table 3A). The investment in capital assets includes land, facilities, improvements, water treatment plants, aqueducts, water transmission, distribution mains, water storage facilities, pump stations, water reclamation facilities, machinery, and equipment. The Water Enterprise’s net revenue and long term debt are used to finance capital investments. Capital assets, net of accumulated depreciation and amortization, increased by $30,969 from the prior year. Facilities, improvements, machinery, and equipment decreased by $51,080 mainly due to depreciation. Intangible assets decreased by $821 mainly due to amortization. Land decreased by $119 from the sale of Balboa Reservoir. Construction work in progress increased by $82,740 mainly from the Mountain Tunnel Improvement and SF Westside Recycled Water projects. Right -to-use lease and subscription assets increased by $249 due to the implementation of GASB Statement No. 96, SBITAs.
Major additions to construction work in progress during the year ended June 30, 2023 include the following:
Major depreciable facilities, improvements, intangible assets, machinery, and equipment placed in service, including transfers of completed projects from construction work in progress, during the year ended June 30, 2023 include the following:
See Note 4 for additional information about capital assets.
Mountain Tunnel Improvements $ 22,623
SF Westside Recycled Water Project 9,400
New Water Utility Service Facilities 7,594
Water Main Replacement and Auxiliary Water Supply System Pipeline - 19th Ave 7,183 College Hill Reservoir Outlet and Pipeline 7,087
Sunol Valley Water Treatment Plant Ozonation 6,987
Water Main Replacement - WD-2718 Prospect/Cortland/Fair Ave 5,987 Harry Tracy Water Treatment Plant - Filters No. 1 to 6 Underdrain Replacement 5,939 Water Main Replacement - WD-2859 Taraval Segment B 5,649 San Joaquin Pipeline Valve and Safe Entry Improvements 5,486 Water Main Replacement - WD-2843 Diamond/27th/28th Streets 5,372 Water Main Replacement - WD-2806 Vicente Street/19th to 25th Ave 5,189 Regional Groundwater Storage and Recovery 5,152
Other project additions individually below $5,000 80,743 Total $ 180,391
Auxiliary Water Supply System Pumping Station No. 2 Improvement - Structural System $ 14,683 Water Main Replacement - WD-2811 17th/Clayton/Ord Streets 11,240 New Water Utility Service Facilities 7,594
Water Main Replacement - 19th Ave 7,018
Auxiliary Water Supply System Pumping Station No. 2 Improvement - Diesel Engine Generator 6,235 Other items individually below $5,000 54,730
Total $ 101,500
50 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Water System Improvement Program (WSIP)
The WSIP delivers capital improvements that enhance the Water Enterprise’s ability to provide reliable, affordable, high-quality drinking water to its 27 wholesale customers and regional retail customers in Alameda, Santa Clara, and San Mateo Counties, as well as approximately 800,000 residential customers in San Francisco, in an environmentally sustainable manner. The program is structured to cost-effectively meet water quality requirements and long-term water supply objectives, as well as improve seismic and delivery reliability.
Overall, the $4.8 billion WSIP to upgrade the City of San Francisco’s regional and local drinking water systems is 99% completed with $4.8 billion of project appropriations expended through fiscal year ended June 30, 2023. The program consists of 35 local projects located within San Francisco and 52 regional projects spread over seven different counties from the Sierra Foothills to San Francisco. As of June 30, 2023, 35 local projects were completed. For regional projects, 48 projects were completed, the Alameda Creek Recapture and Regional Groundwater Storage projects are under construction, the Bioregional Habitat Restoration project is in close -out, and Long-Term Mitigation Endowment project is not applicable as it does not include construction. The expected completion date is February 2027. Additional details regarding the WSIP are available at https://www.sfpuc.gov/construction-contracts/water-infrastructure-improvements .
See Note 4 for additional information about capital assets.
The following table summarizes Wastewater’s changes in capital assets.
Wastewater Capital Assets, Fiscal Year 2024
The Wastewater Enterprise has capital assets of $5,488,410, net of accumulated depreciation and amortization, invested in a broad range of utility capital assets as of June 30, 2024 (see Table 3B). This amount represents an increase of $802,064 or 17.1% from prior fiscal year. As of June 30, 2024, the Wastewater Enterprise had capital commitments of $667,703. The investment in capital assets includes land, buildings, improvements, wastewater treatment plants, sewer pipes and mains, underground transport and storage boxes, pump stations, machinery, and equipment. Construction work in progress increased by $645,826 or 28.9%. Facilities, improvements, machinery, and equipment increased by $156,126 or 6.5%. Land improvements increased by $2,578 or 38.3% relating to improvements for the Ocean Beach Project. Right -to-use lease and subscription assets decreased by $1,506 or 88.9% due to termination of leases and subscriptions and amortization. Intangible assets decreased by $960 or 13.1% due to amortization.
2024 - 2023 2023 - 2022
2024 2023 2022 Change Change
Facilities, improvements, machinery, and equipment $ 2,549,177 2,393,051 2,270,355 156,126 122,696 Intangible assets 6,373 7,333 7,107 (960) 226 Land and rights-of-way 44,572 44, 572 44,572 - - Land Improvements 9,311 6,733 - 2,578 6,733 Construction work in progress 2,878,789 2,232,963 1,724,417 645,826 508,546 Right-to-use lease and subscription assets 188 1,694 4,554 (1,506) (2,860) Total $ 5,488,410 4,686,346 4,051,005 802,064 635,341 Table 3B
Proprietary Fund – Wastewater
Capital Assets, Net of Accumulated Depreciation and Amortization As of June 30, 2024, 2023, and 2022
51 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Major additions to construction work in progress during the year ended June 30, 2024 include the following:
Major depreciable facilities, improvements, intangible assets, machinery, and equipment placed in service, including transfers of completed projects from construction work in progress, during the year ended June 30, 2024 include the following:
See Note 4 for additional information about capital assets.
Sewer System Improvement Program (SSIP)
The Sewer System Improvement Program (SSIP) is the SFPUC’s wastewater capital improvement program which includes multiple projects to improve the existing wastewater system. The implementation of the SSIP projects were originally phased over 20 years to maintain ratepayer affordability and minimize impacts to communities throughout the City. On March 22, 2016, the refined program scope and budget for $7.0 billion was endorsed by the Commission along with the baseline for scope, schedule, and budget for Phase 1 projects totaling $2.9 billion.
The revised program is referred to as the “2016 SSIP Baseline”.
Southeast Plant Biosolids Digester Facilities Project $ 486,344 Southeast Plant New Headworks (Grit) Replacement 91,920 New Treasure Island Wastewater Treatment Plant Capital Improvements 57,168 Large Diameter Sewer Projects and Channel Force Main Intertie 27,993 WW-716 As-Needed Sewer Replacement Number 44 11,693
Taraval Sewer Improvements 10,455
Southeast Plant Power Feed and Primary Switchgear Upgrades 9,968 Westside Pump Station Reliability Improvements 9,691
Southeast Plant / Southeast Community Heating Ventilation Air Conditioning & Mechanical Upgrades 9,117 45th Avenue, 46th Avenue, 47th Avenue, Vicente Street, Wawona Street, and Sloat Boulevard Sewer Replacement 7,810 Oceanside Plant Condition Assessment Improvements - Part 2 7,666 Oceanside Plant Digester Gas Handling Utilization Upgrade 7,173 North Shore Pump Station Wet Weather Improvements 6,278 WW-715 As-Needed Sewer Replacement Number 43 6,272
Lower Alemany Area Stormwater Improvement Project 5,983 Southeast Plant Facility-Wide Distributed Control System Upgrades 5,583 Folsom Area Stormwater Improvement Project 5,578
Folsom Area Stormwater Phase 2 4,825
Green Infrastructure Grant Projects 4,716
Public Works Various Location Number 53 Infrastructure Improvements 4,377 Public Works Various Locations Number 55 Infrastructure Improvements 4,194 Other project additions individually below $4,000 94,639 Total $ 879,443
Wawona Area Stormwater Improvement Project $ 27,262
C
ontributed Capital: Pier 70 Phase 1 25,923
Contributed Capital: Treasure Island Stage 1 17,550
Public Works 19Th Avenue Infrastructure Improvements 14,755 WW-715 As-Needed Sewer Replacement Number 43 11,292
Large Diameter Sewer Projects And Channel Force Main Intertie 11,141 45th Avenue, 46th Avenue, 47th Avenue, Vicente Street, Wawona Street, and Sloat Boulevard Sewer Replacement 8,940 Public Works Various Locations Infrastructure Improvements Number 48 6,998 Public Works Number 56 Infrastructure Improvements 6,668 16th Street Sewer Replacement (Segment 2) 6,528
As-Needed Main Sewer Replacement Number 9 (WW-713) 6,416 Public Works Various Locations Pavement Improvements Number 38 6,240 Public Works Golden Gate Ave And Laguna Street Project 6,051 Public Works Various Locations Number 57 Infrastructure Improvements 5,711 WW-707 Various Locations Number 11 5,171
WW-704 Sewer Replacement Number 9 4,946
WW-708 Various Locations Number 12 4,772
Public Works Richmond Residential Streets Pavement Renovation 4,753 Contributed Capital: Yerba Buena Island Street Improvements 4,607 Public Works Various Locations Pavement Renovations Number 59 4,245 Public Works Various Locations Number 54 Infrastructure Improvements 4,136 Public Works Various Locations Number 52 Infrastructure Improvements 4,066 Other project additions individually below $4,000 40,791 Total $ 238,962
52 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
As of June 30, 2024, 49 projects or 70.0% totaling $525 million were completed, 1 project in multiple phases, 5 projects in pre-construction phase, 7 projects in construction phase, and 8 projects in close-out phase. The Central Bayside System Improvement Project (CBSIP) was completed on June 30, 2023 with reported project expenditures of $36.7 million. The CBSIP provides collection system enhancement to the Channel and Islais Creek urban watersheds, including needed redundancy for the existing Channel Force Main, infrastructure improvements to sewers/pump stations, and stormwater management through elements of both green and grey infrastructure.
Major components of the project consist of a tunnel to transport, via gravity, dry and wet -weather flows from the Channel and North Shore watersheds to the Southeast Water Pollution Control Plant (SEP), a large all -weather pump station to lift the flows into the SEP, improvements to Channel Pump Station, and green/gray infrastructure improvements within the watersheds. The New Headworks (Grit) Replacement Project is on-going construction.
The project is reported at 86.8% complete and forecasted final completion is on May 30, 2025. As of June 30, 2024, total SSIP program expenditures totaled $3.2 billion. Additional details regarding the SSIP are available at https://www.sfpuc.gov/construction-contracts/sewer-system-improvement-program .
Wastewater Capital Assets, Fiscal Year 2023
The Wastewater Enterprise has capital assets of $4,686, 346, net of accumulated depreciation and amortization, invested in a broad range of utility capital assets as of June 30, 2023 (see Table 3B). This amount represents an increase of $635,341 or 15.7% from prior fiscal year. As of June 30, 2023, the Wastewater Enterprise had capital commitments of $750,138. The investment in capital assets includes land, buildings, improvements, wastewater treatment plants, sewer pipes and mains, underground transport and storage boxes, pump stations, machinery, and equipment. Construction work in progress increased by $508,546 or 29.5%. Facilities, improvements, machinery, and equipment increased by $122,696 or 5.4%. Land improvements increased by $6,733 or 100% relating to improvements for the Southeast Community Center Project. Intangible assets increased by $226 or
3.2% due to asset addition of $1,212 for the Customer Billing System Project, offset by $986 depreciation expense.
Right-to-use lease and subscription assets decreased by $2,860 or 62.8% due to amortization.
Major additions to construction work in progress during the year ended June 30, 2023 include the following:
Southeast Plant Biosolids and Digester Facilities Project $ 332,775 Southeast Plant New Headworks (Grit) Replacement 157,143 Westside Pump Station Reliability Improvements 14,226
Large Diameter Sewer Projects and Channel Force Main Intertie 13,125 As-Needed Spot Sewer Replacement Number 42 (WW-699) 11,231 Southeast Community Center at 1550 Evans 9,794
Southeast Plant Power Feed and Primary Switchgear Upgrades 9,711 Oceanside Plant Digester Gas Handling Utilization Upgrade 9,195 North Shore Pump Station Wet Weather Improvements 8,853 New Treasure Island Wastewater Treatment Plant Capital Improvements 8,851 Southeast Plant Facility-Wide Distributed Control System Upgrades 7,581 Wawona Area Stormwater Improvement Project 5,879
As-Needed Main Sewer Replacement Number 9 (WW-713) 5,618 Folsom Area Stormwater Improvement Project 5,403
As-Needed Spot Sewer Replacement Number 43 (WW-715) 4,959 Public Works Golden Gate Avenue and Laguna Street Project 4,612 Ocean Beach Climate Change Adaptation Project 4,585
Taraval Sewer Improvements 4,519
Lower Alemany Area Stormwater Improvement Project 4,425 16Th Street Sewer Replacement (Segment 2) 4,262
Oceanside Plant Condition Assessment Improvements - Part 2 4,208 Other project additions individually below $4,000 78,530 Total $ 709,485
53 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Major depreciable facilities, improvements, intangible assets, machinery, and equipment placed in service, including transfers of completed projects from construction work in progress, during the year ended June 30, 2023 include the following:
* Does not include $1,573 equipment transfers from the Department of Public Works (DPW).
See Note 4 for additional information about capital assets.
Sewer System Improvement Program (SSIP)
The Sewer System Improvement Program (SSIP) is the SFPUC’s wastewater capital improvement program which includes multiple projects to improve the existing wastewater system. The implementation of the SSIP projects were originally phased over 20 years to maintain ratepayer affordability and minimize impacts to communities throughout the City. On March 22, 2016, the refined program scope and budget for $7.0 billion was endorsed by the Commission along with the baseline for scope, schedule, and budget for Phase 1 projects totaling $2.9 billion.
The revised program is referred to as the “2016 SSIP Baseline”.
As of June 30, 2023, 43 projects or 61.4% totaling $457 million were completed, 7 projects in pre -construction phase, 11 projects in construction phase, and 9 projects in close-out phase. The SEP Seismic Reliability and Condition Assessment Improvements Project was completed on March 31, 2023 with reported project expenditures of $33.6 million. This project represents immediate improvements to the existing facilities at Southeast Plant (SEP) identified as part of the condition assessment effort that are not specifically included as part of another near -term SSIP Phase 1 project. Thi s project includes items for rehabilitation such as concrete spalling repair and seismic retrofit of priority process buildings. The Westside Pump Station Reliability Improvements is on- going construction.
The project is reported at 86.2% complete and forecasted final completion is on June 27, 2024. Program expenditures as of June 30, 2023 totaled $2.5 billion. Additional details regarding the SSIP are available at https://www.sfpuc.gov/construction-contracts/sewer-system-improvement-program .
The following table summarizes Hetchy Water’s changes in capital assets.
Hetchy Water Capital Assets, Fiscal Year 2024
Hetchy Water has capital assets of $237,486, net of accumulated depreciation and amortization, invested in a broad range of utility capital assets as of June 30, 2024 (see Table 3C-A). This amount represents an increase of $17,450 or 7.9%, primarily due to increases of $13,434 in construction work in progress and $4,315 in facilities, improvements, machinery, and equipment, offset by decreases of $207 in amortization of intangible assets and $92 in right-to-use lease and subscription assets.
Southeast Community Center at 1550 Evans $ 111,510
Mariposa Pump Station & Force Main 35,852
As-Needed Spot Sewer Replacement Number 42 (WW-699) 12,531 Large Diameter Sewer Projects and Channel Force Main Intertie 9,182 Public Works 41st and 44th Avenue Infrastructure Improvements 7,042 Equipment Purchase, Repair & Replacement Project 6,076
Castro, 19th, 26th Street Water and Sewer Improvements - WD-2739 3,773 Other project additions individually below $3,000 18,887 Total $ 204,853 *
2024 - 2023 2023 - 2022
2024 2023 2022 C hange Change
Facilities, improvements, machinery, and equipmen$ 138,220 133,905 133, 263 4,315 642 Intangible assets 9,960 10,167 10,374 (207) (207)
Land and rights-of-way 3,232 3,232 3,232 — —
Right-to-use lease and subscription assets 190 282 375 (92) (93) Construction work in progress 85,884 72,450 54,138 13,434 18,312 Total $ 237,486 220,036 201,382 17,450 18,654
Table 3C – A
Proprietary Fund – Hetchy Water
Capital Assets, Net of Accumulated Depreciation and Amortization As of June 30, 2024, 2023, and 2022
54 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
For the year ended June 30, 2024, Hetchy Water’s major additions to construction work in progress totaled $23,029. Major depreciable facilities, improvements, intangible assets, machinery, and equipment placed in service totaled $10,538 (see Table 3D).
Hetchy Water Capital Assets, Fiscal Year 2023
Hetchy Water has capital assets of $220,036, net of accumulated depreciation and amortization, invested in a broad range of utility capital assets as of June 30, 2023 (see Table 3C -A). This amount represents an increase of $18,654 or 9.3%, primarily due to increases of $18,312 in construction work in progress and $642 in facilities, improvements, machinery, and equipment, offset by decreases of $207 in amortization of intangible assets and $93 in right-to-use lease and subscription assets.
For the year ended June 30, 2023, Hetchy Water’s major additions to construction work in progress totaled $25,032. Major depreciable facilities, improvements, intangible assets, machinery, and equipment placed in service totaled $6,762 (see Table 3E).
See Note 4 for additional information about capital assets.
The following table summarizes Hetchy Power’s changes in capital assets.
Hetchy Power Capital Assets, Fiscal Year 2024
Hetchy Power has capital assets of $757,752, net of accumulated depreciation and amortization, invested in utility capital assets as of June 30, 2024 (see Table 3C -B). This amount represents an increase of $110,514 or 17.1%, primarily due to increases of $64,646 in facilities, improvements, machinery, and equipment and $46,233 in construction work in progress, offset by decreases of $281 in amortization of intangible assets and $84 in right-to- use lease and subscription assets.
For the year ended June 30, 2024, Hetchy Power’s major additions to construction work in progress totaled $98,413. Major depreciable facilities, improvements, intangible assets, machinery, and equipment placed in service totaled $82,741 (see Table 3D).
Hetchy Power Capital Assets, Fiscal Year 2023
Hetchy Power has capital assets of $647,238, net of accumulated depreciation and amortization, invested in utility capital assets as of June 30, 2023 (see Table 3C -B). This amount represents an increase of $61,273 or 10.5%, primarily due to increases of $35,628 in construction work in progress and $25,795 i n facilities, improvements, machinery, and equipment, offset by decreases of $113 in amortization of intangible assets and $37 in right -to- use lease and subscription assets.
For the year ended June 30, 2023, Hetchy Power’s major additions to construction work in progress totaled $75,348. Major depreciable facilities, improvements, intangible assets, machinery, and equipment placed in service totaled $43,392 (see Table 3E).
See Note 4 for additional information about capital assets.
2024 - 2023 2023 - 2022
2024 2023 2022 Change Change
Facilities, improvements, machinery, and equipmen$ 397,638 332,992 307,197 64,646 25,795 Intangible assets 13,704 13,985 14,098 (281) (113)
Land and rights-of-way 1,949 1,949 1,949 — —
Right-to-use lease and subscription assets 208 292 329 (84) (37) Construction work in progress 344,253 298,020 262,392 46,233 35,628 Total $ 757,752 647,238 585,965 110,514 61,273
Capital Assets, Net of Accumulated Depreciation and Amortization As of June 30, 2024, 2023, and 2022
Proprietary Fund – Hetchy Power
Table 3C – B
55 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
CleanPowerSF Capital Assets, Fiscal Year 2024
CleanPowerSF has capital assets of $13, net of accumulated amortization, for right -to-use lease and subscription assets as of June 30, 2024 (see Table 3C-C).
CleanPowerSF Capital Assets, Fiscal Year 2023
CleanPowerSF has capital assets of $30, net of accumulated amortization, for right -to-use lease and subscription assets as of June 30, 2023 (see Table 3C-C).
See Note 4 for additional information about capital assets.
Major additions to construction work in progress, depreciable facilities, improvements, intangible assets, machinery, and equipment placed in service, including transfers of completed projects from construction work in progress, during the years ended June 30, 2024 include the following:
2024 - 2023 2023 - 2022
2024 2023 2022 Change Change
Right-to-use lease and subscription assets $ 13 30 301 (17) (271) Total $ 13 30 301 ( 17) (271)
Table 3C – C
Proprietary Fund – CleanPowerSF
Capital Assets, Net of Accumulated Depreciation and Amortization As of June 30, 2024, 2023, and 2022
He tchy He tchy 2024
Water Power Total
Cluster 7 Mitigation $ — 21,505 21,505
2023 March Winter Storm 5,970 7,297 13,267
Moccasin Powerhouse Rewind — 12,636 12,636
Mountain Tunnel Improvement 3,611 4,413 8,024
Power Asset Acquisition Analysis — 7,770 7,770
Bay Corridor — 7,658 7,658
O'Shaughnessy Dam Outlet Works Phase 1 3,282 4,012 7,294 Repair & Replacement Life Extension Program and Powerhouse 3,629 1,542 5,171 Sunnydale HOPE SF — 4,686 4,686
Intervening Facilities — 3,312 3,312
Pier 70 — 2,682 2,682
Moccasin Dam Long Term Improvement and Facilities Upgrade 1,698 2,075 3,773 Distribution Services Retail Customers — 1,899 1,899
SFO Substation — 1,833 1,833
Other project additions individually below $1,500 4,839 15,093 19,932 Additions to Construction Work in Progress $ 23,029 98,413 121,442 Transmission Line Clearance Mitigation - Lines 7/8 $ — 32,494 32,494 Contributed Capital - Pier 70 Streetlights and Trench — 16,896 16,896 2023 Emergency Cherry Lake Road Repair 5,050 6,172 11,222 Contributed Capital - Treasure Island Switchyard, Trench, and Streetlights — 9,698 9,698 2023 Emergency Hetch Hetchy Road Repair 1,424 1,740 3,164 Intervening Facilities — 2,323 2,323
Contributed Capital - Yerba Buena Island Trench — 1,862 1,862 Other project additions individually below $1,500 4,064 11,556 15,620 Facilities, Improvements, Intangible Assets, Machinery, and Equipment Placed in Service $ 10,538 82,741 93,279 Table 3D
Proprietary Funds – Hetchy Water and Hetchy Power
Year ended June 30, 2024
Major Additions to Construction Work in Progress and Facilities, Improvements, Intangible Assets, Machinery, and Equipment Placed in Service 56 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Major additions to construction work in progress, depreciable facilities, improvements, intangible assets, machinery, and equipment placed in service, including transfers of completed projects from construction work in progress, during the years ended June 30, 2023 include the following:
Debt Administration
Department-wide Business Type Activities
The following table summarizes the department-wide outstanding debt, net of unamortized costs, discount, and premium. Detailed discussion follows for each proprietary fund.
He tchy He tchy 2023
Water Power T otal
Moccasin Powerhouse Rewind $ — 16, 920 16,920
Mountain Tunnel Improvement 6,835 8,353 15,188
Bay Corridor — 9,093 9,093
San Joaquin Pipeline Valve & Safe Entry Improvement 6,888 — 6,888 Transmission Line Clearance Mitigation Upgrade — 6, 061 6,061 Cluster 7 Mitigation — 5, 398 5,398
O'Shaughnessy Dam Outlet Works Phase 1 1,724 2,107 3,831 Treasure Island Capital Improvements — 3,471 3,471
Moccasin Dam Long Term Improvement and Facilities Upgrade 1,518 1,856 3,374 Repair & Replacement Life Extension Program 3,149 — 3,149 Intervening Facilities — 2,748 2,748
2023 March Winter Storm 874 1,068 1,942
Other project additions individually below $1,500 4,044 18,273 22,317 Additions to Construction Work in Progress $ 25,032 75,348 100,380 Van Ness Bus Rapid Transit $ — 13,916 13,916
Flow Control Facility Bypass Tunnel 3,291 4, 022 7,313 Power Intervening Facilities — 4, 953 4,953
Mission Rock Phase I — 2,075 2,075
Treasure Island Distribution Backbone — 1,792 1,792
Yerba Buena Island Underground Distribution System — 1,677 1,677 Marina Middle School Photovoltaic System — 1,587 1,587 Other project additions individually below $1,500 3,471 13,370 16,841 Facilities, Improvements, Intangible Assets, Machinery, and Equipment Placed in Service $ 6,762 43,392 50,154 Proprietary Funds – Hetchy Water and Hetchy Power
Intangible Assets, Machinery, and Equipment Placed in Service Year ended June 30, 2023
Table 3E
Major Additions to Construction Work in Progress and Facilities, Improvements, 2024 - 2023 2023 - 2022
2024 2023 2022 C hange Change
Bonds $ 7,968,487 7,638,688 6,986,674 329,799 652,014 Revenue notes — 349,556 350,356 (349,556) (800)
Commercial paper 622,027 487,811 625,473 134,216 (137,662) Certificates of participation 124,975 129,550 133,945 (4,575) (4,395) State revolving fund loans 577,632 482,316 424,420 95,316 57,896 922,431 122,357 — 800,074 122,357
Total $ 10,215,552 9,210,278 8,520,868 1,005,274 689,410 Water Infrastructure Finance and
Innovation Act (WIFIA) loans
Table 4
Business Type Activities
Outstanding Debt, Net of Unamortized Costs
As of June 30, 2024, 2023, and 2022
57 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Water Debt Administration
As of June 30, 2024, the Water Enterprise had $5,503,839 total debt outstanding, an increase of $165,408 over the prior year, as shown below in Table 4A. More detailed information about the Water Enterprise’s debt activity is presented in Notes 6, 7, 8 and 9 to the financial statements.
The increase of $253,791 in revenue bonds was due to increases of $928,890 in bond principal and $136,522 in bond premium from the issuances of 2023 Series AB revenue bonds and 2023 Series CD revenue refunding bonds, and $8 from the amortization of discount. These increases were offset by decreases of $619,115 in bond principal from refunding of various bonds by the 2023 Series CD revenue refund bonds, $135,075 in bond principal from repayment, $29,008 in premium from amortization, and $28,431 in bond premium from refunding. The Water Enterprise had $190,000 in tax -exempt commercial paper as of June 30, 2024, and $343,767 in tax -exempt and $27,692 in taxable commercial paper as of June 30, 2023. The $181,459 decrease of commercial paper resulted from a $372,609 decrease due to refunding by the 2023 Series AB revenue bonds, offset by a $190,995 increase in tax -exempt and $155 increase in taxable commercial paper from new issuances. The decrease of $3,267 in certificates of p articipation was from repayment. The $96,343 increase in SRF loans was from $97,477 in additional reimbursement requests submitted mainly for the Mountain Tunnel Improvement project offset by $1,134 in reversals of accrued interest capitalized to principal relating to the SF Westside Recycled Water project.
Credit Ratings and Bond Insurance – The Water Enterprise carried underlying ratings of “Aa2” and “AA -” from Moody’s and S&P Global Ratings (S&P) on June 30, 2024, and “Aa2” and “AA -” from Moody’s and S&P on June 30, 2023, respectively.
Debt Service Coverage – Pursuant to the Amended and Restated Indenture, the Water Enterprise is required to collect sufficient net revenues each fiscal year, together with any Water Enterprise funds (except Bond Reserve Funds), which are available for payment of debt service and are not budgeted to be expended, at least equal to
1.25 times annual debt service for said fiscal year, and for the SFPUC’s debt service coverage policy, at least equal to 1.35 times annual debt service for said fiscal year. During fiscal years 2024 and 2023, the Water Enterprise’s net revenues, together with fund balances available to pay debt service and not budgeted to be expended, were sufficient to meet the rate covenant requirements under the Water Enterprise’s Amended and Restated Indenture and the SFPUC’s debt service coverage policy (see Note 9).
Debt Authorization – Pursuant to the Charter Section 8B.124, the Water Enterprise can incur indebtedness upon two-thirds vote of the Board of Supervisors, as approved by voters in Proposition E in November 2002. As of June 30, 2024, the Board of Supervisors has authorized the issuance of $6,157,510 in revenue bonds under Proposition E, with $4,317,653 issued against this authorization. The Water Enterprise can also incur indebtedness of up to $1,628,000 for improvements to the water system pursuant to Proposition A that was approved by the voters in November 2002. As of June 30, 2024, $1,499,230 of the $1,628,000 Proposition A authorized bonds were issued.
The Water Enterprise is also authorized to issue up to $500,000 in commercial paper.
Cost of Debt Capital – The Water Enterprise’s outstanding long-term debt has coupon interest rates ranging from
0.7% to 7.0% as of June 30, 2024, and 0.3% to 7.0% as of June 30, 2023. The Water Enterprise’s short -term debt has interest rates ranging from 2.2% to 5.2% during fiscal year 2024, and 1.2% to 5.3% during fiscal year 2023.
2024 - 2023 2023 - 2022
2024 2023 2022 C hange Change
Revenue bonds $ 4,964,637 4,710,846 4,860,935 253,791 (150,089) Commercial paper 190,000 371,459 206,297 (181,459) 165,162 Certificates of participation 89,232 92,499 95,637 (3,267) (3,138) State revolving fund loans 259,970 163,627 121,761 96,343 41,866 Total $ 5,503,839 5,338,431 5,284,630 165,408 53,801 Table 4A
Proprietary Fund – Water
Outstanding Debt, Net of Unamortized Costs
As of June 30, 2024, 2023, and 2022
58 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Wastewater Debt Administration
As of June 30, 2024, 2023, and 2022, the Wastewater Enterprise’s debt from revenue bonds, revenue notes, commercial paper, certificates of participation, SRF, and WIFIA loans were $4,290,112, $3,551,970, and $2,988,713, respectively, as shown in Table 4B. More detailed information about the Wastewater Enterprise’s debt activity is presented in Notes 6, 7, 8 and 9 to the financial statements.
The increase of $738,142 was mainly due to $800,074 new WIFIA loans consisting of $792,568 aggregate draw down and $7,506 capitalized interest for the Biosolids Digester Facilities and the Southeast Treatment Plant Improvements projects, $340,000 new issuance and $1,373 interest rolled to principal for commercial paper, and $1,498 capitalized interest for the SRF Headworks and OSP Digester projects, offset by $347,465 defeasance of revenue notes 2021 Series AB, $31,458 repayment of outstanding debt, and $25,880 of premium amortizations and defeasance.
Credit Ratings and Bond Insurance – As of June 30, 2024 and 2023, the Wastewater Enterprise carried underlying ratings of “Aa2” and “AA” from Moody’s and S&P Global Ratings (S&P), respectively.
Debt Service Coverage – Pursuant to the Amended and Restated Indenture, the Wastewater Enterprise is required to collect sufficient net revenues each fiscal year, together with any Wastewater Enterprise funds (except Bond Reserve Funds), which are available for payment of debt service and are not budgeted to be expended, at least equal to 1.25 times annual debt service for said fiscal year, and for the SFPUC’s debt service coverage policy, at least equal to 1.35 times annual debt service for said fiscal year. During fiscal years 2024 and 2023, the Wastewater Enterprise’s net revenues, together with fund balances available to pay debt service and not budgeted to be expended, were sufficient to meet the rate covenant requirements under the Wastewater Enterprise’s Amended and Restated Indenture and the SFPUC’s debt service coverage policy (see Note 9).
Debt Authorization – Pursuant to the Charter Section 8B.124, the Wastewater Enterprise can incur indebtedness upon two-thirds vote of the Board of Supervisors. As of June 30, 2024, the Wastewater Enterprise had $8,052,607 in combined debt issuance authorization from the Board of Supervisors under Proposition E, with $4,482,180 issued against this authorization. The Wastewater Enterprise has a $750,000 authorized commercial paper program, with $341,373 in tax -exempt commercial paper outstanding as of June 30, 2024 and $0 in tax- exempt commercial paper outstanding as of June 30, 2023.
Cost of Debt Capital – The coupon interest rates on the Wastewater Enterprise’s outstanding revenue bonds and revenue notes ranged from 1.0% to 5.8% after factoring in federal interest subsidy receipts on Build America Bonds on June 30, 2024. The 2009 Series C certificates of participation carried coupon interest rates from 2.0% to
5.0% and 2009 Series D certificates of participation carried coupon interest rates from 6.4% to 6.5% in fiscal years 2024 and 2023, respectively. The interest rates on short -term debt ranged from 3.6% to 3.8% during fiscal year 2024 and from 0.9% to 3.1% during fiscal year 2023. The State revolving fund loans (CWSRF loans) carried original interest rates ranging from 0.8% to 1.8% during fiscal year 2024. The State has elected to apply administrative service and grant charges to certain agreement repayment schedules in lieu of receiving interest payments; these charges will not affect the installment payments or increase the repayment amounts. The WIFIA loan carried interest rate of 1.5% during fiscal year 2024 and capitalized interest added to the principal balance of the WIFIA loan on each Semi-Annual Payment Date occurring during the Capitalized Interest Period. 2024 - 2023 2023 - 2022
2024 2023 2022 Change Change
Revenue bonds $ 2,685,051 2,736,910 1,931,253 (51,859) 805,657 Revenue notes — 349,556 350,356 (349,556) (800)
Commercial paper 341,373 — 379,157 341,373 (379,157) Certificates of participation 23,595 24,458 25,288 (863) (830) State revolving fund loans 317,662 318,689 302,659 (1,027) 16,030 922,431 122,357 — 800,074 122,357
Total $ 4,290,112 3,551,970 2,988,713 738,142 563,257 Table 4B
Proprietary Fund – Wastewater
Outstanding Debt, Net of Unamortized Costs
As of June 30, 2024, 2023, and 2022
Water Infrastructure Finance and
Innovation Act (WIFIA) loans
59 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Hetchy Water Debt Administration
Hetchy Water did not have debt outstanding as of June 30, 2024 and 2023. Debt, including bond issuances, associated with the funding of water-related, upcountry infrastructure capital improvements is issued through the Water Enterprise, and is reflected in the Water Enterprise’s financial statements.
Hetchy Power Debt Administration
As of June 30, 2024 and 2023, Hetchy Power had outstanding debt of $421,601 and $319,877, respectively, as shown in Table 4C. More detailed information about the Hetchy Power’s debt activity is presented in Notes 6, 7, 8 and 9 to the financial statements.
The increase of $101,724 was due to $131,230 from issuance of 2023 Series A Revenue Bonds and $91,635 from commercial paper issuance, offset by commercial paper repayment of $117,333, bonds and certificates of participation principal repayments of $2,035, and $1,773 in amortization of premium and discount.
Credit Ratings and Bond Insurance – The Power Enterprise’s Power Revenue Bonds have been rated “AA-” by Fitch Inc and “AA” by S&P Global Ratings (S&P) as of June 30, 2024 and 2023, respectively.
In December 2020, Moody's Investors Service, ("Moody's") assigned a first -time A2 Issuer Rating to CleanPowerSF, with a stable outlook. Hetch Hetchy Water and Power contains the Power Enterprise as a separate enterprise fund, with CleanPowerSF a component unit of the Power Enterprise. CleanPowerSF is tracked and audited as a standalone fund, with financial statements, including revenues and expenses, separate and discrete from the Power Enterprise. As such, CleanPowerSF is deemed to be a separate credit from the Power Enterprise, with its own credit rating.
Debt Service Coverage – Pursuant to the Amended and Restated Indenture, the Power Enterprise is required to collect sufficient net revenues each fiscal year, together with any Power Enterprise funds (except Bond Reserve Funds), which are available for payment of debt service and are not budgeted to be expended, at least equal to
1.25 times annual debt service for said fiscal year, and for the SFPUC’s debt service coverage policy, at least equal to 1.35 times annual debt service for said fiscal year. The Series 2015 AB power revenue bonds represent the first series of senior lien revenue bonds of Hetchy Power. Pursuant to Power’s Master Trust Indenture, senior lien debt service coverage excludes debt service on subordinate obligations, such as Hetchy Power’s existing NCREBs and QECBs. During fiscal years 2024 and 2023, the Power Enterprise’s net revenues, together with fund balances available to pay debt service and not budgeted to be expended, were sufficient to meet the rate covenant requirements under the Power Enterprise’s Amended and Restated Indenture and the SFPUC’s debt service coverage policy (see Note 9).
Debt Authorization – Pursuant to Charter Section 9.107(6), the Power Enterprise can incur indebtedness upon three-fourths vote of the Board of Supervisors, for the purpose of the reconstruction or replacement of existing water facilities and electric power facilities, or combinations thereof, under the jurisdiction of the Public Utilities Commission. Pursuant to Charter Section 9.107(8), the Power Enterprise can issue revenue bonds, without voter approval, upon an affirmative vote of the Board of Supervisors, for the purpose of the acquisition, construction, 2024 - 2023 2023 - 2022
2024 2023 2022 Change Change
Clean Renewable Energy Bonds 2008 $ — — 415 — (415) Certificates of Participation 2009 Series C — — 427 — (427) Certificates of Participation 2009 Series D (BABs) 12,148 12,593 12,593 (445) — Qualified Energy Conservation Bonds 2011 2,021 2,583 3,138 (562) (555) New Clean Renewable Energy Bonds 2015 1,343 1,491 1,637 (148) ( 146) 2015 Series A Revenue Bonds 34,819 34,985 35,144 (166) (159) 2015 Series B Revenue Bonds 2,033 2,948 3,849 (915) (901) 2021 Series A Revenue Bonds 88,375 89,303 90,213 (928) (910) 2021 Series B Revenue Bonds 59,142 59,622 60,090 (480) (468) 2023 Series A Revenue Bonds 131,066 — — 131,066 —
Commercial Paper 90,654 116,352 40,019 (25,698) 76,333 Total $ 421,601 319,877 247,525 101,724 72,352
Table 4C
Proprietary Fund – Hetchy Power
Outstanding Debt, Net of Unamortized Costs
As of June 30, 2024, 2023, and 2022
60 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
installation, equipping, improvement, or rehabilitation of equipment or facilities for renewable energy and energy conservation. Pursuant to Proposition A, approved by the San Francisco voters on June 5, 2018, City Charter Section 8B.124 is amended to authorize the Power Enterprise to enter into indebtedness, including revenue bonds, notes, commercial paper or other forms of indebtedness, when authorized by ordinance approved by a two- thirds vote of the Board of Supervisors to reconstruct, replace, expand, repair, improve or construct new power facilities under the jurisdiction of SFPUC or for any other purpose of the Power Enterprise, and in compliance with City Charter Section 8B.124. Proposition A expressly prohibits the SFPUC from issuing bonds to finance the construction of power plants that generate electricity using fossil fuels or nuclear energy. As of June 30, 2024 and 2023, $287,460 and $163,555 of Hetchy Power revenue bonds were issued against existing authorization of $1,029,790 and $695,933, respectively.
Cost of Debt Capital – The Power Enterprise’s outstanding long-term senior lien debt consists of the 2015 Series AB, 2021 Series AB, and 2023 Series A Power Revenue Bond issued in May 2015, December 2021, and O ctober 2023, respectively, which are issued under the Master Indenture and are senior in lien to all the other Enterprise’s outstanding debt obligations. Coupon interest rates range from 3.0% to 5.0%. The Power Enterprise has previously issued and incurred debt service on Tax Credit Bonds and certificates of participation, which constitute subordinate obligations. Interest rates on the Tax Credit Bonds, which include QECBs and NCREBs, ranging from 1.2% to
1.5% (net of the federal tax subsidy). Certificates of participation carried interest rates ranging from 2.0% to 6.5%.
The Power Enterprise’s short-term debt issued under its commercial paper program has interest rates ranging from
2.8% to 3.7% and 1.1% to 3.2% during fiscal years 2024 and 2023, respectively.
CleanPowerSF Debt Administration
CleanPowerSF did not have debt outstanding as of June 30, 2024 and 2023.
Rates and Charges
Water Enterprise Retail Customers
Proposition E, as approved by the voters in November 2002, amended the City Charter by adding the new Article VIIIB, entitled “Public Utilities,” which changed the Commission’s ability to issue new revenue bonds and set retail water rates. For the retail water rate setting, the Commission is required to:
● Establish rates, fees, and charges based on cost of service; ● Retain an independent rate consultant to conduct cost of service studies at least every five years; ● Consider establishing new connection fees;
● Consider conservation incentives and lifeline rates;
● Adopt a rolling five-year forecast annually; and
● Establish a Rate Fairness Board.
Pursuant to the City and County of San Francisco Charter Section 8B.125, an independent rate study is performed at least once every five years. In compliance with City Charter section 8B.125, a rate study was completed in spring 2023. In May 2023, the Commission subsequently adopted three years of retail rate increases from July 1, 2023 through June 30, 2026.
Other miscellaneous fees for service and charges were last approved in April 2024 to be effective July 1, 2024, and generally increase annually by the Consumer Price Index from the Controller’s Office of the City and County of San Francisco, or the 20- City Average Construction Index (CCI) published by Engineering News -Record (ENR) Magazine. All current SFPUC Rates Schedules and Fees are available at https://www.sfpuc.gov/accounts-
services/water-power-sewer-rates/rates.
Water Enterprise Wholesale Customers
The Water Supply Agreement (WSA) prescribes the rate setting process for the wholesale water rates. The WSA has a 25-year term, beginning on July 1, 2009, with two 5-year extension options, and was most recently amended and restated in January 2023. Compared to the prior contract with the wholesale customers, the WSA changed the rate basis by which the capital cost recovery is determined from a “utility basis” to a “cash basis,” resulting in the repayment of the cost of capital over the life of the debt funding of those assets or at the time of budget 61 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
1 2
3 No retail rate increase adopted and effective July 1, 2022. 4 5
Four-year retail rate increases adopted and effective July 1, 2014.
Wholesale rates adopted annually.
Four-year retail rate increases adopted and effective July 1, 2018.
Three-year rate increases adopted and effective July 1, 2023. 1 Four-year rate increases adopted and effective July 1, 2014. 2 Four-year rate increases adopted and effective July 1, 2018. 3 No retail rate adjustment.
4 Three-year rate increases adopted and effective July 1, 2023. appropriation and spending for revenue-funded capital projects, rather than the life of the asset. The WSA requires the rate be calculated and set annually and includes a reconciliation between prior year revenues and expenses.
Refer to Note 12 of the notes to financial statements for further discussion on the balancing account of the wholesale customers.
Wastewater Enterprise
Proposition E, as approved by the voters in November 2002, amended the City Charter by adding the new Article VIIIB, entitled “Public Utilities,” which changed the Commission’s ability to issue new revenue bonds and set retail water rates. For the retail water rate setting, the Commission is required to:
● Establish rates, fees, and charges based on cost of service; ● Retain an independent rate consultant to conduct cost of service studies at least every five years; ● Consider establishing new connection fees;
● Consider conservation incentives and lifeline rates;
● Adopt a rolling five-year forecast annually; and
● Establish a Rate Fairness Board.
Pursuant to the City and County of San Francisco Charter Section 8B.125, an independent rate study is performed at least once every five years. In compliance with City Charter section 8B.125, a rate study was completed in spring 2023. In May 2023, the Commission subsequently adopted three years of retail rate increases from July 1, 2023 through June 30, 2026.
Other miscellaneous fees for service and charges were last approved in April 2024 to be effective July 1, 2024, and generally increase annually by the Consumer Price Index from the Controller’s Office of the City and County of San Francisco, or the 20- City Average Construction Index (CCI) publis hed by Engineering News -Record (ENR) Magazine. All current SFPUC Rates Schedules and Fees are available at https://www.sfpuc.gov/accounts-
services/water-power-sewer-rates/rates.
The following table is the Water Enterprise’s ten-year average rate adjustments:
The following table is the Wastewater Enterprise’s ten-year approved average rate adjustments:
July 1, 2016 10.0 1 9.3
July 1, 2017 7.0 1 —
July 1, 2018 9.0 2 —
July 1, 2019 8.0 2 —
July 1, 2020 7.0 2 —
July 1, 2021 7.0 2 —
July 1, 2022 — 3 15.9
July 1, 2023 5.0 4 9.7
July 1, 2024 5.0 4 8.8
July 1, 2025 5.0 4 —
Effective date Retail Wholesale5
Ten-y ear A verage Rate A djustm ents
Effective Date Rate
July 1, 2016 7. 0 1
July 1, 2017 11.0 1
July 1, 2018 7.0 2
July 1, 2019 7.0 2
July 1, 2020 8.0 2
July 1, 2021 8.0 2
July 1, 2022 — 3
July 1, 2023 9.0 4
July 1, 2024 9.0 4
July 1, 2025 9.0 4
Ten-y ear A verage Rate A djustm ents
62 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Hetchy Water
Hetchy Water charges for services relate to the storage and delivery of water. The water -related portion of upcountry expenditures not covered by the small quantity of water sales to upcountry customers or other miscellaneous revenues are paid by an assessment to the Water Enterprise. Assessment fees were $46,266 and $49,636 for the years ended June 30, 2024 and 2023, respectively. In fiscal year 2025, the assessment fees will be $49,241, an increase of $2,975 or 6.4% as reflected in the fiscal year 2025 adopted budget. The increase is primarily to cover a portion of the Water share of Hetchy Water capital projects with current year revenues rather than revenue bonds.
Hetchy Power
Hetchy Power charges for services relate to power generation and electricity delivery to contractual, municipal, and retail customers.
All current SFPUC Rates Schedules and Fees are available at https://www.sfpuc.gov/accounts-services/water-
power-sewer-rates/rates. Rates for meter readings on or after July 1, 2024 were approved by the Commission in May 2024.
Hetchy Power Municipal Rates
Departments of the City and County of San Francisco, as well as certain other non- City government agencies, are eligible for municipal power rates. Historically, municipal customers paid either the General Use rate, which was a subsidized rate below the cost of service, or an Enterprise rate, which was set to exactly follow the equivalent PG&E rate.
Based on the results of the 2022 Power Cost of Service Study, beginning in fiscal year 2023, all municipal customers are being transitioned to standardized tariff schedules set to their cost of service. For General Use customers, this means that a) instead of a single flat rate per kWh, customers are assigned to a rate schedule based on their customer class (small commercial, industrial, etc.), and b) the subsidy is being gradually eliminated until the General Use rate reaches the equivalent retail rate, which is projected to take 3 to 8 years, depending on the customer class. For Enterprise customers, their rates no longer follow PG&E. Instead, they are set to a rate for their standardized customer class, and will be phased to cost of service over two years. Beginning in fiscal year 2024, almost all Enterprise customers are on equivalent rate schedules as retail non-municipal customers.
Hetchy Power Retail Rates
Based on the results of the 2022 Power Cost of Service Study, the Commission approved a two-year schedule of retail electric rates for residential, commercial, and industrial customers where Hetch Hetchy has been designated as the power provider to be applied to meter readings on or after July 1, 2022. These rates apply to all existing retail customers, and are the default rates for any new Hetchy Power customers.
CleanPowerSF
CleanPowerSF began offering services in May 2016, giving residential and commercial electricity consumers in San Francisco a choice of having their electricity supplied from clean renewable sources, such as solar geothermal, hydroelectric and wind, at competitive rates. CleanPowerSF offers three products: a “Green” default product comprised of at least 50% RPS -eligible renewable energy and two optional products, “SuperGreen” comprised of 100% RPS -eligible renewable energy at a small additional cost and “SuperGreen Saver” also comprised of 100% RPS-eligible renewable energy to qualifying low-income customers at a 20% bill discount.
Previously, rates were set formulaically at a percentage at or below the equivalent PG&E generation rate. In addition, the formula required rates to be set high enough to allow CleanPowerSF to recover i ts costs. Whenever PG&E rates changed, rates would automatically adjust following the set formula.
Based on the results of the 2022 Power Cost of Service Study, CleanPowerSF customers have now transitioned to fixed rate schedules for the entire fiscal year. The rates for each customer class are set based on their unique cost 63 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
of service, which means that the percentage difference from the equivalent PG&E rates may vary based on the rate schedule and throughout the year as PG&E’s rate change more frequently. Rates for meter readings on or after July 1, 2022 were approved by the Commission in May 2022; rates for meter readings on or after July 1, 2023 were approved by the Commission in May 2023; rates for meter readings on or after July 1, 2024 were approved by the Commission in May 2024.
CleanPowerSF Rates Schedules are available at https://cleanpowersf.org/residential for residential customers and
https://cleanpowersf.org/commercial for commercial customers.
Request for Information
This report is designed to provide our citizens, customers, investors, and creditors with an overview of SFPUC ’s finances and to demonstrate SFPUC’s respective accountability for the money it receives. Questions regarding any of the information provided in this report or requests for additional information should be addressed to San Francisco Public Utilities Commission, Chief Financial Officer, 525 Golden Gate Avenue, 13th Floor, San Francisco, CA 94102. This report is available at
https://www.sfpuc.gov/about-us/reports/audited-financial- statements-reports.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Statements of Net Position
Proprietary Funds
June 30, 2024 and 2023
(In thousands)
64 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
(continued)
A. Included interfund payables and interfund receivables for fiscal year 2024 of $405 between Wastewater and Hetchy Power for the 525 Golden Gate Avenue Headquarters construction costs.
B. Included interfund payables and interfund receivables for fiscal year 2023 of $518 between Wastewater and Hetchy Power for the 525 Golden Gate Avenue Headquarters construction costs.
See accompanying notes to basic financial statements.
Assets 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 Current assets:
Cash and investments with City Treasury..........................................................$ 380,201 402,885 376,658 355,770 46,471 76,973 215, 370 224,234 159,811 98,657 — — 1,178,511 1,158,519 Cash and investments outside City Treasury.....................................................xx 193 192 152 173 — — 41 154 — — — — 386 519 Receivables:
Charges for services (net of allowance for doubtful
accounts of $10,777, $12,865, $0, $1,699, and $9,226 in 2024 and $8,615, $10,060, $0, $3,923, and $7,923 in 2023).........................................xx 79,483 63,943 48,338 40,093 471 405 16,356 12, 277 50,993 41,625 — — 195,641 158,343 Wholesale balancing account, current portion.................................................... 26,121 5,571 — — — — — — — — — — 26, 121 5,571 Due from other City departments, current portion..............................................xx 102 115 82 128 — — 1,558 1, 134 — — (114) A (113) B 1,628 1,264 Due from other governments..............................................................................xx 366 — — — 1,664 1,723 574 646 — — — — 2, 604 2,369 Interest ................................................................................................................xx 3,861 2,621 3,896 2,178 578 295 2,823 1, 503 1,692 559 — — 12,850 7,156 Interest-Leases ...................................................................................................xx 935 911 — — — — — — — — — — 935 911 Restricted due from other governments.............................................................xx 129,580 36,147 — 13,942 — — — — — — — — 129, 580 50,089 Leases receivable, current portion…..................................................................xx 3,246 3,521 226 212 — — — — — — — — 3, 472 3,733 Restricted interest and other receivable (net of allowance for doubtful accounts of $131, $345, $0, $0 and $0 in 2024 and
$30, $99, $0, $0 and $0 in 2023)...................................................................xx 3,789 3,510 689 1,191 — — 169 4, 151 — — — — 4,647 8,852 Total current receivables..............................................................................xx 247,483 116,339 53,231 57,744 2,713 2,423 21,480 19, 711 52,685 42,184 (114) (113) 377,478 238,288 Prepaid charges, advances, and other receivables, current portion..................xx 4,958 5,909 8,142 570 754 92 6,341 1, 579 441 5,641 — — 20,636 13,791 Inventory..............................................................................................................xx 7,825 8,191 3,657 3,340 199 221 1,690 1, 619 — — — — 13,371 13,371 Restricted cash and investments outside City Treasury, current portion..........xx 40,065 10,863 41,778 48,717 — — 6,849 5, 371 — — — — 88,692 64,951 Total current assets......................................................................................xx 680,725 544,379 483,618 466,314 50,137 79,709 251,771 252, 668 212,937 146,482 (114) (113) 1,679,074 1,489,439 Non-current assets: xx
Restricted cash and investments with City Treasury.........................................xx 71,015 21,000 31,613 38,574 31,330 10,980 50,732 17, 606 — — — — 184,690 88,160 Restricted cash and investments outside City Treasury, less current portion...xx 63,185 66,482 59,930 66,439 — — 7,202 3, 840 — — — — 130,317 136,761 Leases receivable, less current portion…..........................................................xx 35,817 40,109 1,019 1,245 — — — — — — — — 36, 836 41,354 Restricted interest and other receivable, and prepaid (net of allowance xx for doubtful accounts of $0, $0, $0, $0, and $0 in 2024 and xx $8, $29, $0, $0, and $0 in 2023)…………….....................................................xx — 4 388 417 — — — — — — — — 388 421 Charges for services, less current portion (net of allowance for doubtful xx accounts of $664, $351, $0, $0, and $0 in 2024 and xx
$656, $566, $0, $0, and $0 in 2023)…………...................................................xx 200 209 342 342 — — — — — — — — 542 551 Wholesale balancing account, less current portion............................................xx — 4,481 — — — — — — — — — — — 4, 481 Note receivable - Balboa Reservoir, less current portion…................................xx 11,512 11,007 — — — — — — — — — — 11, 512 11,007 Prepaid charges, advances, and other receivables, less current portion..........xx 3,236 3,406 1,087 1,115 138 141 10,843 9, 540 11,763 11,424 — — 27,067 25,626 Lease right-to-use assets, net of accumulated amortization.............................xx 2,734 3,943 — 1,272 129 145 157 178 — — — — 3, 020 5,538 Subscription right-to-use assets, net of accumulated amortization…...............xx 311 695 188 422 61 137 51 114 13 30 — — 624 1, 398 Capital assets, not being depreciated and amortized.........................................xx 720,805 640,995 2,926,407 2,280,581 89,122 75,688 347,633 301, 400 — — — — 4,083,967 3,298,664 Capital assets, net of accumulated depreciation and amortization....................xx 5,054,617 5,007,319 2,561,815 2,404,071 148,174 144,066 409,911 345, 546 — — — — 8,174,517 7,901,002 Due from other City departments, less current portion......................................xx — — — — — — 9,863 10, 352 — — (291) A (405) B 9,572 9,947 Total non-current assets..............................................................................xx 5,963,432 5,799,650 5,582,789 4,794,478 268,954 231,157 836,392 688, 576 11,776 11,454 (291) (405) 12,663,052 11,524,910 Total assets..................................................................................................xx 6,644,157 6,344,029 6,066,407 5,260,792 319,091 310,866 1,088,163 941, 244 224,713 157,936 (405) (518) 14,342,126 13,014,349 Deferred outflows of resources xx
Unamortized loss on refunding of debt...............................................................xx 89,186 124,635 — 8 — — — — — — — — 89, 186 124,643 Pensions..............................................................................................................xx 93,526 70,101 42,685 32,592 11,929 8,858 14,580 10, 826 2,187 1,292 — — 164,907 123,669 Other postemployment benefits..........................................................................xx 29,974 28,616 12,816 11,493 3,191 3,248 3,899 3, 969 996 1,009 — — 50,876 48,335 Total deferred outflows of resources............................................................$ 212,686 223,352 55,501 44,093 15,120 12,106 18, 479 14,795 3,183 2,301 — — 304,969 296,647
Business Type Activities – Proprietary Funds
Water SFPUC TotalWastewater Hetchy Water Hetchy Power EliminationsCleanPowerSF
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Statements of Net Position
Proprietary Funds
June 30, 2024 and 2023
(In thousands)
65 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
C. Included interfund payables and interfund receivables for fiscal year 2024 of $405 between Wastewater and Hetchy Power for the 525 Golden Gate Avenue Headquarters construction costs.
D. Included interfund payables and interfund receivables for fiscal year 2023 of $518 between Wastewater and Hetchy Power for the 525 Golden Gate Avenue Headquarters construction costs. #Fiscal year 2023 net position reclassification of restricted payable and capital related liabilities from restricted for capital projects and/or unrestricted to net investment in capital assets balance updated.
See accompanying notes to basic financial statements.
2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 Liabilities
Current liabilities:
Accounts payable....................................................................................$ 25,353 22,671 18, 841 23,207 969 1,033 13,505 24,970 29,018 24,344 — — 87,686 96,225 Accrued payroll.......................................................................................xx 13,444 11,807 8,119 7,631 1,428 1,252 3,292 3,041 639 543 — — 26,922 24,274 Accrued vacation and sick leave, current portion...................................xx 7,585 7,057 6,583 6,040 1,272 1,132 2,038 1,867 413 394 — — 17,891 16,490 Accrued workers’ compensation, current portion...................................xx 2,188 1,914 1,685 1,509 228 216 417 401 — — — — 4,518 4,040 Due to other City departments, current portion......................................xx — 2,440 114 2,215 — — — 1,946 — — (114) C (113) D — 6,488 Damage claims liability, current portion..................................................xx 5,716 11,125 28,742 1,650 121 300 1,872 450 17 16 — — 36,468 13,541 Unearned revenues, refunds, and other, current portion........................xx 15,050 13,977 9,623 6,457 106 110 6,604 5,880 7,986 6,146 — — 39,369 32,570 Bond, loan, lease and subscription interest payable, current portion.....xx 37,924 35,104 30,300 27,918 1 2 2,691 1,597 — — — — 70,916 64,621 Bonds, current portion............................................................................xx 138,140 135,095 35,370 28,070 — — 3,599 1,590 — — — — 177,109 164,755 Certificates of participation, current portion............................................xx 3,402 3,267 900 864 — — 463 445 — — — — 4,765 4,576 Commercial paper, current portion.........................................................xx 190,000 — — — — — 90,654 — — — — — 280,654 — State revolving funds loans payable, current portion……………...…….xx — — 5,629 2,526 — — — — — — — — 5,629 2,526 Lease liability, current portion…..............................................................xx 1,028 1,189 — 1,297 16 16 19 19 — — — — 1,063 2,521 Subscription liability, current portion…...................................................xx 153 400 93 243 30 80 25 65 6 18 — — 307 806 Current liabilities payable from restricted assets...................................xx 39,896 40,863 135,740 122,825 4,027 5,747 25,513 23,119 — — — — 205,176 192,554 Total current liabilities...........................................................................xx 479,879 286,909 281,739 232,452 8,198 9,888 150,692 65,390 38,079 31,461 (114) (113) 958,473 625,987 Long-term liabilities: xx
Arbitrage rebate payable.........................................................................xx 869 — 8,521 188 — — 184 — — — — — 9,574 188 Net other postemployment benefits liability............................................xx 158,301 148,601 49,260 49,035 16,269 14,907 19,883 18,220 4,189 4,053 — — 247,902 234,816 Net pension liability..................................................................................xx 152,643 115,343 67,299 49,549 19,090 14,105 23,332 17,239 3,563 2,124 — — 265,927 198,360 Accrued vacation and sick leave, less current portion...........................xx 6,418 6,528 5,506 5,622 1,208 1,134 1,939 1,849 347 349 — — 15,418 15,482 Accrued workers’ compensation, less current portion...........................xx 8,814 7,821 7,327 6,489 1,069 1,003 1,919 1,837 — — — — 19,129 17,150 Due to other City departments, less current portion..............................xx — — 291 405 — — — — — — (291) C (405) D — — Damage claims liability, less current portion..........................................xx 17,057 8,500 86,341 2,700 147 400 1,902 5,700 4 18 — — 105,451 17,318 Unearned revenues, refunds, and other, less current portion................xx — — — — — — 580 580 — — — — 580 580 Liabilities payable from restricted assets, less current portion..............xx — — — — — — 3,354 — — — — — 3,354 — Bonds, less current portion.....................................................................xx 4,826,497 4,575,751 2,649,681 2,708, 840 — — 315,200 189,342 — — — — 7,791,378 7,473,933 Revenue Notes, less current portion......................................................xx — — — 349,556 — — — — — — — — — 349,556 Certificates of participation, less current portion....................................xx 85,830 89,232 22,695 23,594 — — 11,685 12,148 — — — — 120,210 124,974 Commercial paper, less current portion.................................................xx — 371,459 341,373 — — — — 116,352 — — — — 341,373 487,811 State revolving funds loans payable, less current portion……………...xx 259,970 163,627 312,033 316,163 — — — — — — — — 572,003 479,790 Water Infrastructure Finance and Innovation Act (WIFIA) loans…….....xx — — 922,431 122,357 — — — — — — — — 922,431 122,357 Bond, loan, lease, and subscription interest xx
payable, less current portion….............................................................xx 3,622 — 2,106 — — — — — — — — — 5,728 — Lease liability, less current portion…......................................................xx 1,793 2,821 — — 106 122 131 150 — — — — 2,030 3,093 Subscription liability, less current portion…............................................xx 155 308 93 186 29 59 26 51 7 13 — — 310 617 Pollution remediation obligations............................................................xx 1,271 1,271 6,451 7,800 — — — — — — — — 7,722 9,071 Total long-term liabilities.......................................................................xx 5,523,240 5,491,262 4,481,408 3,642, 484 37,918 31,730 380,135 363,468 8,110 6,557 (291) (405) 10,430,520 9,535,096 Total liabilities........................................................................................xx 6,003,119 5,778,171 4,763,147 3,874, 936 46,116 41,618 530,827 428,858 46,189 38,018 (405) (518) 11,388,993 10,161,083 Deferred inflows of resources xx
Unamortized gain on refunding of debt…...............................................xx 31,854 — 10,255 11,353 — — — — — — — — 42,109 11,353 Pensions.................................................................................................xx 13,305 28,504 4,055 10,023 1,941 4,142 2,372 5,062 925 1,296 — — 22,598 49,027 Leases….................................................................................................xx 36,583 41,558 1,203 1,453 — — — — — — — — 37,786 43,011 Other postemployment benefits.............................................................xx 22,334 27,075 5,809 8,286 2,897 3,084 3,541 3,769 2,292 2,922 — — 36,873 45,136 Total deferred inflows of resources......................................................xx 104,076 97,137 21,322 31,115 4,838 7,226 5,913 8,831 3,217 4,218 — — 139,366 148,527 Net position xx
Net investment in capital assets...............................................................xx 350,430 460,213 1,148,814 1,110, 957 233,276 214,014 343,297 313,171 — — — — 2,075,817 2,098,355 Restricted for debt service........................................................................xx 44,724 14,625 — 3,510 — — — 56 — — — — 44,724 18,191 Restricted for capital projects...................................................................xx 200,632 56,822 31,782 53,137 31,330 10,980 28,625 21,702 — — — — 292,369 142,641 Unrestricted...............................................................................................xx 153,862 160,413 156,843 231,230 18,651 49,134 197,980 183,421 178,490 118,001 — — 705,826 742,199 Total net position...................................................................................$ 749,648 692,073 1,337, 439 1,398,834 283,257 274,128 569,902 518,350 178,490 118,001 — — 3,118,736 3,001,386 Business Type Activities – Proprietary Funds
SFPUC TotalWater Wastewater Hetchy Water Hetchy Power EliminationsCleanPowerSF
# # # # #
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
66 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
Statements of Revenues, Expenses, and Changes in Net Position Proprietary Funds
Years ended June 30, 2024 and 2023
(In thousands)
See accompanying notes to basic financial statements.
2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 Operating revenues:
Charges for services...................................................................................$ 650,233 661,241 384,851 354,491 49,330 52,570 214,154 203,847 366,594 326,777 1,665,162 1,598,926 Rents and concessions..............................................................................xx 8,556 13,282 739 822 162 127 198 156 — — 9,655 14,387 Capacity fees..............................................................................................xx 863 1,256 2,262 3,077 — — — — — — 3,125 4,333 Other revenues...........................................................................................xx 17,238 15,312 7,189 5,546 — — — — — — 24,427 20,858 Total operating revenues........................................................................xx 676,890 691,091 395,041 363,936 49,492 52,697 214,352 204,003 366,594 326,777 1,702,369 1,638,504 Operating expenses: xx
Personnel services.....................................................................................xx 159,779 135,709 105,835 89,726 24,908 18,424 48,175 39,300 9,322 10,735 348,019 293,894 Contractual services...................................................................................xx 20,128 16,919 23,885 20,777 4,035 2,956 13,623 10,819 6,244 6,559 67,915 58,030 Transmission/distribution and other power costs.......................................xx — — — — — — 62,392 70,580 264 226 62,656 70,806 Purchased electricity...................................................................................xx — — — — — — 15,558 8,078 284,631 265,152 300,189 273,230 Materials and supplies.................................................................................xx 23,195 20,046 14,474 14,306 1,755 1,605 2,451 2,612 60 57 41,935 38,626 Depreciation and amortization....................................................................xx 155,172 155,714 82,722 78,039 6,522 6,524 18,460 17,877 17 270 262,893 258,424 Services provided by other departments....................................................xx 77,638 79,910 39,546 40,999 3,501 3,392 6,828 8,674 4,792 4,302 132,305 137,277 General and administrative and other.........................................................xx 93,444 51,955 195,581 17,503 3,229 17,110 33,114 33,612 6,188 7,479 331,556 127,659 Total operating expenses.......................................................................xx 529,356 460,253 462,043 261,350 43,950 50,011 200,601 191,552 311,518 294,780 1,547,468 1,257,946 Operating income (loss).........................................................................xx 147,534 230,838 (67,002) 102,586 5,542 2,686 13,751 12,451 55,076 31,997 154,901 380,558 Non-operating revenues (expenses): xx
Federal and state grants.............................................................................xx 12,414 — 12,256 152 — 1,627 26 937 — 1,173 24,696 3,889 Interest and investment income .................................................................xx 25,097 11,156 25,528 2,556 3,255 457 13,744 3,741 5,904 405 73,528 18,315 Interest expenses........................................................................................xx (222,055) (214,913) (138,883) (95,520) (3) (4) (14,472) (9,486) — (1) (375,413) (319,924) Amortization of premium, discount, refunding loss, and issuance costs...xx 13,825 9,971 47,299 14,387 — — 1,008 1,584 — — 62,132 25,942 Net gain from sale of assets.......................................................................xx 2,060 12,660 77 114 2 4 2 3 — — 2,141 12,781 Other non-operating revenues....................................................................xx 27,597 28,019 11,964 9,644 336 230 8,500 12,665 386 325 48,783 50,883 Other non-operating expenses...................................................................xx (1,760) (1,775) (505) (535) (45) (54) (99) (227) (877) (218) (3,286) (2,809) Net non-operating revenues (expenses)................................................xx (142,822) (154,882) (42,264) (69,202) 3,545 2,260 8,709 9,217 5,413 1,684 (167,419) (210,923) Change in net position before capital contributions and transfers.........xx 4,712 75,956 (109,266) 33,384 9,087 4,946 22,460 21,668 60,489 33,681 (12,518) 169,635 Capital contributions.......................................................................................xx 53,599 2,717 48,080 2,740 — — 29,200 2,535 — — 130,879 7,992 Transfers from the City and County of San Francisco..................................xx 505 5 — 75 42 20,000 — — — — 547 20,080 Transfers to the City and County of San Francisco......................................xx (1,241) (20,032) (209) (32) — — (108) (32) — — (1,558) (20,096) Net capital contributions and transfers…...............................................xx 52,863 (17,310) 47,871 2,783 42 20,000 29,092 2,503 — — 129,868 7,976 Change in net position............................................................................xx 57,575 58,646 (61,395) 36,167 9,129 24,946 51,552 24,171 60,489 33,681 117,350 177,611 Net position at beginning of year.................................................................... xx 692,073 633,427 1,398,834 1,362,667 274,128 249,182 518,350 494,179 118,001 84,320 3,001,386 2,823,775 Net position at end of year..............................................................................$ 749,648 692,073 1,337,439 1,398,834 283,257 274,128 569,902 518,350 178,490 118,001 3,118,736 3,001,386
Business Type Activities – Proprietary Funds
Water Wastewater Hetchy Water Hetchy Power SFPUC TotalCleanPowerSF 67 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Statements of Cash Flows
Proprietary Funds
Years ended June 30, 2024 and 2023
(In thousands)
See
accompanying notes to basic financial statements.
(continued)
2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 Cash flows from operating activities:
Cash received from customers, including cash deposits...................................$ 636,706 582,603 380,336 364,180 49, 264 52,640 211,012 201,707 357,825 324,730 1,635,143 1,525,860 Cash received from tenants for rent....................................................................xx 8,343 13,098 708 3,126 153 129 188 158 — — 9,392 16,511 Cash received from miscellaneous revenues.....................................................xx 4,776 4,832 6,648 686 36 30 4,886 8,689 3 6 16,349 14,243 Cash paid to employees for services..................................................................xx (151,655) (142,866) (104,126) (95,895) (23,234) ( 21, 537) (45,847) (42,804) (9,517) (8,063) (334,379) (311,165) Cash paid to suppliers for goods and services...................................................xx (194,099) (174,938) (116,262) (95,599) (13,563) (31, 864) (146,934) (113,682) (291,457) (275,322) (762,315) (691,405) Cash paid for judgments and claims...................................................................xx (18,216) (6,927) (6,851) (5,500) (357) (331) (3,625) (5,548) (874) (1,725) (29,923) (20,031) Net cash provided by (used in) operating activities......................................xx 285,855 275,802 160,453 170,998 12,299 (933) 19,680 48,520 55,980 39,626 534,267 534,013 Cash flows from non-capital financing activities: xx
Cash received from grants..................................................................................xx 13,400 — 13,688 177 59 389 98 546 — 1,173 27,245 2,285 Cash received from settlements.........................................................................xx — 6,750 — 5,000 300 200 — 244 — — 300 12,194 Cash received from license fees.........................................................................xx — — — — — — 1,997 3,713 — — 1,997 3,713 Cash received from Public Purpose Funds........................................................xx — — — — — — — — 1,624 2,394 1,624 2,394 Cash paid for rebates, program incentives, and other........................................xx (1,760) (1,775) (505) (535) (34) (54) (78) (227) (864) (218) (3,241) (2,809) Transfers from the City and County of San Francisco........................................xx 505 5 — 75 42 20,000 — — — — 547 20,080 Transfers to the City and County of San Francisco............................................xx (1,241) (20,032) (209) (32) — — (108) (32) — — (1,558) (20,096) Net cash provided by (used in) non-capital financing activities....................xx 10,904 (15,052) 12,974 4,685 367 20,535 1,909 4,244 760 3,349 26,914 17,761 Cash flows from capital and related financing activities: xx Proceeds from sale of capital assets..................................................................xx 1,569 1,370 79 127 2 4 2 3 — — 1,652 1,504 Proceeds from bond issuance, net of premium and discount…........................xx 474,538 — — 1,287,593 — — 131,230 — — — 605,768 1,287,593 Proceeds from commercial paper borrowings....................................................xx 191,150 165,162 341,373 177,564 — — 91,635 76,333 — — 624,158 419,059 Proceeds from State revolving fund loans...........................................................xx 4,044 12,371 13,942 207,364 — — — — — — 17,986 219,735 Proceeds from WIFIA loans….............................................................................xx — — 811,356 122,357 — — — — — — 811,356 122,357 Principal paid on commercial paper....................................................................xx (372,609) — — (556,721) — — (117, 333) — — — (489,942) (556,721) Principal paid on revenue notes...........................................................................xx — — (347,465) — — — — — — — (347, 465) — Principal paid on long-term debt..........................................................................xx (138,342) (128,408) (28,933) (454,676) — — (2, 035) (2,397) — — (169,310) (585,481) Principal paid on state revolving fund loans.........................................................xx — — (2,525) (2,481) — — — — — — (2, 525) (2,481) Interest paid on commercial paper......................................................................xx (1,511) (5,170) (1,372) (8,674) — — (1, 969) (1,327) — — (4,852) (15,171) Interest paid on long-term debt............................................................................xx (214,366) (209,194) (112,460) (75,309) — — (11, 221) (7,886) — — (338,047) (292,389) Interest paid on state revolving fund loans...........................................................xx — — (1,479) (1,523) — — — — — — (1, 479) (1,523) Interest paid on WIFIA loans................................................................................xx — — — (74) — — — — — — — (74) Interest paid on revenue notes.............................................................................xx — — — (3,475) — — — — — — — (3, 475) Issuance costs paid on long-term debt...............................................................xx (4,545) — (195) (3,124) — — (765) — — — (5,505) (3,124) Acquisition and construction of capital assets....................................................xx (228,113) (172,835) (871,699) (681,615) (25,692) (25, 856) (94,130) (72,541) — — (1,219,634) (952,847) Lease payments..................................................................................................xx (1,270) (1,050) (1,303) (2,371) (18) (18) (22) (22) — (233) (2,613) (3,694) Subscription payments…....................................................................................xx (408) (862) (247) (523) (82) (172) (66) (139) (18) (39) (821) (1,735) Federal interest income subsidy..........................................................................xx 22,909 23,260 3,911 3,991 — — 332 502 — — 27,152 27,753 Net cash provided by (used in) capital and related financing activities........xx (266,954) (315,356) (197,017) 8,430 (25,790) (26, 042) (4,342) (7,474) (18) (272) (494,121) (340,714) Cash flows from investing activities: xx
Interest income received......................................................................................xx 17,141 9,141 18,001 4,948 1,083 914 8,568 3,663 3,838 1,207 48,631 19,873 Proceeds from sale of investment outside City Treasury...................................xx 1,015,279 348,315 1,860,653 514,288 — — 155,462 10,224 — — 3,031,394 872,827 Purchase of investments outside City Treasury.................................................xx (1,081,634) (348,315) (1,898,189) (514,288) — — (165, 218) (10,224) — — (3,145,041) (872,827) Net cash provided by (used in) investing activities ......................................xx (49,214) 9,141 (19,535) 4,948 1,083 914 (1, 188) 3,663 3,838 1,207 (65,016) 19,873 Increase (decrease) in cash and cash equivalents......................................xx (19,409) (45,465) (43,125) 189,061 (12,041) (5, 526) 16,059 48,953 60,560 43,910 2,044 230,933 Cash and cash equivalents: xx
Beginning of year.................................................................................................xx 514,901 560,366 522,224 333,163 91,857 97,383 257,810 208,857 101,797 57,887 1,488,589 1,257,656 End of year...........................................................................................................$ 495,492 514,901 479,099 522,224 79,816 91,857 273,869 257,810 162,357 101,797 1,490,633 1,488,589 Reconciliation of cash and cash equivalents to the statements of net position:
Cash and investments with City Treasury:
Unrestricted......................................................................................................$ 380,201 402,885 376,658 355,770 46,471 76,973 215,370 224,234 159,811 98,657 1,178,511 1,158,519 Restricted......................................................................................................... 71,015 21,000 31,613 38,574 31,330 10,980 50,732 17,606 — — 184,690 88,160 Add: Unrealized loss on investments with City Treasury..............................xx 7,188 13,479 6,504 12,551 2,015 3,904 3,465 6,605 2,546 3,140 21,718 39,679 Cash and investments outside City Treasury: xx
Unrestricted......................................................................................................xx 193 192 152 173 — — 41 154 — — 386 519 Restricted.........................................................................................................xx 103,250 77,345 101,708 115,156 — — 14,051 9,211 — — 219,009 201,712 Less: Restricted (with maturity more than 90 days – see table in Note 3)...xx (65,815) — (37,269) — — — (9, 756) — — — (112,840) — Less: Unrealized (gain) on investments outside City Treasury.....................xx (540) — ( 267) — — (34) — — — (841) — Cash and cash equivalents at end of year on statements of cash flows..$ 495,492 514,901 479,099 522,224 79,816 91,857 273,869 257,810 162,357 101,797 1,490,633 1,488,589 Business Type Activities – Proprietary Funds
Water Wastewater Hetchy Water Hetchy Power SFPUC TotalCleanPowerSF 68 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Statements of Cash Flows
Proprietary Funds
Years ended June 30, 2024 and 2023
(In thousands)
*In
cludes related deferred outflows/inflows.
See accompanying notes to basic financial statements.
2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 Reconciliation of operating income (loss) to net cash provided by (used in) operating activities:
Operating income (loss)..........................................................................$ 147,534 230,838 (67,002) 102,586 5,542 2,686 13,751 12,451 55,076 31,997 154,901 380,558 Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization.............................................................xx 155,172 155,714 82,722 78,039 6,522 6,524 18,460 17,877 17 270 262,893 258,424 Miscellaneous revenues......................................................................xx 4,776 4,832 6,647 686 36 30 4,886 8,689 3 6 16,348 14,243 Provision for uncollectible accounts....................................................xx 2,263 4,584 2,807 5,500 — — (2,224) 2,626 1,303 1,593 4,149 14,303 Write-off of capital assets and other non-cash items.........................xx 58 4,628 47,795 911 — 192 217 211 — — 48,070 5,942 Changes in operating assets and liabilities: xx
Receivables: xx
Charges for services.......................................................................xx (17,701) (13,655) (10,835) (5,558) (66) 70 (1,855) (4,714) (10,671) 5,485 (41,128) (18,372) Due from other City departments...................................................xx 13 63 — 1,208 — — 187 345 — — 200 1,616 Prepaid charges, advances, and other...........................................xx 560 6,709 (7,452) 1 (659) 129 (372) 115 5,200 5,908 (2,723) 12,862 Inventory............................................................................................xx 366 (1,389) (317) (382) 22 (22) (71) 59 — — — (1,734) Accounts payable..............................................................................xx 2,682 (181) (4,366) 830 (75) (7,421) (11,486) 8,302 4,661 818 (8,584) 2,348 Accrued payroll..................................................................................xx 1,637 1,312 488 1,229 176 154 251 357 96 170 2,648 3,222 Net other postemployment benefits obligations liability*...................xx 3,601 10,042 (3,575) 963 1,232 1,041 1,505 1,272 (481) 2,906 2,282 16,224 Net pension liability*...........................................................................xx (1,324) (21,699) 1,689 (13,551) (287) (4,480) (351) (5,476) 173 (601) (100) (45,807) Leases...............................................................................................xx (327) 575 (38) 2,321 — — — — — — (365) 2,896 Subscriptions.....................................................................................xx 8 895 — 535 — — — — — — 8 1,430 Accrued vacation and sick leave.......................................................xx 418 (144) 427 761 214 97 261 119 17 197 1,337 1,030 Accrued workers' compensation.......................................................xx 1,267 762 1,014 452 78 (9) 98 (12) — — 2,457 1,193 Due to other City departments..........................................................xx (2,440) 2,440 (2,101) 2,102 — — (1,946) 1,566 — — (6,487) 6,108 Wholesale balancing account...........................................................xx (16,069) (89,202) — — — — — — — — (16,069) (89,202) Damage claims liability......................................................................xx 3,148 (16,444) 110,733 (7,695) (432) 73 (2,376) 5,127 (13) 2 111,060 (18,937) Unearned revenues, refunds, and other liabilities.............................xx 213 (4,878) 3,166 320 (4) 3 745 (394) 599 (9,125) 4,719 (14,074) Pollution remediation obligations.......................................................xx — — (1,349) (260) — — — — — — (1,349) (260) Total adjustments.........................................................................xx 138,321 44,964 227,455 68,412 6,757 (3,619) 5,929 36,069 904 7,629 379,366 153,455 275,802 160,453 170,998 12,299 (933) 19,680 48,520 55,980 39,626 534,267 534,013 Net cash provided by (used in) operating activities.................... $ 285,855 Noncash transactions:
Accrued capital asset costs.......................................................................$ 39,896 40,863 135,740 122,825 4,027 5,747 28,867 23,119 — — 208,530 192,554 Interfund payables......................................................................................xx — 2,440 405 2,620 — — — — — — 405 5,060 Interfund receivables..................................................................................xx — — — — — — 405 518 — — 405 518 Payable to SFMTA......................................................................................xx — — — — — — — 1,946 — — — 1,946 Unrealized loss on investments with City Treasury...................................xx 7,188 13,479 6,504 12,551 2,015 3,904 3,465 6,605 2,546 3,140 21,718 39,679 Unrealized (gain) on investments outside City Treasury...........................xx (540) — (267) — — — (34) — — — (841) — Capital contributions...................................................................................xx 53,599 2,717 48,080 2,740 — — 29,200 2,535 — — 130,879 7,992 Sale of land with promissory note..............................................................xx 11,512 11,007 — — — — — — — — 11,512 11,007 Principal refunded.......................................................................................xx 619,115 — — — — — — — — — 619,115 — Bond proceeds paid to refunding escrow..................................................xx 590,874 — — — — — — — — — 590,874 — Water Wastewater Hetchy Water Hetchy Power SFPUC TotalCleanPowerSF Business Type Activities – Proprietary Funds
69 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
(1) Description of Reporting Entity
The San Francisco Public Utilities Commission (SFPUC or the Commission), established in 1932, is responsible for providing operational oversight of the public utility enterprises of the City, which include the Water, Wastewater, Hetchy Water and Power and CleanPowerSF. The Commission is responsible for determining such matters as the rates and charges for services, approval of contracts, and organizational policy.
Until August 1, 2008, the Commission consisted of five members, all appointed by the Mayor. P roposition E, a City and County of San Francisco Charter Section 4.112 amendment approved by the voters in the June 3, 2008 election, terminated the terms of all five existing members of the Commission, changed the process for appointing new members, and set qualifications for all members. Under the amended Charter, the Mayor continues to nominate candidates to the Commission, but nominees do not take office until the Board of Supervisors votes to approve their appointments by a majority (at least six members). The amended Charter provides for staggered four-year terms for the Commission members and requires them to meet the following qualifications:
● Seat 1 must have experience in environmental policy and an understanding of environmental justice issues.
● Seat 2 must have experience in ratepayer or consumer advocacy. ● Seat 3 must have experience in project finance.
● Seat 4 must have experience in water systems, power systems, or public utility management. ● Seat 5 is an at-large member.
The SFPUC is a department of the City, and as such, the financial operations of the Water, the Wastewater, and Hetchy Water and Hetchy Power and CleanPowerSF (Hetch Hetchy) enterprises are included in the Annual Comprehensive Financial Report of the City as enterprise funds. These financial statements are intended to present only the financial position, and the changes in financial position and cash flows of only the portion of the City that is attributable to the transactions of the enterprises. They do not purport to, and do not, present fairly the financial position of the City as of June 30, 202 4 and 2023, the changes in its financial position, or, where applicable, the cash flows for the years then ended in conformity with U.S. generally accepted accounting principles (GAAP).
Water Enterprise
The San Francisco Water Enterprise was established in 1930 under the provisions of the Charter of the City and County of San Francisco (the City). The Water Enterprise acquired the fully developed, mature water works for San Francisco on March 3, 1930. Since then, the City has operated and maintained the water works as the San Francisco Water Enterprise. The Board of Supervisors of the City has adopted resolutions (the Water Resolutions) providing for the issuance of various water revenue and refunding bond series. The Water Resolutions require the City to keep separate books of records and accounts of the Water Enterprise. The Water Enterprise, which consists of a system of reservoirs, storage tanks, water treatment plants, pump stations, and pipelines, is engaged in the distribution of water to San Francisco and certain suburban areas. In fiscal year 2024, the Water Enterprise sold approximately 63,854 million gallons, i.e., about 174 million gallons per day of water, to approximately 2.7 million people within San Francisco and certain suburban areas.
Wastewater Enterprise
The San Francisco Wastewater Enterprise, formerly known as the San Francisco Clean Water Program (the Program), was established in 1977 following the transfer of all sewage system related assets and liabilities of the City to the Program.
In 1976, the electorate of the City approved a proposition authorizing the City to issue $240,000 in revenue bonds pursuant to the Revenue Bond Law of 1941 of the State of California for the purpose of acquiring, constructing, improving, and financing improvements to the City’s municipal sewage treatment and disposal system. Since then, the City’s Board of Supervisors has adopted resolutions (Wastewater Resolutions) providing for the issuance of various sewer revenue and refunding bond series. The 70 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Wastewater Resolutions require the City to keep separate books of records and accounts of the Wastewater Enterprise.
Hetch Hetchy
San Francisco Hetch Hetchy Water and Power (Hetch Hetchy) was established as a result of the Raker Act of 1913, which granted water and power resources rights-of-way on the Tuolumne River in Yosemite National Park and Stanislaus National Forest to the City and County of San Francisco (the City).
CleanPowerSF, launched in May 2016, provides green electricity from renewable sources to residential and commercial customers in San Francisco and was reported as part of Hetch Hetchy starting fiscal year 2016. Hetch Hetchy is a stand- alone enterprise comprised of three funds, Hetchy Power (aka the Power Enterprise), CleanPowerSF and Hetchy Water, the portion of the Water Enterprise’s operations, specifically the upcountry water supply and transmission service. Hetch Hetchy accounts for the activities of Hetch Hetchy Water and Power and is engaged in the collection and conveyance of approximately 85% of the regional system’s water supply and in the generation and transmission of electricity from that resource, as well as the City Power services including energy efficiency and renewable.
Approximately 55% of the electricity generated by Hetchy Power is used to provide electric service to the City’s municipal custom ers (including the San Francisco Municipal Transportation Agency, Recreation and Parks Department, the Port of San Francisco, the San Francisco International Airport and its tenants, Zuckerberg San Francisco General Hospital and Trauma Center, streetlights , Moscone Convention Center, and the Water and Wastewater Enterprises). The majority of the remaining 45% balance of electricity is sold to CleanPowerSF and the wholesale electric market. As a result of the 1913 Raker Act, energy produced above the City’s municipal load is sold first to the Districts (Modesto Irrigation District and Turlock Irrigation District) to cover their agricultural pumping and municipal load needs and any remaining energy is either sold to other municipalities and/or government agencies (not for resale) or sold into the California Independent System Operator (CAISO). Hetch Hetchy operation is an integrated system of reservoirs, hydroelectric power plants, aqueducts, pipelines, and transmission lines.
Hetch Hetchy also purchases whol esale electric power from various energy providers that are used in conjunction with owned hydro resources to meet the power requirements of its customers. Operations and business decisions can be greatly influenced by market conditions, state and federal power matters before the California Public Utilities Commission (CPUC), the CAISO, and the Federal Energy Regulatory Commission (FERC). Therefore, Hetch Hetchy serves as the City’s representative at CPUC, CAISO, and FERC forums and continues to monitor regulatory proceedings.
(2) Significant Accounting Policies
(a) Basis of Accounting and Measurement Focus – Fund Financial Statements
The accounts of Water, Wastewater, Hetchy Water, Hetchy Power and CleanPowerSF are organized on the basis of a proprietary fund type and are included as enterprise funds of the City.
The activities are accounted for with a separate set of self-balancing accounts that comprise the funds’ assets, deferred outflows, liabilities, deferred inflows, net position, revenues, and expenses. Enterprise funds account for activities (i) that are financed with debt that is secured solely by a pledge of the net revenues from fees and charges of the activity; or (ii) that are required by laws or regulations that the activity’s costs of providing services, including capital costs (such as depreciation or debt service), be recovered with fees and charges, rather than with taxes or similar revenues; or (iii) that the pricing policies of the activity establish fees and charges designed to recover its costs, including capital costs (such as depreciation or debt service).
The financial activities of Water, Wastewater, Hetchy Water, Hetchy Power and CleanPowerSF are accounted for on a flow of economic resources measurement focus, using the accrual basis of accounting in accordance with U.S. GAAP. Under this method, all assets and liabilities associated with its operations are included on the statements of net position; revenues are recognized when earned, and expenses are recognized when liabilities are incurred. Water and Wastewater Enterprises’ operating revenues are defined as charges to customers, rental income, 71 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
capacity fees and other revenues while Hetchy Water, Hetchy Power and CleanPowerSF’s operating revenues are defined as charges to customers and rental incomes. Non -operating revenues include grants, interest and investment income, and other non-operating income.
The SFPUC applies all applicable Governmental Accounting Standards Board (GASB) pronouncements.
(b) Cash and Cash Equivalents
The SFPUC considers its pooled deposits and investments held with the City Treasury to be demand deposits and, therefore, cash and cash equivalents for financial reporting. The City Treasury also holds non- pooled cash and investments for the SFPUC. Non -pooled restri cted deposits and restricted deposits and investments held outside the City Treasury with original maturities of three months or less are also considered to be cash equivalents.
(c) Investments
Money market funds are carried at cost, which approximates fair value. All other investments are stated at fair value based on quoted market prices. Changes in fair value are recognized as investment gains or losses and are recorded as a component of non-operating revenues.
(d) Inventory
Inventory consists primarily of construction materials and maintenance supplies and is valued at average cost. Inventory is expensed as it is consumed.
(e) Capital Assets
Capital assets are defined as assets with an initial individual cost of more than $5 and an estimated useful life in excess of one year. Capital assets with an original acquisition date prior to July 1, 1977 are recorded in the financial statements at estimated cost, as determined by an independent professional appraisal, or at cost, if known. All subsequent acquisitions have been recorded at cost. All donated capital assets and capital assets received in a service concession arrangement are valued at acquisition value at the time of donation. Depreciation and amortization are computed using the straight -line method over the estimated useful lives of the related assets, which range from 1 to 100 years for equipment and 1 to 200 years for buildings, structures, and improvements. No depreciation or amortization is recorded in the year of acquisition, and depreciation or amortization is recorded in the year of disposal.
(f) Intangible Assets
Intangible assets are defined as identifiable, non -financial assets capable of being separated, sold, transferred, or licensed, and include contractual or legal rights. Examples of intangible assets include rights-of-way easements, land use rights, water rights, leases, subscription-based information technology arrangements ( SBITAs), licenses, and permits. The SFPUC capitalizes purchased or internally developed intangible assets with a useful life extending beyond one reporting period. It has established a capitalization threshold of $100. Intangible assets are amortized over the benefit period or the contract term for leases and SBITAs, except for certain assets having an indefinite useful life. Assets with an indefinite useful life generally provide a benefit that is not constr ained by legal or contractual limitations or any other external factor and, therefore, are not amortized (see Note 4).
72 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
(g) Construction Work in Progress
The cost of acquisition and construction of major plant and equipment is recorded as construction work in progress. Costs of discontinued construction projects are recorded as expenses in the year in which the decision is made to discontinue such projects.
(h) Bond Discount, Premium, and Issuance Costs
Bond issuance costs related to prepaid insurance costs are capitalized and amortized using the effective interest method. Other bond issuance costs are expensed when incurred. Original issue bond discount or premium are offset against the related debt and are also amortized using the effective interest method.
(i) Accrued Vacation and Sick Leave
Accrued vacation pay, which may be accumulated up to ten weeks per employee, is charged to expense as earned. Sick leave earned subsequent to December 6, 1978 is non-vesting and may be accumulated up to six months per employee.
(j) Workers’ Compensation
The SFPUC is self -insured for workers’ compensation claims and accrues the estimated cost of those claims, including the estimated cost of incurred but not reported claims (see Note 16(b)).
(k) General Liability
The SFPUC is self -insured for general liability and uninsurable property damage claims.
Commercially uninsurable property includes assets that are underground or provide transmission and distribution. Maintained commercial coverage does not cover claims attributed to loss from earthquake, contamination, pollution remediation efforts, and other specific naturally occurring contaminants such as mold. The liability represents an estimate of the cost of all outstanding claims, including adverse loss development, and estimated incurred but not reported claims (see Note 16(a)).
(l) Arbitrage Rebate Payable
Certain bonds are subject to arbitrage rebate requirements in accordance with regulations issued by the U.S. Treasury Department . The requirements generally stipulate that earnings from the investment of the tax exempt bond proceeds that exceed related interest costs on the bonds must be remitted to the federal government on every fifth anniversary of each bond issue. The Water Enterprise arbitrage rebate liability as of June 30, 2024 and 2023 w as $869 and $0, respectively.
The Wastewater Enterprise arbitrage liability as of June 30, 2024 and 2023 w as $8,521 and $188, respectively. Hetchy Water, and CleanPowerSF did not have arbitrage rebate liability as of June 30, 202 4 and 2023 (see Note 7). Hetchy Power arbitrage liability as of June 30, 2024 and 2023 w as $184 and $0, respectively, related to 2021 Series AB and 2023 Series A revenue bonds (see Note 7).
(m) Refunding of Debt
Gains or losses occurring from refunding of debt prior to maturity are reported as deferred outflows and deferred inflows of resources from refunding of debt. Deferred outflows and deferred inflows of resources are recognized as a component of inter est expense using the effective interest method over the remaining life of the old debt or the life of the new debt, whichever is shorter.
73 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
(n) Income Taxes
As a department of a government agency, the SFPUC is exempt from both federal income taxes and California State franchise taxes.
(o) Revenue Recognition
Charges for water, wastewater, and power services are based on usage. Effective July 1, 2013, the majority of residential and non- residential customers are billed on a monthly basis except for building and contractor customers which are billed on a bi -monthly basis by the Water and Wastewater Enterprises. Hetchy Water, Hetchy Power and CleanPowerSF revenues are based on water and power consumption and billing rates. Generally, customers are billed mont hly.
Revenues earned but unbilled are accrued as charges for services receivables on the Statements of Net Position. The unbilled amounts for the fiscal years ended June 30, 2024 and 2023 were as follow:
(p) Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows, liabilities, and deferred inflows and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
(q) Eliminations
Eliminations for internal activities between Wastewater and Hetchy Power are made in the Statements of Net Position. There were activities requiring eliminations during the fiscal years ended June 30, 2024 and June 30, 2023 between Wastewater and Hetchy Power.
(r) Accounting and Financial Reporting for Pollution Remediation Obligations
According to GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations, a government would have to estimate its expected outlays for pollution remediation if it knows a site is polluted, and any of the following recognition triggers occur:
● Pollution poses an imminent danger to the public or environment and a government has little or no discretion to avoid fixing the problem;
● A government has violated a pollution prevention-related permit or license; ● A regulator has identified (or evidence indicates it will identify) a government as responsible (or potentially responsible) for cleaning up pollution, or for paying all or some of the cost of the cleanup;
● A government is named (or evidence indicates that it will be named) in a lawsuit to compel it to address the pollution; or
● A government begins or legally obligates itself to begin cleanup or post-cleanup activities (limited to amounts the government is legally required to complete).
As a part of ongoing operations, situations may occur requiring the removal of pollution or other hazardous material. These situations typically arise in the process of acquiring an asset, preparing an asset for its intended use, or during the design phase of projects under review by the project managers. Other times, pollution may arise during the implementation and construction of a major or minor capital project. Examples of pollution may include but are not limited to: asbestos or lead paint removal; leaking of sewage in underground pipes or neighboring Fiscal Years
Ended June 30 Water Wastewater
He tchy
Water
He tchy
Power CleanPowerSF
SFPUC
Total
2024 $ 44,465 23,256 — 3,624 25,591 96,936 2023 31,704 14,919 — 3,470 19,694 69,787
74 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
areas, chemical spills, removal and disposal of known toxic waste, harmful biological and chemical pollution of water, or contamination of surrounding soils by underground storage tanks (see Note 17).
(s) Leases
Leases are defined as a contract that conveys control of the right to use another entity’s underlying asset for a specified period. The SFPUC is a lessee and a lessor for various noncancellable leases of land, building, equipment, vehicles, easements, and etc.
Short-term Leases - For leases with a maximum possible term of 12 months or less at commencement, the SFPUC recognizes lease revenue if the SFPUC is the lessor of the lease or lease expense if the SFPUC is the lessee of the lease, based on the provisions of the lease contract. Liabilities are only recognized if payments are received in advance, and receivables are only recognized if payments are received subsequent to the reporting period.
Leases other t han Short-term - For all other leases (i.e., those that are not short -term), SFPUC recognizes a lease liability and intangible right-to-use lease asset as lessee leases, or lease receivable and deferred inflow of resources as lessor leases.
Measurement of Lease Amounts (Lessee) - The SFPUC’s lease liability is recorded at the present value of future minimum lease payments as of date of commencement. Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease asset is initially measured as the initial amount of the lease liability, less lease payments made at or before the lease commencement date, plus any initial direct costs ancillary to placing the underlying asset into service, less any lease incentives rec eived at or before the lease commencement date.
Subsequently, the lease asset is amortized into depreciation and amortization expense on a straight-line basis over the shorter of the lease term or the useful life of the underlying asset. If SFPUC is reason ably certain of exercising a purchase option contained in a lease, the lease asset will be amortized over the useful life of the underlying asset.
Measurement of Lease Amounts (Lessor) - The SFPUC’s lease receivable is measured at the present value of payments expected to be received during the lease term, reduced by any provision of estimated uncollectible amounts. Subsequently, the lease receivable is reduced by the principal portion of lease payments collected. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, less any lease incentives paid to, or on behalf of, the lessee at or before the commencement of the lease term, plus lease payments received from the lease at or before the commencement of t he lease term that related to future periods. Subsequently, the deferred inflow of resources as lease revenue on a straight -line basis over the lease term.
Key Estimates and Judgments - Key estimates and judgments include how the SFPUC determines (a) the discount rate it uses to calculate the present value of the expected lease payments, (b) lease terms, (c) lease payments, and (d) materiality threshold for equipment.
● The SFPUC generally uses its estimated incremental borrowing rate as the discount rate for leases unless the rate is implicit in the agreement. The City’s incremental borrowing rate (IBR) is established using the average of Municipal Market Data (MMD) AAA benchmark interest rate index by maturity date (year 1 to 30+), plus the average credit spread based on City’s Aa/AA, COP, Tax -exempt to generate the yield curve and discount rate table. The City’s incremental borrowing rate for leases is based on the rate of interest it woul d need to pay if it issued general obligation bonds to borrow an amount equal to the lease payments under similar terms at the commencement or remeasurement date. ● The lease term includes the noncancellable period of the lease, plus any additional periods covered by either lessee or lessor unilateral option to (1) extend for which it is reasonably certain to be exercised, or (2) terminate for which it is reasonably certain not to be exercised. Periods in which both the lessee and lessor have an option to terminate (or if 75 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
both parties have to agree to extend) are excluded from the lease term. ● Payments are evaluated by the SFPUC to determine if they should be included in the measurement of the lease receivables or lease liabilities, includin g those payments that require a determination of whether they are reasonably certain of being made, such as residual value guarantees, purchase options, payments for termination penalties, and other payments.
● Equipment and other leases have a capitalization threshold of $100. 70% below market rent and/or ground leases are determined to be below market rent (BMR), and are excluded from lease capitalization
Remeasurement of Lease - The SFPUC monitors changes in circumstances that may require remeasurement of a lease. When certain changes occur that are expected to significantly affect the amount of the lease receivable or lease liability, the receivable or liability is remeasured and a corresponding adjustment is made to the deferred inflow of resources or lease asset, respectively.
Presentation in Statements of Net Position - Lease assets are capital assets reported as non- current assets, lease liabilities are reported with current and long-term liabilities and both capital- related lease assets and liabilities are reported under net investment in capital assets in the Statements of Net Position (see Note 10).
(t) Subscription-Based Information Technology Arrangements (SBITAs)
SBITAs are defined as a contract that conveys control of the right to use another entity’s IT software, alone or in combination with tangible capital assets for a specified period. The SFPUC has noncancellable subscription arrangements (similar to a lease) for the right to use various SBITAs.
Short-term SBITAs - For SBITAs with a maximum possible term of 12 months at commencement, the SFPUC recognizes subscription expense based on the provisi ons of the SBITAs. Liabilities are only recognized if payments are received in advance, and receivables are only recognized if payments are received subsequent to the reporting period.
SBITAs other than Short -term - For all other SBITAs ( i.e., those that are not short -term), the SFPUC recognizes SBITAs liability and intangible right-to-use subscription asset.
Measurement of Subscription Amounts (Subscriber) – The SFPUC’s subscription liability is recorded at the present value of future minimum subscription payments as of the date of commencement. Subsequently, the subscription liability is reduced by the principal portion of subscription payments made. The subscription asset is initially measured as the initial amount of the subscription liability, less payments made at or before the subscription commencement date, plus any initial direct costs ancillary to placing the underlying asset into service, less any subscription incentives received at or before the subscription commencement date. For S BITAs, subscription assets also include qualified software implementation costs. Subsequently, the subscription asset is amortized into depreciation and amortization expense on a straight -line basis over the subscription term.
Key Estimates and Judgments - Key estimates and judgments include how the SFPUC determines (a) the discount rate it uses to calculate the present value of the expected subscription payments, (b) subscription terms, (c) subscription payments, and (d) materiality threshold.
● The SFPUC generally uses its estimated incremental borrowing rate as the discount rate for SBITAs unless the rate is implicit in the agreement. The City’s incremental borrowing rate (IBR) is established using the average of Municipal Market Data (MMD) AAA benchmark interest rate index by maturity date (year 1 to 30+), plus the average credit spread based on City’s Aa/AA, COP, Tax -exempt to generate the yield curve and discount rate table.
76 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
● The subscription term includes the noncancellable period of the subscription, plus any additional periods covered by either subscriber or lessor unilateral option to (1) extend for which it is reasonably certain to be exercised, or (2) terminate for which it is reasonably certain not to be exercised. Periods in which both the subscriber and lessor have an option to terminate (or if both parties have to agree to extend) are excluded from the subscription term.
● Payments are evaluated by the SFPUC to determine if they should be included in the measurement of the subscription liabi lities, including those payments that require a determination of whether they are reasonably certain of being made, such as residual value guarantees, purchase options, payments for termination penalties, and other payments. ● SBITAs have a capitalization threshold of $100.
Remeasurement of SBITAs – The SFPUC monitors changes in circumstances that may require remeasurement of a SBITAs. When certain changes occur that are expected to significantly affect the amount of the subscription liability, the liabilit y is remeasured, and a corresponding adjustment is made to the subscription asset.
Presentation in Statements of Net Position - Subscription assets are capital assets and are reported with non- current assets, subscription liabilities are reported with current and long -term liabilities and both capital -related subscription assets and liabilities are reported under net investment in capital assets in the Statements of Net Position (see Note 11).
(u) Pension
Net pension liability, deferred outflows/inflows of resources related to pension, and pension expense are actuarially determined on a citywide basis. For purposes of measuring the net pension liability, deferred outflows/inflows of resources related to pensions, pension expense, information about the fiduciary net position of the SFERS Plan, and additions to/deductions from the SFERS Plan’s fiduciary net position have been determined on the same basis as they are reported by the SFERS Plan (See Note 14(a)).
(v) Other Postemployment Benefits (OPEB)
Net OPEB liability, deferred outflows/inflows of resources related to OPEB, and OPEB expense are actuarially determined on a citywide basis. Net OPEB liability is measured as the porti on of the present value of projected benefit payments to be provided to current active and inactive employees attributed to those employees’ past service, less the amount of the Retiree Healthcare Trust Fund investments measured at fair value (see Note 14(b)).
(w) New Accounting Standards Adopted in Fiscal Year 2024
1) In April 2022, the GASB issued Statement No. 99, Omnibus 2022. GASB Statement No. 99 addresses a variety of topics. The requirements related to extension of the use of the London Interbank Offered Rate, accounting for Supplemental Nutrition Assistance Program distributions, disclosures of nonmonetary transactions, pledges of future revenues by pledging governments, clarification of certain provisions in Statement No. 34, and terminology updates related to Statement No. 53 and Statement No. 63 were adopted by the City for the year ended June 30, 2022. The requirements related to financial guarantees and the classification and reporting of derivative instruments within the scope of Statement No. 53 are effective for fiscal years beginning after June 15, 2023. The SFPUC adopted the provisions of Statement No. 99 in fisca l year 2024 which did not have a significant effect on its financial statements.
2) In June 2022, the GASB issued Statement No. 100, Accounting Changes and Error Corrections. This statement enhances accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability. The 77 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
new standard is effective for periods beginning after June 15, 2023. The SFPUC adopted the provisions of Statement No. 100 in fiscal year 2024 which did not have a significant effect on its financial statements.
(x) New Accounting Standards Adopted in Fiscal Year 2023
1) In May 2019, the GASB issued Statement No. 91, Conduit Debt Obligations . GASB Statement No. 91 enhances the compatibility and consistency of conduit debt obligation reporting and reporting of related transactions by state and local government issuers. The new standard is effective for periods beginning after December 15, 2021. The SFPUC adopted the provisions of Statement No. 91 in fiscal year 2023 which did not have a significant effect on its financial statements.
2) In M arch 2020, the GASB Issued Statement No. 94, Public-Private and Public -Public Partnerships and Availability Payment Arrangements. The primary objective of this statement is to improve financial reporting by addressing issues related to public -private and public-public partnership and availabilit y payment arrangements (PPPs). The new standard is effective for periods beginning after June 15, 2022. The SFPUC adopted the provisions of Statement No. 94 in fiscal year 2023 which did not have a significant effect on its financial statements.
3) In May 202 0, the GASB issued Statement No. 96, Subscription-Based Information Technology Arrangements (SBITAs) . This statement defines such arrangements as contracts that convey control of the right to use another party’s information technology software, alone or in combination with tangible capital assets, as specified in the contract for a period of time in an exchange or exchange- like transaction. The standard clarifies measurement and recognition of capitalizable costs, intangible assets, and subscription liabilities for such arrangements and also requires additional disclosures related to such arrangements. The new standard is effective for periods beginning after June 15, 2022. The SFPUC adopted the provisions of Statement No. 96 in fiscal year 2023 (see Note 11).
(y) Future Implementation of New Accounting Standards
1) In June 2022, the GASB issued Statement No. 101, Compensated Absences. This statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. The new standard is effective for periods beginning after December 15, 2023. The SFPUC will implement the provisions of Statement No. 101 in fiscal year 2025.
2) In December 2023, the GASB issued Statement No. 102, Certain Risk Disclosures . This statement establishes financial reporting requirements for risk related to vulnerabilities due to certain concentrations or constraints within governments. The new standard is effective for periods beginning after June 15, 2024. The SFPUC will implement the provisions of Statement No. 102 in fiscal year 2025.
3) In April 2024, the GASB issued Statement No. 103, Financial Reporting Model Improvements.
This statement is to improve key components of the financial reporting model to enhance its effectiveness in providing information that is essential for decision making and assessing a government’s accountability. The new standard is effective for periods beginning after June 15, 2025. The SFPUC will implement the provisions of Statement No. 103 in fiscal year 2026.
4) In September 2024, the GASB issued Statement No. 104, Disclosure of Certain Capital Assets. This statement requires certain types of capital assets, such as lease assets recognized in accordance with Stat ement No. 87, Leases , and intangible right -to-use assets recognized in accordance with Statement No. 94, Public-Private and Public -Public Partnerships and Availability Payment Arrangements to be disclosed separately by major classes of underlying assets in the capital assets note disclosures. Subscription assets recognized in accordance with Statement No. 96, Subscription-Based Information Technology Arrangements are also required to be disclosed separately. Furthermore, the statement requires intangible as sets other than those three types to be disclosed separately by major 78 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
class. Finally, the statement requires additional disclosures for capital assets held for sale.
The new standard is effective for periods beginning after June 15, 2025. The SFPUC will implement the provisions of Statement No. 104 in fiscal year 2026.
(z) Reclassifications
The SFPUC has reclassified certain amounts relating to the prior period to conform to its current period presentation. Lease receivable, lease related interest receivable, lease related interest payable, and subscription related interest payable were reclassified from net investment in capital assets to unrestricted in the statements of net position for fiscal year 2023. Furthermore, capital related liabilities were reclassified from restricted for capital projects and/or unrestricted to net investment in capital assets in the statements of net position for fiscal year 2023. These reclassifications had no effect on previously reported changes in net position.
(3) Cash, Cash Equivalents, and Investments
Cash, cash equivalents, and investments with the City Treasury are invested in an unrated City pool pursuant to investment policy guidelines established by the City Treasurer. The objectives of the policy guidelines are, in order of priority, preservation of capital, liquidity, and yield. The policy addresses soundness of financial institutions in which the City will deposit funds, types of investment instruments as permitted by the California Government Code, and the percentage of the portfolio that may be invested in certain instruments with longer terms to maturity. The City Treasurer allocates income from the investment of pooled cash at month- end in proportion to SFPUC’s average daily cash balances. The primary objectives of SFPUC’s investment policy are consistent with the City’s policy.
The SFPUC categorizes its fair value measurements within the fair value hierarchy established by GAAP.
The hierarchy is based on the valuation inputs used to measure fair value of the assets. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. The inputs and techniques used for valuing securities are not necessarily an indication of risk associated with investing in those securities.
Certain investments such as money market investments, and cash and cash equivalents are not subject to the fair value hierarchy.
Department-wide Business Type Activities
Department-wide restricted and unrestricted cash and investments outside City Treasury , including commercial paper issuers, credit ratings and the fair value hierarchy as of June 30, 2024 and 2023 consist of the following:
Credit Ratings
Investments
exempt from
Quoted prices in
active markets for
identical assets
Significant
other
observable
inputs
Unobservable
Inputs
(S&P/Moody's) Maturities Fair Value fair value (Level 1) (Level 2) (Level 3)
U.S. Treasury Money Market Funds AAAm/Aaa-mf < 90 days $ 64,783 64,783 — — — M
oney Market Funds A-1/P-1 < 90 days 95 95 — — — Commercial Paper-Toyota Motor Corp A-1+/P-1 < 90 days 6,935 — 6,935 — — Commercial Paper-Toronto-Dominion Bank A-1+/P-1 < 90 days 19,342 — 19,342 — — Commercial Paper-Toyota Motor Corp A-1+/P-1 October 11, 2024 48,238 — 48,238 — — Commercial Paper-Toronto-Dominion Bank A-1+/P-1 October 28, 2024 13,256 — 13,256 — — U.S. Agencies Securities AA+/Aaa March 21, 2025 17,538 — 17,538 — — U.S. Agencies Securities AA+/Aaa April 17, 2025 12,964 — 12,964 — — U.S. Treasury Bonds & Notes A-1+/P-1 September 15, 2025 17,872 — 17,872 — — U.S. Treasury Bonds & Notes A-1+/P-1 October 15, 2025 2,972 — 2,972 — — Cash and Cash Equivalents N/A 15,014 15,014 — — — Total Restricted Cash and Investments outside City Treasury $ 219,009 79,892 139,117 — — Cash and Cash Equivalents N/A $ 386 386 — — —
Total Unrestricted Cash and Investments outside City Treasury $ 386 386 — — — SFPUC's Cash and Investments outside City Treasury
Fair Value Measurements Using
June 30, 2024
Investments
79 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Department-wide cash, cash equivalents, and investments are shown on the accompanying statements of net position as follows:
The following table shows the percentage distribution of the City’s pooled investments by maturity:
Water Enterprise
Some restricted assets are held by an independent trustee outside the City’s investment pool. The assets are held for the purpose of paying future interest and principal on the bonds and for eligible capital project expenditures. The current balances as of June 30, 2024 and 2023 were $103,250 and $77,345, respectively. The Water Enterprise held all investments in guaranteed investment contracts, treasury and government obligations, commercial paper, corporate bonds, and notes, as well as money market mutual funds consisting of Treasury and Government Obligations.
Funds held by the trustee established under the 2002 Amended and Restated Indentures agreements are invested in “Permitted Investments,” as defined in the agreement, which includes money market funds and investment agreements. The agreement permits investment in money market funds registered under the Federal Investment Company Act of 1940 whose shares are registered under the Federal Securities Act of 1933 and have a rating by S&P of “AAAm-G,” “AAAm,” or “Aam,” and a rating by Moody’s of “Aaa,” “Aa1,” or “Aa2”. The credit ratings of the money market funds invested in as of June 30, 2024 were “Aaa- mf” and “P-1” by Moody’s, and “AAAm” and “A -1” by S&P. The credit ratings of the mon ey market funds invested in as of June 30, 2023 were “Aaa- mf” and “P -1” by Moody’s, and “AAAm” and “A -1” by S&P.
Investment agreements must be with a U.S. bank or trust company that have a rating by Moody’s and S&P of “A” or higher, or are guaranteed by any entity with a rating of “A” or higher, at the time the agreement is entered.
Credit Ratings
Investments
exempt from
Quoted prices in
active markets for
identical assets
Significant
other
observable
inputs
Unobservable
Inputs
(S&P/Moody's) Maturities Fair Value fair value (Level 1) (Level 2) (Level 3) U.S. Treasury Money Market Funds AAAm/Aaa-mf < 90 days $ 188,521 188,521 — — — Money Market Funds A-1+/P-1 < 90 days 93 93 — — —
Cash and Cash Equivalents N/A 13,098 13,098 — — —
Total Restricted Cash and Investments outside City Treasury $ 201,712 201,712 — — — Cash and Cash Equivalents N/A $ 519 519 — — —
Total Unrestricted Cash and Investments outside City Treasury $ 519 519 — — — SFPUC's Cash and Investments outside City Treasury
Fair Value Measurements Using
June 30, 2023
Investments
2024 2023
Current assets:
Cash and investments with City Treasury $ 1,178,511 $ 1,158,519 Cash and investments outside City Treasury 386 519
Restricted cash and investments outside City Treasury 88,692 64,951 Non-current assets:
Restricted cash and investments with City Treasury 184,690 88,160 Restricted cash and investments outside City Treasury 130,317 136,761 Total cash, cash equivalents, and investments $ 1,582,596 $ 1,448,910 Fis cal Years
ended June 30 Under 1 1 to less than 6 6 to less than 12 12 to 60 2024 22.2% 19.5% 16.3% 42.0%
2023 21.5% 18.0% 14.5% 46.0%
Investment maturities (in months)
80 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
The following is a summary of the restricted and unrestricted cash and investments outside City Treasury, including commercial paper issuers, credit ratings, and the fair value hierarchy as of June 30, 2024 and 2023.
The restricted cash and investments outside City Treasury as of June 30, 2024 and 2023 included an unrealized gain due to changes in fair value on commercial paper of $540 and $0, respectively.
Additional cash outside of the investment pool included revolving fund and cash in transit. The revolving fund has a balance of $28 and $28 as of June 30, 2024 and 2023, respectively, which is held in a commercial bank in non-interest bearing checking accounts covered by Federal Deposit Insurance Corporation deposi tory insurance. These accounts were established as provided by the City’s Administrative Code for revolving fund needs. The cash in transit was $165 and $164 as of June 30, 2024 and 2023, respectively.
The Water Enterprise’s cash, cash equivalents, and investments are shown on the accompanying Statements of Net Position as follows:
Credit Ratings
Investments
exempt from
Quoted prices in
active markets for
identical assets
Significant other
observable
inputs
Unobservable
Inputs
(S&P/Moody's) Maturities Fair Value fair value (Lev el 1) (Level 2) (Level 3)
U.S. Treasury Money Market Funds AAAm/Aaa-mf < 90 days $ 22,815 22,815 — — — Money Market Funds A-1/P-1 < 90 days 43 43 — — — Commercial Paper-Toyota Motor Corp A-1+/P-1 October 11, 2024 45,422 — 45,422 — — Commercial Paper-Toronto-Dominion Bank A-1+/P-1 October 28, 2024 10,310 — 10,310 — — U.S. Agencies Securities AA+/Aaa April 17, 2025 10,083 — 10,083 — — Cash and Cash Equivalents N/A 14,577 14,577 — — — Total Restricted Cash and Investments outside City Treasury $ 103,250 37,435 65,815 — — Cash and Cash Equivalents N/A $ 193 193 — — —
Total Unrestricted Cash and Investments outside City Treasury $ 193 193 — — — Investments
Water's Cash and Investments outside City Treasury
Fair Value Measurements Using
June 30, 2024
Credit Ratings
Investments
exempt from
Quoted prices in
active markets for
identical assets
Significant other
observable
inputs
Unobservable
Inputs
(S&P/Moody's) Maturities Fair Value fair value (Level 1) (Level 2) (Level 3) U.S. Treasury Money Market Funds AAAm/Aaa-mf < 90 days $ 64,249 64,249 — — — Money Market Funds A-1/P-1 < 90 days 43 43 — — —
Cash and Cash Equivalents N/A 13,053 13,053 — — —
Total Restricted Cash and Investments outside City Treasury $ 77,345 77,345 — — — Cash and Cash Equivalents N/A $ 192 192 — — —
Total Unrestricted Cash and Investments outside City Treasury $ 192 192 — — — Fair Value Measurements Using
June 30, 2023
Investments
Water's Cash and Investments outside City Treasury
2024 2023
Current assets:
Cash and investments with City Treasury $ 380,201 402,885 Cash and investments outside City Treasury 193 192
Restricted cash and investments outside City Treasury 40,065 10,863 Non-current assets:
Restricted cash and investments with City Treasury 71,015 21,000 Restricted cash and investments outside City Treasury 63,185 66,482 Total cash, cash equivalents, and investments $ 554,659 501,422 81 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
As of June 30, 2024, the Water Enterprise has the following commercial paper investments that represent
5.0% or more of the total investments outside City Treasury:
Wastewater Enterprise
The restricted cash and investments for bond reserves are held by an independent trustee outside the City investment pool. The balances as of June 30, 2024 and 2023 were $101,708 and $115,156, respectively. Funds held by the trustee established under the 2003 Indenture are invested in “Permitted Investments” as defined in the Indenture. “Permitted Investments” include money market funds, registered under the Federal Investment Company Act of 1940 and whose shares are registered under the Federal Securities Act of 1933 and having a rating by S&P of “AAAm -G,” “AAAm,” or “A am” and a rating by Moody’s of “Aaa- mf,” “Aa1,” or “Aa2.” “Permitted Investments” also include commercial paper, and US treasury and agency securities.
The following is a summary of the restricted and unrestricted cash and investments outside City Treasury, including commercial paper issuers, credit ratings, and the fair value hierarchy as of June 30, 2024 and 2023.
The restricted cash and investments outside City Treasury as of June 30, 2024 and 2023 included an unrealized gain due to changes in fair values on Commercial Paper, U.S. Treasury Bonds & Notes, and U.S. Agency Securities of $267 and $0, respectively.
Fair Value
% of
Inve stme nts
Toyota Motor Corp $ 45,422 51.2 % Toronto-Dominion Bank 10,310 11.6
Credit Ratings
Investments
exempt from
Quoted prices in
active markets for
identical assets
Significant
other
observable
inputs
Unobservable
Inputs
(S&P/Moody's) Maturities Fair Value fair value (Level 1) (Level 2) (Level 3) U.S. Treasury Money Market Funds AAAm/Aaa-mf < 90 days $ 37,830 37,830 — — — Money Market Funds A-1/P-1 < 90 days 52 52 — — — Commercial Paper-Toyota Motor Corp A-1+/P-1 < 90 days 6,935 — 6,935 — — Commercial Paper-Toronto-Dominion Bank A-1+/P-1 < 90 days 19,342 — 19,342 — — Commercial Paper-Toyota Motor Corp A-1+/P-1 October 11, 2024 1,859 — 1,859 — — U.S. Agencies Securities AA+/Aaa March 21, 2025 17,538 — 17,538 — — U.S. Treasury Bonds & Notes A-1+/P-1 September 15, 2025 17,872 — 17,872 — — Cash and Cash Equivalents N/A 280 280 — — —
Total Restricted Cash and Investments outside City Treasury $ 101,708 38,162 63,546 — — Cash and Cash Equivalents N/A $ 152 152 — — —
Total Unrestricted Cash and Investments outside City Treasury $ 152 152 — — — Wastewater's Cash and Investments outside City Treasury Fair Value Measurements Using
June 30, 2024
Investments
Credit Ratings
Investments
exempt from
Quoted prices in
active markets for
identical assets
Significant
other
observable
inputs
Unobservable
Inputs
(S&P/Moody's) Maturities Fair Value fair value (Level 1) (Level 2) (Level 3) U.S. Treasury Money Market Funds AAAm/Aaa-mf < 90 days $ 115,082 115,082 — — — Money Market Funds A-1/P-1 < 90 days 50 50 — — —
Cash and Cash Equivalents N/A 24 24 — — —
Total Restricted Cash and Investments outside City Treasury $ 115,156 115,156 — — — Cash and Cash Equivalents N/A $ 173 173 — — —
Total Unrestricted Cash and Investments outside City Treasury $ 173 173 — — — Wastewater's Cash and Investments outside City Treasury Fair Value Measurements Using
June 30, 2023
Investments
82 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
The Wastewater Enterprise’s cash, cash equivalents, and investments are shown on the accompanying Statements of Net Position as follows:
As of June 30, 2024, the Wastewater Enterprise has the following commercial paper investments that represent 5.0% or more of the total investments outside City Treasury:
Hetch Hetchy (Hetchy Water, Hetchy Power and CleanPowerSF)
Some restricted assets are held by an independent trustee outside the City’s investment pool. The assets are held for the purpose of paying future interest and principal on the bonds and for eligible capital project expenditures. The balances as of June 30, 2024 and 2023 were $14,051 and $9,211, respectively. Hetch Hetchy held all investments in treasury and government obligations, commercial paper, as well as money market mutual funds consisting of treasury and government obligations.
As of June 30, 2024, a total of $4,138 in restricted cash and investments outside City Treasury were invested in U.S. Treasury Money Market Funds with maturity date less than 90 days. Of this, $4,095 were proceeds from 2023 Series A, 2021 Series AB, and 2015 Series AB bonds and $43 were proceeds from certificates of participation. As of June 30, 2023, a total of $9.190 in restricted cash and investments outside City Treasury were invested in U.S. Treasury Money Market Funds with maturity date less than 90 days. Of this, $8,175 were proceeds from 2021 Series AB and 2015 Series AB bonds and $1,015 were proceeds from certificates of participation.
The following tables present the Hetch Hetchy restricted and unrestricted cash and investments outside City Treasury as of June 30, 2024 and 2023:
2024 2023
Current assets:
Cash and investments with City Treasury $ 376,658 355,770 Cash and investments outside City Treasury 152 173 Restricted cash and investments outside City Treasury 41,778 48,717 Non-current assets:
Restricted cash and investments with City Treasury 31,613 38,574 Restricted cash and investments outside City Treasury 59,930 66,439 Total cash, cash equivalents, and investments $ 510,131 509,673 Fair
Value
% of
Inve stme nts
Toyota Motor Corp $ 8,794 8.7 %
Toronto-Dominion Bank 19,342 19.1
Credit Ratings
Investments
exempt from
Quoted prices in
active markets for
identical assets
Significant
other
observable
inputs
Unobservable
Inputs
(S&P/Moody's) Maturities Fair Value fair value (Level 1) (Level 2) (Level 3) U.S. Treasury Money Market Funds AAAm/Aaa-mf < 90 days $ 4,138 4,138 — — — Commercial Paper-Toyota Motor Corp A-1+/P-1 October 11, 2024 957 — 957 — — Commercial Paper-Toronto-Dominion Bank A-1+/P-1 October 28, 2024 2,946 — 2,946 — — U.S. Agencies Securities AA+/Aaa April 17, 2025 2,881 — 2,881 — — U.S. Treasury Bonds & Notes A-1+/P-1 October 15, 2025 2,972 — 2,972 — — Cash and Cash Equivalents N/A 157 157 — — —
Total Restricted Cash and Investments outside City Treasury $ 14,051 4,295 9,756 — — Cash and Cash Equivalents N/A $ 41 41 — — —
Total Unrestricted Cash and Investments outside City Treasury $ 41 41 — — — Hetchy Power's Cash and Investments outside City Treasury Fair Value Measurements Using
June 30, 2024
Investments
83 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Hetch Water and Hetchy Power and CleanPowerSF cash, cash equivalents, and investments as of June 30, 2024 and 2023 are shown on the accompanying Statements of Net Position as follows:
As of June 30, 2024, Hetchy Power has the following commercial paper investments that represent 5.0% or more of the total investments outside City Treasury:
Credit Ratings
Investments
exempt from
Quoted prices in
active markets for
identical assets
Significant
other
observable
inputs
Unobservable
Inputs
(S&P/Moody's) Maturities Fair Value fair value ( Level 1) (Level 2) (Level 3) Hetchy Power
U.S. Treasury Money Market Funds AAAm/Aaa-mf < 90 days $ 9,190 9, 190 — — — Cash and Cash Equivalents N/A 21 21 — — —
T
otal Restricted Cash and Investments outside City Treasury $ 9,211 9,211 — — — Cash and Cash Equivalents N/A $ 154 154 — — —
Total Unrestricted Cash and Investments outside City Treasury $ 154 154 — — — Hetchy Power's Cash and Investments outside City Treasury Fair Value Measurements Using
June 30, 2023
Investments
Hetchy Hetchy
Water Power CleanPowerSF Total 2024
Current assets:
Cash and investments with City Treasury $ 46,471 215,370 159,811 421,652 Cash and investments outside City Treasury — 41 — 41 Restricted cash and investments outside City Treasury — 6,849 — 6,849 Non-current assets:
Restricted cash and investments with City Treasury 31,330 50,732 — 82,062 Restricted cash and investments outside City Treasury — 7,202 — 7,202 Total cash, cash equivalents, and investments $ 77,801 280,194 159,811 517,806
Hetchy Hetchy
Water Power CleanPowerSF Total 2023
C
urrent assets:
Cash and investments with City Treasury $ 76,973 224,234 98,657 399,864 Cash and investments outside City Treasury — 154 — 154 Restricted cash and investments outside City Treasury — 5,371 — 5,371 Non-current assets:
Restricted cash and investments with City Treasury 10,980 17,606 — 28,586 Restricted cash and investments outside City Treasury — 3,840 — 3,840 Total cash, cash equivalents, and investments $ 87,953 251,205 98,657 437,815 Fair Value
% of
Investments
Toronto-Dominion Bank $ 2,946 21.2 % Toyota Motor Corp 957 6.9
84 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
(4) Capital Assets
Department-wide Business Type Activities – Department-wide capital assets as of June 30, 2024 and 2023 consist of the following:
*Decrease in construction work in progress is less than increase in capital assets being depreciated is mainly explained by $48,070 in capital project write-offs for Water, Wastewater, and Hetchy Power, offset by $ 144,636 mainly related to direct additions to facilities and improvements, intangible assets and machinery and equipment.
*Decrease in construction work in progress is less than increase in capital assets being depreciated is mainly explained by $5,942 in capital project write-offs for Water, Wastewater, Hetchy Water and Hetchy Power, offset by $21,671 mainly related to direct additions to facilities and improvements, intangible assets and machinery and equipment.
2023 Increas es Decreas es 2024
Capital assets not being depreciated and amortized:
Land and rights-of-way $ 163,075 — — 163,075
Intangible assets 5,162 — — 5,162
Construction work in progress 3,130,427 1,221,855 (436,552) * 3,915,730 Total capital assets not being depreciated and amortized 3,298,664 1,221,855 (436,552) 4,083,967 Capital assets being depreciated and amortized:
Facilities and improvements 11,535,007 510,195 — 12,045,202 Land Improvements 6,965 3,747 — 10,712
Intangible assets 82,736 1,862 — 84,598
Machinery and equipment 595,685 17,314 (938) 612,061
Right-to-use lease assets 16,897 — (9,444) 7,453
Right-to-use subscription assets 4,935 — (3,206) 1,729 Total capital assets being depreciated and amortized 12,242,225 533,118 * (13,588) 12,761,755 Less accumulated depreciation and amortization for:
Facilities and improvements (3,822,951) (234,987) — (4,057,938) Land Improvements (232) (1,169) — (1,401)
Intangible assets (54,082) (2,984) — (57,066)
Machinery and equipment (442,126) (20,463) 938 (461,651) Right-to-use lease assets (11,359) (2,518) 9,444 (4,433) Right-to-use subscription assets (3,537) (772) 3,204 (1,105) Total accumulated depreciation and amortization (4,334,287) (262,893) 13,586 (4,583,594) Total capital assets being depreciated and amortized, net 7,907,938 270,225 (2) 8,178,161 Total capital assets, net $ 11,206,602 1,492,080 (436,554) 12,262,128 2022 Increas es Decreas es 2023
Capital assets not being depreciated and amortized:
Land and rights-of-way $ 163,194 — (119) 163,075
Intangible assets 5,162 — — 5,162
Construction work in progress 2,485,201 990,256 (345,030) 3,130,427 Total capital assets not being depreciated and amortized 2,653,557 990,256 (345,149) * 3,298,664 Capital assets being depreciated and amortized:
Facilities and improvements 11,199,956 335,051 — 11,535,007 Land Improvements — 6,965 — 6,965
Intangible assets 80,405 2,331 — 82,736
Machinery and equipment 583,988 13,733 (2,036) 595,685 Right-to-use lease assets 14,961 2,798 (862) 16,897
Right-to-use subscription assets 4,935 — — 4,935
Total capital assets being depreciated and amortized 11,884,245 360,878 * (2,898) 12,242,225 Less accumulated depreciation and amortization for:
Facilities and improvements (3,594,436) (228,515) — (3,822,951) Land Improvements — (232) — (232)
Intangible assets (50,836) (3,246) — (54,082)
Machinery and equipment (421,946) (22,194) 2,014 (442,126) Right-to-use lease assets (8,188) (4,033) 862 (11,359) Right-to-use subscription assets (1,760) (1,777) — (3,537) Total accumulated depreciation and amortization (4,077,166) (259,997) 2,876 (4,334,287) Total capital assets being depreciated and amortized, net 7,807,079 100,881 (22) 7,907,938 Total capital assets, net $ 10,460,636 1,091,137 (345,171) 11,206,602 85 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Water Capital Assets – Water’s capital assets as of June 30, 2024 and 2023 consist of the following:
*Decrease in construction work in progress includes $58 in capital project write-offs, mainly related to Chlorine Trim Station Repairs project. The remaining difference of $59,775 is mainly due to direct additions to facilities and improvements, intangible assets and machi nery and equipment.
*Decrease in construction work in progress includes $4,628 in capital project write-offs, mainly related to Stern Grove Emergency Restoration and Lake Merced Water Level Restoration projects. The remaining difference of $10 ,920 is mainly due to direct additions to f acilities and improvements, intangible assets and machinery and equipment.
2023 Increas es Decreas es 2024
Capital assets not being depreciated and amortized:
Land and rights-of-way $ 113,322 — — 113,322
Intangible assets 679 — — 679
Construction work in progress 526,994 220,970 (141,160) * 606,804 Total capital assets not being depreciated and amortized 640,995 220,970 (141,160) 720,805 Capital assets being depreciated and amortized:
Facilities and improvements 6,755,307 191,146 — 6,946,453 Intangible assets 26,121 1,593 — 27,714
Machinery and equipment 337,799 8,138 (131) 345,806
Right-to-use lease assets 8,208 — (1,197) 7,011
Right-to-use subscription assets 2,450 — (1,590) 860
Total capital assets being depreciated and amortized 7,129,885 200,877 (2,918) 7,327,844 Less accumulated depreciation and amortization for:
Facilities and improvements (1,828,932) (141,039) — (1,969,971) Intangible assets (24,469) (1,267) — (25,736)
Machinery and equipment (258,507) (11,273) 131 (269,649) Right-to-use lease assets (4,265) (1,209) 1,197 (4,277) Right-to-use subscription assets (1,755) (384) 1,590 (549) Total accumulated depreciation and amortization (2,117,928) (155,172) 2,918 (2,270,182) Total capital assets being depreciated and amortized, net 5,011,957 45,705 — 5,057,662 Total capital assets, net $ 5,652,952 266,675 (141,160) 5,778,467 2022 Increas es D ecreas es 2023
Capital assets not being depreciated and amortized:
Land and rights-of-way $ 113,441 — (119) 113,322
Intangible assets 679 — — 679
Construction work in progress 444,254 180,391 (97,651) 526,994 Total capital assets not being depreciated and amortized 558,374 180,391 (97,770) * 640,995 Capital assets being depreciated and amortized:
Facilities and improvements 6,660,691 94,616 — 6,755,307 Intangible assets 25,142 979 — 26,121
Machinery and equipment 332,473 5,905 (579) 337,799
Right-to-use lease assets 5,646 2,562 — 8,208
Right-to-use subscription assets 2,450 — — 2,450
Total capital assets being depreciated and amortized 7,026,402 104,062 (579) 7,129,885 Less accumulated depreciation and amortization for:
Facilities and improvements (1,688,717) (140,215) — (1,828,932) Intangible assets (22,669) (1,800) — (24,469)
Machinery and equipment (247,700) (11,386) 579 (258,507) Right-to-use lease assets (2,834) (1,431) — (4,265)
Right-to-use subscription assets (873) (882) — (1,755) Total accumulated depreciation and amortization (1,962,793) (155,714) 579 (2,117,928) Total capital assets being depreciated and amortized, net 5,063,609 (51,652) — 5,011,957 Total capital assets, net $ 5,621,983 128,739 (97,770) 5,652,952 86 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Wastewater Capital Assets – Wastewater’s capital assets as of June 30, 2024 and 2023 consist of the following:
*Decrease in construction work in progress is less than increase in capital assets being depreciated is due to direct addition s to buildings structures and machinery and equipment by $48,080 and $5,060, respectively, offset by $47,795 in capital project wri te-offs, mainly related to the Channel Tunnel/Bayside Drainage Project. It was decided to shelve this project by management and expense the design costs due to higher than expected costs, reprioritization of other various projects and uncertain future regulatory requirements.
*Decrease in construction work in progress is less than increase in capital assets being depreciated is due to direct additions to machinery and equipment and buildings structures by $3,659 and $2,739, respectively, offset by $911 in capital project write-o ffs, mainly related to the Islais Creek Green Infrastructure Project.
2023 Increas es Decreas es 2024
Capital assets not being depreciated and amortized:
Land and r
ights-of-way $ 44,572 — — 44,572
Intangible assets 3,046 — — 3,046
Construction work in progress 2,232,963 879,443 (233,617) * 2,878,789 Total capital assets not being depreciated and amortized 2,280,581 879,443 (233,617) 2,926,407 Capital assets being depreciated and amortized:
Facilities and improvements 3,923,910 229,886 — 4,153,796 Land Improvements 6,965 3,747 — 10,712
Intangible assets 10,760 269 — 11,029
Machinery and equipment 105,661 5,060 (807) 109,914
Right-to-use lease assets 8,247 — (8,247) —
Right-to-use subscription assets 1,487 — (965) 522
Total capital assets being depreciated and amortized 4,057,030 238,962 * (10,019) 4,285,973 Less accumulated depreciation and amortization for:
Facilities and improvements (1,551,767) (74,441) — (1,626,208) Land Improvements (232) (1,169) — (1,401)
Intangible assets (6,473) (1,229) — (7,702)
Machinery and equipment (84,753) (4,379) 807 (88,325)
Right-to-use lease assets (6,975) (1,272) 8,247 —
Right-to-use subscription assets (1,065) (232) 963 (334) Total accumulated depreciation and amortization (1,651,265) (82,722) 10,017 (1,723,970) Total capital assets being depreciated and amortized, net 2,405,765 156,240 (2) 2,562,003 Total capital assets, net $ 4,686,346 1,035,683 (233,619) 5,488,410 2022 Increas es Decreas es 2023
Capital assets not being depreciated and amortized:
Land and rights-of-way $ 44,572 — — 44,572
Intangible assets 3,046 — — 3,046
Construction work in progress 1,724,417 709,485 (200,939) * 2,232,963 Total capital assets not being depreciated and amortized 1,772,035 709,485 (200,939) 2,280,581 Capital assets being depreciated and amortized:
Facilities and improvements 3,729,320 194,590 — 3,923,910 Land Improvements — 6,965 — 6,965
Intangible assets 9,548 1,212 — 10,760
Machinery and equipment 103,274 3,659 (1,272) 105,661 Right-to-use lease assets 8,247 — — 8,247
Right-to-use subscription assets 1,487 — — 1,487
Total capital assets being depreciated and amortized 3,851,876 206,426 * (1,272) 4,057,030 Less accumulated depreciation and amortization for:
Facilities and improvements (1,481,988) (69,779) — (1,551,767) Land Improvements — (232) — (232)
Intangible assets (5,487) (986) — (6,473)
Machinery and equipment (80,251) (5,754) 1,252 (84,753) Right-to-use lease assets (4,650) (2,325) — (6,975)
Right-to-use subscription assets (530) (535) — (1,065) Total accumulated depreciation and amortization (1,572,906) (79,611) 1,252 (1,651,265) Total capital assets being depreciated and amortized, net 2,278,970 126,815 (20) 2,405,765 Total capital assets, net $ 4,051,005 836,300 (200,959) 4,686,346 87 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Hetchy Water Capital Assets – Hetchy Water’s capital assets as of June 30, 2024 and 2023 consist of the following:
*The difference between decrease in construction work in progress and increase in capital assets being depreciated due to direct additions of $943 to facilities, improvements, machinery, and equipment.
*Decrease in construction work in progress included $192 in capital project write- offs, mainly related to Hetchy Water ’s share of 2018 Moccasin Storm Project. The remaining difference of $339 to capital asset additions was offset by direct additions to facilit ies, improvements, machinery, and equipment.
2023 Increas es Decreas es 2024
Capital assets not being depreciated and amortized:
Land and rights-of-way $ 3,232 — — 3,232
Intangible assets 6 — — 6
Construction work in progress 72,450 23,029 (9,595) * 85,884 Total capital assets not being depreciated and amortized 75,688 23,029 (9,595) 89,122 Capital assets being depreciated and amortized:
Facilities and improvements 311,312 9,228 — 320,540
Intangible assets 20,522 — — 20,522
Machinery and equipment 29,891 1,310 — 31,201
Right-to-use lease assets 198 — — 198
Right-to-use subscription assets 490 — (320) 170
Total capital assets being depreciated and amortized 362,413 10,538 * (320) 372,631 Less accumulated depreciation and amortization for:
Facilities and improvements (185,066) (5,353) — (190,419) Intangible assets (10,361) (207) — (10,568)
Machinery and equipment (22,232) (870) — (23,102)
Right-to-use lease assets (53) (16) — (69)
Right-to-use subscription assets (353) (76) 320 (109)
Total accumulated depreciation and amortization (218,065) (6,522) 320 (224,267) Total capital assets being depreciated and amortized, net 144,348 4,016 — 148,364 Total capital assets, net $ 220,036 27,045 (9,595) 237,486 2022 Increas es Decreas es 2023
Capital assets not being depreciated and amortized:
Land and rights-of-way $ 3,232 — — 3,232
Intangible assets 6 — — 6
Construction work in progress 54,138 25,032 (6,720) * 72,450 Total capital assets not being depreciated and amortized 57,376 25,032 (6,720) 75,688 Capital assets being depreciated and amortized:
Facilities and improvements 306,116 5,196 — 311,312
Intangible assets 20,522 — — 20,522
Machinery and equipment 28,383 1,566 (58) 29,891
Right-to-use lease assets 67 105 26 198
Right-to-use subscription assets 490 — — 490
Total capital assets being depreciated and amortized 355,578 6,867 * (32) 362,413 Less accumulated depreciation and amortization for:
Facilities and improvements (179,839) (5,227) — (185,066) Intangible assets** (10,154) (207) — (10,361)
Machinery and equipment (21,397) (892) 57 (22,232)
Right-to-use lease assets (6) (21) (26) (53)
Right-to-use subscription assets (176) (177) — (353)
Total accumulated depreciation and amortization (211,572) (6,524) 31 (218,065) Total capital assets being depreciated and amortized, net 144,006 343 (1) 144,348 Total capital assets, net $ 201,382 25,375 (6,721) 220,036 88 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Hetchy Power Capital Assets – Hetchy Power’s capital assets as of June 30, 2024 and 2023 consist of the following:
*Decrease in construction work in progress included $217 in capital project write -offs, mainly related to Distribution Interface Project. The remaining difference of $30,778 to capital asset additions was offset by direct additions to facilities, improvements, machinery, and equipment.
*Decrease in construction work in progress included $211 in capital project write- offs, mainly related to Hetchy Power’s share of 2018 Moccasin Storm Project. The remaining difference of $4,014 to capital asset additions was offset by direct additions to facilities, improvements, machinery, and equipment.
2023 Increas es Decreas es 2024
Capital assets not being depreciated and amortized:
Land and rights-of-way $ 1,949 — — 1,949
Intangible assets 1,431 — — 1,431
Construction work in progress 298,020 98,413 (52,180) * 344,253 Total capital assets not being depreciated and amortized 301,400 98,413 (52,180) 347,633 Capital assets being depreciated and amortized:
Facilities and improvements 544,478 79,935 — 624,413 Intangible assets 25,333 — — 25,333
Machinery and equipment 122,334 2,806 — 125,140
Right-to-use lease assets 244 — — 244
Right-to-use subscription assets 397 — (257) 140
Total capital assets being depreciated and amortized 692,786 82,741 * (257) 775,270 Less accumulated depreciation and amortization for:
Facilities and improvements (257,186) (14,154) — (271,340) Intangible assets (12,779) (281) — (13,060)
Machinery and equipment (76,634) (3,941) — (80,575)
Right-to-use lease assets (66) (21) — (87)
Right-to-use subscription assets (283) (63) 257 (89)
Total accumulated depreciation and amortization (346,948) (18,460) 257 (365,151) Total capital assets being depreciated and amortized, net 345,838 64,281 — 410,119 Total capital assets, net $ 647,238 162,694 (52,180) 757,752 2022 Increas es Decreas es 2023
C
apital assets not being depreciated and amortized:
Land and rights-of-way $ 1,949 — — 1,949
Intangible assets 1,431 — — 1,431
Construction work in progress 262,392 75,348 (39,720) * 298,020 Total capital assets not being depreciated and amortized 265,772 75,348 (39,720) 301,400 Capital assets being depreciated and amortized:
Facilities and improvements 503,829 40,649 — 544,478 Intangible assets 25,193 140 — 25,333
Machinery and equipment 119,858 2,603 (127) 122,334
Right-to-use lease assets 81 131 32 244
Right-to-use subscription assets 397 — — 397
Total capital assets being depreciated and amortized 649,358 43,523 * (95) 692,786 Less accumulated depreciation and amortization for:
Facilities and improvements (243,892) (13,294) — (257,186) Intangible assets (12,526) (253) — (12,779)
Machinery and equipment (72,598) (4,162) 126 (76,634)
Right-to-use lease assets (8) (26) (32) (66)
Right-to-use subscription assets (141) (142) — (283)
Total accumulated depreciation and amortization (329,165) (17,877) 94 (346,948) Total capital assets being depreciated and amortized, net 320,193 25,646 (1) 345,838 Total capital assets, net $ 585,965 100,994 (39,721) 647,238 89 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
CleanPowerSF Capital Assets – CleanPowerSF’s capital assets as of June 30, 2024 and 2023 consist of the following:
See Notes 10 and 11 for additional information about right-to-use assets for leases and SBITAs.
(5) Restricted Assets
Department-wide Business Type Activities
The following table summarizes the department-wide restricted assets as of June 30, 2024 and 2023.
Water Restricted Assets
Pursuant to the Indentures, all revenues of the Water Enterprise (except amounts on deposit in the rebate fund) are irrevocably pledged to the punctual payment of debt service on the Water Revenue and Refunding Bonds. Accordingly, the revenues of the Water Enterprise shall not be used for any other purpose while any of its Water Revenue and Refunding Bonds are outstanding, except as expressly permitted by the Indentures. Further, all revenues shall be deposited by the City Treasurer, by instruction of the Water Enterprise, in special funds designated as the Water Enterprise Revenue Fund (the Water Revenue Fund), which must be maintained in the City Treasury. These funds, held at the City Treasury, are recorded in the statement of net position of the Water Enterprise as cash and investments. Deposits in the Water Revenue Fund, including earnings thereon, shall be appropriated, transferred, expended, or used for the following purposes pertaining to the financing, maintenance, and operation of the Water Enterprise in accordance with the following priority:
1. The payment of operation and maintenance expenses for such utility and related facilities;
2. The payment of pension charges and proportionate payments to such compensation and other insurance or outside reserve funds as the Water Enterprise may establish, or the Board of Supervisors may require with respect to employees of the Water Enterprise;
2023 Increas es Decreas es 2024
Capital assets being depreciated and amortized:
Ri
ght-to-use subscription assets $ 111 — (74) 37
Total capital assets being depreciated and amortized 111 — (74) 37 Less accumulated depreciation and amortization for:
Right-to-use subscription assets (81) (17) 74 (24)
Total accumulated depreciation and amortization (81) (17) 74 (24) Total capital assets being depreciated and amortized, net 30 (17) — 13 Total capital assets, net $ 30 (17) — 13
2022 Increas es Decreas es 2023
Capital assets being depreciated and amortized:
Ri
ght-to-use lease assets $ 920 — (920) —
Right-to-use subscription assets 111 — — 111
Total capital assets being depreciated and amortized 1,031 — (920) 111 Less accumulated depreciation and amortization for:
Right-to-use lease assets (690) (230) 920 —
Right-to-use subscription assets (40) (41) — (81)
Total accumulated depreciation and amortization (730) (271) 920 (81) Total capital assets being depreciated and amortized, net 301 (271) — 30 Total capital assets, net $ 301 (271) — 30
2024 2023
Cash and investments with City Treasury $ 184,690 88,160 Cash and investments outside City Treasury 219,009 201,712 Interest and other receivables 134,615 59,362
Total restricted assets $ 538,314 349,234
90 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
3. The payment of principal, interest, reserve, sinking fund, and other mandatory funds created to secure Revenue Bonds issued by the Water Enterprise for the acquisition, construction, or extension of facilities owned, operated, or controlled by the Water Enterprise;
4. The payment of principal and interest on General Obligation Bonds issued by the City for the Water Enterprise’s purposes;
5. Reconstruction and replacement as determined by the Water Enterprise or as required by any of the Water Enterprise’s Revenue Bond ordinances duly adopted and approved; and
6. The acquisition of land, real property, or interest in real property for, and the acquisition, construction, enlargement, and improvement of, new and existing buildings, structures, facilities, equipment, appliances, and other property necessary or convenient to the development or improvement of such utility owned, controlled, or operated by the Water Enterprise; and for any other lawful purpose of the Water Enterprise, including the transfer of surplus funds pursuant to the Charter.
In accordance with the Indenture, the bond financing program maintains certain restricted cash and investment balances in trust. Restricted assets held in trust consisted of the following as of June 30, 2024 and 2023:
2024 2023
Cash and investments with City Treasury:
Water revenue bond construction fund $ 71,015 21,000
Cash and investments outside City Treasury:
2010A Water revenue bond fund — 12
2010B Water revenue bond fund 22,813 21,861
2010D Water revenue bond fund — 12
2010E Water revenue bond fund 16,495 16,643
2010F Water revenue bond fund — 8
2010G Water revenue bond fund 18,994 18,178
2015A Water revenue refunding bond fund 7 4
2016A Water revenue refunding bond fund 13 8
2016B Water revenue refunding bond fund 1 1
2016C Water revenue bond fund 4 2
2017A Water revenue bond fund 1 —
2017B Water revenue bond fund 6 2
2017C Water revenue bond fund — 1
2017D Water revenue refunding bond fund 6 4
2017E Water revenue refunding bond fund 1 1
2019A Water revenue refunding bond fund 7 5
2019B Water revenue refunding bond fund 1 —
2019C Water revenue refunding bond fund 1 —
2020A Water revenue bond fund 4 2
2020B Water revenue bond fund 2 1
2020C Water revenue bond fund 2 1
2020D Water revenue bond fund 1 —
2020E Water revenue refunding bond fund 3 2
2020F Water revenue refunding bond fund 17 13
2020G Water revenue refunding bond fund 1 23
2020H Water revenue refunding bond fund 1 8
2023A Water revenue bond fund 19,235 —
2023B Water revenue bond fund 3,551 —
2023C Water revenue refunding bond fund 99 —
2023D Water revenue refunding bond fund 19 —
2009C Certificates of participation - 525 Golden Gate 965 1,696 2009D Certificates of participation - 525 Golden Gate 7,345 5,761 Commercial Paper - Tax Exempt 17 15
Commercial Paper - Taxable 28 28
Habitat reserve endowment fund 13,610 13,053
Total cash and investments outside City Treasury 103,250 77,345 Interest and other receivables:
3,789 3,514
Due from other government for State Revolving Fund 129,580 36,147 Total restricted assets $ 307,634 138,006
Water bond construction, including interest, prepaids and other receivables 91 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Restricted assets listed above as cash and investments with City Treasury are held in fund accounts within the Water Revenue Fund of the City Treasury.
Wastewater Restricted Assets
The Bond indenture is a legally binding agreement between the SFPUC and U.S. Bank, N.A. (trustee) regarding the issuance of bonds and requires all net revenues of the Wastewater Enterprise (except amounts on deposit in the rebate fund) are irrevocably pledged to the punctual payment of debt service on the Wastewater revenue bonds. Accordingly, the net revenues of the Wastewater Enterprise shall not be used for any other purpose while any of its revenue bonds are outstanding except as expressly permitted by the indenture. Further, all net revenues shall be deposited by the City Treasurer, by instruction of the Wastewater Enterprise, in special funds designated as the Revenue Fund, which must be maintained in the City Treasury. These funds, held at the City Treasury, are recorded in the statements of net position of the Wastewater Enterprise as cash and investments. Deposits in the Revenue Fund, including earnings thereon, shall be appropriated, transferred, expended, or used for the following purposes and only in accordance with the following priority:
1. The payment of operation and maintenance costs of the Wastewater Enterprise;
2. The payment of bonds, parity State revolving and Federal fund loans, policy costs, and amounts due as reimbursement under any letter of credit agreement; and
3. Any other lawful purpose of the Wastewater Enterprise.
In accordance with the Indenture, the Wastewater Enterprise maintains certain restricted cash and investment balances in trust. Restricted assets held in trust consisted of the following as of June 30, 202 4 and 2023:
Restricted assets listed above as cash and investments with City Treasury are held in fund accounts within the Sewer Revenue Fund of the City Treasury.
2024 2023
Cash and investments with City Treasury:
Wastewater revenue bond construction fund $ 31,613 38,574 Cash and investments outside City Treasury:
2009 Series C Certificates of Participation – 525 Golden Gate 255 449 2009 Series D Certificates of Participation – 525 Golden Gate 1,942 1,523 2010 Series A Wastewater revenue bond fund 145 137
2010 Series B Wastewater revenue bond fund 9,027 7,153 2013 Series B Wastewater revenue bond fund 1 5
2016 Series A Wastewater revenue bond fund 3 6
2016 Series B Wastewater revenue bond fund 1 2
2018 Series A Wastewater revenue bond fund 3 6
2018 Series B Wastewater revenue bond fund 4 5
2018 Series C Wastewater revenue bond fund 2 2
2021 Series A Wastewater revenue bond fund 2,239 13,298 2021 Series B Wastewater revenue bond fund 397 2,163
2022 Series B Wastewater revenue bond fund 43 86
2023 Series A Wastewater revenue bond fund 43,212 65,673 2023 Series B Wastewater revenue bond fund 15,998 24,313 2023 Series C Wastewater revenue bond fund 8 19
2021 Series A Wastewater revenue note fund 218 152
2021 Series B Wastewater revenue note fund 1 89
Commercial Paper - Tax Exempt 76 75
2020 WIFIA Biosolids Digester 15,248 —
2020 WIFIA Southeast Treatment Plant 12,885 —
Total cash and investments outside City Treasury 101,708 115,156 Interest and other receivables:
Wastewater revenue bond construction fund including interest, prepaid, and other receivables 1,077 1,608 Due from other government for State Revolving Fund — 13,942 Total restricted assets $ 134,398 169,280
92 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Hetchy Water Restricted Assets
Hetchy Water restricted assets held in trust consist of the following as of June 30, 2024 and 2023:
Restricted assets listed above as cash and investments with City Treasury are held in fund accounts within the Hetchy Water Revenue Fund.
Hetchy Power Restricted Assets
Pursuant to the Hetchy Power T rust Indenture (the “Indenture”), established in fiscal year 2015, net revenues of the Hetchy Power are pledged first to the 2015 Series AB Bonds, 2021 Series AB Bonds, and 2023 Series A Bonds, and have a priority lien on the pledge of net revenues to the outstanding QECBs and NCREBs (the “Subordinate Obligations”). The Lease/Purchase Agreements for the Subordinate Obligations pledge the net revenues of the Hetchy Power to these bonds, and such pledge is subordinate in lien to the net revenues pledge for the 2015 Series AB Bonds, 2021 Series AB Bonds, and 2023 Series A Bonds (the “Bonds” or “Bond”).
In the Indenture, the SFPUC covenants and agrees that it will pay into the Revenue Fund as received all Revenues of Hetchy Power and shall be used and applied, as provided by the Indenture, solely for the purposes of operating and maintaining Hetchy Power and paying all costs, charges, and expenses in connection therewith and for the purpose of making repairs, renewals, and replacements to Hetchy Power and constructing additions, betterments, and extensions thereto.
The Indenture provides that Revenues deposited in the Revenue Fund shall be disbursed in the following order of priority:
1. The payment of operation and maintenance expenses;
2. Any priority reconstruction and replacement fund deposits;
3. Deposit in the interest account of each Bond Fund;
4. Deposit in the bond retirement account of each Bond Fund;
5. Deposit in the reserve fund;
6. (i) Payment of principal and premium, if any, and interest on any Subordinate Obligations; (ii) deposit into a reserve fund securing any Subordinate Obligations; (iii) Swap Agreement payments pursuant to Swap Agreements entered into by the SFPUC with respect to any Subordinate Obligations; and (iv) payment to any financial institution or insurance company providing any letter of credit, line of credit, or other credit or liquidity facility, including municipal bond insurance and guarantees, that secures the payment of principal or interest on any Subordinate Obligations; in each case in any order of priority within this paragraph which may be hereafter established by the SFPUC by resolution;
7. Any additional reconstruction and replacement fund deposits into the reconstruction and replacement fund;
8. Any necessary or desirable capital additions or improvements to the Hetchy Power;
9. Any payment under a Take- or-Pay Power Purchase Agreement that does not constitute an operation and maintenance expense;
10. Any payment under a Swap Agreement that does not constitute a Swap Agreement payment; and
11. Any other lawful purpose of the SFPUC.
In the Indenture, the SFPUC covenants and agrees to transfer to the Trustee for deposit in the Interest Account of each applicable Bond Fund all Refundable Credits received by the SFPUC.
2024 2023
C
ash and investments with City Treasury:
Hetch Hetchy bond construction fund $ 31,330 10,980
Total restricted assets $ 31,330 10,980
93 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
In accordance with the Agreements, Hetchy Power maintains certain restricted cash and investment balances in trust. Restricted assets held in trust consist of the following as of June 30, 2024 and 2023:
Restricted assets listed above as cash and investments with City Treasury are held in fund accounts within the Hetchy Power Revenue Fund.
(6) Short-Term Debt
Department-wide Business Type Activities
The following table summarizes the department-wide commercial paper debt.
Water Short-Term Debt
The Commission and the Board of Supervisors have authorized the overall Interim Funding Program issuance of up to $500,000, pursuant to the voter -approved 2002 Proposition E. The program is made up of two components: (1) three series totaling $400,000 (aggregate principal amount) that are for the issuance of either tax -exempt or taxable commercial paper and which are each supported by a high- grade bank credit facility in the form of a letter of credit or bank liquidity facility; and (2) one series that is for a $100,000 direct bank loan that can be used to make tax -exempt or taxable draws from a high- grade bank pursuant to a revolving credit agreement. As of June 30, 2024 and 2023, amounts outstanding under Proposition E were $190,000 and $371, 459, respectively. Commercial paper interest rates ranged from 3.9% to 5.5%.
With maturities up to 270 days, the Water Enterprise intends to maintain the program by remarketing the commercial paper upon maturity over the near- to-medium term, at which time outstanding commercial paper will likely be refunded with revenue bonds. This is being done to take advantage of the continued low interest rate environment. If the commercial paper interest rates rise to a level that exceeds these benefits, the Water Enterprise will refinance the commercial paper with the long-term, fixed-rate debt.
As of June 30, 2023, the Water Enterprise had $371,459 in outstanding commercial paper which were repaid by the 2023 Series AB Water Revenue Bonds issued in July 2023. The $371,459 has been reclassed to long-term liabilities on the financial statements.
2023 2023
Cash and investments with City Treasury:
Hetch Hetchy bond construction fund $ 50,732 17,606
Cash and investments outside City Treasury:
2009 Series C Certificates of Participation – 525 Golden Gate 131 231 2009 Series D Certificates of Participation – 525 Golden Gate 1,000 784 2015 Series A Revenue Bonds 2,205 2,261
2015 Series B Revenue Bonds 518 532
2021 Series AB Revenue Bonds 442 5,382
2023 Series A Revenue Bonds 9,730 —
Commercial Paper 25 21
Total restricted cash and investments outside City Treasury 14,051 9,211 Interest receivable:
Hetch Hetchy bond construction fund 169 4,151
Total restricted assets $ 64,952 30,968 2023 Additions Reductions 2024 Water $ 371,459 191,150 ( 372,609) 190,000
Wastewater — 341,373 — 341,373
Hetchy Power 116,352 91,635 (117,333) 90,654
SFPUC Total $ 487,811 624,158 (489,942) 622,027
94 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
The commercial paper notes can be issued in the aggregate principal amounts of up to $500,000 and may be marketed and re- marketed with maturities up to 270 days and are secured by three separate bank letters of credit and one revolving note, as set forth below. The commercial paper notes and the revolving notes are payable from revenues and are secured on a parity lien basis with each other. The commercial paper notes and the revolving notes, collectively, are secured on a basis subordinate to the payment of debt service on outstanding bonds and SRF Loans.
As of June 30, 2024, the commercial paper notes are secured by the following series. Series A -1/A-1-T, has a $100 million letter of credit from Sumitomo Mitsui Banking Corporation, acting through its New York Branch, which expires on May 16, 2025. The agreement for the Series A-1/A-1-T credit facility stipulates a quarterly commitment fee of 0.33%, on the maintenance of ratings of at least “AA -” by S&P and “Aa3” by Moody’s. Series A-2/A-2-T, has a $200 million letter of credit from Sumitomo Mitsui Banking C orporation, acting through its New York Branch, which expires on June 14, 2027. The agreement for the Series A - 2/A-2-T credit facility stipulates a quarterly commitment fee of 0.29%, on the maintenance of ratings of at least “AA- ” by S&P and “Aa3” by Moody ’s. Series A- 3/A-3-T has a $100 million letter of credit from Barclays Bank PLC which expires on July 19, 2024. The agreement for the Series A -3/A-3-T credit facility stipulates a quarterly commitment fee of 0 .29%, on the maintenance of ratings of at least “AA-” by S&P and “Aa3” by Moody’s.
BofA Securities, Inc., J.P. Morgan Securities LLC and Wells Fargo Bank, National Association, serve as dealers for the commercial paper notes. The annual fee paid to the dealer equals 0.05% of the average outstanding principal amount of the Notes managed by the Dealer.
The revolving notes were issued pursuant to a $100 million revolving credit agreement with U.S. Bank National Association which expires on July 18, 2024. The revolving credit agreement stipulates an unutilized quarterly commitment fee of 0.21%, on the maintenance of ratings of at least “AA-” by S&P and “Aa3” by Moody’s. The revolving credit agreement had $0 outstanding as of June 30, 2024.
The commercial paper reimbursement agreement and the commercial paper revolving credit and term loan agreements for the Water Enterprise, contain a provision that in the event advances (or drawings) remain unpaid, such advances (or drawings) will convert into term loans and will be subject to the repayment provisions relating thereto.
In accordance with GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowing and Direct Placements , the Water Enterprise had $310,000 and $128,541 in unused authorization as of June 30, 2024 and 2023, respectively. Significant events of default include 1) payment defaults 2) material breach of warranty, representation, or other non- remedied breach of covenants as specified in the respective agreements (not cured within applicable grace periods) and 3) bankruptc y and insolvency events, which may result in all outstanding obligations to be immediately due and payable (unless waived by the respective Bank, if applicable); or issuance of a No- Issuance Notice, reduction in credit to outstanding amount plus interest coverage, and/or termination of the respective agreement. As of June 30, 2024, there were no such events describe herein.
Wastewater Short-Term Debt
Under the voter approved 2002 Proposition E, the Commission and Board of Supervisors authorized the issuance of up to $750,000 in commercial paper for the purpose of reconstructing, expanding, repairing, or improving the Wastewater Enterprise’s facilities. The program is made up of two components: (1) five series totaling $675,000 (aggregate principal am ount) that are for the issuance of either tax -exempt or taxable commercial paper and which are each supported by a high-grade bank credit facility in the form of a letter of credit or bank liquidity facility; and (2) one series that is for a $75,000 direct bank loan that can be used to make tax -exempt or taxable draws from a high -grade bank pursuant to a revolving credit agreement. The Wastewater Enterprise had $341,373 and $0 in commercial paper outstanding as of June 30, 2024 and 2023, respectively. The $ 341,373 was repaid by the 2024 Series CD Wastewater Revenue Bonds issued in July 2024 and has been reclassed to long-term liabilities on the financial statements as of June 30, 2024.
95 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
The commercial paper notes can be issued in the aggregate principal amounts of up to $750,000 and may be marketed and re- marketed with maturities up to 270 days and are secured by six separate bank credit facilities, as set forth below. The commercial paper notes are payable from revenues and are secured on a parity lien basis with each other, collectively the “Subordinate Obligations”. The Subordinate Obligations are secured on a subordinate basis to the payment of debt service on the Wastewater Revenue Bonds.
As of June 30, 2024, the Commercial Paper Notes are secured by th e following series: Series A -1 secured by a $150,000 letter of credit from Sumitomo Mitsui Bank expires on March 2, 2029. The agreement for the Series A-1 facility stipulates a commitment fee of 0.30%, on the maintenance of ratings of at least “Aa3” by Moo dy’s and “AA-” by S&P. Series A- 2 secured by a $150,000 letter of credit facility stipulates a commitment fee of 0.27%, on the maintenance of ratings of at least “Aa3” by Moody’s and “AA-“ by S&P. Series A- 4 secured by a $75,000 liquidity facility from TD Bank expires on July 3, 2028.
The agreement for the Series A -4 facility stipulates a commitment fee of 0.21% on the maintenance of ratings of at least “Aa2” by Moody’s and “AA ” by S&P. Series A- 6 secured by a $200,000 State Street Bank expires on October 14, 2024. The agreement for the Series A -6 facility stipulates a commitment fee of 0.32%, on the maintenance of ratings of at least “ Aa3” by Moody’s and “AA -” by S&P. Series A- 7 secured by a $100,000 letter of credit from Sumitomo Mitsui Bank expires on May 31, 2027. The agreement for the Series A-7 facility stipulates a commitment fee of 0.30%, on the maintenance of ratings of at least “Aa3” by Moody’s and “AA-” by S&P.
Series R-1 secured by a $75,000 revolving credit agreement with U.S. Bank National Association expires on July 18, 2024. The revolving credit agreement stipulates an unutilized quarterly commitment fee of
0.19%, on the maintenance of ratings of at least “Aa3” by Moody’s and “AA-” by S&P. The revolving credit agreement had $0 outstanding as of June 30, 2024.
Morgan Stanley & Co. LLC, RBC Capital Markets, LLC, and U.S. Bancorp Investments, Inc. serve as dealers for the commercial paper notes. The annual fee is 0.05% paid to Morgan Stanley & Co. LLC, and U.S. Bancorp Investments, Inc. and 0.045% paid to RBC Capital Markets, LLC.
The commercial paper reimbursement agreements and the commercial paper revolving credit and term loan agreements for the Wastewater Enterprise, contain a provision that in the event advances (or drawings) remain unpaid, such advances (or drawings) will convert into term loans and will be subject to the repayment provisions relating thereto.
In accordance with GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements , the Wastewater Enterprise had $408,627 and $750,000 in unused authorization as of June 30, 2024 and 2023, respectively. Significant events of default include 1) payment defaults 2) material breach of warranty, representation, or other non- remedied breach of covenants as specified in the respective agreements (not cured within applicable grace periods), and 3) bankruptcy and insolvency events, which may result in all outstanding obligations to be immediately due and payable (unless waived by the respective Bank, if applicable); or issuance of a No- Issuance Notice, reduction in credit to outstanding amount plus interest coverage, and/or termination of the respective agreement. As of June 30, 2024 and 2023, there were no such events described herein.
Hetchy Water Short-Term Debt
Hetchy Water had no commercial paper outstanding as of June 30, 2024 and 2023.
Hetchy Power Short-Term Debt
Effective March 2019, under Charter Sections 9.107(6) and 9.107(8), and 2018 Proposition A, the Commission and Board of Supervisors authorized the issuance of up to $250,000 in commercial paper notes for the purpose of reconstructing, replacing, expanding, repairing or improving power facilities of Hetchy Power. Interest rates for the commercial paper ranged from 2.8% to 3.7% and 1.1% to 3.2% in fiscal years 2024 and 2023, respectively. Hetchy Power had $90,654 and $116,352 commercial paper outstanding as of June 30, 2024 and 2023, respectively. The Power Enterprise had $159,346 and $133,648 in unused authorization as of June 30, 2024 and 2023, respectively. 96 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
$117,333 was repaid by the 2023 Series A bonds issued on October 12, 2023 and has been reclassed to long-term liabilities on the June 30, 2023 financial statements.
The commercial paper notes can be issued in the aggregate principal amounts of up to $250,000 and may be marketed and re -marketed with maturities up to 270 days and are secured by two separate bank credit faciliti es, as set forth below. The commercial paper notes are payable from revenues and are secured on a parity lien basis with each other and with the outstanding 2011 QECBs and 2015 NCREBs, collectively the “Subordinate Obligations.” The Subordinate Obligations are secured on a subordinate basis to the payment of debt service on the Power Revenue Bonds.
As of June 30, 2024, the Commercial Paper Notes are secured by the following series: Series A -1 is secured by a $125,000 letter of credit from Bank of America N.A. which expires on March 6, 2026. The agreement for the Series A-1 facility stipulates a quarterly commitment fee of 0.31%, on the maintenance of ratings of at least “AA -” by S&P and “AA-” by Fitch Ratings. Series A -2 is secured by a $125,000 letter of credit from Bank of America N.A. which expires on March 6, 2026. The agreement for the Series A -2 credit facility stipulates a quarterly commitment fee of 0.29%, on the maintenance of ratings of at least “AA-” by S&P and “AA-” by Fitch Ratings.
Barclays Capital Inc., Goldman Sachs & Co. LLC, and RBC Capital Markets, LLC serve as dealers for the commercial paper notes. The annual fee is 0.05% paid to Barclays Capital LLC and Goldman Sachs & Co. LLC and 0.045% paid to RBC Capital markets, LLC on the average outstanding principal amount of the commercial paper notes managed by the respective dealer.
The commercial paper reimbursement agreements for the Power Enterprise contain a provision that in the event advances (or drawings) remain unpaid, such advances (or drawings) will convert into term loans and will be subject to the repayment provisions relating thereto.
In accordance with GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowing and Direct Placements , significant events of default include 1) payment defaults, 2) material breach of warranty, representation, or other non -remedied breach of covenants as specified in the respective agreements (not cured within applicable grace periods), and 3) bankruptcy and insolv ency events, which may result in all outstanding obligations to be immediately due and payable (unless waived by the respective Bank, if applicable); or issuance of a No- Issuance Notice, reduction in credit to outstanding amount plus interest coverage, and/or termination of the respective agreement. As of June 30, 2024 and 2023, there were no such events described herein.
CleanPowerSF Short-Term Debt
CleanPowerSF had no commercial paper outstanding as of June 30, 2024 and 2023.
(7) Changes in Long-Term Liabilities
Department-wide Long-Term Liability activities for the years ended June 30, 2024 and 2023 are as follows:
Interes t Maturity Due within
rate (Calendar Year) 2023 Additions Reductions 2024 one year Revenue Bonds:
2010B water revenue bonds (Build America) 4.00 – 6.00 2040 $ 336,390 — (13,245) 323,145 13,725 2010E water revenue bonds (Build America) 4.90 – 6.00 2040 331,455 — (13,165) 318,290 13,610 2010G
water revenue bonds (Build America) 6.95 2050 351,470 — — 351,470 — 2010 wastewater series B (Build America) 4.65 – 5.82 2040 185,235 — (7,505) 177,730 7,745 2013 wastewater series A 1.00 – 5.00 2025 575 — (575) — — 2013 wastewater series B 4.00 – 5.00 2042 93,095 — — 93,095 — 2015A water revenue refunding bonds 2.00 – 5.00 2036 366,375 — (92,240) 274,135 29,485 2016A water revenue refunding bonds 4.00 – 5.00 2039 686,945 — (113,445) 573,500 24,800 2015 hetchy power series A revenue bonds 4.00 - 5.00 2045 32,025 — — 32,025 — 2015 hetchy power series B revenue bonds 3.00 - 4.00 2026 2,885 — (880) 2,005 910 2016B water revenue refunding bonds 1.50 – 5.00 2030 58,980 — (13,175) 45,805 13,720 2016C water revenue bonds 0.87 – 4.19 2046 225,275 — (6,105) 219,170 6,275 2016 wastewater series A 4.00 – 5.00 2046 240,580 — (5,475) 235,105 5,760 2016 wastewater series B 4.00 – 5.00 2046 67,820 — (1,545) 66,275 1,625 97 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
*Ending balance included elimination entries of $405 interfund payables and receivables between Wastewater and Hetchy Power for the 525 Golden Gate Avenue Headquarters Living Machine.
#Fiscal year 2023 beginning balance was updated to include bond, loan, lease, and subscription interest payable. **Water Enterprise and Hetchy Power’s commercial paper was short-term in fiscal year 2024. ^Wastewater Enterprise, as of June 30, 2024, had $341,373 in outstanding commercial paper which were repaid by 2024 Series CD Wastewater Revenue Bonds in July 2024. The $341,373 has been reclassified to long-term liabilities on the financial statements.
Interes t Maturity Due within
rate (Calendar Year) 2023 Additions Reductions 2024 one year Revenue Bonds:
2017A water revenue bonds 5.00 2047 24,675 — (2,445) 22,230 2,570 2017B water revenue bonds 5.00 2047 30,095 — (2,985) 27,110 3,135 2017C water revenue bonds 5.00 2047 14,395 — (1,425) 12,970 1,500 2017D water revenue refunding bonds 2.00 – 5.00 2035 345,340 — (88,045) 257,295 10,230 2017E water revenue refunding bonds 4.00 – 5.00 2031 48,125 — (795) 47,330 835 2017F water revenue refunding bonds 5.00 2031 8,005 — (735) 7,270 770 2017G water revenue refunding bonds 2.03 – 2.91 2024 18,890 — (13,665) 5,225 5,225 2018 wastewater series A 4.00 – 5.00 2043 221,335 — (7,160) 214,175 6,580 2018 wastewater series B 5.00 2043 179,690 — (5,810) 173,880 5,335 2019A water revenue refunding bonds 1.81 – 3.47 2043 587,825 — (194,745) 393,080 2,700 2019B water revenue refunding bonds 3.15 – 3.52 2041 16,315 — (70) 16,245 75 2019C water revenue refunding bonds 3.15 – 3.52 2041 17,775 — (80) 17,695 80 2020A water revenue bonds 4.00 – 5.00 2050 150,895 — — 150,895 — 2020B water revenue bonds 5.00 2050 61,330 — — 61,330 — 2020C water revenue bonds 4.00 2050 85,335 — — 85,335 — 2020D water revenue bonds 3.00 2050 49,200 — — 49,200 — 2020E water revenue refunding bonds 2.83 – 2.95 2047 335,035 — (151,400) 183,635 915 2020F water revenue refunding bonds 0.26 – 3.15 2047 135,455 — (1,430) 134,025 1,440 2020G water revenue refunding bonds 0.26 – 3.10 2043 108,970 — (44,310) 64,660 6,360 2020H water revenue refunding bonds 0.26 – 3.15 2047 64,815 — (685) 64,130 690 2021 wastewater series A 4.00 – 5.00 2051 260,835 — — 260,835 — 2021 wastewater series B 5.00 2051 37,045 — — 37,045 — 2022 wastewater series B 5.00 2034 137,080 — — 137,080 8,325 2021 hetchy power series A revenue bonds 4.00 – 5.00 2051 74,280 — — 74,280 1,385 2021 hetchy power series B revenue bonds 4.00 – 5.00 2051 49,720 — — 49,720 585 2023A water revenue bonds 5.00 – 5.25 2052 — 349,495 — 349,495 — 2023B water revenue bonds 5.00 – 5.25 2052 — 64,540 — 64,540 — 2023C water revenue refunding bonds 4.00 – 5.00 2043 — 486,875 — 486,875 — 2023D water revenue refunding bonds 5.00 2035 — 27,980 — 27,980 — 2023 wastewater series A 5.00 – 5.25 2042 530,565 — — 530,565 — 2023 wastewater series B 4.00 – 5.00 2042 278,155 — — 278,155 — 2023 wastewater series C 4.00 2048 165,660 — — 165,660 — 2023 hetchy power series A revenue bonds 5.00 2053 — 123,905 — 123,905 — Qualified Energy Conservation Bonds 4.74 2027 2,583 — (562) 2,021 569 New Clean Renewable Energy Bonds 2015 4.62 2032 1,491 — (148) 1,343 150 Less issuance discount (115) — 8 (107) —
Add issuance premiums 618,784 143,847 (83,001) 679,630 — Revenue Notes:
2021A wastewater - Biosolids 1.00 2025 218,355 — (218,355) — — 2021B wastewater - SEP Headworks 1.00 2026 129,110 — (129,110) — — Add issuance premiums 2,091 — (2,091) — —
Total revenue bonds & notes payable 7,988,244 1,196,642 (1,216,399) 7,968,487 177,109 2009D COPs (Build America) 6.36 – 6.49 2041 129,550 — (4,575) 124,975 4,765 State Revolving Fund Loans (CWSRF Loans) Water 1.00 – 1.10 2057 163,627 97,477 (1,134) 259,970 — State Revolving Fund Loans (CWSRF Loans) Wastewater 0.80 – 1.80 2056 318,689 1,498 (2,525) 317,662 5,629 Water Infrastructure Finance and Innovation Act Loans (WIFIA) 1.45 2062 122,357 800,074 — 922,431 — Water Commercial Papers** 2.20 – 5.15 2023 371,459 — (371,459) — — Wastewater Commercial Papers^ 3.15 – 3.74 2024 — 341,373 — 341,373 — Hetchy Power Commercial Papers** 2.80 – 3.69 2024 116,352 — (116,352) — — Bond, loan, lease, and subscription interest payable # 35,104 253,501 (214,653) 73,952 68,224 Arbitrage rebate payable 188 9,386 — 9,574 —
Net other postemployment benefits liability 234,816 18,439 (5,353) 247,902 — Net pension liability 198,360 79,038 (11,471) 265,927 — Accrued vacation and sick leave 31,972 21,452 (20,115) 33,309 17,891 Accrued workers’ compensation 21,190 8,016 (5,559) 23,647 4,518 Due to other City departments* 4,048 — (4,048) — —
Lease liability 5,614 — (2,521) 3,093 1,063
Subscription liability 1,423 — (806) 617 307
Damage claims liability 30,859 141,574 (30,514) 141,919 36,468 Liabilities payable from restricted assets — 28,867 — 28,867 25,513 Pollution remediation obligations 9,071 — (1,349) 7,722 — Unearned revenues, refunds, and other 12,716 26,358 (23,798) 15,276 14,696 $ 9,795,639 3,023,695 (2,032,631) 10,786,703 356,183 98 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
*Ending balance included elimination entries of $518 interfund payables and receivables between Wastewater and Hetchy Power for the 525 Golden Gate Avenue Headquarters Living Machine.
Interes t Maturity Due within
rate (Calendar Year) 2022 Additions Reductions 2023 one year Revenue Bonds:
2010B water revenue bonds (Build America) 4.00 – 6.00 2040 $ 349,170 — (12,780) 336,390 13,245 2010B wastewater revenue bonds (Build America) 4.65 – 5.82 2040 192, 515 — (7,280) 185,235 7,505 2010E water revenue bonds (Build America) 4.90 – 6.00 2040 344,200 — (12,745) 331,455 13,165 2010G water revenue bonds (Build America) 6.95 2050 351,470 — — 351,470 — 2013A wastewater revenue bonds 1.00 – 5.00 2025 15,535 — (14,960) 575 575 2013B wastewater revenue bonds 4.00 – 5.00 2042 331,585 — (238,490) 93,095 — 2015A water revenue refunding bonds 2.00 – 5.00 2036 382,420 — (16,045) 366,375 28,070 2015A hetchy power revenue bonds 4.00 – 5.00 2045 32,025 — — 32,025 — 2015B hetchy power revenue bonds 3.00 – 4.00 2026 3,735 — (850) 2,885 880 2016A water revenue refunding bonds 4.00 – 5.00 2039 719,735 — (32,790) 686,945 23,590 2016B water revenue refunding bonds 1.50 – 5.00 2030 71,510 — (12,530) 58,980 13,175 2016C water revenue bonds 0.87 – 4.19 2046 231,230 — (5,955) 225,275 6,105 2016A wastewater revenue bonds 4.00 – 5.00 2046 240,580 — — 240,580 5,475 2016B wastewater revenue bonds 4.00 – 5.00 2046 67,820 — — 67,820 1,545 2017A water revenue bonds 5.00 2047 27,000 — (2,325) 24,675 2,445 2017B water revenue bonds 5.00 2047 32,930 — (2,835) 30,095 2,985 2017C water revenue bonds 5.00 2047 15,750 — (1,355) 14,395 1,425 2017D water revenue refunding bonds 2.00 – 5.00 2035 346,795 — (1,455) 345,340 1,270 2017E water revenue refunding bonds 4.00 – 5.00 2031 48,890 — (765) 48,125 795 2017F water revenue refunding bonds 5.00 2031 8,705 — (700) 8,005 735 2017G water revenue refunding bonds 2.03 – 2.91 2024 31,960 — (13,070) 18,890 13,665 2018A wastewater revenue bonds 4.00 – 5.00 2043 229,050 — (7,715) 221,335 7,160 2018B wastewater revenue bonds 5.00 2043 185,950 — (6,260) 179,690 5,810 2018C wastewater revenue bonds 2.13 2048 179,145 — (179,145) — — 2019A water revenue refunding bonds 1.81 – 3.47 2043 591,320 — (3,495) 587,825 3,565 2019B water revenue refunding bonds 3.15 – 3.52 2041 16,385 — (70) 16,315 70 2019C water revenue refunding bonds 3.15 – 3.52 2041 17,850 — (75) 17,775 80 2020A water revenue bonds 4.00 – 5.00 2050 150,895 — — 150,895 — 2020B water revenue bonds 5.00 2050 61,330 — — 61,330 — 2020C water revenue bonds 4.00 2050 85,335 — — 85,335 — 2020D water revenue bonds 3.00 2050 49,200 — — 49,200 — 2020E water revenue refunding bonds 2.83 – 2.95 2047 335,535 — (500) 335,035 1,530 2020F water revenue refunding bonds 0.26 – 3.15 2047 135,455 — — 135,455 1,430 2020G water revenue refunding bonds 0.26 – 3.10 2043 114,765 — (5,795) 108,970 7,065 2020H water revenue refunding bonds 0.26 – 3.15 2047 64,815 — — 64,815 685 2021A wastewater revenue bonds 4.00 – 5.00 2051 260,835 — — 260,835 — 2021B wastewater revenue bonds 5.00 2051 37,045 — — 37,045 — 2021A hetchy power revenue Bonds 4.00 – 5.00 2051 74,280 — — 74,280 — 2021B hetchy power revenue Bonds 4.00 – 5.00 2051 49,720 — — 49,720 — 2022B wastewater revenue bonds 5.00 2034 — 137,080 — 137,080 — 2023A wastewater revenue bonds 5.00 – 5.25 2042 — 530,565 — 530,565 — 2023B wastewater revenue bonds 4.00 – 5.00 2042 — 278,155 — 278,155 — 2023C wastewater revenue bonds 4.00 2048 — 165,660 — 165,660 — Clean Renewable Energy Bonds 0.00 2022 421 — (421) — — Qualified Energy Conservation Bonds 4.74 2027 3,138 — (555) 2,583 562 New Clean Renewable Energy Bonds 4.62 2032 1,637 — (146) 1,491 148 Less issuance discount (130) — 15 (115) —
Add issuance premiums 497,138 178,474 (56,828) 618,784 — Revenue Notes:
2021A wastewater - Biosolids 1.00 2025 218,355 — — 218,355 — 2021B wastewater - SEP Headworks 1.00 2026 129,110 — — 129,110 — Add issuance premiums 2,891 — ( 800) 2,091 —
Total revenue bonds & notes payable 7,337,030 1,289,934 (638,720) 7,988,244 164,755 2009C Certificates of Participation (COPs) 2.00 – 5.00 2022 4,375 — (4,375) — — 2009C COPs issuance premiums 20 — (20) — —
2009D COPs (Build America) 6.36 – 6.49 2041 129,550 — — 129,550 4,576 State Revolving Fund Loans (CWSRF Loans) Water 1.00 – 1.10 2057 121,761 41,866 — 163,627 — State Revolving Fund Loans (CWSRF Loans) Wastewater 0.80 – 1.80 2051 302,659 18,511 (2,481) 318,689 2,526 Water Infrastructure Finance and Innovation Act Loans (WIFIA) 1.45 2059 — 122,357 — 122,357 — Water Commercial Papers 1.20 – 5.30 2023 — 371,459 — 371,459 — Hetchy Power Commercial Papers 1.05 – 3.15 2023 — 116,352 — 116,352 — Arbitrage rebate payable — 188 — 188 —
Net other postemployment benefits liability 227,147 7,757 (88) 234,816 — Net pension liability — 198,360 — 198,360 —
Accrued vacation and sick leave 30,942 20,145 (19,115) 31,972 16,490 Accrued workers’ compensation 19,997 7,260 (6,067) 21,190 4,040 Due to other City departments* 380 4,048 (380) 4,048 4,048 Lease liability 6,870 2,798 (4,054) 5,614 2,521
Subscription liability 3,132 — (1,709) 1,423 806
Damage claims liability 49,796 17,111 (36,048) 30,859 13,541 Wholesale balancing account water 79,150 — (79,150) — — Pollution remediation obligations 9,331 — (260) 9,071 — Unearned revenues, refunds, and other 20,057 33,434 (40,775) 12,716 12,136 $ 8,342,197 2,251,580 (833,242) 9,760,535 225,439
99 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Water Long-Term Liability activities for the years ended June 30, 2024 and 2023 are as follows:
*Fiscal year 2023 beginning balance was updated to include bond, loan, lease, and subscription interest payable. **Commercial paper recorded as short-term liability in fiscal year 2024.
Interes t Maturity Due within
rate (Calendar Year) 2023 Additions Reductions 2024 one year Revenue Bonds:
2010B revenue bonds (Build America) 4.00 – 6.00 % 2040 $ 336,390 — (13,245) 323,145 13,725 2010E revenue bonds (Build America) 4.90 – 6.00 2040 331,455 — (13,165) 318,290 13,610 2010G revenue bonds (Build America) 6.95 2050 351,470 — — 351,470 — 2015A revenue refunding bonds 2.00 – 5.00 2036 366,375 — (92,240) 274,135 29,485 2016A revenue refunding bonds 4.00 – 5.00 2039 686,945 — (113,445) 573,500 24,800 2016B revenue refunding bonds 1.50 – 5.00 2030 58,980 — (13,175) 45,805 13,720 2016C revenue bonds 0.87 – 4.19 2046 225,275 — (6,105) 219,170 6,275 2017A revenue bonds 5.00 2047 24,675 — (2,445) 22,230 2,570 2017B revenue bonds 5.00 2047 30,095 — (2,985) 27,110 3,135 2017C revenue bonds 5.00 2047 14,395 — (1,425) 12,970 1,500 2017D revenue refunding bonds 2.00 – 5.00 2035 345,340 — (88,045) 257,295 10,230 2017E revenue refunding bonds 4.00 – 5.00 2031 48,125 — (795) 47,330 835 2017F revenue refunding bonds 5.00 2031 8,005 — (735) 7,270 770 2017G revenue refunding bonds 2.03 – 2.91 2024 18,890 — (13,665) 5,225 5,225 2019A revenue refunding bonds 1.81 – 3.47 2043 587,825 — (194,745) 393,080 2,700 2019B revenue refunding bonds 3.15 – 3.52 2041 16,315 — (70) 16,245 75 2019C revenue refunding bonds 3.15 – 3.52 2041 17,775 — (80) 17,695 80 2020A revenue bonds 4.00 – 5.00 2050 150,895 — — 150,895 — 2020B revenue bonds 5.00 2050 61,330 — — 61,330 —
2020C revenue bonds 4.00 2050 85,335 — — 85,335 —
2020D revenue bonds 3.00 2050 49,200 — — 49,200 —
2020E revenue refunding bonds 2.83 – 2.95 2047 335,035 — (151,400) 183,635 915 2020F revenue refunding bonds 0.26 – 3.15 2047 135,455 — (1,430) 134,025 1,440 2020G revenue refunding bonds 0.26 – 3.10 2043 108,970 — (44,310) 64,660 6,360 2020H revenue refunding bonds 0.26 – 3.15 2047 64,815 — (685) 64,130 690 2023A revenue bonds 5.00 – 5.25 2052 — 349,495 — 349,495 — 2023B revenue bonds 5.00 – 5.25 2052 — 64,540 — 64,540 — 2023C revenue refunding bonds 4.00 – 5.00 2043 — 486,875 — 486,875 — 2023D revenue refunding bonds 5.00 2035 — 27,980 — 27,980 — Less issuance discount (115) — 8 (107) —
Add issuance premiums 251,596 136,522 (57,439) 330,679 — Total revenue bonds payable 4,710,846 1,065,412 (811,621) 4,964,637 138,140 2009D COPs (Build America) 6.36 – 6.49 2041 92,499 — (3,267) 89,232 3,402 State Revolving Funds Loan 1.00 – 1.10 2057 163,627 97,477 (1,134) 259,970 — Commercial Papers** 2.20 – 5.15 2023 371,459 — (371,459) — — Bond, loan, lease, and subscription interest payable* 35,104 221,095 (214,653) 41,546 37,924 Net other postemployment benefits liability 148,601 9,700 — 158,301 — Net pension liability 115,343 37,300 — 152,643 —
Accrued vacation and sick leave 13,585 13,724 (13,306) 14,003 7,585 Accrued workers’ compensation 9,735 4,336 (3,069) 11,002 2,188 Arbitrage rebate payable — 869 — 869 —
Lease liability 4,010 — (1,189) 2,821 1,028
Subscription liability 708 — (400) 308 153
Damage claims liability 19,625 18,823 (15,675) 22,773 5,716 Pollution remediation obligations 1,271 — — 1,271 — Total $ 5,686,413 1,468,736 (1,435,773) 5,719,376 196,136 100 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
The payments of principal and interest amounts on various bonds are secured by net revenues of the Water Enterprise.
a) Water Revenue Bonds 2010 Series B
The 2010 Series B Bonds in the par amount of $417,720 were issued as taxable Build America Bonds (BAB) (with Direct Pay Subsidy) to provide $364,757 in new money for WSIP capital projects and pay financing costs. The 2010 Series B bonds were issued as serial and term bonds with coupons ranging from 4.0% to 6.0% and have a final maturity of 2040. The Series B bonds have a true interest cost (net of federal subsidy) of 3.9%. As of June 30, 2024 and 2023, the principal amount outstanding was $323,145 and $336,390, respectively.
b) Water Revenue Bonds 2010 Series E
In July 2010, the 2010 Series E Bonds in the par amount of $344,200 were issued as taxable Build America Bonds (with Direct Pay Subsidy) to provide $300,446 in new money proceeds for WSIP capital projects. The Series E bonds were issued as serial and term bonds with coupons ranging from 4.9% to 6.0% and have a final maturity of 2040. The Series E bonds have a true interest cost (net of federal subsidy) of 3.8%. As of June 30, 2024 and 2023, the principal amount of 2010 Series E bonds outstanding was $318,290 and $331,455, respectively.
Interes t Maturity Due within
rate (Calendar Year) 2022 Additions Reductions 2023 one year Revenue Bonds:
2010B revenue bonds (Build America) 4.00 – 6.00 % 2040 $ 349,170 — (12,780) 336,390 13,245 2010E revenue bonds (Build America) 4.90 – 6.00 2040 344,200 — (12,745) 331,455 13,165 2010G revenue bonds (Build America) 6.95 2050 351,470 — — 351,470 — 2015A revenue refunding bonds 2.00 – 5.00 2036 382,420 — (16,045) 366,375 28,070 2016A revenue refunding bonds 4.00 – 5.00 2039 719,735 — (32,790) 686,945 23,590 2016B revenue refunding bonds 1.50 – 5.00 2030 71,510 — (12,530) 58,980 13,175 2016C revenue bonds 0.87 – 4.19 2046 231,230 — (5,955) 225,275 6,105 2017A revenue bonds 5.00 2047 27,000 — (2,325) 24,675 2,445 2017B revenue bonds 5.00 2047 32,930 — (2,835) 30,095 2,985 2017C revenue bonds 5.00 2047 15,750 — (1,355) 14,395 1,425 2017D revenue refunding bonds 2.00 – 5.00 2035 346,795 — (1,455) 345,340 1,270 2017E revenue refunding bonds 4.00 – 5.00 2031 48,890 — (765) 48,125 795 2017F revenue refunding bonds 5.00 2031 8,705 — (700) 8,005 735 2017G revenue refunding bonds 2.03 – 2.91 2024 31,960 — (13,070) 18,890 13,665 2019A revenue refunding bonds 1.81 – 3.47 2043 591,320 — (3,495) 587,825 3,565 2019B revenue refunding bonds 3.15 – 3.52 2041 16,385 — (70) 16,315 70 2019C revenue refunding bonds 3.15 – 3.52 2041 17,850 — (75) 17,775 80 2020A revenue bonds 4.00 – 5.00 2050 150,895 — — 150,895 — 2020B revenue bonds 5.00 2050 61,330 — — 61,330 —
2020C revenue bonds 4.00 2050 85,335 — — 85,335 —
2020D revenue bonds 3.00 2050 49,200 — — 49,200 —
2020E revenue refunding bonds 2.83 – 2.95 2047 335,535 — (500) 335,035 1,530 2020F revenue refunding bonds 0.26 – 3.15 2047 135,455 — — 135,455 1,430 2020G revenue refunding bonds 0.26 – 3.10 2043 114,765 — (5,795) 108,970 7,065 2020H revenue refunding bonds 0.26 – 3.15 2047 64,815 — — 64,815 685 Less issuance discount (124) — 9 (115) —
Add issuance premiums 276,409 — (24,813) 251,596 —
Total revenue bonds payable 4,860,935 — (150,089) 4,710,846 135,095 2009C Certificates of Participation (COPs) 2.00 – 5.00 2022 3,124 — (3,124) — — 2009C COPs issuance premiums 14 — (14) — —
2009D COPs (Build America) 6.36 – 6.49 2041 92,499 — — 92,499 3,267 State Revolving Funds Loan 1.00 – 1.10 2057 121,761 41,866 — 163,627 — Commercial Papers 1.20 – 5.30 2023 — 371,459 — 371,459 — Net other postemployment benefits liability 144,115 4,486 — 148,601 — Net pension liability — 115,343 — 115,343 —
Accrued vacation and sick leave 13,729 12,427 (12,571) 13,585 7,057 Accrued workers’ compensation 8,973 3,984 (3,222) 9,735 1,914 Lease liability 2,863 2,562 (1,415) 4,010 1,189
Subscription liability 1,556 — (848) 708 400
Damage claims liability 36,069 1,898 (18,342) 19,625 11,125 Wholesale balancing account 79,150 — (79,150) — —
Pollution remediation obligations 1,271 — — 1,271 — Total $ 5,366,059 554,025 (268,775) 5,651,309 160,047 101 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
c) Water Revenue Bonds 2010 Series G
In December 2010, the $351,470 Series G bonds were issued as taxable Build America Bonds (with Direct Pay Subsidy) to provide $288,252 in new money for WSIP capital projects. The Series G bonds were issued as term bonds with a coupon of 7.0% and have a final maturity of 2050. The Series G bonds have a true interest cost (net of federal subsidy) of 4.5%. As of June 30, 2024 and 2023, the principal amount of 2010 Series G bonds outstanding was $351,470.
d) Water Revenue Refunding Bonds 2015 Series A
In April 2015, the Water Enterprise issued tax -exempt revenue bonds, 2015 Series A in the amount of $429,600 for the purpose of refunding all the outstanding 2006 Series A bonds maturing on and after November 1, 2015 and portion of the outstanding 2009 Series A bonds maturing on and after November 1, 2023. The bonds carried “Aa3” and “AA -” ratings from Moody’s and S&P, respectively. The 2015 Series A bonds include serial bonds with interest rates varying from 2.0% to 5.0% and have a final maturity in 2036. The Series A bonds have a true interest cost of 3.3%. Unamortized 2006 Ser ies A bond issuance costs were $1,392, and there were no unamortized bond issuance costs for 2009 Series A bonds at the date of the refunding.
The refunding resulted in the recognition of a deferred accounting loss of $25,365, gross debt service savings of $28,148 over the next 20 two-year terms, and an economic gain of $48,561 or
10.3% of refunded principal.
A portion of the proceeds of the 2023 Series C bonds were used to pay at closing a portion of the 2015 Series A bonds which had been tendered for pur chase on August 10, 2023. The proceeds of the 2023 Series C bonds were sufficient to pay the accrued interest and tender price of maturities of the 2015 Series A bonds starting on November 1, 2028 to November 1, 2033 and November 1, 2036. As of June 30, 2024 and 2023, the principal amount of 2015 Series A bonds outstanding was $274,135 and $366,375, respectively.
e) Water Revenue Refunding Bonds 2016 Series AB
In October 2016, the Water Enterprise issued tax -exempt revenue bonds, 2016 Series AB in the aggregate amount of $893,820. The 2016 Series A bonds were issued for the purpose of refunding a portion of the outstanding 2009 Series A bonds maturing on and after November 1, 2020, a portion of the outstanding 2009 Series B bonds maturing on and after November 1, 2020, and a portion of the outstanding 2010 Series F bonds maturing on and after November 1, 2021.
The 2016 Series B bonds were issued for the purpose of r efunding, on a current basis, all the outstanding 2006 Series B and Series C bonds, and a portion of the outstanding 2010 Series A bonds maturing on and after November 1, 2020, the bonds carried “Aa3” and “AA -” ratings from Moody’s and S&P, respectively. T he 2016 Series AB bonds include serial bonds with interest rates varying from 1.5% to 5.0% and have a final maturity in 2039. The Series AB bonds have a true interest cost of 2.9%. Unamortized bond issuance costs at the date of refunding were $145 for 2006 Series B bonds and $54 for 2006 Series C bonds. The refunding resulted in the recognition of a deferred accounting loss of $106,205, gross debt service savings of $135,966, and an economic gain of $107,152 or 11.5% of refunded principal.
A portion of the proceeds of the 2023 Series C bonds were used to pay at closing a portion of the 2016 Series A bonds which had been tendered for purchase on August 10, 2023. The proceeds of the 2023 Series C bonds were sufficient to pay the accrued interest and tender pr ice of maturities of the 2016 Series A bonds starting on November 1, 2031 to November 1, 2035. As of June 30, 2024 and 2023, the principal amount of 2016 Series AB bonds outstanding was $619,305 and $745,925, respectively.
f) Water Revenue Bonds 2016 Series C
In December 2016, the Water Enterprise issued taxable bonds, 2016 Series C in the amount of $259,350. The bonds were issued as Green Bonds. The purpose of the bonds was to refund all of 102 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
the outstanding taxable commercial paper notes in the approximate amount of $237,000, an d to provide $19,975 of new money for WSIP capital projects. The bonds carried “Aa3” and “AA -” ratings from Moody’s and S&P, respectively. The 2016 Series C bonds include serial bonds with interest rates varying from 0.9% to 4.0% and have a final maturity in 2046, and two term bonds with 4.0% and 4.2% interest rates and final maturities of 2041 and 2046. The Series C bonds have a true interest cost of 3.9%. As of June 30, 2024 and 2023, the principal amount of 2016 Series C bonds outstanding was $219,170 and $225,275, respectively.
g) Water Revenue Bonds 2017 Series ABC
In December 2017, the Water Enterprise issued tax -exempt revenue bonds, 2017 ABC in the aggregate amount of $339,540. The purpose of the 2017 Series ABC Bonds was to refund approximately $120,500 aggregate principal amount of commercial paper notes and to provide $230,500 new money for WSIP capital projects, other various capital projects of the Water Enterprise, and capital projects of Hetch Hetchy Water. The bonds carried “Aa3” and “AA-” ratings from Moody’s and S&P, respectively. The 2017 Series ABC bonds include serial bonds with coupon rates of 5.0% and have final maturity in 2045, and four term bonds with coupons of 5.0% and final maturities from 2045 to 2047.
The $121, 140 2017 Series A bonds were issued as tax -exempt Green Bonds to refund approximately $60,265 of commercial paper notes and to provide $65,500 in new money for WSIP capital projects. The Series A bonds were issued as serial and term bonds with coupons of
5.0% and a final maturity of 2047. The Series A bonds have a true interest cost of 3.8%. A portion of the proceeds of the 2020 Series E refunding bonds were deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreement dated October 1, 2020 to refund and legally defease a portion of the outstanding 2017 Series A bonds. These deposits, together with certain other available monies were held by the escrow agent under the Escrow Agreement and invested in non- callable Federal Securities. The principal and interest on monies held by the escrow agent will be sufficient to redeem the maturities of the 2017 Series A bonds starting on November 1, 2030 and thereafter. The defeased principal amount outstanding for the 2017 Series A Revenue Bonds were $94,140 as June 30, 2024. As of June 30, 2024 and 2023, the principal amount of 2017 Series A bonds outstanding was $22,230 and $24,675, respectively.
The $147,725 2017 Series B bonds were issued as tax-exempt bonds to provide $150,000 in new money for Water Enterprise capital projects (non- WSIP). The Series B bonds were issued as serial and term bonds with coupons of 5.0% and have a final maturity of 2047. The Series B bonds have a true interest cost of 3.8%. A portion of the proceeds of the 2020 Series F refunding bonds were deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreement dated October 1, 2020 to refund and legally defease a portion of the outstanding 2017 Series B bonds. These deposits, together with cert ain other available monies were held by the escrow agent under the Escrow Agreement and invested in non- callable Federal Securities. The principal and interest on monies held by the escrow agent will be sufficient to redeem the maturities of the 2017 Serie s B bonds starting on November 1, 2030 and thereafter. The defeased principal amount outstanding for the 2017 Series B Revenue Bonds were $114,795 as of June 30, 2024. As of June 30, 2024 and 2023, the principal amount of 2017 Series B bonds outstanding was $27,110 and $30,095, respectively.
The $70,675 2017 Series C bonds were issued as tax -exempt bonds to refund approximately $60,266 of commercial paper notes and to provide $15,000 in new money for Hetch Hetchy Water capital projects. The Series C bonds were issued as serial bonds and a term bond with coupons of 5.0% and have a final maturity of 2047. The Series C bonds have a true interest cost of 3.8%. A portion of the proceeds of the 2020 Series H refunding bonds were deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreement dated October 1, 2020 to refund and legally defease a portion of the outstanding 2017 Series C bonds. These deposits, together with certain other available monies were held by the escrow agent under t he Escrow Agreement and invested in non- callable Federal Securities. The principal and interest on monies held by the escrow agent will be sufficient to redeem the maturities of the 2017 Series C bonds starting on November 1, 2030 and thereafter. The defeased principal amount outstanding for the 103 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
2017 Series C Revenue Bonds were $54,925 as of June 30, 2024. As of June 30, 2024 and 2023, the principal amount of 2017 Series C bonds outstanding was $12,970 and $14,395, respectively.
h) Water Revenue Refunding Bonds 2017 Series DEFG
In December 2017, the Water Enterprise issued tax -exempt revenue bonds, 2017 Series DEF, and taxable 2017 Series G refunding bonds in the aggregate amount of $442,180. The 2017 Series D (WSIP, Green) bonds were issued for the purpose of refunding a portion of the outstanding 2011 Series A (WSIP) bonds maturing on and after November 1, 2022, a portion of the outstanding 2012 Series A bonds maturing on and after November 1, 2031. A portion of the proceeds of the 2023 Series C bonds were used to pay at closing a portion of the 2017 Series D bonds which had been tendered for purchase on August 10, 2023. The proceeds of the 2023 Series C bonds were sufficient to pay the accrued interest and tender price of maturities of the 2017 Series D bonds starting on November 1, 2031 to November 1, 2035.
The 2017 Series E bonds were issued for the purpose of refunding a portion of the outstanding 2011 Series C bonds maturing on or after November 1, 2022, a portion of the outstanding 2011 Series D bonds m aturing on and after November 1, 2022, a portion of 2012 Series C1 bonds maturing on or after November 1, 2029.
The 2017 Series F bonds were issued for the purpose of refunding a portion of the outstanding 2011 Series B bonds maturing on or after November 1, 2022.
The taxable 2017 Series G (WSIP, Green) bonds were issued to refund a portion of the outstanding 2011 Series A bonds maturing on and after November 1, 2022.
The bonds carried “Aa3” and “AA-” ratings from Moody’s and S&P, respectively. The 2017 Series DEFG bonds include serial bonds with interest rates varying from 2.0% to 5.0% and have a final maturity in 2035. The Series DEFG bonds have a true interest cost of 2.9%. The refunding resulted in the recognition of a deferred accounting loss of $34,275, gross debt service savings of $68,942, and an economic gain of $51,698 or 10.7% of refunded principal. As of June 30, 2024 and 2023, the principal amount of 2017 Serie s DEFG bonds outstanding was $317,120 and $420,360, respectively.
i) Water Revenue Refunding Bonds 2019 Series ABC
In January 2020, the Water Enterprise issued taxable revenue bonds, 2019 Series ABC refunding bonds in the aggregate amount of $656,955. The 2019 Series A (WSIP, Green) bonds were issued for the purpose of refunding a portion of the outstanding 2010 Series F (WSIP) bonds maturing on and after November 1, 2020, a portion of the outstanding 2011 Series A (WSIP) bonds maturing on and after November 1, 2020, and a portion of the outstanding 2012 Series A (WSIP) bonds maturing on and after November 1, 2035. A portion of the proc eeds of the 2023 Series C refunding bonds were deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreement dated August 1, 2023 to refund and legally defease a portion of the outstanding 2019 Series A bonds. These deposits, together with certain other available monies were held by the escrow agent under the Escrow Agreement and invested in non -callable Federal Securities. The principal and interest on monies held by the escrow agent will be sufficient to redeem portions of the maturities of the 2019 Series A bonds starting on November 1, 2024 to November 1, 2026 and November 1, 2029 to November 1 2033. A portion of the proceeds of the 2023 Series C bonds were used to pay at closing a portion of the 2019 Series A bonds which had been tendered for purchase on August 10, 2023. The proceeds of the 2023 Series C bonds were sufficient to pay the accrued interest and tender price of portions of maturities of the 2019 Series A bonds starting on November 1, 2026 to November 1, 2032, November 1, 2034, November 1, 2039 and November 1, 2043. The defeased principal amount outstanding for 2019 Series A Revenue Bonds were $5,745 as of June 30, 2024.
104 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
The 2019 Series B (Hetch Hetchy Water) bonds were issued for the purpose of refunding a portion of the outstanding 2011 Series B bonds maturing on or after November 1, 2032.
The 2019 Series C (Local) bonds were issued for the purpose of refunding a portion of the outstanding 2011 Series C bonds maturing on or after November 1, 2032.
The bonds carried “Aa2” and “AA-” ratings from Moody’s and S&P, respectively. The 2019 Series ABC bonds include serial bonds with interest rates varying from 1.8% to 3.5% and have a final maturity in 2043. The Series ABC bonds have a true interest cost of 3.3%. The refunding resulted in the recognition of a deferred accounting loss of $17,329, gross debt service savings of $119,827, and an economic gain of $92,556 or 14.0% of refunded principal. As of June 30, 2024 and 2023, the principal amount of 2019 Series ABC bonds outstanding was $427,020 and $621,915, respectively.
j) Water Revenue Bonds 2020 Series ABCD
In September 2020, the Water Enterprise issued tax -exempt revenue bonds, 2020 Series ABCD in the aggregate amount of $346,760. The purpose of the 2020 Series ABCD B onds was to refund approximately $229,770 aggregate principal amount of commercial paper notes and to provide $164,632 new money for various capital projects of the Water Enterprise, and capital projects of Hetch Hetchy Water. The bonds carried “Aa2” and “ AA-” ratings from Moody’s and S&P, respectively. The 2020 Series ABCD bonds include term bonds with coupons of 3.0% to
5.0% and final maturity in 2050.
The $150,895 2020 Series A bonds were issued as tax -exempt Green Bonds to refund approximately $180,000 of commercial paper notes for WSIP capital projects. The Series A bonds were issued as term bonds with coupons of 4.0% and 5.0% and a final maturity of 2050. The 2020 Series A bonds have a true interest cost of 3.3%. As of June 30, 2024 and 2023, the principal amount of 2020 Series A bonds outstanding was $150,895.
The $61,330 Series B bonds were issued as tax -exempt bonds to provide $69,644 in new money for Water Enterprise capital projects (non- WSIP, Regional). The Series B bonds were issued as term bonds with coupons of 5.0% and have a final maturity of 2050. The Series B bonds have a true interest cost of 3.7%. As of June 30, 2024 and 2023, the principal amount of 2020 Series B bonds outstanding was $61,330.
The $85,335 Series C bonds were issued as tax -exempt bonds to provide $94,948 in new money for Water Enterprise capital projects (non-WSIP, Local). The Series C bonds were issued as term bonds with coupons of 4.0% and have a final maturity of 2050. The Series C bonds have a true interest cost of 3.0%. As of June 30, 2024 and 2023, the principal amount of 2020 Series C bonds outstanding was $85,335.
The $49,200 Series D bonds were issued as tax -exempt bonds to refund approximately $49,761 of commercial paper notes for Hetch Hetchy Water capital p rojects. The Series D bonds were issued as term bonds with coupons of 3.0% and a final maturity of 2050. The 2020 Series D bonds have a true interest cost of 2.7%. As of June 30, 2024 and 2023, the principal amount of 2020 Series D bonds outstanding was $49,200.
k) Water Revenue Bonds 2020 Series EFGH
In October 2020, the Water Enterprise issued taxable revenue bonds, 2020 Series EFGH refunding bonds in the aggregate amount of $664,395. The 2020 Series E (WSIP, Green) bonds were issued for the purpose of ref unding a portion of the outstanding 2010 Series D (WSIP) bonds maturing on and after November 1, 2020, a portion of the outstanding 2012 Series A (WSIP) bonds maturing on and after November 1, 2038, and a portion of the outstanding 2017 Series A (WSIP) bonds maturing on and after November 1, 2030. A portion of the proceeds of the 2023 Series C bonds were used to pay at closing a portion of the 2020 Series E bonds which had been tendered for purchase on August 10, 2023. The proceeds of the 2023 Series C bonds were 105 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
sufficient to pay the accrued interest and tender price of the 2020 Series E bonds maturing November 1, 2041.
The 2020 Series F (non -WSIP, Regional) bonds were issued for the purpose of refunding a portion of the outstanding 2017 Series B bonds maturing on or after November 1, 2030.
The 2020 Series G (non- WSIP, Local) bonds were issued for the purpose of refundi ng a portion of the outstanding 2010 Series D bonds maturing on or after November 1, 2020, a portion of the 2011 Series D bonds maturing on or after November 1, 2022, a portion of 2012 Series B bonds maturing on or after November 1, 2031, and a portion of 2012 Series C bonds maturing on or after November 1, 2025. A portion of the proceeds of the 2023 Series D refunding bonds were deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreement dated August 1, 2023 to refund and legally defease a portion of the outstanding 2020 Series G bonds. These deposits, together with certain other available monies were held by the escrow agent under the Escrow Agreement and invested in non- callable Federal Securities. The principal and interest on monies held by the escrow agent will be sufficient to redeem portions of the maturities of the 2020 Series G bonds maturing on November 1, 2024 and November 1, 2025. A portion of the proceeds of the 2023 Series D bonds were used to pay at closing a port ion of the 2020 Series G bonds which had been tendered for purchase on August 10, 2023. The proceeds of the 2023 Series D bonds were sufficient to pay the accrued interest and tender price of portions of maturities of the 2020 Series G bonds starting on No vember 1, 2026 to November 1, 2032 and November 1, 2035. The defeased principal amount outstanding for the 2020 Series G Revenue Bonds was $1,495 as of June 30, 2024.
The 2020 Series H (Hetch Hetchy Water) bonds were issued for the purpose of refunding a portion of the outstanding 2017 Series C bonds maturing on or after November 1, 2030.
The bonds carried “Aa2” and “AA-” ratings from Moody’s and S&P, respectively. The 2020 Series EFGH bonds include serial bonds and term bonds with interest rates varying from 0.3% to 3.1% and have a final maturity in 2047. The Series EFGH bonds have a true interest cost of 2.7%. The refunding resulted in the recognition of a deferred accounting loss of $27,010, gross debt service savings of $117,114, and an economic gain of $75,212 or 12.0% of refunded principal. As of June 30, 2024 and 2023, the principal amount of 2020 Series EFGH bonds outstanding was $446,450 and $644,275, respectively.
l) Water Revenue Bonds 2023 Series AB
In July 2023, t he Water Enterprise issued tax -exempt revenue bonds, 2023 Series AB in the aggregate amount of $414,035. The purpose of the 2023 Series AB Bonds was to refund approximately $373,000 aggregate principal amount of commercial paper notes and to provide approximately $59,341 new money f or various capital projects of the Water Enterprise, and capital projects of Hetch Hetchy Water. The bonds carried “Aa2” and “AA -” ratings from Moody’s and S&P, respectively. The 2023 Series AB bonds include serial and term bonds with coupons of
5.0% to 5.3% and final maturities in 2052.
The $349,495 2023 Series A bonds were issued as tax -exempt bonds to refund approximately $305,625 of commercial paper notes for Water Enterprise capital projects and to provide approximately $59,299 new money for various c apital projects for the Water Enterprise. The Series A bonds were issued as serial and term bonds with coupons of 5.0% to 5.3% and a final maturity of 2052. The Series A bonds have a true interest cost of 4.1%. As of June 30, 2024, the principal amount of 2023 Series A bonds outstanding was $349,495.
The $64,540 Series B bonds were issued as tax -exempt bonds to refund approximately $67,348 of commercial paper notes for Hetch Hetchy Water capital projects and approximately $42 in new money for Hetch Hetchy Water capital projects. The Series B bonds were issued as serial and term bonds with coupons of 5.0% to 5.3% and have a final maturity of 2052. The Series B bonds have a true interest cost of 4.1%. As of June 30, 2024, the principal amount of 2023 Series B bonds outstanding was $64,540.
106 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
m) Water Revenue Refunding Bonds 2023 Series CD
In August 2023, the Water Enterprise issued tax -exempt revenue bonds, 2023 Series CD refunding bonds in the aggregate amount of $514,855. The 2023 Series C (WSIP, Green) bonds were issued for the purpose of paying the purchase price of a portion of the 2015 Series A revenue bonds maturing on or after November 1, 2028, a portion of the 2016 Series A revenue bonds maturing on or after November 1, 2031, a portion of the 2017 Series D revenue bonds maturing on or after November 1, 2031, a portion of the 2019 Series A (WSIP, Green) revenue bonds maturing on or after November 1, 2026, and a portion of the 2020 Series E (WSIP, Green) revenue bonds maturing on November 1, 2041 that were tendered for cash and advance refund portions of 2019 Series A maturing on or after November 1, 2024.
The 2023 Series D (Local Water) bonds were issued for the purpose of paying the purchase price of a portion of the 2020 Series G bonds maturing on or after November 1, 2026 that were tendered for cash and advance refund portions of 2020 Series G bonds maturing on or after November 1, 2024.
The bonds carried “Aa2” and “AA-” ratings from Moody’s and S&P, respectively. The 2023 Series CD bonds include serial bonds with interest rates of 4.0% to 5.0% and have a final maturity in 2043. The Series CD bonds have a true interest cost of 3.2%. The refunding resulted in the recognition of a deferred accounting gain of $33,378, gross debt service savings of approximately $85,376, and an economic gain of $58,518 or 9.5% of refunded principal. As of June 30, 2024, the principal amount of 2023 Series CD bonds outstanding was $514,855.
n) Future Annual Debt Service of Revenue Bonds
The following table presents the future annual debt service relating to the revenue and refunding bonds outstanding as of June 30, 2024. The federal interest subsidy amounts represent 35.0%, excluding sequestration, of the interest for the revenue bond 2010 Series B, E, and G.
* The SFPUC received an IRS notice dated April 17, 2024 that the federal interest subsidies on the 2010 Series B bonds, 2010 Series E bonds, and 2010 Series G bonds are reduced by 5.7%, or a total reduction of $16,228, due to sequestration over the remaining life of the bonds assuming the sequestration rate will remain the same after fiscal year 2024.
As defined in the Indentures, the principal and interest of the Water Enterprise’s revenue and refunding bonds are payable from its revenues, as well as monies deposited in certain funds and accounts pledged thereto (see Note 5).
Interest before Federal interes t Interest net
Principal subsidy subsidy* of subsidy
Fiscal years ending June 30:
2025 $ 138,140 214,379 (20,370) 194,009
2026 149,540 207,947 (19,876) 188,071
2027 154,735 200,835 (19,345) 181,490
2028 159,210 193,311 (18,772) 174,539
2029 174,380 185,123 (18,164) 166,959
2030-2034 989,480 790,528 (79,528) 711,000
2035-2039 1,169,760 530,841 (53,376) 477,465
2040-2044 858,385 286,469 (25,530) 260,939
2045-2049 529,695 147,127 (12,339) 134,788
2050-2053 310,740 21,931 (1,184) 20,747
Total 4,634,065 2,778,491 (268,484) 2,510,007
Less: Current portion (138,140)
Less: Unamortized bond discount (107)
Add: Unamortized bond premiums 330,679
Long-term portion as of June 30, 2024 $ 4,826,497
107 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
o) Clean Water State Revolving Fund (CWSRF) Loan and Grant
In September 2017, the SFPUC entered into an Installment Sale Agreement with the State Water Resources Control Board for a Clean Water State Revolving Fund (CWSRF) Loan and Grant to fund the Water Enterprise’s SF Westside Recycled Water Project. The CWSRF loan is in the amount of $191,094, which includes $15,000 of principal forgiveness, or a grant. It will bear an interest rate of 1.0% for a 30- year term, with loan repayment beginning one year after substantial completion of project construction. The CWSRF loan is secured on a parity lien basis with the Water Enterprise’s outstanding revenue bonds. The principal outstanding as of June 30, 2024 and 2023 was $154,178 and $131,525, respectively. In addition, there was $15,000 of principal forgiveness in fiscal year 2023.
p) Drinking Water State Revolving Fund (DWSRF) Loan
In April 2022, the SFPUC entered into an Installment Sale Agreement with the State Water Resources Control Board for a Drinking Water State Revolving Fund (DWSRF) Loan to fund the Water Enterprise’s Mountain Tunnel Improvement Project. The DWSRF loan is in the amount of $238,219. It will bear an interest rate of 1.1% for a 30-year term, with interest payments beginning annually after the initial loan proceed draw occurs and loan principal repayment beginning one year after substantial completion of project construction. Power Enterprise is responsible for repayment for its share of SRF Loan debt service costs representing up to its allocable share of the cost of the Mountain Tunnel Improvement Project by a Memorandum of Understanding that will be executed with the Water Enterprise. The DWSRF loan is secured on a parity lien basis with the Water Enterprise’s outstanding revenue bonds. The principal outstanding as of June 30, 2024 and 2023 was $105,792 and $32,102, respectively.
Principal Interes t Total
Fiscal years ending June 30:
2025 $ — — —
2026 4,432 1,542 5,974
2027 4,477 1,497 5,974
2028 4,521 1,453 5,974
2029 4,567 1,407 5,974
2030-2034 23,526 6,342 29,868
2035-2039 24,728 5,143 29,871
2040-2044 25,989 3,882 29,871
2045-2049 27,315 2,556 29,871
2050-2054 28,708 1,163 29,871
2055 5,915 60 5,975
Total 154,178 25,045 179,223
Less: Current portion —
Long-term portion as of June 30, 2024 $ 154,178
Principal Interes t Total
Fiscal years ending June 30:
2025 $ — — —
2026 — — —
2027 — — —
2028 — — —
2029 3,041 1,058 4,099
2030-2034 15,669 4,827 20,496
2035-2039 16,468 4,028 20,496
2040-2044 17,308 3,188 20,496
2045-2049 18,191 2,305 20,496
2050-2054 19,119 1,377 20,496
2055-2058 15,996 402 16,398
Total 105,792 17,185 122,977
Less: Current portion —
Long-term portion as of June 30, 2024 $ 105,792
108 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
q) Proposition A
On November 5, 2002, the San Francisco voters passed Proposition A, which provides for the issuance of revenue bonds and/or other forms of indebtedness by the Commission in a principal amount not to exceed $1,628,000 to finance the acquisition and construc tion of improvements to the City’s Water System. As of June 30, 2023, there was no commercial paper outstanding pursuant to this authorization and $1,499,230 of bonds had been issued in fiscal years 2006, 2010, 2012, 2021 against Prop A. The total authoriz ation against Prop A was $1,499,230 as of June 30, 2024.
r) Proposition E
On November 5, 2002, the San Francisco voters passed Proposition E, which authorizes the Board of Supervisors’ approval of the issuance of revenue bonds and/or other forms of indebtedness by the Commission to finance costs for the Commission’s capital programs, including WSIP. As of June 30, 2024, the Board of Supervisors authorized the issuance of $6,157,510 in revenue bonds with $4,317,653 issued against this authorization; in Septem ber 2017 and amended in April 2023, the SFPUC entered into an Installment Sale Agreement with the State Water Resources Control Board for a Clean Water State Revolving Fund (CWSRF) Loan and Grant to fund the Water Enterprise’s SF Westside Recycled Water Pr oject in the amount of $191,094 (which includes a $15,000 grant) and in April 2022, the SFPUC entered in to an Installment Sale Agreement with the State Water Resources Control Board for a Drinking Water State Revolving Fund (DWSRF) Loan to fund the Mountain Tunnel Improvement Project in the amount of $238,219. Additionally, $190,000 and $371,459 in commercial paper were outstanding pursuant to this authorization as of June 30, 2024 and 2023, respectively.
s) Events of Default and Remedies
Significant Events of default as specified in the Water Enterprise Indenture (applicable to Water Revenue Bonds, and SRF Loan) include 1) Non- payment 2) material breach of warranty, representation or indenture covenants (not cured within applicable grace periods) and 3) bankruptcy and insolvency events, which may result in the Trustee (upon written request by the majority of the owners (by aggregate amount of the bond obligations or of a credit provider), declaring the principal and the interest accrued thereon, to be due and payable immediately. As of June 30, 2024 and 2023, there were no such events describe herein.
109 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Wastewater Long-Term Liability activities for the years ended June 30, 2024 and 2023 are as follows:
^As of June 30, 2024, the Wastewater Enterprise had $341,373 in outstanding commercial paper which were repaid by 2024 Series CD Wastewater Revenue Bonds in July 2024. The $341,373 has been reclassified to long-term liabilities on the financial statements.
Interes t Maturity Due within
rate (Calendar Year) 2023 Additions Reductions 2024 one year Revenue bonds:
2010 Series B (Build America) 4.65 – 5.82 % 2040 $ 185,235 — ( 7,505) 177,730 7,745 2013 Series A 1.00 – 5.00 2025 575 — (575) — —
2013 Series B 4.00 – 5.00 2042 93,095 — — 93,095 —
2016 Series A 4.00 – 5.00 2046 240,580 — (5,475) 235,105 5,760 2016 Series B 4.00 – 5.00 2046 67,820 — (1,545) 66,275 1,625 2018 Series A 4.00 – 5.00 2043 221,335 — (7,160) 214,175 6,580 2018 Series B 5.00 2043 179,690 — (5,810) 173,880 5,335 2021 Series A 4.00 – 5.00 2051 260,835 — — 260,835 — 2021 Series B 5.00 2051 37,045 — — 37,045 —
2022 Series B 5.00 2034 137,080 — — 137,080 8,325
2023 Series A 5.00 – 5.25 2042 530,565 — — 530,565 — 2023 Series B 4.00 – 5.00 2042 278,155 — — 278,155 — 2023 Series C 4.00 2048 165,660 — — 165,660 —
For issuance premiums 339,240 — (23,789) 315,451 —
Revenue Notes: —
2021 Series A - Biosolids 1.00 2025 218,355 — (218,355) — — 2021 Series B - SEP Headworks 1.00 2026 129,110 — (129,110) — — For issuance premiums 2,091 — (2,091) — —
Total revenue bonds and notes payable 3,086,466 — (401,415) 2,685,051 35,370 2009 Series D COPs (Build America) 6.36 – 6.49 2041 24,458 — (863) 23,595 900 State Revolving Fund Loans (CWSRF) 0.80 – 1.80 2056 318,689 1,498 (2,525) 317,662 5,629 Water Infrastructure Finance and Innovation Act Loans (WIFIA) 1.45 2062 122,357 800,074 — 922,431 — Commercial Papers^ 3.15 – 3.74 2024 — 341,373 — 341,373 — Bond, loan, lease, and subscription interest payable — 32,406 — 32,406 30,300 Arbitrage rebate payable 188 8,333 — 8,521 —
Net other postemployment benefits liability 49,035 225 — 49,260 — Net pension liability 49,549 17,750 — 67,299 —
Accrued vacation and sick leave 11,662 4,425 (3,998) 12,089 6,583 Accrued workers’ compensation 7,998 2,680 (1,666) 9,012 1,685 Due to other City departments 2,620 — (2,215) 405 114 Lease liability 1,297 — (1,297) — —
Subscription liability 429 — (243) 186 93
Damage claims liability 4,350 112,467 (1,734) 115,083 28,742 Pollution remediation obligations 7,800 — (1,349) 6,451 — Total $ 3,686,898 1,321,231 (417,305) 4,590,824 109,416 Interes t Maturity Due within
rate (Calendar Year) 2022 Additions Reductions 2023 one year Revenue bonds:
2010 Series B (Build America) 4.65 – 5.82 % 2040 $ 192,515 — ( 7,280) 185,235 7,505 2013 Series A 1.00 – 5.00 2025 15,535 — (14,960) 575 575 2013 Series B 4.00 – 5.00 2042 331,585 — (238,490) 93,095 — 2016 Series A 4.00 – 5.00 2046 240,580 — — 240,580 5,475 2016 Series B 4.00 – 5.00 2046 67,820 — — 67,820 1,545 2018 Series A 4.00 – 5.00 2043 229,050 — (7,715) 221,335 7,160 2018 Series B 5.00 2043 185,950 — (6,260) 179,690 5,810 2018 Series C 2.13 2048 179,145 — (179,145) — —
2021 Series A 4.00 – 5.00 2051 260,835 — — 260,835 — 2021 Series B 5.00 2051 37,045 — — 37,045 —
2022 Series B 5.00 2034 — 137,080 — 137,080 —
2023 Series A 5.00 – 5.25 2042 — 530,565 — 530,565 — 2023 Series B 4.00 – 5.00 2042 — 278,155 — 278,155 — 2023 Series C 4.00 2048 — 165,660 — 165,660 —
For issuance premiums 191,193 178,474 (30,427) 339,240 — Revenue Notes:
2021 Series A - Biosolids 1.00 2025 218,355 — — 218,355 — 2021 Series B - SEP Headworks 1.00 2026 129,110 — — 129,110 — For issuance premiums 2,891 — (800) 2,091 —
Total revenue bonds and notes payable 2,281,609 1,289,934 (485,077) 3,086,466 28,070 2009 Series C Certificates of Participation (COPs) 2.00 – 5.00 2022 826 — (826) — — 2009 Series C COPs issuance premiums 4 — (4) — —
2009 Series D COPs (Build America) 6.36 – 6.49 2041 24,458 — — 24,458 864 State Revolving Fund Loans (CWSRF) 0.80 – 1.80 2056 302,659 18,511 (2,481) 318,689 2,526 Water Infrastructure Finance and Innovation Act Loans (WIFIA) 1.45 2059 — 122,357 — 122,357 — Arbitrage rebate payable — 188 — 188 —
Net other postemployment benefits liability 49,123 — (88) 49,035 — Net pension liability — 49,549 — 49,549 —
Accrued vacation and sick leave 10,901 4,729 (3,968) 11,662 6,040 Accrued workers’ compensation 7,546 2,976 (2,524) 7,998 1,509 Due to other City departments 629 2,102 (111) 2,620 2,215 Lease liability 3,638 — (2,341) 1,297 1,297
Subscription liability 944 — (515) 429 243
Damage claims liability 12,045 2,716 (10,411) 4,350 1,650 Pollution remediation obligations 8,060 — (260) 7,800 — Total $ 2,702,442 1,493,062 (508,606) 3,686,898 44,414 110 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
The payments of principal and interest amounts on various bonds are secured by net revenues of the Wastewater Enterprise.
a) Wastewater Revenue Bonds 2010 Series B
During fiscal year 2010, the Wastewater Enterprise issued revenue bonds 2010 Series B (Federally Taxable – Build America Bonds – Direct Payment) in the amount of $192,515 with interest rates ranging from 4.7% to 5.8%. Proceeds from the bonds were used to redeem $53,500 in outstanding commercial paper notes, provide funding for capital proje cts in the amount of $112,429, fund a cash debt service reserve fund, and pay financing costs for the bonds. The bonds were rated “Aa3” and “AA -” by Moody’s and S&P, respectively, at the time of issuance.
Bonds mature through October 1, 2040. The true interest cost is 3.7%. As of June 30, 2024 and 2023, the 2010 Series B bonds’ principal amount outstanding was $177,730 and $185,235, respectively.
b) Wastewater Revenue Bonds 2013 Series A
In January 2013, the Wastewater Enterprise issued tax -exempt revenue bonds 2013 Series A in the amount of $193,400 for the purpose of refunding the remaining portion of the outstanding 2003 Series A bonds maturing on and after October 1, 2013. The bonds carried “Aa3” and “AA -” ratings from Moody’s and S&P, respectively, at the time of issuance. The 2013 Series A refunding bonds include serial bonds with interest rates varying from 1.0% to 5.0% and have a final maturity in October 2025. The Series A bonds had a true interest cost of 1.2% at issuance. The 2013 Series A bonds also refunded the remaining portion of the outstanding state revolving fund loans.
The refunding resulted in the recognition of a deferred accounting loss of $2,986, gross debt service savings of $35,107 over the next 13 years, and an economic gain of $32,783 or 15.4% of the refunded principal.
A portion of the proceeds of the 2022 Series B refunding bonds was deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreements, dated July 1, 2022 to refund and legally defease a portion of the outstanding 2013 Series A bonds. This deposit, together with certain other available monies was held by the escrow agent under the Escrow Agreement and invested in non-callable Federal Securities. As of June 30, 2024 and 2023, the principal amount outstanding of the 2013 Series A bonds was $0 and $575, respectively.
c) Wastewater Revenue Bonds 2013 Series B
In February 2013, the Wastewater Enterprise issued revenue bonds 2013 Series B in the amount of $331,585 with interest rates ranging from 4.0% to 5.0%. Proceeds from the bonds were used for Wastewater capital projects, pay off all outstanding Wastewater commercial paper notes, and pay the costs of issuing the bonds. The bonds were rated “Aa3” and “AA -” by Moody’s and S&P, respectively, at the time of issuance. Bonds mature through October 1, 2042. The true interest cost was 3.6% at issuance.
A portion of the proceeds of the 2022 Series B and 2023 Series B refunding bonds was deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreements, date July 1, 2022 and April 1, 2023, respectively to refund and legally defease a portion of the outstanding 2013 Series B bonds. This deposit, together with certain other available monies was held by the escrow agent under the Escrow Agreement and invested in non- callable Federal Securities. The 2013 Series B bonds were defeased by the 2022 Series B and 2023 Series B bonds for $147,920 and $90,570, respectively. The remaining bonds mature through October 1, 2042. As of June 30, 2024 and 2023, the principal amount outstanding of the 2013 Series B bonds was $93,095.
d) Wastewater Revenue Bonds 2016 Series A
In May 2016, the Wastewater Enterprise issued tax-exempt revenue bonds 2016 Series A (Green Bonds) in the amount of $240,580 with interest rates ranging from 4.0% to 5.0%. Proceeds from 111 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
the bonds were used for Wastewater capital projects, to pay off $53,439 of outstanding commercial paper notes, to fund capitalized interest, and pay the costs of issuing the bonds. The bonds carried ratings of “AA” and “Aa3” from S&P and Moody’s, respectively, at the time of issuance. Bonds mature through October 1, 2046. The bonds have a true interest cost of 3.2%.
As of June 30, 2024 and 2023, the principal amount outstanding of the 2016 Series A bonds was $235,105 and $240,580, respectively.
e) Wastewater Revenue Bonds 2016 Series B
In May 2016, the Wastewater Enterprise issue d tax-exempt revenue bonds 2016 Series B in the amount of $67,820 with interest rates ranging from 4.0% to 5.0%. Proceeds from the bonds were used for Wastewater capital projects, to pay off $20,560 of outstanding commercial paper notes, to fund capitalized interest, and pay the costs of issuing the bonds. The bonds carried ratings of “AA” and “Aa3” from S&P and Moody’s, respectively, at the time of issuance. Bonds mature through October 1, 2046. The bonds have a true interest cost of 3.2%. As of June 30, 2024 and 2023, the principal amount outstanding of the 2016 Series B bonds was $66,275 and $67,820, respectively.
f) Wastewater Revenue Bonds 2018 Series A
In August 2018, the Wastewater Enterprise issued tax -exempt revenue bonds 2018 Series A (SSIP) (Green Bonds) in the amount of $229,050 with interest rates ranging from 4.0% to 5.0%.
Proceeds from the bonds were used for Wastewater capital projects in furtherance of the SFPUC’s Sewer System Improvement Program (“SSIP”), to pay off $25,000 of outstanding commercial paper notes, to fund capitalized interest, and to pay the costs of issuing the bonds.
The bonds carried ratings of “AA” and “Aa3” from S&P and Moody’s, respectively, at the time of issuance. Bonds mature through October 1, 2043. The bonds ha ve a true interest cost of 3.4%.
As of June 30, 2024 and 2023, the principal amount outstanding of the 2018 Series A bonds was $214,175 and $221,335, respectively.
g) Wastewater Revenue Bonds 2018 Series B
In August 2018, the Wastewater Enterprise issued tax -exempt revenue bonds 2018 Series B (Non-SSIP) in the amount of $185,950 with 5.0% interest rate. Proceeds from the bonds were used for Wastewater capital projects, to fund capitalized interest, and pay the costs of issuing the bonds. The bonds carried ratings of “AA” and “Aa3” from S&P and Moody’s, respectively, at the time of issuance. Bonds mature through October 1, 2043. The bonds have a true interest cost of
3.5%. As of June 30, 2024 and 2023, the principal amount outstanding of the 2018 Series B bonds was $173,880 and $179,690, respectively.
h) Wastewater Revenue Bonds 2021 Series AB
In November 2021, the Wastewater Enterprise issued tax -exempt revenue bonds, 2021 Series AB in the aggregate amount of $297,880. The purpose of the 2021 Series AB Bonds was to refund approximately $340,000 aggregate principal amount of commercial paper notes which funded various capital projects of the Wastewater Enterprise. The bonds carried “Aa2” and “AA” ratings from Moody’s and S&P, respectively.
The $260,835 2021 Series A Bonds were issued as tax -exempt Green Bonds to refund approximately $296,000 of commercial paper notes for SSIP capital projects. The Series A bonds were issued as serial bonds with coupons of 4.0% and 5.0% and a final maturity of 2051. The 2021 Series A bonds have a true interest cost of 3.0%. As of June 30, 2024 and 2023, the principal amount of the 2021 Series A bonds outstanding was $260,835.
The $37,045 2021 Series B bonds were issued as tax -exempt bonds to refund approximately $44,000 of commercial paper notes for Wastewater capital projects. The Series B bonds were issued as serial bonds with coupons of 5.0% and have a final maturity of 2051. The Series B 112 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
bonds have a true interest cost of 3.2%. As of June 30, 2024 and 2023, the principal amount of the 2021 Series B bonds outstanding was $37,045.
i) Wastewater Revenue Notes 2021 Series AB
In November 2021, the Wastewater Enterprise issued tax -exempt revenue (Green) notes, 2021 Sub-Series A and Sub- Series B together with an aggregate principal of $347,465 to finance a portion of the design, acquisition and construction of the Biosolids Digester Facility Project and Southeast Water Pollution Control Plant improvements. The SFPUC intends to pay principal of the 2021A Notes and 2021B Notes from the proceeds of one or more draws under WIFIA Loan Agreements for the Biosolids Digester Facility Project and Southeast Treatment Plant Improvements, respectively, or from the proceeds of future obligations.
The $218,355 2021 Series A Not es were issued as tax -exempt Green Notes to fund a portion of the Biosolids Digester Facilities Project. The Series A Notes were issued with 1.0% coupons and a final maturity of 2025. The 2021 Series A Notes have a true interest cost of 0.8%. As of June 30, 2024 and 2023, the principal amount of 2021 Series A Notes outstanding was $0 and $218,355, respectively.
The $129,110 2021 Series B Notes were issued as tax -exempt Green Notes to fund a portion of Southeast Water Pollution Control Plant improvements. T he Series B Notes were issued with
1.0% coupons and a final maturity of 2026. The 2021 Series B Notes have a true interest cost of
0.8%. As of June 30, 2024 and 2023, the principal amount of 2021 Series B Notes outstanding was $0 and $129,110, respectively.
In March 2024, the Wastewater Enterprise deposited a portion of WIFIA disbursements with the trustee, acting as escrow agent under the irrevocable Escrow Agreements, dated March 1, 2024 to refund and legally defease the outstanding 2021 Series A Notes and 2021 Series B Notes. This deposit, together with certain other available monies was held by the escrow agent under the Escrow Agreement and invested in non -callable Federal Securities. The principal and interest on monies held by the escrow agent were sufficient to redeem 2021 Series A Notes and 2021 Series B Notes with maturities October 1, 2025 and October 1, 2026, respectively. The defeased principal amount outstanding for 2021 Series A Notes and 2021 Series B Notes were $218,355 and $129,110, respectively, as of June 30, 2024. The refunding resulted in the recognition of an accounting gain in an aggregate amount of $22,212.
j) Wastewater Revenue Refunding Bonds 2022 Series B
In July 2022, the Wastewater Enterprise issued tax -exempt revenue bonds, 2022 Series B in the aggregate principal amount of $137,080 on a forward delivery basis. The 2022 Series B bonds were issued for the purpose of refunding a portion of the outstanding 2013 Series A bonds maturing on October 1, 2024 and October 1, 2025 and a portion of the outstanding 2013 Series B bonds maturing on October 1, 2024 through October 1, 2034. The 2013 Series A bonds were defeased by 2022 Series B bonds for $1,870 in July 2022. The bonds carried “Aa2” and “AA” ratings from Moody’s and S&P, respectively.
The 2022 Series B bonds include serial bonds, each with an interest rate of 5% and have a final maturity in 2034. The Series B bonds have a true interest cost of 3.2%. The refunding resulted in the recognition of a deferred accounting gain of $6,868, gross debt service savings of $12,446, and an economic gain of $12,012 or 8.0% of refunded bonds. As of June 30, 2024 and 2023, the principal amount of the 2022 Series B bonds outstanding was $137,080.
k) Wastewater Revenue Refunding Bonds 2023 Series ABC
In April 2023, the Wastewater Enterprise issued tax -exempt revenue bonds, 2023 Series ABC in the aggregate principal amount of $974,380. The purpose of the 2023 Series ABC bonds was to refund approximately $557,845 aggregate principal amount of commercial paper notes, finance 113 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
various capital projects of the Wastewater Enterprise, and refund certain outstanding revenue bonds. The bonds carried “Aa2” and “AA” ratings from Moody’s and S&P, respectively.
The $530,565 2023 Series A bonds were issued as tax -exempt Green Bonds to refund approximately $400,900 of commercial paper notes for SSIP capital projects and finance certain capital projects benefitting the Wastewater Enterprise. The Series A bonds were issued as serial bonds with coupons of 5.0% and 5.3% and a final maturity of 2042. The 2023 Series A bonds have a true interest cost of 2.9%. As of June 30, 2024 and 2023, the principal amount of the 2023 Series A bonds outstanding was $530,565.
The $278,155 2023 Series B bonds were issued as tax -exempt bonds to refund a portion of the outstanding 2013 Series B bonds maturing on October 1, 2035 through October 1, 2039, refund approximately $156,900 of commercial paper notes for certain capital projects benefitting the Wastewater Enterprise and finance certain capital projects benefitting the Wastewater Enterprise.
The Series B bonds were issued as serial bonds with coupons of 4.0% and 5.0% and a final maturity of 2042. The Series B bonds have a true interest cost of 3.0%. The refunding resulted in the recognition of a deferred accounting gain of $5,316, gross debt service savings of $10,626, and an economic gain of $7,647 or 8.4% of refunded bonds. As of June 30, 2024 and 2023, the principal amount of the 2023 Series B bonds outstanding was $278,155.
The $165,660 2023 Series C bonds were issued as tax -exempt Green Bonds to refund all of the outstanding 2018 Series C bonds. The Series C bonds were issued as serial bonds with a coupon of 4.0% and a final maturity of 2048. The 2023 Series C bonds have a true interest cost of 3.5%.
The refunding resulted in the recognition of a deferred accounting gain of $963, gross debt service savings of $24,606, and an economic gain of $15,785 or 8.8% of refunded bonds. As of June 30, 2024 and 2023, the principal amount of the 2023 Series C bonds outstanding was $165,660.
l) Future Annual Debt Service of Revenue and Refunding Bonds
The following table presents the future annual debt service relating to the revenue and refunding bonds outstanding as of June 30, 2024. The interest before subsidy amounts includes the interest for 2010 Series B, 2013 Series B, 2016 Series A and B, 2018 Series A and B, 2021 Series A and B bonds, 2022 Series B, and 2023 Series A, B, and C bonds. The federal interest subsidy amounts represent 35.0% of the interest, excluding sequestration, for the 2010 Series B revenue bonds.
*The SFPUC received an IRS notice, dated April 17, 2024, that the federal interest subsidy on the 2010 Series B bonds is reduced by 5.7% through fiscal year 2030, or a total reduction of $1,910, due to sequestration over the remaining life of the bonds assuming the sequestration rate will remain the same after fiscal year 2024.
As defined in the Indenture, the principal and interest of the Wastewater Enterprise’s refunding bonds are payable from its corresponding revenue as well as monies deposited in certain funds and accounts pledged thereto (see Note 5).
Interest before Federal interes t Interest net
Principal subsidy subsidy* of subsidy
Fiscal years ending June 30:
2025 $ 35,370 111,665 (3,235) 108,430
2026 38,460 109,860 (3,105) 106,755
2027 70,295 107,170 (2,968) 104,202
2028 77,225 103,460 (2,822) 100,638
2029 104,875 98,877 (2,668) 96,209
2030-2034 541,195 411,644 (10,719) 400,925
2035-2039 515,035 277,620 (5,557) 272,063
2040-2044 499,950 156,118 (527) 155,591
2045-2049 374,635 61,243 — 61,243
2050-2052 112,560 7,096 — 7,096
Total 2,369,600 1,444,753 (31,601) 1,413,152
Less: Current portion (35,370)
Add: Unamortized bond premiums 315,451
Long-term portion as of June 30, 2024 $ 2,649,681
114 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
m) Lake Merced Green Infrastructure Project - CWSRF Loan
In January 2016, then amended in May 2016, the SFPUC entered into an Installment Sale Agreement with the State Water Resources Control Board for a Clean Water State Revolving Fund (“CWSRF”) Loan to fund the Lake Merced Green Infrastructure Project of the Sewer System Improvement Program. The aggregate amount of the CWSRF loans is $7,435. The loan bears an interest rate of 1.6% which was equal to one-half of the State of California’s most recent 30-year General Obligation Bond true interest cost at the time the agreement was executed. The CWSRF loan will have a 30-year term, with loan repayment beginning one year after substantial completion of each project’s construction; completion was in October 2020. The CWSRF loan is secured on a parity lien basis with the Wastewater Enterprise’s outstanding revenue bonds. The SFPUC has received loan disbursements to date totaling $6,116 and a construction period interest of $166 transferred to principal. As of June 30, 2024 and 2023, the principal amount outstanding of the loan was $5,775 and $5,945, respectively.
n) Southeast Plant (SEP) 521/522 and Disinfection Upgrade Project - CWSRF Loan
In September 2017, then amended in December 2017 and May 2018, the SFPUC entered into an Installment Sale Agreement with the State Water Resources Control Board for a CWSRF Loan to fund the SEP 521/522 and Disinfection Upgrade Project of the Sewer System Improvement Program. The aggregate amount of the CWSRF loans is $40,007. The loan bears an interest rate of 1.8% which was equal to one -half of the State of California’s most recent 30- year General Obligation Bond true interest cost at the time the agreement was executed. The CWSRF loan will have a 30- year term, with loan repayment beginning one year after substantial completion of each project’s construction; substantial completion occurr ed in July 2019. The CWSRF loan is secured on a parity lien basis with the Wastewater Enterprise’s outstanding revenue bonds. The SFPUC has received proceeds from loan disbursements to date totaling $39,741. As of June 30, 2024 and 2023, the principal amou nt outstanding of the loan was $35,350 and $36,409, respectively.
o) North Point Facility Outfall Rehabilitation Project CWSRF Loan
In September 2017, the SFPUC entered into an Installment Sale Agreement with the State Water Resources Control Board for a CWSRF Loan to fund the North Point Facility Outfall Rehabilitation Project of the Sewer System Improvement Program. The aggregate amount of the CWSRF loans is $20,199. The loan bears an interest rate of 1.8% which was equal to one- half of the State of California’s most recent 30- year General Obligation Bond true interest cost at the time the agreement was executed. The CWSRF loan will have a 30 -year term, with loan repayment beginning one year after substantial completion of each project’s construction; sub stantial completion occurred in February 2018. The CWSRF loans is secured on a parity lien basis with the Wastewater Enterprise’s outstanding revenue bonds. The SFPUC has received proceeds from loan disbursements to date totaling $17,706. As of June 30, 2024 and 2023, the principal amount outstanding of the loan was $14,744 and $15,231, respectively.
p) Southeast Plant (SEP) Primary/Secondary Clarifier Upgrade Project - CWSRF Loan
In September 2017, the SFPUC entered into an Installment Sale Agreement with the State Water Resources Control Board for a CWSRF Loan to fund the SEP Primary/Secondary Clarifier Upgrade Project of the Sewer System Improvement Program. The aggregate amount of the CWSRF loans is $34,446. The loan bears an interest rate of 0.8% which was equal to one-half of the State of California’s most recent 30- year General Obligation Bond true interest cost at the time the agreement was executed. The CWSRF loan will have a 30 -year term, with loan repayment beginning one year after s ubstantial completion of each project’s construction; substantial completion occurred in June 2018. The CWSRF loan is secured on a parity lien basis with the Wastewater Enterprise’s outstanding revenue bonds. The SFPUC has received proceeds from loan disbursements to date totaling $29,197. As of June 30, 2024 and 2023, the principal amount outstanding of the loan was $24,445 and $25,254, respectively. 115 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
q) Oceanside Plant (OSP) Digester Gas Utilization Upgrade Project CWSRF Loan
In May 2020, the SFPUC entered i nto an Installment Sale Agreement with the State Water Resources Control Board for a CWSRF Loan to fund the OSP Digester Gas Utilization Upgrade Project of the Sewer System Improvement Program. The CWSRF loan is in the amount of $54,388, which includes $4, 000 of principal forgiveness, or a grant. The loan bears an interest rate of 1.4% which was equal to one -half of the State of California’s most recent 30- year General Obligation Bond true interest cost at the time the agreement was executed. The CWSRF loan will have a 30- year term, with loan repayment beginning one year after substantial completion of each project’s construction. The CWSRF loan is secured on a parity lien basis with the Wastewater Enterprise’s outstanding revenue bonds. The SFPUC has receiv ed proceeds from loan disbursements to date totaling $33,230, which included a loan forgiveness grant of $4,000.
As of June 30, 2024 and 2023, the principal amount outstanding of the loan was $30,067 and $29,230, respectively.
r) Southeast Plant (SEP) Biosolids Digester Facilities Project - CWSRF Loan and Grant
In May 2020, the SFPUC entered into an Installment Sale Agreement with the State Water Resources Control Board for a CWSRF Loan to fund the SEP Biosolids Digester Facilities Project of the Sewer System Improvement Program. The CWSRF loan is in the amount of $132,000, which includes $4,000 of principal forgiveness, or a grant. The loan bears an interest rate of 1.4% which was equal to one- half of the State of California’s most recent 30- year General Obligation Bond true interest cost at the time the agreement was executed. The CWSRF loan will have a 30- year term, with loan repayment beginning one year after substantial completion of each project’s construction; substantial completion is expected i n May 2026. The CWSRF loan is secured on a parity lien basis with the Wastewater Enterprise’s outstanding revenue bonds. The SFPUC has received proceeds from loan disbursements to date totaling $132,000, which includes a $4,000 loan forgiveness grant. As of June 30, 2024 and 2023, the principal amount outstanding of the loan was $128,000.
s) Southeast Plant (SEP) New Headworks (Grit) Replacement Project - CWSRF Loan
In May 2021, the SFPUC entered into an Installment Sale Agreement with the State Water Resources Control Board for a CWSRF Loan to fund the SEP New Headworks (Grit) Replacement Project of the Sewer System Improvement Program. The CWSRF loan is in the amount of $112,036. The loan bears an interest rate of 1.1% which was equal to one -half of the State of California’s most recent 30- year General Obligation Bond true interest cost at the time the agreement was executed. The CWSRF loan will have a 30- year term, with loan repayment beginning one year after substantial completion of each project’s construction; substantial completion is expected in August 2027. The CWSRF loan is secured on a parity lien basis with the Wastewater Enterprise’s outstanding revenue bonds. The SFPUC has received proceeds from loan disbursements to date totaling $64,678 and a receivable for reimbursement of $13,942.
As of June 30, 2024 and 2023, the principal amount outstanding of the loan was $79,281 and $78,620, respectively.
116 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
t) Future Annual Debt Service of State Revolving Fund Loans (CWSRF Loans)
The future annual debt service relating to the SRF Loans to fund the Lake Merced Green Infrastructure Project, the North Point Facility Outfall Rehabilitation Project, the SEP Primary/Secondary Clarifier Upgrade Project, the SEP 521/522 and Disinfection Upgrade Project, the OSP Digester Gas Utilization Upgrade Project, the SEP Biosolids Digester Facilities Project, and the SEP New Headworks (Grit) Replacement Project outstanding as of June 30, 2024 is as follows:
*Interest and Fees included debt administrative fees for the North Point Facility and SEP Clarifier Upgrade SRF loans.
u) Biosolids Digester Facility Project Water Infrastructure Finance Innovation Act Loan Agreement (WIFIA)
In July 2018, the SFPUC entered into a WIFIA Loan Agreement with the United States Environmental Protection Agency (EPA) in the amount of $699,242. The WIFIA Loan was entered into pursuant to the WIFIA statute authorized by Congress in 2014. The WIFIA Loan will fund 49% of the costs of the Wastewater Enterprise’s Biosolids Digester Facility Project plus certain eligible expenses. Payment of the WIFIA Loan will be secured by a senior lien pledge of the Wastewater Enterprise’s net revenues and is on a parity lien basis with the SFPUC’s outstanding Wastewater Revenue Bonds and Clean Water SRF Loans entered into with the California State Water Resources Control Board.
The original 2018 loan bore a fixed interest rate of 3.09% for a 35- year term, with loan repayment expected to begin in fiscal year 2026, after substantial completion of project construction. In June 2020 the SFPUC re -executed the WIFIA Loan Agreement to have a fixed interest rate of 1.45% for a 35-year term. All other terms of WIFIA Loan Agreement are unchanged.
In March of 2023, the SFPUC received disbursement of $122,283 in respect to eligible project costs and a capitalized interest of $74 added to principal. In January of 2024, the SFPUC received a second disbursement of $439,995 in respect to eligible project costs. As of June 30, 2024 and 2023, the principal amount outstanding of the loan including capitalized interest was $567,511 and $122,357, respectively.
v) Southeast Treatment Plant Improvements Project - WIFIA Loan
In June 2020, another WIFIA Loan agreement with the United States Environmental Protection Agency in the amount of $513,862 was executed. The WIFIA Loan was entered into pursuant to the WIFIA statute authorized by Congress in 2014. The WIFIA Loan will fund 49% of the costs of the Wastewater Enterprise’s SEP New Headworks Replacement Project and additional costs of the revised Biosolids Digester Facility Project plus certain eligible expenses. Payment of the WIFIA Loan will be secured by a senior lien pledge of the Wastewater Enterprise’s net revenues and is on a parity lien basis with the SFPUC’s outstanding Wastewater Revenue Bonds and Principal Total
Fiscal years ending June 30:
2025 $ 5,629 2,727 8,356
2026 5,711 2,645 8,356
2027 9,257 4,354 13,611
2028 9,390 4,221 13,611
2029 9,525 4,086 13,611
2030-2034 49,720 18,333 68,053
2035-2039 53,409 14,645 68,054
2040-2044 57,379 10,675 68,054
2045-2049 59,630 6,399 66,029
2050-2054 47,720 2,555 50,275
2055-2056 10,292 217 10,509
Total 317,662 70,857 388,519
Less: Current portion (5,629)
Long-term portion as of June 30, 2024 $ 312,033
Interest
and Fees*
117 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Clean Water SRF Loans entered into with the California State Water Resources Control Board.
The loan will bear a fixed interest rate of 1.45% for a 35- year term, with loan repayment expected to begin in fiscal year 2025, after substantial completion of project construction.
In January of 2024, the SFPUC received disbursement of $352,573 in respect to eligible project costs. As o f June 30, 2024 and 2023, the principal amount outstanding of the loan including capitalized interest was $354,920 and $0, respectively.
w) Master Loan Agreement and Project 1 Loan Agreement - WIFIA Loan
In April 2023, the SFPUC entered into a WIFIA Master Agreement and Project 1 Loan Agreement with the United States Environmental Protection Agency. The WIFIA Master Agreement and Project 1 Loan was entered into pursuant to the WIFIA authorized by Congress in 2014. The SFPUC entered the WIFIA Master Loan Agreement with the EPA in an amount not to exceed $791,337 to provide partial funding for projects in the Wastewater Enterprise Capital Plan. The Master Agreement defines the general terms for funding a series of WIFIA loans, the first of which is the “Project 1 Loan Agreement”. The incurrence of the Project 1 Loan Agreement, in an aggregate initial principal amount not to exceed $369,335, will provide partial funding for six Wastewater Enterprise capital improvement projects. Those projects are Westside Pump Station Reliability Improvements, North Shore Pump Station Wet Weather Improvements, Wawona Area Stormwater Improvement, New Treasure Island Wastewater Treatment Plant, Folsom Area Stormwater Improvement, and Yosemite Creek Daylighting. Proceeds of the loan will fund 49% of project costs plus eligible expenses. The Project 1 Loan is on a parity lien basis with the SFPUC’s outstanding Wastewater Revenue Bonds and Clean Water SRF Loans entered into with the California State Water Resources Control Board. The loan will bear a fixed interest rate of 3.65% for a 32- year term, with loan repayment expected to begin in fiscal year 2033. The EPA has approved $90,785 in project costs as of June 30, 2024. The SFPUC has not yet submitted any requests for disbursement and there was no outstanding loan principal as of June 30, 2024 and 2023.
x) Future Annual Debt Service of WIFIA Loans
The future annual debt service relating to the WIFIA Loan to fund the Biosolids Digester Facility Project and the Southeast Treatment Plant Project outstanding as of June 30, 2024 is as follows:
y) Events of Default and Remedies
Significant events of default as specified in the Wastewater Enterprise Indenture (applicable to Wastewater Revenue Bonds, SRF Loans, and WIFIA Loan include 1) Non- payment 2) material breach of warranty, representation, or indenture covenants (not cured wi thin applicable grace periods), and 3) bankruptcy and insolvency events, which may result in the Trustee (upon written Principal Interes t Total
Fiscal years ending June 30:
2025 $ — — —
2026 — 4,115 4,115
2027 — 8,229 8,229
2028 — 8,229 8,229
2029 — 8,229 8,229
2030-2034 — 54,010 54,010
2035-2039 — 66,876 66,876
2040-2044 26,482 66,693 93,175
2045-2049 176,558 59,576 236,134
2050-2054 302,405 41,821 344,226
2055-2059 346,570 18,414 364,984
2060-2062 70,416 1,291 71,707
Total 922,431 337,483 1,259,914
Less: Current portion —
Long-term portion as of June 30, 2024 $ 922,431
118 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
request by the majority of the owners (by aggregate amount of the bond obligations or of a credit provider), declaring the principal and the interest accrued thereon, to be due and payable immediately. As of June 30, 2024 and 2023, there were no such events described herein.
Hetchy Water Long-Term Liability activities for the years ended June 30, 2024 and 2023 are as follows:
Hetchy Power Long-Term Liability activities for the years ended June 30, 2024 and 2023 are as follows:
*Commercial papers were short-term in fiscal year 2024.
Due within
2023 Additions Reductions 2024 one year
Net other postemployment benefits liability $ 14,907 3,469 (2,107) 16,269 — Net pension liability 14,105 9,809 (4,824) 19,090 —
Accrued vacation and sick leave 2,266 927 (713) 2,480 1,272 Accrued workers’ compensation 1,219 337 (259) 1,297 228 Due to Other City departments — — — — —
Lease liability 138 — (16) 122 16
Subscription liability 139 — (80) 59 30
Damage claims liability 700 96 (528) 268 121
Unearned revenues, refunds, and other 110 10 (14) 106 106 Total $ 33,584 14,648 (8,541) 39,691 1,773
Due within
2022 Additions Re ductions 2023 one year
Net other postemployment benefits liability $ 14,240 667 — 14,907 — Net pension liability — 14,105 — 14,105 —
Accrued vacation and sick leave 2,169 700 (603) 2,266 1,132 Accrued workers’ compensation 1,228 76 (85) 1,219 216 Lease liability 62 105 (29 ) 138 16
Subscription liability 309 — (170) 139 80
Damage claims liability 627 320 (247) 700 300
Unearned revenues, refunds, and other 134 15 (39) 110 110 Total $ 18,769 15,988 (1,173) 33,584 1,854
Interes t Maturity Due within
Rate (Calendar Year) 2023 Additions Reductions 2024 on e year Bonds:
Qualified Energy Conservation Bonds 4.74 % 2027 $ 2,583 — (562) 2,021 569 New Clean Renewable Energy Bonds 2015 4.62 2032 1,491 — (148) 1,343 150 2015 Series A Revenue Bonds 4.00 - 5.00 2045 32,025 — — 32,025 — 2015 Series B Revenue Bonds 3.00 - 4.00 2026 2,885 — (880) 2,005 910 2021 Series A Revenue Bonds 4.00 - 5.00 2051 74,280 — — 74,280 1,385 2021 Series B Revenue Bonds 4.00 - 5.00 2051 49,720 — — 49,720 585 2023 Series A Revenue Bonds 5.00 2053 — 123,905 — 123,905 — Add issuance premiums 27,948 7,325 (1,773) 33,500 —
Total bonds payable 190,932 131,230 (3,363) 318,799 3,599 2009 Series D COPs (Build America) 6.36 – 6.49 2041 12,593 — (445) 12,148 463 Commercial Papers* 2.80 – 3.69 2024 116,352 — (116,352) — — Net other postemployment benefits liability 18,220 4,239 (2,576) 19,883 — Net pension liability 17,239 11,989 (5,896) 23,332 — Accrued vacation and sick leave 3,716 2,123 (1,862) 3,977 2,038 Accrued workers’ compensation 2,238 663 (565) 2,336 417 Arbitrage rebate payable — 184 — 184 —
Due to other City departments 1,946 — (1,946) — —
Lease liability 169 — (19) 150 19
Liabilities payable from restricted assets — 28,867 — 28,867 25,513 Subscription liability 116 — (65) 51 25
Damage claims liability 6,150 9,273 (11,649) 3,774 1,872 Unearned revenues, refunds, and other 6,460 7,465 (6,741) 7,184 6,604 Total $ 376,131 196,033 (151,479) 420,685 40,550
119 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
CleanPowerSF Long-Term Liability activities for the years ended June 30, 2024 and 2023 are as follows:
a) Qualified Energy Conservation Bonds
In December 2011, Hetchy Power issued $8,291 of taxable QECBs. The QECBs were issued to fund certain qualified green components for the SFPUC’s 525 Golden Gate Headquarters project.
The QECBs were non-rated and privately placed with Banc of America Leasing. The net effective interest rate on the QECBs, after the federal tax subsidy, is 1.2% through 2028.
Interes t Maturity Due within
Rate ( Calendar Year) 2022 Additions Reductions 2023 o ne year Bonds:
Clean Renewable Energy Bonds 0.00 % 2022 $ 421 — ( 421) — — Qualified Energy Conservation Bonds 4.74 2027 3,138 — (555) 2,583 562 New Clean Renewable Energy Bonds 2015 4.62 2032 1,637 — (146) 1,491 148 2015 Series A Revenue Bonds 4.00 - 5.00 2045 32,025 — — 32,025 — 2015 Series B Revenue Bonds 3.00 - 4.00 2026 3,735 — (850) 2,885 880 2021 Series A Revenue Bonds 4.00 - 5.00 2051 74,280 — — 74,280 — 2021 Series B Revenue Bonds 4.00 - 5.00 2051 49,720 — — 49,720 — Less issuance discount (6) — 6 — —
Add issuance premiums 29,536 — (1,588) 27,948 —
Total bonds payable 194,486 — (3,554) 190,932 1,590
2009 Series C Certificates of Participation (COPs) 2.00 – 5.00 2022 425 — (425) — — 2009 Series C COPs issuance premiums 2 — (2) — —
2009 Series D COPs (Build America) 6.36 – 6.49 2041 12,593 — — 12,593 445 Commercial Papers 1.05 – 3.15 2023 — 116,352 — 116,352 — Net other postemployment benefits liability 17,405 815 — 18,220 — Net pension liability — 17,239 — 17,239 —
Accrued vacation and sick leave 3,597 1,838 (1,719) 3,716 1,867 Accrued workers’ compensation 2,250 224 (236) 2,238 401 Due to other City departments 380 1,946 (380) 1,946 1,946 Lease liability 75 131 (37) 169 19
Subscription liability 253 — (137) 116 65
Damage claims liability 1,023 10,439 (5,312) 6,150 450 Unearned revenues, refunds, and other 6,727 10,385 (10,652) 6,460 5,880 Total $ 239,216 159,369 (22,454) 376,131 12,663
Due within
2023 Additions Reductions 2024 o ne year
Net other postemployment benefits liability $ 4,053 806 (670) 4,189 — Net pension liability 2,124 2,190 (751) 3,563 —
Accrued vacation and sick leave 743 253 (236) 760 413 Subscription liability 31 — (18) 13 6
Damage claims liability 34 915 (928) 21 17
Unearned revenues, refunds, and other 6,146 18,883 (17,043) 7,986 7,986 Total $ 13,131 23,047 (19,646) 16,532 8,422
Due within
2022 Additions Reductions 2023 o ne year
Net other postemployment benefits liability $ 2,264 1, 789 — 4,053 — Net pension liability — 2,124 — 2,124 —
Accrued vacation and sick leave 546 451 (254) 743 394 Lease liability 232 — (232) — —
Subscription liability 70 — (39) 31 18
Damage claims liability 32 1,738 (1,736) 34 16
Unearned revenues, refunds, and other 13,196 23,034 (30,084) 6,146 6,146 Total $ 16,340 29,136 (32,345) 13,131 6,574
120 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
The future annual debt service relating to the QECBs outstanding as of June 30, 2024 is as follows:
*The SFPUC received an IRS notice dated April 17, 2024 that the federal interest subsidy is reduced by
5.7% or a total reduction of $8 due to sequestration over the remaining life of the bonds assuming the sequestration rate will remain the same after fiscal year 2024.
b) New Clean Renewable Energy Bonds 2015
In October 2015, Hetchy Power issued $4,100 of taxable 2015 NCREBs. The 2015 NCREBs were issued to fund certain qualified clean, renewable energy solar generation facilities at the Marina Middle School and the San Francisco Police Academy. The 2015 NCREBs were non- rated and privately placed with Banc of America Leasing. The net effective interest rate on the 2015 NCREBs, after the federal tax subsidy, is 1.4% through 2033. $1,272 of principal was prepaid in fiscal year 2021.
The future annual debt service relating to the 2015 NCREBs outstanding as of June 30, 2024 is as follows:
*The SFPUC received an IRS notice dated April 17, 2024 that the federal interest subsidy is reduced by 5.7% or a total reduction of $11 due to sequestration over the remaining life of the bonds assuming the sequestration rate will remain the same after fiscal year 2024.
c) Power Revenue Bonds 2015 Series A (Green) and Series B
In May 2015, Hetchy Power issued tax -exempt revenue bonds, 2015 Series A (Green) in the amount of $32,025 with interest rates ranging from 4.0% to 5.0% and 2015 Series B in the amount of $7,530 with interest rates ranging from 3.0% to 4.0%. Proceeds from the bonds were used to finance reconstruction or replacement of existing facilities of the SFPUC’s Hetch Hetchy project, to fund capitalized interest on the 2015 Series AB Bonds, to fund a debt service reserve account for the 2015 Series AB Bonds, and to pay costs of issuance of the 2015 Series AB bonds. The bonds were rated “A+” and “AA -” by S&P and Fitch, respectively. Final maturity for 2015 Series AB are November 1, 2045 and November 1, 2026, respectively. The true interest cost is 3.95%. As of June 30, 2024 and 2023, the outstanding principal amounts were $34,030 and $34,910, respectively.
Interest
before
Federal
interes t
Interes t
net
Fiscal years ending June 30: Principal subsidy subsidy* of subsidy 2025 $ 569 89 (63) 26
2026 576 62 (44) 18
2027 582 35 (24) 11
2028 294 7 (4) 3
Total 2,021 193 (135) 58
Less: Current portion (569)
Long-term portion as of June 30, 2024 $ 1,452
Interes t
before
Federal
interes t
Interes t
net
Fiscal years ending June 30: Principal subsidy subsidy* of subsidy 2025 $ 150 60 (40) 20
2026 152 53 (35) 18
2027 154 47 (31) 16
2028 156 39 (26) 13
2029 159 32 (21) 11
2030-2033 572 53 (35) 18
Total 1,343 284 (188) 96
Less: Current portion (150)
Long-term portion as of June 30, 2024 $ 1,193
121 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
The future annual debt service relating to the 2015 Series AB Bonds outstanding as of June 30, 2024 are as follows:
d) Power Revenue Bonds 2021 Series A (Green) and Series B
In December 2021, Hetchy Power issued tax -exempt revenue bonds, 2021 Series A (Green) in the amount of $74,280 with interest rates ranging from 4.0% to 5.0% and 2021 Series B in the amount of $49,720 with interest rates ranging from 4.0% to 5.0%. Proceeds from the bonds wer e used to refinance a portion of the costs of various capital projects benefiting the Power Enterprise, to fund capitalized interest on the 2021 Series AB Bonds, and to pay costs of issuance. The bonds were rated “AA” and “AA-” by S&P and Fitch, respectively. Final maturity for 2021 Series AB are November 1, 2051. The true interest cost is 2.64%. As of June 30, 202 4 and 2023, the outstanding principal amount was $124,000.
The future annual debt service relating to the 2021 Series AB Bonds outstanding as of June 30, 2024 are as follows:
Fiscal years ending June 30: Principal Interes t Total
2025 $ — 1,593 1,593
2026 — 1,593 1,593
2027 830 1,576 2,406
2028 1,020 1,534 2,554
2029 1,075 1,482 2,557
2030-2034 6,225 6,528 12,753
2035-2039 7,940 4,765 12,705
2040-2044 10,135 2,516 12,651
2045-2046 4,800 243 5,043
Total 32,025 21,830 53,855
Add: Unamortized bond premium 2,794
Long-term portion as of June 30, 2024 $ 34,819
Hetchy Power - Power Revenue Bonds 2015 Series A (Green) Fiscal years ending June 30: Principal Interes t T otal 2025 $ 910 62 972
2026 945 25 970
2027 150 3 153
Total 2,005 90 2,095
Less: Current portion (910)
Add: Unamortized bond premium 28
Long-term portion as of June 30, 2024 $ 1,123
Hetchy Power - Power Revenue Bonds 2015 Series B
Fiscal years ending June 30: Principal Interes t Total
2025 1,385 3,050 4,435
2026 1,455 2,979 4,434
2027 1,530 2,905 4,435
2028 1,605 2,826 4,431
2029 1,690 2,744 4,434
2030-2034 9,730 12,442 22,172
2035-2039 11,940 10,221 22,161
2040-2044 14,590 7,577 22,167
2045-2049 17,825 4,346 22,171
2050-2052 12,530 765 13,295
Total 74,280 49,855 124,135
Less: Current portion (1,385)
Add: Unamortized bond premium 14,095
Long-term portion as of June 30, 2024 $ 86,990
Hetchy Power - Power Revenue Bonds 2021 Series A (Green) 122 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
e) Power Revenue Bonds 2023 Series A
In October 2023, Hetchy Power issued tax -exempt power revenue bonds, 2023 Series A in the amount of $123,905 with coupon interest rates of 5.0%. Proceeds from the bonds were used to finance or refinance Power Enterprise projects through the retirement of commercial paper issued as interim financing for such projects in furtherance of the Power Capital Improvement Program, to fund capitalized interest, and to pay costs of issuance. The bonds were rated “AA” and “AA -” by S&P and Fitch, respectively. Final maturity for 2023 Series A is November 1, 2053. The true interest cost is 4.56%. As of June 30, 2024, the outstanding principal amount was $123,905.
The future annual debt service relating to the 2023 Series A Bonds outstanding as of June 30, 2024 are as follows:
f) Events of Default and Remedies
In accordance with GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements, significant events of default as specified in the Power Enterprise Indenture (applicable to Power Revenue Bonds and energy bonds) and the Equipment Lease/Purchase Agreement include 1) non- payment, 2) material breach of warranty, representation, or indenture covenants (not cured within applicable grace periods) and 3) bankruptcy and insolvency events, which may result in the Trustee (upon written request by the majority of the owners (by aggregate amount of the bond obligations), declare the principal and the interest accrued thereon to be due and payable immediately. As of June 30, 2024 and 2023, there were no such events described herein. See Note 17(a) for information about CleanPowerSF guarantee.
Fiscal years ending June 30: Principal Interes t Total
2025 $ 585 2,030 2,615
2026 620 2,000 2,620
2027 650 1,969 2,619
2028 685 1,935 2,620
2029 715 1,900 2,615
2030-2034 4,130 8,932 13,062
2035-2039 5,220 7,964 13,184
2040-2044 6,465 6,798 13,263
2045-2049 15,985 4,887 20,872
2050-2052 14,665 896 15,561
Total 49,720 39,311 89,031
Less: Current portion (585)
Add: Unamortized bond premium 9,422
Long-term portion as of June 30, 2024 $ 58,557
Hetchy Power - Power Revenue Bonds 2021 Series B
Fiscal years ending June 30: Principal Interes t Total
2025 $ — 6, 195 6,195
2026 — 6,195 6,195
2027 1,075 6,168 7,243
2028 1,445 6,105 7,550
2029 1,820 6,024 7,844
2030-2034 10,915 28,603 39,518
2035-2039 14,640 25,403 40,043
2040-2044 18,760 21,251 40,011
2045-2049 24,090 15,922 40,012
2050-2054 51,160 8,080 59,240
Total 123,905 129,946 253,851
Add: Unamortized bond premium 7,161
Long-term portion as of June 30, 2024 $ 131,066
y
123 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
(8) Certificates of Participation Issued for the 525 Golden Gate Avenue Headquarters Building
Department-wide Business Type Activities
In October 2009, the City issued $167,670 in certificates of participation to fund the headquarters building of the SFPUC at 525 Golden Gate Avenue. The 2009 Series C were issued for $38,120 and 2009 Series D for $129,550 as “Build America Bonds” (BABs) on a taxable basis under the 2009 American Recovery and Reinvestment Act. The 2009 Series C certificates carry interest rates ranging from 2.0% to 5.0% and mature on November 1, 2022. The 2009 Series D certificates carry interest rates ranging from 6.4% to 6.5% and mature on November 1, 2041.
After adjusting for the federal interest subsidy, the true interest cost averages 3.4% and 4.3% for Series C and Series D, respectively.
Under the terms of a memorandum of understanding (MOU) between the City and the SFPUC dated October 1, 2009, the City conveyed the real property to the Trustee, the Bank of New York Mellon Trust Company, N.A., which was replaced by U.S. Bank in March 2014 under a property lease in exchange for the proceeds of the sale of the certificates. The Trustee has leased the property back to the City
for the City’s use under a project lease. The City is obligated under the project lease to pay base rental payments and other payments to the Trustee each year during the 32-year term of the project lease. The Commission makes annual base rental payments to the City for the building equal to annual debt service on the certificates. It is anticipated these lease costs will be offset with reductions in costs associated with current office rental expense.
There are no events of default stated in the memorandum of understanding.
Each of the three enterprises has an ownership interest in the building equal to their projected usage of space as follows: Water (73%), Wastewater (15%), and Hetchy Power (12%). Similarly, each enterprise is responsible for a portion of the annual base rental payment based on their ownership percentages less contributed equity. The percentage share of Base Rental Payments for the enterprises is as follows: Water (71.4%), Wastewater (18.9%), and Hetchy Power (9.7%).
Certificates of Participation 2009 Series C have been fully repaid as of June 30, 2023
The future annual debt service relating to the certificates of participation 2009 Series D outstanding as of June 30, 2024 are as follows:
Water Enterprise
*The SFPUC received an IRS notice dated April 17, 2024 that the federal interest subsidy on the 2009 Series D bonds is reduced by 5.7%, or a total reduction of $1,166, due to sequestration over the remaining life of the bonds assuming the sequestration rate will remain the same after fiscal year 2024.
Principal
Interest
before
subsidy
Federal
interes t
subsidy*
Interest net
of subsidy
Fiscal years ending June 30:
2025 $ 3,402 5,652 (1,865) 3,787
2026 3,545 5,431 (1,792) 3,639
2027 3,695 5,201 (1,716) 3,485
2028 3,852 4,961 (1,637) 3,324
2029 4,013 4,710 (1,555) 3,155
2030-2034 22,762 19,369 (6,393) 12,976
2035-2039 28,071 11,157 (3,682) 7,475
2040-2042 19,892 1,972 (651) 1,321
Total 89,232 58,453 (19,291) 39,162
Less: Current portion (3,402)
Long-term portion as of June 30, 2024 $ 85,830
124 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Wastewater Enterprise
*The SFPUC received an IRS notice dated April 17, 2024, that the federal interest subsidy on the 2009 Series D bonds is reduced by 5.7% through fiscal year 2030, or a total reduction of $308, due to sequestration over the remaining life of the bonds assuming the sequestration rate will remain the same after fiscal year 2024.
Hetchy Power
*The SFPUC received an IRS notice dated April 17, 2024 that the federal interest subsidy is reduced by 5.7% or a total reduction of $159 due to sequestration over the remaining life of the bonds assuming the sequestration rate will remain the same after fiscal year 2024.
(9) Revenue Pledge
Department-wide Business Type Activities - Department-wide revenue pledge for the years ended June 30, 2024 and 2023 are as follows:
*Water Enterprise includes other available funds budgetary balances that are non-GAAP.
Water Revenue Pledge
The Water Enterprise has pledged future revenues to repay various revenue bonds and State Revolving Fund loans. Proceeds from the revenue bonds and State Revolving Fund loans provided financing for various capital construction projects, and to refund previ ously issued bonds. The bonds and State Revolving Fund loans are payable solely from revenues of the Water Enterprise through the fiscal year ending 2058.
Principal
Interest
before
subsidy
Federal
interes t
subsidy*
Interest net
of subsidy
Fiscal years ending June 30:
2025 $ 900 1, 494 (493) 1,001
2026 937 1,436 (474) 962
2027 977 1,375 (454) 921
2028 1,019 1,312 (433) 879
2029 1,061 1,246 (411) 835
2030-2034 6,019 5,121 (1,690) 3,431
2035-2039 7,422 2,950 (974) 1,976
2040-2042 5,260 521 (172) 349
Total 23,595 15,455 (5,101) 10,354
Less: Current portion (900)
Long-term portion as of June 30, 2024$ 22,695
Principal
Interest
before
subsidy
Federal
interes t
subsidy*
Interest net
of subsidy
Fiscal years ending June 30:
2025 $ 463 769 (254) 515
2026 483 739 (244) 495
2027 503 709 (234) 475
2028 524 675 (223) 452
2029 546 641 (212) 429
2029-2033 3,099 2,637 (870) 1,767
2034-2038 3,822 1,519 (501) 1,018
2039-2042 2,708 269 (89) 180
Total 12,148 7,958 (2,627) 5,331
Less: Current portion (463)
Long-term portion as of June 30, 2024 $ 11,685
2024 2023
Bonds issued with revenue pledge $ 7,288,964 7,020,019 N
otes issued with revenue pledge — 347,465
Clean Water State Revolving Fund (CWSRF) loans with
revenue pledge 577,632 492,403
WIFIA loans with revenue pledge 922,431 122,357
Principal and interest remaining due at the end of the year 13,704,350 12,347,101 P
rincipal and interest paid during the year 401,428 409,778 Net revenues for the year ended June 30 577,165 603,734 Funds available for debt service* 1,076,907 1,042,606
125 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
The original amount of revenue bonds and State Revolving Funds loan, total principal and interest remaining, principal and interest paid during fiscal years 2024 and 2023, applicable net revenues and funds available for debt service are as follows:
*Includes other available funds budgetary balances that are non-GAAP.
Wastewater Revenue Pledge
The Wastewater Enterprise has pledged future revenues to repay various revenue bonds, SRF, and WIFIA loans. Proceeds from the revenue bonds, revenue notes, SRF, and WIFIA loans provided financing for various capital construction projects, and to refund previously issued bonds. The bonds, SRF, and WIFIA loans are payable through fiscal years 2052, 2056, and 2062, respectively, and are solely from revenues of the Wastewater Enterprise.
The outstanding amount of revenue bonds issued, revenue notes issued, SRF loans, and WIFIA loans, total principal and interest remaining, principal and interest paid during fiscal years 2024 and 2023, applicable net revenues, and funds available for debt service are as follows:
Hetchy Power Revenue Pledge
Hetchy Power has pledged future power revenues to repay the 2011 QECBs and the 2015 NCREBs. Additionally, Hetchy Power has pledged future power revenues for 2015 Series AB, 2021 Series AB, and 2023 Series A power revenue bonds. Proceeds from the bonds prov ided financing for various capital construction and facility energy efficiency projects. 2015 Series AB, 2021 Series AB, and 2023 Series A power revenue bonds are payable through fiscal years 2046, 2052, and 2054, respectively, and are solely payable from net revenues of Hetchy Power on a senior lien basis to the 2011 QECBs and the 2015 NCREBs.
Outstanding bonds issued with revenue pledge, total principal and interest remaining, principal and interest paid during fiscal years 2024 and 2023, applicable net revenues, and funds available for debt service are as follows:
* Per Indenture, debt service for coverage is calculated using the amount of principal and interest paid during the year for the 2015 Series AB, 2021 Series AB, and 2023 Series A power revenue bonds net of capitalized interest, if any, which have a senior lien on Power Enterprise revenues; principal and interest paid during the year for the 2015 Series AB, 2021 Series AB, and 2023 Series A power revenue bonds was $2,565, net of capitalized interest.
2024 2023
Bonds issued with revenue pledge $ 4,634,065 4,459,365 Clean Water State Revolving Fund (CWSRF) loans with
revenue pledge 259,970 163,627
Principal and interest remaining due at the end of the year 7,714,756 7,193,317 Principal and interest paid during the year 306,369 307,062 Net revenues for the year ended June 30 337,985 372,689 Funds available for debt service* 555,585 566,764
2024 2023
Bonds issued with revenue pledge $ 2,369,600 2,397,670 Notes issued with revenue pledge — 347,465
Clean Water State Revolving Fund (CWSRF) loans with
revenue pledge 317,662 328,776
WIFIA loans with revenue pledge 922,431 122,357
Principal and interest remaining due at the end of the year 5,462,786 4,872,238 Principal and interest paid during the year 91,601 98,811 Net revenues for the year ended June 30 188,709 178,850 Funds available for debt service 354,681 313,443
2024 2023
Bonds issued with revenue pledge $ 285,299 162,984
Principal and interest remaining due at the end of the year 526,808 281,546 Principal and interest paid during the year* 3,458 3,905 Net revenues for the year ended June 30 50,471 52,195 Funds available for debt service 166,641 162,399
126 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
(10) Leases
Department-wide Business Type Activities
Lessee
The SFPUC has entered into long- term leases for land, office space, communication site, data processing, machinery, and other equipment. The terms and conditions for these leases var y, which range between 1-75 years.
A summary of intangible right-to-use lease during the years ended June 30, 2024 and 2023 are as follows:
A summary of changes in the related lease liabilities during the years ended June 30, 2024 and 2023 are as follows:
Variable Lease Payments - Variable lease payments, other than those payments that depend on an index or rate or are fixed in substance, are excluded from the measurement of the lease liability.
Such amounts are recognized as lease expenses in the period in which the obligation for those payments is incurred.
Certain equipment or facility rental leases require SFPUC to make variable lease payments that based on usage, related to the property taxes levied on the lessor, and insurance payments made by the lessor; these amounts are generally determined annually.
Right-to-use assets: 2023 I ncreas es Decreas es Remeas urements 2024 Land $ 605 — (
605) — —
Building/facility 16,292 — (8,839) — 7,453
Total lease assets 16,897 — (9,444) — 7,453
Less accumulated amortization for:
Land (580) (55) 605 — (30)
Building/facility (10,779) (1,191) 7,567 — (4,403)
Total accumulated amortization (11,359) (1,246) 8,172 — (4,433) Total leas e as s ets , net $ 5,538 (1,246) (1,272) — 3,020 Right-to-use assets: 2022 Increas es Decreas es Remeas urements 2023 Land $ 605 — — — 605
B
uilding/facility 14,356 149 (862) 2,649 16,292
Total lease assets 14,961 149 (862) 2,649 16,897
Less accumulated amortization for:
Land (383) (197) — — (580)
Building/facility (7,805) (3,836) 862 — (10,779)
Total accumulated amortization (8,188) (4,033) 862 — (11,359) Total leas e as s ets , net $ 6,773 (3,884) — 2,649 5,538 Due within
2023 Additions Remeas urements Deductions 2024 o ne year Water $ 4,010 — — (1,189) 2,821 1,028
Wastewater 1,297 — — (1,297) — —
Hetchy Water 138 — — (16) 122 16
Hetchy Power 169 — — (19) 150 19
CleanPowerSF — — — — — —
SFPUC Total $ 5,614 — — (2,521) 3,093 1,063 Due within
2022 Additions Remeas urements Deductions 2023 one year Water $ 2,863 149 2,413 (1,415) 4,010 1,189 Wastewater 3,638 — — (2,341) 1,297 1,297 Hetchy Water 62 — 105 (29) 138 16 Hetchy Power 75 — 131 (37) 169 19 CleanPowerSF 232 — — (232) — —
SFPUC Total $ 6,870 149 2,649 (4,054) 5,614 2,521 127 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
The amounts recognized as expense for variable lease payments not included in the measurement of the lease liability for SFPUC during the year ended June 30, 2024 and 2023 were as follows:
Lessor
The SFPUC has leased facilities, easements, communication site and equipment to various tenants. The terms and conditions for these leases vary, which range between 1-65 years.
The SFPUC variable payments include percentage of sales, utility payments or payments depended on an index made by the lessee; these amounts are generally determined periodically.
The SFPUC did not incur revenue related to residual value guarantees or lease terminat ion penalties. The total amounts for Water Enterprise’s lease revenue, interest revenue, and other lease-related revenues recognized during the year ended June 30, 2024 and 2023 were $1,742 and $1,161, respectively. The total amounts for Wastewater Enterprise’s lease revenue, interest revenue, and other lease-related revenues recognized during the years ended June 30, 2024 and 2023 were $37 and $7, respectively.
Principal and interest requirements to maturity for the lease receivable on June 30, 2024 and 2023 are as follows:
Water Enterprise as Lessee
A summary of intangible right -to-use leases during the years ended June 30, 2024 and 2023 are as follows:
A summary of changes in the related leases liabilities during the years ended June 30, 2024 and 2023 is as follows:
Water Was tewater
Hetchy
Water
Hetchy
Power CleanPowerSF
SFPUC
Total
2024 $ 79 4 — — — 83
2023 263 673 — — 160 1,
096
Water Wastewater
SFPUC
Total
2024 $ 1,742 37 1,779
2023 1,161 7 1,168
Right-to-use assets: 2023 Increas es Decreas es Remeas urements 2024 Land $ 605 — (605) — —
Building/facility 7,603 — (592) — 7,011
Total lease assets 8,208 — (1,197) — 7,011
Less accumulated amortization for:
Land (580) (55) 605 — (30)
Building/facility (3,685) (1,154) 592 — (4,247)
Total accumulated amortization (4,265) (1,209) 1,197 — (4,277) Total leas e as s ets , net $ 3,943 (1,209) — — 2,734 Right-to-use assets: 2022 Increas es Decreas es Remeas urements 2023 Land $ 605 — — — 605
Building/facility 5,041 149 — 2,413 7,603
Total lease assets 5,646 149 — 2,413 8,208
Less accumulated amortization for:
Land (383) (197) — — (580)
Building/facility (2,451) (1,234) — — (3,685)
Total accumulated amortization (2,834) (1,431) — — (4,265) Total leas e as s ets , net $ 2,812 (1,282) — 2,413 3,943 Beginning End of Due within
Fis cal years of year Additions Remeas urements Deductions year one year 2024 $ 4,010 — — (1,189) 2,821 1,028
2023 2,863 149 2,413 (1,415) 4,010 1,189
128 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Future annual lease payments as of June 30, 2024 and 2023 are as follows:
Water Enterprise as Lessor
Principal and interest requirements to maturity for the lease receivable as of June 30, 2024 and 2023 are as follows:
FY 2024
Fiscal years ending June 30: Principal Interes t Total
2025 $ 1,028 55 1,083
2026 546 32 578
2027 135 26 161
2028 122 23 145
2029 85 21 106
2030-2034 418 77 495
2035-2039 436 29 465
2040-2044 51 1 52
Total 2,821 264 3,085
Less: Current portion (1,028)
Long-term portion as of June 30, 2024 $ 1,793
FY 2023
Fiscal years ending June 30: Principal Interes t Total
2024 $ 1,189 81 1,270
2025 1,028 55 1,083
2026 546 32 578
2027 135 26 161
2028 122 23 145
2029-2033 416 86 502
2034-2038 445 39 484
2039-2043 129 3 132
Total 4,010 345 4,355
Less: Current portion (1,189)
Long-term portion as of June 30, 2023 $ 2,821
FY 2024
Fiscal years ending June 30: Principal Interes t Total
2025 $ 3,246 807 4,053
2026 2,676 748 3,424
2027 2,409 695 3,104
2028 2,423 645 3,068
2029 2,215 595 2,810
2030-2034 10,897 2,348 13,245
2035-2039 8,246 1,280 9,526
2040-2044 363 921 1,284
2045-2049 — 1,056 1,056
2050-2054 — 1,224 1,224
2055-2059 240 1,179 1,419
2060-2064 898 748 1,646
2065-2069 1,291 617 1,908
2070-2074 1,778 433 2,211
2075+ 2,381 181 2,562
Total $ 39,063 13, 477 52,540
129 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Wastewater Enterprise as Lessee
A summary of intangible right-to-use leases during the years ended June 30, 2024 and 2023 are as follows:
A summary of changes in the related leases liabilities during the years ended June 30, 2024 and 2023 are as follows:
Future annual lease payments as of June 30, 2024 and 2023 are as follows:
FY 2023
Fiscal years ending June 30: Principal Interes t Total
2024 $ 3,521 869 4,390
2025 3,610 821 4,431
2026 3,046 756 3,802
2027 2,721 698 3,419
2028 2,423 645 3,068
2029-2033 10,951 2,571 13,522
2034-2038 9,941 1,477 11,418
2039-2043 828 914 1,742
2044-2048 — 1,027 1,027
2049-2053 — 1,191 1,191
2054-2058 117 1,263 1,380
2059-2063 832 768 1,600
2064-2068 1,208 647 1,855
2069-2073 1,676 475 2,151
2074+ 2,756 250 3,006
Total $ 43,630 14,372 58,002
Right-to-use assets: 2023 Increas es Decreas es Remeas urements 2024 Building/facility $ 8,247 — ( 8,247) — —
Total lease assets 8,247 — (8,247) — —
Less accumulated amortization for:
Building/facility (6,975) — 6,975 — —
Total accumulated amortization (6,975) — 6,975 — —
Total leas e as s ets , net $ 1,272 — (1,272) — —
Right-to-use assets: 2022 Increas es Decreas es Remeas urements 2023 Building/facility $ 8,247 — — — 8, 247
Total lease assets 8,247 — — — 8,247
Less accumulated amortization for:
Building/facility (4,650) (2,325) — — (6,975)
Total accumulated amortization (4,650) (2,325) — — (6,975) Total leas e as s ets , net $ 3,597 (2,325) — — 1,272 Beginning End of Due within
Fis cal years of year Additions Remeas urements Deductions year one year 2024 $ 1,297 — — (1,297) — —
2023 3,
638 — — (2,341) 1,297 1,297
FY 2024
Fiscal year ending June 30: Principal Interes t Total
2024 $ 1, 297 6 1,303
Less: Current portion (1,297) 6 1,303
Long-term portion as of June 30, 2024 $ —
FY 2023
Fiscal years ending June 30: Principal Interes t Total
2023 $ — — —
2024 1,297 6 1,303
Total 1,297 6 1,303
Less: Current portion —
Long-term portion as of June 30, 2023 $ 1,297
130 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Wastewater Enterprise as Lessor
Variable payments include percentage of sales, or payments depended on an index made by the lessee; these amounts are generally determined periodically. The Wastewater Enterprise did not incur revenue related to residual value guarantees or lease termination penalties. The total amounts for lease revenue, interest revenue, and other lease -related revenues recognized during the years ended June 30, 2024 and 2023 were $37 and $7, respectively.
Principal and interest requirements to maturity for the lease receivable as of June 30, 2024 are as follows:
Hetchy Water as Lessee
A summary of intangible right-to-use leases during the years ended June 30, 2024 and 2023 are as follows:
A summary of changes in the related leases liabilities during the years ended June 30, 2024 and 2023 are as follows:
FY 2024
Fiscal years ending June 30: P rincipal Interes t Total 2025 $ 226 32 258
2026 241 26 267
2027 257 19 276
2028 215 12 227
2029 105 7 112
2030-2033 201 6 207
Total $ 1,245 102 1,347
FY 2023
Fiscal years ending June 30: Principal Interes t Total
2024 $ 212 38 250
2025 226 32 258
2026 241 26 267
2027 257 19 276
2028 215 12 227
2029-2031 306 13 319
Total $ 1,457 140 1,597
Right-to-use assets: 2023 I ncreas es Decreas es Remeas urements 2024 B
uilding/facility $ 198 — — — 198
Total lease assets 198 — — — 198
Less accumulated amortization for:
Building/facility (53) (16) — — (69)
Total accumulated amortization (53) (16) — — (69)
Total leas e as s ets , net $ 145 (16) — — 129
Right-to-use assets: 2022 Increas es Decreas es Remeas urements 2023 B
uilding/facility $ 67 — 26 105 198
Total lease assets 67 — 26 105 198
Less accumulated amortization for:
Building/facility (6) (21) (26) — (53)
Total accumulated amortization (6) (21) (26) — (53)
Total leas e as s ets , net $ 61 (21) — 105 145
Beginning End of Due within
Fis cal years of year Additions Remeas urements Deductions year one year 2024 $ 138 — — (16) 122 16
2023 62 — 105 (29) 138 16
131 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Future annual lease payments as of June 30, 2024 and 2023 are as follows:
Hetchy Power as Lessee
A summary of intangible right-to-use leases during the years ended June 30, 2024 and 2023 are as follows:
A summary of changes in the related leases liabilities during the years ended 2024 and 2023 are as follows:
FY 2024
Fiscal years ending June 30: Principal Interes t Total
2025 $ 16 2 18
2026 16 2 18
2027 16 2 18
2028 17 1 18
2029 17 1 18
2030-2034 17 4 21
2035-2039 19 1 20
2040-2042 4 — 4
Total 122 13 135
Less: Current portion (16)
Long-term portion as of June 30, 2024 $ 106
FY 2023
Fiscal years ending June 30: Principal Interes t Total
2024 $ 16 2 18
2025 16 2 18
2026 16 2 18
2027 16 2 18
2028 17 1 18
2029-2033 30 4 34
2034-2038 19 2 21
2039-2042 8 — 8
Total 138 15 153
Less: Current portion (16)
Long-term portion as of June 30, 2023 $ 122
Right-to-use assets: 2023 Increas es Decreas es Remeas urements 2024 Building/facility $ 244 — — — 244
Total lease assets 244 — — — 244
Less accumulated amortization for:
Building/facility (66) (21) — — (87)
Total accumulated amortization (66) (21) — — (87)
Total leas e as s ets , net $ 178 (21) — — 157
Right-to-use assets: 2022 Increas es Decreas es Remeas urements 2023 Building/facility $ 81 — 32 131 244
Total lease assets 81 — 32 131 244
Less accumulated amortization for:
Building/facility (8) (26) (32) — (66)
Total accumulated amortization (8) (26) (32) — (66)
Total leas e as s ets , net $ 73 (26) — 131 178
Beginning End of D ue within
Fis cal years of year Additions Remeasurements Deductions year one year 2024 $ 169 — — (19) 150 19
2023 75 — 131 (37) 169 19
132 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Future annual lease payments as of the years ended June 30, 2024 and 2023 are as follows:
CleanPowerSF as Lessee
CleanPowerSF had no intangible right-to-use leases as of June 30, 2024. A summary of intangible right-to-use leases during the year ended June 30, 2023 is as follows:
A summary of changes in the related leases liabilities during the year ended June 30, 2023 is as follows:
Future annual lease payments for the years ended June 30, 2024 and 2023 is $0.
(11) Subscription-Based Information Technology Arrangements (SBITAs)
Department-wide Business T ype Activities
The SFPUC has noncancellable subscription arrangements (similar to a lease) for the right to use various information technology hardware and software (SBITAs). The terms and conditions for these subscriptions varies, which ranges between 1 – 5 years.
FY 2024
Fiscal years ending June 30: Principal Interes t Total
2025 $ 19 3 22
2026 20 2 22
2027 20 2 22
2028 20 2 22
2029 21 1 22
2030-2034 21 4 25
2035-2039 24 2 26
2040-2042 5 — 5
Total 150 16 166
Less: Current portion (19)
Long-term portion as of June 30, 2024 $ 131
FY 2023
Fiscal years ending June 30: Principal Interes t Total
2024 $ 19 3 22
2025 19 3 22
2026 20 2 22
2027 20 2 22
2028 20 2 22
2029-2033 38 5 43
2034-2038 23 2 25
2039-2042 10 — 10
Total 169 19 188
Less: Current portion (19)
Long-term portion as of June 30, 2023 $ 150
Right-to-use assets: 2022 Increas es Decreas es Remeas urements 2023 Building/facility $ 920 — (920) — —
Total lease assets 920 — (920) — —
Less accumulated amortization for:
Building/facility (690) (230) 920 — —
Total accumulated amortization (690) (230) 920 — —
Total leas e as s ets , net $ 230 (230) — — —
Beginning End of Due within
Fis cal year of year Additions Remeasurements Deductions year one year 2023 $ 232 —
— (232) — —
133 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
A summary of intangible right-to-use subscription IT assets during the years ended June 30, 2024 and 2023 are as follows:
A summary of changes in the related subscription liabilities during the years ended June 30, 2024 and 2023 are as follows:
Water
A summary of intangible right-to-use subscription IT assets during the years ended June 30, 2024 and 2023 are as follows:
A summary of changes in the related subscription liabilities during the years ended June 30, 2024 and 2023 are as follows:
2023 Increas es Decreas es Remeas urements 2024
Subscription assets $ 4,935 — (3,206) — 1,729
Less accumulated amortization (3,537) (540) 2,972 — (1,105) Total Subscription assets, net $ 1,398 (540) (234) — 624 2022 Increas es Decreas es Remeas urements 2023
Subscription assets $ 4,935 — — — 4,935
Less accumulated amortization (1,760) (1,777) — — (3,537) Total Subscription assets, net $ 3,175 (1,777) — — 1,398 Due within
2023 Additions Remeas urements Deductions 2024 one year Water $ 708 — — ( 400) 308 153 Wastewater 429 — — (243) 186 93 Hetchy Water 139 — — (80) 59 30 Hetchy Power 116 — — (65) 51 25 CleanPowerSF 31 — — (18) 13 6 SFPUC Total $ 1,423 — — (806) 617 307 Due within
2022 Additions Remeas urements Deductions 2023 one year Water $ 1,556 — — (848) 708 400 Wastewater 944 — — (515) 429 243 Hetchy Water 309 — — (170) 139 80 Hetchy Power 253 — — (137) 116 65 CleanPowerSF 70 — — (39) 31 18 SFPUC Total $ 3,132 — — (1,709) 1,423 806
2023 Increas es Decreas es Remeas urements 2024
Subscription assets $ 2,450 — (1,590) — 860
Less accumulated amortization (1,755) (384) 1,590 — (549) Total Subscription assets, net $ 695 (384) — — 311
2022 Increas es Decreas es Remeas urements 2023
Subscription assets $ 2,450 — — — 2,450
Less accumulated amortization (873) (882) — — (1,755) Total Subscription assets, net $ 1,577 (882) — — 695 Beginning End of Due within
Fis cal years of year Additions Remeas urements Deductions y ear one year 2024 $ 708 — — (400) 308 153
2023 1,556 — — (848) 708 400
134 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Future annual subscription payments as of June 30, 2024 and 2023 are as follows:
Wastewater
A summary of intangible right-to-use subscription IT assets during the years ended June 30, 2024 and 2023 are as follows:
A summary of changes in the related subscription liabilities during the years ended June 30, 2024 and 2023 are as follows:
Future annual subscription payments as of June 30, 2024 and 2023 are as follows:
FY 2024
Fiscal years ending June 30: P rincipal Interes t Total 2025 $ 153 4 157
2026 155 2 157
Total 308 6 314
Less: Current portion (153)
Long-term portion as of June 30, 2024 $ 155
FY 2023
Fiscal years ending June 30: Principal Interes t Total
2024 $ 400 8 408
2025 153 4 157
2026 155 2 157
Total 708 14 722
Less: Current portion (400)
Long-term portion as of June 30, 2023 $ 308
2023 Increas es Decreas es Remeas urements 2024
Subscription assets $ 1,487 — (965) — 522
Less accumulated amortization (1,065) — 731 — (334)
Total Subscription assets, net $ 422 — (234) — 188
2022 Increas es Decreas es Remeas urements 2023
Subscription assets $ 1, 487 — — — 1,487
Less accumulated amortization (530) (535) — — (1,065) Total Subscription assets, net $ 957 (535) — — 422
Beginning End of Due within
Fis cal years of year Additions Remeas urements Deductions year one year 2024 $ 429 — — (243) 186 93
2023 944 — — (515) 429 243
FY 2024
Fiscal years ending June 30: Principal Interes t Total
2025 $ 93 2 95
2026 93 1 94
Total 186 3 189
Less: Current portion (93)
Long-term portion as of June 30, 2024 $ 93
FY 2023
Fiscal years ending June 30: Principal Interes t Total
2024 $ 243 4 247
2025 93 2 95
2026 93 1 94
Total 429 7 436
Less: Current portion (243)
Long-term portion as of June 30, 2023 $ 186
135 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Hetchy Water
A summary of intangible right-to-use subscription IT assets during the years ended June 30, 2024 and 2023 are as follows:
A summary of changes in the related subscription liabilities during the years ended June 30, 2024 and 2023 are as follows:
Future annual subscription payments as of June 30, 2024 and 2023 are as follows:
Hetchy Power
A summary of intangible right-to-use subscription IT assets during the years ended June 30, 2024 and 2023 are as follows:
2023 Increas es Decreas es Remeas urements 2024
Subscription assets $ 490 — (320) — 170
Less accumulated amortization (353) (76) 320 — (109)
Total Subscription assets, net $ 137 (76) — — 61
2022 Increas es Decreas es Remeas urements 2023
Subscription assets $ 490 — — — 490
Less accumulated amortization (176) (177) — — (353)
Total Subscription assets, net $ 314 (177) — — 137
Beginning End of Due within
Fis cal years of year Additions Remeas urements Deductions year one year 2024 $ 139 — — (80) 59 30
2023 309 — — (170) 139 80
FY 2024
Fiscal years ending June 30: Principal Interes t Total
2025 $ 30 2 32
2026 29 1 30
Total 59 3 62
Less: Current portion (30)
Long-term portion as of June 30, 2024 $ 29
FY 2023
Fiscal years ending June 30: Principal Interes t Total
2024 $ 80 2 82
2025 30 2 32
2026 29 1 30
Total 139 5 144
Less: Current portion (80)
Long-term portion as of June 30, 2023 $ 59
2023 Increas es Decreas es Remeas urements 2024
Subscription assets $ 397 — (257) — 140
Less accumulated amortization (283) (63) 257 — (89)
Total Subscription assets, net $ 114 (63) — — 51
2022 Increas es Decreas es Remeas urements 2023
Subscription assets $ 397 — — — 397
Less accumulated amortization (141) (142) — — (283)
Total Subscription assets, net $ 256 (142) — — 114
136 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
A summary of changes in the related subscription liabilities during the years ended June 30, 2024 and 2023 are as follows:
Future annual subscription payments as of June 30, 2024 and 2023 are as follows:
CleanPowerSF
A summary of intangible right-to-use subscription IT assets during the years ended June 30, 2024 and 2023 are as follows:
A summary of changes in the related subscription liabilities during the years ended June 30, 2024 and 2023 are as follows:
Future annual subscription payments as of June 30, 2024 and 2023 are as follows:
Beginning End of Due within
Fis cal years of year Additions Remeas urements Deductions year one year 2024 $ 116 — — (65) 51 25
2023 253 — — (137) 116 65
FY 2024
Fiscal years ending June 30: Principal Interes t To tal 2025 $ 25 1 26
2026 26 — 26
Total 51 1 52
Less: Current portion (25)
Long-term portion as of June 30, 2024 $ 26
FY 2023
Fiscal years ending June 30: Principal Interes t Total
2024 $ 65 1 66
2025 25 1 26
2026 26 — 26
Total 116 2 118
Less: Current portion (65)
Long-term portion as of June 30, 2023 $ 51
2023 Increas es Decreas es Remeas urements 2024
Subscription assets $ 111 — (74) — 37
Less accumulated amortization (81) (17) 74 — (24)
Total Subscription assets, net $ 30 (17) — — 13
2022 Increas es Decreas es Remeas urements 2023
Subscription assets $ 111 — — — 111
Less accumulated amortization (40) (41) — — (81)
Total Subscription assets, net $ 71 (41) — — 30
Beginning End of Due within
Fis cal years of year Additions Remeas urements Deductions year one year 2024 $ 31 — — (18) 13 6
2023 70 — — (39) 31 18
FY 2024
Fiscal years ending June 30: Principal Interes t To tal 2025 $ 6 — 6
2026 7 — 7
Total 13 — 13
Less: Current portion (6)
Long-term portion as of June 30, 2024 $ 7
137 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
As of June 30, 2024 and 2023, no variable subscription payments were noted for SFPUC’s subscription IT arrangements.
(12) Water Wholesale Balancing Account – Water Supply Agreement
From 1984-2009, the Water Enterprise provided water service pursuant to the terms of the 1984 Water Settlement Agreement and Master Water Sales Contract, which established the basis for water rates to be charged to those customers (Wholesale Customers). The Master Water S ales Contract expired on June 30, 2009. The Commission and the Wholesale Customers approved a Water Supply Agreement (WSA) effective July 1, 2009 (the contract was most recently restated and amended in January 2023).
The WSA has a 25- year term from July 1, 2009, with two options for five -year extensions. The existing 184 million gallons per day (mgd) Supply Assurance continues under the WSA and no increase in the Supply Assurance will be considered before December 31, 2028. During the period from 2009 to 2028, the WSA limits the quantity of water delivered to Retail Customers and Wholesale Customers from the watersheds to 265 mgd. Under the WSA, annual operating expenses, including debt service on bonds sold to finance regional system improvements and regional capital projects funded from revenues, will be allocated between Retail Customers and Wholesale Customers on the basis of proportionate annual water use. The original WSA stated the Wholesale Customers’ share of net book value of existing regional assets as of June 30, 2009 would be recovered on level annual payment over the 25- year term of the WSA at an i nterest rate of 5.13%. The 25- year term repayment obligation was settled in February 2013. The Wholesale Customers made an early repayment to the Water Enterprise of the outstanding balance of $356,139 as allowed by Section 5.03 of the WSA. The WSA continues much of the rate setting, accounting, and dispute resolution provisions contained in the expired contract, and has emergency and drought-pricing adjustment provisions.
Pursuant to the terms of the WSA, the Water Enterprise is required to establish water rates applicable to the Wholesale Customers annually. The wholesale water rates are based on an estimate of the level of revenues necessary to recoup the cost of distributing water to the Wholesale Customers in accordance with the methodology outlined in Article V of the WSA (the Wholesale Revenue Requirement (WRR)).
During fiscal years ending in 2024 and 2023, the WRR, net of adjustments, charged to such wholesale customers was $334,261 and $300,502, respectively. Such amounts are subject to final review by the Wholesale Customers, along with a trailing wholesale balancing account compliance audit of the WRR calculation.
Pursuant to Article VII, Section 7.02 of the WSA, the Water Enterprise is required to re- compute the WRR after the close of each fiscal year based on the actual costs incurred in the delivery of water to the Wholesale Customers. The difference between the wholesale revenues earned during the year and the “actual” WRR is recorded in a separate account (the Balancing Account) and represents the cumulative amount that is either owed to the Wholesale Customers (if the wholesale revenues exceed the WRR) or owed to the City (if the WRR exceeds the wholesale revenues paid). In accordance with Article VI of the WSA, the amount recorded in the Balancing Account shall earn interest at a rate equal to the average rate received by the City during the year on the invested pooled funds of the City Treasury and shall be taken into consideration in the determination of subsequent wholesale water rates. The Wholesale Customers owed the Water Enterprise $26,121 as of June 30, 2024. The Wholesale Customers owed the Water Enterprise $10,052 as of June 30, 2023. Refer to the compliance audit report for the final balancing account available at https://www.sfpuc.gov/about-us/reports/audited-financial-statements-reports .
FY 2023
Fiscal years ending June 30: Principal Interes t Total
2024 $ 18 — 18
2025 6 — 6
2026 7 — 7
Total 31 — 31
Less: Current portion (18)
Long-term portion as of June 30, 2023 $ 13
138 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
(13) Other Non-Operating Revenues – Hetchy Power’s Transbay Cable Construction and Licensing Fees
In 2007, the Board of Supervisors adopted the resolution to enter into two non-exclusive licenses with the Transbay Cable LLC (the Licensee) for the Transbay Cable Project. The Licensee proposed to install, operate, and maintain approximately 53 miles of high- voltage direct current transmission cable running from the City of Pittsburg to the City. The first license was a Construction License to install a 400 MW high-voltage transmission line, with a four- year term. The Licensee paid Hetchy Power $3,500 in Renewable Energy, Transmission and Grid Reliability. The Construction licensing fees were fully spent as of 2020.
The second license is an operational license for operation of the transmission line with 25- year term and an option to renew for 10 years. The project came on line November 29, 2010 and cumulative revenues of $22,708 were recorded. Per agreement, the SFPUC shall consider specifically renewable energy, conservation, and environmental health programs, which benefit low -income, at-risk, and environmentally disadvantaged communities. The San Francisco Electricity Reli ability Payment shall also be partly used for green jobs training and placement programs, which benefit low -income, at-risk, and environmentally disadvantaged communities. As of June 30, 2024, cumulative expenses of $14,577 have been incurred, with $2,090 and $1,351 in fiscal years 2024 and 2023, respectively.
(14) Employee Benefits
a) Pension Plan
San Francisco City and County Employees’ Retirement System – The SFPUC participates in a cost-sharing multiple-employer defined benefit pension Plan (SFERS Plan). The SFERS Plan is administered by the San Francisco City and County Employees’ Retirement System (SFERS).
For purposes of measuring the net pension liability, deferred outflows/inflows of resources related to pensions, pension expense, information about the fiduciary net position of the SFERS Plan, and additions to/deductions from the SFERS Plan’s fiduciary net position have been determined on the same basis as they are reported by the SFERS Plan. Contributions are recognized in the period in which they are due pursuant to legal requirements. Benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.
Replacement Benefits Plan – Replacement Benefits Plan (RBP) is a qualified excess benefit plan established in October 1989. Internal Revenue Code Section 415(m) provides for excess benefit arrangements that legally permit benefit payments above the Section 415 limits, provided that the payments are not paid from the SFERS Plan. The RBP allows the City to pay SFERS retirees any portion of the Charter -mandated retirement allowance that exceeds the annual Section 415(b) limit. The RBP plan does not meet the criteria of a qualified trust under GASB Statement No. 73 because RBP assets are subject to the claims of the employer’s general creditors under federal and state law in the event of insolvency.
GASB Statements No. 68 and No. 73 require that the SFERS Plan and RBP reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:
SFERS Plan – The City is an employer of the plan with a proportionate share of 94.85% as of June 30, 2023 (measurement date), 0.02% decreased from prior year, and 94.87% as of June 30, 2022 (measurement date). SFPUC’s allocation percentage was determined based on its employer contributions divided by the City’s total employer contributions for fiscal years 2023 and 2022. The net pension liability, deferred outflows/inflows of resources related to pensions, amortization of Fiscal Year 2024 Fiscal Year 2023
V
aluation Date (VD) July 1, 2022 updated to June 30, 2023 July 1, 2021 updated to June 30, 2022 Measurement Date (MD) June 30, 2023 June 30, 2022
Measurement Period (MP) July 1, 2022 to June 30, 2023 July 1, 2021 to June 30, 2022 139 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
deferred outflows/ inflows, and pension expense are based on each department’s allocated percentage. SFPUC’s allocation of the City’s proportionate share was 7.62%: 4.34% for Water,
1.95% for Wastewater, 0.55% for Hetchy Water, 0.68% for Hetchy Power and 0.10% for CleanPowerSF as of June 30, 2023 (measurement date). SFPUC’s allocation of the City’s proportionate share was 7.57%: 4.27% for Water, 1.99% for Wastewater, 0.55% for Hetchy Water,
0.68% for Hetchy Power and 0.08% for CleanPowerSF as of June 30, 2022 (measurement date).
RBP – The Water Enterprise’s allocation percentage was determined based on the Water Enterprise’s total pension liability divided by the City’s total headcount for fiscal year 2023. The Water Enterprise’s total pension liability, deferred outflows/inflows of resources related to pensions, amortization of deferred outflows/inflows and pension expense is based on the Water Enterprise’s allocated percentage. The Water Enterprise’s allocation of the City’s proportionate share was 1.95% as of June 30, 2023, and 2.31% as of June 30, 2022 (measurement dates).
SFERS Plan Description – The Plan provides basic service retirement, disability, and death benefits based on specified percentages of defined final average monthly salary and provides annual cost -of-living adjustments (COLA) after retirement. The Plan also provides pension continuation benefits to qualified survivors. The City Charter and the Administrative Code are the authorities which establish and amend the benefit provisions and employer obligations of the Plan. The Retirement System issues a publicly available financial report that includes financial statements and required supplementary information for the Plan. That report may be obtained on the Retirement System’s website https://mysfers.org/
by writing to the San Francisco City and
County Employees’ Retirement System, 1145 Market Street, 5th Floor, San Francisco, CA 94103 or by calling (415) 487-7000.
SFERS Benefits – The Retirement System provides service retirement, disability, and death benefits based on specified percentages of defined final average monthly salary and annual COLA after retirement. Benefits and refunds are recognized when due and payable in accordance with the terms of the SFERS Plan. The Retirement System pays benefits according to the category of employment and the type of benefit coverage provided by the City and County.
The four main categories of Plan members are:
a. Miscellaneous Non-Safety Members – staff, operational, supervisory, and all other eligible employees who are not in special membership categories. b. Sheriff’s Department and Miscellaneous Safety members – sheriffs assuming office on and after January 7, 2012, and undersheriffs, deputized personnel of the Sheriff’s department, and miscellaneous safety employees hired on and after January 7, 2012. c. Firefighter Members – firefighters and other employees whose principal duties are in fire prevention and suppression work or who occupy positions designated by law as firefighter member positions.
d. Police Members – police officers and other employees whose principal duties are in active law enforcement or who occupy positions designated by law as police member positions.
The membership groups and the related service retirement benefits are included in the Notes to the Basic Financial Statements of San Francisco Employees’ Retirement System.
All members are eligible to apply for a disability retirement benefit, regardless of age, when they have 10 or more years of credited service and they sustain an injury or illness that prevents them from performing their duties. Safety members are eligible to apply for an industrial disability retirement benefit from their first day on the job if their disability is caused by an illness or injury that they receive while performing their duties.
All retired members receive a benefit adjustment each July 1, which is the Basic COLA. The majority of adjustments are determined by changes in CPI with increases capped at 2%. The Plan provides for a Supplemental COLA in years when there are sufficient “excess” investment earnings in the Plan. The maximum benefit adjustment each July 1 is 3.5% including the Basic 140 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
COLA. Proposition A passed on November 8, 2022 making members who retired before November 6, 1996 (Pre96 Retirees) eligible for a Supplemental COLA, even if SFERS is not fully funded based on the market value of assets. Also, Pre96 Retirees’ base retirement allowances were adjusted to account for Supplemental COLAs not received in 2013, 2014, 2017, 2018, and 2019 due to the full funding requirement. Effective with Proposition A, Pre96 Retirees receive the same Supplement al COLAs as the after November 6, 1996 and before January 7, 2012 members. For all members hired before January 7, 2012, all Supplemental COLAs paid to them in retirement benefits will continue into the future even where an additional Supplemental COLA is not payable in any given year. For members hired on and after January 7, 2012, a Supplemental COLA will only be paid to retirees when the Plan is fully funded on a market value of asset basis and in addition for these members, Supplemental COLAs will not be permanent adjustments to retirement benefits. That is, in years when a Supplemental COLA is not paid, all previously paid Supplemental COLAs will expire.
Funding and Contribution Policy
SFERS Plan – Contributions are made by both the City and the participating employees.
Employee contributions are mandatory as required by the Charter. Employee contribution rates varied from 7.5% to 11.5% and 7.5% to 12.0% as a percentage of gross covered salary in fiscal years 2024 and 2023. Most employee groups agreed through collective bargaining for employees to contribute the full amount of the employee contributions on a pretax basis. The City is required to contribute at an actuarially determined rate. Based on the July 1, 2022 actuarial report, the required employer contribution rates for fiscal year 2024 ranged from 15.24% to 18.24%. Based on the July 1, 2021 actuarial report, the required employer contribution rates for fiscal year 2023 ranged from 17.85% to 21.35%.
Employer contributions and employee contributions made by the employer to the SFERS Plan are recognized when due and the employer has made a formal commitment to provide the contributions. The City’s proportionate share of employer contributions recognized by the Retirement System in fiscal years ended June 30, 2023 and 2022 (measurement years) were $638,003 and $729,578, respectively. The SFPUC’s allocation of employer contributions for fiscal years 2023 and 2022 (measurement periods) were $48,672 and $55,460, respectively. The Water Enterprise’s allocation of employer contributions for fiscal years 2023 and 2022 (measurement periods) were $ 27,925 and $31,151, respectively. The Wastewater Enterprise’s allocation of employer contributions for fiscal years 2023 and 2022 (measurement periods) were $12,383 and $14,543, respectively. Hetchy Water’s allocation of employer contributions for fiscal years 2023 and 2022 (measurement periods) were $3,525 and $4,149, respectively. Hetchy Power’s allocation of employer contributions for fiscal years 2023 and 2022 (measurement periods) were $4,308 and $5,071, respectively. CleanPowerSF’s allocation of employer contributions for fiscal years 2023 and 2022 (measurement periods) were $531 and $546, respectively.
Replacement Benefits Plan – The RBP is and will remain unfunded and the rights of any participant and beneficiary are limited to those specified in the RBP. The RBP constitutes an unsecured promise by the City to make benefit payments in the future to the extent funded by the City. The City paid $4,614 and $4,472 replacement benefits in the years ended June 30, 2024 and June 30,2023, respectively.
Pension Liabilities/(Asset), P ension Expenses, and Deferred Outflows and Infl ows of Resources Related to Pensions
Fiscal Year 2024
As of June 30, 2024 , the City reported net pension liability (NPL) of $3,588,821 for its proportionate share of the SFERS Plan and RBP, which includes the net pension liability for SFERS Plan of $3,456,687 and the NPL of the RBP was $132,134. The City’s NPL for each of its cost-sharing plans is measured as a proportionate share of the plans’ NPL. The net pension liability of the SFERS Plan is measured as of June 30, 2023 (measurement date), and the total 141 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
pension liability for the SFERS Plan used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2022 rolled forward to June 30, 2023 using standard update procedures. The City’s proportion of the net pension liability for the SFERS Plan was based on a projection of the City’s long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined.
The SFPUC’s allocation of the City’s proportionate share of the net pension liability for the plan as of June 30 2024 was $ 263,344 of which $150,060 for Water Enterprise, $67,299 for Wastewater Enterprise, $19,090 for Hetchy Water, $23,332 for Hetchy Power and $3,563 for CleanPowerSF.
The Water Enterprise’s allocation of the total pension liability for the RBP as of June 30, 2024 was $2,583.
For the year ended June 30, 2024 , the City’s recognized pension expense was $659,719 for the SFERS Plan and pension expense of $7, 557 for RBP, including amortization of deferred outflows/inflows related pension items. SFPUC’s allocation of pension expense for the SFERS Plan including amortization of deferred outflow/inflow related pension items were $ 48,429 of which $ 26,330, net of RBP of $1, 422, was for the Water Enterprise, $ 14,091 was for the Wastewater Enterprise, $3,230 was for Hetchy Water, $3,948 was for Hetchy Power, and $830 was for CleanPowerSF. Pension expense increased from the prior year, largely due to the amortization of deferrals.
As of June 30, 202 4, SFPUC reported deferred outflows of resources and deferred inflows of resources related to pensions were the following:
Hetchy Hetchy SFPUC
Water Was tewater Water Power Total
Pension contribution subsequent $ 27,653 12,402 3,518 4,299 657 48,529 16,124 7,231 2,051 2,507 383 28,296
actual experience
19,421 8,710 2,470 3,021 461 34,083
Net difference between projected and actual 28,399 12,736 3,613 4,415 674 49,837 1,033 1,606 277 338 12 3,266
$ 92,630 42,685 11,929 14,580 2,187 164,011
CleanPowerSF
to the measurement date
Total
earnings on pension plan investments
SFERS Plan - Schedule of Deferred Outflows of Resources Differences between expected and
Fiscal Year 2024
Changes in assumptions
Change in employer's proportion
Hetchy Hetchy SFPUC
Water Was tewater Water Power Total
$ — — — — — —
actual experience
8,861 3,974 1,127 1,378 210 15,550
Net difference between projected and actual — — — — — — 2,262 81 814 994 715 4,866
$ 11,123 4,055 1,941 2,372 925 20,416
CleanPowerSF
SFERS Plan - Schedule of Deferred Inflows of Resources
Fiscal Year 2024
Differences between expected and
Changes in assumptions
earnings on pension plan investments
Change in employer's proportion
Total
$ 222 657
actual experience
202 532
472 993
$ 896 2,182
Fiscal Year 2024
Differences between expected and
Changes in assumptions
Change in employer's proportion
Schedule of
Deferred Inflows
of Resources
Water Enterpris e - RBP
Total
Schedule of
Deferred
Outflows of
Resources
142 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Amounts reported as deferred outflows, exclusive of contributions made after the measurement date, and deferred inflows of resources will be amortized annually and recognized in pension expense/(benefit) as follows:
Fiscal Year 2023
As of June 30, 2023, the City reported net pension liability (NPL) of $ 2,708,927 for its proportionate share of the SFERS Plan and RBP, which includes the net pension liability for SFERS Plan of $2,552,996 and the NPL of the RBP was $ 155,931. The City’s net pension (asset)/liability (NPA)/NPL for the SFERS Plan is measured as the proportionate share of the (NPA)/NPL. The NPL of the SFERS Plan is measured as of June 30, 2022 (measurement date), and the total pension liability for the SFERS Plan and RBP used to calculate the NPL was determined by an actuarial valuation as of July 1, 2021 rolled forward to June 30, 2022 using standard update procedures. The City’s proportion of the net pension (asset)/liability for the SFERS Plan was based on a projection of the City’s long- term share of contributions to the pension plan relative to the projected contributions of all part icipating employers, actuarially determined.
The SFPUC’s allocation of the City’s proportionate share of the net pension liability for the plan as of June 30 2023 was $194,760 of which $111,743 for Water Enterprise, $49,549 for Wastewater Enterprise, $14,105 for Hetchy Water, $17,239 for Hetchy Power and $2, 124 for CleanPowerSF.
The Water Enterprise’s allocation of the total pension liability for the RBP as of June 30, 2023 was $3,600.
For the year ended June 30, 2023 , the City recognized net pension exp ense of $1,771, which includes pension (benefit) of ($13,196) for the SFERS Plan and pension expense of $ 14,967 for RBP, including amortization of deferred outflow/inflow related pension items. SFPUC’s allocation of pension expense/(benefit) for the SFERS Plan including amortization of deferred outflow/inflow related pension items were $2,8 66 of which $6,225 , net of RBP of $ 1,363, was for the Water Enterprise, ($1,167) was for the Wastewater Enterprise, ($955 ) was for Hetchy Water, ($1, 168) was for Hetchy Power, and ($69) was for CleanPowerSF.
As of June 30, 2023 , SFPUC reported deferred outflows of resources and deferred inflows of resources related to pensions were the following:
RBP
Fiscal
years Water Was tewater
Hetchy
Water
Hetchy
Power CleanPowerSF
SFPUC
Total Water
2025 $ (340) 769 (336) (410) (330) (647) (366)
2026 (9,299) (3,318) (1,374) (1,680) (422) (16,093) (550) 2027 55,297 25,168 7,151 8,740 1,225 97,581 (384) 2028 8,196 3,609 1,029 1,259 132 14,225 14
Total $ 53,854 26,228 6,470 7,909 605 95,066 (1,286) SFERS Plan
He tchy Hetchy SFPUC
Water Wastewater Water Power Total
Pension contribution subsequent $ 27,925 12,383 3,525 4,308 531 48,672 10,200 4,523 1,288 1,574 194 17,779
actual experience
29,035 12,874 3,665 4,479 552 50,605
1,869 2,812 380 465 15 5,541
$ 69,029 32,592 8,858 10,826 1,292 122,597
to the measurement date
Total
SFERS Plan - Schedule of Deferred Outflows of Resources Differences between expected and
Fiscal Year 2023
Changes in assumptions
Change in employer's proportion
CleanPowerSF
143 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Amounts reported as deferred outflows, exclusive of contributions made after the measurement date, and deferred inflows of resources will be amortized annually and recognized in pension (benefit)/ expense as follows:
Actuarial Assumptions
Fiscal Year 2024
A summary of the actuarial assumptions and methods used to calculate the Total Pension Liability for SFERS Plan as of June 30, 2023 (measurement year) is provided below, including any assumptions that differ from those used in the July 1, 2022 actuarial valuation. Refer to the July 1, 2022 actuarial valuation report for a complete description of all other assumptions, which can be found on the Retirement System’s website https://mysfers.org/.
He tchy Hetchy SFPUC
Water Wastewater Water Power Total
$ — — — — — —
actual experience
8,713 3,864 1,100 1,344 166 15,187
Net difference between projected and actual 13,890 6,159 1,753 2,143 264 24,209 3,138 — 1,289 1,575 866 6,868
$ 25,741 10,023 4,142 5,062 1,296 46,264
Differences between expected and
Changes in assumptions
earnings on pension plan investments
Change in employer's proportion
Total
SFERS Plan - Schedule of Deferred Inflows of Resources
Fiscal Year 2023 CleanPowerSF
$ 475 455
actual experience
579 778
18 1,530
$ 1,072 2,763
Fiscal Year 2023
Differences between expected and
Changes in assumptions
Change in employer's proportion
Water Enterpris e - RBP
Total
Schedule of Deferred
Outflows of
Resources
Schedule of Deferred
Inflows of Resources
RBP
Fiscal
years Water Was tewater
Hetchy
Water
Hetchy
Power CleanPowerSF
SFPUC
Total Water
2024 $ (5,899) (1,574) (1,163) (1,422) (509) (10,567) (283) 2025 (8,602) (2,830) (1,366) (1,669) (426) (14,893) (374) 2026 (17,636) (6,905) (2,405) (2,939) (477) (30,362) (589) 2027 47,500 21,495 6,125 7,486 877 83,483 (445)
Total $ 15,363 10,186 1,191 1,456 (535) 27,661 (1,691) SFERS Plan
Key Actuarial Assumptions SFERS Plan and Replacement Benefit Plan Valuation Date July 1, 2022 updated to June 30, 2023
Measurement Date June 30, 2023
Actuarial Cost Method Entry-Age Normal Cost
Expected Rate of Return 7.20% net of investment expenses Municipal Bond Yield 3.65% as of June 30, 2023
3.54% as of June 30, 2022
Bond Buyer 20-Bond GO Index, June 30, 2022 and June 29, 2023 Inflation 2.50%
Salary Increases 3.25% plus merit component based employee classification and years of service Discount Rate 7.20% as of June 30, 2023
7.20% as of June 30, 2022
Administrative Expenses 0.60% of payroll as of June 30, 2023
0.60% of payroll as of June 30, 2022
Old Miscellaneous Old Police & Fire
Old Police & Fire,
Charters A8.595
Old Police & Fire,
Charters A8.559
and all New Plans pre 7/1/75 and A8.596 and A8.585
Basic COLA June 30, 2023 2.00% 1.90% 2.50% 3.60%
Basic COLA June 30, 2022 2.00% 1.90% 2.50% 3.60%
144 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Changes of Assumptions SFERS plan and Replacement Benefits Plan – There were no changes in the discount rate for the measurement period ended June 30, 2023. The municipal bond yield increased from 3.54% to 3.65%.
Mortality rates for health Miscellaneous members were based upon adjusted PubG -2010 Employee and Retiree tables for non- annuitants and retirees, respectively. Mortality rates were then projected generationally from the base year using the MP-2019 projection scale.
The actuarial assumptions used at the June 30, 2023 measurement date were based upon the result of a demographic experience study for the period July 1, 2014 through June 30, 2019 and an economic experience study as of July 1, 2022.
Fiscal Year 2023
A summary of the actuarial assumptions and methods used to calculate the Total Pension Liability for both SFERS Plan and RBP as of June 30, 2022 (measurement date) is provided below, including any assumptions that differ from those used in the July 1, 2021 actuarial valuation. Refer to the July 1, 2021 actuarial valuation report for a complete description of all other assumptions, which can be found on the Retirement System’s website https://mysfers.org/.
Mortality rates for health Miscellaneous members were based upon adjusted PubG -2010 Employee and Retiree tables for non- annuitants and retirees, respectively. Mortality rates were then projected generationally from the base year using the MP-2019 projection scale.
The actuarial assumptions used at the June 30, 2022 measurement date was based upon the result of a demographic experience study for the period July 1, 2014 through June 30, 2019 and an economic experience study as of July 1, 2021.
Key Actuarial Assumptions SFERS Plan
Valuation Date July 1, 2021 updated to June 30, 2022
Measurement Date June 30, 2022
Actuarial Cost Method Entry-Age Normal Cost
Expected Rate of Return 7.20% net of investment expenses Municipal Bond Yield 3.54% as of June 30, 2022
2.16% as of June 30, 2021
Bond Buyer 20-Bond GO Index, June 24, 2021 and June 30, 2022 Inflation 2.50%
Salary Increases 3.25% plus merit component based employee classification and years of service Discount Rate 7.20% as of June 30, 2022
7.40% as of June 30, 2021
Administrative Expenses 0.60% of payroll as of June 30, 2022
0.60% of payroll as of June 30, 2021
Old Miscellaneous Old Police & Fire
Old Police & Fire,
Charters A8.595
Old Police & Fire,
Charters A8.559
and all New Plans pre 7/1/75 and A8.596 and A8.585
Basic COLA June 30, 2022 2.00% 1.90% 2.50% 3.60%
Basic COLA June 30, 2021 2.00% 1.90% 2.50% 3.60%
Key Actuarial Assumptions Replacement Benefits Plan
Valuation Date June 30, 2021 updated to June 30, 2022
Measurement Date June 30, 2022
Actuarial Cost Method Entry-Age Normal Cost
Municipal Bond Yield 3.54% as of June 30, 2022
Bond Buyer 20-Bond GO Index, June 24, 2021 and June 30, 2022 Inflation 2.50%
Salary Increases 3.25% plus merit component based employee classification and years of service Discount Rate 3.54% as of June 30, 2022
Administrative Expenses 0.60% of payroll as of June 30, 2022 Old Police & Fire, Old Police & Fire,
Old Miscellaneous Old Police & Fire Charters Charters
Basic COLA June 30, 2022 2.00% 1.90% 2.50% 3.60%
Basic COLA June 30, 2021 2.00% 1.90% 2.50% 3.60%
145 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Discount Rate
Fiscal Year 2024
SFERS Plan – The beginning and end of year measurements are based on different assumptions and contribution methods that may result in different discount rates. The discount rate was 7.20% as of June 30, 2023 and June 30, 2022 (measurement date).
The discount rate used to measure the Total Pension Liability as of June 30, 2023 was 7.20%.
The projection of cash flows used to determine the discount rate assumed that plan member contributions will continue to be made at the rates specified in the Charter. Employer contributions were assumed to be made in accordance with the contribution policy in effect for July 1, 2022 actuarial valuation. That policy includes contributions equal to the employer portion of the entry age normal costs for members as of the valuation date, a payment for the expected administrative expenses, and an amortization payment on the unfunded actuarial liability.
The amortization payment is based on closed periods that vary in length depending on the source. Charter amendments prior to July 1, 2014 are amortized over 20 years. After July 1, 2014, any Charter changes to active member benefits are amortized over 15 years and changes to inactive member benefits, including Supplemental COLAs, are amortized over 5 years.
However, the change due to Proposition A was amortized over 10 years. In the July 1, 2016 valuation, the increase in the unfunded actuarial liability attributable to the Supplemental COLAs granted effective July 1, 2013 was amortized over 17 years. For the July 1, 2021 valuation, all amortization periods for actuarial gains and losses and prior assumption changes were reduced to 5 years. The assumption change effective July 1, 2021 is amortized over 20 years. Future experience gains and losses and assumption or method changes on or after July 1, 2021 are amortized over 20 years. If the plan becomes 100% funded based on the actuarial value of assets, any new net surpluses are amortized over a rolling 20- year period. All amortization schedules are established as a level percentage of payroll so payments increase 3.25% each year. The unfunded actuarial liability is based on an actuarial value of assets that smooths investment gains and losses over five years and a measurement of the actuarial liability that excludes the value of any future Supplemental COLAs.
While the contributions and measure of actuarial liability in the funding valuation do not anticipate any future Supplemental COLAs, the projected contributions for the determination of the discount rate include the anticipated future amortization payments on future Supplemental COLAs for current members when they are expected to be granted. For members who were hired before Proposition C passed, a Supplemental COLA is granted if the actual investment earnings during the year exceed the expected investment earnings on the actuarial value of assets. For members who were hired after Proposition C passed, the market value of assets must also exceed the actuarial liability for a Supplemental COLA to be granted. When a Supplemental COLA is granted, the amount depends on the amount of excess earnings and the basic COLA amount for each membership group. Most members receive a 1.50% Supplemental COLA when a full Supplemental COLA is granted.
No Supplemental COLA was payable as of July 1, 2023 due to the unfavorable investment return for fiscal year 2023. The table below shows the net assumed Supplemental COLA for members with a 2.00% Basic COLA for sample years.
The projection of benefit payments to current members for determining the discount rate includes the payment of anticipated future Supplemental COLAs.
Fiscal years
2025 0.75 % 0.50 %
Assumed Supplemental COLA for Members with a 2.00%
Basic COLA
Before 11/6/96
or After Prop C96 - Prop C
+
146 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
Based on these assumptions, the Retirement System’s fiduciary net position was projected to be available to make projected future benefit payments for current members through 2104. Projected benefit payments are discounted at the long-term expected return on assets of 7.20% to the extent the fiduciary net position is available to make the payments and at the municipal bond rate of 3.65% to the extent they are not available. The single equivalent rate used to determine the Total Pension Liability as of June 30, 2023 is 7.20%.
The long-term expected rate of return on pension plan investments was 7.20%. It was set by the Retirement Board after consideration of both expected future returns and historical returns experienced by the Retirement System. Expected future returns were determined by using a building-block method in which best -estimate ranges of expected future real rates of return were developed for each major asset class. These ranges were combined to produce the long- term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation.
Target allocation and best estimates of geometric long- term expected real rates of return (net of pension plan investment expense and inflation) for each major asset class are summarized in the following table.
RBP – The beginning and end of year measurements are based on different assumptions that result in different discount rates. The discount rate was 3.65% as of June 30, 2023. This reflects the yield for a 20 -year, tax-exempt general obligation municipal bond with an average rating of AA/Aa or higher. The Municipal Bond Yields are the Bond Buyer 20 -Year GO Index as of June 30, 2022 and June 29, 2023. These are the rates used to determine the total pension liability as of June 30, 2023.
The inflation assumption of 2.50% compounded annually was used for projecting the annual IRC Section 415(b) limitations. The actual IRC Section 415(b) limitations published by the IRS of $265 was used for the 2023 measurement date.
The SFERS assumptions about Basic and Supplemental COLA previously discussed also apply to the Replacement Benefits Plan, including the impact of the State Appeals Court determination that the full funding requirement for payment of Supplemental COLA included in Proposition C was unconstitutional and the impact is accounted for as a change in benefits.
On June 30, 2024, City’s membership in the RBP had a total of 227 active members and 149 retirees and beneficiaries currently receiving benefits. The Water Enterprise has 6 active members and 4 retirees and beneficiary currently receiving benefits.
Fiscal Year 2023
SFERS Plan – The beginning and end of year measurements are based on different assumptions and contribution methods that may result in different discount rates. The discount rate was 7. 20% as of June 30, 2022 (measurement date) and 7.40% as of June 30, 2021 (measurement date).
The discount rate used to measure the Total Pension Liability as of June 30, 2022 was 7.20%.
The projection of cash flows used to determine the discount rate assumed that plan member contributions will continue to be made at the rates specified in the Charter. Employer contributions were assumed to be made in accordance with the contribution policy in effect for Target
Allocation
Long-term Expected Real
Rate of Return
37.0 % 4.6 %
23.0 7.8
Private Credit 10.0 5.8
10.0 5.3
10.0 4.4
8.0 1.7
5.0 3.5
(3.0) 1.4
100.0 %
Asset Class
Treasuries
Leverage
Private Equity
Hedge Funds/Absolute Returns
Global Equity
Total
Real Assets
Liquid Credit
147 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
July 1, 2021 actuarial valuation. That policy includes contributions equal to the employer portion of the entry age normal costs for members as of the valuation date, a payment for the expected administrative expenses, and an amortization payment on the unfunded actuarial liability.
The amortization payment is based on closed periods that vary in length depending on the source. Charter amendments prior to July 1, 2014 are amortized over 20 years. After July 1, 2014, any Charter changes to active member benefits are amortized over 15 years and changes to inactive member benefits, including Supplemental COLAs, are amortized over 5 years. The remaining unfunded actuarial liability not attributable to Charter amendments as of July 1, 2013 is amortized over a 19- year period commencing July 1, 2014. Experience gains and losses and assumption or method changes on or after July 1, 2014 are amortized over 20 years. The full amortization payment for the 2015 assumption changes is phased in over a period of 5 years. For the July 1, 2016 valuation, the increase in the unfunded actuarial liability attributable to the Supplemental COLAs granted on July 1, 2013 and July 1, 2014 are amortized over 17 -years and 5-years respectively. All amortization schedules are established as a level percentage of payroll so payments increase 3.25% each year. The unfunded actuarial liability is based on an actuarial value of assets that smooths investment gains and losses over five years and a measurement of the actuarial liability that excludes the value of any future Supplemental COLAs.
While the contributions and measure of actuarial liability in the funding valuation do not anticipate any future Supplemental COLAs, the projected contributions for the determination of the discount rate include the anticipated future amortization payments on future Supplemental COLAs for current members when they are expected to be granted. For members who worked after November 6, 1996 and before Proposition C passed (Post 97 Retirees), a Supplemental COLA is granted if the actual investment earnings during the year exceed the expected investment earnings on the actuarial value of assets. For members who did not work after November 6, 1996 and before Proposition C passed, the market value of assets must also exceed the actuarial liability at the beginning of the year for a Supplemental COLA to be granted.
When a Supplemental COLA is granted, the amount depends on the amount of excess earnings and the basic COLA amount for each membership group. The large majority of members receive a 1.50% supplemental COLA when granted.
Because the probability of a Supplemental COLA depends on the current funded level of the Retirement System for certain members, an assumption was developed as of June 30, 2022 for the probability and amount of Supplemental COLA for each future year. A full Supplemental COLA will be paid to all retired members, and their beneficiaries, who were retired effective July 1, 2022.
The table below shows the net assumed Supplemental COLA for members with a 2.00% Basic COLA for sample years.
The projection of benefit payments to current members for determining the discount rate includes the payment of anticipated future Supplemental COLAs.
Based on these assumptions, the Retirement System’s fiduciary net position was projected to be available to make projected future benefit payments for current members for all future years.
Projected benefit payments are discounted at the long-term expected return on assets of 7.20% to the extent the fiduciary net position is available to make the payments and at the municipal bond rate of 3.54% to the extent they are not available. The single equivalent rate used to determine the Total Pension Liability as of June 30, 2022 is 7.20%.
T
he long-term expected rate of return on pension plan investments was 7. 20%. It was set by the Retirement Board after consideration of both expected future returns and historical returns experienced by the Retirement System. Expected future returns were determined by using a Fiscal years
2024 0.75 % 0.70 %
2025 0.75 0.60
2026 0.75 0.60
2027 0.75 0.50
Before 11/6/96
or After Prop C96 - Prop C
+
148 Financial Section | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2024
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2024 and 2023
(Dollars in thousands, unless otherwise stated)
building-block method in which best-estimate ranges of expected future real rates of return were developed for each major asset class. These ranges were combined to produce the long- term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation.
Target allocation and best estimates of geometric long-term expected real rates of return (net of pension plan investment expense and inflation) for each major asset class are summarized in the following table:
RBP – The beginning and end of year measurements are based on different assumptions that result in different discount rates. The discount rate was 3.54% as of June 30, 2022. This reflects the yield for a 20 -year, tax-exempt general obligation municipal bond with an average rating of AA/Aa or higher. The Municipal Bond Yields are the Bond Buyer 20 -Year GO Index as of June 24, 2021 and June 30, 2022. These are the rates used to determine the total pension liability as of June 30, 2022.
The inflation assumption of 2.50% compounded annually was used for projecting the annual IRC Section 415(b) limitations. However, the actual IRC Section 415(b) limitations published by the IRS of $245 was used for the 2022 measurement date.