when you saw us come to the budget committee, you heard both myself and mr. harrington at the time talk about the hetchy fiscal cliff. and at that time it was solved by cutting the capital program, deferring $2 24 million ~ of other types of improvements. that $2 24 million of cuts included the assumed reductions from 5 million down to 2 million go solar sf, cut energy sufficiency, cut city renewables on city buildings, $90 million, 30 million each from programs that we really want to do. but if we continue to provide power below cost, there just is not enough money to do all the things that are good and that we would want to do. and, so, the fiscal plan for the puc's power enterprise was balanced the last two.

previous to that it was not balanced and it showed a shortfall. but it did you point out that it is relatively straightforward if we don't have more revenues to pay for costs, we could only buy what we can afford to. so, here again now, we fast forward two years three new pieces of information mean costs even larger than what we have ever assumed. mountain tunnel was already in last year's capital plan [speaker not understood]. it was in it for the last several as far as the maintenance work, but it was in at $100 million of cost. with the potential for collapse of the mountain tunnel which would disrupt the water supply and a recently completed engineering study, though costs have gone upwards of $6 28 million ~. so, that, sir, is new, and i do understand that that would be a very surprising and large change. the interconnection agreement expiration, though costs have always been in our ten-year

plan, but not to the recently filed and heightened levels by pg&e, to ferc and cpuc. but lastly and a very much smaller amount of it, the regulatory environment, we used to comply -- we used to work with and want to comply with best practices in all our utilities, but that has gone from being best practice to now in the next coming budget mandatory. it is vaster than what we had originally assumed. so, i'm sorry to have to report it and i wish i could -- i wish i could tell you exactly that we can continue to give $50 million of cheaper power to the general fund, but i don't see how to do it at this point any longer. >> and then two follow-up questions. i had shown some of the timelines around the decrease in -- i don't think you can see it from here, but a decrease in go solar s.f. installations and clearly these are all trend lines, but i think all of us as

well as the public are concerned about, if you slash funding, potentially down to zero, what is your suggestion in how we move this forward? is your department able to continue to operate this program? do we need to think about whether your department can continue to do this, whether there are other funding sources that are out there? i think this is something that in the scheme of our budget is a very modest amount of money, but it has had a big bang for its buck from an employment stamped point, from an environmental standpoint, from a solar standpoint. want to get your thoughts on what we do. >> we would agree that going down every avenue to figure out additional funding, additional funding. just for an example, additional rate payers who pay cost of service would be helpful. to the degree we raise the general fund rate for power one penny, we could raise $1 million with the revenue. and, so, that's to provide some perspective.

the only way we collect money at the power utility is if we charge rates. we are exploring wherever we can grant opportunities as well as cap and trade revenues. [speaker not understood] has been very, very active a have i, but we will continue to explore every possibility. that said, we had a very painful task of going to our commission and going to you two years ago and will be possibly again this year saying we don't have a ten-year idea that solves everything unless we get more revenues, unless we raise the rate on the general fund to cost of service because we can't, we can't continue to spend more on capital improvements that have to be done, otherwise the lights won't come on. >> i appreciate your presentation. just [speaker not understood], one of the challenges i have is we know this is a program that generally pays for itself because when we help the public not just with jobs, but by putting on these installations,

we're raising property values, which then lead to property tax revenues that come in. and, so, again, from my perspective, i feel like this is an investment that then leads to future tax dollars coming in and i want to figure out how can we sustain this as we move forward. but appreciate your presentation. >> thank you. >> and now -- >> before you go, supervisor tang has a question. >> just a quick question. i know you mentioned in your presentation that we have before us the california authority initiative which the puc was piggybacking off of is no longer available in northern california. number one, i just wanted to revisit when that rebate program went away and also if you have any insight as to whether something of this nature or similar may be happening or taking place and available for the public in the future. >> yes, thank you for that question. and if i could, i'll defer to assistant general manager hail because she is also an expert in that area, if i may. >> before she comes up, can you talk a little bit about new

customers that -- and what that would do for puc profits? >> yes. i would say what that would do to recover costs, not even profits for the puc. so, for an example -- >> so, we don't make a profit for charging anyone for power or water or anything? >> as a municipal utility, we are barred from making a profit. so, that makes us unique compared to -- >> so, we're subsidizing it now. so, that's my concern is right now based on the rates that we're charging, we're subsidizing our water, our power, our sewer and that's just bad business. >> we cannot subsidize the cross-water power and sewer. each one of those three has to pay their own share -- >> but they're not. we're, we're asking for general fund revenues. we're subsidizing it with grants.

we're looking at bonds and all kinds of other resources to pay for infrastructure needs. and, so, the rates are not covering the costs. >> you, supervisor breed, are correct. in the power enterprise, for the power enterprise work, the general fund rates are not paying for the general fund related costs. >> okay. the general fund related costs, but what about the other power rates that we charge to other customers? >> for example, our customers in hunters point, the shipyard area, the parse away, we are providing them power at about 15% cheaper than pg&e rates. so, we are less costly than pg&e. in the case of the airport -- >> but we're paying pg&e to distribute that power, correct? >> that's correct. so, we don't have our own distribution lines. we don't have our own transmission lines all the way into the city. we have our own generation units and some transmission,

but we have to use pg&e's transmission and distribution lines -- >> what are the future conversations, discussion around how the rates that we set equate to everyone paying their fair share and not -- i mean, i understand, you know, that you believe, based on i guess the data that you have, that the general fund is not necessarily covering its costs. but i'd like to understand that a little bit more -- i want us to go a little bit deeper >> okay. >> -- and look at what people are paying besides general fund support ~ and how the expenses are for the department and how those clearly don't match up, regardless of what you're charging other entities. because that's an important conversation that needs to be had. i realize that we're not able to generate a profit and

recover our costs, but we're not recovering our costs based on the rates. but more importantly, we can't just say, well, the city general fund needs to cover it because we're not paying our fair share, and we don't have any documentation to support who actually is paying their fair share and how do the changes in the amount of money that we pay and say that, okay, we're paying our fair share and everyone is paying their fair share. it's still not going to equal the total amount of expenses that we have for the project. so, i guess i'm just not seeing what you're trying to explain to us because we don't have any data to really understand exactly what that means and what we need to do because i'm not inclined to just say, here's general fund dollars. we're going to pay our fair share without understanding it completely. >> point well taken. and we will provide that during our budget hearing. the charter requires us to not

only do it for one year, but for ten. and the charter also requires us to have an independent rate consultant actually verify and review the numbers. so, those are some of the protections that voters in san francisco put into place in 2002 that holds that sfpuc and the water enterprise, the power enter pry, and the sewer enterprise to a heightened standard of fiscal integrity ~. >> thank you. >> you bet. >> okay. barbara hale can come on up and give us a presentation right now. >> thank you. barbara hale, assistant general manager for power. what i'd like to do is walk us through and give a little background on the program and where we are today. i have an overhead slide. if sfgov-tv could help us walk through those. [speaker not understood]. we've talked a little bit already about some of these

issues, but just to make sure the audience here and viewing electronically are clear, power enterprise is san francisco's power provider. pg&e provides services to many residents and businesses here in san francisco, but power enterprise is a public utilities commission is who provides power services to muni, to fire stations, to police stations, our libraries, our general hospital, you know, those essential city services receive their electricity bill from the san francisco public utilities commission. so, when our cfo was talking about the rates and the funding and the revenues, those are rates we are charging primarily to city services, city service providers. we're also charging rates to tenants and businesses located on city properties. so, you can see on this slide

it's about 2,260 accounts. we have the wonderful benefit of the hetch hetchy hydroelectric system which provides greenhouse gas free electricity to our customer. we're also san francisco's energy efficiency services provider, san francisco's renewable -- rooftop renewable provider. that's where go solar s.f. factors in. and we provide service to san francisco's 40,000 street lights. so, for a part of the city's important public safety feature, street lights and pedestrian lighting, we provide the electricity. we pay all the costs for the operating and maintaining those lights whether we own them or not. next i just wanted to review quickly the power enterprise's overall priorities. this is a very familiar slide to folk paying attention to our budget. what's unique about it and

what's emphasized here on slide 3 is the fact that we're now focusing more on developing new revenues to support our long-term capital requirements and continuing to work to comply with ever changing regulatory requirements. ~ folks there's been quite a bit in the news lately about one aspect of that. you know, the metcalfe substation that pg&e owns and operates was attacked by an individual. the federal energy regulatory commission who has responsibility for overall reliability of the electric grid is responding to that by imposing new regulatory requirements on us. so, we now have additional costs that we hadn't anticipated to address cyber security concerns on the electric grids. that's just to give you an example of that regulatory -- changing regulatory environment we're working in. shifting focus, then, to the purpose of today's hearing, our

go solar s.f. program, we talked a little bit already through supervisor chiu's introduction that this is a program that was established by ordinance. after about 14 hearings, we had an ordinance passed that designated the puc as the program administrator, and it states the objective of providing an appropriation of 2 to $5 million annually. that appropriation comes from the s.f.p.u.c.'s power revenues. so, that appropriation is spending dollars ~ that we have collected from our customers. our overall program objective is to encourage installation of global power systems in san francisco clearly. what's unique about our incentive program is the fact that it includes this important job component where we're providing jobs to disadvantaged san franciscans. we have a work force development program associated

with this incentive -- yes, with this incentive program. most solar programs across the nation do not include that. so, that's the part of the program that's unique to san francisco and that we really want to see continued and replicated across the nation. it also includes the unique bonus, if you will, to low-income households to make sure that solar is not just something for folks who cleared the affordability bar in san francisco, but for folks who are residents here and have a strong interest in having a renewable resource providing their electricity. we have added incentives for those households. and, of course, to support the local businesses here in san francisco. sort of another variation on one of the slides that supervisor chiu provided. here are the appropriationses over time. before we were experiencing our

financial difficulties was at that maximum level, identified in the ~ ordinance the board adopted, that $5 million level. we have seen it drop down to the $3 million level in the 11-12 program year, and down to the 2 million. at that time was when we were asking the general fund to pay more so that we would have sufficient revenues to cover our costs. and then you can see reflective of the supervisor's comments, we did increase the appropriation and brought it back down to what's been in our ten-year capital plan since the 2011-12 time frame, the $2 million level. the program by ordinance is a ten-year program. so, it appears in our ten-year capital plan, funded going forward at that $2 million level until 2018. >> before you move on from this

slide, i want to point out one thing which i think you know and i want to mention this to our colleagues. in february of 2013, go solar san francisco had actually run out of its $2 million funding. >> right. >> and essentially the program ground to a halt. ~ and there was a significant, significant advocacy campaign on behalf of the community and this was why later that year mayor lee and the general manager to the puc then increased the funding from 2 to $4 million. and at the same time i know the s.f.puc die creased the individual incentive levels to stretch program dollars to achieve more installations. i point this out because what i'm concerned about is if we go back down to this $2 million level, we'll just be in that same place we were in a year ago and we'll be back here [speaker not understood] and have this conversation. i'm just not convinced that this $2 million level of funding is sustainable. >> yeah, and for us one of the program challenges that we'd like to be able to work with

the community on is how to sustain the funding. a program like this does best when there is stability. with the california solar incentive being closed, the program being closed in northern california, we've seen a drop off in the rebates and incentives available. our program has sustained the portion of the program that pg&e was contributing to is no longer available to our businesses and residents who are pg&e customers. so, we are seeing that. that funding has gone. our funding availability, because of the competing needs we have, is at the $2 million level. we would love to sit down with folks and talk about what other outside funding sources might be available. in order to not just have funding available for the program years today, but also beyond 2018 because there's no

funding available program beyond 2018. >> so, one thing i'd like to say, and if you have ideas on how to increase that funding, love to hear them. i know you've got looks like another 10 slides to go and we have a lot of members of the public whore here to want to speak. so, if you have any specific ideas, but i want to just take a moment to pause and say ~ the point of this hearing really is to think about long-term sustainable funding. ~ who and we've heard the need puc has, but any ideas would be great. >> okay. let me flip through past a few of these. this is information that's already been provided. i will point out for those who are interested on slide 8, we go a little bit deeper into the current fiscal year appropriations. and you can see on slides 9 and 10 how those appropriations break out among the different

program components. it was last spring, supervisor tang, that the california solar initiative funds became unavailable. you had posed that question earlier. and that really does affect our, our, our residents and businesses. ~ participating. i did want to spend a moment on slide 11 because that shares with you how the work force numbers break out within san francisco by zip code. we've talked about the 121 disadvantaged san franciscans who have been employed through this program since its inception. and you can see how -- how that breaks out within san francisco zip code areas. the data on the right has the zip codes ordered by highest number of disadvantaged san franciscans employed from that

-- from that zip code. >> if i could just comment on that. it seems this is exactly the type of work force development impact we want to see. >> absolutely. >> in neighborhoods that have significant need for folks -- for jobs and particularly [speaker not understood] collar job. >> yes, and not just through 2018, but beyond. completely agree with you. and then looking at slide 12, program changes, we talked about the fact that csi was available to us. we piggybacked on the csi program for applications, for inspections of systems. with the csi program gone, we are now -- we went through a crush of work at the early part of this fiscal year to implement an online application system. at that time we were clearing the queue. we had a backlog of applications and with the additional funding that we

talked about being placed on the program, we were able to clear that backlog in the early part of this fiscal year and then open the program for more applications through this new electronic process in november. we did,s as supervisor chiu mentioned, reduce the incentive level at that time largely because ~ studies were showing nationally the cost of [speaker not understood] are down, which is great. we want to make sure we have this incentive level dialed down at an amount that gets the biggest bang for the buck and is it over rich. we think we're there for most program elements. we may have dialed it back a little too much on the local -- excuse me, on the low-income customer component. and, so, we're taking a look at that as program administrators at that. and then a quick shot of the tiered structure of the program. this what another one of the changes that we implemented in 13-14 to make sure that we were not over inventing small

systems within the statutory discretion we had ~ we went ahead and tiered the incentive structure based on the size of the systems. and then for areas of improvement, we -- flipping through to slide 15, you know, really want to make sure that we are improving access of the program benefit to not just to the pg&e customers who reside and work in san francisco, but also to the customers of the power enterprise. so that the fund leaving our side of the ledger are going to our customers as well as others. we want to make sure we have financing mechanisms for program participants because not everyone has access to financing the balance of the system cost. we want to make sure we're

addressing that going forward, making sure we're really optimizing long-term job opportunities for disadvantaged san franciscans, you know, working with work force development folks. we're very happy to have this component of our program. but given the level of appropriationses and expenditures, 1.5 million for this program, only 121 is -- employed is a fairly small number when you look at the dollars spent. and then we have a quick picture here -- >> i just have one comment on the areas of improvement. one thing i'd like to ask as an outcome of this hearing is you're obviously going to be presenting the budget to us in the coming weeks. >> yes. >> i think it would be helpful if you could document for the public what areas -- what will you be able to improve in the coming weeks for the implementation of this program over the next few years. i think there will probably be other issues that are raised here, but the public would like some answers on. and if we can over the next month get some answers to these

questions, i think that would just help put people at ease on where this program is going. >> yes, and i'm here and we'll take notes on the comments and questions that are posed so our -- the program day to day administrative staff, angela [speaker not understood] excuse me, sorry annette randolph, [speaker not understood] and taking the full bore of the electronic process and working every day with san franciscans and the installation community to keep the program moving forward. we have a goal of processing our reservation letters in this program of 30 days and payments in 45. during that phase of the program where we had some backlog to work through, we were not hitting our goal -- our goal for reservation letters, but we are at this time. we were not hitting our goal

for payments. we're currently processing payments at approximately 60 days instead of the 45, but as the electronic process moves forward and we reconcile the paper process with the electronic one going through that transition, we expect to return to the 45-day payment. >> when do you expect that to happen, electronic signatures? do you have a time frame on that? >> we don't have a time frame on electronic signatures. that's something that we've been advised by the city attorney's office. we can't move towards yet, but we're continuing to push for that. all other aspects of the program, the application is done online, the reservation letters, the agreement. we've skimmed it down to having to sign one piece of paper to, to complete the whole process, but we are required to accept a wet signature and are not allowed at this time to move

forward with electronic signatures. >> is that the case with [speaker not understood]? let me ask the question to the city attorney. can we not accept electronic signatures for other activities? i know this is a common complaint i've heard from the industry on this. >> deputy city attorney jon givner. i'm actually not familiar with the electronic signature issue with regard to go solar, but i do know that we're constrained in many ways, in many programs. i don't know across the board from requiring electronic signatures. >> okay. and i don't want to be labor this point, but i would like if you could ask the city attorney who is providing you this information, it seems to me that if the private sector can do this with much larger amounts of money that city government ought to be able to do it in 2014 ~. but just like to understand that. >> we'll continue to pursue that, yes. >> thanks. >> and then looking, and finally , at sort of where is the money

coming from. you know, our cfo described this bar on the left which is our revenue stream coming in. you can see it's our customers, retail customers, enterprise rate paying customers and general fund customers, that's at 79.6 million and 13.1 million. that's the money that's coming in to pay for this program and all the capital needs and operating and maintenance needs of the hetch hetchy water and power system. those costs are shown on the bar on the right. you can see that at present our total costs for fiscal year 2013-2014, the funding for the go solar sf, our total is 149 million. in order to pay for that, we are dipping into reserves to the tune of 20.7 million. when our cfo says that we have a financial issue and it's not a sustainable enterprise, it's in part because we are having to dip into our reserves in order to pay our standard

operating costs or year to year costs. you can only dip into reserves or, you know, to put it into plain speak, you can only dip into the savings account as long as there are saving there. we're burning through our savings. so, that's part of the challenge we have as an enterprise. we have lot of competing needs for funds, lots of costs. where do -- how do we prioritize and fund those elements? the general manager has, has said that he will continue. he continues to support funding go solar s.f. at the $2 million minimum level so that we can balance that out with other needs. one of the other needs we hear a lot about, not in the forum here today, but in other forums, our street lights. you know, our street light funding and our current proposed budget that we'll be bringing to you is at about the $5 million level. so, these are the issues we hear about locally from residents and businesses associated with power.

go solar s.f. energy efficiency and street lights. most of the capital funds that you see on the slide as a cost, the essential capital costs of 44.7 million is really funding up-country needs to keep the generators operating, to keep the system providing reliable greenhouse gas-free power. and with that i'll go ahead and sit down and take notes on the good comments i'm sure we'll hear from residents. thank you very much for your time. >> appreciate your comments. one just finally guess observation. i understand that there are many competing needs on your services. >> yes. >> i would suggest that this is a program that while low in dollar amounts has generated an enormous amount of community support for all reasons that we talked about today. street lights might be in that category as well. but if you look at all the different needs, i sub petctiontion this has from what the public understands of