ou 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 to save the organization and rate payers money. in 2012 a couple years ago we received the authorization to refund up to $500 million in bonds from the board of supervisors. we used a little bit of that in that year, 2012, so we are coming forward to you

today to use the rest of that existing authorization. so what we're proposing is to request from you an approval of to refund up to $450 million dollars of outstanding bonds. we look forward to bringing that to the market probably next month in march. they will be tax exempt bonds and right now we're looking at interest rates of around 2.7 percent for those bonds and just to give you a sense what that means, our current bonds are right around 4 1/2 percent so we're bringing the 4 1/2 percent bonds down to an average of about 2 1/2 percent. up to 30 year bonds but the vast majority of the savings that we will recognize will be over the next 5 to 6 years because, again, the interest rates over the next 5, 6 years versus 30 years is a bigger differential than 30 year when you compare 30 year bonds to 30 year bonds. right now we're looking at

savings of about $53 million dollars. that will help us not so much in the current year but over the next few years 1212 and 14 million years per year in debt service savings so it's really savings for our users and we will share that with both our wholesale and retail customers. the bonds that we're proposing to refund, believe it or not, it's our first wsip bonds that we issued in 2006 a and some of our 2009 a and b bonds. we have an estimated savings rate of about 11 percent. the city has a general savings rate of 3 percent at a minimum so we are able to get over that threshold quite well. and as this slide notes, we're looking to refund about 476 million dollars in bonds. so the city charter allows us to

bring forward refunding bonds to achieve rate payer savings. we've already received the authorization so we're looking for your approval on this today. we will bring forward a report to the board of supervisors once the transaction is sold to show them the actual savings that we're able to lock in. the documents you have before you today are very similar to what you've seen before, the preliminary official statement, we go through a supplemental indenture which shows the nuts and bolts of this particular transaction, the continuing disclosure certificate is our promise to talk to the investment community about this each year and how we're doing on our revenues no big changes in these documents, they are all very similar to what you have seen before of and with that i will take your questions. >> only a comment, it's real

money. >> i guess my only statement is wow. >> we're taking advantage of the last big opportunity to do refunding. so there won't be much after this, assuming that interest rates do come up as expected. >> well that's true but we've been hearing about that for a long time, haven't we? so that could be to our advantage if it doesn't happen. may i have a motion? >> i have move it. >> second. >> further discussion? all those in favor? oh, sorry, public comment? i will call for the vote. all those in favor. opposed? the motion carries. thank you. next item. >> item 9, public hearing to consider and possible action to adopt the san francisco public utilities commission 10 year financial plan for fiscal year 2015-16 through fiscal year 2024-25. >> good afternoon again,

commissioners, charles perl i wanted to let you know that this update is similar to what you've seen in prior years for our 10 year plan updates so i look forward to spending the next 5 or so minutes with you just talking about the changes that have occurred from what you saw a year ago. so many of the slides haven't changed much so i will spend more of my time on the slides where there has been a change. with that, we don't have any rate actions before you in this budget cycle and next year's fiscal 16 is the second year of our two year budget cycle, so most of the changes are due to the fact that average customers are using less water and how that has impacted our 10 year plan, as well as some capital plan revisions. so the way that this 10 year plan is structured for those folks watching on tv we have the key assumption slide in front of each of our 3 enterprises then we have the money slide. so this is the

key assumption slide again talking about what has changed, those are noted as new, new issues or new items. again, as has been mentioned previously we have reduced water sales, both retail and wholesale water sales, that we are needing to manage around, of course. that has impacted the 10 year plan by about $150 million over 10 years and the revenue bond refunding that you just approved will help offset some of those lower sales and lower revenues by about one-third. as noted there are some, you'll hear more about this when we talk about the capital plan, but there have been some changes to the capital plan. most of those changes is the 10th year coming online and the year that we're in now comes off the plan so we're essentially moving forward one year in terms of the 10 year capital plan. this is the money slide and i can appreciate it's small, but this is our 10 year horizon

looking forward. sources, revenues and other revenues coming in are at the top, underneath those are uses which is our expenses, o and m and debt service and that kind of thing, then all the revenue requirements are highlighted in yellow there. those are the ones you already approved so you already approved retail rates for water and sewer enterprises through fiscal 18 so we're not proposing of course any changes to those and you have approved the wholesale rate change for the current year and the two things i would note on this slide is that the rate -- i'll describe this in more in a moment -- but the wholesale rate we are projecting for next year is higher than what you saw a year ago. it's nearly 31 percent and i'll talk a little bit more about why that's the case. the other thing we've added is the very bottom row. you see

5.2 monthly average, 52.and 5.5, the average usage of water has gone down in san francisco. what we presented to you a year ago was 6 units of water on average per month, that's about 4500 gallons, but now we're seeing about 5.2 units per month. what this 10 year plan projects is that we come back a little bit from this low level that we're in this year, we get back to about 5 1/2 units per month. it's actually easier to see on this slide, which is the next one, which shows over the past 12 years how these changes have occurred with water sales. on the far left you see the last drought, you see the dips there, the two lines are retail and our whole sale customers. the first dip is the last drought that we went through, then the great recession in 2009-10 of course reduced water sales from a more economic perspective, then the far right is where we're at now

in terms of the current drought. and the question that's sort of on our plate that we need to answer is where will consumption come back to? as you can see there is a downward trend line in these charts and generally the issue we are needing to manage around is that as folks conserve and use less water it doesn't come back to where it was before and that is seen repeatedly over time here. so as an organization we will just need to manage around that reality. but as you can see, we are assuming that there is a comeback on the far right in fiscal 16 for retail sales. we have about a 6 percent drop in consumption to retail customers and we're assuming about half of that comes back to retail sales. coming back to that 64 mgd level comes back to that downward trend line that you see. >> on what do you base the water sales going up,

consumption going up? >> we do see generally -- well, two things. first of all when we plan, we set budgets and we do planning, we assume a normal water year. so we will assume that there will be, even though there very well could be an additional reduction for water sales and drought for next year we assume a normal year when we set rates and budgets. so that just shows we will need to manage around the realities as they present themselves. this slide just shows on the retail side again water retail. what's in yellow at the top is what has been approved, no changes to that, of course. but in order to keep things in balance i mentioned roughly a hundred million or so that's dropped in terms of revenues over the 10 years for the water enterprise. that has actually resulted in what we are now projecting to be higher rate changes beginning in fiscal 19. so if you look at fiscal 19

and 20 and 21 you will see not the far right column but the next one over, the 3 percent and 3 percent and 2 percent, that shows you that the projections we have for retail rates in those years is two to three percentage points higher than what we showed you a year ago and that's, again, just to balance things out, lower water revenues needing to balance out with both cost cutting and higher rates. we will come back of course when we do our cost of service study for our water and sewer customers in 2 or 3 years. this will all come back to you for review and we'll do our best to keep those rate changes as low as possible that's our general commitment to you, but we're letting you know now in the absence of right sizing and cost cutting that the projections we're seeing now for rates are slightly higher in those outer years. the interesting thing, though, is the bill is lower. as rates go up and folks use less water,

the average bill goes down. you will see in the far right column compared to 3 years ago and the second to the right column compared to last year folks are using between 5.2 and 5 1/2 units per month, that has translated into lower costs for them. that's an important point to make. even though there are higher rates that we're projecting in later years, that is currently being offset with lower useusage. >> i have a question on that. so the refunding of the bonds that's going to happen, will that affect these numbers yet again? >> we have included an assumption. the actual data from the actual sale will firm those numbers up but we have included an assumption in here on that. this just shows that over time, 24/7 operations and revenue funded capital and debt service is trending up, but debt service is the larger

contributor in terms of the growth of the cost of the average water bill. that's the top piece of this chart. wholesale, as i mentioned whole sale customers, we sent them a letter in january giving them a sense of what the rates could be for next year. we reset whole sale rates annually so unlike on the retail side we've set those rates, retail rates through fiscal 18. wholesale rates we set annually. so we had told you a year ago that the rate for the wholesale customers was projected to be the rate increase was about a 12 percent rate increase. now we are looking at an approximate 31 percent rate increase for next year. that's all driven by the fact that in the current year we are projected to receive about 25 million less than we expected, so we'll take that 25 million that we undercollected in the current year and plug that into next year's rates, which is what's driving that change of going from 12 percent to 31 percent. so that is what's making that change.

you can see the other years below that really haven't changed that much, it's truly just what's happened in the current year. sewer is just a similar story just in that of course as we generate revenues for waste water that's driven by potable water sales minus the full factor for outdoor water use, the 10 year impact is an estimated 15 million from lower water sales and we have adjusted those rates again in fiscal 19, 21 and 22 -- 19, 20, 21 and 22 to yuf set that reduction. there also have been some changes in the capital plan which you will hear more about when we go to the capital plan. this again is the money slide. i won't spend a lot of time here other than to say that the rate changes, this plan is balanced, it abides by all of our financial policies and the rate changes beginning in 19 is

what have been updated and those are reflected here similar to the water. the water slide, again what's in yellow is what's already been approved, we aren't proposing to reopen any current rates at this time, but beginning in 19 you will see that those rates have gone up by 2 to 3 percent each year. here is the average bill, the pronouncement again is much smaller again because water consumption assumption has gone down. interesting again just the components of the sewer bill. you have your 24/7 operations, your revenue funded service. the commission has only taken action on phase i, but we have included in all of our projections here if there were an approval on phase ii and