>> welcome to the march 27th meeting. we'll start off with a call to order and then roll call. >>[ roll call ] we have a quorum today. >> whiff unannouncement, item 9 will not be heard. as their c.e.o. is unable to attend the meeting. item number 3 will be approval of the minutes from march 13th, 2018. do i have a motion?

>> second. any public comment? none. all in favor. aye. >> opposed. approved. item number 4 is general public comment. members of the public may address the commission on matters within the commission's jurisdiction and not on today's agenda. so i think we have mr. warner. please come forward. >> my name is dave warner. i am a former san francisco resident and a palo alto member. thank you for you and steve richy meeting with us earlier and listening to what we have to say. so thank you very much. >> my pleasure. >> it's an honor to speak with you today and thank you for being our commissionsers. in the nation which is a way of saying you have considerable influence beyond just your water

supply and service area and you are in a remarkable position of leadership. i'm her today to ask you to revisit your policy around your drop plan of record with the particular emphasis on having a plan that meets both water availability needs and environmental needs. under commissioner moran's leadership, they adopted the longest drop-planning models in the state. i'm not here to fault him, as you have live threw a time when san francisco was supply was at a risk many were greater with. however, even in commissioner moran's own words, when drop-planning was skulled in december of 2017, he made no mention of environmental review or impact. so if you would revisit your policy regarding the drop plan of record, paying particular attention to incorporating environmental impact, here are some ideas to consider. one, as you know, today no conservation goes towards environmental needs when it is needed other than legally required flows.

instead, during a drop, all available water goes to storage. one idea is to consider allocating some percentage of water to go to the environment. this could be highly motivating for conserving water, given the 2009 san jose state survey that found that the top reason for water conservation was to help the environment. and by the way, to acknowledge a comment steve richy had made that survey was done when there was not a state-wide mandate so the results may have been different if there was a state-wide mandate in place. two, consider other sources such as your portable study coming up later in the agenda. as so many other large water districts have done, reducing pleasure allowing more water for the environment. three, my last one, consider re-evaluating the ability to purchase water during periods of severe drought. given disparity between water for agriculture water district and an urban water district. the opportunity cost including farm worker salaries is in the four figure range.

your analysis puts the opportunity cost for our urban water districts in the five to six year range. one to two orders of magnitude greater than an acre of water for greater than the agriculture director more valuable than an acre of water. note that the metropolitan water district of southern california has been buying farmland for exactly this reason. these are just three ideas. the point is to find a way to have a good drop plan and help the environment. please revisit your policy around the drop plan of record with particular attention to environmental impact. thank you. >> good afternoon, president

kwan and commissioners and staff. i'd like to reiterate that we appreciated our meeting with you last week. president kwan and steve richy. i handed you information on the value of an acre foot of water in agricultural economies. there was a study done in 2016 titled "food system multiplier for specialty food" and this is commissioned by the sack row men toe area council government and it represents six-county area. and, they said that while agriculture contributes significant value to the regional economy, specialty crops generated $2700 per acre annually and more than three times the value per acre than non specialty crops. so we'll use that high figure of 2700 per acre and it takes about three and a half feet per acre to grow produce.

the value would be the value generated from that acre foot would be $771. and then they get into the multiplier effect. that it's not just about the food produced but there's processing, there's transportation and the actual production accounts for about 29% of the value. there's another figure there to support. 11%. that might be part of that original value. to be conservative we'll use 29%. so that would suggest that the over all value of an acre foot is $2,659. so, what would happen if the bay delta plan s. e.d. were put into effect from february through june, well, the last 100 years precipitation repeated, there wouldn't be a problem. what would happen if the design drought kicked in and we got into to a seventh or eighth year of drought. i think it would be pretty easy

to buy water from an irrigation district because $2700 in acre foot, which is slightly more than what you charge your customers, which i think it's about 2200 right now. we can basically pay all the farmers exactly what they would earn if they were growing food, but they don't have to do any work. we can pay all the processers without doing work and the distributors without doing work. farmers in that drought situation, they're probably going to be limited to one and a half to two feet per acre. you can't grow a lot of crops with that. if there's a voluntary program, and they could chose to sell their water at a very high price and make the same amount of money if they were growing crops you would get there. they say they don't want to sell water and they're posturing, everyone has a price, and with the ini remember ties there are other irrigation districts.

i think we're in good shape. thank you. >> thank you. >> is this any other general public comments? >> item 5, communications. anything on communication? any public comments? forgive me. so, we have dave warner again. for item number 5. 5 did. 5d. thank you for letting me speak regarding the environmental steward ship report. this seems like a marketing document as opposed to a useful tool to help commissioner assess the impact of its environmental activities. as you know, it's environmental damage but there's no sense of that. how are you the commissioners able to know the extent of the environmental damage, how it's

changing and what impact the actions are having to remediate that damage. to be a good environmental steward, don't you need to know this. please consider directing the sfuc staff to revisit its environmental stewardship for the metrics that give you the commissioners a realistic reporting of a, the current state of the environmental damage as measured by wild life populations. b, how the environmental damage is changing overtime. and c, the impact of mediation actions on wild life populations. by having these measures, you will have a better understanding of the environmental impact of the sfpuc operations and better ability to assess whether or not further action is needed. thank you. >> thank you. >> peter. >> hello again.

so in the report on the environmental stewardship policy they say it's the policy to operate the regional water system in a manner that protects and restores fish within reservoirs and watershed lands. specifically, consistent with the sfuc's mission relesions from sfuc reservoirs will mimic the variation of the seasonal high drol gee, for example, magnitude, timing duration and frequency of their water sheds in order to sustain the aquatic and ecosystems wish they depend. so, the policy is a percentage of unimpaired flow. which is exactly what the bay delta water quality control plant calls for. somehow this policy applies to the upper wallamy and we think

it s the a few years ago, the sfuc was very generous to help with the funding of dose rios, which is 1600 acres of the confluence of the twalme and the san jaoquin. it was amazing to see the native plants at 10 feet tall. they were planted in 2013. the area is thriving. it's converted to wild life habitat quickly. to look the other way and see the san jaoquin river swollen and inundating the flood plains of dose rios. it felt like being on the bay. it was amazing. that's how that river used to be every year. and it's very, very rare now. basically, only the minimal amount of water is released from don pedro. as recently as 1944, we had 130,000 salmon spawning in the river. last year it was 2800. we had a stretch of the numbers being in the hundreds for five

years in a row earlier this century. twalame needs more water and we kneel that this policy should encourage san francisco to follow the values of san francisco 77% and and it's not any san francisco and like the policy extended into the lower twalemey. >> next we have mr. tim ikeenburg. >> good afternoon. my name is tim ikeenburg and i'd like to echo the remarks peter made and point out the environmental stewardship policy report that you have before you doesn't address the bay delta

water control plant at all. i wanted to remind you the board of supervisors have stated a resolution in 2014 which recognizes that protection and restoration of a healthy, sustainable ecosystem includes adequate water quality, outflow and water supply to support fisheries, wild life habitat and perpetuity. it also states and recognizes that the bay delta ecosystem has been in a state of chronic drought, due to current water management policies. it also wires that adequate tell da out flows to san francisco bay be ensured to support fishery, drinking water quality and other uses and finally it also requires that it be applied as part of any solution or conclusion reached in critical planning and regulatory processes. therefore, i think that you should address this policy in the bay delta water control plan

and support the state water quality plan, goal of ensuring that at least 40% of main stream flows in the rivers are maintained to restore and protect the bay's resources and communities. thank you. >> thank you. any other general public comments? next item, please. >> item 6 is other commission business. >> anything? commissioners. any public comment on item 6? next item. >> item 6 is a revenue bond oversight committee annual report and audit findings. >> good afternoon commissioners charles pearl deputy chief financial officer. i wanted to describe this item for you. the revenue oversight committee is an oversight body that meets monthly here at the puc and reviews how the sfuc responds

its bond proceeds. this report is their annual report so it's their once a year visit before you to talk to you a little bit about their activities over the past year. the current chair of that committee is robert leashner who is here and will speak to you in a moment. he was appointed in november of 2016 and has just been appointed over the past few months as chair of that body. mr. leashner leads the merchant division of point mates which is a technology and logistics company. he holds a b.a. in economics from the university of pennsylvania and is a chartered financial analyst. >> first i'd like to thank the members of puc and commissioners and the hard work that goes as changeless mentioned they presented work and to city

government and this report this year is attached and a pen dex and i'm going to go through some of the highlights through the past year. the revenue bond oversight committee itself facilitates transparency and accountability and it's revenue pond by making sure that all proceeds are spent in accordance with the authorizing bond resolution and applicable laws. in general, our abilities and jurisdiction of using new projects under construction and going through revenue bond proceed expenditures. and before going into highlights, i would like to mention members of the p.u.c. who have been instrumental to our work. this is a incomplete list and there are others i would like to thank. charles pearl, dan weighed, karen cue bick, richard morales have been instrumental to our work. a few of the highlights from this past year, have it his

first we initiated annual bond expenditure ser tive a indication process in the annual report for the first time. we've reviewed the progress of the water system improvement project and the sewer system improvement project with a particular focus on the accuracy of budgeting and scheduling forecasts. with continued tension to ensuring that the lessons learned from the wissop, which was a audit we connected two years ago is applied to the ssip. and we completed two on-site visits of projects. the first was the dam replacement project and including the alameda creek recapture and the plant. in addition we've held monthly meetings and hearings with

p.u.c. staff. we have gone through the financials of different projects. the attached and i want to read it. there's a lot of wonderful material there and over 2018 and going forward, we'll continue to provide as much transparency around the p.u.c.'s good work that we can. thank you, everyone involved. >> thank you. >> public comment on item 7? next item. >> clerk: did you want to speak on this item? did you want to speak on this item? item 8 is report of the general manager. >> good afternoon, commissioners. first item suppose date for clean power s.f. >> good morning commissioners,

barbra hail. i'll report on the success of our program. we're continuing to serve over 80,000 accounts, still seeing a very low opt out rate and seeing customers continue to upgrade to our super green 100 100% renewae service. we've also been very active in preparing forren rolling additional customers as we've discussed. the general manager is working with us to execute supply contracts and we'll continue that activity. i think at the next meeting, we'll be able to present to you more details on the portfolio of supply that will be relying on to serve about 100 megawatts of additional customers starting july 1st. one of the key steps in being

able to sign those contracts and make those commitments to our counter parties is the ability to have that credit facility that we've been working on. we expect that to close early next week and we'll finalize the rest of the portfolio and present that to you at next week's -- next commission meeting in two weeks. we are also are continuing to work with the city attorney's office developing our testimony at the california public utilities commission together with cal c.c.a. on the exit fee reforms. i'm happy to say we're coming together with the community choice agrigays community to have a strong voice at the california p.c. on that critical issue. we're also preparing a simplified bill comparison calculator that will appear on our website to help customers during this enrollment period. understand for themselves,

driven their direct experience with their electric consumption, what the bill impacted will be of our service. scorservice.we expect customere lower bills as theyen roll in our programs. so that is an annual process and we're engage in that now. that rate mailer puts side by side our rates with pg and e content so we're completing that work as well and that will be helpful as wen roll additional customers. finafinally, we worked with staf under c.f.o. sandler to demonstrate to the controllers'

office that he should receive controller certification and we were successful at that to support our additional supply. and with that i'm happy to take questions you may have. >> hi, thank you for the update. i just have a question. i know i had asked it a couple meetings ago about the build out timeline? and just wondering when we can anticipate that. >> when we get through our contracting effort here, we'll be able to spend some more time on that with you. when we bring forward the portfolio supply, you will see that we are increasing the amount of renewables that are constructed in california through our commitments. and we'll be able to demonstrate our ability to bring in more revenue that will support some more local programming. so i don't expect this to be able to complete that work for you until the fall. in terms of the local -- within

san franciscsan francisco impac. >> maybe an understanding of the steps it will take to get to that will be great. i imagine a slight assessments will be done and what the sources will be and how much will be in california versus in city versus regionally. >> so what i'm thinking of, when you talk about local build commissioner, is all within san francisco. # we havrev the preference in or contracting where we've identified local in the nine barrier countries. you will see we are making commitments for that version of local until our contracting bui. i thought you were asking about the granular build within the city of san francisco's footprint. in that context it will be more of the kind of programming efforts that we'll insentavise,

construction of renewable and energy see efficiency adoption by our customers here within san francisco. >> that's the end game but what are the steps to get there and the variations on that would be helpful? all the things we talked about it. >> sort of wrapping up back to what our growth plan identified as the potential. and we need to take it the next step for how we're going to perform the implementation. >> thank you. >> thank you. >> anything else? >> thank you. >> thank you. any public comments on this first item. next item please. >> clerk: next item is sewer system improvement program. karen cubic. >> good afternoon, president kwan, commissioners i'm karen cubic the direct offer wastewater capitol.

last meeting, i gave you the wastewater quarterly update. today we just have the brief sources and improvement program update. if you can bring the slides up please, thank you. this is a snapshot of our phase 1 projects. our 70 projects that are on going representing the $2.9 billion we've expended $508 million and our 22% complete. you will start to notice the construction phase which is shown in green will be expanding this year, 2018, because our largest projects will all be in construction. head works and bio solids and bio solids is the largest part of this pie. back to buy owe solids again, we hit a number of milestones. we received our construction management c.n. proposals for

bio solids on march 7th. on march 8th the planning commission certified the project environmental review. we were back here at the last meeting and surounded by supportive folks from bay view hunters point and we gotta approval for that item at the commission and with the leadership of john scarpula and juliet ellis we were at the board for the finance committee. we got through that and next week we'll get that if the through. so we're chugging along and with construction starting shortly on schedule. head works is in construction currently and it's a couple different phases of construction shown here by scope and this is what the future and right now we're doing sight work and this

is sitting inside and rerouting everything that the patient will function during construction. it's delicate work. here is where we look from a pie if we're looking down at our quarterly lense that ended december of 2017 and you can see we're getting everything from phase 1 out the door. so that is pretty exciting. construction projects going on. southeast clarifier project. this is going to finish up this summer. that was mechanisms in the center and electrical work that was done. the disinfection improvements buildings 521 and 522 new electrical building and improvements to color enation. that will be done next year. and our north point out fall

system cleaning out, reparing, corrosion work, specialty work, under water, we will be bringing that close out to you in may. green infrastructure, we're 50% done with our green infrastructure projects. the wiggle hall away mission valencia are complete. this summer baker beach, which is out in the richmond, will be advertising in may and starting construction in september and then we're going to look to finish the rest of sunset and that will be -- can't wait to get that done. that's done the end of 2019 beginning of 2020. a few reports that are online that were recently put up are annual reports and our third edition of our jobs and contract report gives a breakdown of what districts the ssip jobs and

contracts have gone out to and just some success stories of people that have come into the pipeline, gotten jobs and now have jobs with contractors. that's exciting in an effort to not waste paper they're all online so you can pull them up from where you are. here is just some reporting on how we're doing on the jobs. more and more projects are coming on. we're working constantly with the folks. they help us a lot with teaming, getting subs together and doing outreach at the contracts assistant center. san francisco residents have worked 32% of all the hours and that is still exceeding the requirement which is 30% that equates to san francisco's residents earning a combined $8.6 million in wages and benefits. with regards to the a

apprenticeships, we're working with contractsers, trades, union, community service providors to train for ssip projects and 66% of these hours have been worked by san francisco residents as compared to the 50% requirement. that equates to working 37,000 hours and earning $1.9 million in wages and benefits. then just a great job that our communication folks are doing. the list of things coming up is two sides of one page. in the next couple months, we have so much activity that is occurring in terms of outreach. because we want to make sure the public knows what projects are coming. we're shifting from program to projects. we have opened the southeast construction information hub at the southeast community facility. we have two communication staff that will be there and they will be facilitating getting questions answered, if there's concerns or upcoming things the

communication folks will be right there and they'll also be conducting meetings in the neighborhood so all the neighbors are current. these are stats and this is just looking so good. our list of friends used to be so short and now we have so many people that are really following us and know about us. we're very proud of the great work our communications folks have done. with that, i'll conclude my report. >> thank you, that was really terrific. a lot of great work. we have any public comments or commissioners? >> i have one comment. i couldn't be more pleased about the resolution being passed last meeting or the digester facility. and that you are moving forward so nicely through all the various agencies that we have to touch on. and i want to commend staff and of course my fellow commissioners for pushing forward on this. we finally made it.

>> we were sad you weren't here last time. >> i was too. >> thank you. >> anything else. any public comment? next item. >> clerk: so i have an item that we haven't listed. as you know, we had several incidentses where actually we made the paper. but the one that was most where we had the concern was the moccasin reservoir and dam and steve richy is here to give you an update. >> good evening, steve richy assistant general manager for water. if i can have the slides, please. i'm going to talk about the events around moccasin reservoir and dam last thursday, march 22nd. we'll actually be living with for quite a while. this is a map of the area just to remind everybody that the

water supply flows into priest reservoir from mountain tunnel and it flows down to moccasin power house and moccasin reservoir. from moccasin reservoir the water is taken through to come to the bay area. immediately downstream of moccasin reservoir and moccasin dam is the fish hatchery operated by the department of fish and wild life. so basically on march 22nd we had conventually taken it down for maintenance purposes which was a fortuitous thing to do because that allowed us to not have to deal with the fact we were trying to deliver water supply during thos these events. nearly five inches of rain fell on march 22nd at measured with 3.1 inches in the four-hour period between 11:00 a.m. and 3:00 p.m. i haven't asked

stephanie harrison about three inches in four hours but it would match up with what eve seen in other places. moccasin did overflow. it's normally by passed around. we used our spill ways and foothill tunnel to dump water out of the reservoir. the dam was inspected and seep age was noted. we did activate our emergency action plan. an evacuation order was given for residentses downstream and some of the moccasin cottages because it flooded up into moccasin itself. we did make notification to the division of safety of dams. the s.o.d. arrived at the scene in the late average of march 22nd, to insect the dam along with our staff. the reservoir was as well. there will be photos of different things and first this is a picture of moccasin reservoir that was just taken today. it's dry now because we have emptied it out but this shows

the arrangements there. if you can see, that is the pipeline that carries drinking water to san francisco and it has stacks on it that you are pressure release stacks. two of those were knocked off in the event and so they've been replaced already. but that pipe that actually goes through a siphon under the pipe that cuts across the middle there of the picture and that's the pipe that normally takes the flow of moccasin creek. it normally flows in that pipe and carried out through the other side. that was not the case here. this is a photo of the moccasin dam spill way from the air. that wathat was taken by the sh. i can see the chocolate milk color water, it's pristine. but after the water had flowed in from moccasin creek, it was

really, really chocolaty. you see it coming down the spillway over to the best is where the fish hatchery. this is a photo of the emergency spillway. this is only truly for emergencies. this spillway is used. you can see it was totally flowing heavily through the emergency spillway as well. there was a lot of water coming down. we haven't estimated the actual volume but we'll have that in a few days. this is a photo downstream of the moccasin stream fish hatchery. there's a layer of mud over the fish hatchery area so about 90% of the fish were washed out or killed. the remaining 10% actually were evacuated out by truck and put into don pedro reservoir, where they meet the happy fishermen down there. the fish hatchery is definitely out of commission for a while. this is the moccasin creek

watershed. and you will note that that steep hillside had the giant red gash down the middle of it. that gash is the color of the soil threw. so basically the rain was intense enough to create a number of locations like this where it simply washed down this hillside taking all the plants and debris and everything and washing it down to the moccasin creek. this was taken by an aerial surveillance that the irrigation district went on and they allowed our staff to survey the damage and the watershed. but there are a number of situations like this in the watershed that have that appearance. this is a photo of the moccasin creek diversion dam. the diversion dam is across there in the center of it where you see some rs, that is where the water normally goes into the pipe that goes under the reservoir. but you can see that the -- this is called bank flow condition where it literally, then channel

of the creek is full from bank to bank with a huge amount of debris, it's a hand rail there that was catching all that. there's normally nothing ever there. we had a similar overflow last year over moccasin creek that had no debris and i'll show the difference between the two at the end of this presentation. this is highway 49 right adjacent to the dam where you can see the water spilling over. it eroded half of highway 49 there. this was not the only place of highway 49 that was effected. there were other spots where highway 69 was effected so it's currently closed to allow for reconstruction of large parts of the highway. this slide and it's too bad about the type because it's right in the way of seeing what actually was caused us to take an action here. this is seepage coming through.

it's flowing and it's muddy water flowing out of the face of the dam. that is a fin sign there is a rl problem with the dam and potential failure is upon us. that was the point which we said this is truly an emergency and envoke the evacuation orders for the folks who are downstream to make sure that we were able to take care of it. fortunately we lowered the level of the water in the reservoir and the dam survived. this say photo of the emergency spillway. there is a grey mass in the lower right corner of the picture. that's what is called the set of gabians. they're large, wire mesh baskets that contain rocks. they're often used for erosion control. those gabians, a single bag, a ton or so. you can see that that gabian

should have been up against the grass. the grass is pulled with it as it slid off the hillside there. so that displaced five feet it looks like there. the power of water is tremendous and really demonstrated in this situation. >> they had to dump rock so they can get out there with this excavator to start dismantling that log jam on top of the dam. we were able, on saturday, to restore flow into the moccasin creek diversion. those twisted metal gates there normally are just blocking logs and things that go in so they're just beat up royally to demonstrate again the impact of this. this is the slide that actually shows the difference between this event and last year's event. the upper graph there shows the

three-day period of precipitation. the blue-line shows what happened in the event in february of 2017 that over flowed the diversion dam. the red line shows the march 22nd event. you see there right above the 1.5 mark, that's where we had three inches of rain in about four hours. so it was -- basically the entire event last year was three inches of rain. so we had almost five inches total but throw inches and a very short period of time. you can see on the lower graph, again, sort of the reservoir elevation. again, the blue-line, we managed it. we were able to get water out of the reservoir and it didn't come along. in the case of thursday's event, that red spike, the spike is up so the water got within 1.2 feet in top of the dam. over topping the dam is the last thing you want to have. so we were close to that.

fortunately the rain started to abate and we were able to evacuate water from the dam to start to bring the water levels down. so now we're into the recovery phase. we have a lot of follow-up actions. on friday, there was a thorough inspection with a team who our producer report for us today on immediate actions recommended to go forward. primarily around investigating the status of the dam and the spill ways to make sure that they are still functioning but. cleaning up moccasin facilities and assisting the hatchery with clean up and restoration. we are repairing portable water lines. we provide portable water to them so we have to restore those lines. until they're restored we're trucking water to the residents. we have to inspect the tows and pipelines that may have been damaged and make repairs there. our plan is to restore the water

delivery by april 5th. we had planned on restoring water supply today but there's too much work to do. it's going to be next week before we can restore the supply. we're able to handle it with local supplies. we have a perform further investigations of the spill ways and it was a huge event and i want to acknowledge all of the p.u.c. staff who have nipped to help us man through this and particularly the hetch tetchy water. they're good at responding to emergencies and this was no exception. margaret and her staff did a great job of responding to this and manage it going forward. so with that, i would be happy to answer any questions. >> our compliments to the team that we know. it's a pretty daunting thing. i have two questions. were there leaks in the dam? what was the magnitude? >> well the seepage there --

first thing, we always like to make all dams leak a little bit. even on cottage country dams leak a little bit. the seepage is extraordinary leakage. that is when you see that there is a real sign of trouble is when you see a big change and water that is running with the muddy color to it, that is when you have great concerns about it and so we need to do some investigations, potentially other things to understand what was going on inside the dam and see if we need to make any physical changes to it. we have possibly will have to. >> how long were the residents evacuated? >> they were evacuated, that was thursday afternoon. i believe we had the residents in the fish hatchery property on sunday. it might have been yesterday. the moccasin residents were allowed to go back to their residents on saturday. there are still a couple of residentses that are downstream.

they're on the other side of highway 120. those folks have been allowed back but they don't have any water supply so that's where we're trucking water to. >> commissioners, anything? >> i have a question. mr. richy, could you comment on the article i'm paraphrasing here. stated there were consultants that inspected the dam within the last five years. they were very quick to suggest the failure was due to our oversight. they contradict each other. i would assume in the past. it's the fault lie if it's too premature to talk about that. >> well, we inspect our dams routinely. the division and safety of dams

are inspected annually. they released the last five years of inspection records, which showed the damn was in good shape. in fact in this case, it was truly an overwhelming event that created the bad situation. the article last saturday's chronicle had quotes from two outside experts who actually have never been to the dam, not even seen it as far as i know. i know for sure one of them was talking hypothetically because he didn't have information. these are the kind of things you would be concerned about and look for. i think the headline writer with the very unfortunate headline that said those outside experts are blaming san francisco p.u.c. for this. they were not doing that but obviously that's something to look at. certainly, the division safety of dam staff that was out with our staff on thursday afternoon concurred that our staff took all the necessary actions to deal with it.

the spill ways work. they didn't clog up with things. it was just a massive amount of water in a very short period of time. so yes, our communication staff has been in communication with the chronicle and certainly they've just modified the headline at least in the online version to could be a problem. i think that's where we all are. we all are going to look at the whole situation and see are there physical problems with the dam. of course it was built in 1925. so it's an old dam. it has performed well for years. are there things that we need to do differently about how we manage it? do we need to modify the space? all those things are on the table in terms of getting at what happened, why and is it safe going forward. those are the critical conditions we need to answer and we're prepared to answer them. >> well, i thought it was unfortunate but as you probably know, the headlines are not written by the author of the

piece so it's the headline guy writes it. >> yep, i've had that experience too many times. >> anything else? >> thank you, very much. >> thank you. >> is there any public comment on this item? item 9, the bay area water supply report will not be heard today because they were unable to attend the meeting. item 10 is a 2018 water and wastewater rate study update. with mr. sandler. commissioners, erik sandler c.f.o. of the p.u.c. and i'm here to present, with some colleagues, a number of items. set the stage on april 10th, you

will have before you recommendations to make adjustments to water rates, sewer rage and water and sewer capacity charges. and in may, there will be a number of items before you related to miscellaneous fees and charges as well as rules and regulations regarding sewer service charge for parcels. what i wanted to do in this particular presentation, is to highlight for you some of the work that we've been doing and some of the items that you will be seeing in the next few meetings. so in terms of major topics, i'll talk about the rate study you've been hearing about over the past 18 months. provide background with some overview of the rate-setting process. some of the elements of the scope of the study and some of the highlights of the proposed changes to rates and charges. and then the second half of the presentation, it's going to be provided by simone hudson and

john scarpula and really it's addressing all of the work we've been doing over the last 18 months with respect to affordability and the impacts of our rates and charges on low-income customers. and i understand four years ago when you were considering rates and charges, the commission emphasized that it really wanted to understand a little bit more than this over all percentage of medicinmedian household affordabilities. when we went through the budget process two years ago, i remember commissioner vietor, you encouraged us to do a lot of work. i know this is a long presentation but the work that the staff has done to address this question, i think is tremendous. and a lot of resources were dedicated to get a better picture of the situation.

so, i'm going to start with rates and charges. so just providing a little bit of background with respect to this study, the city charter requires that every five years we engage a third-party expert to conduct a cost of service study. and what is important is that really the state constitution prop 218, requires that rates and charges be set based on cost of service. the requirement of the city charter and the rate study is the main document that insures that we can set rates based on cost of service and we comply with the legal requirements of the state constitution and the city charter. 218 also contains not just the rates setting and also some procedural requirements that

guide how notified rates. provide them an opportunity for public comment as well as protest. the package that we're talking about is a 4-year rate package starting july 1st, 2018. so this has been an effort that's been conducted over the past 18 months. and it has engage a lot of the organizations, not just the rates and charges team, but a lot of the organization as well as outside stakeholders such as the rate fairness board, citizens advisory committee and we have here a variety of the work streams we've engage in so we stained the consultant in the april-june 2016 timeframe. we spent the last year we spent some time with you reviewing a number of critical financial policies that performed the policy. that formed the policy context

of this study. and we've conducted some of the main efforts in the rate study itself as well as community outreach and again the rates and charges will be before you aprie july 1st, 2018. so i spend a little time talking about the statutory framework in which we set rates and charges. now i'm going to spend just a moment talking about the policy framework. over the last year or so, we had a number of policies before you for revision and consolidation, enhancement, and actually a few new policies. the rate pay era insurance policy is the over arching policy that guides rates and charges. sufficient to meet environments of the agency to appropriately budget for repair and reconstruction and replacement of assets and setting rates and charges to achieve certain

policy goals to properly fund the organization to ensure customer equity, environmental sustainability, predictability of rates and charges, simplicitying anand of course affordability. there are a number of financial policies. i listed them here. fund balance reserve and capital financialing policy. they influence the revenue requirement. those policies we talked about when we were reviewing the budget in january and february as well as the 10-year capital and financial plans. they impact the rate and charge process through the revenue requirements. these are the real -- the three elements of the scope of work with respect to the rate study. the first is the revenue requirement scope of work and the revenue -- [ please stand by ]

>> -- there needs to be an adjustment in fact revenue requirement of about 6 or 7% a

year for water and wastewater enterprises. and we also understood that of the increased revenue generated from these adjustments, 80% it was targeted for investment or capital, and that would either be directly funding cash capital investments or bond issues to make those capital investments. the next work stream in the rate study relates to the cost of service. this is kind of the boring financial and engineering exercise, but it's absolutely critical to ensuring that our rates are compliant with state law. we made a number of updates under the hood with respect to the rate study that really enhance the quality of the work product, and this is really a collective effort of not just the rates and charges and finance team but also engineering team and the

various folks at water and wastewater enterprise, so i wanted to thank -- this part is really an organizational effort. some of the key things that we addressed, we really looked at the system peaking factors, the peak hour, peak day, seasonal peaks, and really tried to refine this information on a system level and a customer class level, because these -- that's the main way that we allocate cost to achieve our tier structure and -- for our residential customers. we also went through a detailed allocation of operating expenses, we reviewed all of our asset allocations. we made a major improvement in terms of how we credit revenues from our wholesale customers to different functional categories and cost categories, speak we did a completely new and costal indication of bureau expenses to the enterprise. so before i talk about any

changes to rate design, i thought i'd review for you what our current and water rate structure for you here is. we have fixed charges and variable charges. fixed charges are based on either meter size or account. and then, you have residential -- or you have variable charges that are based on meter water used or estimated discharge to the sewer system. so in the water rate structure, we have a fixed charge for -- that's based on meter size. for residential water customers, we have variable charges that are two tiers. the first tier, for a single-family residential customers is four units, and the first tier for multi-family residential customers is three units, and they have different

prices. for our nonresidential customers, the usage characteristics vary so much that we don't have tiers, and we currently have some different volumetric rates for specific categories of customers, and one thing we looked at was simplifying the volumetric rates for nonresidential customers. on the water side, you've been hearing from me for the past three years, we do not have a waustwater charge for customers. all of it is build on a volume2rdvolum volumetric tier. there are three chemical characteristics, and theose ar the constituents that are used to characterize the strength as sewage, and there's a designed strength for residential customers and then for noid