the initial response i got when i came in, they said, that it's a san francisco thing. it isn't. it is a local government thing. we can all develop programs that meet our needs and play a big part in solving the california energy infrastructure issues, and meet objectives for renewable in greenhouse gas reduction, and do it in a non- partisan -- a non-political way. i think we have made some ground on that. we help people understand that it is what the local government, what the local interest really want to achieve that drives this. commissioner mirkarimi: your cca could be very different from ours. you already referenced the composition of what you would like to see in terms of your -- had you pursue your portfolio,

it would look very different than what we were pursuing. that is the beauty of the cca. the local government's in search and into the question that there has never been -- they have never been allowed to help answer the question of, what kind of energy do we want to be able to administer? i think this broad stroke that opponents or people who are not clear what cca is to try to paint it as a san francisco or liberal thing. it really is not, which is why we have red and blue counties who are part of the mindset that it should be up to local control, or at least local governments should have an influence. >> yes. very well stated. commissioner mirkarimi: comments? questions?

>> thank you for being here. how far south as your authority go? kern county? >> we do reach the northern border of kern county. the conservation district as a 1 million-acre area that encompasses 14 communities within the central valley. we go down as far south -- or southernmost community member was the city of corkran. the northernmost member was fresno. >> what was the response of the growers in the area? what has been the agriculture response? >> it is important -- the best way to answer is to "pull out that the board of the kings river conservation district as an elected board.

they tend to be farmers or representatives of the agricultural community. this started with seven elected members with farming connections sitting around the board room and saying, we have a hydro plant, we have a gas-fired plant, we believe fresno needs more generation infrastructure, and we're not seeing pg&e make those investments. let's use our experience and statutory authorities to pursue expansion of the investment. farmers were very interested in price stability and certainty of supply. if you look at the greater fresno area grid conditions in 2001, it was the center of rolling blackouts.

even today, as we continue to watch the california energy commission's assessment of california infrastructure conditions, they are concerned about the greater fresno area meeting its demand in low hydro conditions. you add on top of that the lack of any significant transmission infrastructure expansion to serve an incredibly -- incredibly fastest-growing area. we are stressed. the farmers felt this would be important to allow them to attain greater certainty and the ability to turn on the pump when they needed to. >> you have senator rubio. >> we have had one briefing with him. >> i wanted to point that out. this is a statewide issue, not a

san francisco issue. the political dynamics of albert -- agriculture transcend their need for efficient, inexpensive energy. that has an impact on the price of the food we eat. there is a natural alliance that can occur between san francisco and the san walking valley -- san joaquin valley. commissioner mirkarimi: any more comments? seeing on, the happiest holiday to you and the people who work with you. i look forward to san francisco county continuing to build its relationship with you in the valley. i think there are a lot of us thinking there are positive opportunities for us. >> thank you very much. commissioner mirkarimi: thank

you very much. colleagues, we will move to public comment. those who would like to participate, one after the other. >> good morning, assembled commissioners. eric brooks, representing san francisco green party. i have worked a lot on this over the past seven years. the first thing i wanted to say is to set and what the commissioner said, which is that we would not want to just focus on the three-year rule. let's see if we can focus on a comprehensive set of legislation. we have got to remember that pg&e is vulnerable. this is our shot to do an omnibus reorganization of that legislation. in 2002, we passed ca after the

bankruptcy bailout. this is a similar opportunity. we should go for it. i wanted to speak to one issue raised, the phasing of the customer base. for san francisco, i would caution against that. we have a bigger market, which means pg&e will be more likely to pull every trick in the book to make sure this market does not come in. they might have a ballot measure that would effectively strain and the remaining customers. we have a lot of major opportunities in that we have our revenue bond authority passed in 2001. that gives us a chance to come if we bring in all customers at once, show a bigger and stronger revenue stream for the project, and if you combine that by making sure we also do the full build-out of local renewable and efficiencies, you

get stronger -- you will get much stronger economies of scale to make the thing strong and to have enough revenue to compete when pg&e start playing games with rates or ballot measures. [tone] commissioner mirkarimi: thank you. next speaker, please. >> ♪ strolling along a king county roads and the budget rain, it begins to fall and i feel the warmth better now it is coming i see lafco in the rain walking hand in hand with the puc it is gone again just you wait and see

after a while, we will run under a tree the farmers, it is going to be real green we are making it better under stormy budgets i see lafco in the rain walking hand in hand with the puc it is going to get better, just you wait and see ♪ commissioner mirkarimi: thank you. next speaker, please. >> that is a hard act to follow. i am becky evans here on behalf of the sierra club. we were active in getting support for the cca. we will continue to support it in the future with staff and

volunteer efforts. please count on us. thank you. commissioner mirkarimi: thank you. any other public comment? public comment is closed. i believe we already made a motion that has been advanced by commissioner schmeltzer for there to be a resolution drafted on behalf of lafco. when we come down to the item of agenda items for the next joint committee, we will be talking about that. other than that, i don't know there is any other [inaudible] very good. we will continue this to the call of the chair. please read the next item. >> item 5, hearing on community choice aggregation status report. responses to the request for proposals for abrogation services.

issues to consider should san francisco directly provide community choice segregation services. >> i will be giving a report on out on items 5a and 5b. first is a status update, where we are with the rfp process. as you know, we issue our initial rfp in the summer. we made a revision in september. responses were due november 3. i have a chart to talk about the time line. following what we received on november 3, we found there were four responses. i believe everyone has been briefed on those. they were from consolation energy, shall energy of north america, and what was formerly

sempra. all of those responses were lacking some of the key information we were looking for in the rfp. what we did was, along with staff, puc staff, we met with each one of the four respondents. we have that meeting on a monday. we'd describe what we really need it. we gave them a tailored message of what was needed to be able to have as far as having the reviews. we asked for those to update their bids and perfect them, and provide that for this meeting. we were hoping to have that on december 6. we got a request. one of the firms needed more time. we acted to accommodate that. they ask for december 10.

bids are due later today. we already have time on the calendars to give the orientation to the scoring panel. these are folks with energy expertise. we have a member from lafco. we have a finance person from the puc. we have folks from our sister municipal agency down in palo alto, as well as a member from marin. we appreciate their efforts. they are doing this without compensation. they are doing this to further renewable energy. that date we set for orientation is on the 15th. next week.

the next bit of the timeline, we're looking to have the final provide written scores the first week of january, conduct oral interviews the week after that, have final scores on january 19, then go to the sfpuc to get the formal guidance to be able to have the sfpuc instruct the general manager and staff begin negotiations. lafco has regularly scheduled meeting set for 2010. we would be able to provide an update on what transpires in the rfp process at that meeting at the end of january. that is what we have on there. another item i wanted to give you a status update briefly, some of the members of lafco are

on the budget and finance committee. we sought release of reserves. commissioner mirkarimi as on that board and asked questions about what we were seeking and how it has been. for my own commission, the sfpuc, real briefly, putting up the history of the reserve request. we start with $5 million. $3.2 million were placed on reserve. we had $1.3 million of reserve. the meeting on wednesday, the budget and finance committee authorized $430,000 to conduct negotiations. following that, i wanted to note that in response to your requests, we have been looking into the budget details and have started the process of working with lafco staff.

we want to make sure the budgets are all in sync. we will be doing some of that digging in the next weeks. we will report that the next availability. as part of that meeting, i know there was a question from commissioner campos. they were asking similar questions of the general manager and the staff. let me talk about it briefly here. the first item, performing the service through a third-party

using the rfp approach. it is clear that the city has the core competencies necessary to take on cca. in so doing, part of that would be they are taking on some financial risk. you have heard about that from ms. weiss and how marin has had to proceed. we would have a third party, working capital, and the like. we would have to get the funding for that, as well as, in terms of entering into the marketplace, counterparty is that you would be entering into long-term. energy contracts often require posting of collateral. should market prices change, you will still be there to purchase the power at the specified price. there are some things we have to

work with their. -- there. one is to have the program where you hedge your portfolio. you by the energy for a long period of time. the benefit of that, the prices would not fluctuate with the market. the flip side is the longer the term, the more energy you buy, the more collateral you have to post to get into those contracts. you have to be making bigger promises. the flip side of that, in terms of not providing the collateral, is having the hedge program. the downside is that, should there be changes in market prices, the customers would not have the insulation of having long term grain to -- arrangements with suppliers.

these are the things we would need to be considering. another area of risk management that we would look into relates to phasing in an targeting of customers. what is tied into that is how we structure the program. how renewable do we make it? the prices might be different than what has been specified in policy, but has an ambitious and strong renewable component. those kinds of things could be discussed. just to talk about the phasing, one of the challenges of starting up front, the challenges of the opt-out risk. that is there, no matter what. you have the opportunity of being able to use the pool of customers you have not offered the program to initially, and customers you can start to bring in at the opt-out rate is

different than what you expected. you can seek additional customers and make sure the volume of energy you have expected to be providing over the course of the year is within targets. you can adjust the number of customers you're bringing in or adding the opt-out to to make sure the volume of energy is the same, which helps in terms of being able to buy blocks of energy through long-term contracts. the city, we have the core competencies here at sfpuc. we have a call center and customer billing that we handle. that would require some additional staffing and computer systems to handle cca. we may want to consider if and how to use a third party vendor to handle the ball popped up in -- handle the bump up in calls. we would need an update to

handle usage and data transfers. it would ensure accurate billing and accurate tracking of customers use it. we have an in-house trading desk. that would need to be augmented. these are all things that we are interested in investigating and can invest a further. i am ready to answer questions, should you have any. commissioner mirkarimi: i want to step back a second and talk about a little bit of the motivation as to why a number of people have mentioned the interest in seeing the sfpuc step up and possibly be an actor and a player in the schematic of what it would mean to provide aggregation. a couple of things. 2010 has been a very

with regard to a false start, for lack of a better phrase, on the first rfp process, pre-june and us being able to corral a fair amount of interest and that process be expedited in a way that we had hoped, only for us to stave off any kind of external threat because of proposition 16, giving us the ability to retrench and redeclare our intentions of moving toward a thorough rfp process, to see what kind of interest we could garner from interested bidders and from implementing a cca. part of the process is more than setting up trial balloons and hoping that there will be an

audience, a business audience, out there potentially attracted to doing business with san francisco. it is about the level of desire they are detecting from the city in getting this done. that level of desire is first will come, or not, by the san francisco public utility commission, and it is that community itself, when they see communications from sfpuc, is able to determine how serious our city is in wanting to pursue an rfp. i am hoping we are still on that page. in the past, i think we may have addressed this, so these concerns are of yesteryear, and i hope that is still the case, that there is some sluggishness, lack of enthusiasm within the sfpuc on

moving forward with cca. that is translated into situations like, when the second rfp was executed, and we had a number of joint meetings about it, we did not expect on november 3, 2010 that you would have to send another letter out to the potential bidders asking them for information like prime proposal financial documents, rps, references, business documentation, audited financial statements, demonstrated energy industry experience, certified energy scheduling, customer care and billing experience. the reason i am bringing this up is, and that, i would assume, is part of the primary package of what an rfp is, but when it

is reported to us that after the clock has been eaten away, after five months, that we have some interest, but the interest is literally a one-sentence e-mail from the bidder who said they are interested. and that is the qualification of someone answering our rfp? that sound like something was not shepherded along the way to qualify interest. then for us to have to extend it again the rfp process to get documentation that we are getting right now, i would have hoped that we would have got this documentation in the first place. so what it is doing unintentionally is feeding concerns that we are drawing down the clock, drawing down this process, and dollars, since you mentioned the budget, of city attorney time, law attorney staff time, of everybody, so

that we get to a place that there is a determination that there may not be a company out there, that there may not be information that suits our standards out there. so i think some people are coming full circle and understanding, if this is in tune with what the sfpuc is doing, why not step up to the plate and the the aggregate themselves, or a hybrid-type of relationship? so if there are concerns about a third party actor in this case providing that, well, sfpuc has the history, infrastructure, and assets that might be able to take some of the chore out of trying to ascertain information that seems to be difficult to ascertain. we are at a critical juncture now. at the end of this year, we have had some lucky breaks, in my

opinion, in the duration of 2010. i do not think this is anything that people here can take for granted. unless we get a significant company that is willing to say, we hear you, san francisco, we are willing to negotiate with you, it is not going to be a repeat of what came up six months ago, than the natural fall back question should not be a report six months from now, or as the time line suggested, we are sorry, p u c, lafco, board of supervisors, we came up with nothing. there has to be a default in some case. as you delineated, one of them should be a plan held by sfpuc that explains what their role will be potentially as a way to administer cca.

if i hear correctly, that it is the ordinance that is giving writer's block, then that is easy, we can fix that. but do not let that intuitively or extensively -- instinctively block anybody from the process in a question that you will be confronted on. that is why a number of us have been anxious. after proposition 16, i would have thought that the city family would have regrouped in an incredible way to say we will never let this happen again. yet, i am feeling that we may not be able to traversed the next go around if we come up then on a bitter response. part of that is we cannot afford to eat up the clock, we cannot afford to draw down on lafco's

reserves, sfpuc's reserves on city attorney time, staff time, or resources that do not get us to where we need to go. i very much appreciate your leadership and your technical leadership on this question, but i have two reports -- i have to report, there is something amiss if we treat this with the next round of bidders -- and we do have some heft in terms of companies that have signaled their interest in us. we cannot blow this. if we somehow do not find some business synergy with these companies, that does not end the discussion. i am not going to wait three months to say, sfpuc, it is your turn. i would rather say it