adoption of rates of the San Francisco Public Utilities — CleanPowerSF Sfpuc Commission, April 28, 2026

Proposal to Adopt Hetch Hetchy
Power Rates for FY 2026-27
San Francisco Public Utilities Commission
Matthew Freiberg, Rates Manager
April 28, 2026
1 2
Presentation Agenda
Topics
• Power Enterprise Overview
• Hetch Hetchy Power Rates Structure
• Rate Study Overview
• Power Expenses
• Proposed Rate Updates
• Public Outreach
3 What is The Power Enterprise
• Publicly owned utility
• Generates power from hydroelectric
and solar. Fills gaps in supply with
market purchases
• Transmission lines from Sierras to Bay
Area, some distribution lines in SF
• Serves SF City departments, with
growing retail customers in
redevelopment areas
• Community Choice Aggregator is a
generation alternative to PG&E on an
opt-out basis
• Procures power supply – no owned
facilities yet
• Transmission, distribution, and billing
provided by PG&E
• Serves 80% of San Francisco by
volume, including most residential

4 Hetch Hetchy Customer Overview
Class Total Usage
Percent of
Usage
Count of
Customers
Percent of
Customers
FYE 2027
Revenue
Percent of
Revenues
Residential 16,689,878 1.7% 4,275 48.9% $ 5,086,282 2.0% Small Commercial 76,425,410 7.7% 4,029 46.1% $ 23,540,825 9.3% Medium
Commercial 164,996,088 16.7% 286 3.3% $ 43,535,534 17.2% Large Commercial 80,589,655 8.2% 42 0.5% $ 22,625,543 9.0% Industrial 631,096,762 63.8% 44 0.5% $ 152,668,686 60.5% Lighting 16,929,580 1.7% 20 0.2% $ 4,446,883 1.8% Upcountry 1,832,965 0.2% 39 0.4% $ 488,605 0.2% Total 988,560,338 100% 8,735 100% $ 252,392,357 100% 5 Hetch Hetchy Power Rates Structure
Hetch Hetchy Retail
Rates
•Private customers, mostly in
redevelopment areas,
affordable housing
•Airport, City Departments,
Port, Tuolumne and Stanislaus
County customers
•Default rate for new customers
•Set at cost of service + share
of subsidy
General Use (GUSE)
Rates
•General Fund departments,
education districts,
governmental agencies
•Less than cost of service
(subsidized)
•Increasing annually by 3
cent/kWh
6 Rate Study Process: Overview
STEP 1
STEP 2
STEP 4
STEP 3
STEP 5
Determine the revenue
requirements of the utility
Unbundle costs by functions and
services (power supply,
transmission, distribution, etc.)
Classify costs (demand, energy,
customer costs, etc.)
Allocate cost among customer
classes
Design rates
Revenue Requirement
Cost Allocation
Rate MakingDesign Rates and Rate ImpactsSTEP 5
7 Power Expense Projections
• Average annual growth:

10. 8%
• Capital and power
supply costs for new
customers are the main
drivers
• Cost escalation is offse
t
b
y additional revenues
from new customers
37%
44%44%
21%
19%
14%
16%
$298
$363
$409
$503 $502 $519 $504
$548
$592
$724
$819
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
FYE
2026
FYE
2027
FYE
2028
FYE
2029
FYE
2030
FYE
2031
FYE
2032
FYE
2033
FYE
2034
FYE
2035
FYE
2036
Millions
Power Supply and Delivery Other Operations & Maintenance Debt Service Revenue-Funded Capital
8 Translating Power Budget into Rates
$ Millions Power Enterprise
FY 2026-27
Power Supply and Delivery $131.9
Other Operations & Maintenance 126.9
Revenue-Funded Capital Expenses 86.6
Debt Service 17.7
Annual Cash Need 363.0
(Less) Non-Rate & Wholesale Revenues (74.8)
(Less) Use of Fund Balance Reserves (34.3)
(Less) GUSE Rate Revenue (84.6)
Net Retail Revenue Requirement $169.3
Revenue Under Current Rates $159.8
Revenue Increase Required 6.0%
9 Example Tariffs
R-1E Residential, Electric
Heating
Customer Charge ($/month) $ 10.00
Summer Energy ($/kWh)
Tier 1 (0 kWh - 250 kWh) $ 0.29969
Tier 2 (250 kWh - 578 kWh) $ 0.35963
Tier 3 (Over 578 kWh) $ 0.53944
Winter Energy ($/kWh)
Tier 1 (0 kWh - 418 kWh) $ 0.29969
Tier 2 (418 kWh - 960 kWh) $ 0.35963
Tier 3 (Over 960 kWh) $ 0.53944
C-3P Retail Large Commercial
Primary (Demand 500kW-1000kW)
Customer Charge ($/month) $ 2,100.00
Summer Energy Charge ($/kWh)
On-Peak $ 0.11771
Part-Peak $ 0.11771
Off-Peak $ 0.09417
Winter Energy Charge ($/kWh)
Part-Peak $ 0.10415
Off-Peak $ 0.09417
Summer Demand Charge ($/kW)
On-Peak $ 17.87
Part-Peak $ 14.29
Max $ 32.69
Winter Demand Charge ($/kW)
Max $ 32.69
10 Proposed Update of Rates
GUSE – Preserve $0.03/kWh increase in effective rates
• Solve for $0.24877/kWh effective rate in all GUSE rate codes • Long Term goal to continue to increase GUSE rates until reaching parity with retail rate 6% average increase for retail rates
• To prevent rate shock, cap tariff increases at 9%
• Customer classes under COS have larger percent increases (Avg. 7.3%) • Large Commercial and Industrial have less than 6% increase Create New Municipal Airport Rate
• Reflects SFO’s different energy usage patterns vs. other industrial customers • Ability to direct charge future CIP projects to SFO
Green Tariff
• Hetchy Power Premium = opt-in for 100% RPS-certified renewable energy • Raise Green Tariff surcharge to $0.0095/kWh cover Hetch Hetchy’s marginal costs 11 Bill Impacts
12 Monthly Bill Impact - Residential
$-
$20
$40
$60
$80
$100
$120
$140
HHP - Current HHP - Proposed PG&E
Residential (R
-
1) vs. PG&E
13 Monthly Bill Impact - Small Commercial
$-
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
HHP - Current HHP - Proposed PG&E
Small Commercial (C
-
1) vs. PG&E
14 Monthly Bill Impact - Large Commercial
$-
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
HHP - Current HHP - Proposed PG&E
Large Commercial (C
-
3P) vs. PG&E
Rates Communications Plan (Jan-July)
Communication Date Notes
Power rates landing page
on SFPUC.gov
January All communications direct customers to
one webpage: sfpuc.gov/powerrates
Customer e-newsletters
and emails
January, April,
June, July
Multilingual notice of July 1, 2026 rate
change and public process; link to
webpage
On-bill message March-July On-bill notice of July 1, 2026 rate change and public process, link to webpage
Direct mail postcard March Multilingual notice of July 1, 2026 rate change and public process; link to
webpage
Key account outreach March-May Specific notice and outreach to key customer accounts

AGENDA ITEM
Public Utilities Commission
City and County of San Francisco
DEPARTMENT: Financial Services Division AGENDA NUMBER: 10 MEETING DATE: April 28, 2026
Calendar: Regular Calendar
Project Manager: Matthew Freiberg
Adopt Hetch Hetchy Power Rates for FY 2026-27
Summary of Proposed
Commission Action:

Public Hearing to consider the adoption of rates of the San Francisco Public Utilities Commission Power Enterprise for Hetch Hetchy Power service, to be effective with meter readings beginning on or after July 1, 2026. This action constitutes the Approval Action for the P roject for the purposes of the California Environmental Quality Act (CEQA) pursuant to San Francisco Administrative Code Section

31.04(h). The Planning Department has determined that the Project is exempt from the CEQA. The Commission will rely on that determination to make its decision on this action.

Background: Executive Summary
This action item proposes one year of rate adjustments for Hetch Hetchy Power for Fiscal Year (FY) 2026- 27. These recommendations are informed by the findings of the 2026 Power Rate Study and the updated revenue requirements
identified in the most recent 10- Year Financial Plan approved by the Commission (Resolution 26-0023). Following Hetch Hetchy’s ongoing objective of standardizing all customers on class-based cost of service rates, the proposed tariff
schedules continue to increase the subsidized General Use (GUSE) rates by $0.03/kWh annually
until they reach their
equivalent non-subsidized class rate at a future time, at which point they will be consolidated. Retail rates are proposed to increase by 6% on average, though implementation of the cost of service results from the 2026 Power Rate Study
means that some rate codes m ay increase by more or less than the bottom-line amount. To prevent rate shock, retail rate increases are capped at 9% annually.

The following sections provide an overview of the 2026
Power Rate Study, the 2026- 27 Rate Setting Process, and the public outreach process that has been conducted to- date.

Details about the Rate Study can be found in attachments to Agenda Title: Adopt Hetch Hetchy Power Rates for FY 2026-27 Commission Meeting Date: April 28, 2026

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this Staff Report. If adopted, the proposed rate tariffs would become effective July 1, 2026 , and would remain in place until the Commission adopts new rates.

2026 SFPUC Power Rates Study
As required by the San Francisco Charter Section 8B.125, the SFPUC engaged an independent rate consultant for the 2026 SFPUC Power Rate Study (Study). The findings of this study informed the proposed changes in Hetch Hetchy Power cost allocations to customer classes and rate structures.

The Study has a broad scope and is being delivered in
multiple phases. Phase 1 includes an evaluation of customer billing data, re- evaluation of the financial plan, preparation of an updated cost of service analysis, and an updated rate design.

Customer Count and Usage Data
The Study began by analyzing actual Fiscal Year 2024- 25 hourly customer billing data to determine how customers in different classes and tariff schedules use the power system.

This billing data was
then escalated to the “test year”
forecasted usage for Fiscal Year 2026- 27 to reflect higher usage from expected new customers, as well as changes to the tariff assigned for some existing customers.

Hetch Hetchy Power has significant ongoing expansion of its customer base. Current year projections suggest a 4.5
percent growth in customer accounts and 2.1 percent growth in total energy usage as compared to Fiscal Year 2024- 25.

Looking forward to FY 2026- 27,
customer accounts are
expected to grow by 2.7 percent, and energy volumes are expected to grow another 2.7 percent from the current FY 2025-26 projections. The majority of the account growth comes from new multi -family residential buildings in
redevelopment areas in the east side of the City. Additionally, the long- term projected increases in electricity sales are buoyed by new electrification projects in municipal facilities that are moving away from natural gas, gasoline, and diesel to heat buildings, power vehicles, and produce emergency power.

Table 1 on the following page shows the projected FY 2026- 27 Hetch Hetchy Power accounts and energy usage by
customer class. While residential customers make up the Agenda Title: Adopt Hetch Hetchy Power Rates for FY 2026-27 Commission Meeting Date: April 28, 2026

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majority of customer accounts, they are a small percentage of total energy usage. Industrial customers and the San
Francisco Airport account for over half of Hetch Hetchy energy usage.

Table 1: FY 2026-27 Projected Customer Class Summary

Class Total Usage
(kWh)
Percent
of
Usage
Count
of
Accounts
Percent
of
Accounts
Residential 17,085,671 1.7% 4,302 49.2%
Small
Commercial
77,862,582 7.9% 4,042 46.3%
Medium
Commercial
164,996,088 16.7% 286 3.3%
Large
Commercial
80,589,655 8.2% 42 0.5%
Industrial 327,643,260 33.1% 43 0.5%
Municipal
Airport
303,453,502 30.7% 1 0.0%
Lighting 16,929,580 1.7% 20 0.2%
Total 988,560,338 100% 8,735 100%
FY 2026-27 projected accounts and power usage served as the basis for various cost allocators used in the cost of service analysis and rate design. Bill determinants in these analyses include the count of accounts on a given tariff/rate schedule and various measures of customers’ usage of the power system, including energy (kWh) and demand (kW)
segmented by season (summer or winter) and time- of-use period (peak, part-peak, or off-peak).

Revenue Requirements
The rate revenue adjustment proposed in this action item is developed using the SPFUC’s financial planning model,
which evaluates total annual cash need compared to the rate revenue generated under existing rates. If the cash need exceeds revenues generated by existing rates and projected billing, staff use the financial model to determine the percentage change in rates required to cover expenses and comply with financial policies.

Total cash need is the sum of the annual operating expenses, revenue-funded capital, and annual debt service payments, less any non -rate sources of revenue. Following the
Agenda Title: Adopt Hetch Hetchy Power Rates for FY 2026-27 Commission Meeting Date: April 28, 2026

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requirements of SFPUC’s Fund Balance Reserve Policy,
annual cash need can be adjusted up or down by either
contribution to or use of fund balance reserves. Finally, additional cash may be needed to meet financial policy
targets such as those established in the Debt Service
Coverage Policy. The 10- Year Financial Plan (Resolution 26- 0023) describes details of the drivers of cash need for Hetch Hetchy Power, which are also summarized on the following page in Table 2.

Operating Expenses
Power supply and delivery charges include power purchased from the market when demand exceeds Hetch Hetchy’s
generation, as well as fees and charges paid to transmit and distribute electricity through delivery systems not owned by the SFPUC . These costs have experienced significant
volatility due to regulatory changes, climate change, and geopolitical conflict, and are now one of the main driver s of cost escalation for Hetch Hetchy Power. To mitigate a portion of the volatility risk, Hetch Hetchy Power establishes a budget that includes projected power market purchases , delivery charges, and
additional contingency. If power purchases
exceed the baseline budget, the added contingency enables staff to quickly access funds needed to secure power
supplies in the market without a need for a supplemental budget appropriation process, which can take many months.

In the event that the contingency goes unus
ed, any
remainder falls to fund balance and can enable lower than projected rates in future years.

Capital Spending
Ongoing and planned capital projects are the other main driver of increased costs. The Hetch Hetchy Power Capital Improvement
Program includes increased investment to
serve new Hetch Hetchy Power customers. The major in- City projects included in the Power Enterprise Capital Program are San Francisco International Airport Substation, Northern Waterfront, and distribution facilities for new customers. For major upcountry projects, the main drivers include
transmission line clearance mitigation, the Moccasin
Powerhouse & Generator Step-Up Transformer Rehabilitation Project, and the Moccasin Penstock Rehabilitation Project.

In the FY 2026- 27 annual cash need calculation, capital expenses include revenue- funded or pay -as-you-go budget appropriations, as well as debt service payments on revenue Agenda Title: Adopt Hetch Hetchy Power Rates for FY 2026-27 Commission Meeting Date: April 28, 2026

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bonds.

Non-Rate and Wholesale Revenues
Non-rate revenues such as wholesale power sales , pass- through revenues of Gas and Steam Sales , and various
capital revenues from Cap & Trade, the Distributed Antenna System (DAS), and developer contributions to our
Transmission System offset the annual cash need by $74.8 million.

Adjustments for Financial Policies
The annual cash need may be adjusted to meet financial
targets set in the SFPUC’s Commission- approved financial policies. Because Hetch Hetchy currently exceeds the
minimum reserves required in the Fund Balance Reserve
Policy, the program will offset higher rate increases by using $34.3 million in reserves to cover expenses next fiscal year.

Table 2: FY 2026- 27 Hetch Hetchy Power Annual Cash
Need ($Millions)
$Million FY 2026-27
Power Supply and Delivery $131.9
Other Operations & Maintenance 126.9
Debt Service 17.7
Revenue-Funded Capital 86.6
= Annual Cash Need $363.0
(Less) Non-Rate & Wholesale Revenue (74.8)
(Less) Use of Fund Balance Reserves (34.3)
= Annual Rate Revenue Requirement $254.0
This projected annual rate revenue requirement is then
compared to revenues at existing rates. General Use all- in effective rates 1 (GUSE) are set to increase by $0.03/kWh annually until they reach their equivalent cost of service.

Retail rates increases must cover the remainder of the annual rate revenue requirement (Table 3) . Changes in customer

1 Effective rates for each customer class are calculated by taking the sum of the projected revenues and dividing that value by the total energy used. Effective rates simplify complex power tariff schedules for purposes of modelling revenues, but are sensitive to changes in customer usage patterns, such as using more energy during peak hours or having higher peak demands.

Agenda Title: Adopt Hetch Hetchy Power Rates for FY 2026-27 Commission Meeting Date: April 28, 2026

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usage – in particular, higher demand revenues – resulted in slightly higher revenues under existing rates than were originally projected in the 10- Year Financial Plan. As a result of these higher bill determinants, lower retail rate increases are needed to collect the same total revenues. SFPUC staff are recommending a 6% increase in retail rates for FY 2026- 27, one percent less than the 7% originally proposed in the 10-Year Financial Plan.

Table 1: Retail Rate Revenue Requirement for FY 2026- 27 ($ Millions)
$Million FY 2026-27
Annual Rate Revenue Requirement $254.0
(Less) GUSE Rate Revenue 84.6
= Retail Rate Revenue Requirement $169.3
Retail Rate Revenue Under Existing Rates 159.8
= Additional Retail Rate Revenue
Requirements $9.5

Cost of Service Analysis
The cost of service analysis is a detailed review of all operating and capital budget line items from the 10- Year Financial plan to determine the allocation of these costs to each customer class. This analysis is completed in three key steps: functionalization, allocation, and distribution. The functionalization piece of the analysis includes assigning a function and sub- function to each expense and offsetting revenue. For example, labor and capital expenses associated with the powerhouses would be assigned to the power supply function and hydro power sub-
function. For Hetch Hetchy
Power, the main functions are power supply, transmission, distribution, and customer, as these represent the core functions of the program’s operations.

Each function and sub- function are then allocated to a cost causation component that aligns with how the system is
designed to serve customers. For example, hydro power
costs are allocated using coincident peaking values. Lastly, the costs are distributed to customer classes using class billing determinants. For example, the hydro power related Agenda Title: Adopt Hetch Hetchy Power Rates for FY 2026-27 Commission Meeting Date: April 28, 2026

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costs are distributed to each customer class based on the coincident peak2 values for each class from the billing data.

The result of the cost of service analysis is a target total revenues to be collected from each customer class, as well as various data about how each class uses power , which can inform rate design.

Rate Design
The last step of the rate study is the rate design, where costs for each customer class are then translated into rates. The structure of many of Hetch Hetchy’s existing rates w as carried over from PG&E ’s or otherwise established based on historic arrangements, and may not necessarily reflect
modern rate design principles. Additionally, many of these legacy rates were set outside of cost of service principals.

Over the last few years, SFPUC has been transitioning both the GUSE and retail rates to better reflect the cost of service.

Proposed General Use Power Rates
General Use Power Rates are set annually to an all -in
effective rate equivalent to a $0.03/kWh increase from the prior year, which equates to a 13.7% increase from
$0.21877/kWh to $0.24877/kWh for FY 2026- 27. Since rates were set for the current fiscal year, some customers have changed how they use power, increasing peak demands (kW) or using more energy during peak periods on time-of-use rate schedules. As a result, some rate tariffs are collecting more revenues than planned, and those tariffs have a higher actual effective rate than the $0.21877/kWh targeted for FY 2025-

26. The re- baselined General Use tariffs for FY 2026- 27 calculated using up- to-date billing data may therefore increase less than three cents – as they were already closer to the target rate – while others may see just over a three- cent increase. The proposed rates will align with the budgets for General Use customers, who are primarily General Fund- supported departments of the City & County of San
Francisco. GUSE rate revenues are projected to total $84.6 million for FY 2026-27.

Proposed Retail Hetch Hetchy Power Rates
Retail Hetch Hetchy Power Rates are increasing on average by 6 percent; however, as rates move towards cost of service

2 Coincident peak demand is the measured demand from each customer class when the Hetch Hetchy Power system reaches its peak load. This is distinguished from non-coincident peak demand, which represent the absolute peak of a customer class regardless of the timing with respect to system peak.

Agenda Title: Adopt Hetch Hetchy Power Rates for FY 2026-27 Commission Meeting Date: April 28, 2026

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some customer classes will experience a larger rate increase and others will undergo a lower rate adjustment. To avoid rate shock for customers, staff are recommending a rate increase cap of 1.5 times, or 9%, on any existing tariff.

In addition to the updates of the existing rate tariffs, staff are also recommending a few modifications to the Hetch Hetchy Power rate structure. First is the creation of a new Municipal Airport Rate. The airport is currently included in the industrial customer class; however, its
overall usage and demand
profile is dramatically different from other industrial customers, with a near level load profile and overall usage comprising about 30% of the overall Hetch Hetchy Power sales. Because of its large size, different power usage characteristics, and reliance on dedicated infrastructure that serves only the airport
, staff recommend a unique rate for
Hetch Hetchy’s largest customer.

In addition, staff propos es the simplification the Small Commercial C-1 rate (and its equivalent GUSE CG and
Enterprise A-1 rates). Small Commercial rates have separate fixed monthly service charges for customers served by single- phase and poly -phase meters. While the initial meter
purchase cost differs, ongoing customer billing costs do not , and consolidation would simplify administration and
communication with customers . As such, staff recommend a single fixed monthly service charge for both single-phase and poly-phase customers on these two tariff schedules.

Tuolumne & Stanislaus County Rates
Finally, there are several rates for customers outside the City & County of San Francisco that were previously set by
contract and are currently below cost of service. Staff evaluated multiple options for these rates and concluded that the most consistent approach is to group them into their equivalent class cost of service and escalate them towards the equivalent retail rate at an effective $0.03/kWh annually, similar to GUSE customers.

To facilitate this transition, the proposed rates also
recommend consolidating the two Tuolumne County small
commercial rates for the California Department of Fish and Wildlife (UH0044) and the United States Forest Service
(UH0047), which are both below cost of service and at close (but not identical) levels . This change will simplify
administration by creating only a single Small Commercial Tuolumne County rate.

Agenda Title: Adopt Hetch Hetchy Power Rates for FY 2026-27 Commission Meeting Date: April 28, 2026

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Proposed Green Premium Rates
Staff also evaluated the Power Premium Charge as part of the Study. This charge is an additional cost adder on the energy charge (kWh) for customers that opt -in to receive 100% Renewable Portfolio Standard- certified renewable
energy (RPS energy). Use of this power enables City
departments to qualify for State Low -Carbon Fuel Standard (LCFS) credits if the power is used for transmission purposes.

These credits can be sold in the market by participating agencies. Currently, Hetch Hetchy Power charges a premium rate of $0.008 per kWh. However, the value of selling the RPS energy on the open market is higher. To avoid taking a loss of potential revenues, staff recommend increas ing the Green Premium to $0.0095 per kWh to cover the opportunity cost of the RPS energy. Even with the higher price, the City Departments that are part of the LCFS program will still receive net positive revenues from this program.

Summary of Rate Changes
Rate changes vary significantly across different customer classes due to certain customer classes being below the cost of service. The Power Rate Study aims to reduce
subsidization of customer classes by implementing higher rate increases on customers determined to be below their cost of service and lower rate increases on customers who are above their cost of service. On average, rates go up by

7.1% for GUSE customers and 6.0% for retail customers.

Table 4 summarizes, at a high level, the changes for each customer class. The detailed schedule of rates can be found in Sections 3-7 of the attached resolution.

Table 2: Summary of GUSE and Retail Rate Adjustments
by Customer Class
Customer Class GUSE Rate
Change
Retail Rate
Change
Residential 7.1% - 7.3%
Small
Commercial 13.8% 6.2% - 8.9%
Medium
Commercial 14.1% - 14.8% 7.0% - 7.7%
Large
Commercial -0.2% - 4.4% 5.5% - 8.4%
Industrial -0.4% - 6.9% -3.5% - 6.3%
Lighting 13.7% 6.0%
Agenda Title: Adopt Hetch Hetchy Power Rates for FY 2026-27 Commission Meeting Date: April 28, 2026

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Public Outreach and Education
SFPUC staff engaged customers and the general public on the Power Rates Study through a variety of public meetings.

The agency’s Rate Fairness Board has been the primary
public venue where Hetch Hetchy Power’s FY 2026- 27 rate- setting methodology, objectives, preliminary analysis, and final tariff proposals have been discussed. These meetings occurred September 9, November 4, December 4, 2025 and
January 16, March 19 and April 6, 2026.

Additionally, staff provided ratepayers with additional information about the proposed rate adjustments via a
multipronged public outreach effort. A dedicated power rates landing page at sfpuc.gov/PowerRates contains news of
upcoming public events, the commission hearing notice, and the final rates ,
once adopted. This website has been
promoted through on- bill messages, and through multilingual e-newsletters emails and direct mail postcards. This
information includes a telephone number Hetch Hetchy
Power customers can call for details.

Public Hearing Notice
Pursuant to Charter Section 16.112, a Notice of Public
Hearing on the establishment of a schedule of rates was published in the official newspaper on April 3, 5, 8, 9, and 10, 2026, and posted on the SFPUC website and at the San
Francisco Public Library, for a public hearing on April 28, with possible Commission action on this date.

Board of Supervisors Review
Pursuant to Charter Section 8B.125, Commission action
adopting rates and charges is subject to rejection by the Board of S upervisors within 30 days of submission to the Board. Absent Board rejection, these proposed Hetch Hetchy Power rates will become effective July 1, 2026, and will remain effective until revised.

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 N o. 2026-
Agenda Title: Adopt Hetch Hetchy Power Rates for FY 2026-27 Commission Meeting Date: April 28, 2026

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003175ENV) related to the establishment, modification,
structuring, restructuring, or approval of rates, tolls, fares, or other charges. The exemption determination is at : View CEQA exemption determination.

This action constitutes the Approval Action for the Project for the purposes of the CEQA pursuant to San Francisco
Administrative Code Section 31.04(h).

Attachments: 1. Power Rate Study Report

2. Memo from Rate Fairness Board to SFPUC

PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO. __________________
WHEREAS, Hetch Hetchy Power provides electric service to municipal, governmental, residential, and commercial customers within the City & County of San Francisco, Alameda, Stanislaus, Tuolumne Counties at rates set by this Commission; and

WHEREAS, In accordance with Section 8B.125 of the Charter of the City and County of San Francisco, the Commission retained an independent rate consultant to perform a rate study and prepare a report entitled “2026 Power Rates Study Report; ” and

WHEREAS, The San Francisco Public Utilities Commission staff have reviewed the independent rate consultant report, and have prepared a staff rate proposal based on the consultant analysis and recommendations; and

WHEREAS, The General Manager finds that Hetch Hetchy Power revenues under existing rates will be insufficient to meet revenue requirements of Hetch Hetchy Power’s 10-Year Financial Plan, and recommends adjustments to Hetch Hetchy Power rates effective July 1, 2026; and

WHEREAS, A Notice of Public Hearing for this proposed rate action was duly provided, and a Public Hearing was held on April 28, 2026, where this proposed action was presented; and

WHEREAS, The Rate Fairness Board has reviewed the findings and recommendations and presented the results of its review to this Commission at a public hearing on April 28, 2026; 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 S ection 21080(b)(8) and the California Environmental Quality Act Guidelines Section 15273 (Rates, Tolls, Fares , and Charges) (Case N o. 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; now, therefore, be it ,

RESOLVED, The following requirements and Schedules of Hetch Hetchy Power Electric Rates and Charges shall apply to all customers of Hetch Hetchy Power; and, be it,

FURTHER RESOLVED, This Commission authorizes the General Manager to make modifications to these schedules that the General Manager determines, in consultation with the City Attorney, are in the best interest of the City, do not materially increase the obligations or decrease the benefits to the City, are necessary or advisable to effectuate the purposes and intent of this resolution, and are in compliance with all applicable laws, including the City Charter.

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 of Retail Sewer Rates
(Adopted April 2026 by Commission Resolution No. XX-XXXX)

Section 1 – Authority and General Purpose
This Resolution is adopted pursuant to Section 8B.125 of the Charter of the City and County of San Francisco for the purpose of establishing an orderly system for the imposition and collection of charges for the operating, maintenance, replacement, debt service and other costs incurred by the Power Enterprise in generating, acquiring from other sources and delivering electricity for consumptive and other uses to customers receiving Hetch Hetchy Power service from the Power Enterprise.

Section 2 – Customer Classification
Class Determination: Upon application for new service, each Customer shall be assigned to a Customer Class based on the class of electric service requested in the application. Whenever the applicable rate cannot be determined (for instance, for a new service without usage data), SFPUC may assign a temporary rate until electric service qualification parameters for the applicable rate are met. This class determination process is in accordance with the requirements of this resolution and Section VI.19.2 of the SFPUC’s Rules & Regulations Governing Electric Service.

For many commercial and industrial rate schedules, a customer must take service on the rate schedule that corresponds to their maximum monthly demand. A customer’s maximum demand will be assessed based on the prior twelve-month period. If their maximum monthly demand exceeds the maximum demand for their currently assigned rate schedule for more than 3 months in the prior twelve -month period, they will be transferred to a different commercial rate schedule for subsequent billing cycles.

Change in Classification: Customers may request their rate be reassessed once every twelve - month period. The SFPUC may waive the twelve-month requirement if the Commission approves a new rate that applies to the customer, or the Customer’s operating conditions have changed significantly to warrant such a change in applicable rate. These stipulations are outlined in Section VI.19.3 of the Rules & Regulations Governing Electric Service.

Section 3 – Rates for Residential, Commercial, and Industrial Electric Service The following Schedules of Hetch Hetchy Power Rates apply to most retail non -municipal Hetch Hetchy Power customers. New customers applying for Hetch Hetchy service will pay one of the rates in Section 3 unless they meet the specific eligibility criteria for rates listed herein.

Residential
Residential rates are applicable to customers served through a separate meter or bank of meters who primarily use electricity for domestic purposes. In cases where a meter serves both domestic and commercial uses, the use which requires the majority of the energy usage will determine the appropriate rate.

For residential rates with tiered energy charges, the price of power increases as a customer uses more energy in each billing period. A standard billing period is one month, defined as 30

days. If a customer’s bill falls more than 5 days outside of the 30 -day billing period (less than 25 days or greater than 35), the amount of energy in each tier will be “pro -rated,” meaning that it will be adjusted to reflect the proportional amount above or below the standard 30 -day bill period.

Residential rates vary based on the summer vs. the winter season, which is defined in Section 9 – Seasonal and Time of Use Periods .

Schedule R-1: Residential, Gas Heating
Eligibility: Applicable to individually metered residential customers whose heating source is natural gas.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $10.00
Summer Energy Charge ($ per kWh)
Tier 1 (0 kWh - 227 kWh) $0.29969
Tier 2 (227 kWh - 524 kWh) $0.35963
Tier 3 (Over 524 kWh) $0.53944
Winter Energy Charge ($ per kWh)
Tier 1 (0 kWh - 252 kWh) $0.29969
Tier 2 (252 kWh - 579 kWh) $0.35963
Tier 3 (Over 579 kWh) $0.53944

Schedule R-1E: Residential, Electric Heating
Eligibility: Applicable to individually metered residential customers whose heating source is electricity.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $10.00
Summer Energy Charge ($ per kWh)
Tier 1 (0 kWh - 250 kWh) $0.29969
Tier 2 (250 kWh - 578 kWh) $0.35963
Tier 3 (Over 578 kWh) $0.53944
Winter Energy Charge ($ per kWh)
Tier 1 (0 kWh - 418 kWh) $0.29969
Tier 2 (418 kWh - 960 kWh) $0.35963
Tier 3 (Over 960 kWh) $0.53944

Schedule R-2: Residential Low-Income, Gas Heating
Eligibility: Applicable to individually metered residential customers whose heating source is natural gas, and who meet the income guidelines established in Section D Rule 9 of the SFPUC Rules and Regulations Governing Water Service to Customers. These rules and regulations currently require customers to have a maximum gross household income, before taxes and deductions, below 200% of the Federal Poverty Level.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $7.00
Summer Energy Charge ($ per kWh)
Tier 1 (0 kWh - 227 kWh) $0.20978
Tier 2 (227 kWh - 524 kWh) $0.25174
Tier 3 (Over 524 kWh) $0.37761
Winter Energy Charge ($ per kWh)
Tier 1 (0 kWh - 252 kWh) $0.20978
Tier 2 (252 kWh - 579 kWh) $0.25174
Tier 3 (Over 579 kWh) $0.37761

Schedule R-2E: Residential Low-Income, Electric Heating Eligibility: Applicable to low -income residential customers whose heating source is electricity, and who meet the income guidelines established in Section D Rule 9 of the SFPUC Rules and Regulations Governing Water Service to Customers. These rules and regulations currently require customers to have a maximum gross household income, before taxes and deductions, below 200% of the Federal Poverty Level.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $7.00
Summer Energy Charge ($ per kWh)
Tier 1 (0 kWh - 250 kWh) $0.20978
Tier 2 (250 kWh - 578 kWh) $0.25174
Tier 3 (Over 578 kWh) $0.37761
Winter Energy Charge ($ per kWh)
Tier 1 (0 kWh - 418 kWh) $0.20978
Tier 2 (418 kWh - 960 kWh) $0.25174
Tier 3 (Over 960 kWh) $0.37761

Schedule REV-1: Residential with Electric Vehicle
Eligibility: Applicable to residential customers operating registered, street-legal electric vehicles and who are taking service under Schedule R -l or R-1E. Customers participating in this schedule will receive one bill for the combined electric consumption of the home use and electric vehicle.

A customer may elect to request separate service for the charging station and will be billed for the home service under the Schedule R -1 or other applicable residential tariff and for the electric vehicle under Schedule EV -1.

Applications for service under this schedule must include proof of registration of the vehicle(s).

Customers taking service under this schedule must re-qualify annually by submitting an application and proof of current California registration of the vehicle.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $10.00
Summer Energy Charge ($ per kWh)
Tier 1 (0 kWh - 400 kWh) $0.29969
Tier 2 (400 kWh - 728 kWh) $0.35963
Tier 3 (Over 728 kWh) $0.53944
Winter Energy Charge ($ per kWh)
Tier 1 (0 kWh - 568 kWh) $0.29969
Tier 2 (568 kWh - 1110 kWh) $0.35963
Tier 3 (Over 1110 kWh) $0.53944

Schedule R-M: Residential Medical Necessity Assistance Program, Gas Heating Eligibility: Applicable to residential customers who have submitted an application and certified in writing that a one full -time resident in the customer's home meets the following conditions:

1. The resident is dependent on an electrically powered life-support device plugged into the home electric system such as an aerosol tent, pressure pad, apnea monitor, pressure pump, compressor, respirator, electronic nerve simulator, suction machine, ultrasound nebulizer, electrostatic nebulizer, inhalation pulmonary pressure breather machine iron lung, dialysis machine, hemodialysis machine, motorized wheelchair, or oxygen generator to sustain the life of the person or to prevent deterioration of the person's medical condition; or

2. A paraplegic, hemiplegic, or quadriplegic, multiple sclerosis, neuromuscular or scleroderma patient or person with a compromised immune system being treated for a life-threatening illness that requires special electrically-powered heating and/or cooling to sustain the life of the patient/person or to prevent deterioration of the patient/person's medical condition.

Applications for the Medical Necessity Assistance Program must include certification by a physician or surgeon licensed in the State of California, or by a person licensed by the State of California in accordance with the Osteopathic Initiative Act, that the person named in the application qualifies for the Medical Necessity Assistance Program.

Recertification: Unless a permanent disability is demonstrated, applications for the Medical Necessity Assistance Program must be submitted annually, in accordance with rules and procedures provided by the General Manager.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $10.00
Summer Energy Charge ($ per kWh)
Tier 1 (0 kWh - 727 kWh) $0.29969
Tier 2 (727 kWh - 1024 kWh) $0.35963
Tier 3 (Over 1024 kWh) $0.53944
Winter Energy Charge ($ per kWh)
Tier 1 (0 kWh - 752 kWh) $0.29969
Tier 2 (752 kWh - 1079 kWh) $0.35963
Tier 3 (Over 1079 kWh) $0.53944

Schedule R-ME: Residential Medical Necessity Assistance Program, Electric Heating Eligibility: Applicable to residential users with all electric heating who have submitted an application and certified in writing that at least one full-time resident in the customer's home meets the following conditions:

1. The resident is dependent on an electrically powered life -support device plugged into the home electric system such as an aerosol tent, pressure pad, apnea monitor, pressure pump, compressor, respirator, electronic nerve simulator, suction machine, ultrasound nebulizer, electrostatic nebulizer, inhalation pulmonary pressure breather machine iron lung, dialysis machine, hemodialysis machine, motorized wheelchair, or oxygen generator to sustain the life of the person or to prevent deterioration of the person's medical condition; or

2. A paraplegic, hemiplegic, or quadriplegic, multiple sclerosis, neuromuscular or scleroderma patient or person with a compromised immune system being treated for a life-threatening illness that requires special electrically powered heating and/or cooling to sustain the life of the patient/person or to prevent deterioration of the patient/person's medical condition.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $10.00
Summer Energy Charge ($ per kWh)
Tier 1 (0 kWh - 750 kWh) $0.29969
Tier 2 (750 kWh - 1078 kWh) $0.35963
Tier 3 (Over 1078 kWh) $0.53944
Winter Energy Charge ($ per kWh)
Tier 1 (0 kWh - 918 kWh) $0.29969
Tier 2 (918 kWh - 1460 kWh) $0.35963
Tier 3 (Over 1460 kWh) $0.53944

Residential Low Income Common Area and Master-Metered Facilities Accounts which serve the common areas of a residential building (such as garages, hallways, community rooms, or courtyards) may be billed to the property owner or building manager.

Because these are not primarily used for domestic purposes, they are typically served under an applicable commercial or industrial rate. However, these accounts may be eligible for a discounted rate if all occupants of a building meet the criteria for a low -income discount, as defined by the State of California’s CARE program. Eligible commercial accounts meeting these criteria will receive a 30% discount off all electric service charges. Similarly, certain older low- income residential facilities with master-metering (a single meter that serves the entire building and is billed to a single entity) may be eligible for this discount.

Small commercial energy rates vary based on the summer vs. the winter season, which is defined in Section 9 – Seasonal and Time of Use Periods .

Schedule C-1: Small Commercial
Eligibility: Applicable to small commercial customers.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $19.63
Summer Energy Charge ($ per kWh) $0.39660
Winter Energy Charge ($ per kWh) $0.31872

Medium Commercial (Demand 75-500 kW)
Medium commercial customers are commercial, industrial and other general non -residential customers with maximum demand between 75 kW and 500 kW served through a separate meter or bank of meters. Maximum demand for purposes of rate schedule eligibility is assessed as defined in Section 2 – Customer Classification. Medium commercial energy rates vary based on the summer vs. the winter season, which is defined in Section 9 – Seasonal and Time of Use Periods.

Schedule C-2S: Medium Commercial, Secondary Voltage
Eligibility: Applicable to medium commercial customers served at secondary voltage.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $350.00
Energy Charge ($ per kWh)
Summer $0.24654
Winter $0.19723
Demand Charge ($ per kW) $28.50
Schedule C-2P: Medium Commercial, Primary Voltage
Eligibility: Applicable to medium commercial customers served at primary voltage.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $350.00
Energy Charge ($ per kWh)
Summer $0.22247
Winter $0.17798
Demand Charge ($ per kW) $23.94

Large Commercial (Demand 500-1000 kW)
Large commercial customers are commercial, industrial and other general non -residential customers with maximum demand between 500 kW and 1000 kW served through a separate meter or bank of meters. Maximum demand for purposes of rate schedule eligibility is assessed as defined in Section 2 – Customer Classification. Large commercial rates vary based on the summer vs. the winter season, and by the time period during which power is used (the “peak,” “part peak,” or “off peak” period). These are defined in Section 9 – Seasonal and Time of Use Periods.

Schedule C-3S: Large Commercial, Secondary Voltage
Eligibility: Applicable to large commercial customers served at secondary voltage.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $2,100.00
Summer Energy Charge ($ per kWh)

On-Peak $0.15142
Part-Peak $0.15142
Off-Peak $0.12113
Winter Energy Charge ($ per kWh)

Part-Peak $0.13398
Off-Peak $0.12113
Summer Demand Charge ($ per kW)

On-Peak $21.02
Part-Peak $16.82
Maximum $38.45
Winter Demand Charge ($ per kW)

Maximum $38.45

Schedule C-3P: Large Commercial, Primary Voltage
Eligibility: Applicable to large commercial customers served at primary voltage.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $2,100.00
Summer Energy Charge ($ per kWh)

On-Peak $0.11771
Part-Peak $0.11771
Off-Peak $0.09417
Winter Energy Charge ($ per kWh)

Part-Peak $0.10415
Off-Peak $0.09417
Summer Demand Charge ($ per kW)

On-Peak $17.87
Part-Peak $14.29
Maximum $32.69
Winter Demand Charge ($ per kW)
Maximum $32.69

Industrial (Demand >1000 kW)
Industrial customers are commercial, industrial and other general non -residential customers with maximum demand greater than 1000 kW served through a separate meter or bank of meters.

Maximum demand for purposes of rate schedule eligibility is assessed as defined in Section 2 – Customer Classification. Industrial rates vary based on the summer vs. the winter season, and by the time period during which power is used (the “peak,” “part -peak,” or “off-peak” period).

These are defined in Section 9 – Seasonal and Time of Use Periods .

Schedule I-1S: Industrial, Secondary Voltage
Eligibility: Applicable to industrial customers served at secondary voltage.

Rate Component FY 2026-27 Rates
Customer Charge $2,300.00
Summer Energy Charge ($ per kWh)

On-Peak $0.13201
Part-Peak $0.13201
Off-Peak $0.10561
Winter Energy Charge ($ per kWh)

Part-Peak $0.11881
Off-Peak $0.10561
Summer Demand Charge ($ per kW)

On-Peak $22.06
Part-Peak $17.65
Maximum $39.71
Winter Demand Charge ($ per kW)

Maximum $39.71

Schedule I-1P: Industrial, Primary Voltage
Eligibility: Applicable to industrial customers served at primary voltage.

Rate Component FY 2026-27 Rates
Customer Charge $2,300.00
Summer Energy Charge ($ per kWh)

On-Peak $0.13100
Part-Peak $0.13100
Off-Peak $0.11249
Winter Energy Charge ($ per kWh)

Part-Peak $0.12641
Off-Peak $0.11249
Summer Demand Charge ($ per kW)

On-Peak $22.06
Part-Peak $17.65
Maximum $36.50
Winter Demand Charge ($ per kW)
Maximum $36.50
Schedule I-1T: Industrial, Transmission Voltage
Eligibility: Applicable to industrial customers served at transmission voltage.

Rate Component FY 2026-27 Rates
Customer Charge $2,300.00
Summer Energy Charge ($ per kWh)

On-Peak $0.12967
Part-Peak $0.12967
Off-Peak $0.10374
Winter Energy Charge ($ per kWh)

Part-Peak $0.11670
Off-Peak $0.10374
Summer Demand Charge ($ per kW)

On-Peak $22.06
Part-Peak $17.65
Maximum $28.25
Winter Demand Charge ($ per kW)

Maximum $28.25

Schedule SS: Shoreside Power
Eligibility: Rates for electric service to ships using shore power at Port of San Francisco facilities, and with maximum demands equivalent to industrial customers, as defined above.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $600.00
Summer Energy Charge ($ per kWh)

On-Peak $0.17213
Part-Peak $0.17213
Off-Peak $0.13770
Winter Energy Charge ($ per kWh)

Part-Peak $0.14771
Off-Peak $0.13770
Summer Demand Charge ($ per kW)
Max $7.50
Winter Demand Charge ($ per kW)

Max $7.50
Schedule MA-1: Municipal Airport
Eligibility: Applicable to San Francisco International Airport.

Rate Component FY 2026-27 Rates
Customer Charge $2,300.00
Summer Energy Charge ($ per kWh)
On-Peak $0.11313
Part-Peak $0.11313
Off-Peak $0.09406
Winter Energy Charge ($ per kWh)
Part-Peak $0.10070
Off-Peak $0.09406
Summer Demand Charge ($ per kW)

On-Peak $25.00
Part-Peak $20.00
Maximum $45.00
Winter Demand Charge ($ per kW)

Maximum $45.00

Electric Vehicles
Electric vehicle rate customers are those who use electricity solely for charging one or more electric vehicles.

For schedule EV -1, the time -of-use periods are different than in other rate schedules. The time - of-use periods for EV -1 are:

Peak 4:00 pm – 9:00 pm Every day
Off-Peak 9:00 pm – 4:00 pm Every day

Schedule EV-1: Electric Vehicle Charging
Eligibility: Applicable to customers with a meter serving only charging station(s) for a street legal electric vehicle. The meter may be used by the customer directly, or may be available for public, employee, or other general usage.

This is a pilot rate subject to change at the discretion of SFPUC. Customers wishing to change to the EV -1 rate should contact the SFPUC, and must have an SFPUC-owned interval meter and equipment installed.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $18.69
Energy Charge ($ per kWh)
On-Peak $0.43120
Off-Peak $0.30099

Lighting and Traffic Control
Lighting and traffic control tariffs are for usage by traffic control signals or metered streetlights.

Schedule TC-1: Traffic Control Signals
Eligibility: Applicable to unmetered traffic control equipment that operates on a 24-hour basis.

Rate Component FY 2026-27 Rates
Energy Charge ($/kWh) $0.34690
Schedule LS-3: Street Lighting
Eligibility: Applicable to street lighting or outdoor lighting customers.

Rate Component FY 2026-27 Rates
Energy Charge ($/kWh) $0.34690

Section 4 – Rates for Enterprise Municipal Electric Service The following Hetch Hetchy Power Rates are only applicable to customers who were enrolled in one of these rate schedules as of July 1, 2024, which includes certain municipal, governmental, and commercial customers, referred to as “Enterprise” customers.

New customers will not be placed on one of these rates, and must instead enroll in one of the applicable tariffs in Section 3 – Rates for Residential, Commercial, and Industrial Electric Service.

Residential Low-Income Common Area
Accounts which serve the common areas of a residential building (such as garages, hallways, community rooms, or courtyards) may be billed to the property owner or building manager.

Because these are not primarily used for domestic purposes, they are typically served under an applicable commercial or industrial rate. However, these accounts are eligible for a discounted rate if all occupants of a building meet the criteria for a low-income discount, as defined by PG&E’s CARE program. Eligible commercial accounts meeting these criteria will receive a 30% discount off all electric service charges.

Small commercial energy rates vary based on the summer vs. the winter season, which is defined in Section 9 – Seasonal and Time of Use Periods .

Schedule A-1U: Enterprise Small Commercial Time -of-Use Eligibility: Applicable to small commercial customers who elect for a time of use option, and who are eligible for Enterprise rates. Schedule A-1U is a legacy rate and does not allow new customer enrollment.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $19.63
Summer Energy Charge ($ per kWh)
On-Peak $0.42836
Part Peak $0.42836
Off Peak $0.36616
Winter Energy Charge ($ per kWh)
Part Peak $0.32738
Off Peak $0.31089

Medium Commercial (Demand 75 -500 kW)
Medium commercial customers are commercial, industrial and other general non -residential customers with maximum demand between 75 kW and 500 kW served through a separate meter or bank of meters. Maximum demand for purposes of rate schedule eligibility is assessed as defined in Section 2 – Customer Classification.

Medium commercial energy rates vary based on the summer vs. the winter season, which is defined in Section 9 – Seasonal and Time of Use Periods .

Schedule A-10US: Enterprise Medium Commercial Time-of-Use, Secondary Voltage Eligibility: Applicable to medium commercial customers served at secondary voltage, who elect for a time of use option, and who are eligible for Enterprise rates. Schedule A -10US is a legacy rate and does not allow new customer enrollment.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $350.00
Summer Energy Charge ($ per kWh)
On-Peak $0.27320
Part-Peak $0.27320
Off-Peak $0.21856
Winter Energy Charge ($ per kWh)
Part-Peak $0.21036
Off-Peak $0.19124
Demand Charge ($ per kW) $28.50
Schedule A-10UP: Enterprise Medium Commercial Time-of-Use, Primary Voltage Eligibility: Applicable to medium commercial customers served at primary voltage, who elect for a time of use option, and who are eligible for Enterprise rates. Schedule A -10UP is a legacy rate and does not allow new customer enrollment.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $350.00
Summer Energy Charge ($ per kWh)
On-Peak $0.24636
Part-Peak $0.24636
Off-Peak $0.19709
Winter Energy Charge ($ per kWh)
Part-Peak $0.18970
Off-Peak $0.17245
Demand Charge ($ per kW) $23.94

Section 5 – Rates for General Use Municipal Electric Service The following Hetch Hetchy Power Rates are only applicable to customers who were on Schedule M -2 as of July 1, 2022, which includes certain municipal, governmental, and commercial customers, referred to as “General Use” customers. New customers will not be placed on one of these rates unless they are new facilities operated by one of the following City departments, government agencies, or organizations:

General Use Customers
Asian Art Museum of San Francisco
California Academy of Sciences
City College of San Francisco
The Exploratorium
San Francisco Adult Probation Department
San Francisco Arts Commission
San Francisco City Administrator’s Office (except Convention Facilities, Bill Graham Civic Auditorium, and Public Works Street & Sewer Repair and Street Environmental Services) San Francisco City Attorney’s Office
San Francisco Department of Child Support Services
San Francisco Department of Elections
San Francisco Department of Emergency Management
San Francisco Department of Homelessness & Supportive Housing San Francisco Department of Public Health
San Francisco District Attorney
San Francisco Fire Department
San Francisco Health Service System
San Francisco Human Services Agency
San Francisco Juvenile Probation Department
San Francisco Mayor’s Office of Housing & Community Development San Francisco Municipal Transit Agency (except Traffic Engineering and Parking Authority) San Francisco Police Department
San Francisco Public Defender’s Office
San Francisco Recreation & Parks Department (except Yacht Harbor) San Francisco Sheriff’s Department
San Francisco Unified School District
San Francisco War Memorial
San Francisco Zoo

Small Commercial (Demand <75 kW)
Small commercial customers are commercial, industrial and other general non -residential customers with maximum demand less than 75 kW served through a separate meter or bank of meters. Maximum demand for purposes of rate schedule eligibility is assessed as defined in Section 2 – Customer Classification. Small commercial energy rates vary based on the summer vs. the winter season, which is defined in Section 9 – Seasonal and Time of Use Periods . See Section 10 – Definitions for more information.

Schedule CG-1: General Use Small Commercial
Eligibility: Applicable to small commercial customers who are eligible for General Use rates.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $13.05
Summer Energy Charge ($ per kWh) $0.27333
Winter Energy Charge ($ per kWh) $0.21965

Medium commercial energy rates vary based on the summer vs. the winter season, which is defined in Section 9 – Seasonal and Time of Use Periods .

Schedule CG-2S General Use: Medium Commercial, Secondary Voltage Eligibility: Applicable to medium commercial customers served at secondary voltage who are eligible for General Use rates.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $278.51
Summer Energy Charge ($ per kWh) $0.20080
Winter Energy Charge ($ per kWh) $0.16064
Demand Charge ($ per kW) $23.05

Schedule CG-2P: General Use Medium Commercial, Primary Voltage Eligibility: Applicable to medium commercial customers served at primary voltage who are eligible for General Use rates.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $278.51
Summer Energy Charge ($ per kWh) $0.20969
Winter Energy Charge ($ per kWh) $0.16775
Demand Charge ($ per kW) $21.46

Large commercial rates vary based on the summer vs. the winter season, and by the time period during which power is used (the “peak,” “part -peak,” or “off-peak” period). These are defined in Section 9 – Seasonal and Time of Use Periods .

Schedule CG-3S: General Use Large Commercial, Secondary Voltage Eligibility: Applicable to large commercial customers served at secondary voltage who are eligible for General Use rates.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $2,064.30
Summer Energy Charge ($ per kWh)

On-Peak $0.11446
Part-Peak $0.11446
Off-Peak $0.09156
Winter Energy Charge ($ per kWh)
Part-Peak $0.10127
Off-Peak $0.09156
Summer Demand Charge ($ per kW)

On-Peak $18.92
Part-Peak $15.14
Maximum $34.62
Winter Demand Charge ($ per kW)
Maximum $34.62

Schedule CG-3P: General Use Large Commercial, Primary Voltage Eligibility: Applicable to large commercial customers served at primary voltage who are eligible for General Use rates.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $2,064.30
Summer Energy Charge ($ per kWh)

On-Peak $0.08773
Part-Peak $0.08773
Off-Peak $0.07018
Winter Energy Charge ($ per kWh)
Part-Peak $0.07763
Off-Peak $0.07018
Summer Demand Charge ($ per kW)

On-Peak $15.86
Part-Peak $12.69
Maximum $29.02
Winter Demand Charge ($ per kW)

Maximum $29.02

Maximum demand for purposes of rate schedule eligibility is assessed as defined in Section 2 – Customer Classification.

Industrial tariffs vary based on the summer vs. the winter season, and by the time period during which power is used (the “peak,” “part-peak,” or “off-peak” period). Section 9 – Seasonal and Time of Use Periods.

Schedule IG-1S: General Use Industrial, Secondary Voltage Eligibility: Applicable to industrial customers served at secondary voltage who are eligible for General Use rates.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $2,148.59
Summer Energy Charge ($ per kWh)

On-Peak $0.12245
Part-Peak $0.12245
Off-Peak $0.09796
Winter Energy Charge ($ per kWh)
Part-Peak $0.11021
Off-Peak $0.09796
Summer Demand Charge ($ per kW)

On-Peak $21.55
Part-Peak $17.24
Maximum $38.78
Winter Demand Charge ($ per kW)
Maximum $38.78

Schedule IG-1P: General Use Industrial, Primary Voltage Eligibility: Applicable to industrial customers served at primary voltage who are eligible for General Use rates.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $2,148.59
Summer Energy Charge ($ per kWh)

On-Peak $0.12238
Part-Peak $0.12238
Off-Peak $0.09790
Winter Energy Charge ($ per kWh)
Part-Peak $0.11014
Off-Peak $0.09790
Summer Demand Charge ($ per kW)

On-Peak $18.93
Part-Peak $15.15
Maximum $34.08
Winter Demand Charge ($ per kW)
Maximum $34.08

Lighting
General Use lighting customers are unmetered load used for street or outdoor lighting. As the load is unmetered, monthly charges are estimated based on the type and voltage of the installed light fixture.

Schedule LG: General Use Lighting
Eligibility: Applicable to street lighting or outdoor lighting customers who are eligible for General Use rates.

Rate Component FY 2026-27 Rates
Energy Charge ($ per kWh) $0.24877

Section 6 – Tuolumne and Stanislaus County Rates
The following Hetch Hetchy Power Rates are only applicable to facilities located within Tuolumne and Stanislaus County which were on one of these rate schedules as of July 1, 2023.

New customers will not be placed on one of these rates.

Residential
Schedule UH0050: Hetch Hetchy Water and Power Employee Housing Eligibility: Applicable to residents of housing owned and operated by the SFPUC within Tuolumne County.

Rate Component FY 2026-27
Rates
Customer Charge ($ per month) $10.00
Energy Charge ($ per kWh) $0.13064

Small Commercial
Schedule CT-1: Tuolumne County Small Commercial
Eligibility: Applicable to facilities operated by the California Department of Fish & Wildlife or United States Forest Service within Tuolumne County currently provided electricity by Hetch Hetchy Water & Power.

Rate Component FY 2026-27 Rates
Customer Charge ($ per month) $10.00
Energy Charge ($ per kWh) $0.13768
Industrial
Schedule IR-1T: Stanislaus County Industrial Rate, Transmission Voltage Eligibility: Applicable to Industrial facilities in Stanislaus County taking service directly from City-owned transmission lines.

Rate Component FY 2026-27 Rates
Customer Charge $1,500.00
Summer Energy Charge ($ per kWh)

On-Peak $0.09412
Part-Peak $0.09412
Off-Peak $0.07822
Winter Energy Charge ($ per kWh)

Part-Peak $0.08377
Off-Peak $0.07793
Summer Demand Charge ($ per kW)

On-Peak $20.00
Rate Component FY 2026-27 Rates
Part-Peak $20.00
Maximum $18.05
Winter Demand Charge ($ per kW)
Maximum $18.05
Section
7 – Hetch Hetchy Power Premium
Rate Component FY 2026-27 Rates
Energy Surcharge ($ per kWh) $0.00950
Genera
l Use Municipal Customers
For customers taking energy on one of the rate schedules in Section 5 – Rates for General Use Municipal Electric Service , and who are participating in the Low Carbon Fuel Standard program, the surcharge above does not apply to any kWh energy used to earn LCFS credits. Instead, customers are provided Hetch Hetchy Power Premium at no additional cost and must pay a fee equivalent to 50% of the revenues from the sale of LCFS credits with Hetch Hetchy Power. In addition, Hetch Hetchy Power will provide services related to the participation in the LCFS Program, including quarterly and annual reporting assistance, credit tracking, and credit sales.

Section 8 – Net Energy Metering Tariffs
Schedule NEM-SFPUC: Net Energy Metering
Applicability
A. This Schedule Net Energy Metering -SFPUC (NEM-SFPUC) is applicable to service for eligible SFPUC customers who site a Renewable Electric Generating Facility on their owned, rented, or leased premises within the SFPUC service area located where SFPUC operates the local distribution system and is able to use exported energy to serve SFPUC customers.

B. Th
is Schedule is available upon request, on a first -come, first-served basis for eligible customers until the total rated generating capacity used by eligible customers exceeds 5 percent of SFPUC’s aggregate customer peak demand. When this total rated generating capacity exceeds 5 percent of SFPUC’s aggregate customer peak demand, this schedule is closed to new customers.

Eligibility: Applicable to Hetch Hetchy customers who apply on a first come, first served basis.

Through this premium, they are provided the opportunity to receive 100 percent renewable energy that meets California’s Renewable Portfolio Standards (RPS). Hetch Hetchy Power Premium is also considered a zero-carbon -intensity electric energy pathway under the California Air Resources Board’s Low-Carbon Fuel Standard (LCFS) Program. The combined total of all enrolled customers in this tariff is limited to 200,000 megawatt-hours per year , as available.

Customers must request to be enrolled.

Hetch Hetchy Power Premium is a premium surcharge that will be added to all kWh energy usage on customer’s otherwise applicable rate schedule. The premium for each Hetch Hetchy rate schedule is as follows:

C. The
eligible customer must submit an application for Net Energy Metering. Upon acceptance by SFPUC, the customer must execute a Net Energy Meterin g A
cknowledgement or any other document containing substantially the terms and conditions of the Acknowledgement as determined by SFPUC in order to receive services under this Schedule.

Definitions
“Annual True-up Period” means the twelve -month period commencing with the May bill of each year.
“Net Electricity Consumer” means a Customer that exports less electricity from its Renewable Electrical Generation Facility during an Annual True-up Period than is delivered by SFPUC to the Customer during the same period.
“Net Electricity Generator” means a Customer that exports more electricity from its Renewable Electrical Generation Facility during an Annual True-up Period than is delivered by SFPUC to the Customer during the same period.
“Renewable Electricity Generation Facility” means a facility that generates electricity from a renewable source listed in California Public Resources Code Section 25741(a)(1)1 for the purpose of NEM-SFPUC and that is:
a. located on the customer’s owned, rented, or leased premises; b. equal to or less than 1 MW (AC) in design capacity;
c. interconnected for parallel operation with the local distribution system; and d. sized principally to offset part or all the customer’s own on-site electrical requirements.

If
t
here is a material and permanent change to the customer’s electrical requirements suc h th
at the renewable facility output exceeds the customer’s load, SFPUC may rea ssess th
e customer’s eligibility for this Schedule.

Metering
A. The utility meter must be capable of accurately measuring the flow of energy in both directions. If the existing utility meter is not an interval meter capable of accura tely
m
easuring the flow of energy in both directions and being read remotely by SFPUC in a manner that allows accurate billing under the customer’s applicable rate , SFPUC will i
nstall a new meter or cause one to be installed, and the customer shall be responsibl e fo
r reimbursing all costs of purchasing and installing that meter. If needed, the cu stomer sh
all install the appropriate meter socket.

B. The
utility meter shall satisfy the requirements of this section and all applicable fed eral, s
tate, and local safety and performance standards.

C. SFPUC
may install an additional meter at its own expense with the consent of th e c
ustomer. The additional meter shall be used only to provide the information necessary to accurately bill or credit the customer and/or to collect generating system performan ce i
nformation for research purposes.

Billing, Settlement and Net Surplus Compensation Rate
Monthly Bills
A. Each customer will be billed monthly. All charges under the customer’s otherwise applicable rate schedule shall be in effect and, except for Net Electricity generators a s s
et forth in the “Annual Settlement” section below, all charges shall be due and payabl e on
a monthly basis. The monthly billing statement will reflect the customer’s ne t ele
ctricity consumption, charges incurred, generation bill credits from previous billing cycles, and credits generated during the current billing period. The monetary value of any excess generation during a monthly billing cycle shall be calculated as follows:

1. For customers on a Flat Rate Schedule: If in any monthly billing cycle, the e
lectricity delivered by SFPUC is less than the electricity received by SFPUC from the
Renewable Electricity Generation Facility, the value of the e xcess kilowatt
-hours (kWh) generated during the monthly billing cycle shall b e ca
lculated according to the electricity usage charges of the customer’s otherwise applicable rate schedule. This amount will be carried over as a monetary credit to th
e next billing cycle and credited against electricity use (kWh) charges on future bills for that account until the end of the Annual True -up Period.

2. For customers on a Time -of-Use Rate (“TOU”) Schedule: If in any monthly billin g cycle,
the electricity delivered by SFPUC is less than the electricity received by SFPUC fro
m the Renewable Electricity Generation Facility, during any TOU pe
riod, the value of the excess kilowatt-hours (kWh) produced during that TOU period shall be calculated according to the electricity usage charges of the customer’s otherwise applicable rate schedule. If the aggregate electricity usage charges and credits summed across all TOU periods result in a net credit for th e
billin
g cycle, this amount will be carried over as a monetary credit to the n ext billin
g cycle and credited against electricity use (kWh) charges on future bills fo r t
hat account until the end of the Annual True -up period.

B. Reside
ntial and small commercial customers may elect to pay the electricity usag e c
harge portion of the billing statement monthly or at the annual settlement. All non - electricity usage charges, such as fees, surcharges, and taxes shall be due and payabl e on
a monthly basis regardless of the customer’s election.

1. For customers who elect monthly payment, net electricity usage charges are d ue a
nd payable per applicable monthly billing schedules.

2. For customers who elect annual payment of electricity usage charges, th e customer
’s net electricity charges and credits, as calculated on a month ly basis, w
ill be carried over until the end of the Annual True-Up Period when payment will b
e due and payable in accordance with Section C, below.

3. For the purposes of this Schedule, “Small commercial customer” mea ns a c
ommercial customer that has a maximum peak demand of less than 75 kilowatts.

4. A customer may change its billing election within 30 days after each annual settlement is completed.

C. All
customers other than residential and small commercial customers must pay the n et b
alance of moneys owed on a monthly basis.

Annual Settlement
A. At the end of the Annual True-up Period, SFPUC will determine whether the Customer is a
Net Electricity Consumer or a Net Electricity Generator during the preceding Annu al Tr
ue-up Period. For new customers, the Annual True-up Period will cover the period

starting on the date that the Customer commences service under this NEM-SFPUC Schedule through the Customer’s April billing cycle.

B. If the customer is a Net Electricity Consumer, SFPUC will calculate the net compensation owed to SFPUC in accordance with the customer’s otherwise applicable rate schedule and the customer must pay the full amount owed in accordance with the SFPUC’s Rules for electricity service. For new customers commencing service under this NEM-SFPUC Schedule less than 12 months prior to the April true -up date, any remaining monetary bill credits will be carried over to the next twelve -month period on a one time only basis. For all other customers, any remaining monetary bill credits will be zeroed out.

C. If the customer is a Net Electricity Generator, the customer must elect either:

1. Net surplus electricity compensation for any net surplus electricity generated during the prior Annual True -up Period, with any remaining credit balance reset to zero, or

2. Carryover of any remaining monetary bill credits to the next Annual True-up Period, to be applied as a credit for future electricity use (kWh) charges. A customer that chooses this option will lose any opportunity to receive net surplus electricity compensation for these credits in the future.

3. In the case of a customer that does not affirmatively elect to receive either net surplus electricity compensation or carryover of credits, SFPUC shall have no obligation to provide compensation or credits for the electricity received from the customer during that twelve-month period, and any remaining credit balance will be reset to zero.

4. A customer may change its current election for net surplus electricity compensation by submitting that change to the SFPUC at least 30 days prior to the April true-up date.

D. The Net Surplus Electricity Compensation rate for each kilowatt-hour of net electricity production during the Annual True-up Period is $0.04 per kWh.

E. If the customer terminates the contractual relationship with SFPUC, SFPUC shall reconcile the customer’s consumption and production of electricity during the relevant portion of the twelve-month period following the last annual settlement and calculate the net credit or net bill as provided in this section. Any credits carried over from prior twelve- month periods that cannot be netted against remaining electricity use (kWh) charges will be zeroed out.

Safety, Standards and Inspections
A. If the Renewable Electricity Generation Facility will be interconnected to SFPUC’s distribution system, the customer must satisfy all applicable SFPUC interconnection requirements and receive SFPUC approval to interconnect. In instances where the renewable facility connection requires SFPUC to meet responsibilities regarding its interconnection with the PG&E distribution system the customer must satisfy all applicable PG&E interconnection rules and regulations. The customer is solely responsible for payment of all fees and charges associated with the interconnection of the Renewable Electricity Generation Facility.

B. The Renewable Electricity Generation Facility shall meet all applicable federal, state and local safety and performance standards, including those established by the National

Electrical Code, the Institute of Electrical and Electronic Engineers, and accredited testing laboratories such as Underwriters Laboratories and, as applicable, the rules of the California Public Utilities Commission regarding safety and reliability. The customer shall operate the renewable facility in compliance with all applicable SFPUC or PG&E tariffs, rules, regulations, and orders, and any rules, regulations and orders of the California Public Utilities Commission. The customer is solely responsible for payment of all fees, rates and charges associated with the operation of the Renewable Electricity Generation Facility.

Schedule NEM-ShaRE: Shared Renewable Energy Arrangement Applicability
A. This Schedule ShaRE is applicable to service for multi-tenant or multi -meter properties located at the same or contiguous properties on which a renewable energy facility owned or installed by an eligible SFPUC customer is located and where the SFPUC operates the local distribution system and is able to use exported energy to serve other SFPUC customers. This Schedule may be extended to customers in other locations on a case-by-case basis where the configuration of distribution facilities permit. Contiguous properties must be owned, rented or leased by the same customer that owns, rents, or leases the property on which the renewable energy facility is located (“Contiguous Properties”).

B. This Schedule is available upon request, on a first -come, first-served basis for eligible customers until the total rated generating capacity used by eligible customers under this Schedule equals 5 megawatts of installed capacity. At that time, this schedule will be closed to new customers.

C. The renewable facility must:

1. be a renewable energy resource as defined in California Public Resources Code Section 25741(a)(1);

2. be sized such that the amount of energy generated does not exceed the total energy requirements of all the benefitting accounts and generating account, but with a maximum design capacity of 1 MW (AC);

3. be located on the customer’s owned, rented, or leased premises; and

4. be interconnected for parallel operation with the local distribution system.

D. Customers on this Schedule are not eligible to take service on Electric Schedule NEM- SFPUC, Net Energy Metering.

E. The eligible customer must submit a ShaRE Application. Upon acceptance by SFPUC, the customer must execute a ShaRE Acknowledgement or any other document containing substantially the terms and conditions of the Acknowledgement as determined by SFPUC in order to receive services under this Schedule. All necessary forms and documents are available for download from the SFPUC website.

Customer Accounts and Metering
A. The customer must designate specific SFPUC-served accounts that are either located on the same property where the renewable facility is located or on Contiguous Properties. These designated accounts will form a “Shared Renewable Energy (ShaRE) arrangement,” made up of both of the following:

1. Designated “benefitting accounts” that will receive billing credits for energy generated by the renewable facility.

2. A single account to which the renewable facility will be primarily associated for the purposes of billing renewable facility -related fees. This account shall be referred to as either a “generating account” or a “primary account” depending on the customer’s chosen renewable facility configuration. Generating accounts and primary accounts will be differently treated according to the following rules:
i. If the renewable facility is located behind a meter billed to the customer, the associated account will be designated as a “generating account”. Any exported energy by the renewable facility will be allocated to benefitting accounts.
ii. If the renewable facility is located in front of existing customer meters, the customer must designate one of its own existing accounts to serve as a “primary account”. The primary account will not receive any billing credits unless the customer chooses to also designate the primary account as a benefitting account in the ShaRE arrangement.

B. Metering for the renewable facility.

1. To enable accurate billing of benefitting accounts, the renewable facility’s utility meter must be capable of (i) measuring the flow of electricity in both directions in a manner commensurate with the smallest time interval required by the SFPUC to establish billing determinants for any of the benefitting account meters and (ii) being read remotely by SFPUC. If necessary, the SFPUC will install a meter to accurately measure and record the total amount of electricity exported by the renewable facility. The customer shall install the appropriate meter socket and shall reimburse the SFPUC for the actual cost of all necessary labor, equipment, materials, and related facilities costs incurred by the SFPUC to install the necessary metering.

2. If the existing distribution utility meter is not an interval meter capable of measuring the flow of electricity in both directions and being read remotely by SFPUC, the SFPUC will install a new meter or cause one to be installed, consistent with the SFPUC’s specifications, and the customer shall be responsible for any costs incurred. If needed, the customer shall install the appropriate meter socket.

3. Meters shall meet the requirements of this section and all applicable federal, state, and local safety and performance standards.

Billing and Settlement
A. Each account in the ShaRE arrangement will be billed monthly. All charges under the participating account’s otherwise applicable rate schedule shall be in effect, and the account will continue to be billed for all applicable charges —including, if applicable, demand and monthly charges —other than those reduced by the crediting method described below.

B. For each monthly billing period, the SFPUC shall allocate the electricity (kWh) exported by the renewable facility to each benefitting account by one of the following methods.

1. The customer may specify a percentage of exported electricity to be assigned to each benefitting account (the sum of the assigned percentages shall equal 100% of monthly exported electricity). The customer must notify all benefitting accounts and submit the signed allocation form to the SFPUC.

2. If the allocation is not specified by the customer, the allocation will be performed by the SFPUC at its sole discretion. The energy (kWh) exported from the renewable facility at each meter interval will then be allocated to each of the benefitting accounts for the corresponding interval for the applicable billing period.

C. The allocated energy (kWh) will be valued at the electricity use (kWh) charges of the benefitting account’s otherwise applicable rate schedule. The value of the allocated energy will not include demand or monthly customer charges. Each benefitting account will be billed for the net amount of energy consumption and demand and customer charges at the account’s otherwise applicable rate schedule. The net balance of all moneys owed must be paid on each monthly billing cycle.

D. If the monetary value of allocated energy in a month exceeds the electricity use (kWh) charges for the benefitting account in that month, the excess value shall be carried over as a monetary credit on the benefitting account. This amount will be credited against electricity use (kWh) charges on future bills for that account until the end of the twelve- month period.

E. The generating account and all benefitting accounts within a ShaRE arrangement will be placed on the same billing cycle. In the May bill each year, any unused accumulated monthly bill credits from the preceding 12 -month period will be zeroed out.

1. For new customers, the annual true-up will cover the period starting on the date that the customer commences service under this ShaRE Schedule up to the annual true-up date. For new customers commencing service under this ShaRE Schedule less than 12 months prior to the annual true -up date, any remaining monetary bill credits will be carried over to the next twelve -month period on a one time only basis.

2. If any account within the ShaRE arrangement terminates participation in this program, the SFPUC will reconcile that account’s consumption and production of electricity during any part of the twelve -month period following the last annual settlement. If there is a material and permanent change to the usage of the ShaRE accounts such that the renewable facility output exceeds the combined load of the accounts, SFPUC may reassess the customer’s eligibility for this Schedule.

F. The customer will retain ownership of all renewable energy credits associated with the renewable facility.

G. The SFPUC will assess fees to recover added costs of billing services for a ShaRE arrangement. The generating account will be charged a one -time setup charge of $12 for each benefitting account. Each benefitting account and the generating account will be charged a monthly billing service fee of $5. The customer may make changes to the allocation percentages by notifying each affected benefitting account and submitting a new signed allocation form to the SFPUC. If the customer wishes to make more than one changed allocation per twelve -month true -up period, additional changes will be implemented at SFPUC’s sole discretion, and the generating account may be charged $12 per account changed.

Safety, Standards and Inspections
A. The customer must satisfy all applicable SFPUC interconnection requirements and receive SFPUC approval to interconnect. The customer is solely responsible for payment of all fees, rates, and charges associated with the interconnection of the renewable facility.

B. The renewable facility shall meet all applicable federal, state and local safety and performance standards, including those established by the National Electrical Code, the Institute of Electrical and Electronic Engineers, and accredited testing laboratories such as Underwriters Laboratories and, as applicable, the rules of the California Public Utilities Commission regarding safety and reliability. The customer shall operate the renewable facility in compliance with all applicable SFPUC or PG&E tariffs, rules, regulations, and orders, and any rules, regulations and orders of the California Public Utilities Commission. The customer is solely responsible for payment of all fees, rates, and charges associated with the operation of the renewable facility.

Section 9 – Seasonal and Time of Use Periods
Unless stated otherwise, for all rates which vary based on season and time period, the following definitions apply.

Summer (May—October)
Peak 12:00 noon to 6:00 pm Monday through Friday (except holidays) Part-Peak 8:30 am to 12:00 noon
6:00 pm to 9:30 pm Monday through Friday (except holidays) Off-Peak 9:30 pm to 8:30 am
All day
Monday through Friday (except holidays)
Saturday, Sunday and holidays.

Winter (November—April)
Part-Peak 8:30 am to 9:30 pm Monday through Friday (except holidays) Off-Peak 9:30 pm to 8:30 am
All day
Monday through Friday (except holidays)
Saturday, Sunday and holidays.

Holidays
Holidays for the purpose of these rate schedules are New Year’s Day, President’s Day, Memorial Day, Independence Day, Labor Day, Veterans’ Day, Thanksgiving Day, and Christmas Day on the dates the holidays are legally observed.

Section 10 – Definitions
For the purpose of this resolution, the following definitions shall apply unless the context specifically dictates otherwise.
"City"
The City and County of San Francisco
"Commercial Customer"
A Commercial Customer is the customer of record at any property used primarily for business or professional purposes responsible for payment of charges for electric service.

"Commission"
The San Francisco Public Utilities Commission (SFPUC)
"Customer"
Person in whose name Electric Service is provided as evidenced by the signature on the Application, contract, agreement for that service, or in the absence of a signed instrument, by the receipt and payment of Bills regularly issued in the Customer’s name, regardless of the identity of the actual user of the Electric Service. In certain cases, the word “customer” is used interchangeable with the number of “billed accounts/services”. "Customer Charge"
That portion of the bill for electric service which is a fixed charge (i.e., does not vary based on energy usage) to cover the costs for metering and billing. "Customer Class"
Users with the same or similar usage characteristics are grouped into customer classes for purposes of cost allocation and rate setting. Customers in the same class may be able to choose from different rate schedules available to their class, but generally cannot choose a rate schedule applicable to a different class. Customer classes are determined as described in Section 2 – Customer Classification.
“Demand”
The measurement (in kW) of the actual energy usage for a metered Electric Service at a given moment. For billing purposes, demand is averaged over the interval the meter measures, which is typically each 15 minutes.
“Demand Charge”
A charge for the peak demand of electricity (measured in kW and assessed as described in “Demand”) used during a billing period or time-of use period. "Energy Charge''
That portion of the bill for electric service based on the electric energy consumed, measured in kWh.
"General Manager"
The General Manager of the SFPUC or their designee.
"Holidays"
Holidays for the purposes of most Hetch Hetchy rate schedules are New Year's Day, President's Day, Memorial Day, Independence Day, Labor Day, Veterans' Day, Thanksgiving Day, Christmas Day; the dates will be those on which the holidays are legally observed; see Section 9 – Seasonal and Time of Use Periods
"Kilowatt (kW)"
Unit of electric load or power or demand
“Kilowatt per Hour (kWh)”
Basic unit of electrical energy equal to one kilowatt of power supplied from an electric circuit for one hour.
"Maximum Monthly Demand”

The measure (in kW) for the highest demand during a monthly bill period based on 15 -minute interval data. Maximum monthly demand is be used to assign a commercial customer to a class (see Section 2 – Customer Classification). In addition, maximum demand charges exist on many rate schedules, and are assessed in addition to any time-of -use demand charges. "Meter"
A device for measurement of electric service provided including energy (kilowatt-hours) and demand (kilowatts)
"Operations and Maintenance Costs"
Expenditures used for the production, acquisition and delivery of electricity including, but not limited to, the costs of personnel, materials and supplies, purchased power, transmission and distribution wheeling, and administration.
"Power System"
The City's power system including all assets (real, personal, and tangible or intangible) controlled by and under the jurisdiction of the Commission used for the gathering, impounding, and transmission of water for hydro-generation, and the generation, transmission, and distribution of electricity, including all future additions, extensions, replacements and improvements to the system.
"Peak" (Time-of-Use)
“Peak” times refer to when a utility’s system demand is typically highest and costs are increased. For rate schedules that have a peak rate, these times can be found in Section 9 – Seasonal and Time of Use Periods .
"Part-Peak" (Time-of-Use)
“Part-Peak” times refer to when a utility’s system demand is typically higher than off-peak, but lower than peak, and costs are changed to reflect this middle tier usage using a Time -of-Use method. These times can be found in Section 9 – Seasonal and Time of Use Periods . Energy rates during part -peak periods for time -of-use rate schedules reflect this middle level of costs, as compared to peak and off -peak periods. If a rate schedule has a Part -Peak Demand Charge, it is assessed based on the highest demand during all part -peak periods in the bill cycle. "Off-Peak" (Time-of-Use)
“Off-Peak” times refer to when a utility’s system demand is typically lowest and costs are decreased using a Time -of-Use method. These times can be found in Section 9 – Seasonal and Time of Use Periods.
"Polyphase Meter”
Polyphase meters measure multiple-phase A/C services; of which three-phase power is common. Three -phase power refers to an electrical system that has three different voltage curves, which start from zero at different times. Polyphase meters are typically installed when there are higher switchboard sizes over 600 amps. For existing accounts, you can contact Customer Service to find out what type of electrical system you have installed. "Primary Voltage"
Voltage class if the customer is served from a single customer substation or without transformation at a standard primary voltage.

"Single-Phase Meter”
Single Phase meters measure single phase A/C service, or an electrical system that has only one voltage or current curve. For existing accounts, you can contact Customer Service to find out what type of electrical system you have installed.
"Residential Customer"
The customer of record, for any single or multiple family dwelling unit, responsible for payment of the charges for electrical service.
"Secondary Voltage"
Voltage class if the service voltage is less than 2,400 volts or if the definitions of "primary" and "transmission" do not apply to the service.
"Summer Season"
The period from May 1 to October 31; see Section 9 – Seasonal and Time of Use Periods . "Transmission Voltage"
Voltage class if the customer is served without transformation at a standard transmission voltage.
"Winter Season"
The period from November 1 to April 30; see Section 9 – Seasonal and Time of Use Periods .

Section 12 – Outside Agencies
The Hetch Hetchy Power rate and charge schedules set forth in this resolution will not apply to any special agreements executed by the City and a Customer; provided that such agreements may be negotiated only when justified by special circumstances not generally applicable to other Customers, that such agreements shall provide schedules of electric rates and charges and other terms and conditions that may be required as the result of any outstanding bonded indebtedness or loan agreements and the requirements of local, state and federal laws and regulations, that are consistent with the customer classification cost allocations set forth in this resolution, and that such agreements shall be approved by the Commission.

Section 13 – Severability
If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this resolution or any part hereof, is for any reason held to be unconstitutional or invalid or ineffective by any court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this resolution or any part hereof. The Commission hereby declares that it would have adopted each section, subsection, subdivision, paragraph, sentence, clause or phrase thereof irrespective of the fact that any one or more sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases be declared unconstitutional or invalid or ineffective.

Section 14 – Effective Date
The rates adopted pursuant to this resolution shall be effective no sooner than thirty days following approval of this resolution, unless the rates are rejected by the San Francisco Board of Supervisors pursuant to Section 8B.125 of the City's Charter, and shall remain in effect until repealed, modified or superseded. These rates will be applied to meter readings on or after July 1, 2026.

Draft Report | March 27, 2026

2027 Power Rates Study

San Francisco Public Utilities Commission

Prepared by:

Economics | Strategy | Stakeholders | Sustainability 1326219207- fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 Table of Contents
Executive Summary
List of Tables ...................................................................................................................................... ii List of Figures .................................................................................................................................... iii Section 1 Introduction ..................................................................................................................... 1-1 Background ...................................................................................................................................... 1-1 Hetch Hetchy Water and Power ........................................................................................... 1-2 Study Schedule/Background ................................................................................................. 1-4 Study Objectives .................................................................................................................... 1-5 COS Process ..................................................................................................................................... 1-6 Steps in the COS Process ....................................................................................................... 1-6 Types of Electric Utility Costs ................................................................................................ 1-7 SFPUC Cost of Service Considerations .................................................................................. 1-8 Section 2 System Characteristics ...................................................................................................... 2-1 Introduction ..................................................................................................................................... 2-1 Hetch Hetchy Power Characteristics ............................................................................................... 2-1 Section 3 Cost of Service for Hetch Hetchy Power ............................................................................ 3-1 Hetch Hetchy Power Introduction/Data Sources ............................................................................ 3-1 Hetch Hetchy Power Cost of Service Analysis ....................................................................... 3-2 Functionalization and Classification ...................................................................................... 3-3 Customer Class Allocation Factors – Hetch Hetchy Power ............................................................. 3-8 General 3-8
Demand Allocation Factors ................................................................................................... 3-9 Energy Allocation Factors .................................................................................................... 3-11 Customer Allocation Factors ............................................................................................... 3-12 Section 4 Cost of Service Results for Hetch Hetchy Power ................................................................ 4-1 Allocation and Assignment of Cost of Service ................................................................................. 4-1 Residential COS Results ......................................................................................................... 4-2 Small Commercial COS Results.............................................................................................. 4-3 Medium Commercial COS Results ......................................................................................... 4-3 Large Commercial COS Results ............................................................................................. 4-3 Industrial COS Results ........................................................................................................... 4-4 Shoreside Power COS Results ............................................................................................... 4-4 Municipal Airport COS Results .............................................................................................. 4-4 Riverside COS Results ............................................................................................................ 4-5 Upcountry COS Results ......................................................................................................... 4-5

Table of Contents

ii 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 Section 5 Rate Recommendations for Hetch Hetchy Power .............................................................. 5-1 Recommended Rate Design ............................................................................................................ 5-2 Residential Rates ................................................................................................................... 5-2 Distribution of Bill Impacts – Residential .............................................................................. 5-4 Small Commercial Rates ........................................................................................................ 5-5 Distribution of Bill Impacts – Small Commercial ................................................................... 5-6 Medium Commercial Rates ................................................................................................... 5-7 Distribution of Bill Impacts – Medium Commercial .............................................................. 5-8 Large Commercial Rates ...................................................................................................... 5-10 Distribution of Bill Impacts – Large Commercial ................................................................. 5-11 Industrial Rates ................................................................................................................... 5-13 Distribution of Bill Impacts – Industrial ............................................................................... 5-15 Other Customer Class Rates .......................................................................................................... 5-16 Shoreside Power Rates ....................................................................................................... 5-16 Municipal Airport Rate ........................................................................................................ 5-17 Riverbank ............................................................................................................................ 5-18 Upcountry ........................................................................................................................... 5-19 Traffic Lights/Streetlights .................................................................................................... 5-20 Individually Metered EV Charging Pilot Rate (EV-1) ........................................................... 5-20 Projected Revenue from Recommended Rates ............................................................................ 5-21 Section 6 Conclusion/Future Rate Changes/Recommendations ........................................................ 6-1 Conclusion ....................................................................................................................................... 6-1 Future Rate Changes ....................................................................................................................... 6-1 Recommendations ........................................................................................................................... 6-2

List of Tables

Table 2-1 Projection of Load and Number of Accounts by Customer Class – Hetch Hetchy Power .............................................................................................................................................. 2-4 Table 3-1 Hetch Hetchy Power Revenue Requirement ($000) .................................................................. 3-2 Table 3-2 Hetch Hetchy Power – Functionalization of Costs ($000) .......................................................... 3-4 Table 3-3 Hetch Hetchy Power – Power Supply ($000) ............................................................................. 3-5 Table 3-4 Hetch Hetchy Power – Transmission ($000) .............................................................................. 3-6 Table 3-5 Hetch Hetchy Power – Distribution ($000) ................................................................................ 3-7 Table 3-6 Hetch Hetchy Power – Customer ($000) ................................................................................... 3-8 Table 3-7 12 CP Cost Allocation ................................................................................................................. 3-9 Table 3-8 Modified 12 NCP Allocation Methods ...................................................................................... 3-11 Table 3-9 Energy Cost Allocation ............................................................................................................. 3-12 Table 3-10 Customer Cost Allocation ....................................................................................................... 3-13 Table 4-1 COS Results – Hetch Hetchy Power ($000) ................................................................................ 4-1 Table 4-2 Existing Test Year Rate Revenues versus Test Year Revenue Requirements – Hetch Hetchy Power ($000) ...................................................................................................................... 4-2 Table 4-3 Residential Cost of Service ......................................................................................................... 4-2 Table 4-4 Small Commercial Cost of Service .............................................................................................. 4-3 Table 4-5 Medium Commercial Cost of Service ......................................................................................... 4-3

Table of Contents

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 iii Table 4-6 Large Commercial Cost of Service .............................................................................................. 4-4 Table 4-7 Industrial Cost of Service ........................................................................................................... 4-4 Table 4-8 Shoreside Power Cost of Service ................................................................................................ 4-4 Table 4-9 Municipal Airport Cost of Service .............................................................................................. 4-5 Table 4-10 Riverside Cost of Service .......................................................................................................... 4-5 Table 4-11 Upcountry Cost of Service ........................................................................................................ 4-5 Table 5-1 Hetch Hetchy Power Residential Rate Schedules and Customers ............................................. 5-3 Table 5-2 Residential Rates (R-1, R-1E, REV-1, R-M, and R-ME) ................................................................ 5-3 Table 5-3 Residential Rates (R-2, R-2E) ...................................................................................................... 5-4 Table 5-4 Hetch Hetchy Power Small Commercial Rate Schedules and Customers ................................. 5-5 Table 5-5 Small Commercial Rates (C-1) ................................................................................................... 5-5 Table 5-6 Small Commercial Rates – GUSE (CG-1) .................................................................................... 5-7 Table 5-7 Small Commercial Rates – Municipal Enterprise (A1-US and A1-UP) ....................................... 5-7 Table 5-8 Hetch Hetchy Power Medium Commercial Rate Schedules and Customers ............................. 5-8 Table 5-9 Medium Commercial Rates (C2-S and C2-P) ............................................................................. 5-8 Table 5-10 Medium Commercial Rates – GUSE (CG2-S and CG2-P) ......................................................... 5-9 Table 5-11 Medium Commercial Rates – Municipal Enterprise (A10-US and A10-UP) .......................... 5-10 Table 5-12 Hetch Hetchy Power Large Commercial Rate Schedules and Customers .............................. 5-10 Table 5-13 Large Commercial Rates (C3-S and C-3P) .............................................................................. 5-11 Table 5-14 Large Commercial Rates – GUSE (CG3-S and CG-3P) ............................................................ 5-12 Table 5-15 Hetch Hetchy Power Industrial Rate Schedules and Customers ........................................... 5-13 Table 5-16 Industrial Rates (I1-S, I1-P, I1-T) ............................................................................................ 5-14 Table 5-17 Industrial Rates – GUSE (IG-1S and IG-1P) ............................................................................ 5-15 Table 5-18 Shoreside Power Rates .......................................................................................................... 5-17 Table 5-19 Municipal Airport Rates ......................................................................................................... 5-18 Table 5-20 Riverbank Rates ..................................................................................................................... 5-19 Table 5-21 Upcountry Rates – Restricted (UH0050, UH0044, UH0047) ................................................. 5-19 Table 5-22 Traffic Lights/Streetlights (TC-1, LS-3, LG)............................................................................. 5-20 Table 5-23 Commercial EV Charging Rate (EV-1) .................................................................................... 5-20 Table 5-24 Revenue Requirement and Projected Revenue by Customer Class ($000) ........................... 5-21

List of Figures

Figure 1-1. Schematic Estimate of Electric Service Territory ..................................................................... 1-2 Figure 1-1. COS Process ............................................................................................................................. 1-6 Figure 2-1. Hetch Hetchy Project Power Generation and Transmission Assets – Exhibit Overview Map ................................................................................................................................ 2-1 Figure 2-2. Hetch Hetchy Power Customers by Class ................................................................................ 2-2 Figure 2-3. Hetch Hetchy Power Load by Customer Class for the TY Period (FY 2026–2027) ................... 2-3 Figure 2-4. Hetch Hetchy Power Energy Sales by Month by Class for Test Year (MWh) ........................... 2-5 Figure 3-1. Hetch Hetchy Power 12 CP Demand Cost Allocation ............................................................ 3-10 Figure 5-1. Distribution of Average Monthly Bill Impacts for Residential Customers ............................... 5-4 Figure 5-2. Distribution of Average Monthly Bill Impacts for Small Commercial Customers .................... 5-6 Figure 5-3. Distribution of Average Monthly Bill Impacts for Medium Commercial Customers GUSE Medium Commercial (CG-2) ................................................................................................. 5-9 Figure 5-4. Distribution of Average Monthly Bill Impacts for Large Commercial Customers .................. 5-12 Figure 5-5. Distribution of Average Monthly Bill Impacts for Industrial Customers ............................... 5-16

Table of Contents

Economics | Strategy | Stakeholders | Sustainability 1326219207- fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26

EXECUTIVE SUMMARY
The San Francisco Public Utilities Commission (SFPUC) supplies high-quality water, power, and wastewater services in the City and County of San Francisco (referred to herein as the City). Within the SFPUC, the Power Enterprise meets the electricity needs of San Francisco’s municipal, business, residential, and wholesale customers. To accomplish this, the Power Enterprise operates two retail electricity programs:

Hetch Hetchy Power, San Francisco’s publicly owned utility (POU), and CleanPowerSF, San Francisco’s community choice aggregation (CCA) program. Hetch Hetchy Power generates, schedules, purchases, sells, transmits, distributes, meters, and bills electricity to retail and wholesale customers; responds to outages; and owns, operates, and maintains the majority of the City’s streetlight system. Hetch Hetchy Power customers include City agencies and a growing number of commercial and residential customers including those associated with the buildout of redevelopment communities (e.g., Treasure and Yerba Buena Islands, Candlestick/Hunter’s Point, and Mission Rock). CleanPowerSF schedules, purchases, and sells electricity to residential and commercial customers located exclusively in the City. Through these two programs, the Power Enterprise serves over 75% of the electricity consumed in San Francisco. The vitality of San Francisco communities depends on the safe, reliable, sustainable, and innovative electric service that the Power Enterprise staff provide every day. This 2027 Power Rates Study (Study) was designed to evaluate the cost of service (COS) and to recommend appropriate rate structures for Hetch Hetchy Power.

The Power Enterprise serves customers with a unified staff, sharing operating resources, but the two retail programs have distinct costs of service and ratepayers. The City Charter (and California state law) requires that revenues from ratepayers be used to benefit those ratepayers; no comingling of revenues from the two sets of ratepayers is allowed. To reinforce the separation of ratepayer funds, the Hetch Hetchy Power program is part of the Hetch Hetchy Water and Power Enterprise Fund while the CleanPowerSF program is a separate fund, the CleanPowerSF Enterprise Fund, established in fiscal year (FY) 2016–2017.

Hetch Hetchy Hydroelectric Power, a byproduct of delivering water to the Bay Area, is the largest single generation component of the Power Enterprise’s energy supply portfolio. The portfolio also includes owned biogas, solar, storage, and energy efficiency resources, as well as purchased solar, storage, wind, and geothermal resources under long-term contracts. The Power Enterprise plans for and manages these power supplies, manages new energy resources on behalf of its customers, and plans for and manages the related transmission and distribution infrastructure needs for Hetch Hetchy Power customers.

Both Hetch Hetchy Power and CleanPowerSF offer customer programs and reinvest profits back into the community. While Hetch Hetchy Power and CleanPowerSF are structurally distinct, they share labor resources for their customer services/programs as well as the general and administrative (overhead) services provided within the Power Enterprise. Together, the programs work to reduce the City's carbon footprint, combat climate change, and create a better, brighter future for San Francisco with safe, reliable, and affordable electric services responsive to community needs and sensitive to environmental impacts.

This report summarizes the analysis conducted for the Study of the Hetch Hetchy Power Enterprise to establish its COS and to provide specific rate recommendations.

Study Objectives
The SFPUC is required to retain an independent rate consultant at least every five years to evaluate the COS of the power systems and to recommend appropriate rate structures. For this Study, costs for SFPUC

EXECUTIVE SUMMARY

2 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 operations were evaluated over the FY 2026–2027 Budget Year, including projections for customers and customer load growth. The Study analysis was developed to allow the SFPUC to utilize specific tools and methodologies to set rates. Due to short-term growth projections and changes included in this Study, however, the recommended rates, charges, and fees for power service were developed for a one-year period for FY 2026–2027. The rates were designed to be in effect on July 1, 2026. This Study was designed to establish a foundational methodology for financial planning and fair rate-setting for the SFPUC. It provides an opportunity to reassess the SFPUC’s existing financial policies and priorities and to develop rates that better achieve its goals. Rates and charges were designed such that the total revenue needed for the system will be recovered in an equitable manner that is consistent with the SFPUC policies.

For Hetch Hetchy Power, these policies include continuing to transition rates away from historical Pacific Gas and Electric Company (PG&E) structures and current rate levels toward those consistent with the COS identified in the Study. This includes updating and modernizing the customer classes used by Hetch Hetchy Power, as well as consider creating new classes, maintaining low-income rates, transitioning municipal customers toward their COS, and preparing the utility for several other new rate classes in the coming years.

Specific Study objectives included the following:
 Review the SFPUC’s financial policies applied to COS and rate design.  Incorporate industry best practices for power rates and fees.  Properly functionalize/allocate costs for equitable, financially sustainable, and legal rates.  Create a plan and timeline to continue the normalization of Hetch Hetchy Power rate structures and the transition of municipal customers to COS.
 Set rates to support the operations, maintenance, programmatic, and capital needs of the SFPUC Power Enterprise.
 Design rates that provide a financial incentive for customers to implement environmentally friendly practices.
 Evaluate affordability of rates for low-income customers and recommend rates or programs that address disproportionate burdens.
 Address concerns regarding market price volatility and uncertainty of future costs.

This Study utilized industry accepted methodology to assign utility costs to the various functions, or business units, of the organization. These functionalized costs were classified based on their underlying cost causation and then allocated to the various customer classes served by the utility. This Study utilized historical and projected load and expense data provided by the SFPUC to create a future Test Year (TY) period for which rates were designed. For this Study, the TY is the adjusted budget for FY 2026–2027.

Hetch Hetchy Power
The TY revenue requirement for Hetch Hetchy Power is projected to be approximately $252.4 million, which includes costs for operations and maintenance (O&M), power purchases, transmission and distribution, debt service, and rate-funded capital improvements. This value reflects offsets to Hetch Hetchy Power net retail costs from wholesale sales, recovery of programmatic costs, and other revenue sources. Additionally, this value includes contributions from reserves of approximately $36 million.

EXECUTIVE SUMMARY

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 3 The revenue requirement was functionalized, classified (or sub-functionalized), and allocated to the customer classes served by Hetch Hetchy Power. Individual customer class characteristics were utilized to develop allocation methods, including those related to demand (peak demand for the system and for each class), energy (total sales, as well as total energy required for load), customers (including customer numbers in each class), and others. Allocations by labor costs for various personnel groups provided by the SFPUC were also utilized in the functionalization, classification, and allocation processes.

Customer classes for this Study include existing classes (residential, small commercial, medium commercial, large commercial, and industrial) and several customers which were recommended by the SFPUC staff to determine whether they should be considered their own class. The groups under consideration were Riverbank, Upcountry, and San Francisco International Airport (SFO). SFO is a very large customer for Hetch Hetchy Power, contributing one third of HHP’s total demand requirements. For the purposes of rate design, SFO was separated into its own class with the intention of creating a municipal airport rate. Riverbank refers to the customer that operates the Riverbank Industrial Complex, which receives service at transmission voltage. Upcountry refers to the customers located “upcountry” in relationship to the HHP system.

Other customers served by Hetch Hetchy Power include “General Use Municipal” (or “GUSE”) departments of the City. The rates for these historical rate classes have varied as a customer’s specific rate is, in part, a function of Hetch Hetchy Power history. Hetch Hetchy Power has already spent several years transitioning these customers closer to their COS. One objective of this Study was to continue this transition from their historical rate classes to industry standard rates and rate structures defined by customer class rather than by City department.

It should also be noted that Hetch Hetchy Power owns and maintains a significant number of streetlights in the City which provide a benefit for all its residents and businesses, not just those that are power customers. Streetlight customers pay a rate based on energy usage. Any remaining costs for the streetlight systems are collected from all customer classes based on an allocation of energy sales by class.

Rate recommendations for individual customer classes and rate codes are presented herein. For residential rates, the recommended rates were designed to limit the rate increase for the class on average to approximately 7.29% or 1.2 times the systemwide need. The rate impact for individual customers will depend on their usage and current rate schedules. The recommended rate changes for the residential class include increasing the customer service charge and increasing the energy rates incrementally for each year of the rate plan. Due to the limit on annual rate increases, residential rates will not be at their COS at the end of the TY, but they will be significantly closer than they are today. Hetch Hetchy Power also proposes to continue its low-income discount program for its residential customers, which is equivalent to a 30% decrease for each rate component, as well as its investment in other residential energy rate programs.

Commercial class rates were also designed to limit the rate increase for the classes on average to approximately 7.29%. Commercial rate changes include standardizing the customer service charges within each customer class. The commercial class includes General Use (GUSE) rates which are charged to General Fund departments, education districts, governmental agencies, and some private customers.

Rates for commercial customers served under the current GUSE rates will be increased by a total effective rate of $0.03/kilowatt-hour (kWh) per year until such time as they meet the effective rate of the corresponding retail class. Because the GUSE rate for some customer classes is significantly lower than their COS and because annual increases are capped, many GUSE rates will not be at their COS at the end of the TY, but they will be significantly closer than they are today. While the GUSE rate is in the process of being phased out, this implementation policy will continue to require a subsidy over the near term, which will be recovered from all Hetch Hetchy Power customers except those in the residential class. Other

EXECUTIVE SUMMARY

4 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 adjustments to commercial customer classes include the development of voltage level adjustments based on COS for customers taking service at primary and transmission levels.

The TY revenue requirement for Hetch Hetchy Power was determined to be approximately $252.4 million.

Table ES-1 summarizes the Hetch Hetchy Power revenue requirement by class, the projected revenue from current rates, and the projected revenue from the recommended rates provided herein.

Table ES-1
Hetch Hetchy Power Revenue Requirement and Projected Revenue by Customer Class for the Test Year ($000)
Class
TY Revenue
Requirement
TY Projected
Revenue –
Current Rates
TY Projected
Revenue –
Recommended
Rates
$ Change
from Current
Rates
% Change
from Current
Rates
Residential $11,198 $4,741 $5,086 $346 7%
Small Commercial $27,542 $21,434 $23,541 $2,107 10%
Medium Commercial $47,743 $38,989 $43,536 $4,547 12%
Large Commercial $23,980 $21,608 $22,626 $1,017 5%
Industrial $77,613 $80,458 $83,304 $2,846 4%
Shoreside Power $9,804 $1,610 $1,727 $117 7%
Municipal Airport $48,104 $62,873 $66,209 $3,336 5%
Riverbank $1,440 $1,331 $1,428 $97 7%
Upcountry $549 $469 $457 ($12) (3%)
Lighting $4,447 $4,447 $4,447 $0 0%
Total Revenue Requirement (1) $252,421 $237,960 $252,360 (1) Totals may not add due to rounding.

The projected TY revenue requirement for Hetch Hetchy Power is approximately $252.4 million. The projected revenue at current rates, which incorporates the estimated load growth over the TY period, is estimated to be approximately $238 million. The projected revenue at recommended rates provided herein is designed to recover the TY revenue requirement of $252.4 million.

Recommendations
Based on the conclusions and supporting analyses presented herein, the following recommendations are made as a result of this Study:
 The SFPUC should adopt rates as described and recommended for FY 2026–2027 in this report.  The SFPUC should not move Riverbank and Upcountry customers into their own classes. Instead, they should continue to be included under their current appropriate tariffs.  The SFPUC should continue to evaluate the impact of the changes in rates, rate tiers, and rate structures to ensure the financial stability of Hetch Hetchy Power.  The SFPUC should utilize the results of this Study to develop future rate proposals, as necessary, to continue to align customer class rates with the COS results.

Economics | Strategy | Stakeholders | Sustainability 1326219207- fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 Section 1

INTRODUCTION
Background
The San Francisco Public Utilities Commission (SFPUC) supplies high-quality water, power, and wastewater services to the City and County of San Francisco (referred to herein as the City). The agency also supplies wholesale water to three other Bay Area counties, drinking water and power services to certain retail customers outside the City, and wastewater services to three municipal service providers in San Mateo County. These utility services are provided through the maintenance, operations, and development of the SFPUC’s three enterprises: the Water Enterprise, the Wastewater Enterprise, and the Power Enterprise.

The SFPUC has provided electricity to City departments and related entities for over 100 years, starting in 1918 and expanding to serve City facilities throughout San Francisco in 1945. The departmental entity of the Power Enterprise was created in February 2005 as part of an agency reorganization effort to separate electric utility services from the Water and Wastewater Enterprises and is now comprised of two retail electric service programs: Hetch Hetchy Power, San Francisco’s publicly owned utility (POU), and CleanPowerSF, San Francisco’s community choice aggregation (CCA) program.

The Hetch Hetchy Water and Power Enterprise Fund is comprised of two key components: Hetch Hetchy Water, which operates and maintains the Hetch Hetchy Project, and Hetch Hetchy Power, which is responsible for all SFPUC power utility commercial transactions and in-City power operations. The Hetch Hetchy Project is the primary source of power supplying Hetch Hetchy Power’s retail electric service program. The Hetch Hetchy Power program currently serves about 9,000 retail accounts. The Hetch Hetchy Project provides water for distribution through the Water Enterprise and hydroelectric power to municipal customers and retail customers through the Power Enterprise. A number of the facilities of the Hetch Hetchy Project are joint assets and are used for both water transmission and power generation and transmission, benefitting both the Water Enterprise and the Power Enterprise. All power sales revenues are allocated to power and joint activities of the Hetch Hetchy Project and to the Power Enterprise.

CleanPowerSF is an electrical power CCA program. Under CleanPowerSF, the SFPUC pools the electricity demands of many City residents and businesses that are retail electric distribution customers of Pacific Gas and Electric Company (PG&E) for the purpose of buying electricity on behalf of such customers.

CleanPowerSF, which currently serves over 385,000 accounts, gives residential and commercial electricity consumers in San Francisco the choice of having their electricity supplied from clean renewable sources, such as solar and wind, at competitive rates.

Figure 1-1 provides a simplified schematic of the service territories for Hetch Hetchy Power (referred to as HHP in the graphic) and CleanPowerSF (referred to as CPSF in the graphic). The schematic suggests that there are solid areas that are served by each operation; however, the dispersion of customers is much more diverse. As discussed herein, Hetch Hetchy Power serves select customers and locations within the City and in neighboring counties (municipally owned facilities), whereas CleanPowerSF serves the majority of other customers in San Francisco. While not shown below, there are scattered Hetch Hetchy Power customers in other locations throughout California, typically adjacent to Hetch Hetchy facilities. This 2027 Power Rates Study (Study) focuses on Hetch Hetchy Power.

Section 1

1-2 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26

Figure 1-1. Schematic Estimate of Electric Service Territory Hetch Hetchy Water and Power
Hetch Hetchy Water and Power was formed in 1913 when the Raker Act granted the City the right to build and operate the Hetch Hetchy Water and Power system on federal land. More than 100 years later, the SFPUC still supplies the City with clean and reliable water and power services as a result of this Act. Hetch Hetchy Power’s portfolio consists of hydroelectric generation, on-site (distributed) solar at SFPUC and other City facilities, and third-party purchases. These third-party purchases are typically made through month-ahead, day-ahead, and spot purchases on the California Independent System Operator (CAISO) market. All market purchases are subject to established risk management practices and guidelines, including trading limits and counterparty credit requirements. The Hetch Hetchy Power supply portfolio is managed to ensure a 100% greenhouse gas-free (GHG-free) product.

Hetch Hetchy Power is committed to the development of clean and “green” power to address environmental concerns and community objectives. This commitment results in continued efforts to

Introduction

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 1-3 evaluate and expand its existing resource base to include additional renewable generation sources, including distributed renewable generation, demand management, and energy efficiency programs.

Hetch Hetchy Power’s mission is to provide safe and reliable energy service at a reasonable cost to customers, with attention to environmental effects and community concerns.

Customer Base
Municipal customers were Hetch Hetchy Power’s only customers for many years, but in recent years, many more retail customers have been added to the system. In fiscal year (FY) 2024–2025, 59% of charges for service were from municipal sales. Notably, one customer, the San Francisco International Airport (SFO or Airport), accounts for over 31% of total Hetch Hetchy Power sales by volume. Because of the outsized importance of this load, SFO costs have been tracked separately; for the purposes of rate design and cost allocation, SFO is treated as a separate class with the intention of creating a municipal airport class.

Recently, Hetch Hetchy Power has grown its retail customer base, designing and constructing new transmission and distribution facilities to serve more retail customers. These expansions have primarily occurred in distinct geographic regions where new development is happening, particularly neighborhoods developed by the Successor Agency to the San Francisco Redevelopment Authority. Hetch Hetchy Power’s expansion was facilitated by Board of Supervisors’ Ordinance No. 0247, which amended the San Francisco Administrative Code Chapter 99 to clarify the requirement for the City to provide electric service to City departments and facilities and to evaluate the feasibility of providing electric power to new developments and projects. Section D of the Ordinance states that “the City should consider the feasibility of supplying electricity to all new City developments, including, without limitation, military base reuse projects, redevelopment projects, projects occupying any portion of public land, and projects funded in whole or in part by local, State, or Federal funds and other City projects.” Section E states that “in addition to the types of projects identified in (d) above, certain other private projects seeking City approvals including but not limited to new or substantial rehabilitation of more than 10 residential units or new or substantial rehabilitation of more than 10,000 square of occupiable space, present good opportunities for City electric service.” These neighborhoods developed by the Successor Agency to the San Francisco Redevelopment Authority therefore meet the outlined requirements.

Other retail customers may choose Hetch Hetchy Power as their power provider if the SFPUC determines that the service is feasible. Part of the SFPUC’s long-term business plan is to own a City-wide distribution system to provide electric service to existing and future customers, so future retail growth is projected in current plans. In addition to these retail customers, the 1913 Raker Act obliges Hetch Hetchy Power to make wholesale power in excess of its needs available to the Modesto Irrigation District (MID) and the Turlock Irrigation District (TID). However, since 2018, the Districts have declined to purchase power from Hetch Hetchy Power. Excess power supply not needed to serve Hetch Hetchy Power customers is sold to CleanPowerSF and on California energy markets, mainly via the CAISO.

Infrastructure
Per the terms of the 1913 Raker Act, Hetch Hetchy Water and Power developed hydroelectric facilities, transmission facilities, and other electric utility infrastructure to serve its customer base. Subsequently, the City built certain distribution facilities to deliver power to end-use customers. A number of the facilities operated by Hetch Hetchy Project staff are joint assets used for both water storage and transmission and electric generation and transmission, benefitting both Water and Power Enterprise operations.

The Hetch Hetchy Project includes the O’Shaughnessy Dam; the Hetch Hetchy Reservoir; the Canyon and Mountain Tunnels; the Kirkwood, Moccasin, and Holm Powerhouses; Cherry Lake and its dam; Lake

Section 1

1-4 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 Eleanor and its dam; the related water storage and transportation and hydroelectric generating facilities down to and including the Moccasin Powerhouse, all located in Yosemite National Park, Stanislaus National Forest, and Tuolumne County, the rights to which were granted to the City by the Raker Act; and the related transmission facilities down to Newark. Operating and capital costs that jointly benefit both ratepayer groups—water and power—are allocated 45% to the Water Enterprise and 55% to the Power Enterprise under existing policies. The values in this Study represent only those values allocated to the Power Enterprise.

In some cases, Hetch Hetchy Power does not own the transmission and distribution facilities to reach every customer. In these cases, Hetch Hetchy Power relies on the transmission system operated by the CAISO and the distribution system of PG&E, the investor-owned utility operating within the City. The SFPUC must pay the CAISO for transmission access and PG&E for the use of its distribution system through the Wholesale Distribution Tariff (WDT). The rates for WDT are regulated by the Federal Energy Regulatory Commission. In recent years, the rates for these services and PG&E’s restrictions on the City’s use of PG&E facilities have led to ongoing disputes and litigation between the SFPUC and PG&E. This complex relationship with PG&E—as both a competitor and a partner—is a major feature in Hetch Hetchy Power’s strategic operations.

Hetch Hetchy Power Rates
A major objective of this Study, as discussed herein, is to transition all customers to rates based on their customer class (e.g., residential, small commercial, industrial) and to move all rates to their cost of service (COS). This transition is designed to support the fiscal health of Hetch Hetchy Power, improve the fairness of Hetch Hetchy Power’s rates, simplify billing administration, and set up the program to implement modern rate structures to support its policy goals.

Study Schedule/Background
This Study was initiated in March 2025 and is anticipated to conclude Phase I with the implementation of the recommended rates and rate structures for Hetch Hetchy Power on July 1, 2026 (the beginning of FY 2026–2027). This section summarizes the overall Study, the deliverables developed for the Study, and the Project Team involved in the Study.

Study Mandate
Per Section 8B.125 of the City & County of San Francisco Charter, the SFPUC is required to retain an independent rate consultant at least every five years to evaluate the COS of the power systems and to recommend appropriate rate structures. The last power rate study was completed in FY 2021–2022 for rates beginning FY 2022–2023. This Study was designed to recommend rates, charges, and fees for power service beginning FY 2026–2027.

NewGen Project Team
NewGen Strategies and Solutions, LLC (NewGen) was retained by the City through a competitive request for proposal (RFP) solicitation to assist the SFPUC with the development of the Study. The NewGen Team includes representatives from Bell Burnett and Associates (BB&A). NewGen is a management and economic consulting firm specializing in serving the utility industry and market. Established in August 2012, NewGen primarily serves public sector utilities and provides nationally recognized expertise in utility COS and rate design studies, financial feasibility studies, and other economic analyses for electric, water, wastewater, solid waste, and natural gas utilities. BB&A is a management and strategic consulting firm

Introduction

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 1-5 serving the utility industry and public sector clients in the West, particularly in California. BB&A offers an independent development, review, and assessment of strategic plans and initiatives.

SFPUC Project Team
The SFPUC Project Team was led by the Rates Manager in the SFPUC’s Financial Services division. Other divisions within the SFPUC organization provided insight and additional analysis during the Study process, including staff from across the Power Enterprise (Hetch Hetchy Water, Hetch Hetchy Power, and CleanPowerSF), Customer Services, IT, and Communications. NewGen would like to express our true appreciation for the spirted cooperation and valuable assistance given through the course of this Study by each member of the SFPUC’s management and staff.

SFPUC Commission
The SFPUC consists of five members nominated by the Mayor and approved by the Board of Supervisors.

They are the approval body for all the SFPUC rates and fees. A presentation of the recommended rates and rate structures for Hetch Hetchy Power and CleanPowerSF is anticipated to be provided to the SFPUC in April 2026.

Study Objectives
This Study was designed to serve as the basis for fair rate-setting for the SFPUC. It provided an opportunity to reassess the SFPUC’s financial policies and priorities and to develop rates that better achieve those goals. This Study culminated in a set of recommended rate designs in which the cost recovery mechanisms (rates and charges) for each customer class and rate code were updated. Rates and charges were designed such that the total revenue needed for the system will be recovered in an equitable manner that is consistent with the results of the Study. In addition, rate design considers and reflects the SFPUC’s overall revenue objectives for the utility, its historical rate structures that are currently in place, and policy considerations for various programs, as well as legal requirements and other energy-related policies established by the California Public Utilities Commission (CPUC).

The SFPUC’s objectives for this Study were as follows:
 Further integrate industry practices and methodologies in COS and rates.  Streamline COS and rate-making process.
 Fully recover Hetch Hetchy Power costs to provide service.  Continue transition to COS-based rates and decoupling from PG&E for Hetch Hetchy Power.  Continue transition of GUSE rates to retail alignment.  Set and adopt rates for FY 2026–2027.
 Evaluate current customer classes and possibly create new classes.

Industry Best Practices and Defensibility
As SFPUC has increased capabilities and capacity to support more robust ratemaking and to respond to the increasingly complex energy market, a key objective of this Study was to further integrate industry practices to provide clear defensible support for electric rates and to further enhance and streamline the COS and rate design models utilized by the SFPUC staff. As a part of the Study, multiple improvements were made to the Hetch Hetchy Power COS modeling and its integration with existing SFPUC budgeting

Section 1

1-6 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 and planning tools. These improvements will directly support the streamlining of updates, scenario analysis, defensibility of rates, and transparency of ratemaking for the SFPUC. This included development of input templates to integrate with the SFPUC’s financial forecasting and planning tools, improved customer allocations, more detailed customer consumption characteristics, and automation of some modeling processes. These improvements will also result in greater insight into ratemaking for stakeholders and increased defensibility of rate-related decisions.

Rate Strategy
The NewGen Team worked with the SFPUC Team to create a rate strategy plan that continues to normalize Hetch Hetchy Power rate structures, decouple Hetch Hetchy Power from PG&E rates, and transition to COS rates for all customers. The Hetch Hetchy Power COS and rate models were developed for a FY 2026– 2027 revenue requirement and ratemaking. The intent is for the models and methodologies developed for this Study to be used by the SFPUC after the completion of this Study for future rate plans.

COS Process
The COS process is an industry-accepted framework that assigns or allocates costs to each customer class served by a utility. This process determines the “cost to serve” each customer class within the utility. The COS process involves a series of steps to identify costs and allocate them by function, classification, and ultimately customer class. Additionally, electric utility costs are typically characterized as either fixed or variable; fixed costs are those that do not change with the production of electricity, whereas variable costs are directly related to the amount of electricity produced and/or purchased. These costs are typically characterized further as demand based, customer based, or energy based. A summary of the steps in the COS process, as well as a description of the types of costs incurred to operate an electric utility, are provided below.

Steps in the COS Process
The process of conducting a COS/rate design analysis generally proceeds as follows and is graphically depicted in Figure 1-1 below.

Figure 1-1. COS Process

Introduction

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 1-7 Step 1. Establish the Revenue Requirement
The revenue requirement determines the total revenues that the utility must collect over a specified period to serve its customers, maintain its debt service obligations, invest in its system, and provide additional funds required by fiscal and reserve policies, as appropriate. The period covered by the revenue requirement (as well as the ensuing rates) is defined as the Test Year (TY).

Step 2. Functional Unbundling
Functional unbundling refers to the process of categorizing the utility’s revenue requirement between its four major business units or functions (as appropriate), including:
 Production
 Transmission
 Distribution
 Customer Service
Step 3. Classify Costs Within Functional Areas
Costs are classified based on their drivers within each functional area. Cost drivers include system demand, energy consumption, the number of customers being serviced, or costs that are directly attributed (or allocated) to a specific class or customer. This process may include “sub-functionalizing” the cost categories to align their costs and cost causation, as further explained herein.

Step 4. Allocation of Costs Across Customer Classes
After costs have been classified into a functional area (production, transmission, distribution, or customer service), costs are further categorized based on the customer usage characteristics of the system. Costs are then allocated to customer classes, allowing the COS to be determined for each class.

Step 5. Design Rates
Rate design is based on a combination of analysis of the customer class revenue requirements (the allocated share of the system costs) and policy decisions.

Types of Electric Utility Costs
Demand-Based Costs
In general, most of an electric utility’s cost structure is formed of demand-based costs. Demand-based costs are associated with fixed costs related to existing and future investments made to produce, transmit, and deliver electrical power from the generation resources to the utility’s customers. For the Power Enterprise, these costs include the debt service associated with its investments as well as a portion of its contracts for purchased power. The labor and materials associated with the operations and maintenance (O&M) and administration of these systems are also demand-based costs, as the labor costs are typically fixed in the short term (budget cycle). In the short term, fixed costs do not change and represent the ongoing costs to meet the needs of the utility.

Demand (fixed) costs are defined as those costs that are incurred to maintain an electric system capable of meeting the total combined demands of all customers at all hours, including peak demand. Demand costs are those costs that are generally fixed in the short run, do not materially vary directly with the number of kilowatt-hours (kWh) generated or sold, and are not defined as customer costs. In the COS

Section 1

1-8 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 process, these costs are assigned based on the electric demand (measured in kilowatts [kW]) that a specific customer or customer class places on the system. Hetch Hetchy Power, like most utilities, has a cost structure that is highly fixed, which is typical of capital-intensive entities.

Customer-Based Costs
Customer-based costs for electric utilities are fixed costs as well, but they are costs incurred in direct support of the customers served by a utility. Customer costs are defined as those costs directly related to the number, type, and size of a customer, such as customer accounting and bill collecting, and the costs of meters and services. Also, a portion of the distribution investment and operating costs are classified to customer costs because the size and design of the distribution system is a function of both the number of customers and their load (demand).

For Hetch Hetchy Power, customer-related costs include the costs associated with labor, equipment, and investments for customer accounting, billing, and customer assistance (call centers). For the Power Enterprise, a portion of overhead labor costs (provided by other bureaus and other departments) is allocated to the customer-related costs, as it is designed to support this function. During the COS process, these costs are allocated by the number of customers within a class and may be weighted to represent the relatively greater amount of time spent to serve larger and more complex customers.

Energy-Based Costs
Energy-based costs for electric utilities are typically variable costs that change with the fluctuations in electric load. The primary example of energy-related costs for the Power Enterprise are purchased power costs. During the COS process, these are allocated to the customer classes by the amount of energy they are projected to utilize within a selected period of time (during the TY).

Other Types of Costs
In the COS process, there are other costs that are not defined or allocated to the demand, customer, or energy-related cost categories. These include those costs that are revenue related and those costs that are directly assigned to classes, as described below.

Revenue-Related Costs
Revenue-related costs are associated with the amount of revenue generated by each utility’s operations.

For some of the cost allocations used herein for certain programmatic expenses, for example, a total revenue requirement allocator was developed to assign costs to functions, subfunctions, classifications, or classes as described herein.

Direct Assignment Costs
There is another category of cost classification that is known as “direct assignment.” Direct assignment costs may be related to demand, energy, customer, or another type of classification; however, these costs are removed from the overall revenue requirement and are allocated directly to a specific customer class or customer.

SFPUC Cost of Service Considerations
Hetch Hetchy Power currently offers services to two distinct customer groups based generally on the type of customer that is being served (a municipal or a non-municipal customer). These customer groups include the General Use Municipal customers, who are municipal departments and other public agencies,

Introduction

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 1-9 referred to as GUSE customers and retail customers. These distinctions in customer classes are the result of the history of Hetch Hetchy Power that has evolved over time, as discussed above.

The revenue requirement for this Study was developed from the SFPUC’s 10-year financial model which develops cost projections for Hetch Hetchy Power operations based on assumptions of power supply costs, load growth, investments, and other items, as necessary. It should be noted that as part of this Study, various assumptions regarding projected expenses and revenues were developed in coordination with the SFPUC staff and management. To the extent that stated assumptions regarding these projections are not realized, the recommended rates and rate structures as developed herein may or may not be sufficient to meet the revenue requirements for the TY.

Economics | Strategy | Stakeholders | Sustainability 1326219207- fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 Section 2

SYSTEM CHARACTERISTICS
Introduction
The purpose of this section is to provide a summary of the system characteristics utilized for this Study that are unique to Hetch Hetchy Power. System characteristics are defined for the TY period, which was defined for this Study as the budget for FY 2026–2027 which aligns with the SFPUC’s FY of July 1, 2026, to June 30, 2027. This section includes a description of the Hetch Hetchy Power operations. Figure 2-1 provides an overview map of the Hetch Hetchy Power generation and transmission assets provided by the SFPUC for this report.

Figure 2-1. Hetch Hetchy Project Power Generation and Transmission Assets – Exhibit Overview Map Hetch Hetchy Power Characteristics
Hetch Hetchy Power consists of generation, transmission, and limited distribution assets that generate power and deliver it to its customers. Additionally, Hetch Hetchy Power pays PG&E to deliver power to many of its customers using PG&E’s transmission and distribution assets. Historically, Hetch Hetchy Power provided electricity to the City’s municipal operations; however, as the City has expanded its public housing and redevelopment areas, it has served additional direct retail customers. Figure 2-2 summarizes the number of Hetch Hetchy Power customers by class. As many of the small classes under consideration

Section 2

2-2 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 have a lower number of customers and contribution to the system, they have been combined in Figures 2-2 and 2-3.

Figure 2-2. Hetch Hetchy Power Customers by Class
As previously indicated, growth in both load and the number of customers in several areas of the City is projected by the SFPUC during the TY. Figure 2-3 summarizes the forecasted TY energy sales by percentage for each of the proposed customer classes utilized for this Study.

System Characteristics

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 2-3

Figure 2-3. Hetch Hetchy Power Load by Customer Class for the TY Period (FY 2026–2027) Growth in Customer Load
Hetch Hetchy Power is projecting significant changes to its customer classes over the TY period. This includes changes within classes as well as across classes. There are large load percentage increases projected for the residential class and Riverbank with more modest increases expected across most other classes. Only Shoreside Power is expecting a decrease to its load but Shoreside Power is a lower contributor to the system, resulting in a collective increase to load over the TY. The number of accounts is expected to increase within the residential class and otherwise remain relatively stable. Table 2-1 below summarizes the projected increases by load for each class and the total system, as well as the anticipated increase in the number of customers for each rate class.

Section 2

2-4 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 Table 2-1
Projection of Load and Number of Accounts by Customer Class – Hetch Hetchy Power Rate Class
FY 2025–
2026 Load
(MWh)
FY 2026–
2027 Load
(MWh)
%
Change
FY 2025–
2026
Customers
FY 2026–
2027
Customers
%
Change
Residential 14,027 16,690 19% 3,881 4,275 10%
Small Commercial 75,030 76,425 2% 4,029 4,029 0%
Medium Commercial 161,932 164,996 2% 283 286 1%
Large Commercial 75,585 80,590 7% 41 42 3%
Industrial 305,498 310,696 2% 41 41 (1%)
Shoreside Power 6,266 6,036 (4%) 1 1 0%
Municipal Airport 298,082 303,454 2% 1 1 0%
Riverbank 7,476 10,911 46% 1 1 0%
Upcountry 1,769 1,833 4% 39 39 0%
Lighting 16,930 16,930 0% 20 20 0%
Total 962,596 988,560

8,337 8,735

Hetch Hetchy Power – Power Supply
Hetch Hetchy Power owns generation resources, which provide most of its power supply; however, it also contracts for other renewable power supply through Power Purchase Agreements (PPAs) and purchases power from the wholesale power market (the CAISO) as necessary. Market purchases in particular are needed during certain seasons as hydroelectric generation is restricted to time periods when water is being released for use by the Water Enterprise. Total energy consumption does somewhat vary by month depending on several factors including the weather. However, the results reflect a relatively stable or consistent load for Hetch Hetchy Power across all months. Figure 2-4 summarizes the energy sales by customer class.

System Characteristics

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 2-5

Figure 2-4. Hetch Hetchy Power Energy Sales by Month by Class for Test Year (MWh) Hetch Hetchy Power – Energy Programs
Hetch Hetchy Power offers an array of energy programs for its customers, which includes discounts for low-income customers, energy efficiency programs, services for municipal customers, and one-time programs as approved by the CPUC. Long-standing customer programs include Hetch Hetchy Power’s Customer Assistance Program (CAP). Eligible residential customers are those whose income is less than 200% of the Federal Poverty Level and who are served by Hetch Hetchy Power. The CAP program offers a 30% discount on each rate component on their bills and applies to both commercial and residential customers. Cost recovery for the CAP program discount is currently provided by general Hetch Hetchy Power operating revenues.

Hetch Hetchy Power – GUSE and Enterprise Service
Hetch Hetchy Power provides service to municipal entities through two existing rate codes, identified as GUSE. GUSE rates are recommended to increase at a maximum of $0.03/kWh for each year of the recommended rate study (FY 2026–2027) as calculated by adding all GUSE revenues divided by all GUSE usage. Not every GUSE tariff will experience a strict $0.03 increase because of this averaging. For the purposes of this Study, this limitation on the increase for GUSE customers was calculated on an average basis (total dollars divided by total kWh for GUSE customers). However, in general, this increase in projected revenue over the Study period is not equivalent to the COS for each class in which the GUSE customers exist. The SFPUC’s rate strategy includes the goal of eliminating this subsidy over time and aligning GUSE rates with the broader retail Power Enterprise rates. However, until the subsidy created by

Section 2

2-6 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 the GUSE rates is completely phased out, it will be recovered from the non-GUSE non-residential customers served by Hetch Hetchy Power so that the total revenue requirement is met.

Economics | Strategy | Stakeholders | Sustainability 1326219207- fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 Section 3

COST OF SERVICE FOR HETCH HETCHY POWER
Hetch Hetchy Power Introduction/Data Sources
This section provides a description of the COS process for Hetch Hetchy Power, which involves the development of the TY revenue requirement and the allocation of those costs to the various functions, classifications, and ultimately the customer classes. Supporting the COS process are several underlying data sources utilized to create the revenue requirement and the subsequent cost allocation methods. A summary of these data sources is provided below.

Load and Customer Billing Data
Hetch Hetchy Power has interval data available for all its locations through its own infrastructure and that of PG&E that is then provided to Hetch Hetchy Power. Interval data allows the utility and the customer to understand how power is used on an hourly basis, providing valuable information for the development of rate programs designed to reduce costs and send pricing signals such as time of use (TOU) rates. The SFPUC provided interval data for FY 2024–2025 for the Study to develop an understanding of how customers use power throughout the year, their contributions to the system peak, and their impacts on system costs.

Billing data from FY 2024–2025 was used as the basis to project customer count and consumption data for the TY (FY 2026–2027). Between the billing data period and the TY, several commercial customers were in the process of transitioning to the appropriate customer classes. NewGen recategorized these customers to place them in their appropriate classes and to modify the billing data to represent the TY conditions. This process was reviewed by the SFPUC staff to ensure that all changes aligned with the known customer transitions.

To the extent that the assumptions used to develop the TY revenue requirement and customer consumption are not realized or under- or over-represent actual usage in the future, this may impact or affect Hetch Hetchy Power revenues and expenses, and the projections developed for this Study.

SFPUC 10-Year Financial Plan
Budget data and cost (expense) projections were provided by the SFPUC in its 10-Year Financial Plan (Plan) and were incorporated into the COS analysis; these form the basis for the projected revenue requirement for the TY period. The Plan incorporates the SFPUC’s proposed budget for FY 2026–2027 with projections for purchased power and related costs (including costs for the WDT and the transmission access charge [TAC] from PG&E) and estimates of labor costs during the five-year planning period. Projected costs also include the amortization of current debt issues for existing projects, as well as anticipated debt issues and use of revenues to fund the projects identified in the 10-Year Capital Plan over the planning period.

The Plan also includes load growth forecasts which the Study followed. The assumptions used for Hetch Hetchy Power load growth projections accounted for drought and economic recovery as well as job growth, housing growth, pricing elasticity, and more. Most Hetch Hetchy Power customers see only a slight load growth projection over the 10 years of the Plan. However, the SFPUC projects total municipal airport load to grow 3.7% annually over the 10-year projection period given the expansion of terminals and associated facilities, and other projects from the airport’s master plan.

Section 3

3-2 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 Hetch Hetchy Power Cost of Service Analysis
Within the COS analysis, the revenue requirement refers to the amount of rate-related revenue that a utility is projected to need during the Study period. For the purposes of this Study, Hetch Hetchy Power is utilizing a TY that represents the budget for FY 2026–2027. The Hetch Hetchy Power net revenue requirement for the TY is projected to be approximately $252.4 million. This value is driven by the specific “known and measurable changes” related to the investments projected in the SFPUC’s 10-Year Financial Model, including offsetting revenues, as discussed herein. A summary of the TY revenue requirement is provided in Table 3-1.

Table 3-1
Hetch Hetchy Power Revenue Requirement ($000)
Expense Line
FY 2026–
2027 (1)
Percentage of
Total
O&M Expenses $126,453 37%
Power Supply $35,979 11%
Transmission and
Distribution
$75,510 22%
Debt Service $17,674 5%
Non-Debt Capital Expenses $86,599 25%
Total Expenses $342,214
(Less Other Revenues) ($53,751)

Deposit to/(Use of) Reserves ($36,042)
Total $252,421
(1) Source: SFPUC 10-Year Financial Pro Forma Model and Power Matrix. Note that totals may not add due to rounding.

O&M expenses consist of labor related to Hetch Hetchy Water (to provide power) and Hetch Hetchy Power (for other power purchases, delivery of power, and customer services and programs) upcountry and downcountry expenses, including labor, services of the SFPUC Bureaus, non-personnel services, materials and supplies, equipment, programmatic projects, and other operating expenses. Other O&M costs include programmatic expenses (related to facilities maintenance) and compliance with federal regulations (related to the Western Energy Coordinating Council [WECC] and the National Electric Reliability Council [NERC]), as well as specific maintenance for redevelopment areas and their operations within the City. As indicated, the combined O&M and programmatic expenses for Hetch Hetchy Power represent approximately 37% of the total expenses (before adjustments for other revenue and reserves).

In addition to generating power from its own resources, Hetch Hetchy Power also purchases renewable energy and spot market energy as well as resource adequacy (capacity) and budgets for contingency for power supply. Combined, these power purchases represent approximately 11% of the total expenses during the TY period.

Hetch Hetchy Power also incurs charges for transmission through TACs as well as charges for use of PG&E’s distribution system through the WDT. Hetch Hetchy Power characterizes certain other delivery costs (non- volumetric charges) associated with its purchased power within its total transmission and distribution costs. Total transmission and distribution costs represent approximately 22% of the revenue requirement for Hetch Hetchy Power during the TY.

Cost of Service for Hetch Hetchy Power

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 3-3 Hetch Hetchy Power has issued debt in the past to finance investments in its system. These have included the 2015 Series AB, 2021 Series AB, and 2023 Series A revenue bonds, as well as the issuance of Qualified Energy Conservation Bonds (QECBs) and New Clean Renewable Energy Bonds (NCREBs). The SFPUC does not anticipate issuing additional debt in FY 2026–2027. Total debt service for the TY period is projected to be approximately $17.7 million. The SFPUC also anticipates funding ongoing capital projects with revenue from retail rates (non-debt capital expenditures) of approximately $86.6 million during the TY.

Total expenses for the TY are projected to be approximately $352.4 million. Hetch Hetchy Power also generates revenues from non-retail rate services that are utilized to offset or reduce the total revenue requirement to recover from retail rates. These represent income from wholesale sales and services provided to CleanPowerSF, as well as specific revenues related to several of the programmatic elements included in the revenue requirement above. Additionally, Hetch Hetchy Power generates revenue from the greenhouse gas cap and trade credits it receives for its generation and from third parties that utilize its infrastructure (collectively referred to as pole attachment fees or distributed antenna system [DAS] fees). Combined, these revenues are anticipated to be approximately $53.8 million during the TY.

Other adjustments were made to the projected revenue requirement. These include a projected contribution from Hetch Hetchy Power’s reserves of approximately $36 million for the TY. The total operational expenses less offsetting non-retail revenues plus this contribution from reserves result in a net revenue requirement of approximately $252.4 million for the TY.

Functionalization and Classification
Allocating costs to Hetch Hetchy Power’s customer classes was achieved through three major processes:
1) functionalization, 2) classification, and 3) allocation. The functionalization and classification of the TY revenue requirement are discussed in the first part of this section. The development of the allocation factors for the TY revenue requirement is discussed in the second part of this section.

Functionalization
Although budgeting and accounting systems generally follow functional groups (e.g, production, etc.), certain costs, such as those associated with operating costs (labor), are generally not assigned by accounting and budgetary convention to a major function. A COS study requires the rearrangement of certain expenditures into functional groups: 1) to be more representative of the expenditure causation, 2) to combine costs that have been incurred for a similar purpose, and 3) to facilitate the allocation of cost responsibility. Thus, the functionalization of certain costs is an industry-accepted rate-making mechanism to apportion such costs to the common utility functions.

Hetch Hetchy Power provides services that were functionalized by all four traditional utility functional elements: Power Supply, Transmission, Distribution, and Customer. After being functionalized into those groups, the revenue requirement was then sub-functionalized into more discrete categories which are further detailed below. Table 3-2 provides a categorization of the COS by function (as a result of the cost allocation process) for Hetch Hetchy Power.

Section 3

3-4 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 Table 3-2
Hetch Hetchy Power – Functionalization of Costs ($000)
Expense Line Power Supply Transmission Distribution Customer Total O&M Expenses $49,401 $12,563 $46,463 $18,025 $126,453 Power Supply $35,979 $0 $0 $0 $35,979
Transmission and
Distribution
$3,360 $34,562 $37,588 $0 $75,510
Debt Service $8,995 $4,891 $3,788 $0 $17,674
Non-Debt Capital
Expenses
$41,799 $10,057 $29,247 $5,497 $86,599
Total Expenses $139,534 $62,072 $117,086 $23,522 $342,214 (Less Other
Revenues)
($25,223) ($1,523) ($20,466) ($6,540) ($53,751)
Deposit to/(Use of)
Reserves
($14,283) ($7,565) ($12,072) ($2,122) ($36,042)
Total $100,029 $52,984 $84,548 $14,861 $252,421
% Total 40% 21% 33% 6% 100%

O&M expenses were functionalized based primarily on labor costs. Labor costs were reviewed at the individual position level with managers assigning each position (including positions budgeted but currently vacant) to the programs and functions on which that employee works. If data was available on the purpose of other O&M expenditures—such as consultant services, payments to other government agencies, and programmatic projects—these expenses were also assigned. For more general expenditures where limited data was available, such as materials and supplies, the labor allocator was used.

Programmatic expenses were assigned by labor, compliance-related costs (for both WECC and NERC), and overall revenue requirement (using the total assigned to each function as a derived allocation method).

In total, approximately 41% of the O&M costs were allocated to the power supply function, approximately 18% to the transmission function, 34% to the distribution function, and 7% to the customer function (a small portion of the costs were directly assigned, as noted below). Power purchases were assigned to the power supply function. Transmission and distribution charges were primarily associated with the TAC and WDT charges and were assigned to those functions accordingly.

Debt service costs include the ongoing amortization of the 2015 Series AB, 2021 Series AB, and 2023 Series A (senior lien revenue bonds) as well as the QECBs and NCREBs (junior lien bonds). These costs were assigned to the function for which the bonds were issued, with the majority of the costs associated with power supply and a portion associated with transmission and customer functions. Revenue-funded capital was allocated to the functions identified in the Capital Improvement Plan (CIP) in the TY.

Total expenses were then adjusted to account for non-rate revenues as well as projected uses of (or contributions to) reserves. Approximately half of the other revenues were directly assigned as offsets to the costs also directly assigned. The remainder of the costs were allocated based on power supply (wholesale revenues) and overall revenue requirement. The projected use of reserves was allocated based on the overall revenue requirement as well.

Cost of Service for Hetch Hetchy Power

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 3-5 Power Supply
Hetch Hetchy Power provides its own power supply through its hydroelectric resources located in Yosemite National Park and the surrounding mountains east of San Francisco. Additionally, Hetch Hetchy Power provides additional energy and capacity needs through a single renewable energy PPA and additional energy through spot market purchases from CAISO. Table 3-3 summarizes the classification/sub-functionalization of the Hetch Hetchy Power supply costs for the TY.

Table 3-3
Hetch Hetchy Power – Power Supply ($000)
Expense Line Hydro
System
Dispatching Demand Energy
Resource
Adequacy Total
O&M Expenses $41,985 $587 $4,382 $39 $2,409 $49,401 Power Supply $0 $0 $0 $25,032 $10,947 $35,979
Transmission and
Distribution
$0 $0 $3,360 $0 $0 $3,360
Debt Service $8,178 $0 $818 $0 $0 $8,995
Non-Debt Capital
Expenses
$40,928 $0 $871 $0 $0 $41,799
Total Expenses $91,090 $587 $9,431 $25,071 $13,356 $139,534 (Less Other Revenues) ($2,054) ($13) ($266) ($22,588) ($301) ($25,223) Deposit to/(Use of)
Reserves
($11,125) ($72) ($1,145) ($310) ($1,631) ($14,283)
Total $77,911 $502 $8,020 $2,173 $11,423 $100,029
% Total 78% 1% 8% 2% 11% 100%

Hetch Hetchy Power supply costs were sub-functionalized into five categories. Hydroelectric (hydro), system dispatching, demand, and resource adequacy are associated with demand-based or fixed costs while energy is an energy-based or variable cost. The primary difference between demand-based and energy-based costs is whether the costs vary with the amount of energy purchased or the amount a power generation plant operates. Demand-based costs remain fixed regardless of the amount of energy used or time a plant operates. Energy-based costs vary with the amount of energy used on the system or the amount a power plant operates. The quintessential example of fixed costs are labor costs. Spot market purchases are a prime example of an energy-based or variable cost as the amount of energy purchased is directly related to how much energy is needed.

Hydro refers to all costs associated with the operation and maintenance of the hydroelectric system.

System dispatching refers to the alignment of loads and resources. Purchased power demand relates to the fixed costs associated with the renewable energy and non-renewable energy other contracts that Hetch Hetchy Power must provide with electricity, including requirements to provide Resource Adequacy (RA) as mandated by the CAISO. Energy relates to the variable costs associated with electricity generation as well as purchases.

The majority of the O&M expenses were allocated to hydro as hydro dominates the labor allocator. Senior lien revenue bonds were assigned to the hydro facilities while junior lien bonds were assigned to demand.

The power supply portion of revenue-funded capital (non-debt capital) was assigned primarily to hydro

Section 3

3-6 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 with the remainder assigned to demand. Other revenues were assigned based on the overall revenue requirement, with the exception of wholesale energy sales (which offsets energy) and Enterprise Bond Interest Subsidy (which offsets demand). Other power supply related revenues, which offset the total revenue requirement for power supply cost, were allocated based on total revenue requirements, as were the anticipated contributions from reserves.

Transmission
Hetch Hetchy Power owns limited transmission facilities that deliver power from its hydro facilities to several substations located in Stanislaus and Alameda counties. Additionally, Hetch Hetchy Power incurs costs to transmit power from its renewable energy PPAs through TACs as well as spot energy market purchases from the CAISO. Table 3-4 summarizes the classification/sub-functionalization of the Hetch Hetchy Power transmission-related costs for the TY.

Table 3-4
Hetch Hetchy Power – Transmission ($000)
Expense
Line
Substation
–
Stanislaus
Substation
–
Other
Substation
–
Airport
Substation
–
Port
Substation
–
Cleansteam
Conductor
–
General
Conductor
–

MID/TID/
CCSF/Others
Transmission
Access
Charges Total
O&M
Expenses
$292 $300 $24 $18 $49 $1,771 $8,756 $1,354 $12,563 Power
Supply
$0 $0 $0 $0 $0 $0 $0 $0 $0
Transmission
and
Distribution
$10 $0 $0 $0 $0 $18 $292 $34,242 $34,562
Debt Service $0 $4,382 $0 $0 $0 $509 $0 $0 $4,891 Non-Debt
Capital
Expenses
$0 $3,050 $0 $0 $2,717 $4,290 $0 $0 $10,057
Total
Expenses
$302 $7,732 $24 $18 $2,766 $6,588 $9,048 $35,595 $62,072 (Less Other
Revenues)
($7) ($177) ($2) ($2) ($64) ($152) ($236) ($885) ($1,523) Deposit
to/(Use of)
Reserves
($37) ($944) ($3) ($2) ($338) ($804) ($1,101) ($4,337) ($7,565) Total $258 $6,611 $19 $14 $2,365 $5,632 $7,711 $30,373 $52,984 % Total 0% 12% 0% 0% 4% 11% 15% 57% 100%

Similar to the power supply cost assignments, Hetch Hetchy Power transmission was sub-functionalized into substation (transmission level), conductor (wires and associated delivery equipment), and TAC with subcategories for specific substations or conductors that serve a specific customer. Programmatic expenses were primarily allocated by labor; however, a small portion were allocated by total transmission expenses. The O&M costs were allocated by labor costs. However, most of these costs are associated with the TAC, with over half of the total costs allocated to TAC. Debt service assigned to transmission was allocated based on the projects funded by the debt issue. Revenue-funded capital (non-debt capital)

Cost of Service for Hetch Hetchy Power

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 3-7 followed the allocation for the capital budget. Other transmission-related revenues, which offset the total revenue requirement for transmission cost, were allocated based on total revenue requirements, as were the anticipated contributions from reserves.

Distribution
Hetch Hetchy Power owns limited distribution facilities that deliver power from the transmission system to customers located in San Francisco and adjacent San Mateo County, including dedicated facilities related to the airport (SFO). Hetch Hetchy Power incurs costs to deliver power from the transmission system to its customers primarily through PG&E’s WDT charges. Additionally, Hetch Hetchy Power incurs labor and expense-related costs to maintain its limited distribution facilities. More critically, Hetch Hetchy Power incurs significant costs associated with the ownership of its streetlighting facilities in the City. Table 3-5 summarizes the classification/sub-functionalization of the Hetch Hetchy Power distribution-related costs for the TY.

Table 3-5
Hetch Hetchy Power – Distribution ($000)
Expense
Line
Distribution
Substations
Conductors
–
Primary Transformers
Service
Drop Meter
Street
Lighting
Municipal
Airport
WDT
Charges
–
Primary
WDT
Charges
–
Secondary
Treasury
Island
–
Legacy Total
O&M
Expenses
$3,080 $8,053 $5,064 $3,151 $4,496 $11,158 $2,204 $3,850 $8 $5,400 $46,463 Power Supply $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Transmission
and
Distribution
$0 $140 $100 $61 $0 $0 $0 $17,604 $19,683 $0 $37,588 Debt Service $2,569 $1,002 $0 $0 $0 $0 $216 $0 $0 $0 $3,788 Non-Debt
Capital
Expenses
$976 $1,117 $613 $376 $799 $24,702 $255 $409 $0 $0 $29,247 Total
Expenses
$6,624 $10,313 $5,777 $3,588 $5,295 $35,860 $2,675 $21,863 $19,691 $5,400 $117,086 (Less Other
Revenues)
($212) ($419) ($263) ($162) ($237) ($12,632) ($116) ($582) ($444) ($5,400) ($20,466) Deposit
to/(Use of)
Reserves
($801) ($1,236) ($689) ($428) ($632) ($2,902) ($320) ($2,659) ($2,405) $0 ($12,072) Total $5,612 $8,657 $4,825 $2,998 $4,426 $20,326 $2,240 $18,622 $16,842 $0 $84,548 % Total 7% 10% 6% 4% 5% 24% 3% 22% 20% 0% 100%

Hetch Hetchy Power distribution costs were sub-functionalized into the various elements of the distribution system (distribution substations, conductors, transformers, service drops, and meters), as well as costs incurred for the WDT charges (both secondary and primary) and categories to directly assign costs associated with specific customers (streetlighting, municipal airport, and Treasure Island).

O&M expenses were allocated based on the labor assigned to the various distribution components, with significant costs associated with the streetlighting maintenance costs. Most of the transmission and distribution costs were allocated to the WDT charges, although some were allocated to elements of the

Section 3

3-8 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 distribution system based on labor. Costs for debt service were allocated to the distribution system according to the projects funded; additionally, revenue-funded capital was allocated based on the anticipated expenses associated with CIP. The majority of the other revenues associated with the distribution system include revenues from DAS pole attachment fees, which are used to offset streetlighting expenses. The other elements of the offsetting revenues, as well as the use of reserve accounts, were allocated primarily based on total revenue requirements.

Customer
Hetch Hetchy Power provides customer service, customer accounting (billing and data management systems), and customer programs. These categories provide the basis for the classification/sub- functionalization of the Hetch Hetchy Power customer-related expenses. Table 3-6 summarizes the classification/sub-functionalization of the Hetch Hetchy Power customer-related costs for the TY.

Table 3-6
Hetch Hetchy Power – Customer ($000)
Expense Line
Customer
Service
Customer
Accounting Programs Total
O&M Expenses $3,572 $5,052 $9,402 $18,025
Power Supply $0 $0 $0 $0
Transmission and Distribution $0 $0 $0 $0
Debt Service $0 $0 $0 $0
Non-Debt Capital Expenses $0 $0 $5,497 $5,497
Total Expenses $3,572 $5,052 $14,898 $23,522
(Less Other Revenues) ($252) ($357) ($5,930) ($6,540)
Deposit to/(Use of) Reserves ($415) ($587) ($1,121) ($2,122) Total $2,905 $4,108 $7,848 $14,861
% Total 20% 28% 53% 100%

O&M costs were allocated based on labor and represent the majority of the Hetch Hetchy Power-related customer costs. Most programmatic expenses were directly assigned to the program’s sub-function. Non- rate revenues and the use of reserves were allocated based on the allocation of total revenue requirements. There is no debt service associated with the customer function. Revenue-funded capital used the CIP to allocate to the customer programs.

Customer Class Allocation Factors – Hetch Hetchy Power
General
Once the functionalization and classification of costs was complete, those costs were then allocated to the customer classes. This section discusses the development of the factors utilized to allocate the classified costs to customer classes based on their electricity consumption characteristics and cost causation

Cost of Service for Hetch Hetchy Power

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 3-9 . Utility costs can be classified as demand-related, energy-related, customer-related, and revenue related.  Demand-related allocation factors are utilized to allocate fixed demand-related costs to customer classes based on the amount of demand they place on the system at certain times.  Energy-related allocation factors allocate costs based on the energy consumption of the class.  Customer-related allocation factors allocate costs to customer classes based on the number of customers within the class and how they utilize the various customer-related programs and services offered by the utility.
 Revenue-related allocation factors utilize the proportional combined costs of the other allocation factors.

Demand Allocation Factors
Demand cost allocation for Hetch Hetchy Power utilized two different methodologies to assign costs to the customer classes: the Coincident Peak (CP) and the Non-Coincident Peak (NCP) of each customer class.

The 12 CP is the contribution to the system peak demand for each of the 12 months in the TY. The 12 NCP is the customer class peak demand (regardless, or non-coincident, with the other classes or system peak) for all 12 months of the TY. The 12 CP method is used for certain generation demand and transmission- related costs while the 12 NCP method is used for portions of the distribution demand costs. 12 Coincident Peak (CP) Method
The CP demand allocation methodology allocates costs based on the customer class contributions to the system CP for each month of the year. Typically, CP allocators are used to assign production demand- related costs to customer classes because production demand costs are generally driven by the utility’s need to meet its system peak(s). For this Study, a 12 CP was utilized to allocate the System Dispatching, Hydro, Resource Adequacy, and other demand-related costs for Hetch Hetchy Power to the respective customer classes. The results of the 12 CP demand cost allocation process are provided in Table 3-7.

Table 3-7
12 CP Cost Allocation
Customer Class
12 CP
Allocation % (1)
Residential 1.32%
Small Commercial 8.18%
Medium Commercial 18.49%
Large Commercial 9.61%
Industrial 31.24%
Shoreside Power 4.87%
Municipal Airport 25.64%
Riverbank 0.51%
Upcountry 0.15%
Lighting 0.00%
(1) Based on TY projections provided by the SFPUC.

Section 3

3-10 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 Figure 3-1 provides a graphical representation of the projected CP demand by month for each customer class served by Hetch Hetchy Power for the TY based on historical usage patterns.

Figure 3-1. Hetch Hetchy Power 12 CP Demand Cost Allocation While there are a few months of peaks (during winter months) and relatively flat stable peaks from July through October (seen primarily in the commercial classes and driven largely by the industrial and municipal airport loads), the peak demand months for Hetch Hetchy Power appear to be relatively constant throughout the year. This indicates that a 12 CP (which considers the entire year) is the appropriate allocator for Hetch Hetchy Power.
12 Non-Coincident Peak (NCP) Method
The NCP demand allocation method is based on the theory that demand costs are strongly influenced by the localized peak demands or highest demand of each customer class regardless of when that class’s peak demand occurs. NCP demand allocators are primarily used to allocate distribution-related costs because the design of these facilities is more consistent with the more localized demand of the classes and infrastructure rather than the demand of the entire system.

For the Hetch Hetchy Power system, two different modified 12 NCP methods were utilized to allocate distribution demand-related costs. This included a 12 NCP for primary and secondary customers and a 12 NCP method excluding the airport and streetlights. Streetlights were excluded from the 12 NCP allocation as the distribution-related costs to support the streetlights were included in the labor allocations for Hetch

Cost of Service for Hetch Hetchy Power

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 3-11 Hetchy Power. Those costs were already assigned to streetlights and entail all the costs that would have been allocated using the 12 NCP-related allocators. The municipal airport was excluded from the NCP allocator because all airport-related distribution costs were already assigned directly to the municipal airport through the labor allocator. The 12 NCP excluding the municipal airport and streetlights was used to allocate costs associated with the distribution substations, primary conductors, and WDT charges for use of the PG&E distribution system. The transformer-related costs in distribution were allocated using the sum of maximum demands for each customer class.

Table 3-8
Modified 12 NCP Allocation Methods
Customer Class 12 NCP %
12 NCP x
SFO x SL %
Residential 1.81% 2.50%
Small Commercial 8.04% 11.11%
Medium Commercial 17.84% 24.66%
Large Commercial 9.77% 13.50%
Industrial 28.32% 39.15%
Shoreside Power 5.79% 8.00%
Municipal Airport 24.99% 0.00%
Riverbank 0.59% 0.81%
Upcountry 0.20% 0.27%
Lighting 2.67% 0.00%

Energy Allocation Factors
Energy allocation factors are used to allocate costs classified as variable or energy related; these types of costs vary directly with the level of kWh sales or generation. The costs classified herein as variable or energy related for Hetch Hetchy Power include the energy-related power purchase costs as well as the TAC costs (charged on an energy basis).

Net energy for load (NEFL) was used to allocate energy-related costs; this was based on customer consumption of energy in kWh (sales), which was adjusted for losses to calculate the amount of energy generated for eventual delivery. NEFL was also used to allocate energy-related production and transmission costs (see Table 3-9). NEFL is a direct relationship between the costs incurred and the customer classes (in this case, energy-related power purchases and transmission-related charges).

Section 3

3-12 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 Table 3-9
Energy Cost Allocation
Customer Class NEFL (MWh) Allocation (%)
Residential 17,559,628 1.7%
Small Commercial 80,408,125 7.8%
Medium Commercial 171,955,576 16.8%
Large Commercial 82,759,695 8.1%
Industrial 316,188,186 30.8%
Shoreside Power 6,350,927 0.6%
Municipal Airport 319,267,206 31.1%
Riverbank 11,479,332 1.1%
Upcountry 1,928,485 0.2%
Lighting 17,811,822 1.7%
Total 1,025,708,983 100.0%

Customer Allocation Factors
Customer costs are defined herein as those costs related to the number of customers. Included in customer-related costs are the investment (asset) costs required to serve customers (as part of the distribution system), which include the equipment from the transformers to the customer premise (service drop and meter costs). Additionally, labor and other costs associated with customer service and accounting (billing, collecting, and other customer-related functions), as well as customer programs, were allocated using the weighted number of customers. The customer allocation factors developed for this Study were based on the projected average number of customers in each class during the TY.

The weighted customer allocation factor was based on the number of customers in a particular class times a weighting factor. The weighting factors were developed based on the estimated costs associated with serving non-residential (commercial) customer classes, recognizing that serving these customer classes is more expensive on a per-customer basis. Program costs were allocated based on the total allocation of the revenue requirement. Table 3-10 summarizes the allocation percentages for the weighted customer allocation factor.

Cost of Service for Hetch Hetchy Power

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 3-13 Table 3-10
Customer Cost Allocation
Customer Class
Weighted
Customer (%)
Residential 40.1%
Small Commercial 37.8%
Medium Commercial 13.4%
Large Commercial 3.9%
Industrial 3.8%
Shoreside Power 0.0%
Municipal Airport 0.2%
Riverbank 0.1%
Upcountry 0.4%
Lighting 0.2%

Streetlighting for Hetch Hetchy Power
Other adjustment factors utilized during the cost allocation process included the use of direct assignment for streetlighting. Hetch Hetchy Power owns and maintains the streetlighting system. Streetlights are charged for their usage on a $/kWh basis. Not all the costs associated with owning and maintaining the streetlights are recovered through the rates charged to streetlights. The remaining costs to be collected after accounting for projected revenues from streetlights were allocated to each customer class based on projected energy sales for the TY.

Economics | Strategy | Stakeholders | Sustainability 1326219207- fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 Section 4

COST OF SERVICE RESULTS FOR HETCH HETCHY POWER
This section summarizes the COS results by customer class for Hetch Hetchy Power. The customer classes identified were based on the initial scope of work. In the scope of work, the SFPUC staff identified several customers to consider breaking out into their own classes. Those customers under consideration were the municipal airport, Riverbank, and Upcountry. The total revenue requirement by class for the TY period is approximately $252.4 million, which was functionalized, classified, and allocated to the customer classes.

The allocated COS results are provided in Table 4-1.

Table 4-1
COS Results – Hetch Hetchy Power ($000)
Residential
Small
Commercial
Medium
Commercial
Large
Commercial Industrial
Shoreside
Power
Municipal
Airport Riverbank Upcountry Lighting Total
Power Supply $1,324 $8,134 $18,356 $9,526 $31,072 $5,284 $25,626 $520 $145 $42 $100,029 Transmission $848 $4,410 $9,676 $4,833 $17,109 $1,531 $13,548 $421 $80 $528 $52,984 Distribution $5,575 $10,180 $14,467 $7,223 $21,448 $2,579 $2,240 $261 $250 $20,326 $84,548 Customer $3,167 $3,513 $2,427 $1,022 $2,681 $308 $1,510 $51 $43 $138 $14,861 Revenue
Requirement
$10,913 $26,237 $44,926 $22,604 $72,309 $9,701 $42,924 $1,254 $518 $21,034 $252,421

Allocation and Assignment of Cost of Service
The results of the cost allocation analysis are presented in Table 4-2, along with a comparison of the cost recovery currently projected for the TY.

Section 4

4-2 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 Table 4-2
Existing Test Year Rate Revenues versus Test Year
Revenue Requirements – Hetch Hetchy Power ($000)
Customer Class
Test Year
Existing
Rate Revenue
Test Year
Revenue
Requirement Difference ($)
Percentage
Rate Increase
Needed
Residential $4,741 $11,789 $7,048 148.68%
Small Commercial $21,434 $30,218 $8,784 40.98%
Medium Commercial $38,989 $51,306 $12,318 31.59%
Large Commercial $21,608 $23,355 $1,746 8.08%
Industrial $80,458 $70,682 ($9,776) (12.15%)
Shoreside Power $1,610 $9,971 $8,362 519.37%
Municipal Airport $62,871 $48,584 ($14,287) (22.72%)
Riverbank $1,331 $1,455 $124 9.28%
Upcountry $469 $614 $145 30.90%
Lighting $4,447 $4,447 $0 0.00%
Total (1) $237,958 $252,421 $14,464
(1) Totals may not add due to rounding.

The differences between the TY existing rate revenue projections and the TY revenue requirements help drive cost recovery by customer class in the rate design process. It is worth noting that Hetch Hetchy Power historically had rates that followed the classes and structures of PG&E rates, creating interclass subsidies. Hetch Hetchy Power has spent several years working to correct these differences and move toward rates based on its COS.

Residential COS Results
Table 4-3 summarizes Hetch Hetchy Power’s residential class COS results developed for this Study for the TY.

Table 4-3
Residential Cost of Service
Rate Component COS COS – Energy (1)
Customer ($/month) $132.28 $132.28
Demand ($/kW) $29.47
Energy ($/kWh) $0.05046 $0.29977
(1) Assumes no demand charge and bundles demand-related costs within the energy charge.

Costs for a given customer class are divided into three categories: customer, demand, and energy. To the extent that customer- and/or demand-related costs are not recovered through the customer or demand rate components, these remaining costs would be shifted to the energy rate, requiring a higher energy

Cost of Service Results for Hetch Hetchy Power

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 4-3 charge to meet the class’s full COS. Hetch Hetchy Power’s residential rates do not have a demand component although the COS analysis calculated one; therefore, Table 4-3 shows that the demand costs are shifted to the energy rate.

Small Commercial COS Results
Table 4-4 summarizes Hetch Hetchy Power’s small commercial class COS results developed for this Study for the TY.

Table 4-4
Small Commercial Cost of Service
Rate Component COS COS – Energy (1)
Customer ($/month) $144.57 $144.57
Demand ($/kW) $80.63
Energy ($/kWh) $0.05046 $0.30393
(1) Assumes no demand charge and bundles demand-related costs within the energy charge.

Similarly to residential rates, small commercial rates do not have a demand component although the COS analysis calculated one; therefore, Table 4-4 shows that the demand costs are shifted to the energy rate.

Medium Commercial COS Results
Table 4-5 summarizes Hetch Hetchy Power’s medium commercial class COS results developed for this Study for the TY.

Table 4-5
Medium Commercial Cost of Service
Rate Component COS
Customer ($/month) $833.98
Demand ($/kW) $92.67
Energy ($/kWh) $0.05014

Because the medium commercial rates include a demand charge, there was no need to calculate an all-in energy rate with demand costs.

Large Commercial COS Results
Table 4-6 summarizes Hetch Hetchy Power’s large commercial class COS results developed for this Study for the TY.

Section 4

4-4 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 Table 4-6
Large Commercial Cost of Service
Rate Component COS
Customer ($/month) $2,073.64
Demand ($/kW) $86.37
Energy ($/kWh) $0.04966

Industrial COS Results
Table 4-7 summarizes Hetch Hetchy Power’s industrial class COS results developed for this Study for the TY.

Table 4-7
Industrial Cost of Service
Rate Component COS
Customer ($/month) $5,117.60
Demand ($/kW) $88.56
Energy ($/kWh) $0.04936

Shoreside Power COS Results
Table 4-8 summarizes Hetch Hetchy Power’s Shoreside Power COS results developed for this Study for the TY.

Table 4-8
Shoreside Power Cost of Service
Rate Component COS
Customer ($/month) $26,109.37
Demand ($/kW) $86.84
Energy ($/kWh) $0.05046

Municipal Airport COS Results
Table 4-9 summarizes Hetch Hetchy Power’s municipal airport COS results developed for this Study for the TY.

Cost of Service Results for Hetch Hetchy Power

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 4-5 Table 4-9
Municipal Airport Cost of Service
Rate Component COS
Customer ($/month) $126,973.24
Demand ($/kW) $68.23
Energy ($/kWh) $0.05046

Riverside COS Results
Table 4-10 summarizes Hetch Hetchy Power’s Riverside COS results developed for this Study for the TY.

Table 4-10
Riverside Cost of Service
Rate Component COS
Customer ($/month) $4,319.14
Demand ($/kW) $79.09
Energy ($/kWh) $0.05046

Upcountry COS Results
Table 4-11 summarizes Hetch Hetchy Power’s Upcountry COS results developed for this Study for the TY.

Table 4-11
Upcountry Cost of Service
Rate Component COS
Customer ($/month) $165.92
Demand ($/kW) $28.62
Energy ($/kWh) $0.05046

Economics | Strategy | Stakeholders | Sustainability 1326219207- fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 Section 5

RATE RECOMMENDATIONS FOR HETCH HETCHY POWER
Rate design is the end result of a rate study and is the process through which the cost recovery mechanisms (rates and charges) for each customer class are established. Rates and charges are set for each customer class to collectively meet the utility’s revenue requirement as well as to address specific policy goals and objectives. For the purposes of this Study, Hetch Hetchy Power rates were designed to follow the subsequent principles, which follow the SFPUC Ratepayer Assurance Policy as they:
 Achieve recovery of costs for the system.
 Equitably allocate costs across and within customer classes.  Encourage efficient use of power that reduces costs to Hetch Hetchy Power.  Provide rate stability.
 Maintain rate competitiveness with PG&E.
 Are simple and easy to understand.

In the rate design, the revenue requirements are allocated to the tariffs within each customer class. The rates for each tariff are calculated based on the revenue requirement that is to be collected from those customers with consideration of the billing determinants within that tariff (in the form of energy, demand, and number of customers). The rates may be further adjusted to account for subsidies that exist within and between customer classes. The final rates are then tested to validate that they will generate revenues that match the rate revenue requirements from the financial plan.

GUSE, Low-Income, and Rate Cap Cost Recovery
Within the Hetch Hetchy Power system, there are a number of interclass dependencies: GUSE customer limitations, low income programs, and class rate caps.

There are several GUSE customers who are served by Hetch Hetchy Power within each of the commercial and industrial classes. The recommended change in rates for GUSE customers is to increase their effective rate by $0.03/kWh for FY 2026–2027. This will be established through a GUSE-wide effective rate that will apply to all GUSE tariffs. GUSE rates were designed to meet this standard GUSE effective rate by utilizing the exact rate components and billing determinants of a given tariff. Because GUSE customers are limited to a $0.03/kWh effective rate increase per rate change, they are not collectively recovering sufficient revenue equal to their costs. This contributes to a subsidy between commercial, industrial, and the municipal airport rate classes and GUSE and other non-commercial classes. It is important to note that this subsidy has existed since Hetch Hetchy Power began offering flat rates to its GUSE customers, and the recommended rate changes for this Study are intended to reduce the subsidy over time.

HHP offers low-income discounts (30%) for qualifying residential customers and the common areas in low- income housing developments through commercial CARE rates. The loss of revenues from these discounts is reallocated to the other tariffs within their customer class.

Finally, the approximate 1.2x cap (this equates to 1.5x cap for retail customers) placed on recommended rate designs for all customer classes creates an under-recovery for that class as indicted in the

Section 5

5-2 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 methodology discussion above. This under-recovery must be recovered by other classes. This can be seen in the rate design where certain class rates may under-recover the class’s COS. However, the rates have been designed to recover for the system as a whole.

Customer Charges
Several changes to customer charges are recommended as part of the Study. It is recommended that all customer charges be made equal within a rate class (with the exception of GUSE, whose customer charges will be equal to the other GUSE customers within that same class). Additionally, it is recommended that the differential between the single and polyphase customers in the small commercial customer class be eliminated. This change will reinforce rates that are easy to understand.

Demand Charges
For customer classes with demand rates that are TOU differentiated (large commercial and industrial classes only), the recommended rates maintain the rate differential between the on-peak, part-peak, and maximum demand rates while moving the demand rates collectively toward their COS values. Currently, the large commercial and industrial customers pay the maximum demand rate for the peak demand during each month in addition to paying the on-peak and part-peak demand rates in summer periods.

Medium commercial customers pay a summer and winter maximum demand.

Energy Charges
All customer classes have rates that contain an energy charge. No changes are recommended to the structure of those rates. Slight changes have been made to the differentials between on-, part-, and off- peak periods within rate codes. The purpose of this was to standardize between tariffs within rate classes but not to drive any behavioral change. These adjustments were minimal.

Recommended Rate Design
This section of the report summarizes the recommended rate design for FY 2026–2027 for each major customer class. Included in this summary is an analysis of the recommended rates.

Residential Rates
Table 5-1 summarizes the rate schedules and rate classes within Hetch Hetchy Power’s residential rate offerings.

Rate Recommendations for Hetch Hetchy Power

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 5-3 Table 5-1
Hetch Hetchy Power Residential Rate Schedules and Customers Rate Code Description
R-1 Residential, Gas Heating
R-1E Residential, Electric Heating
R-2 Residential Low-Income, Gas Heating
R-2E Residential Low-Income, Electric Heating
R-M Residential Medical Necessity Assistance Program, Gas Heating R-ME Residential Medical Necessity Assistance Program, Electric Heating REV-1 Residential with Electric Vehicle

Residential Class Rate Offerings
As indicated in Table 5-1, the residential class includes rate codes which represent different types of customers within the class. The “Standard Retail” is designated R-1 while R-1E is the corresponding rate for customers with electric heating. Electric heating rates have tiers set at a higher level (10% increase to those of the R-1 class in summer). The R-2 rate is the low-income residential service, which is set at a 30% discount to the R-1 rate. The R-M rate is a medical necessity assistance program with a similar rate structure as the R-1 rate; however, the tiers are set at a higher level (75% increase to those of the R-1 class).

Residential Rates and Bill Impact Analysis
All existing structures and differentials in the residential class have been maintained. Table 5-2 and Table 5-3 summarize the recommended rates for the residential rate class for FY 2026–2027.

Table 5-2
Residential Rates
(R-1, R-1E, REV-1, R-M, and R-ME)
Rate Component Existing Recommended
Customer Charge ($/month) $8.91 $10.00
Energy Charge ($/kWh)
Tier 1 $0.28052 $0.29969
Tier 2 $0.33663 $0.35963
Tier 3 $0.50494 $0.53944

Section 5

5-4 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 Table 5-3
Residential Rates
(R-2, R-2E)
Rate Component Existing Recommended
Customer Charge ($/month) $6.24 $7.00
Energy Charge ($/kWh)
Tier 1 $0.19637 $0.20978
Tier 2 $0.23564 $0.25174
Tier 3 $0.35346 $0.37761

Distribution of Bill Impacts – Residential
Figure 5-1 shows the distribution of average monthly bill impacts for Hetch Hetchy Power’s projected residential customer class from FY 2026–2027 rates as determined from customer billing data. Bill impacts will vary based on individual customer usage patterns. However, approximately 1,300 residential customers are expected to receive an average bill increase of approximately $6 per month under the recommended rates. As shown in Figure 5-1, some customers will see an average bill increase of greater than $6.

Figure 5-1. Distribution of Average Monthly Bill Impacts for Residential Customers

Rate Recommendations for Hetch Hetchy Power

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 5-5 Small Commercial Rates
Table 5-4 summarizes the rate schedules and rate classes within Hetch Hetchy Power’s small commercial rate offerings. All the recommended small commercial rate changes are provided in the body of the report.

Table 5-4
Hetch Hetchy Power Small Commercial
Rate Schedules and Customers
Rate Code Description
C-1 (S, P) Small Commercial, Single/Polyphase
A1-U (S, P) Enterprise Small Commercial Time-of-Use, Single/Polyphase CG-1 (S, P) General Use Small Commercial, Single/Polyphase

The small commercial customer class is currently defined as those customers who utilize less than 75 kW in a month and can be served by single phase (S) or polyphase (P) service. The rate classes within the small commercial class include the standard retail class (C-1), the rate for which includes a monthly service charge and a seasonal energy charge (summer and winter). The Municipal Enterprise customer rates include single or polyphase service (A1-US or A1-UP). These rates include a customer charge as well as a TOU rate component that includes an on-, part-, and off-peak summer rate and a part-peak and off-peak winter rate.

To continue the movement toward simple and easily understood rates, the recommended changes to small commercial rates include eliminating the customer charge differential between single phase and polyphase and charging a single customer charge to all small commercial customers. The summer and winter differentials have been maintained in alignment with current rates. GUSE rates will increase at $0.03/kWh in alignment with the GUSE limit. However, recommended changes include eliminating the single phase and polyphase customer charge differential for GUSE as well.

Table 5-5 summarizes the recommended rate adjustments for the retail small commercial rate class (C-1) and a comparison of the rate components to the existing rate structure.

Table 5-5
Small Commercial Rates
(C-1)
Rate Component Existing Recommended
Customer Charge ($/month)
Single Phase $17.63 $19.63
Polyphase $44.11 $19.63

Energy Charge ($/kWh)
Summer $0.36566 $0.39660
Winter $0.29385 $0.31872

Section 5

5-6 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 Distribution of Bill Impacts – Small Commercial
Figure 5-2 shows the distribution of average monthly bill impacts for all customers in the small commercial class for the first phase of the recommended rate changes. As indicated, approximately 1,800 customers will see an average bill increase of approximately $78/month. Few customers are expected to see an average monthly bill decrease and some customers are expected to see an average bill increase greater than the average value, depending on their usage characteristics.

Figure 5-2. Distribution of Average Monthly Bill Impacts for Small Commercial Customers GUSE Small Commercial (Proposed CG-1)
Table 5-6 provides the current and recommended rates for the GUSE small commercial customers for single phase (CG-1S) and polyphase (CG-1P) service. In alignment with policy, the “effective rate” (the total projected revenue divided by the total projected energy sales) is limited to an increase of $0.03/kWh for the GUSE customers.

Rate Recommendations for Hetch Hetchy Power

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 5-7 Table 5-6
Small Commercial Rates – GUSE
(CG-1)
Rate Component Existing Recommended
Customer Charge ($/month)
Single Phase $11.72 $13.05
Polyphase $29.32 $13.05

Energy Charge ($/kWh)
Summer $0.23840 $0.27333
Winter $0.19067 $0.21965

Municipal Enterprise Small Commercial (A1-US, A1-UP)
Table 5-7 provides the current and recommended rates for the Municipal Enterprise small commercial customers for TOU service for single phase (A1-US) and polyphase (A1-UP) service.

Table 5-7
Small Commercial Rates – Municipal Enterprise
(A1-US and A1-UP)
Rate Component Existing Recommended
Customer Charge ($/month)
Single Phase $17.63 $19.63
Polyphase $44.11 $19.63
Summer Energy Charges
On-Peak $0.39494 $0.42836
Part-Peak $0.39494 $0.42836
Off-Peak $0.33760 $0.36616
Winter Energy Charges
Part-Peak $0.30184 $0.32738
Off-Peak $0.28664 $0.31089

Medium Commercial Rates
Table 5-8 summarizes the current rate schedules and rate classes within Hetch Hetchy Power’s medium commercial rate class offerings.

Section 5

5-8 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 Table 5-8
Hetch Hetchy Power Medium Commercial Rate Schedules and Customers
Rate Code Description
C-2 (S, P) Medium Commercial, Secondary/Primary
A10-U (S, P) Enterprise Medium Commercial Time-of-Use, Secondary/Primary CG-2 (S, P) General Use Medium Commercial, Secondary/Primary

The medium commercial customer class is currently defined as those customers who utilize between 75 and 500 kW during a month and can be served by secondary voltage (S) or primary voltage (P). The rate classes within the medium commercial class include the standard retail class (C-2), which has a monthly service charge, a seasonal energy charge, and a demand charge (which is the same for the summer and winter periods). The Municipal Enterprise TOU rate (A10-US or A10-UP) includes on-, part-, and off-peak periods in the summer and part-peak and off-peak periods in the winter (and no summer or winter differential for the demand rate).

Table 5-9 provides the recommended rate adjustments for the medium commercial rate class and a comparison of the rate components to the existing rate structure.

Table 5-9
Medium Commercial Rates
(C2-S and C2-P)
Secondary Primary
Rate Component Existing Recommended Existing Recommended Customer Charge ($/month) $314.29 $350.00 $293.84 $350.00 Demand ($/kW)
Summer $25.50 $28.50 $21.09 $23.94
Winter $25.50 $28.50 $21.09 $23.94
Energy Charge ($/kWh)
Summer $0.23242 $0.24654 $0.20973 $0.22247
Winter $0.18926 $0.19723 $0.17102 $0.17798

Distribution of Bill Impacts – Medium Commercial
Figure 5-3 shows the distribution of average monthly bill impacts for all customers in the medium commercial class due to the recommended rate changes. As indicated, there are approximately 75 customers who are expected to see a bill increase of approximately $1,100, and there are a small number of customers who are expected to see a bill increase greater than $2,000. This broad distribution of estimated monthly rate impacts is due to the wide range of usage characteristics within the medium commercial class.

Rate Recommendations for Hetch Hetchy Power

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 5-9

Figure 5-3. Distribution of Average Monthly Bill Impacts for Medium Commercial Customers GUSE Medium Commercial (CG-2)
Table 5-10 provides the current and recommended rates for the GUSE medium commercial customers.

Table 5-10
Medium Commercial Rates – GUSE
(CG2-S and CG2-P)
Secondary Primary
Rate Component Existing Recommended Existing Recommended Customer Charge ($/month) $250.09 $278.51 $268.21 $278.51 Demand ($/kW)
Summer $20.29 $23.05 $19.25 $21.46
Winter $20.29 $23.05 $19.25 $21.46
Energy Charge ($/kWh)
Summer $0.17513 $0.20080 $0.18018 $0.20969
Winter $0.14080 $0.16064 $0.14485 $0.16775

Municipal Enterprise Medium Commercial TOU
Table 5-11 provides the current and recommended rates for the Municipal Enterprise medium commercial TOU customers for secondary service (A10-US).

Section 5

5-10 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 Table 5-11
Medium Commercial Rates – Municipal Enterprise
(A10-US and A10-UP)
Secondary Primary
Rate Component Existing Recommended Existing Recommended Customer Charge ($/month) $314.29 $350.00 $293.84 $350.00 Demand ($/kW)
Summer $25.50 $28.50 $21.09 $23.94
Winter $25.50 $28.50 $21.09 $23.94
Summer Energy Charges
On-Peak $0.25755 $0.27320 $0.23225 $0.24636
Part-Peak $0.25755 $0.27320 $0.23225 $0.24636
Off-Peak $0.20823 $0.21856 $0.18802 $0.19709
Winter Energy Charges
Part-Peak $0.18148 $0.19124 $0.17874 $0.18970
Off-Peak $0.19787 $0.21036 $0.16403 $0.17245

Large Commercial Rates
Table 5-12 summarizes the current rate schedules and rate classes within Hetch Hetchy Power’s large commercial rate class offerings.

Table 5-12
Hetch Hetchy Power Large Commercial Rate Schedules and Customers Rate Code Description
C-3 (S, P) Large Commercial, Secondary/Primary
CG-3 General Use Large Commercial, Secondary/Primary

The large commercial customer class is currently defined as those customers who utilize between 500 and 1,000 kW during a month and can be served by secondary voltage (S) or primary voltage (P). The rate classes within the large commercial class include the standard retail class (C-3), which includes a monthly service charge, a seasonal and TOU energy charge, and a seasonal and TOU demand charge. The energy charge includes an on-peak, part-peak, and off-peak charge in summer and a part-peak and off-peak charge in the winter. The demand rate is applied to the on-peak, part-peak, and max demand during the summer period and to the max demand during the winter period. GUSE customers mirror the same structural components.

Table 5-13 summarizes the existing and recommended changes for large commercial rates.

Rate Recommendations for Hetch Hetchy Power

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 5-11 Table 5-13
Large Commercial Rates
(C3-S and C-3P)
Secondary Primary
Rate Component Existing Recommended Existing Recommended Customer Charge ($/month) $2,044.27 $2,100.00 $1,914.03 $2,100.00 Demand Charge Summer
On-Peak $19.02 $21.02 $15.88 $17.87
Part-Peak $15.51 $16.82 $13.28 $14.29
Max $34.79 $38.45 $28.25 $32.69
Demand Charge Winter
Max $34.79 $38.45 $28.25 $32.69
Summer Energy Charges
On-Peak $0.14936 $0.15142 $0.11611 $0.11771
Part-Peak $0.14936 $0.15142 $0.11611 $0.11771
Off-Peak $0.12282 $0.12113 $0.09636 $0.09417
Winter Energy Charges
Part-Peak $0.13215 $0.13398 $0.10330 $0.10415
Off-Peak $0.12273 $0.12113 $0.09628 $0.09417

Distribution of Bill Impacts – Large Commercial
Figure 5-4 shows the distribution of average monthly bill impacts for all customers in the large commercial class due to the recommended rate changes. There are approximately 10 customers who are expected to see a bill increase of approximately $2,000, and other customers will experience bill changes both lesser and greater than $2,000. This is due to the recommended changes in the demand and energy rates and the range of usage characteristics within the large commercial class.

Section 5

5-12 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26

Figure 5-4. Distribution of Average Monthly Bill Impacts for Large Commercial Customers Table 5-14 summarizes the existing and recommended changes for large commercial GUSE rates.

Table 5-14
Large Commercial Rates – GUSE
(CG3-S and CG-3P)
Secondary Primary
Rate Component Existing Recommended Existing Recommended Customer Charge ($/month) $2,009.52 $2,009.52 $1,792.56 $1,792.56 Demand Charge Summer
On-Peak $18.70 $18.92 $14.87 $15.86
Part-Peak $15.25 $15.14 $12.44 $12.69
Max $34.19 $34.62 $26.46 $29.02
Demand Charge Winter
Max $34.19 $34.62 $26.46 $29.02
Summer Energy Charges
On-Peak $0.12792 $0.12792 $0.09074 $0.08773
Part-Peak $0.12792 $0.12792 $0.09074 $0.08773
Off-Peak $0.10184 $0.10184 $0.07224 $0.07018
Winter Energy Charges
Part-Peak $0.09096 $0.09096 $0.07875 $0.07763
Off-Peak $0.08338 $0.08338 $0.07217 $0.07018

Rate Recommendations for Hetch Hetchy Power

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 5-13

Industrial Rates
Table 5-15 summarizes the current rate schedules and rate classes within Hetch Hetchy Power’s industrial rate class offerings. Recommended changes to the secondary, primary, and transmission rates for the large commercial class are included in the body of the report.

Table 5-15
Hetch Hetchy Power Industrial Rate Schedules and Customers Rate Code Description
I-1 (S, P, T) Industrial, Secondary/Primary/Transmission IG-1 (S, P) General Use Industrial, Secondary/Primary

The industrial customer class is currently defined as those customers who utilize more than 1,000 kW during a month and can be served by secondary (S), primary (P), or transmission (T)-level voltage. The rate classes within the industrial class include the standard retail class (I-1), which includes a monthly service charge, a seasonal and TOU energy charge, and a seasonal and TOU demand charge. The energy charge includes an on-peak, part-peak, and off-peak charge in the summer and a part-peak and off-peak charge in the winter. The demand rate is applied to an on-peak, part-peak, and max demand during the summer period and to a max demand during the winter period.

Table 5-16 summarizes the existing and recommended changes for industrial secondary, primary, and transmission service rates (I-1S, I-1P, I-1T).

Section 5

5-14 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 Table 5-16
Industrial Rates
(I1-S, I1-P, I1-T)
Secondary Primary Transmission
Rate Component Existing Recommended Existing Recommended Existing Recommended Customer Charge
($/month)
$2,045.64 $2,300.00 $1,964.40 $2,300.00 $1,914.03 $2,300.00 Demand Charge
Summer

On-Peak $20.20 $22.06 $20.49 $22.06 $25.23 $22.06
Part-Peak $15.91 $17.65 $16.93 $17.65 $25.23 $17.65
Max $35.95 $39.71 $33.26 $36.50 $22.77 $28.25
Demand Charge Winter
Max $35.95 $39.71 $33.26 $36.50 $22.77 $28.25
Summer Energy Charges
On-Peak $0.13417 $0.13201 $0.13066 $0.13100 $0.12909 $0.12967 Part-Peak $0.13417 $0.13201 $0.13066 $0.13100 $0.12909 $0.12967 Off-Peak $0.11125 $0.10561 $0.10864 $0.11249 $0.10728 $0.10374 Winter Energy Charges
Part-Peak $0.11924 $0.11881 $0.11631 $0.12641 $0.11488 $0.11670 Off-Peak $0.11084 $0.10561 $0.10823 $0.11249 $0.10688 $0.10374

Table 5-17 summarizes the existing and recommended changes for industrial GUSE rates.

Rate Recommendations for Hetch Hetchy Power

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 5-15 Table 5-17
Industrial Rates – GUSE
(IG-1S and IG-1P)
Secondary Primary
Rate Component Existing Recommended Existing Recommended Customer Charge ($/month) $2,148.59 $2,148.59 $2,111.70 $2,148.59 Demand Charge Summer
On-Peak $21.22 $21.55 $22.03 $18.93
Part-Peak $16.70 $17.24 $18.20 $15.15
Max $37.76 $38.78 $35.76 $34.08
Demand Charge Winter
Max $37.76 $38.78 $35.76 $34.08
Summer Energy Charges
On-Peak $0.11051 $0.12245 $0.10870 $0.12238
Part-Peak $0.11051 $0.12245 $0.10870 $0.12238
Off-Peak $0.08645 $0.09796 $0.08503 $0.09790
Winter Energy Charges
Part-Peak $0.09483 $0.11021 $0.09328 $0.11014
Off-Peak $0.08600 $0.09796 $0.08460 $0.09790

Distribution of Bill Impacts – Industrial
Figure 5-5 shows the distribution of average monthly bill impacts for all customers in the industrial rate class due to the recommended changes. As indicated, 5 customers are projected to see a bill decrease and all other customers are expected to see a bill increase.

Section 5

5-16 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26

Figure 5-5. Distribution of Average Monthly Bill Impacts for Industrial Customers Other Customer Class Rates
During the course of this Study, several customers were identified and analyzed as their own class. These include Shoreside Power, SFO, and Riverbank. Additionally, customers located entirely within the Upcountry system were separated into their own class.

Shoreside Power Rates
Under the current rate structure, the Shoreside Power Rate includes a monthly service charge, a seasonal and TOU energy charge, and a seasonal and TOU demand charge. The energy charge includes an on-peak, part-peak, and off-peak charge in summer and a part-peak and off-peak charge in the winter. The demand rate is applied to an on-peak, part-peak, and max demand during the summer period and to a max demand during the winter period. It is recommended that this rate structure be maintained while continuing to move toward COS. Table 5-18 summarizes the existing and recommended rates for Shoreside Power.

Rate Recommendations for Hetch Hetchy Power

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 5-17 Table 5-18
Shoreside Power Rates
Rate Component Existing Recommended
Customer Charge ($/month) $548.14 $600.00
Demand ($/kW)
Summer $7.16 $7.50
Winter $7.16 $7.50
Summer Energy Charges
On-Peak $0.15853 $0.17213
Part-Peak $0.15853 $0.17213
Off-Peak $0.12399 $0.13770
Winter Energy Charges
Part-Peak $0.13604 $0.14771
Off-Peak $0.12337 $0.13770

Municipal Airport Rate
Due to SFO’s particularly high load factor, it is recommended that SFO be classified into a municipal airport rate class. Currently it is served under I-1P for its primary meter. Greater than 99% of the load is served under one meter; however, there are several smaller meters under other tariffs. It is recommended that those smaller meters continue to be served under the appropriate tariff. Only the primary meter was considered when proposing the municipal airport rate. It is also recommended that all rate components and structures of I-1P be maintained. Because of the planned rate gradualism and shift of customer classes to their COS over time, SFO will not immediately see differences in its monthly bill. However, as all classes continue to align with their class COS, SFO will begin to see a difference as a result of being on a dedicated rate. Table 5-19 summarizes existing and recommended rates for SFO.

Section 5

5-18 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 Table 5-19
Municipal Airport Rates
Rate Component Existing Recommended
Customer Charge ($/month) $1,964.40 $2,300.00
Demand Charge Summer
On-Peak $20.49 $25.00
Part-Peak $16.93 $20.00
Max $33.26 $45.00
Demand Charge Winter
Max $33.26 $45.00
Summer Energy Charges
On-Peak $0.13066 $0.11313
Part-Peak $0.13066 $0.11313
Off-Peak $0.10864 $0.09406
Winter Energy Charges
Part-Peak $0.11631 $0.10070
Off-Peak $0.10823 $0.09406

Riverbank
Riverbank is served at transmission level and previously had rates that equated to 70% of the I1-T rate.

This Study examined Riverbank as its own class and developed rates on those results rather than as a product of another class. This Study recommends maintaining all current rate components and structures for Riverbank while gradually moving it toward COS. Table 5-20 summarizes existing and recommended rates for Riverbank.

Rate Recommendations for Hetch Hetchy Power

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 5-19 Table 5-20
Riverbank Rates
Rate Component Existing Recommended
Customer Charge ($/month) $1,339.82 $1,500.00
Demand Charge Summer
On-Peak $17.66 $20.00
Part-Peak $17.66 $20.00
Max $15.94 $18.05
Demand Charge Winter
Max $15.94 $18.05
Summer Energy Charges
On-Peak $0.09036 $0.09412
Part-Peak $0.09036 $0.09412
Off-Peak $0.07510 $0.07822
Winter Energy Charges
Part-Peak $0.08042 $0.08377
Off-Peak $0.07482 $0.07793

Upcountry
This Study identified four customers that comprise the Upcountry rate class. These include three increase- limited customers and one small commercial customer. Although not GUSE customers, these increase- limited customers have the same rules applied to their rates ($0.03/kWh increase). Rate code UH0050 is associated with customers who live in City-owned Moccasin. UH0044 is associated with the Fish & Wildlife service, and UH0047 is associated with the US Forest Service. The Study recommendations include consolidating UH0044 and UH0047 onto the same rate. Additionally, it is recommended that all three increase-limited customers be assigned a customer charge. Even with the addition of a customer charge, none of these classes will exceed the $0.03/kWh effective increase. Table 5-21 summarizes existing and recommended rates for the increase-limited customers.

Table 5-21
Upcountry Rates – Restricted
(UH0050, UH0044, UH0047)
UH0050 UH0044 UH0047
Rate Component Existing Recommended Existing Recommended Existing Recommended Customer Charge
($/month)
$0.00 $10.00 $0.00 $10.00 $0.00 $10.00
Energy Charges
Summer $0.10875 $0.13064 $0.10875 $0.13768 $0.13500 $0.13768 Winter $0.10875 $0.13064 $0.10875 $0.13768 $0.13500 $0.13768

Section 5

5-20 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26

Evergreen is also located in the Upcountry class and is currently served by each meter’s appropriate commercial tariff. The Study recommends that Evergreen be left in its respective tariffs.

Traffic Lights/Streetlights
Hetch Hetchy Power also owns and maintains streetlights in the City. These lights have a $/kWh only change. For GUSE rates, the recommended rate increase is limited to $0.03/kWh per year, as described herein. All other lighting charges are recommended to increase by the system average. Table 5-22 summarizes the existing and recommended changes for lighting rates.

Table 5-22
Traffic Lights/Streetlights
(TC-1, LS-3, LG)
Rate Component Existing Recommended
LG – (GUSE)
Energy Charge ($/kWh) $0.21877 $0.24877
LS3
Energy Charge ($/kWh) $0.32726 $0.34690
TC1
Energy Charge ($/kWh) $0.32726 $0.34690

Individually Metered EV Charging Pilot Rate (EV-1)
During FY 2024–2025, used in the billing data analysis, there were no customers enrolled in this rate code.

As of the date of this report, there is one customer enrolled. This rate includes a customer charge and energy charges composed of an on-peak and an off-peak rate. It is recommended that these characteristics be maintained and increased at the system average. Table 5-23 summarizes the existing and recommended changes for individually metered EV rates.

Table 5-23
Commercial EV Charging Rate
(EV-1)
Rate Component Existing Recommended
Customer Charge $17.63 $18.69
Energy ($/kWh)
On-Peak $0.40679 $0.43120
Off-Peak $0.28395 $0.30099

Rate Recommendations for Hetch Hetchy Power

1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 5-21 Projected Revenue from Recommended Rates
Hetch Hetchy Power proposes to offer the rates described herein for FY 2026–2027. Table 5-24 summarizes the projected revenue requirement by customer class and the projected revenues at the recommended rates.

Table 5-24
Revenue Requirement and Projected Revenue by Customer Class ($000) Class
Year 1 Revenue
Requirement (1)
Recommended
Rate Increase
(%)
Year 1
Projected
Revenue $ Difference
%
Difference
Residential $11,198 7.29% $5,086 ($6,112) (55%)
Small Commercial $27,542 9.83% $23,541 ($4,001) (15%) Medium Commercial $47,743 11.66% $43,536 ($4,207) (9%) Large Commercial $23,980 4.71% $22,626 ($1,354) (6%)
Industrial $77,613 3.54% $83,304 $5,691 7%
Shoreside Power $9,804 7.29% $1,727 ($8,077) (82%)
Municipal Airport $48,104 5.31% $66,209 $18,105 38%
Riverbank $1,440 7.29% $1,428 ($12) (1%)
Upcountry $549 -2.62% $457 ($92) (17%)
Lighting $4,447 12.19% $4,447 ($0) 0%
Total Revenue
Requirement
$252,421 $252,360 ($60) 0%
(1) Totals may not add due to rounding.

It should be noted that lighting appears to be exactly meeting its COS requirements because the reallocation of these needs were accounted for during the COS process. Table 5-24 represents the COS after lighting reallocation.

The result indicates that, assuming the load growth occurs as projected, the rates recommended herein will provide sufficient revenue in FY 2026–2027 to cover the projected costs for the Hetch Hetchy Power system. Revenues for the residential, small, medium, and large commercial classes will continue to under- collect for the FY relative to their costs, primarily due to the GUSE, low-income, and residential rate cap rate policies discussed herein. Shoreside Power will continue to under-collect due to historically low rates; these rates continue a gradual effort to bring them in alignment with COS. This is true of Riverbank as well but to a lesser extent. The industrial customer class and municipal airport are anticipated to over-collect relative to their costs.

Economics | Strategy | Stakeholders | Sustainability 1326219207- fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 Section 6

CONCLUSION/FUTURE RATE CHANGES/RECOMMENDATIONS
Conclusion
The Study resulted in several findings and recommendations for rate changes for Hetch Hetchy Power.

One key conclusion from the Study is that SFPUC would benefit from a shorter rate plan review period than the current five-year mandated independent review. For this Study, the rate plan period is for FY 2026–2027. However, the results of the analysis, methodologies, and models created for this Study can be utilized by SFPUC to inform rates for the five-year period ending FY 2030–2031. SFPUC’s load, costs, and customers, in addition to the overall energy market, continue to evolve which are driving a need for more frequent rate plan reviews. For Hetch Hetchy Power, the projections for customer growth and the possibility of new large customers are significant. This growth results in increased costs for services, which are met with changes in rates for customers. If the growth does not materialize in the projected period, revenue projections will need to be adjusted (as will expenses). By recommending rate changes for one year, SFPUC management and staff have the opportunity to review projections for growth, revenue, and expenses, and potentially make adjustments as necessary to their operations to ensure fiscal responsibility.

Other findings of this Study included an analysis of the underlying market power costs that vary throughout the year and within the day. The seasonal variation suggests that power supply costs for Hetch Hetchy Power are higher during the winter periods than summer periods. However, current and recommended rate structures are set to have higher costs during the summer. Further, an analysis of power supply costs during the day (TOU) within each operation generally suggests higher costs during on- and part-peak periods than off-peak periods. For Hetch Hetchy Power, the TOU differentials have been maintained while waiting to complete the updated analysis on costs within the TOU periods.

A primary objective of this Study is to continue transitioning all customer classes toward their COS. This goal includes shifting customers within each “group” toward the COS-based rates developed for the industry standard rate offering. This objective will require a transition period; for some customer classes, this transition period is in the near term (depending on load growth). However, for most customer classes this objective may require additional time to fully achieve. During this transition period, the existing under-recovery for GUSE customers will be maintained, but is reduced as those customers’ rates approach COS. For residential customers and other classes, an effective rate cap of 1.2x for the class also creates an under-recovery during this transition period. A final under-recovery related to the low-income rate offering is maintained for the TY. Over time, these under-recoveries (with the potential exception of the low-income discount) should be phased out as customers are moved to COS; the recommended rates make significant progress toward this goal, but the SFPUC should continue on this path in future years.

Future Rate Changes
As indicated, not all of the anticipated objectives of this Study were able to be accomplished during the rate plan for FY 2026–2027. TOU periods for Hetch Hetchy Power rates were not changed from their current structures. Further analysis should examine whether different time periods better capture Hetch

Section 6

6-2 1326219207-fy_2027_sfpuc_hhp_power_rates_study_report_draft_03_27_26 Hetchy Power costs and drive customer behavior. Moreover, not all customer classes have TOU rate options, and future analysis could consider creating those.

Specific rate elements were identified during this Study that warrant future review and potential changes to the rates, rate structures, and fee programs. Specifically, it was identified that, as noted above, the seasonal rates do not appear to correspond with the seasonal market costs. The winter energy costs (on average) for Hetch Hetchy Power appear to be higher than the summer energy costs (on average), whereas the current (and recommended) rate structures reflect the opposite (summer rates are higher than winter rates). Any future changes to seasonal rate structures should recognize that a significant communication and outreach effort will be required.

The resulting recommended rates developed for this Study were prepared for FY 2026–2027 as described herein. The methodology and models prepared for this Study should be utilized by the SFPUC within the five-year period to inform retail rates for Hetch Hetchy Power for this period. As indicated herein, the one-year rate plan period was developed to address the uncertainly regarding projected load growth to be served by Hetch Hetchy Power. However, this Study provides SFPUC with the tools and analyses to evaluate and propose rate changes for the period through FY 2030–2031.

Recommendations
Based on the conclusions and supporting analyses presented herein, the following recommendations are made as a result of this Study:
 The SFPUC should adopt rates as described and recommended in its rate plan for FY 2026–2027.  The SFPUC should not move Riverbank and Upcountry customers into their own classes. Instead, they should continue to be included under their current appropriate tariff.  The SFPUC should continue to invest in infrastructure, equipment, and personnel to ensure its ability to meet customer demand for innovation and reliable power supply.  The SFPUC should continue to monitor and evaluate evolving technologies, systems, and operations to maximize its investments.
 SFPUC should utilize the results of this Study to develop future year rate proposals, as necessary.

OUR MISSION: To provide our customers with high-quality, efficient, and reliable water, power and sewer services in a manner that values environmental and community interests and sustains the resources entrusted to our care.

525 Golden Gate Ave.

San Francisco, CA 94102
(415) 554-3155
sfpuc.gov

7 April 2026

San Francisco Public Utilities Commission
525 Golden Gate Avenue
San Francisco CA 94102

Commissioners:

In accordance with Article 8B of the Charter of the City and County of San Francisco, the Rate Fairness Board (RFB) offers the following comments and recommendations regarding the Staff’s proposed water and wastewater rates for FY 2026/27 and FY 2027/28, and proposed retail electricity rates for Hetch Hetchy Power and for CleanPowerSF for FY 2026/27.

Water and Wastewater

1. We note that the proposed rates for water and wastewater service are the continuation of the rate trends identified in the most recent major rate study completed in 2023.

2. While not insignificant, the proposed rate increases are necessary in order to maintain the financial health of the enterprises, given the substantial long-term capital programs underway, especially for the wastewater enterprise.

3. The proposed wastewater rates also continue the phase-in of the stormwater charge, which this board has previously endorsed.

Retail Electricity

4. We note that the proposed rates for Hetch Hetchy Power are the continuation of the rate trends identified in its first-ever major rate study completed in 2022.

5. The 6% overall rate increase for Hetch Hetchy Power retail customers, and the 3-cent per kilowatt-hour increase for the GUSE rates, are in line with the Staff’s goals, established 4 years ago, for a multi-year move toward rates based on cost of service and for rate simplification. Although the proposed rates increases are not insignificant, we continue to believe that the ultimate rate goals are reasonable, fair, and necessary. The current rate proposals are another important step in this journey.

6. The staff’s proposal for no increase in CleanPowerSF rates for FY 2026/27 is welcome news, especially after a rate reduction in March 2026. This outcome is due, in part, to staff use of the enterprise’s fund balance. We find this to be an appropriate (and intended) use of fund balance, and find this proposal to be fair and reasonable.

7. We note that the Staff’s proposed generation rates for both Hetch Hetchy Power and for CleanPowerSF are based solely on
SFPUC costs, and these proposed rates reflect Staff’s efforts to remain competitive with the corresponding rates for comparable service from Pacific Gas & Electric (PG&E).

Overall, we find that the Staff’s current rate proposals for all four enterprises are a reasoned and measured approach to well-established goals: (1) adjusting rates to account for current and expected costs; (2) establishing all rates based solely on cost of service; (3) maintaining the fiscal health of each enterprise; and (4) providing electricity generations service at rates competitive with PG&E. Thus, the RFB recommends that the Commission approve the Staff’s rate proposals.

We look forward to continued interaction with the Commission on future rate proceedings for water, wastewater and power.

Sincerely,
Howard Ash
Howard Ash
Chair, Rate Fairness Board of the San Francisco Public Utilities Commission

On behalf of:

Ben Becker, Refuse Rates Analyst, Controller’s Office
Eric Dew, Residential City Retail Customer
Celeste Middleton, Principal Budget & Planning Analyst, City Administrator’s Office
Masood Samereie, Vice-Chair and City Retail Large Business Customer Vishal Trivedi, Financial Analyst, Controller’s Office of Public Finance

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.

NOTICE OF PUBLIC HEARING
TUESDAY, APRIL 28, 2026 – 1;30 P.M.

City Hall, Room 400
1 Dr. Carlton B. Goodlett Place
San Francisco, CA 94102

NOTICE OF PUBLIC HEARING Tuesday, April 28, 2026 – 1:30 PM City Hall, Room 400, 1 Dr. Carlton B. Goodlett Place, San Francisco, CA 94102, at a Regular Meeting of the San Francisco Public Utilities Commission:

Public Hearing, discussion, and possible action to adopt the proposed water, sewer, and power rates and charges for customers of the San Francisco Public Utilities Commission. The resolutions to be presented at the hearing are:

1. Proposal to Adopt Retail Water Rates for FYE 2027 (July 1, 2026 – June 30, 2027) and FYE 2028 (July 1, 2027 – June 30, 2028);

2. Proposal to Adopt Sewer Rates for FYE 2027 (July 1, 2026 – June 30, 2027) and FYE 2028 (July 1, 2027 – June 30, 2028); and

3. Proposal to Adopt Hetch Hetchy Power Rates for FYE 2027 (July 1, 2026 – June 30, 2027).

If approved, the new rates and charges would take effect July 1, 2026.

The detailed agenda and related files will be available at least 72 hours before the scheduled meeting at the SFPUC website www.sfwater.org or by calling (415) 554- 3165. For more information about the proposed rates, please visit:
https://www.sfpuc.gov/accounts-services/water-power-sewer-rates/proposed-water- sewer-rates-2026.
https://www.sfpuc.gov/accounts-services/water-power-sewer-rates/power-rates

(Posted March 27, 2026)

CleanPowerSF Sfpuc CommissionApril 28, 2026

CleanPowerSF Sfpuc Commission
April 28, 2026