of reasons we highly recommend that cleanpowersf does work with industrial customers and giving them every opportunity to join the program, in part because per end point the commercial industrial customer uses more electricity than an individual residential. so there is economies of scale there from a business standpoint of working with industrial customers especially those that are motivated to have a higher renewal supplying their electricity. there are companies in san francisco that have that idea. here we are combining a couple of tasks. task six we talk about renewable and task 7

hydroelectronic. what we need to do are the recommended next steps to go out and refine what the overall cost are. leveraging the prior studies and determining how large the various projects would be and get up dated bids for what they would cost. part of what's happened in the last few years, the cost of solar has gone down. it's not actually the cost driver for those types of projects, it becomes more of the labor and aluminum framing that becomes the cost driver. so the task themselves are commodity. so getting estimates for what the various projects would cost and determining whether the construction and supply of generation can be supported by the competitive rates that are envisioned. that's along with that second

bullet point where there are a variety of estimates for how much this will cost for the build-out plan and the required estimates is required. with the addition of hetch hetchy system there is the opportunity to add more efficiency to projects. that seems to be some of the most cost-effective way to get a more generational from existing facilities. here again i'm bringing up the demand side management or behind the meter programs. so within customers themselves can be more engaged in responding to the price of electricity and being more energy efficient, adopting more solar, having

rates a tariffs that encourage distributed energy resources such a solar through net energy metering tariffs and feed in tariffs and engaging with the industrial customers. they maybe interested in something like a feed in tariff. you have the strategy to encourage efficiency, demand response. i encourage you do it in a holistic fashion so you are not only encouraging more use of efficient electricity but demanding electricity with demand response to either rates and tariffs. so that if the cost is high, the customer is incentivized to useless and more during off peak periods and as well as the modern

technology as i mentioned to be more integrated with the electrical grid you have the capability to respond with air-conditioning, with heating and setback temperatures on thermostats and that type of thing in response to electricity. that helps minimize customer bills as well as manage the overall system as to demand on electricity. of course not all of this comes free. the approach for the business plan of how do we introduce electricity and clean power san francisco electricity rates are incentives to stay and while building out these programs so while you have the clean generation resource providing the power for the

customers. there is the financing aspect. there is the potential for bonding, the potential for income from electricity consumption to pay as you build-out. so the phased implementation tarts -- starts small and start getting income for the build-out and the approach the sf puc will find to help see the timing of the build-out strategy will be to be sure to be on good financial footing to launch this program. we recommend integrated resource plan, what are the resources through resources that are procured, that are owned and resources procured by customers and where clean power sff

has renewables. overall we highly recommend having a program management total life cycle cost approach to this. taking a look at a 20-year plus timeframe. here is an investment in a renewable resource. it's going to take 20 years for that resource to provide it's full value of investment. so, how do you pay the upfront cost for that. what does that translate to for rates for customers that are going to be receiving power from that investment and taking a look at that full life cycle cost from construction to utilization and retirement of the asset, upgrade and maintenance of the asset. what are the cost and make sure the rates can support that type of plan going forward. again, the updated cost need to be taken into account.

things like solar. it has come down in price recently. updated estimates for cost and build-out should be done to make sure the latest greatest information is used to build that recommendation which generation resources are most cost-effective for initial launch. the next step is rate analysis. what are the rates that can be sustained and can we be competitive with pg & e rates doing so. all of this would feed into an updated implementation plan that would need to be filed with the california public utilities commission. there was a quick overview, but i know there is a lot to talk

about. with that, i will take questions. >>supervisor john avalos: thank you, we can have questions now or we can hear from the public utilities commission staff. i think harlin kelly was up next. if you have questions that you want to ask. >> thank you. >> you are here, okay. >> ms. hale. >> thank you, barbara hale. sf puc. i want to thank you for the information. i want to say the collaboration and dialogue that we had with taf was constructive. the report reinforces the number of program design elements that the puc was already considering in the cleanpowersf program. there is five key points from the enernex report that i think from a

business perspective are worth emphasis. first is the report recommends that we set the energy price and then figure out the mix of supply that we can afford. second, we need to recognize that local requirements and preferences are going to be more expensive. that a phased implementation of the program is smart with the 2-tiered offering with the light green and clean start is what sonoma calls it. that basic light green offering be at pg & e rates and include build-out with the expansion of the program. once we have established that financial stability that jeremy just referred to. to remember that investment in generation may impact rates and affect

customer retention. i mean that both in effect customer retention in a positive way as well as a negative way if we don't get the numbers right and pay attention to the cost profile. the study i think has been very helpful and while we've collaborated on this report we've also been working as general manager kelly referred to on a business plan effort. that effort will outline our business opportunities including cleanpowersf and help us tart our effort to bring the hetch hetchy power system to san francisco in a financially stable manner. that business planning effort will be discussed with our commission over the next couple months and should result in a finished product in the spring. that's our target. with the completion of the enernex report it is our goal to complete the

program design. the program should lead for affordablity and offer more associated jobs. consistent with the enernex recommendations puc staff propose we develop a new cleanpowersf program with a 2-tiered program offering. the new offering would be our version of light green or clean start and that will include you the basic opt out required by state law and enhanced offering, the san francisco offering the dark green opt up option for san francisco. our next step at the puc for power staff is to advance the study work to the integrated program design. we need to staff up, we need to complete the business plan, we need to identify and obtain revised power purchase contracting authority so that we can mitigate risk and

operate at the commercial pace that this program is going to require of us. by that, i mean we are going to put together our ideas and vet them with the general manager and our commission on how to modify our contracting authority so we can build a portfolio of resources that are cost-effective to make the commitments in the supply market of a duration to allow us to have a stable program. that was part of the function that shell was providing for us. with shell out of the picture, we are talking about new ideas of changing the contract approach that we have authority for. then we need to complete and present our rate setting and program design. unlike our prior cleanpowersf program design and rate making process we had done that in tandem. what i'm proposing here is to

take those steps in parallel. i think we can do that because now we are not talking about figuring out the cost and then setting a rate. we are talking about setting a rate at the pg & e rate and then building a cost profile, a supply that fits within that ceiling. so i think we can parallel track those staff efrs with the rate fairness board and with staff on the program design and consultants on program design. >>supervisor john avalos: does that parallel process help to expedite? >> it should, commissioner. and depending on what sort of other changes we might be able to make to the prior program plan on the activities that happened after rate setting, i'm sorry to tell you that i think it's not doable to launch a program. i think the earliest

i heard during this afternoon's conversation was this summer. it's just not, we are not physically able to do that given the requirements of notification, given the fact that we can't negotiate a contract for supply in that amount of time under the existing city contracting rules. it's just not physically possible . >> what would be great to see given that. you do seem to have some constraints to develop the process. if you can give us different scenarios that way we can have some leeway to push at certain times. >> certainly. let me get around the desk. hopefully this will show if i can get sf govtv to put this

on. this shows my version of the next to follow adoption of not to exceed rates by the commission. this is the same, i'm sorry. better? okay. thank you. this is the same set of activities that you saw in july of 2013 when we presented what the activities are that follow adoption of not to exceed rates. couple things have changed. we don't have shell in the picture. so, there is no activity around authorizing a shell contractor signing a shell contract. there will be other contracts, however, for us to bring the supply forward for us to have the back office functionality. there will be other contracts. a couple of the areas where we maybe able to shave

some time, supervisors, avalos, to respond to your specific question is in our earlier program where we are envisioning rates higher than the pg & e rate, there was a lot of concern about having accidental customers or customers who weren't well informed being opted into this program, right, and response to that, we developed an earn -- early customer and notification program. i would like to suggest that maybe since we are now talking about a program that is easy at or below the pg & e rate we can relax some of those requirements and reconsider that plan. as you see on this sheet, that activity is starting here and it takes some time to go through those steps. so we might be able to shave some time there. where i'm saying we won't be able to shave time is in the steps for

example here where opt out notices are mailed. those opt out notices are required by state law and required timeframe of two 2 months out of launch. we can't shave time there. that's a fixed activity. but as we come through the program design phase and think more about how quickly we can act, those are some of the areas where i think we might be able to shave some time if we are given the latitude to do that. >>supervisor john avalos: when it comes to assessing the competing rate, the pg & e rate that we are trying to come under or come at for the light green option, that's very predictable, right, we have the right information to the california public utilities commission where the rates are. it's not like it's a moving target that it's going to delay anything. >> it is a moving target that we follow. we know where it is and we participate in the proceedings when it's set.

>> what kind of anticipation do we see, we have generally in terms of anticipating any rates that pg & e might try to have for the california public utilities commission. >> they raise their rates about four times a year. the generation of the component of the rates is what are we are talking about and we are follow that closely. we'll talk in a future item, we'll see pg & e this summer financing options -- proposing the rates for green tariff option and that will help us gauge the competitiveness of the program to propose and design an offer. >> >>supervisor john avalos: thank you. we have a question from supervisor campos. >>supervisor david campos: thank you. do you have a target date for when rates would be set?

>> what i'm suggesting is that we would bring the program design and the rates to the commission prior to the end of this year consistent with what mayor lee had directed. we can try to do that quicker. it's going to be dependent on a number of activities falling into place easily. we are going to need to staff up as i mentioned so we have some hiring activities that have to occur and modifications to our contracting authority for power so we can act at a commercial pace and bring supply into the portfolio for cleanpowersf and knowing we'll be able to operate at a pace and using the tools for the marketplace. >> can we add one thing. i think the first offering maybe the easier of the

two. it's the second one, where the dark green is something that we really have to pay attention to because that is something that we'll be competing with pg & e on because that's their green tariff option. i think and you are going to talk more about it. so the first offering, the one that we are opting everyone in we can figure out what the price is and based off the price we can see the mix and the build-out. but when you look at the second option, the darker green option, that is one that will take some time because to see what the exception -- competition is doing and work that out. >>supervisor david campos: if i may, thank you to the general manager. i was hoping we would have something more concrete in terms of a time line. i think that the goal of setting rates

by the end of the year to me is not a very aggressive goal and it's also very intangible goal because it can mean a lot of different options. and it does, you know, i will say this i think for the record, it does worry me that we are having to staff up, if you will, at this point because this program has been on going for a very long time and it's sort of disappointing in a way that there isn't the person designated at puc to be exclusively working on this project. you know, it's almost

february of 2015. so i would simply ask the commission if there is a way of presenting something more concrete and if that means needing to hire someone. i know you have an amazing director and they can expedite hiring if needed. if you have the board of supervisors and the mayor with all hands-on deck, if there is a need to expedite anything, i think the people are committed to doing that. i hope we approach it from a perspective is how do we launch a program as soon as we possibly can and do everything possible to expedite that day. that's what i hope happens. thank you. >>supervisor john avalos:

great. commissioner vietor? >> yes, i think there is a lot of interest in moving this more quickly than what's being put forth. what i would like to propose is that by february the latest there is a time line to be brought back. this is january 30th. that's soon. that we see a time line that takes all of these factors that you laid out in the last round and really unpack them internally and come back and say this is the earliest we can do the rates. i would like to see the rate setting process before our commission in 3 months if possible. maybe that's a bench mark. three 3 months at the latest and see if we can work with that. we can review that once we see the timeline. i think that's a critical piece for us to get through. this contracting authority piece seems like a major hurdle and there is an

invitation from this board, this body. let's tackle that. i don't know why i couldn't start with some of the education and outreach from the communitmembers. it seems that has been a long period of time to take place. seems like there is a momentum here to be able to reach out, cleanpowersf san francisco, hello, and what that really takes. i would like to see a time line brought back particularly before this body in february for us to really look at and tight and short as humanly possible to get this program launched. and i would like to direct our general manager to take care of that, please. >> i'm back in the principals office, right? [ laughter ] yes, i think the plan is to layout a plan and i think at the next commission meeting we'll look at everything and it's great to have the will of all the board of

supervisors behind you and the mayor. maybe i will ask for more things when i come before you, but, i just, you know, there is certain things we just wanted to highlight to let you know that tomorrow we just can't do it. i think the biggest obstacle is we are relying on shell to do a lot of the things that we couldn't do as a city, you know, contracting and campos, you are very aware of a lot of the obstacles, processes that we have to go through. we've already kind of recognized and we are going through all the things that we think that we need to have to be successful. and so for my standpoint, just to put it out there that when i produce something and we go out, i want it to be successful. i don't want to go out there as fast as possible and it's not something that we are proud of. so, yes, we are going to do it quick fast as

possible but we want to make sure it's a quality launch. so i have to balance all that and i will work to present a schedule, but i do feel proper notification of informing people that your provider will be changed. i do feel strongly about that because they will not have a choice when we opt them in. so i do feel that that notification, even though it's lower which i like a lot because there is no financial burden that we are imposed on anyone but i still feel that a notification if you are changing your provider should be warranted. >> yes. thank you and i couldn't agree more. if i might have one clarifying question on the report. the financing piece. i just wanted to ask because on the marin launch they were

seeded with private investment money. is there an at some point or potential because you didn't mention that and i know there is a lot of money these days in san francisco. would there be opportunity for private investment at a low rate of return or something that could be put into this equation and i don't know if that would affect the contract pieces or exploration or launch. >> there are many options on the financing aspect. one of the interesting one is the investment of tax credit at the local level. a lot of the municipalities that have tried to procure their own new resources have private investors to build-out and that private investor at the federal level can get federal tax credit. that tax credit ends 2017. the build-out would have to occur

before 2017. after 2017 is the question can you do your own financing through less over bonding or another arrangement with another private investor and there is a variety of options that the report gets detail on. >> that's another reason to expedite as quickly as possible and i would request the puc look into that option specifically to see if there is some opportunity to be able to launch in a more aggressively if it would benefit not only for the launch but the financing of the program. >>supervisor john avalos: commissioner crews? >>cynthia crews: thank you, i have a question for ms. hale. i'm looking at the picture i took from my phone. if we are looking at the schedule of events, i think it says days

to rate approval do i understand the not to exceed rate is before the build-out? >> the not to exceed rate for the basic light green offering that we are talking about would be set competitive with pg & e's rate and we would need to see if we can have resources whose cost profile totals an amount below that. right? and what the enernex report suggest and what i think is a good idea is it says have that rate discipline and then just

build the resources that, you know, stay within that cost ceiling and if you can get local resources in, get them in, if you can get regional resources in, get them in and if you don't have financial capacity and you have to go outside the region, go outside the region. so the focus is lead with the affordability factor and then develop the resource portfolio within that financial constraint. >> maybe i'm just being paranoid. but, do you think that it is possible that pg & e's proposed green tariff option will set rates that are