wish the energy industry was run by different players. i wish the companies that we -- as a city could do business with had a different track record. the reality is that the reason why jurisdictions like ma ren county are doing business with shell is because that is the only option we have. that is to say, though, that we have to understand that as we look at this contract, the goal of this contract ultimately is to lead to a build-out that no longer requires us to engage in those type contracts. i'm not here to defend the track record of any company but i do believe there is a way we can responsibly do business and protect taxpayers and it does so in a way consistent with values and principles we have as a city.

this is an opt-out program. if i had a choice, i don't know that i would do it that way, but at the end of the day the program is set out the way it is because of state law. that is something the puc will be explaining very shortly. so i look forward to a robust discussion. i know there are a number of issues raised in the last few days. those are issues we have thought about. we care about the impact of this program on low income communities. someone who represents district nine with many low income residents. i'm mindful of the importance of protecting those communities. i guarantee we have done and will do everything we can to make sure the interest of those communities are taken into consideration and we go as far as we can possibly go legally and financially to make that happen. i know i have a commitment and the puc has that commitment. i also believe some of the

reports that have been presented on this, including the economist, which is very informative. i appreciate the work they did around that program -- around this program. i think that report has also -- should be put in the context that we at this point don't really know the full benefits of a buildout. i think it is important for us as a policy body to think about that as we try to figure out what some of the costs would be. so with that i will open it up to the public utilities commission. again, i look forward to a robust conversation. the goal is for us to make sure we offer rate payers in san francisco an option. it is about choice. i think at the end of the day there is a way to provide that choice in a way that is fiscally responsible. the last pointly make is

just yesterday mayor lee announced october will be the month of innovation in san francisco. we have an opportunity to city government to be a part of that. i think this is an innovative way of us offering choices to our consumers and do so in a way that protects the liability of the city. with that, mr. harrington. >> supervisor campos, do you want to briefly explain the substance of the amendments? >> yes, thank you. >> we will take that up after public comment. just make sure we are aware of what they are. >> one of the key changes is it makes it clear that it delegates the authority to the general manager of the puc to make any non-material amendments that may be required, technical amendments that may be required to finalize the contract. the language basically is

added to strengthen to the extent it is legally possible the commitment to a long-term build-out. we believed that the initial language did that, but to the extent that ceqa and other laws allow us to strengten that language, that is the intent of many of the changes. they are not substantive. it is simply a matter of emphasizing the commitment to that intent. i think there may be other minor technical changes recommended or need bid the attorney's office. but the substance of the program remains. we don't believe these are substantive changes. >> thank you. to the city attorney is there anything you would add? >> john gifford, deputy city attorney.

these amendments would be non substantive. >> thank you very much. why don't we go to the puc. >> good morning, board members. i'm general manager of sf public utilities commission. thank you for your opening comments, supervisor campos. i will try not to repeat those, in the interest of efficiency. with me is barbara hale, in charge of our power, todd is in charge of finance and mike campbell has been in charge of the community program for a while. as a note mike campbell will leave us to go to work for the california puc as a manager in the rate payer advocacy in the future but they are here to answer questions. i thought i would cover most points and make it easier but if you have detailed questions, we are available to answer those. the presentation today, first start with the big picture, obviously. we don't just do this because we think it is a fun idea. we do it because there is climate change, there are things happening and san francisco has to respond to

that. this is the single biggest program on the horizon with the city and county of san francisco to make any difference toward any of the goals toward the greenhouse gasses and climate change in san francisco. without this program you have very little sitting out there. this can make a dramatic change and provides the city to offer a choice. i'm sure some in the audience, including myself, got a robo-call that talked about the board forcing people into something. after this discussion i will be very clear the board is not forcing anyone to do anything. this is a choice we are making available to our citizens and residents in san francisco. many residents in the city are renters with low usage. i'm a renter in san francisco. i am not going to put a solar system on the roof of my landlord's property. for a small amount of money i can go out and change to get my electricity as a

totally greenway of doing business. it makes a change in my life and the world. options but that.n't have the program would start with 95,000 people. the long-term goal is reach everyone. that is what state law says. at some point all residential customers have to have the opportunity to be in this program. as supervisor campos said, the long-term look at this is really simple. if you look at our water system the reason it works so well for everybody in san francisco is we own our assets. we can control our costs and figure out how we will maintain those assets. the problem in the power system is we don't own it accept for hetchy. we have to start slow, get a revenue base. once we get that, it is possible then to start doing a real control of assets of generating green power. what we can do is this will leverage our ability to create energy future for the city and local jobs. we have been working with

lafco, outside consultants to jump start how we can do that local generation, create the jobs, make renewable programs and make a difference. the appropriation before you puts about $6 million into doing energy efficiency, doing solar and starting to prepare for those programs to create our own energy. the cca allows communitis to provide electric generation for customers within the territory, that is the idea. all we do is provide the generation. we do not take over and do anything else that pg&e does. if you have called and want new service, pge will handle that. if lights go out, if anything happens in your home, peg will come out. they are in charge of distribution systems in san francisco and the bill that will come from pg and e. the one thing we do is provide clean power and see a change on one or two lines that will talk about the difference in rates we

will charge. this is not taking over pg&e and not doing anything that would hurt in any way any jobs of pg&e persons in san francisco. they will still work doing the same things they do today. there's been discussion of opt-out services. in fact, people will have plenty of opportunity to opt out. at least two before we start the program with them. at least two after we do the program with them. then we are looking at having a minimal charge or no charge to have people opt out after the program starts if they choose not to be part of it. again, this provides the customer the ability to choose. if they want to pay a bit more and want to work on the environment of san francisco and the world. the history, i will not bore you too much, it's been a long time coming. we were first direct bid the board to start working on this eight years ago. the next several goes through in horrible detail all the different times you have told us to do this.

repeatedly different supervisors and different mayors have told the puc to get a program we can bring to you. 2004, 5, 6, 7 we appropriated $5 million to this program then. we spent a substantial portion of that. we appropriated another million in the last year or two. we have gone out several times and tried to get a program that would work the way we hoped. we hoped it would be cheaper. that is not what the market is having available to us. in 2010 with the second rfp we appropriated another million in the budget. you gave us the authority to negotiate a contract and bring it to you. that is what we are doing today. as supervisor campos mentioned lafco has been very involved and had 11 meetings on this topic. it is not news to anyone and we are ready to go.

before i get into the description of the program there have been questions raised. i thought it was better to hit those off the top. the first is the why isn't this an opt-in program? there is discomfort people will be captured by an opt-out. the first reason it is not an opt-in is that is not allowed by state law. the law says it is an opt-out process. in addition, there is no benefit to the puc or clean power program of inadvertently capturing anyone in this program. we need a stable base. capturing people in our base a couple months and losing them is of no interest to us at all. we have a major marketing plan we expect to go out with to make sure people understand their choice. this is a premium product. if they want to that is their choice. if they don't that is their choice. we would have great assistance from pg&e in making sure customers knew

they had a choice if they look around the room today. they can get people out when they want to. we are also saying that you don't get captured even after the first opportunities. after you are in the program a year you can opt out. is this really 100% green? so if you have hetch hetchy water in this building, i can promise that hetch hetchy water started at hetchy, put it in one of our pipes and brought it to this building, it is hetchy water. if it is power, though we say this building is powered by hetch hetchy power, clearly there is no extension cord running to the tuolumne river. that goes into the bathtub and other power comes out. this will put in for every bit of power we use, this program will put in a same bit that will be renewable. may not be the exact same

time of day or same unit, won't trace itself to this place but it is 100% green, guaranteing our customers for every time we get a unit of power here, it is a green unit of power. the only way anybody in the state does it, actually. protecting low-income customers, again, if you look at mr. rose's report on page ten it has a schedule that shows what we had thought about in terms of the rates. it showed we would not be producing the 20% discount industrial utilities do for low-income customers. if you look at our presentation we are including that 20% discount. that makes a difference in the rates, from the higher amount to about the average of everybody else in the program, so that though it is not a requirement we are proposing to our commission and rate fairness board we propose the same 20% rate discount pg&e has and other investor-owned utilities have in the state of california. you will see that does

include that 20% discount continuing there. we are sensitive to the fact some can't afford this, which is why we will not impose it on them. so what is the program? the goals that are on page 14 in many ways supervisor campos covered those. let me go to page 15. the original goal was meet or beat pg&e but you can't get that. green power costs more than brown. if it didn't, pg&e would have switched to green power. clearly there is a reason, because it is a premium product. we are telling people it will cost more money. the stability, we wanted to have multi-year fixed rates, we are planning on that. when you sign up on day one you will know your rates for the next four and a half years. no one has that kind of stability or information like that when they are customers of pg&e. the energy mix, we want 51%

renewable ten years from now. instead we are presenting a program 100% renewable day one. the development ultimately the goal is 260 megawatts. we are starting small, as we said. we will put money into starting that. that goal is a ways off. the enrollment will be the entire city. we are doing it in a phased approach to make sure we do this responsibly and proposing 30 megawatts to start, about 90,000 customers. in fact, there was a single supplier related to power but a separate supplier for the back office things that people can talk to and really the billing processes will be naibl america. the final thing with the supplier takes all risks, that is not possible but we have given you a program where we believe the risks are acceptable. there are risks when you walk across the street, risks in life. the risk we think is an

appropriate level of risk. to show you -- busy page but to show you the impact this has, the city has currently committed to spend $9 3 million on sunset solar, solar projects, micro hydro, cogent facilities. $9 3 million that. will reduce the carbon equivalent of less than 7,000 households. if you appropriate this 19.5, we don't expect to spend yet, ten times all the efforts of all the work we have done for san francisco. dramatically different impact this program can have based on anything else for any price we have ever approached. the term sheet highlights, mitigation of risk is because we are going to

phase it in. the opt-outs we expect to be sent to approximately less than half the people who own or rent in san francisco. we assume on the people we are working with that about 50% of people in those district also want to stay with the program and 50% will not want to stay with the program. we will offer our customers 100% renewal, plan to launch in mid 2013. again it is shell energy and noble america. we are asking for 19.5 supplemental to start but once the revenue stream is established the whole idea is to get it going with city resources layered in to replace the shell resources over time. the $13 million of city funds that's part of the 19.5, because six million is for other programs. the 13 million, 7 million into an escrow as collateral. i will talk about when that

might be used. 4.5 goes into a security account that takes care of the cash flow issues of the monthly billing and million half appropriated to mitigate potential costs. should we think we will get 90,000 customers, we won't have that at first, it will take us time to catch up. this is for that risk. we hope we will never have to spend. while we are appropriating, the goal is not to spend but the collateral and unlikely event of termination. what does that mean? what is the city liability? if the program is successful, obviously there is no liability. if the program is financially successful -- not successful, we just can't get the customers we can't get. we go to shell and say, this isn't going to work. can we go out and sell that power someplace else? it is renewable power.

with the rules in california there is such demand and the current rates are so cheap that we believe we could turn around and re-sell that power should this program not work. if for some reason that is not true we are liable up to $15 million should shell be unable to sell the power to someone else. that is the limit of that liability. that decides if we decide it is not viable and power rates in california change dramatically. if the program is financially successful and working and the board chooses to kill the program any way that is where liability is open and completely under our control. if you like to shoot yourself in the foot, we have the ability but you would have to intentionally want to do that. again, shell would only experience losss if the market changes in california and renewables are lower than they currently are. we don't see that as a high

probability. even if that is the case it is only the difference. not at total $15 million or amount. the difference between what we can sell it for and others can buy it for. the reason we have slide for incremental cost of renewal, people say why 100% green power. couldn't you do one with 40% or 50%? in our polling we found there are people that are price-sensitive. they don't have the money, don't want to buy in. if you ask them for $5, they will fall off. if you ask them for $9 you have almost the same group that says i'm in for $5, i'm in for $9. we found it was a much more straight forward to offer 100% renewable, get rid of confusion because the people that are price sensitive you have lost anyway. the difference in 40% and 100% renewable is small. they are with or with you, the difference is not great enough to make them change their mind to. be able to

get this program going, it is two steps. one is the master contract. second is confirmation agreement to set prices out. we have to execute the confirmation agreement. the first thing is rates. go to the rate fairness board and then to the commission. if this board of supervisors wishes to reject those you will have 30 days, the same with water or sewer rates in san francisco. we have to have resources to make this work. we have to have the appropriations in place, we have to have a financially stable organization. contract with noble america is pretty much finished, just not a high enough dollar amount to require board approval, that is why that is not before you. the termination provision do not take effect. nothing kicks in until the final confirmation is in place. we have months to go and many steps before we are financially committed. that shows you what we think is a decent time line, approval by this

committee, by the board, going through the rate process over the fall and hopefully to enroll customers and start to deliver power late next spring. financial rate payer aspects of it, we are trying to spend as much as possible on green energy. there is overhead. this shows 82% goes to green power. other goes to things like marketing. we want to make sure we don't capture people we don't want to capture. you will see here that the huge percentage of san franciscans are in tier one. i'm tier one. this will cost me about $7 more a month on my bill. that means i could do this, have green energy for the cost of dinner of two on valencia for a year. i can get green energy for a year for the cost of one dinner. i think it a good deal for people that want to do this. the affordability, to be

clear, we are talking about 9.5 dollars for people in tier one. as your bill goes up the premium goes up. in general on your bill the difference is about 18 to 25 percent. there's a higher number there for people who are all electric. most people in san francisco have a mix of gas and electric. this doesn't affect the gas side. but people all-electric would sigh higher increase because they are more dependent on electric than gas. this is to put it in perspective along with garbage collection. pg&e bill, water and power to show this is relatively small for the average homeowner in san francisco, should they choose to do this. i should note mr. rose had two recommendations. one is four and a half versus five-year. i recommend you change that to up to five years.

the difference is that it is a five-year contract but we won't be buying power all 60. up to five years works. they have suggested $6 million go on reserve, that makes perfect sense to us. i'm here to answer questions and again ms. hale, mr. campbell here, mr. wiener also. >> thank you for the presentation. colleagues, any questions at the moment? supervisor kim? >> i just wanted to go over some of the concerns and you had brought up on the program questions. i was hoping you could talk in more detail about some of the ideas around multilingual customer education. i know one of the concerns that comes up among colleagues was that seniors are not english-speaking consumers. they need to be properly

educated. if you would talk about the assurances around education. >> right. we could use help we can get. recommendations are warmly accepted. we have about a million dollars set aside for marketing. the discussion is we go out and heavily market in multilingual ways. probably tv spots, along with radio. clearly most would be mail, though. it would be in people's mailboxes. we would also engage community groups to work with us in different communities, especially multilingual to make sure word gets out to people. again it is no interest to catch anyone. any recommendations you might have for how we hit niche communities we might otherwise miss, happy to work with you. but we have money, staff and the promise to do that. >> will this primarily housed under puc or assistance from other departments like the department of environment? >> department of environment has been helpful. they have people that work in the community.

they believe in this program. >> the other question i have that has come up is the $5 opt-out. i know that is a nominal amount. i'm curious. >> marin tried this to pay for administrative costs and make people stop and say do i really want to opt out or not. we are not projecting any income from it. if it made more sense to have it be zero, that is not a big deal at all. >> my last question, so you are saying delivery of energy, metering and billing will be provided by pg&e. so do we have to share costs with them? is part of the budget we will be paying pg&e to do this work or how does that work? >> pg&e is doing the work they have always done. taking care of transmission and distribution so we are not paying them extra. in fact, we have customers paying that through

transmission and distribution lines. there is a charge we will see on the bill, included in numbers here. it is really designed to pay pg&e for investments they may have had in other kinds of generation that they may not get the full benefit of if they don't get the full customer base. o theser than that people are paying for the transmission distribution and people to serve their homes and continue to pay that. >> i apologize. i have one more question. how does this work for large buildings? i know in my district there are a number of sro. how did it work for those residents? >> where there are people who pay their pg&e bill, that is the target. we are going after people who pay their bill. other people who want to opt in, businesses who may want to opt in or large sros that have one meter in the building, they may choose to opt in. that is not part of the first roleout. we would hope to get

programs and rates that would attract people that aren't in this opt-out but not go after major buildings first with a master meter because it doesn't work yet for that. >> so in the phase i program of potential for customers, your analysis is sensitive enough you can exclude those large buildings in the first phase? >> we are only going to people on pg&e rolls. in general you have one water meter but tend to have separate pg&e meeters. large apartments tend to be separately metered. we expect a lot will be people in large buildings that are renters but have separate meeters. >> large buildings, not sros, so for example condos and apartment buildings. >> right. they tend to be separately metered, we will go after them as customers. they are ideal.

they can't put things on their roof but this is the next best thing in terms of climate change. >> thank you. thank you, supervisor. >> thank you. thanks, mr. harrington and you and your staff. i see juliet and todd and barbara, spending a lot of time educating me. i appreciate your hard work on that. i will say at the time a resident hearing the initial goals of the clean power sf that cheaper, greener, all that stuff sounded -- local jobs sounded terrific. obviously i have questions about what we have going on. i know you are operating under the construct of state law and things given so thank you for the hard work but i want to press for having a dialogue. i know i have had questions over time. i continue to say one of my favorite people in city government i have met in the year and a half. sorry you will be leaving us at some