SEC. 8B.125. RATES.
§ 8B.125
The Public Utilities Commission sets rates, fees, and charges for utility services subject to Board of Supervisors rejection within 30 days. The Commission must establish rates sufficient to maintain financial health and bond ratings, hire independent rate consultants every five years, base rates on cost of service, and establish a Rate Fairness Board of seven members to review and recommend on rate proposals.
The Public Utilities Commission decides what customers pay for water and clean water services, but the Board of Supervisors can reject those rates within 30 days. The Commission must set rates high enough to keep the utilities in good financial shape and maintain good credit ratings. Every five years, the Commission must hire an outside expert to study whether rates are fair. The Commission also creates a Rate Fairness Board—made up of city officials and customer representatives—that reviews rate proposals and holds public hearings before rates take effect.
- Complex:The section contains multiple numbered requirements, cross-references to charter sections, bond resolutions, and state/federal law, plus delayed effective dates contingent on a 2002 election outcome, making it dense and multi-layered.
- Controversial:Rate-setting is inherently contentious in San Francisco; the section touches on affordability (lifeline rates for low-income users) and cost allocation among customer classes, subjects of ongoing public debate.
AI-generated · claude-haiku-4-5 · informational only, not legal advice.
Official text
Notwithstanding Charter sections 2.109, 3.100 and 4.102 or any ordinance (including, without limitation, Administrative Code ), the Public Utilities Commission shall set rates, fees and other charges in connection with providing the utility services under its jurisdiction, subject to rejection – within 30 days of submission – by resolution of the Board of Supervisors. If the Board of Supervisors fails to act within 30 days the rates shall become effective without further action.
In setting retail rates, fees and charges the Commission shall:
1. Establish rates, fees and charges at levels sufficient to improve or maintain financial condition and bond ratings at or above levels equivalent to highly rated utilities of each enterprise under its jurisdiction, meet requirements and covenants under all bond resolutions and indentures, (including, without limitation, increases necessary to pay for the retail water customers' share of the debt service on bonds and operating expenses of any state financing authority such as the Regional Water System Financing Authority), and provide sufficient resources for the continued financial health (including appropriate reserves), operation, maintenance and repair of each enterprise, consistent with good utility practice;
2. Retain an independent rate consultant to conduct rate and cost of service studies for each utility at least every five years;
3. Set retail rates, fees and charges based on the cost of service;
4. Conduct all studies mandated by applicable state and federal law to consider implementing connection fees for water and clean water facilities servicing new development;
5. Conduct studies of rate-based conservation incentives and/or lifeline rates and similar rate structures to provide assistance to low income users, and take the results of such studies into account when establishing rates, fees and charges, in accordance with applicable state and federal laws;
6. Adopt annually a rolling 5-year forecast of rates, fees and other charges; and
7. Establish a Rate Fairness Board consisting of seven members: the City Administrator or his or her designee; the Controller or his or her designee; the Director of the Mayor's Office of Public Finance or his or her designee; two residential City retail customers, consisting of one appointed by the Mayor and one by the Board of Supervisors; and two City retail business customers, consisting of a large business customer appointed by the Mayor and a small business customer appointed by the Board of Supervisors.
The Rate Fairness Board may:
i. Review the five-year rate forecast;
ii. Hold one or more public hearings on annual rate recommendations before the Public Utilities Commission adopts rates;
iii. Provide a report and recommendations to the Public Utilities Commission on the rate proposal; and
iv. In connection with periodic rate studies, submit to the Public Utilities Commission rate policy recommendations for the Commission's consideration, including recommendations to reallocate costs among various retail utility customer classifications, subject to any outstanding bond requirements.
These provisions shall be effective January 3, 2003 for the setting of retail rates, fees and charges related to the clean water system. If the voters approve bonds for the Public Utilities Commission's Capital Improvement Program at the November 5, 2002 election then the provisions of this section shall take effect on July 2, 2006 for the setting of retail rates, fees and charges related to the water system. If the voters do not approve such bonds then this section will take effect on January 3, 2003.
(Added November 2002)