SFPUC approves steep double-digit wastewater and water rate hikes to fund capital plan

SFPUC approves steep double-digit wastewater and water rate hikes to fund capital planSan Francisco commissioners have signed off on consecutive 7% water rate increases and up to 15% wastewater rate hikes for FY2027 and FY2028, citing the mounting costs of climate resilience, aging infrastructure, and debt service.

Retail water rates will increase by 7% annually in FY27 and FY28, while wastewater rates will jump 15% and 14.5% respectively.

A phased-in stormwater charge will see a 53.3% increase in FY27, adding further pressure to combined sewer bills.

Wastewater expenses are growing at an average of 8.4% per year, largely driven by capital projects and regulatory requirements.

The Commission also approved a 7.4% increase to wholesale water rates for FY27, setting the new rate at $6.23 per CCF.

The rate packages were unanimously approved despite public pushback from small business owners and residents citing affordability concerns.

The San Francisco Public Utilities Commission (SFPUC) has unanimously approved a series of steep multi-year retail water and wastewater rate increases, locking in double-digit hikes for the city's sewer system to fund a capital-heavy 10-year plan. During its April 28, 2026 meeting, the Commission adopted retail water rate increases of 7% for both fiscal years 2026-27 and 2027-28. The wastewater enterprise will see even sharper top-line revenue requirement increases of 15% in FY27 and 14.5% in FY28. The wastewater hikes will be compounded by the continued phase-in of a dedicated stormwater charge, which was added to sewer bills following a 2023 rate study. The stormwater component will spike by 53.3% in FY27 and 43.1% in FY28, while the standard wastewater volumetric rates will increase by roughly 10.8% and 10.1% over the same periods. SFPUC Rates Manager Matthew Freiberg told the Commission that while water enterprise expenses are growing at a modest 4.3% annually, wastewater expenses are escalating at an average of 8.4% per year. "While our operating expenses are increasing by about 3% a year, capital spending is a chief driver of the growth in expenses for the wastewater enterprise," Freiberg said, noting that the projects are necessary to address climate change, aging infrastructure, and regulatory requirements. Furthermore, while the water enterprise splits regional costs with wholesale customers, the wastewater burden falls almost entirely on retail ratepayers. SFPUC President Arce pointed to four macroeconomic factors driving the system's capital costs: the region's exceptionally high construction costs, mounting regulatory mandates, escalating debt service, and a lack of support from Washington. Arce described the federal environment as "more hostile than ever" for cities trying to secure infrastructure funding. To soften the immediate rate shock, the utility is drawing heavily on its fund balance reserves for the wastewater enterprise. Financial Planning Director Erin Korbenova and Communications Director John Cote also highlighted SFPUC's customer assistance program, which currently provides 25% to 40% discounts to approximately 7,000 eligible low-income accounts, though Korbenova estimated up to 35,000 households could be eligible. The rate hikes drew significant pushback during the public hearing. Representatives from local business groups, including the San Francisco Minority Chamber of Commerce Foundation and the Hispanic Chambers of Commerce of San Francisco, warned that the compounding costs of water, rent, and labor could force small businesses to close. A local laundromat owner testified that a recent reduction in SFPUC commercial water efficiency rebates—from $5,000 down to $1,000 per machine—has already made it nearly impossible for high-water-use businesses to offset the rising utility costs through conservation. Despite the objections, the city's Proposition 218 majority protest threshold was not met, clearing the way for the Commission to adopt the new schedules. In a separate agenda item, the Commission also approved a 7.4% increase to wholesale water rates for FY27, setting the new rate at $6.23 per CCF. Freiberg attributed the wholesale hike to a 3.2% drop in projected wholesale water usage, an inversion in the balancing account between SFPUC and the Bay Area Water Supply and Conservation Agency (BAWSCA), and baseline growth in debt service and operating spending.