SFPUC defers regional dam upgrades to manage $1.24 billion cost surge

SFPUC defers regional dam upgrades to manage $1.24 billion cost surgeThe San Francisco Public Utilities Commission has pushed construction of three major dam projects into the second half of its 20-year capital plan after updated scope and construction estimates added $1.24 billion to their combined price tag.

Cost forecasts for the Turner, San Andreas, and Pilarcitos dam projects increased by a combined $1.24 billion after planning phases revealed the true scope of work.

To maintain affordability, the utility has deferred the projects, with construction on the first—San Andreas Dam—now slated to begin in year 11 of the 20-year capital plan.

The utility's water transmission program also saw a $1.4 billion long-term increase, driven by main replacements and a potable emergency firefighting water system.

Despite the long-term cost spikes, the approved 10-year CIP for local and regional water only increased by $250 million due to strategic project deferrals.

The San Francisco Public Utilities Commission (SFPUC) is deferring construction on three major regional dam projects to the next decade after cost forecasts for the upgrades surged by $1.24 billion. During a May 12 Water Enterprise Capital Improvement Program (CIP) quarterly update, Director of Water Capital Programs Katie Miller revealed that the Turner, San Andreas, and Pilarcitos dam projects are now expected to cost between $300 million and $700 million each. The massive price increases stem from a better understanding of the actual scope required during the planning phase, coupled with more realistic construction estimates. Previously, the utility had only budgeted approximately $30 million per project for planning and design, holding around $90 million in total while anticipating that cost increases were imminent. To accommodate the $1.24 billion spike without violating affordability goals or resource constraints, SFPUC has restructured its capital planning into a 20-year CIP. The major dam construction works have been pushed into the second decade of the plan, with the San Andreas Dam project scheduled as the first to break ground in year 11. "This is why we staggered it out to the next 10 years and then over the year so that the cost impact can fit around other projects that also need to get done," Miller told commissioners. Because of the deferrals, the updated 10-year CIP for local and regional water increased by only $250 million, allowing smaller active projects to proceed. To account for inflation over the extended timeline, the utility included a 4% annual cost escalation factor for the first 10 years and 3% for the second 10 years. The dam projects were not the only long-term expenses to see significant increases. The water transmission program added approximately $1.4 billion in the second 10 years of the plan. This includes $900 million for a main replacement project and an additional $500 million to extend the potable emergency firefighting water system. In the near term, the water enterprise is seeing heightened construction activity. Projects spent $178 million over the past two quarters—the highest spending level the program has experienced in five years—driven by major works like the Sunol Valley Water Treatment Plant ozone project moving into the construction phase.