San Francisco Public
Utilities Commission
Fiscal Year 2026-2027
Wholesale Water Rates
April 28, 2026
1 2
Agenda
Wholesale Rate Setting Process
Drivers of Wholesale Rate Increase
Fiscal Year 2026-2027 Wholesale Water Rate
Historic and Projected Wholesale Rates
3 Wholesale Water Rate-Setting Process
1. Wholesale water rates are set annually following process dictated by the Water Sales Agreement
2. Rates are calculated based on the wholesale customers proportionate share of budgeted Regional Water and Hetch Hetchy water expenses
3. After fiscal year is complete, the actual expenses due to wholesale customers are reviewed.
4. Under/over-collection goes to “balancing account” which is used to ensure all parties pay their share
4 Drivers of Wholesale Rate Increase
𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊 𝑅𝑅𝑊𝑊𝑅𝑅𝑊𝑊 =
𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊 𝑅𝑅𝑊𝑊𝑅𝑅𝑊𝑊𝑅𝑅𝑅𝑅𝑊𝑊 𝑅𝑅𝑊𝑊𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑊𝑊𝑅𝑅𝑊𝑊𝑅𝑅𝑅𝑅 − 𝐹𝐹𝑅𝑅𝐹𝐹𝑊𝑊𝐹𝐹 𝐹𝐹𝑊𝑊𝑊𝑊 ± 𝐵𝐵𝑊𝑊𝑊𝑊𝑊𝑊𝑅𝑅𝐵𝐵𝑅𝑅𝑅𝑅𝐵𝐵 𝐴𝐴𝐵𝐵𝐵𝐵𝑊𝑊𝑅𝑅𝑅𝑅𝑅𝑅 𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊 𝑉𝑉𝑊𝑊𝑊𝑊𝑅𝑅𝑅𝑅𝑊𝑊𝑊𝑊
1) Wholesale Revenue Requirement
• Operating, debt service and cash funded capital expenses, based on Adopted Budget
2) Balancing Account
• Used to stabilize rates
3) Water Sales Volumes
• Wholesale has had a strong drought recovery
• Retail remains low post drought and pandemic
5 Wholesale Share of Expenses
37% 42% 43% 44% 45% 45% 47%
51% 48% 54% 52% 52% 48% 47%12%
10% 3%
3% 3% 7% 6%
$329
$375 $382
$413 $432 $444 $464
$-
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
FYE 2025 FYE 2026 FYE 2027 FYE 2028 FYE 2029 FYE 2030 FYE 2031 Millions
Operating Costs Debt Service Revenue Funded Capital
• Inflationary increase in operating costs
• Gradual Increase in debt service
• Slight reduction in cash funded capital
6 Balancing Account Impact
• Large balancing account owed to wholesale in recent years allowed for lower rates • The draft FY 2025 WRR balancing account shows SFPUC owing BAWSCA $13.4M • The FYE 2026 balancing account is projected to result in $3.4M owed by BAWSCA • SFPUC proposes to incorporate the full amount owed into FY 2027 rates FY Beginning Balancing Account Due (To)/From Wholesale Customers -$63.0
-$30.6
$9.7 $12.0
-$13.4
$3.4 $0.2 $0.1 $0.1 -$0.1
$(70)
$(60)
$(50)
$(40)
$(30)
$(20)
$(10)
$-
$10
$20
FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 FYE 2029 FYE 2030 FYE 2031 Millions
7 Water Usage: Actuals and 10-year
Financial Plan Projections
134.2
116.5
54.0 53.4
52.4 129.2 125.5 129.9
0 20
40 60
80 100
120
140
160
Water Sales (MGD)
Actual Retail Sales (MGD) Actual Wholesale Sales (MGD)
Projected Retail Volumes (MGD) Projected Wholesale Sales (MGD) 8 Proposed FY 2026-27 Rate Increase
Wholesale Rate =
Wholesale Revenue Requirement − Fixed Fee ± Balancing Account Wholesale Volumes
FYE 2027 Rate =
$383.7𝑀𝑀−$5.4M+$3.2𝑀𝑀
125.5 𝑀𝑀𝑀𝑀𝑀𝑀 = $6.23/𝐵𝐵𝐵𝐵𝑐𝑐
Rate increase from FYE 2026 = 7.4%
Factors driving rate increase:
• Reduction in projected water sales
• Shift in balancing account owed from SFPUC to amount due to SFPUC • Growth in Operating and Debt Service Spending
9 Historic and Projected Wholesale Rates
$3.00
$3.50
$4.00
$4.50
$5.00
$5.50
$6.00
$6.50
$7.00
$7.50
$8.00
FYE
2019
FYE
2020
FYE
2021
FYE
2022
FYE
2023
FYE
2024
FYE
2025
FYE
2026
FYE
2027
FYE
2028
FYE
2029
FYE
2030
FYE
2031
Wholesale Rate ($/CCF)
Rate With No Balancing Account
Adopted Rate
Fiscal Year FYE 2019 FYE 2020 FYE 2021 FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 FYE 2029 FYE 2030 FYE 2031 Adopted /
Forecasted Rates
$4.10 $4.10 $4.10 $4.10 $4.75 $5.21 $5.67 $5.80 $6.23 $6.70 $6.93 $7.09 $7.41 Rate Change 0.0% 0.0% 0.0% 0.0% 15.9% 9.7% 8.8% 2.3% 7.4% 7.5% 3.4% 2.3% 4.5% Rate w/o
Balancing
Account
$4.32 $3.85 $4.14 $4.56 $5.48 $5.26 $5.18 $6.08 $6.18 $6.70 $6.93 $7.09 $7.41 Thank you!
Questions and Discussion
10 AGENDA ITEM
Public Utilities Commission
City and County of San Francisco
DEPARTMENT: Business Services AGENDA NUMBER: 11
MEETING DATE: April 28, 2026
Calendar: Regular Calendar
Project Manager: Matthew Freiberg
Proposal to Adopt Wholesale Water Rates for Fiscal Year 2026-27 Summary of Proposed
Commission Action:
Consider and adopt the proposed Wholesale Water Rates for Fiscal Year 2026 -27, which will become effective for meter readings on or after July 1, 2026. The San Francisco Public Utilities Commission developed the proposed rates in
accordance with the terms of the Water Supply Agreement between the City and County of San Francsico and its Wholesale Customers, which the Commission approved on April 28, 2009, by Resolution No. 09 -0069,
and most recently amended and
restated on May 14, 2025, by Resolution No. 25- 0074, with subsequent approval by the Wholesale Customers. This action constitutes the Approval Action for the Project for the purposes of the California Environmental Quality Act (CEQA), pursuant to San Francisco Administrative Code Se ction 31.04(h). The Planning Department has determined that this Project is exempt from the CEQA. T he Commission will rely on that determination to make its decision on this action.
Background: The San Francisco Public Utilities Commission (SFPUC) sells water to retail customers who are located primarily inside the City and County of San Francisco (San Francisco), and 27 wholesale customers in Alameda County, San Mateo County, and Santa Clara County. The wholesale customers establish local utility rates for the retail water customers that they serve in their respective jurisdictions.
The SFPUC establishes water rates applicable to the Wholesale Customers (Wholesale Water Rates) in accordance with the terms of the Water Supply Agreement (WSA) between San
Francisco and 26 of the 27 wholesale customers (Wholesale Customers), which this Commission approved on April 28, 2009, by Resolution No. 09 -0069, and most recently amended and restated on May 14, 2025 , by Resolution No. 25 -0074, with Agenda Title: Adopt New Miscellaneous Fees Related to the Power Enterprise Commission Meeting Date: May 12, 2026
subsequent approval by the Wholesale Customers.
Under the WSA, the Commission must consider annual
adjustments to the Wholesale Water Rates, which are based on projected expenses attributable to the Wholesale Customers, and water deliveries to the Wholesale Customers, in coordination with the SFPUC’s financial planning and budget process. The WSA also sets forth specific procedures that the SFPUC must follow if it intends to increase Wholesale Water Rates during the ensuing fiscal year.
In general, the WSA requires the Wholesale Customers to pay operating expenses and capital costs associated with the SFPUC’s “regional” assets, which serve both the Wholesale Customers and the SFPUC’s retail customers, based on
proportional water use. The WSA allows the SFPUC to recover a portion of net annual debt service for new regional assets and to recover the Wholesale Customers’ share of revenue- funded regional capital costs. The WSA also authorizes the SFPUC to collect the Wholesale Customers’ contr
ibution to meet debt
service coverage reserve requirements.
In addition, the WSA directs the SFPUC to consider, when establishing Wholesale Water Rates, whether the Balancing Account maintained under the WSA has a balance reflecting an amount that the SFPUC owes to the Wholesale Customers or a balance reflecting an amount that the Wholesale Customers owe to the SFPUC, based on actual costs incurred by the SFPUC and actual amounts of water used by wholesale and retail customers in previous fiscal years. The SFPUC may apply an amount from the Balancing Account to redu
ce or increase Wholesale Water
Rates for the immediately ensuing year.
As discussed in further detail below and shown on the attached revised Schedule W -25: Wholesale Use With Long- Term
Contract,
SFPUC Finance staff’s proposed Wholesale Water
Rates for Fiscal Year (FY) 2026-27 include:
1. A new volumetric water rate of $6.23 per CCF (1 CCF = 748 gallons), based on:
a. The Wholesale Customers’ portion of the SFPUC
Regional Water System’s capital and operating
costs under the WSA, known as the Wholesale
Revenue Requirement;
b. The application of an amount from the Balancing
Account that the Wholesale Customers owe to the
SFPUC; and,
c. Water sales assumptions.
This new rate reflects a $0.43 per CCF, or 7.4%,
Agenda Title: Adopt New Miscellaneous Fees Related to the Power Enterprise Commission Meeting Date: May 12, 2026
increase from the current rate of $5.80 per CCF.
2. A 7.4% increase to the Monthly Service Charge
component of the Wholesale Water Rates, to correspond
with the proposed 7.4% increase for the volumetric rates.
The Monthly Service Charge is a fixed fee that is
determined for each Wholesale C ustomer based on the
type and size of applicable meters.
3. A $0.05 increase to the Untreated Wholesale Water
Rate Discount Factor applicable to Coastside County
Water District, the only Wholesale Customer that receives non-potable water from the SFPUC, rather than treated
potable drinking water, and treats that water at its own facilities. This increase brings the discount factor from $0.39 per CCF to $0.44 per CCF.
In accordance with WSA section 6.03.A, on March 27, 2026 more than 30 days before this Commission meeting, the SFPUC sent a written notice of the proposed adjustments to the Wholesale Water Rates for FY 2026-27 to the Wholesale Customers and the Bay Area Water Supply and Conservation Agency (BAWSCA), which represents the Wholesale Customers. The SFPUC’s notice to the Wholesale Customers and BAWSCA (attached to this staff report) included tables and schedules illustrating the calculation of the proposed Wholesale Water Rates
, which would be
effective on July 1, 2026, more than 30 days after adoption by the Commission.
Proposed Volumetric Water Rate and Monthly Service
Charge Adjustments
SFPUC Finance staff prepared an analysis of the Water
Enterprise’s projected revenues and revenue requirements for FY 2026- 2027. Without the proposed adjustments to the Wholesale Water Rates , the SFPUC would collect a total of $357.8 million in revenue from projected Wholesale Customer water sales in FY 2026 -27 with (1) the current volumetric water rate applicable to the Wholesale Customers ($5.80 per CCF), (2) the existing Monthly Service Charges, which would total $5.1 million, and (3) revenue losses of $ 2.7 million from both the existing Untreated Wholesale Water Rate Discount applicable to Coastside County Water District
and contractual discounts for
certain Wholesale Customers.
As shown in Table 1 below, however, the projected Wholesale Revenue Requirement for FY 2026- 27 is a higher amount:
$381.1 million . The Wholesale Revenue Requirement for FY 2026-27 includes the Wholesale Customers’ proportionate share of (1) anticipated operating expenses, (2) debt service on bonds Agenda Title: Adopt New Miscellaneous Fees Related to the Power Enterprise Commission Meeting Date: May 12, 2026
sold to construct or acquire new regional assets, and (3) new cash-funded regional assets over the course of the fiscal year.
SFPUC Finance staff project that there will be a Balancing Account balance of approximately $3.4 million owed by the Wholesale Customers to the SFPUC by the end of FY 2025- 26.
Staff propose applying $3.2 million balance to the Wholesale Revenue Requirement for FY 2026-27, which adjusts the amount that the SFPUC will collect from the Wholesale Customers via the Wholesale Water Rates to $384.3 million, as shown in Table
1. Table 1: Projected FY 2026 -27 Wholesale Revenue
Requirement ($ millions)
FY 2026-27
Operating Costs $176.3
Debt Service $168.4
Revenue-Funded Capital $36.9
Debt Service Coverage $1.6
(Less) Interest on Balancing Account
and Coverage Reserve $(2.1)
Wholesale Revenue Requirement $381.1
Balancing Account Amount Applied to
Wholesale Water Rates for FY 2026-27 $3.2
Wholesale Revenue Requirement
Applied to Rates $384.3
To meet the Wholesale Revenue Requirement Applied to Rates for FY 2026-2027, SFPUC Finance staff recommends increasing the Wholesale Water Rates on or after July 1, 2026, by 7.4% . As stated in the SFPUC’s March 27, 2026 notice to the Wholesale Customers and BAWSCA, the volumetric water rate will increase from $5.80 per CCF to $6.23 per CCF . Monthly Service Charges will correspondingly increase by the same 7.4% to the new schedule of charges based on meter type and size shown on revised Schedule W -25: Wholes ale Use With Long -Term
Contract, attached to this agenda item.
Table 2 below illustrates how the SFPUC has calculated the proposed new volumetric water rate for FY 2026-27:
1. Staff has identified the portion of the adjusted Wholesale Revenue Requirement that will be met by the volumetric
water rate (i.e., the Wholesale Variable Rate Revenue
Requirement). This amount is comprised of the Wholesale Revenue Requirement Applied to Rates from Table 1, less the revenue that the SFPUC will collect from the Monthly Agenda Title: Adopt New Miscellaneous Fees Related to the Power Enterprise Commission Meeting Date: May 12, 2026
Service Charges, plus the revenue that is lost from selling some water at rates below the proposed new volumetric
water rate due to the lower costs of raw water and other contractual terms.
2. The Wholesale Variable Rate Revenue Requirement is
then divided by the total projected water sales from the Wholesale Customers over the course of the fiscal year.
Table 2: Projected FY 2026-27 Wholesale Volumetric Rate ($ millions)
FY 2026-27
Wholesale Revenue Requirement
Applied to Rates $384.3
Monthly Service Charge Revenue $(5.4)
Revenue Loss to Contractual Discounts
and Untreated Water $2.7
Wholesale Variable Rate Revenue
Requirement $381.6
Full Price Wholesale Water Sales 60,588,900 CCF
Contractually Discounted Water Sales 414,773 CCF
Untreated Water Sales 241,464 CCF
Total Water Sales for Volumetric Rate 61,245,136 CCF
Wholesale Volumetric Rate $6.23/CCF
Untreated Wholesale Water Rate Discount Factor
The SFPUC’s March 27, 2026, notice also informed the
Wholesale Customers and BAWSCA that the Untreated
Wholesale Water Rate Discount Factor applicable to Coastside County Water District (CCWD) for FY 2026- 27 would increase to $0.44 per CCF. Unlike the SFPUC’s other Wholesale Customers, who receive treated potable drinking water from the SFPUC, CCWD receives non- potable water from the SFPUC, which it treats to drinking water standards at its own facilities.
As required by Section 8 of the Individual Water Sales Contract between the SFPUC and CCWD under the terms of the WSA,
SFPUC Finance staff commissioned an independent analysis in 2010 to evaluate the cost of service for untreated water. The lower contract price of untreated water compared to treated water, which the SFPUC and the Wholesale Customers refer to as a “discount factor,” is based on the unit cost of capital and operating expenses for the SFPUC’s Harry Tracy Water
Treatment Plant, which is not use d to treat the “raw” water Agenda Title: Adopt New Miscellaneous Fees Related to the Power Enterprise Commission Meeting Date: May 12, 2026
delivered to CCWD.
SFPUC Finance staff recommends increasing the discount factor applicable to CCWD in FY 2026- 2027 to $0.44 per CCF , as shown on the attached new Schedule W -25. The SFPUC
calculated this discount factor by dividing the total projected costs and expenses for the Harry Tracy Water Treatment Plant in FY 2026-27 by the total projected water deliveries to the Wholesale Customers in FY 2026-27.
Environmental
Review:
On April 14, 2026 , the San Francisco Planning Department determined the Project to be statutorily exempt from
environmental review pursuant to Public Resources Code
Section 21080(b)(8) and the CEQA Guidelines Section 15273 (Rates, Tolls, Fares and Charges) (Case No. 2026-003175ENV) related to the establishment, modification, structuring, restructuring, or approval of rates, tolls, fares, or other charges.
The exemption determination can be found here:
View the CEQA
exemption determination.
This action constitutes the Approval Action for the P roject for the purposes of the CEQA pursuant to San Francisco Administrative Code Section 31.04(h).
Attachments: 1. New Schedule W-25: Wholesale Use with Long-Term Contract
2. FY 2026-27 Wholesale Water Rates Notice
PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO. __________________
WHEREAS, The San Francisco Public Utilities Commission (SFPUC) sells water to retail customers, who are located primarily inside the City and County of San Francisco (San Francisco), and 27 wholesale customers in Alameda County, San Mateo County, and Santa Clara County, who in turn establish local utility rates for the retail water customers that they serve in their respective jurisdictions; and
WHEREAS, The SFPUC establishes water rates applicable to the wholesale customers (Wholesale Water Rates) in accordance with the Water Supply Agreement (WSA) between San Francisco and 26 of the 27 wholesale customers (Wholesale Customers), which this Commission approved on April 28, 2009, by Resolution No. 09- 0069, and amended and restated on May 14, 2025, by Resolution No. 25- 0074, with subsequent approval by the Wholesale Customers; and
WHEREAS, The SFPUC proposes to adjust the Wholesale Water Rates for Fiscal Year (FY) 2026- 27 to include a volumetric water rate of $6.23 per CCF, which is a $0.43 per CCF, or 7.4%, increase from the current volumetric water rate of $5.80 per CCF; and
WHEREAS, To correspond with the 7.4% increase for the volumetric water rate, the SFPUC also proposes to increase the Monthly Service Charge component of the Wholesale Water Rates for FY 2026- 27 by 7.4%, as shown in the revised Schedule W - 25: Wholesale Use With Long- Term Contract , attached to this resolution and incorporated in this resolution by reference; and
WHEREAS, The SFPUC also proposes to increase by $0.05, from $0.39 per CCF to $0.44 per CCF, the Untreated Wholesale Water Rate Discount Factor for FY 2026-27, which applies only to Coastside County Water District, the one Wholesale Customer that receives non- potable water from the SFPUC, rather than treated potable drinking water, and treats that water at its own facilities; and
WHEREAS, On March 27, 2026, more than 30 days before the Commission held its April 28, 2026 public hearing to consider the proposed adjustments to the Wholesale Water Rates for FY 2026- 27, the SFPUC sent a written notice of the proposed adjustments to the Wholesale Customers and BAWSCA, in accordance with WSA section 6.03; and
WHEREAS, A copy of the WSA, and a copy of the SFPUC’s March 27, 2026, notice to the Wholesale Customers and BAWSCA, which included among its attachments a revised Schedule W -25: Wholesale Use With Long- Term Contract ,
showing the proposed Wholesale Water Rates effective July 1, 2026, are on file with the Director of Commission Affairs and incorporated in this resolution by reference; and
WHEREAS, On April 14, 2026, the San Francisco Planning Department determined the Project to be statutorily exempt from environmental review pursuant to Public Resources Code Section 21080(b)(8) and the California Environmental Quality Act Guidelines Section 15273 (Rates, Tolls, Fares, and Charges) (Case No. 2026- 003175ENV) related to the establishment, modification, structuring, restructuring, or approval of rates, tolls, fares, or other charges; and
WHEREAS, This Commission hereby finds that adoption of this resolution will establish rates for the purpose of (1) meeting operating expenses, including power purchases, employee wage rates, and fringe benefits; (2) purchasing or leasing supplies, equipment, or materials; (3) meeting financial reserve needs and requirements; (4) obtaining funds for capital projects necessary to maintain service within existing service areas; and (5) obtaining funds necessary to maintain such intra- city transfers as are authorized by city charter; and
WHEREAS, The Commission is securing revenue to meet estimated FY 2026- 27 “Regional” operating and capital costs consistent with Article 5 of the WSA; and
WHEREAS, This Commission hereby finds that adoption of this resolution will establish Wholesale Water Rates for the purpose of (1) meeting operating expenses, including employee wage rates and fringe benefits; (2) purchasing or leasing supplies, equipment, or materials; (3) meeting financial reserve needs and requirements, and (4) obtaining funds for capital projects necessary to maintain service within existing service areas; now, therefore, be it,
RESOLVED, That this Commission determines that increases in the volumetric water rate, monthly service charges, and untreated wholesale water rate discount factor applicable to the Wholesale Customers are required for Fiscal Year 2026-27 and hereby adopts the proposed rates and charges, as enumerated in the revised Schedule W -25:
Wholesale Use With Long- Term Contract, attached to this Resolution and incorporated by reference as if set forth here in full, for all water delivered to the Wholesale Customers, on or after July 1, 2026.
I hereby certify that the foregoing resolution was adopted by the San Francisco Public Utilities Commission at its meeting of April 28, 2026.
__________________________________
Director of Commission Affairs
San Francisco Public Utilities Commission
ATTACHMENT 1
SCHEDULE W-25: Wholesale Use with Long-Term Contract
For service to municipalities, water districts and others who, under long-term contracts, purchase water for resale:
First: A Monthly Service Charge base on the type and size of the meter:
Meter Size Turbine Meters
(C-701, Class II)
Electronic Meters
(C-715, Class II)
Displacement
Meters
(C-700, Class II)
2" - - $157
3" $430 $345 -
4" $741 $592 -
6" $1,580 $791 -
8" $2,766 $1,975 -
10" $4,148 $2,964 -
12" - $3,952 -
16" $7,705 - -
The service charge for a battery of meters installed on one service in lieu of one meter or for a special type of meter, shall be based on the size of single or multiple standard type meters of equivalent capacity.
Second: A charge for water delivered based on one-month’s meter readings:
$2,713.79 per acre-foot or $6.23 per 100 cu. ft.
Third: An Untreated Wholesale Water Rate Discount Factor for Wholesale Customers receiving untreated water, based on one-month’s meter readings:
($191.66) per acre-foot or ($0.44) per 100 cu. ft.