Mountain Tunnel, a key part of the Hetch Hetchy water system - which supplies 2.6 million Bay Area residences and businesses - is at risk of a "catastrophic collapse" and will cost more than $100 million to repair or up to $630 million to replace, according to the San Francisco Public Utilities Commission.

City officials have known for 25 years that significant work is needed on the 19-mile-long tunnel just outside Yosemite National Park in a steep, hard-to-access wilderness area. They considered making it part of the PUC's decade-old, $4.6 billion water system improvement program, which is now more than 80 percent complete. But ultimately, the 89-year-old connector was left out of the rebuild, which focused on upgrading Bay Area water facilities that could fail in an earthquake.

PUC officials say that the program gave priority to infrastructure on the three major Bay Area fault lines whose failure could shut off the water supply, such as the Calaveras Dam near Fremont - and that the tunnel, as well as other "upcountry" projects, didn't pose enough of a seismic risk to be included.

Now, the PUC is grappling with whether to shore up the Mountain Tunnel, which would require shutting it down for two months at a time for up to 10 years, or go the far more expensive but arguably more reliable route of building a new tunnel. The issue has taken on more urgency since the January release of a report that laid out the options and recommended building a new tunnel.

A major project

Whichever fix the agency chooses, said Steve Ritchie, the commission's assistant general manager for enterprise, it's going to be an expensive, complex project - far bigger than most of the individual components of the water system improvement program.

"The risk right now is that the tunnel lining could continue to fail and, at some point, that might restrict our ability to get flow through it," he said. "That would be catastrophic to us - any rapid failure that results in the reduction of water flow by 25 percent. That's a big deal."

Ritchie stressed that the likelihood of something happening is low, but the risk increases the longer the PUC waits.

"The drought keeps me awake at night a lot more than this does," he said. "Saying a section of this tunnel could fail - that applies to anything in our system. ... I think we see the risk of this increase over time, so the time is ripe to get started working on this. If we could accomplish it in 10 years, that would be a good thing. If it took longer than that, I would get more concerned."

Concern outside S.F.

The potential for catastrophe, however, has raised alarms at the Bay Area Water Supply and Conservation Agency, which represents the PUC's 1.7 million residential customers and 30,000 business customers outside the city of San Francisco. The costs of any improvements would be borne by water ratepayers as well as the commission's hydropower customers, because the tunnel is used for both purposes.

Nicole Sandkulla, the agency's general manager, said she and others unsuccessfully pushed for the PUC to include Mountain Tunnel on the agency's larger water system improvement program in order to keep it "front and center," and they were concerned when it "fell off that list."

When the issue came up in January, Sandkulla followed up with a letter to the PUC "about the surprising and alarming notice we received ... that the Mountain Tunnel, a vital part of the San Francisco Regional Water System, is at serious risk of a catastrophic collapse, which could cut off, for months, 85 percent of the water needed by residents, businesses and community agencies in the Bay Area."

Backup plans

She asked the agency about not only the long-term fix but what the commission is doing to ensure it has a way to deliver water in the event of problems with the tunnel.

Customers wouldn't be left without water, Ritchie said. The PUC has four to five months' worth of water in Bay Area reservoirs at all times - something that hasn't changed with the drought - and is in the process of finalizing an emergency response plan that includes agreements with other water agencies, he said. That storage will be even more robust in 2018, when the reconstruction of the Calaveras Dam is completed, he said.

"That's first and foremost, so if there's a failure of any kind, we have a plan in place to deal with the problem," he said.

The agency is also working to increase monitoring throughout the tunnel so it will have early indications if something does go awry. And it is working on improving physical access to the tunnel - such as widening roads - so "that if we have to do something in a hurry, we can get in more easily," Ritchie said.

Finally, the PUC is in the process of signing contracts with three outside experts to study the issue and offer recommendations on whether it should shore up the existing tunnel or build a new one, he said.

Pleased with progress

Sandkulla said she is pleased with the progress made over the past months, particularly around the emergency preparedness plan.

"I'm not here to beat up the PUC for lack of progress - the question is, 'Now that you know you have other infrastructure issues, how are you putting money and effort into making sure you are in a good spot to address it?' " she said. "I want to make sure they are moving promptly to address the situation, and taking the necessary precautions now, because nothing happens fast with this kind of issue - it takes time for a final fix."

She agreed with Ritchie that the seismic issues in other parts of the system addressed by the PUC in recent years were far more pressing and potentially catastrophic.

"This is different," she said. "As long as we stay focused and the PUC stays focused on making progress on near-term actions and long-term plans, we can manage this risk."