. >> >> are we ready? >> i'd like to call to order the regular meeting of the san francisco public utilities commission. today's date is

january january 27th, 2015. roll call, please. >> president caen. >> here. >> commissioner courtney. >> here. >> commissioner moran. >> commissioners before you, you have the minutes of january january 13, 2015, are there any additions or corrections. >> no. i move approval. . >> second. >> any public comment? >> all those in favor? opposed? the vote carries. >> at this time i'd like to call for general comments. any item that's not on today's agenda. i have no speaker cards and i see no one indicating so let's move onto the next item communications. >> i have a couple of items. on 5 b the state of the

regional water system report that lays out a very rational and comprehensive approach not just replacing things as they break but actually managing the things that you have. the focus was on the water system and my question is -- a couple of questions -- one is the degree to to which that represents current practice as opposed to being an aspirational kind of a document and the other is whether that same kind of thinking and systematic approach is being incorporated in the clean water program and the power side of hetchy as well. >> so i can actually get back to you on as far as any other programs, but -- steve?

>> this is steve ritchie general manager for water. for the water system we look at it in two chunks. one is the systems here within the bay area and this particularly focuses on the the peninsula and alameda water facilities and yes it very much does represent current practice and there are shift and priorities due to drought and others and that's certainly true on the hetchy side certainly with facility assessment for example right now we're completing the coast range tunnel which hasn't been inspected since 1996 i believe so that's good news so one of the things we've been

emphasizing for the last 6 to 8 years is really assessing the status of the facilities and deal with them as they come up and at other times lead to inspections to date. we haven't finished it so it's not a hundred percent guaranteed but you can you can get disrupted by a rim fire so those things happen. >> so as as far as the power and clean water enterprise? do they have a similar process in place? >> they do but i don't know -- we'll get back to you on you know, how similar or different they are. >> because the thinking behind the question is with all of the project management systems that you put in place for the program one thing is that we have wanted to do was take

advantage of that good work and extend that that to other projects and i think the same kind of issue may well exist here if there's a lot of good work that's taking place with the water enterprise there's no reason that shouldn't be extended to the other enterprises as well and i don't expect an answer but this in part stems from a conversation that i had with emilio about a week ago and we were talking about the ssip program and how, in the resip program we got really lucky the economic situation meant our cost of debt was very low so we ended up having really a financial cushion that we normally wouldn't have and

emilio's concern was as we get into ssip there's a lot of money involved in that and the economy is improving and we seem to be stretching the capacity of consultants to respond so what i'm wondering is what do do you do about that and how do we approach it. an analog that occurs to me is if you are putting money into a portfolio over time and do dollar cost average basically say we'll spend the same amount every year and if the stocks are cheap we'll buy a lot of them if not so cheap we won't but it can help us deal with the boom and bust economy in a way in a way that we don't spend all of our money when things are expensive and spend

less when things are really cheap. >> that's a definitely interesting question and one of the things is we do a risk assessment and look at the risks and try to mitigate it. i don't know if you remember when we did the water system improvement program i was very concerned because of the price of steel before the olympics in china and steel prices was 7 and a half percent and i was very concerned that we were just going to get high prices and so what we did do is we did a risk assessment and realized not a lot of contract ors wanted to do business in san francisco and i don't know if you remember we worked with the mayor's office and gavin and the city attorney looking at how we can make san francisco more attractive to get more bidders so we mitigated that

risk but we're also fortunate because after the olympics the price of steel went down, the economy dropped, and we've already enticed all these people that we changed our business practices that they were more willing to come and we got outstanding jobs so you know, we planned and i thought we were smart but we were also fortunate and lucky that it happened so i just think that one of the things that we are doing and one of the lessons learned is do that risk assessment early in the process and i think that will determine what are somewhat key indicators that we need to pay attention and how do we mitigate it so our system improvement program we have a more robust risk management program and so maybe we should, as part of the sewer system improvement program maybe should talk about the risks and how we're dealing with each one

of those risk registers. >> i think the question of contractor capacity is coming back. we've had more circumstances where there's only one bid. >> for consultants. >> yeah for consultants and i'm not sure what we can do to attract more people into the bay area money ought to be a good magnet and we have a lot of of the that in the program but those are things and emilios comment got me thinking about it and thinking it's something we should be discussing over time. the second item, the hunters point development report i'm curious how much of the development at hunters point has solar built into it or is this virgin

territory for future good work? >> my understanding and barbara you can correct me if i'm wrong , they are building the facilities solar ready, right? you want to -- >> barbara hale assistant general manager for power yes, he is correct they are building the facilities under construction now solar ready, the rooftops are solar ready and conduits to the electrical room and we've been working with them on how to integrate construction of solar at the site and the service agreement we signed with lennar commitmented 2 $2 million so it's just a matter of the facilities, the buildings themselves being constructived and us figuring out the

construction method and business arrangement for solar. it's on its way. >> is there any thinking to try to to tie that opportunity to some to some of the programs that we're currently funding? >> there will be opportunities for residential owners of property there to part in the to part in the go solar sf program what i just described was making solar available for common area use at the -- most of of the facilities are condos and town homes but for private residents where there's an individual owner of an individual roof, yes. >> at our last program it was part of the community benefits program and if this is an opportunity to move some of some of the that some of the that into the the business plan, that would be a nice thing. >> if we move forward with the

cca, then it makes sense to have the solar component because those are our customers . we do like hunters point phase 1 and 2, those are customers as we look at programs to reach out to those that makes sense. the challenge is that the go solar that we offer to non puc customers is something that the mayor wanted us to figure out a way to help fund that. if we can't use our hetchy money so i think each one will have a component. we just need to figure out what is the appropriate funding for it. >> was the goal to fund solar projects in non hetchy customers or just to fund solar projects somewhere? >> i think the ultimate goal is to maximize solar installation but it depends on where and the

funding we have to figure that out. >> you know where my interest is on that. if, you know, access to go solar can be a benefit of doing business with san francisco as your power supplier, that would seem to be a good thing. the last question i have i think has been answered it was the report on the sewer inspection and replacement program looks like we were behind goal on that and what i'm told is it's a it's a 3-year program and just reflects some work in progress that doesn't show up on the report yet, but we are still on schedule for that and that's the extent of my questions. thank you. >> well, also the sewer replacement, i thought that we worked in tanned in tandem with the repaving of streets there's a notation here that says we're behind in our

mileage because of the increase in the city's paving program. this is not happening the way i thought it was going to be? >> i think one of the challenges is when you actually do inspections of sewers typically you would like to go long stretches and what's challenging is that the paving program goes 2 blocks here and stops 2 blocks over here and 2 blocks over here and it's not really efficient so we try to coordinate and that's why we prioritize the paving but i think the most productive way is we're able to do long stretches so what we do do is plan these long stretches and for areas outside of that take away some some of the productivity and do 2 streets, side streets, and tell sunrise

tell evise those and that's one of the reasons we're behind. >> is my conclusion correct that by the end of the 3-year program we'll be on target? >> i believe we're still planning to try to make up the time because we've, one of the other challenges was trying to get enough companies to help us because we're being very aggressive to televise our sewers and i think we have how many contractors? a couple of contractors on board to help us televise our sewers. >> okay. >> you want to add something, michael? >> one more thing. we actually have information coming from pg and e so we have terabytes of information on our sewers that we're going through now that they are out there with those

independent contractors as part of that program. >> so actually when we capture that information, we'll be way ahead. >> yeah. >> okay. is there any public comment on communications? moving then to the report of the general manager. >> all right. so before we start i just wanted to hopefully you have a chance to read the press release yesterday from the mayor and the board of supervisors president london breed calling on san francisco public utilities commission to develop a clean energy program for san francisco. i just wanted you to know, you know i've been working with each one of the commissioners talking about, you know. credit cca and what some some of some of the vision that we had moving forward been talking to the mayor's 's office, the board of

supervisors and lafco to talk about a path forward for clean power program the press release yesterday was pretty consistent with what we've been talking about the desires to do a community aggregation program in san francisco that's affordable and then the san francisco environmental goals and to create job opportunities so this friday will be the joint lafco meeting where we'll talk about our next steps but what's also important is that you know when we produce our business plans, we're going to talk about the cca program but also how the power enterprise and all their issues and how to move forward and so i just wanted to just share that with you and i'm sure we'll talk more about this on friday at the joint meeting at lafc o.

any questions on that? >> i have a comment a comment. there's no question. so i wanted to make sure that people realize for for probably the duration of the conversation that was taking place even though we were really ambitious with our efforts there were some concerns related to the organizational chart presented originally that i actually endorsed because you can really see transparently what the workers are going to report and i want to go on to go on record thanking the mayor and all the people john avalos and all the people that did a lot of the heavy lifting and as you recall the san francisco labor's council representing all the unions in town had taken a position that wanted us to move forward with the jobs components specifically and we

heard at the last meeting where everyone was here we heard about the affordability issue and i'm eager to get on with that conversation again and there's a lot of folks that deserve a a lot of credit and i feel comfortable on how quickly and aggressively we'll move it ford. forward. >> so the next item, mr. ritchie. >> >> excuse me, general manager for water again. if i can have the slides please and we can then go to the presentation. several of these charts are the same as we've seen before with updated numbers again hetch hetchy storage holding instead

there and the water bank is increasing and that's due to snow melt running off so we're still in relatively good shape on storage compared to others but have a long way to go particularly in water bank storage our precipitation so far this year you can see up to close to medium early in the year decent december and you will see another slide later getting specific with what january was like in terms of precipitation and snow pack you can see it's reducing it's not a good sign. we still have time to rectify but it's still a cause for concern. on the deliveries front it's a new calendar year and started starting at the at the

left-hand side of the page you will see the little green boxes in the lower left down there again the numbers are below the dashed black line representing an approximation of what we're trying to achieve in terms of demand so it's a good year and the blue is what 2014 was so if we have a green year looking like the blue year we'll basically achieve what we did last year and equates to about a 10 percent demand reduction those numbers well below the the 5-year average which is much higher than that and the chart, we're starting out ahead of the game. so again, our customers have continued to conserve well so on on the demand side things look

relatively good. i showed you last presentation this slide, it looks almost identical, one difference here is that we've now gone through virtually all of january and you see a a big zero down there at the bottom of the january bar. that repeats itself with the local watersheds. the last part of december was dry and again, january has been completely dry we may get a little bit of precipitation in the bay area from this current front going through but don't expect a whole lot. this is a new chart here basically comparing the januarys over time and we have kept precipitation records at hetch hetchy since 1930 and

there's some speculation we might get a tenth or two out of the system which would still be the lowest in our record there but not at zero and you can see 76 and 89 definite drought years and 2013 is on the low group here so when you put 2013 and 2014 together the januarys have not been good to us in the last couple of years. this is a slide i tend not to show at all because it's got lots of colors that might not be meaningful. the bottom picture is precipitation and the top one is the forecast for this week and red means a lot of water and green means a good chunk of water and blue means some water and you will see the map in the top box there shows the san francisco bay area and a little indentation no precipitation and you can see

southern california getting some this week that's for the current week and next week shows california being green with a little bit of blue throughout and we could have a very good week of precipitation next week. don't know for sure. these have a habit of changing on you fairly rapidly so there's no indication but i wanted to show you there's certainly at least hope out there that the first part of february will prove to be different than january which is what happened last year and we'll keep you apprised. i gave you some numbers last time in what we're trying to achieve in terms of water available to san francisco this is water week actually take off the river either to feed water bank or for direct delivery to customers. that top line that would be a full system storage.

if we got to 230, 000 that would mean that july 1st of this year would be where we were july 1st of 2014 so if we got close to 720 that would be very good news that would be potentially raising the 10 percent restriction. if we're we're at the 230 we're at the 230,000 feet range we're definitely in the 10 percent reduction at least for for the foreseeable future and less than that definitely need to consider further options. in 2015 we're there in january with the blue box around the 7. we're at 7 thousand acre feet this year so obviously a long ways to go. we did not bad in february and march. hopefully

that's the case again this year. that's basically a summary. december was decent and january was horrible and february and march will have to be played out. we need a good year to get out of the hole and one thing to note the state water resources control board earlier this month sent out a notice indicating that the potential for curtailment of diversions is a possibility that they will be ready to take up throughout the year depending on how it goes forward and personally if february is a dry month i i suspect we'll see a lot of activity out of sacramento and it's very important to us so we'll be watching that one very closely but other things could

happen as well and i'd be happy to answer any questions. . >> in case you guessed a while back that since 1900 if we have very heavy december rainfall we will have above average in february, march and april so you heard it from me. [laughter]. >> i'll go go to the bank on that one. [laughter]. >> yeah, i would recommend that if you were thinking about putting a bet [laughter] that you keep your money close. >> any questions? >> and then i would like to get your input on the mid-cycle budget priorities and we have matt coming up to give a presentation. >> may i have the projector

please? >> good afternoon. i'm chief financial officer. the second year the budget cycle is closed the commission has the ability to make some adjustments for priorities that it deems critical in nature. today i'll provide this to you and when we were last before you with this topic the annual budgets are here before you for reference. at this time if there are no changes, no action is required

on your part during the mid-cycle budget process unless you choose to. between year 1 and 2 the adopted budget remained relatively flat. the the 2-year budget was approved in accordance with the commission and quality of services and planning for the future and commitment and personnel. >> they are further clarified through key policy initiatives of the commission. the matrix here highlights next years

approved budget of 988.8 million . again, no action is required by the commission if there are no changes to the budget, however, those adjustments can be made to account for any key policy changes that you feel are important or new emerging priorities. this is a list of considerations that you may find helpful. these areas are other policies within our department. . charles pearl, our deputy chief financial officer