which i've talked about water available to the city as being very important to us. in this case we bumped up from this last set of storms to 42,000 acre feet as water available to the city so far this year, which is almost double what we got last year already this early in the season, so that's a very good number. the fact there's not very much snow is a little disappointing but we're already ahead of the game compared to last year in terms of having that very important metric in our favor. it's low, but it's double what it was last year for the total year so that sounds good. and while next week looks dry the week after is projected to have some additional precipitation. that we'll see when it comes. in terms of total deliveries, demand has crept up so it's just above the black dashed line so we have seen an increase in demand. we're working with our customers on the constant message of we need

to continue with our demand reduction to make sure that we keep pace with achieving the 10 percent reduction again this year, which would be a demand of 209 million gallons a day. again the key to those numbers for us, we're ahead of pace to achieve that but we need to work hard to keep there and we're working our wholesale customers on different messages to make sure we accomplish that. a couple more statistical slides on up country precipitation. for the month of february the average is about 6 inches and basically out of this last storm we got 3.9 inches of precipitation, so we got about two-thirds of the amount of precipitation we would normally get in february just out of these last storms so that's a good thing. it's early in the month and the chances of a wetter than normal february look promising at this point. in the bay area it's

about half of what the normal precipitation is for february so it was a good precipitation for february in the bay area as well. on the regulatory front i wanted to bring your attention to the fact that on february 4 the state water resources control board staff issued an order for additional information to be submitted by pre-1914 water rights holders regarding diversions. they had said they need to make sure they stay on top of what people are actually diverts -- diverting so if necessary they can take action relative to curtailment to protect certain downstream water users. monthly reports is due in march and this is the same kind of reporting we do once every 3 years under existing requirements to the state water board. again we'll be watching this very closely. we're happy to report our information, we'll share with anybody on what we divert and how we use it, but if it goes farther than that we'll be consulting with the city attorney's office

closely on any action taken by the state water board. in summary, decent december, january was lousy, february and march, you know we're in the milds of the game right now. we clearly need to continue with the 10 percent system-wide water use reduction and we need a good quality of water in san francisco and we did pretty good this last storm. hopefully we can keep that up and stay in the black and i'm happy to answer any questions. >> good. any questions? >> i have a question. curious how our system handled this storm. were there flooding incidences? it seems like these storms we've gotten both in december and now are pretty intense between the wind and the water. >> i can talk about the water side the waste water side, someone else will have to speak to that. on the water side, our property was involved, at least associated with some flooding incidents outside san francisco. there were none of those in the wholesale area that i'm aware of. up country there were some

issues in the rim fire area where we did have some culvert cloging and a rock slide or two on roads. we have been able to clear those. good news that one of the things we've been concerned about is what might flow overband end up in the lower cherry aqua duct and there was no sign of that happening there so on the physical side the water system did very well. the waste water side mr. carlin may want to speak to. >> on the waste water side, the storm starting friday, going through saturday and saturday, there was lets than an inch. we had the usual light calls but there was no major flooding that occurred? san francisco and most of the storm actually passed if you read the news to the north of san francisco and the bay area so there wasn't that much activity. >> thank you. >> any other questions? thanks, mr. ritchie.

>> next will be a report of the quarterly budget status report update. i'm asking francis lee to come up. >> good afternoon, president and commissioners francis lee here, interim agm business services and cfo here to present the fiscal year 2014-15 second quarter budget update. the first slide highlights the key budgetary variances. basically all 3 enterprises are experiencing reduced revenues due to a call for water conservation. these revenue shortfalls are partially offset by debt service savings and using the planned reserves.

the next slide shows the beginning fund balance for each of the enterprises and the effects of the current year operations on those fund balances. (inaudible) and sales continue nd water enterprise so the fund balance is projected now to end at 144.4 million dollars. waste water and power have a similar story with lower revenues than budget due to water conservation, lower water demand and treatment, as well as lower power sales. waste water began the fiscal year with $111 million dollars projected $23 million revenue shortfall offset by $20 million of planned reserve and so with a net reduction of 1.3 million dollars to the fund balance ending with $109 million

dollars. hetch hetchy began with 30 million, projected power sales to western system power pull and the districts. the revenue shortfall is offset by $14 million of user savings and also tapping into the general reserve, neting 2.1 million reduction to fund balance and ending with $31 million dollars. the next slide shows that all 3 enterprises still need out of the fund balance research ratios. a cautionary note here is that if revenue projections hold for the rest of the year, that is no further reductions to water sales, then we will be able to continue to meet these reserve ratios per the covenants. however, if revenues further weaken then we may need to take more drastic

measures like deappropriation or at least budget reprioritization and we're hoping that the third quarter will bring more positive results. this concludes the update and i'm happy to answer any questions. >> questions, commissioners? >> so if i can just put it into perspective, congratulations on the water savings. now we have to monetize the savings and it comes into what is the bottom line. we're actually seeing revenues drop because we're not using as much water, of course water is also tied to our power production and sales there. as francis kind of mentioned, we have some plans in place to kind of make up some of that shortfall. part of it is our wholesale rates still being a truing up of the contract that happens after the fact with our whole sale customers and we'll be discussing that in may. the biggest thing is if we continue to see revenues drop we will have to do some adjustments to the operating budget we can't

just cover it any more. we're going into our reserves as much as we can and we will have to go into the operating budget if we see another $8 million drop in revenue in the water side, and that means actually going in and not defering capital projects, but actually defering actual maintenance and actual activities on the water side. so we want to be sure you understand that. we've been in discussions with a lot of places in california across the country, this is not unique to us. we have a fixed charge and a large volume metric charge in our rates. in discussions harlan kelly has had with other managers, it's something everyone is wrestling with. we're trying to figure out what the rate structure should look like to avoid ups and downs. we don't want to encourage water sales but we need to figure out a way to recover our costs to run a 24/7 operation. i want to be sure

you are aware of that i know commissioner moran had some discussions with us off-line and i want to bring that back to you sometime in the future. >> well said. i do have a couple questions, actually. i don't understand why our power revenues are off. >> it's because we're holding as much water as we can and only generating what we absolutely need at this point in time, so there's no excess that we're making right now. >> okay. and the other question i had for you, what are the specific debt service -- excuse me -- debt ratios? >> the 15 percent of the revenues and expenses --. >> but what is our debt service? >> 1.25 times --. >> it's not exactly 1.25, i'm curious about the exact --. >> the current status? would

you like --. >> the current status of the venture bases, debt service coverage is 1.74 projected at year end, and then the current basis which excludes the fund balance is only 1.03. so at this time we are needing the 1.25 of the venture basis because we are at 1.74, and we are also needing -- meeting the current basis of 1 but bearly because we are only at 1.03. for the revenues to appear we will need to take more drastic measures. >> right. so that's a real red flag. >> uh-huh. >> thank you. >> a question too about,

sounds like the two options that we're moving towards are either rate restructure and revisit or some operational cuts unless something changes, along the lines of additional sales or net conservation or things that we don't necessarily want to encourage. which would we have to make a decision on, what information would we need to be queued up to more deeply explore those two options? >> we're developing that information for you now so we hope to come back a couple meetings from now and start having a discussion what it would look like. when you have a discussion about rate structures you need to look at what are all the options available to you and balance that against -- you just mentioned, there's a belief that there's a conservation rate, a volume metric rate people use less therefore they save more. on the other hand there's a 24/7 cost to doing that with our crews and everything else, so how do you balance the two of those.

we're kind of looking at what other people are doing at this point in time. we changed our rate structure or begin to change our rate structure but this is a long-term process, this is not going to happen over the next couple months. so it's a discussion we need to have with you. >> i think the longer term, certainly the right structuring. we're not going to do that before we start rates for the next cycle. the other question if water revenues precipitously fall then you may need to do some very short term corrections in terms of deobligating funds and all and that's, you would hope that your rate structure would obviate the need for that. but between now and then we may get into that and that, frankly, will be something that management will have to take care and just monitor where those numbers are and take action if it's necessary. >> correct. and there might even be some emergency measures we would have to take beyond

what we've been talking about just to continue to provide service. >> thank you. thank you so much. >> next report is mr. wade with the water system improvement update. >> i have exciting video. >> good afternoon, commissioners, dan wade and today's report covers from october 1st to december 31st of last year. at the end of the reporting period, the regional program was approximately 86 percent of the local program approximately 99 percent in the overall wsip complete. the overall program continues to be on schedule and on budget. that is that all of the projects will be complete by 2016 except for threee regional projects. those projects will be complete in

construction by the end of 2018 and the total program would be closed out by 2019. our major activity obviously continues to be in construction. we have 14 projects in active construction worth about 2 1/2 billion dollars and as you can see from this chart, we only have two projects remaining in preconstruction, namely the alameda creek recapture and the ground water storage and recovery which is soon to go to construction and we have completed construction on 65 projects worth about a billion dollars or actually 1.3 billion. now, as always we have a number of accomplishments to report. rather than read off of these off to you, i just want to highlight the last 3 bullets. first of all our risk does continue to come down as we complete these projects and we complete the shut downs associated with these projects. in fact, we've completed 176 of approximately 200 shut downs

and we haven't had any major schedule glitches associated with those shutdowns to date. we have achieved level of service on 33 of the 44 projects to date, so right now we're about 70 percent in terms of level of service achievement on the seismic reliability goal. by the end of this goal we'll be more like 90 percent, which is a major accomplishment and of course we won't reach final until 2018. then thank you, commissioner, for acknowledging the safety rate with a rate at less than half the industrial average. we went out to the field and issued certificates to the active construction teams and there are some happy faces and proud moments for those folks because this is a major accomplishment, including the

construction teams consisting of the contractor personnel, the construction management personnel, which is city staff, construction management staff and of course our partners in labor. you've seen this slide before but i like to put it up because it's a great visual reminder of what we're trying to accomplish to achieve that life line across the bay across 3 major earthquake faults in the bay area. the blue line represents projects that are complete and the green represents projects in active construction. as you can see we're whittling it down to a few major projects and two of those, the bay tunnel and the seismic updates, are actually already in service. we celebrated from the tunnel as well as the seismic upgrades.

so to recap our preconstruction update, the alameda creek recapture project has recpbltly completed the planning phase and we're well into final design and the environmental review phase. in fact we're going to put up a notice of preparation for the california environmental quality act later this spring then for the ground water storage and recovery project we opened s in november and actually awarded the contract a range of pipelines, just last month. we expect to issue notice to proceed for construction within the next couple months. i also want to acknowledge a major milestone on that project, which is a signing of the operating agreement with cal water of city of daly city as well as san bruno and we were able to commemorate that in december with the formal signing of that document.

now, leading on to construction, i want to show you this time lapse video of the major construction that's taken place at calaveras. you can see 6 million tons of rock and dirt that has been removed since that time. we're looking upstream toward the existing dam. you can see the left abuttment starting to take shape where we removed those two ancient land slides and you can see the spillage start to take place and you can see the repeat with the wide angle where both abuttments are being xef vat i had. sometimes people ask me how can you say this project is 65 percent complete if you haven't even started building the dam yet? i think a good analogy is building a dam is kind of like painting a house. if you've ever painted a house you know most of the work is in the preparation. you need to scrape the paint, you need to

fill the cracks with putty, you need to tape to make sure your lines are straight when you apply the paint, which i call the glory work. right now we're doing the hard work removing the land slide materials, moving the loose alluvial materials in the bottom of the valley. we're getting the conduit and the spill way ready so that during that last 18 months we get to have the glory of building the dam itself. and so i think it's helpful to see how much excavation has taken place since 2012 because when you're out there seeing it day after day you don't necessarily see the progress. you live too close to it. so looking at this recent air photo you can see the existing dam on the left of the photo and the major excavation that's taken place on the left abuttment. again, that's about 700 feet high from the top of

the hill to the bottom of the valley. over 45,000 cubic yards of concrete, we're going to pour about 65000 yards of concrete for the spill way and the grouting to continue to take place to seal up the cracks in the concrete before we begin building the dam. we had the site tour for commissioners caen and vietor a couple weeks ago. we appreciate you taking the time to visit with us. future risk and challenges i think it's helpful for all of us to see what's actually taking place in person so thank you for coming out. moving on to the tunnel project, i'm happy to report we've actually completed our repairs of the chief pipe buckles that took place in august and october. in fact, we've regrouted the entire

length of the 3 1/2 miles of tunnel up to 150 pounds per square inch, which means that we've taken the entire tunnel up to the future working load of the tunnel when it's in operation which essentially proves out that the grouting and the inner space is now competent and we're able to remotelize our morter lining contractor and this is the machine that they use to install the morter lining on the inside of the pipe. that work has now been completed and we expect to disinfect and put the tunnel into use the end of this month. i want to show this picture of the discharge structure of the san antonio back-up pipeline project. we completed this project at the end of the year and the reason i think it's significant to put this photo up is that we're able to use this structure in fact to drain the coast range tunnel. we're currently, actually we just completed an inspection of the entire 25 miles of the coast

range tunnel. the tunnel is actually in very good condition, but prior to doing that inspection we needed to drain the tunnel and we were able to discharge that water through this structure and save the water in the small core so it could be recaptured back into our system. then we also completed the crystal springs san andreas transmission project at the end of the year. we conducted a test jueft a few weeks ago to test the valves. that demonstrates the dofl division of safety of dams that the valves on the structure are working properly. we also were able to capture a lot of critical hydrologic information with the valves open to demonstrate that the creek was handling the flow properly. the traes long-term improvement project is coming along well. we completed the

last major shutdown of the project at the end of the year. that went very well and the photo shows the site is getting tidied very well and we are close to being in substantial completion the end of march. the last major construction project is doing very well, about 24 percent complete. we expect it to be done the end of the year. again this project will essentially replace critical pipeline sections on the peninsula where there are fault crossings and liquefiable zones. thank you for the opportunity to provide the update and i'd be happy to answer any questions. >> questions? >> irvington tunnel is such a good thing to see progressing as it is. >> the crews have been working very hard. the glitches that

we had in construction were unfortunate, we do have about a 3 month delay to substantial completion as a result, but the team has worked very hard, double shifting a lot of that work, to get to where we are today and we do respect them for their service . >> better to have it happen now. >> mr. wade i want to say vice president vietor and commission secretary hood and myself really enjoyed our trip to calaveras. the scope of it was amazing, not to mention the fossils. we thank you for that. >> thank you for coming. secretary hood, thank you for coming as well, thank you for acknowledging that and i'll be happy to host others at any time. >> thank you. >> all right, thanks. >> that concludes my report. >> very good. any public

comment on the general manager's report? next item, please. >> item 7 is the consent calendar. all matters listed hereupb err constitute a consent calendar are considered to be routine by the san francisco public utilities commission and will be acted upon by a single vote of the commission. there will be no separate discussion of these items unless a member of the commission or the public so requests in which event the matter will be removed from the calendar and considered as a separate item. a, award agreement cs298 and cs299 for an amount not to exceed $70,000

per agreement (inaudible) d, accept contract no. hh954r2 and approve modification no. 2 decreasing the contract by $114,345 with time extension of 178 consecutive calendar days and authorize payment to the contractor. e, across contract no. sxwr. oc-52 for an amount not to exceed $3 million to the lowest qufded responsible and responsive bidder, us electric technologies, inc.. f, acard contract no. joc-53 to the lowest qualified responsible and responsible bidder. h, approve contract number

increasing contract by $4,725i, accept work contract wd-2682, decreasing contract by $19,085 with a contract amount with a time extension of 86 calendar days. j, accept work performed by shaw pipelines for contract no. ww-545, authorize final payment to the contractor. k, approve a revocable license to raintree fair oaks llc for a use fee of $5,310 per month for 5 years. l, approve a 5 year revocable license to st. francis center of red wood city for an annual use fee of $125. >> thank you. i see that

staff has requested that item 7f be removed. any other items on consent calendar to be removed? may i have a motion? >> so moved. >> excluding 7f all those in favor? opposed? the motion carries. next item, please. >> item 8, discussion and possible action to authorize the issuance of refunding water revenue bonds of up to $450 million to refinance all of the outstanding water enterprise revenue bonds series 2006a and portions of the series 2009 a and 2009b bonds and approve the form and authorizing the execution and delivery of related document bes, authorize the general manager to sell in one or more series of bonds on

either a competitive or negotiated basis and delegate to the gm authorization to award each series of bonds to the highest bidder. >> good afternoon, commissioner charles perl, this item before you today is to request authorization to remupbd existing water revenue bonds to a lower interest rate. we continue to see interest rates at historic lows and given the situation with reduced water revenues and the water enterprise we wanted to take advantage of this at that time before the expected rise in interest rates later this year. we have been keeping an eye on these bonds to refund and thought this would be a good time to bring this to you. so if i could just have the slides? so the good thing with these revenue bonds is that the board of supervisors has already given us preapproval to refund bonds. the basic concept here is that we aren't requesting any new authorization, we're actually trying