income. that is about one hundred and 28 million in resources. we have additional need for expertise and that's where we dip historically into our reserves to fund our overall costs. as you see our operating costs open the right our operating costs and - the wholesale purchases we make and the distribution we procure from pg&e to move our power and other high cost items. you can see how we balanced out that one hundred and 49 million and still have a fund balance at the end of the fiscal year 2014. as the general manager mentioned

we've been in an era of having a balanced plan. you adapted in federal bureau february of 2012 was your - final plan is new revenues about $3 million a year it assumed higher to the general fund which resulted in higher revenues that's the two kent a year over the 4 years that the general manager talked about. we anticipate over the 10 year plan debt financing at 63 million. in order to balance that plan we noted to cut about 3 hundred and

- exemplary 3 hundred million was cut in order to come into balance. the largest portion of that on the up cut capital needs. we also cut some of our local programs our energy efficiency and our renewable projects that included go solar and our other capital projects locally which includes street light services. it was tough to get there but we got a balanced financial plan and that funded number one deferral fees. we funded that through our current customer basis. in a normal year we generate about 1.4 million megawatt hours. you can see on that left bar the total hours and how their

distributed among our customers with 41 percent of megawatt hours going to our enterprise customers and that's where our largest portion of revenues comes from the 79 million. in the middle column the rate on average we're chargingors customers. for 41 percent of the power you can see we've received 69 percent of our revenues that's our highest paying customer base they pay retail rates. then we have our general fund and wholesale customer transactions at the top. so this is - funds one hundred and 11 or 12 million every year of our costs. now we have new challenges.

although we had a balanced plan we've got new capital improvement needs. as i mentioned our current adapted plan fund 4 hundred in power needs and we're expecting american people increase of 3 million over the new 10 year period. we're seeing increases of costs from pg&e for the transmission costs. and some increased operating costs associated with the loss of our intersection agreement with pg&e. taken together we're seeing from that challenge an increases of $20 million a year in operating costs. and then finally, our third challenge that would anticipated in our balanced financial plan in our 10 year plan adapted in

february with some new regulatory requirements like newark and federal requirements and our federal cal i placing requirements on us. we assumed 26.9 million in regulatory compliance costs with the standards that are embodied on us by newark and we can. and we've identified an increase for new rules of 32.4 million of up country capital needs to comply with the standards. taken together - >> i'm going to ask you to go back to the challenges slide. >> yes. >> so thank you. i'm hoping that commissioner vietor will consider commenting.

i'm looking the memoranda in the passage for the public january 10th >> yes. >> you kind of summarize this in advance. i'm looking at page 6 it's the second paragraph. i'm concerned that we're not listing energy efficiency under challenges especially, since you highlight the build out options that's been identified. the puc budget for the renewable projects and efficiency promotions has fallen from 10 million to 3.3 million in favor of and we're in favor of the following; right? to support rate discounts for customers and for defender needs to keep the system returning. first of all, we have to address the challenge of energy and it's

important because we represent a lot of the maintenance workers. i know there's also going to be the balancing act but it's appropriate certainly given our recent conversations to say that's one more challenge >> it is and when we presented in order to bring our budget into balance we presented the option of increasing the general fund rates and in order to continue to support this reyou believe so going go gunshots or efficiency but that was rejected for a lower increase spread over a long-range time period. this is the policy choice that was made two or three years ago in order to bring the budget

into balance. we continue to struggle about how to keeling keep our funding be available. it's a resource to us as a illuminate and it certainly a program area that has a lot of support among our supporters >> i agree i think that energy efficiency has a lot of things this renumbers are not caught up with the installation but energy efficiency has been proven and i'd like to get more data specific to the puc and more specific to the general fund. has the promise and the actual benefits of saving power have been if we had a board enough

customer base we could resecondly, hopefully at the highest rate possible as well as the financial savings. you're saving power and money and creating jobs because of the maintenance piece and rugby the green house gas emission. so from a policy prospective i think does beg for a deep look and analysis how that might work. a couple years ago they were fighting to keeping that at a priority level but those capital improvements are coming down the pike and we've got to cut costs and identify additional revenue resources to address the capital needs. i think that part of the conversation needs to be energy

efficiency whether it's the general fund, you know, go on going in and changing the bulbs or the commercial customers which we're going to hear about t is a potential resource doesn't make sense in the energy efficiency if we save the power do we have a customer to sell it to. i would welcome more thought and a high-level analytical to save the power to sell it as well as the financial savings understanding we don't have the capital to invest in energy efficiency >> commissioner moran. >> i think i agree. the challenge is to fourth where we can make the saved to the

customers we sell the power to. that's one the issues that's been con fouvend. it's harder to afford programs that benefit pg&e customers than it is to show the ability we have the power to sell 1928 and highlight the importance of the subsection agreement. we heard that the dollar impact is 20 mill every year into the future. it will also effect we get to call the customers. as we precede on that it's not just budgetary but in other regions as well. it is one of the keys channels >> unless there are objections i said to see the slide to include a brief statement of

that additional challenge i didn't hear an objection. i think that's one of the things we face and it should be render. general manager kelly >> i want to highest energy efficiency we've been talking about a plan and components of a plan. one of the things we've talked to the mayor's office is to really look at ways to increase the general fund rate and in doing that they recognize that try to reduce the shock of the increased rates by energy efficiency where you can reduce consumption. we're interested and in providing energy efficiency along with a rate increase. we're looking and working with the mayor's office to look at ways that we can actually do

that. that's something that's coupled with the agreed increased rate >> i guess that's a question for barbara. so when we talk about renewables it's providing reluctant power to the puc >> yes. >> so we can serve our general customers go solar is serving residential commerce correct. >> it's larger low serving customers that are pg&e customers and businesses that are pg&e customers and available to customers of obvious who have the fund to several provide those renewables. for example, we put the solar on

the roof at the semiphone hall from our renewable program. other customers of ours have the wherewith all to fund some of the solar themselves at about just need a little bit of help through the go solar program. we do have go solar fund to some of the customers that we serve but it's largely prominently going to customers that pg&e serve >> what i'm getting another is what is the return if we look at the benefits saving the power to resell it or saving money to a pay for other capital improvements we know we need to pay for we have green house gas emissions and maintenance to have information about the rate of return for the go solar

program versus the renewable comparing it and prioritizing it. >> we can do that. >> i apologize for the interruption. >> no, it's a helpful dialog. you know that challenge together with the other challenges i've listed on page 8 puts us in the fiscal cliff situation that's on slide 9. we have various somewhere put together by our financial team and in cfo services group. you can see, you know, we are above zero until we get to the 16, 17 fiscal year where we begin to dip below by fiscal year 17 under ail scenarios.

we had the black bar that you see i'm looking at a non-color version. so i got thank you. the black line that you see shows where we were in our adapted financial plan and adapted capital plan. with those new financial needs those unanticipated costs we are in any of those other colored lines depending upon actions that can be taken. so starting with you guess we can discuss the two extremes. the blue where we have our current assumptions but with new costs that we outlined. the half of a penny in the

annual program we're in the deepest dive the deepest fall off the cliff that blue line >> that's the do nothing prove that, if you will. >> do nothing more than what we've done which is a lot. then the other extreme within the blow zeros would be the orange bar closet to zero where we have general fund rate increase covering that brings it up to covering our cost in san francisco so it's closer to 12 kent then on the $0.04 the departments are currently paying. we have subsection agreement costs that stay about the same

and don't increase at the anticipated increase of 20 million extra we talked about >> i'm sorry so this assumes we can avoid the $20 million cost. >> yes. we have street light costs covered and by the general fund and by general obligation bonds that fund our street light improvements. >> okay. >> and that puts us on the orange boar that brings us closer into balance. >> and mr. president, maybe we should have an understanding as to whether or not we can interrupt as we go i do have some questions that may help. when you say the street light cost of service is that paid by the general fund >> yes. historically it had

been. >> but it's not currently. >> not current with no compensation to the city. >> and the gore bond would it be paid by the general fund. >> yes. >> what about the cost of the general fund. >> that's assumed under the general fund scenario. >> a claire question the line around the customers whether it's commercial e.r. residential. i want to go there in those conversations with that create a new line that would bring us above the black and allow for more opportunity >> yes. if we had additional revenues name our source.

we would see ourselves rising above that black line >> the do nothing current assumption the blue line up above. >> depending upon on the amount of the alleged revenues you could get above the black line. >> i know it's hard to project but whether or not it is tied into the ida but it seems like it could be something else that she's us different revenues we can restore some of the revenues. my other questions is around the energy piece if we could add another line that the savings would help us as well, you know, whether, you know, added to the mix would make a difference and

make it worth another colored line >> i would say we're moving to page 10 because that's the sort articulate the areas we would like to pressure and bring it into balance. >> if you could to clarify a miss statement the debt service on the general obligation bonds would be paid for by property owners. >> that's the orange line does it make the assumption we're taking over pg&e lights? >> yes. that's the reference to ownership consolidation. >> i think we'll probably 79 to talk about that more as we go

on. >> yes within the context of the budget. >> when you say the geobonds will be paid for by the property owners so that's a general fund. that's the mechanism that it gets paid for by the general fund >> yes. and still looking at slide 10 what's our obligations and actions to address staying closer to the black and away a from the blue. number one is issuing debt. we had planned that in order to bring the financial plan into balance. the last time we'll continue that effort with revenue bonding capacity being exhausted in fiscal year 16 and 17 and then the issue of considering general

obligation bonds to fund other appropriate bond for the hetch hetchy revenues we need to continue to look for ways to reduce our operating costs and look at it ways to increase the revenue rates. we've done that already we've reviewed and are looking at scenarios where that will continue marry we are looking at new revenue sources and identifying new commercial customers that set of customers that pay 13 kent for kilowatt hours and looking at the general bond as a new source for street lights. then the need to continue to protect our reserves. you know, a cautionary note if we're in drought that means

observer costs go up and outlining all of those potential solutions continue to fall short of a balanced plan >> commissioner torres. >> if we're in daughter i thought we were. >> we're not officially in drought. >> i thought the governor was prepping to issue such a statement. >> maybe we can talk about the state declaring a drought vs. our agency we normally look at it in february our water supply. >> so we're able to so declare even though the governor does. >> the governor is focused on state water. >> about it has an impact over the drought. >> yes. >> but we can 2k3i7b8 delivery a drought for our purposes why

with are we waiting actually february. >> we have a timeline so we normally look at the water year and we have a couple of more months left. so everyday it doesn't wayne rain or snow we're concerned so when february roles around we look at our water supply and then we will work with our wholesale customers to determine what acts we should take. so that is typically what we normally would do >> so at this point, i thought we were over and over desolations. >> we - >> are reaccelerating that as other counties are doing napa and other other counties, in fact, one reservoir is empty and

dry. there are consistent patterns and in my county their receding dramatically like the village that was flooded is now reappearing and they're taking a advisors conservatism now should we do the same >> we actually have a presentation on part of the general managers reporting report we can talk about it in detail. >> i'm ahead of it. >> will that be satisfactory to talk about it at this point. >> yes. >> of course, the chair will entertain a motion to declare a drought (laughter). >> thank you barbara. >> thank you. >> so are you - so i think the take away from this slide that we want everyone to understand that if we do nothing we're to

go into dire straight. we have a plan to pressure has we articulated that we plan to pressure commercial customers that's where we get our largest amount of return. we're talking to the mayor's office. we're working with city attorney and getting ready for the i a discussions because that has a significant input or impact on our budget and so we're trying to pressuring pursue this to maintain the programs and everything we've had the luxury of supporting. i want to let everyone know if we're not successful we're going to have to come back and cut. so the first, we will look at

are number one essential service that will provide power to san francisco. all of that will be up to evaluate and cut and not concluding cutting puc staff. we're going to look at, you know, all the other programs we're supporting are also up. so the thing i'll tell everyone it was great while it lasted. people have the benefit of having hetch hetchy but hetch hetchy is in trouble. we need people to focus and remember the benefits and the themes that this enterprise contributed to the other programs and rally behind our ability to bring it back into alignment. i know a lot of people were looking for restoring certain programs. we try to continue the programs

but let them know that we're doing this but look at our situation if the situation becomes worse we maybe will have to reduce stuff. that's really the big message we're taking something serious and this is something that is the highest priority at least me being a general manager and it's probably the highest priority of the commission >> if i can just add to that. i think one of the things that's disturbing about the grafts is the best option and doesn't advance our situation and it assumes some things that are not absolute >> yes. >> the i a costs being a big

one. which kind of 2k3we9s us to the discussion including some of the alleged customer somewhere as well that that is how hopefully, we'll weather some of the things. not everything is going to go carotid to plan. the other things or thing is the comment this is the do-nothing approach. if we get the muni departments up to paying the costs that's a huge benefit to the city. okay even at the full cost rates. the full costs between that and pg&e rate is huge. i don't want to, you know, it's not as though everything is going to go away. the city does benefit and will continue to benefit from the