to express more strongly to the planning department and to the mayor that we need to resolve these issues. we need answers and perhaps we should slow down that growth until we finance this because someone said there's going to be an earthquake soon well that's true and lastly the housing element the master plan for housing in san francisco requires you all have input in regards to water supply well you have to be more serious about the water supply in the event of a drought and high-rise issue so please be forth right and tell the planning commission that the water supply in regards to drought and the increased population. >> thank you very much for being here and thanks for your input and participation the next speaker card i have is

from lorraine lucas. >> hi lorraine good afternoon. >> happy earth day. >> happy birthday? >> earth day. >> oh i'm lorraine lucas and the coalition voted at the april meeting the following resolution we represent 48 neighborhood organizations throughout the city whereas the programs included in the category of policy expenditures in both water and wastewater enterprises whereas the cost project tree and the 10-year cash flow models is un

sustainable 1 billion and 176 million and 569 thousand and 9$36 and together with annual payments related to debt in the next 10 years projected to increase 7 fold makes the cost of water and wastewater service prohibitive for the families of san francisco whereas water and wastewater rates must adhere to the cost of service requirements of prop 218 of the state constitution, which requires property related fees and charges do not exceed the proportional cost of providing the service to the individual property. whereas this proportional requirement is violated embedded in rates not essential and not core to the

mission of the sfpuc to provide water and wastewater service and do not benefit the individual rate pay er and policy expenditures if desirable and if necessary should be funded by the general fund departments whereas community benefit programs and other policy expenditures may have benefits to some interest groups, they do not benefit all rate pay ers whereas city rate payers have not bought into the value of these policies because there has not been a venue and aggregate costs of these

programs therefore resolved strongly urging the puc commission policy expenditures and also on the cap program as you know the big horn desert california supreme court ruled in 206 that this type of program is illegal the city needs to ask the board of supervisors you do to fund these programs if you find that low income water rate payers need help it should not be put on the rest of the rate pay ers thank you. >> thank you very much for being here lorraine. >> the next card and this is the last card i have -- unless -- is there any mail? is joan -- this is good. joan girardo is that right? >> hi joan good afternoon. >> thank you for the venue i

wanted to say when we talk about an average bill it's a useless tool to understand your residential customer classes because the predominant occupancy of single family resident i want to say that pennies per gallon is also kind of useless to understand in effect and i took my neighbors's household five people measured by 1 meter to parents and 3 teenage kids and i gave them 50 gallons a day per person the lowest consumption rate in the state of california which we have

achieved in san francisco and in 2017 under these rates they will be paying $2,556 annually. now, commissioner ann moller caen asked a very good question -- why are we waiting 4 years to implement a uniform rate for wastewater? back in 2007 i started the fight the family tax campaign to try to get rid of tiered rates because we believed they were unfair to families and at that time we had 3 tiers for water and 3 tiers for wastewater and using a calculation of 1 person in a single family condo using all 3 units, a buy monthly billing

for that person for water and wastewater would have been 34.20 cents using the same amount of water per person per day in the 5-person family household, they would have been paying bi monthly 286 $286.66 if tier one represented the true cost of service then you would have expected in a 4-person household that the rate would have been the bill would have been four times the 34 the $34.20 of the 1 person household but indeed it was over annually $791 more. the san the san juan, capistrano

case -- i'm sure you are aware is that tiered structures is illegal and i would say there's a provision for rate deviations within that 4-year period and i would urge you to tell staff to get rid of the rates, the tiered rates for water and wastewater before the 4th year and you know that has taken a lot of money from families particularly for wastewater and they have actually been subsidizing the use of the single person household and that can be proved and at any rate maybe we can get rid of tiered rates next year rather than waiting 4 years and i urge you to investigate this a little bit further and we often wonder why are middle class families leaving san francisco because policies and programs

squeeze them that's why. thank you. >> thanks very much for being here so along that note my hope would be with respect to the public comment we heard today the issues presented prior to our next meeting on may 13th donna is that correct? we would have some memorandum dealing with those specific issues a particular concern to me and it may be just me were the legal issues just raised so i want to make sure we're able if we're in need we're able to get an opinion on the fly there. >> mr. president. >> yes mr. moran i propose at the end of today's rate discussions one of the things i'm going to be asking for is a start of a discussion through a couple calendared items in the near future to start looking at

changes to the rate structure that would bring our revenue structure in line with the expenditure structure and what that would do is increase fixed charges and probably get rid of tiers on the variable section and i think that there's a variety of benefits to that and mr. -- gave me a couple more so i think that's what we need to look at they are complicated issues and take time to resolve and that's why i want to get that discussion started as soon as we adopt these rates that we start talking in terms of what we need to do for the next set of rates. >> thank you commissioner. >> okay go easy on me. olodai,

omaka -- how's that? my first a. >> good afternoon. i want to thank everyone my first time here and english is my second language so i'm here as myself i represent myself as a single mom and i do -- i'm going to talk about the new increase that they are trying to implement to low income families it's really hard i do have to say that these increases go to -- i want to say based on the presentation saying that they have information to chinese and english and spanish language -- and over 10 years and i'm the landlord for that place and i haven't received anything about what they are saying that it's about training to community how

to do better -- i'm not sure what she's talking about because i haven't received anything so i'd like to see how that we can -- learn more and have a full understanding about the new increases of the water supply. thank you. >> thanks very much for being here. the last speaker card we have is from judy berkowitz good afternoon judy thank you for being here. >> thank you good afternoon mr. chair and commissioners. coalition for san francisco neighborhoods i'm the president. . ms. lucas read

into the record strongly urging you to take immediate steps to scale back policy expenditures and also to explore state laws as it applies to prop 218 i have finding which of these many organizations that receive money from the puc could possibly be more beneficial ly directed towards the general fund so thank you very much. here is a rather more detailed description of what we considered at the coalition for san francisco neighborhood's meeting. i meant to introduce it says 48 individual

neighborhood organization -- the umbrella association we potentially would have thousands of members under this umbrella. thank you. >> can we get a copy of that. >> i'm giving copies right now. >> stay up here. >> so the groups that are receiving funding can you name a couple of ones that you are proposing not receiving funding? >> there's [inaudible] there's success center and the community development center and hunter point family and collective impact and a phillip

randolph institute we're not saying stop funding we're saying cut back and explore other sources for these policy expenditures the public simply doesn't know that the size and scope and number and the aggregate cost of all of these programs that are coming under -- that they are paying for in their rate payer rates and the cost of these programs. >> so i'm just taking a look here and i'd like to go on record and perhaps there is more outreach that we could do to let the public and rate payers and what the nature of them are. >> uh-huh. >> i'm familiar with several of these and i'm quite supportive of these projects because i know they are in the community doing very important work and that we as a commission adopted

a community benefits policy directly to fund and support these community based groups working in the community to help develop jobs and for career training. >> we understand that. and we're just questioning the source of the funding based on the puc rather than from the general fund. >> oh like you guys receive for your summer project, right? >> we received nothing. >> i thought you received money from the city for summer use programs? >> we have no programs we receive no federal state or city money our sole source of funding is our annual dinner and member dues which come from the associations which is a piddly $45 a year and we're true nonprofit [laughter] we received nothing more than

that. >> judy the conversation is going to continue right on may 13th and we appreciate you being here. >> thank you. >> it's an impressive roster of members 48 members and thousands certainly of interested parties so please return. >> thank you. >> and commissioner do you have something else. . >> >> i do remember the first earth day i pulled a huge prank on my biology teaching assistant and professor [laughter]. >> thank you very much for being here i have no further public comment cards but we'll continue public comment i would say we will cut it off by about midnight unless there's any objections anyone? >> okay public comment is now closed madam secretary we do not have an action item is that correct.

>> we're diss continuing the item to the may 13th meeting. >> it wouldn't hurt to make a motion and you could just say if that's the order. >> are there any objections hearing none that shall be the order. >> 17. >> item 17 presentation and discussion regarding proposed wholesale requirement and rate schedule for fiscal year ending 2015. >> hello again charles pearl deputy cfo you just heard retail water rates we'll also be bringing wholesale water rates today for your consideration and just as a reminder the rates for

wholesale customers are contractual and it's very much dictated by that agreement and we reset rates each year so quickly we always start by talking about water projections and yes we had a large drop back from the recession in 2008 but the projections for water sales flattened over the last 4 years and project that to continue over the next 2 years which is our budget cycle. we're projecting a slight decline in water sales because of the call for conservation related to the drought a lot of members on this one but the only one you need to pay attention to is the shaded column for 2015 and the revenue

requirement is 222 million. we allocate costs based on how much water they use so right now they take about two-thirds of the water so pay about two-thirds of the operating expense. half operating and half debt service and in the 19 million that you see is a true adjustment each year we do a planning and set rates at this point in time but at the end of the year based on actual costs and water sales make an adjustment if we owe the wholesale customers money we give them a credit. >> what happens to the balancing account? >> as this slide shows we actually adjust the rates and take any over payment and reduce the amounts they pay us

in the subsequent year. so the rate we're proposing for next year is 2 $2.93 for unit a $0.48 increase this chart shows historical rate as well as the projected rates for the next few years so for the wholesale customers a 19.6 percent rate increase for next year we've shared this rate with our wholesale customers so they are aware of this and we had a wholesale customer meeting with them in february so they are aware of this change. this is a lot of numbers again but the yellow represents the past and the white represents the future and the point i'd like to draw your eye to on this slide number 5 is the far right column what we told you a year ago has gone down because the

wholesale customers you may recall paid us back in february of last year and owed the retail customers approximately $350 million and our contract allowed for the prepayment so we've taken that money and actually lowering the rates and because they have prepaid that amount their rates have actually gone down and you will see those negative numbers in the far right column shows their rates are actually lower for the next 10 years. pennies per gallon again for wholesale customers it's much lower we again wholesale water to them a third of a penny right now to sell water to these folks that's expected to go to 3 quarters of a cent another way of looking at their cost. this is the rate structure unit cost

way of looking at things. what you get from that is a unit cost of about 2.93 cents again that's under a 20 percent rate change compared to what they are currently paying. they then have a treatment plant that they take from crystal springs and we provide them a discount and that discount represents the cost of treatment we pull the cost of treatment out of our wholesale water rate for them so we give them a discount. that's it happy to take your questions. >> one of the speakers indicated that families are discriminated against by the tiered system are you familiar

with that? was that a court decision or regulatory decision. >> i can't speak to that but in our rate setting try to be as equitable as possible so typically means that if you take large volumes of water that will bump you into that next tier so you should pay the cost for those larger pipes and pumps. >> one of the reasons you might use more water is because you have a large family. >> and for the wholesale rates there's no tier it's a flat rate. >> is there any fixed charge component. >> there is basically a metering charge we collect about 4 and a half million dollars a year. >> what percentage is that? >> 2 or 3 percent a small

percent. >> so the imbalances there between fixed and variables is more pronounced than retail rates. >> you can say that. >> i did [laughter]. >> thank you. >> thanks very much for being here and thanks for all your hard work. there is no action on this item but i'll go ahead and call comment. is there any? seeing none it's closed madam secretary next item please. i'll tell you what we're going to go ahead and go with the staff recommendation: are there any objections? seeing none that will be the order. >> madam secretary please. >> considering possible action to adopt hetch hetchy, item 19 public hearing to consider

possible action to adopt hetch hetchy item 20 public hearing to consider the adoption of the 2-year 2014 and 2015-16. >> general manager and cfo my comments today will be brief on these 3 items. i've got 11 slides i'd like to walk you through. what's in your packet today is a lot of progress that we've made under the leadership under the deputy manager as well as the general manager the information in your packet provides 3 potential scenarios

would be called the financial plan option however i would also want to let you know that we're continuing to work with the mayor's office on additional scenarios the great news is each of these scenarios is above zero so we've solved a very large half a billion dollars problem with these choices if implemented the hard news is that it did not come without very difficult choices so you will see our capital plan in your packet and the hard choices to come up with about $179 million of cuts to solve 40 percent of that half a billion dollars shortfall the other solutions are revenues higher rates from the general fund as well as additional bonding capacity. that being said we're not done yet the mayor's proposed budget is

still being finalized but we're making solid progress so the slides before you i'll share them quickly for the public, out line that cliff which we've talked about at length in the budget hearing process. the backgrounds and updates as well as 9-month report news which you will hear a full report on may 13th and where we are at the solution process. the cliff about a half a billion dollars currently our rates do not recover costs for general fund subsidized rates and that has meant we're able to provide power cheaper than pg and e the current encounter is a 60 percent encounter relative to

pg and ee and summarized here for you the large cliff or shortfall was from required investment in capital notably the tunnel improvements and as well as pg and e's higher cost to transmit and then also a smaller amount for regulatory cost increases. the items currently being reviewed with the mayors office show increased faster than half a penny previously adopted by this commission some of the scenarios instead of a half a penny perhaps $0.02 or perhaps 2 and a half cents and so we continue to review that and

then show those to policy makers. we have some historical context here we've been reviewing with policy makers as well showing that enterprise rates are auto adjusted but the general fund low cost for over 10 years now and financial plans as well as capital plans were balanced with hundreds of millions of dollars of capital cuts you reviewed with us so the scenario here with an additional $179 million of capital costs comes with risks and we want to make sure we identify that both with you and the mayor's office and others. the reason for the shortfall we now