allowing me to speak. since 2004, i have had the honor and privilege of assisting the program. i think managing it is a little bit of an overstatement. for those of you who have had an opportunity to work with the executive director sneed, pretty much, she tells you what to do and you do your best to execute. having worked with the sheriff and the director, we counted over 350 earth stewards, apprentices, and in turns. we have grown quite a bit. we run a robust summer program now that involves the police department. in years past, the housing authority. they have literally calmed the watershed from places unknown to most city residents right here within our borders, all the way up to the mountains and spent

last week of their avoiding animals and all kinds of hazards and clearing 4.5 miles along the power lines. [applause] they are great producers, and i think they have that the gold standard here of providing tremendous benefits and service to the ratepayers. >> thank you. that is hard work. [applause] them and share of -- >> and sheriff hennessey, i will personally miss working with you. commissioner vietor: i also want to acknowledge and recognize all the earth stewards who are here. thank you for coming out and showing up, and it is not easy

thank you for being here and all the work you do. [applause] commissioner moran: thank you very much. moving on to the report of the general manager. >> we have two items today. the first is our wsip update report. i will give her a minute to have the room.

commissioner moran: ok, thank you. just a notice to staff, we have an awful lot of business to do today. we had talked about time limits on staff presentations. i will be enforcing those. julie, you get the first five minutes. >> ok. good afternoon. my update today -- i wanted to start with some good news. at the end of november, our contractor at sunol valley water treatment plant was able to complete the project, and i wanted to mention that because the timely completion was required to bring back the plan to its full capacity prior to the hetch hetchy shutdown that began on december 5. that required a lot of hard work from our contractor and operations staff, so they are to be commended. the other good news is that last friday, we reached substantial completion on bay division

pipeline 5. considering the number of challenges that were associated with installing a pipeline in an urban area like that, we are very glad to have that project behind us and only have minor restoration work left to do. wanted to touch on one of our biggest pre-construction challenges at this point, and it has to do with the procurement of a large, customized slip joint needed for the crossing of the hayward fault. this is a one-of-a-kind item, and only one manufacturer showed interest in fabricating that unit for us. we have been negotiating with them on the terms and conditions of that unit for about a year now. recently, they informed us that they needed additional limits on their liability, so that was a setback in our negotiations. i now have our deputy of pre-

construction involved, and he is helping with the negotiation. i'm being told right now that an agreement is very likely. we are certainly hopeful, but since this is one of our most critical seismic projects, i'm keeping a close eye on this one. this setback in negotiation will delay the start in construction by a few months. we are currently looking at any potential impacts on system shutdown. two items of interest in today's agenda i wanted to mention -- there is a 5.25 micro tunneling project we wanted to award. the reason we need that tunnel is that back in november 2009, we discovered a culturally significant archaeological site with very human remains. we analyzed a number of alternatives and found that the best option to minimize our cost and schedule impacts was to tunnel under that site, leave

the remains in place, and also, under a nearby creek. we asked our contractor on the project for a", and it was much higher than our engineer estimates. they also have special requirements that we did not agree to, so we decided to bid that job separately, and the winning bid is actually significantly lower than the -- the quote we were given. we have a brief you on the number of challenges we have encountered with the irvington tunnel project. lately, what we are encountering is softer grounds that have a tendency to crumble, so we had to install the steel ribbing that supports the tunnel at a much closer interval. also encountered some squeezing ground conditions that required

additional concrete support. finally -- not finally, another challenge. cal osha reclassified the tunnel to gaseous because of the detection of a high concentration of methane. that requires that we move to a full-time gas monitoring program. finally, large influx of ground water. we have seepage from the close by, existing pressurized tunnel that essentially represents a limitless source of water intrusion to the construction of the new tunnel, so we have had to use probing and grouting techniques to be able to address the ground water. actually, cal osha classified the ground condition to be some of the most challenging they have ever seen in california. all of this resulted in time extensions that are thoroughly

calculated. we are not in a position yet to have the full cost impacts, but when we do, we will keep you informed and come back to a request to increase cost contingency at that point. finally, we received a letter from bawsca dated december 7. they make six recommendations, and we are in the process of putting together a response. five minutes? commissioner moran: that is five minutes. >> ok, done. commissioner torres: what was the nature of the archeological site? >> we found human remains as well as material. i'm not sure exactly, but it was classified as a very protected-

type site. we would have had to get a number of permits to be able to entrench. >> -- commissioner torres: no indication of the age of the site? >> i'm sure there was, but i do not have that data. commissioner torres: could you get back to me when you get it? >> i can do that. commissioner moran: the letter from bawsca -- the issues you mentioned sound at least on the surface to be very project and site-specific. any element of that, as you have wrestled with that, that has greater impact on either schedules generally or management procedures generally? >> a lot of our issues are project specific. there is an ongoing assessment by a third party that tries to

draw conclusions that our program-wide. we are looking at those. some of them may, you know -- we may have to make some adjustments. some of them we do not necessarily agree with. we are in the process also to provide extensive comments on those. i could not off the top of my head right now think of a common theme that could be applied to every single project that is ongoing. commissioner moran: ok, thank you. certainly, the tunneling projects in general are challenging, and of shaughnessy found that particular stretch as challenging as anything he had to face -- and o'shaughnessy found that particular stretch as challenging as anything he had to face. thank you. any public comment on that report? >> commissioners, the second item was an update -- for those of you who were watching a tv -- watching tv a few weeks ago and

seeing our guys are in san francisco. mr. ritchie is going to give us an update on what happened and what we're doing. >> thank you. good afternoon, commissioners. i'm going to give an update on the crystal springs pipeline incident, which did occur the day after thanksgiving. we provided you a memo to net -- today, and i will briefly hit the highlights. the pipeline is shown on the map. it runs from down in hillsboro up to san francisco. it is one of five lines into san francisco, and the incident site itself is highlighted there. it is in the city of south san francisco, just a bit north of the airport. probably one of the things that is unique about our system is how spread out it is. in our particular case, this is where a wsip project was taking

place, and there had just been a replacement of one of the connections at that location. on the 25th, there was a leak that was reported at 9:45 in that vicinity, so we have a timeline of that. initially, there was a small leak that grew very rapidly into a larger leak, and we are investigating the cause. i will talk about that in a little bit. the timeline shows it takes a while to work through the different factors of what you find that a leak site, respond to it, start to shut down the system. you are closing 5-foot diameter balls, which you cannot show one like that due to what is called water hammer that will cause water damage if you shut too fast. it will take a long time to isolate those. it took roughly about three hours to completely isolate this and get the leak completely shut off. on one level, it sounds like a long time. as we have shown, it takes a fair amount of time to get

through to it. ultimately, we have clean up starting at 2:00 and a restoration contract to work with people who had suffered damage by about 4:00. it was actually from 9:45 to 4:00 p.m. we were well in to clean up mode at that time. these are from the news coverage. we have high pressure out there. when it is right there adjacent to a big line, you do have a big leak. that is the nature of the business we have to deal with. this shows one of our staff actually closing down the end of the leak in the trenches there. these are not little things we are dealing with. these are big, heavy duty operations to try to get them closed down. that but a flight to the right -- that is where it occurred. this shows some of the response

you see here. mud out there, and those crewmembers are from a contract working with the site. you can see the fire department drop in the background, so a lot of people but dissipated in getting on top of this and trying to do with it as rapidly as possible. the big thing for us we're dealing with now is how does this happen, and can we make sure it does not happen again? the last slide is the incident response. we retain independent expert to fully investigate the cause of failure to make sure we understand why it occurred and that it will not happen again. what do we have to do to make sure it does not happen again? there are 35 other similar connections in place we all want to take a close look at. we have reviewed our design standards and construction management procedures. we're starting to make change now. even though we do not have the definitive cause or set up houses in place -- or set of

causes in place, we are starting to do the reports we can look at it and make some good decisions on how to move forward between us and our contractors to make sure this kind of incident does not happen again. commissioner moran: thank you. commissioners? -- >> thank you. commissioners? commissioner moran: thank you, steve. public comment on that report? thank you. that is the end of the general managers' report? thank you. the next item is the report from the area water supply conservation agency. >> brief comment on steve's report. your staff has kept me informed on the main break. we have received calls from interested officials.

i'm pleased to report that we have told them you guys are doing a good job. julie mentioned the letter we sent to ed and the commission, and i wanted to go over briefly a report that i gave to our board of directors just a couple of weeks ago. so you will see the flavor of how we approach looking at the way you are managing the program and the concerns and questions we have. i will refer -- mike, if you could use the overhead projector. these are slides from that report. first, we look at a comparison of the projects and programs status relative to the budgets and schedules the commission adopted back in july of this year. we cite simple questions and answers for the benefit of our board of directors. they are not as close as you folks are.

very close tolerance -- is it on schedule now? yes. the program completion date remains as it was when you adopted those changes. i will observe your five-minute time line, so i'm going to select some of the slides and leave a couple of them out. that prior slide had to do with the overall program. what about individual projects? can we break this down? some projects taking a little bit more budget than originally adopted. those issues have been reported to you. the schedules very close within one to four months. we focused on two large projects. julia has mentioned these to you before. the tunnel classification to change, the groundwater and flows to squeeze in ground -- all of those things we anticipate the staff would come to you for the extension that is

on your agenda today. calaveras dam is similar. different soil conditions. for the benefit of our board members, we asked a series of questions and answer them. where the schedule impacts reasonably preventable? was there something that could have been done to avoid these? the answer is no. we think that the staff and their consultants took reasonable precautions and did reasonable work during investigating the site conditions. you had been hit with a combination of issues and the magnitude of those issues that could not have reasonably been foreseen. did the puc take appropriate actions in response to those conditions? again, we say yes. you did the right things. the calaveras dam is the

critical project at this point in time. if that goes along, that will extend -- if that those long, that will extend the completion date of the project. in answer to the question of what we're doing, we have been investigating a number of issues for several months. we were confirming our findings and conclusions with staff for following up on issues that we did not understand, numbers we did not understand, and then highlighting the issues or potential issues to questions with the board, with your general manager. we do have six recommendations, but rather than go through those, i thought i would just use the tunnel on your consent calendar today to highlight a couple of questions, and for your questions. are the scheduled extension is necessary? the answer is yes. we have looked at that.

you have had reports that absolutely are prudent, and not just concerned for money and schedule, but for worker safety. the people working in that tunnel need to be safe. i can tell you for a fact i would never go into the tunnel because i am chicken, and i honor the men and women that do go in. is it prudent to expect delays? the answer is yes. the memo you have today talks about trends and ask for more time extensions to be made available in case more of the same conditions are run into. are the extensions requested sufficient? that we cannot tell. we do not know if the trends that are projected that your staff is using our -- most engineers are optimistic. i spoke with the general manager

who said that project manager makes conservative estimates, but we do not know that, and from the staff report, you cannot know that. a reasonable question from a commissioner might be, "will you have to come back for more time, do you think, and what impact will that have on the program?" that is the last question -- what is the potential impact of these extensions on the program? does it make the tunnel a critical impact? we do not believe so, but we think it would be helpful. we are trying to be constructed and assist you in completing the program successfully, and we think the answer to these questions would be helpful. that concludes my presentation. be glad to answer questions or respond to comments. commissioner moran: thank you. first of all, i appreciate the tone of that presentation.

i think we respect and count on, you know, knowledgeable people who are outside the organization to take a look at us, and we have a variety of those folks -- auditors and advisory committees and you and your organization are certainly primary among those. our water professionals, and beyond that, you have a huge stake in how this comes out, so i appreciate those comments, and i think one of the things that we have been talking about internally is that we are entering into a stage of the construction program where we are spending huge amounts of money. i think the burn rate currently is about $30 million a quarter -- did i get that right? >> and month. commissioner moran: oh, a month?

ohly off -- only off by a factor of three. that means things are happening quickly president moran: and that is not what they were intended for. it is important that we stay up to date, that is why you were in front of us today and we will continue to see what the regular basis -- you on a regular basis. thank you. any public comment? thank you. mr. secretary, will equal the consent calendar? >> considered to be retained by the san francisco public utilities commission and will be acted on by a single vote of commission.

a, for the new a ministry of building. and authorize the hon general manager to execute and increase the agreement not to exceed 14,001,400 --- the water systemt funded program to lowest qualified bidder. award water enterprise fund contract for recovery project. [reading items]

this was the item that miss lamonte discussed. [continues reading] if you could entertain a commotion for -- a motion for items 9a through e. >> so moved. >> the questions on item d are still important, but we will pursue the answers to them anyway. president moran: any other public comment? all those in favor? the motion passes. let's see.

for regular business, mr. cheng is not here. so let's pass on that item. we also, it's not 1:30 so we can't go to item 11. >> we can start item 12 if you like. president moran: ok. there's nothing before that that leads into that. why don't we do that. you're our next.

>> ok. good afternoon. i'm mike campbell from clean powersf. i have five slides to get through in five minutes and i think i can do it. first, to summarize the resolution that is before you for consideration, a contract with shell. your approval is the approval of the master contract and the final revisions that are still in the works. we need to be consistent with the substantive matters that are in the resolution the attached to those materials. and also authorized the general manager to submit the contract to the board of supervisors for consideration as well as a supplemental appropriation. those are funds that we talked about in the past related to

collateral and other items. the general manager would need to return to this body for further approval before executing a final confirmation agreement. one item is how we need to the bond requirement. there are several conditions precedent that are outlined in the contract that would need to be established prior to making a final contract executed and launching the program. there is also a term sheet. we talked about the activities of the first time it was before you. the general manager will continue discussions with noble america. i touched base about the conditions present. the approvals go in two steps. what is really before you, the

master contract is really the rules of the road in terms of the services being provided and how the relationship to work. there is the confirmation agreement that would have the dates of service, specific start watching dates, final pricing, and the types of products being purchased. and we would be coming back for another set of approvals on the confirmation agreement. some high level items for the confirmation agreement and what it requires. we would have to have rates in place for the fairness board and the claim power -- clean po wer sf program. the sfpuc would have to have whatever is necessary. the appropriations for