and he needs the support of the commissioners because he's a brother, he's a brother to me, and i'm going to watch his back. and i'm asking you all to continue to support him in whatever way you can. thank you very much. i have to go to the port authority on the other side. >> good luck. yes. mr. [speaker not understood]. good afternoon, commissioners, aaron brooks, green party and our community, san francisco. just wanted to address the first item that you covered in the report, which was espinola jackson. i've been doing city hall stuff and working on sfpuc issues for about the last decade, which is much less than dr. jackson has been working on similar issues. she's been doing it for several decades. and over the decade that i've

worked on issues like making sure that we don't bring in the new peaker natural gas plants issues like closing down the morant plant, issues around the bayview hunters point shipyard candlestick development on top of the superfund site, and myriad other issues around the southeast and the entire city when it comes to environmental protection and getting good low-cost clean energy to the public. espinola jackson has always been around. i'm bumping into her constantly. i wish she was here to hear it. her contribution to the city process is profound -- has been profound. and so i not only would want to lionize dr. jackson, but just to say that even though dr. jackson has helped solve many problems like getting rid of the last power plant and stopping a new one from coming

in and without her we probably would have never accomplished those goals. but there are still -- and then there's the digester issue. there are still a lot of other issues like the digester issue that are not solved yet. so, i would just strongly urge the commission and the staff to continue to pay attention to dr. jackson and listen to her wise advice, because she knows what she's talking about and she has helped this city process and the sfpuc process i am immeasurably in the last years. >> move to the consent calendar. any member wishing to remove an item, a, b or c? all right. i'll entertain a motion to approve and then we'll get to public comments if there are any. >> i'll move the item. >> all right, moved by commissioner moran. second by commissioner vietor.

all those in favor say aye. >> aye. >> it is approved. any comment on calendar item? being none, we'll move to item 9. >> approve an increase in the contract duration contingency for contract hh-935c, san joaquin pipeline system - eastern segment and other facilities, of up to 109 consecutive calendar days, authorize the general manager to approve future time extensions to the contract duration for a total revised contract duration up to 758 consecutive calendar days. the potential increase in the contract duration is due to design modifications required to meet performance criteria for oakdale portal, differing site conditions, and unanticipated bird migrations. >> [speaker not understood]. >> pretty straightforward item so i'm here to answer questions. >> any questions? all right. is there a motion? >> so moved. >> seconded? commissioner vietor and commission vice president courtney. any other comments? all knows in favor signify by saying aye. >> aye. >> opposed? none, there being none, the motion carries. is there any public comment on this item? all right. we'll move to item number 10. >> item number 10 is the budget hearing.

>> good afternoon, todd [speaker not understood], assistant general manager and chief financial officer. as we discussed periodically in these meetings during your quarterly budget report, we are in the middle of our two-year budget process, our mid cycle review. i provided to you previously through the general manager about 300 pages of documents and review both at last time's meeting as well as this time's meeting. what i have for you is a brief highlights and executive summary of all the key changes of which there are very few. and, so, it will not take very long today. but i would also like to thank from the controller's office, we have with us today jennifer de sota, if i could have her stand. she will be working on your recently adopted assurance policy. i want to thank the controller's office. jennifer here as well, to hear your direct comments and hear your direct feedback that you may have. in your packet, our budget

summaries, our capital budget, all of our financial plan and capital plan updates, what we're doing over the next 24 months as you hear every two weeks when you're in this meeting, and then how we're keeping rates affordable for our rate payers in particular. the key changes and updates here is that the budget was already approved by you and board of supervisors and the mayor's office. it was approved as a two-year budget. so, there's only small adjustments needed effective july 1st. our focus has been with direction from the general manager to keep rates as affordable as possible and, so, we've done that in the water department by rolling through the successful bond results that mr. jensen mentioned with the early repayment by the wholesale customers that's helped a great deal on the retail customers because they've benefited from that repayment. power enterprise, additional movement of cost of service, you'll see that in the ten-year financial plan which i'll go

through briefly. and then in the sewer department as you have approved and given a green light for the endorsement last august, a faster digester construction, moving that up almost 18 months to completion by june 2022. rates are sufficient in the budget and as adopted by you and as projected to advance commission policies, and that includes the capital plan changes which include the sewer system improvement program as planned going up $232 million over the next 10 years compared to last year's ten-year capital plan. and then also updated condition assessments [speaker not understood] at hetch hetchy predominantly on the power enterprise in particular, the lion's share of that, $90 million. and then additional investments in the water enterprise as well as the ultimate water supply system. and those are ten-year plans, not appropriations, but just plans for us to keep on our

horizon. the annual budget, if i could take just a step back. of our nearly $900 million budget, half of it goes for investments in capital in the system. and only about a quarter of it is people costs. so, the lion's share of what you really do are the very large capital investment programs which you're doing now to make sure the system is ready and prepared for today's users as well as tomorrow's users. the water department continues to be the largest part of the budget, about $4 46 million. to summarizeedth key changes of the operating budget * as i said there were very few updates to some retirement fringe benefit rates, small changes. and then we'd like to spend more investment dollars in up country water for maintenance to make sure that we keep things at a state of repair. that's a change of about 1.6 million and that explains the net change in up country.

the savings that we've [speaker not understood] from our debt service as well as our general re serves are more than enough to pay for these adjustments in the budget. so, we, with your approval, with the other items in item number 10 that's before you, will work with the controller's office and the mayor's office to make those adjustments if you concur. in addition to that, we looked at every single project that had any money unspent. we asked project managers to update what their projected needs were over the next 18 months. and because of that we were able to tighten our belts in a couple of places on our capital needs in 2013-14 and you'll see those adjustments there. that's helping keep rates affordable. our ten-year capital plan is summarized on slide 7. as you, as you endorse in the levels of service back in august for the sewer system improvement, you will see that is now coming online in the next 10 years. and the majority of the

changes, because of that planned investment for the sewer system. not the costs have gone up, it's just that planning horizon we discussed in august was a 20-year horizon and now we've moved another year down the road. additional investment in hetch hetchy is also a key, a key reason for a $90 million increase. summarized on slide 8 is every key change of the ten-year capital plan, but the ones that are the biggest changes, there are additional investment in water place many. additional investment in some capital projects in transmission, including some clean up at the gun club property. the additional investment in emergency preparedness with auxiliary water supply system. and then the sewer system improvement program. and then the other big one at the bottom is power, new projects. and, so, we have always known there would be large potential investments needed and as we've gotten updated condition

assessments from our up country personnel, we've identified about $73 million in particular of additional generation needs and some transmission upgrades and switch yard upgrades. what does all this mean for the average rate payer? it means that if you look at the average water bill and you look at the current year monthly folks pay about $35 a month for water service 24/7 reliability. everything there in the slide, everything in the yellow is what's already been adopted for rates by this commission. everything in green is what's projected. and if you compare the graven columns of what came before you a year ago, showed you the projected average monthly bills will be, and you now look at the updated numbers, every single year is projected to be less than what it was a year ago and that's because of the savings that retail rate payers are seeing with the early repayment by bawsca and the wholesale customers for a

capital program. so, that has been a big help for retail rate payers. on the wastewater side of the bill, moving up the digesters a full 18 months as well as putting investments into the early implementation green projects has meant that the policy decision to do things faster and get more construction underway faster, which will help mitigate inflationary increases in construction. it has allowed us to do that. you'll see the average monthly bill here are up slightly. the combined bill, once you take the savings on the water side are what was less than we thought a year ago. the faster construction on the sewer side shows that we're pretty close to what we were last year on a combined bill. however, we do have savings in the out years because faster construction sooner saves a lot of construction inflation costs. and thatis oftentimes in the large capital programs that you run and that we administer

under your direction is where costs can escalate quickly. the slides that we had for you in august were updated to show the components of the average monthly bill. the blue portion of this shows the average monthly water bill over the next 20 years. and then the bars above that show he the average on sewer bill. and almost all of the increase is just exactly what you directed us to do, invest in capital and make sure our system is reliable and seismically upgraded. the cost for staff are assumed to grow with inflation about 3%. the majority of this growth is all capital investment and related investment and deferred in what is now investment in previously deferred capital. the average bill scenarios that we'll be looking at as we

update the projected rate needs are what you saw in august. whether or not we do a two-year rate adoption or a three-year rate adoption or five or 10 or 12-year, this shows you what the average bill increase would need to be. and we heard you very clearly to keep these average bill increases below double digits and to make them as low as possible. so, these are very similar to what you, what you've seen back in august. on the rates for the power side of your budget and our work is the ten-year financial plan assume that we would continue to migrate towards cost and service for the general fund. we successfully adopted a four-year rate increase on the general fund departments moving up half a penny a year for the next four years. what is assumed here in the next ten years is that migration would continue and there would be a second four-year period where we continue to notch up half a penny.

we need that to be able to fund what the additional capital investment needs are up country at hetch hetchy. so, those two extra pennies basically pay for what is that $90 million of extra needs. so, that's why your budget, whether you look at the water department or the sewer department or hetch hetchy power and water, it's still all in balance and still meeting your fiscal reserve requirements. but it's predicated upon the continuation of the general fund rate going up towards cost of service. starting or continuing in 2017 through 2020. you're going to hear more in may about community benefits and environmental justice. but what i've summarized for you with the help of the other agms on slide 15 are just some key sound bytes in areas where your budget does continue to invest in sustainability, whether it's the work and research we're doing on bay-delta issues or the federal energy regulation commission.

there is also the renewable power content, the technology plan. you will notice this year that, as was shepherded by this commission, the technology policy now is included in each of the capital project sheets and how that capital project is reviewed against the technology policy is a new thing this year. community benefits on investments in the garden project in [speaker not understood], and also the schools with the environmental science center. also very large improvements in the southwest community center are here. that is a commitment that you have asked us to make and that we continue to charge forward with. so, what is before you, then, is really those small changes and the rest of the items in item number 10 are your adoption legislation, unless you have any amendments that you would like. and i know president torres,

when we talked about the bond savings, had proposed a consideration of that amendment as well. i'm happy to answer any questions and all the other agms are here to respond as well. >> any questions from members of the commission? i have some as well. commissioner moran. >> thank you. first of all, thanks to the staff for getting the budget material out prior to the last meeting. that was very helpful. i was able to go through and get my questions formed and then answered between then and now, so that helps a great deal. it also gave time to understand what was behind all of the rather daunting amount of material that was presented. and i think you've done a very nice job of summarizing that. i'd just like to, i guess, emphasize a couple things i think are important. one is that compared to where we were a year ago, and when we look at the long-time financial

picture, we were very concerned with a bump in rates when we came out of the five-year rate package that we had. and we have substantially addressed that. and that i think is doubly sweet because that was a cooperative effort between ourselves and bawsca. and i think in a way that served both of us very well and is hopefully portends of better things to come. so, i think that was very important. i think the work that we did last summer on the ssip is reflected in the capital program and i think we've done some heavy lifting in terms of shaping that. take special joy in the fact that we're able to move up the digesters by 18 months. that's something the commission very much wanted to do. it's too bad espinola is not here to celebrate that. and commissioner caen, who has

been on this issue for a very long time. but i think that's very significant. and then i guess as far as kind of issues that we had not yet resolved and stay on our list to deal with in the coming year, the big one is hetch hetchy. we have transmission and other upgrades that we put out beyond 10 years. that makes them kind of all off the piece of paper so we can lose track of them. but they are real, and that's a golden egg that we need to protect and come to terms with in how we do that. and part of that is dealing with the ever popular issue of municipal power rates. and that's what we've taken our first shot at, first time in decades we've been able to address that. we will have a second shot at that as well. and that will be equally important.

so, i think this has been an interesting exercise in terms of a two-year budget. we've never done this before. it is as we hoped, not a big event. and that i think does credit to the quality of work that was done a year ago in putting this together as well as the work that's taken place since then. one thing i think we do need to move toward as we get into additional budget cycles and you've talked about the score card, we do have a series of policies we've adopted. i think as we look at the budget, it's important we look at how we're doing not only on community benefits, but how we're dealing with environmental justice, our rates policy, our rate payer assurance policy, those policies this commission had adopted its direction. it is time to revisit those and see how we're doing and

[speaker not understood]. i'm delighted with this and i commend you and your staff on the considerable work that goes into that. >> thank you. >> 2014-2015 we can say to the rate payers their rates will increase by only $1.33; is that correct? >> [speaker not understood] answer. so, in 2013-14, the bill would be going up monthly about $5 a month is all. with all this -- even with all this additional investment capital. >> commissioner moran makes some very good points, especially in terms of some of the future expenses we have to take into account. are there other variables we should be concerned about ahead of time? >> we have -- we've already locked in place every single bond we could refund much like mr. jensen reported out. and, so, the next times we'll be able to refund bonds is 2016 and 2020. so, it's really just to keep

the microscope on all the projects in particular mr. [speaker not understood] does quarterly and [speaker not understood] will do for the sewer system. i think those are the key variables as well as the power enterprise. >> any other questions by members of the commission? i think we'll go to public comment and then move to accept the amendment and then the final report. oh, do you want to call those separately, for a motion separately? all right, fine. let's hear the public comment first. good afternoon, commissioners. eddy young with broad line defense project. [speaker not understood] on the slide this particular budget item. there is mention, very brief mention of a program that bright line has advocated for

in the past, go solar sf. it is an important program that has been recently involved 2012 with the mayor's energy task force been recommended as one of the key components in the city strategy for reaching 100% renewable energy target. and the full funding of that program is absolutely crucial. go solar sf as this commission well knows has had considerable achievements over its inception since 2008. first of which is it serves closely 2000 homeowners, business owners, nonprofits in having solar installations on top of their rooftops. the second major achievement was also supporting the over hundreds of jobs that can occur with this full funding of the program including 80 direct jobs for disadvantaged san francisco residents in addition to those hundreds of jobs. and then that way full funding also not only spurs that kind of job support, but also ensures that there is actually clean tech industry that is attracted to the city of san francisco as well as indicated

by clean tech companies that have written in support of this particular program and headquartered in san francisco as a result of this incentives based program. all this constitutes of course tremendous environmental achievement by the sfpuc and by line has worked with the [speaker not understood] office and mayor's office and other environmental justice advocates to assure full funding for this program. however, it's been cut from 5 million to $2 million. and although an extra million was promised in last fall has never materialized during that time. and recognizing of course there are balancing of budgets that need to occur, but there are two points that still would offer a reason to why we should fully fund this program. first of which is demand is still strong. the rebates are now offered on a three-month cycle and reports from the assessor's office those rebates run out on the first day can complaints have reached our office as well as

to why this program is not as available as it used to be. the second key thing is that there are -- there's a potential for wage and prevailing wage working conditions that can be guaranteed through apprenticeship opportunities through large scale go solar sf projects if the program is fully funded. so, our question now to the sfpuc and its staff is what is the status of the funding for this project? and where can we go from here on out? thank you. >> do we have a response to that? >> so, first of all, it's been 110 days on the job and this is an issue that has been brought up by several people. and, so, the main thing is a balancing act because we're using our hetchy fund because we have to balarie investing in our infrastructure.

and i know that solar, go solar program is an important program. so, we are having dialogues about, you know, what's the best way to address this issue. and, so, one of the things that we have done is identified about a million dollars and, so, we are going to, you know, reappropriate or move that money into the solar program. we are looking for additional money to add to the program. but i really want to have a dialogue about the go solar because of a lot of issues that it has. for example, you know, we're actually rebating people putting solar on private homes and they're pretty much pg&e customers. so, we have to address those issues and in a way that, you know, would be the best way to proceed. and, so, we're going to have

those conversations out in the open so that, you know, we all understand what the impacts would be to hetchy and go solar and all the stakeholders. so, in a nutshell, we are looking at temporary funding, but we are looking to have a bigger conversation about the future of go solar. one of the things that we've talked about is when we define the rates, put a -- i guess what pg&e has on their renewable portion of the bill that will go to the go solar program. so that is identified up front that that's what that is for so that we won't continue to have these debates. so, we're trying to flesh these ideas out. so, we're continuing to work on it. >> how many applicants do we have per year on this program now? that are actually funded? >> barbara?

>> it varies -- barbara harris, assistant general manager for power. it varies year to year, commissioner. as the public commenter mentions, not all of them are funded because we have limitations. we have, we have broken up the annual allocation into four sets of allocation to try to make sure the funding is available throughout the year so that we don't have all of the uptake at the beginning of the year and have the employees who are hired to meet the program needs laid off at the various installation companies. so, that's why we broke up the funding into four quarters and are appropriatesing -- excuse me, are v. serving the funds for customers that way. if memory serve me, it's about 1500 a year, but we get far more than that. >> mr. hunt said at the spur it was cut by 60%. and why is that? >> i'm not sure about the percentage.

the program when it was initially established by the board of supervisors was identified as a 2 to 5 million per year appropriation as fund were available. when the program first started, 5 million was appropriated to it for the first funding cycle. i think that was true for the first three or four. and then it dropped down to the $2 million level. and that's where it sits today and it sits there in our ten-year capital plan as well. it's a ten-year program. it concludes in 2018. >> 2018. but the general manager suggested we need to tweak part of it, correct? >> well, what we're doing is we are looking for additional funds because in our ten-year capital plan it was committed i guess last year that we had renewables and solar go solear. and the decision was to put 2 million in the go solar and also reduce the renewable portion. also, you know, we have a big

capital need and then repairing our hetchy system. so, we talked about that as well. so -- >> i need correct myself. i overtated the account. it's closer to 500 on average -- >> not 2 million? >> yes. >> have we ever asked pg&e why they don't offer rebates? >> pg&e does offer rebates. pg&e offer rebates under the state california solar incentive program. >> then why do we need this program at all? >> that's the policy call of the board of supervisors and implementing the program initially. as we've talked about implementing our community choice aggregation program, clean power s efficienttion, we talked about tying it to that customer set. and when the board authorized the clean power sf program, they appropriated an additional $2 million to go solar sf customers of the cca program. so, so, you know