the southeast building we had a very good program. we had a gentleman who had a stellar record graduating drop outs and giving them a ged. so in course of time, that program went away. i am graduate that the sheriff's department is now looking at the southeast to fulfill the aspirations of many of our trunts and drop outs. this is very important. today in south africa we are remembering a great leader,

nelson mandela. and one of the things that he wanted was all young people, all children get an education. now, the sheriff was standing there i fought very hard for him to do exactly the things that have been stated here. he's a man that not only talks the talk but walks tot the walk. i have followed him. i'm not saying that because he's by the door. i say to him whatever is right. most of the time he agrees with me. so this situation is very important to our community. it's the same with our general

manager kelly. it's the same with our police chief gregory. it's the same with our mayor edwin lee. the heart is in the right place when it comes to our youth. whether we give them summer jobs, whether we want to give them the best so they can get educated. and most importantly as i stated here again and again, we need to give our youth career jobs, not toes little jobs that they work for a week and they are let go. so i know the person is connected with the unions. as soon as they go ahead get a ged, i hope you have them get career jobs. thank you very much. >> thank you francisco, very much. maybe we can get the sheriff to comma way from the door. >> you are very kind. thank

you. it's an honor to be before you. all i think the right things have been said. let me just provide some things in reference. i'm proud as a sheriff to restate it. it was my predecessor, who established the first charter high school embedded in a jail system in the united states. the five key charter school is now as if early this year we celebrated the anniversary. we celebrated the largest graduating class of incarcerated. why this is important, when this was established some years ago in san francisco, i'm sure how you can imagine how many other counties saw this as a kind of thing for san francisco to do and now we are a city and count

that is experiencing the low population in jails and we are beginnings to see an incredible nexus between our efforts to try and reduce recidivism and try turn around people's lives, the five key charter school has been a healthy part of our efforts. to the point now we are the largest jail system on the planet. the department is down this department. that says a lot. the work inside the jail that is known to the communities where there is most distressed or quarrelary relationships to the criminal justice systems having the satellite of the 5 keys and partnering with the puc's is that more innovative in our endeavor about tackling the

wrongs of the criminal justice system and to right the people's lives. i want to thank you for your efforts and as you know we had a very successful summer jobs youth program between the puc and sheriff's department and police department. it really gives rise to this collaborative effort that we are trying to get people in education so they have what is a living wage and then the ability to stay and flourish in san francisco. us working together is approving in all the right directions. thank you very much. >> thank you very much for being here, . if there is no other public comment, i will entertain a motion. >> moved. >> so moved. anymore public comment? seeing none, all in

favor say, "aye". >> aye. >> the motion carries. general manager kelly. >> back to my report. so we want the commissioners input on the 2014-2015, 2015-16 budget. >> i want to thank you for this report. frances does a lot of this work and it's really a lot of her credit too as well as the whole sf puc staff. so we are also now focusing on the

budget and there is a few slides here i want to walk through relatively quickly so that you have a chance to tell us what you want to see in the upcoming budget. the general manager is already very busy going through hundreds of pages of proposals that staff have developed and call through what meets his muster. there are several things that are new this year and they are because of policies that you have adopted and you have told us to review these and look at these. i will review these quickly. over all you are going to hear during the budget hearings in january and february an update to a nearly billion dollar budget and this is to refresh our memory, the most recent adopted one is $874 million. we have had a number that has worked well for us. this is to

pause to see if the mission statement still works and if it does we will develop the budget to tieback to that mission statement. in past cycles you have adopted strategic goals and you have done well for us as well as the commission for the budget. they are here in this page to provide high quality service plan for the future, promote a green sustain able city and engage the public and also invest in our communities and people. as we propose the budget to you we also then show how much each of those dollars go into those various categories and we would continue to do the same as well as to cross tabulate those across your key policy initiate ifs which in the past have been the five listed here. the utilities operation, resource conservation, management, capital investment,

redevelopment and work force development. that all gets synthesized in that nearly billion dollar figure gets put into a table that crossed tabs and see's how much gets invested. that's a very small print for you on page six, nevertheless it shows up bigger in your printed materials and also available in our website. that helps policy makers to see how much comes up in our categories and the information presented for you in the budget in january and february. >> sorry, excuse me. to the chair, that last slide. can you go back, this is assuming as we have our budget hearing this is going to assume the key policies are the same, right?

>> that is unless you say you want to see new things. too opportunity for that would be during the set of budget hearings we have coming up. >> as well as today. that's i nice segway to the presentation because today you can tell us how you want to see it and how you would like to have your deliberations in january and february and have enough time to get the materials ready for you. so in addition to what we've done and what's been working withel in the past there is new things because ever adopted the rate policy and we are implementing it and those three new things. how we are doing that just as an example for the technology policies all related to capital project is going to a checklist. it's very small but to the right hand side of the screen it goes to every point

within that policy and gives the assistant general manager and the manager and ability to go there and see what things are backing up against those metrics. the key criteria is economical and environmental and work force and leadership and transparency. that's how we are operationalizing it. as for the rates policy we are looking at affordability compliance sufficiency and transparency and that is coming back before you during your deliberations as we have proposed rate changes and also are reported now from the rate fairness board. the rate payer -- assurance card. that is getting ready to

be published in early january which will be a critical piece of transparency for our rate payers to show our mission through efficient personnel as well as cost containment. the key budgets that big items are further discussion in january and february rebalancing the additional cost associated with some of the w sip projects with the tunnel and heche with the compliance. there is new compliance that is going to be put before and required for the commission as well as what you talked about at the various previous times during the rim fire and we'll be talking about the mountain tunnel and that's an item that

will sound familiar to you because there was some money for that in the previous capital plan and of course the sewer system improvement program. so now i get to be quiet and listen. so specifically it's really kind of what commission input is needed on the next slide. do you have requested changes, updates to the key strategies or goals or initiatives and if the proposed timeline as far as budget hearings in january 14, '28 and february 11th? is that okay for the commission? >> commissioners? >> commissioner moran? >> thank you, todd. my first observation is we have compressed the time for a 2-year budget significantly.

and we are going to have to be efficient with our time and that probably means that some stuff that in years past might have been a matter of somebody standing up and making a presentation in this environment. it's put in writing so we can read it ahead of time and ruin our holidays, perhaps, but nonetheless. read it ahead of time. as a general matter, one of the things i will be looking for is those three policies that you said that we are implementing is having a discussion about compliance with those policies and as we discussed when we talked about the assurances of those policies in addition to the check format which you mentioned here is important and it also maybe the kind of things that require some

discussion probably in writing so that if you are talking about mission creek or have we sufficiently provided for the various policies of the commissioners adopted, that is probably not a yes or no kind of answer, there is probably some nuance to that to be shared with us. i encourage you to use those policies as a scaffold to have the discussion we need to have. some specific things that i will be looking for: we talked about the 265 mcf projects. the other 2018, decisions, one of the budget report says during the budget process we'll be listening to those. the service above 184,

the change in supply assurance potentially and one that gets stuck in there and deserves to be stuck in there any change you might want to make to the drought deficiency policy. also one thing that is not on our list and that i want to make sure we are prepared to deal with is rate structures wholesale and retail customers. the goal is trying to deal with economic equity issues, aligning revenues with cost structures and providing incentives to deal with some of the supply issues that we are coming up with. finally, to make sure that we have budgeted sufficient resource to deal with the various proceedings that we have coming our way. thank you.

>> thank you. commissioner vietor? >> yeah, some of this is kind of embedded in here. i don't know how to elevate it. i think there is consensus and i know nationally among the scientist and in san francisco it's probably unanimous around the changing climate and the implications of that. i think particularly for the puc, there are issues related to risk management and to redundancy and we talked briefly about when we saw the rim fire. i think we are going to continue to see fire issues that are larger and more complicated to manage and contain. i think there is going to be issue with sea level rise that are going to affect our infrastructure, the drought piece, the wind piece, the colder temperatures, everything that is related to a change in climate. i know we have some modeling and the data

is not firm. i don't know what the policy really looks like, but i just think that we need to be better prepared and think about some resource allocation to do internal coordination and the frame could be around disaster preparedness or risk management or redundancy of the system. but that we really need to be a leader in this conversation of the change in climate and what we are going to do to best prepare. there might be some, i talked a bit about this off line, but, around sort of some accounting procedures that we look at more strategically as far as the utility and how we value our assets particular or natural resource, our water and energy assets. and perhaps that could be a piece of the conversation

as well. >> with that, we will -- >> can i add? knowing that the time is compressing, so we may want to have a further conversation on the items that you brought up and the other thing that i'm just sort of directing staff is that, you know, we are now looking at rate increases. so i mean we are trying to live within our budget as much as possible. we definitely would like to have a conversation of what expectations you have versus what other things that we are doing and how can we be more efficient, do more with less. >> i think as we've talked about in some of our past budget proceedings that if there is a way to present it to

us in someway that you can recommend whether it's based on urgency or what's the criteria related to sort of the urgency of it. what do we need to do when i think that would be really helpful as we condense the timeframe and knowing how much we want to do. >> good. thank you very much. >> all right. so, todd, don't go too far away. so, todd is going to present on power revenue and clean energy bond. >> thank you for the opportunity to do this. i know commissioner caen mentioned at the last meeting that we had

progress and it has been a while since we issued power revenue bonds and we are going to be in the market soon and i know that you have studied the issue as well and we we goes through budget deliberations and review where we are on the bond discussion on the policy making as well as on the required steps to be able to issue very low cost power revenue bonds on and to do critical infrastructure investment. i will go through where we've been and where we are on this journey. significant capital means means that we can no longer cash fund like we have been doing in the past our heche operations largely. and we need to do issuance of revenue bonds to

smooth out the cost as we are building new assets and restoring assets that will last 30-40 or 50 years in some cases. we have a plan that issuance in august, september of 2014 up to $70 million and those are items that you have already considered and have as part of your plans of deliberations. this is also important because it helps us do more and also keep things affordable that help meet them our citywide climate action goals and keeps this stable. how to looks in your policy making documents is summarize slide three and this is a summary of the capital plan for the next ten 10 years which is balancing $170,000 in property bonds. not only is the capital plan but also the financial plan. so this is a summary of

the financial plan with the red arrows noting the special row of wherever we have assumed the property bonds. that's $270 million number. the outstanding power that we have today has been mainly very attractive that we've gotten from the federal government from our clean renewable energy bonds and we've been able to get those. but those are not publically issued bonds. those are privately issued, dead issuances. you can see the numbers about the $20 million range. so those have already been issued under prop h authority as well. plan, we have a lot more to do, we have about $73 million worth of need. that would include trying to get the lowest cost possible for our rate payers and those

are the loan program that we are able to take out and there is power revenue bonds. to get there you have to show that you are creditworthy. that's a testament to this commission to given up. you have heard from the external auditor that we have 5 years of clean opinions of more importantly we have 3 years of power enterprise of financial so you can look at heche so you can see how much is related to water and power and they really do stand-alone as well as jointly in those financial statements depending what perspective you want to look at t revenue adoption of the financial on all the required legal documents and then the indenture as well as

the official statement. agencies we have been starting to visit with them about it and we'll have a formal presentation about the middle of next year. the summary for your future as well as present. prop b back in 2001, prop h, 2001, also two charter mandates and some california energy commission loans on funding. there is a lot of being able to access local cost funding and we have access about $27 million of that. what does it cost to borrow for power enterprise. power revenue bonds cost about 4-6 percent. that compares to federal subsidy bonds as we did with energy conservation and

clean revenue bonds. that's anywhere from zero to one 1/2 percent. so it's no surprise that we used that money first and we went to borrow out the cheepest money possible first and the california state loan and that is 3-5 percent. we are always looking to try to get access to the cheapest amount of capital first and then work our way from there. the credit considerations are many but just to highlight a couple. all the financials are teed up for the rate agencies. we have a lot of explanation to do and build as part of our official statement of our documentation because we don't have bond documents like the enterprise as we have issued the bonds over the last 5 years. this is from scratch and we've been

doing that over the last year 1/2. all of this comes together between now and april and the full bond documents are ready to tell the stories and the issues that are before the power enterprise. there are some big items like the deferred heche maintenance capital projects. you are going to hear more about that during the budget hearings as well as our very unique strengths and weaknesses in fact that we are such a large producer and we use it within our own customer base. that can be seen as well as a concern. the alternatives at how efficient we are with our peers as if we have to buy power from pg & e. key dates are here and it gives us a lot

of opportunity to key this in the front of our minds as well as we go into budget deliberations and where we may have capacity look at revenue bonding as a source. with that, i'm happy to answer any questions. >> commissioner vietor? >> i have a question and sorry, i'm missing the gene when i was born about getting my head around this. i know some of the questions i seem to ask repeatedly. i don't know when it's going to appear, when the conversation happens where once we use our hechy power and what happens when the water to generate power, do these bonds help back fill? can we specify the kind of power that we are buying is the end question that i want to get to. we've talked a little bit about this and my

trying to understand. i did have some concerns about the environmental policy perspective that what we had to do especially in line light of our power station going out in the rim fire and in the market having to buy the dirtiest cheapest power possible and what that says and means. i don't know where how if that fits into this conversation per say fanned there is a way to use these bonds to specify this power or if that's a different kind of conversation? >> on the latter part of the question, these bonds have to be for built assets thechlt -- they would be for renewable plants and the up graets for existing facilities. they would be assets for generating power. >> all of these bonds? >> in this case, all of these

bond authorizations. there is also on the operating side of the budget where and how we purchase power. so that's not funded through bonds. that's really funding through the currents rates and charges. >> also to tie into the bonds, these bonds we have to have revenue actually pay for the bonds. >> from the sales of the power? >> from power operations. so we probably getting some good rates for capital power assets to deal now but we have to pay, have the receive -- revenue to pay down on those bonds. in essence we can't get as many bonds as possible but we can get to afford to pay. >> hence the question about customers to generate the nu