have to procure up to 33% of renewable power and we wouldn't have to do -- meet that compliance requirement within the same calendar year. we'd have some flexibility on delaying our compliance due to that unforeseen circumstance. so, focus just briefly on the cost limitation. you know, it's really intended to allow us to address uncertainties, like extreme dry year or plant outages. allows us to budget for any contingencies. we presently have in our adopted budget a budget line item for risk management as a contingency fund. at this point that is set at $4 million a year. we are proposing that the cost limitation be limited -- excuse me, that the use of that risk management fund, that $4

million, be applied as it is today, but also be available to us to meet this rps requirement. it would be -- allow us to use those funds, modest amounts of those funds, minimizing the need to raise rates on -- to customers in future budget years. it's really a safety valve to make sure that our compliance doesn't push costs up unreasonably. president torres, you alluded to the timeline. let me put it up on the screen here so that you can see more specifically where we're at. >> right, that's good for the public to see that. >> yes. >> my other question is in terms of the rps eligible, the renewables, what percentage are we looking at in terms of renewables? we have solar, wind -- >> right. so, now our resource mix is our biogas, our hydro and solar.

>> okay. >> and because we have this separate section of the rps law, we don't have to procure beyond those resources except very infrequently. and we are proposing that that procurement be from renewable energy credits. >> so, the way they're titled would be appropriate? >> they would be. they would be qualified resources under state law. >> if we had -- >> if we had them, yes. >> and we have no geo thermal here? >> correct. we have purchased it in the part, but we do not have any in our portfolio today. >> where do we purchase it from? >> we purchase from the geo thermal system in guyser. >> in guyser ville? >> yes. >> are they acceptible our hydro now? >> yes, commissioner, they are accepting our hydro. yeah, another hooray, that's three in one meeting. [laughter] >> we have -- we were able through the legislative process

to explain that were we to have the same rules applied to us, we would just be selling our hydro and substituting in other renewable resources. the objective of the law is to in part to reduce the emissions from power plants. we don't have any power plants that emit. >> [inaudible]. >> yeah, i have a couple of questions. so, we can't bank the rps resources? >> we can. under the rules, we can -- if we have -- if we do that math equation and we have lots of extra rps compliant power, we can bank those renewable energy credits. you earlier allowed us to register with us the western system that allows folks to have those credits certified in a way that's recognized by the

marketplace. we are registering those credits, then, and we can use them ourselves in a subsequent compliance year. so, for example, in this year because last year was wet, 2011 was wet, we had some extra. this year we're going to need to purchase some, but we're also taking some of what we generated last year and applying it to this year. so, we're not having to purchase as much as we otherwise would have. >> and they don't expire? >> they do expire. under the regulations, they do expire. so, we would either use them or if we projected that we wouldn't need them, we would attempt to sell them before they expire. so, we extract the value one way or the other. >> that was my other question. and then i thought we budgeted in our budget for some additional renewable procurement. >> yes, we do have additional renewable procurement in our budget. some of that capacity, if you will, that financial capacity is absorbed by the power purchase agreement we have with sunset, for the sunset soler

output. but we also recognize that even in any year, what we may need may need we exceed forecast. we're looking at the risk management part of our line item to fund these unusual circumstances. >> and when was the last time that we weren't able to meet our needs? and i know that these rps standards are new, so, maybe we didn't have the same issues. >> we didn't have the same requirement. >> but have we been able to meet our needs with hetch hetchy with our parr? >> there have been times we had to meet short-term purchases in order to meet our needs. and maybe the best way to look at that is to again look at the first background slide i put up where you can see there are some years where a lot of our generation is considerably lower. you could tell that our retail

sales pretty much track a wet year. not exactly, but in recent years, sorry, they pretty much track a dry year. so, the dry year line you see on this slide here is about where our retail sales are or have been in the last 10 or so years. and, so, looking at these -- the tail end of this slide here, you can see although years we have plenty of power to cover our retail sales. >> so, one of the things this slide doesn't give you is sort of like that day to day sort of variation that happens. that's an annual sort of like slide. and when you look at it sort of by quarter or by month, great, you have lots of power in april, may, june, and you have very little in september, october, november. until the rain starts and the snow starts again. so, if there is a cycle that kind of goes on and we do do short term purchases in what we call quarter 3 and quarter 4. just to cover, you know, our existing customers.

>> and that's why we'd be procuring the recs this year, right? >> yes. this is a lower than normal water year and we've had some outages. >> right. >> thank you very much. >> anybody have any questions? yes, commissioner moran. >> on the -- on page 12 of the presentation where you talk about the cost limitation proposal. >> yes. >> and you have $100 per megawatt hour. >> yes. >> which is twice what the penalty level is that was set by the cpuc for pg&e. >> yes. >> what is the thinking as to why we doubled that? why do we choose to have a twice what the cpucd? >> one is a penalty is one is a cost limitation. it could certainly be lower if you prefer a lower -- to cap

the amount the puc will pay at a lower level, we could. it was really just -- we're just providing that as a benchmark for you to understand sort of some of the context in which we're proposing this number. >> and the market for renewables ranges from currently what to what? >> it's also about 30 to 50 megawatt premium on top of the brown power. brown power price. >> so, 30 do $50 per megawatt hour premium? >> yes. >> and this says that it would be market -- in case of an adverse market which is probably when we would most likely need to buy this stuff, it gives us some price flexibility there. >> right. to the extent that we are low on hydro -- california is low on hydro, and, so, market prices are going to be up overall as a result. >> thank you. >> what is the impact of the deductions on solar utilization? have we measured that? tax deductions that are --

>> have we measured that? we certainly realize that it lowers the cost. >> right. >> and that's why we pursued a third-party for our development of the sunset solar project. >> okay. >> and didn't fund it ourselves. i can't recall off the top of my head, maybe you do, todd, what the -- mr. reedstrom, what the financial impact of that was for us. >> it was pretty significant. by way of comparison, the tax credit, tax credit financing that we successfully undertook for current sunset solar brought the average cost per kilowatt hour down to 23-1/2 cents. that compares to average costs of our hydro system. all the costs included of about 9 cents. so, without the tax credit federal financing as well as the state programs, it would have been over 30 cents kilowatt hour. >> you need to take credit for that. >> we have a line item -- >> that's why i try to raise

some of these issues because when you and the work that this agency has been doing, i am so proud of the fact that the cost saving that ultimately go to the rate payer, we need to talk about. if we're going to get your trumpet so you can blow your horn, we'll do that. you should be commended because you've been taking into account, you've been a steady steward of the process and look what it's producing for the rate payer here in san francisco. i'm sure most jurisdictions, knowing some of the mayors in those other jurisdictions, i don't think they've had as good a record as we've had here in san francisco. i want to say thank you. i think it's important to bring it out into the public view. >> thank you. it's definitely a team effort. a lot of detail. >> no question it's a team effort. my comments were directed to the team. any other comments? we don't need to accept anything. [speaker not understood]. >> there's no action. >> right, no action necessary. i guess there is an action necessary to go into executive session, closed session. >> thank you. >> any public comments before

we move into closed session? all right, we need a motion to assert the attorney/client privilege. >> move to assert the attorney/client privilege. >> second. all those in favor signify by saying aye. >> aye. >> all right. >> closed session items, item 17, existing litigation lennon versus city and county of san francisco. item 18, existing litigation cadmin versus city and county of san francisco. item 19, existing claim, chung versus city and county of san francisco. and item 20, existing litigation city and county of san francisco versus pacific run and gun club. >> let the record show that the private session [inaudible]. >> i would like to make a motion not to disclose --

[inaudible]. >> [inaudible]. >> aye. >> [inaudible]. [adjourned]

.

>> if our comments and whatever wrk we need to do, we could be as efficient as possible it would be greatly appreciated by everybody. just a few announcements. we got a thank you letter to the dbi staff, del rosaro from the permit department gtd a thank you letter. dbi staff were very helpful to mr. chin's reopening of his new business, ming khee restaurant, a good example of the staff doing their thing it make sure that smaller business got reopened again. i know the mayor's office was very happy about that. the small business when they are in this type of trouble it's great that we can

help out. another 4-alarm fire unfortunately took place. as a consequence of that severe damage occurred, the director issued two emergency orders for the demolition of both, one west portal and one at (inaudible) west portal. the orders had 15 days to file for a required demolition permit and take other specified steps to comply with that order. as of today, one west portal is underway and we're expecting the order of 9 to 15 west portal, which we got an update they had a meeting about that today, they have submitted a private engineer's report that documents the building is repairable and thus may not need demolition but we will give an update on that. as we did during the earlier

ocean avenue tragedy, dbi is working closely with the property owners, businesses and the mayor's offices and other city departments to expedite recovery from the west portal fire and i know a lot of the staff members had to spend some extra hours over the weekend to make sure that things were going well. we appreciate that. i went by and saw deputy director sweeney hanging out to see if he could help. it plays well with our community that you are out there and talking during these difficult times. the director and deputy director, ed sweeney and also i was at this meeting, there were a few names here, met with supervisor jane (inaudible) on monday to discuss legislation that she is considering that amends supervisor david chiu's vacant building ordinance. it was a productive discussion and we look forward to working with the supervisor to finalize her proposal amendments with review and recommendations and that will come in front of us, to the code advisory committee and

the bic eventually but just another good example how when everybody gets together problems get solved and can be a good outcome for amendments for legislation, particularly the board of supervisors. supervisor kim also worked with dbi housing inspection staff on new legislation addressing the additional department of hub health action steps to deal more effectively with the bedbugs infections which we read a lot about that in the papers. the supervisor is most appreciative with dbi assistance with the drafting of this ordinance. dbi chinese-speaking volunteers will be at another community outreach event from 11 am to 2 pm, the chinatown resource fair. if you are in the vicinity please stop by and be good to see people from the department. that, madam secretary,

concludes my president's announcement. >> is there any public comment on the president's announcement? seeing none, item 3, general public comment, bic will take public comment on matters within the commission's jurisdiction that are not on the agenda. >> good afternoon, commissioners. >> before we start i'd like to read the ground rules. any personal comments regarding the staff will not be tolerated. >> my name is spencer gosh, i have been a building inspector for 30 years. i would like for people who have problems with the department to come to public comment. as with all my previous appearances before this commission, i do not wish to be here. i am here because of your continuous and repeated

failures to address the problems within the department. i with prefer to not work in the toilet of a workplace your actions and inactions have made. i have previously complained about the racist and bullying in hiring and job assignments. you have done nothing. i have previously complained about the confusion created by not having policies and procedures. this confusion costs the department millions of dollars annually and collectively our customers even more than that. you have done nothing. i have previously complained about the illegal transfer of funds from this department to politicians so the department is impacted to the point of inoperatability, you have done nothing. i have previously complained to you that this advice is in error and you are the governmental body responsible for the department of building inspection and its malfunction. i have urged you to seek outside counsel, both

to correct your erroneous legal advice. i will be filing formal xlaipblts regarding the city attorney and i continue to urge you to seek outside counsel. your willful failures (inaudible) while i now have to far formally recognize your impotence, i see you people as little more than criminals. which brings me to the mayor. this commission is the mayor's puppet show. our dishonest, lying mayor who has been informed of these problems and

does nothing. once again, i urge you to seek outside counsel. my purpose is to is no longer to expect any action on your part, i am here to reiterate what some of the problems are and confirm your unwillingness to perform the duties to correct the problems. i show my due diligence at this level and will now take further steps to correct your failings. thank you for listening, see you next month. >> i am john (inaudible), building inspector. i would like to say congratulations to our building inspection team. thanks to you, your leadership, we have the highest morale we have ever had in the department. we have just one disgruntled employee out of 250, approximately. i think that's a pretty good track

record. we hear that particular individual month after month here inviting others, they are not showing up. i am not aware of any. keep up the good work. thank you. . >> president mccarthy, honorable commissioners, my name is irvin comminsky. i am here to request that you take an interest in this case and help me address the problems and my tenants so we can solve the issues that the building has. there is one item i think may be ripe for your consideration and that was an order of abatement that was posted on april 18th and it probably should have moved to your commission for

consideration and the 2655 folks have filed plans on may the 7th or 2nd, i believe, and i've seen those plans now and unfortunately they have languished in city planning for all these months. and the good folks in city planning have requested additional information which has never been forthcoming and the plans that i have seen, i have challenged because they are simply inaccurately portraying the existing realities on the ground. i think this is going to go on for a very long time. i'm in my fourth year in trying to get this thing resolved. my retaining wall is going to continue to rotate and it shows a greater rotation than it did a year and a half ago. the problems all continue as yet another winter approaches. the single biggest problem that we have is that as these

violations were brought in one by one, secretly on the part of those folks, they are attempting to resolve it in the same way by simply reversing the process and trying to take item by item before the building department by trying to get it permitted and christened the red headed child. unfortunately this has to be looked upon as a entity because it all functions as a system with regard to the retaining wall. not only is there the soil pressure, all my engineers have worked out the issues that my hundred-year-old building that was built in 1912 as one of the first apartment buildings in calhollow and is on the 1976 historic asset list, that gravity wall, retaining wall, cannot sustain the kind of pressure that has been brought on it by the nonconforming unpermitted structures. and the kinds of estimates of the pressure, both the lateral pressure and the

monen pressure, the lateral pressure at 1 foot height of fill is over 210 percent and over the moment frame it goes up to 250 percent, as i think i've written in my notes. the point is we hope this doesn't come down. there is an over 20,000-pound planter on it with 6 foot trees. none of this is really visible on the plans that were submitted to city planning and when i point it out to them they are rather amazed, they are, gee, that doesn't show it. i hope you can take an interest in this case and help me resolve it. >> thank you for your comments. >> is there any additional public comment? seeing none, item 4, update on the department's issuance of and response to notices of

violation. >> good evening, commissioners, ed sweeney, deputy director of permit services. since our last update of the condition of the complaints and notices of violations, like i told you before, we abated approximately 2,000 either or complaints or nov's and that was the easy stuff, that was the low-hanging fruit, that was housekeeping, it was us going back 10, 15 years ago and finding permits that had been taken out and not finaled, a lot of duplicate nov's and what have you. so now we come down it a

little more difficult stuff, to make the changes what we did is we first what we do, instead of having one director's hearing, we made one just for housing, one for building. rosemary of course will speak for housing inspection services. what building did is we tripled the amount of director's hearings going forward. we put additional staff into code enforcement to go after the first and second notices of violation that seemed to be languishing and push them forward. on that note, one of the inspectors we put there, he is out ill due to a knee replacement. we expect him back probably in november, december, january. we do have one extra person up there working and as the amount

of inspections decrease we can put probably more inspection staff assigned to it. we are also waiting for civil service exam which we figure will occur sometime in late november for the 6331 position, which is building inspector. that process should probably take 2, 2 1/2 months. we're expecting by january-february to hire more building inspectors, one of whom we will assign to code enforcement and again that person's primary responsibility will be to push these first and second notice of violations forward and capture more directors hearings, more orders of abatement. other than that, i'll let rosemary give you the his

>> thank you, i just want to complement ed because the report you just got is nr someone who is now the deputy director over another division, yet he is keeping track of this and being as helpful as he can with this and i commend him for his leadership. with respect to the housing division, i want tolg back to some numbers i gave you last year so you can see a comparison. when i first reported to you the number of open cases that we had in the housing division back in march 26, 2012, was about 4,891 cases. we have been reduced that today with respect to that time frame to 3,359. that's a reduction of about 1500 cases and these are the cases, everything that's in complaint tracking up to march of 2011 and we've now gotten in another 1300 complaints from that