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 hetch hetchy project >> thank you in light of that it's not playing the devils advocate but a lot of the the programs people begin to count on it and i think it would be a mistake if we didn't at least entertain the notation of continuing the agenda item so we're continually updated and obviously, the stakeholders and public villaraigosa an opportunity to abstract to the discussion i wouldn't want to

find out proposed cuts. >> i want to have dialog each meeting and if there's nothing to report then so be it but to over discuss it and over analyze it would benefit all of us picture that's my request unless there's objections. >> i want to pout you are definitely psych we need to come quarterly and give you an update. we laid out our plan of attack and everyone i may ask for saubs in doing things and i think everyone has a stake in that and when we get to a point to reduce costs that will, you know, be, you know, give them information

to let them know that programs that we've funded are in jeopardy. we need to do. you notice that even if we're successful in a lot of stuff and although it doesn't address all the potential customers which we will probably look at the scenario but you notice there are years where the orange line is below the black line. so some years we generate excess power and have revenue. so the thing i'll caution you when we do have that we need to save it instead of spend it. so the one thing i want to point out we need to make sure we have adequate enough money for the

times like this. and the last thing i want to say is also as we get new customers we have to be more prudent and be a utility that has good practices so we need to look at our reserve because our power is dependent on water. so we are going to need to increase, you know, our compliant money to supply the power when we don't have rain >> yeah. i know that the commissioner referenced it but i want to see this on a list it's not just about the commercial customers but the energy

efficiency conversation we're having residential is in the base for the revenue source what does that look like. what are the other revenue sources to be able to make end moot >> to clarify the 10 year financial plan includes anticipated revenue from new customers. we brought to you the service agreement with transbay 1y0i7b9 power short to serve the transbay transit center. they're not an actual 0 customer yet but because a they've signed a service agreement we're anticipating their revenue from them as a customer in the 10 year financial plan. there are additional customer opportunities anticipated in that plan and other additional customers that aren't anticipated in that plan.

we can show you other scenarios that anticipated that aren't currently in the mask >> i'm slightly more interested in those specifics but the bigger ticket item is it a new development play or a residential opportunity so sort of what could be the big buckets the of revenue. >> we can talk about that in another session. >> but is it relevant to the fact we don't have any water how can we get new customers. >> he yeah, we run model in a stiffly year the budget materials you see in the workshop are assuming a normal water year. we can present that in a dry water year

>> i think that's important for the transparency. i know the general manager and staff are making sure those are on the table. it's important for us and the public to know that >> and to give you a sense of magnitude. if we're in drought we apartment another $8 million in cost >> that's what. >> net. >> thank you. with that, i'd like to visit to the budget particulars if i may come out of the workshop >> please. that will return to the one marked hetch hetchy power turning to the section with the

title page for power enterprise. and our total budget slide on the screen here. it's slide number 8 once in that first packet. and here's where you see our total budget. adapted for 2013 and 14. it is flat the only cost increase that you see represented here that brings us to the one hundred and 579 million is an increase in our contribution and dictionary costs vs. the power of 21 million. there are some additional costs associated with salaries and fringe but the only the big-ticket stem is the change

and anticipated cost for transmission >> and the subsection issue. >> correct. then we have a couple of slides that shows our source of fund. first sources you can see the primary source is the revenue from the sale of electricity and other sources listed there and our uses with our operating costs and our purchase of power being some of our larger items there. >> and how does you show 2014 and 15 the balance how does that square with the dead issuance assumption. >> this assumes that issuance

and i'm not sure when. >> i'm thinking of coverage. >> so what you have is a budget balance it allows us to issue some debt over the next two years but after that it maybe impossible for additional debt. it allows us to may pay the mortgage and as well as cash fund some but we run out of reserves at the end of year two >> we don't have any fund balance to speak have to the 14, 15? >> in 14, 15 we do but we end the second year with only about $7 million of recurs is the 4 percent of reserve which is

quickly used up as & we transition to 17 but once we trigger into year 3 it's not substantial. >> can we have a reserve policy that states we have a minimum. >> we do it's predicted upon to establish the reserve and by the end of that 10 year plan we satisfy the 15 percent of operating right side and expenses and the debt coverage ratio. so in year one and two we're satisfying that debt service so we're technical low meeting reserves but by 3 through 10 it's no longer substantial.

how much is that presidential >> that's about 27 to $28 million so right now we have $20 million in reserve so we're showing that next year and in the two years as well. >> i want to highlight although we're submitting a two year budget it's eating into our reserve so i hope to meet quarterly and if we are looking at, you know, not increasing our revenue it would be prudent to start directing our costs. so instead of waiting for year two and our reserves are down to fumes we need to do corrective actions as soon as we know that

we know things we're planning on pursueing. we probably need to really, you know, pursue a lot of those things we're pursuing and get back to you >> i'm looking the bar chart that says in the coming fiscal year year one we're down to 2.7 million. >> that's a good question. that's what we need to use in year one not what we're adopt to. this is not just to balance the budget >> this is the source of fund. >> yeah. and nicole it's saying we don't have to use as much of the reserves in that 14, 15 year but we have to use a lot of them in the subject years.

so that's why we transition i'll give you the 10 year look for the balances by the year >> thank you. >> and so then moving onto the uses slide. i think we've talked about that sufficiently. our flat budget is under our existing structure. we're going to be doing reorganization within my group for the customer development associated with getting assessing new revenues you know getting new customer commitments over the next couple of months. and then in terms of the actual position changes we're trevor some positions out of my unit and not