save you we ask for 50% of the money we save or even 30%. i am calling this a challenge because i hear the same things over and over and francisco talked about the community not involved. i have ph.ds that can design the blueprint. we have a draft blueprint -- if not in the u.s. we're going to take it abroad because there seems innovation stipelling going o we have a company with technology here in the u.s. and brought to market by an individual born in san francisco yet we can't present it. i want to know if we can take a look at change because we want to create jobs. this technology can be done in bay view and i have talked to them and have a manufacturing plant and sustainable jobs and build by san franciscans that will solve the problem with the water shortage. we opportunities to bring cleaner water to the

people in the community and one of the things i am concerned about when we mix the groundwater with the hetch hetchy water who will be the five% that receive that water and those that receive it how we will protect them? because we talk about pipes leaking and they all leak but what is leaking in? we know it's tested at the point of distribution and not at the point of use. what are we getting in the water and especially the old pipes in san francisco. are we getting copper, lead? who knows and we will know when consumers test at home and we can protect them and there is technology that will improve the safety but reduce the costs so we don't have to rate increases and conserve the water and recharge the groundwater with the water supply so think about those things reduce, recycle and recharge. there is technology

here today. >> any more speakers? before we move on anything we can do about the air conditioning in this room? is there a control? >> i can call. >> okay. thank you very much. okay. item 10. >> item 10 is a bawsca update. >> good afternoon. >> greetings. thank you for having me here today. i appreciate this opportunity to get this every month. can we bring up the slides please? i am pleased to be able to report today on stuff i have been talking about for a while. we have completed our demand projection frs the wholesale customer service area and i presented this -- a report was

presented to my board last week and made public and i will walk through the findings today. we initiated our long-term reliable water strategy, our long-term water planning effort to do two things, do a regional assessment of the water supply needs for normal and dry years through 2040 and evaluate water management actions to meet those needs. we look at reliability assessment. it takes two pieces. you look at both the demand and the projections and the supplies projected to meet the demand and our projections are the as a result of this project showing more than normal demands than before so lower demands and we're increasing projected development of the local agencies by other water supplies and i will walk through

each of these for you. so first we did this updated water demand projections and came out of the recommendations of the phase two report two years ago because it was clear that our old numbers from 2008 were not a solid basis for regional planning. they were developed for different purposes and pulled together as a region but weren't a true regional effort so this effort was a uniform methodology used for all 26 member agencies run through my office and able to pull together and culminate in a single number and what it shows is that the projected 2035 total normal year water demand for the customers after passive conservation is roughly 20% less than it was from the 2008 numbers. specifically 2008 we projected a total demand after passive conservation as listed

and now projecting 275 so what changed? i have to say when the numbers came across my desk what in the world happened here but we knew there would be differences. a couple of key things. projected retail water rates. while we knew the rates were going to increase when we did the projections that rolled up to 2008 they were directly incorporated into the projections we have better capability of doing that and they're higher than at that time and population and job growth has been slowed. those projections from abag from 2008 have been reduced at this point through the 2013 projections and pushed off a little bit so we're seeing slower growth and stricter plumbing code standards, state requirements, things like the state wide

reductions by 20% by 2020, those hinges that were not in place in 2008 have also impacted the demand, so the net result is the projected total 2040 water demands after the savings are estimated to be 284 million-gallons a day in the service area so let's look at that graphically, visibly. what does the number mean? this shows on the left the vertical a i guess is a million -- axis of a million gallons a day and this is from the earliest records projecting out to 2040 on the right. the blue line is historical numbers so the total demands in your wholesale service area, and you will see the dips that we all anticipate. obviously the first reduction from the 87 -- 92 drought and

the slow rebound and the start of the recession that dramatically decreased water use in the service area. this orange line are the projections from the 2008 study. they only went to 2035 so at this point that's as far as we were going but those were the projections at the time so here are the new projections. you will see the bend in the line. that's because we have a tool how fast we will bounce back from the economic recession and the drought but the net is 20% reduction in total demand. so now switching to supplies. you've got demands and how do you meet the demand? what's the supply portfolio used to meet that? so again another graph. millions of gallons per day on the left same scale. on the left you have the planning year horizon in five year increments. the green line is the same

total demand and in here are what are called water supply portfolios so the mix of supplies and meet those demands in future years. the biggest bar is the puc purchases. you will continue to be the largest single supply for the region and a backbone supply for many of the agencies but that projected amount to 2040 is 168 million-gallons per day. it's growing but at a slower pace. the hash bar are other supplies so the combination of groundwater, local surface supplies purchased from the santa clara county water district, local desal recycled water and the gold bar is projected and agencies have to implement to get the savings and washing

machines and rebates and those things so the agencies projections to meet those. so now focusing in on this a little bit to explain what we see going on we're really seeing an increase in local supply use as a percentage of total demand. as we go from a normal year case and this year i picked 2015 because this year isn't normal so you can't use this year to show that so we picked the first projected normal year so 2015 and again this pie is showing percentage of the whole. 64% of the agency's water demands are met by the puc purchases and that is consistent. and the yellow is

the groundwater and again what is important is the active conservation. not passive but active conservation at 2%. this is for demand of 232mgd so going to 2040 so at the end of the planning period total demand is grown as shown but the reliance on the different supplies has changed so the agencies total demands have grown but instead of buying 64% of the supply from you they're buying 59% and to meet the projected customer needs. that is definitely a change and there's different factors that i am sure are playing into that but it's clear in the results that we have gotten from this. so kind of the take away when we

look at this study is that new local supplies are coming online and increased use of local supplies so it's the combination of the two things and a slowing of demand increase is really changing the reliability outlook for the wholesale customers and anticipating to purchase this number and that includes nine for san jose and santa clara so it includes all of the permanent customers and the interruptible customers. just a point in case here the 2008 study showed them reaching this at that point and it's a significant difference and that i want to call out one thing and i made this point clear at our meeting. as an organization and entity you have a perpetual obligation to the wholesale customers and we will continue to expect that from

you moving into the future. the world doesn't end in 2040 and risks and concerns don't go away. these numbers are built upon agencies developing new supplies. there's always the possibility they can't get them developed so this is for planning and we fultly expect you to meet your contractual obligations but it's an important number and change what is we have been thinking about so the need for essential normal years supply has been eliminated for the most part through 2040, but there is still a need for additional drought year supplies. what these numbers show is the demand hardening. we're doing more, we're serving more people. our per capita water use is going down over time. there is a strong desire by the wholesale customers to increase the reliability that they get. when this body -- some of you were on it, some of you were not, made the decision

to adopt a service goal allowing for rakzing up to 20% we and other agencies came out strongly against that and it should be 10%. planning for rationing above 10% creates a burden on the whole area and there is a burden for the wholesale customers for that and that is part of the strategy and looking what investments do we need to make to essentially back fill that reliability that the puc has not planned for in your supply and we will look at what those alternatives are as we complete the strategy. so our schedule is to complete the report by december of this year. we're going to be refining the reliability analysis on an individual agency basis. you have unique set of customers that you serve. they range from

small to large, single source to multiple source. they have different needs because of the customer base and water sources so we will talk to them and understanding exactly what their needs are and on an individual agency basis. assessing the threats to the existing supplies because we want to understand this more because it plays into what are the no fail options or the things that you would do no matter what and then developing and evaluating some of the alternative supply poverty foli -- portfolios around that impact. >> >> and the report will meet that need, avoid the economic impacts and additional actions and studies that will form our future work plans and the activities taken on behalf of the member agencies by us so with they will conclude my comments and i am willing to answer any questions that you have.

>> yes commissioner. >> thank you. interesting report. i appreciate your making it to us. as far as the supply and demand protection you talked about and talked about the final report not ready until the end of the year but are the numbers final? >> yes they're final and so it's published in a report and on our website so we publish that report separately. it was finalized last week. because it's going to stand alone and used independently say for the puc's efforts if it chooses to do so and other purposes. >> okay. so if i go to your website i can download that document and update the chart you know i love so much. >> yeah, the chart will do demand projections. it doesn't have the alternative use of supplies piece of it because

that estimate was subsequent document. you raised a good point though so we may look at how to memorialize that before the final strategy report was done because that would go in there. that would be helpful. >> and through 2040 what was the number? i didn't write it down. >> it's 168. mgd -- >> that includes the nine? >> yes. >> and the interruptible customers. okay. have you had time to think about how that makes you think about the 2018 questions that we have to answer? >> yes. in some respects many of them go away i believe. the 2018 questions were -- i mean and one of them remains. the

question -- the first one is do you by 2018 because you exceed 265 need to give notice or terminate san jose and santa clara? and the numbers i ind i have indicate that us independently and us with you will not get to that point by that i'm so you will not have that need to make that determination at this point. you will still have the opportunity if you would choose it to make a decision to make them permanent. i mean that's the alternative corollary to the question, and i would -- i think that's a worthy question to consider at this time. certainly we had a lot of conversations about it. it's been an issue on the table for a long time. i would like to resolve it to everyone's better understanding and that's as far as i got on that particular piece. the other question is --

if i remember it. should san franciscos make additional supplies available? it's showing collectively the agency can stay within that number and there are a few agencies that are above their individual supply guarantees. whether that individual agency at this point is interested in paying you more or having you invest more. that's not clear with the new numbers because they're so new because they have to think through what are my other alternatives? some don't have alternatives so that's part of the question. >> and part of the thinking process has to be how do we think about the 184? if 184 is the amount that we never get to how do we think about the 184? and i know the quick answer is

that's a contractual obligation that survives the term of the agreement so it lives forever. that's the quick and easy answer. the other answer is that as you are seeking to deal with the interruptibles on a permanent basis, -- not just continue a ad hoc status. if you're trying to figure out where the water will come to take you from 20% to 10% drought curtailment that it might play a role in that at least numerically. i don't want to start a fight. it raises all those questions. >> it does and these results show how we look at the reliability picture. and not meaning we don't need to investigate and it raises those questions but from the wholesale customer and the 184 is they're relying on it even if they're

saying today i only need 80% of my individual supply guarantee. they know -- absolutely 100% and they know exactly how much it is they have to grow if they need to and if some respects their community changes or if they can't get the groundwater project on line that is part of their reliability portfolio they want to use and anticipate to continue to use it. can we further those conversations? possibly. is there a place now for an transfer market to start to move? possibly. that hasn't happened yet and my belief is it's waiting for this report to come out waiting for the next piece. what are the alternatives? what's the market? who sets the price? >> and that last one you mentioned who sets the price and how do you set it and justify the price against charges of

gorging on the one hand or gift of public property on the other hand is tricky. >> absolutely. >> i think those are really important issues and it's not a "we, they" issue. it's not wholesale versus retail and that portion of san francisco. we don't plan to use it in the near future so that puts us in a very similar position before these numbers that the supply issue was predominantly a wholesale issue. it's now looking as though the policy questions that you have to wrestle are similar to the ones we wrestle with. >> yeah the difference is you get to do it differently than the bawsca board does but we will work to that end. i can tell you that the conversations i am having with the staff on

this issue are going very well and the collaboration process has been going very well as we have worked through this so i think that's a step in a much better direction than we have been some times in the past on that. >> good. thank you. i will definitely go to your website. >> good. >> any other questions, comments? thank you very much. >> thank you. >> it's a fascinating report. >> thank you. >> let's see. item 11. >> would you like to call public comment? >> thank you. public comment. >> [inaudible] actions required in the report. it reminds me of the biblical story of joseph. during the time of famine they saved for those times -- i'm sorry at the time of abundance they saved for the times of famine so when i think about san jose being in danger, being cut

off. that means those residents are stuck with groundwater which the san jose water company in the last report published on a report had arsenic levels higher than the legal limit so they will have infested water and we need the clear pristine hetch hetchy and let's look at a model and you're rewarded for doing the right thing and the cities and retailers using the water why don't they look at recycling at least for non potable. san jose is the largest discharger into the bay and 100 million-gallons a day. if we cleend the water and remove the nitrates make it potable today, not 10 years from now or after more research. we have demonstrated independent verification that can happen. we said 2% active conservation and these are the worse numbers

since 1776. that doesn't sound right and we could make them do 25% recycling and it's not desalination and membranes and cost prohibitive. give us a chance to demonstrate there is technology that can do this. think about the aborigines that owned the land and had it taken away and cherished the land. they would never do this to the land. when i think about the waste we could do simple things and put a little pressure and the people losing the hetch hetchy water. people don't understand what hetch hetchy s you can't get cleaner water that i have seen in the reports. all of the rest is contaminated and we have pristine and conserve 2% and goal of 5% by 2040. i feel like i am living back in the days when we didn't have technologies or computers and have the capability to do what

we can do. i would like to think in addition the reduction. we talked about two of the digesters in operation so we can take quick actions and reduce by 70% by replacing reverse osmosis water filtration systems in the homes and rebate so the sfpuc can take an active role for the rebate and take charge of these issues. i feel like i am continually saying the same thing and upon death ears and i don't mean that disrespecting here but francisco has been doing it for a long time. thank you. >> thank you. item 11. >> item 11 is the consent calendar. items a through j constitute a consent calendar and considered routine by the public utilities commission and acted upon a single vote of the commission. there is no

separate discussion of these items unless a member of the commission or the public so requests and in the event move to the calendar and considered as a separate item and staff requested that 11d be removed from the calendar as there is a change on the notice to proceed date in the resolution. >> okay. we will take item d later. any other items you would like removed? >> c. >> any items that the public would like to take separately removed from the consent calendar? may i have a motion on the remaining items? >> so moved. >> second. >> all those in favor? >> aye. >> opposed? the motion carries. now let's consider item c. thank you my concern is the award of a $5 million contract which there was only one bidder and i guess my first

question is why do we think that's a good idea? >> good afternoon commissioners. with this we tend to have at times multiple jobs with contractors already in contract, so the fact that this one had one eligible bidder doesn't necessarily surprise me, and i don't know if at this time going out at hetch hetchy if we would get an additional bidders. we had another bidder who was interested because they're still remaining capacity pursuant to the administrative code depending on the amount of

capacity you can only have one job contract with a particular department at a time, so it left one bidder. >> i didn't understand that. >> commissioners i am the assistant general manager for infrastructure. the job program if you recall is a preset prepriced program so basically all of the items of work that are to be performed are in a book that identified the price that the contractor can charge, and so when we look at a job contract we're less concerned about the number of bidders because we have the price already set in most cases, and so they're bidding off of the job manual and as stated in some cases we have up to three contractors that have the same license for the same type of work, but given this work is in hetch hetchy there are fewer

contractors that bid on the job projects up in hetch hetchy because most of the san francisco firms -- especially this is targeted towards small firms can't travel up to hetch hetchy and perform the work cost effectively so we have local firms in hetch hetchy that are under contract and far fewer than there are in san francisco. >> well, you raised a couple of issues. what some of the bids -- even though there is a table of cost they bid a multiplier, so if vendor or firm a says i need a multiplier of 1.4 and another firm says i need 1.5 than the 1.4 multiplier is the lower cost bid? >> correct. >> so competition still matters. >> it does, but again the things we look at is the engineer's estimate of the work and is the bid within the range of the

estimate of work, and what would be the overall impact of going out to bid, and the delays associated with a bidding procedure which takes six to eight months verses going with the preset job contract. >> so can i -- >> well, we don't have a fixed scope of work; right? by the nature of the beast this is for work unidentified -- pretty small and not like you're bidding a scope of work. you're bidding a capacity to deliver a menu of work items. >> so can i interject? so there's a couple of things so one in the process as ivy stated one of the challenges is only a