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May 18, 2004

The Honorable John Spratt-Ranking Member
House Budget Committee
B-17 Cannon House Office Building
Washington DC 20515

Opposition To The Proposed Hetch-Hetchy Fee Increase

Dear Ranking Member Spratt:

On behalf of the Mountain View City Council, I am writing to express our opposition to a provision in the President's Fiscal Year 2005 budget request to charge the City and County of San Francisco $8.0 million per year for the use of Hetch-Hetchy Reservoir.

The Raker Act, which became law in 1913, grants San Francisco the right to use the land for a fixed fee of $30,000 per year. In addition to this fee, the San Francisco Public Utilities Commission (SFPUC) voluntarily paid an additional $1.9 million to the National Parks Service in 2003 for services relating to facility security and watershed protection activities. For Fiscal Year 2004-05, the SFPUC has agreed to pay a total of $2.8 million to the National Parks Service to cover cost increases related to these services. The SFPUC also provides approximately $1.0 million per year of in-kind support to the National Parks Service by providing employee housing and utility services as well as road and trail maintenance.

Under Federal law, municipalities are typically exempt from usage fees when Federal land is used for hydroelectric power facilities. If the SFPUC were considered a private utility, they would be charged under the Federal Energy Regulatory Commission's (FERC) fee schedule. The current rate in Tuoluxnne County (the location of Hetch-Hetchy) is $33.30 per acre. The highest rate charged in California is $80 per acre, far less than the $1,164 per acre fee proposed by the Administration.

Based on this information, there does not appear to be a basis for the fee increase.

Sincerely,

Matt Pear
Mayor