time where just kicking off the program, enrolled, going through the process. during that initial stage there is a deposit charged to consumer who's are in this program that goes directly into a rate stabilization fund. >> yes. >> what does that look like on an annual basis, total deposits? >> about half million a year, it is not a large number. >> half million if you were to say you have a 5% inflater going forward we would expect a stream of half million bonded against for generations? >> there is that. the bigger issue, frankly, is if you are planning on bonding you would normally look and see what your revenue stream would be when the facility is up and running and capitalize your interest in between. so if you have a revenue stream people are comfortable with you are not just limited to that revenue stream in terms of what you can bond against.

you are limited to that stream, plus anticipated revenue of the new facility. that gives you the real big bump. this gives you the seed money. >> can i ask, when you folks were thinking about this and structuring it, the idea about the stabilization fund is this would be rate stabilization but also beginning point for which you create the revenue stream, you start to create the ability to bond and create generation in the future. was there ever a conversation around why with the way the contract is structured we didn't build in certain amount that participants would pay for for their own reserves, so for other reserves, the $13 million, why wasn't that billed into the rates? >> the simplest answer is we are trying to make it as affordable as possible and city has contributed $97 million for things like this in the past and continues to do it.

we thought some contribution from the city was appropriate. it was policy call. >> is there a possibility that -- what would it represent to have participants pay for reserves. is there a possibility? what would that cost? >> i will ask mr. -- he will need a minute. do you have another question? >> sure. we can come back to that. why don't we go to the next supervisor. supervisor kim. >> thank you. actually after some discussion i discussed with supervisor campos i didn't realize the p.u.c. had capacity or sensitivity to exclude certain buildings in the first phase. i propose we exclude buildings in the first phase of customers we outreach to, given the complications you stated but many of our most vulnerable rate payers live here and most often are

low-income. that is the top concern many of my colleagues have. that would allow greater time for outreach as we phase in other parts of the city. >> yes, supervisor. we can do that. >> great. i just want to thank supervisor campos for that. i think that alleviates many of my concerns as we move forward with this program. supervisor campos. >> thank you, madam chair. i want to piggy back on what supervisor kim was saying. i think that is a great suggestion. i think under state law we have to offer the program to everyone at some point. i think doing that in phase i makes a lot of sense. mr. harrington, i was wondering if you could touch on the issue of how we plan to do outreach in a culturally sensitive way. i know that is a concern for all of us here. we have a diverse

population, multilanguage wall. if you can talk about that it would be greatly appreciated. >> i would be happy by to and happy to turn it over to juliet ellis, external affairs. juliet. >> juliet ellis, external manager for internal affairs. we have prioritized this years since we have been working on the development of the cca program. some of the things we have been talking about internally as far as ensuring we be able to go deep into community os of color and communities that speak multiple languages, it includes partners with organizations that have a lot of direct access. for multihousing, not thinking about exclusion at this point, we were talking about working with some entitis that do the organizing and advocacy and do work on site within those units. this obviously may not be necessary within phase i if we exclude. then we have a request for

proposal that was issued for a million dollars to have consultants come in and work with us. one of the key tasks within the development of the communication outreach education engagement plan as relates to cca is specifically about being able to reach out to multiple languages and to diverse communities. with approval that is maybe the first and biggest task. we have been prioritizing and cuing up in preparation for that. >> thank you. i know that is a priority and one of the things you also will be doing as you are planning finaling an outreach, working with every supervisor. because your offices will have a better understanding of who the good -- the right partners would be in each district. so any insight you have would be greatly appreciated. >> i just wanted to say, we

are happy to work with the p.u.c. i think one of the advantages is they are often fairly well organized. educating may be easier. i think the additional time is important. also the first phase we will get to see how it operators, what worked, what didn't. we know our most vulnerable and low income tenants live in these buildings. many nonprofits own a good portion. i think we can spend that time working with them, educating them and seeing if this is the right fit for them and residents. thank you. >> thank you, supervisor kim. just a quick question on what supervisor campos has indicated. we don't -- according to state rules we don't have to necessarily. we offer it in terms of opt-out so long as we provide opt-in opportunity for everybody. is that right? >> state law requires all residential customers at some point go through the opt-out. >> they all have to go

through the opt-out. >> we have targeted precincts we believe have the greatest opt in choice so there will be more information before we go to those that may have people who don't want to join. >> you couldn't structure the program that once you had adequate customers you could stop and do opt-in but have to roll out opt-out to every customer? >> yes. at some point -- ma ren has been up and now at the point of doing the larger opt-out. it can be done however you want but at some point has to be offered all residential, not business. >> supervisor? >> thank you. a question of what is happening in marin. how broadly has their version of clean power been marketed? throughout the whole county? >> they started with most but not all. it's been so successful that all have joined the program. richmond across the bay is

trying to join also. they are in the process of having that happen. it is a program growing. those doubting it in some of the communities have now chosen to join in. all of marin, now expanding. >> in terms of the outreach to a lot of communities that might need extra help in terms of communication, having language services that are available to understand the program, what was the experience in marine like? do we have any information about that? >> i don't know. i'm looking at lafco staff to see if they have heard anything. i think in fairness we would have a richer language and multicultural thing in san francisco. >> true. but there are places in marine like the canal, san rafael, where you would probably ned a strong program that is probably community based organizations that could help. wondering if there was any information we have from that experience that can show. >> we do not. we talk to them all the

time so we can ask. >> i agree. what we have in san francisco is pretty rich to do that kind of outreach, thank you. >> thank you, supervisor avalos. supervisor ferl? >> i would say to follow onto supervisor kim's comments about sros, i appreciate the comments. if we go down that slope we have a lot of senior homes in district two i think fall in the same category that i think would benefit greatly. if we are going to go down the road of excluding certain ones i ask that become a priority as well. i think elderly folks are part of it the population that i'm concerned about, about kind of not being aware about the scenario. there are a larger amount of homes in district two that if we will go exclude because to be vulnerable and so forth i would ask we consider that as well. >> we can try anything you like. to be clear, sros were never en included. the whole point is they are

the master meter. we are only going after single occupancy or individual meters. apartments with multiple meters we are going after. sros, master meter, they weren't there. no problem with that. the database we use, the pg&e database, i don't believe it has age in it. >> we can work together on the individual ones, because that would be important. >> thank you. did you get an answer with regard to the rates on reserves? >> we assumed that it would be a couple cents more per kilowatts. so for tier one, if we absorb and have rate payers pay for the funds, it would go from $9.50 to $11.50 a month, so a $2 increase for higher end. of course it goes higher. on average it is about $4 or $5 more per customer per month. we thought it was reasonable amount the city could kick in. it could be changed. >> so that is something we could as policy makers

choose to do, is say let's have the program be self-sufficient, pay for itself. remove the city's contribution. >> we could do that. we would probably urge you not to. just because, again, it is what you -- we have spent so much money for so much less value on so many programs to say this is the first program that has huge value. we intend to spend no money to make it work. just doesn't seem to make a lot of sense but would be a policy call. >> this would be something you could phase i want? >> yes. >> in the rate-setting process could you say you would phase in customers actually paying for their reserves? >> instead of the average of 5% raise it could be higher than that and start to capture that. yes, it is possible. >> supervisor campos. >> thank you very much, madam chair. i understand the point.

i think what mr. harrington said is true. we are getting a big bang for the buck. the residents are close to 100 million and 6,000 plus. i do think maybe that is a conversation as the program progresses we can revisit. i think that is something we can always revisit. starting out i don't know if that is necessarily is best approach, thank you. >> starting out we clearly need to put city money up front because it has to be in the bank. it is how fast we pay ourselves back. >> great. i think there is a value to -- if we are saying that we want to sort of remove the risk, we want to have the program be self-sufficient, we want that this is a choice, that people choose to create this program, they choose the premium to have green energy. you know, it makes sense they pay for the reserve that is there as well. that would free up the funding for the city to

invest in the infrastructure we need as well for the rest of -- >> see your point, supervisor. >> the rest of the puc's operations. why don't we go to office of economic analysis. as you are going through your report, i know there are rates we are hearing about in terms of what the puc has versus what you have. just for reflection about what your analysis assumes. >> certainly. good afternoon, ted egan, controller's office of economic analysis.

last month our office issued

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payments that would be made by shell covering the 4.5 year period.

and additional programs the p.u.c. is implementing. those total 19.5 million, of which 13.5 go to suppliers, shell and noble americas. they really represent essentially a withdrawal of that amount of money of government spending in that time period. it would come back in four and a half years, though another amount may have to secure another 4.5, if there was a need for a security fund. that is the another unknown. the 6 million the p.u.c. is proposing to spend on go solar sfs subsidy and studies for a build-out would represent an injection to the economy and in fact, that is something we believe would be an economic benefit to the program. so to consider the economic impact factors, we present the economic impact of legislation as kind of a sum of the different elements that are changing as a result of the

legislation. so in this case we have a situation where one of the economic impacts stems from the fact that residential consumers who remain in the program will pay more for electricity. part of that is as they phase higher prices for electricity those consumers will reduce energy consumption. however, we don't believe it is reasonable to think that prices will go up so much or that consumption will be reduced so much that people's aggregate electric payments go down. there are markets where people are cost-sensitive, the price goes up. the total amount people pay goes down. we don't think electricity falls into that cat gir. that means despite the conservation effect higher electricity prices will lead to higher payment business san francisco consumers. what that means is because this money is essentially leaving to pay for shell's cost, this will reduce the net amount of consumer spending in san francisco.

that will have a broader economic impact in the city. on the other hand the investment and energy efficiency, alternative energy programs and, in fact, the studies represent an economic benefit. so there are economic gains associated with that. the program funds require funds from the hetch hetchy enterprise and indirectly from the general fund. as i mentioned that will result in a reduction of local government spending during the period. so essentially you have an economic reduction associated with higher electricity prices. you have an economic gain associated with the local energy efficiency and other program commitments and second contraction associated with local government spending. to get to the bottom line in terms of what that means for the economy we believe

the electricity cost also be in the neighborhood of 13 million. again, supervisor, that is in reference to the $18 number. if that jumps by 50% it is reasonable to think this number will jump by around 50% as well. the 4.3 million annual reduction in government spending, that comes from the security payments and the program costs, that would not change regardless of what the final rates would be. then the benefits coming from the $6 million spending on profession services, energy efficiency and go solar sfs would be benefits. according to our modeling this represents a less of 95 million jobs annually and reduction in the city's economy about $8 million during the four and a half years of the program. to put those figures into context, san francisco has approximately 550,000 wage and salary job, approximately 100 billion economy and these represent

1.01% of city in terms of total employment. >> just a question. >> uh-huh. >> the -- what is the source of funding for -- that we are using for the withdrawal of government funding? >> from an economic modeling point of view it is government funding. the money comes directly from the hetch hetchy enterprise. >> so we are saying we are moving it from a particular service and function to something else but it seems like that function service of the hetch hetchy enterprise might not be impactful to local economies. so are we doing an apples to apples comparison? >> i think we are. we are legally required to maintain a balance in the enterprise fund. so even though it is a reserve and technically not actively doing something, if it is reduced it needs

to be raised. whereever it raised does mean something. raised by a general fund or rate increase the general fund's paid for that is a reduction for the general fund. >> had you done modeling excluding this fund -- source of government withdrawal? have you done a model that actually did not consider this loss of funding for the hetch hetchy fund? >> i have not. we think that is the right way. it would affect the economy. >> thank you. >> thank you, supervisor avalos. supervisor campos? >> thank you. on that note does the report take into account if this reserve is not spent it would be injected back into the economy? >> if the reserve was not spent? you mean if the program did not go forward? >> or that at some point there was no need for the

reserve to remain in place. >> if the reserve were not needed and those could be spent in other ways, that would represent a net positive to the economy, yes. >> could you talk about the extent to which your report takes into account the phase ii of program, the buildout. i understand the item is this contract. your report, as i understand it, does not take into account benefits of build-out in terms of employment creation and jobs we are hoping to create in that event, right? >> that is correct, supervisor. we were not able to have specifics on what a phase ii local build-out would look like. it is true those benefits that include economic benefits are not considered in our report. it is also true to the extent a local build-out

would lead to higher rates, those costs are also not considered in the report. >> thank you. >> thank you. supervisor ferl. >> thank you. that was a question about phase ii. we heard from mr. harrell on the there were not enough specificks to consider it in terms of the bonding capacity so on and so forth. i think whether it is job creation or economic pain, if you will to consumers, based upon a rate, that is something that really can be factored in. the question for you around maybe -- this was touched on by supervisor avalos, i think. because of the reserve in hetch hetchy, there is one line item he talked about increasing in the departments in terms of their electricity costs. can you talk a little more about that. >> it is my understanding that the need to restore the hetch hetchy fund balance requires -- the option proposed to address

that is a rate increase by general fund departments. that is why our report makes the link between the security payment that comes from that fund balance and some impact on the general fund. i have not tried to say that all of it gets paid by the general fund or all that increase is solely caused by this program, but absent a change in the reserve requirement around hetch hetchy, one way or the other, taking the 13.5 million out, or whatever amount it is, does represent a withdrawal of government spending. >> okay. so the job loss you had estimated 95 jobs with your report. >> right. >> again, if the cost goes from 18 to 27 per average consumer -- again, we are saying average. i understand that is a complicated way to phrase it.

how does that roll through? >> as i mentioned, supervisor, there are two pieces of the negative impact. there is reduction in consumer spending, then reduction in government spending. i haven't broken out those two separately, per supervisor avalos' question. i cannot say it will be 50% more, it will be probably more than less of 50% more. >> supervisor avalos? >> just want to have you continue with your presentation, but a question to general manager harrington about our hetch hetchy reserve and his point of view of -- we are actually seeing a real withdrawal of government spending by moving money from that reserve to the clean power reserves. supervisors, hetch hetchy has had a high reserve because we are self-insured. we would not otherwise be spending this money. i think the answer is we could have. but our proposal would be

that if we are not spending on this, we don't have something else we think needs to be taken care of instead. we would leave that money and to make sure we have adequate reserves to self-insure. the reason we are comfortable here is it is going into reserves. if we were really spending it we would feel less comfortable. >> so from your point of view you are not saying withdrawal of government funding. >> we would not have anticipated spending this money, no. so we don't believe withdrawing government money. i understand mr. egan's point we could. we would not normally be doing that. >> thank you. quick question. about the increase to -- i know we talked about city hall gets a break on electricity and maybe it is time to pay more of a fair share. you are saying that would happen regardless? >> yes. >> okay. okay. one other thing because -- sorry, you are up there. we are 19.5 in total.