computer -- >> recognize that you are in the right spot, then. >> [inaudible] >> thank you, commission. barbara hale, assistant to our -- assistant power generation. we have a pretty flat budget without much change from last year. very happy to answer any questions as we go through. so, you see that we have our capital and program changes, where we are reducing our boat, if you will. by $22 million.

the recall of assets from water to power reflected here as well, as mr. ritchie described. so, generally an overall modest change. in looking at the authorized positions, similarly pretty flat. look at the changes. not a lot to address their. here is my overall organizational structure. you see, from the boxes of activity, you can see where our operating funds are falling within the organization. you can see where the position loading is. notice the box on the extreme left. energy infrastructure planning and development is where we implement energy efficiency and the renewables project. not a lot of operating budget there for 21 positions, but that is where a large part of our capital program dollars go, with

energy efficiency investments, renewables investments, including go solar. we are sticking with our focus for priorities on providing high-quality service, planning for the future, and meeting those green and sustainable objectives that we have been talking about in our climate action plan and our strategic sustainability plant and the various policy directives that we have discussed with you over the years. on the topic of providing high- quality services, our focus is on the core activities as a utility with preventative maintenance programs. as you know, we are also looking forward to a successful launch an operation of our cca program. planning for the future is largely focused on our efforts to adjust our operations to the

changing regulatory environment that we are in and changing contractual agreement -- environment that we are in. as you know, our pg&e contract expires in 2015 and we are spending time and effort planning on how to replace those services and protect our existing customer base and the revenue stream that they represent, making sure that we are paying attention to those risk-management issues inherent in being an electric service provider. for our green and sustainable efforts, it is release starting first with optimizing our use of the hetch hetchy resources. making sure that we are operating it under the water first policy, consistent with extracting as much value on the power side as we can. that is the coordination that we have between miss and offered's folks and our purchasing and

scheduling groups that are doing the day-to-day activities there, and the coordination. this is, of course, our first year of compliance under the new renewable portfolio standard that the state of california adopted. we will be purchasing renewable products to cover any electric consumption from customers that is not met by our hetch hetchy system. >> can i ask you a question? >> yes, commissioner. >> it seems like clean power assets should be one of those boards. >> -- clean power sf should be one of those boards. >> it should have shown up twice. >> will it? >> beg your pardon? >> will it? i do not know, i guess this is just presentation service, speaking about why we do the things that we do and it does

not have it really in there. >> but it is a good reminder, even if it is not but physically on the page, to keep that in mind. here we have a quick summary of some of the changes. they are small numbers on the operating side. i will point out that the energy data system here, which is on a single item, is really helping us to address the performance benchmarking requirements that we now have where city buildings will be visible to customers to see how well they do in energy performance. that is a city adopted program. it is also allowing us to integrate our systems, our data systems with the new information

and systems that we are getting from pg&e, because they are implementing automated meters on some of our customer load, allowing us to integrate those data points better. looking at our capital requests and the changes there, you can see that the highlights are the trends bay transit center efforts, where we are working with the trans bay joint power authority load as a new customer, looking at reducing our ocean generation capital project as we complete the studies that had been on our to do list. with the close of this fiscal year. >> on the trans bay transit center, often we have a capital or expenditure item and there is no relationship to bringing in new revenue.

this one is actually offset. >> thank you. that is an important highlight. to relate this to the big sheet capital pages, if you have questions, i can point you to the right lines. with that, we have concluded a brief presentation that i have of our budget. happy to take any questions. >> the treasure island question? >> the treasure island question. >> yes. so, -- no? very good. questions, commissioners? no? ok. >> on the overall financial, the 10 year financial plan, that shows the rate increases over

four years. >> that is right. behind no. 5 in the binders, that is where the 10-year financial plan was summarized before. that 10-year financial plan, you will recall, is the already adopted in door, already planned implementations to the degree that there is an additional brake increase in years five through 10, that would give us -- additional rate increase in years five to 10, that would give us additional capital programs. >> those rate increases do not recover costs. isn't that correct? >> two parts to that answer. so, our costs right now in the model, because of the $90 million in cuts that you made to the capital, it means that total costs are $90 million last.

so, if we redid the cost of service study now with a smaller capital plan, your costs have gone down because those have not been added back. so, when the last cost of serviced study was done two years ago, it was on a larger capital plan that had $90 million of higher larger investments in energy efficiency renewables. so, if the plan is to add those 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