of reflecting the true cost of electricity as previously mentioned. president moran: any other public comment? if not, we will take a five- minute break and reconvene at 20 after.

president moran: we are back, the public utilities commission is back in session. >> discussion and possible action for the water enterprise water system improvement program habitat restoration to the lowest qualified and responsible bidder. >> thank you, commissioners. do you need a presentation? >> i would like to move item number 11. >> motion and the second. no speaker cards. any discussion? commissioner caen, we have called, moved, seconded item 11.

>> without me? >> here is your chance if you have questions. commissioner caen: actually, i do. i am fascinated. this bid that came in at $448,000. president moran: they really wanted the business, didn't they. we have no public comment. all those infavor? opposed? the motion carries. next item, please. >> item 12. enforcement program for california renewable energy resources back to workshop at the discussion. it will be a discussion for sbx1-2, the california renewable

energy resources back. >> i am manager of regulatory and legislative affairs for the power enterprise. i am here for barbara hale. mike, if you could put of the slides? i am here to introduce the first step in the implementation and compliance with california's new renewal law, vthe california renewable energy resources act. this law revises the renewable portfolio standards for electric utilities. the first step in this process is to adopt what is called the enforcement program and a statute for enforcement of the law. just to expand a bit on the outset of what the enforcement program actually is, it is

essentially the process under which we will regularly come to you and report to you on how we will do procurement of renewal bulls under the new law -- renewables under the new law. the enforcement program establishes the process. i will start with just a brief overview of the legislation and what it does. it was signed into law by governor brown on april 12. it becomes effective on december 10 of this year. an important major goal of the legislation is to displace the use of fossil fuels for electricity production. with benefits of reducing pollution, reducing greenhouse gases, the production of a electricity. and to also reduce the price of volatility that comes along with

that, and to maintain a safe and reliable system. this is important because we rely heavily on hydroelectric power for our generation and not fossil fuels. in the act itself, this is the section that lays out our requirements, our renewable portfolio standard. i will not go through this in detail, but i will point to a couple of things specifically. this provision of the statute applies to utilities that get more than 57% of their demands met by hydroelectric. and specifically, what it lays out is that such utilities are required to procure eligible renewable energy resources to meet only the demands that are not met by the hydroelectric generation. what does that mean? in any given year, we will need

to meet all of our energy demands with hetch hetchy or rps renewables. geothermal, ocean power, biomass facilities. as a result, we will continue to have the lowest ghg emissions of the utility in california. the act does nothing to change your continued funding of the renewable energy programs according to the capital improvement program. to put this in context a little bit, this compliance obligation for hetchy power applies to us because we are the only large utility where if we were to go beyond that to what other

utilities are required, we would be the only ones displacing 1 ghg resource, the hetchy power with another for renewable energy. it is a 33% standard that could potentially increase our cost, and potentially reducing city services. it could increase ghg emissions. getting to the topic of the day, the enforcement program, what the act requires is for publicly owned utilities to have the government adopt an enforcement program. and to have that program adopted by the first of the year, january 1, 2012. yet to provide at least 30 days notice prior to that adoption.

we are providing that notion, -- notice. we will be back at the december 13 meeting for possible adoption. what is an enforcement program? it identifies obligations under the act. either hetchy or rps renewables. it establishes a process about how we can come back to you and report to you. it requires us as a staff to come back regularly three procurement plan process. this is how we are going to meet our obligations. this is how we will report back to you and how we are doing. this establishes that process. it does identify what we need to do to comply with the act. it does not determine city policy on renewable development

and it does not modify existing renewable programs as determined by the commission. this chart helps identify that. the procurement planning processes pacific to the obligations under the new regals -- renewables law. policies will function as they do right now. but to be consistent with in the act, the act establishes an enforcement program process at a planning process. that is what we are setting up. this enforcement program applies specifically to the sfpuc's operations as a publicly owned utility. it does not apply to the cca program, clean power sf. the renewable obligations are governed by the enforcement

process. so, to get tho the meat of it, the actual elements of what it will do to establish what we put into our procurement plan is where the commission, you are basically providing guidance with what you want to see in these retirement plans when we come to you regularly with how we plan to meet our obligations. what the enforcement program has said is that each preferment plan will have specific elements. it will essentially forecast tehe demands, and through the forecast, determine procurement. we will come to u.s. estimates of cost, the impact of rates,

and the impact of the financial condition. and given that by its nature it will be a forecast, we will identify uncertainties and what the obligations maybe be over the course of the planning period. the enforcement program requires us to come back to you and report on how we are doing on the procurement plan itself once it is adopted. the other thing the enforcement program does is that it establishes the timing process. our initial plan will be developed in the early 2012, the timing is somewhat a function of the california energy commission's final regulations that they are preparing.

under the act, we want to make sure that we are in sync. so we know exactly what we need to procure. the initial plan will cover from the effective date of the act which is december 10 of this year to the end of fiscal year 2012-2013. it will be june 30, 2013. the plan will include a longterm outlook. subsequent plans will be synced with the budget process. this is a quick summary of the timeline of how we got to where we are now. we did meet with the citizen's advisory committee and the clean energies towards to get their input on the draft plan we have before you today in september and october. we have the meeting with you for the workshop and discussion.

we anticipate more comment between now and december 13. we will come back on december 13 and present the enforcement program as it stands for your adoption. in 2012, we will come back with the first program plan and basically proceed from there. that is a quick summary and i welcome any questions that you might have. commissioner vietor: i just want to understand how this works. for municipal buildings, correct? for municipal power sources? >> operations as a publicly owned utility service, full- service transition distribution, supplies services for the customers. our loads, airport loads, all end-use customers. commissioner vietor: currently, aren't we 100% or 95% hetch

hetchy? >> when we have power, yes. commissioner vietor: the mandate would not apply to us unless we get to below 100%? >> we would have to dip below 67%. as long as we are meeting -- and it goes back to the provisions of the act, the statute. as long as we are meeting our municipal needs with at least 67% hetchy power, it is the remainder that needs to be renewable. 90% hetchy, 10% renewable. commissioner vietor: we would have to come up with a plan to be safe and conservative of 33%. >> 67% is confusing. in a year, we produce enough

power for hetchy. we are never even close to the 67% discussion threshold. typically, we buy whatever power is on the market. we need to buy green power. >> certify green power from wherever. >> things got so bad, power plants went down, who knows what else happened? other things kick in, but that will hopefully never happen. >> there will have to be a combination of drought and the maintenance outages. the concept is that we are only held to 33%. we don't have to go beyond that. in most circumstances, we will be above that limit and it is the remainder that needs to be renewable. commissioner vietor: from a

conservative planning perspective, we should budget at a minimum and identify renewable sources to meet the 33% responsibility. >> in the planning process, we will be doing forecasts of what the shortfall might be, what the surplus might be over the short- term budget planning horizon and a longer-term horizon. we will look at the scenarios, the outage scenarios. from that, we will be able to come up with recommendations given this forecast, what is the provincial level to procure to insure that we are meeting obligations? >> practically speaking, the real difference will be the difference of the cost of the power we now by vs. green power -- buy versus green power. that is probably the amounts we have to budget. >> right, we can look at the

product to fulfil that obligation. >> do we have long-term contracts? >> we have the sunset reservoir. >> no, when we buy power. not renewable. >> for the most part, the current market procurement is on a relatively short-term basis of one year or less. we are doing it to match with thehetchy -- with the hetchy generation shortfall. president moran: any other questions? i think the guidance for the commission would be to keep on going the way you're going. >> i think we will come back to have you officially adopted this one month from now. >> in the forecast data descriptions, can included where some renewable energy resources

would be? wind from new mexico, solar in san francisco, whatever? details, megawatts, whatever? president moran: any public comment on this item? hearing none, we are approaching our closed session. the next item is if we have public comment on any of the items on the calendar for a closed session. >> we have no speaker cards. president moran: i don't see any. do i have a motion to assert attorney client privprivilege? seconded. any comment? >> if i can briefly read the item. the public services facility consultation chief of security.

a property negotiator, portion of three and four parcels under negotiations, rights, and terms. if we will now clear the room, we can move into closed session. president moran: we will now president moran: we took no action during closed session. all those in favor? it carries. any other new business? seeing none, this meeting is adjourned.

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