is your life. >> >> good afternoon and welcome to the local agency formation commission, of san francisco. my name is john avalos, the chair of this commission and joined by london breed and across the room by eric mar. our clerk today is linda wong and we are being broadcast today by sfgtv staff, jennifer low and bill dueling, thanks for your work. madam clerk. any

announcements? >> no, mr. chair. >> okay. if you can please call our first item. >> approval of local agency formation commission minutes from the june 28, 2013, regular meeting. >> thank you, any comments regarding our minutes. public comment? seeing none, we'll close public comment. a motion to approve our june 28th, meeting. a motion from mr. mar. next item. >> community choice aggregation activity report.

status update on clean power sf program. status update on proceedings at the california public utilities commission. >> whether we are at the crossroads or passed the crossroads, this has been very shocking year for how there has been incredible effort to kill this program by members of, seems like the commission, the public utilities commission as well as the mayor's office. this board of supervisors and local agency formation commission have talked to the mayor about what his concerns are about the program and it watts -- was shocking to hear

the mayor's response to a real doozey of information. he read what his staff gave to him but the fact that he read on the mic and the board's chambers stands by what was presented. it's not correct in a lot of ways. since that time the board has taken other action. i want to thank commissioner and supervisor london breed for her resolution urging that we move forward with the clean power sf program and concerns that were expressed for that resolution as well that the puc was not acting in its right judgment by not moving forward with the not to exceed rate. i think 92 was the vote for that resolution, clear indication that the policies body of the sitting county san francisco, board of supervisors still believes we want this program to go forward

and we feel there is real sound footing for this program to go forward and there has been a lot of great work done by the public utilities commission and for the commission to make the program more affordable and get the financing for build out to make sure we had a program that was going to be as green as possible and the puc staff has, kim malcolm and have worked to respond to these issues that have been raised. now it seems the concerns raised by the commissioners on the public utilities commission were rational that were pretty flimsy about really to cover up their over all opposition to the program going forward. that's the perception issue but given the track record and given the answers provided for

even though they were real answers and the program that has been altered and tweaked to make affordability, those didn't measure up to any recognition that they were worthy of supporting shows there wasn't an effort to make this program work but to object -- object 50s skate -- this program. it's a political issue we have of moving this program forward and it's unfortunate that politics get exposed. our inability to move forward on the clean power sf program and trying to exposed -politics i issued a letter of inquiry to the public utilities

commission to ask why they did not provide the not to exceed rates and i will ask the public utilities commission staff to present their quick response on these questions and i believe they have a draft response that will be a shared with the public utilities commission for the commission to respond on in their own words. but to me, it was important to ask the questions. the answers i'm curious about but i'm not thinking there is real answer in the questions because what i felt like the commissioners had provided in the form of question and direction for puc staff were very limited and not thought out and more like efforts to delay the clean power sf program with very flimsy rational and didn't amount to much. i would like to have puc staff today present their responses to that. i will begin with that part of the

update on lafco is to be able to hear on puc staff on the letter of inquiry that we've issued and we'll take it from there without any questions that arise as we move forward. i think miss malcolm will be discussing those questions. >> thank you, commissioners, kim malcolm director of san francisco puc. i don't have your questions before me. but i thought i would just tell you that most of the questions are in the nature of question of opinion of the commissioners and i wouldn't presume to represent their various, their five of them who expressed different concerns at different times or different expressions of support at different times. i will say we are putting together a draft that addresses some of the underlying factual

irrelevancy example the green tariff and issues we've tried to address in the way we've redesigned certain parts of the program or how the rates have been calculated. can i answer any specific questions for you? >> well, maybe you can summarize for us all the different ways that between the months of say february, march, until august 12th, different rationals that the different public commissioners used to delay this program and ultimately kill this program? >> well, i don't know that i would want to characterize their actions in any particular way or with any particular motivation. we did make several changes to the way this program

was designed and the rates were set. for example, in response to some concerns that we heard from our commission from members of l.a. lack -- lafco and the board we tried to bring the rates down and in relation to build out. >> you tried to get the rate down? >> we got the rate down to 11.5 cents. when i joined the puc in april it was at 14.57 cent from 12.8 cents which is what general manager presented to the board of supervisors last september. we got the rate down primarily from changing the resource mix from the products

we purchased from shell. we also reduced our own internal budget and there were some changes that happened in the market that allowed us to bring the customer rate down and finally shell agreed to a few changes to the contract that were favorable to us, small, but they made a difference. >> what were those changes? was that in the letter issued in late july or other changes? >> no, that letter referred more to the resources they were trying to procure on our behalf. one of the things they agreed to do was to reduce the $11 million collateral by $1 million in the first year and half million in the second year. because we asked them to calculate the rates with more

of the unbundled recs, the price went down, and we also eliminated a volume band. this is getting technical. but that saved about a half cent in the rate they were going to charge the city. >> do you recall that we had a joint meeting in july between lafco and the public utilities commission? >> yes. >> do you recall what point issues were raised by the committee and why they chose not to approve not to exceed rates? >> in july, i know they wanted to wait and have the commission staff talk to members of the labor council and other labor groups. so we did meet with several members of the labor leadership in the city over the course of about a month. >> then when you had reported back on those meetings to the

public utilities commissioners, what was the response from public utilities commissioners about those meetings? >> i don't recall specifically the meetings didn't resolve anything in particular. the meetings -- >> according to the public utilities commissioners what was supposed to be resolved? >> well, i know some of them expressed concerns that some labor representative were not supporting the program going forward. >> like i bw which has been running a mail campaign for months, decrying the program and the shell contract? >> ibw was the most vocal opponent of the program as far as i know. the labor council did actually issue a resolution with certain conditions and we

discussed those conditions with them and talked about how the city might be able to work with them to make it a program that would be acceptable to them or at least improvement. >> when those conditions were discussed with the commissioners, after there was a meeting with labor, did they mention anything about their concern about labor after that or did they still express there wasn't any concern? i actually never heard they made any statement after they delayed the meeting from the labor standpoint. they never expressed that again and the next meeting they had was, we don't like this program. it was pretty much just because. >> again, i wouldn't put words in their mouths but i didn't know there was anything outstanding with the issues. we agreed to keep talking together. >> there were no real labor

issues before it at all. it was all construction or running, no contract yet, no workers and nothing yet that really needs to be negotiated. >> nothing specific. we did talk about a build out plan and how we might proceed with that, some ideas for that. >> which is still not immediately before us, before the puc? >> the staff did not present a specific build out plan to the puc. we did present some ideas and suggestion for how we might proceed at lunch and there after. >> okay. thank you. >> all right. thank you. >> so next we wanted to -- some more questions. sorry.

lafco staff informed me that staff presented a not to compete rate at 11.5 cents. what do you see at the prospect at the program going forward that we would actually be able to meet pg & e's rate if we were not doing that but it's still a possibility for that happening? >> we started to do some analysis of whether we can get down to the pg & e rate with a hundred percent renewable product. we haven't completed that analysis and it would depend on many things and how the commission and supervisors would want the build out if we get at or below the rate of pg

& e, we might not meet any margin. it also would depend on the type of what it looks like we execute because they still haven't given us any final number. that will happen after we get a rate after we would get a rate for our customers. >> and this maybe a question for miss hale, i have been told by the general manager that there are tremendous needs to resolve in the power generation side of the puc and especially what was highlighted with the rim fire that some of the facilities have deteriorated from the rim fire and also need renovations and the general manager said to me that in order to renovate these facilities we need more customers and we want to actually grow local power and

local build out for these power sources. if you can talk about what the plans are for the puc and how we intend to fulfill that? >> yes, barbara hale, assistant manager for power. we do have a balanced financial plan, a balanced 10-year picture. part of the way we have shown the balanced budget for heche power enterprise was by capitalizing that need. it includes improvement to some of our major pieces of infrastructure of one, for example, mountain tunnel that conveys water to the powerhouses is a joint asset. so it serves both a water and purpose. the current estimate of that one 1 piece of the system are upwards of 350

$350-450 million. that's a need not present in the current capital plan. what we've been looking at is how does the utilities address funding needs. rate increases? increase that pays us revenues. >> why wasn't that considered as part of the wis epiprogram? >> it only because it a joint asset, it could have been considered part of wii sip, i suppose, a boars -- a portion of the asset by power is partially funding. you only address the water portion of the funding through wii sip

solution.ey way, the 55 percent of the power side of the puc would have remained unfunded. >> 55 percent? >> yes. all asset shared between water and power, 55 percent to power and 45 percent to water. that's true for all of the assets on the heche system. they are classified as either water, power or joint. and when it's joint, power pays 55 percent of it. when you look at the capital plan as it's approved by the capital planning committee through city's process you see a balanced plan that's funding because of the large needs are not funding and are deferred. with the rim fire, that's exacerbated. hopefully only exacerbated on a cash flow

basis because we'll be reimbursed by the disaster fund, but just the same we'll have a cash shortage as we fund our way through recovery from the fire. the estimates at this point are about $40 million of unfunded improvements that need to occur now that the fire has been suppressed and we are in recovery mode. we are very happy to be in recovery mode but we have a cash need that needs to be addressed. that's probably what general manager kelly was referring to which is our financial picture prior to fire and post fire, and the needs are raised rates, increased load. we are looking at the increase load option. >> so, can you elaborate on that option, what you need to

do to increase load? general manager kelly said get new customers. what are why you ideas and plans on that? >> that would certainly be an option under the act that allows us to build a conveyance system in a national park. we are obligated to transfer the benefit of that system to the public and we are allowed to serve municipal and commercial electric customers. so that would be an option. we are under the charter, the city's charter responsible for assessing the fees ability for new customers within a context of redevelopment. that's most likely city structured process for that. >> what are the areas of

redevelopment, bayview hunters point, treasure island? >> yes. >> i was told there may be new customers like pg & e and if there are not already pg & e customers there might not be a legal mechanism or might be different? >> it's certainly a clearer road ahead when we look to areas of the city where our pg & e is not already providing a service under the federal power act. we can work with pg & e in a public access tariff they have that is approved by the general regulatory commission to referee -- receive from them distribution service that

allows us to get power to those new customers like the redevelopment areas you referred to. that's not an effort without unsefrnlt pg & e has filed a new whole tariff distribution at the commission that would substantially increase the cost of object obtaining that service and places new terms on that service that make it more challenging. that's before the federal energy regulatory commission today and we are in designated settlement conversations with parties on that filing as we speak. we expect to be before a fork judge in that case. that's some of the complexities behind the solutions to finding a

financial fix to our pickle. >> so, with i talk to kelly, he said that the staff is not really working on power and looking around sources around power and this was what i was told. my response was, this sound fine and good for the heche power system, but we still want to give direction and we have certainly clear indications from the board of supervisors that we want the work continued. what kind of work is being done in your department? >> i think the areas that we are hearing of broad mutual interest is the local build component of the community

choice aggregation program we've been talking about. so staff is working on more fully developing that concept. as you know we had a draft with stake holders in concept and hadn't presented it to our commission and you referred earlier when you were asking miss malcolm questions about the lack of detail and there is no labor work force definition there or real work defined in that local build paper. and we would agree with you and one of the tasks that general manager kelly has given us to build out more detail like that in the local build plan that we have drafted where we would be able to answer some of the questions that have remained unanswered about local build in terms of

projected work force, what's the still sets that would be needed, the hours that will be needed. that circles back to the question of that you were asking earlier about rim fire and financial needs. we are very much a utility dependent on 1 generation system that heche hydrosystem. we have some local solar but in the event of an emergency like the rim fire like we just experienced we are reminded of our vulnerability of being so dependent on that asset and that also influenced the general manager at wanting to look again at the plant. >> it can build a local power sf need if that was a future

need or our public utilities service need as that need matures as well. that is focused on that local build component. >> and do you think at some point if it does look like you are looking at local build out under a clean power community choice aggregation type of framework that our public utilities commissioners would support that? >> i'm not going to hazard a guess as to what future commissions could or would support. i just know that the general manager has asked us to use that local build out plan and that's the action that's being taken at this point. >> thank you. >> when we talked about those rates in if -- in particular,

part of it was how it would come out at the 9.5. is that accurate? >> we expected pg & e's rate to be about $0.09 because it's at the california public utilities commission because it not normally in an a lot of controversy oovment was that based on a hundred percent clean power? >> no. that's their current portfolio which is about 19 percent of bucket one bundled renewable product. >> because i'm trying to get some clarity around a comparable comparison because we are talking about a hundred percent versus the potential rate pnl would -- pg & e

would charge for percentage. >> are you talking about the rate pg & e proposed? >> yes. last year pg & e filed for a green rate and there was a settlement reached by a number of parties. that has been on hold pending the legislature's consideration of sb 43 which the governor has not signed, but it passed both houses. we expect based on pg & e's statement to the media that if the rate as proposed were to be adopted by the puc, in january or later, that rate would be about, well we originally thought it would be 11.5 cents because pg & e based that rate on which it would calculated would be going up by

a penny in january. >> that would be what percentage of clean products for that particular amount? >> the settlement proposes that that portfolio would be a hundred percent bundled renewable resources. not with new resources but with pg & e has with the portfolio. it would move to another rate portfolio. >> would that be something they are able to achieve on a gradual scale basically starting at one level and increasing or would they have to start running at hundred percent? >> they already have a hundred percent. if the green tariff has a hund