CleanPowerSF Sfpuc Commission
February 10, 2026

Total operating expenses, excluding interest expenses and non- operating expenses were $311,553, an increase of $16,773 or 5.7% from prior year. P urchased 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 $1,378 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 result of the above activities, net position for the year ended June 30, 202 4 increased by $60,141 or

51.0% compared to prior year.

* The fiscal year 2024 results of operations narrative was updated to reflect the restatements from Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences.

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Management’s Discussion and Analysis (Unaudited)
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)

25 (Continued)

Capital Assets

The following tables summarize Hetch Hetchy’s changes in capital assets.

Capital Assets, Fiscal Year 2025

Hetch Hetchy

Hetch Hetchy has capital assets of $1,060,337, net of accumulated depreciation and amortization, invested in both water and power utility capital assets as of June 30, 2025 (see Table 3A). This amount represents an increase of $65,086 or 6.5 %, resulting from increases of $ 41,057 in facilities, improvements, machinery and equipment , $23,231 in construction work in progress, and $1,036 in right -to-use building lease and intangible subscription assets , offset by a decrease of $238 in amortization of intangible assets. The investment in capital assets includes land, buildings, improvements, hydropower facilities, dams, transmission lines, machinery, and equipment. Hetch Hetchy had capital commitments of $6 2,107 as of June 30, 2025.

2025-2024 2024-2023
2025 2024 2023 Change Change
Hetch Hetchy
Facilities, improvements, machinery, and equipment $ 576,915 535,858 466,897 41,057 68,961 Intangible assets 23,426 23,664 24,152 (238) (488) Land and rights-of-way 5,181 5,181 5,181 — — Right-to-use building lease and intangible subscription assets 1,447 411 604 1,036 (193) Construction work in progress 453,368 430,137 370,470 23,231 59,667 Total 1,060,337 995,251 867,304 65,086 127,947
Hetchy Water
Facilities, improvements, machinery, and equipment 137,935 138,220 133,905 (285) 4,315 Intangible assets 9,753 9,960 10,167 (207) (207) Land and rights-of-way 3,232 3,232 3,232 — — Right-to-use building lease and intangible subscription assets 652 190 282 462 (92) Construction work in progress 98,758 85,884 72,450 12,874 13,434 Total 250,330 237,486 220,036 12,844 17,450
Hetchy Power
Facilities, improvements, machinery, and equipment 438,980 397,638 332,992 41,342 64,646 Intangible assets 13,673 13,704 13,985 (31) (281) Land and rights-of-way 1,949 1,949 1,949 — — Right-to-use building lease and intangible subscription assets 709 208 292 501 (84) Construction work in progress 354,610 344,253 298,020 10,357 46,233 Total 809,921 757,752 647,238 52,169 110,514
CleanPowerSF
Right-to-use intangible subscription assets 86 13 30 73 (17) Total $ 86 13 30 73 (17) Table 3A - Capital Assets, Net of Accumulated Depreciation and Amortization As of June 30, 2025, 2024, and 2023

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Management’s Discussion and Analysis (Unaudited)
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)

26 (Continued)

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 year ended June 30, 2025 include the following:

Hetchy Water

Hetchy Water has capital assets of $ 250,330, net of accumulated depreciation and amortization, invested in a broad range of utility capital assets as of June 30, 202 5 (see Table 3A). This amount represents an increase of $1 2,844 or 5.4%, primarily due to increases of $ 12,874 in construction work in progress and $462 in right -to-use building lease and intangible subscription assets, offset by decreases of $ 285 in facilities, improvements, machinery, and equipment and $207 in amortization of intangible assets.

Hetchy Hetchy
Water Power 2025 Total
Mountain Tunnel Improvement $ 4,442 5,429 9,871 Moccasin Powerhouse Rewind — 9,829 9,829 O'Shaughnessy Dam Outlet Works Phase 1 4,094 5,002 9,096 Power Asset Acquisition Analysis — 8,107 8,107 Repair and Replacement Life Extension Program and Powerhouse 2,769 1,749 4,518 Moccasin Powerhouse Bypass and Facilities Upgrades 971 2,917 3,888 Transmission Line Clearance Mitigation — 3,767 3,767 Bay Corridor Transmission and Distribution — 3,277 3,277 Power Intervening Facilities — 3,228 3,228 Cluster 7 Mitigation — 3,135 3,135
City Distribution Division Facility - 2000 Marin Street — 2,523 2,523 Moccasin Wastewater Treatment 962 1,176 2,138 Sunnydale HOPE SF — 2,134 2,134
Treasure Island Capital Improvements — 1,772 1,772 Moccasin Dam Long Term Improvement 785 960 1,745 Other project additions individually below $1,500 4,929 15,430 20,359 Additions to Construction Work in Progress $ 18,952 70,435 89,387 Bay Corridor Transmission and Distribution Electrical Duct Banks $ — 37,887 37,887 Power Intervening Facilities — 3,210 3,210 Potrero HOPE SF Backbone — 2,152 2,152 Contributed Capital - Mission Rock Power System Improvement — 1,906 1,906 Hetch Hetchy Reservoir Boat Ramp Improvement 838 1,022 1,860 Treasure Island Distribution Backbone — 1,772 1,772 Moccasin Low Head Powerhouse — 1,673 1,673 Other project additions individually below $1,500 5,549 15,228 20,777 Facilities, Improvements, Intangible Assets, Machinery, and Equipment Placed in Service $ 6,387 64,850 71,237 Table 3B - Hetch Hetchy
Major Additions to Construction Work in Progress and
Facilities, Improvements, Intangible Assets, Machinery, and Equipment Placed in Service Year ended June 30, 2025

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Management’s Discussion and Analysis (Unaudited)
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)

27 (Continued)

For the year ended June 30, 2025 , Hetchy Water’s major additions to construction work in progress totaled $18,952. Major depreciable facilities, improvements, intangible assets, machinery, and equipment placed in service totaled $6,387 (see Table 3B).

Hetchy Power

Hetchy Power has capital assets of $809 ,921, net of accumulated depreciation and amortization, invested in utility capital assets as of June 30, 202 5 (see Table 3A). This amount represents an increase of $ 52,169 or 6.9 %, primarily due to increases of $41,342 in facilities, improvements, machinery, and equipment , $10,357 in construction work in progress, and $501 in right -to-use building lease and intangible subscription assets, offset by a decrease of $31 in amortization of intangible assets.

For the year ended June 30, 202 5, Hetchy Power’s major additions to construction work in progress totaled $70,435. Major depreciable facilities, improvements, intangible assets, machinery, and equipment placed in service totaled $64,850 (see Table 3B).

CleanPowerSF

CleanPowerSF has capital assets of $ 86, net of accumulated amortization, for right -to-use intangible subscription assets as of June 30, 2025 (see table 3A).

See Note 4 for additional information about capital assets.

Capital Assets, Fiscal Year 2024

Hetch Hetchy

Hetch Hetchy has capital assets of $ 995,251, net of accumulated depreciation and amortization, invested in both water and power utility capital assets as of June 30, 2024 (see Table 3A). This amount represents an increase of $127,947 or 14.8%, resulting from increases of $ 68,961 in facilities, improvements, machinery and equipment and $59,667 in construction work in progress , offset by decrease s of $488 in amortization of intangible assets and $193 in right-to-use lease and subscription assets. The investment in capital assets includes land, buildings, improvements, hydropower facilities, dams, transmission lines, machinery, and equipment. Hetch Hetchy had capital commitments of $65,261 as of June 30, 2024.

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Management’s Discussion and Analysis (Unaudited)
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)

28 (Continued)

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 year ended June 30, 2024 include the following:

Hetchy Water

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, 202 4 (see Table 3A). This amount represents an increase of $17,450 or 7.9%, primarily due to in creases of $13,434 in construction work in progress and $4,315 in facilities, improvements, machinery, and equipment, offset by decrease s of $207 in amortization of intangible assets and $92 in right-to-use lease and subscription assets.

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 3C).

Hetchy Hetchy
Water Power 2024 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 Transmission and Distribution — 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
Power 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 Power 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 3C - Hetch Hetchy
Major Additions to Construction Work in Progress and
Facilities, Improvements, Intangible Assets, Machinery, and Equipment Placed in Service Year ended June 30, 2024

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Management’s Discussion and Analysis (Unaudited)
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)

29 (Continued)

Hetchy Power

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 3A). 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 decrease s of $281 in amortization of intangible assets and $84 in right-to-use lease and subscription assets.

For the year ended June 30, 202 4, 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 3C).

CleanPowerSF

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 3A).

See Note 4 for additional information about capital assets.

Debt Administration

Hetch Hetchy

As of June 30 , 2025, Hetch Hetchy has outstanding C ertificates of P articipation, Qualified Energy Conservation Bonds (QECBs), New Clean Renewable Energy Bonds (NCREBs), 2015 Series AB revenue bonds, 2021 Series AB revenue bonds, 2023 Series A revenue bond, and commercial paper. The aforementioned debts are obligations of the Power Enterprise. See Hetchy Power section below for more
details.

Hetchy Water

Hetchy Water did not have debt outstanding as of June 30, 2025 and 2024. 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

As of June 30, 202 5 and 2024, Hetchy Power had outstanding debt of $4 94,397 and $421,601, respectively, as shown in Table 4. More detailed information about the Hetchy Power ’s debt activity is presented in Notes 6, 7 and 8 to the financial statements.

CleanPowerSF

CleanPowerSF did not have any debt outstanding as of June 30, 2025 and 2024.

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Management’s Discussion and Analysis (Unaudited)
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)

30 (Continued)

The increase of $72,796 was due to $ 78,679 from commercial paper issuance, offset by bonds and certificates of participation principal repayments of $4,062 and $1,821 in amortization of premium.

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, 2025 and 2024, 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 year s 2025 and 2024, 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 8).

Debt Authorization – P ursuant 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, 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 2025-2024 2024-2023
2025 2024 2023 Change Change
Certificates of Participation 2009 Series D (BABs) $ 11,685 12,148 12,593 (463) (445) Qualified Energy Conservation Bonds 2011 1,452 2,021 2,583 (569) (562) New Clean Renewable Energy Bonds 2015 1,193 1,343 1,491 (150) (148) 2015 Series A Revenue Bonds 34,647 34,819 34,985 (172) (166) 2015 Series B Revenue Bonds 1,103 2,033 2,948 (930) (915) 2021 Series A Revenue Bonds 86,076 88,375 89,303 (2,299) (928) 2021 Series B Revenue Bonds 58,080 59,142 59,622 (1,062) (480) 2023 Series A Revenue Bonds 130,828 131,066 — (238) 131,066 Commercial Paper 169,333 90,654 116,352 78,679 (25,698) Total $ 494,397 421,601 319,877 72,796 101,724 Outstanding Debt, Net of Unamortized Costs
As of June 30, 2025, 2024, and 2023
Table 4 - Hetchy Power

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Management’s Discussion and Analysis (Unaudited)
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)

31 (Continued)

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, 202 5 and 2024, $287,460 of Hetchy Power revenue bonds were issued against existing authorization of $1,029,790.

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 October 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 1.4% (net of the federal tax subsidy). Certificates of participation carried interest rates rang ing from 2.0% to 6.5 %. The Power Enterprise’s short-term debt issued under it s commercial paper program has interest rates ranging from 2. 7% to 3. 7% and 2.8% to 3.7% during fiscal years 2025 and 2024, respectively.

Rates and Charges

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 $49,241 and $46,266 for the years ended June 30, 2025 and 2024, respectiv ely. In fiscal year 202 6, the assessment fees will be $54,147, an increase of $ 4,906 or 10.0% as r eflected in the fiscal year 202 6 adopted budget. The increase is primarily driven by higher operating expenses for the water share of Hetch Hetchy Water and Power.

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 , while rates for meter readings on or after July 1, 2025 were approved by the Commission in April 2025.

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

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Management’s Discussion and Analysis (Unaudited)
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
32 U
se 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.

Retail Rates
Re
tail electric rates are the default rates charged to residential, commercial, and industrial customers where Hetch Hetchy has been designated as the power provider. Retail power rates were increased by an average of 12% and 10% for fiscal years 2025 and 2026, respectively.

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.

C
leanPowerSF generation rates for each customer class are set based on their unique cost of service. The last Power Cost of Service Study was completed in 2022 with subsequent rate approvals in 2023 and 2024.

An average 8.5% rate increase for meter readings on or after July 1, 2024 was approved by the Commission in May 2024. There will be no change to rates for fiscal year 2026.

CleanPowerSF Rates Schedules are available at http://cleanpowersf.org/residential for residential customers and http://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 Hetch Hetchy’s finances and to demonstrate Hetch Hetchy’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. 33 * Restated per Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences. (Continued)
Restated
Hetchy Hetchy 2025 Hetchy Hetchy 2024
Water Power Total Water Power Total*
Assets
Current assets:

Cash and investments with City Treasury $ 103,244 254,557 222,449 580,250 46,471 215,370 159,811 421,652 Cash and investments outside City Treasury — 5 — 5 — 41 — 41 R
eceivables:

Charges for services (net of allowance for doubtful accounts from 437 11,116 54,679 66,232 471 16,356 50,993 67,820 Due from other City departments, current portion — 661 — 661 — 1,558 — 1,558 Due from other governments 1,665 575 — 2,240 1,664 574 — 2,238 Interest 673 2,466 2,054 5,193 578 2,823 1,692 5,093 Restricted interest and other receivables — 513 — 513 — 169 — 169 Total current receivables 2,775 15,331 56,733 74,839 2,713 21,480 52,685 76,878 Prepaid charges, advances, and other receivables, current portion 734 7,667 969 9,370 754 6,341 441 7,536 Inventory 276 1, 828 — 2,104 199 1,690 — 1,889
Restricted cash and investments outside City Treasury, current portion — 4,138 — 4,138 — 6,849 — 6,849 Total current assets 107,029 283,526 280,151 670,706 50,137 251,771 212,937 514,845 Non-current assets:

Restricted cash and investments with City Treasury 20,815 78,197 — 99,012 31,330 50,732 — 82,062 Restricted cash and investments outside City Treasury, less current portion — 3,832 — 3,832 — 7,202 — 7,202 Capital assets, not being depreciated and amortized 101,996 357,990 — 459,986 89,122 347,633 — 436,755 Capital assets, net of accumulated depreciation and amortization 148,334 451,931 86 600,351 148,364 410,119 13 558,496 Prepaid charges, advances, and other receivables, less current portion 134 11,179 12,191 23,504 138 10,843 11,763 22,744 Due from other City departments, less current portion — 9,505 — 9,505 — 9,863 — 9,863 Total non-current assets 271,279 912, 634 12,277 1,196,190 268,954 836,392 11,776 1,117,122 Total assets 378,308 1,196,160 292,428 1,866,896 319,091 1,088,163 224,713 1,631,967 Deferred outflows of resources:

Pensions 12,435 15,198 2,753 30,386 11,929 14,580 2,187 28,696 Other postemployment benefits 2,954 3,611 1,195 7,760 3,191 3,899 996 8,086 Total deferred outflows of resources 15,389 18,809 3,948 38,146 15,120 18,479 3,183 36,782 Hetchy Power of $3,299 and CleanPowerSF of $11,437 as of June 30, 2025; and Hetchy Power of $1,699 and CleanPowerSF of $9,226 as of June 30, 2024

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Statements of Net Position
June 30, 2025 and 2024
(In thousands)
CleanPowerSF CleanPowerSF
34 * Restated per Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences.

S
ee accompanying notes to financial statements.

Restated
Hetchy Hetchy 2025 Hetchy Hetchy 2024
Water Power Total Water Power Total*
Liabilities
Current liabilities:

Accounts payable $ 1,609 16,536 32,127 50,272 969 13,505 29,018 43,492 Accrued payroll 1,918 3,787 917 6,622 1,428 3,292 639 5,359 Accrued compensated absences, current portion 3,256 4,462 666 8,384 2,995 4,144 574 7,713 Accrued workers’ compensation, current portion 238 429 —   667 228 417 —   645 Damage claims liability, current portion 297 570 —   867 121 1,872 17 2,010 Due to other City departments, current portion —   102 —   102 —   —   —   — Lease liability, current portion 86 105 —   191 16 19 —   35 Subscription liability, current portion 175 141 70 386 30 25 6 61 Unearned revenues, refunds, and other, current portion 24 7,391 4,425 11,840 106 6,604 7,986 14,696 Bond, loan, lease, and subscription interest payable 7 2,845 2 2,854 1 2,691 —   2,692 Bonds, current portion —   3,748 —   3,748 —   3,599 —   3,599 Certificates of participation, current portion —   483 —   483 —   463 —   463 Commercial paper, current portion —   169,333 —   169,333 —   90,654 —   90,654 Current liabilities payable from restricted assets 1,118 18,155 —   19,273 4,027 25,513 —   29,540 Total current liabilities 8,728 228,087 38,207 275,022 9,921 152,798 38,240 200,959 Long-term liabilities:

Arbitrage rebate payable —   207 —   207 —   184 —   184 Net other postemployment benefits liability 16,590 20,277 3,753 40,620 16,269 19,883 4,189 40,341 Net pension liability 20,410 24,945 4,625 49,980 19,090 23,332 3,563 45,985 Accrued compensated absences, less current portion 2,940 4,057 618 7,615 2,799 3,884 534 7,217 Accrued workers’ compensation, less current portion 992 1,824 —   2,816 1,069 1,919 —   2,988 Damage claims liability, less current portion —   78 —   78 147 1,902 4 2,053 Due to other City departments, less current portion —   37,720 —   37,720 —   —   —   — Bonds, less current portion —   309,631 —   309,631 —   315,200 —   315,200 Lease liability, less current portion 341 417 —   758 106 131 —   237 Subscription liability, less current portion 33 26 15 74 29 26 7 62 Unearned revenues, refunds, and other, less current port 6 886 72 964 —   580 —   580 Liabilities payable from restricted assets, less current portion —   3,104 —   3,104 —   3,354 —   3,354 Certificates of participation, less current portion —   11,202 —   11,202 —   11,685 —   11,685 Total long-term liabilities 41,312 414,374 9,083 464,769 39,509 382,080 8,297 429,886 Total liabilities 50,040 642,461 47,290 739,791 49,430 534,878 46,537 630,845 Deferred inflows of resources:

Pensions 868 1,061 730 2,659 1,941 2,372 925 5,238 Other postemployment benefits 2,832 3,461 1,737 8,030 2,897 3,541 2,292 8,730 Total deferred inflows of resources 3,700 4,522 2,467 10,689 4,838 5,913 3,217 13,968 Net position:

Net investment in capital assets 248,610 341,791 — 590,401 233,276 343,297 — 576,573 Restricted for capital projects 20,815 32,645 — 53,460 31,330 28,625 — 59,955 Restricted for other purposes — 5,772 — 5,772 — — — — Unrestricted 70,532 187,778 246,619 504,929 15,337 193,929 178,142 387,408 Total net position $ 339,957 567,986 246,619 1,154,562 279,943 565,851 178,142 1,023,936

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Statements of Net Position
June 30, 2025 and 2024
(In thousands)
CleanPowerSF CleanPowerSF
35 * Restated per Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences. ** Interest expenses are net of amortization of premium, discount, and issuance costs.

See accompanying notes to financial statements.

Restated
Hetchy Hetchy 2025 Hetchy Hetchy 2024
W ater Power Total Water Power Total*
Operating revenues:

Charges for services $ 53,071 218,274 429,796 701,141 49,330 214,154 366,594 630,078 Rents and concessions 140 189 — 329 162 198 — 360 Total operating revenues 53,211 218,463 429,796 701,470 49,492 214,352 366,594 630,438 Operating expenses:

Personnel services 21,319 56,678 12,251 90,248 25,367 48,737 9,357 83,461 Contractual services 3,919 13,263 6,779 23,961 4,035 13,623 6,244 23,902 Transmission/distribution and other power costs — 52,907 264 53,171 — 62,392 264 62,656 Purchased electricity — 25,106 342,669 367,775 — 15,558 284,631 300,189 Materials and supplies 1,765 2,781 102 4,648 1,755 2,451 60 4,266 Depreciation and amortization 7,263 21,008 126 28,397 6,522 18,460 17 24,999 Services provided by other departments 2,622 8,082 3,316 14,020 3,501 6,828 4,792 15,121 General and administrative and other 8,583 38,256 6,671 53,510 3,229 33,114 6,188 42,531 Total operating expenses 45,471 218,081 372,178 635,730 44,409 201,163 311,553 557,125 Operating income 7,740 382 57,618 65,740 5,083 13,189 55,041 73,313 Non-operating revenues (expenses):

Federal and state grants 152 187 33 372 — 26 — 26 Interest and investment income 5,016 14,688 10,482 30,186 3,255 13,744 5,904 22,903 Interest expenses** (23) (16,006) (5) (16,034) (3) (13,464) — (13,467) Net gain (loss) from sale of assets 18 (2,851) — (2,833) 2 2 — 4 Other non-operating revenues 35 5,769 688 6,492 336 8,500 386 9,222 Other non-operating expenses (8) (534) (339) (881) (45) (99) (877) (1,021) Net non-operating revenues 5,190 1,253 10,859 17,302 3,545 8,709 5,413 17,667 Change in net position before transfers and contributions 12,930 1,635 68,477 83,042 8,628 21,898 60,454 90,980 Capital contributions — 4,032 — 4,032 — 29,200 — 29,200 Transfers from the City and County of San Francisco 47,084 — — 47,084 42 — — 42 Transfers to the City and County of San Francisco — (3,532) — (3,532) — (108) — (108) Capital contributions and net transfers 47,084 500 — 47,584 42 29,092 — 29,134 Change in net position 60,014 2,135 68,477 130,626 8,670 50,990 60,454 120,114 Net position at beginning of year:

Beginning of year, as previously reported 279,943 565,851 178,142 1,023,936 274,128 518,350 118,001 910,479 Cumulative effect of accounting change — — — — (2,855) (3,489) (313) (6,657) Net position at beginning of year as restated 279,943 565,851 178,142 1,023,936 271,273 514,861 117,688 903,822 Net position at end of year $ 339,957 567,986 246,619 1,154,562 279,943 565,851 178,142 1,023,936

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Statements of Revenues, Expenses, and Changes in Net Position Years Ended June 30, 2025 and 2024
(In thousands)
CleanPowerSF CleanPowerSF
36 (Continued)
* Restated per Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences.

Restated
Hetchy Hetchy 2025 Hetchy Hetchy 2024
Water Power Total Water Power To tal*
Cash flows from operating activities:

Cash received from customers, including cash deposits $ 53,109 225,191 422,349 700,649 49,264 211,012 357,825 618,101 Cash received from tenants for rent 141 169 —   310 153 188 —   341 Cash received from miscellaneous revenues 35 2,042 147 2, 224 36 4,886 3 4,
925
Cash paid to employees for services (20,057) (54,872) (12,686) (87,615) (23,234) (45,847) (9,517) (78,598) Cash paid to suppliers for goods and services (15,795) (138,644) (356,474) (510,913) (13,563) (146,934) (291,457) (451,954) Cash paid for judgments and claims (329) (
2,222) (
274) (
2,825) (
357) (
3,625) (
874) (
4,856)
C
ash received for license fees —   3,218 —   3,218 —   1,997 —   1,997 Cash received from settlements —   —   —   —   300 —   —   300 Cash paid for rebates, program incentives, and other (19) ( 555) (
364) (
938) (
34) (
78) (
864) (
976)
N
et cash provided by operating activities 17,085 34,327 52,698 104,110 12,565 21,599 55,116 89,280 Cash flows from non-capital and related financing activities:

Cash received from grants 100 114 33 247 59 98 — 157 Cash received from Public Purpose Funds — — 345 345 — — 1,624 1,624
Transfers from the City and County of San Francisco — — — — 42 — — 42 Transfers to the City and County of San Francisco — (3,532) — (3,532) — (108) — ( 108)
Net cash provided by (used in) non-capital financing activities 100 (3,418) 378 ( 2,940) 101 (10) 1,
624 1,
715
Cash flows from capital and related financing activities:

Acquisition and construction of capital assets (22,933) (79,632) (127) (102,692) (25,788) (94,214) (18) (120,020) Transfers from the City and County of San Francisco 47,084 — — 47,084 — — — — Proceeds of State revolving loan from Water Enterprise — 37,720 — 37,720 — — — — Proceeds from sale of capital assets 18 22 — 40 2 2 — 4 Interest paid on leases (9) (13) —
(22) (2) ( 3) — (5)
Interest paid on subscriptions (8) (6) (3) (17) (2) (1) — (3) Proceeds from bond issuance, net of premium and discount — — — — — 131,230 — 131,230 Principal paid on long-term debt — (4,062) — (4,062) — (2,035) — (2,035) Proceeds from commercial paper borrowings — 78,679 — 78,679 — 91,635 — 91,635 Principal paid on commercial paper — — — — — (117,333) — (117,333) Interest paid on long-term debt — (13,850) — (13,850) — (11,221) — (11,221) Interest paid on commercial paper borrowings — (3,678) — (3,678) — (1,969) — (1,969) Issuance costs paid on long-term debt — — — — — (765) — ( 765)
Federal interest income subsidy — 420 — 420 — 332 — 332 Net cash provided by (used in) capital and related financing activities 24,152 15,600 (130) 39, 622 (
25,790) (4,342) (18) (
30,150)
Cash flows from investing activities:

Interest income 3,104 10,862 7,387 21,353 1,083 8,568 3,838 13,489 Proceeds from sale of investments outside City Treasury — 29,850 — 29,850 — 155,462 — 155,462 Purchases of investments outside City Treasury — (23,093) — (23,093) — (165,218) — (165,218) Net cash provided by (used in) investing activities 3,104 17,619 7,387 28,110 1,083 (1,188) 3,838 3,733 Increase (decrease) in cash and cash equivalents 44,441 64,128 60,333 168,902 (12,041) 16,059 60,560 64,578 Cash and cash equivalents:

Beginning of year 79,816 273,869 162,357 516,042 91,857 257,810 101,797 451,464 End of year $ 124,257 337,997 222,690 684,944 79,816 273,869 162,357 516,042 Reconciliation of cash and cash equivalents to the statements of net position:

Cash and investments with City Treasury:

Unrestricted $ 103,244 254,557 222,449 580,250 46,471 215,370 159,811 421,652 Restricted 20,815 78,197 —   99,012 31,330 50,732 —   82,062 Add: Unrealized loss on investments with City Treasury 198 297 241 736 2,015 3, 465 2,546 8,026 Cash and investments outside City Treasury:

Unrestricted —   5 —   5 —
41 —   41
Restricted — 7,970 —   7,970 —   14,051 —   14,051 Less: Unrealized (gain) on investments outside City Treasury — (30) — ( 30) — (34) — (
34)
Less: Restricted (with maturity more than 90 days - see table in Note 3) — (2,999) — (2,999) — (9,756) — (9,756) Cash and cash equivalents at end of period on statements of cash flows $ 124,257 337,997 222, 690 684,944 79,816 273,869 162,357 516,042 CleanPowerSF CleanPowerSF

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Statements of Cash Flows
Years Ended June 30, 2025 and 2024
(In thousands)
37 *
Restated per Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences. ** Includes related deferred inflows and outflows of resources.

See accompanying notes to financial statements.

Restated
Hetchy Hetchy 2025 Hetchy Hetchy 2024
Water Power Total Water Power Total*
Reconciliation of operating income to net cash provided by operating activities:

Operating income $ 7,740 382 57,618 65,740 5,083 13,189 55,041 73,313 Adjustments to reconcile operating income to net cash
provided by operating activities:

Depreciation and amortization 7,263 21,008 126 28,397 6,522 18,460 17 24,999 Miscellaneous revenues 35 2,042 147 2,224 36 4,886 3 4,925 License fees — 3,218 — 3,218 — 1,997 — 1,997
Provision for uncollectible accounts — 1,600 2,211 3,811 — (2,224) 1,303 (921) Write-off of capital assets 332 491 — 823 — 217 — 217 Settlements — — — — 300 — — 300
Rebates and program incentives (19) (555) (364) (938) (34) (78) (864) (976) Changes in operating assets and liabilities:

Receivables:

Charges for services 34 3,640 (5,897) (2,223) (66) (1,855) (10,671) (12,592) Prepaid charges, advances, and other 30 (135) (504) (609) (659) (372) 5,200 4,169
Due from other City departments — 1,405 — 1,405 — 187 — 187
Inventory (77) (138) — (215) 22
(71) — (49)
Accounts payable 651 3,050 3,134 6,835 (75) (11,486) 4,661 (6,900)
Accrued payroll 490 495 278 1,263 176 251 96 523 Other postemployment benefits obligations** 493 602 (1,190) (95) 1, 232 1,505 (481) 2, 256
P
ension liabilities** (259) (316) 301 (274) (287) (351) 173 (465)
Accrued compensated absences 402 491 176 1,069 673 823 52 1, 548 A
ccrued workers’ compensation (67) (83) — (150) 78
98 — 176
Damage claims liability 29 (3,126) (21) (3,118) (432) (2,376) (13) (2,821) Due to other City departments — — — — — (1,946) — (1,946) Unearned revenues, refunds, and other liabilities 8 256 (3,317) (3,053) (4) 745 599 1,340
Total adjustments 9,345 33,945 (4,920) 38,370 7,482 8,410 75 15,967 Net cash provided by operating activities $ 17,085 34,327 52,698 104,110 12,565 21,599 55,116 89,280 Noncash transactions:

Accrued capital asset costs $ 1,118 21,259 — 22,377 4,027 28,867 — 32,894 Receivables from Wastewater Enterprise —   291   — 291 —   405   — 405 Unrealized loss on investments on investments with City Treasury 198 297 241 736 2,015 3,431 2,546 7,992 Unrealized (gain) on investments outside City Treasury — (30) — (30) — — — — Capital contributions — 4,032 — 4,032 — 29,200 — 29,200 Interfund loan payable to Water Enterprise — 37,720 — 37,720 — — — —

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Statements of Cash Flows
Years Ended June 30, 2025 and 2024
(In thousands)
CleanPowerSF CleanPowerSF

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
38 (Continued)
(1) Description of Reporting Entity
Sa
n Francisco Hetch Hetchy Water and Power (Hetch Hetchy or the Enterprise) 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 (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
.

A
pproximately 70% of the electricity generated by Hetchy Power is used to provide electric service to the City’s municipal customers (including the San Francisco Mun icipal Transportation Agency , R
ecreation 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 30 % 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.

H
etch Hetchy also purchases wholesale 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 Energ y
R
egulatory Commission (FERC). Therefore, Hetch Hetchy serves as the City’s representative at CPUC, CAISO, and FERC forums and continues to monitor regulatory proceedings.

The
City Charter was amended in 2008 by Proposition 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 SFPUC. Under the amended Charter, the Mayor continues to nominate candidates to the SFPUC, but nominees do not take office until the Board of Supervisor s
v
otes to approve their appointments by a majority (at least six members). The amended Charter provides for staggered four -year terms for SFPUC members and requires them to meet the following qualifications:
• Se
at 1 must have experience in environmental policy and an understanding of environmental justice issues.
• Se
at 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.

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
39 (Continued)
The SFPUC is a department of the City, and as such, the financial operations of Hetch Hetchy, Wastewater, and the Water Enterprise 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 that portion of the City that is attributable to the transactions of Hetch Hetchy. They do not purport to, and do not, present fairly the financial position of the City as of June 30, 2025 and 2024, and 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).
(2) Significant Accounting Policies
(a) Basis of Accounting and Measurement Focus
The accounts of Hetch Hetchy are organized on the basis of proprietary fund types and are included as enterprise funds of the City. The activities of Hetch Hetchy and each fund are accounted for with a separate set of self -balancing accounts that comprise Hetch Hetchy’s and each fund’s 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).

T
he financial activities of Hetch Hetchy 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 operations are included on the Statements of Net Position, revenues are recognized when earned, and expenses are recognized whe n
l
iabilities are incurred. Operating revenues are defined as charges to customers and rental income. Non-operating revenues include grants, investment income, and other income from non-operating activities. When both restricted and unrestricted resources are available for use, it is the Enterprise’s policy to use restricted resources first, then unrestricted resources as they are needed.

H
etch Hetchy applies all applicable Governmental Accounting Standards Board (GASB) pronouncements.
(b) Cash and Cash Equivalents
H etch Hetchy 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 Enterprise. Non- pooled restricted deposits and restricted deposits and investments held outside the City Treasury with origina l
ma
turities of three months or less are considered to be cash equivalents. (c) Investments
Mon ey market funds are carried at cost, which approximates fair value. All other investments are stated at fair value based upon quoted market prices. Changes in fair value are recognized as investment gains or losses and are recorded as a component of non-operating revenues.

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
40 (Continued)
(d) Inventory
I nventory consists primarily of construction materials and maintenance supplies and is valued at average cost. Inventory is expensed as it is consumed. (e) Capital Assets
C apital assets are defined as assets with an initial individual cost of more than $ 10 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 concessi on
a
rrangement 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 , st
ructures, 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
In tangible 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 Enterprise 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 constrained by legal or contractual limitations or any other external factor and, therefore, are not amortized (see Note 4).
(g) Construction Work in Progress
T he cost of acquisition and construction of major plant and equipment is recorded as construction work in progress. Costs of construction projects that are discontinued 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 Compensated Absences
Cit y employees may accumulate earned, but unused leave benefits up to a specified maximum, as outlined in their applicable leave policies. In accordance with GASB Statement No. 101, Compensated Absences, the Enterprise recognizes liabilities for leaves that are attributable to services already rendered, will be paid upon separation or usage, and are more likely than not to be used or paid. Compensated absences that meet these criteria consist of vacation, sick, compensatory time, and other holidays and leaves. The Enterprise records the compensated absences liability, including employer payroll taxes and the employer's share of social security and Medicare taxes, as both current and non- current liabilities in the Statement s of Net

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
41 (Continued)
Position. The Enterprise applies the current pay rates of active employees to leave balances in effect at fiscal year-end.
(j) Workers’ Compensation
The Enterprise 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 12(b)).
(k) General Liability
T he Enterprise 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. As of June 30, 2025, the Enterpris e
e
stimated its liability for pending and threatened lawsuits based on the Office of the City Attorney’s assessment of probable claims and historical trends for incurred but not reported losses. The recorded liability represents management’s best estimate of the Enterprise’s potential exposure based on currently available information (see Note 12(a)).

Du
ring fiscal year 2025, the Enterprise changed its methodology for estimating claims liability.

The Enterprise’s claims liability had historically been actuarially determined. The revised measurement methodology aligns more closely with the Office of City Attorney’s judgment of the Enterprise’s potential exposure based on currently available information. This prospective change in accounting estimate is intended to enhance the understandability, relevance, and timeliness of the financial information. Affected financial statement items include current and non-current estimated claims payables and general and administrative expenses in the Statements of Revenues, Expenses, and Changes in Net Position. (l) Arbitrage Rebate Payable
C ertain bonds are subject to arbitrage rebate requirements in accordance with regulations issued by the U.S. Treasury Department. The requirements of the Clean Renewable Energy Bonds (CREBs), the Qualified Energy Conservation Bonds (QECBs), the New Clean Renewable Energy Bonds (NCREBs) , and Power Revenue Bonds stipulate that the first payment of excess investment earnings, if any, is required to be rebated to the federal government, no later than 60 days after the end of the fifth bond year of the agreement or date of issuance. Hetchy Power arbitrage liability as of June 30, 2025 and 2024 were $207 and $184, respectively, related to 2021 Series AB and 2023 Series A revenue bonds.
(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 interest expense using the effective interest method over the remaining life of the old debt or the life of the new debt, whichever is shorter.
(n) Deferred Inflow of Resources and Deferred Outflow of Resources Deferred inflows of resources represent an acquisition of net assets that applies to future periods. Deferred outflows of resources represent a consumption of net assets that applies to future periods.

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
42 (Continued)
(o) Income Taxes
As a department of a government agency, the Enterprise is exempt from both federal income taxes and California State franchise taxes.
(p) Revenue Recognition
Water and power revenues are based on water and power consumption and billing rates.

Generally, customers are billed monthly. Revenues earned but unbilled are accrued as charges for services receivables on the Statements of Net Position. The unbilled amounts as of June 30, 2025 and 2024 are as follows:
(q) 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, 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. (r) Accounting and Financial Reporting for Pollution Remediation Obligations According to GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations, as amended, 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).

A
s 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 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.

Hetchy Hetchy
Water Power Cl eanPowerSF Total
2025 $ —   4, 694 27,728 32,422
2024 —   3,624 25,591 29,215

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
43 (Continued)
(s) Pensions
For purposes of measuring the net pension liability (asset) and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the San Francisco Employees’ Retirement System (SFERS) plan and additions to/deductions from the plan’s fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Plan member contributions are recognized in the period in which the contributions are due. Investments are reported at fair value (see Note 10(a)). (t) Other Postemployment Benefits (OPEB)
For purposes of measuring the net OPEB liability (asset) and deferred outflows/inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the Retiree Health Care Trust Fund (RHCTF) and additions to/deductions from the plan ’s fiduciary net position have been determined on the same basis as they are reported by the plan .

F
or this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Plan member contributions are recognized in the period in which the contributions are due. Investments are reported at fair value (see Note 10(b)). (u) New Accounting Standard s Adopted in Fiscal Year 2025 1) In June 2022, the GASB issued Statement No. 101, Compensated Absences . This statement requires that liabilities for compensated absences be recognized if the leave is attributable to services already rendered and the leave is more likely than not to be used fo r t
ime off or otherwise paid in cash or settled through noncash means and establishes definitions, guidance, and disclosure requirements related to compensated absences. The new standard is effective for periods beginning after December 15, 2023. The Enterprise adopted the provisions of Statement No. 101 in fiscal year 2025 . In accordance with GASB Statement No. 100, Accounting Changes and Error Corrections, the Enterprise reported the implementation of GASB 101 as a change in accounting principle. The cumulative effect of applying the new recognition and measurement guidance as of July 1, 202 3 was recorded as a restatement of beginning net position and liabilities. The impact to beginning net position is presented in the following table:
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 Enterprise adopted the provisions of Statement No. 102 in fiscal year 2025 which did not have a significant effect on its financial statements.
7/1/2023
As Previously
Reported
Changes in
Accounting
Principle
7/1/2023
As Restated
Hetchy Water $ 274,128 (2,855) 271,273 Hetchy Power 518,350 (3,489) 514,861
CleanPowerSF 118,001 (313) 117,688
Net Position $ 910,479 (6,657) 903,822

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
44 (Continued)
(v) GASB Statements Implemented 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 Enterprise adopted the provisions of Statement No. 99 in fiscal 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 assessin g
ac
countability. The standard is effective for periods beginning after June 15, 2023. The Enterprise adopted the provisions of Statement No. 100 in fiscal year 2024 which did not have a significant effect on its financial statements.
(w) Future Implementation of New Accounting Standards
1) In April 2024, the GASB issued Statement No. 103, Financial Reporting Model Improvements. This statement is to improve key components of the financial reportin g mo
del 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 Enterprise will implement the provisions of Statement No. 103 in fiscal year 2026.
2 ) In September 2024, the GASB issued Statement No. 104, Disclosure of Certain Capit al As
sets. This statement requires certain types of capital assets, such as lease assets recognized in accordance with Statement 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 assets other than those three types to be disclosed separately by major 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 Enterprise will implement the provisions of Statement No. 104 in fiscal year 2026.

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
45 (Continued)
(x) Reclassifications
The Enterprise has reclassified certain amounts relating to the prior period to conform to its current period presentation. The cash received from settlements, license fees, and cash paid for rebates and program incentives in the direct cash flows statement has been reclassified under operating activities for fiscal year 2024. In addition, lease and subscription payments were reclassified to acquisition and construction of capital assets under cash flows from capital and related financing activities for fiscal year 2024. These reclassifications had no effect on previously reported changes in net position.
(3) Cash, Cash Equivalents, and Investments
H
etch Hetchy’s 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 o f
i
nvestment instruments as permitted by the California Government Code, and the percentage of the portfolio, which may be invested in certain instruments with longer terms to maturity. The Cit y Tr
easurer allocates income from the investment of pooled cash at month- end in proportion to Hetch Hetchy’s average daily cash balances. The primary objectives of Hetch Hetchy’s investment policy are consistent with the City’s policy.

Som
e r estricted cash and investments 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, 2025 and 2024 were $7,970 and $14,051, respectively. The Enterprise held all investments in treasury and government obligations, commercial paper, as well as money market mutual funds consisting of treasury and government obligations. See Note 5 for additional information on restricted assets.

Custodial Credit Risk – Deposits
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, the Enterprise will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits.

The
California Government Code requires California banks and savings and loan associations to secure the Enterprise’s deposits not covered by Federal Deposit Insurance Corporation (FDIC) insurance by pledging government and/or local agency securities as collateral. The fair value of such pledged securities must equal at least 110% and be of the type authorized in California Government Code, Section 53651 (a) through (i). The collateral must be held at the pledging bank’s trust department or another bank, acting as the pledging bank’s agent, in the Enterprise’s name. At June 30, 2025, all banks with funds deposited by the Treasurer secured deposits with sufficient collateral or FDIC insurance.

Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in interest rates. Information about the sensitivity to the fair values of the

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
46 (Continued)
Enterprise’s investments to interest rate fluctuations is provided by the tables below, which show the distribution of the Enterprise’s investments by maturity.

Credit Risk
Credit risk is the risk that an issuer of an investment will not fulfill its obligation to pay the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The ratings for each of the investment types are provided by the tables below.

Custodial Credit Risk – Investments
Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, the Enterprise will not be able to recover the value of its investment or collateral securities that are in the possession of another party.

T
he California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for investments; however, it is the practice of the City Treasurer that all investments are insured, registered or held by the Treasurer’s custodial agent in the Enterprise’s name. The Enterprise also has investments with trustees related to the issuance of bonds that are uninsured, unregistered and held by the counterparty’s trust departments but not in the Enterprise’s name. These amounts are included in the investments outside City Treasury and are provided by the tables below.

H
etch Hetchy 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.

C
ertain investments such as money market investments, and cash and cash equivalents are not subject to the fair value hierarchy.

The
following is a summary of the Hetch Hetchy restricted and unrestricted cash and investments outside City Treasury, including commercial paper issuers, credit ratings, and the fair value hierarchy as of June 30, 2025 and 2024.

Credit Ratings
Investments (S&P/Moody's) Maturities Fair Value
Hetchy Power
U.S. Treasury Money Market Funds AAAm/Aaa-mf < 90 days $ 4,945 4,945 — U.S. Treasury Bonds & Notes A- 1+/P-1 October 15, 2025 2,999 — 2,999 Cash and Cash Equivalents N/A 26 26 —
Total Restricted Cash and Investments outside City Treasury $ 7,970 4,971 2,999 Cash and Cash Equivalents N/A $ 5 5 —
Total Unrestricted Cash and Investments outside City Treasury $ 5 5 — Fair value
measurements
using quoted
prices
in active
markets for
identical assets
(Level 1)
June 30, 2025
Investments
exempt from
fair value

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
47 (Continued)
A
s of June 30, 2025, a total of $4,945 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, $ 3,777 were proceeds from 2023 Series A, 2021 Series AB , and 2015 Series AB bonds and $1,168 were proceeds from certificates of participation. 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 proceed s from 2023 Series A, 2021 Series AB, and 2015 Series AB bonds and $43 were proceeds from certificates of participation.

H
etch Hetchy’s cash, cash equivalents, and investments are shown on the accompanying Statements of Net Position as of June 30, 2025 and 2024:

Credit Ratings
Investments (S&P/Moody's) Maturities Fair Value
Hetchy Power
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. Agency 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 — I
nvestments
exempt from
fair value
Fair value
measurements
using quoted
prices
in active
markets for
identical assets
(Level 1)
June 30, 2024
Hetchy Hetchy
Water Power CleanPowerSF Total 2025
Current assets:

Cash and investments with City Treasury $ 103,244 254,557 222,449 580,250 Cash and investments outside City Treasury —  5 —  5 Restricted cash and investments outside City Treasury —  4,138 —  4,138 Non-current assets:

Restricted cash and investments with City Treasury 20,815 78,197 —  99,012 Restricted cash and investments outside City Treasury —  3,832 —  3,832 Total cash, cash equivalents, and investments $ 124,059 340,729 222,449 687,237 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

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
48 (Continued)
The following table shows the percentage distribution of the City’s pooled investments by maturity:

Concentration of Credit Risk
The City’s investment policy contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code and/or its investment policy. U.S.

Treasury and agency securities explicitly guaranteed by the U.S. government are not subject to single issuer limitation.

A
s of June 30, 2025, except for investments issued or explicitly guaranteed by the U.S. government and investments in mutual funds, external investment pools, and other pooled investments, the Enterprise did not have any investments in any one issuer that exceeded 5.0% of total investments.

As of June 30, 2024, Hetchy Power ha d the following commercial paper investments that represented

5.0% or more of the total investments outside City Treasury:
(4) Capital Assets
a) H
etch Hetchy capital assets as of June 30, 2025 and 2024 consist of the following:
* Decrease in construction work i n progress included $ 823 in capital project write -offs, mainly related to the Camp Mather Leach Field Project. The remaining difference of $ 7,791 to capital asset additions was offset by direct additions to facilities, improvements, machinery, and equipment.

Fiscal years
ended June 30 Under 1 1 to less than 6 6 to less than 12 12 to 60 2025 20.8% 18.9% 17.5% 42.8%
2024 22.2% 19.5% 16.3% 42.0%
Investment maturities (in months)
Fair Value
% of
Investments
Toronto-Dominion Bank $ 2,946 21.2 %
Toyota Motor Corp 957 6.9
2024 Increases Decreases 2025
Capital assets not being depreciated and amortized:

Land and rights-of-way $ 5,181 — — 5,181
Intangible assets 1,437 — — 1,437
Construction work in progress 430,137 89,387 (66,156) * 453,368 Total capital assets not being depreciated and amortized 436,755 89,387 (66,156) 459,986 Capital assets being depreciated and amortized:

Facilities and improvements 944,953 65,402 (8,601) 1,001,754 Intangible assets 45,855 250 — 46,105
Machinery and equipment 156,341 5,585 (229) 161, 697
R
ight-to-use building lease assets 442 882 — 1,324
Right-to-use intangible subscription assets 347 1,005 (41) 1, 311 T
otal capital assets being depreciated and amortized 1,147,938 73,124 * (8,871) 1,212,191 Less accumulated depreciation and amortization for:

Facilities and improvements (461,759) (21,941) 5,729 (477,971) Intangible assets (23,628) (488) — (24,116)
Machinery and equipment (103,677) (5,117) 229
(108,565)
Right-to-use building lease assets (156) (184) — (340)
Right-to-use intangible subscription assets (222) (667) 41 (848) Total accumulated depreciation and amortization (589,442) (28,397) 5,999 (611,840) Total capital assets being depreciated and amortized, net 558,496 44,727 (2,872) 600,351 Total capital assets, net $ 995,251 134,114 (69,028) 1,060,337

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
49 (Continued)
* Decrease in construction work i n progress included $ 217 in capital project write -offs, mainly related to Distribution Interface Project. The remaining difference of $ 31,721 to capital asset additions was offset by direct additions to facilities, improvements, machinery, and equipment.
b) Hetchy Water c apital assets as of June 30, 2025 and 2024 consist of the following:
* Decrease in construction work in progress included $332 i n capital project write -offs, mainly related to the Camp Mather Leach Field Project. The remaining difference of $ 1,487 to capital asset additions was offset by direct additions to facilities, improvements, machinery, and equipment.
2023 Increases Decreases 2024
Capital assets not being depreciated and amortized:

Land and rights-of-way $ 5,181 — — 5,181
Intangible assets 1,437 — — 1,437
Construction work in progress 370,470 121,442 (61,775) * 430,137 Total capital assets not being depreciated and amortized 377,088 121,442 (61,775) 436,755 Capital assets being depreciated and amortized:

Facilities and improvements 855,790 89,163 — 944,953
Intangible assets 45,855 — — 45,855
Machinery and equipment 152,225 4,116 — 156,341
Right-to-use building lease assets 442 — — 442
Right-to-use intangible subscription assets 998 — (651) 347 T
otal capital assets being depreciated and amortized 1,055,310 93,279 * (651) 1,147, 938 L
ess accumulated depreciation and amortization for:

Facilities and improvements (442,252) (19,507) — (461,759) Intangible assets (23,140) (488) — (23,628)
Machinery and equipment (98,866) (4,811) — (103,677)
Right-to-use building lease assets (119) (37) — (156)
Right-to-use intangible subscription assets (717) (156) 651 (222) Total accumulated depreciation and amortization (565,094) (24,999) 651 (589,442) Total capital assets being depreciated and amortized, net 490,216 68,280 — 558,496 Total capital assets, net $ 867,304 189,722 (61,775) 995,251 2024 Increases Decreases 2025
Capital assets not being depreciated and amortized:

Land and rights-of-way $ 3,232 — — 3,232
Intangible assets 6 — — 6
Construction work in progress 85,884 18,952 (6,078) * 98,758 Total capital assets not being depreciated and amortized 89,122 18,952 (6,078) 101,996 Capital assets being depreciated and amortized:

Facilities and improvements 320,540 5,427 — 325,967
Intangible assets 20,522 — — 20,522
Machinery and equipment 31,201 960 (88) 32, 073
Right-to-use building lease assets 198 397 — 595
Right-to-use intangible subscription assets 170 449 (20) 599 Total capital assets being depreciated and amortized 372,631 7,233 * (108) 379, 756 Less accumulated depreciation and amortization for:

Facilities and improvements (190,419) (5,651) — (196,070) Intangible assets (10,568) (207) — (10,775)
Machinery and equipment (23,102) (1,021) 88 (24,035)
Right-to-use building lease assets (69) (83) — (152)
Right-to-use intangible subscription assets (109) (301) 20 (390) Total accumulated depreciation and amortization (224,267) (7,263) 108 (231,422) Total capital assets being depreciated and amortized, net 148,364 (30) — 148,334 Total capital assets, net $ 237,486 18,922 (6,078) 250,330

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
50 (Continued)
* The difference between decrease in construction work in progress and increase in capital assets being depreciated due to direct additions to facilities, improvements, machinery, and equipment. c) Hetchy Power capital assets as of June 30, 2025 and 2024 consist of the following:
* Decrease in construction work i n progress included $491 in capital project write -offs, mainly related to the Camp Mather Leach Field Project. The remaining difference of $ 6,105 to capital asset additions was offset by direct additions to facilities, improvements, machinery, and equipment.
2023 Increases Decreases 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 building lease assets 198 — — 198
Rig
ht-to-use intangible subscription assets 490 — (320) 170 T
otal capital assets being depreciated and amortized 362,413 10,538 * (320) 372, 631 L
ess 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 building lease assets (53) (16) — (69)
Right-to-use intangible 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 2024 Increases Decreases 2025
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 344,253 70,435 (60,078) * 354,610 Total capital assets not being depreciated and amortized 347,633 70,435 (60,078) 357,990 Capital assets being depreciated and amortized:

Facilities and improvements 624,413 59,975 (8,601) 675,787 Intangible assets 25,333 250 — 25,583
Machinery and equipment 125,140 4,625 (141) 129, 624
R
ight-to-use building lease assets 244 485 — 729
Right-to-use intangible subscription assets 140 357 (16) 481 T
otal capital assets being depreciated and amortized 775,270 65,692 * (8,758) 832,204 Less accumulated depreciation and amortization for:

Facilities and improvements (271,340) (16,290) 5,729 (281,901) Intangible assets (13,060) (281) — (13,341)
Machinery and equipment (80,575) (4,096) 141
(84,530)
Right-to-use building lease assets (87) (101) — (188)
Right-to-use intangible subscription assets (89) (240) 16 (313) Total accumulated depreciation and amortization (365,151) (21,008) 5,886 (380,273) Total capital assets being depreciated and amortized, net 410,119 44,684 (2,872) 451,931 Total capital assets, net $ 757,752 115,119 (62,950) 809,921

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
51 (Continued)
* Decrease in construction work i n 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.
d) CleanPowerSF capital assets as of June 30, 2025 and 2024 consist of the following:
2023 Increases Decreases 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 building lease assets 244 — — 244
Right-to-use intangible subscription assets 397 — (257) 140 T
otal capital assets being depreciated and amortized 692,786 82,741 * (257) 775, 270 L
ess 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 building lease assets (66) (21) — (87)
Right-to-use intangible 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 2024 Increases Decreases 2025
Capital assets being depreciated and amortized:

Right-to-use intangible subscription assets $ 37 199 (5) 231 T
otal capital assets being depreciated and amortized 37 199 (5) 231 L
ess accumulated depreciation and amortization for:

Right-to-use intangible subscription assets (24) (126) 5 (145) Total accumulated depreciation and amortization (24) (126) 5 (145) Total capital assets being depreciated and amortized, net 13 73 — 86 Total capital assets, net $ 13 73 — 86
2023 Increases Decreases 2024
Capital assets being depreciated and amortized:

Right-to-use intangible subscription assets $ 111 — (74) 37 T
otal capital assets being depreciated and amortized 111 — (74) 37 L
ess accumulated depreciation and amortization for:

Right-to-use intangible 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

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
52 (Continued)
(5) Restricted Assets
Pu
rsuant to the Hetchy Power Trust 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, a
nd 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.

T
he 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 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.

I
n 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.

I
n accordance with the Agreements, Hetch Hetchy maintains certain restricted cash and investment balances in trust.
(a) Hetchy Water has the following restricted assets held in trust as of June 30, 2025 and 2024:
2025 2024
Cash and investments with City Treasury:

Hetch Hetchy bond construction fund $ 20,815 31,330
Total restricted assets $ 20,815 31,330

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
53 (Continued)
(b) Hetchy Power has the following restricted assets held in trust as of June 30, 2025 and 2024:

R
estricted assets listed above as cash and investments with City Treasury are held in fund accounts within the Hetch Hetchy Revenue Fund. These assets are subject to use restrictions that are externally imposed by creditors, grantor, contributors, or by the laws or regulations of other governments. (6) Short-Term Debt
Ef
fective March 2019, under Charter Sections 9.107(6) and 9.107(8), and 2018 Proposition A, th e Co
mmission 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. In December 2024, the Board of Supervisors approved an expansion of the Power Enterprise Interim Funding Program size to $450,000. Interest rates for the commercial pape r ra
nged from 2. 7% to 3. 7% and 2.8% to 3.7% in fiscal year s 2025 and 2024, respectively . The Enterprise had $169 ,333 and $90,654 commercial paper outstanding as of June 30, 2025 and 2024, respectively. The Enterprise had $ 280,667 and $159,346 in unused authorization as of June 30, 2025 and 2024, respectively.

The
commercial paper notes can be issued in the aggregate principal amounts of up to $ 450,000, and may be marketed and re- marketed with maturities up to 270 days. The program is made up o f t
wo components: (1) three series totaling $350,000 (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 totaling $100,000 as a direct bank loan that can be used to make tax-exempt or taxable draws from a hi
gh-grade bank pursuant to a revolving credit agreement. 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, 2025 , the commercial paper notes are secured by the following series: Series A- 1 is s
ecured 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 leas t “AA-” by S&P and “AA -” by Fitch Ratings. Series A- 3/A-3-T is secured by a 2025 2024
Cash and investments with City Treasury:

Hetch Hetchy construction fund $ 78,197 50,732
Cash and investments outside City Treasury:
2009 Series C Certificates of participation - 525 Golden Gate 1 131 2009 Se
ries D Certificates of participation - 525 Golden Gate 1,167 1,000 2015 Series A Revenue Bonds 2,310 2,205
2015 Series B Revenue Bonds 542 518
2021 Series AB Revenue Bonds 10 442
2023 Series A Revenue Bonds 3,914 9,730
Commercial Paper 26 25
Total restricted cash and investments outside City Treasury 7,970 14,051 Interest and other receivables:

Hetch Hetchy construction fund 513 169
Total restricted assets $ 86,680 64,952

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
54 (Continued)
$100,000 letter of credit from Sumitomo Mitsui Banking Corporation which expires on February 15, 2030. The agreement for the Series A -3/A-3-T credit facility stipulates a quarterly commitment fee of

0.32%, 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 revolving notes were issued pursuant to the following series. Series R -1/R-1-T has a $100 ,000 revolving credit agreement with Wells Fargo Bank N.A. which expires on March 3, 2028. The R-1/R-1-T revolving credit agreement stipulates an unutilized quarterly commitment fee of 0.25% on the maintenance of ratings of at least “AA- ” by S&P a nd “AA -” by Fitch Ratings. The revolving credit agreement had $0 outstanding as of June 30, 2025.

The commercial paper reimbursement agreements and the interim funding program revolving line of credit for the Enterprise contain a provision that in the event advances (or drawings) or loans remain unpaid, such advances (or drawings) will convert into term loans and will be subject to the repayment provisions relating thereto.

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, 202 5 and 2024, there were no such events described herein.

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
55 (Continued)
(7) Changes in Long-Term Liabilities
a) Hetch Hetchy’s long -term liability activities for the years ended June 30, 2025 and 2024 are as follows:
* Restated per Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences. ^ The change in accrued compensated absences above is the net change for the fiscal year. * Restated per Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences. ^ The change in accrued compensated absences above is the net change for the fiscal year. ~ Commercial paper is short-term in fiscal year 2024.

Interest Maturity Restated Due within
rate (Calendar Year) 2024* Additions Reductions 2025 one year Bonds:

Qualified Energy Conservation Bonds 4.74 % 2027 $ 2,021 —   (569) 1,452 576 New Clean Renewable Energy Bonds 2015 4.62 2032 1,343 —   (150) 1,193 152 2015 Series A Revenue Bonds 4.00 - 5.00 2045 32,025 —   —   32,025 — 2015 Series B Revenue Bonds 3.00 - 4.00 2026 2,005 —   (910) 1,095 945 2021 Series A Revenue Bonds 4.00 - 5.00 2051 74,280 —   (1,385) 72,895 1,455 2021 Series B Revenue Bonds 4.00 - 5.00 2051 49,720 —   (585) 49,135 620 2023 Series A Revenue Bonds 5.00 2053 123,905 —   —   123,905 — Add issuance premiums 33,500 —   (1,821) 31,679 — Total bonds payable 318,799 —   (5,420) 313,379 3,748 2009 Series D COPs (Build America) 6.36 - 6.49 2041 12,148 —   (463) 11,685 483 Net other postemployment benefits liability 40,341 715   (436) 40,620 — Net pension liability 45,985 3,995   —   49,980 —
Accrued compensated absences ^ 14,930 1,069   —   15,999 8,384 Accrued workers’ compensation 3,633 819   (969) 3,483 667 Arbitrage rebate payable 184 23   —   207 — Damage claims liability 4,063 8,212   (11,330) 945 867 Due to other City departments —   37,822   —   37,822 102 Lease liability 272 882   (205) 949 191
Liabilities payable from restricted assets 28,867 —   (7,608) 21,259 18,155 Subscription liability 123 1,005   (668) 460 386 Unearned revenues, refunds, and other 15,276 32,872   (35,344) 12,804 11,840 Total $ 484,621 87,414   (62,443) 509,592 44,823
Interest Maturity Restated Du e within
rate (Calendar Year) 2023 Additions Reductions 2024* one 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 paper ~ 2.80 - 3.69 2024 116,352   —   (116,352) —   — Net other postemployment benefits liability 37,180   8,514   (5,353) 40,341 — Net pension liability 33,468   23,988   (11,471) 45,985 — Accrued compensated absences ^ 6,725   8,205   —   14,930 7,713 Accrued workers’ compensation 3,457   1,000   (824) 3,633 645 Arbitrage rebate payable —   184   —   184 —
Damage claims liability 6,884   10,284   (13,105) 4,063 2,010 Due to other City departments 1,946   —   (1,946) —   — Lease liability 307   —   (35) 272 35
Liabilities payable from restricted assets —   28,867   —   28,867 25,513 Subscription liability 286   —   (163) 123 61
Unearned revenues, refunds, and other 12,716   26,358   (23,798) 15,276 14,696 Total $ 422,846   238,630   (176,855) 484,621 54,735

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
56 (Continued)
b) Hetchy Water’s long-term liability activities for the years ended June 30, 2025 and 2024 are as follows:
* Restated per Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences. ^ The change in accrued compensated absences above is the net change for the fiscal year. * Restated per Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences. ^ The change in accrued compensated absences above is the net change for the fiscal year. c
) Hetchy Power’s long-term liability activities for the years ended June 30, 2025 and 2024 are as follows:
* Restated per Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences. ^ The change in accrued compensated absences above is the net change for the fiscal year.

Restated Due within
2024* Additions Reductions 2025 one year
Net other postemployment benefits liability $ 16,269 321 —   16,590 — Net pension liability 19,090 1,320 —   20,410 —
Accrued compensated absences ^ 5,794 402 —   6,196 3,256 Accrued workers’ compensation 1,297 203 (270) 1,230 238 Damage claims liability 268 155 (126) 297 297
Lease liability 122 397 (92) 427 86
Subscription liability 59 449 (300) 208 175
Unearned revenues, refunds, and other 106 26 (102) 30 24 Total $ 43,005 3,273 (890) 45,388 4,076
Restated 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 compensated absences ^ 2,266 3,528 —   5,794 2,995 Accrued workers’ compensation 1,219 337 (259) 1,297 228 Damage claims liability 700 96 (528) 268 121
Lease liability 138 —   (16) 122 16
Subscription liability 139 —   (80) 59 30
Unearned revenues, refunds, and other 110 10 (14) 106 106 Total $ 33,584 17,249 (7,828) 43,005 3,496 Interest Maturity Restated Due within
rate (Calendar Year) 2024* Additions Reductions 2025 one year Bonds:

Qualified Energy Conservation Bonds 4.74 % 2027 $ 2,021 —   (569) 1,452 576 New Clean Renewable Energy Bonds 2015 4.62 2032 1,343 —   (150) 1,193 152 2015 Series A Revenue Bonds 4.00 - 5.00 2045 32,025 —   —   32,025 — 2015 Series B Revenue Bonds 3.00 - 4.00 2026 2,005 —   (910) 1,095 945 2021 Series A Revenue Bonds 4.00 - 5.00 2051 74,280 —   (1,385) 72,895 1,455 2021 Series B Revenue Bonds 4.00 - 5.00 2051 49,720 —   (585) 49,135 620 2023 Series A Revenue Bonds 5.00 2053 123,905 —   —   123,905 — Add issuance premiums 33,500 —   (1,821) 31,679 — Total bonds payable 318,799 —   (5,420) 313,379 3,748 2009 Series D COPs (Build America) 6.36 - 6.49 2041 12,148 —   (463) 11,685 483 Net other postemployment benefits liability 19,883 394   —   20,277 — Net pension liability 23,332 1,613   —   24,945 —
Accrued compensated absences ^ 8,028 491   —   8,519 4,462 Accrued workers’ compensation 2,336 616   (699) 2,253 429 Arbitrage rebate payable 184 23   —   207 — Damage claims liability 3,774 7,758   (10,884) 648 570 Due to other City departments —   37,822   —   37,822 102 Lease liability 150 485   (113) 522 105
Liabilities payable from restricted assets 28,867 —   (7,608) 21,259 18,155 Subscription liability 51 357   (241) 167 141 Unearned revenues, refunds, and other 7,184 11,535   (10,442) 8,277 7,391 Total $ 424,736 61,094   (35,870) 449,960 35,586

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
57 (Continued)
* Restated per Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences. ^ The change in accrued compensated absences above is the net change for the fiscal year. ~ Commercial paper is short-term in fiscal year 2024.
d) Cl
eanPowerSF’s long-term liability activities for the years ended June 30, 2025 and 2024 are as follows:
*
Restated per Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences. ^ The change in accrued compensated absences above is the net change for the fiscal year. *
Restated per Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences. ^ The change in accrued compensated absences above is the net change for the fiscal year.

Interest Maturity Restated Due within
rate (Calendar Year) 2023 Additions Reductions 2024* one 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 paper ~ 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 compensated absences ^ 3,716 4,312 —   8,028 4,144 Accrued workers’ compensation 2,238 663 (565) 2,336 417 Arbitrage rebate payable —   184 —   184 — Damage claims liability 6,150 9,273 (11,649) 3,774 1,872 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
Unearned revenues, refunds, and other 6,460 7,465 (6,741) 7,184 6,604 Total $ 376,131 198,222 (149,617) 424,736 42,656 Restated Due within
2024* Additions Reductions 2025 one year
Net other postemployment benefits liability $ 4,189 —  (436) 3,753 — Net pension liability 3,563 1,062 —  4,625 — Accrued compensated absences ^ 1,108 176 —  1,284 666 Damage claims liability 21 299 (320) —  — Subscription liability 13 199 (127) 85 70 Unearned revenues, refunds, and other 7,986 21,311 (24,800) 4,497 4,425 Total $ 16,880 23,047 (25,683) 14,244 5,161 Restated Due within
2023 Additions Reductions 2024* one year
Net other postemployment benefits liability $ 4,053 806 (670) 4,189 — Net pension liability 2,124 2,190 (751) 3,563 —
Accrued compensated absences ^ 743 365 —  1,108 574 Damage claims liability 34 915 (928) 21 17
Subscription liability 31 —  (18) 13 6
Unearned revenues, refunds, and other 6,146 18,883 (17,043) 7,986 7,986 Total $ 13,131 23,159 (19,410) 16,880 8,583

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
58 (Continued)
(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 fiscal year 2028.

The
future annual debt service relating to the QECBs outstanding as of June 30, 202 5 is as follows:
* The SFPUC received an IR S notice dated April 8, 2025 that the federal interest subsidy is reduced by 5.7% or a total reduction of $4 due to sequestration over the remaining life of the bonds assuming the sequestration rate will remain the same after fiscal year 2025.
(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 wa s
pr
epaid in fiscal year 2021.

T
he future annual debt service relating to the 2015 NCREBs outstanding as of June 30, 202 5 is as follows:
* The SFPUC received an IRS notice dated April 8, 2025 that the federal interest subsidy is reduced by 5.7% or a total reduction of $ 9 due to sequestration over the remaining life of the bonds assuming the sequestration rate will remain the same after fiscal year 2025.
(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 Interest Federal Interest
before interest net of
Fiscal years ending June 30: Principal subsidy subsidy* subsidy 2026 $ 576 62 (44) 18
2027 582
35 (24) 11
2028 294
7 (4) 3
1,
452 104 (72) 32
Less: Current portion (576)
Long-term portion as of June 30, 2025 $ 876
Interest Federal Interest
before interest net of
Fiscal years ending June 30: Principal subsidy subsidy* subsidy 2026 $ 152 53 (35) 18
2027 154 47 (
31) 16
2028 156 39 (
26) 13
2029 159 32 (
21) 11
2030 161 25 (
16) 9
2031-
2033 411 28 (19) 9
1,
193 224 (148) 76
L
ess: Current portion (152)
Long-term portion as of June 30, 2025 $ 1,041

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
59 (Continued)
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, 2025 and 2024, the outstanding principal amounts were $33,120 and $34,030, respectively.

T
he future annual debt service relating to the 2015 Series AB Bonds outstanding as of June 30, 2025 is 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 were 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 2.6 4%. As of June 30, 202 5 a
nd 2024, the outstanding principal amounts were $122,030 and $124,000, respectively.

Fiscal years ending June 30: Principal Interest Total
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 1,125 1,427 2,552
2031-2035 6,535 6,208 12,743
2036-2040 8,340 4,358 12,698
2041-2045 10,640 1,997 12,637
2046 2,460 62 2,522
32,025 20,237 52,262
Add: Unamortized bond premium 2,622
Long-term portion as of June 30, 2025 $ 34,647
Hetchy Power - Power Revenue Bonds 2015 Series A (Green) Fiscal years ending June 30: Principal Interest Total
2026 $ 945 25 970
2027 150 3 153
1,095 28 1,123
Less: Current portion (945)
Add: Unamortized bond premium 8
Long-term portion as of June 30, 2025 $ 158
Hetchy Power - Power Revenue Bonds 2015 Series B

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
60 (Continued)
The future annual debt service relating to the 2021 Series AB Bonds outstanding as of June 30, 2025 is as follows:
(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 202 3 Series A is November 1, 2053 .

T
he true interest cost is 4. 56%. As of June 30, 202 5 and 2024, the outstanding principal amount was $123,905.

Fiscal years ending June 30: Principal Interest Total
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 1,775 2,658 4,433
2031-2035 10,155 12,016 22,171
2036-2040 12,430 9,734 22,164
2041-2045 15,185 6,981 22,166
2046-2050 18,550 3,618 22,168
2051-2052 8,520 344 8,864
72,895 46,805 119,700
Less: Current portion (1,455)
Add: Unamortized bond premium 13,181
Long-term portion as of June 30, 2025 $ 84,621
Hetchy Power - Power Revenue Bonds 2021 Series A (Green) Fiscal years ending June 30: Principal In terest Total
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 750 1,864 2,614
2031-2035 4,330 8,742 13,072
2036-2040 5,455 7,751 13,206
2041-2045 6,745 6,534 13,279
2046-2050 19,215 4,183 23,398
2051-2052 9,970 403 10,373
49,135 37,281 86,416
Less: Current portion (620)
Add: Unamortized bond premium 8,945
Long-term portion as of June 30, 2025 $ 57,460
Hetchy Power - Power Revenue Bonds 2021 Series B

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
61 (Continued)
The future annual debt service relating to the 202 3 Series A Bonds outstanding as of June 30, 2025 is as follows:
(f) Certificates of Participation Issued for the 525 Golden Gate Headquarters Building In October 2009, the City issued $167,670 in certificates of participation to fund construction of the headquarters of the SFPUC at 525 Golden Gate Avenue. The 2009 Series C certificates 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 matured 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 Series D for the federal interest subsidy, the true interest cost averages 3.4% and 4.3% for Series C and Series D certificates, respectively.

U
nder the terms of a Memorandum of Understanding 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.

Hetchy Power’s share is reflected on the Hetchy Power fund statements. There are no events of default stated in this memorandum of understanding.

The
Power, Water, and Wastewater Enterprises have ownership interest in the building equal to their projected usage of space as follows: Water (73%), Wastewater (15%), and 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 Power (9.7%)
.

Fiscal years ending June 30: Principal Interest Total
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 1,920 5,930 7,850
2031-2035 11,650 28,039 39,689
2036-2040 15,370 24,653 40,023
2041-2045 19,725 20,289 40,014
2046-2050 25,320 14,687 40,007
2051-2054 45,580 5,661 51,241
123,905 123,751 247,656
Add: Unamortized bond premium 6,923
Long-term portion as of June 30, 2025 $ 130,828

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
62 (Continued)
The future annual debt service relating to the certificates of participation 2009 Series D outstanding as of June 30, 2025 is as follows:
* The SFPUC received an IRS notice dated April 8, 2025 that the federal interest subsidy is reduced by 5.7% or a total reduction of $143 due to sequestration over the remaining life of the bonds assuming the sequestration rate will remain the same after fiscal year 2025.
(g) Events of Default and Remedies
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, 2025 and 2024, there were no such events described herein. See Note 13(a) for information about CleanPowerSF guarantee. (h) Leases
Hetch Hetchy has entered into long-term leases for office space and other equipment. The terms and conditions for these leases vary, which ranges between 1 to 75 years.

F
uture annual lease payments as of June 30, 2025 are as follows:

Interest Federal Interest
before interest net of
Fi
scal years ending June 30: Principal subsidy subsidy* subsidy 2026 $ 483 739 (244) 495
2027 503 709 (
234) 475
2028 524 675 (
223) 452
2029 546 641 (
212) 429
2030 569 606 (
200) 406
2031-
2035 3,232 2,432 (802) 1,630
2036-
2040 3,985 1,266 (418) 848
2041-
2042 1,843 121 (40) 81
11,
685 7,189 (2,373) 4,816
Less: Current portion (483)
Long-term portion as of June 30, 2025 $ 11,202

Hetchy Water
Fiscal years ending June 30: Principal Interest Total
2026 $ 86 10 96
2027 90
8 98
2028 96 5 101
2029 101 3 104
2030 18 1 19
2031-2035 17 3 20
2036-2040 19 1 20
427 31 458
Less: Current portion (86)
Long-term portion as of June 30, 2025 $ 341

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
63 (Continued)
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.

Ce
rtain equipment or facility rental leases require Hetch Hetchy 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. During the years ended June 30, 2025 and 2024, there were no amount recognized as expense for variable lease payments not included in the measurement of the lease liability. (i) SBITAs
Hetch Hetchy has noncancellable subscription arrangements (similar to a lease) for the right to use various SBITAs. The terms and conditions for these subscriptions vary, which ranges between 1 to 5 years.

F
uture annual subscription payments as of June 30, 2025 are as follows:

Hetchy Power
Fiscal years ending June 30: Principal Interest Total
2026 $ 105 12 117
2027 111 9 120
2028 117 6 123
2029 123 3 126
2030 21 1 22
2031-2035 22 4 26
2036-2040 23 1 24
522 36 558
Less: Current portion (105)
Long-term portion as of June 30, 2025 $ 417
Hetchy Water
Fiscal years ending June 30: Principal Interest Total
2026 $ 175 6 181
2027 33 —  33
208 6 214
Less: Current portion (175)
Long-term portion as of June 30, 2025 $ 33
Hetchy Power
Fiscal years ending June 30: Principal Interest Total
2026 $ 141 4 145
2027 26 —  26
167 4 171
Less: Current portion (141)
Long-term portion as of June 30, 2025 $ 26

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
64 (Continued)
A
s of June 30, 2025 and 2024, no variable subscription payments were noted for Hetch Hetchy’s subscription IT arrangements.
(8) 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 , a
nd 2023 Series A power revenue bonds . Proceeds from the bonds provided 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 year s 2046, 2052, and 2054, respectively, a
nd are solely payable from net revenues of Hetchy Power on a senior lien basis to the 2011 QECBs and the 2015 NCREBs.

O
utstanding bonds issued with revenue pledge, total principal and interest remaining, principal and interest paid during fiscal years 202 5 and 2024, 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 t he 20 15 Ser
ies 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 $9,615, net of capitalized interest.
(9) Other Non-Operating Revenues – Transbay Cable Construction and Licensing Fees I
n 2007, the Board of Supervisors adopted the resolution to enter into two non -exclusive licenses with the Trans bay Cable LLC (the Licensee) for the Transb ay 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.

T
he 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 Reliability Payment shall also be partly used for green jobs training and placement programs, which benefit low -income, at-ris k,
CleanPowerSF
Fiscal years ending June 30: Principal Interest Total
2026 $ 70 2 72
2027 15 —  15
85 2 87
Less: Current portion (70)
Long-term portion as of June 30, 2025 $ 15
Hetchy Power 2025 2024
Bonds issued with revenue pledge $ 281,700 285,299
Principal and interest remaining due at the end of the year 510,130 526,808 Principal and interest paid during the year* 10,484 3,458 Net revenues for the year ended June 30 67,523 50,471
Funds available for debt service 228,686 166,641

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
65 (Continued)
and environmentally disadvantaged communities. As of June 30, 202 5, cumulative expenses of $16,812 have been incurred, with $2,235 and $2,090 in fiscal years 2025 and 2024, respectively. (10) Employee Benefits
(a) Pension Plan
Retirement Plan – Hetch Hetchy 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/deduction s f
rom 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 require ments. 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
.

G
ASB Statement No. 68 requires that the SFERS Plan reported results must pertain to liability and asset information within certain defined timeframes. For this report, the followin g t
imeframes are used:

SFERS Plan – The City is an employer of the plan with a proportionate share of 94.70% as of June 30, 2024 (measurement date), 0.15% decreased from prior year, and 94.85% as of June 30, 2023 (measurement date). Hetch Hetchy’s allocation percentage was determined based on its employer contributions divided by the City’s total employer contributions for fiscal years 2024 and 2023. Hetch Hetchy’s net pension liability, deferred outflows/inflows of resources related to pensions, amortization of deferred outflows/inflows, and pension expense is based on its allocated percentage. Hetch Hetchy’s allocation of the City’s proportionate share was 1.3 2%, of which 0.54 % for Hetchy Water, 0. 66% for Hetchy Power, and 0.1 2% for CleanPowerSF as of June 30, 2024 (measurement date). Hetch Hetchy’s allocation of the City’s proportionate share was 1.3 3%, of which 0.5 5% for Hetchy Water, 0.6 8% for Hetchy Power, and 0.10% for CleanPowerSF as of June 30, 2023 (measurement date).

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 http s://mysfers.org or by writing to the San Francisco Employees’ Retirement System, 1145 Market Street, 5 th 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 Fiscal Year 2025 Fiscal Year 2024
Valuation Date (VD) July 1, 2023 updated to June 30, 2024 July 1, 2022 updated to June 30, 2023 Measurement Date (MD) Ju ne 30, 2024 June 30, 2023
Measurement Period (MP) July 1, 2023 to June 30, 2024 July 1, 2022 to June 30, 2023

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
66 (Continued)
COLA after retirement. Benefits and refunds are recognized when due and payable in accordance with the terms of the Plan. The Retirement System pays benefits according to the category of employment and the type of benefit coverage provided by the City. The four main categories of Plan members are:
a) M
iscellaneous 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.

T
he membership groups and the related service retirement benefits are included in the Notes to the Financial Statements of San Francisco Employees’ Retirement System.

A
ll 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.

A
ll retired members receive a benefit adjustment each July 1, which is the Basic COLA. The majority of adjustments are determined by changes in Consumer Price Index 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 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 fair 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 Supplemental COLAs as the members who retired on or after November 6, 1996 , and were hired before January 7, 2012. 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 fair 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 11.0% and 7.5% to 11.5% as a percentage of gross covered salary in fiscal years 2025 and 2024. 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, 202 3

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
67 (Continued)
actuarial report, the required employer contribution rates for fiscal year 202 5 ranged from

14.91% to 16.91% . Based on the July 1, 2022 actuarial report, the required employer contribution rates for fiscal year 2024 ranged from 15.24% to 18.24%.

E
mployer contributions and employee contributions made by the employer to the 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, 202 4 and 2023 (measurement years) was $636,991 and $638,003, respectively. Hetch Hetchy’s allocation of employer contributions was $8,474, of which $ 3,518 for Hetchy Water, $ 4,299 for Hetchy Power, and $657 for CleanPowerSF for fiscal year 202 4 (measurement period). Hetch Hetchy’s allocation of employer contributions was $8,364, of which $3,525 for Hetchy Water, $4,308 for Hetchy Power, and $531 for CleanPowerSF for fiscal year 2023 (measurement period).

Pension Liabilities, Pension Expenses, and Deferred Outflows and Inflows of Resources Related to Pensions
Fiscal Year 2025
As of June 30, 202 5, the City reported net pension liability (NPL) for its proportionate share of the net pension liability of the SFERS Plan of $3, 775,717. 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, 202 4 (measurement date), and the total pension liability for the SFERS Plan used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 202 3 rolled forward to June 30, 202 4 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. Hetch Hetchy’s allocation of the City’s proportionate share of the net pension liability for the SFERS Plan as of June 30, 2025 was $ 49,980, of which $ 20,410 was for Hetchy Water, $ 24,945 for Hetchy Power, and $4,625 for CleanPowerSF.

F
or the year ended June 30, 202 5, the City’s recognized pension expense was $ 734,019 including amortization of deferred outflows/inflows related pension items. Hetch Hetchy’s allocation of pension expense including amortization of deferred outflows/inflows related pension items was $8,352 , of which $3,264 for Hetchy Water, $3,989 for Hetchy Power, and $1,099 for CleanPowerSF. Pension expense increased from the prior year, largely due to the amortization of deferrals.

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
68 (Continued)
At June 30, 2025 , Hetch Hetchy’s reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Am
ounts 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:

At June 30, 2025, Hetch Hetchy reported deferred outflows of resources related to contributions subsequent to the measurement date of $8,625, of which $3,522 for Hetchy Water, $4,305 for Hetchy Power, and $798 for CleanPowerSF , which will be recognized as an adjustment to net pension liability/(asset) in the reporting year ending June 30, 2026.

Fiscal Year 2024
As of June 30, 2024, the City reported net pension liability ( NPL) for its proportionate share of the net pension liability of the SFERS Plan of $ 3,456,687. 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 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. Hetch Hetchy’s allocation of the City’s proportionate share of the net pension liability for the SFERS Plan as of June 30, 2024 was $ 45,985, of which $ 19,090 was for Hetchy Water, $ 23,332 for Hetchy Power, and $3,563 for CleanPowerSF.

F
or the year ended June 30, 2024 , the City’s recognized pension expense was $ 659,719 including amortization of deferred outflows/inflows related pension items. Hetch Hetchy’s allocation of pension expense including amortization of deferred outflows/inflows related Hetchy Hetchy Hetchy Hetchy
Fiscal Year 2025 Water Power CleanPowerSF Total Water Power CleanPowerSF Total Pension contributions subsequent to the
measurement date $ 3,522 4,305 798 8,625 —   —   —   — Differences between expected and actual
experience 3,218 3,933 729 7,880 —   —   —   — Changes in assumptions 1,609 1,967 366 3,942 491 600 111 1,202 Net difference between projected and actual
earnings on pension plan investments 3,771 4,609 854 9,234 —   —   —   — Change in employer's proportion 315 384 6 705 377 461 619 1,457 Total $ 12,435 15,198 2,753 30,386 868 1,061 730 2,659 Resources Resources
Schedules of Deferred Outflows and Inflows of Resources Deferred Outflows of Deferred Inflows of
Fiscal Hetchy Hetchy
years Water Power CleanPowerSF Total
2026 $ (1,000) (1,222) (449) (2,671)
2027 7,339 8,970 1,483 17,792
2028 1,356 1,657 179 3,192
2029 350 427 12 789
$ 8,045 9,832 1,225 19,102

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
69 (Continued)
pension items was $8,008, of which $ 3,230 for Hetchy Water, $3, 948 for Hetchy Power, and $830 for CleanPowerSF. Pension expense increased from the prior year, largely due to the amortization of deferrals.

A
t June 30, 2024 , Hetch Hetchy’s reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Am
ounts 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:

Actuarial Assumptions
Fiscal Year 2025
A summary of the actuarial assumptions and methods used to calculate the Total Pension Liability for the SFERS Plan as of June 30, 202 4 (measurement year) is provided below, including any assumptions that differ from those used in the July 1, 202 3 actuarial valuation.

Refer to the July 1, 2023 actuarial valuation report for a complete description of all other assumptions, which can be found on the Retirement System’s website https://mysfers.org.

Hetchy Hetchy Hetchy Hetchy
Fiscal Year 2024 Water Power CleanPowerSF Total Water Power CleanPowerSF Total Pension contributions subsequent to the
measurement date $ 3,518 4,299 657 8,474 —   —   —   — Differences between expected and actual
experience 2,051 2,507 383 4,941 —   —   —   — Changes in assumptions 2,470 3,021 461 5,952 1,127 1,378 210 2,715 Net difference between projected and actual
earnings on pension plan investments 3,613 4,415 674 8,702 —   —   —   — Change in employer's proportion 277 338 12 627 814 994 715 2,523 Total $ 11,929 14,580 2,187 28,696 1,941 2,372 925 5,238 Resources Resources
Schedules of Deferred Outflows and Inflows of Resources Deferred Outflows of Deferred Inflows of
Fiscal Hetchy He tchy
years Water Power CleanPowerSF Total
2025 $ (336) (410) (330) (1,076)
2026 (1,374) (1,680) (422) (3,476)
2027 7,151 8,740 1,225 17,116
2028 1,029 1,259 132 2,420
$ 6,470 7,909 605 14,984

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
70 (Continued)
C
hanges of Assumptions SFERS plan – There were no changes in the discount rate for the measurement period ended June 30, 202 4. The municipal bond yield increased from 3.65% to

3.93%.

M
ortality 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, 202 4 measurement date were based upon the result of a demographic experience study for the period July 1, 2014 through June 30, 2019 and a review of economic assumptions as of July 1, 2023.

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.

Key Actuarial Assumptions
Valuation Date July 1, 2023 updated to June 30, 2024
Measurement Date June 30, 2024
Actuarial Cost Method Entry-Age Normal Cost
Expected Rate of Return 7.20% net of investment expenses Municipal Bond Yield 3.93% as of June 30, 2024

3.65% as of June 30, 2023
Bond Buyer 20-Bond GO Index, June 29, 2023 and June 27, 2024 Inflation 2.50%
Projected Salary Increases 3.25% plus merit component based employee classification and years of service Discount Rate 7.20% as of June 30, 2024

7.20% as of June 30, 2023
Administrative Expenses 0.60% of payroll as of June 30, 2024

0.60% of payroll as of June 30, 2023
Basic COLA
Old Miscellaneous and
All New Plans
Old Police & Fire,
pre 7/1/75
Old Police & Fire
Charters A8.595
and A8.596
Old Police & Fire
Charters A8.559
and A8.585
June 30, 2024 2.00% 1.90% 2.50% 3.60%
June 30, 2023 2.00% 1.90% 2.50% 3.60%
SFERS Plan

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
71 (Continued)
C
hanges of Assumptions SFERS 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%.

M
ortality 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.

Discount Rate
Fiscal Year 2025
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, 2024 and June 30, 2023 (measurement date).

The discount rate used to measure the Total Pension Liability as of June 30, 2024 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, 2023 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.

T
he 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.

Key Actuarial Assumptions
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%
Projected 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
Basic COLA
Old Miscellaneous and
All New Plans
Old Police & Fire,
pre 7/1/75
Old Police & Fire,
Charters A8.595
an
d A8.596
Old Police & Fire,
Charters A8.559
an
d A8.585
June 30, 2023 2.00% 1.90% 2. 50% 3.60%
June 30, 2022 2.00% 1.90% 2.50% 3.60%
SFERS Plan

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
72 (Continued)
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.

W
hile 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 fair 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.

A

0.50% Supplement COLA is expected to be payable as of July 1, 2024 for most non -Prop C members due to the favorable investment returns for fiscal year ended 2024. The table below shows the net assumed Supplemental COLA for members with a 2.00% Basic COLA for sample years.

T
he projection of benefit payments to current members for determining the discount rate includes the payment of anticipated future Supplemental COLAs.

B
ased on these assumptions, the Retirement System’s fiduciary net position was projected to be available to make future benefit payments for current members through 2106 . 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 3.93% to the extent they are not available. The single equivalent rate used to determine the Total Pension Liability as of June 30, 2024 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 best - estimate of expected future nominal rates of return for each major asset class over 10 and 30 - year horizons. These estimates were combined to produce the long -term expected rate of return by weighting the expected future nominal rates of return by the target asset allocation percentage.

Fiscal years
2026+ 0.75 % 0.50 %
96 - Prop C
Before 11/6/96
or After Prop C

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
73 (Continued)
The target allocation and best estimates of geometric long -term expected real rates of return (expected returns, net of pension plan investment expense and inflation) for each major asset class are summarized in the following table.

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.

T
he 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.

W
hile 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 Asset Class
Target Allocation
from Jan 2021 -
Jun 2024
Target Allocation
Effective as of
Jul 2024
Long-Term
Expected Real
Rate of Return
Global Equity 37.0 % 32.0 % 4.2 %
Private Equity 23.0 20.0 7.2
Liquid Credit 5.0 12.0 3.9
Private Credit 10.0 10.0 5.9
Real Assets 10.0 10.0 5.5
Absolute Return 10.0 10.0 4.4
Treasuries 8.0 8.0 1.8
Cash — 1.0 1.2
Leverage (3.0) (3.0) 1.6
Total 100.0 100.0

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
74 (Continued)
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 fair 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.

N
o 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.

T
he projection of benefit payments to current members for determining the discount rate includes the payment of anticipated future Supplemental COLAs.

B
ased 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%.

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 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.

T
arget 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.

Fiscal years
2025+ 0.75 % 0.50 %
96 - Prop C
Before 11/6/96
or After Prop C
Asset Class
Target
Allocation
Long-Term Expected Real
Rate of Return
Global Equity 37.0 % 4.6 %
Private Equity 23.0 7.8
Private Credit 10.0 5.8
Real Assets 10.0 5.3
Ab
solute Return 10.0 4.4
Treasuries 8.0 1.7
Liquid Credit 5.0 3.5
Leverage (3.0) 1.4
Total 100.0

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
75 (Continued)
Sensitivity of Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The
following presents Hetch Hetchy’s allocation of the employer’s proportionate share of the net pension liability/( asset) for the SFERS Plan, calculated using the discount rate, as well as what Hetch Hetchy’s allocation of the employer’s proportionate share of the total pension liability/(asset) would be if it were calculated using a discount rate that is 1% lower or 1% higher than the current rate.
(b) Other Postemployment Benefits
H
etch Hetchy participates in a single-employer defined benefit other postemployment benefits plan (the Plan). The Plan is maintained by the City and is administered through the City’s Health Service System. It provides postemployment medical, dental and vision insurance benefits to eligible employees, retired employees, surviving spouses, and domestic partners. Health benefit provisions are established and may be amended through negotiations between the City and the respective bargaining units. The City does not issue a separate report on its OPEB plan.

G
ASB Statement No. 75 requires that reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used.

H
etch Hetchy’s proportionate share percentage of the Plan was determined based on its percentage of citywide “pay -as-you-go” contributions for the year s ended June 30, 2024 and June 30, 2023. Hetch Hetchy’s net OPEB liability, deferred outflows/inflows of resources related to OPEB, amortization of deferred outflows/inflows and OPEB expense to each department is based on its allocated percentage. Hetch Hetchy’s proportionate share of the City’s OPEB elements was 1.04%, of which 0.42% for Hetchy Water, 0.52% for Hetchy Power, and 0. 10% for CleanPowerSF as of June 30, 202 4 (measurement date). Hetch Hetchy’s proportionate share of the City’s OPEB elements was 1.03%, of which 0.41% for Hetchy Water, 0.51% for Hetchy Power, and 0.11% for CleanPowerSF as of June 30, 2023 (measurement date).

Hetchy Hetchy
Fiscal Year 2025 Water Power CleanPowerSF Total
$ 46,983 57,423 10,646 115, 052
20,410 24,945 4,625 49,980
(1,486) (1,816) (337) (3,639)
Hetchy Hetchy
Fiscal Year 2024 Water Power CleanPowerSF Total
$ 44,775 54,725 8,357 107, 857
19,090 23,332 3,563 45,985
(2,088) (2,552) (390) (5,030)
1% Decrease Share of NPL @ 6.20%
Share of NPL @ 7.20%
1% Increase Share of NPA @ 8.20%
1% Decrease Share of NPL @ 6.20%
Share of NPL @ 7.20%
1% Increase Share of NPA @ 8.20%
Fiscal Year 2025 Fiscal Year 2024
Valuation Date (VD) June 30, 2024 June 30, 2022 updated to June 30, 2023 Measurement Date (MD) June 30, 2024 June 30, 2023
Measurement Period (MP) July 1, 2023 to June 30, 2024 July 1, 2022 to June 30, 2023 San Francisco Health Service System Retiree Plan - Single-Employer

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
76 (Continued)
Benefits
P
ermanent full- time and elected employees are eligible to retire and receive post employment health insurance benefits when they are eligible for retirement benefits from the City and County of San Francisco’s Retirement System. The eligibility requirements are as follows:

Normal Retirement Miscellaneous Age 50 with 20 years of credited service1 Age 60 with 10 years of credited service
Safety Age 50 with 5 years of credited service
Disabled Retirement2 Any age with 10 years of credited service Terminated Vested 5 years of credited service at separation 1 Age 53 with 20 years of credited service, age 60 with 10 years of credited service, or age 65 for Miscellaneous members hired on or after January 7, 2012 under Charter Section 8.603. 2 No service requirement for Safety members retiring under the industrial disability benefit or for surviving spouses/domestic partners of those killed in the line of duty.

Re
tiree healthcare benefits are administered by the San Francisco Health Service System and include the following:

Medical: PPO – Blue Shield (self-insured) and UHC Medicare Advantage (fully-insured) HMO – Kaiser (fully-insured) and Blue Shield (flex-funded) and Health Net (flex-funded) Dental: Delta Dental, DeltaCare USA, and United Healthcare Dental Vision: Vision benefits are provided under the medical insurance plans and are administered by Vision Service Plan.

P
rojections of the sharing of benefit related costs are based on an established pattern of practice.

Contributions
Benefits provided under the Plan are currently paid through “pay -as-you-go” funding.

Additionally, under the City Charter, active officers and employees of the City who commenced employment on or after January 10, 2009, shall contribute to the Retiree Health Care Trust Fund (Trust Fund) a percentage of compensation not to exceed 2% of pre-tax compensation. The City shall contribute 1% of compensation for officers and employees who commenced employment on or after January 10, 2009 until the City’s GASB Actuary has determined that the City’s portion of the Trust Fund is fully funded. At that time, the City’s 1% contribution shall cease, and officers and employees will each contribute 50% of the maximum 2% of pre -tax compensation.

S
tarting July 1, 2016, active officers and employees of the City who commenced employment on or before January 9, 2009, shall contribute 0.25% of pre- tax compensation into the Trust Fund.

Beginning on July 1st of each subsequent year, the active officers and employees of the City who commenced employment on or before January 9, 2009, shall contribute an additional 0.25% of pre-tax compensation up to a maximum of 1%. Starting July 1, 2016, the City shall contribute

0.25% of compensation into the Trust Fund for each officer and employee who commenced employment on or before January 9, 2009. Beginning on July 1 st of each subsequent year, the
City shall contribute an additional 0.25% of compensation, up to a maximum of 1% for each officer and employee who commenced employment on or before January 9, 2009. When the

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
77 (Continued)
City’s actuary has determined that the City’s portion of the Trust Fund is fully funded, the City’s 1% contribution shall cease, and officers and employees will each contribute 50% of the maximum 1% of pre -tax compensation. Additional or existing contribution requirements may be established or modified by amendment to the City’s Charter.

Fiscal Year 2025
F
or the fiscal year ended June 30, 2025, the City’s funding was based on “pay as you go” plus a contribution of $52,126 to the Retiree Healthcare Trust Fund. The “pay as you go” portion paid by the City was $248,806 for a total contribution of $300,932 for the fiscal year ended June 30, 2025. Hetch Hetchy’s proportionate share of the City’s contributions for fiscal year 202 5 were $3,117: $1,273 for Hetchy Water, $1, 556 for Hetchy Power, and $ 288 for CleanPowerSF and will be recognized as a reduction of the net OPEB liability in the reporting year ending June 30, 2026.

Fiscal Year 2024
F
or the fiscal year ended June 30, 2024, the City’s funding was based on “pay as you go” plus a contribution of $48,779 to the Retiree Healthcare Trust Fund. The “pay as you go” portion paid by the City was $229,922 for a total contribution of $278,701 for the fiscal year ended June 30, 2024. Hetch Hetchy’s proportionate share of the City’s contributions for fiscal year 2024 were $2,864: $1,155 for Hetchy Water, $1,412 for Hetchy Power, and $297 for CleanPowerSF and will be recognized as a reduction of the net OPEB liability in the reporting year ending June 30, 2025.

OPEB Liability, OPEB Expenses and Deferred Outflows/Inflows of Resources Related to OPEB Fiscal Year 2025
As of June 30, 202 5, the City reported net OPEB liability related to the Plan of $3, 921,799.

Hetch Hetchy’s proportionate share of the City’s net OPEB liability as of June 30, 202 5 was $40,620: $16,590 for Hetchy Water, $20,277 for Hetchy Power, and $3,753 for CleanPowerSF.

For the year ended June 30, 2025, the City’s recognized OPEB expense was $2 59,579.

Amortization of the City’s deferred outflows and inflows is included as a component of OPEB expense. Hetch Hetchy’s proportionate share of the City’s OPEB expense/(income) was $3,023:
$1,766 for Hetchy Water and $2,158 for Hetchy Power, and $(901) for CleanPowerSF.

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
78 (Continued)
As of June 30, 2025, Hetch Hetchy reported its proportionate share of the City’s deferred outflows and inflows of resources related to OPEB from the following sources:

Am
ounts reported as deferred outflows, exclusive of contributions made after the measurement date, and deferred inflows of resources will be amortized annually and recognized in OPEB expense as follows:

A
t June 30, 2025, Hetch Hetchy reported as deferred outflows of resources related to contributions subsequent to the measurement date of $3,117 , of which $1,273 for Hetchy Water, $1,556 for Hetchy Power, and $288 for CleanPowerSF, which will be recognized as an adjustment to net OPEB liability/(asset) in the reporting year ending June 30, 2026.

Fiscal Year 2024
As of June 30, 2024, the City reported net OPEB liability related to the Plan of $3,924,832.

Hetch Hetchy’s proportionate share of the City’s net OPEB liability as of June 30, 2024 was $40,341: $16,269 for Hetchy Water, $19,883 for Hetchy Power, and $4,189 for CleanPowerSF.

For the year ended June 30, 2024, the City’s recognized OPEB expense was $261,158.

Amortization of the City’s deferred outflows and inflows is included as a component of OPEB expense. Hetch Hetchy’s proportionate share of the City’s OPEB expense/(income) was $5,204:
$2,390 for Hetchy Water and $2,922 for Hetchy Power, and $(108) for CleanPowerSF.

Hetchy Hetchy Hetchy Hetchy
Water Power CleanPowerSF Total Water Power CleanPowerSF Total Contributions subsequent to measurement date $ 1,273   1,556   288   3,117   —   —   —   — Differences between expected and actual
experience 500   612   113   1,225   1,554   1,900   352   3,806 Changes in assumptions 706   862   160   1,728   —   —   —   — Net difference between projected and actual
earnings on plan investments
—   —   —   —   186   227   42   455
Change in proportion 475   581   634   1,690   1,092   1,334   1,343   3,769 Total $ 2,954 3,611 1,195 7,760 2,832 3,461 1,737 8,030 Schedules of Deferred Outflows and Inflows of Resources Deferred Outflows of Deferred Inflows of
Resources Resources
Fiscal Hetchy Hetchy
years Water Power Cl eanPowerSF Total
2026 $ (175) ( 214) (364) (753)
2027 (268) (327) (261) (856)
2028 (460) (561) (151) (1,172)
2029 (180) (221) (178) (579)
2030 (34) (42) 62 (14)
Thereafter (34) (41) 62 (13)
Total $ (1,151) ( 1,406) (830) (3,387) Deferred Outflows/(Inflows) of Resources

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
79 (Continued)
As of June 30, 2024, Hetch Hetchy reported its proportionate share of the City’s deferred outflows and inflows of resources related to OPEB from the following sources:

Am
ounts reported as deferred outflows, exclusive of contributions made after the measurement date, and deferred inflows of resources will be amortized annually and recognized in OPEB expense as follows:

Hetchy Hetchy Hetchy Hetchy
Water Power CleanPowerSF Total Water Power CleanPowerSF Total Contributions subsequent to measurement date $ 1,155   1,412   297   2,864   —   —   —   — Differences between expected and actual
experience 699   854   180   1,733   1,886   2,305   486   4,677 Changes in assumptions 473   578   122   1,173   —   —   —   — Net difference between projected and actual
earnings on plan investments
125   152   32   309   —   —   —   —
Change in proportion 739   903   365   2,007   1,011   1,236   1,806   4,053 Total $ 3,191 3,899 996 8,086 2,897 3,541 2,292 8,730 Schedules of Deferred Outflows and Inflows of Resources Deferred Outflows of Deferred Inflows of
Resources Resources
Fiscal Hetchy He tchy
years Water Pow er CleanPowerSF Total
2025 $ (238) (292) (571) (1,101)
2026 (79) (96) (456) (631)
2027 (170) (209) (355) (734)
2028 (362) (443) (244) (1,049)
2029 (12) (14) 33 7
Total $ (861) (1,054) (1,593) (3,508)
Deferred Outflows/(Inflows) of Resources

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
80 (Continued)
Actuarial Assumptions
Fiscal Year 2025
A
summary of the actuarial assumptions and methods used to calculate the total OPEB liability as of June 30, 2024 (measurement date) is provided below:

The mortality rates in the base tables are projected generationally from the base year using the MP-2019 projection scale.

Key Actuarial Assumptions
Valuation Date June 30, 2024
Me
asurement Date June 30, 2024
Actuarial Cost Method The Entry Age Actuarial Cost Method is used to measure the Plan's Total OPEB Liability Healthcare Cost Trend Rates Pre-Medicare trend starts at 6.87% trending down to ultimate rate of 3.94% in 2075 Medicare trend starts at 6.87% trending down to ultimate rate of 3.93% in 2075 10-County average trend starts at 5.00% trending down to ultimate rate of 3.94% in 2075 Vision and expenses trend remains a flat 3.0% for all years Expected Rate of Return on Plan Assets 7.00%
Salary Increase Rate Wage Inflation Component: 3.25%
Additional Merit Component (dependent on years of service):

Police: 0.50% - 7.50%
Fire: 0.50% - 14.00%
Muni Drivers: 0.00% - 16.00%
Craft: 0.50% - 3.75%
Misc: 0.30% - 5.50%
Inflation Rate Wage Inflation: 3.25% compounded annually Consumer Price Inflation: 2.50% compounded annually
Mortality Tables
Base mortality tables are developed by multiplying a published table by an adjustment factor developed in SFERS experience study for the period ending June 30, 2019.

Non-Annuitants
Published Table Male Fe male
Miscellaneous PubG-2010 Employee 0.834 0.866
Safety PubS-2010 Employee 1.011 0.979
Healthy Retirees
Published Table Male Fe male
Miscellaneous PubG-2010 Employee 1.031 0.977
Safety PubS-2010 Employee 0.947 1.044
Disabled Retirees
Published Table Male Fe male
Miscellaneous PubG-2010 Employee 1.045 1.003
Safety PubS-2010 Employee 0.916 0.995
Beneficiaries
Published Table Male Fe male
Miscellaneous PubG-2010 Employee 1.031 0.977
Safety PubG-2010 Employee 1.031 0.977
Adjustment Factor
Adjustment Factor
Adjustment Factor
Adjustment Factor

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
81 (Continued)
Fiscal Year 2024
A
summary of the actuarial assumptions and methods used to calculate the total OPEB liability as of June 30, 2023 (measurement date) is provided below:

The mortality rates in the base tables are projected generationally from the base year using the MP-2019 projection scale.

Key Actuarial Assumptions
Valuation Date June 30, 2022 updated to June 30, 2023
Measurement Date June 30, 2023
Actuarial Cost Method The Entry Age Actuarial Cost Method is used to measure the Plan's Total OPEB Liability Healthcare Cost Trend Rates Pre-Medicare trend starts at 7.24% trending down to ultimate rate of 3.94% in 2075 Medicare trend starts at 7.24% trending down to ultimate rate of 3.94% in 2075 10-County average trend starts at 5.00% trending down to ultimate rate of 3.94% in 2075 Vision and expenses trend remains a flat 3.0% for all years Expected Rate of Return on Plan Assets 7.00%
Salary Increase Rate Wage Inflation Component: 3.25%
Additional Merit Component (dependent on years of service):

Police: 0.50% - 7.50%
Fire: 0.50% - 14.00%
Muni Drivers: 0.00% - 16.00%
Craft: 0.50% - 3.75%
Misc: 0.30% - 5.50%
Inflation Rate Wage Inflation: 3.25% compounded annually Consumer Price Inflation: 2.50% compounded annually
Mortality Tables
Base mortality tables are developed by multiplying a published table by an adjustment factor developed in SFERS experience study for the period ended June 30, 2019.

Non-Annuitants
Published Table Male Female
Miscellaneous PubG-2010 Employee 0.834 0.866
Safety PubS-2010 Employee 1.011 0.979
Healthy Retirees
Published Table Male Female
Miscellaneous PubG-2010 Employee 1.031 0.977
Safety PubS-2010 Employee 0.947 1.044
Disabled Retirees
Published Table Male Female
Miscellaneous PubG-2010 Employee 1.045 1.003
Safety PubS-2010 Employee 0.916 0.995
Beneficiaries
Published Table Male Female
Miscellaneous PubG-2010 Employee 1.031 0.977
Safety PubG-2010 Employee 1.031 0.977
Adjustment Factor
Adjustment Factor
Adjustment Factor
Adjustment Factor

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
82 (Continued)
Sensitivity of Liabilities to Changes in the Healthcare Cost Trend Rate and Discount Rate The following presents Hetch Hetchy’s proportionate share of the City’s net OPEB liability calculated using the healthcare cost trend rate, as well as what its allocation of the City’s net OPEB liability would be if it were calculated using a healthcare cost trend rate that is 1% lower or 1% higher than the current rate as of June 30, 2025 and June 30, 2024:

Discount Rate
Fiscal Year 2025
The discount rate used to measure the Total OPEB Liability as of June 30, 2024 was 7.00%.

Based on the assumption that plan member contributions will continue to be made at the rates specified in the Charter, it was determined that the Plan’s projected fiduciary net position will be greater than or equal to the benefit payments projected for each future period. As such, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability.

T
he long-term expected rate of return on OPEB plan investments was 7.00% based on expected future returns and historical returns experienced by the Trust Fund. Expected future returns were determined based on 10-year and 20-year capital market assumptions for the Trust Fund’s asset allocation.

Hetchy Hetchy
Water Power CleanPowerSF 2025
1% Decrease $ 13,982 17,089 3,163 34,234
Healthcare Cost Trend Rate 16,590 20,277 3,753 40,620 1% Increase 19,824 24,229 4,485 48,538
Hetchy Hetchy
Water Power CleanPowerSF 2024
1% Decrease $ 13,835 16,909 3,562 34,306
Healthcare Cost Trend Rate 16,269 19,883 4,189 40,341 1% Increase 19,288 23,574 4,966 47,828

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
83 (Continued)
Target allocation for each major asset class and best estimates of geometric real rates of return are summarized in the following table:

The following presents Hetch Hetchy’s proportionate share of the City’s net OPEB liability calculated using the discount rate, as well as what Hetch Hetchy’s proportionate share of the City’s net OPEB liability would be if it were calculated using a discount rate that is 1% lower or 1% higher than the current rate:

Fiscal Year 2024
The discount rate used to measure the Total OPEB Liability as of June 30, 2023 was 7.00%.

Based on the assumption that plan member contributions will continue to be made at the rates specified in the Charter, it was determined that the Plan’s projected fiduciary net position will be greater than or equal to the benefit payments projected for each future period. As such, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability.

T
he long-term expected rate of return on OPEB plan investments was 7.00% based on expected future returns and historical returns experienced by the Trust Fund. Expected future returns were determined based on 10-year and 20-year capital market assumptions for the Trust Fund’s asset allocation.

Asset Class
Target
Allocation
Long-term
Expected Real
Rate of Return
Equities
U.S. Large Cap 25.0 % 5.5 %
U.S. Small Cap 2.0 6.4
Developed Market Equity (non-U.S.) 13.0 5.9
Emerging Market Equity 10.0 5.9
Credit
Bank Loans 3.0 3.7
High Yield Bonds 3.0 3.9
Rate Securities
Investment Grade Corporate Bonds 7.0 1.9
Short-term Treasury Inflation-Protected Securities (TIPS) 5.0 0.9 Private Markets
Private Equity 10.0 6.9
Private Debt 5.0 6.2
Core Private Real Estate 5.0 5.2
Infrastructure (Core Private) 2.0 6.0
Risk Mitigating Strategies
Global Macro 10.0 1.6
Total 100.0 %
Hetchy Hetchy
Water Power CleanPowerSF Total
1% Decrease 6.00% $ 19,557 23,902 4,425 47,884
Discount Rate 7.00% 16,590 20,277 3,753 40,620
1% Increase 8.00% 14,156 17,301 3,203 34,660

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
84 (Continued)
Target allocation for each major asset class and best estimates of geometric real rates of return are summarized in the following table:

The following presents Hetch Hetchy’s proportionate share of the City’s net OPEB liability calculated using the discount rate, as well as what Hetch Hetchy’s proportionate share of the City’s net OPEB liability would be if it were calculated using a discount rate that is 1% lower or 1% higher than the current rate:

The City issues a publicly available financial report that includes the complete note disclosures and required supplementary information related to the City’s postemployment health care obligations. The report may be obtained on the City’s website https://www.sf.gov/annual- comprehensive-financial-reports-acfr, by writing to the City and County of San Francisco, Office of the Controller, 1 Dr. Carlton B. Goodlett Place, Room 316, San Francisco, California 94102, or by calling (415) 554-7500.
(11) Related Parties
(a) Hetch Hetchy
Various common costs incurred by the SFPUC are allocated among Hetch Hetchy, Water, and Wastewater Enterprises. The allocations are based on the SFPUC management’s best estimate and may change from year to year depending on the activities incurred by each Enterprise and the information available. For the year s ended June 30, 202 5 and 2024, the SFPUC allocated Asset Class
Target
Allocation
Long-term
Expected Real
Rate of Return
Equities
U.S. Large Cap 25.0 % 6.1 %
U.S. Small Cap 2.0 6.7
Developed Market Equity (non-U.S.) 13.0 7.2
Emerging Market Equity 10.0 7.4
Credit
Bank Loans 3.0 4.4
High Yield Bonds 3.0 4.7
Rate Securities
Investment Grade Corporate Bonds 7.0 2.8
Short-term Treasury Inflation-Protected Securities (TIPS) 5.0 1.0 Private Markets
Private Equity 10.0 8.4
Private Debt 5.0 6.4
Core Private Real Estate 5.0 3.9
Infrastructure (Core Private) 2.0 5.2
Risk Mitigating Strategies
Global Macro 10.0 3.1
Total 100.0 %
Hetchy Hetchy
Water Power CleanPowerSF Total
1% Decrease 6.00% $ 19,040 23,272 4,903 47,215
Discount Rate 7.00% 16,269 19,883 4,189 40,341
1% Increase 8.00% 13,995 17,105 3,604 34,704

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
85 (Continued)
$33,719 or 23. 9% and $28,789 or 23.1 %, respectively, in administrative costs which are presented in the financial statements under various expense categories. These costs are then allocated to Hetchy Water, Hetchy Power, and CleanPowerSF in the Hetch Hetchy financial statements, using the periodically reviewed department overhead allocation model.

The
City performs certain administrative services such as maintenance of accounting records and investment of cash for all fund groups within the City. The various funds are charged for these services based on the City’s indirect cost allocation plan. Some City departments provide direct services such as engineering, purchasing, legal, data processing, telecommunication, and human resources to Hetch Hetchy and charge amounts designed to recover those departments’ costs. These charges totaling approximately $14, 020 and $15,121 for the years ended June 30, 202 5 and 2024, respectively, have been included in services provided by other departments in the accompanying financial statements.

S
FPUC’s 75-year lease agreement with the San Francisco Recreation and Parks Department, for the use of parking spaces for its fleet of vehicles at the Civic Center Garage, commenced on February 1, 2011. Total payment under this agreement is $6,274, which was fully made as of fiscal year 2015. The expenses and prepayments among the three SFPUC Enterprises are based on 525 Golden Gate occupancy. As of June 30, 202 5, Hetch Hetchy’s allocable shares of expenses and prepayment were $ 19 and $85 2, respectively , and as of June 30, 2024 were $16 and $871, respectively.
(b) Hetchy Water
For the years ended June 30, 202 5 and 2024, the SFPUC allocated $6,905 or 4.9% , and $12,805 or 10.3%, respectively, in administrative costs.

The
Water Enterprise purchases water from Hetchy Water. Included in the operating revenues are the water assessment fees of $49, 241 and $46,266 for the years ended June 30, 202 5 and 2024, respectively. The water assessment fees represent a recovery to fund upcountry, water-related costs that are not otherwise funded through Hetchy water -related revenue or Water revenue bonds.

H
etchy Water received $47,084 and $42 from the Water Enterprise for the years ended June 30, 2025 and 2024, respectively. The increase was mainly due to the transfer of Stat e Re
volving Fund (SRF) loan proceeds to fund Hetchy Water's share of the Mountain Tunnel Project.
(c) Hetchy Power
For the years ended June 30, 2025 and 2024, the SFPUC allocated $ 20,062 or 14.2% , and $10,297 or 8.3% respectively, in administrative costs.

F
or the years ended June 30, 2025 and 2024, operating revenues in sales of power to departments within the City were $144,286 and $125,197, respectively.

The
Water Enterprise purchases electricity and gas from Hetchy Power. This amount totaled $13,477 and $10,256 for the years ended June 30, 2025 and 2024, respectively.

The
Wastewater Enterprise purchases electricity and gas from Hetchy Power. This amount totaled $14,841 and $12,377 for the years ended June 30, 2025 and 2024, respectively.

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
86 (Continued)
The Low Carbon Fuel Standard (LCFS) program, overseen by the California Air Resources Board (CARB), seeks to reduce the carbon intensity of California’s transportation fuel. Transportation fuel suppliers can achieve this goal by either reducing the carbon intensity of their fuels or purchasing LCFS credits from other fuel suppliers that have a lower carbon intensity. In 2017, the San Francisco Municipal Transportation Agency (SFMTA) joined the LCFS program, signing up its transit fleet of electric buses, cable cars, and light rail vehicles and generating LCFS credits. Through a Memorandum of Understanding (MOU) with SFMTA, approved by the SFPUC Commission in Resolution 17 -0199, net proceeds from the sale of LCFS credits would be shared 50/50 between SFMTA and Hetchy Power. In Ordinance 0199- 19, the Board of Supervisors authorized Hetchy Power to establish the Low Carbon Fuel Standard Fund to account for the revenue and expenditure from the credit sales . The Ordinance also allowed Hetchy Power to sell LCFS credits on behalf of other City agencies which includes Port of San Francisco (Port) and San Francisco International Airport (SFO). Revenue allocations and fees are based on agreements with the departments. LC FS revenue is reported as other non- operating revenues on the Statements of Revenues, Expenses, and Changes in Net Position.

D
uring the fiscal year ended June 30, 2025, Hetchy Power received total payments of LCFS credits of $1,668, of which $1,041 was transferred to other City departments ( $627 for SFMTA, $238 for Port, and $176 for SFO). The remaining portion was reported as other non -operating revenues on the Statements of Revenues, Expenses, and Changes in Net Position.

D
uring the fiscal year ended June 30, 2024, Hetchy Power received total payments of LCFS credits of $1,838, of which $1,154 was transferred to other City departments ($684 for SFMTA, $372 for Port, and $98 for SFO ). The remaining portion was reported as other non- operating revenues on the Statements of Revenues, Expenses, and Changes in Net Position.

Du
e from other City departments was $10, 166 and $11,421 as of June 30, 2025 and 2024, respectively. Hetchy Power serves as the City’s department for energy efficiency projects and maintains the Sustainable Energy Account (SEA) (formerly known as the Mayor’s Energy Conservation Account) fund to sponsor and financially support such projects at various City departments. In this role, Hetchy Power may secure low -interest financing to supplement funds available in the SEA fund. At June 30, 2025 and 2024, receivables related to projects completed throughout the City amounted to $2, 531 and $3,037, respectively and are recorded as due from other City Departments.

H
etch Hetchy funded a project for the Treasure Island Development Authority and recorded receivables in connection with an upgraded submarine power cable, and gas and electrical charges for the Treasure Island as due from other City departments . This amount totaled $7,304 and $7,041 for the years ended June 30, 2025 and 2024, respectively.

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
87 (Continued)
As of June 30, 2025 and 2024, Hetchy Power recorded receivables of $291 and $ 405, respectively, due from Wastewater Enterprise for its share of costs relating to SFPUC Headquarters Living Machine System. Details of due from other City departments are as follows:

A
s of June 30, 202 5, Hetchy Power had payable in the amount of $ 37,822 for SRF loan reimbursement to the Water Enterprise.
(d) CleanPowerSF
For the years ended June 30, 2025 and 2024, the SFPUC allocated $6, 752 or 4.8%, and $5,687 or 4.5%, respectively, in administrative costs to CleanPowerSF.

A
s of June 30, 202 5, and 202 4, operating revenue in sales of power to Hetchy Power were $8,399 and $1,421, respectively. Operating expenses in purchase of power from Hetchy Power were $8, 634 and $13,521, respectively. Wholesale sales of energy, capacity and/or other electric power related products may be made between the CleanPowerSF and Hetchy Power, when available. CleanPowerSF and Hetchy Power transact for such products at prevailing market prices.

Cl
eanPowerSF received program support services from Hetchy Power. This amount totaled $0 and $2,841 for the years ended June 30, 2025 and 2024, respectively. Starting fiscal year 2025, Hetchy Power's support services are recorded to personnel services. (12) Risk Management
The
Enterprise’s Risk Management program includes both self -insured (i.e., self- retention) and insured exposures at risk. Risk assessments and purchasing of insurance coverage are collaboratively coordinated by SFPUC Enterprise Risk Management and the City’s Office of Risk Management. With certain exceptions, the City and the Enterprise’s general approach is to first evaluate the exposure at risk for self -insurance. Based on this analysis, internal mitigation strategies and financing through a self-retention mechanism are generally more economical , as the SFPUC in coordination with the City Attorney’s Office administers, adjusts, settles, defends, and pays claims from budgeted resources (i.e., pay -as-you-go fund). When economically more viable or when required by debt financing covenants, the Enterprise obtains commercial insurance. The Enterprise does not maintai n
c
ommercial earthquake coverage, with certain minor exceptions, such as a sub -limit for fire-sprinkler leakage due to earthquake under the SFPUC Property Insurance Program. In the past three years, there were no settlements that exceeded insurance coverage. 2025 2024
Treasure Island Development Authority $ 7,304 7,041
SEA-related project: Moscone Center 2,531 3,037
General Fund — 754
Wastewater - 525 Golden Gate Headquarters Project 291 405 San Francisco Recreation and Park — 105
Department of Public Works 40 79
Total due from other City departments 10,166 11,421
Less: current portion (661) (1,558)
Long-term portion as of June 30, net $ 9,505 9,863

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
88 (Continued)
(a) General Liability
The Enterprise’s liability as of June 30, 2025, was estimated based on professional judgment regarding probable claims exposure provided by the City Attorney’s Office and includes an estimate of incurred but not reported losses. The recorded liability represents management’s best estimate of the City’s potential exposure based on currently available information.

The changes for the general liability (damage claims) for the years ended June 30, 2025, 2024, a
nd 2023 are as follows:
(b) Workers’ Compensation
The City actuarially determines and allocates workers’ compensation costs to the Enterprise according to a formula based on the following: (i) the dollar amount of claims; (ii) yearly projections of payments based on historical experience; and (iii) the size of the Enterprise’s payroll. The administration of workers’ compensation claims and payouts are handled by the Workers’ Compensation Division of the City’s Department of Human Resources. Statewide workers’ compensation reforms have resulted in budgetary savings in recent years. The City continues to develop and implement improved programs, such as return -to-work programs, to Risk Coverage Approach
(a) General Liability Self-Insured
(b) Workers’ Compensation Self-Insured through Citywide Pool (c) Property Purchased Insurance and Self-Insured
(d) Public Officials Liability Purchased Insurance
(e) Employment Practices Liability Purchased Insurance
(f) Cyber Liability Purchased Insurance
(g) Crime Purchased Insurance
(h) Electronic Data Processing Purchased Insurance and Self-Insured (i) Surety Bonds Contractual Risk Transfer
(j) Errors and Omissions Contractual Risk Transfer
(k) Builders’ Risk Contractual Risk Transfer
Beginning End of
Fi
scal years of year year
Hetch Hetchy
4,063$ 8,212 (11,330) 945
6,884 10,284 (13,105) 4,063
1,682 12,497 (7,295) 6,884
Hetchy Water
268$ 155 (126) 297
700 96 (528) 268
627 320 (247) 700
Hetchy Power
3,774$ 7,758 ( 10,884) 648
6,150 9,273 (11,649) 3,774
1,023 10,439 (5,312) 6,150
CleanPowerSF
21$ 299 (320) —
34 915 (928) 21
32 1,738 (1,736) 34
Claims and
changes in
es
timates
Claims paid and
changes in
es
timates
2024
2025
2024
2025
2024
2025
2023
2023
2023
2023
2025
2024

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
89 (Continued)
lower or mitigate the growth of workers’ compensation costs. Programs include accident prevention, investigation, and duty modification for injured employees with medical restrictions so return to work can occur as soon as possible.

The
changes for the workers’ compensation liabilities for the years ended June 30, 2025, 2024, and 2023 are as follows:
*
CleanPowerSF had no workers’ compensation liabilities as of June 30, 2025 and 2024. (c) Property
The Enterprise’s property risk management approach varies depending on whether the facility is currently under construction, the property is part of revenue- generating operations, the property is of high value, or is mission -critical in nature. During the course of construction, the Enterprise requires each contractor to provide its own insurance, while ensuring the full scope of work is covered with satisfactory levels to limit the Enterprise’s risk exposure. Once construction is complete, the Enterprise performs an assessment to determine whether liability/loss coverage will be obtained through the commercial property policy or self- insurance. The majority of property scheduled in the insurance program is for (1) revenue generating facilities, (2) debt- financed facilities, (3) mandated coverage to meet statutory requirements for bonding of various public officials, or (4) high-value, mission-critical property or equipment. (d) Public Officials Liability
All Enterprise public officials with financial oversight responsibilities are provided coverage through a commercial Public Officials Liability Policy. (e) Employment Practices Liability
An Employment Practices Liability Policy is retained to protect against employment -related claims and liabilities.
(f) Cyber Liability
A Cyber Liability Policy is retained to protect against cyber-related claims and liabilities.

Beginning End of
Fiscal years of year year
Hetch Hetchy
3,633$ 819 (969) 3,483
3,457 1,000 (824) 3,633
3,478 300 (321) 3,457
Hetchy Water
1,297$ 203 (270) 1,230
1,219 337 (259) 1,297
1,228 76 (85) 1,219
Hetchy Power
2,336$ 616 (699) 2,253
2,238 663 (565) 2,336
2,250 224 (236) 2,238 2023
2023
2025
2024
2025
2024
2025
2024
Claims paid and
changes in
estimates
Claims and
changes in
estimates
2023

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
90 (Continued)
(g) Crime
The Enterprise also retains a Commercial Crime Policy, in lieu of bonding its employees, to provide coverage against liabilities or losses due to third-party crime or employee fraud. (h) Electronic Data Processing
The Electronic Data Processing policy protects selected high-value electronic property in case of damage or loss.
(i) Surety Bonds
Bonds are required in most phases of the public utilities construction contracting process for such phases as bid, performance, and payment or maintenance. Additionally, bonds may be required in other contracts where goods or services are provided to ensure compliance with applicable terms and conditions such as warranty.
(j) Errors and Omissions
Errors and omissions, also known as Professional Liability, are commonly transferred through contract to the contracted professional, or retained through self insurance on a case -by-case basis depending on the size, complexity, or scope of construction or professional service contracts. Examples of such contracts are inclusive of services provided by engineers, architects, design professionals, and other licensed or certified professional service providers. (k) Builders’ Risk
Builders’ Risk policies of insurance are required to be provided by the contractor on all construction projects for the full value of construction. (l) Energy Risk Management
Similar to other electric utilities with a heavy reliance on hydroelectric generation, Hetch Hetchy is exposed to risks that could impact its ability to generate net revenues to fund operating and capital investment activities. Hydroelectric generation facilities in the Sierra Nevada are the primary source of electricity for Hetch Hetchy . For this reason, the Hetch Hetchy revenues can vary with watershed hydrology, unexpected generator outages, and market prices for energy.

Given the inherent risk for all hydroelectric generation, several risk management interventions have been developed to mitigate exposure.
(m) Enterprise Risk Management
The Power Enterprise adopted the ISO 31000 standard for Hetchy Power and the CleanPowerSF program as the framework for implementing Enterprise Risk Management (ERM). The Enterprise utilizes this framework to systematically and proactively identify and mitigate risks that threaten its business objectives. Since not all risks are insurable or transferable contractually, the ERM program provides an additional method to manage risks and protect the Enterprise’s current and expanding business allowing for increased operational resiliency and the ability to capitalize on opportunities.

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
91 (Continued)
(13) Commitments and Litigation
(a) Commitments
As of June 30, 202 5 and 2024, Hetch Hetchy had outstanding commitments with third parties of $1 85,619 and $154,975, respectively, for various capital projects and purchase agreements.

Hetchy Water
To meet certain requirements of the Don Pedro Reservoir operating license, the City entered into an agreement with the Modesto Irrigation District (MID) and Turlock Irrigation District (TID) in which the Districts would be responsible for an increase in water flow releases from the reservoir in exchange for annual payments from the City, which are included in Hetchy Water’s operating expenses. The payment amounts we re $5,940 and $5,714 for fiscal years 2025 and 2024, respectively. The payments are to be made for the duration of the license, but may be terminated with one year’s prior written notice after 2001. The City and the Districts have also agreed to monitor the fisheries in the lower Tuolumne River for the duration of the license. A maximum monitoring expense of $1,400 is to be shared between the City and the Districts over the term of the license. The City’s share of the costs is 52%, while the Districts are responsible for 48% of the costs.

Hetchy Power
Wholesale Distribution Tariff (WDT) and Key Operating Agreements for Grid Access U
pon expiration of the City’s previous Interconnection Agreement with PG&E, the City beg an taking service in 2015 under the WDT for distribution service and under the CAISO Open -Access Transmission Tariff for transmission service. The FERC -regulated Wholesale Distribution Tariff i s imp
lemented by PG&E through the City specific Service Agreements and Interconnection Agreements. The terms of these agreements have been in contention since the effective date.

The City continues to negotiate with PG&E and, where necessary, file complaints and protests at FERC. In September 2020, PG&E filed a revised WDT (WDT3) that increased rates and significantly decreased the City’s ability to serve City projects. Under the terms of WDT3, the City would be required to install costly and inefficient equipment not needed for technical, safety or reliability of operations. In addition, Hetchy Power would no longer be allowed to connect to the “network” grid in the center of San Francisco; have new secondary interconnections; and/ or serve any small, typically unmetered loads, such as streetlights, Distributed Antenna System ,
t
raffic signal s, and bus shelters. The City and PG&E have reached a limited settlement agreement that allows the City to continue serving City projects (like Affordable Housing, streetlights, parks, and schools) at a secondary interconnection. PG&E filed this agreement at FERC on August 11, 2025 and it is now waiting for FERC approval. Cost assignment issues still remain as PG&E requires the City to pay for distribution upgrades to PG&E’s system that benefits PG&E’s own retail customers. This issue is still being litigated at FERC under the WDT3 proceeding. PG&E has since filed a new iteration of the WDT, WDT4, which became in effect May 2025. The cost assignment issues remain in WDT4 and the City is currently engaged in settlement discussions with PG&E at FERC.

St
aff prepare regular reporting to the Board of Supervisors outlining on -going disputes wit h P
G&E over project requirements, costs and delays. During fiscal years 2025 and 2024, Hetchy Power purchased distribution services for $21, 782 and $27,932, respectively, from PG&E under the terms of the Service Agreements and Interconnection Agreements that implement the

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
92 (Continued)
WDT. The City continues to litigate and dispute these terms at FERC and in the court systems; and pursue the purchase of PG&E’s electric grid in San Francisco.

Western System Power Pool and other Market Purchases and Sales Hetchy Power may purchase or sell energy and other related products (such as ancillary services, spinning reserves, resource adequacy products, and congestion revenue rights) with different market entities through the Western System Power Pool (WSPP) and the CAISO. During fiscal years 2025 and 2024, Hetchy Power purchased $ 11,364 and $11,945 of power and other related products, respectively. Sales of excess power, after meeting Hetch Hetchy’s obligations, were $1,589 for fiscal year 2025 and $6,532 for fiscal year 2024, respectively.

Power Purchase Agreement (PPA)
H
etchy Power (Buyer) purchases energy, capacity, and environmental attributes from a local solar photovoltaic project located at Sunset Reservoir (the facility) pursuant to the 2009 25 -year PPA with SFCity1, LP, owned by Duke Energy (Seller). In November 2010, the facility commenced commercial operation and began to provide Hetchy Power energy generated by the facility.

The
PPA sets the starting purchase price of generated energy at $ 235/MWh, increasing by 3% each year throughout the term of the agreement, and it is expected that the facility will generate 6,560 MWh per year on average. Rates for fiscal year s ended June 30, 2025 and 2024 were $365/MWh and $354/MWh, respectively. In the event that the facility generates more energy than expected due to better than normal meteorological conditions, the PPA requires the Buyer to purchase all the excess energy but generation in excess of 120% of expected is purchased at no cost. The PPA also requires the Seller to generate a minimum amount of energy from the facility annually. If energy production falls below 50% of expected, the Seller must provide replacement power, and if energy falls below 90% of expected, the price for energy generated is lowered. In fiscal years 2025 and 2024, purchases of energy under the Agreement were $2,371, or 6,599 MWh, and $2,184, or 6,269 MWh, respectively.

APX, Inc
Hetchy Power and CleanPowerSF participate in the CAISO energy markets which requires the SFPUC to have a contract with a certified Scheduling Coordinator (SC). In June 2022, CleanPowerSF renewed a 5-year contract with APX, Inc with contract amount not to exceed $134,743 to fulfill this requirement. APX, Inc provides a number of services including but not limited to an interface with the CAISO’s energy scheduling portal, manage invoice payments to the CAISO and communications between the CAISO and the SFPUC, and dispatch of the Hetch Hetchy plant 24 hours a day, seven days a week. The contract also provides that APX, Inc will act as the SC for renewable generation plants under some of CleanPowerSF’s Power Purchase Agreements. Hetchy Power’s share was $ 475 and $456 as of June 30, 202 5 and 2024, respectively. CleanPowerSF’s share was $264 for fiscal years 2025 and 2024.

CleanPowerSF
Cl
eanPowerSF regularly adds new short-term and medium- term contracts with multiple counterparties pursuant to master agreements, including the WSPP Master Agreement, to purchase renewable, carbon -free and conventional energy and resource adequacy capacity.

CleanPowerSF has also entered into long-term contracts for renewable energy and capacity with

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
93 (Continued)
renewable energy developers including sPower, Terra -Gen, NextEra , Intersect Power and EDF Renewables. These contracts have been entered to allow CleanPowerSF to meet its existing retail sales obligations, to support future retail sales from anticipated load growth , and to comply with State requirement that 65% of CleanPowerSF’s Renewables Portfolio Standard (RPS) compliance targets be fulfilled by RPS- eligible electricity from contracts of 10 or more years. Citywide enrollment was completed in 2020 . Since it began serving customers in 2016 , CleanPowerSF’s cumulative opt -out rate is 4. 7% of all enrolled accounts. The total power purchase cost, net of wholesale sales, were $334,299 and $270,340 in fiscal years 2025 and 2024, respectively.

Cl
eanPowerSF contracts with Calpine Energy Solutions to provide meter data management, billing and customer care support. Calpine is responsible for calculating and providing CleanPowerSF charges to PG&E, which in turn bills both CleanPowerSF and PG&E customers for electricity transmission, distribution , and CleanPowerSF generation services. PG&E remits payments received from customers for CleanPowerSF charges to the City. During fiscal years 2025 and 2024, amounts paid were $4,683 and $4,742, respectively.

CleanPowerSF Guarantee
In March 2018, CleanPowerSF entered into a five -year, $75,000 Credit Agreement with JPMorgan Chase Bank, National Association (“Bank”) to provide letters of credit or loans from the Bank to guarantee certain power purchase agreement payment obligations of CleanPowerSF and to meet working capital needs, if necessary. In November 2021 the Credit Agreement decreased (at the request of CleanPowerSF) the available amount from $75,000 to $20,000, and the stated term of the agreement was extended to March 2024. Additional changes to the agreement effected by the November 2021 Amendments include elimination of target reserve requirements, revisions to debt service coverage (allowing for a liquidity test two times in the aggregate for any consecutive four quarters) and rate -setting covenants, changes to ongoing reporting requirements to the Bank, and changes to events of default, including the addition of an event of default if CleanPowerSF’s long -term unenhanced credit rating is downgraded below investment grade or suspended, withdrawn or otherwise unavailable. In May 2022 CleanPowerSF executed another amendment to its Credit Agreement to eliminate and change certain financial covenants contained in the 2018 Credit Agreement. Specifically, this Amendment eliminated the covenant of the Commission to maintain a specified debt service coverage ratio and changed such financial covenant to commit the Commission to maintain a specified level of Day Liquidity on Hand (as defined in the Credit Agreement). In March 2024 CleanPowerSF executed a fourth amendment to the Credit Agreement increasing the available amount from $20,000 to $75,000 and extended the agreement end date from March 2024 to March 2027. The Credit Agreement is secured by CleanPowerSF’s net revenues; there is no pledge of, or lien on net revenues that ranks senior to the obligations under the Credit Agreement. The Bank issued letters of credit in the face amounts totaling $ 6,183 for fiscal years ended June 30, 2025 and 2024, respectively. CleanPowerSF did not draw on the Credit Agreement during fiscal years 202 5 and 2024. Accordingly, the uncommitted credit capacity under the Credit Agreement was $68,817 during fiscal years 2025 and 2024.

O
riginal financial covenants include that CleanPowerSF maintain a Debt Service Coverage Ratio as defined in the Credit Agreement of not less than 1.05 for each fiscal quarter, as determined for the four consecutive fiscal quarter periods ended on the last day of such fiscal quarter.

CleanPowerSF was in compliance with all covenants and requirements of the Credit Agreement as amended for fiscal years ended June 30, 2025 and 2024.

HETCH HETCHY WATER AND POWER AND CLEANPOWERSF
Notes to Financial Statements
June 30, 2025 and 2024
(Dollars in thousands, unless otherwise stated)
94 Significant events of default under the Credit Agreement, include 1) non- payment, 2) material breach of warranty, representation, or other non -remedied breach of covenants as specified in the agreement and 3) bankruptcy and insolvency events, which could result in all outstanding loans under the Credit Agreement to be immediately due and payable; or the immediate termination of the Bank’s commitment to issue letters of credit or make loans under the Credit Agreement.

Green Tariff and Community Solar Green Tariff Programs for Disadvantaged Communities In
June 2018. the CPUC established the Disadvantaged Communities- Green Tariff (DAC -GT) program and Community Solar Green Tariff (CSGT) program to address barriers to solar adoption faced by low -income electric customers in neglected communities. The DAC -GT program provides a 20% bill discount on 100% RPS eligible electricity service to income- qualified customers residing in Disadvantaged Communities (DACs) as defined by the California Environmental Protection Agency’s (Cal EPA) Office of Environmental Health Hazard Assessment (OEHHA). Similar to DAC- GT, the CSGT program was to provide a 20% bill discount to qualifying customers in DACs to benefit from the development of solar generation projects located in their own or nearby DACs.

The
CPUC approved CleanPowerSF’s application to establish DAC -GT and CSGT programs in April 2021 and to receive funds to cover program administration and a portion of electricity supply costs. CleanPowerSF began enrolling customers in the DAC- GT program branded as “SuperGreen Saver” on June 1, 2022. The CSGT program was expected to start serving customers during fiscal year 2026, but the CPUC discontinued the program. CSGT capacity was shifted to the SuperGreen Saver program. For the years ended June 30, 202 5 and 2024, CleanPowerSF received $345 and $98, respectively, from a combination of ratepayer funds and California Cap and Trade Auction proceeds.
(b) Litigation
Hetch Hetchy is a defendant in various legal actions and claims that arise during the normal course of business. The final disposition of these legal actions and claims is not determinable.

However, in the opinion of management, the outcome of any litigation of these matters will not have a material effect on the financial position or changes in net position of Hetch Hetchy. (c) Grants
Grants that the Enterprise received are subject to audit and final acceptance by the granting agency. Current and prior year costs of such grants are subject to adjustment upon audit. ww
w.mgocpa.com Macias Gini & O’Connell LLP
2121 N. California Boulevard, Suite 750
Walnut Creek, CA 94596
95 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
Honorable Mayor and the Board of Supervisors
City and County of San Francisco, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States ( Government Auditing Standards ), the financial statements of each major fund of Hetch Hetchy Water and Po wer and CleanPowerSF (Hetch Hetchy), an enterprise fund of the City and County of San Francisco (City), as of and for the year ended June 30, 2025, and the related notes to the financial statemen ts, and have issued our report thereon dated November 5, 2025.

Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial stat ements, we considered Hetch Hetchy’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances fo r the purpose of expressing our opi nions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Hetch Hetchy’s internal control.

Accordingly, we do not express an opinion on the effectiveness of the Hetch Hetchy’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a ma terial misstatement of the entity’s financial statements will not be prevented, or det ected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficienc ies in internal control that might be material weaknesses or significant deficiencies. Given thes e limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.

Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Hetch Hetchy’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
96 Purpose of This Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integr al part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Walnut Creek, California
November 5, 2025

SFPUC Financial Services
525 Golden Gate Avenue, 4th Floor
San Francisco, CA 94102-3220
sfpuc.gov
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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.

San Francisco Public Utilities Commission
An Enterprise Department of the City and
County of San Francisco, California
Cover photo: Visitacion Valley Middle
School-Rooftop Solar Project
Back cover photo: Moccasin Powerhouse
Generator Rehabilitation
Photos by: Robin Scheswohl, Sabrina Wong
Date of Publication:

November 2025