. >> good afternoon, everyone, i'd like to call to order the general meeting of the san francisco public utilities commission. today's date is february 10th, 2015. roll call, please. >> president caen, here. commissioner courtney, here. commission moran, here. commissioner vietor is00 her way here. >> next item is approval of the mibts. >> second. >> all those in favor? opposed, the motion carries.

any general comment on those minutes? the next set of minutes, january 30th, special joint sf puc/lafco >> i will move it. >> all those in favor? opposed? the motion carries. any public comment? seeing none we will move on to item 4, which is public comment on any item not on the agenda. yes, please come forward. >> hi, my name is maria robertson and i am here today to request that the plan to put a sewer overflow tank at the corner of folsum and 17th street be reconsidered. it was

up for consideration a year or so ago because of the flooding that constantly occurs at folsum and septemberth street but it was tabled and i am here to request that it be (inaudible). >> the microphone is not working. >> the solutions that have been put forward and offered to us at that area or in that area of san francisco are not functioning. the flood barriers do not work because the building floods from within, literally sewer water comes in through the drain and out of the toilets and into our building. and also the back flow restrictors that have been -- that we can put in a grant be to get, they are not going to function with such a large amount of water coming through.

so the only viable solution has been canceled, which is the overflow tank at folsum and 17th street so i'm requesting that that be reconsidered until the 10 year plan or the 20 year plan to improve the sewer systems down there is finished. because we will continue to flood. water floods, they happen every year, basically. this year we were flooded twice, twice in december and it is with sewer water that comes through the sewers and into our buildings and on to the streets. so that's --. >> mr. carlin is there somebody we can suggest that she talk with regarding this? >> she can talk with me. we're actually looking at all the possible solutions for many areas in the city that flood when it storms and storm water is a problem in san francisco. so we do have a combined sewer

system so it's not just sewage, it is storm water, it's rain water. 17 *t and folsom is one of the areas we're looking at. i'm well aware of the detention tank at 17th and folsom and while we did address it, it didn't address all the problems you are speaking of. >> that plan to put the overflow tank there is not completely off the table? >> no, it's completely off the table at this point in time. it's going to be a question of what are the solutions, what are the costs and how effective are they. >> so is there any way i can keep abreast of those solutions? >> tyrone our communications director, will be glad to take your information and we'll stay in contact with you. >> do we have your name?

>> my name is maryann robertson. >> thank you very much, we appreciate it. any other public comment? okay, next item, please. >> item 5 is communications. >> commissioner. >> i've got a couple requests that come out of the various audits that we received as far as this package and the first goes to, there was a general summary of prior audits and findings and where we are in terms of implementation. there were several items dating back to 2011 having to do with inventory management, parts and fuel and tools, as i recall. and it looks from the comments in the report as though those

have been addressed in a very spotty way. there are some parts of the organization that seem to be kind of getting around to thinking about it now. what i would like is a report back to the commission about the status of our addressing those issues and specifically if there are obstacles to moving that along quickly that we know what they are so we can consider whether we should remove those obstacles. then the second one has to do with the audit that was done on the 14b, the contracting minority -- this involves several departments, rec and park, dpw, ourselves, and the chief administrator's office. and within that there was some -- controller made some recommendations as to who ought

to be doing some stuff and several of the responses were to the effect it's really not our job, it's somebody else's job. and i understand that on the one hand. on the other hand it's got to be somebody's job. so what i would like is a report back as to the resolution of those issues that are outstanding with particular attention to there was a controller's recommendation to reconsider what was evidently a change in policy not to require contractors to submit -- subcontractors to submit invoices. and i think most of the departments did not concur with that recommendation. i read and i read their responses. i did not find any of their arguments compelling or even convincing so as you respond to that audit in general if you could specifically address the issue

about subcontractor invoicing and if we really think it's not a necessary thing, explain that. >> we would be glad to come back with a report on those issues. >> thank you. >> thank you. any other comments? >> item in the file, i think it's worth noting and i want to thank tyrone jew for bringing it to my attention. there was a press advisory released on january 30th relating to unsafe working conditions. with respect to the water system improvement, the public utilities commission as an agency was successful at achieving 7 million safe working hours. that's far above the industry average and i think what's most impressive about that is that it was done so while we were undertaking some major projects, including the bay tunnel tunneling through some of the hill sides and a lot of the other things

we've been discussing. sometimes it kind of goes unnoticed and unless we bring a whole bunch of workers into the room people don't tend to recognize not just how successful our agency is and how we set the standard industry-wide across the country, but how successful the work force is and the contractors we do business with. i'm excited just to be a part of that, i want to congratulate the folks that are involved certainly in overseeing our projects. emilio cruz for one, michael carlin who is sitting next to me. at the end of the day this agency prioritized the safe working conditions of our workers, whether they are public workers or our private workers and when you get that kind of result you have to talk a little bit about it. to my brothers and sisters and the other unions, whether we're talking about sheetmetal, laborers the carpenters and to our good contractor family, a

round of applause to them. (applause). >> thank you, madam chair. >> well said, commissioner. i do have a request to the general manager and that is all the quarterly reports i would like to take out of communications and put them under reports of the general manager. i think they should be disclosed publicly, certainly the public probably will not be reading these reports so i think it's important. any other comments? any public comment on item 5, communications? moving then to item 6, the report of the general manager. >> thank you. mr. kelly is out of the country for the moment so i'm sit not guilty for him and our first item is to recognize one of our long tenured employees who is

leaving us, carlos berrios, if you can stand up. he's been with the sf puc for 30 years and some of you may have actually worked with him commissioner moran, but he's been an accountant in our financial section. he's had 30 years of service processing probably a half million different transactions for us and doing it in a very exemplary way. he's looking forward to his retirement and we want to wish him the best and thank you for your service to the city and county of san francisco. (applause). if you'd like to come up we have a certificate to present to you. >> yes come up for a photo as

well. congratulations. >> thank you very much. >> everybody stand on their little tape mark. >> nice, good. thank you. >> no turning back.

>> all right, continuing on, we will have our drought update from mr. ritchie. >> good afternoon, commissioners, steve ritchie, assistant general manager for water. if you bring up the slides we can review recent events which actually show some promise for us. first, here's the standard slide i use on our reservoir storage levels which hetch hetchy has been holding steady at about 65 percent of capacity. water bank continues to climb up. actually the number is up to the 266,000 acre feet to 272,000 acre feet as of this morning, so we're continuing to show good progress there. here's the cumulative precipitation slide. and the red line is the current year and it's actually interesting to note, there's a series of 4 dry years shown here. they all have one characteristic in

common, they all have a flat january. i don't know if that's a trend by any means but it's just a coincidence, but it is there, it was a flat january but it has now climbed up in february and things are starting to look better at least from a precipitation point of view. snow pack we have been tailing off since our december storms but we did get some snow out of this. it was at higher elevations so it's not going to be a lot in terms of snow. in fact, we basically have kept up with last year's snow pack at this point, which is nothing to write home about but certainly it's better than going below it. this is the slide that actually shows the best news of the batch, 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 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