been considered historically when the puc settled upon using the separable costs method. >> i would imagine that the great volume of resource that we yield from the tunnel would be more on the water side than the energy side. i mean water and electricity are very different things, but as resource, there is probably many more people in the bay area who get benefit from the water then get benefit from electricity. so you could look at it that way. >> sure, you could. >> with the bulk of the percentage or proportion on water versus energy. >> and just so i'm being clear in describing to you the method that we are using, while each asset is categorized as either a water, a power or a joint water and power asset, the sharing of the costs is applied

uniformly. so we didn't look for example at mountain tunnel and say, what is the split for that particular asset? the whole system was assessed and the 55/45 was the resulting allocation. and with respect to mountain tunnel, it is a joint asset. it does provide both water and power service to the hetchy system. it conveys water that is held behind -- drinking water that is held behind oshaughnessey dam and throughs through the dam through canyon power tunnel to kirkwood powerhouse. from kirkwood powerhouse, it flows into mountain tunnel. from mountain tunnel, the tunnel ends at a regulating reservoir called priest reservoir and down into moccasin and generates

electricity. so that drinking water from the dam is providing both the drinking water service and a power-generation service. mountain tunnel is part of the system that allows us to do both of those things and so it has been categorized historically as a "joint asset." your final question to describe the opportunities for getting energy-efficiency funds and we provided that to our own commission by way of providing a comprehensive response to you as well. i think we have summarized this to you before, but just briefly, in looking at the issue, we believe that while we could go to the california public utilities commission and request authority to administer

energy-efficiency funds separated from implementing our community choice aggregation program, we believe the cpuc expects you to ultimately operate your community choice aggregation program and to utilize those funds in tandem with it. so we see those as linked in the regulator's minds, the decision to allow you to administer funds is linked to operating the community choice aggregation program. as we have had discussed before, marin energy authority before they implemented -- after they registered as a community choice aggregator, but before they implemented their first transactions under that program, also went to the cpuc and took advantage of the opportunity to access those

funds. but they've launched their cca program and been operating since 2010. so we see those two activities as linked in the mind of the cpuc. >> great, thank you. i think the only other question i had if there has been any communication with shell energy since august of last year? and communication between the public utilities commission, energy enterprise and shell? >> we have communicated both formally and informally through theirs letters and i believe i alluded to that at the joint meeting that we had. if you would like me to provide a copy of that i can provide a copy of the formal correspondence. >> what was the upshod of the correspondence? >> so let them know it didn't appear we were launching our program. >> did that severe the

contract or put on hold or the nature of the relationship as codified by the contract or nullified by the letter of the contract? >> i think it would be fair to say that we weren't holding them to their offer to provide service under the terms that we had negotiated. >> okay. >> thank you. >> thank you, i appreciate your responses. thank you. >> you bet. >> any other parts to the presentation, miss miller? >> my staff report links the next three items together, 3, 4 and 5 and we could call those and do the presentation as well. >> let's keep this item open and we'll add the next three item 4, 5 and 6. >> thank you. >> before we do that, let's have public comment. we'll have public comment on 3,

and then we'll call the next item. >> good afternoon, commissioners, eric brooks representing cleanpowersf and the local grassroots organization our city. first i want to reiterate real quickly regardless of the sfpuc's financial problems, which are clearly very serious, cleanpowersf is a stand-alone program meant to fund itself as commissioner campos pointed out in that hearing where this was discussed. none of the advocates would want cleanpowersf to be anything otherwise than a program which funds itself. nor i believe would any of the supervisors and also the staff,

the lead staff at the sfpuc for cca is already hired and is already getting paid and is available to be dedicated to cca. so the upshod is that none of the financial woes of the sfpuc has nothing to do with whether they spend time on this program or it goes forward because it's self-funding and there is staff already paid to deal with it. i want to specifically speak to ab 2145 and ab 25159. 2159. these are both urgent, it's especially urgent to stop ab 2145 because if it passes cca will essentially die in california and it will be as if prop 16 passed. the leaders on both ever these issues are definitely calling on individual supervisors to

make the trip to sacramento next week on monday for ab 2145 and on wednesday for ab 2159. to make the case, we really want you to go the extra mile on this and i will email you later today letters that you can sign onto and the people to contact about those sign-on letters to get them to the assembly members. thanks >> thank you. there are no other members of the public here and we'll close public comment on item 3 and go on to items 4 5 and 6. >> item 4 is approval of the contract with the enernex for tasks under a not-to-exceed budget and item 5 approval of the contract with san francisco community power on an as-needed basis subject to the prior approval by the commission for tasks not-to-exceed amounts and

item 6 approval of the contract with the mrw and associateds an as-needed basis subject to prior approval by the commission for tasks and not-to-exceed amounts. >> good afternoon staff, i have a report and powerpoint that i will show you, but initially the rfp was issued february 20, it this was rfp to obtain a consultant to provide a build-out plan for our cca program. one of the main issues was criticism that we had heard when the program was brought before the puc with shell and the uncertainties whether or not the program after the shell contract was completed were adequately planned? so the idea here is to have a build-out plan, so that we answer some of those questions that had been raised by the

sfpuc. and alisa, thank you. so we received four proposals on our rfp. rfp just once again was vetted with our stakeholder community. we did not receive comments from the sfpuc at that particular point in time and we had not yet had our joint meeting with the sfpuc. so they were not comfortable providing comments. however, once we had our joint meeting, the sfpuc did participate in our scoring panel. and have been helpful and i look forward to working with them to work with the selective consultant and provide information as needed and that was a pledge that was made by sfpuc commissioners at our joint meeting. so the four proposals were received by edf group, san francisco power, mrw associates llc and enernex llc.

our panel consisted of not only sfpuc, but a member of the department of the environment and lafco staff member, as well as an outside member from the sonoma energy authority. as a result of the scoring, we had pretty much unanimously recommended enernex to do most of the tasks. they were -- they are an international group. they are based in many cities and overseas. they are an electric power and engineering consulting firm that has staff both locally and of course as i said overseas. as part of our rfp, i just want to just rereiterate what we are looking for, universal access and equitable treatment and

providing 100% renewable and energy-efficiency and installations. so on our enernex proposal, they have been engaged in multi-year solar and wind generation program for many of the investor-owned utilities, san diego gas and electric, including los angeles department of water and they have been consultants for the california energy commission and awarded the 2013 project management distincted project of the year for smart grid. these are primarily engineers, but they work a lot in interface with government on new high technology renewable energy programs. we were impressed with the breadth of their knowledge, as well as the fact that they did have a credibility in that they are a company that is not only independent, not having provided any work for pg&e, but

also just their very background in terms of the basic resources that we are looking at both wind, hydroand lynwood behind the meter. the issue that was brought up earlier during miss hale's presentation which is the shell contract was critcized by public utilities commission and members of labor and one of the tasks was to make an assessment of whether or not sfpuc's staff was capable of running the program? and in addition, they were also looking at the

alternative, another service provider, could be shell or anyone. the other more generic tasks, but the first task that we would have our consultant go forward is that initial task of making an assessment about how should the project go forward in terms of do we contract with another energy service provider? or can the sfpuc provide those servicesin the second part of that critical question is also whether or not there is any economies of scale with that? meaning that we understand and we were told at the joint meeting that there is obvious a budget problem with the sfpuc and whether or not by implementing a program like this, you could gain any economies of scale? is there a source of revenue here that would in terms of administrative piece actually assist you in dealing with a potential budgetary shortfall?

so those are the two critical questions. part of enernex's team was a company called willdan financial and i have seen willdan providing economic services and they are a well-known company that would work with the sfpuc, both management staff, as well as their financial staff to answer those two kind of critical questions. >> i just have one question, and it goes back a little bit to the slide that you had where it says "community choice aggregation commitment outline." under the fourth bullet point "providing the option of 100% renewable power." i just wanted to get clarity that we are actually looking at various options that could include less than 100%? >> that is correct. >> okay. so i just wanted to make sure that was the case. >> that is a good question. i was trying to really get the slides to come back, but that was the option of 100%

renewable. always before it has been 100% renewable program and they are looking at customers can, i mean we always looked at it as phasing, starting small. they will look at that as well. >> so we'll look at various percentages in order to? >> correct. so they are looking at both program and customer rollout. >> okay. >> so i think i have already talked about this slide. this is just the -- once again the initial task which is important and we'll actually have a report on this prior to the completion of other tasks. as to the other consultants that bid, san francisco community power is a

locally-based consultant. what we are recommending is that we provide them a letter basically saying that we will use them on as as-needed basis. the task that they bid on, they only bid on a few tasks in the rfp, but the ones that they bid on had to do with basically the energy-efficiency and community outreach portion of the plan, which is a task that would come later in our consultant's timeline. and we would like to keep them on as-needed basis. the idea being that i would come back -- we would come back to you if we were to assign a task and then have an amount assigned to that task that. is also true of mrw and associated. they have worked on both marin and sonoma cca programs. they are involved in the power

generation portfolio side and their team as well had the legal counsel for both the two programs. just dealing with regulatory issues, which some of our rfp had some regulatory tasks. once again, those aren't our initial tasks, but something that we may want to use them. so once again i'm recommending that we authorize them to be available to us on an as-needed basis, once again subject to come back to you, if we do asin a task and then add a budget amount. just going back on enernex, their initial bid was $1.1 million, but that also included do something designs of a number of programs that we do not need for a plan. we would actually need it for implementation, things such as design of programs, preparation of rfps. so we were able to negotiate after our interview that the projects that we need

from them would be not-to-exceed $210,000 and that is what is reflected in the contract that you have before us. the not-to-exceed amount overall for community power is $40,000 and not-to-exceed amount for mrw and associates would be $50,000. we have the budget for the these amounts both this year and in our protective budget that jason will speak to on a item before you coming up next. so next steps would be obviously if you have any questions, i would answer them, but to award the contract to enernex and then we would receive the report back and we're looking at trying to get that back within six weeks and actually i'm trying to get it back at your next board meeting. a lot of that depends on cooperation with sfpuc staff of course.

we would then authorize task -- remaining tasks at our next meeting. it's expected to be completed the entire report by september, 2014. and that concludes my presentation. >> thank you. thank you for your work on this and your presentation. commissioner breed, do you have any questions? mr. fried? >> there is one task that we're going to get started immediately, looking at what level, if the puc took over all the aspects instead of having a third-party like shell providing services and what that would mean for budgetary reasons? because we know you have a budget hearing coming up in may around the puc budge shortfalls and some thought on my part and others that there could be ability for cca program to offset the shortfalls. so we're going to

get that portion needing to go right away. i wanted to make sure that part was clear and that one section will need to be done immediately. >> okay. what is the overall not-to-exceed rate for enernex? >> $210,000. >> thank you. i really appreciate all of the work that was done and the puc involvement as well, and reviewing the respondents. we can go ahead and open this item for public comment. any members of the public that would like to comment, please come forward? >> good afternoon again commissioners. eric brooks. san francisco clean energy advocates. very pleased to say that even though we didn't have much time to look it over, only about one day, we didn't see any red-flags come up in any of

these contracts with one small exception, with the sf community power. if i ran out of time, i would appreciate it if you would ask me to elucidate that. the upshod is that we can support this. it looks like it's good enough for us to move forward and for the advocates to be supportive of it. enernex looks pretty exciting in its abilitis to get this work done. we do want to make sure that what the work that they do is really oriented on what is called a virtual power plant where you mix together a lot of different types of resource and not just solar and wind, but a lot of other things and we're hoping it will be that comprehensive. some specifics that we want to make sure you guys consult us on and that enernex keeps in mind as it goes forward is that we want to keep that focus on the 50% local clean energy in ten years,. that kind of build-out.

thousands of jobs over that ten-year period and sufficient economies of scales and good rates for rate-payers, meaning a good program, hundreds of millions of dollars and hundreds of megawatts and first diverse and integrated resources to create a virtual power plant. and then importantly we think that the idea of a two-tiered system the way marin and sonoma both have, is actually pretty important and makes it much easy to beat pg&e's price. it makes it easier not to use rex. we'll get rid of a lot of criticism if we get to a two-tiered system instead of this all 100% thing. and same thing with the shell contract, we don't think any reason now that we have pushed the reset button that we have to own that liability and let's just do it in-house with the puc. >> i would like to hear your

thoughts on the community energy. >> on san francisco community power, i know steve moss. he is very upstanding guy and does great work. there is one small concern that we would like staff to explore with him and that is historically his firm has been pretty dependent on the public good charge funds that come there pg&e's bill. there may not be a conflict of interest there, but if there is a possibility that pg&e could at some point threaten his business, that he does for them, we need to find out about that? because we don't want him to be in the middle of working on this and suddenly face this issue of being pressured by pg&e. so if you could all just check on that, that would be great. thanks. thank you. just the comment about rex. i don't necessarily have a problem with rex. my concern and my questions about it has been that the lead administration and some of the commissioners have talked about rex as "dirty energy." and that is just not the case. and so if we -- you know, i

think rex should be a tool that we could use to kind of build in a level of affordability for what power we generate. and as we go through the years of providing power, we can probably replace rex with renewable energy that we generate ourselves. so to me, it's not necessarily the worse thing. i just think that we should be consistent how we talk about it and how we use it and that has not been the case with the lead administration and by some of the commissioners on the public utilities commission. if there are no other members of public we can close public comment and exactly what is before us here is to approve all three of these as contracts that work together in terms of assessing our generation needs. >> that is correct. if you approved all three items as presented by staff, it would

authorize the signature of the contract with enernex with an initial task as discussed that we would bring back at your next meeting or the meeting after having to do with the initial assessment of the sfpuc versus an energy service provider? and how does that work? and remaining tasks would be [thao-rz/]ed authorized as well. if we were going to actual authorize them to do a task, i would bring that back to you to have you authorize the task and the budget related to that under a not-to-exceed amount. >> okay. and then on the enernex deliveribles are for september of 2014, i heard. is that correct? >> that is the final for all deliverables. the initial deliverable would be within your next meeting or the meeting after. >> okay. and then in terms of by probably the fourth week of

may, is that adequate time for enernex for a series of deliverables. >> probably not, just to be honest, but i think it may give them -- i just hate to go back a whole other month. so we'll look at that. they might be able to give you a status report of where they are going and answer some questions that might have and figure out a way that they have a partial draft. >> i think that would be the better way to go about it, to get a check-in and status report. >> right. >> if we can get a partial draft, i think that would be great. and then by june, right? >> right. i know we have a time frame here and so i'm hoping -- >> are we scheduled for a meeting for the fourth week of june? >> yes, we are. we will get before our may meeting the one item that i know you are interested in

around the budgetary issues. that will actually be done and not technically be presented necessarily for us until the end of may, but available to the city and county for the budget. that one item, but separating that, the rest of it, i would agree with miss miller, in all likelihood june is more realistic to get a more in-depth look. >> i am hoping that we would could have assumptions and definite answers and then maybe the report to follow. something like that. >> okay. very good. colleagues, i'm entertaining motions? >> we called them all together, so however stated to approve all three. >> so moved.

>> and second from commissioner breed. the motion was from commissioner schmeltzer and colleagues can we take that without objection? very good. i want to thank commissioner breed for taking the leadership on moving this forward and we have a dual pathway like now for how we are looking at our community choice aggregation programs and clean power programs and looking at the build-out assessment of local jobs that we are doing here today. and the other is also looking at studying how we could perhaps join marin clean energy as well. so those present various options for us or two options for us to move forward and i'm thinking that we might need more, but two is good for right now. appreciate your work. >> thank you. >> thank you. >> i will just say quickly thank you to the staff for working really hard to get this done in a really timely manner. i'm really excited about this possibility and how we're going to be looking into this program

and looking forward to the outcomes. i know we already voted on the matter, but thank you eric brooks and some of the other advocates who have been working on this and full-speed ahead. let's get it going. >> okay. very good. let's go on to our next item. >> item no. 7, consideration and approval of the proposed lafco budget for fiscal year 2014-2015. >> jason fried lafco staff. in your package you have the proposed budget to do -- just as a reminder within lafco statute we pass a draft budget by may 1st and final budget by july -- middle of july, if i am not mistaken, june, i'm sorry. this is our chance to pass our draft budget and come back, unless there are changes that are suggested today drom co