proposed adoption of FY 2026-27 and FY 2027-28 water rates in light of written objections and the San Francisco — CleanPowerSF Sfpuc Commission, April 28, 2026 (part 1 of 3)

Public HearingProposed Water and Sewer Rates for Fiscal Years Ending 2027 and 2028 San Francisco Public Utilities CommissionMatthew Freiberg, Rates ManagerApril 28, 20261 2 Overview•Agenda Item 8: •Resolution: Proposal to Reject Objections to Water Rates•Resolution: Proposal to Adopt Water Rates for FYEs 2027 & 2028•Agenda Item 9: •Resolution: Proposal to Reject Objections to Sewer Rates•Resolution: Proposal to Adopt Sewer Rates for FYEs 2027 &, 2028 3 Rate Hearing AgendaRate Setting OverviewProposal for Updated Water RatesProposal for Updated Sewer RatesCustomer Bill ImpactsResources for CustomersPublic OutreachDiscussion

4 Rate Setting OverviewSan Francisco Charter requires:•An independent cost of service study for each utility at least every five years•Rate Fairness Board review of proposed ratesLast Water/Sewer Rates Study completed in 2023:•Adopted three years of rates through the current Fiscal Year•Proposing two years of rate increases effective July 1, 2026 and July 1, 2027CA Proposition 218 sets legal requirements for:•Calculation of water and sewer rates based on proportional allocation of costs to customer classes•Noticing customers of rate increases and providing opportunity for public comment•New exhaustion of remedies requirement enabled through Government Code Section 53759.1 5 Government Code Section 53759.1•In 2024, the California State Legislature passed Assembly Bill 2257, which is codified at Government Code section 53759.1 (effective January 1, 2025) •Creates an “exhaustion of remedies requirement” that local agencies may implement: (b) For purposes of any fee or assessment adopted by a local agency pursuant to Section 4 or 6 of Article XIII D of the California Constitution, if the local agency complies with the procedures described in subdivision (c), a person or entity shall be prohibited from bringing a judicial action or proceeding alleging noncompliance with Article XIII D of the California Constitution for any new, increased, or extended fee or assessment, unless that person or entity has timely submitted to the local agency a written objection to that fee or assessment that specifies the grounds for alleging noncompliance 6 Protest Procedure on Proposition 218 Notice

7 Objection Procedure on Proposition 218 Notice

8 Water Expense Projections•Average annual growth: 4.3%•Capital is the driver•Costs of regional water system split between retail and wholesale customers44%43%42%46%15%11%$812 $829 $890 $912 $955 $1,015 $1,137 $1,180 $1,235 $1,257 $- $200 $400 $600 $800 $1,000 $1,200 $1,400FYE2026FYE2027FYE2028FYE2029FYE2030FYE2031FYE2033FYE2034FYE2035FYE2036 MillionsOperations & MaintenanceDebt ServiceRevenue-Funded Capital 9 Translating Water Budget into RatesWater EnterpriseFY 2027-28Water EnterpriseFY 2026-27$ Millions$410.9$386.7Operating Expenses108.198.7Revenue-Funded Capital Expenses370.7343.9Debt Service$889.7$829.2Revenue Requirement(465.9)(434.3)(Less) Non-Rate & Wholesale Revenues(14.1)(10.7)(Less) Use of Fund Balance Reserves$409.7$384.2Net Retail Revenue Requirement$357.9$359.1Revenue Under Current Rates7.0%7.0%Revenue Increase Required Water Rate Structure:Rate Updates•Rates are updated using customer class allocations and rate structure recommended by 2023 Water & Sewer Rates Study•Flat 7.0% increase to all rate schedule line itemsFixed Charge ($/Month)•Increases with larger meter sizes•Separate rates for Fire Sprinkler vs. Standard AccountsVolumetric Charge ($/CCF)•2 Tiers for Residential•4 CCF for Single Family•3 CCF per Multi-family Dwelling Unit•Uniform for Non-Residential 11 Proposed Water Rates: Fixed ChargesFYE 2028FYE 2027CurrentStandard Accounts(by Meter Size)$21.02 $19.65 $18.36 5/8 inch$26.68 $24.93 $23.30 3/4 inch$38.02 $35.53 $33.21 1-inch$66.35 $62.01 $57.95 1-1/2 inch$100.37 $93.81 $87.67 2-inch$191.05 $178.55 $166.87 3-inch$293.07 $273.90 $255.98 4-inch$576.48 $538.77 $503.52 6-inch$916.57 $856.61 $800.57 8-inch$1,426.68 $1,333.35 $1,246.12 10-inch$2,446.94 $2,286.86 $2,137.25 12-inch$4.260.71 $3,981.97 $3,721.47 16-inch FYE 2028FYE 2027CurrentFire Service(by Service Size)$10.66 $9.96 $9.31 1-inch$11.25 $10.52 $9.83 1-1/2 inch$12.30 $11.49 $10.74 2-inch$16.04 $14.99 $14.01 3-inch$22.51 $21.04 $19.66 4-inch$45.68 $42.69 $39.90 6-inch$85.70 $80.09 $74.85 8-inch$145.86 $136.32 $127.40 10-inch$229.27 $214.27 $200.25 12-inch 12 Proposed Water Rates: Volumetric ChargesFYE 2028FYE 2027CurrentVolumetric Rate(per CCF)Single-Family Residential$13.05 $12.20 $11.40 First 4 CCF per Month$14.49 $13.55 $12.66 All Additional CCFMultiple-Family Residential$12.87 $12.03 $11.24 First 3 CCF per Dwelling Unit per Month$13.82 $12.91 $12.07 All Additional CCF$14.05 $13.13 $12.27 Non-Residential$2.28 $2.13 $1.99 Untreated Water Service 13 Wastewater Expenses More than Double•Average annual growth: 8.4%•Capital is the driver•Huge increase in capital costs translates into higher debt service costs•All costs borne by San Francisco retail ratepayers64%42%17%43%19%15%$544 $587 $654 $709 $805 $892 $962 $1,029 $1,118 $1,173 $1,225 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400FYE2026FYE2027FYE2028FYE2029FYE2030FYE2031FYE2032FYE2033FYE2034FYE2035FYE2036 MillionsOperations & MaintenanceDebt ServiceRevenue-Funded Capital 14 Translating Budget into RatesWastewater EnterpriseFY 2027-28Wastewater EnterpriseFY 2026-27$ Millions$275.5$254.1Operating Expenses95.185.5Revenue-Funded Capital Expenses283.3247.6Debt Service$653.9$587.2Revenue Requirement(25.8)(25.8)(Less) Non-Rate & Wholesale Revenues(18.5)(26.1)(Less) Use of Fund Balance Reserves$609.6$535.3Net Retail Revenue Requirement$451.2$453.5Revenue Under Current Rates14.5%15.0%Revenue Increase Required Sewer Rate Structure:Stormwater Component ($/Month)•Residential•3 tiers of flat monthly charges•Non-Residential•Charges per 1,000 sq ft permeable and impermeable areaFixed Charge ($/Month)•Flat charge per accountWastewater Component($/CCF)•Residential•Charge per CCF of sanitary sewage discharged•Non-Residential•Charge per CCF of sanitary sewage discharged•Strength charges based on flow and business typeWastewater flows are estimated using a customer class specific “flow factor” multiplied by the metered water usage. 16 Calculating Rate ChangeContinued phase-in of stormwater charge means some rates go up more or less than bottom-line percent FY 2027-28 Rate IncreaseFY 2026-27 Rate Increase14.5%15.0%Monthly Service Charge43.1%53.3%Stormwater Component of Sewer Bill10.1%10.8%Residential Wastewater7.8%8.7%Non-Residential Wastewater Volumes12.8%13.3%Non-Residential Wastewater Chemical Oxygen Demand12.9%13.4%Non-Residential Wastewater Total Suspended Solids14.0%14.5%Non-Residential Wastewater Oil & Grease14.5%15.0%Average Sewer Rate Change Proposed Sewer RatesFYE 2028FYE 2027CurrentCharge$7.58$6.62$5.76Monthly Service ChargeWastewater Volumetric Charges$22.84$20.74$18.72Residential ($/ccf)Non-Residential$12.22$11.34$10.43Flow ($/ccf)$1.270$1.126$0.994Chemical Oxygen Demand ($/lb)$2.489$2.205$1.944Total Suspended Solids ($/lb)$1.617$1.418$1.239Oil & Grease ($/lb)Monthly Stormwater ChargesSimplified Residential Charge (based on total Assessor parcel area)$18.08$12.63$8.24Tier 1 (0-1,700 sq ft)$28.13$19.66$12.82Tier 2 (1,701–3,300 sq ft)$42.29$29.55$19.27Tier 3 (3,301–6,000 sq ft)Standard Charge (Non-Residential, Large Residential, Mixed Use)$1.47$1.03$0.67Permeable ($/1,000 sq ft)$14.75$10.30$6.72Impermeable ($/1,000 sq ft)17 18 Customer Bill Impacts – Residential Static Usage Avg Combined Bill IncreaseSewer Rate IncreaseWater Rate Increase12.6%15.0%7.0%FYE 2027(July 1, 2026)12.5%14.5%7.0%FYE 2028(July 1, 2027)The accounts, the 5/8” meter size, and the Tier 2 stormwater charge. The calculation assumes 4.5CCF of water use and a wastewater flow factor of 90%. $70$75$80$94$110$128$165$186$209$0$50$100$150$200$250Current Year (FY26)Proposed (FY 27) Proposed (FY 28)Average Single Family Residential Monthly Combined Bill Water BillSewer Bill 19 Customer Bill Impacts – Small Business$98$105$113$132$153$178$230$259$291$0$50$100$150$200$250$300$350Current Year (FY26)Proposed (FY 27) Proposed (FY 28)Average Small Commercial Monthly Combined BillWater BillSewer BillAvg Combined Bill IncreaseSewer Rate IncreaseWater Rate Increase12.5%15.0%7.0%FYE 2027(July 1, 2026)12.3%14.5%7.0%FYE 2028(July 1, 2027)The calculated bill assumes a 5/8” water meter and water use of 6.5 CCF and a wastewater flow of 90%. The bill also assumes a permeable area of 4.3 square feet and an impermeable area of 2,135.8 square feet for the stormwater component of the sewer bill. 20 How we stack up to our peer agenciesAverage Single Family Residential Monthly Bill Projected FY27 and current FY26 costs based on local average water usage$225$214$205$200$192$189$178 $- $50 $100 $150 $200 $250Los Angeles(LADWP &LASAN)(Projected FY2027)****City of San Jose(Projected FY2027)City of SantaClaraCity of San Diego(Projected FY2027)***City of SantaCruz (ProjectedFY 2027)**San Francisco(Projected FY2027)*City of Oakland& EBMUD(Projected FY2027)*Water BillSewer Bill*San Francisco (SFPUC) and City of Oakland (EBMUD) projected FY rates are calculated by multiplying FY 26 rates by projected FY 27 rate increase percentages **City of Santa Cruz FY 27 rates from 2021 Water & Wastewater Cost of Service Rate Study*** City of San Diego FY 27 rates from 2025 Water & Wastewater Cost of Service Rate Study**** Los Angeles (LADWP & LASAN) FY 27 total projected bill observes FY 27 Water rates and FY 26 Sewer rates 21 Resources for Customers•Rebates and incentives•Online bill calculator•Free water wise checkups and water saving devices•Low-income Customer Assistance Program•sfpuc.gov/2026-rates

22 Public Outreach Robust, Multifaceted, Multilingual Campaign•Formal notice mailed to all account holders and property owners•Direct outreach to customers through bill messaging, inserts, MyAccount, and emails•Offered presentations to nearly 40 community & stakeholder groups•Multilingual social media campaign •Digital, TV and print advertisements in English, Spanish, Chinese and Filipino

23 Reaching Our CustomersTypes of EngagementsCount of EngagementsNumber of Prop 218 notices mailed203,554Public webinars3Languages 4Community organization presentations20People at community presentations & webinars600Individual visits to rates web pages in all languages14,000Unique views on social media content300,000Impressions from multilingual digital, TV and print advertisements 1,400,000

24 Staff Recommendation•Review the count of official protests to water and wastewater rates•Agenda Item 8: •Adopt Resolution rejecting the objections to the proposed water rates for fiscal years ending 2027 and 2028•Adopt Resolution approving the proposed water rates for fiscal years ending 2027 and 2028•Agenda Item 9: •Adopt Resolution rejecting the objections to the proposed sewer rates for fiscal years ending 2027 and 2028•Adopt Resolution approving the proposed sewer rates for fiscal years ending 2027 and 2028 Discussion Website: sfpuc.gov/2026-rates

AGENDA ITEM
Public Utilities Commission
City and County of San Francisco

DEPARTMENT: Financial Services AGENDA NUMBER: 8
MEETING DATE: April 28, 2026
Calendar: Regular Calendar
Project Manager: Matthew Freiberg
Proposal to Adopt FY 2026-27 and FY 2027-28 Water Rates Summary of Proposed
Commission Action:

Public Hearing (1) to consider whether to proceed with the proposed adoption of FY 2026- 27 and FY 2027- 28 water
rates in light of w ritten objections and the San Francisco Public Utilities Commission’s responses; and (2) to consider and adopt a new schedule of rates for retail water service in San Francisco and suburban areas, to be effective with meter readings on or after July 1, 2026. This action constitutes the Approval Action for the Project for the purposes of the California Environmental Quality Act (CEQA) pursuant to San Francisco Administrative Code 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: The San Francisco Public Utilities Commission (SFPUC) Water Enterprise provides retail water service to the City and County of San Francisco and some suburban areas and
charges rates for such service calculated in conformance with California Constitution Article XIII D (Proposition 218) and the San Francisco Charter.

This action item proposes two years of retail water rate adjustments (FY 2026- 27 and FY 2027- 28) for Commission approval as summarized in Table 1 . The recommended
action to approve the rate adjustments is informed by the findings of the 2023 Water and Wastewater Rate Study and the updated revenue requirements identified in the most recent 10- Year Financial Plan approved by the Commission (Resolution No. 26-0023).

Agenda Title: Proposal to adopt FY 2026-27 and FY 2027-28 Water Rates Commission Meeting Date: April 28, 2026

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Table 1: Retail Water Rate Two-Year Proposed Change
Fiscal Years Water Rate
Increase
FY 2026-27
Effective July 1, 2026 7%
FY 2027-28
Effective July 1, 2027 7%
The following sections provide the basis for the rate
increases and the methodology supporting the need for the proposed rate increases.

2023 SFPUC Water and Wastewater Rate Study and
Subsequent Rate Actions
As required by section 8B.125 of the San Francisco Charter, the SFPUC retains an independent rate consultant at least once every five years to evaluate the cost of service of the retail water and sewer systems and to recommend
appropriate rate structures. The rate study combines
engineering and financial expertise to analyze the cost of service, describe a rate structure that compl ies with all applicable legal and operational requirements including Proposition 218 and the San Francisco Charter, and
communicate this information to SFPUC’s water and sewer customers.

Following the completion of the 2023 Water and Wastewater Rate Study , the SFPUC adopted three years of rates
adjustments (July 1, 2023- June 30, 2026) . These rates allocated costs to customer classes and funded the
operations, maintenance, and capital investment
expenditures required to continue to meet the level of service goals of the enterprise. Details of the rates analysis can be found in the 2023 Water and Wastewater Rate Study Report (attached).

Rate Change Rationale
This rate action proposes two years of rate increases 1. The rates under this plan continue to rely on the cost allocations, rate structures, and rationale developed in the
2023 Water
and Wastewater Rate Study . The percent rate adjustments

1 Given the completion of the last Water and Sewer Rate Study in 2023 and the Charter requirement to complete a cost of service study every five years, the Water Enterprise is limited to two years of rate increases before another Rate Study is required.

Agenda Title: Proposal to adopt FY 2026-27 and FY 2027-28 Water Rates Commission Meeting Date: April 28, 2026

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proposed are informed by the operating budget, capital
budget, and 10-year financial plan adopted by the
Commission on February 10, 2026, through the following actions:
• SFPUC Biennial Operating Budget (Resolution No. 26-
0020);
• Two-Year Capital Budget of the SFPUC (Resolution
No. 26-0021);
• SFPUC 10-Year Capital Plan for FY 2026- 27 through
FY 2035-36 (Resolution No. 26-0022); and,
• SFPUC 10-Year Financial Plan for FY 2026-27 through
FY 2035-36 (Resolution No. 26-0023).

The rate- revenue adjustments proposed in this action item are developed using the SFPUC’s 10- year financial planning model, which evaluates total annual cash need compared to the rate revenues generated under existing rates. If the cash need exceeds revenues generated by existing rates and
projected water billing, staff use the financial model to determine the percent 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
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 describes details of the drivers of cash need for the Water Enterprise.

Water Enterprise Capital Improvement Plan & Annual
Capital Expenditures
The Water Enterprise 10- Year Capital Improvement Plan
contains $2.4 billion in total spending, with $2.5 billion in projects net of $98 million in de -appropriations. During the two years of proposed rates, capital expenditures include annual appropriations to support revenue- funded or pay -as- you-go capital, and principal and interest payments
outstanding loans and bonds. Water Enterprise’s capital budget for FY 2026- 27 and FY 2027- 28 are $442.6 million and $478.7 million, respectively.

Agenda Title: Proposal to adopt FY 2026-27 and FY 2027-28 Water Rates Commission Meeting Date: April 28, 2026

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Operating Expenses
For all enterprises, operations and maintenance expenses are based on the SFPUC’s proposed two- year budget for FY 2026-27 and FY 2027-28. The largest driver of cost increases for the budget are new proposals to operate new facilities, respond to new customer needs, address regulatory
requirements, and maintain service levels across the agency.

Water Enterprise’s operating expenses for FY 2026- 27 are $386.7 million and for FY 2027-28 are $410.9 million.

Non-Rate Revenues
Non-rate revenues offset a portion of expenditures and
therefore allow for lower rate increases. Operating non- rate revenue for the Water Enterprise includes interest income, rental revenue f rom SFPUC -owned properties, and
miscellaneous fee revenues. Capital non- rate revenues
include certain water revenue bonds and the Federal Build America Bonds which subsidize the interest cost of the
bonds.

Adjustments for Financial Policies
The annual c ash need may be adjusted to meet financial targets set in the SFPUC’s Commission- approved financial policies. Table 2 summarizes these cost drivers.

Table 2: Annual Cash Need for FY 2026- 27 and FY 2027-
28 ($ Millions)
$Millions FY 2026-
27 FY 2027-
28 Operating Expenses $386.7 $410.9
Debt Service 343.9 370.7
Revenue-Funded Capital 98.7 108.1
Annual Cash Need $829.2 $889.7
(Less) Non-Rate Revenue &
Wholesale revenues (434.3) (465.9)
(Less) Use of Fund Balance Reserve (10.7) (14.1)
Annual Rate Revenue
Requirement $384.2 $409.7

Historic and Projected Water Demand
For purposes of this two- year rate- setting, the number of customer accounts is projected to grow 0.2 3% annually.

Figure 1 shows the historic and projected water sales for FYE 2021 through FYE 2028. In the last five years, water volumes have fluctuated between 5 1.6 MGD and 53.8 MGD. Water
Agenda Title: Proposal to adopt FY 2026-27 and FY 2027-28 Water Rates Commission Meeting Date: April 28, 2026

Page 5 ends

volumes are forecasted to rebound from their all -time low of

51.6 MGD in FYE 2024 to 54.0 MGD in FY 2026 as usage
has recovered from the combined impacts of the COVID -19 pandemic and the most recent drought. Volumes are then
projected to decline slightly in FY 2026- 27 and FY 2027- 28, driven by the impact of price elasticity and conservation slightly offsetting assumed job and population growth.

Figure 1: Historic and Projected Retail Water Sales
(MGD)

Proposed Rate Increases
Under the existing rates, accounting for account growth and changes in customer usage, the Water Enterprise is
projected to generate $359.1 million and $357.9 million in retail rate revenues in FY 2026- 27 and FY 2027-28
respectively. This is $25.1 million and $51. 8 million less than the projected FY 2026- 27 an d FY 2027- 28 rate revenue requirements. Rate adjustments of 7% in both FY 2026-27 and FY 2027-28 are necessary for rate revenues to meet the remaining cash need.

Depending on a customer’s relative usage of the water
system, the proposed rates will have a range of impacts that may vary from the bottom -line rate change. For example, the average single family water bill is projected to increase by

5.1% in FY 2026-27 and 7.0% in FY 2027-28 (Table 3).

53.6 51.6 53.8 54.0 53.4 53.0
0 10
20 30
40 50
60 Annual Water Sales (MGD)
Actual Retail Sales (MGD)
Projected Retail Sales (MGD)
Agenda Title: Proposal to adopt FY 2026-27 and FY 2027-28 Water Rates Commission Meeting Date: April 28, 2026

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Table 3: Projected Average Single Family Residential
Water Bill
Rate
Components
Current
Rates
FYE 2026
Proposed
FYE 2027
Effective
July 1, 2026
Proposed
FYE 2028
Effective
July 1, 2027
Water Fixed
Charge $18.36 $19.65 $21.02
Water Variable
Charge $51.93 $55.58 $59.45
Average
Water Bill $70.29 $75.23 $80.47
% Increase 7.0% 7.0%
Notes: The average combined water and sewer bill includes projected changes in average water and wastewater usage from year -to-year and assumes 4.5 CCF of monthly water usage.

Average Combined Monthly Bill
Most customers receive a combined water and sewer bill
(sewer rate increases are being considered in a separate action item). Table 4 below, summarizes the estimated bill for the most common SFPUC customer, a Single- Family
Residential customer, with a 5/8” water meter, that uses approximately 4.5 CCF of water per month, with the
stormwater component of the sewer bill being assessed on the Tier 2 charge. The average customer’s combined bill is projected to increase 12.6% on average in FYE 2027 and an additional 12.5% in FYE 2028.

Table 4: Projected Average Monthly Single Family
Residential Combined Bill
Current
Rate
FYE 2026
Proposed
Rate
FYE 2027
Proposed
Rate
FYE 2028
Effective July
1, 2025
Effective July
1, 2026
Effective July
1, 2027
Water $70.29 $75.23 $80.47
Sewer $94.40 $110.28 $128.21
Average
Combined Bill $164.69 $185.51 $208.68
%
Increase 12.6% 12.5%
Notes: The average combined bill between each fiscal year includes projected changes in average water and wastewater usage from year -to-year. Bills are Agenda Title: Proposal to adopt FY 2026-27 and FY 2027-28 Water Rates Commission Meeting Date: April 28, 2026

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calculated using the average monthly water usage with a 5/8” meter size and billable sewer usage for all single-family accounts with a Tier-2 stormwater charge.

Rate Fairness Board
The proposed retail rates have been presented to and
discussed by the Rate Fairness Board during their meetings on March 19, and April 6, 2026. The Rate Fairness Board will present its report on the proposed rates at this hearing.

Public Outreach and Education
The SFPUC Communications Team has reached out to more
than 400 organizations to describe SFPUC services, why rate increases are needed, and the potential impacts
of the
proposed increases on their monthly bill s. Since February 2026, SFPUC has offered briefings to more than 30
organizations; invited more than 400 organizations and their members to attend three virtual town hall meetings; and launched a multilingual public communications campaign that includes ads in four languages to educate the public about the rates proposal s, invite them to the town hall meetings, and direct them to more detailed information on SFPUC’s dedicated rates web page. SFPUC also created a one- stop shop web page with information about how customers can
save on their bill with discount programs, grants, rebates, and incentives. In addition, SFPUC staff have engaged in multiple forms of communication to reach SFPUC ratepayers with bill inserts, emails, physical flyers, social media, and targeted advertising using print, digital, and broadcast outlets. SFPUC devoted special attention to Black, indigenous, and people-of- color communities and people for whom English is a second language. This included
direct emails to 70,000 customers
with a 65% open rate and special geo- targeted advertising with trusted media outlets including Bayview Newspaper, the Sun Reporter, Sing Tao, KTSF, El Tecolote, and Wind
Newspaper to ensure information was accessible and
culturally relevant.

Public Notice, Objection Procedures, and Rate Adoption
Process
On January 27, 2026, by Resolution No. 26-0015, this
Commission adopted the Rules and Regulations Governing
the Procedures for Submitting Written Objections to
Proposed Water or Sewer Fees or Charges (the Objection Procedures) in conformance with Government Code Section 53759.1, which allows property owners and tenants who
receive water and/or sewer bills from the SFPUC to submit a Agenda Title: Proposal to adopt FY 2026-27 and FY 2027-28 Water Rates Commission Meeting Date: April 28, 2026

Page 8 ends

Written Objection to the proposed rates.

On February 13, 2026, SFPUC mailed the attached official notices to customers and parcel owners informing them of the proposed rate changes and their right to submit a written protest against the proposed rates. In conformance with the notice requirements of Proposition 218, the notice additionally informs customers of the Objection Procedures.

Pursuant to Charter section 16.112, on April 3, 5, 8, 9 and 10 2026, SFPUC published a Notice of Public Hearing on the establishment of a schedule of rates in the official newspaper and posted on the SFPUC website and at the Main Branch of the San Francisco Public Library, for a public hearing on April 28, 2026, with possible Commission action on this date. If approved by the Commission, these rates would take effect on or after
July 1, 2026, unless rejected by the Board of
Supervisors, as provided in Charter section 8B.125.

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-
003175ENV) related to the establishment, modification,
structuring, restructuring, or approval of rates, tolls, fares, or other charges.

View CEQA exemption determination.

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

Attachments: 1. Schedule of Retail Water Rates

2. Water Enterprise FY 2026-27 and FY 2027-28 Revenue
Requirement

3. 2023 SFPUC Water and Wastewater Rate Study

4. Proposition 218 Notice to Customers

5. Notices of Public Hearing

6. Protest Letters

7. Written Objections and SFPUC Responses

8. Additional Communications

9. Memo from Rate Fairness Board to SFPUC

PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO. __________________
The San Francisco Public Utilities Commission (SFPUC) is recommending increases the sewer service rates for Fiscal Years 2026- 27 and 2027-28 in compliance with California Constitution Article XIII D (Proposition 218) and the San Francisco Charter; and

WHEREAS, On January 27, 2026, by Resolution No. 26-0015, this Commission adopted the Rules and Regulations Governing the Procedures for Submitting Written Objections to Proposed Water or Sewer Fees or Charges (the Objection Procedures) in conformance with Government Code S ection 53759.1, which allows property owners and tenants who receive water and/or sewer bills from the SFPUC to submit a W ritten Objection to the proposed rates; and

WHEREAS, Under the Objection Procedures, the SPFUC set April 2, 2026 as the deadline to submit a Written Objection; and

WHEREAS, Before February 13, 2026, and continuing through the full Written Objection period (a period of at least 45 days), the SFPUC posted onto its website and otherwise made available upon request its proposed revisions to the water rates , the 2023 Water and Wastewater Rate Study, and other information that formed the basis for the proposed revisions to the water rates; and

WHEREAS, On February 13, 2026, the SFPUC issued by United States Postal Service mail a notice of the proposed rate adjustments to all ratepayers and parcel owners as required by Proposition 218 (the Proposition 218 Notice), more than 45 days in advance of the Commission’s April 28, 2026 hearing; and

WHEREAS, The Proposition 218 Notice contained all necessary information and instructions for submitting a Written Objection including notification of the April 2, 2026, deadline for submitting Written Objections , which deadline was more than 45 days after the February 13, 2026 mailing of the Proposition 218 Notice; and

WHEREAS, The Proposition 218 Notice directed recipients to the SFPUC webpage that contained a copy of the 2023 Water and Wastewater Rate Study and additional information about the proposed adjustments to the water rates.

WHEREAS, As of the deadline to submit Written Objections, SFPUC received three Written Objections regarding the proposed water rates; and

WHEREAS, SFPUC staff have prepared responses to each Written Objection as required by the Objection Procedures, and all Written Objections and SFPUC

responses are included in the published agenda for the April 28, 2026 hearing to consider adoption of the revised water rates; and

WHEREAS, At its April 28, 2026, public hearing to adopt revised Schedules of Water Rates and Charges to be charged for retail water service in San Francisco, the Commission considered all Written Objections and SFPUC responses; and

WHEREAS, Based on all the information before the Commission, including the information contained in the 2023 Water and Wastewater Rate Study and the SFPUC responses to the Written Objections, this Commission has determined that none of the contents of the Written Objections warrant revision to the 2023 Water and Wastewater Rate Study or the proposed FY 2026-27 or FY 2027-28 water rates; now, therefore, be it,

RESOLVED, That pursuant to Rule 4.4, subdivision (a), of SFPUC’s Rules and Regulations Governing the Procedures for Submitting Written Objections to Proposed Water or Sewer Fees or Charges , this Commission has determined that nothing in the Written Objections or SFPUC’s responses to the Written Objections warrant clarifications or adjustments to the proposed schedules of water rates, and on that basis rejects all Written Objections; and, be it,

FURTHER RESOLVED, That this Commission will proceed with the hearing to consider adoption of the proposed FY 2026-27 and FY 2027-28 water rates.

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

PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO. __________________
WHEREAS, Water revenues under existing rates will be insufficient to meet revenue requirements of the Water Enterprise as projected in the San Francisco Public Utilities Commission (SFPUC) 10-Year Financial Plan for FY 2026- 27 through FY 2035- 36, and rate adjustments are therefore needed that result in revenue increases of 7% in fiscal year ending 2027 and 7% in fiscal year ending 2028; and

WHEREAS, The 2023 Water and Wastewater Rate Study reviewed all necessary and relevant information and evidence to establish a retail water rate structure to remain in effect until fiscal year ending 2028, the information and basis SFPUC used to establish the current retail water rate structure remains accurate and current, and this rate structure remains compliant with California Constitution, Article XIII D, § 6(b) (Proposition 218); and

WHEREAS, Pursuant to Charter Section 16.112, a Notice of Hearing on the proposal to adopt a new schedule of rates was published in the City and County of San Francisco official newspaper on from April 3 through April 10 2026, and posted on the SFPUC’s website and at the San Francisco Public Library, as required, for a public hearing on April 28, 2026; and

WHEREAS, During its April 28, 2026, hearing to consider adjustments to the water rates, by Resolution No. 26- ____, this Commission considered all Written Objections and SFPUC responses and, based on all the information before it, voted to recommend no changes to the 2023 Water and Wastewater Rate Study or to the proposed schedule of fiscal year 2026- 27 or fiscal year 2027- 28 water rates, and to reject all Written Objections and proceed with its water rate adoption hearing; and

WHEREAS, Pursuant to the published notice of the intention of this Commission to adopt revised Schedules of Retail Water Rates to be charged for retail water service in San Francisco and adjacent areas, the Commission held a public hearing on April 28, 2026, and members of the public were given an opportunity to comment on the revised Schedules of Water Rates; and

WHEREAS, At the April 28, 2026, public hearing, the Commission considered protests against the proposed rates, and written protests against the proposed rates were presented by less than a majority of parcel owners and direct water services customer tenants; and

WHEREAS, On April 14, 2026, the San Francisco Planning Department determined the Project to be statutorily exempt from environmental review pursuant to Public Resources Code Section 21080(b)(8) and the California Environmental Quality Act Guidelines Section 15273 (Rates, Tolls, Fares, and Charges) (Case No. 2026- 003175ENV) related to the establishment, modification, structuring, restructuring, or approval of rates, tolls, fares, or other charges; and

WHEREAS, This Commission hereby finds that adoption of this resolution will establish rates for the purpose of (1) meeting operating expenses, including power purchases, employee wage rates, and fringe benefits; (2) purchasing or leasing supplies, equipment, or materials; (3) meeting financial reserve needs and requirements, and (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, That, effective April 28, 2026, based on the rate structure and rationale of the 2023 Water and Wastewater Rate Study , this Commission hereby adopts and incorporates by reference as if set forth here in full the revised Schedule of Retail Water Rates attached to this Resolution , which Schedule shall apply to all retail customers of San Francisco’s water system as so defined in the Schedule, with the revised rates to become effective on or after July 1, 2026.

I hereby certify that the foregoing resolution was adopted by the San Francisco Public Utilities Commission at its meeting of April 28, 2026.

__________________________________
Director of Commission Affairs
San Francisco Public Utilities Commission

Attachment 1. Schedule of Retail Water Rates
RATES EFFECTIVE JULY 1, 2026
(adopted April 28, 2026, by Commission Resolution No.: XX-XXXX) Section 1 – Authority and General Purpose
This Schedule is adopted by the Commission 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 San Francisco Water Enterprise in gathering, treating and delivering water for consumptive and other uses in San Francisco and other areas receiving retail service from the Water Enterprise.

Section 2 – 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
“Commission”
The San Francisco Public Utilities Commission
“Customer”
Any person, firm, corporation, partnership, trust, or any other entity including, but not limited to, local, state and federal governments utilizing the services of the City’s utility systems.
“Customer Class”
Customers with the same or similar usage characteristics are grouped into Customer Classes for purposes of cost allocation and rate setting. “Dwelling Unit”
As defined in San Francisco Planning Code Section 102.7, a room or suite of two or more rooms that is designed for, or is occupied by, one family doing its own cooking therein and having only one kitchen. For the purposes of this resolution, “Dwelling Unit” shall not include a lodging house, rooming house, motel or hotel, as defined in San Francisco Housing Code Section 410, or a live/work unit, as defined in Section 102.13 of the San Francisco Planning Code.

“Equivalent Meter”
A measure of the capacity of a meter expressed as a ratio to the capacity of a 5/8 X 3/4 meter.
“General Manager”
The General Manager of the Public Utilities Commission or his or her designee. “Operations and Maintenance Costs”
Expenditures used for the storage, treatment, and delivery of Retail and Regional water including, but not limited to, the costs of personnel, materials and supplies, energy and administration.
“Residential Customer”
A Residential Customer is the owner or customer of record of any single- family or multiple-family Dwelling Unit.
“Water System”
The City’s water system including all properties (real, personal, and tangible or intangible) owned, operated, maintained by and under the jurisdiction of the Commission used for the gathering, impounding, treatment, transmission and distribution of water, including all future additions, extensions, replacements and improvements to the system.

Section 3 – Customer Classification
a. Class Determination
Upon application for new service, each Customer shall be assigned to a Customer Class based on the City’s evaluation of the Customer’s usage characteristics in accordance with the requirements of this resolution and applicable laws and regulations.

Such Customer Class determination shall be based on the Customer’s description of its current operation and use of the water facilities of the City. Such description shall be subject to verification by the City.
b. Change in Classification
Customers requiring or requesting a change in their classification shall do so in writing within 30 days of a change in operations.

Section 4 - Enterprise Funds
Pursuant to Article V, Section 5.01 of the Indenture between the San Francisco Public Utilities Commission and U.S. Bank, NA, as trustee, all revenues of the Water

Enterprise shall be set aside and deposited into a fund in the City treasury (the Revenue Fund). All amounts paid into the Revenue Fund shall be maintained separate and apart from other City funds. Moneys in the Revenue Fund shall be appropriated and expended in accordance with the Indenture.

Section 5 – Billing Rates for Retail Water
The following Schedules of Retail Water Rates to be paid by all retail customers of the City’s Water System are hereby adopted and imposed.

SCHEDULE W-1A: Single Family Residential Service
Applicable to single-family dwelling units inside and outside of the City and County of San Francisco served through a separate meter or bank of meters:

First: A Monthly Service Charge based on the size of the meter.

Meter Size
FYE 2026
Effective July 1,
2025
FYE 2027
Effective July 1,
2026
FYE 2028
Effective July 1,
2027
5/8 in $18.36 $19.65 $21.02
3/4 in $23.30 $24.93 $26.68
1 in $33.21 $35.53 $38.02
1-1/2 in $57.95 $62.01 $66.35
2 in $87.67 $93.81 $100.37
3 in $166.87 $178.55 $191.05
4 in $255.98 $273.90 $293.07
6 in $503.52 $538.77 $576.48
8 in $800.57 $856.61 $916.57
10 in $1,246.12 $1,333.35 $1,426.68
12 in $2,137.25 $2,286.86 $2,446.94
16 in $3,721.47 $3,981.97 $4,260.71

Second: A charge for all water delivered based on monthly meter reading.

Meter Size
FYE 2026
Effective July 1,
2025
FYE 2027
Effective July 1,
2026
FYE 2028
Effective July 1,
2027
First 4 CCF per month $11.40 $12.20 $13.05
All additional CCF $12.66 $13.55 $14.49
SCHEDULE W-1B: Multiple-Family Residential Service
Applicable to multiple-family accounts within and outside of the City and County of San Francisco consisting of two or more dwelling units served through a separate meter or bank of meters:

First: A monthly Service Charge based on the size of the meter.

Second: A charge for all water delivered based on monthly meter reading. The first three units of water per dwelling unit per month are billed the first -tier rate, while any additional units of water are billed the second-tier rate.

Meter Size
FYE 2026
Effective July 1,
2025
FYE 2027
Effective July 1,
2026
FYE 2028
Effective July 1,
2027
First 3 CCF per month $11.24 $12.03 $12.87
All additional CCF $12.07 $12.91 $13.82
SCHEDULE W-1C: Commercial, Industrial, Public and General Uses Applicable to commercial, industrial public buildings, parks, docks & ships, and other general uses within and outside of the City and County of San Francisco, excluding Wholesale customers, served through a separate meter or bank of meters .

For Street Sprinkling and Flushing when quantities are computed from records of tank wagons and billed as one amount: Schedule W-1C (no service charge to apply)

First: A Monthly Service Charge based on the size of the meter.

Second: A charge for all water delivered based on monthly meter reading.

Meter Size
FYE 2026
Effective July 1,
2025
FYE 2027
Effective July 1,
2026
FYE 2028
Effective July 1,
2027
For all units of water $12.27 $13.13 $14.05
SCHEDULE W-2: Fire Service
Applicable to private fire service within and outside of the City and County of San Francisco installed and maintained according to the rules, regulations, and specifications of the San Francisco Water Enterprise.

First: A Monthly Service Charge based on the size of the service.

Meter Size
FYE 2026
Effective July 1,
2025
FYE 2027
Effective July 1,
2026
FYE 2028
Effective July 1,
2027
1 in $9.31 $9.96 $10.66
1-1/2 in $9.83 $10.52 $11.25
2 in $10.74 $11.49 $12.30
3 in $14.01 $14.99 $16.04
4 in $19.66 $21.04 $22.51
6 in $39.90 $42.69 $45.68
8 in $74.85 $80.09 $85.70
10 in $127.40 $136.32 $145.86
12 in $200.25 $214.27 $229.27

Second: If water is used for any purpose other than extinguishing accidental fires, the W-1C rates for water delivery shall apply.

SCHEDULE W-4: Docks and Shipping Supply within the City and County of San Francisco.

Applicable to special shipping service, including hose truck and other special services, from open docks through common hydrants where delivery is not through a service and meter for which the customer is responsible:

First: A Docks and Shipping Connection Charge: Schedule W-41B.

Second: A charge for all water delivered based on monthly meter reading: Schedule W- 1C.

SCHEDULE W-5: Hydrant Use for Temporary Water Supply.

Applicable to temporary metered service connections through fire hydrants within the City and County of San Francisco:

First: A Builders and Contractors Connection Fee: Schedule W-41B

Second: A Meter Rental Deposit: Schedule W-41B.

Third: A Monthly Service Charge based on the size of the meter .

Fourth: A charge for all water delivered based on monthly meter reading: Schedule W- 1C

Fifth: Any customer who fails to report water consumption as required shall be

assessed a non- reporting penalty equivalent to the cost of 25 units of water per month at the current Schedule W-1C volumetric rate.

SCHEDULE W-24: Untreated Water Service

Applicable inside and outside the City and County of San Francisco for untreated water service when the customer furnishes all facilities necessary to convey the untreated water from the San Francisco Water Enterprise's water supply reservoirs to the customer’s point of use.

First: A Monthly Service Charge based on the size of the meter.

Second: A charge for all water delivered based on monthly meter reading.

Meter Size FYE 2026
Effective July 1, 2025
FYE 2027
Effective July 1, 2026
FYE 2028
Effective July 1, 2027
For all units of water $1.99 $2.13 $2.28

Section 6 - Drought Surcharge
If the Commission, at a publicly noticed meeting, adopts a resolution declaring a stage of water delivery reduction in accordance with the Retail Water Shortage Allocation Plan (i.e., Stage 1, Stage 2 or Stage 3), the following schedule of drought surcharges shall be applied to the volumetric portion of retail water rates as of the date of the Commission resolution or any effective date designated by the Commission. For residential customers, the surcharges shall assume that the overall demand reduction is split evenly between Tier 1 and Tier 2. Each nonresidential customer shall incur the percent drought surcharge uniformly. The overall required surcharge is based on the final formula: surcharge ($ per ccf) = Water Revenue Shortfall from reduced flow/ Reduced Water Flow.

Water Shortage
Contingency Plan Stage
Target Water Usage
Reduction
Drought Surcharge on
Volumetric Water &
Wastewater Rates
Stages 1 – 3 5% Up to 5%
Stage 4 5-18% Up to 18%
Stage 5 – 6 18-32% Up to 32%

Section 7 – Effective Date
The rates for FYE 2027 set forth herein shall be effective for water meter readings made on or after July 1, 2026, or as soon thereafter as possible. The rates for FYE 2028 shall be effective for water meter readings made on or after July 1, 2027 , and shall remain in effect until repealed, modified or superseded.

Attachment 2. Water Enterprise FY 2026-27 and FY 2027-28 Revenue Requirement

FYE 2027 FYE 2028
Beginning Fund Balance ($M) $ 177.5 $ 166.8

Sources ($M)
Retail Water Sales 384.2 409.7
Wholesale Water Sales 384.9 416.2
Other Miscellaneous Income 49.4 49.6 Total Sources $ 818.5 $ 875.6

Uses ($M)
Operations & Maintenance 327.4 347.7 Hetchy Water Operating Transfer 59.3 63.2 Debt Service 343.9 370.7
Revenue-Funded Projects 98.7 108.1 Total Uses $ 829.2 $ 889.7

Net Revenues ($M) $ (10.7) $ (14.1)

Ending Fund Balance ($M) $ 166.8 $ 152.7

Rate Increase - Retail 7.0% 7.0%
Water Sales - Retail (MGD) 53.42 53.04

SAN FRANCISCO

PUBLIC UTILITIES COMMISSION
2023 Water and Wastewater Rate Study
FINAL REPORT / MAY 15, 2023

445 S. Figueroa Street , Suite 1925, Los Angeles , CA 90071

www.raftelis.com
May 15, 2023

Ms. Erin Corvinova
Financial Planning Director, Financial Services
San Francisco Public Utilities Commission

Subject: 2023 Water and Wastewater Rate Study

Dear Ms. Corvinova:

Raftelis Financial Consultants, Inc. (Raftelis) is pleased to provide this Water and Wastewater Rate Study Report to the SFPUC. This report explains the methodologies and rationale used to develop a rate revenue requirement and rates for water and wastewater service for SFPUC retail customers.

The major study objectives include the following:
• Develop a financial plan
• Conduct a cost of service analysis for water and wastewater services • Develop fair, and equitable, water and wastewater rates over a three-year period • Conduct a customer impact analysis for the proposed water and wastewater rates

It has been a pleasure working with you and we appreciate the support you, Matthew Freiberg, and other SFPUC staff have provided during this study.

Sincerely,

Steve Gagnon, PE (AZ) John Wright, CPA (CO)
Vice President Senior Manager

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study

Contents

1. Executive Summary ..................................................................... 1

1.1. Background ...................................................................................................................1

1.2. Process and Approach ................................................................................................. 1

1.3. Retail Water Rate Study Summary ..............................................................................2

1.4. Retail Wastewater Rate Study Summary................................................................... 10

2. Introduction ................................................................................ 18

2.1. Water Enterprise Overview ......................................................................................... 18

2.2. Wastewater Enterprise Overview ............................................................................... 19

2.3. Water and Wastewater Rate Study Overview ........................................................... 20

2.4. Financial Policies ........................................................................................................ 20

3. Water Financial Plan .................................................................. 22

3.1. Overview of the Financial Planning Process ............................................................ 22

3.2. Financial Plan Components ....................................................................................... 23

4. Water Cost of Service Analysis .................................................. 37

4.1. Water Cost of Service Methodology .......................................................................... 37

4.2. Water Revenue Requirement Determination ............................................................ 37

4.3. Water Revenue Requirement Functionalization ....................................................... 38

4.4. Water Revenue Requirement Allocation to Cost Causation Components ............. 42

4.5. Water Unit Cost Development .................................................................................... 52

4.6. Water Customer Class Revenue Requirements ....................................................... 54

5. Water Rate Design ..................................................................... 55

5.1. Water Rate Design Overview ...................................................................................... 55

5.2. Water Rate Calculations ............................................................................................. 56

5.3. Water Customer Bill Impacts ..................................................................................... 62

6. Wastewater Financial Plan ........................................................ 64

6.1. Overview of the Financial Planning Process ............................................................ 64

6.2. Financial Plan Components ....................................................................................... 65

7. Sewer Cost of Service Analysis ................................................. 82

7.1. Sewer Cost of Service Methodology ......................................................................... 82

7.2. Sewer Revenue Requirement Determination ............................................................ 83 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study

7.3. Sewer System Cost Functionalization....................................................................... 83

7.4. Sewer Cost Component Allocations ......................................................................... 89

7.5. Sewer Unit COS Development ................................................................................. 101

7.6. Sewer Customer Class Revenue Requirements ..................................................... 103

8. Sewer Rate Design ................................................................... 108

8.1. Sewer (Wastewater and Stormwater) Rate Design Overview ................................ 108

8.2. Wastewater Rate Calculations ................................................................................. 108

8.3. Stormwater Charge Overview .................................................................................. 110

8.4. COS Sewer Bill Impacts ............................................................................................ 114

9. Proposed Sewer Rates ............................................................. 117

9.1. Introduction ............................................................................................................... 117

9.2. Phase-In Revenue Requirement Projection ............................................................ 117

9.3. Proposed Sewer Rates ............................................................................................. 117

9.4. Proposed Sewer Bill Impacts ................................................................................... 118

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study

Tables
Table 1-1: Proposed Water Enterprise Revenue Adjustments.................................................................. 4 Table 1-2: Comparison of Proposed vs. Current Water Cost of Service (FY 2024) .................................. 6 Table 1-3: Proposed and Projected Retail Water Rate Schedule (FY 2024 – FY 2028) ........................... 7 Table 1-4: Current Wastewater Enterprise Rates ................................................................................... 10 Table 1-5: Sewer Service Attributable to Runoff Charges for Customers without SFPUC Accounts ....... 10 Table 1-6: Proposed Wastewater Enterprise Revenue Adjustments ...................................................... 12 Table 1-7: Summary of FY 2024 Cost of Service for Wastewater and Stormwater ................................. 14 Table 1-8: Comparison of Proportional Share of Proposed and Current Cost of Service (FY 2024) ....... 14 Table 1-9: Proposed and Projected Retail Wastewater Rate Schedule .................................................. 15 Table 1-10: Proposed and Projected Retail Stormwater Monthly Charges ............................................. 15 Table 3-1: Existing Retail Water Rates ................................................................................................... 24 Table 3-2: Projected Metered Water Connections .................................................................................. 25 Table 3-3: Projected Private Fire Service Connections .......................................................................... 25 Table 3-4: Projected Water Use ............................................................................................................. 26 Table 3-5: Projected Water Enterprise Rate Revenue at Existing Rates ................................................ 27 Table 3-6: Assumptions for Water Enterprise Other Revenues .............................................................. 28 Table 3-7: Projected Water Enterprise Other Revenue .......................................................................... 28 Table 3-8: Inflationary Assumptions for Water Enterprise O&M Expenses ............................................. 29 Table 3-9: Projected Water Enterprise O&M Expenses .......................................................................... 29 Table 3-10: Water Enterprise Debt Service ............................................................................................ 30 Table 3-11: Water Enterprise Funding for Pay-as-you-go Capital Expenditures ..................................... 30 Table 3-12: Status Quo Water Enterprise Financial Plan ....................................................................... 32 Table 3-13: Proposed Water Enterprise Revenue Adjustments .............................................................. 34 Table 3-14: Proposed Water Enterprise Financial Plan .......................................................................... 35 Table 4-1: Annualized Retail Water Rate Revenue Requirements for FY 2024 ...................................... 38 Table 4-2: Water Enterprise Functional Allocations Bases ..................................................................... 40 Table 4-3: Allocation of FY 2024 Retail Water Rate Revenue Requirement to Functions ....................... 41 Table 4-4: Water System Peaking Factors ............................................................................................. 42 Table 4-5: Preliminary Allocation of FY 2024 Retail Water Rate Revenue Requirement to Cost Components .......................................................................................................................................... 44 Table 4-6: Number of Water Meters and Equivalent Meter Units (In-City and Suburban Retail Only) ..... 46 Table 4-7: Number of Fire Protection Connections and Equivalent Fire Demand Units .......................... 47 Table 4-8: FY 2024 Water Use and Max Day Extra Capacity Requirements .......................................... 48 Table 4-9: Fire Protection Extra Capacity Requirements ........................................................................ 49 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study

Table 4-10: Max Day Extra Capacity Cost Allocation ............................................................................. 49 Table 4-11: Final Adjusted Allocation of FY 2024 Retail Water Rate Revenue Requirement to Cost Components .......................................................................................................................................... 51 Table 4-12: FY 2024 Unit Costs ............................................................................................................. 53 Table 4-13: Comparison of Proposed vs. Current Cost of Service (FY 2024) ......................................... 54 Table 5-1: Revenue Recovery by Charge Type ..................................................................................... 55 Table 5-2: Proposed FY 2024 Fixed Monthly Service Charge Calculation ............................................. 56 Table 5-3: Private Fire Service Unit Cost Differentiation......................................................................... 57 Table 5-4: Proposed FY 2024 Private Fire Fixed Monthly Service Charge Calculation .......................... 57 Table 5-5: Extra Capacity Unit Rate Calculation..................................................................................... 58 Table 5-6: Proposed FY 2024 Variable Charge Calculation ................................................................... 59 Table 5-7: Proposed and Projected Retail Water Rate Schedule (FY 2024 – FY 2028) ......................... 61 Table 6-1: Current Wastewater Enterprise Rates ................................................................................... 66 Table 6-2: Runoff Rates for Customers without SFPUC Accounts ......................................................... 66 Table 6-3: Wastewater Enterprise Strength Loading Groups ................................................................. 67 Table 6-4: Projected Wastewater Enterprise Customer Accounts .......................................................... 68 Table 6-5: Projected Wastewater Enterprise Discharge Volumes (CCF) ................................................ 69 Table 6-6: Projected Wastewater Enterprise COD Loadings (Pounds) ................................................... 70 Table 6-7: Projected Wastewater Enterprise TSS Loadings (Pounds) .................................................... 71 Table 6-8: Projected Wastewater Enterprise Oil and Grease Loadings (Pounds) ................................... 71 Table 6-9: Projected Wastewater Enterprise Revenue at Existing Rates ............................................... 72 Table 6-10: Projected Wastewater Enterprise Miscellaneous Revenues ................................................ 73 Table 6-11: Projected Wastewater Enterprise CIP Expenditures by Funding Source ............................. 73 Table 6-12: Wastewater Enterprise Debt Service ................................................................................... 74 Table 6-13: Inflationary Assumptions for Wastewater Enterprise O&M Expenses .................................. 75 Table 6-14: Projected Wastewater Enterprise O&M Expenses ............................................................... 75 Table 6-15: Status Quo Wastewater Enterprise Financial Plan .............................................................. 77 Table 6-16: Proposed Wastewater Enterprise Revenue Adjustments .................................................... 79 Table 6-17: Proposed Wastewater Enterprise Financial Plan ................................................................. 80 Table 7-1: FY 2024 Wastewater Enterprise Revenue Requirement ....................................................... 83 Table 7-2: Summary of FY 2024 Functional Allocation Percentages ...................................................... 85 Table 7-3: FY 2024 Revenue Requirement Allocation Basis .................................................................. 86 Table 7-4: Consolidated FY 2024 Revenue Requirement Functionalization ........................................... 88 Table 7-5: Estimation of FY 2024 Wet Weather Flows ........................................................................... 90 Table 7-6: Allocation of FY 2024 O&M to Cost Causation Components ................................................. 96 Table 7-7: Summary of FY 2024 Capital Costs to Cost Causation Components .................................... 97 Table 7-8: Allocation of FY 2024 Non-Rate Revenue Offsets to Cost Causation Components ............... 98 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study

Table 7-9: Consolidated FY 2024 Rate Revenue Requirement Allocation to Cost Causation Components ............................................................................................................................................................ 100 Table 7-10: Summary FY 2024 Units of Service .................................................................................. 101 Table 7-11: Allocation of Dry Weather Infiltration to Customer Classes ................................................ 103 Table 7-12: Summary FY 2024 COS by Cost Causation Component................................................... 104 Table 7-13: Detail of FY 2024 Wastewater Customer Class Revenue Requirements ........................... 105 Table 7-14: FY 2024 Wastewater Portion of Revenue Requirement vs. Revenues at Existing Rates .. 106 Table 7-15: FY 2024 Stormwater Revenue Requirement ..................................................................... 106 Table 7-16: FY 2024 Revenue Requirement Summary ........................................................................ 107 Table 8-1: Proposed FY 2024 Monthly Service Charge........................................................................ 108 Table 8-2: Proposed FY 2024 Residential Commodity Rates ............................................................... 109 Table 8-3: Proposed FY 2024 Non-Residential Commodity Rates ....................................................... 110 Table 8-4: Summary of Cost of Service Wastewater Rates FY 2024 – FY 2028 .................................. 110 Table 8-5: New Stormwater Charge Structure ...................................................................................... 111 Table 8-6: FY 2024 Stormwater Unit COS Calculation ......................................................................... 112 Table 8-7: FY 2024 Stormwater Revenue Requirement by Customer Type ......................................... 112 Table 8-8: $/Thousand Square Foot/Month Unit Costs ........................................................................ 112 Table 8-9: Development of FY 2024 Stormwater Charges by Residential Tier ..................................... 113 Table 8-10: Cost of Service FY 2024 Stormwater Charge .................................................................... 113 Table 8-11: Summary of Cost of Service Stormwater Charges FY 2024 – FY 2028 ............................. 114 Table 9-1: Revenue Requirements for Proposed Sewer Rates ............................................................ 117 Table 9-2: Proposed Sewer Rates ....................................................................................................... 118

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study

Figures
Figure 1-1: Projected Reserve Balances under Status Quo Water Enterprise Financial Plan ................... 3 Figure 1-2: Projected Debt Coverage under Status Quo Water Enterprise Financial Plan ........................ 4 Figure 1-3: Projected Reserve Balances under Proposed Water Enterprise Financial Plan ..................... 5 Figure 1-4: Projected Debt Coverage under Proposed Water Enterprise Financial Plan .......................... 5 Figure 1-5: Sample Single Family Residential Water Monthly Bill Impacts (FY 2024) .............................. 8 Figure 1-6: Sample Multiple-Family Residential Water Monthly Bill Impacts (FY 2024) ............................ 9 Figure 1-7: Sample Non-Residential Water Monthly Bill Impacts (FY 2024) ............................................. 9 Figure 1-8: Projected Reserve Balances under Status Quo Wastewater Enterprise Financial Plan ....... 11 Figure 1-9: Projected Debt Coverage under Status Quo Wastewater Enterprise Financial Plan ............ 12 Figure 1-10: Projected Reserve Balances under Proposed Wastewater Enterprise Financial Plan ........ 13 Figure 1-11: Projected Debt Coverage under Proposed Wastewater Enterprise Financial Plan ............. 13 Figure 1-12: FY 2024 Single Family Residential Bill Impacts by Usage Percentile ................................. 16 Figure 1-13: FY 2024 Multifamily Residential Bill Impacts by Usage Percentile ..................................... 16 Figure 1-14: FY 2024 Non-Residential Bill Impacts by Usage Percentile ............................................... 17 Figure 2-1: Water System Overview....................................................................................................... 18 Figure 2-2: Wastewater System Overview ............................................................................................. 19 Figure 3-1: Projected Reserve Balances under Status Quo Water Enterprise Financial Plan ................. 33 Figure 3-2: Projected Debt Coverage under Status Quo Water Enterprise Financial Plan ...................... 33 Figure 3-3: Projected Reserve Balances under Proposed Water Enterprise Financial Plan ................... 36 Figure 3-4: Projected Debt Coverage under Proposed Water Enterprise Financial Plan ........................ 36 Figure 5-1: Sample Single Family Residential Water Monthly Bill Impacts (FY 2024) ............................ 62 Figure 5-2: Sample Multiple-Family Residential Water Monthly Bill Impacts (FY 2024) .......................... 63 Figure 5-3: Sample Non-Residential Water Monthly Bill Impacts (FY 2024) ........................................... 63 Figure 6-1: Projected Reserve Balances Under Status Quo Wastewater Enterprise Financial Plan ....... 78 Figure 6-2: Projected Debt Coverage Under Status Quo Wastewater Enterprise Financial Plan ............ 78 Figure 6-3: Projected Reserve Balances under Proposed Wastewater Enterprise Financial Plan .......... 81 Figure 6-4: Projected Wastewater Enterprise Debt Service Coverage ................................................... 81 Figure 8-1: FY 2024 Single Family Residential Bill Impacts by Usage Percentile ................................. 115 Figure 8-2: FY 2024 Multifamily Residential Bill Impacts by Usage Percentile ..................................... 115 Figure 8-3: FY 2024 Non-Residential Residential Bill Impacts by Usage Percentile ............................. 116 Figure 9-1: FY 2024 Single Family Residential Bill Impacts by Usage Percentile ................................. 119 Figure 9-2: FY 2024 Multifamily Residential Bill Impacts by Usage Percentile ..................................... 119 Figure 9-3: FY 2024 Non-Residential Residential Bill Impacts by Usage Percentile ............................. 120 Figure 9-4: Proposed and Planned Single Family Residential Bill Impacts ........................................... 120 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study

Figure 9-5: Proposed and Planned Multifamily Residential Bill Impacts ............................................... 121 Figure 9-6: Proposed and Planned Non-Residential Customer Bill Impacts ......................................... 121

Appendices
Appendix A: Ten-Year Water Enterprise Financial Plan
Appendix B: Water Cost of Service: O&M Functional Allocations Appendix C: Water Cost of Service: Debt Functional Allocations Appendix D: Water Cost of Service: CIP Functional Allocations Appendix E: Water Cost of Service: Wholesale Revenue Functional Allocations Appendix F: Water Cost of Service: Federal Bond Interest Subsidy Functional Allocations Appendix G: Sewer Cost of Service: SIC Code to SIC Group Appendix H: Ten-Year Wastewater Enterprise Financial Plan Appendix I: Sewer Cost of Service: O&M Functional Allocations Appendix J: Sewer Cost of Service: Detailed Units of Service

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study

Glossary
Terms Descriptions
AF Acre foot / Acre feet, 1 AF = 435.6 hundred cubic feet AWSS Alternative Water Supply System
AWWA American Water Works Association
CAP Customer Assistance Program
CCF Hundred cubic feet or 100 cubic feet, 1 CCF = 748 gallons CIP Capital Improvement Program
COD Chemical Oxygen Demand
COS Cost of Service
FY Fiscal Year (July 1 – June 30)
GPM Gallons per Minute
M1 Manual Principles of Water Rates, Fees, and Charges: Manual of Water Supply Practices M1, Seventh Edition (published by the AWWA)
Max Day Maximum daily water demand over a one-year period Max Month Maximum monthly water demand over a one-year period Monthly Service Charge A fixed monthly charge assessed on both the water and wastewater bills.

MME McGovern McDonald Engineers
O&M Operations and Maintenance
OG Oil and Grease
Raftelis Raftelis Financial Consultants, Inc.

SFPUC San Francisco Public Utilities Commission
SIC Standard Industrial Classification
SRF Clean Water or Drinking Water State Revolving Fund Loan SRT Simplified Residential Tier
SSIP Sewer System Improvement Program
Stormwater Charges A fixed monthly charge assessed on parcels based on the approximated stormwater runoff generated from each property.

TSS Total Suspended Solids
Water Enterprise The Water Enterprise provides water service to retail customers in the City and County of San Francisco and wholesale water service to additional customers in the greater San Francisco Bay Area.

Water Usage Charge Variable portion of the water bill assessed for all metered waters.

Wastewater Charges Variable portion of the sewer bill assessed for all billed wastewater flows. This includes the volumetric and strength charges.

Wastewater Enterprise The Wastewater Enterprise collects and treats wastewater flows from homes and businesses as well as stormwater flows from land surfaces during rain events in the City’s combined and separate sewer systems.

WIFIA Water Infrastructure Finance and Innovation Act
WSIP Water System Improvement Program

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San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 1

1. Executive Summary

1.1. Background
Section 8B.125 of the San Francisco Charter states that the SFPUC shall “retain an independent rate consultant to conduct rate and cost of service studies for each utility at least every five years.” The SFPUC last conducted a water and wastewater cost of service study in 2018, which established the basis for the SFPUC’s existing water and wastewater retail rates currently in effect in FY 2023.

The SFPUC engaged McGovern McDonald Engineers (MME) and Raftelis (sub-consultant to MME) in 2022 to conduct this water and wastewater cost of service study to establish a proposed three-year water and wastewater retail rate schedule for FY 2024-FY 2026. Water and wastewater rates for wholesale customers are not within the scope of this study. The major study objectives are to:

• Develop multi-year financial plans for the SFPUC’s Water Enterprise and Wastewater Enterprise that sufficiently fund operations and maintenance (O&M) expenses, debt service payments, and capital expenditures while adequately funding reserves and achieving debt coverage requirements. • Conduct cost of service analyses that establish a clear nexus between the cost to serve retail water and wastewater customers and the rates charged to customers, per Proposition 218 and industry standards. • Review the SFPUC’s existing retail water and wastewater rate structures to ensure that proposed rates achieve the financial and policy objectives of the agency. • Develop and introduce a stormwater charge to recover costs associated with wet weather flows and treatment.
• Develop a three-year water and sewer rate schedule for retail customers that are fair, equitable, and compliant with Proposition 218 requirements.

1.2. Process and Approach
The study is informed by the SFPUC's policy objectives, current retail water and wastewater rates, as well as the legal requirements in California (namely, Proposition 218). The resulting cost of service analyses and rate design process considers all these factors and follows four key steps, outlined below, to derive proposed rates that fulfill the SFPUC's policy objectives, meet industry standards, and align with Proposition 218.

Step 1: Revenue Requirement Calculation
The rate-making process begins by determining the revenue requirement for the base year, also known as the test year or rate-setting year. The base year for this study is FY 2024 (July 1, 2023 to June 30, 2024). The revenue requirement should sufficiently fund the utility's O&M costs, annual debt service, capital project expenses, and reserve funding as projected in the SFPUC's budget and 10-Year Financial Plans.

Step 2: Cost of Service Analysis
The annual cost of providing the utility service, or the revenue requirement, is then distributed among customer classes commensurate with their cost burden on the system. A cost of service analysis involves the following steps:
• Functionalize costs – Expenses are categorized into system functions such as supply, treatment, and pumping for water and primary treatment, secondary treatment, and solids handling for wastewater.

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• Allocate costs to cost components – The functionalized costs are then allocated to system cost components such as water supply, base delivery, and extra capacity for water and flow, chemical oxygen demand, and total suspended solids for wastewater. • Develop unit costs – Unit costs for each cost component are determined using appropriate units of service such as the number of customer accounts, equivalent meter units, water use, and wastewater flows.
• Distribute cost components – The cost components are allocated to each customer class by applying unit costs to each customer class in proportion to each class’s units of service.

Step 3: Rate Design and Calculation
After allocating the revenue requirement for each system to its corresponding customer classes, the rate design and calculation begins. Rates do more than simply recover costs; within the legal framework and industry standards, properly designed rates should support the SFPUC's policy objectives while adhering to cost of service principles. In addition to being a financial instrument, rates help communicate policy objectives to customers. The rate design process also includes a customer bill impact analysis.

Step 4: Report Preparation and Rate Adoption
The final step in a cost of service and rate study is to develop a formal report in preparation for the rate adoption process. The report documents the rate study results and presents the methodologies, rationale, justifications, and calculations used to derive the proposed rates. A thorough and methodical report serves two important functions: it derives the rates and shows the nexus to costs and communicates the rate adoption process to customers and other important stakeholders.

1.3. Retail Water Rate Study Summary

Existing Retail Water Rates
The SFPUC’s current water rates for retail customers in FY 2023 have been in effect since July 1, 2021. Retail water customers are billed monthly and currently are subject to the following rates and charges:
» A Fixed Monthly Service Charge that varies based on meter size » A Private Fire Service Fixed Monthly Service Charge that varies based on service size (these charges apply only to customers with a dedicated private fire service connection such as a fire sprinkler system, standpipe, or other private fire service) » Variable Charges per 100 cubic feet (CCF) of water delivered that vary based on customer class » Drought Surcharges: Drought Surcharges are effective only when the Commission adopts a resolution declaring Stage 1, Stage 2, or Stage 3 of the Retail Water Shortage Allocation Plan to be in effect. Drought Surcharges are assessed as a percentage of Variable Charges and were set to 5% of Variable Charges in FY 2022 and FY 2023, but were formally rescinded effective May 2023.1

1 At the time the financial plan analysis was conducted, it was anticipated that Drought Surcharges would remain in effect through FY 2024. Since the analysis was completed, however, the Commission formally rescinded Drought Surcharges effective May 1, 2023 due to significant recent improvement in drought conditions. SFPUC staff conducted a sensitivity analysis indicating that the Water Enterprise will continue to be able to meet its goals and financial obligations, even with the removal of Drought Surcharges in FY 2024.

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Proposed Water Enterprise Financial Plan
Water Enterprise Financial Plan Overview
MME and Raftelis prepared a water utility financial plan model in Microsoft Excel to project the SFPUC Water Enterprise’s revenues, expenses, cash flows, reserve balances, and debt coverage over a multi-year period. Although proposed retail water rates developed in this study are for the next three fiscal years only (FY 2024 to FY 2026), the financial plan extends out ten fiscal years through FY 2033 to ensure that a longer- term planning horizon is accounted for in the rate-setting process. Note that the water financial plan projections developed for this study correspond to, and are aligned with, the SFPUC staff’s own 10-Year Financial Plan, which is updated on an annual basis as part of staff’s on-going financial management processes.

Status Quo Water Enterprise Financial Plan
A status quo cash flow analysis was first conducted to evaluate whether existing retail water rates can adequately fund the Water Enterprise’s various expenses over the next ten years. This provided a baseline scenario from which to evaluate the need for any proposed rate increases. Under the status quo scenario (i.e., no rate increases), the Water Enterprise is projected to fully deplete its cash reserves in FY 2028 (Figure 1-1) and fail to meet its debt coverage target beginning in FY 2026 (Figure 1-2). This demonstrates the insufficiency of existing rates to support the Water Enterprise’s financial needs over the next ten years.

Figure 1-1: Projected Reserve Balances under Status Quo Water Enterprise Financial Plan

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Figure 1-2: Projected Debt Coverage under Status Quo Water Enterprise Financial Plan

Proposed Water Enterprise Financial Plan
SFPUC staff evaluated various revenue adjustment scenarios before arriving at the proposed and planned revenue adjustments (i.e., overall annual rate increases) shown below in Table 1-1. Note that although this report includes ten-year financial projections, SFPUC staff is only recommending that the Commission consider adoption of three years of proposed rates (i.e., FY 2024-FY 2026). All revenue adjustments beyond FY 2026 are for planning purposes only. All revenue adjustments are assumed to become effective at the beginning of each fiscal year in July.

Table 1-1: Proposed Water Enterprise Revenue Adjustments

With the addition of revenue adjustments, the Water Enterprise’s reserve balance (see Figure 1-3) is projected to meet the minimum required level in all years and debt coverage (see Figure 1-4) is projected to meet the target level in all years. Reserves are projected to be drawn down gradually to fund near-term capital needs.

The proposed financial plan demonstrates a multi-year plan that generates sufficient revenue to support the Water Enterprise’s financial needs and meet the SFPUC’s official financial policies.

Line Fiscal Year
Revenue
Adjustment
Effective
Date Notes
1 FY 2024 5.0% 7/ 1/2023 Proposed
2 FY 2025 5.0% 7/1/2024 Proposed
3 FY 2026 5.0% 7/1/2025 Proposed
4 FY 2027 4.0% 7/1/2026 For Near-Term Planning Purposes Only 5 FY 2028 4.0% 7/1/2027 For Near-Term Planning Purposes Only 6 FY 2029 4.0% 7/1/2028 For Long-Term Planning Purposes Only 7 FY 2030 3.0% 7/1/2029 For Long-Term Planning Purposes Only 8 FY 2031 3.0% 7/1/2030 For Long-Term Planning Purposes Only 9 FY 2032 3.0% 7/1/2031 For Long-Term Planning Purposes Only 10 FY 2033 3.0% 7/1/2032 For Long-Term Planning Purposes Only San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 5

Figure 1-3: Projected Reserve Balances under Proposed Water Enterprise Financial Plan

Figure 1-4: Projected Debt Coverage under Proposed Water Enterprise Financial Plan

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 6

Water Cost of Service Analysis
Raftelis performed a water cost of service analysis for FY 2024 in accordance with industry-standard principles outlined by the American Water Works Association in its Principles of Water Rates, Fees, and Charges:

Manual of Water Supply Practices M1, Seventh Edition. The cost of service analysis evaluates each customer class’s cost burden on the water system, and then proportionally allocates the overall retail rate revenue requirement to each customer class. A comparison of the proposed cost of service to the current cost of service2 is shown in Table 1-2.3 Most customer classes experience a relatively minor distributional impact from the proposed cost of service allocations due to changes in Water Enterprise cost structure, customer water use patterns, and methodological refinements made since the prior water cost of service study in 2018.

Table 1-2: Comparison of Proposed vs. Current Water Cost of Service (FY 2024)

Proposed Retail Water Rates
All proposed rates shown are consistent with the SFPUC’s existing retail water rate structure. No changes to the existing system of Drought Surcharges are proposed as part of this study. Current and proposed/projected water rates are shown in Table 1-3. Note that SFPUC staff is only recommending that the Commission consider adoption of the three years of proposed rates through FY 2026. All rates shown beyond FY 2026 are projections for planning purposes only. Proposed FY 2024 rates were established based on the results of the water cost of service analysis. Proposed and projected rates in FY 2025 to FY 2028 were established by increasing all proposed FY 2024 rates by the proposed and projected revenue adjustments (shown previously in Table 1-1). All rates are proposed to become effective on July 1 of each fiscal year.

2 The current cost of service in Column B of Table 1-2 represents the amount of revenue each customer class is projected to generate in FY 2024 based on existing water rates.
3 Retail water rate revenue from customers with rates based on contracts with the SFPUC, as well as all d rought surcharge revenue, is excluded from Table 1-2, as these revenues are outside the scope of the water cost of service analysis.

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Table 1-3: Proposed and Projected Retail Water Rate Schedule (FY 2024 – FY 2028)

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Retail Water Bill Impacts
Sample monthly water bill impacts are shown for single family residential customers in Figure 1-5, multiple- family residential customers in Figure 1-6, and non-residential customers in Figure 1-7.4 The bill impacts compare current FY 2023 monthly water bills with proposed FY 2024 monthly water bills at varying levels of monthly water use.5 All bills exclude Drought Surcharges to provide a direct comparison of current versus proposed rates, even though Drought Surcharges equal to 5% of Variable Charges were effective in FY 2023 through April 2023 before being formally rescinded effective May 2023.

Figure 1-5: Sample Single Family Residential Water Monthly Bill Impacts (FY 2024)

4 Assumed meter sizes are 5/8-inch for single family residential and non-residential customers. Multiple-family residential bills assume a 1-inch meter and ten dwelling units. 5 The varying levels of water use correspond to the 10th percentile, 25th percentile, median, 75th percentile, and 90th percentile of monthly water use for each customer class based on an analysis of FY 2022 account-level billing data.

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Figure 1-6: Sample Multiple-Family Residential Water Monthly Bill Impacts (FY 2024)

Figure 1-7: Sample Non-Residential Water Monthly Bill Impacts (FY 2024)

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1.4. Retail Wastewater Rate Study Summary

Existing Retail Wastewater Rates
The SFPUC’s current wastewater rates for retail customers in FY 2023 have been in effect since July 1, 2021 and are shown in Table 1-4. The rates shown include:
» A Fixed Monthly Service Charge that is the same for both residential and non-residential customers
» Variable Charges per 100 CCF of discharge that vary based on whether the customer is residential or non-residential
» Chemical Oxygen Demand (COD) per pound in 100 CCF of discharge that is charged to non- residential users. Residential users have this charge included in their volumetric charges. » Total Suspended Solids (TSS) Charges per pound in 100 CCF of discharge that is charged to non- residential users. Residential users have this charge included in their volumetric charges. » Oil and Grease (OG) Charges per pound in 100 CCF of discharge that is charged to non- residential users. Residential users have this charge included in their volumetric charges.

The SFPUC does not currently have separate stormwater charges. The SFPUC does have a monthly sewer service attributable to runoff charge for properties who do not have water and wastewater service agreements (Table 1-5). The current sewer rates shown in Table 1-4 recover the cost of providing both wastewater and stormwater service for most accounts, with a smaller amount being collected by the sewer service attributable to runoff charges shown in Table 1-5.

Table 1-4: Current Wastewater Enterprise Rates

Table 1-5: Sewer Service Attributable to Runoff Charges for Customers without SFPUC Accounts

Line Customer Class Current Rate
1 Residential Wastewater
2 Monthly Service Charge $5.21
3 Volume per Discharge Unit (CCF) $15.97
4 5 Non-Residential Wastewater
6 Monthly Service Charge $5.21
7 Volume per Discharge Unit (CCF) $9.46
8 Chemical Oxygen Demand (COD)/lb $0.65
9 Total Suspended Solids (TSS)/lb $1.65
10 Oil and Grease (OG)/lb $1.66
Line Stormwater Class Current Rate
1 Low Runoff $22.16
2 Standard Runoff $36.31
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Wastewater Enterprise Financial Plan Overview
The MME and Raftelis team prepared a wastewater financial plan model in Microsoft Excel to project the SFPUC Wastewater Enterprise’s revenues, expenses, cash flows, reserve balances, and debt coverage over a multi-year period. Although proposed retail sewer rates developed in this study are for the next three fiscal years only (FY 2024 to FY 2026), the financial plan extends out ten fiscal years through FY 2033 to ensure that a longer-term planning horizon is accounted for in the rate-setting process. Note that the financial plan projections developed for this study correspond to, and are aligned with, the SFPUC staff’s own 10-Year Financial Plan, which is updated on an annual basis as part of staff’s on-going financial management processes.

Status Quo Wastewater Enterprise Financial Plan
A status quo cash flow analysis was first conducted to evaluate whether existing retail water rates can adequately fund the Wastewater Enterprise’s various expenses through FY 2033. This provided a baseline scenario from which to evaluate the need for any proposed rate increases. Under the status quo scenario (i.e., no rate increases over the next five years), the Wastewater Enterprise is projected to deplete its cash reserves by FY 2025 (Figure 1-8) and fail to meet its debt coverage requirements (per existing bond covenants) beginning in FY 2026 (Figure 1-9). This demonstrates the insufficiency of existing rates to support the Wastewater Enterprise’s financial needs over the next five years.

Figure 1-8: Projected Reserve Balances under Status Quo Wastewater Enterprise Financial Plan

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Figure 1-9: Projected Debt Coverage under Status Quo Wastewater Enterprise Financial Plan

Proposed Wastewater Enterprise Financial Plan
SFPUC staff evaluated various revenue adjustment scenarios before arriving at the proposed and planned revenue adjustments (i.e., overall annual rate increases) shown below in Table 1-6. Nine percent revenue adjustments are proposed annually in FY 2024-FY 2026. Because this study developed proposed rates for the next three years only (FY 2024-FY 2026), the revenue adjustments shown in FY 2027 through FY 2033 are for planning purposes only and will be reevaluated as part of the next rate study. All revenue adjustments are assumed to become effective at the beginning of each fiscal year on the first of July.

Table 1-6: Proposed Wastewater Enterprise Revenue Adjustments

With the addition of revenue adjustments, the Wastewater Enterprise’s reserve balance (see Figure 1-10) is projected to meet the minimum required level (per the SFPUC’s Fund Balance Reserve Policy) each year.

Debt coverage (see Figure 1-11) is projected to meet the SFPUC’s required level (per the SFPUC’s Debt Service Coverage Policy) in all years per the SFPUC’s bond covenants. The proposed financial plan Line Fiscal Year
Proposed
Revenue
Adjustment
Effective
Date Notes
1 FY 2024 9.0% 7/1/2023 Proposed
2 FY 2025 9.0% 7/1/2024 Proposed
3 FY 2026 9.0% 7/1/2025 Proposed
4 FY 2027 10.0% 7/1/2026 For Near-Term Planning Purposes Only 5 FY 2028 10.0% 7/1/2027 For Near-Term Planning Purposes Only 6 FY 2029 10.0% 7/1/2028 For Long-Term Planning Purposes Only 7 FY 2030 9.0% 7/1/2029 For Long-Term Planning Purposes Only 8 FY 2031 9.0% 7/1/2030 For Long-Term Planning Purposes Only 9 FY 2032 5.0% 7/1/2031 For Long-Term Planning Purposes Only 10 FY 2033 5.0% 7/1/2032 For Long-Term Planning Purposes Only San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 13

demonstrates a five-year plan that generates sufficient revenue to support the Wastewater Enterprise’s financial needs and meet the SFPUC’s official financial policies.

Figure 1-10: Projected Reserve Balances under Proposed Wastewater Enterprise Financial Plan

Figure 1-11: Projected Debt Coverage under Proposed Wastewater Enterprise Financial Plan

Sewer Cost of Service Analysis
MME and Raftelis completed a sewer cost of service analysis for FY 2024 in accordance with industry- standard principles outlined by the Water Environment Federation’s Manual of Practice No. 27, Financing and Charges for Wastewater Systems. The cost of service analysis evaluates each customer class’s cost burden on the sewer system, and then proportionally allocates the overall retail rate revenue requirement to each customer class.

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As part of the cost of service analysis, sewer costs were split between the wastewater related costs for sanitary sewer service and stormwater related costs for the collection and treatment of runoff from properties.

Currently, stormwater-related costs are recovered as part of wastewater rates. By splitting these costs, SFPUC will be able to enhance the equity in its rate structure by establishing a stormwater change in addition to its wastewater rates. Under this new methodology, all customers will be billed for the total flows that they contribute to SFPUC’s combined sewer system. Table 1-7 shows the overall FY 2024 Wastewater Enterprise cost of service is $389,190,725. Wastewater costs represent 77.5% and stormwater costs represent 22.5% of the total.

Table 1-7: Summary of FY 2024 Cost of Service for Wastewater and Stormwater

A comparison of the proportional share of each wastewater customer class contributes to the FY 2024 cost of service as compared to the current cost of service is shown in Table 1-8. Despite the shift in stormwater costs out of the wastewater rates, the proportionate share of costs for each customer class remains relatively unchanged, as shown in Column C and Column D.

Table 1-8: Comparison of Proportional Share of Proposed and Current Cost of Service (FY 2024)

Proposed Retail Wastewater Rates
The rates presented by MME and Raftelis in Section 8, are designed to recover the FY 2024 wastewater portion of the sewer revenue requirement of $301,471,528 as well as the FY 2024 stormwater portion of the sewer revenue requirement of $87,719,197. This change would result in significant bill impacts on customers for parcels with large impermeable surface areas. The SFPUC’s Ratepayer Assurance Policy principles of Affordability and Predictability suggests that major rate structure changes should take place over a few years instead of all at once. The SFPUC proposed sewer rates - which are discussed further in Section 9 - are phased in so that by FY 2030 they will fully recover the cost allocation as defined in Section 8. To phase in rates, wastewater rates will continue to include, albeit on a decreasing level each year, a portion of stormwater- related costs. The proposed wastewater rates for FY 2024 through FY 2026 as well as the projected rates for FY 2027 and FY 2028 are shown in Table 1-9.

Line Service Total $ % of Total
1 Wastewater $301,471,528 77.5%
2 Stormwater $87,719,197 22.5%
3 Total $389,190,725 100.0%

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Table 1-9: Proposed and Projected Retail Wastewater Rate Schedule

Proposed Stormwater Charges
Table 1-10 shows the SFPUC proposed stormwater charges for FY 2024 – FY 2026 as well as the projected charges for FY 2027 and FY 2028. These monthly charges feature the new stormwater charge structure previously developed by SFPUC staff with the support of consultants in a prior engagement.

Table 1-10: Proposed and Projected Retail Stormwater Monthly Charges

Retail Sewer Bill Impacts
Figure 1-12 presents sample FY 2024 sewer bill impacts for Single Family Residential customers assuming a Simplified Residential Tier 2 customer. Figure 1-13 presents the FY 2024 impacts for multifamily apartments assuming the Standard stormwater charge for a medium-sized apartment building with 43 sq. ft. of permeable area and 4,008 sq. ft. of impermeable area. Figure 1-14 shows the FY 2024 impacts for non-residential customers assuming the Standard stormwater charge, 22,974 sq. ft. of permeable area, and 141,018 sq. ft. of impermeable. The bill impacts shown in each figure include the impact of proposed FY 2024 phased-in wastewater rates and stormwater charges.

(A) (B) (C) (D) (E) (F)
Line Class Current
(Since 7/1/2022)
Proposed
FY 2024
Proposed
FY 2025
Proposed
FY 2026
Projected
FY 2027
Projected
FY 2028
1 Monthly Service Charge $5.21 $4.85 $5.28 $5.76 $6.33 $6.97 2 3 Residential Volumetric (per CCF) $15.97 $16.91 $17.80 $18.72 $19.83 $20.99 4 5 Nonresidential Volumetric
6 Discharge (CCF) $9.46 $9.74 $10.09 $10.43 $10.84 $11.23 7 Chemical Oxygen Demand (lb/CCF) $0.65 $0.86 $0.93 $0.99 $1.08 $1.17 8 Total Suspended Solids (lb/CCF) $1.65 $1.68 $1.81 $1.94 $2.11 $2.29 9 Oil and Grease (lb/CCF) $1.66 $1.05 $1.14 $1.24 $1.36 $1.49 (A) (B) (C) (D) (E) (F)
Line Stormwater Class Current
(N/A)
Proposed
FY 2024
Proposed
FY 2025
Proposed
FY 2026
Projected
FY 2027
Projected
FY 2028
1 Simplified Residential Tiered Rate
2 SRT1 (1 - 1,700 square feet parcel size) N/A $2.31 $5.04 $8.24 $12.08 $16.61 3 SRT2 (1,701 - 3,300 square feet parcel size) N/A $3.60 $7.84 $12.82 $18.80 $25.85 4 SRT3 (3,301 - 6,000 square feet parcel size) N/A $5.41 $11.79 $19.27 $28.26 $38.86 5 6 Standard
7 Permeable ($/KSF/Mo) N/A $0.19 $0.41 $0.67 $0.99 $1.36 8 Impermeable ($/KSF/Mo) N/A $1.89 $4.11 $6.72 $9.86 $13.55 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 16

Figure 1-12: FY 2024 Single Family Residential Bill Impacts by Usage Percentile

Figure 1-13: FY 2024 Multifamily Residential Bill Impacts by Usage Percentile

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Figure 1-14: FY 2024 Non-Residential Bill Impacts by Usage Percentile

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2. Introduction
The SFPUC is a public agency of the City and County of San Francisco that provides water, wastewater, and municipal power services to San Francisco. The SFPUC is responsible for the maintenance, operation, and development of three utility enterprises: the Water Enterprise, the Wastewater Enterprise, and the Power Enterprise. The SFPUC’s enterprises are operated and managed as separate financial entities with separate enterprise funds.

2.1. Water Enterprise Overview
The SFPUC is the largest water purveyor in Northern California, serving a population of nearly 2.7 million people in over 30 cities. Customers are divided into three categories: retail customers in the City and County of San Francisco, wholesale agencies on the San Francisco Peninsula, in the South Bay, and parts of the East Bay, and retail customers outside of San Francisco. About one-third of the SFPUC’s water supply is served to retail customers, the remaining two-thirds is served to wholesale customers. Source water comes from three systems including: (1) the Hetch Hetchy system (Hetch Hetchy, Lake Lloyd, and Lake Eleanor Reservoirs), (2) the Alameda Reservoirs (Calaveras and San Antonio), and (3) the Peninsula Reservoirs (Crystal Springs, Pilarcitos, and San Andreas) (Figure 2-1). The SFPUC delivers roughly 190 MGD of water, with approximately 130 MGD to wholesale customers and 60 MGD to retail customers based on Fiscal Year (FY) 2022 flows.

Figure 2-1: Water System Overview

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2.2. Wastewater Enterprise Overview
The Wastewater Enterprise provides wastewater and stormwater collection, treatment, and disposal services for the City. The collection system consists of approximately 900 miles of sewer system lines throughout the City. The SFPUC treats both sanitary sewer and wet weather flows in its three water pollution control plants (Southeast Treatment Plant, Oceanside Treatment Plant, and the North Point Wet Weather Facility), which discharge effluent to the San Francisco Bay and Pacific Ocean (Figure 2-2). The combined sewer system reduces pollution in the San Francisco Bay and Pacific Ocean by managing wet weather flows and urban runoff that would otherwise discharge to the Bay and Ocean untreated. Dry weather flows, including street runoff, receive full secondary treatment at either the Oceanside or Southeast Wastewater Treatment Plants.

Wet weather flows receive either secondary treatment at Oceanside or Southeast facilities, or primary treatment at the North Point wet weather facilities.

The collection system is a combined wastewater and stormwater system. Historically, customer wastewater rates have been collected to recover both the wastewater and stormwater incurred costs. In this analysis, stormwater charges are separated from wastewater rates. The SFPUC treats approximately 60 to 70 MGD during dry weather and 115 to 180 MGD during wet weather events.

Figure 2-2: Wastewater System Overview

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2.3. Water and Wastewater Rate Study Overview
Section 8B.125 of the San Francisco Charter states that the SFPUC shall “retain an independent rate consultant to conduct rate and cost of service studies for each utility at least every five years.” The SFPUC last conducted a water and wastewater cost of service study in 2018, which established the basis for the SFPUC’s existing water and wastewater retail rates currently in effect in FY 2023.

The study results are documented within this report. Note that proposed rates cannot be implemented until formally adopted by the SFPUC’s Commissioners after a public hearing. Proposition 218 requires that the SFPUC must mail to its water and wastewater retail customers a public hearing notice detailing any proposed rate changes no fewer than 45 days before the public hearing. The notice includes a customer’s right to protest the rate proposal. The SFPUC mailed out public hearing notices to customers on April 7, 2023 in advance of a public hearing scheduled for May 23, 2023.

2.4. Financial Policies
The study was informed by the following key financial policies adopted by the SFPUC. Each policy pertains to both the Water Enterprise and Wastewater Enterprise.

Reserves
The SFPUC’s Fund Balance Reserve Policy states that operating and capital budgets will be proposed such that reserves total a minimum of 25% of annual O&M expenses (i.e., approximately 90 days of O&M expenses).

Debt Coverage
The SFPUC’s Debt Service Coverage Policy states that budgets, rates, and financial plans shall be adopted such that “Indenture Coverage shall be at least 1.35x” and that “Current Coverage shall be at least 1.10x.” Note that debt coverage requirements per the SFPUC’s bond covenants are less stringent (1.25x for Indenture Coverage and 1.00x for Current Coverage). The two debt service coverage tests are calculated as follows:

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 21

𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 𝐶𝐶𝐶𝐶𝐶𝐶𝐼𝐼𝐼𝐼𝐶𝐶𝐶𝐶𝐼𝐼 = (𝐴𝐴𝐼𝐼𝐼𝐼𝐼𝐼𝐶𝐶𝐴𝐴 𝑅𝑅𝐼𝐼𝐶𝐶𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝑅𝑅 − 𝑂𝑂𝑂𝑂𝐼𝐼𝐼𝐼𝐶𝐶𝐼𝐼𝑂𝑂𝐼𝐼𝐶𝐶 𝐸𝐸𝐸𝐸𝑂𝑂𝐼𝐼𝐼𝐼𝑅𝑅𝐼𝐼𝑅𝑅) + 𝑈𝑈𝐼𝐼𝐶𝐶𝑂𝑂𝑂𝑂𝐼𝐼𝐶𝐶𝑂𝑂𝐼𝐼𝑂𝑂𝐶𝐶𝐼𝐼𝐼𝐼𝐼𝐼 𝐹𝐹𝐼𝐼𝐼𝐼𝐼𝐼 𝐵𝐵𝐶𝐶𝐴𝐴𝐶𝐶𝐼𝐼𝐵𝐵𝐼𝐼 𝐴𝐴𝐼𝐼𝐼𝐼𝐼𝐼𝐶𝐶𝐴𝐴 𝐷𝐷𝐼𝐼𝐷𝐷𝐼𝐼 𝑆𝑆𝐼𝐼𝐼𝐼𝐶𝐶𝑂𝑂𝐵𝐵𝐼𝐼

𝐶𝐶𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 𝐶𝐶𝐶𝐶𝐶𝐶𝐼𝐼𝐼𝐼𝐶𝐶𝐶𝐶𝐼𝐼 = (𝐴𝐴𝐼𝐼𝐼𝐼𝐼𝐼𝐶𝐶𝐴𝐴 𝑅𝑅𝐼𝐼𝐶𝐶𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝑅𝑅 − 𝑂𝑂𝑂𝑂𝐼𝐼𝐼𝐼𝐶𝐶𝐼𝐼𝑂𝑂𝐼𝐼𝐶𝐶 𝐸𝐸𝐸𝐸𝑂𝑂𝐼𝐼𝐼𝐼𝑅𝑅𝐼𝐼𝑅𝑅) 𝐴𝐴𝐼𝐼𝐼𝐼𝐼𝐼𝐶𝐶𝐴𝐴 𝐷𝐷𝐼𝐼𝐷𝐷𝐼𝐼 𝑆𝑆𝐼𝐼𝐼𝐼𝐶𝐶𝑂𝑂𝐵𝐵𝐼𝐼
San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 22

3. Water Financial Plan

3.1. Overview of the Financial Planning Process
The primary goal of the financial planning process is to identify the total amount of retail water rate revenue required on an annual basis to support the Water Enterprise’s financial needs. MME and Raftelis prepared a water utility financial plan model in Microsoft Excel to project the SFPUC Water Enterprise’s revenues, expenses, cash flows, reserve balances, and debt coverage over a ten-year period through FY 2033. However, financial plan projections presented in this section extend out through the next five fiscal years only (through FY 2028). Note that the water financial plan projections developed by MME and Raftelis for this study correspond to, and are aligned with, the SFPUC staff’s own 10-Year Financial Plan, which is updated on an annual basis as part of staff’s on-going financial management processes.

The critical steps in developing a water utility financial plan include:

• Projecting Billed Water Connections and Water Use (Demand Forecast): The demand forecast projects the “units of service” subject to each rate/charge, including the number of metered water connections, private fire service connections, and water use. Projections are based on factors such as customer account growth and projected changes in customer water demand patterns.

• Projecting Retail Water Rate Revenues at Existing Rates: This step in the financial planning process determines how much retail rate revenue will be generated annually if there are no rate increases. The level of rate revenues at existing rates is compared to projected expenditures to determine the annual funding shortfall that must be met by the appropriate combination of rate revenue increases or external debt financing.

• Projecting Miscellaneous Non-Rate Revenue and Wholesale Water Rate Revenue: Miscellaneous non-rate revenue items can include interest income from cash reserves, grants, capacity fee receipts, and miscellaneous ancillary fees. Miscellaneous non-rate revenues assist in closing the annual funding shortfall and reduce the revenue requirement from rates (i.e., the level of amount of rate revenue that must be earned from customers). Wholesale water rate revenue is also projected and incorporated into the financial plan.

• Projecting Operating and Maintenance Expenses and Existing Debt Service: This step in the financial planning process projects the O&M expenses that will be incurred to provide utility service as well as required debt service payments on existing debt obligations.

• Determining a Capital Financing Strategy: In many utilities, the key driver of the annual funding shortfall is projected CIP expenditures. In this step in the financial planning process, the utility determines the optimal mix of annual rate revenue increases and external debt financing to cover the funding shortfall. An outcome of this process is the identification of rate-revenue-funded CIP expenditures, required debt proceeds, and projected debt service costs.

• Identifying Cash Reserve and Debt Service Coverage Targets: In addition to having sufficient revenues to pay for projected costs, utilities must also maintain prudent cash reserves and meet both San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 23

contractually obligated and target debt service coverage requirements. The water revenue requirement from rates must include the cost of meeting both cash reserve and debt service coverage targets.

• Determining Annual Revenue Requirement from Rates: The final outcome of the financial planning process is the determination of the annual amount of rate revenue that must be recovered from customers to pay for all projected costs and meet financial targets.

3.2. Financial Plan Components

Existing Retail Water Rates
The SFPUC’s current water rates for retail customers in FY 2023 have been in effect since July 1, 2021 and were developed in the 2018 Water and Wastewater Cost of Service Study. Retail water customers are billed monthly and currently are subject to the rates and charges described below (and shown in Table 3-1):
» Fixed Monthly Service Charges: Each metered water connection is subject to a Fixed Monthly Service Charge based on the meter size each monthly billing period. Larger meter sizes are subject to higher charges because larger meters burden the water system with greater capacity-related and maintenance-related costs.

» Private Fire Service Fixed Monthly Service Charges: Each dedicated private fire service connection6 is subject to a Fire Service Fixed Monthly Service Charge based on service size each monthly billing period. Larger service sizes are subject to higher charges because larger services burden the water system with greater capacity-related costs.

» Variable Charges: Variable Charges are assessed per 100 CCF of water delivered within a monthly billing period. Residential Variable Charges are based on an inclining two-tier rate structure. Single Family Residential customers are charged at a lower rate for the first four CCF per month and a higher rate for all additional water use. Multiple-Family Residential customers are charged at a lower rate for the first three CCF per dwelling unit per month and a higher rate for all additional water use. Non-residential potable water customers are subject to a uniform rate per CCF for all usage. Non-potable customers receiving untreated water service are subject to a different uniform rate per CCF that excludes treatment and other potable-specific costs.

» Drought Surcharges: Drought Surcharges are in effect when the Commission adopts a resolution declaring Stage 1, Stage 2, or Stage 3 of the Retail Water Shortage Allocation Plan. Drought Surcharges are assessed as a percentage of Variable Charges and are based on a formula designed to recover the retail revenue shortfall due to reduced water sales during drought. Current surcharges are limited to up to 10% for Stage 1, up to 20% for Stage 2, and up to 25% for Stage 3.

Stage 1 Surcharges of 5% were in effect in FY 2022 and FY 2023, but were formally rescinded effective May 2023.

6 Private fire service connections include fire sprinkler systems, standpipes, and other private fire services.

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 24

Table 3-1: Existing Retail Water Rates

Line Retail Water Rates
Current Rates
(effective 7/1/2021)
1 Fixed Monthly Service Charges (by Meter Size)
2 5/8 i
nch $15.17
3 3/4 inch $19.43
4 1-inch $27.95
5 1-1/2 inch $49.25
6 2-inch $74.81
7 3-inch $142.97
8 4-inch $219.65
9 6-inch $432.65
10 8-inch $688.25
11 10-inch $1,071.65
12 12-inch $1,838.45
13 16-inch $3,201.65
14 15 Private Fire Fixed Monthly Service Charges (by Service Size) 16 1-inch $9.55
17 1-1/2 inch $12.45
18 2-inch $15.93
19 3-inch $25.21
20 4-inch $35.65
21 6-inch $64.65
22 8-inch $99.45
23 10-inch $151.65
24 12-inch $256.05
25 26 Variable Charges (per CCF)
27 Single-Family Residential
28 First 4 Units per Month $9.60
29 All Additional Units $10.71
30 31 Multiple-Family Residential
32 First 3 Units per Dwelling Unit per Month $9.60
33 All Additional Units $10.76
34 35 Commercial, Industrial, and General Uses
36 For All Units of Water $10.55
37 38 Untreated Water Service
39 For All Units of Water $0.95
40 41 Drought Surcharges (for Stage 1 Drought)
42 Effective Drought Surcharge (% of Variable Charges) 5.0% San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 25

Projected Water Units of Service
Projected units of service include the number of metered water connections by meter size (Table 3-2), private fire connections by service size (Table 3-3), and water use in CCF by customer class (Table 3-4). The number of metered water connections and private fire service connections is estimated from detailed account-level monthly billing data for FY 2022. As the service area is largely built out, the majority of growth is assumed to be redevelopment resulting in no net gain in service connections. Therefore, no change in the number of accounts or connections is assumed through FY 2028. Projected water demand by customer class is based on detailed demand forecasts incorporated into SFPUC staff’s 10-Year Financial Plan. SFPUC staff’s detailed water demand forecast is based on assumptions regarding population change, job growth, price elasticity (with respect to water rates), conservation trends, and changes in customer water use characteristics. Water demand is projected to increase by approximately 1.1% per year on average through FY 2028 relative to FY 2022 water demand, although demand does fluctuate from year to year. Overall demand is projected to decrease in FY 2024 due to reductions in wholesale water use, and in FY 2027 due to reductions in retail water use, for example.

Table 3-2: Projected Metered Water Connections

Table 3-3: Projected Private Fire Service Connections

Line
Number of Water Meters
(FY 2023-FY 2028)
In-City Retail
Paying
(excl. Treasure
Island)
Suburban Retail
Paying Other* Total
1 Water Meter Size
2 5/8 inch 125,811 181 12 126,004
3 3/4 inch 18,310 32 2 18,344
4 1-inch 11,670 24 15 11,709
5 1-1/2 inch 5,480 13 9 5,502
6 2-inch 7,423 30 48 7,501
7 3-inch 676 1 1 678
8 4-inch 456 3 28 487
9 6-inch 249 16 33 298
10 8-inch 16 0 17 33
11 10-inch 2 6 18 26
12 12-inch 0 0 0 0
13 16-inch 1 0 1 2
14 Total Water Meters 170,094 306 184 170,584
*Other includes Treasure Island, Non-Paying Municipal, Recycled Water, Upcountry/Hetch Hetchy, & Wholesale Water Meters
Line
Number of Private Fire Service Connections
(FY 2023-FY 2028)
In-City
Retail
Suburban
Retail Total
1 Connection Size
2 1-inch 186 0 186
3 1-1/2 inch 33 0 33
4 2-inch 3,899 3 3,902
5 3-inch 155 0 155
6 4-inch 3,471 5 3,476
7 6-inch 1,640 1 1,641
8 8-inch 710 5 715
9 10-inch 6 1 7
10 12-inch 23 0 23
11 Total Private Fire Service Connections 10,123 15 10,138 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 26

Table 3-4: Projected Water Use

Line Projected Water Use (CCF) FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Water Use - In-City Retail Paying
2 Single Family Residential
3 First 4 Units per Month 3,981,233 3,908,473 3,966,386 4,035,732 3,996,905 3,971,835 4 All Additional Units 2,380,659 2,337,150 2,371,781 2,413,247 2,390,030 2,375,039 5 Subtotal 6,361,892 6,245,622 6,338,167 6,448,980 6,386,935 6,346,874 6 7 Multi-Family Residential
8 First 3 Units per Dwelling Unit per Month 6,886,851 6,760,988 6,861,168 6,981,126 6,913,961 6,870,594 9 All Additional Units 3,880,179 3,809,265 3,865,708 3,933,294 3,895,452 3,871,019 10 Subtotal 10,767,030 10,570,253 10,726,877 10,914,420 10,809,413 10,741,614 11 12 Non-Residential
13 In-City Retail - Residential Fire Service 8,498 8,342 8,466 8,614 8,531 8,478 14 In-City Retail - Residential Irrigation 154,470 151,647 153,894 156,585 155,079 154,106 15 In-City Retail - Municipal 708,272 743,672 759,368 777,402 761,577 748,792 16 In-City Retail - Municipal Fire Service 539 565 577 591 579 569 17 In-City Retail - Municipal Irrigation 456,746 479,574 489,696 501,326 491,121 482,876 18 In-City Retail - Commercial/Industrial 6,176,772 6,787,340 6,867,225 6,966,309 6,877,133 6,812,593 19 In-City Retail - Docks & Shipping Supply 3,572 3,925 3,971 4,028 3,977 3,939 20 In-City Retail - Builders & Contractors 89,740 98,610 99,771 101,211 99,915 98,977 21 In-City Retail - Non-Residential Fire Service 20,061 22,044 22,303 22,625 22,336 22,126 22 In-City Retail - Non-Residential Irrigation 185,485 203,820 206,219 209,194 206,516 204,578 23 In-City Retail - Treasure Island 159,085 165,930 167,682 170,358 168,448 167,591 24 Subtotal 7,963,239 8,665,470 8,779,174 8,918,244 8,795,211 8,704,626 25 26 Total In-City Retail Paying Water Use 25,092,161 25,481,346 25,844,218 26,281,643 25,991,559 25,793,114 27 28 Water Use - Suburban Retail Paying
29 Single Family Residential
30 First 4 Units per Month 5,268 5,172 5,249 5,340 5,289 5,256 31 All Additional Units 25,491 25,026 25,396 25,840 25,592 25,431 32 Subtotal 30,760 30,198 30,645 31,181 30,881 30,687
33 34 Non-Residential
35 Municipal 25,329 26,595 27,157 27,801 27,235 26,778
36 Commercial/Industrial 1,032,752 1,134,838 1,148,195 1,164,762 1,149,852 1,139,061 37 Subject to Contract Rates 142,485 143,395 143,514 143,662 143,529 143,433 38 All Other 890,267 991,443 1,004,681 1,021,100 1,006,323 995,628 39 Fire Service 50 55 55 56 55 55
40 Irrigation 274,680 301,832 305,385 309,791 305,825 302,955 41 Subject to Contract Rates 15,353 16,870 17,069 17,315 17,093 16,933 42 All Other 259,328 284,962 288,316 292,476 288,732 286,022 43 Untreated Water 141,383 155,358 157,187 159,455 157,414 155,936 44 Recycled Water 34,894 38,343 38,795 39,355 38,851 38,486 45 Subtotal 1,509,088 1,657,022 1,676,773 1,701,220 1,679,232 1,663,271 46 47 Total Suburban Retail Paying Water Use 1,539,848 1,687,220 1,707,418 1,732,400 1,710,113 1,693,959 48 49 Water Use - Other
50 Non-Paying (inc. In-City Water Loss) 2,520,174 2,574,312 2,611,439 2,656,110 2,625,354 2,603,919 51 Upcountry/Hetch Hetchy 368,319 390,976 395,929 401,999 397,231 393,870 52 Wholesale 60,509,507 59,663,244 61,586,672 66,333,170 66,532,170 66,914,046 53 Total Other Water Use 63,398,000 62,628,532 64,594,040 69,391,279 69,554,755 69,911,835 54 55 TOTAL WATER USE (CCF) 90,030,008 89,797,098 92,145,676 97,405,323 97,256,427 97,398,908 56 Total Water Use (AF) 206,680 206,146 211,537 223,612 223,270 223,597 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 27

Water Enterprise Revenues at Existing Rates
Retail water rate revenues from Fixed Monthly Service Charges, Fire Service Fixed Monthly Service Charges, Variable Charges, and Drought Surcharges were projected for FY 2023 to FY 2028 based on existing rates and projected units of service (Table 3-5). Annual revenue from Fixed Monthly Service Charges and Fire Service Fixed Monthly Service Charges was calculated by multiplying the existing charge (from Table 3-1) by the number of connections for each meter size (from Table 3-2) and service size (from Table 3-3) by 12 monthly billing periods per year. Annual Variable Charge revenue was calculated by multiplying the current charge per CCF (from Table 3-1) by projected annual use in CCF (from Table 3-4).

Drought Surcharge revenue was calculated by multiplying projected Variable Charge revenue from potable retail customers by 5% in FY 2023 and FY 2024 only, under the assumption that no drought stage (and accompanying Drought Surcharges) will be in effect beginning in FY 2025 through FY 2028. 7 Note that a
small number of suburban retail customers are subject to unique water rates based on historic contracts with the SFPUC rather than the adopted rates in Table 3-1. The retail water rate revenue projections in Table 3-5 include adjustments to account for the unique rates paid by customers with these historic contracts.

Table 3-5: Projected Water Enterprise Rate Revenue at Existing Rates

In addition to revenues produced by retail water rates, the Water Enterprise receives revenues from different sources including wholesale water sales, interest income, miscellaneous one-time charges, and others. These other revenues were projected annually through FY 2028 (Table 3-7). Other revenues including Customer Assistance Program (CAP) Use of Revenues,
8 Wholesale Water Sales, Federal Bond Interest Subsidies, Power Enterprise State Revolving Fund (SRF) Loan Reimbursements, Programmatic Revenues (which include retail water rate revenue from the Treasure Island Development Authority and other revenues associated with the SFPUC’s headquarters building at 525 Golden Gate Avenue), and Capacity Fees are

7 At the time the financial plan analysis was conducted, it was anticipated that Drought Surcharges would remain in effect through FY 2024. Since the analysis was completed, however, the Commission formally rescinded Drought Surcharges effective May 1, 2023 due to significant recent improvement in drought conditions . SFPUC staff conducted a sensitivity analysis indicating that the Water Enterprise will continue to be able to meet its goals and financial obligations, even with the removal of Drought Surcharges in FY 2024. 8 CAP use of revenues represents the use of Water Enterprise lease and rental income anticipated to offset bill adjustments to customers enrolled in SFPUC’s Customer Assistance Program. It is included in the financial plan as a negative revenue rather than an operating expense.

Line Retail Water Rate Revenues FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 In-City Retail (excl. Treasure Island)
2 Fixed Monthly Service Charges $44,839,107 $44,839,107 $44,839,107 $44,839,107 $44,839,107 $44,839,107 3 Private Fire Fixed Monthly Service Charges $4,502,806 $4,502,806 $4,502,806 $4,502,806 $4,502,806 $4,502,806 4 Variable Charges $253,915,013 $258,115,540 $261,792,557 $266,220,158 $263,268,950 $261,241,880 5 Drought Surcharges $12,695,751 $12,905,777 $0 $0 $0 $0 6 Subtotal $315,952,677 $320,363,230 $311,134,470 $315,562,071 $312,610,863 $310,583,793 7 8 Suburban Retail
9 Fixed Monthly Service Charges $252,925 $252,925 $252,925 $252,925 $252,925 $252,925 10 Private Fire Fixed Monthly Service Charges $11,274 $11,274 $11,274 $11,274 $11,274 $11,274 11 Variable Charges $13,361,496 $14,772,588 $14,956,929 $15,176,584 $14,978,000 $14,826,008 12 Drought Surcharges $636,912 $704,272 $0 $0 $0 $0
13 Subtotal $14,262,607 $15,741,059 $15,221,128 $15,440,783 $15,242,199 $15,090,208 14 15 Total $330,215,284 $336,104,288 $326,355,598 $331,002,855 $327,853,063 $325,674,000 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 28

based on detailed projections from SFPUC staff’s 10-Year Financial Plan. Rental income, Water Service Installation Charges, and Other Non-Operating Revenue are based on the adopted budget in FY 2023 and FY 2024 and escalated annually thereafter based on SFPUC staff’s forecasted changes in the Consumer Price Index (Table 3-6). Interest earnings are based on the adopted budget in FY 2023 and FY 2024 and projected thereafter by multiplying the assumed annual interest rate on cash reserves (Table 3-6) by the average of the beginning and ending projected Water Enterprise reserve balance each year.

Table 3-6: Assumptions for Water Enterprise Other Revenues

Table 3-7: Projected Water Enterprise Other Revenue

Water Enterprise O&M Expenses
The Water Enterprise’s O&M expenses primarily consist of personnel costs, administrative overhead costs, and other operating costs associated with water production, treatment, and delivery. Programmatic expenses9 are also considered part of the Water Enterprise’s O&M expenses. O&M expense projections are based on the FY 2023 and FY 2024 adopted budgets and take into account both annual inflationary and execution factor assumptions.

Before accounting for execution factors, budgeted O&M expenses in FY 2024 were increased annually by inflationary assumptions (from Table 3-8) to establish preliminary O&M projections through FY 2028 (Table 3-9, Lines 1-11). All inflationary assumptions are consistent with the SFPUC staff’s 10-Year Financial Plan.

Benefits inflation is based on the City and County of San Francisco’s Proposed Five-Year Financial Plan for FY 2022 through FY 2026.

9 Programmatic expenses include expenses associated with the SFPUC’s headquarters building at 525 Golden Gate Avenue, a drought response program, a neighborhood stewardship program, Treasure Island maintenance, and other expenses associated with specific programs.

Line Revenue Ty pe FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Revenue Escalation
2 Consumer Price Index Budget Budget 2.71% 2.56% 2.56% 2.56% 4 4 Interest Earnings on Cash Reserves
5 Annual Interest Rate Budget Budget 0.50% 0.50% 0.50% 0.65%

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 29

SFPUC staff conducted an analysis of actual versus budgeted Water Enterprise O&M expenses in prior years, which provided the basis for execution factor assumptions (Table 3-9, Lines 13-22). Execution factors represent the percentage of budgeted expenses actually incurred each year. Adjusted O&M expense projections (Table 3-9, Lines 24-34) were calculated by multiplying the preliminary O&M expense projections by the corresponding execution factors. Financial plan projections presented in the following sections incorporate the adjusted O&M expense projections, inclusive of execution factors.

Table 3-8: Inflationary Assumptions for Water Enterprise O&M Expenses

Table 3-9: Projected Water Enterprise O&M Expenses

Water Enterprise Debt Service
Table 3-10 shows existing and proposed Water Enterprise debt service through FY 2028. The Water Enterprise’s existing debt service includes principal and interest payments associated with outstanding revenue bonds and State Revolving Fund (SRF) Loans. Proposed debt service projections are based on

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 30

detailed projections from SFPUC staff’s 10-Year financial plan and are associated with planned revenue bond issuances to fund the Water Enterprise CIP. Proposed debt service projections assume three new revenue bond issuances through FY 2028 ($361.25 million in FY 2023, $360 million in FY 2025, and $360 million in FY 2027). Total issuance amounts include assumed interim financing costs associated with commercial paper. All proposed debt service was estimated based on a 5% interest rate, 30-year term, and 30 months of capitalized interest (which effectively delays debt repayment by 30 months but results in an overall increase in total debt service payments).

Table 3-10: Water Enterprise Debt Service

Water Enterprise Funding for Capital Expenditures
Table 3-11 shows the annual revenue budgeted as a funding source for capital expenditures, as approved in the SFPUC’s FY 2024 10-Year Capital Improvement Plan. The revenue sources include capacity fees (i.e., one-time fees assessed to new development/intensified redevelopment), local revenue (i.e., Retail water sales), and regional revenue (i.e., a proportional allocation between Retail water sales and Wholesale water sales). The amounts shown do not represent annual spending on capital projects, but rather the amount of revenues appropriated each year through the SFPUC’s budget process as a funding source for pay-as-you-go (i.e., cash funded) capital projects to meet the long-term capital replacement needs of the Water Enterprise.

Table 3-11: Water Enterprise Funding for Pay-as-you-go Capital Expenditures

Status Quo Water Enterprise Financial Plan
To evaluate the need for future year rate increases (referred to as “revenue adjustments”), MME and Raftelis first developed a status quo financial plan. The status quo financial plan assumes that current FY 2023 retail water rates remain unchanged over the multi-year planning period. The status quo financial plan (Table 3-12) combines projected revenues under existing rates (from Table 3-5 and Table 3-710), O&M expenses (from Table 3-9), debt service (from Table 3-10), and funding for pay-as-you-go capital expenditures (from Table 3-11) to project net revenue (revenue less O&M expenses), net cash flow (net revenue less debt service and funding for pay-as-you-go capital expenditures), reserve balances (for the entire Water Enterprise), and debt coverage.

10 Interest earnings in Table 3-12 are less than the amounts shown in FY 2025-FY 2028 in Table 3-7, as lower reserves under the status quo scenario will result in lesser interest earnings. The amounts shown Table 3-7 reflect interest earnings under the proposed financial plan shown in the next section.

Line Debt Service FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Existing Revenue Bond Debt Service$328,352,143 $332,575,608 $332,048,174 $337,015,314 $335,590,956 $333,534,949 2 Existing SRF Bond Debt Service $0 $923,816 $1,587,615 $8,739,151 $9,175,886 $9,452,785 3 Proposed Debt Service $0 $0 $1,751,735 $27,898,491 $29,690,107 $56,432,137 4 Total $328,352,143 $333,499,425 $335,387,524 $373,652,956 $374,456,949 $399,419,870

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 31

Reserve balance projections (Table 3-12, Lines 55-58) are based off the Water Enterprise’s beginning fund balance in FY 2023 (as of July 1, 2022) and projected net cash flow thereafter. Debt coverage (Table 3-12, Lines 62-65) is shown based on the “Current Coverage” test only, which is significantly more stringent than the “Indenture Coverage” test. Net revenues used to calculate debt coverage (Table 3-12, Line 63) exclude specific revenues and expenses, which are legally restricted from being used to pay for debt service or are not considered SFPUC operating expenses. Additionally, net revenues used to calculate debt coverage include fund balance budgeted as revenue, which is in alignment with SFPUC staff’s 10-Year financial plan. Projected reserve balances and debt coverage under the status quo financial plan are also shown in graphical format in Figure 3-1 and Figure 3-2 over an extended timeframe through FY 2033 to provide a longer-term financial outlook. See Appendix A for supporting financial plan projections beyond FY 2028.

In the absence of any revenue adjustments, the Water Enterprise’s reserve balance is projected to fall below the minimum level (per the SFPUC’s Fund Balance Reserve Policy) beginning in FY 2027. Furthermore, reserves are projected to be fully depleted in FY 2028. Debt coverage is projected to fall below the SFPUC’s target level (per the SFPUC’s Debt Service Coverage Policy) in FY 2026 – FY 2033. More significantly, debt coverage is projected to fall below the required level per the SFPUC’s bond covenants beginning in FY 2027.

The status quo financial plan is insufficient to meet the Water Enterprise’s financial needs through FY 2033.

This demonstrates a clear need for near-term revenue adjustments to increase retail water rate revenues and ensure that the Water Enterprise’s financial needs are met.

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 32

Table 3-12: Status Quo Water Enterprise Financial Plan

Line Water Enterprise Financial Plan FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Retail Rate Revenue from Existing Rates
2 In-City Retail (excl. Treasure Island) $315,952,677 $320,363,230 $311,134,470 $315,562,071 $312,610,863 $310,583,793 3 Suburban Retail $14,262,607 $15,741,059 $15,221,128 $15,440,783 $15,242,199 $15,090,208 4 Less Contract Rate Revenue ($508,554) ($561,118) ($557,017) ($544,961) ($552,849) ($550,544) 5 Total Rate Revenue subject to Adjustments $329,706,730 $335,543,171 $325,798,581 $330,457,894 $327,300,214 $325,123,456 6 7 Proposed Revenue Adjustments
8 Fiscal Revenue Month
9 Year Adjustment Effective
10 FY 2024 0.0% July $0 $0 $0 $0 $0 $0
11 FY 2025 0.0% July $0 $0 $0 $0 $0 $0
12 FY 2026 0.0% July $0 $0 $0 $0 $0 $0
13 FY 2027 0.0% July $0 $0 $0 $0 $0 $0
14 FY 2028 0.0% July $0 $0 $0 $0 $0 $0
15 Total Revenue Adjustments $0 $0 $0 $0 $0 $0
16 17 REVENUE
18 Retail Rate Revenue incl. Adjustments $330,215,284 $336,104,288 $326,355,598 $331,002,855 $327,853,063 $325,674,000 19 CAP Use of Revenues ($1,245,932) ($7,000,000) ($7,000,000) ($7,000,000) ($7,000,000) ($7,000,000) 20 Wholesale Water Sales $289,598,379 $316,979,387 $326,505,882 $341,633,834 $342,654,481 $364,404,777 21 Interest Income $1,109,000 $1,133,000 $1,133,273 $804,576 $406,013 $5,565 22 Rental Income $13,136,000 $13,595,800 $13,964,246 $14,321,731 $14,688,367 $15,064,389 23 Federal Bond Interest Subsidy $21,289,804 $21,317,856 $21,184,845 $20,849,738 $20,536,693 $20,098,912 24 Other Misc Income $12,429,431 $13,067,577 $13,596,883 $14,021,344 $14,486,674 $14,917,017 25 Programmatic Revenues $7,156,000 $7,158,000 $7,277,000 $7,202,000 $7,223,000 $7,234,000 26 Capacity Fees $1,520,000 $1,997,000 $2,061,000 $1,520,000 $1,580,000 $1,644,000 27 TOTAL REVENUE $675,207,967 $704,352,909 $705,078,728 $724,356,078 $722,428,291 $742,042,660 28 29 O&M Expenses
30 Personnel $112,230,822 $114,601,996 $118,517,389 $122,571,352 $126,768,977 $131,115,546 31 Other Non-Personnel Services $20,712,391 $20,476,847 $21,091,153 $21,723,887 $22,375,604 $23,046,872 32 Materials, Supplies & Equipment $19,176,058 $19,395,185 $19,977,040 $20,576,352 $21,193,642 $21,829,451 33 Services of SFPUC Bureaus $63,140,408 $64,047,698 $65,969,129 $67,948,203 $69,986,649 $72,086,248 34 Services of Other Departments $26,469,977 $27,510,078 $28,241,518 $29,077,688 $29,938,942 $30,826,035 35 Hetch Hetchy Assessment $49,636,000 $46,032,000 $49,477,000 $51,029,000 $52,585,000 $53,965,000 36 Other Operating Expenses $1,795,868 $3,458,368 $3,561,643 $3,668,017 $3,777,582 $3,890,434 37 Programmatic Expenses $33,863,389 $33,266,186 $33,266,186 $33,266,186 $33,266,186 $33,266,186 38 TOTAL O&M $327,024,913 $328,788,358 $340,101,058 $349,860,685 $359,892,582 $370,025,772 39 40 NET REVENUE $348,183,054 $375,564,551 $364,977,669 $374,495,393 $362,535,709 $372,016,888 41 42 DEBT SERVICE
43 Existing Debt Service $328,352,143 $333,499,425 $333,635,790 $345,754,465 $344,766,842 $342,987,734 44 Proposed Debt Service $0 $0 $1,751,735 $27,898,491 $29,690,107 $56,432,137 45 TOTAL DEBT SERVICE $328,352,143 $333,499,425 $335,387,524 $373,652,956 $374,456,949 $399,419,870 46 47 FUNDING FOR PAY-AS-YOU-GO CIP
48 Capacity Fees $1,520,000 $1,997,000 $2,061,000 $1,520,000 $1,580,000 $1,644,000 49 Local Revenue $20,604,600 $20,579,658 $51,559,000 $57,100,000 $38,545,000 $30,000,000 50 Regional Revenue $25,000,000 $25,000,000 $25,000,000 $25,000,000 $25,000,000 $25,000,000 51 TOTAL FUNDING FOR PAY-AS-YOU-GO CIP $47,124,600 $47,576,658 $78,620,000 $83,620,000 $65,125,000 $56,644,000 52 53
NET CASH FLOW ($27,293,689) ( $5,511,532) ($49,029,855) ($82,777,563) ($77,046,240) ($84,046,982) 54 55 FU ND BALANCE (excl. Proposed Debt Proceeds)
56 Beginning Balance $284,541,332 $257,247,642 $251,736,111 $202,706,255 $119,928,692 $42,882,452 57 Net Cash Flow ($27,293,689) ($5,511,532) ($49,029,855) ($82,777,563) ($77,046,240) ($84,046,982) 58 ENDING BALANCE $257,247,642 $251,736,111 $202,706,255 $119,928,692 $42,882,452 ($41,164,529) 59 Ending Balance (% of Annual O&M) 78.7% 76.6% 59.6% 34.3% 11.9% -11.1% 60 Minimum Reserve Target (% of Annual O&M) 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 61 62 CURRENT DEBT SERVICE COVERAGE TEST
63 Net Revenue Subject to Debt Coverage Test $352,766,443 $380,143,737 $369,437,855 $379,030,579 $367,086,895 $376,596,074 64 Projected Debt Coverage 1.28 1.19 1.10 1.01 0.98 0.94 65 Required Debt Coverage 1.10 1.10 1.10 1.10 1.10 1.10 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 33

Figure 3-1: Projected Reserve Balances under Status Quo Water Enterprise Financial Plan

Figure 3-2: Projected Debt Coverage under Status Quo Water Enterprise Financial Plan

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 34

Proposed Water Enterprise Financial Plan
The Water Enterprise must increase its revenues from retail water rates to adequately fund its O&M expenditures, meet required debt coverage, and maintain sufficient reserve funding in the near term. SFPUC staff evaluated various scenarios using its 10-Year Financial Plan Model before arriving at the proposed and planned revenue adjustments (i.e., overall annual rate increases) shown below in Table 3-13. The proposed revenue adjustments ensure the Water Enterprise meets all its financial policies throughout the entire ten-year planning period, with some buffer in case of unexpected expenditures or revenue reductions. All revenue adjustments are assumed to become effective at the beginning of each fiscal year in July. Note that although this report includes financial projections over a ten-year period, SFPUC staff is only recommending that the Commission consider adoption of three years of proposed rates (i.e., FY 2024 - FY 2026).

Table 3-13: Proposed Water Enterprise Revenue Adjustments

The proposed financial plan (Table 3-14) was developed using the same calculation methodology outlined in the previous section for the status quo financial plan (from Table 3-12). The key difference is the inclusion of additional retail water rate revenue (Table 3-14, Lines 7-15). The additional revenue from the proposed adjustments is calculated based on current revenue from retail water rates, exclusive of revenue from contract customers (which are subject to unique rates stipulated in each contract). The proposed revenue adjustments are projected to generate an additional $52 million in annual retail water rate revenue relative to current rates by FY 2026.

With the addition of the proposed and planned revenue adjustments, the Water Enterprise’s reserve balance is projected to meet the minimum level (per the SFPUC’s Fund Balance Reserve Policy) each year. Debt coverage is projected to meet the SFPUC’s required level (per the SFPUC’s Debt Service Coverage Policy) in all years. Projected reserve balances and debt coverage under the proposed financial plan are also shown in Figure 3-3 and Figure 3-4 over an extended timeframe through FY 2033 to provide a longer-term financial outlook. See Appendix A for supporting financial plan projections beyond FY 2028. The proposed financial plan demonstrates a multi-year plan that generates sufficient revenue to meet the SFPUC’s official financial policies.

Note that SFPUC staff and Raftelis opted for a levelized approach to capital planning for the purpose of setting rates to avoid any rate spikes across years during the study period. The proposed financial plan results in fund balances above the minimum reserve amount to provide added contingency given the uncertainty in future capital spending needs in any given year, and to ensure sufficient cash on hand once Drought Line Fiscal Year
Revenue
Adjustment
Effective
Date Notes
1 FY 2024 5.0% 7/1/ 2023 Proposed
2 FY 2025 5.0% 7/1/2024 Proposed
3 FY 2026 5.0% 7/1/2025 Proposed
4 FY 2027 4.0% 7/1/2026 For Near-Term Planning Purposes Only 5 FY 2028 4.0% 7/1/2027 For Near-Term Planning Purposes Only 6 FY 2029 4.0% 7/1/2028 For Long-Term Planning Purposes Only 7 FY 2030 3.0% 7/1/2029 For Long-Term Planning Purposes Only 8 FY 2031 3.0% 7/1/2030 For Long-Term Planning Purposes Only 9 FY 2032 3.0% 7/1/2031 For Long-Term Planning Purposes Only 10 FY 2033 3.0% 7/1/2032 For Long-Term Planning Purposes Only San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 35

Surcharges are no longer in effect. Under the proposed financial plan, reserves are projected to be gradually drawn down to provide funding for capital needs.

Table 3-14: Proposed Water Enterprise Financial Plan

Line Water Enterprise Financial Plan FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Retail Rate Revenue from Existing Rates
2 In-City Retail (excl. Treasure Island) $315,952,677 $320,363,230 $311,134,470 $315,562,071 $312,610,863 $310,583,793 3 Suburban Retail $14,262,607 $15,741,059 $15,221,128 $15,440,783 $15,242,199 $15,090,208 4 Less Contract Rate Revenue ($508,554) ($561,118) ($557,017) ($544,961) ($552,849) ($550,544) 5 Total Rate Revenue subject to Adjustments $329,706,730 $335,543,171 $325,798,581 $330,457,894 $327,300,214 $325,123,456 6 7 Proposed Revenue Adjustments
8 Fiscal Revenue Month
9 Year Adjustment Effective
10 FY 2024 5.0% July $0 $16,777,159 $16,289,929 $16,522,895 $16,365,011 $16,256,173 11 FY 2025 5.0% July $0 $0 $17,104,425 $17,349,039 $17,183,261 $17,068,981 12 FY 2026 5.0% July $0 $0 $0 $18,216,491 $18,042,424 $17,922,431 13 FY 2027 4.0% July $0 $0 $0 $0 $15,155,636 $15,054,842 14 FY 2028 4.0% July $0 $0 $0 $0 $0 $15,657,035
15 Total Revenue Adjustments $0 $16,777,159 $33,394,355 $52,088,425 $66,746,333 $81,959,462 16 17 REVENUE
18 Retail Rate Revenue incl. Adjustments $330,215,284 $352,881,447 $359,749,953 $383,091,280 $394,599,395 $407,633,462 19 CAP Use of Revenues ($1,245,932) ($7,000,000) ($7,000,000) ($7,000,000) ($7,000,000) ($7,000,000) 20 Wholesale Water Sales $289,598,379 $316,979,387 $326,505,882 $341,633,834 $342,654,481 $364,404,777 21 Interest Income $1,109,000 $1,133,000 $1,300,644 $1,186,491 $1,086,925 $1,378,470 22 Rental Income $13,136,000 $13,595,800 $13,964,246 $14,321,731 $14,688,367 $15,064,389 23 Federal Bond Interest Subsidy $21,289,804 $21,317,856 $21,184,845 $20,849,738 $20,536,693 $20,098,912 24 Other Misc Income $12,429,431 $13,067,577 $13,596,883 $14,021,344 $14,486,674 $14,917,017 25 Programmatic Revenues $7,156,000 $7,158,000 $7,277,000 $7,202,000 $7,223,000 $7,234,000 26 Capacity Fees $1,520,000 $1,997,000 $2,061,000 $1,520,000 $1,580,000 $1,644,000 27 TOTAL REVENUE $675,207,967 $721,130,067 $738,640,454 $776,826,419 $789,855,535 $825,375,027 28 29 O&M Expenses
30 Personnel $112,230,822 $114,601,996 $118,517,389 $122,571,352 $126,768,977 $131,115,546 31 Other Non-Personnel Services $20,712,391 $20,476,847 $21,091,153 $21,723,887 $22,375,604 $23,046,872 32 Materials, Supplies & Equipment $19,176,058 $19,395,185 $19,977,040 $20,576,352 $21,193,642 $21,829,451 33 Services of SFPUC Bureaus $63,140,408 $64,047,698 $65,969,129 $67,948,203 $69,986,649 $72,086,248 34 Services of Other Departments $26,469,977 $27,510,078 $28,241,518 $29,077,688 $29,938,942 $30,826,035 35 Hetch Hetchy Assessment $49,636,000 $46,032,000 $49,477,000 $51,029,000 $52,585,000 $53,965,000 36 Other Operating Expenses $1,795,868 $3,458,368 $3,561,643 $3,668,017 $3,777,582 $3,890,434 37 Programmatic Expenses $33,863,389 $33,266,186 $33,266,186 $33,266,186 $33,266,186 $33,266,186 38 TOTAL O&M $327,024,913 $328,788,358 $340,101,058 $349,860,685 $359,892,582 $370,025,772 39 40 NET REVENUE $348,183,054 $392,341,709 $398,539,395 $426,965,734 $429,962,954 $455,349,256 41 42 DEBT SERVICE
43 Existing Debt Service $328,352,143 $333,499,425 $333,635,790 $345,754,465 $344,766,842 $342,987,734 44 Proposed Debt Service $0 $0 $1,751,735 $27,898,491 $29,690,107 $56,432,137 45 TOTAL DEBT SERVICE $328,352,143 $333,499,425 $335,387,524 $373,652,956 $374,456,949 $399,419,870 46 47 FUNDING FOR PAY-AS-YOU-GO CIP
48 Capacity Fees $1,520,000 $1,997,000 $2,061,000 $1,520,000 $1,580,000 $1,644,000 49 Local Revenue $20,604,600 $20,579,658 $51,559,000 $57,100,000 $38,545,000 $30,000,000 50 Regional Revenue $25,000,000 $25,000,000 $25,000,000 $25,000,000 $25,000,000 $25,000,000 51 TOTAL FUNDING FOR PAY-AS-YOU-GO CIP $47,124,600 $47,576,658 $78,620,000 $83,620,000 $65,125,000 $56,644,000 52 53
NET CASH FLOW ($27,293,689) $11,265, 627 ($15,468,129) ($30,307,222) ($9,618,995) ($714,615) 54 55 FUND BALANCE (excl. Proposed Debt Proceeds)
56 B
eginning Balance $284,541,332 $257,247,642 $268,513,269 $253,045,140 $222,737,918 $213,118,923 57 Net Cash Flow ($27,293,689) $11,265,627 ($15,468,129) ($30,307,222) ($9,618,995) ($714,615) 58 ENDING BALANCE $257,247,642 $268,513,269 $253,045,140 $222,737,918 $213,118,923 $212,404,308 59 Ending Balance (% of Annual O&M) 78.7% 81.7% 74.4% 63.7% 59.2% 57.4% 60 Minimum Reserve Target (% of Annual O&M) 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 61 62 CURRENT DEBT SERVICE COVERAGE TEST
63 Net Revenue Subject to Debt Coverage Test $352,766,443 $396,920,895 $402,999,581 $431,500,920 $434,514,140 $459,928,442 64 Projected Debt Coverage 1.28 1.24 1.20 1.15 1.16 1.15 65 Required Debt Coverage 1.10 1.10 1.10 1.10 1.10 1.10 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 36

Figure 3-3: Projected Reserve Balances under Proposed Water Enterprise Financial Plan

Figure 3-4: Projected Debt Coverage under Proposed Water Enterprise Financial Plan

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 37

4. Water Cost of Service Analysis
This section details the water cost of service (COS) analysis performed for the Water Enterprise. The COS analysis allocates the overall retail water rate revenue requirement to customer classes based on their cost burden on the water system. As stated in the American Water Works Association (AWWA) M1 Manual, “the costs of water rates and charges should be recovered from classes of customers in proportion to the cost of serving those customers.” To develop retail water rates that comply with Proposition 218 and industry standards while meeting other goals and objectives of the SFPUC, we follow the COS methodology outlined below.

4.1. Water Cost of Service Methodology
The framework and methodology used to develop the COS analysis and to apportion the revenue requirement to each customer class is informed by the processes outlined in the M1 Manual. COS analyses are tailored specifically to meet the unique needs of each water system. However, there are five distinct steps in every COS analysis to recover costs from customers in an equitable and defensible manner:

1. Revenue requirement determination: The first step in the COS analysis is to determine the revenue required from rates, which is determined directly from the results of the proposed financial plan presented in the previous section.

2. Cost functionalization: Expenses are categorized based on their associated function in the water system. Functions include water supply, treatment, storage, transmission, distribution, customer service, etc.

3. Cost component allocation: Functionalized expenses are then allocated to cost components based on the associated burden on the water system. Cost components include raw water supply, base delivery, extra capacity, meters, customer service, etc. The revenue requirement is allocated accordingly to each cost component and results in a total revenue requirement for each cost component.

4. Unit cost development: The revenue requirement for each cost component is divided by the appropriate units of service to determine the unit cost for each cost component.

5. Revenue requirement distribution: Unit costs for each cost component are used to distribute the revenue requirement to customer classes based on each class’s proportional use of the water system.

4.2. Water Revenue Requirement Determination
A COS analysis allocates the rate revenue requirement for a single rate-setting year, typically referred to as the “test year.” In this study, the test year is FY 2024 (i.e., the first year of the proposed three-year rate schedule).

Table 4-1 shows the total retail water rate revenue requirement for FY 2024 (Line 24), which is equal to the sum of revenue requirements (Lines 1-5), revenue offsets (Lines 7-18), and adjustments (Lines 20-22).

Revenue requirements (Lines 1-5) include the sum of FY 2024 O&M expenses, debt service, and pay-as-you- go funding for CIP per the proposed financial plan (from Table 3-14). Revenue offsets (Lines 7-18) include all other revenues per the proposed financial plan (from Table 3-14), as well as Contract Rate Revenue and Drought Surcharges. Total revenue offsets (Line 18) are applied as a funding source for the overall revenue requirement (Line 5) to effectively reduce the total rate revenue requirement (Line 24). Finally, an adjustment is added (Line 21) to account for contributions to reserves, which is equal to FY 2024 net cash flow per the proposed financial plan (from Table 3-14). The total retail rate revenue requirement (Line 24) is the total San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 38

revenue to be recovered by Fixed Monthly Service Charges, Fire Service Fixed Monthly Service Charges, and Variable Charges in FY 2024, inclusive of additional revenue from the 5% proposed revenue adjustment.

Table 4-1: Annualized Retail Water Rate Revenue Requirements for FY 2024

4.3. Water Revenue Requirement Functionalization
The next step of the COS analysis is to allocate the total retail rate revenue requirement to the following water system functions:
» Surface Water Supply: relating to the SFPUC’s primary raw surface water supplies, including Hetch Hetchy and the Alameda and Peninsula watersheds
» Alternative Water Supply: relating to water resources planning efforts for future alternative water supply sources
» Groundwater: relating to the San Francisco Groundwater Supply Project » Recycled Water: relating to the Harding Park Recycled Water Project and Pacifica Recycled Water Project
» Water Conservation: relating to water conservation, outreach, and efficiency programs » Pumping: relating to transport of water across elevation gradients » Transmission: relating to the potable water transmission system » Distribution: relating to the delivery of potable water from storage facilities to the end user » Storage: relating to potable water storage tanks and reservoirs Line Retail Water Rate Revenue Requirem ent FY 2024
1 Revenue Requirem ents
2 O&M Expenses $328,788,358
3 Debt Service $333,499,425
4 Funding for Pay-as-you-go CIP $47,576,658
5 Subtotal $709,864,441
6 7 Revenue Offsets
8 Contract Rate Revenue ($561,118)
9 CAP Use of Revenues $7,000,000
10 Wholesale Water Sales ($316,979,387)
11 Interest Income ($1,133,000)
12 Rental Income ($13,595,800)
13 Federal Bond Interest Subsidy ($21,317,856)
14 Other Misc Income ($13,067,577)
15 Programmatic Revenues ($7,158,000)
16 Capacity Fees ($1,997,000)
17 Drought Surcharges ($13,610,049)
18 Subtotal ($382,419,786)
19 20 Adjustments
21 Contribution to (Draw from) Reserves $11,265,627
22 Subtotal $11,265,627
23 24 Total Retail Rate Revenue Requirement $338,710,281 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 39

» Treatment: relating to the treatment of water to potable standards » Water Quality: relating to water quality testing
» Meters: relating to water meters (including maintenance and replacement) » Hydrants / Alternative Water Supply System (AWSS): relating to fire protection provided by hydrants on both the primary potable water distribution system and the Alternative Water Supply System
» Private Fire Service: relating to private fire service connections » Customer Service: relating to meter reading, billing, customer call center services, and other customer service functions
» Indirect – General: relating to general administration and overhead, as well as any activities not directly attributable to one of the above functions » Revenue Offsets: relating specifically to any other revenues not attributed to any of the above functions

To allocate the retail water rate revenue requirement to the above functions, the following functional allocation bases were first established (see Table 4-2):
» O&M Functional Basis: SFPUC staff conducted a detailed analysis of the Water Enterprise’s FY 2024 budgeted operating and programmatic expenses. Expenses were evaluated at the departmental level and allocated across the various functions based on the best available information provided by each department’s management. Most departments allocated costs based on the percentage of staff time devoted to each functional activity. See Appendix B for detailed functional allocations.
» Debt Functional Basis: SFPUC staff conducted a detailed analysis of the Water Enterprise’s existing revenue bond debt service over the next five years (FY 2024-FY 2028). The debt service for each revenue bond series was individually allocated based on the functions of the associated capital projects funded by each bond series. See Appendix C for detailed functional allocations.
» CIP Functional Basis: SFPUC staff conducted a detailed analysis of the Water Enterprise’s planned CIP projects (both local and regional) over the next five years (FY 2024-FY 2028).

Each capital project was allocated on an individual basis to one or multiple functions. See Appendix D for detailed functional allocations.
» Wholesale Revenue Functional Basis: SFPUC staff conducted a detailed analysis of wholesale customers’ share of the Water Enterprise expenses over the next five years (FY 2024-FY 2028). This functional allocation basis is required to accurately allocate projected wholesale water sales revenue, which constitutes over 40% of total Water Enterprise revenues.

See Appendix E for detailed functional allocations.
» Federal Bond Interest Subsidy Functional Basis: The Water Enterprise’s federal bond interest subsidy is associated with three specific outstanding revenue bonds and one SRF Loan. A specific functional allocation basis was developed to accurately allocate this subsidy across the various functions. The debt service for each of the three associated revenue bonds and one SRF Loan was individually allocated based on the associated functions of the capital projects funded by each bond/loan. See Appendix F for detailed functional allocations. » Indirect Functional Basis: This functional allocation basis is not based on detailed analysis of expenses. It simply represents a 100% allocation to the “Indirect – General” function.

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 40

» Revenue Offset Functional Basis: This functional allocation basis is not based on detailed analysis of expenses. It simply represents a 100% allocation to the “Revenue Offsets” function.

Table 4-2: Water Enterprise Functional Allocations Bases

Table 4-3 shows the allocation of the FY 2024 retail water rate revenue requirement to each function. Each component of the rate revenue requirement in Lines 1-25 (from Table 4-1) is allocated based on the seven functional allocation bases (from Table 4-2). The total amount associated with each component (in Table 4-3, Column A, Lines 1-25) is distributed to each function based on the corresponding functional allocation basis percentages (from Table 4-2). This results in the overall allocation of the total retail water rate revenue requirement to each function (in Table 4-3, Column A, Lines 27-46)

O&M expenses, debt service, funding for pay-as-you-go CIP, wholesale water sales, and the federal bond interest subsidy are all allocated based on the functional allocation basis that clearly corresponds with each component. Contract rate revenue, programmatic revenues, and drought surcharges all include rate revenues excluded from the scope of this COS analysis and are therefore most appropriately allocated on an indirect functional allocation basis. Capacity fees are typically used to fund capital projects and are therefore allocated based on the CIP functional allocation basis. All other revenue offsets are simply allocated based on the Revenue Offsets functional allocation basis. The contribution to reserves is allocated based on the CIP functional allocation basis, as reserve funding is generally most attributable to future capital funding. (A) (B) (C) (D) (E) ( F) (G)
Line Functions O&M Debt CIP
Wholesale
Revenue
Federal
Bond
Interest
Subsidy Indirect
Revenue
Offsets
1 Surface Water Supply 32.88% 17.56% 1. 02% 28.30% 20.92% 0.00% 0.00% 2 Alternative Water Supply 0.06% 0.17% 6.07% 0.56% 0.00% 0.00% 0.00% 3 Groundwater 0.65% 2.79% 0.00% 1.67% 1.02% 0.00% 0.00% 4 Recycled Water 1.74% 0.60% 2.79% 0.37% 0.78% 0.00% 0.00% 5 Water Conservation 3.45% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 6 Pumping 2.36% 3.51% 1.42% 1.76% 2.12% 0.00% 0.00%
7 Transmission 8.77% 47.81% 17.38% 37.25% 51.77% 0.00% 0.00% 8 Distribution 5.64% 3.64% 25.45% 0.25% 0.00% 0.00% 0.00% 9 Storage 0.32% 7.09% 8.88% 3.87% 4.45% 0.00% 0.00%
10 Treatment 21.76% 15.23% 25.92% 24.26% 16.34% 0.00% 0.00% 11 Water Quality 10.22% 0.00% 3.77% 0.07% 0.00% 0.00% 0.00% 12 Meters 2.46% 1.57% 1.69% 0.51% 0.00% 0.00% 0.00%
13 Hydrants / AWSS 3.46% 0.04% 4.27% 0.01% 0.00% 0.00% 0.00% 14 Private Fire Service 0.02% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 15 Customer Service 6.19% 0.00% 1.33% 1.11% 0.00% 0.00% 0.00% 16 Indirect - General 0.00% 0.00% 0.00% 0.00% 2.60% 100.00% 0.00% 17 Revenue Offsets 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.00% 18 Total 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% *AWWS refers to the Alternative Water Supply System
San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 41

Table 4-3: Allocation of FY 2024 Retail Water Rate Revenue Requirement to Functions

Line Description (A) (B)
1 RETA IL RA TE REVENUE REQUIREMENT FY 2024 ($) Functional Allocation Basis 2 Revenue Requirem ents
3 O&M Expenses $328,788,358 O&M
4 Debt Service $333,499,425 Debt
5 Funding for Pay-as-you-go CIP $47,576,658 CIP
6 Subtotal $709,864,441
7 8 Revenue Offsets
9 Contract Rate Revenue ($561,118) Indirect
10 CAP Use of Revenues $7,000,000 Revenue Offsets
11 Wholesale Water Sales ($316,979,387)Wholesale Revenue 12 Interest Income ($1,133,000)Revenue Offsets
13 Rental Income ($13,595,800)Revenue Offsets
14 Federal Bond Interest Subsidy ($21,317,856)Federal Bond Interest Subsidy 15 Other Misc Income ($13,067,577)Revenue Offsets
16 Programmatic Revenues ($7,158,000)Indirect
17 Capacity Fees ($1,997,000)CIP
18 Drought Surcharges ($13,610,049)Indirect
19 Subtotal ($382,419,786)
20 21 Adjustments
22 Contribution to (Draw from) Reserves $11,265,627 CIP 23 Subtotal $11,265,627
24 25 Total Retail Rate Revenue Requirement $338,710,281 26 27 A LLOCA TION OF RETA IL RA TE REVENUE REQUIREMENT TO FUNCTIONS FY 2024 ($) FY 2024 (%) 28 Functions
29 Surface Water Supply $73,071,935 21.57%
30 Alternative Water Supply $2,437,496 0.72%
31 Groundwater $5,912,222 1.75%
32 Recycled Water $7,989,879 2.36%
33 Water Conservation $11,341,074 3.35%
34 Pumping $14,246,877 4.21%
35 Transmission $69,023,385 20.38%
36 Distribution $44,360,706 13.10%
37 Storage $16,526,769 4.88%
38 Treatment $56,713,182 16.74%
39 Water Quality $35,531,727 10.49%
40 Meters $12,683,934 3.74%
41 Hydrants / AWSS $13,890,792 4.10%
42 Private Fire Service $66,678 0.02%
43 Customer Service $17,593,763 5.19%
44 Indirect - General ($21,883,764) -6.46%
45 Revenue Offsets ($20,796,377) -6.14%
46 Total Retail Rate Revenue Requirement $338,710,281 100.00% San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 42

4.4. Water Revenue Requirement Allocation to Cost
Causation Components
The next step in the COS analysis is to allocate the functionalized retail water rate revenue requirement to various cost components. Cost components (also known as cost causation components) represent different cost categories that are used to characterize and distribute costs to each customer class. Some cost components directly correspond to a single function. The cost components include:
» Raw Water Supply: costs associated with obtaining water supplies prior to treatment » Base Delivery: costs associated with providing water under average water demand (i.e., base demand) conditions
» Extra Capacity: costs associated with providing water during peak water demand conditions » Customer Service: costs associated with meter reading, billing, customer call center services, and other customer service functions; directly corresponds to the “Customer Service” function » Meters: costs associated with meter maintenance and replacement; directly corresponds to the “Meters” function
» Private Fire Service: Costs associated with fire protection provided by private fire service connections; directly corresponds to the “Private Fire Service” function » Revenue Offsets: directly corresponds to the “Revenue Offsets” function

Systemwide Peaking Factors
Peaking factors are used to allocate costs associated with certain functions between the Base Delivery and Extra Capacity cost components. Table 4-4 shows the system-wide peaking factors used to develop this cost component allocation basis. Base demand represents average daily demand during the year, which is normalized to a factor of 1.00 (Column A, Line 1). SFPUC staff provided maximum day deliveries each year for the last five calendar years (2018-2022). The system-wide Max Day peaking factor (Column A, Line 2) represents the average of the ratio of maximum day demand to average day demand each year over the last five calendar years. Costs allocated on a “Max Day” basis in the next section are distributed to the Base Delivery and Extra Capacity cost components based on the percentages shown in Columns B and C of Line

2. These percentages are calculated based on the following equations. Columns are represented in these equations as letters and rows are represented as numbers. For example, Column C, Line 2 is shown as C2.

𝐵𝐵𝐶𝐶
𝑅𝑅𝐼𝐼 𝐷𝐷𝐼𝐼
𝐴𝐴𝑂𝑂𝐶𝐶𝐼𝐼𝐼𝐼𝐷𝐷: 𝐵𝐵2 = 𝐴𝐴1
÷ 𝐴𝐴2 × 100%

𝑀𝑀
𝐶𝐶𝐸𝐸 𝐷𝐷𝐶𝐶𝐷𝐷: 𝐶𝐶2 = 1
00% − 𝐵𝐵2

T
able 4-4: Water System Peaking Factors

(A) (B) (C) (D)
Line Description
Systemwide
Peaking
Factor
Base
Delivery
Extra
Capacity Total
1 Base 1.00 100.0% 100.0%
2 Max Day 1.32 75. 7% 24.3% 100.0%
San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 43

Preliminary Allocation of Revenue Requirement to Cost Components Table 4-5 shows the allocation of each function to the various cost components on a percentage basis in Lines 1-17. Many functions are fully allocated to a single cost component that clearly corresponds. However, other functions are allocated to cost components on the following bases that require further explanation:
» The Alternative Water Supply, Groundwater, and Recycled Water functions are allocated fully to the Base Delivery (distribution) cost component rather than the Raw Water Supply cost component because these functions do not benefit non-potable customers (who are subject to Raw Water Supply but not Base Delivery costs).
» The Water Conservation function is allocated fully to the Extra Capacity cost component because conservation efforts are primarily aimed at reducing peak demand rather than average day demand.
» The Pumping, Transmission, Distribution, Storage, and Treatment functions are all allocated on a “Max Day” basis to the Base Delivery and Extra Capacity cost components based on the systemwide peaking factors shown in Table 4-4. This is because infrastructure associated with these functions is typically sized to meet maximum day water demand conditions. Therefore, associated costs are most appropriately allocated between the Base Delivery and Extra Capacity cost components based on ratio of peak to average demand. » The Water Quality function is allocated fully to the Base Delivery cost component, as water quality testing costs typically do not vary per unit of potable water delivered. » The Hydrants/AWSS function is allocated to the Meters cost component to ensure that all water system users support fire protection provided by hydrants.

Table 4-5 also shows the allocation of the functionalized rate revenue requirement (from Table 4-3) to each cost component in Lines 19-37 based on the percentage allocations for each function in Lines 1-17. Costs allocated to the Indirect – General cost component are proportionally reallocated to all other cost components (except Revenue Offsets) in Lines 39-41. The Indirect – General cost reallocations in Line 41 are added to the initial cost component allocations in Line 37 to determine the preliminary allocation of the retail water rate revenue requirement to each cost component in Line 43. This preliminary allocation is subject to adjustments in the following section.

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 44

Table 4-5: Preliminary Allocation of FY 2024 Retail Water Rate Revenue Requirement to Cost Components (A) (B) (C) (D) (E) (F) (G) (H) (I)
Line Functions
Raw Water
Supply Base Delivery Extra Capacity
Customer
Service Meters
Private Fire
Service
Indirect -
General
Revenue
Offsets Total
1 Functional Allocations to Cost Components (%)
2 Surface Water Supply 100.00% 0.00% 0.00% 0.00% 0.00% 0. 00% 0.00% 0.00% 100.00% 3 Alternative Water Supply 0.00% 100.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.00% 4 Groundwater 0.00% 100.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.00% 5 Recycled Water 0.00% 100.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.00% 6 Water Conservation 0.00% 0.00% 100.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.00% 7 Pumping 0.00% 75.70% 24.30% 0.00% 0.00% 0.00% 0.00% 0.00% 100.00% 8 Transmission 0.00% 75.70% 24.30% 0.00% 0.00% 0.00% 0.00% 0.00% 100.00% 9 Distribution 0.00% 75.70% 24.30% 0.00% 0.00% 0.00% 0.00% 0.00% 100.00% 10 Storage 0.00% 75.70% 24.30% 0.00% 0.00% 0.00% 0.00% 0.00% 100.00% 11 Treatment 0.00% 75.70% 24.30% 0.00% 0.00% 0.00% 0.00% 0.00% 100.00% 12 Water Quality 0.00% 100.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.00% 13 Meters 0.00% 0.00% 0.00% 0.00% 100.00% 0.00% 0.00% 0.00% 100.00% 14 Hydrants / AWSS 0.00% 0.00% 0.00% 0.00% 100.00% 0.00% 0.00% 0.00% 100.00% 15 Private Fire Service 0.00% 0.00% 0.00% 0.00% 0.00% 100.00% 0.00% 0.00% 100.00% 16 Customer Service 0.00% 0.00% 0.00% 100.00% 0.00% 0.00% 0.00% 0.00% 100.00% 16 Indirect - General 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.00% 0.00% 100.00% 17 Revenue Offsets 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.00% 100.00% 18 19 Functional Allocations to Cost Components ($)
20 Surface Water Supply $73,071,935 $0 $0 $0 $0 $0 $0 $0 $73,071,935 21 Alternative Water Supply $0 $2,437,496 $0 $0 $0 $0 $0 $0 $2,437,496 22 Groundwater $0 $5,912,222 $0 $0 $0 $0 $0 $0 $5,912,222 23 Recycled Water $0 $7,989,879 $0 $0 $0 $0 $0 $0 $7,989,879 24 Water Conservation $0 $0 $11,341,074 $0 $0 $0 $0 $0 $11,341,074 25 Pumping $0 $10,785,554 $3,461,323 $0 $0 $0 $0 $0 $14,246,877 26 Transmission $0 $52,253,940 $16,769,446 $0 $0 $0 $0 $0 $69,023,385 27 Distribution $0 $33,583,135 $10,777,571 $0 $0 $0 $0 $0 $44,360,706 28 Storage $0 $12,511,539 $4,015,230 $0 $0 $0 $0 $0 $16,526,769 29 Treatment $0 $42,934,538 $13,778,643 $0 $0 $0 $0 $0 $56,713,182 30 Water Quality $0 $35,531,727 $0 $0 $0 $0 $0 $0 $35,531,727 31 Meters $0 $0 $0 $0 $12,683,934 $0 $0 $0 $12,683,934
32 Hydrants / AWSS $0 $0 $0 $0 $13,890,792 $0 $0 $0 $13,890,792 33 Private Fire Service $0 $0 $0 $0 $0 $66,678 $0 $0 $66,678 34 Customer Service $0 $0 $0 $17,593,763 $0 $0 $0 $0 $17,593,763 35 Indirect - General $0 $0 $0 $0 $0 $0 ($21,883,764) $0 ($21,883,764) 36 Revenue Offsets $0 $0 $0 $0 $0 $0 $0 ($20,796,377) ($20,796,377) 37 Total $73,071,935 $203,940,032 $60,143,287 $17,593,763 $26,574,727 $66,678 ($21,883,764) ($20,796,377) $338,710,281 38 39 Preliminary Cost of Service Allocation
40 Indirect - General Cost Reallocation (%) 19.16% 53.47% 15.77% 4.61% 6.97% 0.02% N/ A N/A 100.00%
41 Indirect - General Cost Reallocation ($) ($4,192,787) ($11,701,855) ($3,450,956) ($1,009,511) ($1,524,829) ($3,826) $21,883,764 $0 $0 42 43 Preliminary Cost of Service ($) $68,879,148 $192,238,177 $56,692,331 $16,584,252 $25,049,898 $62,852 $0 ($20,796,377) $338,710,281 44 Preliminary Cost of Service (%) 20.34% 56.76% 16.74% 4.90% 7.40% 0.02% 0.00% -6.14% 100.00% Cost Components
San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 45

Units of Service
FY 2024 units of service must be determined to calculate adjustments to the preliminary cost component allocations and to develop unit costs. The development of units of service is shown in Table 4-6 through Table 4-8 on the following pages. Units of service associated with Treasure Island, Non-Paying Municipal, Recycled Water, Upcountry/Hetch Hetchy, and Wholesale customers are excluded, as the COS analysis only pertains to customers subject to the proposed retail water rates developed within the study scope.

Meters and Equivalent Meter Units
Table 4-6 shows the number of water meters and equivalent meter units associated with each customer class.

Equivalent meter units are necessary to apportion meter-related costs by meter size, as larger meters can impose greater demands on the system and are more expensive to install, maintain, and replace than smaller meters. Meter capacity ratios (Column A, Lines 17-28) are first calculated by dividing meter capacity (Column A, Lines 2-13) by 20 gallons per minute (gpm), which is the safe maximum flow through a standard 5/8-inch meter. Meter capacity ratios are then multiplied by the number of water meters at each meter size to determine equivalent meters units (Columns B-H, Lines 17-28). Equivalent meters in this study are based on AWWA-rated safe operating capacities and are calculated to represent the potential demand on the water system relative to the base 5/8-inch meter size.

Fire Connections and Equivalent Fire Demand Units
Table 4-7 shows the calculation of equivalent (or potential) fire demand associated with fire hydrants and private fire service connections. Each connection size has a fire flow demand factor similar to the meter capacity ratio of a water meter. The diameter of the connection (in inches) is raised to the power of 2.63 (per the Hazen-Williams equation and AWWA M1 Manual) to determine the fire demand factor (Column A).

The fire flow demand factor is multiplied by the number of connections by size (Column B) to calculate equivalent fire demand units (Column C). Total equivalent fire demand is shown for fire hydrants and private fire service connections in Lines 3 and 15 respectively.

Water Use and Max Day Extra Capacity
Table 4-8 shows FY 2024 water use in CCF by customer class and the calculation of Max Day Extra Capacity requirements in CCF per day. Max Day extra capacity requirements are used to allocate Extra Capacity costs based on customer class-specific water use patterns during peak demand periods. Average daily water use (Column C) is simply annual water use (Column B) divided by 365 days. Max Month factors (Column D) represent the ratio of maximum month water use to average month water use for each customer class/tier in FY 2019.
11 Max Day factors (Column E) represent the ratio of maximum day water use to average day water use and are estimated by multiplying the Max Month factor for each customer class/tier (Column D) by the ratio of the systemwide Max Day factor (1.32 per Table 4-4) to systemwide Max Month factor (estimated at

1.10). Max Day capacity (Column F) is equal to average daily water use (Column C) multiplied by the Max Day factor (Column F). Max Day Extra Capacity (Column G) equals Max Day capacity (Column F) less average daily water use (Column C). Note that the Max Day Extra Capacity calculations pertain to the potable water system only. Therefore, no Max Day Extra Capacity requirements are attributed to non-potable water use.

11 Max Month factors were evaluated for FY 2019 and FY 2022. FY 2019 factors were used due to anomalous impacts of COVID-19 on water use patterns in FY 2022. FY 2019 was determined to be the most representative recent year of water use data.

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 46

Table 4-6: Number of Water Meters and Equivalent Meter Units (In-City and Suburban Retail Only)

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 47

Table 4-7: Number of Fire Protection Connections and Equivalent Fire Demand Units

(A) (B) (C) (D)
Line Connection Size
Fire Demand
Factor
Number of
Connections
Equivalent Fire
Demand Units
Equivalent Fire
Demand (%)
1 Fire Hydrants
2 6-inch 111.31 8,721 970,743 64.62%
3 Subtotal 8,721 970,743 64.62%
4 5 Private Fire Services
6 1-inch 1.00 186 186 0.01%
7 1-1/2 inch 2.90 33 96 0.01%
8 2-inch 6.19 3,902 24,154 1.61%
9 3-inch 17.98 155 2,787 0.19%
10 4-inch 38.32 3,476 133,198 8.87%
11 6-inch 111.31 1,641 182,661 12.16%
12 8-inch 237.21 715 169,603 11.29%
13 10-inch 426.58 7 2,986 0.20%
14 12-inch 689.04 23 15,848 1.05%
15 Subtotal 10,138 531,519 35.38%
16 17 Total 18,859 1,502,262 100.00%
San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 48

Table 4-8: FY 2024 Water Use and Max Day Extra Capacity Requirements (A) (B) (C ) (D) (E) (F) (G)
Line Customer Class
FY 2024
Projected
W
ater Use
(CCF)
Water Use for
COS Analysis
(
CCF)
Average Daily
Water Use
(
CCF/Day)
Max Month
Factor
Max Day
Factor
Max Day
Capacity
(
CCF/Day)
Max Day Extra
Capacity
(
CCF/Day)
1 Single Family Residential
2 F
irst 4 Units per Month 3,913,645 3,913,645 10,722 1.03 1.24 13,252 2,530 3 All Additional Units 2,362,176 2,362,176 6,472 1.20 1.44 9,323 2,851 4 Subtotal 6,275,820 6,275,820 17,194 22,575 5,381
5 6 Multiple-Family Residential
7 First 3 Units per Dwelling Unit per Month 6,760,988 6,760,988 18,523 1.01 1.21 22,432 3,909 8 All Additional Units 3,809,265 3,809,265 10,436 1.12 1.35 14,039 3,602 9 Subtotal 10,570,253 10,570,253 28,960 36,471 7,511
10 11 Non-Residential
12 Commercial/Industrial/Municipal 8,549,050 8,549,050 23,422 1.15 1.38 32,279 8,857 13 Irrigation 1,120,003 1,120,003 3,069 1.15 1.38 4,229 1,160 14 Docks & Shipping 3,925 3,925 11 1.15 1.38 15 4
15 Builders & Contractors 98,610 98,610 270 1.15 1.38 372 102 16 Fire Service 31,006 31,006 85 1.15 1.38 117 32
17 Non-Potable 155,358 155,358 426 N/A N/A N/A N/A
18 Excluded from COS* 62,993,071 N/A N/A N/A N/A N/A N/A 19 Subtotal 72,951,025 9,957,954 27,282 37,012 10,156
20 21 Total 89,797,098 26,804,027 73,436 96,058 23,048
*Treasure Island, Non-Paying Municipal, Recycled Water, Upcountry/Hetch Hetchy, Wholesale, and Suburban Contract Rate water use San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 49

Fire Protection Extra Capacity Analysis
Fire hydrants and private fire service connections are allocated a portion of Extra Capacity costs. Table 4-9 and the formula below show the methodology (per the AWWA M1 Manual) used to calculate Max Day Extra Capacity associated with fire protection. The calculations are based on assumptions regarding the duration and flow rate in gallons per minute (gpm) associated with representative fires for which the system is designed to provide capacity:

Max Day Requirements (CCF/day) = Duration of Fire (hrs) × Water Use Rate (gpm) × 60 mins/hr ÷ 748.05 gallons/CCF

Table 4-9: Fire Protection Extra Capacity Requirements

Table 4-10 shows the allocation basis used to distribute Extra Capacity costs among retail water use not used for fire protection, fire hydrants, and private fire service based on the proportion of Max Day Extra Capacity requirements in CCF per Day. Max Day Extra Capacity for retail water use not used for fire protection (Column A, Line 1) was calculated previously in Table 4-8. Total Max Day Extra Capacity attributable to fire protection (from Table 4-9) is distributed between fire hydrants (Column A, Line 2) and private fire service connections (Column A, Line 3) based on the proportion of equivalent fire demand units associated with each (from Table 4-7, Column D, Line 3 and Line 15). The percentage of Max Day Extra Capacity attributed to each category provides the Extra Capacity cost allocation basis in Column B.

Table 4-10: Max Day Extra Capacity Cost Allocation

(A) (B) (C)
Line Fire Protection Extra Capacity
Duration of Fire
(Hours)
Water Use Rate
(gpm)
Max Day Extra
Capacity
(CCF/Day)
1 Representative Fire #1 4 4,000 1,283 2 Representative Fire #2 3 3,000 722 3 Total Fire Protection Peaking Requirements 2,005
(A) (B)
Line Max Day Extra Capacity
Max Day Extra
Capacity
(CCF/Day)
Extra Capacity
Cost Allocation
1 Retail (Non-Fire Protection) 23,048 92.00%
2 Fire Hydrants 1,296 5.17%
3 Private Fire Services 709 2.83%
4 Total 25,053 100.00%
San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 50

Final Adjusted Allocation of Revenue Requirement to Cost Components Table 4-11 shows the final adjusted allocation of the retail water rate revenue requirement to the various cost components. The final adjusted allocation to each cost component in Line 5 ultimately provides the basis for FY 2024 rate calculations shown in the following sections. The final adjusted COS allocations in Line 5 equal the sum of the components shown in Lines 1-4, which are described in further detail below:

1. Preliminary Cost of Service Allocation (Line 1): The preliminary allocations to each cost component were previously developed in Table 4-5. The Indirect - General cost component is excluded because all General costs were previously reallocated to other cost components.

2. Reallocation of Fire Hydrant Extra Capacity to Meters (Line 2): Extra Capacity costs associated with providing fire flow for fire hydrants are reallocated to the Meters cost component to recover hydrant- related fire protection costs from metered connections. Approximately 5.17% of Extra Capacity costs are reallocated to the Meters cost component (per Table 4-10, Column B, Line 2). Note that this reallocation results in a shifting of costs between cost components but does not change the total rate revenue requirement.

3. Reallocation of Private Fire Extra Capacity to Private Fire Service (Line 3): Extra Capacity costs associated with providing fire flow for private fire protection are reallocated to the Private Fire Service cost component to recover the associated costs from customers with dedicated private fire service connections.

Approximately 2.83% of Extra Capacity costs are reallocated to the Private Fire Service cost component (per Table 4-10, Column B, Line 3). Note that this reallocation results in a shifting of costs between cost components but does not change the total rate revenue requirement.

4. Reallocation of Extra Capacity to Meters (Line 4): It is a common practice for public water utilities in California to recover a portion of Extra Capacity costs from fixed charges to improve revenue stability.

Approximately $5.2 million of the Extra Capacity cost component is being allocated to the Meters cost component. Public water utilities in California typically recover approximately 20-25% of rate revenues from fixed charges, compared to the SFPUC which is projected to recover approximately 15% of retail water rate revenues from fixed charges. The allocation of Extra Capacity costs to the Meters cost component will provide a degree of revenue stability without adversely affecting customer affordability (as higher fixed charges tend to disproportionately impact bills for low use residential customers).

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 51

Table 4-11: Final Adjusted Allocation of FY 2024 Retail Water Rate Revenue Requirement to Cost Components (A) (B) (C) (D) (E) (F) (G) (H)
Line Final Adjusted Cost of Service Allocation
Raw Water
Supply Base Delivery Extra Capacity
Customer
Service Meters
Fire
Sprinklers
Revenue
Offsets Total
1 Preliminary Cost of Service $68,879,148 $192,238,177 $56,692,331 $16,584,252 $25,049,898 $62,852 ($20,796,377) $338,710,281 2 Extra Capacity Reallocation to Hydrants $0 $0 ($2,932,140) $0 $2,932,140 $0 $0 $0 3 Extra Capacity Reallocation to Private Fire Service $0 $0 ($1,605,461) $0 $0 $1,605,461 $0 $0 4 Extra Capacity Reallocation to Meters $0 $0 ($5,215,473) $0 $5,215,473 $0 $0 $0 5 Final Adjusted Cost of Service ($) $68,879,148 $192,238,177 $46,939,258 $16,584,252 $33,197,511 $1,668,313 ($20,796,377) $338,710,281 6 Final Adjusted Cost of Service (%) 20.34% 56.76% 13.86% 4.90% 9.80% 0.49% -6.14% 100.00% Cost Components
San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 52

4.5. Water Unit Cost Development
The next step of the COS analysis is to calculate unit costs for each cost component, which are used in the final step of the COS analysis to distribute the retail water rate revenue requirement to each customer class.

Table 4-12 shows the development of unit costs for each cost component, which are calculated by dividing the final adjusted COS allocation in Line 14 (from Table 4-11) by the total units of service in Line 10 (from Table 4-6 through Table 4-8). Units of service associated with Treasure Island, Non-Paying Municipal, Recycled water, Upcountry/Hetch Hetchy, and Wholesale customers are excluded from the unit cost calculations, as the COS analysis only pertains to customers subject to the proposed retail water rates developed within the scope of this study. The units of service applied to each cost component are as follows:

» Raw Water Supply Units of Service: total retail water use in CCF » Base Delivery: total retail water use in CCF (excluding non-potable) » Extra Capacity: total Max Day Extra Capacity in CCF per day associated with retail water use not used for fire protection
» Customer Service: total number of annual bills, estimated by multiplying total retail water connections (including private fire service connections) by 12 monthly billing periods per year » Meters: total number of equivalent meter units multiplied by 12 monthly billing periods per year
» Private Fire Service: total number of equivalent fire demand units associated with private fire service connections multiplied by 12 monthly billing periods per year » Revenue Offsets: total retail water use in CCF
San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 53

Table 4-12: FY 2024 Unit Costs
(A) (B) (C) (D) (E) (F) (G)
Line Description
Raw Water
Supply
Base
Delivery
Extra
Capacity
Customer
Service Meters
Private Fire
Service
Revenue
Offsets
1 Units of Service by Customer Class
2 Single Family Residential 6,275,820 6,275,820 5,381 1,343,196 1,499,244 N/A 6,275,820 3 Multiple-Family Residential 10,570,253 10,570,253 7,511 464,364 1,232,970 N/A 10,570,253 4 Commercial/Industrial/Municipal 8,549,050 8,549,050 8,857 211,536 808,446 N/A 8,549,050 5 Irrigation 1,120,003 1,120,003 1,160 21,156 103,788 N/A 1,120,003 6 Docks & Shipping 3,925 3,925 4 324 3,732 N/A 3,925
7 Builders & Contractors 98,610 98,610 102 4,200 47,112 N/A 98,610 8 Private Fire Service 31,006 31,006 32 121,656 N/A 6,378,232 31,006 9 Non-Potable 155,358 N/A N/A 24 1,200 N/A 155,358
10 Total Units of Service 26,804,027 26,648,669 23,048 2,166,456 3,696,492 6,378,232 26,804,027 11 12 Unit Descriptions Water Use
(CCF)
Potable Water
Use (CCF)
Max Day Extra
Capacity
(CCF/Day)
Annualized Bills
Annualized
Equivalent
Meter Units
Annualized
Equivalent Fire
Demand Units
Water Use
(CCF)
13 14 Final Adjusted Cost of Service $68,879,148 $192,238,177 $46,939,258 $16,584,252 $33,197,511 $1,668,313 ($20,796,377) 15 16 Unit Cost $2.570 $7.214 $2,036.611 $7.655 $8.981 $0.262 ($0.776) San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 54

4.6. Water Customer Class Revenue Requirements
Table 4-13 shows the distribution of the total FY 2024 retail water rate revenue requirement to each customer class under the proposed COS (Column A). Costs were distributed to each customer class by multiplying the unit costs for each cost component by the corresponding units of service associated with each customer class (from Table 4-12). The current COS in Column B represents the amount of revenue each customer class is projected to generate in FY 2024 based on existing water rates. The difference between the total proposed COS (Column A, Line 9) and current COS (Column B, Line 9) is the proposed 5% revenue adjustment in FY 2024. Note that retail water revenue from contract rates and Drought Surcharges is excluded from Table 4-13.

Columns C-E provide a comparison of the proposed versus current COS in percentage terms. Most customer classes experience a relatively minor distributional impact from the proposed COS allocations. Private fire service customers’ cost allocation decreases largely due to the refinement of the methodology used to allocate fire-related extra capacity costs relative to the prior cost of service study in 2018. Non-potable customers’ cost allocation increases primarily because the updated O&M expense functionalization allocates more costs to the Surface Water Supply function relative to the prior study.

Table 4-13: Comparison of Proposed vs. Current Cost of Service (FY 2024)

$ Comparison % Comparison
(A) (B) (C) (D) (E)
Line Customer Class
Proposed
Cost of
Service
($)
Current
Cost of
Service
($)
Proposed
Cost of
Service
(%)
Current
Cost of
Service
(%)
Change
(%)
1 Single Family Residential $91,236,228 $84,575,700 26.94% 26.27% 2.53% 2 Multiple-Family Residential $125,138,244 $119,486,099 36.95% 37.12% -0.46% 3 Commercial/Industrial/Municipal $103,924,835 $98,487,157 30.68% 30.59% 0.29% 4 Irrigation $13,545,814 $12,840,998 4.00% 3.99% 0.26%
5 Docks & Shipping $79,631 $75,358 0.02% 0.02% 0.44%
6 Builders & Contractors $1,551,568 $1,469,665 0.46% 0.46% 0.34% 7 Private Fire Service $2,944,309 $4,841,198 0.87% 1.50% -42.19% 8 Non-Potable $289,652 $157,974 0.09% 0.05% 74.27%
9 Total $338,710,281 $321,934,148 100.00% 100.00% 0.00% San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 55

5. Water Rate Design

5.1. Water Rate Design Overview
This section details the proposed retail water rate calculations. FY 2024 proposed rates are calculated directly from the unit costs developed in the COS analysis. Proposed and projected rates in FY 2025-FY 2028 are calculated by increasing proposed FY 2024 rates by the annual revenue adjustments from the proposed financial plan. SFPUC staff and Raftelis evaluated the need to modify the existing rate structure but determined that no changes will be proposed as part of this study. Raftelis also analyzed residential water use data to ensure that the existing residential tier allotments (four units per month for Single Family Residential and three units per month per dwelling unit for Multiple-Family Residential) are reasonable. The proposed rates shown are consistent with the SFPUC’s existing retail water rate structure. Note also that no changes to the existing system of Drought Surcharges are recommended as part of this study.

Table 5-1 indicates which cost components are collected by each charge type to develop proposed retail water rates in FY 2024. Fixed Monthly Service Charges are designed to recover a share of Customer Service costs and all Meters costs. Private Fire Fixed Monthly Service Charges are designed to recover a share of Customer Service costs and all Private Fire Service costs. Variable Charges are designed to recover all remaining cost components, including Raw Water Supply, Base Delivery, Extra Capacity, and Revenue Offsets. Note that Untreated Water Variable Charges are exempted from Base Delivery and Extra Capacity costs, which only pertain to the potable water system.

Table 5-1: Revenue Recovery by Charge Type

Line Cost Component Asso ciated Charge
1 Raw Water Supply Variable Charges
2 Base Delivery Variable Charges (excluding Untreated Water) 3 Extra Capacity Variable Charges (excluding Untreated Water) 4 Customer Service Fixed Monthly Service Charges; Private Fire Fixed Monthly Service Charges 5 Meters Fixed Monthly Service Charges
6 Private Fire Service Private Fire Fixed Monthly Service Charges 7 Revenue Offsets Variable Charges
San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 56

5.2. Water Rate Calculations

Proposed FY 2024 Fixed Monthly Service Charge Calculation Fixed Monthly Service Charges are designed to recover costs associated with the Customer Service and Meters cost components. The Meters cost component includes costs to repair or replace meters and include a portion of Extra Capacity costs as allocated in Table 4-11. Table 5-2 shows the detailed calculation of Fixed Monthly Service Charges in FY 2024 based on Customer Service and Meters unit costs (from Table 4-12).

Customer Service costs do not vary by meter size. Therefore, the Customer Service unit cost is applied uniformly to all proposed charges regardless of meter size (Column B). Because Meters costs vary by meter size based on meter capacity, AWWA capacity ratios in Column A (from Table 4-6) are used to differentiate Meters charges by meter size. The Meters charges (Column C) are calculated by multiplying the Meters unit cost (from Table 4-12) by the corresponding meter capacity ratio (Column A). Proposed charges (Column D) equal the sum of Columns B-C, and are compared to current FY 2023 charges in Columns E-F.

Table 5-2: Proposed FY 2024 Fixed Monthly Service Charge Calculation

(A) (B) (C) (D) (E) (F)
Line Meter Size
Meter
Capacity
Ratio
Customer
Service Meters
Proposed
Charge
(FY 2024)
Current
Charge
(FY 2023)
Difference
($)

1 5/8 inch 1.00 $7.655 $8.981 $16.64 $15.17 $1.47
2 3/4 inch 1.50 $7.655 $13.471 $21.13 $19.43 $1.70
3 1-inch 2.50 $7.655 $22.452 $30.11 $27.95 $2.16
4 1-1/2 inch 5.00 $7.655 $44.904 $52.56 $49.25 $3.31
5 2-inch 8.00 $7.655 $71.847 $79.51 $74.81 $4.70
6 3-inch 16.00 $7.655 $143.693 $151.35 $142.97 $8.38
7 4-inch 25.00 $7.655 $224.520 $232.18 $219.65 $12.53
8 6-inch 50.00 $7.655 $449.041 $456.70 $432.65 $24.05
9 8-inch 80.00 $7.655 $718.465 $726.13 $688.25 $37.88
10 10-inch 125.00 $7.655 $1,122.602 $1,130.26 $1,071.65 $58.61 11 12-inch 215.00 $7.655 $1,930.875 $1,938.54 $1,838.45 $100.09 12 16-inch 375.00 $7.655 $3,367.806 $3,375.47 $3,201.65 $173.82 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 57

Proposed FY 2024 Private Fire Fixed Monthly Service Charge Calculation
Private Fire Fixed Monthly Service Charges are designed to recover costs associated with the Customer Service and Private Fire Service cost components. A Private Fire Service unit cost was calculated previously in Table 4-12, but is further refined into two components in Table 5-3 below. Private Fire Service costs associated with backflow administration do not vary based on service size, as do all other Private Fire Service costs associated with Extra Capacity. Therefore, a “Backflow Administration” unit cost is calculated (Column C, Line 1) by dividing direct backflow administration costs (Column A, Line 1) by annualized private fire service connections (Column B, Line 1). All remaining Private Fire Service costs (Column A, Line 2) are divided by annualized equivalent fire demand units associated with private fire service connections (Column B, Line 2) to determine a “Private Fire Extra Capacity” unit cost (Column C, Line 2).

Table 5-3: Private Fire Service Unit Cost Differentiation

Table 5-4 shows the detailed calculation of Private Fire Fixed Monthly Service Charges in FY 2024 based on Customer Service, Backflow Administration, and Private Fire Extra Capacity unit costs. Customer Service and Backflow Administration costs do not vary by service size. Therefore, Customer Service unit costs (from Table 4-12) and Backflow Administration unit costs (from Table 5-3) are applied uniformly to all proposed charges regardless of service size (Columns B-C). Because Private Fire Extra Capacity costs vary by service size based on equivalent fire demand, fire demand factors in Column A (from Table 4-7) are used to differentiate Private Fire Extra Capacity charges by service size. The Private Fire Extra Capacity charges (Column D) are calculated by multiplying the Private Fire Extra Capacity unit cost (from Table 5-3) by the corresponding fire demand factor (Column A). Proposed charges (Column E) equal the sum of Columns B-D, and are compared to current FY 2023 charges in Columns F-G.

Table 5-4: Proposed FY 2024 Private Fire Fixed Monthly Service Charge Calculation

(A) (B) (C) (D)
Line
Private Fire Service
Cost Component
FY 2024
COS
Allocation
Units of
Service Unit Cost Unit Description
1 Backflow Administration $62,852 121,656 $0.517 Annualized Private Fire Service Connections 2 Private Fire Extra Capacity $1,605,461 6,378,232 $0.252 Annualized Private Fire Service Equivalent Fire Demand Units 3 Total $1,668,313
(A) (B) (C) (D) (E) (F) (G)
Line
Connection
Size
Fire
Demand
Factor
Customer
Service
Backflow
Adminis-
tration
Private Fire
Extra
Capacity
Proposed
Charge
(FY 2024)
Current
Charge
(FY 2023)
Difference
($)

1 1-inch 1.00 $7.655 $0.517 $0.252 $8.43 $9.55 ($1.12)
2 1-1/2 inch 2.90 $7.655 $0.517 $0.731 $8.91 $12.45 ($3.54) 3 2-inch 6.19 $7.655 $0.517 $1.558 $9.73 $15.93 ($6.20) 4 3-inch 17.98 $7.655 $0.517 $4.526 $12.70 $25.21 ($12.51) 5 4-inch 38.32 $7.655 $0.517 $9.645 $17.82 $35.65 ($17.83) 6 6-inch 111.31 $7.655 $0.517 $28.018 $36.19 $64.65 ($28.46) 7 8-inch 237.21 $7.655 $0.517 $59.707 $67.88 $99.45 ($31.57) 8 10-inch 426.58 $7.655 $0.517 $107.374 $115.55 $151.65 ($36.10) 9 12-inch 689.04 $7.655 $0.517 $173.439 $181.62 $256.05 ($74.43) San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 58

Proposed FY 2024 Variable Charge Calculation
Variable Charges are designed to recover costs associated with the Raw Water Supply, Base Delivery, Extra Capacity, and Revenue Offsets cost components. An Extra Capacity unit cost was calculated previously in Table 4-12, but is further refined into unique “unit rates” in Table 5-5 below. This provides a basis to differentiate potable Variable Charges by customer class and tier. Max Day Extra Capacity in CCF per day in Column B (from Table 4-8) is multiplied by the Extra Capacity unit cost per CCF per day in Column C (from Table 4-12) to determine the Extra Capacity cost allocation for each customer class and tier in Column D.

The Extra Capacity cost allocation in Column D is then divided by FY 2024 water use in CCF in Column A to establish unique Extra Capacity unit rates for each customer class and tier in Column E.

Table 5-5: Extra Capacity Unit Rate Calculation

Table 5-6 shows the detailed calculation of Variable Charges in FY 2024 based on Raw Water Supply, Base Delivery, and Revenue Offsets unit costs (from Table 4-12) and Extra Capacity unit rates (from Table 5-5) in Columns A-D. Proposed charges per CCF (Column E) equal the sum of Columns A-D, and are compared to current FY 2023 charges in Columns F-G. Potable water charges are differentiated based on Extra Capacity unit rates only, which reflect differences in peak water demand patterns between residential and non- residential customers. Untreated Water charges are exempt from Base Delivery and Extra Capacity costs, which only pertain to the potable water system.

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 59

Table 5-6: Proposed FY 2024 Variable Charge Calculation (A) (B) (C) (D) ( E) (F) (G)
Line Customer Class
Raw Water
Supply
Base
Delivery
Extra
Capacity
Revenue
Offsets
Proposed
Charge per
CCF
(FY
2024)
Current
Charge per
CCF
(FY
2023)
Difference
($)
1 Single-Family Residential
2 First 4 Units per Month $2. 570 $7.214 $1.316 ($0.776) $10.33 $9.60 $0.73 3 All Additional Units $2.570 $7.214 $2.458 ($0.776) $11.47 $10.71 $0.76 4 5 Multiple-Family Residential
6 First 3 Units per Dwelling Unit per Month $2.570 $7.214 $1.177 ($0.776) $10.19 $9.60 $0.59 7 All Additional Units $2.570 $7.214 $1.926 ($0.776) $10.94 $10.76 $0.18 8 9 Commercial, Industrial, and General Uses*
10 For All Units of Water $2.570 $7.214 $2.110 ($0.776) $11.12 $10.55 $0.57 11 12 Untreated Water Service
13 For All Units of Water $2.570 N/A N/A ($0.776) $1.80 $0.95 $0.85 *Includes Commercial, Industrial, Municipal, Irrigation, Docks & Shipping, Builders & Contractors, and Fire Service water use San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 60

Proposed Retail Water Rate Schedule (FY 2024 – FY 2028) Table 5-7 shows current FY 2023 retail water rates and proposed/projected water rates for FY 2024 to FY 2028. Note that SFPUC staff is only recommending that the Commission consider adoption of three years of proposed rates through FY 2026. All rates shown beyond FY 2026 are projections for planning purposes only.

Proposed FY 2024 rates were calculated in Table 5-2, Table 5-4, and Table 5-6. Proposed and projected rates in FY 2025-FY 2028 were calculated by increasing all proposed FY 2024 rates each year by the proposed and planned revenue adjustments in Table 3-13. All rates are proposed to become effective on July 1 of each fiscal year and are rounded up to the nearest cent to ensure adequate revenue recovery.

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 61

Table 5-7: Proposed and Projected Retail Water Rate Schedule (FY 2024 – FY 2028)

(A) (B) (C) (D) (E) (F)
Line Proposed Water Rate Schedule
Current
(since
7/1/2021)
Proposed
FY 2024
(7/1/2023)
Proposed
FY 2025
(7/1/2024)
Proposed
FY 2026
(7/1/2025)
Projected
FY 2027
(7/1/2026)
Projected
FY 2028
(7/1/2027)
1 Fixed Monthly Service Charges (by Meter Size)
2 5/8 inch $15.17 $16.64 $17.48 $18.36 $19.10 $19.87
3 3/4 i
nch $19.43 $21.13 $22.19 $23.30 $24.24 $25.21
4 1-inch $27.95 $30.11 $31.62 $33.21 $34.54 $35.93
5 1-1/2 inch $49.25 $52.56 $55.19 $57.95 $60.27 $62.69
6 2-inch $74.81 $79.51 $83.49 $87.67 $91.18 $94.83
7 3-inch $142.97 $151.35 $158.92 $166.87 $173.55 $180.50 8 4-inch $219.65 $232.18 $243.79 $255.98 $266.22 $276.87 9 6-inch $432.65 $456.70 $479.54 $503.52 $523.67 $544.62 10 8-inch $688.25 $726.13 $762.44 $800.57 $832.60 $865.91 11 10-inch $1,071.65 $1,130.26 $1,186.78 $1,246.12 $1,295.97 $1,347.81 12 12-inch $1,838.45 $1,938.54 $2,035.47 $2,137.25 $2,222.74 $2,311.65 13 16-inch $3,201.65 $3,375.47 $3,544.25 $3,721.47 $3,870.33 $4,025.15 14 15 Private Fire Fixed Monthly Service Charges (by Service Size) 16 1-inch $9.55 $8.43 $8.86 $9.31 $9.69 $10.08
17 1-1/2 inch $12.45 $8.91 $9.36 $9.83 $10.23 $10.64
18 2-inch $15.93 $9.73 $10.22 $10.74 $11.17 $11.62
19 3-inch $25.21 $12.70 $13.34 $14.01 $14.58 $15.17
20 4-inch $35.65 $17.82 $18.72 $19.66 $20.45 $21.27
21 6-inch $64.65 $36.19 $38.00 $39.90 $41.50 $43.16
22 8-inch $99.45 $67.88 $71.28 $74.85 $77.85 $80.97
23 10-inch $151.65 $115.55 $121.33 $127.40 $132.50 $137.80 24 12-inch $256.05 $181.62 $190.71 $200.25 $208.26 $216.60 25 26 Variable Charges (per CCF)
27 Single-Family Residential
28 First 4 Units per Month $9.60 $10.33 $10.85 $11.40 $11.86 $12.34 29 All Additional Units $10.71 $11.47 $12.05 $12.66 $13.17 $13.70 30 31 Multiple-Family Residential
32 First 3 Units per Dwelling Unit per Month $9.60 $10.19 $10.70 $11.24 $11.69 $12.16 33 All Additional Units $10.76 $10.94 $11.49 $12.07 $12.56 $13.07 34 35 Commercial, Industrial, and General Uses
36 For All Units of Water $10.55 $11.12 $11.68 $12.27 $12.77 $13.29 37 38 Untreated Water Service
39 For All Units of Water $0.95 $1.80 $1.89 $1.99 $2.07 $2.16 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 62

5.3. Water Customer Bill Impacts
Sample monthly water bill impacts are shown for single family residential customers in Figure 5-1, multiple- family residential customers in Figure 5-2, and non-residential customers in Figure 5-3. The bill impacts compare current FY 2023 monthly water bills with proposed FY 2024 monthly water bills at varying levels of monthly water use. These examples assume meter sizes of 5/8-inch for single family residential and non- residential customers. Multiple-family residential bills assume a one-inch meter and ten dwelling units. The varying levels of water use correspond to the 10th percentile, 25th percentile, median, 75th percentile, and 90th percentile of monthly water use for each customer class based on an analysis of FY 2022 account-level billing data. Note that all bills exclude Drought Surcharges to provide a direct comparison of current versus proposed rates, even though Drought Surcharges equal to 5% of Variable Charges were effective through April 2023 before being formally rescinded effective May 2023.

Figure 5-1: Sample Single Family Residential Water Monthly Bill Impacts (FY 2024)

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 63

Figure 5-2: Sample Multiple-Family Residential Water Monthly Bill Impacts (FY 2024)

Figure 5-3: Sample Non-Residential Water Monthly Bill Impacts (FY 2024)

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 64

6. Wastewater Financial Plan

6.1. Overview of the Financial Planning Process
The primary goal of the financial planning process is to identify the total amount of retail wastewater rate revenue required on an annual basis to support the Wastewater Enterprise’s financial needs. MME and Raftelis prepared a wastewater utility financial plan model in Microsoft Excel to project the SFPUC Wastewater Enterprise’s revenues, expenses, cash flows, reserve balances, and debt coverage over the next ten fiscal years (through FY 2033). Note that the financial plan projections presented in the body of this report extend through the next five fiscal years (through FY 2028). However, graphical representations of the financial plan are presented for the period FY 2023 – FY 2033. Also note that the wastewater financial plan projections developed by MME and Raftelis for this study correspond to, and are aligned with, the SFPUC staff’s own 10-Year Financial Plan where possible, which is updated on an annual basis as part of staff’s on- going financial management processes.

The critical steps in developing a wastewater utility financial plan include:

• Understanding the Existing Rate Structure and Billing Methodology: This initial step in the financial planning process lays the foundation for the development of a demand forecast and the projection of rate revenues at existing rates that accurately reflects customer usage characteristics and Wastewater Enterprise cost recovery procedures.

• Projecting Wastewater Units of Service (Demand Forecast): The demand forecast projects the “units of service” subject to each rate/charge, including the number of wastewater service connections, volumetric wastewater discharges, and the strength loadings of the wastewater discharges. Projections are based on factors such as customer account growth, projected changes in customer water demand patterns, and associated wastewater discharges.

• Projecting Wastewater Rate Revenues at Existing Rates: This step in the financial planning process determines how much rate revenue will be generated annually if there are no rate increases. The level of rate revenues at existing rates is compared to projected expenditures to determine the annual funding shortfall that must be met by the appropriate combination of rate revenue increases or external debt financing.

• Projecting Miscellaneous Non-Rate Revenue: Miscellaneous non-rate revenue items can include interest income from cash reserves, grants, capacity fee receipts, and miscellaneous ancillary fees.

Miscellaneous non-rate revenues assist in closing the annual funding shortfall and reduce the revenue requirement from rates (i.e., the level of amount of rate revenue that must be recovered from customers).

determines the optimal mix of annual rate revenue increases and external debt financing to cover the funding shortfall. An outcome of this process is the identification of rate revenue funded CIP expenditures, required debt proceeds, and projected debt service costs.

• Identifying Cash Reserve and Debt Service Coverage Targets: Utilities must not only have sufficient revenues to pay for projected costs, but they must also maintain prudent cash reserves and meet both contractually obligated and target debt service coverage requirements. The sewer revenue requirement from rates therefore must include the cost of meeting both cash reserve and debt service coverage targets.

6.2. Financial Plan Components

Existing Retail Wastewater Rates
The SFPUC’s currently effective FY 2023 wastewater rates are shown in Table 6-1. The rates shown include:
» A Fixed Monthly Service Charge that is the same for both residential and non-residential customers
» Variable Charges per 100 CCF of discharge that vary based on whether the customer is residential or non-residential
» Chemical Oxygen Demand (COD) per pound in 100 CCF of discharge that is charged to non- residential users. Residential users have this charge included in their volumetric charges. » Total Suspended Solids (TSS) Charges per pound in 100 CCF of discharge that is charged to non- residential users. Residential users have this charge included in their volumetric charges. » Oil and Grease (OG) Charges per pound in 100 CCF of discharge that is charged to non- residential users. Residential users have this charge included in their volumetric charges.

In addition to the current wastewater rates, the SFPUC currently assesses a monthly service charge to a small number of non-metered parcels to account for the runoff generated from these properties (see Table 6-2).

Therefore, the current wastewater rates shown in Table 6-1 recover the cost of providing both wastewater and stormwater service.

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 66

Table 6-1: Current Wastewater Enterprise Rates

Table 6-2: Runoff Rates for Customers without SFPUC Accounts

Wastewater Billing Methodology
The volumetric wastewater rates paid by SFPUC customers reflect the volume of their billed wastewater discharges and their assumed strength loadings for chemical oxygen demand (COD), total suspended solids (TSS), and Oil and Grease (OG). The $/CCF volumetric rate paid by residential customers combines the costs the SFPUC incurs to treat both the volume and strength loadings of residential customers (Line 3 in Table 6-1). In contrast, non-residential customers pay a separately identified amount per CCF and dollars per pound ($/lb) components for the volume of billed discharges (Line 7 in Table 6-1) and strength loadings (Lines 8 – 10 on Table 6-1).

The SFPUC’s billing system assigns all wastewater customers to one of 11 strength loading groups based on their Standard Industrial Classification (SIC) Code. For example, a residential hotel with no eating facilities with a SIC Code of 7014 is assigned to strength loading Group 2. Similarly, a nursing facility with a SIC Code of 8050 is assigned to strength loading Group 3. With very few exceptions, residential customers are assigned strength loading Group 4. The SIC Codes and their loading groups are shown in Appendix G. This information is used to calculate the monthly volumetric bill paid by each wastewater customer. Table 6-3 shows the SFPUC’s strength loading associated with each group.

Table 6-3: Wastewater Enterprise Strength Loading Groups

Wastewater Units of Service (Demand Forecast)
Table 6-4 through Table 6-8 summarize the projected wastewater discharge volumes and strength loadings for FY 2023 – FY 2028. The information shown Table 6-4 through Table 6-8 provides a foundation for the projection of revenues at existing rates, the allocation of costs to customer classes, and the determination of wastewater rates. These unit of service projections shown in Table 6-4 through Table 6-8 are based on actual historical recorded values for FY 2022 as obtained from the SFPUC’s billing system. The FY 2022 units of service were projected forward using the following methodologies:

• Projected Customer Accounts (Table 6-4): There is no projected customer account growth during the financial planning period. This reflects that fact that the City of San Francisco is virtually 100% built out.

• Projected Discharge Volumes (Table 6-5): Discharge volumes in FY 2022 reflected the impact of the COVID-19 pandemic coupled with the effects of prolonged drought conditions on customer water usage. Beginning in FY 2023 customer wastewater discharge volumes are projected to return to historical norms for each type of customer.

• Projected Discharge Strength Loadings (Table 6-6 through Table 6-8): Projected strength loading is directly correlated to projected discharge volumes.

Line SIC Code C OD TSS OG COD TSS OG
1 SIC Group 2 194 56 26 1.211 0.350 0.162
2 SIC Group 3 640 239 63 3.995 1.492 0.393
3 SIC Group 4 684 279 85 4.270 1.742 0.531
4 SIC Group 5 641 224 86 4.002 1.398 0.537
5 SIC Group 6 396 59 100 2.472 0.368 0.624
6 SIC Group 7 1,387 171 112 8.659 1.068 0.699
7 SIC Group 8 1,539 181 125 9.608 1.130 0.780
8 SIC Group 9 1,616 284 137 10.088 1.773 0.855
9 SIC Group 10 1,153 303 251 7.198 1.892 1.567
10 SIC Group 11 4,921 1,371 559 30.721 8.559 3.490
11 SIC Group 12 715 303 100 4.464 1.892 0.624
Strength (lbs/CCF)Strength Concentration (mg/L)
San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 68

Table 6-4: Projected Wastewater Enterprise Customer Accounts

Line Customer Type Customer Rate Class FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Single Family Residential Residential 111,671 111,671 111,671 111,671 111,671 111,671 2 Multifamily Residential Residential 36,443 36,443 36,443 36,443 36,443 36,443 3 Municipal Non-Residential 797 797 797 797 797 797
4 Nonresidential/Commercial Non-Residential 15,182 15,182 15,182 15,182 15,182 15,182 5 Fire Non-Residential 9,775 9,775 9,775 9,775 9,775 9,775 6 Municipal Fire Non-Residential 354 354 354 354 354 354 7 Total Accounts 174,222 174,222 174,222 174,222 174,222 174,222 8 9 Strength Group Customer Rate Class FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 10 SICGRP1 Varies 208 208 208 208 208 208
11 SICGRP2 Varies 356 356 356 356 356 356
12 SICGRP3 Varies 43 43 43 43 43 43
13 SICGRP4 Varies 99,297 99,297 99,297 99,297 99,297 99,297 14 SICGRP5 Varies 328 328 328 328 328 328
15 SICGRP6 Varies 9 9 9 9 9 9
16 SICGRP7 Varies 198 198 198 198 198 198
17 SICGRP8 Varies 111 111 111 111 111 111
18 SICGRP9 Varies 11 11 11 11 11 11
19 SICGRP10 Varies 1,891 1,891 1,891 1,891 1,891 1,891
20 SICGRP11 Varies 4 4 4 4 4 4
21 SICGRP12 Varies 319 319 319 319 319 319
22 NO SIC CODE (Note 1) Varies 71,447 71,447 71,447 71,447 71,447 71,447 23 Total Accounts 174,222 174,222 174,222 174,222 174,222 174,222 Note 1: Customers without an assigned SIC Code either have measured strength loadings or are assigned to Strength Group 4 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 69

Table 6-5: Projected Wastewater Enterprise Discharge Volumes (CCF)

Line Customner Type Customer Rate Class FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Single Family Residential Residential 5,852,347 5,745,781 5,831,301 5,933,638 5,877,158 5,841,158 2 Multifamily Residential Residential 9,900,937 9,720,649 9,865,331 10,038,464 9,942,912 9,882,008 3 Municipal Non-Residential 478,645 502,612 513,265 525,501 514,877 506,336 4 Nonresidential/Commercial Non-Residential 5,230,218 5,747,608 5,815,681 5,900,020 5,825,165 5,771,448 5 Fire Non-Residential 25,656 28,194 28,528 28,942 28,575 28,311 6 Municipal Fire Non-Residential 552 580 592 606 594 584 7 Total Discharge 21,488,357 21,745,424 22,054,698 22,427,172 22,189,281 22,029,846 8 9 Strength Group Customer Rate Class FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 10 SICGRP1 Varies 10,433 11,391 11,528 11,697 11,550 11,446 11 SICGRP2 Varies 589,153 647,433 655,101 664,602 656,170 650,119 12 SICGRP3 Varies 63,797 70,108 70,938 71,967 71,054 70,399 13 SICGRP4 Varies 13,066,514 13,196,809 13,386,809 13,615,240 13,469,806 13,372,058 14 SICGRP5 Varies 845,942 929,607 940,620 954,265 942,155 933,464 15 SICGRP6 Varies 3,054 3,356 3,396 3,445 3,402 3,370
16 SICGRP7 Varies 180,645 198,514 200,866 203,779 201,193 199,338 17 SICGRP8 Varies 19,004 20,884 21,131 21,438 21,166 20,971 18 SICGRP9 Varies 12,938 14,217 14,386 14,594 14,409 14,276 19 SICGRP10 Varies 498,801 548,062 554,569 562,627 555,476 550,341 20 SICGRP11 Varies 760 835 845 857 846 838
21 SICGRP12 Varies 137,980 151,629 153,425 155,650 153,676 152,258 22 NO SIC CODE (Note 1) Varies 6,059,338 5,952,578 6,041,084 6,147,011 6,088,379 6,050,968 23 Total Accounts 21,488,357 21,745,424 22,054,698 22,427,172 22,189,281 22,029,846 Note 1: Customers without an assigned SIC Code either have measured strength loadings or are assigned to Strength Group 4 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 70

Table 6-6: Projected Wastewater Enterprise COD Loadings (Pounds)

Line Customner Type Customer Rate Class FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Single Family Residential Residential 24,989,962 24,534,916 24,900,091 25,337,080 25,095,906 24,942,184 2 Multifamily Residential Residential 42,277,835 41,507,991 42,125,792 42,865,086 42,457,071 42,197,005 3 Municipal Non-Residential 2,024,408 2,125,773 2,170,833 2,222,582 2,177,648 2,141,526 4 Nonresidential/Commercial Non-Residential 23,768,545 26,119,805 26,429,159 26,812,436 26,472,258 26,228,144 5 Fire Non-Residential 9 10 10 10 10 10
6 Municipal Fire Non-Residential 0 0 0 0 0 0
7 Total COD (lbs) 93,060,758 94,288,494 95,625,885 97,237,194 96,202,893 95,508,868 8 9 Strength Group Customer Rate Class FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 10 SICGRP1 Varies 5,295 5,505 5,578 5,667 5,604 5,561
11 SICGRP2 Varies 717,457 788,430 797,768 809,337 799,069 791,700 12 SICGRP3 Varies 254,805 280,011 283,327 287,436 283,789 281,172 13 SICGRP4 Varies 56,971,927 57,645,753 58,472,189 59,466,386 58,828,694 58,399,373 14 SICGRP5 Varies 3,288,404 3,613,631 3,656,444 3,709,485 3,662,409 3,628,624 15 SICGRP6 Varies 9,548 10,493 10,617 10,771 10,634 10,536 16 SICGRP7 Varies 1,561,472 1,715,937 1,736,260 1,761,440 1,739,092 1,723,055 17 SICGRP8 Varies 157,489 173,068 175,118 177,658 175,404 173,786 18 SICGRP9 Varies 100,530 110,475 111,783 113,404 111,966 110,933 19 SICGRP10 Varies 3,571,034 3,923,852 3,970,409 4,028,073 3,976,898 3,940,159 20 SICGRP11 Varies 21,898 24,064 24,349 24,702 24,389 24,164 21 SICGRP12 Varies 619,696 680,998 689,064 699,057 690,187 683,823 22 NO SIC CODE (Note 1) Varies 25,781,204 25,316,277 25,692,979 26,143,778 25,894,759 25,735,982 23 Total Accounts 93,060,758 94,288,494 95,625,885 97,237,194 96,202,893 95,508,868 Note 1: Customers without an assigned SIC Code either have measured strength loadings or are assigned to Strength Group 4 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 71

Table 6-7: Projected Wastewater Enterprise TSS Loadings (Pounds)

Table 6-8: Projected Wastewater Enterprise Oil and Grease Loadings (Pounds)

Line Customer Type Customer Rate Class FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Single Family Residential Residential 10,193,273 10,007,662 10,156,615 10,334,861 10,236,487 10,173,785 2 Multifamily Residential Residential 17,244,873 16,930,858 17,182,856 17,484,409 17,317,982 17,211,903 3 Municipal Non-Residential 800,096 840,158 857,966 878,419 860,660 846,384 4 Nonresidential/Commercial Non-Residential 7,774,587 8,543,674 8,644,863 8,770,231 8,658,960 8,579,111 5 Fire Non-Residential 0 0 0 0 0 0
6 Municipal Fire Non-Residential 0 0 0 0 0 0
7 Total TSS (lbs) 36,012,829 36,322,352 36,842,300 37,467,919 37,074,090 36,811,182 8 9 Strength Group Customer Rate Class FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 10 SICGRP1 Varies 2,160 2,246 2,275 2,312 2,286 2,268
11 SICGRP2 Varies 207,432 227,952 230,652 233,997 231,028 228,898 12 SICGRP3 Varies 95,121 104,531 105,769 107,303 105,941 104,964 13 SICGRP4 Varies 22,604,391 22,817,727 23,146,341 23,541,408 23,290,569 23,122,154 14 SICGRP5 Varies 1,147,726 1,261,237 1,276,180 1,294,692 1,278,262 1,266,470 15 SICGRP6 Varies 2,653 2,915 2,950 2,993 2,955 2,927
16 SICGRP7 Varies 192,254 211,273 213,775 216,875 214,123 212,149 17 SICGRP8 Varies 19,187 21,085 21,335 21,644 21,370 21,173 18 SICGRP9 Varies 17,228 18,932 19,157 19,434 19,188 19,011 19 SICGRP10 Varies 942,318 1,035,389 1,047,680 1,062,902 1,049,393 1,039,694 20 SICGRP11 Varies 8,776 9,644 9,758 9,900 9,774 9,684
21 SICGRP12 Varies 260,776 286,573 289,967 294,172 290,440 287,762 22 NO SIC CODE (Note 1) Varies 10,512,807 10,322,848 10,476,461 10,660,288 10,558,760 10,494,029 23 Total Accounts 36,012,829 36,322,352 36,842,300 37,467,919 37,074,090 36,811,182 Note 1: Customers without an assigned SIC Code either have measured strength loadings or are assigned to Strength Group 4 Line Customer Type Customer Class FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Single Family Residential Residential 3,105,478 3,048,930 3,094,310 3,148,614 3,118,643 3,099,541 2 Multifamily Residential Residential 5,253,846 5,158,178 5,234,951 5,326,823 5,276,119 5,243,801 3 Municipal Non-Residential 220,000 231,016 235,913 241,537 236,654 232,728 4 Nonresidential/Commercial Non-Residential 3,036,535 3,336,919 3,376,440 3,425,406 3,381,946 3,350,760 5 Fire Non-Residential 0 0 0 0 0 0
6 Municipal Fire Non-Residential 0 0 0 0 0 0
7 Total O/G (lbs) 11,615,859 11,775,042 11,941,614 12,142,379 12,013,363 11,926,829 8 9 Strength Group Customer Rate Class FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 10 SICGRP1 Varies 658 684 693 704 696 691
11 SICGRP2 Varies 95,923 105,412 106,661 108,208 106,835 105,850 12 SICGRP3 Varies 25,072 27,552 27,879 28,283 27,924 27,667 13 SICGRP4 Varies 6,836,188 6,897,383 6,996,616 7,115,933 7,040,427 6,989,821 14 SICGRP5 Varies 441,325 484,972 490,718 497,836 491,518 486,984 15 SICGRP6 Varies 1,801 1,979 2,003 2,032 2,006 1,988
16 SICGRP7 Varies 126,077 138,549 140,190 142,223 140,419 139,124 17 SICGRP8 Varies 12,989 14,274 14,443 14,652 14,466 14,333 18 SICGRP9 Varies 7,190 7,902 7,995 8,111 8,008 7,934
19 SICGRP10 Varies 774,809 851,379 861,477 873,985 862,884 854,916 20 SICGRP11 Varies 2,493 2,739 2,772 2,812 2,776 2,751
21 SICGRP12 Varies 87,462 96,114 97,253 98,663 97,411 96,513 22 NO SIC CODE (Note 1) Varies 3,203,872 3,146,102 3,192,916 3,248,937 3,217,991 3,198,259 23 Total Accounts 11,615,859 11,775,042 11,941,614 12,142,379 12,013,363 11,926,829 Note 1: Customers without an assigned SIC Code either have measured strength loadings or are assigned to Strength Group 4 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 72

Projected Wastewater Revenues at Existing Rates
Table 6-9 shows a detail of projected rate revenues for the period FY 2023 – FY 2028 assuming that existing wastewater rates remain unchanged. The projection of revenues at existing rates, when compared to projected expenditures, allows for the quantification of the funding gap that must be filled by rate revenue increases, external debt financing, or some other form of funding. The revenues shown in Table 6-9 were calculated by multiplying the projected units of service for each year by the existing wastewater rates.

Table 6-9: Projected Wastewater Enterprise Revenue at Existing Rates

Projected Wastewater Non-Rate Revenue Offsets
In addition to revenues produced by retail sewer rates, the Wastewater Enterprise has several sources of miscellaneous non-rate revenues that offset the amount of rate revenue that must be collected from retail sewer customers.

Table 6-10 provides a detailed projection of these miscellaneous revenues for the period FY 2023 – FY 2028.

They include Other Retail Charges earned from providing retail sewer service to communities located outside of the City of San Francisco (Lines 2 and 3). They also include Operating Revenues from providing wastewater collection services to local sewer utility districts (Line 7), interest income (Line 8), and Federal Bond Interest Subsidy revenue (Line 9). Programmatic Revenue includes revenues from specific Wastewater Enterprise programs (Lines 15 – 18), which include wastewater rate revenue from the Treasure Island Development Authority and other revenues associated with the SFPUC’s headquarters building at 525 Golden Gate Avenue. In addition, the Wastewater Enterprise also earns significant Non-Debt Capital Revenue from capacity charges (Line 22).

Line Customer Class FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Single Family Residential $100,443,646 $98,741,782 $100,107,532 $101,741,860 $100,839,877 $100,264,958 2 Multifamily Residential $160,396,402 $157,517,207 $159,827,768 $162,592,707 $161,066,741 $160,094,100 3 Municipal $7,570,774 $7,947,357 $8,114,760 $8,307,017 $8,140,081 $8,005,882 4 Nonresidential/Commercial $83,653,724 $91,835,121 $92,911,544 $94,245,186 $93,061,510 $92,212,094 5 Fire $853,829 $877,839 $880,998 $884,911 $881,438 $878,945 6 Municipal Fire $27,365 $27,626 $27,742 $27,876 $27,760 $27,667 7 Total $352,945,740 $356,946,933 $361,870,344 $367,799,557 $364,017,407 $361,483,646 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 73

Table 6-10: Projected Wastewater Enterprise Miscellaneous Revenues

Projected Rate Funded CIP Expenditures
Table 6-11 shows the annual revenue budgeted as a funding source for capital expenditures, as approved in the SFPUC’s FY 2024 10-Year Capital Improvement Plan. The revenue sources include capacity fees (i.e., one-time fees assessed to new development/intensified redevelopment) and local revenue (i.e., Retail Sewer sales). The amounts shown do not represent annual spending on capital projects, but rather the amount of revenues appropriated each year through the SFPUC’s budget process as a funding source for pay-as-you-go (i.e., cash funded) capital projects to meet the long-term capital replacement needs of the Wastewater Enterprise.

Table 6-11: Projected Wastewater Enterprise CIP Expenditures by Funding Source

Projected Debt Service Expenditures
Table 6-12 shows existing and proposed Wastewater Enterprise debt service through FY 2028. The Wastewater Enterprise’s existing debt service includes principal and interest payments associated with outstanding revenue bonds, State Revolving Fund (SRF) Loans, and Water Infrastructure Finance and Innovation Act (WIFIA) Loans.

Line Category FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Other Retail Charges
2 Saddleback $73,782 $81,348 $89,924 $99,664 $108,475 $118,472 3 Suburban Sanitary Retail (SSR) $4,927 $5,290 $5,587 $6,189 $6,748 $7,380 4 Total Non-Rate Operating Revenue $78,709 $86,638 $95,511 $105,853 $115,223 $125,852 5 6 Operating Revenues
7 Wholesale Sewer Charges Total $11,034,000 $12,121,000 $13,334,000 $14,656,000 $16,141,000 $17,464,000 8 Interest Income Total $1,600,000 $1,654,000 $2,121,000 $1,953,000 $1,903,000 $2,180,000 9 Federal Bond Interest Subsidy Total $3,470,860 $3,356,167 $3,234,710 $3,105,412 $2,967,774 $2,821,938 10 Rental Revenue Total $747,800 $774,000 $795,000 $815,000 $836,000 $857,000 11 Other Misc Income Total $735,033 $910,608 $935,000 $959,000 $984,000 $1,009,000 12 Total Non-Rate Operating Revenue $17,587,693 $18,815,775 $20,419,710 $21,488,412 $22,831,774 $24,331,938 13 14 Programmatic Revenues
15 Treasure Island Sewer Charges $1,555,000 $1,715,000 $1,896,000 $2,102,000 $2,288,000 $2,499,000 16 525GG Infrastructure Recovery - O&M $265,000 $268,000 $268,000 $268,000 $276,000 $284,000 17 525GG Infrastructure Recovery - Lease $1,872,000 $1,872,000 $1,872,000 $1,872,000 $1,872,000 $1,872,000 18 525GG COPS Bond Interest Subsidy $520,828 $511,760 $493,247 $473,961 $453,862 $432,911 19 Total Programmatic Revenue $4,212,828 $4,366,760 $4,529,247 $4,715,961 $4,889,862 $5,087,911 20 21 Non-Debt Capital Revenues
22 Capacity Charges $5,695,000 $6,329,000 $5,695,000 $5,695,000 $5,695,000 $5,695,000 23 Total Non-Debt Capital Revenue $5,695,000 $6,329,000 $5,695,000 $5,695,000 $5,695,000 $5,695,000 24 25
26 TOTAL REVENUE $396,920,863 $437,648,873 $460,796,192 $508,434,886 $552,204,836 $601,798,753 Line CIP Expenditures by Funding Source FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Rate Funded $83,005,000 $92,038,000 $122,657,438 $125,110,586 $127,612,798 $130,165,054 2 Revenue Bonds $658,750,000 $607,500,000 $0 $825,855,000 $736,610,000 $0 3 Capacity Fees $5,695,000 $6,329,000 $5,695,000 $5,695,000 $5,695,000 $5,695,000 4 Annual CIP Expenditures $747,452,023 $705,869,024 $128,354,463 $956,662,612 $869,919,825 $135,862,082 5 Cumulative CIP Expenditures $747,452,023 $1,453,321,047 $1,581,675,510 $2,538,338,122 $3,408,257,947 $3,544,120,029 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 74

Proposed debt service projections are based on the SFPUC Capital Financing Team’s planned revenue bond issuances to fund Wastewater Enterprise CIP. The proposed debt service projections assume four new revenue bond issuances through FY 2028 ($658,750,000 in FY 2023; $607,500,000 in FY 2024; $825,855,000 in FY 2026; and $736,610,000 in FY 2027). Total issuance amounts include assumed interim financing costs associated with commercial paper. All proposed debt service was estimated based on a 5% interest rate, 30- year term, and 30 months of capitalized interest. The capitalized interest delays the payment of debt by adding the interest that would be accrued to the principal. This results in a lag in the timing of the proposed debt service.

Table 6-12: Wastewater Enterprise Debt Service

Projected Wastewater Operations and Maintenance Expenses The Wastewater Enterprise’s O&M expenses primarily consist of personnel costs, administrative overhead costs, and other operating costs associated with wastewater and stormwater collection, conveyance, treatment, and disposal. Programmatic Expenses12 are also included in the Wastewater Enterprise’s O&M expenses. O&M expense projections are based on the FY 2023 and FY 2024 adopted budgets and take into account both annual inflationary and execution factor assumptions.

Before accounting for execution factors, budgeted O&M expenses in FY 2024 were escalated annually by inflationary assumptions (from Table 6-13) to establish preliminary O&M projections through FY 2028 (Table 6-14, Lines 1-14). All inflationary assumptions are consistent with the SFPUC staff’s 10-Year Financial Plan. SFPUC staff conducted an analysis of actual versus budgeted Wastewater Enterprise O&M expenses in prior years, which provided the basis for execution factor assumptions (Table 6-14, Lines 16-25). Execution factors represent the percentage of budgeted expenses actually incurred each year. Adjusted O&M expense projections (Table 6-14, Lines 27-40) were calculated by multiplying the preliminary O&M expense projections by the corresponding execution factors. Financial plan projections presented in the following sections incorporate the adjusted O&M expense projections, inclusive of execution factors.

12 Programmatic expenses include expenses associated with the SFPUC’s headquarters building at 525 Golden Gate Avenue, Treasure Island operating costs, and the cost of other specific programs such as low impact development and the Youth Employment and Environment Program.

Line Debt Service FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 Senior Lien Revenue Bonds $96,538,372 $98,754,602 $111,094,427 $112,704,838 $112,616,493 $112,478,633 2 Senior Lien SRF $4,004,851 $4,004,851 $10,152,294 $10,483,590 $15,738,159 $15,738,159 3 Senior Lien WIFIA $0 $0 $0 $5,239,457 $10,478,914 $10,478,914 4 Senior Lien Revenue Notes $3,474,650 $3,474,650 $3,474,650 $2,382,875 $645,550 $0 5 Proposed Debt Service $0 $0 $0 $22,403,639 $71,487,376 $97,647,836 6 Total $104,017,873 $106,234,104 $124,721,371 $153,214,399 $210,966,492 $236,343,542 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 75

Table 6-13: Inflationary Assumptions for Wastewater Enterprise O&M Expenses

Table 6-14: Projected Wastewater Enterprise O&M Expenses

Status Quo Financial Plan
To evaluate the need for future year rate increases (referred to as “revenue adjustments”), MME and Raftelis first developed a status quo financial plan. The status quo financial plan assumes that current FY 2023 retail Line Category FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 General Budget Budget 3.00% 3.00% 3.00% 3.00%
2 Salary Budget Budget 3.00% 3.00% 3.00% 3.00%
3 Benefits Budget Budget 4.40% 4.40% 4.40% 4.40%
4 Utilities Budget Budget 3.00% 3.00% 3.00% 3.00%
5 Chemicals Budget Budget 3.00% 3.00% 3.00% 3.00%

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 76

water rates remain unchanged through FY 2028. The status quo financial plan (Table 6-15) combines projected revenues under existing rates (from Table 6-9), miscellaneous revenues (from Table 6-10), O&M expenses (from Table 6-14), debt service (from Table 6-12), and funding for pay-as-you-go capital expenditures (from Table 6-11) to project net revenue (revenue less O&M expenses), net cash flow (net revenue less debt service and funding for pay-as-you-go capital expenditures), reserve balances (for the entire Wastewater Enterprise), and debt coverage.

Reserve balance projections (Table 6-15, Lines 59-62) are based on the Wastewater Enterprise beginning fund balance in FY 2023 (as of July 1, 2022) and projected net cash flow thereafter. Debt coverage (Table 6-15, Lines 66-69) is shown based on the “Indenture Test,” which allows for unappropriated fund balance to contribute toward debt service coverage. Additionally, net revenues used to calculate debt coverage (Table 6-15, Line 67) exclude specific revenues and expenses, which are legally restricted from being used to pay for debt service or not considered SFPUC operating expenses. This is in alignment with SFPUC staff’s 10-Year Financial Plan. Projected reserve balances and debt coverage under the status quo financial plan are also shown in graphical format in Figure 6-1 and Figure 6-2.

In the absence of any revenue adjustments, the Wastewater Enterprise’s reserve balance is projected to fall below the minimum level (per the SFPUC’s Fund Balance Reserve Policy) and is fully depleted beginning in FY 2026. Debt coverage is projected to fall below the SFPUC’s required level (per the SFPUC’s Debt Service Coverage Policy) in FY 2026. More significantly, debt coverage is projected to fall below the required level per the SFPUC’s bond covenants in FY 2027 and FY 2028. The status quo financial plan is therefore insufficient to meet the Wastewater Enterprise’s financial needs through FY 2028. This demonstrates a clear need for revenue adjustments over the next five fiscal years to increase retail sewer rate revenues and ensure that Wastewater Enterprise’s financial needs are met.

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 77

Table 6-15: Status Quo Wastewater Enterprise Financial Plan

Line Category FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 RETAIL RATE REVENUE SUBJECT TO ADJUSTMENTS
2 Drought Revenue $16,282,325 $17,302,729 $0 $0 $0 $0
3 Retail Rate Revenue from Existing Rates - Volumetric $334,527,202 $338,151,551 $342,907,443 $348,644,265 $345,029,167 $342,629,698 4 Retail Rate Revenue from Existing Rates - Fixed $10,820,399 $10,820,399 $10,820,399 $10,820,399 $10,820,399 $10,820,399 5 Municipal - Volumetric $7,526,181 $7,903,026 $8,070,545 $8,262,935 $8,095,884 $7,961,591 6 Municipal - Fixed $71,957 $71,957 $71,957 $71,957 $71,957 $71,957 7 Total Rate Revenue Subject to Adjustments $369,228,064 $374,249,662 $361,870,344 $367,799,557 $364,017,407 $361,483,646 8 9 PROPOSED REVENUE ADJUSTMENTS
10 Fiscal Revenue Month
11 Year Adjustment Effective
12 FY 2024 0.0% July $0 $0 $0 $0 $0
13 FY 2025 0.0% July $0 $0 $0 $0
14 FY 2026 0.0% July $0 $0 $0
15 FY 2027 0.0% July $0 $0
16 FY 2028 0.0% July $0
17 Total Revenue Adjustments $0 $0 $0 $0 $0 $0
18 19 Adjustment for Drought Revenue ($17,302,729) $0 $0 $0 $0 20 Stormwater Rate Revenue $118,568 $118,568 $118,568 $118,568 $118,568 $118,568 21 Total Rate Revenue without Drought Rates $369,346,633 $357,065,501 $361,988,912 $367,918,125 $364,135,975 $361,602,214 22 23 OTHER REVENUE
24 Drought Rates (with Revenue Increase) $0 $17,302,729 $0 $0 $0 $0 25 Other Retail Charges $78,709 $86,638 $95,511 $105,853 $115,223 $125,852 26 Operating Revenues $17,587,693 $18,815,775 $20,419,710 $21,488,412 $22,831,774 $24,331,938 27 Programmatic Revenues $4,212,828 $4,366,760 $4,529,247 $4,715,961 $4,889,862 $5,087,911 28 Non-Debt Capital Revenues $5,695,000 $6,329,000 $5,695,000 $5,695,000 $5,695,000 $5,695,000 29 TOTAL REVENUES $396,920,863 $403,966,403 $392,728,380 $399,923,351 $397,667,835 $396,842,915 30 31 O&M EXPENSES
32 Personnel $82,802,526 $84,155,575 $87,016,323 $89,977,680 $93,043,316 $96,217,039 33 Other Non-Personnel Services $26,603,401 $27,295,904 $28,114,906 $28,958,483 $29,827,373 $30,722,336 34 Materials, Supplies & Equipment $12,913,549 $13,727,571 $14,139,398 $14,563,580 $15,000,488 $15,450,502 35 Services of SFPUC Bureaus $35,694,439 $36,237,828 $37,324,963 $38,444,712 $39,598,053 $40,785,995 36 Services of Other Departments $35,700,349 $41,213,880 $42,268,433 $43,354,622 $44,473,397 $45,625,735 37 Other Operating Expenses $140,857 $140,857 $140,857 $140,857 $140,857 $140,857 38 Programmatic Expenses $7,736,917 $7,766,551 $7,807,711 $7,850,106 $7,893,772 $7,938,749 39 TOTAL O&M EXPENSES $201,592,038 $210,538,166 $216,812,590 $223,290,039 $229,977,256 $236,881,212 40 41 NET REVENUE $195,328,824 $193,428,237 $175,915,790 $176,633,312 $167,690,579 $159,961,703 42 43 DEBT SERVICE
44 Existing Debt Service $104,017,873 $106,234,104 $124,721,371 $130,810,760 $139,479,116 $138,695,706 45 Proposed Debt Service $0 $0 $0 $22,403,639 $71,487,376 $97,647,836 46 TOTAL DEBT SERVICE $104,017,873 $106,234,104 $124,721,371 $153,214,399 $210,966,492 $236,343,542 47 48 FUNDING FOR PAY-AS-YOU-GO CIP
49 Rate Funded $83,005,000 $92,038,000 $122,657,438 $125,110,586 $127,612,798 $130,165,054 50 Capacity Fee Funded $5,695,000 $6,329,000 $5,695,000 $5,695,000 $5,695,000 $5,695,000 51 TOTAL FUNDING FOR PAY-AS-YOU-GO CIP $88,700,000 $98,367,000 $128,352,438 $130,805,586 $133,307,798 $135,860,054 52 53 NET CASH FLOW $2,610,951 ($11,172,866) ($77,158,019) ($107,386,672) ($176,583,711) ($212,241,893) 59 FUNDING BALANCE (EXCLUDING PROPOSED DEBT PROCEEDS)
60 Beginning Balance $157,769,951 $160,380,902 $149,208,036 $72,050,018 ($35,336,655) ($211,920,366) 61 Net Cash Flow $2,610,951 ($11,172,866) ($77,158,019) ($107,386,672) ($176,583,711) ($212,241,893) 62 ENDING BALANCE $160,380,902 $149,208,036 $72,050,018 ($35,336,655) ($211,920,366) ($424,162,259) 63 Ending Balance (% of Annual O&M) 79.6% 70.9% 33.2% -15.8% -92.1% -179.1% 64 Minimum Reserve Target (% of Annual O&M) 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 65 66 CURRENT DEBT SERVICE COVERAGE TEST
67 Net Revenue Subject to Debt Coverage Test $200,355,741 $198,444,788 $180,932,341 $181,649,863 $172,707,130 $164,978,254 68 Projected Debt Coverage 2.00 1.94 1.58 1.27 0.88 0.70 69 Required Debt Coverage 1.10 1.10 1.10 1.10 1.10 1.10 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 78

Figure 6-1: Projected Reserve Balances Under Status Quo Wastewater Enterprise Financial Plan

Figure 6-2: Projected Debt Coverage Under Status Quo Wastewater Enterprise Financial Plan

Proposed Wastewater Enterprise Financial Plan
The Wastewater Enterprise must increase its revenues from retail sewer rates to adequately fund its operating and capital expenditures, meet required debt coverage, and maintain sufficient reserve funding over the next five years. SFPUC staff evaluated various scenarios using its 10-Year Financial Plan Model before arriving at the proposed and planned revenue adjustments (i.e., overall annual rate increases) shown below in Table 6-16. The proposed revenue adjustments ensure the Wastewater Enterprise meets all its financial policies throughout the entire ten-year planning period, with some buffer in case of unexpected expenditures or revenue reductions or the removal of the Drought Surcharge. All revenue adjustments are assumed to become effective at the beginning of each fiscal year in July. Note that although this report includes proposed rates

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 79

over a five-year period, SFPUC staff is only recommending that the Commission consider adoption of the first three years of proposed rates (i.e., FY 2024-FY 2026).

Table 6-16: Proposed Wastewater Enterprise Revenue Adjustments

The proposed financial plan (Table 6-17) was developed using the same calculation methodology outlined in the previous section for the status quo financial plan (from Table 6-15). The key difference is the inclusion of additional retail wastewater rate revenue (Table 6-17, Lines 9-17). The additional revenue from revenue adjustments is calculated based on current revenue from retail wastewater rates, exclusive of revenue from contract customers (which are subject to unique rates stipulated in each contract). The proposed revenue adjustments are projected to generate an additional $208.7 million in retail wastewater rate revenue relative to current rates by FY 2026.

With the addition of the proposed and planned revenue adjustments, the Wastewater Enterprise’s reserve balance is projected to meet the minimum level (per the SFPUC’s Fund Balance Reserve Policy) each year through FY 2028. Debt coverage is projected to meet the SFPUC’s required level (per the SFPUC’s Debt Service Coverage Policy) in all future years. Projected reserve balances and debt coverage under the proposed financial plan are also shown in graphical format in Figure 6-3 and Figure 6-4. The proposed financial plan demonstrates a five-year plan that generates sufficient revenue to meet the SFPUC’s official financial policies.

Note that SFPUC staff and the MME and Raftelis team opted for a levelized approach to capital planning for the purpose of setting rates to avoid any rate spikes across years during the study period. The proposed financial plan results in fund balances above the minimum reserve amount to provide added contingency given the uncertainty in future capital spending needs in any given year, and to ensure sufficient cash on hand once Drought Surcharges are no longer in effect. In future years, the ten-year plan shows the enterprise fund balance gradually approaching the minimum target for O&M and the minimum debt coverage in the out years (Figure 6-3).

Line Fiscal Year
Proposed
Revenue
Adjustment
Effective
Date Notes
1 FY 2024 9.0% 7/1/2023 Proposed
2 FY 2025 9.0% 7/1/2024 Proposed
3 FY 2026 9.0% 7/1/2025 Proposed
4 FY 2027 10.0% 7/1/2026 For Near-Term Planning Purposes Only 5 FY 2028 10.0% 7/1/2027 For Near-Term Planning Purposes Only 6 FY 2029 10.0% 7/1/2028 For Long-Term Planning Purposes Only 7 FY 2030 9.0% 7/1/2029 For Long-Term Planning Purposes Only 8 FY 2031 9.0% 7/1/2030 For Long-Term Planning Purposes Only 9 FY 2032 5.0% 7/1/2031 For Long-Term Planning Purposes Only 10 FY 2033 5.0% 7/1/2032 For Long-Term Planning Purposes Only San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 80

Table 6-17: Proposed Wastewater Enterprise Financial Plan

Line Category FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 1 RETAIL RATE REVENUE SUBJECT TO ADJUSTMENTS
2 Drought Revenue $16,282,325 $17,302,729 $0 $0 $0 $0
3 Retail Rate Revenue from Existing Rates - Volumetric $334,527,202 $338,151,551 $342,907,443 $348,644,265 $345,029,167 $342,629,698 4 Retail Rate Revenue from Existing Rates - Fixed $10,820,399 $10,820,399 $10,820,399 $10,820,399 $10,820,399 $10,820,399 5 Municipal - Volumetric $7,526,181 $7,903,026 $8,070,545 $8,262,935 $8,095,884 $7,961,591 6 Municipal - Fixed $71,957 $71,957 $71,957 $71,957 $71,957 $71,957 7 Total Rate Revenue Subject to Adjustments $369,228,064 $374,249,662 $361,870,344 $367,799,557 $364,017,407 $361, 483,646 8 9 PROPOSED REVENUE ADJUSTMENTS
10 Fiscal Revenue Month
11 Year Adjustment Effective
12 FY 2024 9.0% July $32,125,224 $32,568,331 $33,101,960 $32,761,567 $32,533,528 13 FY 2025 9.0% July $35,499,481 $36,081,137 $35,710,108 $35,461,546 14 FY 2026 9.0% July $39,328,439 $38,924,017 $38,653,085 15 FY 2027 10.0% July $47,141,310 $46,813,180
16 FY 2028 10.0% July $51,494,498
17 Total Revenue Adjustments $0 $32,125,224 $68,067,812 $108,511,536 $154,537,001 $204,955,837 18 19 Adjustment for Drought Revenue ($17,302,729) $0 $0 $0 $0 20 Stormwater Rate Revenue $118,568 $118,568 $118,568 $118,568 $118,568 $118,568 21 Total Rate Revenue without Drought Rates $369,346,633 $389,190,725 $430,056,724 $476,429,661 $518,672,976 $566,558,051 22 23 OTHER REVENUE
24 Drought Rates (with Revenue Increase) $0 $18,859,974 $0 $0 $0 $0 25 Other Retail Charges $78,709 $86,638 $95,511 $105,853 $115,223 $125,852 26 Operating Revenues $17,587,693 $18,815,775 $20,419,710 $21,488,412 $22,831,774 $24,331,938 27 Programmatic Revenues $4,212,828 $4,366,760 $4,529,247 $4,715,961 $4,889,862 $5,087,911 28 Non-Debt Capital Revenues $5,695,000 $6,329,000 $5,695,000 $5,695,000 $5,695,000 $5,695,000 29 TOTAL REVENUES $396,920,863 $437,648,873 $460,796,192 $508,434,886 $552,204,836 $601,798,753 30 31 O&M EXPENSES
32 Personnel $82,802,526 $84,155,575 $87,016,323 $89,977,680 $93,043,316 $96,217,039 33 Other Non-Personnel Services $26,603,401 $27,295,904 $28,114,906 $28,958,483 $29,827,373 $30,722,336 34 Materials, Supplies & Equipment $12,913,549 $13,727,571 $14,139,398 $14,563,580 $15,000,488 $15,450,502 35 Services of SFPUC Bureaus $35,694,439 $36,237,828 $37,324,963 $38,444,712 $39,598,053 $40,785,995 36 Services of Other Departments $35,700,349 $41,213,880 $42,268,433 $43,354,622 $44,473,397 $45,625,735 37 Other Operating Expenses $140,857 $140,857 $140,857 $140,857 $140,857 $140,857 38 Programmatic Expenses $7,736,917 $7,766,551 $7,807,711 $7,850,106 $7,893,772 $7,938,749 39 TOTAL O&M EXPENSES $201,592,038 $210,538,166 $216,812,590 $223,290,039 $229,977,256 $236,881,212 40 41 NET REVENUE $195,328,824 $227,110,707 $243,983,602 $285,144,848 $322,227,580 $364,917,541 42 43 DEBT SERVICE
44 Existing Debt Service $104,017,873 $106,234,104 $124,721,371 $130,810,760 $139,479,116 $138,695,706 45 Proposed Debt Service $0 $0 $0 $22,403,639 $71,487,376 $97,647,836 46 TOTAL DEBT SERVICE $104,017,873 $106,234,104 $124,721,371 $153,214,399 $210,966,492 $236,343,542 47 48 FUNDING FOR PAY-AS-YOU-GO CIP
49 Rate Funded $83,005,000 $92,038,000 $122,657,438 $125,110,586 $127,612,798 $130,165,054 50 Capacity Fee Funded $5,695,000 $6,329,000 $5,695,000 $5,695,000 $5,695,000 $5,695,000 51 TOTAL FUNDING FOR PAY-AS-YOU-GO CIP $88,700,000 $98,367,000 $128,352,438 $130,805,586 $133,307,798 $135,860,054 52 53 NET CASH FLOW $2,610,951 $22,509,603 ($9,090,207) $1,124,863 ($22,046,710) ($7,286,055) 54 FUNDING BALANCE (EXCLUDING PROPOSED DEBT PROCEEDS)
55 Beginning Balance $157,769,951 $160,380,902 $182,890,506 $173,800,299 $174,925,162 $152,878,452 56 Net Cash Flow $2,610,951 $22,509,603 ($9,090,207) $1,124,863 ($22,046,710) ($7,286,055) 57 ENDING BALANCE $160,380,902 $182,890,506 $173,800,299 $174,925,162 $152,878,452 $145,592,397 58 Ending Balance (% of Annual O&M) 79.6% 86.9% 80.2% 78.3% 66.5% 61.5% 59 Minimum Reserve Target (% of Annual O&M) 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 60 61 CURRENT DEBT SERVICE COVERAGE TEST
62 Net Revenue Subject to Debt Coverage Test $191,908,023 $223,289,201 $239,760,360 $280,211,768 $316,659,477 $358,627,062 63 Projected Debt Coverage 1.92 2.18 2.09 1.96 1.62 1.57 64 Required Debt Coverage 1.10 1.10 1.10 1.10 1.10 1.10 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 81

Figure 6-3: Projected Reserve Balances under Proposed Wastewater Enterprise Financial Plan

Figure 6-4: Projected Wastewater Enterprise Debt Service Coverage

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 82

7. Sewer Cost of Service Analysis
This section details the sewer cost of service (COS) analysis performed for the Wastewater Enterprise. A COS analysis distributes a utility’s revenue requirements from rates (costs) to each customer class based on their proportionate share of total system sewer demand. The COS analysis completed by Raftelis for the Wastewater Enterprise follows industry standard cost allocation principles as presented in the Water Environment Federation’s Manual of Practice No. 27, Financing and Charges for Wastewater Systems (WEF Manual No. 27).

As part of the cost of service analysis in this study, sewer costs 13 were split between the wastewater related
costs for sanitary sewer service and stormwater related costs for the collection and treatment of runoff from properties. Currently, stormwater-related costs are recovered as part of wastewater rates. By splitting these costs, SFPUC will be able to enhance the equity in their rate structure by establishing a stormwater change in addition to the wastewater rates. Under this new methodology, all customers will be billed for the total flows that they contribute to SFPUC’s combined sewer system.

7.1. Sewer Cost of Service Methodology
The framework and methodology used to develop the COS analysis and to apportion the revenue requirement to each customer class is informed by the processes outlined in WEF Manual No. 27. COS analyses are tailored specifically to meet the unique needs of each customer class’s use of the sewer system. However, there are five distinct steps in every COS analysis to recover costs from customers in an equitable, and defensible manner:
• Revenue Requirement Determination: The first step in the COS analysis is to determine the revenue required from rates, which is determined directly from the results of the proposed financial plan presented in the previous section.

• Cost Functionalization: Expenses are categorized based on their associated function in the wastewater system. Functions include primary treatment, secondary treatment, disinfection, pumping/lift stations, collection, biosolids handling, etc.

• Cost Component Allocation: Functionalized expenses are then allocated to cost components based on the associated burden on the wastewater system. Cost components include flow (the volume of wastewater discharges), and strength loading characteristics such as COD and TSS. The revenue requirement is allocated accordingly to each cost component and results in a total revenue requirement for each cost causation component.

• Unit COS Development: The revenue requirement for each cost component is divided by the appropriate units of service to determine the unit COS for each cost component.

• Revenue Requirement Distribution: Unit costs for each cost component are utilized to distribute the revenue requirement to customer classes based on each class’s proportional use of the wastewater system.

13 The term sewer is used when referring to both wastewater and stormwater expenses, revenues, and charges.

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 83

7.2. Sewer Revenue Requirement Determination
A COS analysis allocates the rate revenue requirement for a single rate-setting year, typically referred to as the “test year.” In this study, the test year is FY 2024 (i.e., the first year of the proposed three-year rate schedule).

Table 7-1 shows the total retail sewer rate revenue requirement for FY 2024, divided between operating and capital cost components (Line 19). The total revenue requirement is equal to the sum of revenue requirements (Lines 1-5), revenue offsets (Lines 7-13), and adjustments (Lines 15-17).

Revenue requirements (Lines 1-5) include the sum of FY 2024 O&M expenses, debt service, and pay-as-you- go funding for CIP per the proposed financial plan (from Table 6-11). Revenue offsets (Lines 7-13) include all other revenues per the proposed financial plan (from Table 6-17). Total revenue offsets (Line 13) are applied as a funding source for the overall revenue requirement (Line 5) to effectively reduce the total rate revenue requirement (Line 19). Finally, an adjustment is added (Line 16) to account for contributions to reserves, which is equal to FY 2024 net cash flow per the proposed financial plan (from Table 6-17). The total retail rate revenue requirement (Line 19) is the total revenue to be recovered by sewer rates and charges in FY 2024, inclusive of additional revenue from the 9% proposed revenue adjustment.

Table 7-1: FY 2024 Wastewater Enterprise Revenue Requirement

7.3. Sewer System Cost Functionalization
The assignment of costs to functional categories is a critical step in the COS process. It answers the question, what sewer system utility functions are supported by (i.e., paid for) the rate revenue provided by customers? The total retail rate revenue requirement to the following sewer system functions are:

Line Category Operating (O&M) Capital Total
1 Revenue Requirements
2 Wastewater O&M $210,538,166 $210,538,166
3 Existing Debt Service $106,234,104 $106,234,104
4 Rate Funded CIP $92,038,000 $92,038,000
5 Total $210,538,166 $198,272,104 $408,810,270
6 7 Less: Revenue Offsets
8 Other Retail Charges $86,638 $86,638
9 Operating Revenues $18,815,775 $18,815,775
10 Programmatic Revenues $4,366,760 $4,366,760
11 Non-Debt Capital Revenues $0 $0
12 Drought Rate Offset $18,859,974 $18,859,974
13 Total Revenue Offset $42,129,148 $0 $42,129,148
14 15 Adjustments
16 Change in Cash Reserves $22,509,603 $22,509,603
17 Total Adjustments $0 $22,509,603 $22,509,603
18 19 Revenue Requirement from Rates $168,409,018 $220,781,707 $389,190,725 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 84

» Headworks: relating to removing large inorganic materials from the influent streams entering the SFPUC’s wastewater treatment plants
» Primary Treatment: relating to the sedimentation process that removes suspended organic solids from sewage
» Secondary Treatment: relating to the process of removing soluble organic material from sewage through biological processes and secondary settling » Solid Handling: relating to the process used to reduce and stabilize the volume of sludge produced
» Pumping/Lift Stations: relating to the process of pumping from a lower elevation to a higher elevation as sewage moves through the sanitary sewer collection and conveyance system » Stormwater: relating to surface water runoff that is generated from both permeable and impermeable surfaces during wet weather events (rainfall). Stormwater enters the sewer collection system and is conveyed to the SFUC’s wastewater treatment plants » General Collections: relating to the system of pipes that collect and convey customer wastewater discharges and stormwater flows caused by wet weather events » Interceptors: relating to large diameter sewer pipes that aggregate customer wastewater discharges and stormwater flows caused by wet weather events before delivery to the SFPUC’s wastewater treatment plants
» Customer Service: relating to meter reading, billing, customer call center services, and other customer service functions
» Bureau: relating to costs that are directly associated with SFPUC administrative activities » Indirect - General: relating to general administration and overhead, as well as any activities not directly attributable to one of the above functions » Revenue Offsets: relating specifically to any other revenues not attributed to any of the above functions

To allocate the retail wastewater rate revenue requirement to the above functions, the following functional allocation bases were first established (see Table 7-2):

O&M Cost Functionalization Basis: The FY 2024 Wastewater Enterprise O&M revenue requirement is $210,538,166 (Line 5 in Table 7-1). The FY 2024 O&M revenue requirement was assigned to functions based on a detailed SFPUC staff analysis of approximately 350 O&M budget operating and programmatic expenses.

Expenses were evaluated at the departmental level and allocated across various functions based on the best available information provided by each department’s management. Most departments allocated costs based on the percentage of staff time devoted to each functional activity. Details of the cost functionalization are shown in Appendix I.

Capital Cost Functionalization Basis: The total FY 2024 capital cost revenue requirement is $220,781,707.

This amount reflects the revenue requirement associated with existing debt service payments, rate-funded CIP, and the change in cash reserves (Line 19 of Table 7-1). Capital costs were allocated to functions using the following methodology:

• Existing Debt Service: This portion of capital costs was allocated to functions by identifying the specific capital assets paid for by past SFPUC debt issues. The SFPUC staff reviewed a total of 12 past revenue bond issues, seven state revolving fund loans, and two existing loans associated with WIFIA.

The result was the direct allocation of existing debt service to the functions it was used to finance.

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 85

• Rate-Funded CIP and Change in Cash Reserves: This capital cost component was allocated to functions based on the specific functions that will be performed by the capital projects included in the SFPUC’s 10-year CIP plan for the period FY 2024 – FY 2033.

Functionalization Basis for Non-R ate Revenue Offsets: The FY 2024 non-rate revenue offsets total $42,129,148. This amount is detailed in Table 7-1 , Lines 8 -12 and includes Other Retail Charges, Operating Revenues, Programmatic Revenues, and a Drought Rate Offset. With the exception of the Drought Rate Offset, all of the items were functionalized in a manner similar to the overall outcome of the O&M cost functionalization process. The Drought Rate Offset was functionalized based on the combined functionalization of both O&M and capital costs. Table 7-2 shows the functional allocation percentages for the FY 2024 revenue requirement.

Table 7-2: Summary of FY 2024 Functional Allocation Percentages

Table 7-3 shows the allocation basis for each revenue requirement component. (A) (B) (C) (D) (E)
Line Function O&M Debt Cash-Funded
Capital
Revenue
Offsets
1 Headworks 3.54% 3.96% 0.63% 3.24%
2 Primary Treatment 3.50% 1.31% 0.69% 2.93%
3 Secondary Treatment 8.08% 1.80% 1.68% 6.63%
4 Disinfection / Discharge 5.03% 3.43% 1.08% 4.38%
5 Solids Handling 16.72% 45.04% 35.61% 22.09%
6 Pumping / Lift Stations 8.29% 5.16% 7.20% 7.81%
7 Stormwater 4.06% 7.94% 0.00% 4.00%
8 General Collections 11.58% 31.37% 16.48% 14.34%
9 Interceptors 0.00% 0.01% 36.51% 4.34%
10 Customer Service 0.00% 0.00% 0.13% 0.02%
11 Bureau 17.21% 0.00% 0.00% 13.27%
12 Indirect 21.99% 0.00% 0.00% 16.95%
13 Total 100.00% 100.00% 100.00% 100.00%
San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 86

Table 7-3: FY 2024 Revenue Requirement Allocation Basis

Consolidated Revenue Requirement Functionalization
Table 7-4 shows the consolidated functionalization of the FY 2024. The FY 2024 O&M revenue requirement allocated to each function in Table 7-4 was determined by multiplying the O&M revenue requirement show in Line 5 of Table 7-1 by the percentage allocations summarized in Column B of Table 7-2. These same percentage allocations can be seen in Line 5 of Table 7-4.

Line Description ( A) (B)
1 RETAIL REVENUE REQUIREMENT F Y 2024 ($) Functional Allocation Basis 2 Revenue Requirements
3 O&M Expenses $210, 538,166 O&M
4 Debt Service $106, 234,104 Debt
5 Funding for Pay-as-You-Go CIP $92, 038,000 CIP
6 Subtotal $408, 810,270
7 8 Revenue Offsets
9 Saddleback $81, 348 Overall O&M Allocation
10 Suburban Sanitary Retail (SSR) $5, 290 Overall O&M Allocation 11 Wholesale Sewer Charges Total $12, 121,000 Overall O&M Allocation 12 Interest Income Total $1, 654,000 Overall O&M Allocation 13 Federal Bond Interest Subsidy Total $3, 356,167 Overall O&M Allocation 14 Rental Revenue Total $774, 000 Overall O&M Allocation 15 Other Misc Income Total $910, 608 Overall O&M Allocation 16 Treasure Island Sewer Charges $1, 715,000 Overall O&M Allocation 17 525GG Infrastructure Recovery - O&M $268, 000 Overall O&M Allocation 18 525GG Infrastructure Recovery - Lease $1, 872,000 Overall O&M Allocation 19 525GG COPS Bond Interest Subsidy $511, 760 Overall O&M Allocation 20 Drought Surcharges $18, 859,974 Overall Capital Allocation 21 Subtotal $42, 129,148
22 23 Adjustments
24 Contribution To (Draw Down From) Reserves $22, 509,603 CIP 25 Subtotal $22, 509,603
26 27 Total Retail Revenue Requirement $389, 190,725
28 29 ALLOCATION OF RETAIL RATE REVENUE REQUIREMENT TO FUNCTIONS F Y 2024 ($) FY2024 (%) 30 Headworks $11, 018,555 2.83%
31 Primary Treatment $8, 320,215 2.14%
32 Secondary Treatment $18, 056,463 4.64%
33 Disinfection / Discharge $13, 623,641 3.50%
34 Solids Handling $114, 521,884 29.43%
35 Pumping / Lift Stations $27, 878,971 7.16%
36 Stormwater $15, 287,355 3.93%
37 General Collections $70, 536,203 18.12%
38 Interceptors $40, 002,806 10.28%
39 Customer Service $140, 828 0.04%
40 Bureau $30, 648,196 7.87%
41 Indirect $39, 155,608 10.06%
42 Total Retail Revenue Requirement $389, 190,725 100.00% San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 87

The FY 2024 capital cost revenue requirement allocated to each function in Table 7-4 was determined by multiplying the capital cost revenue requirements shown in Lines 3 and 4 of Table 7-1 by the percentage allocations shown in Columns C and D of Table 7-2, respectively. The change in cash reserves is being used to cash fund capital projects and is also multiplied by Column D. The outcome of this capital cost allocation process, when expressed on a percentage basis, can be seen in Line 13 of Table 7-4.

The FY 2024 non-rate revenue offset allocated to each function in Table 7-4 was determined by multiplying the non-rate revenue offset show in Line 13 of Table 7-1 by the percentage allocations summarized in Column E of Table 7-2. These same percentage allocations can be seen in Line 2 of Table 7-4.

The final revenue requirement of $389,190,725 shown in Column N, Line 25 of Table 7-4 matches Line 19 of Table 7-1 and several other preceding tables in this report.

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 88

Table 7-4: Consolidated FY 2024 Revenue Requirement Functionalization

(A) (B) (C) (D) (E) (F) (G) (H) (I) (J) (K) (L) (M) (N) Line Component Headworks Primary
Treatment
Secondary
Treatment
Disinfection /
Discharge Solids Handling Pumping / Lift
Stations Stormwater General
Collections Interceptors Customer Service Bureau Indirect Total 1 O&M Including Execution Factors
2 O&M Net of Programmatic $7,458,510 $7,377,788 $17,017,601 $10,590,026 $35,197,624 $17,446,821 $7,861,024 $24,373,118 $0 $0 $36,237,828 $39,211,275 $202,771,615 3 Programmatic $0 $0 $0 $0 $0 $0 $681,000 $0 $0 $0 $0 $7,085,551 $7,766,551 4 Total O&M $7,458,510 $7,377,788 $17,017,601 $10,590,026 $35,197,624 $17,446,821 $8,542,024 $24,373,118 $0 $0 $36,237,828 $46,296,826 $210,538,166 5 % of Total 3.54% 3.50% 8.08% 5.03% 16.72% 8.29% 4.06% 11.58% 0.00% 0.00% 17.21% 21.99% 100.00% 6 7 Capital Costs
8 Existing Debt Service $4,206,626 $1,386,862 $1,907,402 $3,639,684 $47,842,905 $5,479,519 $8,431,608 $33,328,447 $11,053 $0 $0 $0 $106,234,104 9 Proposed Debt Service $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 10 Cash Funded CIP $577,931 $633,720 $1,545,862 $996,999 $32,771,146 $6,623,861 $0 $15,167,421 $33,602,732 $118,328 $0 $0 $92,038,000 11 Change in Cash Reserves $141,344 $154,988 $378,069 $243,835 $8,014,793 $1,619,988 $0 $3,709,475 $8,218,173 $28,939 $0 $0 $22,509,603 12 Total Capital Costs $4,925,901 $2,175,569 $3,831,332 $4,880,517 $88,628,844 $13,723,368 $8,431,608 $52,205,343 $41,831,958 $147,268 $0 $0 $220,781,707 13 % of Total 2.23% 0.99% 1.74% 2.21% 40.14% 6.22% 3.82% 23.65% 18.95% 0.07% 0.00% 0.00% 100.00% 14 15 Gross Revenue Requirement $12,384,410 $9,553,358 $20,848,933 $15,470,543 $123,826,468 $31,170,189 $16,973,632 $76,578,461 $41,831,958 $147,268 $36,237,828 $46,296,826 $431,319,873 16 % of Total 2.87% 2.21% 4.83% 3.59% 28.71% 7.23% 3.94% 17.75% 9.70% 0.03% 8.40% 10.73% 100.00% 17 18 Revenue Requirement Offsets
19 Other Retail Charges $3,069 $3,036 $7,003 $4,358 $14,484 $7,180 $3,515 $10,030 $0 $0 $14,912 $19,052 $86,638 20 Non-Rate Operating Revenues $666,566 $659,352 $1,520,861 $946,430 $3,145,608 $1,559,221 $763,400 $2,178,223 $0 $0 $3,238,571 $4,137,543 $18,815,775 21 Programmatic Revenues $154,697 $153,022 $352,961 $219,647 $730,032 $361,864 $177,170 $505,521 $0 $0 $751,607 $960,240 $4,366,760 22 Non-Debt Capital Revenues $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 23 Drought Offset $541,523 $417,732 $911,644 $676,468 $5,414,460 $1,362,954 $742,192 $3,348,484 $1,829,152 $6,439 $1,584,542 $2,024,384 $18,859,974 24 Total Offsets $1,365,855 $1,233,142 $2,792,470 $1,846,902 $9,304,584 $3,291,217 $1,686,277 $6,042,259 $1,829,152 $6,439 $5,589,632 $7,141,218 $42,129,148 25 % of Total 3.24% 2.93% 6.63% 4.38% 22.09% 7.81% 4.00% 14.34% 4.34% 0.02% 13.27% 16.95% 100.00% 26 27 Net Revenue Requirement $11,018,555 $8,320,215 $18,056,463 $13,623,641 $114,521,884 $27,878,971 $15,287,355 $70,536,203 $40,002,806 $140,828 $30,648,196 $39,155,608 $389,190,725 28 % of Total 2.83% 2.14% 4.64% 3.50% 29.43% 7.16% 3.93% 18.12% 10.28% 0.04% 7.87% 10.06% 100.00% San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 89

7.4. Sewer Cost Component Allocations
The allocation of costs to cost causation component answers the question, what types of customer demands are met by different functional components of the sewer system? Cost causation components on the SFPUC’s sewer system include a flow component for the volume of customer wastewater discharges and for storm runoff generated from properties, as well as strength loading components for COD, TSS, and oil and OG.

Considering that SFPUC operates a combined sewer system that treats both wastewater and stormwater, the cost allocations were conducted in two steps.
• First, the split of wet weather to dry weather flows were evaluated; this is the first step of splitting costs between wastewater related expenses and stormwater related costs. • Second, the remaining dry weather related expenses were allocated to cost causation components.

This provided the basis for allocating wastewater related expenses to flow and strength cost drivers.

Determination of Wet Weather Flows (Stormwater Flows)
The SFPUC has historically recovered stormwater-related costs through wastewater rates. In this study, the stormwater related portion of the sewer cost of service has been calculated to enable the split of the sewer rates into wastewater rates and stormwater charges. To allocate costs between wastewater and stormwater service, the projected volume of dry weather flows (customer wastewater discharges and dry weather infiltration) and stormwater flows must be determined for a “typical” year. The analysis required to determine wet weather flows included the following key steps as shown in Table 7-5 for the period FY 2020 – FY 2022:

Identification of Wet Weather Days (Line 1): This reflects the number of days designated as experiencing wet weather flows at the Oceanside Wastewater Treatment Plant (FY 2020 and FY 2022) or the number of days with precipitation in excess of 0.10 inches from recorded weather data (FY 2021).

Estimation of Customer and Non-Customer Treatment Plant Influent (Lines 8 – 11): This shows the estimate of customer and non-customer flows to the SFPUC’s treatment plants. Approximately 16,704 million gallons (67.4%) of influent flows at the wastewater treatment plans are estimated to be associated with customer wastewater discharges (Line 10) and 8,093 million gallons (32.6%) of the flows are estimated to be from non-customer sources (Line 11).

Estimation of Non-Customer Wet Weather Flows and Dry Weather Infiltration (Lines 13 – 19): Of the non-customer influent of 8,093 million gallons (Line 11), 4,353 million gallons (17.6%) is estimated to be from flows on wet weather days and 3,740 (15.1%) is associated with dry weather infiltration (Line 17).

Flows on Wet Weather Days Excluding Customer Flows (Lines 21 – 24): In order to isolate infiltration on wet weather days -which includes some daily infiltration and pure stormwater flows- the customer flows on wet weather days of 1,368 (Line 23) is subtracted from the total wet weather flow of 4,352 million gallons (Line 22). This results in wet weather infiltration (daily infiltration and stormwater flows) of 2,984 million gallons (Line 24).

Determination of Pure Stormwater Flows (Lines 26 – 31): This section of the analysis shows the final derivation of the estimate of 10.8% of SFPUC treatment plant influent being associated with “pure” stormwater flows. By definition, this means that 89.2% of all remaining flows are not associated with stormwater.

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The outcome of the above analysis indicates that 89.2% of wastewater flows entering the SFPUC’s wastewater treatment facilities were dry weather-related and that 10.8% were created by stormwater.

Table 7-5: Estimation of FY 2024 Wet Weather Flows

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Allocation to Cost Causation Components
The wastewater utility industry typically uses one of two basic cost-allocation approaches when allocating wastewater costs to billable constituents (i.e., flow, COD, TSS, and OG). These are the Design Basis Cost- allocation Method and the Functional Cost Allocation Method. 14 The Design Basis Cost-Allocation Method (sometimes called the Capital Cost Allocation Method) is used in this study to proportionally allocate capital costs based on industry design standards for each functional area to cost components based on the relative costs borne by the utility to construct or repair capital assets15. The Functional Cost Allocation Method (sometimes called the Operation and Maintenance Cost Allocation Method) allocates O&M functional costs based on the drivers of costs as they relate to flows and loads.

The allocations presented in the 2018 Rate Study served as the starting point for this analysis. The allocations in the 2018 Rate Study were based on a 2014 functional allocation completed by MME for the rate study prior to the 2018 Rate Study. The allocations were then updated based on the changes that have been made to the facilities and customer uses that have impacted the combined sewer system16 over the last ten years. The SFPUC is in the process of undergoing major wastewater improvements based on the needs identified in the Sewer System Improvement Program (SSIP). Where appropriate, the percentages allocated to the flow and strength components were reevaluated considering these on-going capital improvements and customer use changes.

The allocations to each cost causation component were conducted in a multi-step evaluation. First costs were allocated more generally to flows and loads. Flows were distributed between wastewater (dry flows) and stormwater (wet flows), and loads were split between COD, TSS, and OG. To allocate the flow component of operating costs and non-rate revenues between dry flows and wet flows, the total allocation to flow for each function was multiplied by the wet and dry weather flow allocation that was calculated in the previous section (Table 7-5). The flow component for capital costs as well as the cost components were based on the specific design standards and operations of each functional group.

The following sections provide a description of each functional area and a summary of the considerations that went into assigning the allocation factors for each function to cost causation component. The final allocation factors used in the analysis are presented in Table 7-6 through Table 7-8.

Headworks:

The Headworks is the first treatment process in the wastewater treatment plant. The Headworks has several treatment functions. These include screening grit, rags and large debris, flow metering, and typically influent pumping. The Headworks are designed to accommodate all influent flow. Following the Design Basis Cost- Allocation Method for capital cost allocations, the percentage allocated to flow reflects the expected capital expenditures for accommodating flow. Headworks system components such as bar screens and grit collection

14 Reference: Financing and Charges for Wastewater Systems, Water Environment Federation Manual of Practice, No. 27 4th Edition, 2018.
15 The following manuals were referenced for consideration of design standards and industry best practices ; 1) Design of Municipal Wastewater Treatment Plants, 5th Edition, Joint Publication: Water Environment Foundations (WEF), Manual of Practice (MOP) No.8, 2) ASCE Manuals and Reports on Engineering Practice No.76., and 3) Wastewater Engineering Treatment and Resource Recovery, 5th Edition, Metcalf & Eddy|AECOM, McGraw-Hill, 2014.
16 In the last ten years, conservation efforts have successfully reduced indoor water use. Consequentially wastewater has become more concentrated, resulting in a greater allocation of costs from flows to loads.

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facilities are TSS based, so this proportionate share of the cost allocation of the headworks is appropriately based on TSS. The 2018 values are 86.5% for flow and 17.5% for TSS. Since that time, the Headworks has been upgraded to include a new Head Cell grit screening system and a new odor control system. The Headworks is where the odors and hazardous air emissions are first released in the treatment process. Air and odor emissions come from the strength components (COD, TSS, and OG). The strength components of COD and OG were not included in the 2018 allocations but have been added here to reflect Headworks screening and air emissions and odor control. Percentages of 2% for COD, 14% for TSS, and 1% for O/G that reflect the estimated capital expenditures spent on each strength component at the Headworks. A similar breakdown can be expected of the O&M expenditures.

The Headworks are sized to accommodate peak wet weather flows. Further, the SFPUC headworks includes back-up pumps in case of pump failure. These pumps also convey wet weather flows. The proportion of costs associated with the wet weather flows allocated towards the sizing and back-up pumps is 10% of total flows.

The resulting cost allocation for wet weather is roughly 8% of the total allocation for the Headworks (10% of the total allocation to flow). Historical wet weather and dry weather flow splits are used to allocate the flow component of the O&M costs between them using the Functional Cost Allocation Method.

Primary Treatment:

After sewer flows are screened in the headworks facility, they go through primary treatment, where suspended solids and organic matter are removed through settling and oil and grease is floated to the top and skimmed off. As previously discussed in the example, flows determine overall sizing and volume of the primary settling tanks because the tanks must be sized large enough to slow the velocity of the wastewater flow and to settle out the suspended solids.

Approximately 75% of capital cost for primary treatment is typically attributed to the settling tanks, so a 75% allocation is given to flow. The purpose of the primary tanks is to settle out and skim off the solids (i.e., TSS, and OG). Therefore, the costs for the rakes and skimmers and associated sludge pumps can be attributable to strength. Costs for the racks/skimmers/sludge pumps are typically 20% of the total capital cost of the primary tanks. In addition, the primary tanks at both the Southeast Plant and the Oceanside Plant are covered to contain odors. An odor control system treats the air emissions associated with the COD and OG strength components. This study has similar allocations to the 2018 study, reflecting odor control improvements, and resulting in an allocation of 75% flow, 20% TSS, 2% COD, and 3% O/G.

Primary tanks are typically sized with some allowance to accommodate peak wet weather flows. Typical design ratios for overflow rates for dry weather versus wet weather flows in primary tanks are approximately 1,200 gallons per day per square foot (gpd/sf) versus 1,400 gpd/sf . This is an increase of approximately 10% and is the basis of the wet weather allocation.

The O&M costs for the primary process include electrical power for sludge raking (TSS) and primary sludge pumping (TSS), chemical addition (TSS), and chemical and electrical use for the odor control facilities (COD). Related operational costs for handling flow include the operation and maintenance of the gates and valves and associated SCADA and control system. In addition, the primary tanks are designed to remove roughly 70% of the TSS and 30% of COD. The 2018 study reported an O&M allocation of costs of 40% flow and 60% TSS for primary treatment. This cost allocation is updated to reflect odor control and improvements to sludge raking resulting in an allocation of 55% TSS, 5% COD, and 40% to flow. Finally, historically San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 93

recorded wet weather and dry weather flows are used to allocate the flow component of the O&M costs between wet and dry weather in this analysis (Table 7-5).

Secondary Treatment:

Secondary treatment is where biodegradable organic matter is removed. The secondary treatment process requires aeration of the flow in one set of basins followed by a second set of clarification basins to settle out biomass. The secondary process is designed to meet the plant’s discharge requirements for TSS and COD removal. Both the secondary treatment process at the Southeast Wastewater Treatment Plant (SEP) and at the Oceanside Wastewater Treatment Plant are High Purity Oxygen Activated Sludge (HPOAS) processes. Both plants have conventional aeration basins (pure oxygen) followed by final clarifiers.

The design and sizing of the aeration tanks, which is the first set of secondary treatment basins, and the aeration equipment costs are directly controlled by the organic loading and the COD associated with that organic loading and flow. Structural and equipment costs (i.e., channels and gates) are attributable to the flow component. The flow component must also be managed in this process to allow for the required hydraulic retention time. Therefore, the Aeration Basins are sized based on hydraulic retention time (HRT), solids retention time (SRT), and oxygen feed concentrations to meet the COD design loading treatment requirement. The costs for the aeration basins in the 2014 Study are 95% derived from COD and 5% derived from flow. This study maintains this allocation.

The aeration basins are followed by the secondary clarifiers. The secondary clarifiers are the greatest expense of the secondary system after the aeration basins. The secondary clarifiers are designed primarily based on flow, as their purpose is to settle the TSS out the mixed liquor. The secondary sludge pumping equipment is sized for the waste activated sludge and return activated sludge (COD & OG). The 2014 allocations were 32% COD, 8% TSS, and 60% flow. This study maintains these allocations, with the addition of OG to reflect the proportional cost contributions of OG from the sludge pumping equipment.

The secondary allocation is a combination of the proportional costs of the aeration process and secondary clarifiers. The ratio of costs between the aeration system and the secondary clarifiers, including sludge pumping, is estimated to be roughly 60% and 40% respectively The blended cost allocation for the secondary process, including the aeration basins and the clarifiers, is 25% to flow, 70% to COD, 3% to TSS, and 2% to OG

17. This results in an increase from the 2018 stud in the strength allocations, reflecting water conservation efforts. A similar breakdown can be expected of the O&M expenditures.

Wet weather flows do not significantly impact the sizing of the secondary treatment process due to several reasons. First, the design of the secondary treatment process is such that a wide range of flows, including peak flows due to diurnal variability, is accommodated without significant cost adjustments. The secondary system is also designed with the ability to take tankage out of service for routine maintenance, so the additional capacity with all tanks in service can also be deployed during wet weather conditions. Also, the SFPUC wet weather flows are dampened in the Storage/Transport system. Therefore, no allowance is given to wet weather flows for the secondary system for the Capital Cost Allocation. Historically recorded wet weather and dry weather flows are used to allocate the flow component of the O&M costs between wet and dry weather in this analysis (Table 7-5).

17 Example calculation for COD: 0.6*95% +0.4*32%=70%
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It is recommended that consideration be given to separating out the aeration and secondary clarification processes during the next scheduled rate study due to their relatively different rationale and cost allocation results. Nutrients are an increasing regulatory concern in the Bay, consequently putting more of a focus on the secondary treatment system operation.

Solids Handling/Digesters:

Solids that are settled from both the primary and secondary clarifiers are treated in the solids handling and treatment facilities. Both the Oceanside Plant and the Southeast Treatment Plant use sludge digestion to handle and to treat the biosolids. The Southeast Treatment Plant has recently completed a major rebuild of the solids handling and digestion process and implemented a new state-of-the-art thermal hydrolysis process (CAMBI Process). The overall solids handling system includes primary and secondary sludge thickening, CAMBI Digestion Process (SEP), Conventional Anaerobic Digestion (OSP), Sludge Dewatering, Truck Transfer Station, and Trucking. These facilities all are designed based solely on the solids loadings as measured by COD, TSS, and OG. The solids handling facilities are not significantly impacted by wastewater flow. Therefore, the capital cost allocation using the Design Basis Cost Allocation Method for the solids handling/digesters is 100% to strength. The O&M cost allocation using the Functional Cost Allocation Method is also 100% to strength. The percentages of 55% COD, 40% TSS, and 5% OG reflect the allocations that are reasonably assigned to the solids handling/digester system to capital and O&M cost expenditures based on the influent wastewater characteristics.

Disinfection and Effluent Discharge:

Disinfection is the final treatment step before discharging the treated wastewater into receiving waters, or in the case of the Southeast Treatment Plant, San Francisco Bay. The Oceanside Treatment Plant does not disinfect due to ocean discharge. Ultraviolet light (UV) disinfection is used at the Southeast Treatment Plant.

Average day monthly flows are the parameter for determining the size of UV system to achieve the required contact time. Therefore, both capital and O&M cost allocations are attributed 100% to flow. The hypochlorite feed system handles peak wet weather flows. Historically recorded wet weather and dry weather flows are used to allocate the flow component of the O&M costs between wet and dry weather.

Pumping/Lift Stations:

Lift and pumping stations convey wastewater and storm water from one area to another. Sizing and design are based solely on flow. Therefore, flows are the basis for both the capital and O&M allocation costs for pumping/lift stations. The capacity of the pumping/lift stations is based on the design 5-year wet weather event. Historically recorded wet weather and dry weather flows are used to allocate the flow component of the O&M costs between wet and dry weather.

Collection System:

The collection system is a system of underground pipes that move sewage to the headworks of the treatment plants. The sizing of the collection system piping, pumping, and other system components is based solely on flow. Therefore, 100% of the capital cost allocation is based on flow. The pipe sizes are increased to accommodate peak flows because San Francisco has a combined collection system that collects and combines wastewater with wet weather stormwater flows. The incremental capital cost of 20% is associated with upsizing for accommodating wet weather flows.

Using the Functional Cost Allocation Method for allocation of the O&M costs, rags (TSS) and OG are the primary O&M expense for the collections system. That includes eliminating roots and rag and grease build-up San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 95

in order to keep the wastewater flowing freely in the collection system piping. This is a large O&M expense with regard to the collection system. The O&M allocation reflects this. The estimated O&M costs, including accepting and responding to customer complaints of system backups due to TSS and OG related issues are (TSS 20%, O/G 20% and Customer Service 10%). The remaining O&M flow allocation is split based on the historically recorded wet weather and dry weather daily average flows.

Interceptors:

San Francisco collects both dry weather and wet weather flows. Large interceptors (Transport/Storage Boxes) have been built to accommodate wet weather flows. Therefore, the percentage allocation for both capital and O&M for the interceptors is 100% flow. Although they were built with the goal to partially treat wet weather flows during wet weather events, the T/S Boxes also include design accommodations to transport dry weather flows on a daily basis. For the capital cost allocation, the 70% allocation to wet and 30% allocation to dry flows, reflect the estimated wet and dry weather expenditure split. Historically recorded wet weather and dry weather flows are used to allocate the flow component of the O&M costs between wet and dry weather.

Table 7-6 shows the allocation of estimated FY 2024 O&M costs to cost causation components. The percent allocations shown in Lines 1–13 reflect the outcome of the cost causation factor allocation analysis discussed above. These percentage allocations are then multiplied by the total FY 2024 O&M revenue requirement for each function as determined in Table 7-4. Note that the total FY 2024 O&M costs identified in Line 4 of Table 7-4 match the total O&M costs shown in Column J, Lines 16–27, in Table 7-6.

Table 7-7 shows the allocation of estimated FY 2024 capital costs to cost causation components. The percentage allocations shown in Lines 1 – 12 reflect the outcome of the cost causation factor allocation analysis discussed above. These percentage allocations are then multiplied by the total FY 2024 capital cost revenue requirement for each function as determined in Table 7-4. Note that the total FY 2024 capital costs identified in Line 12 of Table 7-4 match the total capital costs shown in Column J, Lines 15–26, in Table 7-7.

Table 7-8 shows the allocation of estimated FY 2024 non-rate revenue offsets to cost causation components.

The percentage allocations shown in Lines 1-13 reflect the outcome of the cost causation factor allocation analysis discussed above. These percentage allocations are then multiplied by the total FY 2024 non-rate revenue offset for each function as determined in Table 7-4. With the exception of primary treatment and general collections, the allocations match those used for O&M costs. For primary treatment and general collections, the allocations are similar to those used for capital costs. Note that the total FY 2024 non-rate revenue offsets identified in Line 24 of Table 7-4 match the total capital costs shown in Column J, Lines 16– 27, in Table 7-7.

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Table 7-6: Allocation of FY 2024 O&M to Cost Causation Components

(A) (B) (C) (D) (E) (F) (G) (H) (I) (J)
Line Category Flow (Dry) Flow (Wet) Flow (Total) COD TSS O/G Customer Service Admin. Total
1 Percent Allocations
2 Headworks 74.03% 8.97% 83.00% 2.00% 14.00% 1.00% 100.0% 3 Primary Treatment 35.68% 4.32% 40.00% 0.00% 55.00% 5.00% 100.0% 4 Secondary Treatment 22.30% 2.70% 25.00% 70.00% 3.00% 2.00% 100.0% 5 Disinfection / Discharge 89.19% 10.81% 100.00% 100.0% 6 Solids Handling 0.00% 0.00% 0.00% 55.00% 40.00% 5.00% 100.0% 7 Pumping / Lift Stations 89.19% 10.81% 100.00% 100.0%
8 Stormwater 100.00% 100.00% 100.0%
9 General Collections 44.59% 5.41% 50.00% 20.00% 20.00% 10.00% 100.0% 10 Interceptors 89.19% 10.81% 100.00% 100.0%
11 Customer Service 0.00% 0.00% 0.00% 100.00% 100.0%
12 Bureau 0.00% 0.00% 0.00% 100.00% 100.0%
13 Indirect 89.19% 10.81% 100.00% 100.0%
14 15 O&M Costs
16 Headworks $5,521,326 $669,237 $6,190,563 $149,170 $1,044,191 $74,585 $7,458,510 17 Primary Treatment $2,632,082 $319,033 $2,951,115 $4,057,784 $368,889 $7,377,788 18 Secondary Treatment $3,794,474 $459,926 $4,254,400 $11,912,320 $510,528 $340,352 $17,017,601 19 Disinfection / Discharge $9,445,181 $1,144,845 $10,590,026 $10,590,026 20 Solids Handling $19,358,693 $14,079,050 $1,759,881 $35,197,624 21 Pumping / Lift Stations $15,560,716 $1,886,105 $17,446,821 $17,446,821 22 Stormwater $8,542,024 $8,542,024 $8,542,024
23 General Collections $10,869,120 $1,317,440 $12,186,559 $4,874,624 $4,874,624 $2,437,312 $24,373,118 24 Bureau $36,237,828 $36,237,828
25 Indirect $41,291,864 $5,004,962 $46,296,826 $46,296,826 26 Total $89,114,763 $19,343,571 $108,458,335 $31,420,184 $24,566,176 $7,418,331 $2,437,312 $36,237,828 $210,538,166 27 Percentage of Total 42.33% 9.19% 51.51% 14.92% 11.67% 3.52% 1.16% 17.21% 100.00% San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 97

Table 7-7: Summary of FY 2024 Capital Costs to Cost Causation Components

(A) (B) (C) (D) (E) (F) (G) (H) (I) (J)
Line Category Flow (Dry) Flow (Wet) Flow (Total) COD TSS O/G Customer Service Admin. Total
1 Percent Allocations
2 Headworks 75.00% 8.00% 83.00% 2.00% 14.00% 1.00% 100.00% 3 Primary Treatment 65.00% 10.00% 75.00% 2.00% 20.00% 3.00% 100.00% 4 Secondary Treatment 25.00% 0.00% 25.00% 70.00% 3.00% 2.00% 100.00% 5 Disinfection / Discharge 80.00% 20.00% 100.00% 100.00% 6 Solids Handling / Digestors 55.00% 40.00% 5.00% 100.00% 7 Pumping / Lift Stations 80.00% 20.00% 100.00% 100.00% 8 Stormwater 100.00% 100.00% 100.00%
9 General Collections 80.00% 20.00% 100.00% 100.00%
10 Interceptors 30.00% 70.00% 100.00% 100.00%
11 Customer Service 100.00% 100.00%
12 Indirect 100.00% 100.00%
13 14 Cash-Funded Capital Costs
15 Headworks $3,694,425 $394,072 $4,088,497 $98,518 $689,626 $49,259 $4,925,901 16 Primary Treatment $1,414,120 $217,557 $1,631,677 $43,511 $435,114 $65,267 $2,175,569 17 Secondary Treatment $957,833 $957,833 $2,681,933 $114,940 $76,627 $3,831,332 18 Disinfection / Discharge $3,904,414 $976,103 $4,880,517 $4,880,517 19 Solids Handling / Digestors $48,745,864 $35,451,538 $4,431,442 $88,628,844 20 Pumping / Lift Stations $10,978,694 $2,744,674 $13,723,368 $13,723,368 21 Stormwater $8,431,608 $8,431,608 $8,431,608
22 General Collections $41,764,274 $10,441,069 $52,205,343 $52,205,343 23 Interceptors $12,549,587 $29,282,371 $41,831,958 $41,831,958 24 Customer Service $147,268 $147,268
25 Total $75,263,348 $52,487,453 $127,750,801 $51,569,826 $36,691,218 $4,622,595 $147,268 $0 $220,781,707 26 Percentage of Total 34.09% 23.77% 57.86% 23.36% 16.62% 2.09% 0.07% 0.00% 100.00% San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 98

Table 7-8: Allocation of FY 2024 Non-Rate Revenue Offsets to Cost Causation Components

(A) (B) (C) (D) ( E) (F) (G) (H) (I) (J)
Line Category Flow (Dry) F low (Wet) Flow (Total) COD TSS O/G Customer Service Admin. Total
1 Percent Allocations
2 Headworks 74.03% 8.97% 83.00% 2.00% 14.00% 1.00% 100.00% 3 Primary Treatment 66.89% 8.11% 75.00% 2.00% 20.00% 3.00% 100.00% 4 Secondary Treatment 22.30% 2.70% 25.00% 70.00% 3.00% 2.00% 100.00% 5 Disinfection / Discharge 89.19% 10.81% 100.00% 100.00% 6 Solids Handling 55.00% 40.00% 5.00% 100.00%
7 Pumping / Lift Stations 89.19% 10.81% 100.00% 100.00% 8 Stormwater 100.00% 100.00% 100.00%
9 General Collections 89.19% 10.81% 100.00% 100.00%
10 Interceptors 89.19% 10.81% 100.00% 100.00%
11 Customer Service 100.00% 100.00%
12 Bureau 100.00% 100.00%
13 Indirect 89.19% 10.81% 100.00% 100.00%
14 15 Non-Rate Revenue Offsets
16 Headworks $1,011,104 $122, 555 $1,133,660 $27,317 $191,220 $13,659 $1,365,855 17 Primary Treatment $824,874 $99, 983 $924,857 $24,663 $246,628 $36,994 $1,233,142 18 Secondary Treatment $622,647 $75, 471 $698,117 $1,954,729 $83,774 $55,849 $2,792,470 19 Disinfection / Discharge $1,647,241 $199, 661 $1,846,902 $1,846,902 20 Solids Handling $5,117,521 $3, 721,834 $465,229 $9,304,584 21 Pumping / Lift Stations $2,935,417 $355, 800 $3,291,217 $3,291,217 22 Stormwater $1,686,277 $1, 686,277 $1,686,277
23 General Collections $5,389,055 $653, 204 $6,042,259 $6,042,259 24 Interceptors $1,631,410 $197, 742 $1,829,152 $1,829,152 25 Customer Service $6,439 $6, 439
26 Bureau $5,589,632 $5, 589,632
27 Indirect $6,369,210 $772, 008 $7,141,218 $7,141,218
28 Total $20,430,958 $4, 162,701 $24,593,659 $7,124,230 $4,243,456 $571,731 $6,439 $5,589,632 $42,129,148 29 Percantage of Total 83.07% 16. 93% 58.38% 16.91% 10.07% 1.36% 0.02% 13.27% 100.00% San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 99

Consolidated Revenue Requirement Allocation to Cost Causation Components
Table 7-9 summarizes the information provided in Table 7-6, Table 7-7, and Table 7-8 into a single consolidated FY 2024 revenue requirement allocation to cost causation components. The final revenue requirement of $389,190,725 matches Line 27 of Table 7-4 and several other preceding tables in this report (for example, Line 27 of Table 7-4).

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 100

Table 7-9: Consolidated FY 2024 Rate Revenue Requirement Allocation to Cost Causation Components

(A) (B) (C) (D) (E) (F) (G) (H) (I) (J)
Line Cost Component Flow (Dry) Flow (Wet) Flow (Total) COD TSS O/G Customer Service Admin. Total
1 O&M $89,114,763 $19,343,571 $108,458,335 $31,420,184 $24,566,176 $7,418,331 $2,437,312 $36,237,828 $210,538,166 2 % Allocation 82.16% 17.84% 51.51% 14.92% 11.67% 3.52% 1.16% 17.21% 100.00% 3 4 Capital Costs $75,263,348 $52,487,453 $127,750,801 $51,569,826 $36,691,218 $4,622,595 $147,268 $0 $220,781,707 5 % Allocation 58.91% 41.09% 57.86% 23.36% 16.62% 2.09% 0.07% 0.00% 100.00% 6 7 Gross Revenue Requirement $164,378,111 $71,831,024 $236,209,135 $82,990,010 $61,257,394 $12,040,926 $2,584,579 $36,237,828 $431,319,873 8 % Allocation 38.11% 16.65% 54.76% 19.24% 14.20% 2.79% 0.60% 8.40% 100.00% 9 10 Non-Rate Revenue Offsets $20,430,958 $4,162,701 $24,593,659 $7,124,230 $4,243,456 $571,731 $6,439 $5,589,632 $42,129,148 11 % Allocation 83.07% 16.93% 58.38% 16.91% 10.07% 1.36% 0.02% 13.27% 100.00% 12 13 Net Revenue Requirement $143,947,153 $67,668,323 $211,615,476 $75,865,780 $57,013,938 $11,469,195 $2,578,140 $30,648,196 $389,190,725 14 Percentage of Total 68.02% 31.98% 54.37% 19.49% 14.65% 2.95% 0.66% 7.87% 100.00% San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 101

7.5. Sewer Unit COS Development

Customer Contributed Units of Service
The units of service are used in the allocation of costs to customer classes and the eventual determination of proposed FY 2024 rates and charges as part of the rate design process. This process involves developing estimates, in consultation with SFPUC staff, of the projected FY 2024 contributed units of service (i.e., customer wastewater discharges flowing to the treatment plants), billed units of service, return flows, strength loadings, and infiltration volumes, originally shown in Table 6-4 through Table 6-8. Table 7-10 shows the volume and strength loading inputs used to determine the units of service for FY 2024 prior to the allocation of flows from dry water infiltration. Key points of Table 7-10 include:

Projected Flow (Column C): The SFPUC’s wastewater billing system calculates the projected flow volumes shown in Column C of Table 7-10 by applying a return flow factor to each customer’s billed water consumption. Therefore, the projected flow volumes shown in Column C include a return flow adjustment made by the billing system. The return flow factor assumed for Single Family Residential is 90% and Multifamily Residential customers is 95%. The return flow factors for non-residential customers are based on the SIC Code assigned to each customer in the billing system.

Weighted Average Strength Loadings (Column D-F): The concentration (mg/L) of the strength loadings shown in Columns D, E, and F reflected the aggregate weighted average of each customer type (e.g., Single Family Residential, Municipal, Nonresidential/Commercial) based on their strength loading assignment (see Wastewater Strength Loading Groups).

Wet Weather Flows (Line 13): The strength loading of wet weather flows shown on Line 13 were estimated based on an analysis of treatment plant influent data for the three-year period FY 2020 - FY 2022.

Strength Loading Pounds (Columns G-I): The pounds of strength loadings were determined based on the projected flow volumes in Column C by the weighted average strength loadings for each customer class as shown in Columns D-F.

Table 7-10: Summary FY 2024 Units of Service

(A) (B) (C) (D) (E) (F) (G) (H) (I)
Line Description % of Treatment
Effluent
Projected Flow
(CCF)
Wtd Avg.

COD (mg/L)
Wtd. Avg.

TSS (mg/L)
Wtd. Avg
O/G (mg/L)
Est. COD
Pounds
Est. TSS
Pounds
Est. O/G
Pounds
1 Customer Contributions
2 Single Family Residential 5,745,781 566 258 34 24,534,916 10,007,662 3,048,930 3 Multifamily Residential 9,720,649 780 333 35 41,507,991 16,930,858 5,158,178 4 Municipal 502,612 308 152 17 2,150,964 875,535 268,434 5 Nonresidential/Commercial 5,747,608 407 134 27 25,004,030 8,732,452 3,434,081 6 Fire 28,194 0 0 0
7 Municipal Fire 580 604 271 33
8 Total Billed Retail 21,745,424 2,665 1,147 145 93,197,901 36,546,507 11,909,623 9 10 Wholesale 138,860 687 269 88 595,137 233,376 76,052 11 12 Non-Customer Flows
13 Wet Weather Flows 17.6% 5,849,076 284 101 10 10,365,927 3,699,771 379,531 14 Dry Weather Infiltration 15.1% 5,026,950 0 0 0 0 0 0 15 Total Non-Customer 32.6% 10,876,027 284 101 10 10,365,927 3,699,771 379,531 16 17 Estimated Customer and Non-Customer Contributions 32,760,311 510 198 60 104,158,964 40,479,654 12,365,206 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 102

Allocation of Dry Weather Infiltration to Customer Units of Service After determining the test year units of service summarized in Table 7-10, the next step in the COS process is to determine how dry weather infiltration volumes loadings should be allocated to each customer class.

There is no industry standard approach for the allocation of infiltration in every situation. Methods for allocating infiltration to customer classes range from relying entirely on the proportionate share of contributed volume from each customer class (100% volume) to relying entirely on the proportionate share of customer accounts/wastewater service connections (100% accounts). For this study, 25% of dry weather infiltration volumes were allocated based on customer accounts and 75% of dry weather infiltration volumes were allocated based on customer volumes.

Table 7-11 shows a summary of the allocation of dry weather infiltration to each wastewater customer class.

Note that no strength loadings were assigned to dry weather infiltration volumes (see Line 14 of Table 7-10).

This is because there was no data available to appropriately assign dry weather infiltration strength loadings.

Therefore, there is no change in the pounds of COD, TSS, or OG allocated to each customer class due to dry weather infiltration.

As shown in Line 1 of Column B in Table 7-11, the estimated FY 2024 volume of dry weather infiltration is 5,026,950 CCF. Of this amount, 3,770,213 (75%) is allocated to customer classes based on the volume of wastewater projected to be contributed by each customer class (Column C, Line 1). The remaining 1,256,738 CCF of dry weather flow (25%) is allocated to customer classes based on number of accounts projected for each customer classes (Column D, Line 1).

Column B, Lines 7–14 of Table 7-11 show the volume of wastewater projected to be contributed to each customer class before the allocation of dry weather infiltration. For example, the projected volume of wastewater for Single Family Residential customers is 5,745,781 (Column B, Line 8). After allocating flows from dry water infiltration to Single Family Residential customers based on their proportionate share of projected FY 2024 contributed volumes and accounts, the estimated total flow contribution assigned to Single Family Residential customers is 7,547,512 CCF as shown in Column B, Line 17. Note that the amount of strength loading pounds projected for each customer classes is the same both before and after the allocation of dry weather infiltration (Columns C, D, and E, Lines 7-23). As noted previously, this is due to the fact that no strength loadings were assigned to dry weather flows infiltration.

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 103

Table 7-11: Allocation of Dry Weather Infiltration to Customer Classes

7.6. Sewer Customer Class Revenue Requirements
As discussed previously in Section 7.2 (Table 7-1, Line 19), the total FY 2024 sewer revenue requirement for the Wastewater Enterprise is $389,190,725. The calculated wastewater service-related revenue requirement is $301,185,528 or 77.5% of the total. The calculated stormwater service-related revenue requirement is $87,719,197 or 22.5% of the total. This report section discusses the derivation of these service-related costs and the specific revenue requirement for each wastewater customer class.

Unit Cost of Service Calculation
Having established the units of service for each customer class (Table 7-11), the next step in the wastewater COS process is to calculate the revenue requirement for each customer class. To allocate costs to customer classes, a unit COS is calculated for each cost causation component.

A starting point in the unit COS calculation process is to summarize the allocated FY 2024 COS as shown in Table 7-12. Line 1 of Table 7-12 corresponds to the amounts presented in Line 1 of Table 7-9. Lines 2 and 3 of Table 7-12 correspond to Lines 2 and 10 of Table 7-9, respectively. Administrative costs totaling $30,648,196 (Column I, Line 4) were identified in the process of assigning costs to functions. These costs were allocated to each cost causation component as shown in Line 8 of Table 7-12. Specifically, administrative costs were allocated to each cost causation component shown in Columns B-H based on their proportionate share of the

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 104

of the FY 2024 revenue requirement. The total allocated revenue requirement sums to $389,190,725 (Line 4 and Line 7) which matches the overall rate revenue requirement developed in the financial plan and shown in several proceeding tables.

Table 7-12 also shows the unit COS calculation for each cost causation component. The unit COS is calculated by dividing the revenue requirement for each cost causation component (Line 7) by the units of service (Line 20). The value of $7.04 per CCF shown in Line 22 of Column B reflects the cost of providing service for all types of sewer flows on the SFPUC system. This includes dry weather flows consisting of customer wastewater discharges and dry weather infiltration (Column C) and wet weather flows from stormwater (Column D). The value of $5.84 per CCF shown in Line 22 of Column C is used in the calculation of the revenue requirement for each wastewater customer class. The value of $12.56 per CCF shown in Line 22 of Column D is used in the calculation of the stormwater revenue requirement. A detail of the unit COS calculation for flow, COD, TSS, OG, and customer billing is shown in Appendix J.

Table 7-12: Summary FY 2024 COS by Cost Causation Component

Wastewater Portion of Sewer Revenue Requirement
The wastewater portion of the sewer revenue requirement allocated to each customer class is calculated by multiplying the customer class units of service for each cost causation component by the total system unit COS for each cost causation component. Lines 2 -7 of Table 7-13 show the units of service for each customer class for each cost causation component. The unit cost of service shown in Line 11 was derived in Table 7-12.

The customer class revenue requirements are shown in Table 7-13, Lines 15 – 20. The total wastewater revenue requirement for each customer class is the sum of the flow portion of the revenue requirement, each strength portion of the revenue requirement (COD, TSS, and OG), and the total customer service portion of the revenue requirement. The resulting aggregate wastewater portion of the FY 2024 sewer revenue requirement is $301,471,528 as shown in Column K, Line 21 of Table 7-13. This is 77.5% of the $389,190,725 total sewer revenue requirement shown, for example, in Column K, Line 7 of Table 7-12. (A) (B) (C) (D) (E) (F ) (G) (H) (I) (J)
Line COS Component Flow (Total) Flow (Dry) Flow (Wet) COD TS S O/G Customer Service Admin. Total
1 O&M $108,458,335 $89,114,763 $19,343,571 $31, 420, 184 $24,566,176 $7,418,331 $2,437,312 $36,237,828 $210,538,166 2 Capital $127,750,801 $75,263,348 $52,487,453 $51, 569, 826 $36,691,218 $4,622,595 $147,268 $0 $220,781,707 3 Less: Non-Rate Revenue Offsets $24,593,659 $20,430,958 $4,162,701 $7,124,230 $4,243,456 $571,731 $6,439 $5,589,632 $42,129,148 4 Subtotal Before Allocation of Admin. $211,615,476 $143,947,153 $67,668,323 $75, 865, 780 $57,013,938 $11,469,195 $2,578,140 $30,648,196 $389,190,725 5 6 Allocation of Admin. Costs $18,088,879 $12,304,595 $5,784,285 $6, 485, 003 $4,873,548 $980,386 $220,379 ($30,648,196) $0 7 Final Net Revenue Requirement $229,704,355 $156,251,748 $73,452,607 $82, 350, 783 $61,887,486 $12,449,581 $2,798,519 $0 $389,190,725 8 Percent of Total 59.02% 40.15% 18.87% 21. 16% 15.90% 3.20% 0.72% 0.00% 100.00% 9 10 Units of Service
11 Single Family Residential 7,547,512 7,547,512 24,534,916 10,007, 662 3,048,930 1,340,050 12 Multifamily Residential 11,668,893 11,668,893 41,507,991 16,930, 858 5,158,178 437,320 13 Municipal 595,502 595,502 2,125,773 840,158 231,016 9,562 14 Nonresidential/Commercial 6,853,641 6,853,641 26,119,805 8,543, 674 3,336,919 182,184 15 Fire 103,592 103,592 0 0 0 117,298
16 Municipal Fire 3,235 3,235 0 0 0 4,249
17 Total Wastewater 26,772,375 26,772,375 94,288,484 36,322, 352 11,775,042 2,090,663 18 19 Stormwater 5,849,076 5,849,076 10,365,927 3,699, 771 379,531 0 20 Total Units of Service 32,621,451 26,772,375 5,849,076 104,654, 412 40,022,124 12,154,574 2,090,663 21 22 Total System Unit COS $7.04 $5.84 $12.56 $0.79 $1.55 $1.02 $1.34 23 Type of Units $/CCF $/CCF $/CCF $/P ound $/Pound $/Pound $/Bill Flow (CCF) Strength (Pounds)
San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 105

Table 7-13: Detail of FY 2024 Wastewater Customer Class Revenue Requirements

(A) (B) (C) (D) (E) (F) (G) (H) (I) (J) (K)
Line Class Dry Weather
Infiltration
(Flow Allocation)

(Dry Weather Flow
+ Infiltration) COD TSS O/G

(Account
Allocation)
Customer
Service
Customer
Service Total
Aggregate
Total
1 Units of Service
2 Single Family Residential 5,745,781 996,201 6,741,982 24,534,916 10,007,662 3,048,930 805,530 1,340,050 3 Multifamily Residential 9,720,649 1,685,362 11,406,012 41,507,991 16,930,858 5,158,178 262,881 437,320 4 Municipal 502,612 87,143 589,754 2,125,773 840,158 231,016 5,748 9,562 5 Nonresidential/Commerc 5,747,608 996,518 6,744,126 26,119,805 8,543,674 3,336,919 109,514 182,184 6 Fire 28,194 4,888 33,082 0 0 0 70,510 117,298
7 Municipal Fire 580 101 681 0 0 0 2,554 4,249
8 Total 21,745,424 3,770,213 25,515,637 94,288,484 36,322,352 11,775,042 1,256,738 2,090,663 9 10 Unit COS
11 Unit Cost $5.84 $5.84 $5.84 $0.79 $1.55 $1.02 $5.84 $1.34 12 Units $/CCF $/CCF $/CCF $/Pound $/Pound $/Pound $/CCF $Blil 13 14 Revenue Requirement
15 Single Family Residential $33,534,131 $5,814,134 $39,348,264 $19,306,109 $15,475,167 $3,122,931 $4,701,316 $1,793,764 $6,495,080 $83,747,552 16 Multifamily Residential $56,732,675 $9,836,288 $66,568,963 $32,661,935 $26,180,726 $5,283,373 $1,534,256 $585,388 $2,119,644 $132,814,641 17 Municipal $2,933,395 $508,591 $3,441,986 $1,672,735 $1,299,163 $236,623 $33,547 $12,799 $46,346 $6,696,852 18 Nonresidential/Commerc $33,544,796 $5,815,983 $39,360,779 $20,553,232 $13,211,356 $3,417,910 $639,159 $243,868 $883,026 $77,426,304 19 Fire $164,549 $28,529 $193,079 $0 $0 $0 $411,518 $157,013 $568,531 $761,610 20 Municipal Fire $3,385 $587 $3,972 $0 $0 $0 $14,908 $5,688 $20,596 $24,568 21 Total $126,912,931 $22,004,112 $148,917,044 $74,194,011 $56,166,412 $12,060,838 $7,334,704 $2,798,519 $10,133,223 $301,471,528 CustomerFlow (CCF) Strength (Pounds)
San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 106

Wastewater Portion of Sewer Revenue Requirement versus Revenues at Existing Rates
Table 7-14 provides a summary comparison of how the FY 2024 wastewater customer class revenue requirements compare to the level of revenue earned from existing rates. For all wastewater customer classes, the FY 2024 cost to serve (Column B), is less than the amount earned from existing rates. This is because the SFPUC’s current wastewater rates recover the cost of both wastewater and stormwater services. The calculated FY 2024 wastewater revenue requirement excludes stormwater-related costs. However, the proportion of costs incurred between classes has remained at a similar level, as shown in Column D and Column E.

Table 7-14: FY 2024 Wastewater Portion of Revenue Requirement vs. Revenues at Existing Rates

Stormwater Portion of Sewer Revenue Requirement
The stormwater portion of the sewer revenue requirement is calculated by multiplying the units of service for each cost causation component by the unit cost of service. Line 9, Column F of Table 7-15 shows the calculated FY 2024 stormwater related costs of $87,719,197 which is 22.5% of the total FY 2024 Wastewater Enterprise revenue requirement of $389,190,725. The units of service shown in Line 2 of Table 7-15 were originally presented in Line 19 of Table 7-12. No allocation of dry weather infiltration costs or customer service costs were included in the stormwater revenue requirement.

Table 7-15: FY 2024 Stormwater Revenue Requirement

(A) (B) (C) (D) (E)
Line Customer Class
Proposed Cost of
Service ($)
Current Cost of
Service ($)
Proposed Cost of
Service (%)
Current Cost of
Service (%)
1 Single Family Residential $83,747,552 $103,329,788 27.78% 27.61% 2 Multifamily Residential $132,814,641 $165,279,146 44.06% 44.16% 3 Municipal $6,696,852 $8,342,234 2.22% 2.23%
4 Nonresidential/Commercial $77,426,304 $96,379,418 25.68% 25.75% 5 Fire $761,610 $891,175 0.25% 0.24%
6 Municipal Fire $24,568 $27,900 0.01% 0.01%
7 Total $301,471,528 $374,249,662 100.00% 100.00%
Flow (CCF)
(A) (B) (C) (D) (E) (F)
Line Class Wet Weather COD TSS O/G Aggregate Total
1 Units of Service
2 Stormwater 5,849,076 10,365,927 3,699,771 379,531
3 4 Unit COS
5 Unit Cost $12.56 $0.79 $1.55 $1.02
6 Units $/CCF $/Pound $/Pound $/Pound
7 8 Revenue Requirement
9 Stormwater $73,452,607 $8,156,772 $5,721,074 $388,743 $87,719,197 Strength (Pounds)
San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 107

Revenue Requirement Summary
Table 7-16 shows a summary of the FY 2024 sewer revenue requirement by cost causation component, and by service type (wastewater or stormwater) based on the allocations discussed in this section of the report.

Table 7-16: FY 2024 Revenue Requirement Summary

(A) (B) (C) ( D) (E) (F) (G)
Line Service Flow C OD TSS O/G CS Total
1 Wastewater $148,917,044 $74,194,011 $56, 166,412 $12,060,838 $10,133,223 $301,471,528 2 Stormwater $73,452,607 $8,156,772 $5, 721,074 $388,743 $0 $87,719,197 3 Total $222,369,651 $82,350,783 $61, 887,486 $12,449,581 $10,133,223 $389,190,725 4 5 % Wastewater 66.97% 90.10% 90. 76% 96.88% 100.00% 77.46% 6 % Stormwater 33.03% 9.90% 9. 24% 3.12% 0.00% 22.54%
7 Total 100.00% 100.00% 100. 00% 100.00% 100.00% 100.00% San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 108

8. Sewer Rate Design

8.1. Sewer (Wastewater and Stormwater) Rate Design
Overview
This report section shows the calculation of FY 2024 rates for each wastewater customer class. The rates are an outcome of the comprehensive analysis of customer flows and strength loadings completed as part of the wastewater COS process described in Section 7 of this report. The rates are designed to recover wastewater service-related costs of $301,471,528 (see Line 1 of Table 7-16) and stormwater service-related costs of $87,719,197 (see Line 2 of Table 7-16) for the projected FY 2024 total sewer revenue requirement of $389,190,725.

8.2. Wastewater Rate Calculations
Monthly Service Charge
Table 8-1 shows the calculation of FY 2024 monthly service charge. The cost components recovered in the monthly service charge include the cost of dry weather infiltration and the cost of customer service, each of which are allocated on the basis of accounts. The proposed monthly service charge is calculated by dividing the total revenue requirement (Column B plus Column C) by the total number of bills (Column E). This results in a monthly service charge of $4.85 per bill which is $0.36 less than the current monthly service charge of $5.21 per monthly.

Table 8-1: Proposed FY 2024 Monthly Service Charge

Residential Commodity Rates
Table 8-2 shows the calculation of COS FY 2024 residential commodity rates. This rate is calculated by taking the FY 2024 revenue requirement for each residential class (Column B) and dividing it by the billed units (Column C). This results in a rate of $13.45/CCF which is $2.52 less than the current residential commodity rate of $15.97/CCF. A detail of the components of the FY 2024 revenue requirement shown in Lines 1 and 2 in Column B was presented in Table 7-13, Columns D-G, Lines 15 and 16. The projected FY 2024 billed units shown in Column C of Table 8-2 are based on the projected FY 2024 billable wastewater discharge volumes presented in the FY 2024 Column of Table 6-5.

(A) (B) (C) (D) (E ) (F) (G) (H)
Line Customer Class Account Allocated
Infiltration
Customer
Service
Total Revenue
Requirement Bills Calculated
$/Bill
Current
$/Bill $ Difference
1 Single Family Residential $4,701,316 $1, 793, 764 $6,495,080 1,340,050 $4.85 $5.21 -$0.36 2 Multifamily Residential $1,534,256 $585, 388 $2,119,644 437,320 $4.85 $5.21 -$0.36 3 Municipal $33,547 $12, 799 $46,346 9,562 $4.85 $5.21 -$0.36 4 Nonresidential/Commercial $639,159 $243, 868 $883,026 182,184 $4.85 $5.21 -$0.36 5 Fire $411,518 $157, 013 $568,531 117,298 $4.85 $5.21 -$0.36 6 Municipal Fire $14,908 $5, 688 $20,596 4,249 $4.85 $5.21 -$0.36 7 Total $7,334,704 $2, 798, 519 $10,133,223 2,090,663 $4.85 $5.21 -$0.36 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 109

Table 8-2: Proposed FY 2024 Residential Commodity Rates

Non-Residential Commodity Rates
Table 8-3 shows the calculation of FY 2024 non-residential commodity rates which consist of components for flow and strength (COD, TSS, OG). The rate is derived by taking the total flow or strength related revenue requirement Billed units refers to the total CCF of non-residential billed wastewater discharges as well as the billed pounds of COD, TSS, and OG. For example, the volumetric $/CCF rate is determined by dividing the FY 2024 revenue requirement (Colum D, Lines 1-4) by the projected billed units (Column E, Lines 1-4). The projected $/lb. rate for COD is determined by diving the FY 2024 revenue requirement (Column B, Lines 9 and 10) by the projected billed units (Column C, Lines 9 and 10). A similar process is followed for the $/lb. rates for TSS and OG.

With the exception of the $/lb. rate for COD (Columns D and E, Line 9 and 10 of Table 8-3), each billing component declines as compared to current rates. The increase in the dollar per pound ($/lb.) rate for COD is primarily due to the large investment in treatment plant digester technologies made by the SFPUC.

A detail of the components of the FY 2024 revenue requirement values shown in Table 8-3 can be found in Table 7-13, Columns D-G, Lines 17 and 18. The various projected FY 2024 billed units shown in Table 8-3 (flow, COS, TSS, OG) can be found in the FY 2024 Columns of the following tables: Table 6-5, Table 6-6, Table 6-7, and Table 6-8.
(A) (B) ( C) (D) (E) (F)
Line Class Revenue
Requirement Billed Units Calculated $/CCF Cu rrent $/CCF $ Difference 1 Single Family Residential $77, 252,472 5,745,781 $13.45 $15.97 ($2.52) 2 Multifamily Residential $130, 694,998 9,720,649 $13.45 $15.97 ($2.52) 3 Blended Total $207, 947,470 15,466,430 $13.45 $15.97 ($2.52) San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 110

Table 8-3: Proposed FY 2024 Non-Residential Commodity Rates

Five-Year Wastewater Rate Projection
Table 8-4 summarizes COS wastewater rates for the period FY 2024 – FY 2028. The increase in rates after FY 2024 are based on the overall rate revenue increases specified in the financial plan in Table 6-16, which are also shown in Line 1 in Table 8-4.

Table 8-4: Summary of Cost of Service Wastewater Rates FY 2024 – FY 2028

8.3. Stormwater Charge Overview
The Wastewater Enterprise has historically recovered stormwater-related costs through wastewater rates. In this study, a separate stormwater revenue requirement was calculated so that the SFPUC can implement stormwater specific charges. As discussed in Section 7, the projected FY 2024 stormwater service-related costs (A) (B) (C) (D) (E) (F) (G) (H)
Line Class
Flow Revenue
Requirement
Infiltration
(Flow Alloc) Total Flow Billed Units
Calculated
$/CCF Current $/CCF $ Difference
1 Municipal $2,933,395 $508,591 $3,441,986 502,612 $6.85 $9.46 ($2.61) 2 Nonresidential/Commercial $33,544,796 $5,815,983 $39,360,779 5,747,608 $6.85 $9.46 ($2.61) 3 Fire $164,549 $28,529 $193,079 28,194 $6.85 $9.46 ($2.61) 4 Municipal Fire $3,385 $587 $3,972 580 $6.85 $9.46 ($2.61) 5 Blended Total $36,646,125 $6,353,690 $42,999,816 6,278,994 $6.85 $9.46 ($2.61) 6 7
8 Class
COD Revenue
Requirement Billed Units Calculated $/Lb. Current $/Lb. $ Difference 9 Municipal $1,672,735 2,125,773 $0.79 $0.65 $0.14
10 Nonresidential/Commercial $20,553,232 26,119,805 $0.79 $0.65 $0.14 11 Blended Total $22,225,967 28,245,578 $0.79 $0.65 $0.14 12 13
14 Class
TSS Revenue
Requirement Billed Units Calculated $/Lb. Current Charge $ Difference 15 Municipal $1,299,163 840,158 $1.55 $1.65 ($0.10)
16 Nonresidential/Commercial $13,211,356 8,543,674 $1.55 $1.65 ($0.10) 17 Blended Total $14,510,518 9,383,832 $1.55 $1.65 ($0.10) 18 19
20 Class
OG Revenue
Requirement Billed Units Calculated $/Lb. Current Charge $ Difference 21 Municipal $236,623 231,016 $1.02 $1.66 ($0.64)
22 Nonresidential/Commercial $3,417,910 3,336,919 $1.02 $1.66 ($0.64) 23 Blended Total $3,654,534 3,567,935 $1.02 $1.66 ($0.64) COD
TSS
O/G
Flow Revenue Requirement Component
(A) (B) (C) (D) (E) (F) (G)
Line Wastewater Current
(Since 7/1/2022)
Proposed
FY 2024
Proposed
FY 2025
Proposed
FY 2026
Projected
FY 2027
Projected
FY 2028
1 Revenue Rate Increase 9% 9% 9% 10% 10%
2 3 Residential Volumetric ($/CCF) $13.45 $14.66 $15.97 $17.57 $19.33 $21.26 4 5 Nonresidential Volumetric
6 Discharge ($/CCF) $6.85 $7.46 $8.14 $8.95 $9.84 $10.83 7 COS ($/pound) $0.79 $0.86 $0.93 $1.03 $1.13 $1.24
8 TSS ($/Pound) $1.55 $1.69 $1.84 $2.02 $2.22 $2.45
9 O/G ($/pound) $1.02 $1.12 $1.22 $1.34 $1.47 $1.62
San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 111

are $87,719,197 (see Line 2 of Table 7-16). The stormwater rates presented in this section of the report are “full cost” (or COS based) rates that are designed to recover all the projected FY 2024 stormwater specific costs.

New Stormwater Charge Structure
The SFPUC has elected to implement a stormwater charge beginning in FY 2024 that features a “Simplified” structure for residential customers and a “Standard” structure for non-residential customers. Residential customers are defined as having a maximum of six dwelling units and a maximum lot size of 6,000 square feet. Under the Simplified rate structure, residential customers who meet this definition will be assessed a flat monthly charge in one of three Simplified Residential Tiers (SRT), based on parcel size. This flat charge is based on the average amount of permeable and impermeable area for parcels within each tier. These averages are based on a GIS analysis of all parcels in the City of San Francisco. Customers who do not meet the residential criteria are charged under the Standard rate structure based on their actual square footage of permeable and impermeable area. It is worth noting that any parcel area that does not drain to SFPUC’s combined sewer will be excluded from the calculation of billable area18. Table 8-5 summarizes this rate structure.

Table 8-5: New Stormwater Charge Structure

Stormwater Charge Calculation
Table 8-6 shows the calculation of the FY 2024 stormwater unit COS (dollar per thousand square feet per month or $/KSF/mo.). The total billable permeable and impermeable areas shown in Column B are based on a geospatial analysis of areal imaging that was prepared for SFPUC. The total billable areas are then multiplied by a runoff coefficient (Column C) that was determined by SFPUC by calculating the runoff generated from impervious area and various pervious surfaces. The pervious surface analysis included multiple vegetation and soil conditions. For the purpose of setting up the stormwater charge, it was determined that 100% of precipitation would run off from impermeable surfaces, while 10% of precipitation would run off from the typical permeable surface in the city. To normalize the unit cost calculation, the billable areas were multiplied by the runoff coefficient (Column B * Column C) to calculate the effective permeable and impermeable areas. The total revenue requirements (Column E) were then divided by the effective area to calculate the rate on a dollar per square foot per year basis. The rate was then converted to dollar per thousand square feet per month (Column G).

18 Excluded area includes land that drains to a lake, pond, or to the Bay; submerged portions of water front parcels; and areas that are managed by their own stormwater management system under a separate permit.

Line Customer Type Type of Charge
1 Simplified Residential Tiered Rate
2 SRT1 (1 - 1,700 square feet parcel size) Monthly Flat Charge 3 SRT2 (1,701 - 3,300 square feet parcel size) Monthly Flat Charge 4 SRT3 (3,301 - 6,000 square feet parcel size) M onthly Flat Charge 5 6 Standard Non-Residential Rate Structrure
7 Standard Rate Impermeable $/Thousand Square Feet / Month 8 Standard Rate Permeable $/Thousand Square Feet / Month San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 112

Table 8-6: FY 2024 Stormwater Unit COS Calculation

Having established the unit COS for all permeable and impermeable surfaces, the next step in the development of the stormwater charge is to calculate the revenue requirement for each customer type and each tier. The percentage of the total effective permeable and impermeable areas for each class and tier is calculated and shown in Column D and Column E of Table 8-7 and are based on the effective areas originally shown in Column D of Table 8-6. These percentages are then used to determine the portion of the revenue requirement that is allocated to each class and tier. The total permeable revenue requirements (Column F) and impermeable revenue requirements (Column G) in Table 8-7 are equal to the revenue collections in Column E of Table 8-6. Table 8-7 shows a summarized version of this calculation.

Table 8-7: FY 2024 Stormwater Revenue Requirement by Customer Type

The third step in the calculation of the stormwater charge is the development of dollar per thousand square foot per month unit costs for both permeable and impermeable areas. Table 8-8 shows this calculation which is a more detailed version of the information previously provided in Table 8-7 and Table 8-6. The permeable charge is the permeable revenue requirement (Column B) divided by the permeable area (Column E) and multiplied by 1,000 and divided by 12 to create a monthly charge. The impermeable charge is derived in the same manner (Column C divided by Column F * 1,000 *12).

Table 8-8: $/Thousand Square Foot/Month Unit Costs

The fourth step in the calculation of the stormwater charge is the development of the differentiated monthly fixed charge for each residential tier in the Simplified portion of the stormwater charge structure. This calculation requires the use of average residential parcel size estimates as developed by the SFPUC. Table 8-9 (A) (B) ( C) (D) (E) (F) (G) (H)
Line Customer Type
Permeable
Revenue
R
equirement
Impermeable
Revenue
R
equirement
Total Revenue
Requirement
Permeable Area
(Sq. Ft.)
Impermeable
Area (Sq. Ft.)
Permeable
$/KSF/Mo.

Impermeable
$/KSF/Mo.
1 Simplified Residential
2 SRT 1 $22, 088 $1,419,500 $1,441,588 1,394,726 8,963,289 $1.32 $13.20 3 SRT 2 $1, 183,824 $28,747,484 $29,931,308 74,751,352 181,523,041 $1.32 $13.20 4 SRT 3 $485, 867 $9,720,299 $10,206,166 30,679,558 61,377,834 $1.32 $13.20 5 Standard $3, 451,282 $42,688,853 $46,140,135 217,927,647 269,554,385 $1.32 $13.20 6 Total $5, 143,061 $82,576,137 $87,719,197 324,753,283 521,418,549 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 113

shows this calculation. The impermeable monthly charge (Column D) is derived by multiplying Columns B and C and dividing by 1,000. The permeable monthly charge is the permeable unit rate multiplied by the assumed permeable area and divided by 1,000. The total monthly charge is the sum of the impermeable monthly charge and the permeable monthly charge.

Table 8-9: Development of FY 2024 Stormwater Charges by Residential Tier

FY 2024 Stormwater Cost of Service Rate Summary
Table 8-10 summarizes the COS FY 2024 stormwater charge calculated as shown in Table 8-7, Table 8-8, and Table 8-9.

Table 8-10: Cost of Service FY 2024 Stormwater Charge

Five-Year Stormwater Cost of Service Rate Projection
Table 8-11 summarizes stormwater charges for the period FY 2024 – FY 2028. The increase in rates after FY 2024 are based on the overall rate revenue increases specified in the financial plan.

(A) (B) (C) (D) (E) (F) (G) (H)
Line Simplified Residential Tier Impermeable
$/KSF/Mo
Assumed
Impermeable
Area (Sq. Ft.)
Impermeable
Monthly
Charge
Permeable
$/KSF/Mo
Assumed
Permeable
Area (Sq. Ft.)
Permeable
Monthly
Charge
Total
Monthly
Charge
1 SRT1 (1 - 1,700 square feet parcel size) $13.20 1,207 $15.93 $1.32 188 $0.25 $16.18 2 SRT2 (1,701 - 3,300 square feet parcel size) $13.20 1,832 $24.18 $1.32 754 $1.00 $25.17 3 SRT3 (3,301 - 6,000 square feet parcel size) $13.20 2,731 $36.04 $1.32 1,365 $1.80 $37.84

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 114

Table 8-11: Summary of Cost of Service Stormwater Charges FY 2024 – FY 2028

8.4. COS Sewer Bill Impacts
Several examples are presented in this section to illustrate the bill impacts for different users of the proposed rate structure. The bills shown in each figure include the impact of proposed FY 2024 sewer rates, which include a monthly sewer service charge, a stormwater charge, and volumetric wastewater rates without a phase-in period for the stormwater charge.

Table 8-1 presents FY 2024 bill impacts for Single Family Residential customers assuming the Simplified Residential Tier 2 charges without a phase-in.

Figure 8-2 presents the FY 2024 impacts for multifamily apartments assuming the Standard stormwater charge for a medium-sized apartment building with 43 sq. ft. of permeable area and 4,008 sq. ft. of impermeable area and 71.2 CCF of discharge.

Figure 8-3 shows the FY 2024 impacts for non-residential customers assuming the Standard stormwater charge with 22,924 sq. ft. of permeable area and 141,018 sq. ft. of impermeable area.

(A) (B) (C) (D) ( E) (F)
Line Stormwater Class Current (N/A) Proposed
FY 2024
Proposed
FY 2025
Proposed
FY 2026
Projected
FY 2027
Projected
FY 2028
1 Revenue Rate Increase 9% 9% 9% 10% 10%
2 3 Simplified Residential Tiered Rate
4 SRT1 ($/M onth ) N/A $16.18 $17.63 $19.22 $21.14 $23.25 5 SRT2 ($/M onth ) N/A $25.17 $27.44 $29.91 $32.90 $36.19 6 SRT3 ($/M onth ) N/A $37.84 $41.25 $44.96 $49.46 $54.41 7 8 Standard Rate Impermeable ($/ksqft/mo.) N/A $13.20 $14. 39 $15.68 $17.25 $18.97 9 Standard Rate Permeable ($/ksqft/mo.) N/A $1.32 $1. 44 $1.57 $1.72 $1.90 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 115

Figure 8-1: FY 2024 Single Family Residential Bill Impacts by Usage Percentile

Figure 8-2: FY 2024 Multifamily Residential Bill Impacts by Usage Percentile

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 116

Figure 8-3: FY 2024 Non-Residential Residential Bill Impacts by Usage Percentile

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 117

9. Proposed Sewer Rates

9.1. Introduction
The rates presented by MME and Raftelis in Section 8 are designed to recover the FY 2024 wastewater service-related costs of $301,471,528 and the FY 2024 stormwater service-related costs of $87,719,197. This change would result in significant bill impacts on customers with parcels that have large impermeable surface areas. The SFPUC’s Ratepayer Assurance Policy principles of Affordability and Predictability suggests that major rate structure changes should take place over a few years instead of all at once. The SFPUC proposed sewer rates include a phase in of the stormwater charges to full stormwater cost recovery in FY 2030. From FY 2024 – FY 2029, wastewater rates will continue to include, albeit on a decreasing level each year, a portion of stormwater-related costs, as shown in Table 9-1. The proposed sewer rates for FY 2024 through FY 2026 as well as the projected rates for FY 2027 and FY 2028 are shown in Table 9-2.

9.2. Phase-In Revenue Requirement Projection
Table 9-1 shows the revenue requirements from Section 8 of this report and the re-allocation of the stormwater costs between FY 2024 and FY 2029. Key items shown on this table include:

Stormwater Phase-In Percentage (Line 1): This is the percentage of the annual stormwater related costs that will be collected through wastewater rates each year of the phase in period.

Adjusted Wastewater Total (Line 5): This is annual revenues to be collected through wastewater rates after the addition of a portion of the stormwater related costs.

Adjusted Stormwater Total (Line 10): This is the annual revenue to be collected through stormwater charges after a portion of costs have been shifted to wastewater.

Table 9-1: Revenue Requirements for Proposed Sewer Rates

9.3. Proposed Sewer Rates
Table 9-2 shows the proposed sewer rates for FY 2024 – FY 2028. All rates and charges were calculated using the same methodology described in Section 8, with the exception of adjustments made to phase-in the rates.

The phase-in period is from FY 2024 – FY 2030.
(A) (B) (C) (D) (E) (F) (G) (H) (I)
Line Description FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 1 Stormwater Phase-In Percentage 85.71% 71.43% 57.14% 42.86% 28.57% 14.29% 0.00% 0.00% 2 3 Wastewater Cost of Service $301,471,528 $328,603,965 $358,178,322 $393,996,154 $433,395,770 $476,735,347 $519,641,528 $566,409,266 4 Add: Stormwater Phase-In $75,187,883 $68,295,661 $59,553,816 $49,131,898 $36,030,059 $19,816,532 $0 $0 5 Adjusted Wastewater Total $376,659,411 $396,899,626 $417,732,138 $443,128,053 $469,425,829 $496,551,879 $519,641,528 $566,409,266 6 % Change $0 $0 $0 $0 $0 $0 $0 $0
7 8 Stormwater Cost of Service $87,719,197 $95,613,925 $104,219,178 $114,641,096 $126,105,206 $138,715,726 $151,200,142 $164,808,155 9 Less: Stormwater Phase-In ($75,187,883) ($68,295,661) ($59,553,816) ($49,131,898) ($36,030,059) ($19,816,532) $0 $0 10 Adjusted Stormwater Total $12,531,314 $27,318,264 $44,665,362 $65,509,198 $90,075,147 $118,899,194 $151,200,142 $164,808,155 11 % Change 0.00% 118.00% 63.50% 46.67% 37.50% 32.00% 27.17% 9.00% 12 13 Total Revenue Requirement $389,190,725 $424,217,890 $462,397,501 $508,637,251 $559,500,976 $615,451,073 $670,841,670 $731,217,420 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 118

Table 9-2: Proposed Sewer Rates

9.4. Proposed Sewer Bill Impacts
Figure 9-1 presents sample FY 2024 sewer bill impacts for Single Family Residential customers assuming a Simplified Residential Tier 2 customer.

Figure 9-2 presents the FY 2024 impacts for multifamily apartments assuming the standard stormwater charge for a medium-sized apartment building with 43 sq. ft. of permeable area and 4,008 sq. ft. of impermeable area.

Figure 9-3 shows the FY 2024 impacts for non-residential customers assuming the standard stormwater charge, 22,974 sq. ft. of permeable area, and 141,018 sq. ft. of impermeable area. The bill impacts shown in each figure include the impact of proposed FY 2024 phased-in wastewater rates and stormwater charges.

Line Class Proposed
FY 2024
Proposed
FY 2025
Proposed
FY 2026
Projected
FY 2027
Projected
FY 2028
1 Wastewater Rates
2 Monthly Service Charge (All Classes) $4.85 $5.28 $5.76 $6.33 $6.97 3 4 Residential Rate ($/ccf) $16.91 $17.80 $18.72 $19.83 $20.99 5 6 Non-Residential ($/ccf) $9.74 $10.09 $10.43 $10.84 $11.23 7 COD ($/lb) $0.86 $0.93 $0.99 $1.08 $1.17
8 TSS ($/lb) $1.68 $1.81 $1.94 $2.11 $2.29
9 OG ($/lb) $1.05 $1.14 $1.24 $1.36 $1.49
10 11 Stormwater Charges
12 Simplified Residential
13 SRT1 (1 - 1,700 square feet parcel size) $2.31 $5.04 $8.24 $12.08 $16.61 14 SRT2 (1,701 - 3,300 square feet parcel size) $3.60 $7.84 $12.82 $18.80 $25.85 15 SRT3 (3,301 - 6,000 square feet parcel size) $5.41 $11.79 $19.27 $28.26 $38.86 16 17 Standard
18 Permeable ($/KSF/Mo) $0.19 $0.41 $0.67 $0.99 $1.36
19 Impermeable ($/KSF/Mo) $1.89 $4.11 $6.72 $9.86 $13.55 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 119

Figure 9-1: FY 2024 Single Family Residential Bill Impacts by Usage Percentile

Figure 9-2: FY 2024 Multifamily Residential Bill Impacts by Usage Percentile

San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 120

Figure 9-3: FY 2024 Non-Residential Residential Bill Impacts by Usage Percentile

Figure 9-4, Figure 9-5, and Figure 9-6 show the proposed bill impacts from FY 2024 to FY 2030 for three different types of customers. Figure 9-4 is a Single Family Residential customer with billed sewer discharges of 4.32 CCF in Simplified Residential Tier SRT 2. Figure 9-5 shows the bill impacts for a Multifamily Residential building with monthly billed discharges of 71.2 CCF, 43 sq. ft. of permeable area, and 4,008 sq. ft. of impermeable area. Figure 9-6 shows the impacts for a Non-Residential customer with monthly billed discharges of 307.6 CCF, 22,924 sq. ft. of permeable area, and 141,018 sq. ft. of impermeable area.

Figure 9-4: Proposed and Planned Single Family Residential Bill Impacts

$74.20
$81.48
$90.02
$99.43
$110.81
$123.48
$137.57
$151.86
$0
$20
$40
$60
$80
$100
$120
$140
$160
Current FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Single Family Residential in SRT 2
Sewer Service Charge Wastewater Usage Charge Stormwater Bill Total San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 121

Figure 9-5: Proposed and Planned Multifamily Residential Bill Impacts

Figure 9-6: Proposed and Planned Non-Residential Customer Bill Impacts

$1,142.27
$1,216.20 $1,289.12
$1,365.32
$1,458.05
$1,555.67
$1,658.23
$1,749.69
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
Current FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Multifamily Residential in Standard
Sewer Service Charge Wastewater Usage Charge Stormwater Bill Total $4,918.44
$5,475.68
$6,069.53
$6,725.92
$7,519.67
$8,404.90
$9,391.98
$10,397.04
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
Current FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Nonresidential/Commercial in Standard
Sewer Service Charge Wastewater Usage Charge Stormwater Bill Total San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 122

APPENDIX A:

Ten-Year Water Enterprise
Financial Plan
San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 123

Ten-Year Status Quo Water Enterprise Financial Plan

Line Water Enterprise Financial Plan FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 1 Retail Rate Revenue from Existing Rates
2 In-City Retail (excl. Treasure Island) $315,952,677 $320,363,230 $311,134,470 $315,562,071 $312,610,863 $310,583,793 $307,104,623 $304,677,067 $302,247,320 $301,910,414 $300,494,150 3 Suburban Retail $14,262,607 $15,741,059 $15,221,128 $15,440,783 $15,242,199 $15,090,208 $14,848,189 $14,678,137 $14,508,134 $14,470,480 $14,368,507 4 Less Contract Rate Revenue ($508,554) ($561,118) ($557,017) ($544,961) ($552,849) ($550,544) ($545,125) ($541,529) ($537,855) ($536,117) ($533,379) 5 Total Rate Revenue subject to Adjustments $329,706,730 $335,543,171 $325,798,581 $330,457,894 $327,300,214 $325,123,456 $321,407,688 $318,813,675 $316,217,599 $315,844,777 $314,329,278 6 7 Proposed Revenue Adjustments
8 Fiscal Revenue Month
9 Year Adjustment Effective
10 FY 2024 0.0% July $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
11 FY 2025 0.0% July $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
12 FY 2026 0.0% July $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
13 FY 2027 0.0% July $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
14 FY 2028 0.0% July $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
15 FY 2029 0.0% July $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
16 FY 2030 0.0% July $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
17 FY 2031 0.0% July $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
18 FY 2032 0.0% July $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
19 FY 2033 0.0% July $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
20 Total Revenue Adjustments $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 21 22 REVENUE
23 Retail Rate Revenue incl. Adjustments $330,215,284 $336,104,288 $326,355,598 $331,002,855 $327,853,063 $325,674,000 $321,952,812 $319,355,204 $316,755,454 $316,380,894 $314,862,657 24 CAP Use of Revenues ($1,245,932) ($7,000,000) ($7,000,000) ($7,000,000) ($7,000,000) ($7,000,000) ($7,000,000) ($7,000,000) ($7,000,000) ($7,000,000) ($7,000,000) 25 Wholesale Water Sales $289,598,379 $316,979,387 $326,505,882 $341,633,834 $342,654,481 $364,404,777 $366,410,350 $384,657,715 $386,956,713 $392,273,772 $402,060,094 26 Interest Income $1,109,000 $1,133,000 $1,133,273 $804,576 $406,013 $5,565 $0 $0 $0 $0 $0 27 Rental Income $13,136,000 $13,595,800 $13,964,246 $14,321,731 $14,688,367 $15,064,389 $15,450,038 $15,845,559 $16,251,205 $16,667,236 $17,093,917 28 Federal Bond Interest Subsidy $21,289,804 $21,317,856 $21,184,845 $20,849,738 $20,536,693 $20,098,912 $22,885,952 $22,223,726 $21,535,376 $20,702,559 $19,710,866 29 Other Misc Income $12,429,431 $13,067,577 $13,596,883 $14,021,344 $14,486,674 $14,917,017 $17,130,431 $17,503,215 $17,885,542 $18,277,657 $18,679,810 30 Programmatic Revenues $7,156,000 $7,158,000 $7,277,000 $7,202,000 $7,223,000 $7,234,000 $7,277,000 $7,328,000 $7,380,000 $7,431,000 $7,083,407 31 Capacity Fees $1,520,000 $1,997,000 $2,061,000 $1,520,000 $1,580,000 $1,644,000 $1,644,000 $1,634,000 $1,554,000 $1,520,000 $1,520,000 32 TOTAL REVENUE $675,207,967 $704,352,909 $705,078,728 $724,356,078 $722,428,291 $742,042,660 $745,750,583 $761,547,420 $761,318,290 $766,253,118 $774,010,752 33 34 O&M Expenses
35 Personnel $112,230,822 $114,601,996 $118,517,389 $122,571,352 $126,768,977 $131,115,546 $135,616,547 $140,277,675 $145,104,844 $150,104,194 $155,282,100 36 Other Non-Personnel Services $20,712,391 $20,476,847 $21,091,153 $21,723,887 $22,375,604 $23,046,872 $23,738,278 $24,450,426 $25,183,939 $25, 939,457 $26,717,641
37 Materials, Supplies & Equipment $19,176,058 $19,395,185 $19,977,040 $20,576,352 $21,193,642 $21,829,451 $22,484,335 $23,158,865 $23,853,631 $24,569,240 $25,306,317 38 Services of SFPUC Bureaus $63,140,408 $64,047,698 $65,969,129 $67,948,203 $69,986,649 $72,086,248 $74,248,836 $76,476,301 $78,770,590 $81,133,708 $83,567,719 39 Services of Other Departments $26,469,977 $27,510,078 $28,241,518 $29,077,688 $29,938,942 $30,826,035 $31,739,740 $32,680,856 $33,650,206 $34,648,636 $35,677,019 40 Hetch Hetchy Assessment $49,636,000 $46,032,000 $49,477,000 $51,029,000 $52,585,000 $53,965,000 $55,477,000 $57,221,000 $58,947,000 $60,676,000 $62,689,000 41 Other Operating Expenses $1,795,868 $3,458,368 $3,561,643 $3,668,017 $3,777,582 $3,890,434 $4,006,671 $4,126,395 $4,249,712 $4,376,727 $4,507,553 42 Programmatic Expenses $33,863,389 $33,266,186 $33,266,186 $33,266,186 $33,266,186 $33,266,186 $33,266,186 $33,266,186 $33,266,186 $33,266,186 $33,266,186 43 TOTAL O&M $327,024,913 $328,788,358 $340,101,058 $349,860,685 $359,892,582 $370,025,772 $380,577,592 $391,657,705 $403,026,107 $414,714,148 $427,013,536 44 45 NET REVENUE $348,183,054 $375,564,551 $364,977,669 $374,495,393 $362,535,709 $372,016,888 $365,172,991 $369,889,716 $358,292,183 $351,538,970 $346,997,216 46 47 DEBT SERVICE
48 Existing Debt Service $328,352,143 $333,499,425 $333,635,790 $345,754,465 $344,766,842 $342,987,734 $349,133,265 $349,286,883 $347,553,611 $348,155,670 $341,823,983 49 Proposed Debt Service $0 $0 $1,751,735 $27,898,491 $29,690,107 $56,432,137 $58,261,233 $85,562,710 $85,562,710 $85,562,710 $85,562,710 50 TOTAL DEBT SERVICE $328,352,143 $333,499,425 $335,387,524 $373,652,956 $374,456,949 $399,419,870 $407,394,498 $434,849,593 $433,116,321 $433,718,379 $427,386,693 51 50 FUNDING FOR PAY-AS-YOU-GO CIP
51 Capacity Fees $1,520,000 $1,997,000 $2,061,000 $1,520,000 $1,580,000 $1,644,000 $1,644,000 $1,634,000 $1,554,000 $1,520,000 $1,520,000 52 Local Revenue $20,604,600 $20,579,658 $51,559,000 $57,100,000 $38,545,000 $30,000,000 $42,000,000 $40,327,975 $27,600,000 $35,698,998 $23,000,000 53 Regional Revenue $25,000,000 $25,000,000 $25,000,000 $25,000,000 $25,000,000 $25,000,000 $25,000,000 $25,000,000 $20,000,000 $19,958,681 $22,000,000 54 TOTAL FUNDING FOR PAY-AS-YOU-GO CIP $47,124,600 $47,576,658 $78,620,000 $83,620,000 $65,125,000 $56,644,000 $68,644,000 $66,961,975 $49,154,000 $57,177,679 $46,520,000 55 56
NET CASH FLOW ($27,293,689) ($5,511,532) ($49,029,855) ($82,777,563) ($77,046,240) ($84,046,982) ($110,865,507) ($131,921,852) ($123,978,138) ($139,357,088) ($126,909,477) San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 124

Line Water Enterprise Financial Plan FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 57 FUND BALANCE (excl. Proposed Debt Proceeds)
58 Beginning Balance $284,541,332 $257,247,642 $251,736,111 $202,706,255 $119,928,692 $42,882,452 ($41,164,529) ($152,030,036) ($283,951,888) ($407,930,027) ($547,287,115) 59 Net Cash Flow ($27,293,689) ($5,511,532) ($49,029,855) ($82,777,563) ($77,046,240) ($84,046,982) ($110,865,507) ($131,921,852) ($123,978,138) ($139,357,088) ($126,909,477) 60 ENDING BALANCE $257,247,642 $251,736,111 $202,706,255 $119,928,692 $42,882,452 ($41,164,529) ($152,030,036) ($283,951,888) ($407,930,027) ($547,287,115) ($674,196,592) 61 Ending Balance (% of Annual O&M) 78.7% 76.6% 59.6% 34.3% 11.9% -11.1% -39.9% -72.5% -101.2% -132.0% -157.9% 62 Minimum Reserve Target (% of Annual O&M) 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 63 64 CURRENT DEBT SERVICE COVERAGE TEST
65 Net Revenue Subject to Debt Coverage Test $419,940,957 $395,226,440 $369,437,855 $379,030,579 $367,086,895 $376,596,074 $369,709,177 $374,374,902 $362,725,369 $355,921,156 $351,766,995 66 Projected Debt Coverage 1.28 1.19 1.10 1.01 0.98 0.94 0.91 0.86 0.84 0.82 0.82 67 Required Debt Coverage 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 125

Ten-Year Proposed Water Enterprise Financial Plan

Line Water Enterprise Financial Plan FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 1 Retail Rate Revenue from Existing Rates
2 In-City Retail (excl. Treasure Island) $315,952,677 $320,363,230 $311,134,470 $315,562,071 $312,610,863 $310,583,793 $307,104,623 $304,677,067 $302,247,320 $301,910,414 $300,494,150 3 Suburban Retail $14,262,607 $15,741,059 $15,221,128 $15,440,783 $15,242,199 $15,090,208 $14,848,189 $14,678,137 $14,508,134 $14,470,480 $14,368,507 4 Less Contract Rate Revenue ($508,554) ($561,118) ($557,017) ($544,961) ($552,849) ($550,544) ($545,125) ($541,529) ($537,855) ($536,117) ($533,379) 5 Total Rate Revenue subject to Adjustments $329,706,730 $335,543,171 $325,798,581 $330,457,894 $327,300,214 $325,123,456 $321,407,688 $318,813,675 $316,217,599 $315,844,777 $314,329,278 6 7 Proposed Revenue Adjustments
8 Fiscal Revenue Month
9 Year Adjustment Effective
10 FY 2024 5.0% July $0 $16,777,159 $16,289,929 $16,522,895 $16,365,011 $16,256,173 $16,070,384 $15,940,684 $15,810,880 $15,792,239 $15,716,464 11 FY 2025 5.0% July $0 $0 $17,104,425 $17,349,039 $17,183,261 $17,068,981 $16,873,904 $16,737,718 $16,601,424 $16,581,851 $16,502,287 12 FY 2026 5.0% July $0 $0 $0 $18,216,491 $18,042,424 $17,922,431 $17,717,599 $17,574,604 $17,431,495 $17,410,943 $17,327,401 13 FY 2027 4.0% July $0 $0 $0 $0 $15,155,636 $15,054,842 $14,882,783 $14,762,667 $14,642,456 $14,625,192 $14,555,017 14 FY 2028 4.0% July $0 $0 $0 $0 $0 $15,657,035 $15,478,094 $15,353,174 $15,228,154 $15,210,200 $15,137,218 15 FY 2029 4.0% July $0 $0 $0 $0 $0 $0 $16,097,218 $15,967,301 $15,837,280 $15,818,608 $15,742,707 16 FY 2030 3.0% July $0 $0 $0 $0 $0 $0 $0 $12,454,495 $12,353,079 $12,338,514 $12,279,311 17 FY 2031 3.0% July $0 $0 $0 $0 $0 $0 $0 $0 $12,723,671 $12,708,670 $12,647,691 18 FY 2032 3.0% July $0 $0 $0 $0 $0 $0 $0 $0 $0 $13,089,930 $13,027,121 19 FY 2033 3.0% July $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $13,417,935 20 Total Revenue Adjustments $0 $16,777,159 $33,394,355 $52,088,425 $66,746,333 $81,959,462 $97,119,982 $108,790,642 $120,628,439 $133,576,148 $146,353,152 21 22 REVENUE
23 Retail Rate Revenue incl. Adjustments $330,215,284 $352,881,447 $359,749,953 $383,091,280 $394,599,395 $407,633,462 $419,072,794 $428,145,847 $437,383,893 $449,957,042 $461,215,809 24 CAP Use of Revenues ($1,245,932) ($7,000,000) ($7,000,000) ($7,000,000) ($7,000,000) ($7,000,000) ($7,000,000) ($7,000,000) ($7,000,000) ($7,000,000) ($7,000,000) 25 Wholesale Water Sales $289,598,379 $316,979,387 $326,505,882 $341,633,834 $342,654,481 $364,404,777 $366,410,350 $384,657,715 $386,956,713 $392,273,772 $402,060,094 26 Interest Income $1,109,000 $1,133,000 $1,300,644 $1,186,491 $1,086,925 $1,378,470 $1,335,955 $1,224,789 $1,658,287 $1,630,960 $1,710,506 27 Rental Income $13,136,000 $13,595,800 $13,964,246 $14,321,731 $14,688,367 $15,064,389 $15,450,038 $15,845,559 $16,251,205 $16,667,236 $17,093,917 28 Federal Bond Interest Subsidy $21,289,804 $21,317,856 $21,184,845 $20,849,738 $20,536,693 $20,098,912 $22,885,952 $22,223,726 $21,535,376 $20,702,559 $19,710,866 29 Other Misc Income $12,429,431 $13,067,577 $13,596,883 $14,021,344 $14,486,674 $14,917,017 $17,130,431 $17,503,215 $17,885,542 $18,277,657 $18,679,810 30 Programmatic Revenues $7,156,000 $7,158,000 $7,277,000 $7,202,000 $7,223,000 $7,234,000 $7,277,000 $7,328,000 $7,380,000 $7,431,000 $7,083,407 31 Capacity Fees $1,520,000 $1,997,000 $2,061,000 $1,520,000 $1,580,000 $1,644,000 $1,644,000 $1,634,000 $1,554,000 $1,520,000 $1,520,000 32 TOTAL REVENUE $675,207,967 $721,130,067 $738,640,454 $776,826,419 $789,855,535 $825,375,027 $844,206,521 $871,562,852 $883,605,016 $901,460,226 $922,074,410 33 34 O&M Expenses
35 Personnel $112,230,822 $114,601,996 $118,517,389 $122,571,352 $126,768,977 $131,115,546 $135,616,547 $140,277,675 $145,104,844 $150,104,194 $155,282,100 36 Other Non-Personnel Services $20,712,391 $20,476,847 $21,091,153 $21,723,887 $22,375,604 $23,046,872 $23,738,278 $24,450,426 $25,183,939 $25, 939, 457 $26,717,641
37 Materials, Supplies & Equipment $19,176,058 $19,395,185 $19,977,040 $20,576,352 $21,193,642 $21,829,451 $22,484,335 $23,158,865 $23,853,631 $24,569,240 $25,306,317 38 Services of SFPUC Bureaus $63,140,408 $64,047,698 $65,969,129 $67,948,203 $69,986,649 $72,086,248 $74,248,836 $76,476,301 $78,770,590 $81,133,708 $83,567,719 39 Services of Other Departments $26,469,977 $27,510,078 $28,241,518 $29,077,688 $29,938,942 $30,826,035 $31,739,740 $32,680,856 $33,650,206 $34,648,636 $35,677,019 40 Hetch Hetchy Assessment $49,636,000 $46,032,000 $49,477,000 $51,029,000 $52,585,000 $53,965,000 $55,477,000 $57,221,000 $58,947,000 $60,676,000 $62,689,000 41 Other Operating Expenses $1,795,868 $3,458,368 $3,561,643 $3,668,017 $3,777,582 $3,890,434 $4,006,671 $4,126,395 $4,249,712 $4,376,727 $4,507,553 42 Programmatic Expenses $33,863,389 $33,266,186 $33,266,186 $33,266,186 $33,266,186 $33,266,186 $33,266,186 $33,266,186 $33,266,186 $33,266,186 $33,266,186 43 TOTAL O&M $327,024,913 $328,788,358 $340,101,058 $349,860,685 $359,892,582 $370,025,772 $380,577,592 $391,657,705 $403,026,107 $414,714,148 $427,013,536 44 45 NET REVENUE $348,183,054 $392,341,709 $398,539,395 $426,965,734 $429,962,954 $455,349,256 $463,628,928 $479,905,147 $480,578,909 $486,746,078 $495,060,874 46 47 DEBT SERVICE
48 Existing Debt Service $328,352,143 $333,499,425 $333,635,790 $345,754,465 $344,766,842 $342,987,734 $349,133,265 $349,286,883 $347,553,611 $348,155,670 $341,823,983 49 Proposed Debt Service $0 $0 $1,751,735 $27,898,491 $29,690,107 $56,432,137 $58,261,233 $85,562,710 $85,562,710 $85,562,710 $85,562,710 50 TOTAL DEBT SERVICE $328,352,143 $333,499,425 $335,387,524 $373,652,956 $374,456,949 $399,419,870 $407,394,498 $434,849,593 $433,116,321 $433,718,379 $427,386,693 51 50 FUNDING FOR PAY-AS-YOU-GO CIP
51 Capacity Fees $1,520,000 $1,997,000 $2,061,000 $1,520,000 $1,580,000 $1,644,000 $1,644,000 $1,634,000 $1,554,000 $1,520,000 $1,520,000 52 Local Revenue $20,604,600 $20,579,658 $51,559,000 $57,100,000 $38,545,000 $30,000,000 $42,000,000 $40,327,975 $27,600,000 $35,698,998 $23,000,000 53 Regional Revenue $25,000,000 $25,000,000 $25,000,000 $25,000,000 $25,000,000 $25,000,000 $25,000,000 $25,000,000 $20,000,000 $19,958,681 $22,000,000 54 TOTAL FUNDING FOR PAY-AS-YOU-GO CIP $47,124,600 $47,576,658 $78,620,000 $83,620,000 $65,125,000 $56,644,000 $68,644,000 $66,961,975 $49,154,000 $57,177,679 $46,520,000 55 56
NET CASH FLOW ($27,293,689) $11,265,627 ($15,468,129) ($30,307,222) ($9,618,995) ($714,615) ($12,409,570) ($21,906,421) ($1,691,413) ($4,149,980) $21,154,181 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 126

Line Water Enterprise Financial Plan FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 57 FUND BALANCE (excl. Proposed Debt Proceeds)
58 Beginning Balance $284,541,332 $257,247,642 $268,513,269 $253,045,140 $222,737,918 $213,118,923 $212,404,308 $199,994,738 $178,088,318 $176,396,905 $172,246,924 59 Net Cash Flow ($27,293,689) $11,265,627 ($15,468,129) ($30,307,222) ($9,618,995) ($714,615) ($12,409,570) ($21,906,421) ($1,691,413) ($4,149,980) $21,154,181 60 ENDING BALANCE $257,247,642 $268,513,269 $253,045,140 $222,737,918 $213,118,923 $212,404,308 $199,994,738 $178,088,318 $176,396,905 $172,246,924 $193,401,106 61 Ending Balance (% of Annual O&M) 78.7% 81.7% 74.4% 63.7% 59.2% 57.4% 52.6% 45.5% 43.8% 41.5% 45.3% 62 Minimum Reserve Target (% of Annual O&M) 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 63 64 CURRENT DEBT SERVICE COVERAGE TEST
65 Net Revenue Subject to Debt Coverage Test $419,940,957 $412,003,598 $402,999,581 $431,500,920 $434,514,140 $459,928,442 $468,165,114 $484,390,333 $485,012,095 $491,128,264 $499,830,653 66 Projected Debt Coverage 1.28 1.24 1.20 1.15 1.16 1.15 1.15 1.11 1.12 1.13 1.17 67 Required Debt Coverage 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 127

APPENDIX B:

Water Cost of Service:

O&M Functional Allocations
San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 128

Dept ID Title Project Title
Account Level
5 Title Account Title
FY 2024 O&M
Expenses Functional Allocation Basis
WTR01 Administration UW Administration WTR 5010Salary Perm Salaries-Misc-Regular $2,366,683 100% Indirect - General WTR01 Administration UW Administration WTR 5010Salary Ret Payout - SP & Vac - Misc $353,349 100% Indirect - General WTR01 Administration UW Administration WTR 5010Salary Temp Misc Regular Salaries $270,345 100% Indirect - General WTR01 Administration UW Administration WTR 5130Fringe Dental Coverage $13,626 100% Indirect - General WTR01 Administration UW Administration WTR 5130Fringe Dependent Coverage $153,048 100% Indirect - General WTR01 Administration UW Administration WTR 5130Fringe Flexible Benefit Package $19,424 100% Indirect - General WTR01 Administration UW Administration WTR 5130Fringe Fringe Adjustments-Budget $113,225 100% Indirect - General WTR01 Administration UW Administration WTR 5130Fringe Health Service-Admin Cost $202,974 100% Indirect - General WTR01 Administration UW Administration WTR 5130Fringe Health Service-City Match $59,531 100% Indirect - General WTR01 Administration UW Administration WTR 5130Fringe Health Service-Retiree Subsidy $4,837,318 100% Indirect - General WTR01 Administration UW Administration WTR 5130Fringe Long Term Disability Insurance $5,252 100% Indirect - General WTR01 Administration UW Administration WTR 5130Fringe Retire City Misc $329,969 100% Indirect - General WTR01 Administration UW Administration WTR 5130Fringe Retiree Health-Match-Prop B $18,526 100% Indirect - General WTR01 Administration UW Administration WTR 5130Fringe RetireeHlthCare-CityMatchPropC $11,378 100% Indirect - General WTR01 Administration UW Administration WTR 5130Fringe Social Sec-Medicare(HI Only) $43,360 100% Indirect - General WTR01 Administration UW Administration WTR 5130Fringe Social Security (OASDI & HI) $153,803 100% Indirect - General WTR01 Administration UW Administration WTR 5130Fringe Unemployment Insurance $2,992 100% Indirect - General WTR01 Administration UW Administration WTR 5200OHAllo Department Overhead $64,047,698 100% Bureau WTR01 Administration UW Administration WTR 5210NPSvcs Air Travel - Employees $46,925 100% Indirect - General WTR01 Administration UW Administration WTR 5210NPSvcs Employee Field Expenses-Budget $950 100% Indirect - General WTR01 Administration UW Administration WTR 5210NPSvcs Judgements & Claims-Budget $950,000 100% Indirect - General WTR01 Administration UW Administration WTR 5210NPSvcs Membership Fees $600,928 100% Indirect - General WTR01 Administration UW Administration WTR 5210NPSvcs Non-Air Travel - Employees $86,835 100% Indirect - General WTR01 Administration UW Administration WTR 5210NPSvcs Other Current Expenses - Bdgt $19,000 100% Indirect - General WTR01 Administration UW Administration WTR 5210NPSvcs Other Equip Maint $426,884 100% Indirect - General WTR01 Administration UW Administration WTR 5210NPSvcs Prof & Specialized Svcs-Bdgt $2,538,875 100% Indirect - General WTR01 Administration UW Administration WTR 5210NPSvcs Rents-Leases-Bldgs&Struct-Bdgt $146,443 100% Indirect - General WTR01 Administration UW Administration WTR 5210NPSvcs Software Licensing Fees $133,000 100% Indirect - General WTR01 Administration UW Administration WTR 5210NPSvcs Taxes, Licenses & Permits-Bdgt $24,267 100% Indirect - General WTR01 Administration UW Administration WTR 5210NPSvcs Training - Budget $167,452 100% Indirect - General WTR01 Administration UW Administration WTR 5400Mat&Su Data Processing Supplies $475 100% Indirect - General WTR01 Administration UW Administration WTR 5400Mat&Su Food $7,600 100% Indirect - General WTR01 Administration UW Administration WTR 5400Mat&Su Minor Data Processing Equipmnt $9,500 100% Indirect - General WTR01 Administration UW Administration WTR 5400Mat&Su Other Equipment Maint Supplies $475 100% Indirect - General WTR01 Administration UW Administration WTR 5400Mat&Su Other Materials & Supplies $91,427 100% Indirect - General WTR01 Administration UW Administration WTR 5810OthDep DT Technology Infrastructure $2,474,086 100% Indirect - General WTR01 Administration UW Administration WTR 5810OthDep DT Telecommunications Services $1,343,587 100% Indirect - General WTR01 Administration UW Administration WTR 5810OthDep GF-Bus & Ecn Dev $252,210 100% Indirect - General WTR01 Administration UW Administration WTR 5810OthDep GF-Chs-Medical Service $519,080 100% Indirect - General WTR01 Administration UW Administration WTR 5810OthDep GF-Chs-Toxic Waste&Haz Mat Svc $246,327 100% Treatment WTR01 Administration UW Administration WTR 5810OthDep GF-City Attorney-Legal Service $2,680,787 100% Indirect - General WTR01 Administration UW Administration WTR 5810OthDep GF-Emergency Communications $60,375 100% Indirect - General WTR01 Administration UW Administration WTR 5810OthDep GF-Environment $124,000 100% Indirect - General WTR01 Administration UW Administration WTR 5810OthDep GF-HR-Employee Relations $46,704 100% Indirect - General WTR01 Administration UW Administration WTR 5810OthDep GF-HR-Workers' Comp Claims $2,225,000 100% Indirect - General WTR01 Administration UW Administration WTR 5810OthDep GF-Risk Management Svcs (AAO) $1,798,482 100% Indirect - General WTR01 Administration UW Administration WTR 5810OthDep Is-Purch-Reproduction $2,812 100% Indirect - General WTR01 Administration UW Administration WTR 5810OthDep Sr-CWP-Clean Water Department $530,450 100% Indirect - General WTR01 Administration UW Administration WTR 5910_OTO OTO To 2S/GSF-General Svcs Fd $15,856 100% Indirect - General WTR01 Administration UW Administration WTR 5910_OTO OTO To 5T-Hetch Hetchy W&P Fds $46,032,000 100% Surface Water Supply San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 129

Dept ID Title Project Title
Account Level
5 Title Account Title
FY 2024 O&M
Expenses Functional Allocation Basis
WTR0301 CDD Program and MaintUW Water Distribution 5010Salary Overtime - Scheduled Misc $311,325

7.8% Pumping / 7.4% Transmission / 23.4% Distribution / 1.0% Storage / 2.1% Meters / 9.7% Hydrants/AWSS / 0.1% Fire Sprinklers / 9.4% Customer / 39.0% Indrect - General WTR0301 CDD Program and MaintUW Water Distribution 5010Salary Perm Salaries-Misc-Regular $6,471,778

7.8% Pumping / 7.4% Transmission / 23.4% Distribution / 1.0% Storage / 2.1% Meters / 9.7% Hydrants/AWSS / 0.1% Fire Sprinklers / 9.4% Customer / 39.0% Indrect - General San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 130

Dept ID Title Project Title
Account Level
5 Title Account Title
FY 2024 O&M
Expenses Functional Allocation Basis
WTR0302 CDD Admin UW Water Distribution 5010Salary Overtime - Scheduled Misc $15,498

7.8% Pumping / 7.4% Transmission / 23.4% Distribution / 1.0% Storage / 2.1% Meters / 9.7% Hydrants/AWSS / 0.1% Fire Sprinklers / 9.4% Customer / 39.0% Indrect - General WTR0302 CDD Admin UW Water Distribution 5010Salary Perm Salaries-Misc-Regular $2,657,956

Dept ID Title Project Title
Account Level
5 Title Account Title
FY 2024 O&M
Expenses Functional Allocation Basis
WTR0302 CDD Admin UW Water Distribution 5400Mat&Su Other Hosp, Clinics&Lab Supply $3,325

7.8% Pumping / 7.4% Transmission / 23.4% Distribution / 1.0% Storage / 2.1% Meters / 9.7% Hydrants/AWSS / 0.1% Fire Sprinklers / 9.4% Customer / 39.0% Indrect - General WTR0303 CDD Bldgs & Grounds UW Water Distribution 5010Salary Holiday Pay - Misc $26,460

Dept ID Title Project Title
Account Level
5 Title Account Title
FY 2024 O&M
Expenses Functional Allocation Basis
WTR0303 CDD Bldgs & Grounds UW Water Distribution 5400Mat&Su Data Processing Supplies $1,425

7.8% Pumping / 7.4% Transmission / 23.4% Distribution / 1.0% Storage / 2.1% Meters / 9.7% Hydrants/AWSS / 0.1% Fire Sprinklers / 9.4% Customer / 39.0% Indrect - General WTR0304 CDD Engineering UW Water Distribution 5010Salary Overtime - Scheduled Misc $6,185

Dept ID Title Project Title
Account Level
5 Title Account Title
FY 2024 O&M
Expenses Functional Allocation Basis
WTR0304 CDD Engineering UW Water Distribution 5210NPSvcs Taxes, Licenses & Permits-Bdgt $1,900

7.8% Pumping / 7.4% Transmission / 23.4% Distribution / 1.0% Storage / 2.1% Meters / 9.7% Hydrants/AWSS / 0.1% Fire Sprinklers / 9.4% Customer / 39.0% Indrect - General WTR0305 CDD Const & Maint UW Water Distribution 5010Salary Holiday Pay - Misc $15,307

Dept ID Title Project Title
Account Level
5 Title Account Title
FY 2024 O&M
Expenses Functional Allocation Basis
WTR0305 CDD Const & Maint UW Water Distribution 5400Mat&Su Other Equipment Maint Supplies $95,000

7.8% Pumping / 7.4% Transmission / 23.4% Distribution / 1.0% Storage / 2.1% Meters / 9.7% Hydrants/AWSS / 0.1% Fire Sprinklers / 9.4% Customer / 39.0% Indrect - General WTR0401 WQD Administration UW Water Treatment 5010Salary Overtime - Scheduled Misc $5,096 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5010Salary Perm Salaries-Misc-Regular $1,278,504 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5010Salary Premium Pay - Misc $5,390 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5010Salary Temp Misc Regular Salaries $24,304 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5130Fringe Dental Coverage $10,138 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5130Fringe Dependent Coverage $109,226 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5130Fringe Flexible Benefit Package $9,712 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5130Fringe Health Service-City Match $53,688 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5130Fringe Long Term Disability Insurance $3,370 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5130Fringe Retire City Misc $181,926 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5130Fringe Retiree Health-Match-Prop B $8,139 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5130Fringe RetireeHlthCare-CityMatchPropC $4,998 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5130Fringe Social Sec-Medicare(HI Only) $19,042 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5130Fringe Social Security (OASDI & HI) $74,400 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5130Fringe Unemployment Insurance $1,315 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5210NPSvcs Employee Field Expenses-Budget $3,800 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5210NPSvcs Maint Svcs-Bldgs & Impvts-Bdgt $100,700 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5210NPSvcs Maint Svcs-Equipment-Budget $9,975 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5210NPSvcs Other Current Expenses - Bdgt $59,850 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5210NPSvcs Other Equip Maint $80,057 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5210NPSvcs Other Equipment Rentals $2,850 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5210NPSvcs Prof & Specialized Svcs-Bdgt $217,550 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5210NPSvcs Software Licensing Fees $76,000 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5210NPSvcs Subscriptions $9,500 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5210NPSvcs Taxes, Licenses & Permits-Bdgt $541,500 100% Water Quality WTR0401 WQD Administration UW Water Treatment 5210NPSvcs Utilities Expenses-Budget $28,500 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5400Mat&Su Food $1,900 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5400Mat&Su Minor Data Processing Equipmnt $71,250 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5400Mat&Su Other Bldg Maint Supplies $14,250 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5400Mat&Su Other Equipment Maint Supplies $4,750 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5400Mat&Su Other Materials & Supplies $118,265 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5400Mat&Su Other Safety Expenses $24,258 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5600CapOut Automotive & Other Vehicles $35,438 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5810OthDep DT Technology Projects $20,000 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 135

Dept ID Title Project Title
Account Level
5 Title Account Title
FY 2024 O&M
Expenses Functional Allocation Basis
WTR0401 WQD Administration UW Water Treatment 5810O thDep GF-PUC-Light Heat & Power $103,000 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5810O thDep Is-Purch-Reproduction $25,750 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0401 WQD Administration UW Water Treatment 5810O thDep Sr-SAS-Building Repair $100,000 1.6% Distribution / 3.2% Treatment / 95.2% Water Quality WTR0402 WQD Engineering UW Water Treatment 5010S alary Overtime - Scheduled Misc $2,450 5.6% Distribution / 11.1% Treatment / 83.3% Water Quality WTR0402 WQD Engineering UW Water Treatment 5010S alary Perm Salaries-Misc-Regular $4,038,899 5.6% Distribution / 11.1% Treatment / 83.3% Water Quality WTR0402 WQD Engineering UW Water Treatment 5010S alary Premium Pay - Misc $72,830 5.6% Distribution / 11.1% Treatment / 83.3% Water Quality WTR0402 WQD Engineering UW Water Treatment 5010S alary Temp Misc Regular Salaries $52,430 5.6% Distribution / 11.1% Treatment / 83.3% Water Quality WTR0402 WQD Engineering UW Water Treatment 5130F ringe Dental Coverage $25,378 5.6% Distribution / 11.1% Treatment / 83.3% Water Quality WTR0402 WQD Engineering UW Water Treatment 5130F ringe Dependent Coverage $290,020 5.6% Distribution / 11.1% Treatment / 83.3% Water Quality WTR0402 WQD Engineering UW Water Treatment 5130F ringe Health Service-City Match $108,816 5.6% Distribution / 11.1% Treatment / 83.3% Water Quality WTR0402 WQD Engineering UW Water Treatment 5130F ringe Long Term Disability Insurance $14,086 5.6% Distribution / 11.1% Treatment / 83.3% Water Quality WTR0402 WQD Engineering UW Water Treatment 5130F ringe Retire City Misc $565,285 5.6% Distribution / 11.1% Treatment / 83.3% Water Quality WTR0402 WQD Engineering UW Water Treatment 5130F ringe Retiree Health-Match-Prop B $25,813 5.6% Distribution / 11.1% Treatment / 83.3% Water Quality WTR0402 WQD Engineering UW Water Treatment 5130F ringe RetireeHlthCare-CityMatchPropC $15,852 5.6% Distribution / 11.1% Treatment / 83.3% Water Quality WTR0402 WQD Engineering UW Water Treatment 5130F ringe Social Sec-Medicare(HI Only) $60,419 5.6% Distribution / 11.1% Treatment / 83.3% Water Quality WTR0402 WQD Engineering UW Water Treatment 5130F ringe Social Security (OASDI & HI) $218,607 5.6% Distribution / 11.1% Treatment / 83.3% Water Quality WTR0402 WQD Engineering UW Water Treatment 5130F ringe Unemployment Insurance $4,167 5.6% Distribution / 11.1% Treatment / 83.3% Water Quality WTR0402 WQD Engineering UW Water Treatment 5210N PSvcs Other Current Expenses - Bdgt $4,750 100% Water Quality WTR0402 WQD Engineering UW Water Treatment 5210N PSvcs Other Equip Maint $86,660 100% Water Quality WTR0402 WQD Engineering UW Water Treatment 5210N PSvcs Prof & Specialized Svcs-Bdgt $753,350 100% Water Quality WTR0402 WQD Engineering UW Water Treatment 5210N PSvcs Software Licensing Fees $28,500 100% Water Quality WTR0402 WQD Engineering UW Water Treatment 5400M at&Su Food $1,900 100% Water Quality WTR0402 WQD Engineering UW Water Treatment 5400M at&Su Other Equipment Maint Supplies $31,350 100% Water Quality WTR0402 WQD Engineering UW Water Treatment 5400M at&Su Other Hosp, Clinics&Lab Supply $142,500 100% Water Quality WTR0402 WQD Engineering UW Water Treatment 5400M at&Su Other Materials & Supplies $47,500 100% Water Quality WTR0402 WQD Engineering UW Water Treatment 5400M at&Su Other Safety Expenses $4,750 100% Water Quality WTR0402 WQD Engineering UW Water Treatment 5600C apOut Medical, Dental & Lab Equipmnt $20,534 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5010S alary Overtime - Scheduled Misc $75,685 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5010S alary Perm Salaries-Misc-Regular $2,404,540 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5010S alary Premium Pay - Misc $434,367 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5010S alary Temp Misc Regular Salaries $27,048 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5130F ringe Dental Coverage $20,387 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5130F ringe Dependent Coverage $252,366 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5130F ringe Health Service-City Match $68,924 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5130F ringe Long Term Disability Insurance $8,797 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5130F ringe Retire City Misc $339,414 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5130F ringe Retiree Health-Match-Prop B $18,226 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5130F ringe RetireeHlthCare-CityMatchPropC $11,194 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5130F ringe Social Sec-Medicare(HI Only) $42,652 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5130F ringe Social Security (OASDI & HI) $178,397 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5130F ringe Unemployment Insurance $2,943 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5210N PSvcs Other Current Expenses - Bdgt $4,750 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5210N PSvcs Other Equip Maint $19,000 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5210N PSvcs Prof & Specialized Svcs-Bdgt $403,750 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5210N PSvcs Rents & Leases-Equipment-Bdgt $4,750 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5210N PSvcs Software Licensing Fees $29,743 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5210N PSvcs Subscriptions $4,750 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5210N PSvcs Taxes, Licenses & Permits-Bdgt $1,330 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5400M at&Su Minor Data Processing Equipmnt $14,250 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5400M at&Su Other Equipment Maint Supplies $14,250 100% Water Quality San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 136

Dept ID Title Project Title
Account Level
5 Title Account Title
FY 2024 O&M
Expenses Functional Allocation Basis
WTR0403 WQD Envnmtl Services UW Water Treatment 5400M at&Su Other Hosp, Clinics&Lab Supply $118,750 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5400M at&Su Other Materials & Supplies $47,500 100% Water Quality WTR0403 WQD Envnmtl Services UW Water Treatment 5400M at&Su Other Safety Expenses $23,750 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5010S alary Overtime - Scheduled Misc $2,940 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5010S alary Perm Salaries-Misc-Regular $3,603,449 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5010S alary Premium Pay - Misc $68,104 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5010S alary Temp Misc Regular Salaries $75,215 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5130F ringe Dental Coverage $24,366 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5130F ringe Dependent Coverage $275,881 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5130F ringe Flexible Benefit Package $4,856 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5130F ringe Health Service-City Match $107,771 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5130F ringe Long Term Disability Insurance $11,677 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5130F ringe Retire City Misc $508,232 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5130F ringe Retiree Health-Match-Prop B $23,234 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5130F ringe RetireeHlthCare-CityMatchPropC $14,262 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5130F ringe Social Sec-Medicare(HI Only) $54,369 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5130F ringe Social Security (OASDI & HI) $213,624 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5130F ringe Unemployment Insurance $3,749 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5210N PSvcs Fees Licenses Permits $85,500 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5210N PSvcs Other Current Expenses - Bdgt $9,500 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5210N PSvcs Other Equip Maint $427,500 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5210N PSvcs Prof & Specialized Svcs-Bdgt $546,250 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5210N PSvcs Software Licensing Fees $104,500 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5400M at&Su Other Equipment Maint Supplies $71,793 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5400M at&Su Other Hosp, Clinics&Lab Supply $551,591 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5400M at&Su Other Materials & Supplies $104,500 100% Water Quality WTR0404 WQD Labs UW Water Treatment 5600C apOut Medical, Dental & Lab Equipmnt $617,500 100% Water Quality WTR0501 WST Admin UW Water Transmission WTR 5010S alary Overtime - Scheduled Misc $8,330 32.3% Transmission / 12.0% Treatment / 49.9% Indirect - General WTR0501 WST Admin UW Water Transmission WTR 5010S alary Perm Salaries-Misc-Regular $1,781,010 32.3% Transmission / 12.0% Treatment / 49.9% Indirect - General WTR0501 WST Admin UW Water Transmission WTR 5010S alary Premium Pay - Misc $6,370 32.3% Transmission / 12.0% Treatment / 49.9% Indirect - General WTR0501 WST Admin UW Water Transmission WTR 5010S alary Temp Misc Regular Salaries $67,620 32.3% Transmission / 12.0% Treatment / 49.9% Indirect - General WTR0501 WST Admin UW Water Transmission WTR 5130F ringe Dental Coverage $14,841 32.3% Transmission / 12.0% Treatment / 49.9% Indirect - General WTR0501 WST Admin UW Water Transmission WTR 5130F ringe Dependent Coverage $160,757 32.3% Transmission / 12.0% Treatment / 49.9% Indirect - General WTR0501 WST Admin UW Water Transmission WTR 5130F ringe Flexible Benefit Package $9,712 32.3% Transmission / 12.0% Treatment / 49.9% Indirect - General WTR0501 WST Admin UW Water Transmission WTR 5130F ringe Health Service-City Match $77,256 32.3% Transmission / 12.0% Treatment / 49.9% Indirect - General WTR0501 WST Admin UW Water Transmission WTR 5130F ringe Long Term Disability Insurance $4,881 32.3% Transmission / 12.0% Treatment / 49.9% Indirect - General WTR0501 WST Admin UW Water Transmission WTR 5130F ringe Retire City Misc $251,404 32.3% Transmission / 12.0% Treatment / 49.9% Indirect - General WTR0501 WST Admin UW Water Transmission WTR 5130F ringe Retiree Health-Match-Prop B $11,546 32.3% Transmission / 12.0% Treatment / 49.9% Indirect - General WTR0501 WST Admin UW Water Transmission WTR 5130F ringe RetireeHlthCare-CityMatchPropC $7,090 32.3% Transmission / 12.0% Treatment / 49.9% Indirect - General WTR0501 WST Admin UW Water Transmission WTR 5130F ringe Social Sec-Medicare(HI Only) $27,019 32.3% Transmission / 12.0% Treatment / 49.9% Indirect - General WTR0501 WST Admin UW Water Transmission WTR 5130F ringe Social Security (OASDI & HI) $102,683 32.3% Transmission / 12.0% Treatment / 49.9% Indirect - General WTR0501 WST Admin UW Water Transmission WTR 5130F ringe Unemployment Insurance $1,863 32.3% Transmission / 12.0% Treatment / 49.9% Indirect - General WTR0501 WST Admin UW Water Transmission WTR 5210N PSvcs Employee Field Expenses-Budget $1,161 32.3% Transmission / 12.0% Treatment / 49.9% Indirect - General WTR0501 WST Admin UW Water Transmission WTR 5210N PSvcs Rents & Leases-Equipment-Bdgt $22,800 32.3% Transmission / 12.0% Treatment / 49.9% Indirect - General WTR0501 WST Admin UW Water Transmission WTR 5210N PSvcs Taxes, Licenses & Permits-Bdgt $2,375,000 32.3% Transmission / 12.0% Treatment / 49.9% Indirect - General WTR0501 WST Admin UW Water Transmission WTR 5400M at&Su Food $3,800 32.3% Transmission / 12.0% Treatment / 49.9% Indirect - General WTR0501 WST Admin UW Water Transmission WTR 5400M at&Su Other Materials & Supplies $10,925 32.3% Transmission / 12.0% Treatment / 49.9% Indirect - General WTR0501 WST Admin UW Water Transmission WTR 5400M at&Su Other Safety Expenses $4,940 32.3% Transmission / 12.0% Treatment / 49.9% Indirect - General WTR0501 WST Admin UW Water Transmission WTR 5810O thDep Is-Purch-Centrl Shop-AutoMaint $47,393 32.3% Transmission / 12.0% Treatment / 49.9% Indirect - General WTR0501 WST Admin UW Water Transmission WTR 5810O thDep Is-Purch-Centrl Shop-FuelStock $825 32.3% Transmission / 12.0% Treatment / 49.9% Indirect - General San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 137

Dept ID Title Project Title
Account Level
5 Title Account Title
FY 2024 O&M
Expenses Functional Allocation Basis
WTR0502 WST Distribution Ops UW Water Transmission WTR 5010S alary Overtime - Scheduled Misc $191,198

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5010S alary Perm Salaries-Misc-Regular $6,083,085

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5010S alary Premium Pay - Misc $392,000

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5010S alary Temp Misc Regular Salaries $94,840

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5130F ringe Dental Coverage $60,671

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5130F ringe Dependent Coverage $787,827

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5130F ringe Flexible Benefit Package $4,856

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5130F ringe Health Service-City Match $166,770

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5130F ringe Long Term Disability Insurance $19,445

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5130F ringe Retire City Misc $867,019

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5130F ringe Retiree Health-Match-Prop B $41,898

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5130F ringe RetireeHlthCare-CityMatchPropC $25,725

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5130F ringe Social Sec-Medicare(HI Only) $98,050

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5130F ringe Social Security (OASDI & HI) $409,819

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5130F ringe Unemployment Insurance $6,751

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5210N PSvcs Other Equip Maint $57,000

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5210N PSvcs Prof & Specialized Svcs-Bdgt $166,250

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5210N PSvcs Rents & Leases-Equipment-Bdgt $14,250

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5210N PSvcs Software Licensing Fees $3,325

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5400M at&Su Other Equipment Maint Supplies $203,300

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5400M at&Su Other Materials & Supplies $38,000

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5400M at&Su Other Safety Expenses $94,888

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5600C apOut Automotive & Other Vehicles $254,957

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5600C apOut Equipment Purchase-Budget $0

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General WTR0502 WST Distribution Ops UW Water Transmission WTR 5810O thDep GF-PUC-Hetch Hetchy $297,052

8.9% Surface Water Supply / 0.1% Alternative Water Supply / 0.6% Groundwater / 0.2% Pumping /

81.8% Transmission / 0.4% Distribution / 0.5% Storage / 7.1% Treatment / 0.4% Indirect - General San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 138

Dept ID Title Project Title
Account Level
5 Title Account Title
FY 2024 O&M
Expenses Functional Allocation Basis
WTR0503 WST Maint Engr UW Water Transmission WTR 5010S alary Overtime - Scheduled Misc $49,431

5.9% Surface Water Supply / 0.02% Groundwater / 0.4% Pumping / 80.3% Transmission / 0.2% Distribution / 3.0% Storage / 9.6% Treatment / 0.4% Indirect - General WTR0503 WST Maint Engr UW Water Transmission WTR 5010S alary Perm Salaries-Misc-Regular $2,777,469

5.9% Surface Water Supply / 0.02% Groundwater / 0.4% Pumping / 80.3% Transmission / 0.2% Distribution / 3.0% Storage / 9.6% Treatment / 0.4% Indirect - General San Francisco Public Utilities Commission / 2023 Water and Wastewater Rate Study 139

Dept ID Title Project Title
Account Level
5 Title Account Title
FY 2024 O&M
Expenses Functional Allocation Basis
WTR0503 WST Maint Engr UW Water Transmission WTR 5400Mat&Su Other Safety Expenses $6,650

5.9% Surface Water Supply / 0.02% Groundwater / 0.4% Pumping / 80.3% Transmission / 0.2% Distribution / 3.0% Storage / 9.6% Treatment / 0.4% Indirect - General WTR0504 WST Maintenance UW Water Transmission WTR 5010Salary Overtime - Scheduled Misc $186,309 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5010Salary Perm Salaries-Misc-Regular $7,918,569 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5010Salary Premium Pay - Misc $392,000 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5010Salary Temp Misc Regular Salaries $222,460 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5130Fringe Dental Coverage $74,228 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5130Fringe Dependent Coverage $933,429 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5130Fringe Flexible Benefit Package $4,856 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5130Fringe Health Service-City Match $204,543 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5130Fringe Long Term Disability Insurance $27,198 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5130Fringe Retire City Misc $1,120,426 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5130Fringe Retiree Health-Match-Prop B $54,023 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5130Fringe RetireeHlthCare-CityMatchPropC $33,170 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5130Fringe Social Sec-Medicare(HI Only) $126,427 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5130Fringe Social Security (OASDI & HI) $530,876 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5130Fringe Unemployment Insurance $8,712 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5210NPSvcs Maint Svcs-Bldgs & Impvts-Bdgt $336,381 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5210NPSvcs Other Equip Maint $513,000 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5210NPSvcs Prof & Specialized Svcs-Bdgt $166,250 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5210NPSvcs Rents & Leases-Equipment-Bdgt $128,250 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5210NPSvcs Software Licensing Fees $3,325 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5400Mat&Su Data Processing Supplies $1,900 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5400Mat&Su Fuels & Lubricants $380,000 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5400Mat&Su Minor Data Processing Equipmnt $6,650 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5400Mat&Su Other Bldg Maint Supplies $1,279,839 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5400Mat&Su Other Equipment Maint Supplies $203,300 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5400Mat&Su Other Materials & Supplies $152,000 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5400Mat&Su Other Safety Expenses $95,000 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5400Mat&Su Water &Sewage Treatment Supply $71,250 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5600CapOut Automotive & Other Vehicles $198,552 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0504 WST Maintenance UW Water Transmission WTR 5810OthDep Sr-SAS-Building Repair $50,000 6.0% Pumping / 3.5% Transmission / 90.5% Treatment WTR0505 WST Systems Ops UW Water Treatment 5010Salary Overtime - Scheduled Misc $216,678