Transcripts For SFGTV SF Public Utilities Commission 20240713

Good afternoon. Id like to call to order the regular meeting of the San Francisco Public Utilities commission. This day is tuesday, february 11, 2020. Roll call, please. [ roll call ]. Before you have the minutes of three meetings, we will take them individually. The first, january 23, are there any additions or corrections to the minutes . Move approval. Second. Any Public Comment on the minutes of 23 of january . Hearing none, all those in favor . Aye. Opposed. The motion carries. Secondly, the january 28 minutes of the regular meeting. Are there any additions or corrections . Second. Public comment on the minutes of january 28. All in favour . Aye. Opposed . The motion carries. Lastly, the minutes of january 30, which was the special Budget Hearing number four. Any additions or corrections . Move to approve. Second. Public comment on the minutes of january 30. All in favour . Aye. Opposed. The motion carries. Next item, please. Item 4 is general Public Comment. Members of the public may address the commission on matters that are within the commissions jurisdiction and are not on todays agenda. President caen so i have two speaker cards in front of me. The first mr. Pecasa. Commissioners, my name is francisco de kosta. One of the positions i had in my life is i was six army and procedural San Francisco congressional liaison. When i did that job, i had to interact with congressmen and senators from this great nation. I learned a lot. You know, my heart is heavy because as a citizen, i come here to monitor some of the projects as best i can. Im not paid to do it, nor will i receive remuneration for that type of work. But it saddens me that in the southeast sector of San Francisco, people are suffering. The San Francisco Public Utilities commission profits a lot from what is happening in the southeast sector. There are designs that are brought so that housing can be built, Recreation Centers can be built, a lot of money spent on art while our children die. Our children are dying. Our elders are dying. Some of them are pushed to live on the streets of San Francisco to die. And i know every human being has a conscience. You dont have to read some law or some book. Your conscience will tell you what is right and what is wrong. Now finally it has come to my attention many times, but now more common, people reaching out to me and saying about the corruption thats going on in San Francisco Public Utilities commissi commission. And ive never done this before, but i reached out to two elders who know a lot about the San Francisco Public Utilities commission so they can read what i get, so they can do something and put this thing on track. We are not supposed to spend taxpayers money on having a picnic and having a special thing offsite and spending thousands of dollars. Thats wrong, simply wrong. President caen the next speaker peter drakmeyer. Hello. Peter drakmeyer with community trust. If i could have the overhead. I came across a chart with different demand projections. Its interesting. I put that red dot to show what demand is now. If you look at four studies that went out in 2020. They range from 350 million gallons per day to 450 million gallons per day. We looked at what would happen if the sfpuc contributed for two years and then maybe we got nervous and hit a third year of drought. You could make it through the design drought, 8. 5 years. So now is the time to make that decision for this year. Were in february. Its the beginning of the o outmigration of the baby salmon. Last year sfpuc entitlements were enough to last seven years. We came into the system with full storage. The alternative is what happened in 2012. 2011 big water year. 2012 i think the unimpaired flow was 12 or 13 . That continued for another four years. We averaged 12 unimpaired flow and then in 2017 had to dump that water. The unimpaired flow was 79 . Here is an opportunity to avoid that, but we have to act quickly. Thank you. Excuse me, through the chair. I know that we dont have an agenda today, but i would like at the next meeting to get a response to that possibility. And if that is, indeed, something that we could do while staying within the design drought scenario. Yes, we can provide that for you. Thank you. I would just like to comment that the data is quite old. One back to 1969. Thank you. All right. Any other Public Comment . Next item, please. Clerk item 5 is communications. President caen commissioners, any comment . I had a comment on item h, the sewer inspection. Why cant we be like 2016 2017 . Were way behind on that. Id like to know why. Good afternoon, commissionerings. Greg norby, assistant general manager for the wastewater enterprise. Commissioner caen, youre referring to the last row of numbers, the pipes replaced . So this chart in front of you, this is information on miles that have been put out to bid or into construction so theyre not actually miles completed. What youre seeing is a essentially the impact of a couple of considerations here where if you look at the Bigger Picture and were considering changes to this report for future versions to address this, weve wrestled with whether it makes more sense to share with the commission the contracted mileage thats been achieved each year or the completed construction mileage, because they do vary. For example, i think this is one weve noted in the past. Weve had a significant portion of mileage tied up in the joint projects, like vanefs and m. T. A. So those we book the credit in a sense for when they go out to construction, but the timing of that getting completed can be substantially delayed depending on the timing of those projecs. S so if you look at a running average of the last approximately three to four years, were just below the 15 mile target and this data doesnt quite convey that. Ill put it that way. Does that answer your question, commissioner . President caen right. And its going to be an ongoing problem . Correct. Yeah, thats why i think i mentioned this before that were thinking about moving towards how many miles were contracted out. Because if its a joint project and its delayed a year, we cant book that mileage on sewer replacement until its actually installed. As long as were contracting out 15 miles a year, eventually youll get down to a year after. Thats sort of what were going to move more towards or keep track of both probably. Yeah, perhaps in your reporting to separate that. Thats what we talked about. So for your next Quarterly Report on this, youre going to see a modified version of this table, both contracted out that fiscal year and completed that fiscal year. I think that will give a more complete picture. The bottom line is were right between 13 and 14 miles per year. Anything else . Next item, please. Clerk Public Comment. President caen seeing none, were moving to the report of the general manager. Good afternoon. The first item is the bay delta Water Quality control plan update, steve ritchie. Steve ritchie. What im going to present today is information that was presented by the two secretaries of the california Inspection Agency and the california e. P. A. To a group of stakeholders last tuesday. It was kind of the biggest the very statement on the voluntary process. So ill be presenting the information here. A lot of it, were still delving into the background of it and what supports it. There are a lot of Unanswered Questions as well, but we wanted to share this with the commission so you had the sense of how the conversation seemed to be proceeding with the state. So weve been working on refining agreements. This is one of the statements of recovering fish populations than regulatory requirements and less social and economic combam intacts. The refind agreement that will be talked about will build a package that the state believes will be scientific and legal adequacy. We have collectively made progress towards securing the assets that are required. The state agency team performed a preliminary assessment in what they believe is needed for scientific adequacy to implement the bay delta update. The framework will be displayed in a couple of tables following this, but it requires 900,000 acre feed for new flows of the environment above existing conditions, dry and above normal water types and several hundred feet to help recover fish populations. Restores over 60,000 acres of new habitat from targeted improvements and tributaries to large restoration in the sacramento valley. Enables new collaborative science hub, expands tools to recover fish populations and more adaptiveness to changing fish. And also gets water and habitat quickly. It enhances a goal to achieve a doubling of the salmon populations by 2050. This slide shows how this state is improving. Increased flows above the base line inset. The sand flows from the sacramento inset and then the exporters. Each one of these columns represents a different water year type. C is critical, meaning the driest years. D is a dry year. B is a below normal year. W is wet. Going through that in the top lines, in the sanjoaquin basin. Youll note that there is 63,000 acre feed of critical year water. This line is intended to be water purchases from willing sellers. I would call it a public number that that is what is needed. When we get to the money piece of this presentation, youll see there is money set aside to try to acquire water from willing sellers. Again, the exporters being the state and federal water projects have a small amount that theyre contributing here to the subtotal of new outflow above baseline. Then the next line is new water projects and programs. This is the notion there will be money available to build new projects and develop new programs for water that can be shared between water users and the environment. So the green line then is total new outflow above baseline for years 1 through 8. Because the next line, exporters, spring baseline maintenance is the amount that the exporters believe will be able to be made available eight years from now. So thats where you get another increment of water. All this leads to what the total new and reoperated levels. The bottom is the state team adequacy target. I would suggest the state team suggested those numbers, but did not provide any backup as to where those came from. Both of these are the water elements discussed last tuesday. Again, you have the area of the whole area that were working in, acres pursuant to the planning agreement, which is where we were at in march of 2019 and then additional acres per the framework to support more than 50 of the doubling objective. Quen the san joaquin basin talk about the new agreement numbers. The state agreement says we need 246 additional flood acres. The san joaquin basin is where you see large, large amounts of acreage for different types of habitat. Thats just another indication that within the bay delta system, the sacramento side is kind of the big area of opportunity. And then the last line is called the north delta marsh. Various scientists have been proposing for quite some time that the prime habitat that can be developed that might help the system would be in the north delta area and close to suisun marsh. These are habitat improvements that would be coupled with the improvements the state is suggesting would be appropriate. Going back to text, the governance science and Adaptive Management is a key part of this. The Government Department to increase flows and develop strategic plans and annual reports. This is basically how this whole thing would be managed, would have dedicated staff and would have an Environmental Water trustee, which would be someone responsible for making sure the waters show up. A comprehensive Science Program guided by structured decisionmaking process to determine and or to adjust flow and nonflow measures. When we say nonmeasure measures we mean habitat development. And to test specific outcomes, learn from those experiments, and facilitated habitat and transparent process. The idea is you would do better in the future based on learning from the past. This is a total of 5. 2 billion. 280 million for science and Adaptive Management. 1. 7 for Habitat Restoration. 1. 6 billion for new waters and programs. 1. 2 billion for water purchase willing sellers. Voluntary fallowing would require 416 million. So were talking about a massive program in terms of funding to accomplish all of these purposes. Quick question, what is fallowing . That is someone who has an annual crop and they would take their planting out of production. The water used there to raise the crop would be devoted to the environment. Thank you. Sorry, i have a question on that one too. Where do these billions come from . Well, thats the next slide. There are three elements to that. The upper element is the federal government funding of 740 million. The rest, and i guess its interesting that they chose red for the color of it would be 2. 3 billion coming from water users. That would be some sort of dollars per acre foot that would be collected in some way. Were still trying to understand exactly what that means and what the implications are for us. Its not clear because were already willing to commit 78 million for the habitat for the Tuolumne River. How that fits in is not clear. The State Government would contribute 2. 2 million. I think that red arc would be some kind of a combination of new fees or voluntary funding from water agencies to actually help complete this package. And i should say, the presentation by the state, a lot of this was brand new for virtually everybody in the room. So this is very, very new stuff. Ill talk about where were headed when i get to the conclusion. On implementation, the voluntary agreements would remain in effect for a term of 15 years. The state water board will work with folks to ensure accounting procedures to ensure the flow is materialized. They will use their legal agreement against other purposes. Nonsignatories to the voluntary agreement would be subject to the state water boards regulatory requirements to achieve unimpaired flows. The last bullet is one weve talked about here. The state team would work with willing participants to expedite participation in 2020 or as soon as possible following applicable environmental review, et cetera. The idea of early implementation. Again, as weve talked about it, needing some clear signal from the state that were all kind of marching down a similar path. Theyve put that forward there as a statement. This is the recognition by the state that theres a lot of work ahead to finalize the voluntary agreements, finalizing them for pumping roles and working with our participants to refine the framework to finalize the outstanding governance, policy, and legal issues and submit the proposal to the state water board for a third party review, state review, and public consideration. So after the state released this, the final slide is what was in a joint irrigation district and sfpuc statement on the announcement, which is in effect we appreciate the governments leadership on this, we appreciate folks are working hard. We think weve got a good voluntary agreement to fit into this. We look forward to analyzing all the information and understanding what the implications are for us. Since last tuesday, weve had no contact with the state in particul particular. The state, frankly, as we understand it is busy in conversations with the federal government about state Valley Project and Central Valley operations because that is a big deal that fits into the middle of this and is far from settled at this point. This is to make sure the commission is aware that after pretty much silence since about midoctober, the state is kind of moving things along now. Theres something here to grapple with. Were trying to understand the implications for us and hopefully can move forward productively with the state and hopefully answer any questions about it i can. A lot of it i cant answer. So how does this differ from the p. U. C. Model, if you will, or not necessarily model, but the p. U. C. s proposal and position . The p. U. C. s proposal and position can fit into this. Were trying to figure out exactly how and if maybe a real key question is if it fits in nicely and the state says on top of that we want to charge you 10 per acre foot to put that much more money into the system. We just dont know whats envisioned in the package. This is a huge amount. Just at the super high level, there was this question around 40 release, which is where the state where we last left the state. Does this reflect that continued commitment or has that this is different than the 40 impaired flow. This is really at on the one slide it showed different year types you would be looking at different quantities of flow. I dont know if anybody has run the calculations to see what they constituted unimpaired flow, but its not the same type of block of water that we were talking about with the regulatory action by the state. Its i would say but its still a lot of flow. And more than we had counter proposed . Well, we had proposed a certain amount of flow for our contribution to the system from the Tuolumne River. This is the state looking at the whole picture, you know, the sacramento basin and the whole san joaquin basin. Thats what i tried to say more than once, were a fairly small part of the Bigger Picture. This is looking at bay delta outflows. How much is going into the delta and how much is coming out the other side of the delta as opposed to the tributaries. To stay on the high level, the request our concerns around the 40 and what that might do particularly in times of drought seems like this new direction somewhat addresses those concerns, but you havent really done the calculations yet. Yeah, we have to look behind every one of these numbers and see how they were developed, what they mean, and as i said, our proposal it can fit right into this. It looks like it does to some extent, but you have to peel back all the layers of the onion to know for sure if there is anything additional obligations that would be imposed on the p. U. C. As part of this. I am at some point going to be curious about the level of detail. I mean, i do remember a conversation we had around the doubling of salmon, for example. That was sort of discouraged and we had talked about whether baseline could be established and whatnot. I was pleased to see that back in here, but dont understand what that means. Some of this stuff would be great once you guys have had a chance to digest and understand it because theres so much in here to present a deeper level of what those numbers mean, what the implications are specifically for our system and meeting our apply demands. Absolutely. I think thats our obligation to the commission to make sure we can talk about what it means. We want to make sure we got it clearly in front of you as part of this update that something has happened, boom. A big rock hit the pond and ripples are going in every direction. We need to find out where those ripples are going to go. Are you saying their proposal is less than that was previously . Its different. Its not less than 40 . In terms of the pure volume of water, thats not the important question. The important question weve always pushed is when it occurs in the system and what is being used to accomplish in terms of biology. Weve been presented with what they presented you. But those questions of where we were and our level of concerns, because of the 40 and now the new scenario, when will we be able to receive that level of detail . It will take a little time to get that together. Were trying to understand what the state meant by this and what the implications are and how we can talk about that with the commission and others so we can get to informed decisions throughout the whole process. So for this year in particular, we had the possibility because its a wet year, we dont know yet. When we made the decision for the opportunity to release more water for the health of the fish, would we then refer to this chart and say, okay, well it turns out this is a d or whatever it was. So therefore in order to maximize fish health or forward the objectives of this proposal, were going to release this amount . Yeah, we can present how this would fit into that. Just f. Y. I. , in case you didnt look at the item in the water conditions update, its looking like a d at this point in time. Commissioners, i do have a question on slide 5. Theyre proposing to increase the flood plain 246 thats correct. How was that done . Basically what we would have to do is look at that number and if that is all for the tuolumne, figure out what kind of constraints we had there, partly in terms of land ownership, partly in terms of physical impediments. I know weve had a little conversation with them that if we were unable to accomplish flood plain habitat that was desired on the tuolumne, we would look at the lower san joaquin down from the tuolumne as well. It could be as simple as working with a land owner to move a levee back and create a larger area and pay for that easement or purchase or whatever to accommodate it. Thats the kind of thing that that would envision. Well, as the Vice President said, there is a lot here to understand. We might have to have another runthrough. I think well definitely need another runthrough with what we know about it and what these numbers are and what they mean for us. Right. And i always would be curious to know who the other people are involved with the various rivers that come into the delta and how theyre represented right now. I know how were represented, but im not certain about this. I would say some of the biggest participants are the state water contractors and the Central Valley contractors. The state water contractors is metropolitan Water District of southern california, santa clara Water District. They are the singlebiggest diverters out of the system. Okay. Any other questions from the any Public Comment . Peter. Thank you. Peter drakmeyer, Tuolumne River trust. So i havent had a chance to see the details. I dont think theyre available to just broad general members. A concern we had last year, and you might remember the report that environment put out called smoke and mirrors and found a number of flaws in the process. For example, double counting water. Assuming that water thats already required or funding or Habitat Restoration would be lumped into this, but thats already committed. Well have to take a look at that. The process has been disturbing. Tuolumne trust has not been at the table. They are six environmental groups. A little over a week ago there was what i heard described as a backroom deal and that worked against the arrangements of the voluntary agreement. That was not supposed to happen. At that meeting, two of the six environmental groups were maybe peeled off to be at least somewhat supportive of this announcement last week. When the other four groups heard about that, they were pretty upset. They were told there was going to be no media around this, but at the meeting last tuesday that was just referenced, before that meeting even started there was a guest editorial from the governor and a press release that went out. What ive heard is statements made at that meeting by the two environmental groups that had been peeled off seemed very scripted. There were a lot of people asking, hey, is this a good thing or not . There was a lot of politics and creating an image that was happening. With the delta reform act of 2009, the first thing that came out of that was a flow criteria report. In 2010 that report found that for the san joaquin basin, we would likely need 60 of unimpaired flow. Thats what the science tells us. When the draft substitute environmental document came out at the end of 2012, it recommended 35 . There were a lot of good comments made. It was very controversial. The state water board said we really need to flesh this document out. When they came back in 2016, it was up to 40 . They didnt drop it and it went up. The good thing thats proposed by the state Water Resources control board is that theres Adaptive Management. If noncontrol measures arent working, it could go down to 10 or 20 or if not, up to 50 . Whats the backup if these plans fail like every other plan thats happened in the last three or four decades. Thats our real concern about the voluntary agreements. Thank you. President caen any other Public Comment . Mr. Kelly. Clerk the next item is cleanpowersf update. Michael hines. Good afternoon, commissioners. Michael hines, director of the cleanpower program for the power enterprise. Im here before you today for our quarterly cleanpowersf update. If i could have the slides, please. Thank you. I will cover our enrolment and service statistics, whats been happening since our last report, and whats coming up between now and the next time we report to you. Our service to cleanpowersf customers continues successfully. We are now at 3. 7 of our accounts on the uptick. However, our super green product enrolment has also increased and were now serving 2 of our active accounts with 100 renewal power. It was 1. 8 last time. Weve again increased there, hit a little bit of a milestone. From an energy sales standpoint, thats now more than 4. 5 of cleanpowersf annual sales that is 100 californiabased Renewal Energy. So whats been happening. First, i would to highlight that we have executed a couple Renewal Energy contracts since our last update, expanding our commitment to new solar and wind power in california. In december the general manager executed an expansion of the voyager for the wind contract project that was initially executed in 2018 for 47 megawatts, increasing the total combriment from cleanpowersf to 110 megawatts of new repowered wind and Energy Capacity in california. That project will come online in phases starting in december of this year and should be fully operational by the middle of 2021 calendar year. We also executed a new contract for energy from 100 megawatts of new solar from the maverick 6 solar project. This project is expected to start operations in december of 2021. All in all, thats four longterm contracts of 15 to 22 years in duration to buy Renewal Energy from 2b constructed plans in california from our cleanpowersf Customer Base. Thats 372 megawatts of new renewal capacity that will get built in california as a result of our cleanpowersf Energy Contracts to date. Those plants will produce a combined 1 million megawatts of energy, which represents about a third of cleanpowersfs energy needs, given its current enrolment. All four of these are in california . Yes. Where are they . These four are located in southern california, which is also part of the reason why weve been focusing on Northern California procurement, bay area procurement. And our most recent solicitation issue was focused on this region. So were working now on the next batch of contracts that will build capacity around and within the bay area. With addback funding from the board of supervisors for this current budget cycle, our staff has also been working on a cleanpowersf equity project. The purpose of this project is to develop a policy framework that embeds an equity lens across cleanpowersf policies, programs, and business practices. Systematically applying an equity lens will help us ensure that factors such as race, income, gender, language, and employment status, for example, do not determine access to or the quality of clean Surgery Services within our community. A working group of sfpuc staff that has been developing the framework is planning an outreach and engagement with stakeholders to get feedback on the proposed framework when ready. After incorporating stakeholder feedback, we intend to bring the policy forward for adoption before the end of this fiscal year. Were excited about this and hope its a model not just for our business but also for other communities. So whats coming up . When we presented to you in november, our last update, we gave you a headsup that we would be coming back soon with a cleanpowersf rate action. We now have more clarity regarding pg es power. We want to show you the rates after accounting for the exit fee that our customers pay pg e. Were now expecting for 2020 a 4 increase in pg es sorry, i said that wrong, a 4 decrease in pg es generation rates and a 20 increase in the pcia to be implemented as soon as april. With no cleanpowersf rate adjustments, we estimate our customers will be paying 4 to 6 more for their generation costs than they would be with pg e. To help our customers manage these changes, were planning to bring our rate action to you at the next Commission Meeting on february 25. The action will be consistent with Previous Commission rate actions for cleanpowersf to support Cost Recovery and Overall Program competitiveness. Do we have any method of challenging the pcia . I mean, its getting outrageous. I mean, its always been outrageous. Its now even more outrageous. Yeah, theres ongoing proceedings at the california p. U. C. Admittedly, theyre very slow and they dont always go in our favor. So its a challenging process, but its a process we continue to remain engaged in. We have to. Were also in discussions with other communities, other c. C. A. s about potential solutions that at a minimum address the volatility that weve seen in the pcia that affects our planning process, but maybe more aspirationally driveways the methodological things that we think unfairly collects from our customers through the pcia. Well, i would imagine that this is based on the fact that they have these contracts that they buy, and therefore they assume they have the customers and then they dont. Am i correct in that . You are correct. These costs are recovering commitments they made prior to the customers leaving. I know, but how long is this going to last . Well, it will last the length of the commitments. Some of those commitments are 25 years. So were looking at for our Customer Base at the far end 2040, in that range. That sounds bleak, but the positive here is not all of their projects are that long. Some are five years or 10. So theres a variety of terms of contracts and commitments that they had made prior to us forming our c. C. A. Program. As those end, the costs associated will get pulled out of the calculation. So it will decline. The other potential i guess hopeful way of looking at this is that as the costs of our Energy Supply increase over time, those contracts will look more favorable. Theres some expectation that that will happen, especially when pg e retires the diabolo powerplant in 2025. Thats going to cause the need to build again. That could drive up the value of the existing resources. Thats something coming up that were looking closely at that could actually be a positive on the pcia. I have a followup question on that because i thought that i didnt think that the pcia was actually directly connected to stranded assets or whatever isnt that what they call them . The idea is not to strand them. Theyre not stranded because of the pcia really. So there is a direct connection to the assets, the pcia . Because i thought that sometimes there was a question about that and they would raise the pcia and it was like, wait a minute now, is this being used to fill some other financial gap that not to be skeptical, that pg e needs, or is that 20 actually directly going to the asset relationship . Well, its to recover a specific pool of assets that were committed to prior to the departure of our customers. Right. To be clear, the pcia recovers the out of market, the above market portion of those commitment commitments. So the idea is if they have excess energy, pg e, as a result of the departure of the captures, they would sell it, liquidate it in the market. If the market value is lower than the cost of their commitments, they need to recover that difference and its that difference. But there are a lot of you know, the devils in the details as always. And there are components of the method that well continue to push back on that i think ultimately harm c. C. A. Rate repairs and are arguably unfair. But how do we know that they dont continue to buy these longterm contracts and this can continue for ever . Well, there are ongoing proceedings at the california p. U. C. First of all, they have to approve new contracts and pg e has to justify any new commitments. Pg es sales are going in the opposite direction. Theyve been shrinking. So its been very clear and pg e has been quite clear with the commission that it doesnt need to procurement and is long. So really the focus has been what do we do with these resources that pg e has contracted for. Thats the topic of the current phase of the proceeding is might we be able to allocate these resources to c. C. A. S so the customers get the full rate value of those commitments in a manner that is an improvement on the current situation. Could we purchase the contract . That is possible. It might also be possible for the city to take on specific contracts or a share of their portfolio. So all of these options are being explored in the current proceeding. Okay. I have one more thing. As we discussed last meeting, our staff has been working on the preparation of an integrated resource plan, or i. R. P. As a reminder, cleanpowersf is required under state law to prepare an i. R. P. Every two years and this plan must be approved by this body and submitted to the california p. U. C. For certification. We have some scheduled changes to share here today that have come up since the last Commission Meeting. First, the california p. U. C. Has extended the due date for the california i. R. P. Some additional time to incorporate final guidelines coming from the california p. U. C. Over the next couple of months. We are submitting for your approval later in this meeting cleanpowersf capital plan that was presented to the commission at the budget workshops on january 30. That was of course informed in part by the local Renewal Energy planning work that we reported at the last meeting on january 28. Well be delivering a draft of the written report later this month. And the california p. U. C is expected to issue its final guidelines in march. We will make any changes to the i. R. P. Based on those guidelines. And our planning Stakeholder Engagement starting next month through may. Well then incorporate feedback we get. We intend to submit our draft i. R. P. To the commission for approval during a meeting in may. So thats the schedule and ill wrap up there. If you have any other questions, im happy to address them. I do through the chair. So Stakeholder Engagement, who are the stakeholders . So we are going to be presenting to our c. A. C. We will be presenting here to this body the work being done in advance of bringing you a draft report to get feedback from you and also from any members of the public. We are pulling together sort of a round table workshop, two meetings, with community and environmental stakeholders to occur. Were targeting i believe early march for those. We also plan to present to the local Agency Formation commission. Those are some of the things that i remember off the top of my head. Im happy to share some correspondence. With the rwanda table, i would like to see a list of people youre engaging. Sure. Thank you. President caen any comments or questions . Any Public Comment . Thank you. Clerk the next item is update on pg e bankruptcy and city acquisition offer. This is the time set aside for an update on the pg e bankruptcy and the citys acquisition offer. Ill provide an update on four topics, the bankruptcy case, our frc and california p. U. C. , regulatory activities, our legislative activities, and our internal work. First off on the bankruptcy, weve previously discussed at the january 23 meeting that pg e announced that it had reached an agreement with their note Holders Committee that the note Holders Committee will withdraw their alternative plan and support the pg e preferred plan on friday, january 31, since we met last, pg e filed more details of this newest pg epreferred plan in both the bankruptcy proceeding and at the california p. U. C. At the california p. U. C. , pg e filed testimony that supports the preferred plan and addresses compliance with the ab1054 requirements. Just as a reminder, those requirements are fair treatment of victims and rate payers and employees with prepetition and wildfire claims being satisfied, continuing Climate Change progress, demonstrating how the plan is neutral on average to rate payers, and how the plan gives for rate affordability Going Forward. The pg e testimony describes this newest pg e plan. It states on a number of important issues, including some of those ab1054 issues i just highlighted, that it will provide information and detail after it emerges from bankruptcy. Sort of a to be decided or placeholder response in its testimony. So there really isnt content there for us to address as to whether theyre in compliance with the ab1054 requirements. So were following that case. Together with the city attorney, were evaluating how were going to engage, what our level or form of engagement will be in that case. As youve likely seen in the press, the pg e testimony, though, does make it clear that pg e and its Parent Corporation will hold much more debt than they did prior to going into bankruptcy. Theyll be much more highly leveraged. The california p. U. C. Will need to evaluate what that may mean for pg es ability to meet the 1054 requirements. We do know that the pg e is increasing rate increases, not in the context of the bankruptcy plan itself, but generally. Pg e made a number of additional filings for Cost Recovery just last week at the california p. U. C. These applications to the california p. U. C would allow pg e to increase electric and gas rates to pay for higherthanexpected insurance costs that theyre currently experiencing, Fire Prevention work, and responses to some events that they regard as extreme weather events. Pg e has estimated that the average residential electric customer monthly bill will increase 5. 70 for the Fire Prevention and extreme weather event cost for 17 months. Theyve estimated that the insurance costs will raise residential gas billsedly 5. 70 a month for one year. Those expected recently filed costs are in addition to their general rate increases. Pg e is seeking in yet another application before the california p. U. C an additional 5. 69 a month indefinitely to cover their general expenses. So thats the p. U. C. Activity that were tracking with respect to pg e and its costs and service. On friday, february 7th, we filed a protest with one of pg es federal regulators, the federal Energy Regulatory commission. This protest addresses issues weve had with pg es recent compliance filing on its treatment of city load thats connected to its grid under the wholesale distribution tariff that pg e has on file at the regulatory commission. Its under this tariff that we receive service from pg e and serve most of our 150 megawatts of the customers. Its pg es treatment of us under this tariff that has resulted in the numerous i think were over 70 distinct disputes we have with pg e. Pg e is delaying in making more expansive critical city projects. So we will continue to protect the citys interests in obtaining open and fair access to distribution services, to its distribution system, excuse me, in this federal proceeding. The third topic was legislative. Last meeting i reported that the securitization bill was introduced by senator weiner, sw04. This would reduce Debt Service Coverage thats required by our investors. If passed, agencies like ours would use this authority to make Power Systems more resilient, safer, cleaner by financing things like storage and renewal generation or combinations of those two, distribution system, conviction, or improvements. So staff have continued to work with stakeholders to garner this bill. We see this as great to lower the cost to take these important steps on infrastructure and investment. Senator weiner has also introduced a bill to transfer this into a stateowned public utility. The bill language became public a week ago monday. This is a complex legislation. Were reviewing it and intend to work with the Senators Office to make sure that the outcome there is compatible with our efforts on the acquisition project. Finally, on the internal front were continuing to work on our operational readiness. Were evaluating legislation, as i just mentioned, and our participation in the california p. U. Cs bankruptcy case. I wanted to highlight, though, that we have also implemented a new website. This website will help educate people about our efforts and the benefits of our power work. The website is publicpowersf. Org and i encourage you to check it out. Im happy to take any questions you may have. I have a question. If i get this right, next commission youre going to come with a rate proposal adjustment . Correct. Meanwhile, pg e is doing all kinds of stuff, theyre going to increase pcia and generation rates. It also sounds like theyre going to be increasing rates related to their payout, their bankruptcy. Yes. And i think those increases i highlighted in my comments to you will show up on the distribution side of the bill. So the part of the bill that cleanpowersf customers pay will be impacted by those increases. Again, its on the distribution side of the bill. Its the part of the bill that our customers pay to pg e. But the bottom line, is it a wash or are we going to increase just to decrease in two months once these new pg e charges take effect . No. So these new pg e charges are going to take effect on the distribution side of the bill. So regardless of what we do with cleanpowersf, which is a supply side offering, rate payers will face these rate increases, assuming the cleanpowersf adopts them or some portion of them. I guess im missing something. Sonchts so well still be cheaper than pg e because the distribution will appear on their bill, their customers and our customers. Remember, were only focusing on supply. And the supply that we purchase is cheaper than what pg e supplies. Even we absorb the pcia and its still cheaper. But the distribution is they charge their customers and our customers. Thats what you see and nancy and i had a conversation earlier today. Thats where pg e is moving towards because these come out and theyre making money moving the supply around. Okay. Thank you. Thank you. President caen does the consumer look at the total bill . They dont separate these things out. They probably would be unhappy that the bill is going up, but its going up on both sides. So its not like only us. Our bill is going higher and we have to absorb it, its going up on everyone. Yeah, so everyone is going to see the same increase on the distribution side. Then we are responsive on the supply side to make sure that our supply inclusive of pcia is still cheaper than pg e. So youre right, commissioner, everybodys bills are going to go up because of distribution costs going up. When you look at the total bill for a cleanpowersf customer and a pg ebundled customer, pending your action on the rates proposal we will bring to you next meeting, the cleanpowersf customer bills will be lower. Right. Yes. Thank you. Commissioners. Theyll be lower but higher than what theyre paying. Right. And money is going to pg e. I have a question. Is there going to be a summary document of all this stuff i presume prior to whatever we vote on . Yeah, when we come to you, well show you the increases on the distribution, what how much our supply is increasing and what the pcia is and compared to our bill their bill versus our bill. Well provide all of that for you. Including maybe how it looks on the bill . Yes. President caen id like to call for Public Comment. Seeing none, lets continue. Clerk next item is water supply improvement program. Katie miller. Good afternoon, commissioners. Im katie miller. Im the acting director for water capital programs. This is the position that was formerly held by dan wade. Im happy to have the opportunity to present to you the status of the water improvement System Program that was reported in our last Quarterly Report. The report covered the period from october 1, 2019, to december 1, 2019. So ill quickly go over the Overall Program status and then give you some highlights of projects that are still in design, construction, and closeout. As you recall, this includes 87 regional and local projects and five local supply projects, with a total cost of 4. 8 billion. At the close of the reporting period, 4. 5 billion was expended, representing 95 of the budget. To date 76 projects are complete, two are in closeout, six in construction, and one in final design. Ill share highlights of these projects still underway. The Alameda Creek recapture project recirculates water from the Alameda Creek. We made Great Strides during the last quarter, the recirculated Environmental Impact report was published and comments are being collected in this quarter. With significant progress of this phase, the project is confident this will move forward through Design Updates and into construction in 2020. The photos here show Alameda Creek as well as a rendering of the final pump station. The redesign work in order to accommodate some of the comments from the Environmental Impact report as well as some design code updates is ongoing. The next project is the regional groundwater storage and recovery project. This project is 97 complete at the end of the quarter for the phase 1 construction project. The photos here show the coma water well on the left and the park plaza project on the right. Although substantial completion was achieved on december 1, 2017, Key Construction work is being implemented, including modifications to pumps, treatment systems, flow measuring, and control systems. Sevenday testing at all the wells will be initiated in this quarter and has, in fact, begun in january. The groundwater storage recovery phase 2 subproject is in the planning phase and is 20 comple complete, including progress on the conceptionual engineering report for the antonette lane well in San Francisco. The next project almost in completion is the fish passage facility. Construction is 99 complete. The contractor is submitting closeout documentation. There is a little bit of testing left to do. One of the tests that needs to happen is during wet weather and wet flows. So were looking for some rain so we can do the wet weather testing of the facilities and make sure it works at high flows. We hope for water. Also the repairs that are made to the debris and rake and rack system will happen over the spring and summer. This project is still on schedule to be closed out in december 2020. As you may be aware, we have several regional closeout projects that are smaller projects to complete the different parts of the regions. Steady progress was made for san joaquin, bay valley. In the san joaquin region, two job order contractors came on board, but it was discovered that the solar Power Facilities have batteries that require a 30week lead time. So the construction was put on hold until those batteries arrive and then it will resume. And this project will still stay on track for a completion in the end of 2020. The Sonoma Valley regional project primarily consists of Pilot Testing for the system of the water basin. The mobile plant was conducted and testing is underway. For the san antonio backup pipeline, a carrier system for the sodium hypochlorate was not completed, but now a j. O. C. Was completed and on target for completion. Whats that . A job order contract. These are Small Contracts that are 600,000 or less that are much simpler to put in place for small jobs. Got it, thank you. For the bay division region, a couple of things that happened is an erosion ditch, a b ditch and also some damage on the erosion that was observed. And in the peninsula, there was significant work at water Crystal Springs dam. The basinconnecting channel was a follow up project that is 75 complete. For the bridge replacement and you will recall that was a joint project with san mateo county. There was a gap in the parapet wall. That should be done by this june. Finally, at the harry tracy Water Treatment plant, new mixers were put into the equalization basins and those are working successfully. So that project is in closeout. And then all of our favourite projects. I know you heard quite a bit about this. The contract in the last quarter was officially completed and the finishout items will be completed by 2030. I wish to acknowledge the leadership and Technical Expertise of dan wade who led this project to successful and completion. I look forward to bringing this to a successful close and leaving waters future and the programs effectively and with excellence. Id be happy to take any questions. President caen that was very nice to hear about the very end of all these things. So now we have to look towards the raising of calaveras. Thats right. President caen any Public Comment . Thank you so much. Thank you. I have one item thats not listed here that i was asked to comment on. As youve probably read in the paper about the situation that happened at public works. I just wanted to shed some light on our working relationship with public works. So we do do projects with them, but theyre low bid. They provide engineering and Architectural Services for us. They work with us as it relates to street cleaning and with a lot of our Green Infrastructure we work with them to clean that. So we have a great working relationship with them and well continue to do so. But as far as our house is concerned, i just wanted to ensure you that most of or the majority of our contracts are low bid. We do have some alternative that is prescribed in chapter 6 that is not totally low bid, but it is a formula that we have independent panel grading. It is transparent and you can ask sunshine for the data on it. The only thing is sole sources emergencies. We have few contractors, but call them to see who has the equipment so they can come out immediately. Then there is stuff that is delegated to me. And i talk to the and the Commission President to make that more transparent of what is delegated to me, but most of the things that are delegated to me also go through a process. That is small and just dont come to the commission. So were going to give a report to all the themes that were delegated to me and let you know who was the low bid, how many bidders there were, so it will be totally transparent to everyone here what we are doing. And then the last thing is the controller has requested from all the departments about status of nonprofit organizations and how different city departments interact with them. So theyre looking more for friends of because they partner and they help the city do certain things. So were participating in providing them information like that. So most of the nonprofits we work with are we give grants to nonprofits to do equal literacy work. You know, they help do barrier removals that the unions dont do. So we do a lot of things with the nonprofits. So we are going to provide that to the controller so that we can be totally transparent. So i just wanted to let you know that we are making clear and trying to be as transparent as possible how we run our operation. I would like to thank you very much for that. The department of public works, do they have a commission . No. They dont and ive been at the public works for 12 years. I would say that most of the work that public works do from the engineering side, they work for a department that has a commission. And theyre performing work at the direction of departments, like the Fire Department when they do fire stations, police stations. They do work for us. So for them to have a commission, deciding what the priority that theyre working on that all these other commissions are giving could be problematic. The other thing is having the commission to decide what communities get what resources and you have to wait until a Commission Meeting to decide that is very challenging. When we had the 1989 earthquake, i remember the director of public works, he was in charge of the whole effort at the marina. So there is an operation component where its just i think its difficult to have a commission over when youre head of operations for the city. Thats my opinion. I think it makes sense since a lot of the work is done through city agencies that have commissions. So there is oversight there. Yeah. Thank you. President caen good point. Yes. Thank you for that report. And one of the things we have talked about quite a bit is we live or die on the trust of our rate payers. And like it or not, you know, whats been reported reflects on us and we have to recognize that. I think we have a whole slug of standards and procedures that protect the integrity of what we do. [ please stand by ] yeah. I definitely will provide what we come up with on more opportunities to be transparent. But we are reengaging the Fraud Protection because we had incidents ourselves about fraud in our organization. When you have 2600 employees at all levels, you know, were trying to make sure theyre all aware and you understand that we have zero tolerance for that type of behavior. And so were going to do the training, were going to try to make sure they understand the policies and the procedure. And to the extent that temptation flows from money, we spend more of it than almost anybody else, so i think we just have to be extra careful and extra vigilant and extra assertive in our providing, you know, proof and transparency. And when you mentioned low bid, how is low bid another form of protection . So when you have multiple bidders, there is a competition, right . So you get to see what the Industry Price is versus if you go sole source. You have an opportunity, you know, to collude in a sense. But you have situations where a couple agencies collude and get high bids because they know someones going to get it. But high competition, these contracts want to get the contract so they can work and continue because they have their staff and stuff like that. So the high bid is probably the safest way to go about it, or the alternate delivery method where it has bids, but it has other criterias, which is ascribed in the r. F. P. , and you just make sure you follow it. When you start deviating from it, thats when you can get yourself into trouble. So we comply strictly by our policies and procedures and contract documents. Thank you. We do have a Contract Office that is involved in making sure that those procedures are followed . Yeah, and i rely heavily on i. B. Fine. Shes a Police Officer just a couple incidents shes had to bring to my attention, but she handles everything really well. She certainly does. I did call the general manager, and we talked about this as an outflow of what happened with d. P. W. , and it its a good wake up that we look at our systems, which were doing. And as you stated, we are a very fine, wellknit procedure for contract. We follow this as commissioners, and in our material, you will see the different material, the agencies, and the bid, and its all very clear, and its all very fair. And mr. Kelly has suggested that there is a range of contracts that a general manager can deal with. I believe its is it under 500,000 or 1 million . 1 million. And mr. Kelly said he would report out for that, so thats the only thing that wasnt clear for this commission. Yeah. I just want to make sure that those contracts go out for process. Its not like i handout 1 million, so dont anybody call me. His numbers not posted. All right. So that concludes your report. Comment . Public comment . Seeing none that concludes my report. Next item, please. Item 7 is new commission business. Yes. I would like to have an update on our fire strategy and the on the peninsula before the fire season. Fire season is in june, so if we could have that before that . Yes, ill do that. Any Public Comment . Next item. Item 8 is the consent calendar. All matters listed here understand constitute a consent calendar, are considered to be routine by the San Francisco Public Utilities commission and will be acted upon by a single vote of the commission. There will be no separate discussion of these items unless a member of the commission or the public so requests, in which question the matter will be removed from the calendar and considered as a separate item. Commissioners, any removal of items . Public . Ill entertain a motion. Move to approve. Second. All in favor . Opposed . Item carries. Next item, please. Clerk approve the plans and specification and award contract db 129. 1 bay corridor transmission and distribution, in the amount of 24,058409 and with a duration of 396 consecutive calendar days, to the responsible bidder submitting the lowest ossive bid. Mitchell engineering, to install electrical conduits, electrical vaults, and Fire Suppression pipelines on the Terry Francois boulevard between mission rock street and warriors way. This section constitutes the approval action for the project for the purposes of ceqa, pursuant to section 31. 0 2k4shd of the San Francisco administrative code. Do you know if its on 22, 23, mariposa . Right now, its a little bit west of Terry Francois boulevard. Thank you. Any other questions . This is literally digging up Terry Francois . Yes. Its not any other street . No. Yeah. That was my concern, because thank you. Because i ride down there all the time, and im thinking, youre going to dig it up again . But its further down. Yeah. Thank you. Any Public Comment . Commissioners . May i have a motion . So moved. Second. All in favor . Opposed . Motion carries. Next item. Clerk clerk [agenda item read]. This item was actually something similar before you at the last Commission Meeting. We had put out a request for proposal to hire three consultants. We had a protest against the one of the consultants, g. E. I. Weve resolved that protest. Im working with our city attorneys office, and so now were before you, asking you to award the third contract. Ill move the item. Second. Any Public Comment on this item . All those in favor . Opposed . The motion carries. Yeah. I thought i saw this item before. Clerk item 11 is adopt a finding declaring as exempt surplus land portions of the unimproved property owned by the city and county, in sunnyvale, santa clara, commonly known as a portion of manzano way, and authorize the citys director of property to execute a quitclaim deed qiing the existing restreet to the cy of sunnyvale. Commissioners, were selling this item for 1 million. Commissioners, motion . Ill move the item. Second. All in favor . Opposed . Motion carries. We will hear 13, 14, 15, and then item 12. Correct. We will hear 13, 14, 15, vote on 13, 14, 15, and then vote on 12. Clerk okay. [agenda item read]. Item 14r, discussion and possible action to adopt the San Francisco Public Utilities commission tenyear capital plan, and item 15, discussion and possible action to adopt the San Francisco Public Utilities commission tenyear Financial Plan. Commissioners, we started this in july, and its been the work of the whole organization, but i wanted to ask the budget Financial Planning team to please standup. No shyness. [applause] a lot of long hours, a lot of hard work, so were addressing 13, 14, and 15, and then 12, and ill address them in reverse order, 15, 14, 13, and 12, and hopefully, you wont go to sleep. These plans cover the fiscal year 2021 to fiscal year 2030. And the Financial Plans are required by the city charter, and the city charter was amended in 2002. Propositions a and propositions e passed, which really provided the p. U. C. Powers to execute Large Capital bonds, authorities to set rates and charges, and it came with a number of planning requirements as well as oversight requirements. And the oversight requirements were to prepare fiveyear capital plans and tenyear capital plans, and when youre preparing capital plans, you want to have some oversight in terms of what youre making in terms of rates and charges. This isnt different in terms of other water and wastewater agencies. They look at the fiveyear picture and the tenyear picture, so the city is on, i would say, the progressive end of capturing, and its because of this requirement. Now, how do we appropriately inform the public and the commission about the potential rate impact . The way we approach it there are many variables here, but we try to approach it from a conservative approach. I wanted to spend a moment talking about the inputs and the constraints and the outputs of these plans before i get into them specifically. So the inputs are the proposed operating biennial capital operating budgets that we have before you, any adopted rate increases, and sales volume assumptions. So those are the major inputs. When you look at the constraints of the Financial Plans, you need Budget Constraints and uses. The constraints are around ensuring credit resources, so your revenue and sources, not your uses, and that you meet certainly financial policies adopted by the commission to ensure that our enterprises are well rated from a credit perspective and can actually Access Capital investments that we propose to make, and those are fund balance and reserve policies that make sure that we have at least 90 days of operating finances on hand. There are debt Service Policies that ensure that we are taking in enough money relative to our Debt Service Liabilities in each year, and then, theres a metric of how much of our capital plan is reserved, and those are the big constraints. And then finally, the output is how much money do you need each year to meet all those requirements. And if you take that revenue requirement and divide it by your sales volume, you get the rate increase. And thats the structure of the plan. One of the enhancements that we tried to do this year is to look at some sensitivities around a major function. So we know these forecasts arent going to play out as were to the tee as were expecting. Its very possible to look at a forecast and think oh, thats absolutely going to happen. So were looking at provide some sensitivities, and weve done sensitivities with respect to sales volume. We make some conservative assumptions with regards to Sales Volumes, but what happens if it looks a little better . Because we think its important not to anchor on any particular assumption. Lets see. Also, i wanted to highlight that there is a document so this isnt just a series of slides, theres a document attached to the agenda item, which is the full text of the plan which describes in detail some of the things that im going to cover. So with that long preamble, t lets get into the plan. So the basis for water and wastewater assumes a sales decline of. 05 . There are two more years of retail rate increases that have been adopted, and the plan conforms with the policies, Debt Service Coverage and Financial Plan. Im sorry. Can i ask you a plan about the water . Sure. So we heard a plan that the state seems to be making some moves, and im just wondering if and when that happens if thats going to have implications on the budget . On the budget or on the Sales Volumes . No, not so much as the Sales Volumes as, you know, the budget. So i saw something that said that water users are going to have to pay more. Yes. I think that theres a certain amount theres some early implementation projects that steve has reflected in the water enterprise budget. You heard about those. I think some of the longterm effects in the settlement havent been considered so if we approve the budget today, does that then appear, like, in the rate package that comes before us or in two years or in ten years. Steve mitchell, assistant general manager for water. I think the thing that would have a Material Impact would be if there was a dollar per acrefoot charge that was leveed on all users throughout the system, and theres no information recording timing of when that would happen or when it exactly would be. There would be a process involved in that. But when it comes clear, wed have to come back and i find this highly unlikely, if it started january 1, 2021, we would probably be coming back for a midyear budget adjustment. Okay. Thank you. May i have the slides, please. So slide five shows historical and projected retail and wholesale water Sales Volumes, and you can see sort of its the base case volume projections, which assume a half a percent decrease each year Going Forward. And you can see, heres the upside volumes with the retail sensitivities. The base is 57. 4 m. G. D. And the wholesale is 57. 1 m. G. D. And this is the performance of the base case pro forma. The sources, you can see, contain is it advisable on yo visible on your screens . It contains wholesales, miscellaneous, and operations and maintenance, the hetchy transfer, which is funds going to hetch hetchy water and water to pay for the water and power assets in hetchy. Debt service, revenue funded uses, and then, you can see sources minus uses. And in these first few years, youll notice that theres some negative numbers. And what that reflects, theres a balance due to the wholesale customers, and were earning interest paying them back over time. You can see the retail increases and the projected wholesale rate increases over that time. The items shaded in beige are actually adopted rate increases. And then, you see the credit metrics and the constraints at the bottom, and you can see funds at the bottom. So i i think some things id point out is the [inaudible] so you know higher sales volume can mitigate the impact you can see how that results in, you know, a lower estimate of the rate impact. You said we were paying back. What are we paying back . Yes. So the wholesale customers, what we the way we set their rates is we estimate what the revenues what their share of the expenses will be, we estimate Sales Volumes, we set a rate for them. At the end of the year, we look at what the actual expenses will be were, and what we collected from them. And if we overcollected, we owe them funds back. So we, for a number of reasons, but in part to a large degree because we have been so successful refinancing our debt over the last several years, we ended up recollecting to the whole sale customers, so we are refunding it in the way of lower rates. That goes out six years . Not all of it yes. Not all of this is a secure is wholesale customer its really its primarily the first two years. But not all of that yes. You can see that the rate increase in the first two years is zero. Its about a 60some Million Dollar credit. So lets turn to the wastewater enterprise. From a sales assumption, its the same assumption as our retail water system. Meter metered volume wastewater discharge is measured as a metered volume, so thats why its parallel [inaudible] oh. The same assumptions in terms of expenses. One of the things that we do assume are the favorable terms on our executed federal and state loans, so we dont use a longterm planning estimate, we use what those terms will be. And its in connection with financial policies. This graph is the discharge volumes for wastewater, and this graph is the base case versus the upside case scenario. And then, here, we have the pro forma. And i think, you know, the things id point out in this pro forma are that the average retail rate increase under the base Case Assumptions are 7. 5 . Under the upside assumptions, its 6. 5 , so again, you can see how the assumptions that you make with regards to Sales Volumes can really influence the results. This is a very you can see the metrics are quite strong in the wastewater enterprise, and thats important because it will be quite leverage as a result of the bonds associated with ssip. Now what we have here is, you know, if you take those water and wastewater pro formas, and you look at the percentage increases for water and wastewater over time, you can see that the rate increases the increase in the combined bill is in the high to m mid Single Digits and decreasing over time. I have a question on the last slide . Yeah. Why do we show negative net revenues starting in 26 . So thats largely because of the increase in revenue funded capital. So were accumulating it has to do with the when you have increasing debt service, and youre trying to maintain a stable Debt Service Coverage metric. So you end upsetting rates as you meet your Debt Service Coverage ratio that generate enough funds that you can use a significant amount to cash fund your capital plan, and so that reflects the build up of cash in the reserve. You can see we reach a high level of about 100 of operating expenses as reserves, and its the spend down of that. Oh, i see. Its an interesting optimization when youre trying to solve a multiconstraint situation. So again, on slide 13, heres the combined bill, the percentage increase, and the combined bill over time. And then, on slide 14rks you can see on slide 14, you can see whats driving that. Thats largely the wastewater capital plan thats driving the increase. So in 15 years, it doubles . Yes. Now, i wanted to elaborate a little bit on that because one of the questions, i think, commissioner maxwell, that you had posed during the budget presentations we went through, as we go through this affordability, what are some of the levers that we have. What we have here is a graph of the information on the prior page, and what you can see is a combined bill of a percentage of Median Household Income overtime. Weve had discussions of that being a gross metric and not necessarily of the impact of the bill on all of our customers, but for a second, lets look at this. As i mentioned, the combined bill is 122, about 122 per month currently. When you look at the 2030 number, youre looking at 236 per month. And you can see visually how the ssip or the sewer bill is whats really driving that increase, although the water bill is also increasing. Now, if you look at the blue section here, about 75 of the blue section is a reflection of already incurred debt for wesip, and operating decisions, for example. So if the commission were to make decisions on budget or operating expense, about 25 of that slice is avoidable. If you look at wastewater, about 60 of that slice can be spread out, mitigated. Your future decisions as a governing body can affect about half of that future cost. One question, again. Could you repeat what the red line is, the affordability target. Is that based on the Median Household Income . Yes. 2. 5 of the median household increase, assuming theres a 17 increase of the Median Household Income. Why is there such a difference . Its because its so big, and much of it hasnt been committed yet. Any other questions for this . I think its a helpful slide for me, as we look how to focus our attention. So now, lets move to the power enterprise. This so when we look at power and clean power, were looking at slightly different were not looking at necessarily mature Monopoly Service areas. Were looking at slightly different business environments. Were competitive with pg e, we have a number of regulatory issues that you, for example, talked about earlier, you heard about from mike and barbara with nonmarket issues, like the pcia. So our assumptions here with the power enterprise are for a 1. 8 annual growth rate average over the next ten years. And you may be wondering in we would make assumptions, and were looking at really specific customer acquisition. And we believe that this is a conservative estimate of customer acquisition. So the largest driver of this particular low growth is growth in existing customer, the airport. And then, theres also some transfer customers included as well as growth in the redevelopment service areas. But most of this casebased growth is associated with the airport. We assume a 1 cent growth in the annual power rate and 3 increase from longterm customers in what we perceive to be the growth rate. We have a lot to cover, so ill move a little bit more quickly. This is a base rate 1. 8 annual increase. Heres a downside projection to ensure that some of our airport load doesnt materialize. Its about a 2 reduction versus the base case. And then, theres an upside projection that assumes that theres much more growth in the redevelopment service areas. Its about 1 above the base case. Now, one thing id like to point out, and i know that barbara is probably saying eric, point this out. The base case assumes that we will make the proper investments to carry load. So if we see a downside, we would need to mitigate the investment. And heres the base case pro forma. I know that one thing that we mentioned was when you appointed funds for the acquisition project earlier this year, it seemed as if the fund balance requirement wasnt going to be met. I want to assure you that estimates are going to be meeting the target for the fund balance enterprise this year, and you can see that the projected pro formas Going Forward meet all of your financial requirements. Now we turn to cleanpowersf. So we have on the base case pro forma, we have a half percent annual sales growth volume over the next ten years. This reflects completion of Major Customer enrollment. Weve incorporated in the plan all of the assumptions that you regarding the budget and the tenyear capital plan. Its the first year of a capital plan for clean power, and same assumption because rates track pg e, weve made a similar assumption with our power regarding pg e rates. So the base case shows a growth here so 3,105 to 3,105 gigawatts by the end of the period. I think there are a number of large customers that we havent enrolled in cleanpowersf. That would generate another 518 million over the same period, so another opportunity there. Heres the base case pro forma. I think one of the things to point out is that all of the currently, all of the Capital Investment for clean power is modell modelled as revenue funded, cash funded. We are looking to seek a Credit Rating for the clean power enterprise that would allow us a little bit more financing flexibility. When is that going to happen . Were still working out exactly probably by the end of this calendar yes, the end of this calendar year. Okay. So those are the Financial Plans, and i will be returning to the capital plan and the twoyear Capital Budget. So we covered these in great detail over our multiple public hearings. Im just recapping them before we return them to you to consider them for voting. So the tenyear capital plan and the twoyear budget development, youll remember that i talked about the planning framework of prop e that requires tenyear capital plans. The first two years of the capital plan form the budget request. This is the First Capital plan for cleanpowersf, really focusing on local build. And we went through a new quality review process with all of our capital plan submittals. Amongst the three oh, sorry. Amongst the three enterprises, you can see that waste water represents the largest share of the 9 billion capital over the next ten years, which is why its driving, and projecting the future bill. Here is the tenyear capital plan compared to last year. There was an increase of will 4 , largely because of hetchy water and power, and there was a decrease in wastewater. Now president caen, i think you pointed out that without a got of context, its not particularly useful, but we went through all that context in 12 hours of work. I called it academic. And then heres the twoyear Capital Budget by enterprise, and it really parallels the change in the tenyear budget or the tenyear capital plan. So finally, these are the items, numb items. 13 is the adoption of the Capital Budget. 14 is the adoption of the tenyear capital plan, and item 15 is the adoption of the Financial Plan update. Ill move the item. Second. Which which item . Were going to do them separately, so we start with item 13. Would you like to do that . Yes, ill move item 13. Do we have a second . Oh, yes, second. Second. Public comment on item 13 . Seeing none, all those in favor . Opposed . The motion carries. Item 14, Public Comment on item 14. I do have two speaker cards. Tom francis. Tom francis. Im the Water Resources manager for bosca. I provided you a written statement for boscas support for the written c. I. P. Ill read from that. On january 28, 2020, boscas c. E. O. Provided a written statement regarding the c. I. P. And the associated twoyear budget, which youve just adopted. Were specifically dealing with the water enterprise and the hetch hetchy conditions. Two important things to note in the c. E. O. s statement. Bosca pointed out that while additional staff is certainly needed to implement the c. I. P. As proposed, boscas concerned that it will require an even greater number of internal staff and outside support to deliver these critical results on time. Boscas pleased that the Commission Response in response to that comment has been to direct staff to provide a implementation plan. Bosca looks forward to that plan and interaction with the sfpu 2k4r0d task, and will anticipate it, with additional details, with the goal that the staffing plan will address this critical concern. Second, relative to one particular project, in boscas statement of that date, we referenced the groundwater storage project. That was one of the key projects that remains to be funded. Until the project is complete and the associated level of service goal met, bosca considers that the c. I. P. Will still be open. The c. I. P. Prepared is robust in nature. It and then bosca therefore supports the c. I. P. And associated twoyear budget and recommends adoption by the commission. Thats it. Thank you. Thank you very much. Peter druckmach. Thats on item 15. Oh, 15. You have 14. So i will call item 15. We need a vote on item 14, first. Thank you. The motion for item 14. All those in favor . Opposed . The motion carries. Item 15. Commissioners, any comments . Ill move the item. Ill second it. All right. Peter, you would like to speak to this item. Peter dreckmeier, t 4r0uolo river trust. This will remain flat in ten years. Now the number thats been bandied out a lot is 265 m. G. D. By 2040. Thats a 27 increase on what it is today, 192. If you assume its going to be half in the next five years, thats 13. 5 . But this report says on average its probably going to remain flat. So thats a pretty big discrepancy, and i hope youll ask some questions on that. If this plan is adopted, youll go on record saying essentially, we dont expect demand to increase in the next ten years, and yi would hope t hear that reflected in the next few years because demand has a huge impact on water supply. Thank you. Thank you. Any other Public Comments on this item . Let me just ask, would y mr, would you like to address the discrepancies . Steve ritchie. So the p. U. C. Generally works with two sets of projections. One developed for development purposes, and one is developed for water supply purposes, and they are different for their purposes in that on the financial side, it pays to underestimate to make sure that rates are properly set to account for all the costs that are coming up. We cant be in a position of having a larger than demand numbers show up without having set rates in a way that reflects that you need to cover all the requests or activities for doing. The water supply projections are the ones that are done primarily in anticipation of the planned growth in the service area, and they generally tend to be on the higher side because theyre trying to make sure you do have enough supply and you dont run out of supply. So by their very nature, their directions tend to diverge on that very fundamental point because we dont want to run out of water, and we dont want to run out of funding. Weve had lots of conversations about this. Its always been this way. Water agencies have this issue. You cant just use one set of projections on that and be wrong either way. Thank you. And i think what it does the other things thats different of the two projections is the time frame. Thats correct. If your financial projections is right for a cup of years but wrong for 20, you can adjust. On the water supply side, because it takes ten or 20 or more years to develop supplies, youre thinking in different terms, and the risk picture changes. So i think theres good reason for those numbers to be different, and i would not suggest that one number should be used when we talk about the other purpose. It does, however i mean, our experience to date is relevant, and the chart that mr. Dreckmeier put up earlier, i chuckled when i saw it because its been the history of those that try to project things are always wrong, and the trend is down. Thats correct. So i think what were dealing with is less a conflict its not one number that one persons arguing one thing, and another persons arguing is another thing. I think it reflects the uncertainty and the mistakes that youre dealing with as you make those recommendations, those decisions. And it also does i think there is a real issue out there as to what we think the longterm future of Sustainable Conservation is. I think thats a real issue, and thats not something that should be swept under, you know, the technicals, you know, of how we develop numbers. Thats correct. And the other large variable there is the fate planned projections and growth bay area to the quicker legislation. Sb 50 failed again this year, but the issue is not going away, urban growth in the bay area that we have to deal with one way or the other. And as the water supplier, we are going to follow the planning lead on that, and thats the reality we need to face. And like any number, you need to know what goes into it and why. Yep. Thank you. So now, we will vote on item 15. All those in favor . Opposed . The motion carries. Madam secretary, could you please read item 12. Item 12 is discussion and possible discussion to adopt the San Francisco p. U. C. S buyenial project, biennial program attic project budget, and appropriate operating revenue funds for Capital Projects. As you all know, my daughter wor works in this department, and i will recuse myself to avoid a conflict of interest. I just want you guys to know that i will always do this to avoid a conflict of interest. So miss Vice President , could you preside . I will. Item 12 has been read. Mr. Sandler, would you like to speak to this . No, actually, ill start from here. Ill wait so wow. This is the last item. Yeah, its been a lot of effort in putting this budget together. Ill have my long arm, John Scarpulla and so what ill do is ill give a recap of what the budget operating budget you know, its 1. 5 over 1. 5 billion, and were over 2600 employees. And so i will kind of go over the key themes and then eric already addressed the you know, the tenyear capital plan, tenyear Financial Plan, and twoyear operating budget. But as eric said, we started this in the summer, 2019. We said were going to start early because we want to put a lot of effort in. In doing that, we roughly estimated that we had 156 meetings amongst ourselves, and it probably more, because when they came up, we said okay, you had to live within the rates. So then, we went back and met again to bring these proposals back to make sure that our budget would be within our rates. And i just want to say, they have done an excellent job of vetting, especially the budget team of these proposals because when they came before me, they were real vetted, they were vetted pretty well, and they were really great. The other thing is that you guys were engaged. 146 questions that we had to answer. Hopefully, they were answered to your satisfaction. Almost as many as me. Yes a, and we want you to kw that once you adopt this item, were going to submit it to the mayors office, and then, the capital plan, were going to submit it to the citys Capital Planning committee for their review, and then, the budget moves to the board of supervisors where theyll review and approve our budget. Now going through each one of those processes, there could be a possibility that these may be changed, and so we will definitely come back and let you know, but were going to fight for everything that you approved in the budget, just to let you know. So id like to go over kind of a quick overview of the three budget themes that we talked about. Ill start by talking about utility of the future now. And you know, were in full transition to become a utility of the future now. And it is especially true in the service area where technology is king, and our customers expect and deserve rapid, Efficient Services with the emphasis on equity. And i dont have we dont have all the tools and resources to actually meet those expectations right now, but i think in this budget, that were going to address a lot of our shortfalls. So to best meet our growing expectations from our customers, were rolling out an innovative Customer Program such as cleanpowersf and hetch hetchy Customer Programs. Were also staffing a onestop permit center with other city agencies. We also want to be the agency that customers want to come and talk, and we want to call them and engage with them, so we want to be that agency. Were also stepping up our engagement efforts as we are adding high Value Community engagement position to permanently staff a college hill learning garden. And then also which the college hill learning garden supports 1,000 kids that goes to San Francisco unified school district, so thats something that were really proud of. And then, were also pioneering Innovative Technology and practicing such as implementing Cloud Infrastructure and managing our biosolids in a way that benefit the environment. Were also utilizing technology to help us be more efficient and nimble in response to issues so we can better operator systems and more quickly response to any issues that impact our customers. We are dedicated to equity practices, and we are practicing what we preach by hiring an equity and inclusion manager to ensure that we have a Diverse Workforce that reflects the community. Finally, utility of the futures are transparent and accountable. Thats why were hiring a Public Record analyst and implementing a cybersecurity enhancement to ensure that all our customers confidential information continues to remain safe and secure. The second budget theme is resiliency, and were focused on continued high quality serve in light of the growing population, the impact of Climate Change, and increasing National Disasters as well as increasing environmental regulations. Weve done a lot of work in short and longterm infrastructure investments, but we have a lot more work to do to ensure were able to continue to provide our core services. Seismic activity continues to be a major threat on our infrastructure. Were committing both Capital Projects and staff to expand and update the city emergency firefighting water supply systems. Additionally, were imp wi implementing a robust dam and water structure Safety Service to make sure that even after a seismic event, all our structures are safe. Were hiring wildfire mitigation staff and implementing wide range of Vegetation Management projects. To ensure that we have a resilient water supply in the face of increasing threats of drought, were putting funding towards both near term and longterm water supply to continue to diversefy our water supply. Climate change means increasing precipitation variability. Were seeing fast and strong storm surge hitting our cities more frequently. We are scaling up our Green Infrastructure programs and continuing to fund or flood programatic solutions. We are making sure that we have highly skilled and highly trained workforce to manage our old and new assets alike. Finally, were increasing our power supply budget and implementing budget distribution projects. There will ensure that were able to procure and distribute the clean power that we need to supply reliably and Cost Effective energy to our approximately 38 240ur0,000 customers. The city we do to everything here at the p. U. C. Is a diverse and competent workforce. In the previous two budget themes that i talked about, you saw that the proposals were based on the people, such as mitigation staff, and focus on diversity at work. In order to meet our goals and facing the growing challenges of a 247 workforce, we must have a growing staff or our agency will not be what it is today. As such, this is more a budget about people. And justine henderlighter, she did a great job of explaining the hiring and retention challenges that were facing. These challenges are only going to get more difficult as the number of retire eligibility staff grows. Thats why were asking for staff for critical functions like e. E. O. To speed up the hiring and recruitment process. We also need to retain our employees and support the career development, as well. So one of the Top Priorities for this budget cycle is to ensure that Core Functions are staffed by permanent employees. I ask our entire executive teams to take a lohard look at their Organization Staff to look at where staff are working on and should be permanent. We have 23505 positions that we proposing to convert to permanent. While the number of p. U. C. Facilities has grown significantly over the last four years, weve only been authorized at 13 new positions. For example, we used to have one groundwater well. Now we have 14. We used to have eight treatment plants. Now we have 16. We must have new staff to man or to to respond to these new facilities. We also have new programs, such as cleanpowersf or school led inspection programs. Not keeping pace with the growth has resulted in some of these core operations to fall short. We need to increase our staffing on baseline programs such as stormwater management, streetlight programs. We must appropriately staff these programs to be successful. In addition, we havent been able to keep pace with properly staffing our capital programs to ensure Capital Projects are efficiently managed and that we are implementing thorough Financial Planning, we are increasing Capital Projects support staff in light of the sewer projects that are moving forward. Again, i cant reiterate enough that our staff are our most important asset, and im proud that this Budget Proposal focuses largely on them. And so thats to really kind of put the budget in the theme, and ill have eric talk a little more detail about our operating budget. Thank you, general manager kelly. Commissioners, ive got to get to the right page. Okay. As the general manager mentioned, and as youve experienced, this budget has gone theres been a lot thats gone into developing the budget and vetting the budget. Id just point out that earlier in your agenda, in the communications items, there was the record of all of your questions and answers as well as the Technology Information that was provided, which was part of this record for the budget adoption. One of the other things i wanted to highlight was that in december 2019, supervisor fewer sponsored and the board acted on a Budget Transparency resolution. It provides the public opportunities to comment on it, but thats not the case of many departments. So there were a number of requirements of that ordinance, and i just want to point it out here. Budget information sorry. I just want to say that we may do that, but we i think we can do a better job. We have maybe two people, two people of the public there. And so, i mean, i dont want to burst our bubble, because its not only participation of the public, but its at 1 30 in the afternoon, so we could do a little bit about public participation. Certainly. So the requirements are that you hold at least one public meeting. [inaudible] we had five. The budget information is to be broken up by each diversion within the agency, and we provided that in what was delivered and posted for the commission. The major changes are supposed to be highlighted, which weve done and will recap here. Service level changes are supposed to be identified and highlighted, and the general manager talked about a number of those Service Level issues. Were supposed to talk about projected salary savings, which is essentially, of your authorized position, theres a certain number of them that at any given point in time will not be occupied, and so theres a reduction against your budget. Yeah. I just want to point out that we get a lot of folks who watch this on t. V. , so just were televised, so we get a lot of folks who respond to stuff that weve said on t. V. , so i just wanted to we dont have any way of doing it, but maybe we could also consider having one in the evening at some point. Mmhmm. And then so thats the compliance with the Budget Transparency initiative. Just to recap, this is our combined twoyear budget, by uses, by enterprise. We have a 1. 45 billion for 2021 and and 1 1. 45 billion fo 2022. Debt service and revenue funded capital account for a net increase, as well, and the cost of living increases associated for labor and nonlabor are approximately about 17 17. 17. 5 million and 11 million respectively. This was provided you in the answers, but you can see the budget by project positions. This is the combined twoyear period, and you can see where those conditions are going to progr programmat kr programmatically. Making do with the resources that we have. And finally, present the item the operating budget for your consideration. One thing, on the questions that we had put out there, there was the issue about being able to tell the story of how we have managed position increases over the years, and you provided, you know, some of the data for that. I think whats needed is less of an accounting exercise, what im looking for than a writing exercise that tells what the story is and supported by the numbers, but its the story itself thats important. So i think thats a task thats ongoing for some cleanup on this and also maybe transfers over to the Public Information post. Okay. Commissioners, any further questions on this . Is this a motion to a is there a motion to approve item number 12, the operating budget . And before we take a motion, i just wanted to thank all the effort putting this together. 156 meetings is really something. Thank you, everyone, for your input. Its been a remarkable process, and just want to thank everyone for their effort. I think we wore carlos out. We wore carlos out. Its that 154th meeting, and im out of here. This is something where we had more citizens, so they could really see and understand what goes on, and what we do, and where their water comes from, and what it takes to deliver the product that we have, and i just want more people to see and be aware of it. So is there a motion . So moved. Second . Second. Public comment . Public comment on this item . Seeing none, all those in favor . Opposed . Motion carries. Congratulations. That was good. Thank you. I just want to thank you for adding all this. Okay. Item 16. Item 16, authorize the general manager to execute a memorandum of understanding with the Real Estate Division of the city and county of San Francisco at a cost of 500,000. Ill move this item. Second. All in favor . Opposed . The motion carries. So, madam secretary, please read the closed calendar. [agenda item read]. Good. Any Public Comment on the matters to be addressed during closed session . May i have a motion on whether to assert . Move to assert. Second. All those in favor . Opposed . Positiomotion carries. This meeting is