mitchell fan. >> okay. commissioner mar? >> can you talk a little bit about the green tariff that pg & e is subsidizing the rate and it's competitive. can you talk about that? >> yes, the san francisco is that it supports the tariff to offer to customers. when we analyzed it however there are settlements that suggest that other rate pairs would be subsidizing that product in several ways. the settlement itself is not very clear about how the rate would be set. we

argued that any bill supporting or any requiring tariff for california utilities should stand-alone just like the sf rate has to stand-alone in terms of requirement and cost. >> thank you. what's the bill number? >> i think there are several. we can get you some information about all of them. sure. >> sb 3 is one of them. there are three. i'm sorry. i'm sorry, there are three. >> okay. if there are no other comments or questions from the panel we can go to public comment on this item. this is item no. 5, i believe. so i don't have any cards.

>> i was listening to a person that now works for sf puc. and are we here, we the public, to make statements one-sided statements. now, do you think for a second and i can give you instances that any city department including sf puc has a clean traffic record? so we don't want this gossip like what c puc does i have been been before puc and pg & e and

i know pg & e throws a lot of money there. they have been here more than five years. they take on the san francisco. i also know that most of the cases that the city has brought against pg & e, pg & e has won. the city has won a few but pg & e has won most. i was involved in a case where three conduits were under our force main. by our city, with the knowledge of sf puc and they tried to put the blame on pg & e to compromise our force main. when the public gets home, we the public, we need the experts to discuss factual stuff. we know

pg & e is going to fight you and you need to fight pg & e. >> your time is up. >> next speaker please. anyone else would like to comment? seeing no one. public comment is closed. >> next item. >> schedules of rates and charges of the san francisco public utilities commission power enterprise for phase one of the clean power sf community choice aggregation program for renewable power procurement within san francisco. >> today i can like to talk to you about the history of the program, just a few reminders. talk a little bit about the ogram and how it's designed

and how we vision it and how we have revised it and made a change to make it a more viable program than it has been in the past. first, as you all know in 2004 the board of supervisors voted to implement as part of it's energy resource program and a way to decrease in-house gases and initiate efficiency. more recently in september, the board voted to authorize the general manager to sign a contract to shell energy and go ahead with the program subject to the usual regulatory authorizations that we require including authorization of our rate. in march, just before i

came on board, the rate fairness board was presented with a 14.57 rate and didn't approve or disapprove of the rate, but they did say that we should be looking at ways to get the rate down. which is something we've been doing. right now, the program's designed so that there will continue to be a hundred percent renewable product using california certified products in the resource mix. we are ready to start local buildup immediately at launch. we are working on some components right now. if we get the go ahead we'll work on it with much more vigor. we have a contract as you know with shell that wee been negotiating and we'll continue to work on with the approval of the board of

supervisors and we are also looking into ways to bring procurement in-house. we have expertise. the staff have been scheduling power from many resources for many years. i understand that there are also some excess supplies that might be able to serve the cca. of course we would pay for that power so the city was either better off or indifferent. as you know our plan is to initially launch in the neighborhoods where we got the most positive responses from customers in several surveys. we will not include low income customers as part of this process. that was because the rate was a bit higher at one point. we might change our views on that if we can get the rate that for care customers that is comparable for pg & e and they are always welcome to

join us. finally we have a rather elaborate customer outreach and education plan that we've developed internally to make sure that everybody understands what the program does and the rights are and ways they can opt out or enroll. as our general manager mentioned, we tried to hear you and also the rate fairness board and our board of supervisors with regard to finding what we call internally a sweet spot for these policy preferences. we want a fair and reasonable rate, we want a product as green as it can be in light of everything else and we want some resources so that we can go forward with the build out which was envisioned by the board of supervisors in 2004, and i think in several

forms since then. since the september vote by the board of supervisors, some good things have happened. prices have fallen for products that we can buy on the market. pg & e proposed a tariff which is good for customers and makes us more vigilant about what we are doing and supporting this model, i will say that energy authority has been very successful with it's program. all of marine counties now being served in some development stage with 60 omega watts with power locally and they have signed all residents of the city of richmond. they have a very low opt out rate. they have had a lot of very positive experience. as you all know the county of sonoma is

putting this with cca and have very low bids to provide this and others in california looking at cca to see if they can be components of a bigger research strategy. a few things have changed to allow us to reduce the rate. today it's 11.9 cents we've proposed recs as a way to reduce the rate which i understand is 3 cents of the lower rate attributable to the rates if that is the direction we'll go. we are also hoping to collect $2.4 million a year to allow us to jump start a build

out process before we are able to bond and go forward with bigger and more projects. shell has reduced it's pricing a little bit for us. our rates as of today, the proposed rate is 11.9 cents. if we launch today we can set a rate today of under 11 cents. since the pg & e has presented a rate of 9 cents, we are now within striking distance within the pg & e rate and the bill for tier one customers would be for pg & e. this is another table. it shows you three scenarios for three different resources mixes at

11.9 cents retail. each of those scenarios will provide us with come build out funds and each of them give us a little head room for reducing the rate. as you can see, the scenario that we would propose today is that 25 percent bundled product with the remainder of the purchases of rec's. all of these scenarios would give us around $200 million around bonding capacity probably after two 1/2 years. if you have questions about that, todd can explain than better than i can. are there any questions so far? okay. >> yes, what counts for the difference in the rates between

marine and the lower? >> a couple of things. we have a strip to payback the $13 million reserve that we need in order to sign long-term contracts. since we don't have a creditworthy independent organization. we have a little bit set aside in case we sign of care customers. i think we have estimated what it would take to sign up 5,000 care customers. that is going down because our rate is going down, but it's still there. our budget, our administrative budget is higher. i actually think we'll be able to bring it down more, but i haven't consulted with the general manager about how much more we can strip out of that and still be safe. there is one more component. rim doesn't have a

hundred percent green rate. i can't tell you offhand exactly what that component of the rate is, but it's probably around a penny for that. so it's a lot of little things to add up. >> you mentioned sonoma. have you figured out what they are going with? >> no. what they have is proposals in concept. so they still need to -- >> i thought there was a short list of those suppliers? >> there is a short list. i'm not sure if they picked one. >> is she will on that list? >> no. >> why do you think that is? >> well, i can speculate, i think it's a complicated equation. some of those bidders

provided ancillary services, energy efficiency services. i don't know how they analyzed each of those bids. >> it would be interesting to reflect on that to see if that might be applicable here. >> we have had some discussions with sonoma and marine as well. marine is purchasing power from shell. >> yes. i have been in contact with them also. lastly the rate board has received the contract. they have not reviewed the current contract, is that correct? >> i'm not sure if they have reviewed the contract, they have reviewed the rate. the rate service board, they have been informed of our reduction in rates. they have held a hearing and heard from us on the reduced rate.

>> but i'm sure their decision would be supported. >> they can be happy. >> right. i thought that was important to get in the record. thank you. >> commissioner? >> i would like to backtrack for a moment. why don't they have the $13 million aspect of their contract with them? >> that's a very good question and it's one that i have asked. again, i would have to speculate but, i believe there was an assumption that shell would be able to draw from the county's resources if there was a problem with the contract if the cca failed for some reason. if that was the assumption, i don't think it's correct. since

marine launched it's program, it has been paying it's bills and has been signing up customers and growing and i suspect now it's a very creditworthy operation three years in. >> do you know what percent is green in marine? >> marine has two products, i think their base product is 30 percent green and they have a hundred percent green product that is priced i believe around 9 1/2 cents right now. i would have to confirm that for you. >> i would question why their rates are lower? >> right. so, again, they don't have to payback a reserve. they don't have a reserve. they have until recently had a smaller staff that we are proposing on our own budget so our

administrative budget is higher than theirs still and we have taken some out of it. we have about 8.6 cents in our rate for build out. they have in the process of building 60 omega watts of power. they have a little bit of a model in san francisco which is conceived, this program was conceived as a build out program as well as a procurement service for customers. >> and care customers too, right? >> they don't have care customers. they have a large group of users. our target customers are very small users because they are in apartments. in marine they started with a lot of users and they were able to spread the cost over a lot

of kilo watt hours. it's a different business model and they have different circumstances. >> thank you. >> just a follow up question on the process for the rate fairness board. what was the requirement in terms of the rate fairness board weighing in on our not to exceed rate. does it happen before or after. what is the guideline for that to happen? >> i will defer to our general manager, todd. >> good morning, todd, general manager. our rate provider has the opinion in that rate and they have done that in march and they have presented to this body and they have done a couple of recommendation and that should consider how to minimize cost. the proposal with a reflection of reduction

of 14 1/2 cents down to under 12 cents reflects on the spirit of what they did. they have been pieg on this and now for your consideration. they have the updated rates which are lower so they have been pleased with that progress that's been made. >> then the expression of that pleasure, what was that exactly, was there a letter or communication? >> it's been verbal to me and i do not have a letter in my position. but it has been verbal from the chair. >> commission moran? >> thank you. you have discussed the rates a couple months ago and i want to make sure i understand that there are four elements as i understand it that have changed. the energy mix which

is basically the rec's issue, admin cost, stretching out the reserve recovery period and then adding in the build out margin and the map you gave me earlier walks it's from the 14 down to the 11.50. those are the same issues that we looked at a couple months ago and when we looked at it and did the math, the results were higher. i want to make sure that those are still the four that we were looking add and that we have not included a fundamental change of the program in terms of reducing the amount of reserve or things that would fundamentally change for something that we've been looking at now. >> no, commissioner, i think

you named all the different revenue requirement changes, all the different items that change the requirement revenue and the rate. >> it's a passage of time and sharper pencil will get you through a better answer? >> yes. i think so and recs. >> recs were on the table a couple months ago. that's important. i think it's been, i want to make sure that we keep faith with the policy decisions that we made earlier and the board of supervisors has looked at. and also just observed while it's been frustrating to wait a couple months for this answer and i appreciate the work that you and staff have put into this. >> thank you. >> commissioner breed? >> thank you. i just want to ask a few questions, is there

anyone who has compared information. i understand it's a different program and this is a really big decision, and what we have to base this decision on is, you know, a model that exist, although not as significant as what we plan to do, but, you know, having a clear understanding is really important to me in order to see a comparison in some capacity. >> sure, i would like to get you the most recent rates but i think we have some rates in our packet that i can share with you. right now, marine county's green rate which is 27 percent green products that are compliant with state rules is 7.4 cents. and the rate that's

a hundred percent green and again 27 percent of the resource mix is compliant with state rules or is with a state certified product is 8.4 cents. >> can you, the difference for us is ours will be a hundred percent state compliant green? >> yes. >> thank you, that's helpful. also, the other question i had was, i mean this is of course a big concern, i want this program to be a success. i realize that what we are doing is again innovative, including the build out, including the build out being completely financed from this program. i mean that's really significant, but and i know that the rate initially we were looking at the 14 cent rate and now we are

looking at a significantly less rate at 11.9, but pg & e is still proposed a lower rate. my concern is from a consumer perspective regardless of what's -- of the decisions that we are making. i want to be sure that we are able to compete and i want to make sure that people have a strong desire to choose this particular program. so i do have real concerns that if we are not at the same level or even below that level there is not incentive to choose this program over pg & e's program. i just want to know are there any plans, i mean what are we going to be able to do to deal with that? >> i'm glad you asked the question. first of all, the

11.5 percent rate for the pg & e is what they quoted. that rate is expected to go up next year because pg & e's proposed a higher base rate for next year. even if that doesn't happen, if we launched that program today, we can have a rate with the revenue requirement that we've discussed that will be under 11 cents. 11.9 cents is a ceiling and it gives us a little room so we can plan for. we would not set the rate of 11.9 today if we were able to launch. >> right. you said somewhere around 9 cents is something you were looking at. i thought i heard a mention of that rate. >> it would be below 11 cents.

pg & e's rate is 9 cents that would be adopted. >> you don't have an estimated rate below 11.9? >> the latest we have is about 10.9 cents and we are working with shell and i'm still trying to cut back our budget. >> i know there is a lot of folks that have worked on this before i became a supervisor and there have been a lot of hours on this and this is a significant project and of course we want this program to be a huge success so of course the rate is going to be a huge success to that rate. thank you. >> i do want to say, i want to put a pigeon for the marine county which they have had a successful program for the rate but they have not had like san

francisco with the puc and the resources. we are very lucky to have that kind of business environment for this program. >> i know there was a proposed fee for opting out and now there is no fee. finally the job component definitely i think is really something that could be really significant. i want to make sure that we have a clear plan on how we propose to train and hire local residents for this great opportunity. thank you. >> excuse me, i wonder if the general manager can also respond to questions because i had a question between the pg & e product and our less expensive product. the response

i got with the local component, because i think this is significant to air. >> so you would like for me to -- so, to me it's a lot of difference between pg & e and our program. one of the significance is opt out versus opt in. for me is the focus for a lot of people in the audience is to look at san francisco build out. so that means job opportunities. so that was sort of what our focus was putting our program together. as it relates to pg & e, they are also committed to local build out but local may mean within their service territory. i think that's a difference. and i can't speak to their plan or where they plan locally. it could be in san francisco or outside of san francisco.

>> thank you. >> i would like to add that as you all know the staff conducted numerous customer surveys about how residents might feel about this program and whether they would want to participate, and when the rate was over 14 cents, we had positive response rates between 50 and 72 percent -- in a large portion of san francisco. and with a lower rate we'll get an even better response from the community. >> i think it's important to recognize that we didn't really see a movement on a green tariff rate from the pg & e until we started to work on the program. pg & e has moved in that direction. at the same time we know that