when they do occur, typically in dry years or in the event of an unexpected generator outage. and to set a cost limitation for compliance, which is allowed under the act. the commission does not need to take action today. it needs to adopt a procurement plan, however, pursuant to the legislation and the enabling regulation by january 1st, 2013. so, i think we've given you plenty of time to take in the information and digest it before asking for action. you can give us direction. by way of background, i put a slide up if sfgtv folks could go to the overhead for me. it shows, it shows our hetch hetchy annual generation. and, you know, we have 90 years worth of data that we're relying on to project forward.

this slide shows you both the actual hetchy generation in the blue bars. the wet year projection, what we refer to as a wet year, what we refer to as normal year here in the green dash line. and then dry year. we use those same scenarios for our budget planning and financial planning. we set the budget every -- on our budget cycle every two years, assuming a normal generation year, a normal water year. of course, there are exceptions to that which this slide shows. so, the act requires that we -- that we start in calendar year 2011 meet 100% of our retail energy needs from hetch hetchy and rps eligible resources on a

calendar year basis. it does have some limited exceptions and i'll describe those to you. what that means to us, sort of the simple math which i show here on the slide is we take our demand, our puc retail sales. we subtract out our supply, which is made up of hetchy generation and resources. and if that equation results in a positive, that indicates that we need to procure rps eligible resources. as i said, most years it's going to be a negative number. we're going to have more supply than we do retail demand. the act does not apply to our wholesale sales. so, we do not need to meet any rps requirements for sales we make to the districts or into the western systems power pool. and the act has requirements

for community aggregation plans like our clean power sf program. but those requirements are set by the cpuc, not by you as a governing body. so, as i mentioned in most years, there's no need to procure additional supply. the small volumes of additional rps resources would be needed only during dry years. our forecasted need is small, unpredictable, short-term, and nonrecurring. as the slide shows here -- let me move it so you can see -- are actual or actual generation is shown here. the normal year forecast is the green line. we have a forecasted wet year. the forecasted dry year. and then this orange line is our retail sales. so, you can see the demand and

the supply. the difference between the green and the orange retail is -- retail sales is our wholesale sales out into the market. so, in almost all years our generation is sufficient to meet 100% of our retail needs. and it's typically of a quality that meets our rps obligation. so, turning, then, to our proposed procurement plan guidelines and authority, the plan for normal year, we are proposing that we plan to meet normal hydro year conditions just like we do in the budget. we are planning to update our forecast as needed to ensure that we comply with the act. that's also consistent with how we report on a quarterly basis for budget variances. and as i mentioned, we're seeking authorization to have the general manager procure the

rps resources as needed within these boundaries, up to 5% of retail sales over the two-year budget cycle. that's about 50,000 megawatt hours. or $500,000, whichever is greater. his discretion would be capped at that amount. and to meet that requirement at the lowest cost. we would bring to the commission any procurement necessary to comply with the law beyond those levels for further action. so, we're asking -- >> for november 13th? >> beg your pardon? >> you plan to present that november 13? >> no, r i'm planning to present the actual plan and a resolution november 13th. this is -- this give you the information behind it. >> ahead of time? >> yes. >> okay. so, the commission will adopt the procurement plan november 13th? >> if you're comfortable with it, yes. >> but i'm not clear on this. what would the commission

workshop november 23rd? >> that's today, that's what we're doing right now. >> oh, this is the workshop? >> this is the workshop. >> i didn't realize that. >> this is the discussion. >> welcome to the commission workshop. >> yes, it's your workshop. [laughter] >> we have this year -- excuse me, in 2011, just to take that policy proposal that i just put before you and describe what it means to us. in 2011 it was a wet year. there would have been no additional rps purchases needed to comply with the law. the calendar year we're in right now, 2012 is more of a dry year. and we have some plant outages. we project that we will need to procure rps resources to meet the acts requirements. they will be small so they're going to be under the 5% of retail sales limit. we're forecasting each month to monitor and evaluate the need. we expect we will need to procure renewable energy

credits equivalent to 50,000 megawatt hours before january 1st, 2013. -- to comply with this law * . we expect that will cost us about $50,000. the act also allows for cost limitations, as i mentioned, if exceptions. the exceptions briefly are that our obligation is capped at the same level as other publicly owned utilities. so, for example, the requirement for publicly owned utilities is 20% of your retail sales need to be met by rps compliant resources. in 2012 that rises to 33% by 2020. we may delay compliance due to circumstances beyond our control, and we may adopt a cost limitation. so, putting the cap and the delay ability together, for example, if we had an

unexpected outage that was significant, but made it so our hetchy generation was less than 67% of our retail sales, that would mean that we would only 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.

>> i tried to think about this room as the dream room, where we dream and bring some of those dreams to life. i feel very blessed that i have been able to spend the last 31 years of my life doing it my way, thinking about things better interesting to me, and then pursuing them. there are a lot of >> let the record show that the private session [inaudible]. >> i would like to make a

motion not to disclose -- [inaudible]. >> [inaudible]. >> aye. >> [inaudible]. [adjourned] impossible. announcer: when you open a book, you can explore new lands... [bird screeches] meet new friends, and discover new adventures. there are amazing possibilities when you open your mind to reading. [roar] you can log onto he library of congress website and let the journey begin.

>> i tried to think about this room as the dream room, where we dream and bring some of those dreams to life. i feel very blessed that i have been able to spend the last 31 years of my life doing it my way, thinking about things better interesting to me, and then pursuing them. there are a lot of different artists that come here to work, mostly doing aerial work. kindred spirits, so to speak. there is a circus company that i have been fortunate enough to work with the last couple of years.

i use elements of dance and choreography and combine that with theater techniques. a lot of the work is content- based, has a strong narrative. the dancers have more of a theatrical feel. i think we are best known for our specific work. in the last 15 years, spending a lot of time focusing on issues that affect us and are related to the african-american experience, here in the united states. i had heard of marcus shelby and had been in join his work but never had the opportunity to meet him. we were brought together by the equal justice society specifically for this project. we were charged with beginning work.

marquez and i spent a lot of time addressing our own position on the death penalty, our experiences with people who had been incarcerated, family members, friends of friends. pulling our information. beyond that, we did our own research. to create a picture that resonated with humanity. it is the shape of a house. in this context, it is also small and acts like a cell. i thought that was an interesting play on how these people make these adjustments, half to create home. what is home for these people? the home is their cell.

people talk a lot about noise -- very noisy in prisons. that is interesting to me. looking at the communication level, the rise of frustration of being caged, wondering, where does redemption fit into the equation here? [singing] i think both of us really believe the death penalty is wrong, and is flawed for many reasons. the list is as long as my arm -- about several others. we feel this is important for

both of us, personally, to participate in the debate of this issue in a way that we can help people frame it for a conversation. good morning. welcome to the regular meeting of the budget and

finance committee, carmen chu, joined by supervisor kim. supervisor avalos is unfortunately tied up at a bay quality air quality management meeting. i would like to entertain a motion to excuse him. our clerk is mr. victor young. at sfgtv we have mark bunch and jesse larson. announcements? >> yes. please silence cell phones and devices. complete speaker cards and documents to be included as part of the file to be submitted to the clerk. items acted upon today will be on the october 23rd, 2012 board of supervisors agenda unless otherwise stated. >> thank you very much. just going back to the earlier comments, supervisor avalos unfortunately is tied up at the bay air quality district and will not be able to attend in time. do we have a motion to excuse? >> motion to excuse. >> we have the motion. without objection. call item one, please. >> one, resolution authorizing recreation and

parks to accept and expand habitation grant in amount of 163,587 from california department of parks and recreation for glen canyon loopside project. >> thank you, we have lisa wayne. >> tony moran, the grant manager. i will present the grant. i'm here to present to accept and expend habitat conservation fund grant for glen canyon creek side loop trail. also to authorize director of real estate to file a memorandum of unrecorded grant agreement on the trail portion of the park. the glen canyon creekside trail is part of the 2008 clean and safe neighborhood park bond trail program. the intention of the 2008 park bond is to leverage bond funds to secure additional grant funding. this grant is one of three

that will provide additional funding to trail projects identified in the 2008 bond. in 2010 and 2011 the recreation park department and trust republic land held a series of meetings regarding improvements to glen canyon park. this project is the as a result of that public process. the content plan for the glen canyon trail system, which includes creek side trail loop was approved by recreation park commission in august of 2011. we expect the bid and award for this to happen later this year, or in early 2013. and construction to be scheduled in spring of 2013. the state park grant funds provided through this program will be used mostly to the existing creek side trail. the state park grants require