SFPUC adopts $12.6bn capital plan as wastewater mandates drive double-digit rate hikes

SFPUC adopts $12.6bn capital plan as wastewater mandates drive double-digit rate hikesThe San Francisco Public Utilities Commission has greenlit a massive ten-year investment program that prioritizes regulatory compliance and aging infrastructure, forcing the utility to defer $1.5 billion in projects to mitigate ratepayer impact.

The Commission adopted a $12.6 billion 10-year capital plan for FY 2026-27 through FY 2035-36.

Wastewater rates are projected to rise by 15% and 14.5% over the next two years to fund regulatory mandates.

The utility deferred over $1.5 billion in planned capital work, including alternative water supply projects, to manage affordability.

A $192.8 million progressive design-build contract was awarded to a Jacobs/PCL joint venture for nutrient reduction.

The plan relies on debt financing for approximately 70% of the capital program.

The San Francisco Public Utilities Commission (SFPUC) voted on February 10 to adopt a comprehensive suite of financial plans, including a $12.6 billion 10-year capital plan and a biennial operating budget, setting the stage for significant rate increases driven primarily by wastewater infrastructure needs. The approved 10-year capital plan, totaling $12,558,987,332, prioritizes projects required for regulatory compliance and the renewal of aging infrastructure. To balance these expenditures against ratepayer affordability, staff reduced the proposed capital plan by over $1.5 billion compared to earlier drafts. Ms. Dooney, presenting the budget, noted that the team took a "disciplined approach" to prioritize critical projects while deferring others to smooth out rate impacts. The financial strain is most acute in the wastewater enterprise, where costs are projected to grow by 8.4% annually over the next decade. Consequently, the Commission approved plans forecasting wastewater rate increases of 15% in FY 2026-27 and 14.5% in FY 2027-28. In contrast, retail water rates are projected to rise by 7% annually over the same period. The decision to defer specific investments drew scrutiny regarding long-term water security. Commissioner Stacy expressed "disappointment in the decision to defer alternative water supply projects," emphasizing the necessity of such projects given the changing water landscape in the western United States. While acknowledging the difficult financial trade-offs, Stacy argued that the utility must treat alternative supplies seriously moving forward. Underscoring the regulatory drivers behind the spending, the Commission also voted to award a progressive design-build contract for the Southeast Water Pollution Control Plant Nutrient Reduction project to a joint venture of Jacobs and PCL Construction. Jacobs brings extensive regional experience to the partnership, having previously managed major infrastructure initiatives such as the $200 million modernization of the San Jose-Santa Clara Regional Wastewater Facility. The initial award of $192.8 million covers preconstruction services, with the total contract budget anticipated to reach $1 billion. Project Manager Jignesh Desai described the project as "purely a regulatory-driven project" mandated by a nutrient watershed permit following severe algal blooms in San Francisco Bay. The adopted financial plan assumes that approximately 70% of the capital program will be financed through debt. Ms. Dooney highlighted that while the utility is pursuing low-interest state and federal loans, the financial modeling conservatively assumes higher interest rates on revenue bonds to ensure fiscal stability.