powerhouse line, what does the $69.4 million left allow you to do? >> we have three major power houses. they are aging. they have to be rewound. they have to have a variety of things happening to them. we have put enough money in to hopefully keep them working and in proper condition. if we had more money, again, we would remind those. they would make additional energy, which could be used in the city, or as clean energy and could be sold. the ability to make those powerhouses more efficient and be able to generate more clean energy is what we're giving up there. supervisor chu: i see. you had mentioned the changes in the energy efficiency/a renewable energy portfolio, which is the improvement to city facilities. looks like you have taken a pretty even reduction across the board, so we are taking a wise

percentage from renewable generation. >> that is right. supervisor chu: ok, thank you. >> the next issue i wanted to talk about was the subsidy that hajji -- hetch hetchy provides to city and related parties. supervisor chu: could you actually -- i think this is act like a pretty important slide, and i'm sorry i missed it. the structural shortfall, can you just walk me through the numbers we are seeing here and help me understand what it is that is driving the structural shortfall? >> yes, supervisor. if you go back to slide 6, it should be there. eight is the shortfall on the

five-year -- right, sorry. hetch hetchy tends to produce about $25 million in what you might consider to be net profit each year. when you take into consideration what the revenues bring in and take the normal operating kinds of costs, you have about $25 million left over. that is not really net revenue because it has to pay for all the power-related capital programs along with any programs we want in san francisco. that is what pays for the energy efficiency, of those solar, city facility kinds of programs. hetch hetchy, for many years, was not taking re of its upcountry assets. five years ago or so, we started having some powerhouse failures. we have been working on the

water system improvement program, which has allowed us to shut down the system. we shut down the mountain tunnels last year for the first time in about 45 years, and we were able to finally go in and assess that tunnel. what we are finding is that the tunnel is starting to be great. that tunnel is starting to -- there is the inside of the tunnel. it is just blasted through granite in many cases. the granite is starting to fall into the water. the water starts to become more turbid. if we do not stop that, we have the possibility of having to filter hetch hetchy water, which would be an incredible expense because we are one of the few agencies that currently does not filter water. we treat it, but we do not have to filter it because it is so pure. we start looking at what it takes to start taking care of those power houses, those tunnels, and the facilities we have throughout the mountain region. our capital spending was going to go up, and last year's 10- year plan, we said, "tell us

what you think you need, and we got a lot of suggestions from staff, and that was put into the plan. this year, we said we cannot possibly do all of those things, so start making cuts. we cut $224 million. we actually had to cut closer to $300 million because we are still out $62 million on the 10- year capital plan. that means that by 2014-2015, we either have to make additional cuts, or we have to start charging city departments more money for the power revenue. if you look at that figure in 2013-2014, you will see that revenue fund capital is going up by $50 million. the biggest portion is the realigning of the mountain tunnel. the problem we have right now is that we are cash funding haji's capital because we cannot issue debt. we cannot issue debt because we do not have a reliable stream of revenue. the debt-rating agencies understand that we are not

charging even our cost to deliver water to agencies in the city and school districts, so since we are not even recover our costs, they are reticent to even give us a bond rating, and without a bond rating, we cannot issue debt. unless we do something about the rates that allow us to actually end up being able to bond for haji, we will have to shut down a lot more in three years. if we are able to stabilize our rates, start to grow our rates, and be able to issue debt, then this picture becomes appreciably different over the long run. supervisor chu: thank you. >> which is a good segue into this slide. the hetch hetchy system is a wonderful system. it provides good, clean power.

that power is given at incredibly subsidized rates to general fund departments and school districts. for example, the general fund pays us about $10 million for power every year. it costs us $31 million to generate and deliver that power, and if that power was being purchased from pg&e, it would cost about $47 million. similarly for the unified school district and community college, we are charging them about 27% of what pg&e would charge. less than 1/3, and less than half of what it costs to deliver power to the community college and school districts. should these be reduced any more, the discussion we just had about the need to raise rates and the discussion about bonding for hetch hetchy or not being able to take care of the infrastructure -- any reduction in these rates would simply make that entire conversation worse. if anything, we have to have conversations over the next few years about increasing those

rates to start to least try to recover our costs. we never think we should be making money the way that pg&e makes money, but the idea that we are paying out a subsidy of this size and not even recovering our costs jeopardize the entire infrastructure of the system, and that is the numbers you have before you. for the community college district, i realize they were asking in some venues that we not charge them anything. right now, we charge them $860,000. if we charge them the cost to deliver the power, it would be $2 million. if we charge them what pg&e charges them, it would be $3 million. we encourage you to not make that decision. >> i will recognize myself. if what some folks are asking for for city college is the reduction were granted to the

school district, which is also struggling catastrophically, as well as other enterprise -- or other departments -- for example, an m.t.a. or any of the other departments also have been catastrophic budget situations, what would be hit be on hetch hetchy? >> good question. you are right -- the community college district has certain issues, obviously. so does recreation and park, sodas unified school district. in total, if they were all relieved of and responsibility to pay their electricity bill, that would be $12 million worth of a hit. i was saying about $25 million was produced. if that one away, all the programs in the city would have to be ended. supervisor wiener: i ask that because there are many of us who are incredibly supportive of city college and are, frankly,

disgusted with what is happening in sacramento with respect to city college, and other critical government functions. but i just think it is really important to always take the broad perspective that unfortunately in this budget times, it is a 0 sum game, and that we need to -- you cannot just look at one thing in isolation. you have to look at how this would impact the overall system, and i know that if we do this for city college -- and i'm looking forward to hearing the public comment, to hear all perspectives on this, but i am sure we will be getting a request from other departments. if i were the school district, i would have sent a letter already. >> there would be no reason not to. supervisor wiener: thank you. >> that brings us to a discussion of those solar. the go solar program, because i

know some of you were not here -- was supposed to be a 10-year program. the program was supposed to be funded to the tune of between $2,000,000.5000000 dollars a year. for the first three years, we funded at the full amount of $5 million. as of a few weeks ago, $13.3 million have been requested. that has changed by about $100,000 in the last week or two. we now have, as opposed to $1.4 million, $1.3 million available in the program as of today. what that means is that even though the program was fully funded at five mills -- so- called fully funded at $5 million, we have only had requests for less than 34 $5 million in funding in the current year, so it is not being used to the tune of $5 million. one of the items always talk about is the job creation aspect for the particularly disadvantaged low-income workers. in the first two years of the

program when we spent $10 million, 59 jobs were created. about 10 of those people are still working. in the current year, about 13 jobs were still working. out of the 32 jobs were created out of a $15 million budget item, 23% are still employed. when we say there are 72 jobs created, that is anywhere from a week, two weeks, or a year. it is the number of people, not the full time equivalent of a number of people for a year. this information is what we receive from the goals set -- a solar community -- which -- the go solar community. supervisor kim: i actually got this morning data that 400 jobs were created. i know that that is a very large discrepancy, so i was wondering if someone could address that.

>> thank you. assistant general manager for power. when we compiled the information that the general manager just presented to you, as he said, we worked with the vendors of certified installers to compile that information. we also worked with oewd, and these numbers were confirmed as recently as this morning to the numbers that are accurate representations of the disadvantaged san franciscans currently employed. supervisor chu: the number is 13 jobs created this fiscal year, 72 total short-term and long- term? >> yes, with 23 hires still employed over the duration of the program. >> we have not seen what ever you have, but we work closely with them on this program. supervisor kim: could summon clarify for me when this number

came from? - danny was a came from the mayor's office. perhaps what we can do is request that the mayor's office workforce development folks do come and address that question, and in the meantime, perhaps we can continue with the presentation. >> thank you. >> the next slide is a slide of the most successful installers and the number of low-income people that they have hired by their own information at the end of april. you will notice that luminalt got $2.4 million of the program. of the other larger groups below them, they have somewhat less than that, but it is a total of

21 for the current certified installers, and there are two more that were hired before. the installers are not in the program, but we are still tracking the at the those other two are still employed. we do not have good tracking on what may have happened to others that were not continue to be employed. the other thing that i think we need to keep in mind is the other programs i talked about were programs that are a direct benefit to the city. they keep the power lines up. the key power houses going. they work on city facilities for energy conservation, energy efficiency things. they put solar on the roofs of city facilities that generate power that the city and county of san francisco uses. this is the one program that has no direct benefit to hetch hetchy. the people who receive the benefit are not our customers. they are the customers of pg&e. the power they are currently using is not our power. the power that they say it is

not our power. the power that they generate does not come to us. nothing related to the current power or the power that is generated has any connections from a business perspective with hetch hetchy. that is not to say this is not a globally good thing to do, but it has no business connection with the hetch hetchy system. supervisor wiener: i'm sure there is unanimity in the room of the importance of solar power, so my question is -- if we allocate $3 million instead of $5 million for next year, and you said that there is $1.4 million currently -- $1.3 million. let's assume $1.2 million by the end of the fiscal year. with that carry forward into the account? that would mean $3,000,000.10 $0.2 million, total of $4.2 million? >> that would be compared to the current year, they would have spent $3.8 million.

supervisor wiener: for the folks coming to advocate for the increase, i would appreciate if folks could -- maybe some people could address that issue. in other words, if it is $3 million, plus the $1.2 million carryover, give or take, why would that be insufficient, given the current year's usage of $3.8 million? i would appreciate the perspective on that. >> i think the final point on this item, and like, is that you're talking about a sustainable universe, the very first thing you do is you do energy conservation. you always do conservation and efficiency before you do additional production. you do not build another dam. you use less water. you do not build other production facilities. you use less power appear this

program produces more power, and at the same time, we're cutting programs that reduce the need to have power by reducing the amount of money we're spending on energy efficiency programs. that is not the right way to be thinking about how to make this a better world. the last item is what is called the bureau's. there is one new program of community benefits. juliet ellis is our new assistant general manager for external affairs, and she is starting a program for jobs, environmental stewardship, land use, and community benefits that will focus the efforts of the puc on the people we impact the most. as you know, we are planning on doing a major sewage system improvement program, particularly. we have major impacts on communities in the bay area, so we're focusing our efforts and increasing our efforts to make sure that as we impact these communities, there are also positive impact. you will find three new

positions in the budget and additional funds to bring these programs into fruition. ms. ellis is here if you have any questions on this programs. the final discussion based on last year's -- a lot of discussion last year in terms of local hire, the puc has been extraordinarily supportive of the local hire legislation. we have been the ones spearheading the work, and we hope to get contracts out soon that have local hire requirements. we are increasing our capacity to make sure that we go out and are able to get people, that we hire them and track them, and also, that these are not flag drop jobs in the field for a week or tilt wheel, but that these are real jobs for people. we also have a real interest in making sure that our regional partners are treated well in this. this is a regional program, especially for the water system improvement program. if you recall, last year, we added a substantial amount of money, so the budget now puts

the mayor's office of economic workforce development at 15 $5 million. they were not able to spend all that the first year because of startup time in terms of hiring people, so we have taken advantage of that and recently signed mou's with three job training organizations in the area for $100,000 each to get more training and more jobs. we are now working with our partners on the project and providing money so that they can additionally help us hire people and work on jobs. finally, in terms of a pilot work force program, there are programs that we do and projects that we do that it is often difficult to hire people. one of those tends to be tunneling. there is not normally in a tunneling work in the bay area to sustain the local work force, but we're doing a lot of tunneling in the next few years. we had a class three months ago, but we brought in by people from alameda, five from san

francisco, five from san the tail county, and can ultimately passed, and they are working on projects during tunneling in the bay area pirie two started recently on the sunnyvale tunnel in the sunnyvale area. we're working closely with the laborers union and working with the 3 job training organizations, we are hiring people from getting people trained specifically in work for underground close containment work, and we are trying to place them and schedule the training so they can get real jobs as opposed to training people who remain unemployed. supervisor chu: thank you very supervisor mirkarimi: thank you. director harrington, i would like to ask a couple questions regarding the go solar program and the city's approach. most of the solar installation

does not go into the -- to our own system generated by san francisco, why isn't pg&e stepping up to the plate and providing more subsidy to the very people who should be benefiting so that the energy that is generated is going into the pg&e system? why is it that we are actually helping pg&e? >> that would be a pg&e question. i do not know that either, supervisor. this is not the kind of money. supervisor mirkarimi: let's go to that point. i think it's a very important statement. i think you really know and no best that we are trying to advance something that the monopoly utility is not really on the level that we would like to see. isn't that correct?

>> yes. supervisor mirkarimi: has there anythen any return comment from pg&e? i have looked at their profit statements. despite a series of strategies and misfortunes and costly endeavors, like bad campaigns, like prop 16, they seem to be doing pretty well in the profit margin. >> good question, supervisor. not to speak for pg&e, but in many ways, they act as if locally generated solar is in competition with them because they cannot sell it. if you put in a solar installation on your house and you generate excess power, you don't get paid from that from pg&e. they're getting benefits from

this and they provide no funding for it. the other point to keep in mind is that they do collect funds for a variety of different programs that we think are beneficial. we have been trying to get more control over those funds, also, so they're not able to spend money in that way. so that we have the authority to direct that money and spend and how we would like to. we have been unsuccessful at california puc so far in trying to do that. supervisor mirkarimi: in the go solar program and san francisco's determination to be a leader on this front with regard to the green jobs phenom -- and i was on budget committee when this happened. there was a lot of enthusiasm for us to bring this program on line politic. lee speaking, the term "green

jobs" became very much a mantra term. while i very much support the program, i think we should have a more honest discussion. i'm still not impressed by the term "green jobs" in san francisco or frankly, anywhere in california, because i do not think it has lived up to the term. i want to be careful. i think it's important that we continue to invest in the '80s of advancing a work force connected to renewable energy infrastructure, it does not seem to be the way we would want. i want you to be able to sort of opine. >> i guess i would agree with you, supervisor. i think we all have that hope that we will have local jobs, jobs for disadvantaged workers, green jobs or otherwise.

green was the thinking. it has not panned out in my mind, either. it does not mean we give up on it. this may not have been the best strategy. we have to keep looking for ones that create more jobs and better jobs for people that are low income people that are entry level into the work force. supervisor mirkarimi: should we be scaling down our expectations in some ways so it is a more intellectually honest discussion? when we talk about subsidizing in low-income areas, like the southeast sector, which has been degraded by environmental impacts. it really felt like two or three years ago that we were on a promise that this was going to really deliver. it has not delivered. i do not think that anybody's

fault, but i think we should be clear about how real this notion is of green jobs. >> again, supervisor, this has not worked out as much as we would like it to work out. i'm not willing to give up on the idea. if you recall, last year's budget had $8 million for l.e.d. streetlights. we are planning on replacing all the lights in san francisco with more efficient, greener lights. we could have gone the old fashioned way. probably would have been an outside vendor. we would have fired the standard folks. instead, we chose to break down the job so that we are going to have one vendor supply us with the lights and then we are going to break into 10 micro-benderve.

local people do that work. that's the benefit of doing it that way. i would rather try to change how we do it then give up on it. those people will end up being trained to do work related to lighting. they will be good jobs that last for a while. again, we tried different pilots. we tried different ways. if this does not work as well as we would like, we try something else. supervisor mirkarimi: all right. i appreciate that. this is also a question for the leaders in the community, who i know will come up in public comment, to help answer this question. what needs to happen in order to really return back to the objective of having an accountable, and verifiable, robust go solar program in -- robust green jobs program in san

francisco. supervisor chiu: is oewd here yet? supervisor chu: i believe they're not here yet. supervisor chiu: i understand they're going to come shortly. from my perspective, the numbers for economically disadvantaged workers are very low and quite troubling. there are ways for us to consider how this program can be changed or tweet -- that would be an interesting conversation. mr. harrington, do you know how many solar panels have been installed as a part of the go solar program? >> i do not know the number of panels. there have been approximately 1300 installations. i could make a guess of what the average size would be. supervisor chiu: i know you had an op-ed yesterday where you talked about how energy efficient programs are much more

efficient than the go solar program. can you explain that concept a little bit? >> sure. if we spend money to go to the police department or the fi re station and we change out their lighting, it means we will produce less power. we can sell the power and have of that money to programs we want to do. if you're looking of the need for a new heating and ventilation and air-conditioning system in your library, and we can provide the money to do that, you end up saving taxpayer money that would go to the library, and you have a more efficient way of providing for heating ventilation at the library. if you're looking at the general goods for greenhouse gas emissions in san francisco, if you took the go solar money and you gave everyone who had a refrigerator that was more than 20 years old a new