REPORT TO COUNCIL
SUBJECT
Title
Adopt a Resolution Authorizing the Bay Area Water Supply and Conservation Agency (BAWSCA) to Initiate, Defend, and Settle Arbitration Related to the Water Supply Agreement (WSA) with the City and County of San Francisco
Report
BACKGROUND
The City of Sunnyvale purchases approximately 50 percent of its potable water supply from the San Francisco Public Utilities Commission (SFPUC) Hetch Hetchy System under the terms of the Water Supply Agreement (WSA). The WSA Between the City and County of San Francisco and Wholesale Customers in Alameda County, San Mateo County, and Santa Clara County was signed in 2009, expires in 2034, and delineates the terms under which the City purchases water, including water supply (quantity) and water quality, and all aspects of the SFPUC rate-setting process.
The City is a member of the Bay Area Water Supply and Conservation Agency (BAWSCA), a special district that represents the interests of the 26 water agencies that purchase SFPUC water. In addition to the wholesale customers, the SFPUC provides retail water service to customers in the City and County of San Francisco (retail customers). A primary responsibility of BAWSCA is ensuring water rates accurately reflect the actual costs of providing water service. BAWSCA staff performs extensive rate reviews each year to: (1) verify the accuracy of the SFPUC's revenue requirement calculations (used to determine rates); (2) ensure the SFPUC's adherence to Generally Accepted Accounting Principles and compliance with annual audit findings; and (3) ensure SFPUC capital and operations costs are appropriately allocated between retail and wholesale customers. If BAWSCA identifies costs they believe are incorrectly allocated, BAWSCA and SFPUC staff attempt to resolve disputes through informal discussions. Per the terms of the Agreement, issues not resolved informally must be settled through arbitration, which has only been necessary one time since 1...
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