creating profitable contracts with people, how are we allocating this? we might choose to allocate this to the solar -- if we save energy in this building, we have a hard time recouping the cost because we don't have anyone to sell it to and a higher price. the options are limited. the more options that we can create to have high revenue markets, the more we can afford to do but in the conservation area. it makes more sense to preserve that capacity which we have fought for four decades. >> let's go back and look at a

nature that we can explain which way we believed it is, if it matches the explanation. >> you indicated the formula gave you the flexibility to deal with the methodology. hunters point might be paying more than most rate payers. >> actually for the relevant comparison, this is what the rates are compared to pg&e as compared to the rest of the marketplace.

we are looking at what we can do and what we can provide for a green product as well as provide incentives for economic redevelopment. we are looking at the ability to be able to propose this cheaper rate back and provide a clean product. >> in terms of privatization, i also agree with respect to conservation issues and where we can't find the necessary funds to do that. we can help the ratepayer achieve a more competitive rate. is there a formula you have devised to determine that? >> this is on slide 16 or 17. we did look at that because we took your comments for prioritizing and providing a

green sustainable product and also a stable rate. that is what we took. we turned this into a staff proposal. this is a great side -- segue. e*trade player class will paying for the green products they're getting and it might be a nice thing to segue to mr. perle. >> thank you very much. good afternoon. once the independent rate study

is completed, what staff does this takes the information and compares it to information, industry trends, that kind of thing. this develops a rate proposal for this commission. there is a residential side and the commercial side that i will look at. we work on this project to make sure that the policy priorities were taken into account. what you will see on the next couple of slides provide high- quality services promoting and green sustainable city and expanding our to occasions as well as investing in our

community. looking at the policy initiatives and focusing on our sustainability, resources conservation, asset management, the investments, looking at the redevelopment which is pertinent to the retail rate as well as work force development, we wanted to make sure that all of these things were on the table. on the retail side on the reach of residential side, the goalie had was wanted to make sure what we are proposing to you came in

cheaper and greener than the alternative. we were able to achieve both of those things. this provides an economic area because you probably know that we don't have any customers there on the the the retail or the customer site. this is an economic stimulus for the redevelopment areas. adding to years to promote conservation, the first two tiers represent the vast majority of the kilowatt hour usage and the vast majority of the customers. that third will provide the opportunity of finding additional green power purchases so that by the first day you should be able to provide 100% green and clear energy. those funds will fund the green

power investment fund to purchase additional green energy. there will be conservation and rebate type plans for customers. this helps to set aside some of the problems with a great shock this is recommended by the rate consultant and trying to fight the cost of race. that means the cost during the summer would be higher than those during the winter. we will propose low income

discounts of about 30% off the retail rates that will describe any moment as well as the medical assistance program for those customers that relied on electrically powered devices. in terms of the rate proposal perspective, what it shows is the proposal on the right reflecting the 10% savings over the pg&e rates. this is different than the rate structure from pg&e which is being consolidated into a three tier system. they all have the same numbers. they represent that those are in a single tear. our customer service charges

include customer service and billing related type expenses. the discount would be 30% off of the rates. this is not so much a rate adjustment as an expansion in the kilowatt hours because they will have a higher electric demand. what this looks like for our budget and cost of service, cost of service as described is what you see in this chart to the left. on top of that, we are lower in the contribution between 1 cents and 2 cents per tear as well as the -- contribution. if you look at the capital fund column, you will see the vast

majority of that rate. this will fund future green power purchases. the total residential rate proposed is about 24 cents. we would like to show you what the average bill looks like. this is the estimated average customer use the bill per must between 52 and $77. on the commercial side, many of

the reactor before similar in terms of the various programs but the actual structure is different. there is a single tear which is the standard until the the approach to rate setting for commercial customers and you differentiate different uses based on season, the summer season which is a little bit pickier will be a little higher than the winter season which is from november through april. this is providing a 10% savings as proposed by pg&e. the capital investment arms provide an economic stimulus rate for providing customers into the regional mysterious and funding our public goods benefit programs and the stabilization reserves. pg&e's rates have 11.3% rate of

return included in their rates so that is where we can provide some cost advantage because we're not looking for profit. specifically, what the rates look like on the right side for reflecting the 10% as proposed pg&e rates reflect the difference between the winter and summer variants and the customer charge which shows the raids on a daily basis which is between $13.20 dollars a month. -- $13 and at $20 a month. 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