cents, we are now within striking distance within the pg & e rate and the bill for tier one customers would be for pg & e. this is another table. it shows you three scenarios for three different resources mixes at 11.9 cents retail. each of those scenarios will provide us with come build out funds and each of them give us a little head room for reducing the rate. as you can see, the scenario that we would propose today is that 25 percent bundled product with the remainder of the purchases of

rec's. all of these scenarios would give us around $200 million around bonding capacity probably after two 1/2 years. if you have questions about that, todd can explain than better than i can. are there any questions so far? okay. >> yes, what counts for the difference in the rates between marine and the lower? >> a couple of things. we have a strip to payback the $13 million reserve that we need in order to sign long-term contracts. since we don't have a creditworthy independent organization. we have a little bit set aside in case we sign of care customers. i think we have estimated what it would take to sign up 5,000 care customers. that is going down

because our rate is going down, but it's still there. our budget, our administrative budget is higher. i actually think we'll be able to bring it down more, but i haven't consulted with the general manager about how much more we can strip out of that and still be safe. there is one more component. rim doesn't have a hundred percent green rate. i can't tell you offhand exactly what that component of the rate is, but it's probably around a penny for that. so it's a lot of little things to add up. >> you mentioned sonoma.

have you figured out what they are going with? >> no. what they have is proposals in concept. so they still need to -- >> i thought there was a short list of those suppliers? >> there is a short list. i'm not sure if they picked one. >> is she will on that list? >> no. >> why do you think that is? >> well, i can speculate, i think it's a complicated equation. some of those bidders provided ancillary services, energy efficiency services. i don't know how they analyzed each of those bids. >> it would be interesting to reflect on that to see if that might be applicable here. >> we have had some discussions with sonoma and marine as well. marine is purchasing power from

shell. >> yes. i have been in contact with them also. lastly the rate board has received the contract. they have not reviewed the current contract, is that correct? >> i'm not sure if they have reviewed the contract, they have reviewed the rate. the rate service board, they have been informed of our reduction in rates. they have held a hearing and heard from us on the reduced rate. >> but i'm sure their decision would be supported. >> they can be happy. >> right. i thought that was important to get in the record. thank you. >> commissioner? >> i would like to backtrack for a moment. why don't they have the $13 million aspect of their contract with them? >> that's a very good question and it's one that i have asked.

again, i would have to speculate but, i believe there was an assumption that shell would be able to draw from the county's resources if there was a problem with the contract if the cca failed for some reason. if that was the assumption, i don't think it's correct. since marine launched it's program, it has been paying it's bills and has been signing up customers and growing and i suspect now it's a very creditworthy operation three years in. >> do you know what percent is green in marine? >> marine has two products, i think their base product is 30 percent green and they have a hundred percent green product that is priced i believe around

9 1/2 cents right now. i would have to confirm that for you. >> i would question why their rates are lower? >> right. so, again, they don't have to payback a reserve. they don't have a reserve. they have until recently had a smaller staff that we are proposing on our own budget so our administrative budget is higher than theirs still and we have taken some out of it. we have about 8.6 cents in our rate for build out. they have in the process of building 60 omega watts of power. they have a little bit of a model in san francisco which is conceived,

this program was conceived as a build out program as well as a procurement service for customers. >> and care customers too, right? >> they don't have care customers. they have a large group of users. our target customers are very small users because they are in apartments. in marine they started with a lot of users and they were able to spread the cost over a lot of kilo watt hours. it's a different business model and they have different circumstances. >> thank you. >> just a follow up question on the process for the rate fairness board. what was the requirement in terms of the rate fairness board weighing in on our not to exceed rate. does it happen before or after. what is the guideline for that to happen? >> i will defer to our general

manager, todd. >> good morning, todd, general manager. our rate provider has the opinion in that rate and they have done that in march and they have presented to this body and they have done a couple of recommendation and that should consider how to minimize cost. the proposal with a reflection of reduction of 14 1/2 cents down to under 12 cents reflects on the spirit of what they did. they have been pieg on this and now for your consideration. they have the updated rates which are lower so they have been pleased with that progress that's been made. >> then the expression of that pleasure, what was that exactly, was there a letter or communication? >> it's been verbal to me and i

do not have a letter in my position. but it has been verbal from the chair. >> commission moran? >> thank you. you have discussed the rates a couple months ago and i want to make sure i understand that there are four elements as i understand it that have changed. the energy mix which is basically the rec's issue, admin cost, stretching out the reserve recovery period and then adding in the build out margin and the map you gave me earlier walks it's from the 14 down to the 11.50. those are the same issues that we looked at a couple months ago and when

we looked at it and did the math, the results were higher. i want to make sure that those are still the four that we were looking add and that we have not included a fundamental change of the program in terms of reducing the amount of reserve or things that would fundamentally change for something that we've been looking at now. >> no, commissioner, i think you named all the different revenue requirement changes, all the different items that change the requirement revenue and the rate. >> it's a passage of time and sharper pencil will get you through a better answer? >> yes. i think so and recs. >> recs were on the table a couple months ago. that's important. i think it's been, i want to make sure that we keep

faith with the policy decisions that we made earlier and the board of supervisors has looked at. and also just observed while it's been frustrating to wait a couple months for this answer and i appreciate the work that you and staff have put into this. >> thank you. >> commissioner breed? >> thank you. i just want to ask a few questions, is there anyone who has compared information. i understand it's a different program and this is a really big decision, and what we have to base this decision on is, you know, a model that exist, although not as significant as what we plan to do, but, you know, having a clear understanding is really important to me in order to see a comparison in some capacity. >> sure, i would like to get

you the most recent rates but i think we have some rates in our packet that i can share with you. right now, marine county's green rate which is 27 percent green products that are compliant with state rules is 7.4 cents. and the rate that's a hundred percent green and again 27 percent of the resource mix is compliant with state rules or is with a state certified product is 8.4 cents. >> can you, the difference for us is ours will be a hundred percent state compliant green? >> yes. >> thank you, that's helpful.

also, the other question i had was, i mean this is of course a big concern, i want this program to be a success. i realize that what we are doing is again innovative, including the build out, including the build out being completely financed from this program. i mean that's really significant, but and i know that the rate initially we were looking at the 14 cent rate and now we are looking at a significantly less rate at 11.9, but pg & e is still proposed a lower rate. my concern is from a consumer perspective regardless of what's -- of the decisions that we are making. i want to be sure that we are able to compete and i want to make sure that people have a strong

desire to choose this particular program. so i do have real concerns that if we are not at the same level or even below that level there is not incentive to choose this program over pg & e's program. i just want to know are there any plans, i mean what are we going to be able to do to deal with that? >> i'm glad you asked the question. first of all, the 11.5 percent rate for the pg & e is what they quoted. that rate is expected to go up next year because pg & e's proposed a higher base rate for next year. even if that doesn't happen, if we launched that program today, we can have a rate with the revenue requirement that we've discussed that will be under 11 cents. 11.9 cents is a ceiling

and it gives us a little room so we can plan for. we would not set the rate of 11.9 today if we were able to launch. >> right. you said somewhere around 9 cents is something you were looking at. i thought i heard a mention of that rate. >> it would be below 11 cents. pg & e's rate is 9 cents that would be adopted. >> you don't have an estimated rate below 11.9? >> the latest we have is about 10.9 cents and we are working with shell and i'm still trying to cut back our budget. >> i know there is a lot of folks that have worked on this before i became a supervisor

and there have been a lot of hours on this and this is a significant project and of course we want this program to be a huge success so of course the rate is going to be a huge success to that rate. thank you. >> i do want to say, i want to put a pigeon for the marine county which they have had a successful program for the rate but they have not had like san francisco with the puc and the resources. we are very lucky to have that kind of business environment for this program. >> i know there was a proposed fee for opting out and now there is no fee. finally the job component definitely i think is really something that could be really significant. i want to make sure that we have

a clear plan on how we propose to train and hire local residents for this great opportunity. thank you. >> excuse me, i wonder if the general manager can also respond to questions because i had a question between the pg & e product and our less expensive product. the response i got with the local component, because i think this is significant to air. >> so you would like for me to -- so, to me it's a lot of difference between pg & e and our program. one of the significance is opt out versus opt in. for me is the focus for a lot of people in the audience

is to look at san francisco build out. so that means job opportunities. so that was sort of what our focus was putting our program together. as it relates to pg & e, they are also committed to local build out but local may mean within their service territory. i think that's a difference. and i can't speak to their plan or where they plan locally. it could be in san francisco or outside of san francisco. >> thank you. >> i would like to add that as you all know the staff conducted numerous customer surveys about how residents might feel about this program and whether they would want to participate, and when the rate was over 14 cents, we had positive response rates between 50 and 72 percent -- in a large portion of san francisco. and

with a lower rate we'll get an even better response from the community. >> i think it's important to recognize that we didn't really see a movement on a green tariff rate from the pg & e until we started to work on the program. pg & e has moved in that direction. at the same time we know that puc has not even approved that program. pg & e could back out and it's great that they want to do that, they provide another opportunity for customers, but it's no guarantee and they could have done that a long time ago if they were really serious about it. it's unclear what the future brings around for that program. if we move forward with our program and i expect we will, then it probably more likely they will

have their program in opposition. they will try to sand bag us and i believe it and when it comes down to it we have to go with our program and know that not every san franciscans is going to be a customer. that's what we have accepted moving forward. >> i actually want to wait until miss malcolm finishes her presentation. >> okay. i just want to let you know that we continue to work on a build out red map and working with stakeholder groups and we have presented them an elaborate concept and getting feedback and we are also internally looking at analyzing different sites for different projects. i thought i would let you know that in fact if san

francisco

>> i'm confident that we have followed that the lafco staff and puc staff have followed the direction of the board of supervisors that was decided many months ago and that direction wants to move forward and to set rates. i think that we have reached a point where the rate that has been presented is probably the best we can do in light of all the competing interest. i do believe that we have lessons to learn from marine and we have all along incorporating those difference. marine is a different jurisdiction and what san francisco is trying to do is something unique and it's unique also because