Two-Year Package Includes New Tiered Rate Structure to Encourage Conservation, Capacity Charge for New Development

The San Francisco Public Utilities Commission (SFPUC) today unanimously adopted a new two-year water and wastewater rate package needed to continue funding critical seismic, drought reliability and other improvements to San Francisco’s aging water and wastewater systems. The package will result in an increase of $4.59 per month (9%) for the average San Francisco residential household beginning July 1, 2007 and a $5.67 (10%) increase beginning July 1, 2008. The package also includes a new three-tiered residential water conservation rate structure that rewards households that conserve water and a new capacity charge for new or expanding development connecting to the San Francisco water system.

“We are making tremendous progress rebuilding our aging water and sewer infrastructure and this rate package will allow that urgent work to continue,” said SFPUC General Manager Susan Leal. “Our new three-tiered water rate structure provides an added financial incentive for San Franciscans to conserve water, which is today more important than ever. The less you use, the less you pay.”

Increases in water rates are necessary to continue funding ongoing local and regional seismic improvements to the Hetch Hetchy water delivery system that provides 2.4 million customers with water. The increasing wastewater rates will be used to continue funding a flood-improvement or odor projects part of a $150 million 5-Year Wastewater Capital Improvement Program launched in 2005.

Currently, all customers are billed a uniform water rate of $1.97 per unit (1 unit = 748 gallons) regardless of the amount of water used. The new progressively priced structure will charge $2.08 for the first 3 units of water, $2.50 for the next 7 units, and $3.83 for use over 10 units. An average San Francisco household uses 7 units (5236 gallons) of water and would be charged using the first and second pricing tier. Approximately 88% of all SFPUC ratepayers fall within the first two payment tiers.

The winter of 2006 was one of the driest on record, with snowpack in the Sierra at just 29% of normal for the season. In April, the SFPUC asked customers to voluntarily cut back on water consumption in an effort to avert the need for mandatory limits later this year. Among the projects funded through water rate increases are the rebuilding of the seismically vulnerable Calaveras Reservoir in the East Bay, which will restore 60,000 acre feet of water storage to the SFPUC system and provide an additional buffer against future droughts, as well as new groundwater storage and recycled water projects to diversify the Bay Area’s water supply sources. The SFPUC’s progress on capital project schedule and spending can be publicly tracked through detailed quarterly reports available online at www.sfwater.org.

The rate proposal also includes a new water capacity charge of $986 per equivalent dwelling unit, and increases in the wastewater capacity charge from $2,604 to $2,907. A capacity charge is an equity charge ensuring that any new or expanding developments in San Francisco fairly compensate existing customers for their years of investment in the City’s infrastructure. Applicable projects will pay a “connection fee” to connect to either the water or wastewater system. Revenue collected through capacity charges will be used to fund capital improvement projects and offset future rate increases. Every other county in the State of California has already implemented a similar charge for its customers.

The rate package was developed through a series of public meetings by SFPUC staff with the input, guidance and review of the Rate Fairness Board, an advisory group of SFPUC ratepayers and City financial officers created under the voter-approved Proposition E (2002) to ensure rate stability, fairness and affordability. The SFPUC has been working to educate residential and commercial customers about the new rate package since the beginning of the year, presenting at nearly 50 community, professional and neighborhood group meetings and holding numerous public meetings and hearings.