from a cost of service perspective, this is with the average cost of 9 cents a gallon over five years. on top of that, we are glaring at the additional contributions. we are projecting over the next five years assuming the bill that moves forward that we will be able to pull together about 1.3 million and the rate stabilization fund at about $3.8 million in the green capital fund. >> in what amount of time? >> over five years. >> thank you.

>> we are averaging a bill and this would take about 3600 monthly kilowatt hours which would be about $500 on average for that customer as compared to the proposed pg&e. miscellaneous fees are part of our proposal as with our other economic prizes. we have some -- as with our other economic enterprises. there is one-and-a-half% of the outstanding balance. there is a restoration feet. if the services terminated any is to be turned on, we can send a crew out there. these are currently with the water and wastewater. in these fees are tied to an inflationary index so do not be

coming back and adjusting them each year but we will be looking at them periodically from the cost of service perspective. my last slide it is talking about the effectiveness. these must be repealed or modified. we need to come back every five years. however, we will look at the cost of surface every year during the budget. we currently do that for the water and wastewater enterprises. in terms of future rate considerations, we consider this to be a base for us and this is a good exercise for us to look at our customer classes.

looking at a future rate considerations, economic incentives, if we have a need for addressing a particular customer that would like to relocate. electric vehicles, clean energy, and two other fairly popular areas. the fact is that we don't have any customers at the present time so we are happy to entertain those new rate support needs as the customer demand is better defined. that is the formal review of the rate proposal. we will be submitted the details for approval two weeks from now and i would be happy to take your questions as they relate to the rate proposal.

>> you have built in here a couple places to find to some of the initiatives that we have put forward.

the public benefit fund was set up at 2.5% of total revenues. we have solar power programs, we have the ocean generation, does this fully fund that? or does this reduce that resource? >> first of all, we are starting off with nothing as far as these redevelopment areas. what we are funding a as 10-$15 million of energy efficiency become a public benefits types of programs. right now, we are finding the

equivalent of 10-15%. the apartment is that we find 2.85%. -- we find ourselves at 2.85%. this is a low cost. >> i think he might be answering the reverse of my question. the methodology looks at the entire enterprise and it creates a category for the public benefit and also for funding the green power. does the enterprise represent an increase in funding or a decrease in funding to those kinds of programs? what you have said is that we are doing more than is required so we don't have to worry about

the requirement. the question is whether we are fully funding what we are doing. >> there would be an additional 2.85% included in these rates so there would be a few thousand dollars which would be part of the projected load depending on how big it is. we don't know for sure how many of those 10,000 units will actually be built by 2011. we have the developer's projections and that is what we are using in our capital plan. by way of comparison, if you look at 2.8% on this protected loan, that would be $31,000 of additional revenue we could put it towards the public good compared to the $10-$15 million

we are already doing. while we are building the rates that we think are respectable and meet various goals for the efficiencies, the amount of extra revenue generated or not be a terribly large funding service for the public good. you are already super funding if you look at what the policies are. >> if we were to take all the money that we were spending in those programs and reflect that in the analysis, what would that do? >> we have already reflected that tend to we have assumed the 10-year capital plan. we have the energy efficiency

provisions in there and that is the average cost for the enterprise which would be 9 cents. everything you have had in your financial plan, your capital plan, in your adopted budget, that is what is intriguing because this is an intriguing system on the generations side, even with all of the additional costs and the investment on the energy efficiency and the $5 million a year, we're still able to come to you and propose rates that are cheaper, greener and

economic development incentive for people to purchase homes and start businesses. >> i think that that is a critical thing for all of these discussions. all of this is based on a very small load and a very small number of people. we will not have to go out and buy a lot of power. >> i think what i'm hearing is that this is not a revenue source that we have any place else.

>> this is a few thousand dollars. this is not an option on this type of customer. >> that 9 cents rate includes all of the energy efficiency program in. that is assuming that that money will basically stayed the same. >> a relatively flat budget, that's right. >> there might be allocation within that. >> you will see some of those things going down. >> the basic totals will stay

the same. >> i want to make sure that commission amaranth had a couple of questions. >> we understand what we are aiming at is an aim at a redevelopment areas. one of the questions is what do we do with the subsidy to the general fund. the general funds will end up paying costs as well. there is no assumption that

dealt with that deficit. >> our hope is that this will not raise the cost of doing so. >> we've talked about why it is our hope that this has happened. when i first do not with this, it was nearly 40 years ago. the general manager was an advocate for getting rates up to two levels. he was never successful in doing that. it was never the right time. either you have a budget balancing or a projection at

this level. what i have seen is that we will never get there unless something pretty drastic happens. if we are setting restructure's and we want to give a class of customers it benefit that derives from the system, i have no problem with that but i don't want to give it away twice. i'm wondering if it makes sense. does it make sense to build this into the rate structure so that until such time as we bring the

general departments up to a cost of service-based rate, that the other rates will reflect that. the redevelopment portion would be relatively small because it would be allocated among everyone else. this would be a very useful line item to have in the rate calculations so that if you want to lower the rates, it is self evident that one of you could do this would be to deal with the general fund subsidy. >> this is a difference between the average cost of 9 cents vs. 11 cents. the way i illustrated that the was that those are two parts. that excludes the rate stabilization. >> i did not hear that. >> the proposal from stuff is

also 11 cents and the 9% average cost in addition to the 2 cents per kilowatt hour for the stabilization fund. >> that is different. there was the value of the general fund subsidy. >> we are happy to help you look at this. you are correct. >> that is the general fund subsidy question and that is the white elephant in the room as far as these discussion go. we would very much welcome as part of these discussions some suggestions and recommendations on how to crack that net. this is one suggestion. maybe there is a way to create a

methodology to see if it would work. how else could we do it? it keeps coming up. i think we need to really be moving towards at least covering the cost of service to the general fund departments if not incentives as far as cost goes. >> in the current year and in the budget year, if you were to look at adopting his rates, you will still be providing the same $54 million worth of lower- cost for the general fund, whether you have these as they are now or not. by looking at this small sliver alone for just the redevelopment, helping or harming the general fund or other rates. >> i think that is the point they're making.

do they want to change the methodology so we show this differently and therefore it to increases the interest and possibly changing the subsidy. now, we don't get a chance to talk to the port of supervisors or anyone else. what you need to do is to pay your fair share. that is on the table. >> my last observation would be the nature of a five-year rate within the power market, which is very volatile. there was an objection that was raised because the rates are expected to go up over the past 15 years and our rates would be at 80% of pg&e. that makes me a little uncomfortable that we are providing a deeper and deeper discount from what the market

indicates is the value of our and not just in -- is the value of power and not just he frequently. >> we are going to revisit this annually. pg&e has averaged two rate changes every few years. staff here, just like we did for water and waste water rates, we revisited the requirements. what you have seen here is an assumption for 2011 and for the last 12-18 months. if you want us to come back -- >> the question goes beyond that because if you came back every month, we would have roughly the same answer. there's nothing in here that talks about the market. there is nothing in here that talks about market value.

this is cost-driven. if the market changes, you will come up with the same answer. i note this as a point of discomfort. i don't have a suggestion. >> we were interested in having our rates below are, the energy mix be greener, and i also thought was useful to save the stability and pricing for people which is a safe thing. one of our intentions is not to change this too often. that does not mean that you get out of sync with the market. we were intentionally trying not to make these changes on a frequent basis.

quarks if there are no more questions -- >> if there are no more questions -- >> how this transmission come into this? >> about 45% will be generation.

this is transmission and distribution. >> we have to pay them now. >> we have acted in what our costs are under the agreement and the projections through 2015 as included in the cost of service. >> thank you. sorry to keep you waiting. >> i sit as chair of the rate fairness board and i see some new faces on the commission since i have been here last. welcome, if you have any questions. i will try not to go over too much has gone through 04. there are a few items in discussion. i will not dwell too much on the staff proposal of the rates. we will talk to the power process and our recommendation

and our opinions. the rate fairness aboard was established in november of 2002. we are an advisory board to this commission. this also sets forth rate policy goals, cost of service, etc.. we can hold public hearings, which we do, and we make rate policy recommendations. this is our fifth go round before you. we finally got to talk to about -- rates and this is our first presentation regarding the electric retail rates. who are we, we are a seven- member board. there are four civilians which represent residential and commercial customers and we also have three very able members of the staff who are on our board.

we have had about six or 8 meetings and they have been very engaged and may ask the right questions and they are eager to see the new retail program for the redevelopment areas. i don't think any of them are in the oddest of they have been great. what are the fair rates? people have a different opinion about what is fair and not fair. a lot of different factors that went through our considerations, some of them are from the charter and some are things we bring to the table. you can see that some might be in conflict. we have a certain amount of revenue that we have to get and sometimes that means raising rates. there are many factors to be

considered better on this chart. we have added green generation, something we don't have to deal with but we are -- by the green element. the next slide, i did not know the commissioner would be asking this question, but this gives us a brief introduction about how we look at the revenue requirement. if you take the total cost of service of the power enterprise and used to track that by what we get -- and you subtract that by what we get, the revenue set by the budget process and market sales, that leaves a balance to be connected and the general fund. including the sales to the other entities at pg&e, there is a huge subsidy to the general fund. as was mentioned, this is the

elephant in the room. that allows the general fund department to be much lower than the pg&e rates. up until about two years ago, this was at -- this has been one success of the commission. there is some precedent for that. i will not go too much into the staff proposal but we want to talk about the seasonal tears. what are the higher tiers. there was more kilowatt hours in the first tier dent in the second. we might heat the air with my gas-fired furnace, there is a

gas-fired -- the moves the air around the home. this provides more energy at a lower cost than at the time when people are using more power. that is a good thing. with respect to commercial, this just reviews was in the staff proposal and a slightly higher winter rate which would not reflect the market consideration to the price of natural gas tends to rise. the electric power rates are slightly higher. what are the fairness criteria,

w does this meet our criteria in general? there is a customer charge, there is revenue regardless of the size of the load. we have the same kind of tears in water and wastewater. we have the same program which is a technical, waste water and water. in the bottom, we have the common treatment. and support for of the rates generally reflecting cost levels, we think they do. to get to the bottom line for residential and commercial rates in the redevelopment areas, we believe the rate structure is fair and did these include the same kind of tears and customer charges. the level of the rates are fair because they are lower than

pg&e's and the seasonal variations are fair because this is common practice on the residential and commercial side. a couple of things to watch as we go forward, we understand that there might be a building or two in hunters point for. we would like to see that the commission has used potential flexibility to negotiate rates even lower. there might be some flexibility on the commission and staff to negotiate rates. we would be perfectly happy to see that and that is a common element of other rate structures. you talked a lot