attributes, to grow, and the portion of our resource mix from tradable renewable energy credits to shrink. that is expected for two reasons. one is our emphasis on a building out local renewals, and the other is the state law requirements which said that you have to increase your use of bundled resourced and decrease your use of tradable renewable energy credits over time. for our project, our resource mix and a picture looks like this. so you will see the firmed and shaved and the tradable in the dark green and blue over time becoming smaller and a light green, 10% bundled, getting bigger.

we are continuing to work internally and with stakeholders to develop the in-city built out program. that related to agent them item 8c today. we are including in the business terms with shell, provisions that will allow the city to incorporate those city selected resources into the mix that is serving a clean power asset customers. our business terms with shell account for that. in terms of pricing, this is a premium product being 100% renewable, and we are providing it as an affordable product. low-income customers will continue to receive a discounted rate, as they do today. let me talk a little bit about the financial needs of the project. clean power sf will be funded by customer revenues. the kick off of the project will require some financial support. and some of these financial

support points are some of our outstanding continuing to be negotiated issues with shell. for example, we will have to have a reserve that is accessible to shell. we will have to have contingency staffing and consultant funds available for the ongoing operation of the program. we're working with shell on what financial responsibilities each party will have in the event of a default. with both parties looking to be made whole in the event of a default by the counterparty. with respect to regulatory and legislative issues than, we need to have a decision from the california public utilities commission that will determine for us what our performance of bond requirements are. that is another financial draw on the program. it is an unknown. it is basically a method for calculating the amount of cca a

provider or opposed to cover the cost if customer -- of customers abruptly returned to the utility in the event of a disorderly dissolution of the program. not an outcome we expect, but certainly one we need to prudently prepare for. that is an unknown number at this point. we're also continuing to support senator leno's guidance to the california public utilities commission on cost-sharing and holds utilities to a code of conduct. so that gives a broad overview. i will be returning. we will be returning to you on july 26 with the term sheet. we will be seeking authority from the commission to negotiate the contracts substantially within the framework that i have just described to you. and taking that to the board of supervisors for their consideration in august and september. thank you. >> commissioners, what would be

helpful today for us is we'd like to make sure that once we come back here on july 26, we have something that would make you want to vote for it. so to the extent that you have questions or concerns, that would allow us two weeks to answer some of those questions or come back with a more definitive response. we would love to hear that today. between now and then, the goal would be that if you have any kind of concern you can tell us about today, we can try and get the information to you by that meeting. >> recently had the first question from commissioner torres on how many commercial accounts we have in the city. >> i did not capture the schedule you are anticipating. it is a term sheet for july 26. >> correct. >> then what? >> we will be going to the board with that term sheet and contract for consideration.

we will need to opposite -- also bring the contracts with noble. >> just a minute. term sheet and contract with and go to the board. so do we see the contract? >> the idea is you it's about the term sheet in contract. the term sheet first of the contract later. >> yes. commissioner torres: ok. and then and noble follows? >> yes. and then as we bring the information forward to the board, through the commission to the board, we will have to have the necessary appropriations approved by the board. this is the commission and the board. >> and then whatever is in those contracts will have certain triggers and we can go forward with it. >> ok. a term sheet and contract for rishel on july 26, the coast -- >> the term sheet on july 26 because we want people to have it before we finalize the contract.

the contract will be later. >> term sheet with noble -- >> it is the back office stuff that is interesting, and that can come any time in the next few months. about the substance of the business deal. >> right. >> ok. for some reason, it is not competing for me. when do we see a contract with shell? >> if the term sheet is approved and you're happy with the terms, we're starting to work on contract language. it is not complete. if the term sheet is approved, we can bring back a contract hopefully as early as september. it depends on the responses. commissioner moran: with both noble and a shell, it will be term sheets first. >> with noble, there may not be any for one. a should be much more

straightforward. it does not have the back office staff. it might be that a contract is easier to bring. >> i appreciate your forbearance. >> absolutely. >> we're talking about this coming to issue late summer, early fall. >> the goal would be to be able to produce and have customers next summer. and so we're kind of working through that by seeing if we work through this part here, it allows us to start setting some stuff. then we work with pg and e. in terms of records and the customer notifications. then you have the notice before you. it is working back from that. it is also a level from the board of supervisors of interested in seeing how it is coming, so they thought if they saw a term sheet, there would be an ability to see where they are with negotiations. president vietor: there might be

some questions from the board. if we get the go-ahead on the term sheet, it could come back of the board has significant questions or concerns. >> the board would like to see a term sheet from this commission on july 26. there will be meeting on july 29. that would not be a normal meeting for them. they would like to see something they could recommend to the board and introduce at the beginning of august before the board goes on recess. that would then allow the board to hear it sometime in september. >> ok, thank you. commissioner torres: i wanted to make sure that what provisions are we making to notified the rate payers of this process? >> we have already conducted quite a bit of in formal outreach to neighborhood groups, to individuals. we're tabling at fairs and as such through our communications office and through lafco's out

reach officers. we will produce a marketing and outreach plan. we expect to comply -- we will comply with the state of california is required notification process, which is four separate notifications to each customer. the first two medications have to happen 60 and 30 days in advance of the offer of service -- the first two medications -- and notifications. the next two notices have to happen subsequent to serve as having begun. so each customer, each account holder, will receive four separate notifications from us. we are envisioning a very broad campaign, a multi-media campaign, making sure, with an objective, that is an informed choice the customers are making.

commissioner torres: so they could opt in or out? >> correct. >> and once they got in, they can opt out? >> yes. president vietor: i have a couple questions, too. 340,000 customers will be invited. >> accounts. >> accounts will be invited but 230 of those will be invited to opt out. >> let me make sure we have the numbers right. the total number of residential accounts is the 340,000 number. we will only formally notice 230,000 accounts. president vietor: about the program? >> correct. anybody can join who wishes to join, but for purposes of this specific state-required opt out, we're going to target 230,000

customers. given the survey information we have received, we expect a number of those to opt out and to have approximately 75,000 accounts stay with us. president vietor: i want to hear this again. i know that in past experience, the survey results differ quite substantially from what the actual program showed, as far as opt out rate. can you address that? because it seems like you're basing the program on some of these survey results. but what if there is a big a bite? >> that is why staging the opt out notification is important to us. because if we are wrong on how many customers choose to opt out, we want to be able to reach out to more customers and backfill so that the commitment level we have the best matches

the commitment we are making with shell. >> so of people opt out at a lower rate than we expect, it would be great. if they opt out at a higher rate, then we have this reserve a customers to back fill its. president vietor: right. in the marin, 8,000 are currently enrolled. do know how many were invited? >> i do not know how many, but they had about a 20% of doubt rate. they are light green programs. -- they had about a 20% of doubt rate. the dark green program was an opt in the program. remember, their program parameters are different than ours. president vietor: the low-income would still have a reduced rate, but it would still go up, right? >> it would be a subsidized

rate. the generation co our service is higher than the generation component of pg&e's service. the overall discount will be comparable. and we're working out the details on how that discount will be applied. president vietor: that will be on the term sheet as well? >> it is more of a rate-making issue. we have discussed it with shell so they understand. but it is more of a rate making issue. president vietor: isn't that going to be part of the financial discussion of what needs to be put up up front and the numbers will play out? >> yes, but what the total revenue stream is that shelled needs to support the program -- that shell needs to support the program, and the dividing up peace is something we have discretion over. >> and you'll be getting a rate package also. that is not until early next year.

president vietor: so that is not going to be part of the terms are contract. >> he will be able to make a decision about how you want the rates to look as long as the result in the total amount of money that we need. the regular rate-setting process of the city. it will go to the board to this commission, with the authority of the board of supervisors to override it if they choose to do so. >> great. i want to make sure our low- income customers in particular, especially in the cca program, that that is really addressed in a comparable. can you talk also about the necessary appropriation that is going to need to happen? you have a sense of how much that is? >> under negotiation at this point. >> that is a big hurdle we still have to cover. there are certainly items like reserve accounts, cash flow, those kind of things, but the real issue is what do we set aside for the potential to

falter the termination. that is the crux of our in tense negotiations now. president vietor: is that tied in with the state negotiations around the bond posting issue? >> it is hard to say. is the california puc and their regulatory body. we are unclear when they will be making their decision. we are certainly in conversations with them. president vietor: well is part of our financial picture, it is not part of our negotiations with shell? >> shell is not overly concerned with that. i have not heard concern from them. president vietor: what seems to be the main barrier? are there other barriers to get a term sheet that you would be comfortable with that the staff level? >> it is the financial issue. >> that is the biggest one. >> and separately, the

performance bond. the financial commitment that the city needs to make are the hurdles for the programs. >> and that shell is asking for? >> yes, and that will be imposed on us by imposedcpuc. >> there are a lot of details, but that is a large discussion. >> commissioner moran. commissioner moran: will we see the financial picture for the basic initiative, and i do not mean legal an issue to, but the effort? >> yes. >> we have a performance. commissioner moran: it is important that we not jesse the negotiated terms but also how that fits into the larger beast and what kind of pro forma as we're looking at for the city as a whole, assuming that noble works out and everything else.

in essence, taking that first step, we are saying this is something that we think has legs and that we should pursue. so we need to have at least a good sense of what it will look like as we contemplate that. >> right, because this is you giving us the authority to complete negotiations for a contract to bring back to you. and if you're not going to be happy, it is better to know it now. >> it seems like this is a significant stage of the cca program. if there is any way we can get the term sheet somewhat in advance of the friday before the tuesday meeting, that would be quite helpful for individuals who have questions so we have something we can work with at the meeting. commissioner moran: or if it really looks like an awful lot of material to digest, then we can set up presentations and discussions with action following.

that may fit this one as well. but at your discretion, given the size and nature of the beast, whether that is appropriate. >> happy to be available to do briefings in advance of the meeting on the pro forma. >> and i want to make sure that belasco is briefed on these terms and their input is collected as well in whatever form that needs to take so we're not going off in the direction they're not comfortable with. >> my recollection is that the schedule also calls for a meeting with the clean energies to words. >> yes. >> before the july 26 meeting. >> so this is not an action item. >> really is to get your input. president vietor: other questions or comments? commissioner torres: as any member of the board did the candidates? but said the board she? no. commissioner torres: so we're

still in flux? >> yes. thank you. president vietor: thank you. we will take some public comment now on item number 19. >> good afternoon, commissioners. first, i will say, before you, my time, since he shifted 19 to much earlier in the agenda, i literally had to rush in here as fast as i possibly could to get here. so for public participation, it would be good to try to leave the agenda as written. to my comments. i have a lot to say and only three minutes to say it. the first thing is, item 8c, which you continued earlier, is actually quite vital. and if you can revisit that now that ann is here and vote to approve it, it is very important, because we need those contractors to be about to be tasked by your staff to do extensive preparatory work that

well informed things like the term sheet. what i am specifically referring to as the preparatory work towards the bill about that advocates have been pushing so hard for. -- the build out that advocates have been pushing for. on that note, please understand that at this point, advocates and the sfpuc power enterprise staff and representatives of local power have been meeting in some very boiler room type meetings to try to hammer out the scope of work, and is an extensive scope of work, to prepare the abilities to do rfp's for renewable and efficiency in san francisco. and we have been saying for years that only when this scoping of what we will build out in san francisco and will in is completed, will we be able to sufficiently understand things like rates?

and ability to feed into things like h bonds or revenue bonds? advocates have been pushing hard and meeting with a considerable amount of resistance from staff to let us run with this, getting this whole scope of work done. so the key theme that we need you to understand is that if the term sheet is approved very rapidly and that kind of locks in a structure for an agreement with shell, that that will be to sued -- too soon. we need until january for the scope work to be completed on the build out so it can properly inform what the rates will be like and what all the different variables will be for the cca and clean power sf as it rolls out. we need to let you know that

there is a big red flag here. we're not happy with where things are at. and there is a pretty big disconnect, and we need to make sure that that disconnected is overcome before read jump the gun and pass a term sheet or a program description. finally, to the program descriptiondescription itself. it looks to me what staff is proposing is an informal widthwise into the program -- opt-in to the program. [chime] only 70% took that chance. opt-in is a very bad way to roll out the program. it is liable to get people enrolled and that could kill the entire thing. thank you. president vietor: just to follow-up, i do not think it is an opt-in program beginning --

program. >> it is opt-out. all san franciscans can participate from day one. if you opt out, you are under three years in current regulations. it is one chance, yes or no, on the program. >> so, you are automatically enrolled? >> yes, you are formally enrolled unless they say yes or no. unless they do one of the notification points i mentioned earlier. >> they will be formally

offered services? >> correct. at the end of the day, we expect 7500 account holders -- not people. bayh you are going to have a smaller program than you otherwise would -- 7500 account holders is larger, by far, then what marin is offering. president vietor: can i ask a follow-up question? don't they have a substitution claus? >> yes, they have a clause in their contract with shell that allows them to some substitutes resources through negotiation or construction. president vietor: is that something we are considering as well? >> yes. we are providing a similar opportunity. the fact that we may have more customers, more accounts than

projected through our opt-in and in the event we are wrong on the rates of opt out may allow us to procure additional resources above the 30 megawatts commitment remaking with shell. president vietor: if this work is complete for build out, hal will that fit in? >> is not need to be addressed in our contract. in the schedule we are talking about so far, having nats -- that room in the term sheet will be provided their. we are on a separate track, working on how we're going to procure those resources. we have had a number of meetings

with stakeholders about how to do that. then we are also working on it internally. that is moving on a parallel, but separate track. president vietor: thank you. more public comment? >> good afternoon, commissioners. i just want to reiterate mr. brookes points -- mr. bruck -- brook's . . as soon as that scoping is completed, we will be better able to understand those rates. basically, this is a comprehensive analysis of the potential short and long term employment options that will be offered by the program. this includes workers training, development, that will ensure

local hiring and job retention numbers and emphasize a robust training. this also leads to other things such as local businesses, and also the ability to scope opportunities for local contractors. and especially in underserved communities. thank you. president vietor: thank you. additional comments? commissioners? ok, next item, please. i guess we're going to return back to this discussion. where are we -- >> madam president, regular business agenda item 9, a positive -- possible action to approve the project level scope, schedule, and budget of the june

2000 and revised water system improvement program and directs that to send a notice of change report to the california joint legislative audit committee, the california department of public health, and the california seismic safety commission in compliance with california assembly bills 1823 and 2437. >> president vietor, commissioners, good afternoon. could you turn on the projector? thank you. we are seeking commission approval to revisions to the program, a process we go through every couple years. it is common industry practice to periodically adopt new schedules and budgets for the program, the magnitude, and complexity of the water program.

the packets for today's public hearing include a number of documents that do support the changes we are proposing to make on the program. i am happy to report he will not see any surprises today. these changes are consistent with what i have been reporting to you and the board of supervisors through my quarterly reports. except for a few minor changes, our proposals are just hanging as the forecast -- are just saying as the forecast from late may as part of the quarterly update. we are in deep implementation of the program with ongoing construction projects worth over $2.5 billion throughout our service area, and we're very proud of the work that is being currently accomplished on the program.