an amended version. >> we have an amendment that is moved, and seconded, and is there any discussion on the amendment? and is there any public comment? >> i can live with that for the moment. >> all of those in favor? the item will carry. we have a motion on the second. is there any additional public comment? all of those in favor? the item carries. thank you. you can call item 16. >> this is to authorize the increase in utilities and commercial notes, the paper program, request approval from the board of supervisors, to negotiate the banking proposals, and provide banking

for such an increase. >> these particulars are different and -- with anyone like a presentation on this. in the absence of this, do i have a motion? and the second? and is there any public comment? all of those in favor? the item will carry. >> item 16, the possible action item of the public service commission to enter into the agreement to authorize the proposition for commercial paper programs. >> similar item -- have a motion? and the second? and is there any public comment? all of those in favor?

the item will carry. >> item 17, for the capital improvement program contract -- and the obsolete sewer project, increasing the contract with a time extension. >> ok. this item is worth a few words. >> good afternoon, commissioners. the sunnyvale on solar project has gone very well. the tunnelling was very effective. we will actually be activating the main title in january to begin providing flood protection and this project has been selected to receive $11 million in grant funding for the department of water resources. the modification in front of you

will enable us to improve the local sewers, to provide additional flood protection. we will use the same technology that works so well. originally there was going to be a separate contract, that would create significant disruption to the neighborhood, and traffic, and was very close to home. the modification in front of you would use the existing tunnelling we have there now and would reduce service disruption, and actually saved -- save $200 and we can have this asset in service before next year's wet weather. the modification will also install meters and calibration equipment that is a requirement of the grant. and with that your consideration, were further questions? >> and are there any questions? it is nice when we have a chance

to do something that is a better solution that costs less. do i have a motion? this is approved and seconded. >> there is an environmental analysis for this project to review that particular change in the project and this is before you and you'll be adopting findings on that. >> thank you. >> three items on this, and the last time we spoke about the significant seward project i talked about the environmental documentation and i was told that the meeting with the general manager -- i was told that we would make certain that the members of the waste water had a minimum notification list for the environmental determination.

i did not see this, the first time i saw this was at the meeting. we have not yet fixed this. the second thing is that this change in the scope of the project, i now believe was brought to the waste water committee. we have certainly spoken about this project before, but i don't believe this particular change was brought before us. it sounds like a good idea and i am in support of this, but when we do this large of a change, we should be telling people about this and finally, there is a significant typo on the -- on attachment a of the sequa findings. the first paragraph -- the last line, of the improvement project located at these facilities --

this is not really. somebody should amend that attachment, and once again, they should have caught that. and perhaps you can see to it that this is done before adopting the resolution. >> this is duly noted. thank you. and is there any other public comment? >> ok. we have a motion, all of those in favor? and the motion will pass. thank you. >> i just want to respond and make certain that in the future, these to go there -- >> there are too many of them. >> and please call item 18. >> this is for the general manager of san francisco public utilities -- to accept the grant

funding, for the emergency services, for the 2008 buffer zone program, for the department purchase of security equipment, 3602 upgrade. >> i have a motion on the second period and is there any public comment? all of those in favor? the item will carry. call item no. 19. >> the commissioner is a designee on behalf of the city of san francisco, for the indoor water conservation, -- >> i would like a few words on this. this represents a change in direction that i think we should -- >> i am the assistant general manager for water.

this program represents a new program for indoor water conservation and commercial -- commercial and institutional customers. they represent a large segment of the water-using community. as we have looked at overtime throughout the various models we have, this is a large area of the marketplace with a lot of opportunity for the installment of the additional fixtures, and in this particular case, we spoke about art conservation model, and we anticipate a substantial amount of conservation in san francisco at a relatively modest cost. for the investment we are talking about -- given the

commercial and industrial and institutional issues -- you can get water-saving set produce water at about $356. this is a good way to generate water. what we're looking for is the approval of the pilot program to go forward, and the ability to enter into that agreement, and this is funded in the 2012 budget, and part of the budget process -- we would come together for the additional funding to move forward into the future. we think the investment in fixtures, and the community industrial institution was a great way to have conservation safety. >> thank you. and my way of commenting on this, this has been my experience when we look at conservation performance. the hardware-oriented measures

are the ones that say -- >> those are the ones that will save us. it is safe to represent a saturation of one part of the market in terms of the residential trade. we are moving beyond that. >> there are only so many toilets out there. we will have to start with some additional fixtures out there. >> and are there any questions? and is there any public comment? do i have a motion? it is moved and seconded. all of those in favor? the motion will carry. >> item 20, discussion of the possible actions for the enforcement program, section 399 po.03. >> this came before us on

november 8. has anything changed. could i have a motion? >> this is moved and seconded. public comment? >> good afternoon, commissioners. i have touched on this -- at the meetings before and had wanted to bring this to the commission earlier, but the community aggregation stuff has taken a lot more attention. but now that we're finally getting to the stage where renewable portfolios standards are going up, and we have to comply with these, we have to consider the reality of the

standards on what is renewable, -- this is not that good in many ways. landfill gas, if you don't go through this very expensive process, -- this left a lot of toxic gas out there. and also, if you don't handle this the right way, having the municipalities that encourages its production, by throwing organic matter into these facilities -- instead of trying to minimize this, another serious problem requires -- the biomass. this is so incredibly complex, that with all of these facilities that are being listed on the state website, it would contribute to the -- renewals. a lot of these are not

sustainable and probably should not be considered renewable. we do not consider this renewable even though you can see that this is. there are crucial environmental reasons for this. with the enforcement of this program and how the enterprise as procurement in the future. and a lot of times, there are wood chips from the logging operations that are bad territory. we need to start evolving the way that we purchase energy, to the power enterprise -- where we can leverage this for you as an agency, to start choosing when we can -- the sources or the mix of sources. i know this is not easy. but we have to of all the concept of what is renewable. it will also apply to committee choice aggregation. this is a battle we have not

gotten into, because the allies -- they are going to find themselves on different sides of the fence because you will have some hard-liners like myself, and i have had discussions with the sierra club. they have had discussions about landfill gas, we have to make certain that we are engaging in this process, and what we call renewable -- it really is renewable, and that san francisco leads the way on this policy. and this just does not pattern itself off of the state policy. >> we had a motion and the second on this? is there any additional public comment? all of those in favor? the item will carry. >> i now call item 21. >> the commission input

requiring priorities -- a workshop with commissioners input, identifying areas of special interest for the fiscal year 2012, the budgets for discussion -- of the january 2012 budget workshop. >> and as he is setting up, i have spoken with commissioner caen, and she will share the budget next year. >> we have a tentative dates of the thursdays beginning on the 12th, -- the 12th of january but we had not agreed of a start time yet and there was discussion as to if this would be 1030 or 11:00.

>> january 12 for january 26 -- >> >> i don't remember seeing this. the mind sending this again? i don't have them. >> they are not on my calendar. >> in terms of starting times, what we had done was 10 or 3 -- >> he suggested a reasonable compromise would be the 10:30 start time that would allow some discussion over people who had obligations at the end of the day, picking up their children and things like that. >> thank you. >> the idea was to allow staff time to make any adjustments from one to the next. and that question came back to the commissioner. that is why we have allowed time in the morning.

>> you would be available for the early starts? >> this is when we get back to the office. >> not so much, it depends on the date. we have to see the date requests, you can tell me now. >> so they are on thursdays. >> in january. >> all three days. and the fourth on february 2. >> part of the reason for the session today is to give general direction to the staff so -- >> this is over the holidays. >> they have furlough days, that they will be taking as well. but hopefully, part of what this would do is result in less issues of -- conflict or

controversy, so hopefully -- the past practice has been that it takes this amount of time to get through this. and hopefully we can make efficient -- efficient use of this time. and so -- i think the task on that -- is that we make certain to close the loop with the commissioners and come up with times on those three days. >> i get this, exactly what we need. >> i don't know if you are meeting with this or anything like that but this is very helpful for me, and you can get some time options. >> ok. thank you. >> good afternoon. i am the general manager. part of that responsibility is to help you as you go through

your deliberations of the budget. the mayor gave all of the department heads, across the city budget, this was a continuation of the lean years, and contingencies that are needed. for instance, the general support was 5%, of the general fund support over the next few years, as well as 1% reductions in position. as the general city budget instruction, the enterprise -- we have had a very tight budget with the water sale for charles -- shortfalls, going over to waste water. the item before you later will be the power rates. with the decrease water sales environment, they're telling

department heads to target a flat operating budget. and you will see in our budget, the budget was going up each year for the current year, but $38 million is the planned service for the water program going on line. it was relatively flat save for that service, and the french benefit cost increase. the entire city has 27 bargaining labor contracts after the renegotiation, and the expiration of the 12 floating furlough days, and this came with the additional cost that we have assumed in the budget production -- budget perception. we really do want your input, on a couple of key items.

one of them is how to look at the proposals that come before us, and how to present to view the proposals that will be coming for you in january and february, and what it will mean for us in the first item, with proposition a, which we asked of voters in san francisco. we will fully implement this based on the option to move the airport -- to the two-year budget. this will be the first time that we have a fixed, two-year budget and we will be presenting to you what you think that -- what we think that we need with sharpened pencils, for the next 24 months, and then roll forward in the next two years. we will say, this is what we really need and this is part of the policy that was recently adopted by the board, >> let me

pause there because this is very important. >> there was the second-year look out and this year, for the first time there will be legal authority for two years. if nothing changes there will be no action required by this commission by january 2013. >> and no need for the meetings. >> sometimes things do change, but even more than that, they'll be taking a look at how the budgets go in, and what we should know about -- with the performance review as opposed to setting up the budget authorization. this is a different -- difference in the process that we will be doing this year. i did not take that from your time. >> and what is this meeting?

>> this is the two-year budget. >> we will come to you with as sharpened pencils as we can with what is needed for this deliberation and we will come back to you for the next 10-year plan, with the capital plan, and what this would need to be. we require you to deliberate on the 10-year financial plan. and there will be a two-year budget as well. i wanted to go through some of the key things that you had us consider and incorporate into the budget, -- into the budget process. these were your policy initiatives, being maintained, with sustainability and resources -- capital development, and there was no

indication from you to add to those, and we would continue to look at some of those as well as providing high-quality services and promoting green, -- green, sustainable city. and investing in our communities and people. these were some of the key policies and strategies that you had and we would be happy to continue that if you would like for us to. in addition, we're also considering items with the level of service that you deliberated on, the reliability of systems, for the health and safety and susceptibility of resources, affordability and the adoption of the benefits policies that you have done. last but not least is the revenue generation, because bills have to be paid on time, with water revenues.

you ask us each year, to come back before you and update you on if we apply these to the 10- year financial plan and the rate projections, and the capacity -- the next two slides do that for you, for each of the enterprises. the first is the water enterprise. you heard about this in the quarterly report, with lower retail by about $6 million, and the lower wholesale collection. we continue to maintain the five-year adopted retail rate plan, and we work with you and the wholesale customers to smooth the recovery of the balance -- and the funded replacement, and the repair for the local program through 2018

and also, what we are doing to make certain that we can fit within the budget is managing to a hiring plan and considering, if there is any further weakness on water, that we would have to look at a budget freeze, and possibly even some reductions. we are not there yet, but to the degree we have further revenue issues -- it would put them in perspective. this is historic sales of water from the water department and you can see that some years we were in excess back in 2003 and 2004. over the last five-seven years we have used less and less of this resource from the local watersheds and right now we're going to be trending to about 205 -- dependent upon how cool the winter and spring yes, for

an entire year. do not lose sight of that. that has been a great impact for us because we have adopted the five-year rates and did not assume that we would have this much of a protracted decline in water consumption. this is on the retail and wholesale customers. people are doing a good job of conserving but the economy has not come back as quickly as we had hoped. but what this means for retail rates and planning -- the charter requires us to look out, and have there be more transparency, that we could potentially have an unpleasant surprise of needing larger rate increases, then what we would have otherwise planned in 2014 and 2015. the same as for wholesale

customers. they absorbed a 38% rate increase because of the planned debt service increase, but there were water sales by customers of the retail. as projected we would need a 22% rate increase in 2012. the waste water enterprise -- is protected predominantly by the same factors as retail water, as you have read about in the quarterly report, as well as the need to look at the timing -- specifically of the sewer system improvement program in particular. and we manage to the hiring plans as well. this is a slightly different story and what i would like to show you here -- we have the potentially bad news in the water department.

this could be a lower-than- expected increase in waste water with the timing and utilization of commercial paper, that item you approved earlier, making use of the cheaper debt and the variable rates. this could also be helpful and prudent for the rate-payers. the customers we served c one bill from us, and this is the chart you require us to provide in each time you deliberate on the budget. this is on the total combined impact. i would like to draw your eyes to the combined circles, and you can see that if you look at the waste water bill, by the time the retail customers would run off the five-year rate plans, this is looking at 11.5-11.10% rate increases. and then