years, every penny hearings in $4.5 million in. if you look at the solar energy efficiency, over 10 years, we cut $90 million. two cents brings in $9 million. over 10 years, that restores the $90 million. the cca is $20 million. hopefully we will never after spending. president moran: the others thing that struck me is that after all of this, we are still not back at cost of serviced. >> you are right. we are getting closer. president moran: it is about one penny difference. do we know what it would look like if this were 50 years. >> this gets us back to what i

call smoothed cost of service. we are allowing ourselves to pay for large capital and infrastructure investments that have a life of 40-50 years with 30-year bonds. that is how it keeps it in a balance. the operation of the three you oversee has been the one that has been held to the highest standard of all cash funding, because we have not had a bond credit rating. this would allow you to a knowledge that enterprise department would still continue to pay pg &e rates. that little bit of extra had room -- extra headroom would allow us to continue our public our programs and maintain reasonable rates. assuming the weekend bond fund the capital infrastructure.

we do well in our capital enterprises as far as creating enough money to pay for operating costs. where are short, has come from is that now that the goose who laid the golden egg is 80 years old, here we need upgrades to substations or transformers. those are big cash investments that we do not have the cash to pay for. >> two other thoughts. the 8-9 cents our judgment calls. for example, we paid for the street lights. is that an appropriate thing to have a wonderful cost? you need revenue to pay for that. is that something that public health pays for? or does someone thinks it should be paid for differently? all of the cost that it takes to

run the place should be taken equally. once you get past about 8 cents, it starts getting into more interesting discussions about certain things -- about how certain things should be funded. about four years from now, our costs will have gone up. i am not sure when we catch up to that. it does start to raise other policy calls. the money we are asking for now is safely including the things that people would agree are the costs that they would want to participate in. when you get higher than that, you have to have additional policy discussions. president moran: the world does not end in 2020 to either. having another penny at our disposal to deal with it would be prudent. >> i know that we had talked about making the rounds and i do not know what that looks like, but talking about -- but talking to the supervisors, the mayor's office, some of the budget falls -- some of the budget

folks about the marketability of one penny, two pennies, 4 cents -- we have had to compromise to get to where we are so far. i am wondering if that is the next step in order for you to come back to us and say, this is the word on the street or what we have heard as far as eligibility -- as far as palatability of any kind of an increase. i do not know the best way to go about that. >> we have already met with the budget staff and the mayor's office and we are starting with the supervisors talking about what this is. there are two in general responses. who wants to raise any money or

have additional budget problems? however, there is a general understanding that you need to support hetch hetchy to keep going. while no one wants to see it, they realize that if you have not raise your rates in 10 years and you're doing work, you need some money to pay it off. there is a general understanding, i would not say there is an agreement. certainly, if that is what it takes, do we rolled into the regular budget discussion? the other general response is, if you're going to make as raise rates, do not just do it to make yourself whole and leave all the programs we care about starving. if you're going to raise your rates, raise them enough so that we can restore the kind of things we care about. probably teh -- the two cent option will not give us enough help. especially for those programs

the board has enjoyed being a part of. we have talked to a good number of the board members already. >> that addresses these aggregation and conservation issues and takes the longer view of where we are going as a city around efficiency and renewable help sufficiency and the bottom line in the long run. power saved is power sold eventually. it is taking a longer view. that is where i would land on two versus four cents. it is the higher number, because of what we would be able to gain back. >> one of the things that is correct about the situation is the impact of doing two versus

four is a general fund impact. it turns out is it is also -- it turns out is also a financial fund impact. the people who really need to decide this are the mayor and the board of supervisors. we need to present them the option of doing what we think is the best thing. i would also lean towards the four cents. they will have to figure out out how much the general fund can afford and how valuable are the other things we want to find. >> there is also the point that it does not even cost service yet -- it does not reach the cost of service get rid is still low. >> we are also meeting with the major departments to let them know and start to have that conversation. >> if you look at five cents over five years? >> that would cause us to be in excess of our reserve policy.

not that i would not like to have that extra cushion, it does not actually require -- >> and we could take care of that in an instant. all we would have to do is make -- is moving the transmission projects for a couple of years. >> the other key point, if i may get some direction from the commission, the rate increase and the duration of that increase send a very strong signals. when we last went for a five- year rate adoption for the sewer rates, that was a good indicator to the bond market and we are in the business of sustainable, long-term rate setting. it would be a duration of four pennies over four years. would something like that with the fifth year being black, no further rate increase, following

a similar process of a five-year rate cycle, would that be of interest to the commission? >> yes, i think so. >> that would also help us. the clean power sf would be a 4.5 year contract. >> i want to thank you for this piece of work. 43 years now, i have been on the commission. i have heard rumblings before that this has been an issue and it has taken some time to get to this point. it is not an easy conversation to have. i appreciate all of your hard work. >> i am happy to do it. thank you in. president moran: we need to have public comment. and then i would entertain a break for about five minutes. mr. brooks.

>> good afternoon. eric brooks, representing the sand for cisco green party. -- representing the san francisco green party. talking about the build out fo a clean power csf, -- for clean power sf, when we met with south, we said we would step up to the play to help fight for these increases in. not only because of some kind of cynical tit-for-tat, but because getting renewable energy in the city, getting cca to work properly, is dependent on making sure we are paying cost. conserving electricity is less dependent on getting people to pay real costs for electricity. we have done that on water for decades. we need to do it with

electricity. the other key reason that we, as advocates, are ready to step up, and we want to make sure we can step up, is to make sure that the task order for the scoping for the build out of work is fully engaged within the next couple of days so that we are under way. fully fleshing out all of the locations in the city, including city college building, hospitals, etc. where we can get strong efficiency installations, renewable installations, demand response, those things over the long term are going to create revenue streams. so that we can look over the course of three, four, five decades and go to these departments that we are saying we are going to increase their rates with a package that saves them money on the actual in --

saves them how much electricity they actually use because we have done the bill out work in a comprehensive way. and we know where our opportunities are in the city. that enables us to go to these departments and say yes, we are goi for your rates, but here is where we are willing to save electricity or generate it off your roof. that is why the bill the work is so important. it will give us a picture of the entire city, including all the municipal and state buildings. >> and that is the last point i would bring outup, we don't wano lose other advocates that we need on this. unlike city college, as you know, the president of the community college board is also very strong in community choice segregation. as soon as i brought this up with him, he said, how can you

raise electricity rates on city college? we need to use the build-out work, use good scoping and a decade-long planne so we can goo the hospitals and schools and show them something that is going to work that is not going to hurt them. we don't necessarily have to put the full two cents like a flat tax on everybody. with the mta, we need to make sure that we are not rising electricity so high that we are discouraging transit. [chime] that is where the build-out is so important. >> good afternoon, commissioners. in support of raising their rates in reflecting the true

cost of electricity. as he mentioned, revisiting the rates are essential to make sure that we reflect the true cost of electricity and to make sure that hetch hetchy is a good project. we need to make sure that the full scoping is done for the local buildout and being able to bring down the cost of electricity again said that such a high rate increases not necessary. the positive thing about adjusting the rates, an increase in energy efficiency that could lead to potentially dozens or even hundreds of energy efficiency jobs. we see the prevailing wage jobs, to ensure local residents can be put to work with higher wage benefits. so, in support 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