of having hetch hetchy for the general fund pay for startup costs, how would it look if we adjusted the program to perhaps make it a little less screen, but still charge the same rate? that would still be higher and better and more green than any other marketplace product, but nevertheless, this does that for you. what it shows is that the very top the renewable portfolio of not being 20% minimum. then that goes all the way through to 100% to the far right. the far right column is the proposed program that mr. campbell walked through with you where we would need a customer rate of 11 cents per kilowatt hour. for most customers, this would be pennies per day or less than $1 per day to be able to for

dissipate in 100% green product. however, if we needed to recuperate at $19.5 million over the 4.5 years by de-greening the program, it does not generate enough cash. it would only generate $7.5 million needed to repay $19.5 million. this cannot be an answer in and of itself, and that was a question the commission have had prior. the other option we looked at is it the ratepayers pay for it themselves, paid for it not at 11 cents, we just raise the brake a little bit more to be able to provide 100% green, and also recover $19.5 million over 4.5 years. what this shows is we would need to do an average customer rate

of 12.7 cents, and that would mean about $9 per month and cost for customers to be able to have 100% free product. and --- green product. it is by far the largest single group of users. if you go to the next largest level, which takes as well over to half of all of the residential consumers, $18.90 per month. the good thing is we could provide 100% renewable product. customers could pay less than $1 per day to be able to choose and select into that. that would actually pay for itself and cover the $19.5 million. it is one of the possibilities. the other possibilities mentioned in the past, but your commission as well as san

francisco, is that we could look at tapping into fund balances to the degree that we have cash between now and june 2014 s still projected for the general fund could look at general fund reserves as one of the funding sources. those are four items are going to be items that will be before the policy makers on this choice. de-green it to pay for it. keep it 100 percent signed green and up the amount to pay for it. that creates the amount -- the need to adjust that unbalance it sooner or the general fund could look at paying for the startup costs. those will be for discrete issues that u.s. policy-makers will want to consider. >commissioner avalos: when we

talk about reapying 19.5 million, that assumes how many customers? >> about 75,000 customers. to put that in comparison, we have 316 megawatts. this would be assuming megawatts of load. 75,000. because we are very good conservationists here in the city in use very little water, very little electricity on average, that is why the average bill impact is a very small number. commissioner avalos: we're not sure how long it would take to get to 75,000 customers? >> the assumption would be the noticing and invitation to be in it would be large enough so that

we would end up with at least 75,000 to use 30 megawatts of load. that is one of the key points to the contract as well that mr. harrington said in previous meetings. we have tried to take a product that to mitigate risks and make the smallest -- startup costs as small as possible, we have tried to do that in a way that the risk of not being successful is we think very small. we basically have taken the assumption and gone from a market of 360 megawatts down to an assumption of only 30 megawatts of assumed participation. that allowed us to shrink the startup costs and termination payment down to this very small $19.5 million total number. >> vice-president. >> vice-presiden

vice-president mirand: this goes to the question of where does the money come from. in the case of the hetchy fund balance versus the general fund, those and that being the same thing. in that they're not courting money. we basically give everything that we generate to the general fund through discount rates. if we have to increase manciple ratunicipal rates in order to cr this, then it deprives the general fund of that money as well. it looks like the way to follow through is an reserves we have to front end any risk of that we carry, in essence, is a general

fund obligation. did i get that right? >> i think that is a fair statement. slide 12 shows you what the magnitude of the problem was, regardless of whether cca is a good idea at this time or not. there are very few choices except for power rates and cutting costs. in the budget and 10-year capital plan that we performed -- presented, we are ready cut over $220 million worth of capital needs in the last 10- year capital plan in order to help solve the structural support paul -- short fall. to g>> that is one reason why ty did is helpful to get this in front of the board in the mayor. there is a ripple effect, which makes this a potential charge

against the general fund. we're not the people that do of the board is appropriate. commissioner schmeltzer: thank you. you have looked at four options, but i assume there would be a way to mix and max -- mix and match option so what would not have to be all or nothing -- all on their rates or all from the general fund or all the last option. to limit the risk to make it laret work well because the rates have increased. i am not sure i entirely agree. that is a small amount of money would you look at -- i do not

have the slide right here, but you are talking about assuming double rates by the time you add that in. >> the average gas and electric bill is $123 per month. in the case of tier one, this would be $9 extra per month. you would have to look your average bill and compare it to how much their total bill would change. commissioner schmeltzer: [inaudible] >> if i could take a minute to show an average slide of how this presents in that average customer's pocketbook. i do not recall if we had the lafco. this shows you the average monthly bills for all of san

franciscans and what it means to their household purse. the far right is the average monthly bill but san franciscans have for gas and electric service. that is $123 broken into electric. you see this cellphone average build up folks have typically amounted to did the plans right now is averaging about $99. some folks have better plants. the average water bill and sewer bill is down here, it going down to $76 per month. average garbage rates, 27. participated in green powers sf would be an additional commitment of $9 if you are very small user. $23 per month if you are an

average user. this is a 100 percent signed green premium product for less than a dollar per day. commissioner schmetlzer: fight understand that. i am trying to figure out how these rates would be 12.7 cents per kilowatt hour. >> i would invite you to look at your bills when you get home tonight, because the average electricity bill has about 59 items on it. of those items, the generation line is only about 30% to 40% of all the charges. they have additional lines that are much larger numbers for transmission and for distribution and for taxes. and other types of charges and fees. the sliver of the delivery bill

for power is one of the smaller line items, and that is all we're talking about. even though as a percentage we are a larger percentage, as far as a lot -- larger bill is pennies per day. we're only dealing with the generation component. that is something that we went through in detail with the rate fairness board. as you've been hearing about this, we've also been convening great fairness boards with potential customers. so we have gone through with them even last friday afternoon, they have a public meeting going through how the average bill compares and how we're able to do this relatively affordable week, and that is because the generation line item is about the 30% of the typical residential customer's bill. commissioner moore rirand: i tha

marketing dilemma is reject marketing challenge is if you look at on the dollar basis or compare it to other things we spend money on, it sounds pretty reasonable. if you do it as a percentage, it gets pretty big. as i recall it was about 30 percent of the power part of the pg&e bill. something in that order. those sound like big percentages. that is why it is a marketing challenge as we go out and make sure people are aware of what the true cost to them is. >> my experience has been folks know what their monthly bills are in know what they are in dollar terms. i think the slide showing on average you have this high $123 gas and electric bill over here to be one under% green -- 100%

green would be less than $1 per day. that is numbers that are less than what the monthly landslidde prices are at this point. the first question we worked over as a commission and the titular is that over all health of the operations. what this shows, and each of you have seen a version of this in your previous meetings, is it starts with the line at the top showing what the projected fund balance reserves were, regardless -- or week -- without cca coming before you. if it were a policy decision, it you would see that the line would judge it down slightly across all those years. -- would shift and down slightly

across all those years. we were running out of funds, regardless of cca. now and this is a matter of running out a few months earlier. there are other options policy makers could make. it the rates are increased to balance hetch hetchy, increasing a penny of the subsidized rate would affect themunicipa municil ways. we would need to start charging city hall for free power. we would have to charge the general fund cost for street lights, which is now free. it is not been charged to recover from anybody. the school district and community colleges and others, you would see additional power

cost increases it were to raise costs a penny. that would generate $4.6 million of the very last line. that is one option to the repayment. it is one option to make the water and power system be structurally sound. you have heard about this repeatedly. i know i sound like a broken rudder -- record, but we have an amazing system but the average cost is 9 cents per kilowatt hour. ithere are charging customers about 15 cents per kilowatt hour. we are producing power and delivering it for 9 cents per kilowatt hour, but only charging the general fund apartment 3.25 cents. we are running a good system, but still undercharging for what the system actually is. that has been a policy decision.

luckily we have been able to do that for a number of years because we do not have profit margins build into our rates. commissioner campos: commissioner pimentel. >> it would be additional cost of 4.6 million per year. to be clear -- over here. we would have been coming to the board and asking for this kind of discussion in any case. the decision really is not just 4.5 years of letting us fall off. we're planning on doing more work to maintain the system, and

we expect we would be asking you to put rates into effect that will stay to affect for a long time. commissioner avalos: can you refresh me on what are the changes or how it has been utilize and so ad and sold on t. >> we a put a great deal of money into energy efficiency. that has been a great thing for us. it has allowed us to not have to buy much power on the open market because we of of extra water to produce hydropower, and that has been a very big asset for the city. commissioner avalos": we use to sell a lot more on the open market. was there a change that made that happen? >> we tried to manage it up to

the bank we can retain. right now we are allowed to retain about 110 megawatts each year. we're always trying to maximize and put into the bank as much as we can, and to the degree we are blessed with any additional hydro power, we're selling that into the market to the degree we are not meeting of four city facilities, and we're also not buying power in certain months when we're not generating electricity. it is managed daily to make sure we're maximizing whenever the revenues are in minimizing the cost for that day based on the hydro electric flow. commissioner avalos: are there other ways in which it is being looked at to see how it can be used? i was talking to the commissioner up or and looking

at ways to generate the power. are there other options that are available but are being explored that could change with this crap looks like? >> we took advantage of the short-side power and implemented those are ready. we have taken some of the surplus power and provided public power -- power to the redevelopment areas. has been 100% green public power provider since earlier this year. already those examples the commission has acted upon, and we have in place now. we are always looking at that. transbay terminal and other redevelopment areas as well. we will continue to monitor that and make sure we maximize the revenues. >>commissioner avalo? s: will those an agreement have an impact on the revenues coming in.

>> they sure will, and it will help. we're looking at opportunities to be able to net benefit or at least cover costs well we also provide a premium product or customers, like the hunters point shipyard yard better rates that are less than 10% of pg&e. commissioner raamorand: one of the reasons for pursuing this, in my view, is when we save energy from buildings, we have some opportunity to sell but for a lot of money, but not whole lot.

the best kind of customer we think it for the power is a retail customer. whether that is hunters point or treasure island or short side power, those retail opportunities are the places we can actually recuperate the cost of the conservation programs we've been funding. >>presidentv vietor: when we were looking at cca we realize there was the biggest -- bigger policy decision we needed to be making that his release city- wide because of the implications come and i think this body in particular is committed to cca and trying to make that work, but it brings up another issue around the system of the use, the general fund department from a power perspective, a real

question, how much retail can bring on line to make ends meet, but we are already looking at a budget next year and the years moving forward were programs that are near and dear to my heart around energy efficiency were there is real energy payback and solar programs and the environment and initiatives we have started, not to mention capital improvements are at stake, so it has started to drive this question are around priorities. understanding cca is an appropriation, and i think we all feel it will be a successful program, we really need to look at this bigger policy conversation around what we're going to do about the system overall and how we're going to be able to educate and inform everyone so we can make really sound decisions. i want to get back to the

contextualizing decision on how best to move forward. to commissi >> the slide on page 12, the black line is the status quo. the blue line is the decision we have already taken a lot of cuts to our capital program. slide 14 goes through capital reductions of what are power- related. you can see we have already made significant cuts to the capital program. we have cut $60 million from the capital plan for city-owned it renewable generation. that was a very hard decision. we have had to cut $30 million

in energy efficiency, a very hard decision. we have had to cut $120 million of costs on of country transmission. a very difficult decision. it only looks as good as it does after those cuts. there will be a lot of policy discussions and decisions on how to do more investments in city- owned generation as well. with that, i wanted to briefly update you on the timeline, finalizing negotiations with shell and mobil, on december 2011. i mentioned we arctic at the rate fairness board discussions under way. we have show them how average bills will look for customers. we have also mentioned we will be coming back to them for discussion and review of

municipal rates its approval. those would come before you and the board before did agree. the enrollment would be a key time in july and august to be operational by july 2012. the key pending policy decisions, there are a number of them here. i will let them read -- i will let you read them for yourself. it is great to be able to say yes to a couple of things. we cannot say yes to everything without a balanced choices. i am happy to answer any questions. >> presidentpresident campos: mr. , anything else? >> one item i wanted to

emphasize because i did not see it on the timeline, is moving forward on the bill that i touched on that my previous comments were close to this but finalize in the works of work can begin soon. that fits within the time line. supervisor campos: if i may, and know there have been discussions and negotiations -- where is that in terms of moving forward with the initial work on the build out? >> the commission had given the approval to continue the contract with local power, and that official approval is not finished. we have discussed the coscope ad now we're down to talking about what the liberals will click with what time payments. finalizing in about 11 months. we have had changes several

times in the past week. we would expect if we can get that wrapped up with local power, we would have approval within the next week or two. supervisor campos: so you see a contract being executed. >> we already have a contract executed. president vietor: i feel like a great promise is a move to not just our first up, which is 100 percent in renewable, but really being able to generate our own and becoming a more self-reliant community and city. i am hoping, and so pleased it seems like that conversation and work scope is getting figured out. i look forward to when we can see a budget and plan for what that local build out peace will look like, understanding it is tied in with a lot of the greater policy questions we have. i want to reiterate my support

for the process and program. >> i think the difference would be in the past we've talked about where is the 360 megawatts, coming from. it is really more of a road map and an end product sort of thing to say here are the first of its and here is how you move here di. commissioner courtney: one of the things i heard the commissioner talk about was our need to maintain the system, and the concern i have, and i think it was raised is is about doing good business. what i would not want to see is i would not want to see us shuffling the deck and failing to take care of the system, because we have workers, especially workers who live in