By Brian Browne
The San Francisco Public Utilities Commission (SFPUC) creeps along with the Hetch Hetchy (HH) system fix-up. HH is a complex gravity system including dams, hydro-power plants, siphons, pumps, tunnels and pipelines that stretches from the High Sierras to the Bay. It provides water for approximately 2.4 million local and regional water customers with undoubtedly some of the most pristine water available in the USA. HH is also probably the only federally mandated municipal power provider in the US.
The 1913 Raker Act granted San Francisco the right to build dams and extract water from the Tuolumne River and provide water and power to municipalities and municipal customers. The system receives approximately 80 to 85 percent of its water from the Tuolumne River. Under Raker the SFPUC has junior riparian water rights. The senior rights are vested in the Turlock and Modesto irrigation districts. The SFPUC may only extract water after the flows of the Tuolumne River meet certain criteria at different times of the year. Approximately sixty percent of all Tuolumne River water goes to the irrigation districts and SFPUC. The Hetch Hetchy system receives the residual amount of its deliverable water from sources west of the Oakdale intakes for the San Joaquin pipelines.
The system is over 7 decades old and for years it has been known that this marvel of engineering must be repaired and improved. Over the years, many plans were advanced but never became operational. In 2002 the SFPUC boldly announced that they had a 76 project local and regional fix-up plan, known as the Capital Improvement Plan (CIP), and all that was needed was the funding authority and the SFPUC would implement and complete this plan by 2015.
Blank Check In 2002 San Francisco voters passed Proposition A granting the SFPUC the right to issue $1.6 billion in revenue bonds. This was trumped by 2002 Proposition E (Ammiano) that removed the voters’ the right to issue water and wastewater bonds and ceded it to the Board of Supervisors. SFPUC now had a blank check to implement their plan. The voters also passed Proposition P, which created the Revenue Bond Oversight Committee (RBOC) as a ratepayer advocate to monitor the expenditure of revenue bond funds.
Who Controls the Water? The 29 wholesale customers making up the Bay Area Water Users Association were clearly dubious. Their politicians passed three pieces of legislation AB2058 which morphed their entity into the Bay Area Water Supply and Conservation Agency with powers analogous to the Metropolitan Water District of Southern California. SFPUC was welcome to join and cede approximately 70 percent of its now 100 percent governance of the Hetch Hetchy system.
BAWUA successfully lobbied to pass AB1823 which called for 50 percent of the Hetch Hetchy fix-up work to be done by 2010 and 100 percent by 2015. SB 1870 collaborative efforts by local and regional folks created a regional financing authority to ensure the fix up would be funded in the event Props. A and E failed.
In 2002 both Props A and E passed and the SFPUC was given the green light to implement its multibillion dollar CIP.
In 2005 a new plan, Water Supply Improvement Project (WSIP) was unveiled under a new manager. It proposed major changes to the CIP including a system wide project environmental impact review (PEIR) and established a new concept called level of service. The large and expensive PEIR basically caused a major re-work of the original plan (CIP) and cost large amounts of time and resources. The levels of service are stated goals as to how quickly and at what levels the system may be restored after a major system break. It is unclear what, if any, mathematical model derived these so called ‘levels of service.”
Score card. The local percent complete is shown as 48.1% complete. The larger regional fix up is 13.3% and the total bill has reached approximately $4.5 billion. Why? It appears, based on extrapolation of current SFPUC costs and the blending in of the debt service for these billions in expenditures that conservatively rates will increase by a factor of 5 (6) before this system is finally completed.
In 2008 a “variant” to the WSIP was implemented under yet another new general manager. This plan extends the fix-up until 2018 and claims that the SFPUC will be able to deliver 265 million gallons of water per day (MGD) for regional and local customers from current pristine sources i.e. Tuolumne river and local reservoirs.
265. This 265MGD number is important. The current “variant” plan calls for the peninsula customers to receive 184 MGD and for SF to receive 81 MGD a total of 265 MGD. The city is currently negotiating a new Master Water Sales Agreement (MWSA), 1984-2009, and if this amount is enshrined in contract then the city customers could face water shortages, labeled by the SFPUC as “conservation.”
Historically, using SFPUC data, since 1984 (when the MWSA was signed), on average the Hetch Hetchy system has delivered 251 MGD with BAWSCA (nee BAWUA) receiving on average 163 MGD and SF 89 MGD. Using a longer historical period shows the annual average deliveries from the SFPUC decreasing more.
Over forecasting has some major negative impacts. State law demands that forecasts must be reliable and in the absence of available water residential and commercial projects may be stopped. The over forecasting phenomenon leads to underestimating the cost per unit of water. Over forecasting leads to over expectations in writing contracts such as was done in 1984 and appears to being replicated in 2009.
Competition. Yes, SFPUC is a municipal supplier of public power to both public and private customers if it so elects. It actually has private customers at the Ferry Building and SFO. It could win market share by providing a better widget, rather than socializing an existing private company, that is well scrutinized by the California Public Utilities Commission. The 1940 Supreme Court in affirming SFPUC as a municipal power provider stipulated that Hetch Hetch power could not be sold to PG&E for resale, but exhorted the SFPUC to compete against PG&E for both public and private customers
Looking Forward. San Francisco can look forward to the strong possibility of ceding governance of the Hetch Hetchy system, rate spikes of a magnitude that are not being discussed, intergenerational transfers of great debt to future San Franciscans, and the real possibility the system won’t really get fixed and all these well advertised calamities will befall an unprepared service area.
The Mayor, Board of Supervisors, Commission, and RBOC must exert real oversight and not externalize their implosive political aspirations onto our water and municipal power system. These folks need to confront the real issue: Can the current business model at the SFPUC actually plan and implement such a vast infrastructure project?