Affordable? Utility Rates Up Up and Away.
SFPUC’s Holiday Gift to San Franciscans
• • • • • • • • • December 2025 • • • • • • • • •
SFPUC (water/sewer/power) sets rates for water and sewer services, and also, partially, for power. Water and sewer are tightly tied; the more water you use, the more sewer for which you are charged. Some towns just combine both in one, simplifying. For SFPUC, complexity is a feature, not a bug, as we'll explain, so you get two charges.
SFPUC has an Affordability Policy guiding how it sets rates. It has recently been amended. Previously, the median household was to pay no more than 2.5% for utilities for average usage. This was said to be a national standard. As amended, the goalposts have changed. As usual, it's more complex. Complexity works in favor of the bureaucracy, which uses it to do what it wants while hiding the ball from the public.
Now, the 40% household—the household with income at the 40th percentile—is to pay no more than 3% of its income towards water and sewer, per the revised affordability policy. The 20th percentile is to pay 7%, but that is reduced to 5% if it enrolls in a special program for poorer households.
Soon, SFPUC will take over PG&E's electrical assets located in San Francisco. The matter has been pending in an administrative law court for a few years … SFPUC is not smiling. ”
Rates for water and sewer have been rising at about 2.5 times inflation—for many years. Sewer rates are expected to rise 15% per year in the two upcoming years, a big increase! SFPUC is working on an $8 billion program of renovating the sewer system. The largest job has already inflated by 69%, adding tens of millions. Nothing is cheap when done by SFPUC; delays are frequent. Contracting is often done not by old-style competitive bidding, designed to get the lowest price for public dollars, but by complicated processes that reward insiders with generous contracts and, often, even more generous change orders that add to the contract price.
Yet despite rapidly rising rates, San Francisco has no organization bird-dogging waste or critiquing rates. By state law (1996 Prop 218), water rates are to reflect the cost of service. This proposition was passed because SF had set high rates, then transferred "surpluses" to its general fund–for use by supes and mayor. Prop 218 was to stop that. But SFPUC just adapted. It pays for social programs and calls that a cost of service. It subverts the plain purpose of state law. As no challenge has emerged, all is well for SFPUC. Not so much for the ratepayer.
Soon, SFPUC will add to its remit and add hundreds of employees. It is on course to take over PG&E's electrical assets located in San Francisco. The matter has been pending in an administrative law court for a few years. The battle has been done over how to value the assets, and this correspondent's sense is that SFPUC is not smiling. PG&E's remaining ratepayers (after the takeover) are to be left whole, that is, as happy as they would have been had there been no takeover. SFPUC may be on the hook for severance costs. While no numbers have surfaced—other than the initial $2.5 billion estimate or target—one senses that the cost to be set by the administrative body will not be pleasing to SFPUC. No matter. It already has authorization to float bonds to cover any cost. Of course, your rates will pay off those bonds. Electricity rates have risen and are rising rapidly. Expect more of that going forward.
Will the day come when middle-class San Franciscans realize that they are paying too much for utilities? Will action be taken in time?
Steve Lawrence is a Westside resident and SF Public Utility Commission stalwart. Feedback: lawrence@westsideobserver.com
December 2025
