back at a future time, the plan is to have it go with it future rate increases to do cost recovery. >> without those added back in, how close do we get? >> on average, we are recovering costs. that is on average. some customers are slightly below individual costs. >> and then the levels of reserve that you have down here are -- i do not want to put words in your mouth, but they are adequate for the anticipated level of debt issuance? >> in addition to the risk assessment that miss an effort and her staff did in last year's budget, which showed the amount of risk that would be before us is a powerhouse or generation unit were to go down.

based upon that, we believe the output at this time. >> just to point out what the numbers are for those that are not able to see this, in 2018 we would be at the bottom of the fund balance, 8.5% of our percentage of revenue. by the end be would be back at our 15% five goal, the goal for our fund balance. >> good. thank you. >> are there any further questions hetch hetchy for -- for any hetch hetchy water and power? our next item is to go back to responses to budgeting for sewage. >> at this time, i will take public comment. >> i guess that would be me. just one brief item on the

moccasin penstock. i am glad that that was raised. i remember, and i am sure the president will remember, in the late 1980's, early 1990's, there was a contract to do work on the moccasined penstock and it kept getting deferred because of needs to balance the capital programs. to the extent that we are finally doing work that has been deferred, this kind of relates to the overall hetch hetchy infrastructure needs. we should not defer those big items, even though they are big items, because that is what keeps the system running. it often seems easier to deal with water issues that are closer to the service area than water and power issues in the country, but that is what makes

the whole thing work. i just wanted to take a moment to reference moccasined and stock and other things in the up country as not being things to defer forever. hopefully with both the tower rate increase being approved, and other things that we look at in time in terms of getting too " -- getting closer to cost of service, hetch hetchy will have the resources to maintain their assets in the up country. so. >> thank you, i appreciate that, actually. we have been considering not only just asset and capital maintenance that we need to do, but these other cuts the we are facing this year, and moving forward. i would request and urged that we would be looking, really, as often as we can add

reinstituting and generating additional revenues, what have you, to make sure that our assets are protected, the energy program in particular, to the highest standard. >> afternoon, commissioners. we are concerned about the proposed transfer to the [unintelligible] service territory. we have had this concern since the first step. we did not challenge it, in spirit of compromise. now the issue is coming back before us. our concerns are, first of all, that we believe the environmental analysis is inadequate. that there was inadequate baseline data at the time. we are starting to get more on that from the ecosystem project, the climate change study that we heard a draft of earlier this month.

but we feel that the environmental review is not adequate at this point. the second thing is that we should be very proud of the tremendous gains we have made in water conservation. sales are down, the climate actors, etc. i think that people have really embraced the fact that we can meet our needs without putting extra strain on the watershed. i believe that last year we were at 220 m g d, far below the cap. the demanded projections are down, looking at the future. it does not make a lot of sense to spend $1.6 million per year on water that we may never need. i think that the ratepayer issues are what we need to consider. we will be submitting more formal comments, but thank you for the opportunity to comment today. >> thank you.

>> commissioners, what i am going to do is state to you very clearly that as the director of environmental justice advocacy, i take a different view about this budget. because i have to pay attention to the first people, with whom i have certain talks. but also with our university students, with whom i share this information. going back to the [unintelligible] every budget that is presented, every year, we need to pay attention as to how, exactly,

our hydro electricity is distributed and how do we want to consume this power that is expressly explain in the [unintelligible] act. as to the water, we know, even this year and in the years to come, it is going to be impacted by various factors. some people call it global warming. i just call it whatever. but our water resources, from our budget and the position of

the employees, they are all connected. it is going to take as to some kind of model that will impact our budget in the future. sometimes very drastically. i have said it before. our budget and our operations need to be vetted by the best minds. and if this is done, then every facet of this budget, clean water, and electricity, when they are addressed with the best type of input, from what i consider the best areas, this is not shown in figures. it will be shown in figures in the future with the input being

effective and incorporated. thank you very much. >> any more comments? at this time -- >> i had a couple of questions that i did not think of earlier. where -- the number i am looking for is the total amount of money that we send to the national parks service per year. that is an issue that has received some recent attention. do we have that number handy? could we be provided with that? >> it is not five and a half million, but there is a five- year contract with $5 million to $6 million. we can get to that estimate, but it is between $5 million to $6 million per year. >> i think it is an important

number to highlight because there has been criticism about the level, but we do make a significant contribution to the parks service for maintaining their willingness in our watershed. i think that that is it. thank you. >> i had a question on that $1.6 million. i think it is for mike. i do not know. is that annual? >> it is the irrigations transfer. >> an annual amount. that is sort of just a number that will be negotiated, correct? >> commissioners, michael, deputy general manager. that number will be negotiated. >> i have forgotten, when would that start? from a budget perspective, would that be fiscal year 13? >> july 1, 2012.

that is all to be negotiated, obviously. >> ok. great. thank you. >> any more questions, before we move on? does everyone have a copy of the questions and answers? who is going to help me out? >> you are a bit faster than me, commissioner, though i have to pass out, through the secretary, answers to the question from budget hearing one of water and sewer. there are a couple of copies here for the public as well, as well as copies over at that table. while both are being distributed, questions and answers to water and sewer, if i could clarify with the commissioner the exact amount of

the national park service's $5,742,000 for the proposed 1213 -- 12-13 budget. that would be the amount for 12- 13? >> do that again? >> [says number] >> ok. >> we have track every question that was asked in years past, and what comments were given verbally. water is on the first page. any road that is highlighted in yellow or green is something that new information for you today. the yellow road means that we will plan to put that out a future commission calendar for you to deliberate on. green means that there is something in the packet for you today in this attachment. the most significant item that

the general manager talked about earlier was this first attachment, which talks about how to mitigate the increases of the projected 30% rate increase for retail customers in 14-15. if we could go to the overhead projector, mr. secretary? it has been a priority for all of us to look at what our alternatives are to make this as affordable as possible. those are before you on this chart. as mentioned before, wholesale customers have the ability to repay over a 25 year. for the capital assets that were invested with those customers.

projected to be about $360 million in additional repayments that could be prepaid, though they are not required to be prepaid. mr. jensen talked earlier today about the mutually beneficial impact of that, as well as the potential for additional cash funding, which could mitigate retail increases as well. if $10 million were to be repaid, that would allow us to shave 6% of of that $30 million. as i mentioned earlier, about $350 million would be owed on that capital investment as of june, 2014. additionally, we could look at cutting. >> the idea is that in the new

water supply agreement, we are changing the methodology from the old days. as you recall, we spent the money first and were repaid over time. with the new contract, wholesale customers share in the contract as we incur them in the first place. there were these stranded assets that had not been fully paid off under the old methodology. at the time we said you could pass all over the next 25 years, which was our cost of funds at the time. if they can go out and sell any amount of that or less, they save money, so it is great for them. if they give us more cash up front, it avoids the large rate increase, which we need to have

for coverage -- >> i am just going to leave. >> for $60 million, you would not need any rate increase. >> there are a variety of things that become much more possible over the next 10 years, if the wholesale customers went ahead and made that kind of payment. there may be a need for sizable rate increases. if we believe that that can happen, it makes a huge difference in that 10-year outlook. >> can they increase the rates? the rate of repayment? >> they can be repaid any time. we want to check to make sure they can do it.

they said that while the rates were good, we should see if we can do this. >> delaying their -- delaying the increase until fiscal 15, does that mean the numbers are not going to be operative in the rate increase? >> if we made that decision to defer the transfer over the next three years, that would mean that the rate increase for retail customers to be lower by that amount. >> by the lagging, does that imply that it could be reconstituted? >> it presumes that it could go forward in a subsequent year. at that point in a subsequent year, a rate increase would be necessary. the idea was to isolate one

year, said there would be just the impact in the case of the water transfer, year, there would be an increase in rates. >> there would be an increase in fiscal 15 in 16? >> pardon me. >> there would be an increase in 15 and 16? >> the decision here would be to not delay water transfer allowing us to shave a couple of percent off. like those are the delays, correct? >> isolating the delays, 1.8% would be the value to the retail customer. >> if they decided to operate these projects in 2016, the increase would be 3.5% on top of

that? >> it would be an increase for when you would want to take delivery for the water. if you want to take delivery starting in 16-17 -- >> the difficulty that we are having is that the delay represents three years' worth of water and three years' worth of savings. it would be three years worth of savings if you did not start in 2015. accumulating 15 years' worth. some of them are discreet. one year, yes no. those of the capital sale repayments, multi-year in nature. just because of the five-year adopted rates. >> these are not recommendations. this is just the value of those types of decisions, if you would

like to look at them. >> the delay of the west side recycle water project, i have been following the press that we have been seeing and the comparative numbers, compared to the other cities and counties in the state. i feel that we need to have more of a lead on the recycle water work. i am not really happy seeing that on the list, especially with the small percentage that we would gain. if there was anything else that we can identify? >> we wanted to show you how little the amount was. people were saying -- if we did not do that, but said a lot of money. because we are borrowing, we would not get a modest set -- a lot of savings. >> then we could take it off the

list. >> depending on what happens,, but we will have property sales. they will at least be reduced by the 2.8%. those are worth about $5 million. >> also on the land use, that is what we know. there might be other opportunities as we get the policy together to say that this is redundant. right? >> one of the things that is an important issue, you never know what you will find out until you see it on the day. i think that it was referred to

as a classification creep. i am curious about what we will find in the record. if possible, would you mind going over the attachments? if you could explain it a little bit better for us? certainly so that the public can get their arms around it. it is easy to see in front of me, but i would like your take on it. >> i will turn to the fifth attachment, e as part of the packet. we put on hear what the cumulative impact was for substitutions. we show that by every enterprise.

we also have on the screened for the public what it means in the context for the total budget. what would be before you is that 34 position substitutions by way of comparison of the 2400 authorized positions that we have my in the sf puc. it is a small percentage of the budget. and even smaller percentage of the financial budget. there are two choices of staff, as we but at operations. sometimes there is a need to change the position classification to make sure it is what it needs to be for job descriptions. this budget does not come to you and ask for new positions, largely. if there are not 2400 authorized positions, the general manager has asked us to rearrange those not as general positions, but to

substitute out. you will see by their summaries that while some of those are up, for example in the waste water department, up slightly, others in hetch hetchy power are slightly down. the water enterprise is slightly down. the second page of attachmente, you have the bureau of infrastructure that shows slight increases. in the context of our nearly a billion dollar budget, you will see it is a small percentage of the budget. nevertheless, 34 positions substituted, as opposed to asking for new ones, and it has a small impact on the line item of the budget. >> if i may, with respect to -- let's go to hetch hetchy. that is where refined -- is that a salary savings?

is that correct? >> in that case, it would be a salary increase of 36 dives in dollars. a positive number here would be a slight increase in cost. a negative number would be savings on the sheet. >> reading it correctly, with respect to that particular chart, the first two classifications listed, the first one is 1842, the second one is 1646. am i to assume that the individual in the 1446 classification has been promoted to an 1832? is that what this chart is showing me? >> no, it is not. it is saying that of our 2300 or so positions, at any one time, about 10% to 12% of those positions are vacant and that really fund but we need for

operations in we assume some natural turnover of retirements. this is saying that operationally, within hetch hetchy water, in that example, there is a proposal to change the funding and authorization from a secretary to a management position. that would be a slight upgrade. that is regardless of the individual, whether or not that position is filled or not failed, currently, by a person. >> with respect to the same chart, those classifications contained in parentheses where the final figure on the column to the right is in red, those positions will no longer be with hetch hetchy water, and instead be substituted by the

ones in the black. >> that is right. to the degree that a person is eligible to apply, what they would be applying for is a slightly higher paid jobs in this case. >> 1.4%, i would rather work with that figure. we are not bringing in any new positions in this budget. at what point do you consider that to be the baseline or what was far below what is acceptable. certainly for the public, are we running amok behind closed doors? or is this really good news that we want to share? it that we are doing things on the up and up? it is very transparent, raised by the public. 1.4, is that really low? >> it is a very small% of the

total, reflecting in particular what is before us. we can provide services to the ratepayer within those means. meaning that we would have to substitute positions at a slightly higher pay. >> i think that it is great that we got that information. i am excited about it. i am excited about what it says about management. so, thank you. >> on that point, what is the management assistant? >> a management assistant -- >> i am sure that it varies from department to department. >> it is someone who can do much of the functions, in addition to some of the basic, basic

assistance and analytical work. so, as we become more sophisticated with online document management, much of our world is becoming more sophisticated and meeting a slightly enhanced skills that. in this case, there are slight enhancements. >> i would like to go back to the 30% increase. >> there are two companions lives to that as well, commissioner. so, the 30% is here as attachments a