>> i'd like to call this meeting of the san francisco public utilities commission to order. it's tuesday, may 8, and i just wanted to start with a couple of announcements. first, for those of you that did not hear, our former colleague and counselor noreen ambrose was nominated to the ethics commission. on behalf of all of us, obviously, congratulations to her. our general manager now in the

house. pretty good stalling, right? and then to our colleagues at sfgtv for being recognized for the sixth year in a row, for being nominated for a california emmy, working behind the scenes for making us look really, really good, right, harlan. i think they'll find out june 2nd to see if they won any of those awards. and finally, thank you, donna for sending me this beautiful invitation, and yuljulia ellisd her team for this award. this is for the 2017 golden pride awards. that concludes my announcements. madam secretary, will you

please read the roll. [roll call] >> clerk: we have a quorum. >> thank you. next item, approval of the meeting minutes of april 24, 2018. colleagues? >> i'd like to move approval of the minutes. >> second that. >> it's been moved and seconded. is there any public comment on the meeting minutes from april 24, 2018? hearing none, it's closed. i'll call for a vote. all those in favor, signify by saying aye. all opposed? the ayes have it. next item, [agenda item read] >> thank you. i have one speaker card. francisco de-costa, please approach the front. good afternoon. >> good afternoon, commissioners. so you may have noticed that i do not come to this meeting,

and i haven't come for a long time, and that's because i'm very busy at ground zero. but commissioners, you need to pay attention to people who come here and give public comment. because if you do not pay attention, then, you go into this land where more hallucination takes place, and you don't want to go there. for your information, in the late 60's and the early 70's the original water board participated in some mitigation measures from which the san

francisco public utilities commission derives a lot of income. the sewage fees that we pay. now, in the year 2018, when the sewer system improvement project is being addressed, we see a lot of confusion. and you commissioners, have to pay attention to the confusion. why is it that tony flores had to retire? why is it that karen kubic is going to retire, and i can go deeper. commissioners, you are there because you represent the people, and what we see is lack of representation. what we see on the side are ploy ploys, machinations, and s

shenanigans, and it's going to come to a stop. and it's going to come to a stop like our president. our president is saying oh, i had nothing to do with the russians. well, you did. and it will be said, it will be done, and it will be exposed. so right here in our back yard, we have the same type of ploys, machinations and shenanigans, and there are certain city people involved in it, and let them do it. there are some people that were trained -- and that's my public comments. thank you very much. i have to go to the board. >> next speaker, renee anderson, please come to the front.

hello. good afternoon. >> hello. good afternoon. greetings to the commission, general manager, and secretary. my name is renee anderson, a former employee who now lives in southern california. i wouam shifting my career to shoreline, and any assistance you can provide would be great. >> thank you. are there any other public comment? seeing none, public comment is now closed. [agenda item read] >> clerk: there were a couple of changes to the update that was in the packet. on page two, number five, and page two, number two at the bottom were both revised. copies were mailed to the commission yesterday, and there are updated copies on the table

for the public. >> thank you, donna. colleagues, is there any discussion on the item? is there any public comment on communications, including the amended communication? hearing none, public comment is now closed. madam secretary, next item, please. >> clerk: item six is other commission business. >> colleagues, is there any other commission business? hearing none, the item is now closed. madam secretary, next item, please. >> clerk: item seven is report of the general manager. >> good afternoon, commissioners. i want to -- actually, our first item is cleanpowersf. >> thank you. today's clean power update will quickly cover our enrollment and service to customers and do a little work ahead, but we're going to spend a little more

time taking a deeper dive into our power supply portfolio and projected enrollment. on enrollment, it's the same story. 98.8% of the customers that we provide service to are opting out, and we're proud of the fact that our opt up to super green rate exceeds that at 4.2% of our customers. our power source disclosure report for 2017 is coming due. this report is required to be filed with the california energy commission after your review and approval. you'll find the cleanpowersf power disclosure report as well as the hetch hetchy report are action items 8 a and 8 b on our agenda. i was really pleased that we

were able to obtain a 47% california green product with our service, and it's 100% carbon free, so really happy to be able to celebrate that with you. looking ahead this week, we will begin mailing our enrollment notices for the july 2018 enrollment. that enrollment will increase that customer count from the 81,000 i just report today about 105,000. we're adding mostly commercial accounts this round. also very pleased to report that gm kelly has signed the master agreements and confirmations that build the power supply portfolio to serve that growing customer base. to walk you through the portfolio and the projected pro forma, i'll ask mike himes to come up, and as he does, i'll ask to publicly thank and recognize him and the core team

for getting us to this point. thank you to the city attorney's office, and thank you to the power staff, the core staff that worked on these supply contracts: randall smith, erin mulberg, and mike himes. mike. thank you. >> thank you, barbara. >> thank you, barbara, and good afternoon, commissioners. mike himes, director of cleanpowersf. it is a great pleasure to be here with you this afternoon to share some of the work we've been doing over the past few months to build a power portfolio to complete enrollment in cleanpowersf citywide. i've got just a few slides -- four slides, exactly, that i will run through quickly with you. this first one is a chart that shows how or portfolio looked before we started our recent contracting effort a few months

ago. of course this really kicked off with rfp's that we issued in the summer and fall of 2017, but we began signing contracts after obtaining authority from the board and from this body in the early -- or the winter of 17-18. so this chart shows cleanpowersf's annual projected demand and contracted supply over the next 12 years. the back line on this chart represents our projected annual energy demand given our citywide enrollment plan today. this line's plotted against the left side y objection i say in megawatt hours of energy. you can see we're projecting about 1.2 million megawatt hours in 2018, jumping up to about 3 million in 2019 and 3.7 million in 2020. the bars on this chart at the bottom represent contracted energy supply in megawatt

hours, which is also plotted against that left side axis. the orange dotted line represents the percentage of our projected demand that's now under contract, and that we've identified the percent for each year, and that's against the right side, y axis. you can see from this chart when we started our contracting effort, we were 37% contracted for our plan demand, this year, 2018, and that's counting for our up coming july enrollment. in short, there was a lot of work that we had to do a few months back. and this is what our portfolio looks like now after our recent power contracting effort. the blue bar segments represent the additional energy we've contracted for since february , given the authority delegated to the general manager. you may recognize the laddered shape of this portfolio and the contracting effort from

presentations we've given over the past six months or so, and that is one of our risk management strategies and staying with the market as prices changeover time and as technology costs decline. you can see along the dotted orange line here that we're 98% contracted for 2018, 90% for 2019, 71% for 2020, and so on, until the portfolio plateaus at 20% contracted forward through 2030. those longer term contracts in the portfolio were just recently executed by the general manager and include two main contracts, a 22-year power purchase agreement with the developer s-power to take energy from a 2(a) constructed 100 megawatt power plant in lancaster, california, and

another to take power from a wind power project in tehachapi, california. these represent the first two long-term contracts that we've entered into, and it's just the beginning, but very strong start for the portfolio, and these -- both of these projects will deliver new jobs to the state of california and clean energy, and we are going to be working on more to come on-line in the next several years. in addition to those two contracts, the puc entered into a 4.5 year agreement with cal pine to purchase energy from the facilities geothermal facility in alpine, california. that actually started delivering energy to the cleanpowersf program earlier this month. the energy portfolio work for 2018 is largely done, but a lot of additional work still needs to be done to round out our

portfolio for 2019 and 20 and we'll be conducting additional solicitations and keeping the commission informed of all of our actions as we do that. this slide, number four, summarizes our projected 2018 power content, so as gm hale indicated in her comments, before you is your 2017 power source disclosure report which under lies the power content label for the cleanpowersf. this is what we think the program will look like this year, given the contracting work we've done. of course this will get settled this time next year when we have all the actual deliveries for the program over the next seven, eight months yet to come, but given the contracting work, these bar charts

summarize what we're expecting. on the left side are the major resource categories, so at the bottom in green is renewable energy? the blue segment represents ghg free hydro purchases, and the top gray segment represents conventional purchases which, for the most part, our system grid energy that we're planning. if you move to the right bar, what you can see in the multiple segments that are color coded are the different contracts that we've entered into to makeup this portfolio. and that's about 13 different contracts that we've entered into, and that's also part of our risk management strategy is to diversify our supplier base to mitigate any risk associated with individual supplier failure. i'm going to pause here for a minute, did you have any

questions about this? >> i could. so you mentioned tehachapi. is there any data that you're able to provide based on those contracts or any requirements that we're placing related to the jobs piece, 'cause you mentioned jobs piece? >> yeah. so we are pulling some estimates we'll bring back to the commission on specific job creation stats. we're working with the developers on that. the -- all of the contracts we're entering into require prevailing wage. that's a contractual term. the s-power solar project is also committing to enter into project labor agreements to construct those facilities. so that's the sort of general outline of the labor arrangement, but we'll be bringing more information on the specifics back to you as we gather the specific job stats. >> thank you. for people who are watching, throughout the course of this whole conversation going way back, we always were talking about jobs, and so now that

we're finally starting to get to those points, i think it's probably in our best interest to make sure that we check those boxes because pla's and prevailing wage, that's good stuff, right? >> yeah, absolutely. and we know that's an important part of the message that we deliver, and we're in the process of gathering that, so we'll give you a briefing on that, yeah. >> okay. >> can you just put that slide back up? i just want to make sure i understand. so basically, what this is saying is 81% of the additional enrollment that we're going to be doing this year will be ghg free, correct? >> that's right. so the way that we represent the energy purchases in the portfolio is all of our sales, not just the incremental customers that we're enrolling. so we look at it over the 12 months, all of the energy that we purchase and supply to our customers. so it's not just the enrolled

customers, but it's the customers we're serving today, so they're all part of the same -- they're all getting served by the same body of resources. one point of clarification i do want to make so you can see it, it identifies over 48% renewable. we have included the super green component in this chart, so this is all of the energy that the program's purchasing for all of its products. we're forecasting that our super green sales will be about 3% of total in 2018? we've actually worked our way up to about 6% -- 6-7% with the current enrollment, and we expect we'll do that, but it'll take a little bit of time after we enroll the customers to facilitate those upgrades. >> so another way of looking at it, if you look at the stacked bars, it represents all the energy that we sell. and so when you look at the combination of the green and

blue, that is, you know, ghg free power. >> that's right. >> right? so that represents, you know, 80, 82 -- >> 81%. >> no, 82%, right? >> right. >> maybe a little bit of rounding there. >> yeah. >> i think that's what's going on. >> yeah. and then, however, when you look at super green, super green customers, which is 7%, is of -- is pretty much made of that 48%, 7% of the super green is 100% in that -- >> yeah. so all of the energy that we sell to super green customers is 100% renewable. >> so if you take that 7% away, you're actually at 37%, versus 34% is for the green customers with the 19, right? >> that's right. >> yeah. >> so how many -- >> i'll make it more complicated. >> i know.

it's just -- it's an odd -- i can't quite -- it seems that there's a better way to present this. rather than megawatt hours, can you translate this into customers? >> so this is really an energy measurement? what it -- what this is saying is 48% of the megawatt hours we bought for all of our customers comes from renewables. >> right. >> so this percentage applies to every single customer we serve. >> oh, i see. >> right? >> now, one thing we did hear that i will admit may have been confusing is we took all of the energy we serve, all of the customers we serve, including both the green customers and the super green customers, so for the remaining of the year, agm hale was saying we'll have about 3% of our total sales

will be super green, so the base product super green will be 45% renewable energy, but the total portfolio will deliver 81% ghg free. >> okay. that's better. thank you. >> okay. >> i have a question. i wanted to ask you how we are determining how far out to go in the contracting. >> yeah, that's a great question. we have been reviewing best -- best utility practice in this area? we've been working closely with our other cca colleagues, working with consultants, utility consultants that are risk management experts, and the laddering that i showed before, like, like this is a shape that is -- is recommended within the utility -- the electric sector utility industry in forward contracting? and part of the idea here is we

don't want to lock in too much of our supply at a given point in time given the fact that the market will move around, the price of supply will move around, and just sort of an anecdotal point, in 2010, sola times what it is now. so we don't want to overcommit to a particular resource at a particular point in time, which is why we've structured it this way. in the very near term, we want to be procured as close to 100% as possible so we're not exposed to changing market prices every day? but we want to leave a little bit open each year to procure so that we're not out of the market, so that gives us some room to procure every year to fill the whole portfolio.

>> right. is there any projection of how much of these different renewables are going to drop in price? >> yeah. so one thing that our team is working on now is an integrated resource plan that we'll be bringing to the commission within the next two months? that is a plan that actually takes a 30-year forward look at our portfolio and supply resources -- supply and demand resources. so that plan also includes projections of technology costs. this is a plan that we're going to update every two years, and part of that, again, is because the market is evolving all the time, the technologies are evolves, so the answer is lon do account for changes in the prices and the costs of the technologies that we may be wanted to procure. >> thanks. just brought back

these contracts moving forward, and it was -- it turned out to be a disaster. to i'm just- really have a han on it. >> yeah. those contracts in the early 2000's -- trying to learn from previous mistakes. >> right. >> i do have one more slide, and that's the five-year financial projection. so this is an updated our pro forma, and this reflects the cleanpowersf's budget, and on the whole it reflects what we've been projecting about the project for the last few months. we're projecting a 10% operating margin for the program in the next two-year budget cycle each year, and that's fla b that's 16.3 milli

20.7 million in the next two years of the budget cycle. this is net operating revenue that can be used to fund our unexpected unexpectedly. and i did want to say this does include a 5% contingency in our power supply line. so we're trying to make sure that the program is sufficient and has the resources it needs to pay for power costs as they changeover this next two-year period. one final comment about this is at the very bottom, you can see i target is being mend fiscal yearth. how are you justifying the jump of the super green in one year

going from 1.4 to 1.8? >> yeah. we're anticipating that there'll be a fairly significant jump associated with the new enrollment that we make. we actually did -- you may recall that we had set a stretch goal for the program of 5% of accounts enrolled in super -- i think we have been at 4.2%. we expect that when we we enro the super green program? so we think that number is around 3%? it's still conservative, given -- and the big jump is -- it's due to the enrolled -- the additional enrolled customers, so it's a percentage of the additional enrolled customers. >> i see. thank you. >> commissioners? >> thank you. >> yeah, thank you. >> thanks very much.

thank you for shouting out your team members by name. great work being done by the whole group. is there any public comment on this item? hearing none, public comment is now closed. madam clerk, next item, please -- oh, i'm sorry. still on my report. the next item is a water impro quarterly report, by dan we ad >> good afternoon, commissioners. dan wade, director of water capital programs and improvements. >> i'm here to present the water system quarty 31st, 2018. so the highlights for this reporting period are that we were awarded a contract for -- [inaudible] >> -- the purpose of this

project is toheion watershed until we are able to do a longer term solution, we have an ozone project planned as so we're glad that we're moving forward on this expeditiously. the emergency repair, the flywheel uninterruptible power supply at tesla is now complete and back in service. and we have a number of local water projects under construction. we have a number of others that are nearing construction, and so we're very busy in that area, as well. and just to highlight a couple of those, this is the water project you may all have heard of, vanness improvements. i just want to highlight that although we have 14 local projects currently in construction, our forecast dele of these large joint streetscape projects that have multiple components associated with them, not the least of which is vanness.

i'm glad to say that we've made some significant progress recently on long ways to go, and we're committed to working with >> how about the masonic? >> i'm sorry. >> how about the masonic avenue project, how iatgoing ? >> yeah. i don't have the details on that one today, but i'd be happy to get back to you on that. on the -- on -- the early street project is another street project. mta's not involved in this public, but public works is involved, and the water work on this is about 40% complete. i put this slide up just to show, you know, the major differences that we have between some of these local water projects, whereas, you know, vanness being a major corridor, we get into a lot of complicates with lane changes, lots of other utilities, whereas some of these other projects, although they're not necessarily easy, they do have less obstacles to get pipe in the ground, and so we're moving

forward on that one. moving onto sunol, the long-term improvement projects, the corporate yard is moving forward quite nicely. again, this project is to replace out dates facilities at the sunol operations yard. many of the buildings out there are now enclosed, and site utility work is underway. roofing is going in, and the anticipated final completion date of this project for the current construction contract is december of 2018. back to san francisco, the san francisco groundwater supply project has made very good progress. this includes water to produce and deliver an average of 44

million gal-lons perday, and recently, well, last fall, actually, we issued a notice to proceed for phase two, which is contract c, and the pipeline construction's been completed, and we've also started the construction of the north lake pump station. this is a photo of the west sunset well station, and so we've been able to go through, start-up and testing on some of the wells, and we're moving forward quite nicely. the automated water meter program, i haven't talked about in a while. this is to install meters with low frequency radio signals to collect water consumption data and transmit them four times a day from residential and commercial customers to our billing system. the phase three portion of this work is about 61% complete.

this includes about 7,000 water meter units which were either returned by the previous contractor for handling by our city distribution staff or partially installed due to the presence of obstacles that the contractor encountered, and so our cdd operations folks are continuing to install these. and i'd like to end with the southern skyline rich trail extension project. this is a trail extension that will add about six miles to the existing ten miles of trail, resulting in about a 16.5 mile trail access across our watershed on the peninsula. it's a -- the design is 95% complete. we've been able to get the encroachment permit from cal trans, and we do have a public hearing on the environmental impact report scheduled now for december. with that, i'd be happy to take any questions on the water c.i.p. >> commissioners? >> thank you for the report. >> thank you very much.

>> all right. >> is there any public comment on this item? seeing none, public comment is now closed. general manager kelly? >> okay. the next item, dan, you can talk about the wsip now. >> so again, dan wade. i'm pleased to present the quarterly report for the water system improvement program, and this first slide shows a snapshot of where we are in the project, 86 projects, $4.8 billion, and as you can see, we have an overall completion of about 96%.

again, the largest project in the program is the calaveras dam replacement, and i'm glad to report that we're actually making very strong progress at this point. we had, you know, some slow down during the winter search as we cannot compact the clay for the core of the dam in the rains, but we are now making substantial progress. in fact, the top elevation of the dam as of last month was elevation 694, which is about 150 meet abofeet above the low foundation rock in the dam, and the top elevation will be 776, and we expect to reach that elevation late summer this year. so it's going to be an exciting year for calaveras, and we're making very good progress. >> dan, is that where the upper

spillway is -- chute? is that the -- would that be -- is that the top? >> yes. so the top of the -- if i go back to that slide. so where it says new dam access in kind of the lower center of the photo, and you look at the upper spillway chute, that's exactly correct. the top of the dam will be up to the top of that portion of the spillway, and if you can see in the photo, there's a bridge that will actually go across the spillway onto the top of the dam. and so in that photo, you're seeing the dam access, which is the dark material. in the middle, that's the core of the dam, and then, you have the upstream shell on the left of that photo, and the downstream shell on the right. >> so where were all the fossils? >> the fossils were in the left

abutment of observation hill in that photo. and thank you for bringing that up. we've had some great media coverage on fossils recently. in fact, we were able to provide the fossils to u.c. berkeley under a memorandum of understanding, and they are -- actually have students working on curating the fossils, and they'll be available to us to borrow back to display over time. this is a photo of a tour that we gave for bos, and this is from observation hill looking down into what used to be a big hole, and now, the hole is being filled up. so we excavated a hole, and we're putting the hole back -- putting the fill back, and you can see the dark material is the core of the dam. to the left, we have the

transition zone and the downstream shell. to the right, we have the upstream shell, which is the hard rock excavated from the quart quarry pit below. and then, just a photo of some of the activities that take place as the dam comes up. in the upper left, we have a bulldozer that's spreading the material ain lifts or thicknesses, layers, essentially before it's compacted. in the upper right, moisture conditioning of that lift of clay. and then, in the lower right, the track walking and continuing spreading of that material put forward for compaction. and then in the lower left, that's the import material in the transition zone between the core material and the dam.

and this is the day shift activities. we have day shift activities and night shift activities, but there's just as much that comes up with these zones of the dam. moving to the fish passage facilities and alameda creek diversion dam, this is a sub project of the calaveras dam replacement project, and this aerial photo shows the original concrete dam in the center of the photo that diverts water off alameda creek to calaveras reservoir. and to the right in the existing dam, you can see the fish ladder that is now essentially constructed. all of the in-stream work is complete. on the left of the dam, you can see the screens that take the water in and provide safe

passage for fish, both upstream and downstream as we divert water and pass water downstream through the ladder. this recent photo in april shows those drum fish screens that are self-cleaning. they actually rotate and there's brushes that clean them. there's a lot of dirt that comes into the rain during rain events, so we're able to raise the screens as those events take place, and we can lower them when it's safe to do so and start diverting water. another major project that will continue through the end of the program is the regional groundwater storage and recovery project. we recently rebaselined this project, along with the overall program, and as i described at that time, we are now moving forward with phase two of the

program, which has been modified to include two to three test wells outside of san bruno to really ascertain whether or not we can build viable well stations, you know, kind of on the edges of the groundwater basin. so we are installing those test wells currently, and we're looking forward to seeing how they produce. i like this photo, kids for the bay. we're able to bring the sunol glenn school fourth and fifth graders for an educational presentation at our watershed. this is one of our biorestoration sites last month, and all of the bhr sites are essentially complete with construction. there's some final activities taking place, but we will

continue the monitoring for some time as we monitor those plantings and mitigation sites. and another fairly substantial part of the program is what we call the whistle close out programs. we continue to work on those in the san joaquin and sunol p. i'd be happy to take any questions. >> thanks. the construction photos are good. i think all the photos are good. i appreciate each one. i hope my colleagues agree. i know the workers like seeing pictures of themselves, right? are there any public comments

on the general manager's report? hearing none, public comment is closed. general manager kelly? >> that concludes my report. >> madam secretary, please read the next item. >> clerk: item eight is the consent calendar. all matters listed here under 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. >> any requests, commissioners? any members of the public wish to remove an item from the consent calendar? commissioners public comment?

seeing none, public comment is closed. seeing none, call the vote. all those in favor, say aye. all opposed? thank you. the motion carries. madam secretary, next item, please. [agenda item read] >> thank you, donna. welcome. long time no see. >> yes. good afternoon, commissioners. my name is carolyn chu, and i'm the project manager for the biosolids digesters facilities project. i'm here before you today to request award of this professional services contract, pro 0068 construction management staff augmentation services to the arcadeis team who will be providing support to our construction manager

staff in support of the biosolids project. i'm also here to request authorization for our general manager to negotiate and execute this agreement with or arca arcad arcadis in an amount not to exceed 42 million and for a period of time not to exceed seven years. so you might request back in march at the same podium, you approved the current project with the ceqa findings, so with this contract today, you will be able to bring on the last members of the project team who will help us construct the project at the southeast plant. so thank you, and at this time i can answer any of your questions. >> thank you. commissioners, questions? >> how do we come up with the figure of $42 million? >> well, basically, we have a puc construction manager resident engineer, and obviously, you know, with the whole construction manager

bureau, this is a staff augmentation. they looked at the job, and they developed -- it's basically a staffing plan and all the different expertise we need, and we looked at what we had for city resources, and what we didn't have and we needed augmented. that's how the rfp was developed and obviously the dollar amount, as well. >> okay. so it's a committee. >> well, yeah. >> what we do is we base it off of resources that we need, and then, there is a percentage that you should be within for construction management, but since we're supplying city, staff, and consultant, this number is a lot less than what you would normally have if you fully would use consultants. because if you think about the biosolids, the digesters, this project is how much total? >> $1.3 billion.

>> yeah, you're spending in seven -- seven years? >> well, this contract is for seven years. >> yeah. so... >> well, the reason i ask is there was just one bidder, so i was just -- >> yeah. so that is something that in going through our program, we have certain conflicts, and so this was pretty much the last team actually some of the team members who could have bided against each other decided to form one team and pursue this rfp. so we only had one bidder, but it's actually a really, you know, team with a lot of great consultants on it. and so that's why we ended up with one bidder, because everyone else is pretty much conflicted out. >> yeah. >> and i think as you -- you know, we recognized it was one team, but we met with them, and it's a very strong team. it is primed by arcadis, but it

has consultants with hdr and c.m. smith, so it does have a deep bench that we can utilize as we move forward with this project. >> i would like to move the item. >> the item's been moved. is there a second? >> second. >> the item's been moved and seconded. is there any public comment? seeing none, public comment is closed. call the question. all those in favor, say aye. all opposed? thank you. the motion carries. madam secretary, next item, please. [agenda item read] >> good afternoon, mr. carlin. >> good afternoon. [inaudible] >> -- we thought it was a good

investment working with the community down there to advance the more affordable housing. >> i'd like to move the item. >> the item's been moved. is there a second? >> second. >> the item's been moved and seconded. is there any public comment? seeing none, public comment is closed. i'll call the question. all those in favor signify by saying aye. all opposed? thank you. the motion carries. madam secretary, next item, please. [agenda item read] >> good afternoon, commissioners. charles pearl, deputy chief financial officer. this item before you today is one of several items that's on your agenda related to rates, and specifically, this item has to do with our wholesale water rates out of our water enterprise. we are recommending no change to our wholesale water rates for fiscal '19, commissioners,

and the rate that it's currently at $4.10 perccf. we are recommending a one cent decrease to customers that take raw water or untreated water from our system, but that's the only change included in this item that's before you. the reason we're able to hold wholesale rates steady for now. this would be the third year that we're able to hold wholesale rates at this same rate is because they're buying more water, so their additional sales are covering the revenues that would cover their additional expenses next year, and that's why we're able to hold the rates the same. with that, i'm happy to take any questions. >> commissioners. >> i move. >> second. >> item has been moved and seconded. public comment? seeing none, public comment is

closed. >> caller: the question. all those in favor, signify by saying aye. all opposed? the motion carries. madam secretary, next item, please. [agenda item read] >> commissioners, again, charles pearl, deputy chief financial officer. this next rates item is associated with our power enterprise and included proposed rates for our municipal generates customers for the next two years, so that would be for fiscal '19 and for fiscal '20. this ties with our budgeting process that you heard earlier this year. we did share this proposal with the rate fairness board who voted to support it when they met back in march, and i do have a couple of slides to share with you on this item. so if i could have the slides. i'll bach through a little bit of background in terms of who our electric customers are.

it can get a little confusing because we do have so many different customer groups and so many different rates, so i'll spend a few minutes about through that. i'll talk a little bit about our municipal generates history, and then -- general rates history, and then i'll talk a little bit more about what's in front of you. first, we have retail customers. those are primarily our customers who are served in the redevelopment areas however we do have some customers along the bay. those customers are pegged at a 10% discount to pg&e rates. you did approve this action back in 2016 to set these rates with an automatic adjustment each year, and on the agenda today in your communications section, you will see that memo to you describe the proposed rate changes for this customer group which is between 1 and 5% in terms of their rate change for next year. so there's no action needed from you at this time.

this is just more as a -- as a little bit of a background. the item before you today is about our general use customers, and that's the central box on this slide. we are talking about customers that primary are what our general customers. our general fund customers would be public service customers, public -- police, fire, city hall, those -- those customers, street lights, traffic signals, and it also includes the school district as well as community college. that is the primary focus of this action before you, and i'll come back to the details in a moment. we also have our enterprise customers. these are customers that, like the airport and actually the water department, the waste water department. these are all the enterprise customers. those rates are tied to pg&e rates, and those rates are

adjusted as pg&e rates change. we also have irrigation customers, modesto and turlock irrigation customers. those rates are based on contracts that we have with those customers. we have wholesale market customers. those prices do change as the supply and demand component changes on the wholesale electric market. then, we have clean power customers, and you approved rate changes in ifiscal 19 for our clean power customers back on april 10. so in terms of our general use customers, these were established back in 1989, and have been increased at various points since then. because some rate increases were not implemented over the years, and due to rising costs, the general use customer rates are currently below cost of service.

you may hear that we provide a discount to general fund customers or general use customers, that's what we're talking about, in that the rates that we're charging are below our cost of service. in recent years we have established an annual half-cent inperkilowatt hour for general customers to bring them to closer to cost of service. so again, we are getting them close to cost of service but it's on a slower growth path. in 2016 we completed the study that will guide rate setting for this next two years, so fiscal '19 and fiscal '20. and also, the rates that are currentlying in place f-- currentl currently in place this year. one of the central recommendations that came out of this study was to simplify the rate structure, but that

unfortunately was not implemented at that time, and here is the current rate structure that we have which can be a little confusing. we have six different current general use rates, and these rates were established over the -- over the past ten, 15 years or so in somewhat arbitrary budgetary decisions based on which department was getting which rate. and so what the rate study recommended was for us to consolidate all of these rates into a single rate, and we did receive an approval from the mayor's office for us to move forward in our budget that's being submitted through the mayor to the board to include this consolidation. i'll show you what that looks like. so this is the proposed rate. we've consolidated that six-rate story for fiscal '19 into a single rate, and for fiscal '19 going forward, so the two rates being proposed are noted here. again, this does include the

half-cent increase that i mentioned earlier. i think that's about a $2 million increase each year, and that represents about a 7% increase each year for these customers. so while they are still below cost of service, they are committing to additional revenues to help us meet or infrastructure and operating budget needs. now, some departments may see a slight decrease, some departments may see a greater increase in order to get them to get everybody to this single rate, so that's just the point that i wanted to -- to clarify here, is that consolidating a six or eight-story into a single story, might see some decreases, might see some increases, so we had to work with the mayor's office to help communicate with the departments themes in terms of understand of how their rates are going to be changing for next year. [please stand by for captioner switch]