commission. we did have a longer, prepared statement. we do welcome option number five, and it is not totally aware we would like to be, but we think it is an improvement over option number four and hope that it is therefore adopted into not have to get into being very confrontational on this, so we very much appreciate your efforts in this regard. thank you. president vietor: thank you. we appreciate your comments. commissioner: we know for elected officials, that is quite a burden, so we appreciate your time. >> i am on the city council, in a way to draw your attention to a letter that is in your packet, and i would like to make a few points from that letter. menlo park is fundamentally

opposed of using something other, for a number of reasons. being used to alter contractual rights or as a means to establish the price of water. i want to draw your attention to the attachments. this goes through six or seven bullet points that describe the uncertainties in the current projections.

this has the projections for each of our wholesale customers. you will see their footnotes associated with those -- there are footnotes. for planning purposes, some cities took a very hard look at this. they adjusted their numbers. there is many reasons that water use varies between cities, commercial use of water, the weather, and the city should not be penalized for that.

the isg's, on the of. , they are clearly the most prevalent method of establishing water allocation among the whole set of customers. this is by virtue of executing the water supply agreement. president vietor: thank you. and thank you for coming today. we appreciate it. next speaker, please treat >> good afternoon, president

vietor and members of the commission. i want to congratulate them on their thorough and thoughtful work. the city concerns are in letters attached to your package, so i will not go through thosother than to note that we believe that the option four is disproportionately low and impacts conservation-related investments we have made. with that, we have had a chance to briefly review option 5, and we still have some concerns regarding the development process. this is listed in our letter. we think item five addresses some of those issues for us, and we are supportive of option five versus the other options. president vietor: thank you very much. next speaker, please.

>> good afternoon, commissioners. i am peter. option five. the one thing that stands up for me that does seem a little unfair is palo alto, which does have a supply guarantee of 1.96, with purchases of 3.94, is not getting anything more than its isg, and they have 45 gallons per person per day. that is compared to san jose and santa clara, who do not have isg's, but who are getting 4.13, and they asked for 4.5. it seems of unfair that palo alto, which does have an individual supply guarantee, is getting quite a bit less to

customers. president vietor: thank you. next speaker, please. >> good afternoon, commissioners. patrick, with water resources. i like option number three. one city continues to believe that the fairest and most appropriate means by which to establish a supply allocations would be projections. this is by the agencies. also, we believe that the establishment of the projections is the fairest and appropriate because it is the commission's decision aimed at a projection by 2018, it meets the agency needs. it does not establish what class of an agency. because it provides a collective mechanism by which all agencies are protected.

i cannot comment for others on what they submitted with their projections, but i can trust you that we took a very hard look at what those projections would be, and we're still above the supply guarantee. not by much, but we're still above, so the point that we are raising in our correspondents, and we do want to thank staff, so i appreciate it -- we are raising in our correspondents -- correspondence, you need to allocate the full amount. i think that is necessary. the reserve component of thought within our context does not meet the requirements because it establishes, a larger -- it establishes a larger role in a market -- the market.

we believe that a balanced and reasonable approach among competing interests, none of us are going to be happy. the point is, we think we have modest -- what we're doing with our water supply and how we are investing in conservation, how we're managing our demands within the agency. when you look at what is happening with this allocation no. 5, it seems to be somewhat ironic that three agencies stand to gain almost 3.7 million gallons more water. now, is that really their needs? or is that just what balances us out? we of multiple challenges. and this is not to put a situation such as ours.

so thank you, and happy holidays. president vietor: thank you. next speaker, please. if you could speak into the microphone? >> draft five has just come out, so i will summarize the principles, which are that we still stand by draft two, that we think the isg takes precedence over projections. i mean senior water resources engineer, and i am really at going are comments from the november 9 meeting. we still stand by the isg and think that is the most appropriate. there is an interruptible customers that perhaps won't.

-- customer that perhaps will not. president vietor: thank you. thank you for coming. next speaker, please. >> thank you. i am the city manager of palo alto. i want to thank the commission and the staff for a job that i would not want to have. and we believe the we have recorder our objection to most of the proposals. i am perplexed that these options and alternatives keep coming up, and we are not made aware of them.

i am uncertain as to why this is continuing. we started out with several options that came to you in november, and i voiced my objection to the ones that were being proposed at that time. i am not in favor of option four at all. i would have to study and look at options 5 a little closer before i could make comment on that. we are struggling with a 1.196. i am very concerned about the allocation and what that is going to do to us. i believe there was a

presentation to before that if we go over yet -- over that, it could affect palo alto, and i think that is unfair. i just wanted to address that. president vietor: 84 your comments. yes? commissioner: on that point, what are the variables that we need to consider in this? president vietor: did you want to hear the rest of public comment? more public comment, please. >> i guess we are trying to argue a problem that might not exist. we're going to reach 265. the water use is going down.

if the system succeeds, it will be one of the first agencies to be paying the environmental surcharges. we are not asking to grow. we are willing to live within our means at this point. we are not asking that we will need water for growth. our customer base is mostly commercial and industrial. the population in the area is about 10,400. the people who work in our area are also in san jose, menlo

base, so hetch-hetchy is critical to us. we are looking at how we can destroy the economic impact. nobody is talking of limiting the water supply. the agency can take whatever water supplies they need. we're talking but the economic impact. so we are not asking for growth. $220 million invested. santa clara and other agencies in the south bay. we have implemented conservation measures. again, we are down to about 63 gallons per day. for residential customers. thank you for your attention. president vietor: thank you very

much for your time. next speaker, please. >> i am with the city of santa clara. i also have submitted prepared comments. given that we see option 5, i think i would comment on some of the impacts to santa clara. santa clara has been a customer since 1974 of the sfpuc, and though we have seen a decline, we have still been using an average of 4.1 over those 25 years on average. option five, there'll be a risk for santa clara. we would be at risk of exceeding that value. we do appreciate coming up with these options.

we appreciate your time. president vietor: thank you very much. any other speakers? public comment? >> i am with the city of heyward. thank you very much. this is the projected u.s.

agreed it was the best allocation. since then, some agencies with relatively high isg's have allocated to receive more water -- this is the projected. it was the best allocation, some have said. is s -- if sfpuc decides to include this, my area asks -- we benefit similarly. you have heard that our allocation is going to be its projected use. but agencies with higher isg's, they're going to get their projected use and then some.

please give us the same treatment. thank you. commissioner: just for clarification, your area does not have an isg. what number would we use? >> we would take into account agencies that have higher isg's and how they benefit from the inclusion of isg's. one was increased by 10% because of their isg. there should be given to us. i just wanted to finish by saying item five, which we became aware of at this meeting to hey, we cannot support that at this point. thank you very much.

-- at this meeting today. president vietor: thank you. anymore public comment? hearing none, public comment is closed. commissioners? commissioner torres? commissioner torres: we have the first issue, is that we have allocations that add up to over 100 million gallons per day. in the negotiated water supply agreement, that everyone here has signed, we will take a look and see whether they can be permanent or what might happen.

so folks that are saying san jose and santa clara should have known individual in terms of allocation, that is not in compliance with the contract. that is not one of the choices. the choice is either that you give them the entire 4.5 that is the traditional amount of water that has been used. or you reduce them by the average of everybody else and has a reduction of an isg, and that is what we have done in number five, so that seems to be a fair allocation. hayward has the right to have any amount of water that they want. they have a pre-existing contract with san francisco, and

so, they do not have an individual supply guaranteed to respect or to add to or anything. i do understand we can make a calculation, but they do not have one, so those are the three kind of outliers, and then you have people that have supply guarantees. some estimated they will be using more than their guarantee. some would be using at their individual supply guarantee, and some would be using less than that, so it is really how you deal with those people. we have done a variety of ways to do that.

there was the idea of giving everybody what they said they would use, and there were a number of objections to that. they were projections that were used in a different context that we said, gee, since we have them, maybe we can use them. there is some belief that some agencies will look at this differently if they thought they were going to be a basis for this allocation. this is the one number that these there was agreement within and among the agencies. it does have a standing as a

guarantee, and so, we have always tried to figure out how to improve that. if you look at the wholesale supply, agreement, it talks about having a transfer process. if there is not enough to go around with in those guarantees during this interim period, there could be transfers among agencies. i think we were trying to assert ourselves in some way in option four and other options to try to make it easier to be more flexible in how the allocation might happen, should we need to make it happen, but the contract does of the process, application process. it is the transfer process, and it is in the contract. option five premeds as to use what is in the contracts. i am not sure if that helps or not.

>> why would east palo alto have that? commissioner: they needed development to survive economically, and that development would require water. >> and they're looking at going very significantly into development.

you need to fix the among yourselves. >> there does not seem to be anything inappropriate. >> i do not think it is inappropriate. i think from their point of view, they would prefer that we fix it for them. it is several areas. those are the four, with their projections for use would have exceeded their individual supply guarantee. >> the high number for hayward is mainly a pre-existing contract. >> right, they get what they need. i think the distinction is if there is a transfer market, and those that have higher guarantees would possibly sell some of their extra that they may not want to hav that city, because of the way we treated them, would not have the option of selling it, because they already have whatever they need. they do not have something in

addition to that as an allocation. commissioner: while i do not want to suggest what the position of our wholesale customers might be, what i would like to suggest is that what the people with isg's would love -- they have a very preferred position but that others would envy. -- position that others would envy. >> when was that signed? >> 1962. president vietor: commissioner moran? commissioner moran: i have read them and keep reading them as they come in. thank you for doing that. over the course of time, i think that has served to put on the

table all of the issues and arguments that take place, and i do not think there is an and presented argument that we need for our consideration. it has been an interesting and productive effort would staff to get us where we are. anybody who has been listening to my comments knows that i started up by saying that if i got free rein, what i would do is with the isg's, make that equal supply insurance, so why was my preference, i cannot do that. i would prefer to do that, frankly, because it keeps our long-term objectives consistent with our short term objectives. things would be solved within the isa's, if you could do it

that way. i presented it as a dilemma. it created a situation where somebody could use more than their supply guarantee. more than the interim supply assurance.

it is a surplus back to the people who have that. this is a for every issue. -- a forever issue. if eat