the sludge that allows us and gives more flexibility in the market and secondarily reduces the volume of biosolids by about 10 percent because of the additional consumption that happens during digestion and looked at the over all plan looked at alternatives. we did 3 dimensional mock-ups to understand how the plant would operate and came up with a preferred layout. in defining that preferred layout we looked at maintenance and operational costs and flexibility and looked at environmental issues and what else we need to introduce to the plant in order to keep up with the regulations and at the social components, how can we make

the plant a better friend and a better neighbor. so adjacent to fell street and residential units and a plan is to acquire the 2 parcels that are is shown adjacent to the cal train one is an triangleal and one an odd shape. we are moving along towards acquisition of that and are far along in that acquisition and we've been in negotiations with central shop and see identified a location to a to move them to in the city of brisbane and we've met with both the city admin state of the city administrators office and they are in line with that project moving forward so the plan is to move

the train adjacent to the train terms and to the train tracks. it moves the newest construction which is currently not used for operations because we have to stay 100 percent 100 percent in compliance during this construction project. secondly it moves it further away from the residents that we possibly can in the land we own and in the land that we're looking at acquiring. when we made the presentation they were very happy to see this location because one of the recommendations that came out of the biosolids task force -- at that time the puc did not commit at that time we are in fact now moving forward to move them as far from the residential component as possible. >> i have a question -- on the existing layout, where would

the new digesters be? >> they are the yellow circles so as you can see we currently have 9 digesters in operation we'd be going to more efficient digesters and we believe we can get down to 6 from the 9 that we have today. another interesting interesting component, we did look at 4 detailed alternatives in layout and 3 of them were paired alternatives and one of one of the analysis is that that you can stuck with pairs and we do believe we can get down from 6 digesters down to to 5 and so going with the linear layout gives us that flexibility to continue working on the size and shape of the digesters and possibly bringing down from 6 to five and secondly as you

can see we're also setting back from the property lines so we can allow design of some type of correction to the community and some type of public use adjacent to our property which is an improvement over what is there currently today. >> what is is shown in white is our plant operations you can see the digesters as is shown right now adjacent to the cal train track and as they are is shown today, they are is shown as as 65 feet in height that is the current zoning for that area we do believe the digesters will ultimately need to be 85 to 90 feet in height so we plan to bury them in order to stay at the 65-foot height clearly there's costs associated with the structural work necessary so we're still

leaving open the conversation of possibly having a height adjustment in order to bring down costs associated with the digesters. as we move forward we look at construction costs we're at 2 percent design so there's arguably more that we don't know than we know right now and our rough order of costs right now as is shown is 1.75 billion $1.75 billion and we're currently scrubbing through that number i know it will come down i don't yet know to what degree. there's components in this estimate and those will get flushed out and will be reduced. there are assumptions in this schedule that schedule and we believe we

can save hundreds of thousands of dollars if not millions of dollars with an alternative method and finally we just don't have enough detail. the digesters themselves if we can get a variance that will certainly save us millions of dollars so we're looking at that as well and finally the last thing that that we're looking at is what is our contingency and we do need to make sure through our risk analysis that general manager kelly spoke of that we have an appropriate level of contingency so we're looking at what is our contingency and are we in fact budging enough risk to move forward as we move into the next phase so moving into the next phase we're going to continue with our planning effort through september of 2015 we have sent our letter to

city planning asking to initiate environmental review we have a kick off meeting next week so from my perspective the clock starts ticking this week. staff is to to complete environmental within a 2-year window which is very aggressive but we're pushing to try to complete environmental within that 2-year window and our goal would be to start construction immediately after completion of environmental with a phase delivery method which would allow us to start construction in 2017. >> and then just by way of background i've made a similar informational presentation to the southeast commission and then to supervisor cohen because the work is in her district. >> you said you have already

done this? >> we've done though 3 briefs yes, ma'am. >> thank you. are there any public comments? >> next item, please. >> item 8 is the report. >> good afternoon commissioners. i'm pleased to speak with you this evening. over the course of the last year a couple of times i've had an opportunity to talk to you about our long-term planning efforts what we call our long-term water supply strategy and i wanted to give you an update today on where that's at. i'll be pulling slides

from a presentation we gave to our board last week. i'm pleased to say we're done with our planning effort it is complete and the report will be out shortly we're doing final editing and the report does two things -- it determines what the problem is the water supply problem and when where and where water supply is needed under what conditions and i'm not going to go through everything and it's how we handled it with our board -- a focus on the strategic findings recommended actions and how are we moving forward with implementation so we're using this report to really provide direction about where our activities go regarding water supply and water supply reliability and one of the things we've found in the course of this project there's more more characteristics and we talked

about that with you before and that's really effected the findings in the report and also our actions going forward and you will see that as i talk to those 2 pieces. our focus right now is really looking at dry year needs that is the focus of the effort and then keeping an eye on those treats to your systems, reliability, outside threats could certainly -- supply is a major component that my agencies need to serve their customers so that's a critical area and the recommended actions -- really consistent with the scope and breadth of work we've been doing so there's no surprises. it's a little bit different than that because of these changed conditions. and where we've seen those changed conditions is in the demand

projections. when i talked to you in october i think i gave you the results of that report. essentially demands are 20 percent lower than previously projected. million gallons per day is your access on the left and you have historical data in the blue and you go go to the right you have got projections the projections, when we started this process back in in 2009 and 10 came out of the agency's urban management plans at that time so that's the gold line if you will. we went through 2 years ago the characteristics of the service area really changed we're seeing demands at that time much lower than anybody anticipated we need to do an updated demand study. that's for total demand so it's not just puc supply so the question is what does that mean on the

puc supply component so this pie, this is a normal year and this is for 2040 to meet my customers total needs they use 117 117 million gallons a day of other sources local sources planned conservation and imported supplies they buy and then they are projecting the purchase from you 168 168 million gallons per day in a normal year. that does include water for san jose and santa clara as well so it's an interesting number and it's critical when you start thinking how do we plan for things but notice there's there's no reliability shortfall in that. there's a few agencies slightly over that might need a little bit of water but they are below their

contractual allotment from you. >> what investments do we want to make to remove ourselves from that risk? it's almost critically evident this year when you think about what that means. we're using water much more efficiently than 10 years ago so a 20 percent cut back can be much more than that is a very significant and potentially significant economic impact so that's that's the focus moving forward. so our findings were changed by these demand studies and we're no longer looking at normal years but dry

years and timing and implementation how they change because of this changed focus and realistically it's it's different. and so all of those are reflected in our actions. this is a table -- we presented this to our board they wanted to get a sense of what is the work that's been going on. it was very important to them so we evaluated all of the projects against that and i'm not going to go through all of this but the importance was that our findings were based on criteria set by the board so the first one is water transfers is a high priority. we're looking at dry years and

water transfers become your single largest high priority and the existing infrastructure your infrastructure, the infrastructure that my agencies have and the neighboring agencies have allow us to match dry year demands and create a low effective costs one of the things we'll look at is what's the benefit of added storage? partnering with other agencies that have available storage for example contra contra costa water district so that adds a lot to the mix so the recommended action -- basically to continue in that leadership role on water transfers and to look for opportunities to evaluate water storage as part of that. the next finding relates to desal and because we're focussed on dry years not

normal years we really need a partner to make that a viable alternative it's a very could costly project and requires a lot of infrastructure. so we're looking for partners to help pay for and utilize supplies during those normal years. it can provide a sizable yield. there are some questions. but it makes a poor dry year only project so we're looking for partners. also pursuing outside funding to address the technical questions with, when you look at, you know de salting bay mud water the question is how much can you get out of it? you want to study that before you know much more about that project. so

the other finding is related to what we call other projects projects that we know are going on throughout the region and certainly the individual agencies are implementing and they have a benefit. these are like recycled water projects, local gray water projects those types of things they provide a real benefit but they are small. it will address that 20 percent systemwide short age number. >> what does that mean? in the past we've helped create again their partnership opportunities because we know what everybody else needs and sort of create those connections for all of them. so with those actions we're rolling them into our work plan so we're in the process right now of doing our work plan development for next fiscal year and they will call

out each of those specifically and that's where the bulk of our activity on developing new water supplies is going to be focussed and water transfers and looking at these partnership opportunities, outside funding and supporting your local agencies in their other projects so with that that i'll conclude my comments that i have and answer any questions you might have. >> first of all, excellent presentation and mostly because of the excellent work behind it and the thought process i very much appreciate that. what do you need from us? >> that's an interesting question i think a few things and it goes back to your commitment. our our expectation is that you are going to continue to meet your reliability goals that you have committed to under the level of service that means that

obviously our demands are much lower than 265 right now as a region but as a region. . skwshgs. the question of addressing the contractual side the fact that the projected purchases are less than 265 and less than 184 the 2018 question is much easier doesn't necessarily have to be addressed the same way however that's critically important and i'd encourage all of us to continue to talk about that even though it's not the hammer than it was in 2007 when we first started talking about it. but you are the single largest

supplier to our agency so they need to make sure your supply is reliable and it's there and you protect it from outside threats. that's our expectation from you always and if we want more how do we go about investing and you have been very cooperate with us so far. >> the 20 percent isn't one of those questions and as i hear your presentation, it sounds like your focus if we were negotiating that agreement today those questions might be different. >> yeah, those questions were really generated by your action and just codified if you will or reiterated as part of the contract none of them were questions that we wanted to

have to deal with to be quite honest you made the limitation and said okay this is what we're going to do so it generates that question. from the very beginning the wholesale customers have asked for you to increase your reliability level we had asked long ago for only a 10 percent systemwide short age and said we'd like to pay our share for you to invest to make that happen and this study is saying we can't wait any longer to make that happen but that doesn't mean if something were to show up we wouldn't be interested in having that conversation. >> so i think the shift is i think the major concern was before you did the study that

in 2018 there may be an issue of us just meeting the needs and not the 10 percent in dry year or 20 percent in dry year and now since you are seeing that that may not be be the case your shift is how can we address this dry year issue? and for me i think the size is different. right? >> the dry years are significant certainly. >> the amount or size. >> the amount of water needed is significant. >> which, you know, that's good to know and so i think, you know, that would definitely help the conversation. >> good. yeah, i mean it's an interesting -- i've never experienced such a complete change in the conditions in the course of the study. it always gets taylored and modified and you learn a little bit more but this is a a significant swing and it really does change the

conversation of what's most important and how do we want to deal with that and i think this drought, if nothing else, has highlighted this issue that i've had for a long time about demand hardening we've got communities using 55 per day a lot of communities it's not just you, that's significant. because if you were to say we had to go to mandatory rationing it's not clear how they would survive so that means my board has recognized it's on them as representatives for the region to look at it seriously and push that envelope very hard so certainly interested in that conversation with you. >> it has been easy to think about the wholesale retail split as you know san francisco is geographically contained not

a whole lot of lawn and vegetation and our per capita use is pretty low and you go go into the wholesale area and there's a lot of lawns and landscaping and stuff so the 20 percent rational in part was i think based on that when you look at it just from that binary fashion that there may be be more opportunity to adjust to a drought than san francisco would have but what your study makes clear and the numbers we had at our last meeting made clear some some of the people getting the lowest per capita use numbers are in your service area lower than san francisco's so it's a more complex picture and how you deal with that going forward i think just requires greater subtlety and sophistication and your demand

numbers coming down one of the things i think that does is it makes your issues and our issues look very much the same that within the division of 265 that we both have some room to work with. it's not -- it used to be we to be we had some room but now looks like we both have some room and our service areas close to the bone and other parts parts that aren't so i think if that is in fact the case, if our interests are more merged that may make some of some of the discussion easier as well but i think it's exciting in terms of discussions that make sense today that were very hard to come by a year or so or more ago. >> absolutely and i appreciate your interest in it because i think what we know, this is a

very tough conversation to have it's significant long-term and if there was an easy answer i'd come up with one but none of these solutions are a very easy answer at all they are going to take a lot of effort and support to implement and anything you might do similar so what do we know is it takes the leadership to make it happen and i think the recognition that, you know, the conditions have changed. we have a service area that uses some of the lowest per capita water use throughout the state. that's a serious question when you start to say how does that impact our planning assumptions and what do we want to do differently as opposed to where we were 10 years ago. >> very good. that's the kind of things studies are supposed to do they are supposed to make us think and this one certainly does. thank you. >> thank you very much. >> thank you. are there any

public comments? >> next item, please. >> item 9 is a consent calendar calendar on matters considered to be routine by the san francisco public utilities commission and acted upon by a single vote of the commission. a award agreement number cs cs 298 and cs 299 for an amount not to exceed seventy $70,000 per agreement award agreement cs cs 388 and authorize professional services agreement for an amount not to exceed one million and 500 $500,000 million and $500,000.

accept contract number ww 565 for a total contract amount and authorize final payment to the contractor. >> okay i understand that staff would like item 9 a to be removed and to be placed on the february 10th agenda. any other items to be removed? >> general public, any items to be removed? may have a motion? >> i'll move what is it? b through d? >> correct. >> second. >> further discussion? >> all those in favor. >> aye. >> opposed? and carries. >> next item, please. >> item 10 authorize a new 10-year water service contract for continued water service to lawrence livermore national

laboratory. >> mr. ritchie, i'm happy to answer any questions. >> any only comment -- >> is it different? >> it's not much different than the prior contract we have to do a contract with the federal government because of the nature of the beast. the contract really is about you know, how we would potentially you know, cut off service if a problem occurs and how they would get water alternatively those are the primary issues but basically provides that they get water service they pay in effect the same rates city customers pay and subject to the reductions that we apply to our customers here. >> is the zone 7 part of it

new? >> it's not part of the agreement but they do have the ability to provide water service to portions of lawrence livermore so we've worked at at times to get them to provide -- >> and there's some language for us looking for opportunities i don't know whether we would prebank water in zone 7 or -- >> that's something that we actually considered this year that there's a possibility that that we'd be in a position to get water to zone 7 in some way so that they could deliver water to lawrence livermore in case of a disruption in service. >> any other questions? >> i'll move the item. >> second. >> all those in favor. >> aye. >> opposed? the motion carries . . >> didn't ask for public comment. seeing none,