consequence of issuing debt against hetch hetchy. it does strike me -- it is certainly not new. it strikes me it could be a tricky credit to evaluate. i think some discussion of that and how we want to deal with that, how we structure that into the financial plan would be helpful. it might as well be at the same time we are talking about this. >> we have done a whole lot of work around that. we can bring it forward. if prop 26 passes, it could change that dramatically. prop. 26 is a bit of a sleeper right now. it is not getting much attention. in its simplest form, it would tend to have power revenues for government agencies treated in many ways like prop 218 requires

for water and wastewater. the most immediate impact would be that -- for example, right now we provide power to the airport tenants. the airport tenants pay us lower than they would pay pg&e, but pay us more than it costs us to generate the power. we use those extra proceeds to finance other programs. prop. 26 would say it cannot -- you cannot charge more than it costs you to generate your power. it would not allow government agencies to generate any income to be used for other projects. it would be a major impact on general fund to the city, all of the programs we have been doing using hetchy money. president crowley: it sounds like prop 16 revisited. >> only municipally owned utilities, not on investor-owned

utilities. i believe the board of supervisors will have a item introduced to have the city go on record against the proposition. president crowley: i noticed also you have now -- commissioner moran: i noticed you have also scheduled the allocations. that is well in advance of the end of the year deadline. it does strike me that may take more than one meeting. i do not know if that is the way it is planned on there. i think it shows a decision as opposed to a setup. >> i am the assistant general manager for water. it should be on decision on december 14. november is just a discussion to make sure we are on the same page. vice president vietor: i am sorry. i had a follow-up on prop. 26.

how would that affect cca? >> it would not have a dramatic impact on cca, because the way we are envisioning it is it would simply pass through the cost and only the cost, and we would not have any kind of profit. when we said profit, if we charge somebody a pg&e rate, that is more than our cost. that is where the profit comes in. nobody pays more than if the use pg&e, but it would lower it to what our cost of generation is. to the extent we used hetchy power in cca, we would only charge generation costs. vice president vietor: would that impact the negotiation of the contract with the cca provider because of the profit? >> i do not think so. again, it would only impact

that, and potentially in a positive way, if we were going to be buying power from another municipal entity. it would limit how much it could charge us. that is probably on the margin, not a major part of it. president crowley: it takes all of the financial incentive out of any energy conservation. >> exactly. vice president vietor: that is one in -- i am from the city attorney -- >> i am from the city attorney's office. that is only one interpretation. that is only one reading which could be given to it. >> we will give you a fact sheet on that. vice president vietor: in november -- on the november

ballot? >> yes, it is. president crowley: anything that needs to be received? commissioner moran: there were several things distributed with the agenda binder that are in essence staff reports that were not listed. they in some cases were pretty important and significant stuff. i am suggesting that they should be. >> a number of them were received at the end of the week. there were sent out immediately. those show up on the next -- but what i can do is start bringing amended ledger summary is that the show everything that has been updated. those will show up on the next report. commissioner moran: what confuses me on that is they were distributed to us, and i figured if there were timely to be

distributed to us there were timely to be posted. >> i will do an amended versions of this so everything sent out to you is listed at the meetings with a matching list. some things come in at the end and roll over to the next meeting. commissioner moran: just to point out -- there was a wsip annual project report that was interesting in that it responds to issues that were raised by people from the state department of health. i think there were useful discussions in those cases. the commission essentially pointed out, in case we did not know it already, that the cost of delay on some of these projects is not simply the cost of inflation to the project. it is a prolongation of risk. that is important to think -- to keep in mind. it is a point well taken.

the west side recycled water project -- there is an update to how that is proceeding. that is a project that is about $8,000 an acre foot. it is a significant project from a variety of standpoints. as we look at the triple bottom line, this is pretty expensive. that is going to go to environmental review and a lot more discussion before it comes to us for action, but i wanted to point that out. four audits are in there. they are exactly the kind of audits i hope we are doing for our internal operations, making sure things do not fall into disrepair over time. i guess all of those were done by the controller. and then the last one -- there was a memo on the price of

alternate water supplies. that gets into calculated unit cost, the cost per acre foot of some projects we are doing. i think starting a baseline of information will be very useful to us as we have water supply discussions in the future. thank you for those. if we can somehow coordinate these things so they are posted when they are distributed? >> yes. president crowley: anything else? todd, it was also going through our information, and i saw the rebuttals article in the west side observer. i thought it was good to get the communication tool out to folks so they know we are capable and functional in terms of watching their money. thank you for putting that in. >> thank you. >> mr. president, the next item is item 6, report of the general manager. >> we have had part of the

report. a couple other items that are not on the agenda -- one is that the police department is making some changes in its management. we are saying goodbye to captain perra and saying hello to captain erlich. you have his resonate in front of you -- his resume in front of you. >> i am the san francisco police department capt and director of homeland security. we were notified very recently from the chief there have been some changes to route the police department. one of them obviously impact the sfpuc. he has asked myself and captain erlich to switch commands. i will be moving over and

overseeing the sex crimes unit, the child abuse and exploitation unit, the missing persons unit, and along with those a number -- working with a number of advocates for children. this is a very sensitive type of investigation to be conducted. we are putting cases together against those predators who would prey on our most defenseless population -- our children. i am looking forward to this future assignment, but it is bittersweet. i want to thank each of you. mr. harrington through all of the managers come up field personnel -- all of the managers through field personnel. everyone was wonderful. the vast and complicated system i was requested to oversee in

establishing some of the security protocols for homeland security were immense. i built what had been established and took it to the next level. john will be moving forward with the next level as well. i truly want to thank you. the sfpuc should be very proud of its employees -- what dedication i have seen through all levels. very dedicated. everyone bent over backwards to exist me whenever -- to assist me whenever i made requests. i am always at the service of the sfpuc, wherever i served in the police department. thank you. >> my name is john erlich. [applause] i have then a captain in the police department since 1997, employed in the police department since 1980.

i have experience in city government. you have my resume in front of you. i have had some experience with the puc when i ran the combined charity campaign. puc was one of the department's contributing to the campaign. i already had some exposure. i look forward to working with all of you. it is going to be interesting. thank you. [applause] >> captainin -- in a short time with us, you have won a lot of parts of country. thank you very much. there is also an update on the incident in san bruno thursday night. the director of water supply and treatment was very involved, as long -- as well as other members of the organization. >> good afternoon,

commissioners. i am david briggs with the water supply treatment commission. -- treatment division. the response to last thursday's explosion by the puc staff was amazing. it was immediate and multifaceted. there was certainly a response by the fire department here and at the airport. that was very rapid and throw. puc staff or the first ones on the scene. some of us live in san bruno, 20 to 30 staff. they are our neighbor and wholesale customers. within minutes of the explosion, we knew exactly what was happening. staff at the tracy water treatment plant were only 2 miles away. staff there felt, heard, and saw the explosion. we have staff in the watershed that live half a mile away that were sent immediately. once we pinpointed the location, we quickly determined our system

was okay. that was the first thing we were concerned with -- our own ability to keep delivering water. we verified that within minutes and then made ourselves available for mutual aid. obviously, the situation was very chaotic and real time on thursday night. our activities in the first few hours after the incident were four fire support. our first issue was making sure san bruno has water. they get all their water from us. they do have some ground water wells, but in the upper elevations it is all from puc. obviously, the explosion damaged their distribution system and their ability to get water to the firefighters. we were making sure we had water delivered to the rest of san bruno so they could get water to the area. we also brought water up by truck, which we had immediately available. if you saw the video, you saw the helicopters ferrying water over and dropping it on the fire, which was literally the

only thing they could do in the first few hours after the incident. the water was all coming from san andreas reservoir. friday, we switched to recovery support for san bruno. we sent plumbing cruise up to the area to the devastated area of and viewed the crater where the explosion was to aid the investigation for pg&e, who were on the scene. we speak to san bruno stuff every day and make ourselves available to any other support they need. i can give you more details on that and what is happening on the ground now if you care to hear. the short story is we are making ourselves available for any additional help. it is also important to realize we were available with more humanitarian support. we have water trucks that are always ready to go in san francisco and on the peninsula

that were ready. they were not needed. the impacted area relative to the mutual aid response was small. there was plenty of mutual aid available and so our water trucks were not needed. but they were ready in case there were called upon. the other issue the general management wanted to address was the location of the pg&e pipeline, which is on everybody's mind right now. we are in a good position to know where pg&e's pipelines are relative to our own assets to assess vulnerability. we have meticulous records of all the permits and easements granted to pg&e from us, the land owner. we were there first in almost every situation. we have 700 easements and permits granted to pg&e in san mateo, santa clara, and alameda 0 county alone. i cannot speak to other areas.

700 easements in areas where pg&e facilities of any type are on our land. 12, we have already determined, are 12-inch diameter pipe lines carrying natural gas. we have already narrow the 700 down to 12. we will begin investigation to was the crossing is like, how well the construction was done, what kind of access rights we have. we will begin to thoroughly worked through all of those areas where pg&e pipelines across our infrastructure and will have this resolved within a week. the larger liability picture relates to our own assets. we own and operate a large water transmission system in an urban area with high-pressure pipelines. we have five dams that are upstream of populated areas in the bay area. staff are continuously

evaluating not only the vulnerability of those assets to their ability to deliver water, but also public safety. it is a continuous effort. we are making no greater statement right now then investing with the wisa program and the large capital investments. in parallel to that, we have a thorough asset management program which is well documented. it houses all of our assets, the condition they are in, the maintenance programs used to take care of them, including the corrosion program, which has been getting a lot of news. when any deficiencies are detected in our regular inspections, that feeds directly into our cip so we can address that deficiency. i have asked myself many times in the last five days, what would happen if the public, the media, or my peers in the water industry were to come into my

office and look at my documents for my inspection records, how do maintenance, how i take care of things, and whether i am on top of things, because this is exactly what happened to pg&e. i feel very comfortable. we are very much on top of things. >> thank you, mr. briggs. commissioner caen: i do have a question. the pipes that are on our land. can we demand of pg&e to inspect them? >> that would probably come down to the terms in the easement, which is probably where our legal rights would be housed. it is common in easements and permits that one of the stipulations is that they do nothing that harms our ability to deliver water. there is probably something in there that could get us to the front of the line. everybody is asking, wherever the lines are, that they be

inspected in case they have the same issue. we do have the ability to inspect them to some extent our cells, and possibly excavate and look at pipelines. -- to inspect them to some extent ourselves, and possibly excavate and look at pipelines. i have all the records in my office of what is already documented. as you know, the program is very active and things are very fluid right now. i will circle back if i see anything out there i do not know about right now that we can look at as well. the short answer is there is some ability to get answers quickly. commissioner caen: i think that is very important and i think we should move forward on that, to look at the records that exist now in terms of the inspections that have been done. why should we spend our money and our time inspecting their pipes, in light of what has

happened? i think that would be a reasonable request that they inspect what is on our property. >> as you know, the california puc has licensed to do inspections. they have to prioritize. the question is how we get to the front of that line in the priority of what they inspect. commissioner ellis: can you talk about what you see as the longer-term water to support san bruno needs and what role we will continue to play? >> over the weekend, at san bruno's primary concern was to take care of the power lines first. there were power lines that were down. that was a dangerous condition to every person on the ground. then they cleaned up the sewer lines. that was the next level of priority for public health and safety. what the city of san bruno has done is essentially isolated the devastated area for the water

distribution standpoint. it is completely isolated at this point. there is no water needed in those areas. there are no homes. there is no use. they have isolated the area and cut a chunk out of their distribution session -- distribution pattern. it could take years for them to rebuild. in the open hills, there are still open lots from 1991. as homes begin to get rebuilt, they will go in parallel and rebuild the distribution system. we are making ourselves available to help them, but it is not an immediate need. president crowley: anything else? i know you probably possess the answer to this. given the fact that this blast happened, that it did not seismically change our configuration of piping down there, making sure we are not

having destruction with leaks or anything else -- we are going to the system as we speak. >> one thing we can immediately check remotely is all of our system pressures in all of our system. there was not even a ripple reflected in the system. the infrastructure we have is the line at that the north coast county water district -- and 8 inch line roughly a quarter mile away. all is fine. all checked out. our closest matches -- major transmission line is 1 mile away. we did not detect anything. commissioner ellis: as far as emergency response, i am guessing our ability to respond so quickly is just that we are practicing and have things documented as far as how to respond to these types of things immediately. can you talk a little bit about that? >> we drill all the time. there is always after action

reports that are put together so we learn from things that did not go quite as planned. once or twice a year, there is a drill of some kind for emergency response, whether it is in the watershed or some type of event. in this particular event, it is always amazing to me to witness house staff know what to do. it is one of the most satisfying things i have in my job. it was second nature. we know the people at san bruno. our maintenance guys know they're maintenance guys. they know who to call. there is not a situation where we have to go through an intermediate your -- an intermediary. we knew the guys trying to figure out how where water was going. we called that guy and asked if we could help him. it is proximity and knowledge of our customers. we know many of our customers'

distribution systems as well as they do. we are well-trained and well positioned to provide help like this. >> thank you very much. >> i would like very much at the end of this session to give a moment of silence for the families of san bruno who have been devastated by this disaster. thank you. >> the next item is on the agenda. >> commissioners, good afternoon. i will be brief. i want to update you on a few different topics. the packet for today's meeting included the latest update on our wsip change orders. i wanted to point out i ask for a change in format to that

report so it is a little more comprehensive. we now have one table that summarizes change orders associated with cost and one for those associated with schedule. i also asked that we differentiate between approved, pending, and potential change orders. i think it is a little more comprehensive. i would welcome your comments if there are things you would like to see in there that are not currently in there. please let me know. we can always provide more information. on the cost side, i wanted to highlight the fact that with all the ongoing construction contracts we are currently at a 1.5% of our total contingency has been used. it looks good, but we are still early on some of our larger projects. i encourage you to look at that table and give me any comments you might have. annual reports -- we did issue our recent annual report on

september 1 to meet state requirements follo. following that report, there was some feedback which led us to add a section to the report. we will be reissuing that report if not late this week early next week. the revision will be provided to you and will also be posted on our website. i wanted to take the opportunity to give you advance notice on some challenges we are encountering on the two construction contracts for the bay division pipeline no. 5 project. this is a very challenging project because are building a major pipeline in an urban area with a narrow right of way. i mentioned in the previous meeting that on the peninsula side we were having to deal with a few archaeological sites that required we micro tunnel under those sites.

we have encountered contaminated ground water on that segment of the peninsula. contaminated ground water is also an issue on the east bay side, where we have an alignment close to the sfc site. we are having to deal with treating that groundwater to greater levels to be able to discharge as planned. on the east bay side, we also had to change the alignments of a micro tunneling operation when we encountered an underground and derriere on a crossing of the union pacific railroad. this will result in cost increases. i will be coming to you if not next meeting than the next couple of meetings with a request to increase the construction contract, the cost of these construction contracts because of these field conditions. i wanted to point out that

because of the large cost savings that we had because of the low bids, there is money in these projects to be able to cover those costs. but i wanted to give you advance notice before i come before you with those agenda items. i also wanted to talk about the three projects in october. those are three key regional projects, the lower crystal springs dam, pipeline number two replacement project, as well as the herridge receive long-term project improvements. those will all come in october -- as well as the harry tracy long-term project improvements. there is the san joaquin pipeline system. that contract was advertised earlier in