management and monitoring plan. to work again with our partners and bosca to move that forward as quickly as possible, while negotiations are going on. we do not have time to wait. lastly, i do believe -- and i did not see this in the current resolution and i'm hoping we can try and move closer to what some specific outcomes and objectives could be and will be for the health of the river. i know that the state statute is a doubling of salmon, i understand what that means a little bit better. if there's only 2,000 salmon does that mean 4,000 salmon? i mean i just don't think -- you know i think that there are some tricky nuances both in state statute and in what we're driving towards as a

satisfactory, viable, healthy ecosystem. i would be interested in relatively short order in trying to get to that before we address this resolution at the next meeting. because i believe that we really need a better understanding to come together and say what does success look like? everybody is on board and we want an adequate number of fish we want a healthy ecosystem and enough water supply to meet our obligations and for future growth and development. if that can be the large goal, that's great. devil's in the details. as far as we can get with a resolution, putting this commission on record, towards the loftier goals, but what do we need to be able to move the ball down the field? so with that, there is a new alternative resolution. it will likely be amended in the coming days before our next

commission meeting. with the approval through the chair, i would like to request that we table the current resolution and that we introducs correct procedurally. the alternative resolution for consideration at the next commission meeting. >> chairwoman: so, vice president vietor, are you making a motion? >> i don't think it's a continuance of the current resolution. i'm going to introduce an amendment of the whole resolution. so i suppose i'm moving to introduce an amended version of the resolution that will be considered at the subsequent meeting. >> i think if we just continue the item and when we notice the item next time, it includes different resolutions that that will take care of it.

>> i would like to move to continue the item. >> i second that. >> to march 26th. >> chairwoman: i'm going to call for further discussion. seeing none. sorry, i'm losing my voice here. all those in favor. >> aye. >> opposed. the motion carries. >> clerk: for clarification, who seconded? >> i'm sorry? >> clerk: did we get a second. >> commissioner moran. >> clerk: thank you. >> chairwoman: ok. >> thank you. first of all, i'd like to thank commissioner. >> just to second the idea this is a work in process and it has

not been reviewed by the city attorney yet. we do need to make sure it happens. mean it's part of the process that is important. it was suggested that we change our business model. i understand the point. in general, the way we do things is just fine. there are times when you get to sensitive policy issues where the commission appropriately takes a stronger role. i would not want anybody to believe the staff brings things to the commission that has never been discussed before that it row reflects to the extent the staff can do what the commission wants them to do. the commission has to say no every once in a while, you didn't get that right. i don't think there's a fundamental flaw in the process. i think that there are times when it's appropriate for us to take a more active role and this is one of those.

i have inform note that the slide presentation was interesting. in that, for the wrestling of the wordings and resolve, that was very clear. it was english and it was very clear and i think to the degree that bosco can teach lawyers how to write that way, it would be a good thing. one thing that i think is also important about the direction that we've been heading in is that it's forward-looking. there's the tenne tenancy to lop resolutions with every bit of history since adam and eve. it's not necessarily useful. and in this case, it's important that we are forward-looking. we have the state board has done what the state board has done. we have done what we have done. our position on the state board's plan is clear and nothing in this resolution

changes that. and i think what we need to focus on is that we are here today and we have issues in front of us in dealing with how we make actions or requirements imposed by the state board more consistent within the needs of our constituents in this community as well as meeting the needs of the fishery. i think that what we have did not doing is appropriately focusing on that forward-looking aspect of it and giving direction to staff and expression to the rest of the world how we want to approach that future. final comment is that there is a tricky issue that we need to figure out how to talk about. between the over all delta goals and the tuolumne goals, it's important that what we control and what we should be held accountable is what happens on the tuolumne. we really don't have control over what the rest of the state

does. what fish and game does about permitting aggressive fishing for in vase i havfor invasive s. ultimately the goal as a state board and the fishery in the delta has to thrive. for things we talk about and we have to be careful to make sure that we commit to things that we can do and we have control over. we can also have some influence over what the rest of the world does, but we can't be held accountable whether they do it or not. it's something we have to figure out how to talk about and that if we're successful in figuring it out it may show up in language in the resolution. thank you to commissioner vietor

for her leadership. we have work to do between now and the next meeting and i look forward to getting that done. >> chairwoman: thank you. any other comments on this topic? mr. kelly -- could you briefly outline how we're going to approach this? >> so, the plan is that we will work with francesca to review her resolution and with the city attorney, we will -- if there's language that we all feel comfortable, we'll put -- you know we'll put it at part of the next one. if there's some issues, say from city attorney, we will bring that back to the commissioner

and let her know what the concerns are. >> chairwoman: very good. is everybody comfortable with that? ok. all right. moving on. next item, please. >> clerk: item 11, approve amendment 3 to agreement number cs246 and authorize a general manager to execute the amendment increasing the agreement by 4 million and with a time ex pension of one year, five months and 13 days. -- extension. >> acting for assist amount general manager richy. i'm here to answer questions if you have any on the item. >> thank you. i do have one question. is there anticipated to be the last amendment on this agreement? >> it is. there's an r.s.p. being prepared

for a new contract on this. we also have positions where we're having trouble recruiting. it's a two-pronged approach of developing a new r.f.p. and also trying to improve our recruitment to get in-house staff with the expertise. >> great. thank you. >> chairwoman: my public comment on this item? >> i'd like to move the item. >> i'll second it. >> further discussion? >> no. >> all those in favor. >> aye. >> opposed. motion carries. next item, please. >> clerk: in the 12 award job order contract number 50r2 for a contract amount not to exceed $5 million and a contract duration of two years. >> i'll move approval. >> chairwoman: second. >> any public comment on this item 12? all those in favor. aye.

>> opposed. motion carries. next item, please. >> clerk: staff as asked i read items 13 and 14 together in one presentation on both items. item 13 discussion and possible action to adopt the san francisco puc10 year capital plan update. and item 14 discussion and possible action to increase the water enterprise capital budget by $26,000,000.71000. increase the water and power capital budget by 28,922,599 and authorizes a general manager to seek mayor and board of supervisor approval for a supplemental appropriations for the water enterprise and the amount of 26,071,000 and for water and power enterprise in the amount of 27,922,599 as well as associated bond authorization amendments. >> good afternoon, commissioners. eric sandler, c.f.o. the two items before you include

the annual updates to our 10-year capital plan required by the city charter as well as amendments to the fiscal year '20 capital budget for next year. it starts in july. you will remember you original leah proved the two-year capital budget in february of last year. that is for fiscal year '19 and '20. so, you remember that we have a by annual budget process and we spend a lot of time through multiple hearings every two years. right now we're in the mid-cycle period talking to you about the 10-year capital plan as well as any adjustments to your capital budget or the fiscal year '20 capital budget. so essentially, what we do is we update the plans for any major change conditions. this isn't a wholesale revisiting of the capital plan. the next complete comprehensive

review will be in fall of 2019 for the next year budget. so the items before you, again, are to adopt the 10-year capital plan, approve the amendments to the fiscal year '20 capital budget and also the financing ordinances associated with the capital budget changes. so the 10-year capital plan is required by the charter, the commission is required it be updated every year. it provides an assessment of our long-term capital needs and the investments required to meet surface levels. you last updated it in february of last year. these updates -- this is a repeat of what i just said. ok. [laughter] here we have the summary of the 10-year capital plan. what you can notice here, it's segmented by enterprise, water

waste, water and hetchy water and power. awss is segmented out here because when this gets rolled into the cities' 10 year plan a.w.s. is not included as part of the p.u.c.'s ca capital plant generally the city's safety budget. what you can see is that 10-year capital plan has gone down. it went from $8.6 billion to $8.1 billion. that's a decrease of almost half a billion dollars or 5.5%. and largely, that's due to this 10-year update -- we're changing the 10-year horizon so we're getting read of fiscal year '19 and adding fiscal year '20. the early years had large appropriations relative to what the tenth year of this newcap tanewcapital plan. we're moving down the hill of the large capital investment

programs that we have today. when you look at a pie chart of that $8.1 billion you can see as expected, it's largely related to the wastewater program and the sewer system improvement program, which is almost two-thirds of the total amount. the rest is split pretty evenly between hetchy water and power. in terms of the 10-year capital plan changes, let me back up for a second. the change conditions that or the changed events that were really integrated into this plan and the two-year budget are the passage of prop a in june of last year, which allows us to fund electric infrastructure for the distribution system using bonds rather than cash. the other change is the renegotiation of elements of the water supply agreement, the wholesale customers including the cost sharing of certain

infrastructure and in this case, the cost responsibility for mountain tunnel is adjusted to be a water-only asset rather than a joint project. >> can i stop you. i just have -- the prop a, was that for power but also for water? wasn't there a late addition? >> it applied to infrastructure. it had to do with our capital financing. in particular, it added the authority to issue bonds for all types of power infrastructure, not just renewable energy or repair and replace. >> i'm getting at this and it's connected to our previous item around water supply diversification. we talked about the need to -- if there's a state mandate to make sure we're diversified and i'm wondering if the financing mechanism could now be using prop a for bonding. >> we already had the authority

to do issue bonds for all sorts of water supplies and water transmission and treatment projects. so, the changes, those were the basic changes that we incorporated that made their way through this 10-year plan and i'll just highlight them quickly. on the water side, water supply diversification projects, we had a 19 million-dollar to the 10-year plan. that split about 13 and a half of it is regional and 5.5 are local. i think you've heard about these before. also, we accelerated spending on the daily city recycle water projects. we moved four and a half million dollars from the 2022 period to the fiscal year '20 period which impacts the fiscal year 20 supplemental appropriation and then also, with respect to the awss system, there was a

discussion at the city-wide level of the emergency earthquake safety and emergency recovery bonds, ether bonds, ask it increased so we're looking at $125 million versus $90 million in the prior plan for the swss. the wastewater plan there were no changes. in terms of hetchy water and power, there was a increase in the bay quarter transmission and distribution projects over the 10 years of $23 million. which allows us to build the sub station at quinn street and there was a change in the classifications of the mountain tunnel resigning project and about $103.4 million was reclassified from a joint responsibility and water responsibility. now i'm just going to go -- that was over all 10-year plan picture.

i'm going to quickly move through a few slides that talk about water waste, water and hetchy water and power. and present it in terms of an overview with respect to spending and sources of spending plan and sources of revenue. then how it appears in this city wide capital plan and a comparison of the new plan and the old plan. so what you can see here on the water enterprise, you can see it's broken down on the spending side between regional projects and local projects and awss. half of the spending is regional. less than half relates to local. as we've talked about before, the local spending is largely in reconstruction of our placement of linear assets, so water main on the sources of funds side. you can see that about 44% is

coming from water rates. we're really transition everythining overthis 10-year pe cash funding of replacement and funding of linear infrastructure. this chart represents how the 10-year plan appears in terms of rolling up to the city wide 10-year capital plan. you can see the sources and uses are equal. you can see at bottom, the number of jobs that are anticipated from the capital investment being proposed. here is a comparison of the 10-year plan that you adopted last year versus the 10-year plan for this year. as i mentioned, there's a total decrease of about $102 million. the most notable thing about this plan is that it's the first times all of the appropriations have been approved by the commission and so this is the first time in 10-year plan we

don't have appropriation. it's good news. we got something done. turning to the wastewater plan, this looks largely identical to a year ago. most of the 70% of the spending relates to the sewer system improvement program. here is how that plan appears in the city wide 10-year capital plan. which is being published later this year. and then you can see the comparison of the prior plan as a decrease of $300 million largely associated with getting rid of fiscal year '19 and adding 2029. so the hetchy water and power program is represents water and

power it's at $1.2 billion. you can see that most of the investment is water. 30% is power. this reflects that reclassification of the mountain tunnel project. from the sources side, we have a combination of revenue which is revenue from power bonds and that has increased to use prop a from in-city distribution projects and we have cap-and-trade. here is the presentation of the 10-year plan as it appears in the city-wide 10-year plan. you can see the current 10-year plan versus the past 10-year plan. you can see there's a reduction of $52 million. slide 17.

now we're moving off of the 10-year capital plan and into the two-year budget amendment. to the second item. item number 14. this table reflects fiscal year '20 increasing 52 and a half million dollars increasing the total budget to $879 million. the project changes include, i've talked about them earlier, an increase in water diversification projects as described earlier. anwe have $29 million shown her. 10 of that was actually -- one of the things that happened as we presented these items to the capital planning committee of the city in late january was there was -- ma -- you may haved about the windfall. there was discussion about those

funds being spent and proposals were put forward that included allocating funds to the public utilities commission and we received four and a half million dollars to investigate the acquisition projects for pg&e and proposal for distribution project. ultimately what resulted from that was not eraf funds but a board appropriation of prop a bonds of $10 million. essentially we've noted that. of the 29, 10 has already been appropriated by the board of supervisors. going forward to them from your action here, would be the increase of 10 -- or 19. i am sorry. finally, what we have are the bond authorizations that provide the funding for these increased capital appropriations and

fiscal year '20. i'm happy to answer any questions. >> chairwoman: commissioners, any questions? >> i was glad to see the inclusion of diversification. it's something that in our prior discussion we said was important and it gets reflected in the resolution but the allocation was done in these studies so i'm pleased with that. >> i'm taking public comment now. i have one speaker card. good afternoon, commissioners, nicole, c.e.o. i just wanted to speak today in support of the staff recommendation. bosca is strongly supportive supply diversification certainly in response to our reliability

issues and in response to what are the other known existing issues that this commission has been studying through the water supply management action plan, including the interests of your permanent wholesale customers to potentially get more water and importantly san jose and santa clara's interest in becoming permanent customers. it remains a significant outstanding issue for those two agencies. so we support the efforts, the planning, also the funding. i felt it was important for you to understand that and hear that from me as well as the change in the funding for the next fiscal year as well. both items. thank you. >> chairwoman: we're going to take these items separately. i would like a motion for item 13, which is the capital plan. >> i'll move it. >> second. >> chairwoman: any further discussion? all those in favor. >> aye. >> opposed. the motion carries.

turning now to item 14. >> i'll move the item. >> second. >> any further discussion? all those in favor. >> aye. >> aye. >> the item carries. so, moving on to item 15. >> clerk: item 15 is the discussion of possible action to adept this sfpuc10-year financial plan. >> put up the slides, please. >> ok. commissioners, eric sandler, c.f.o. and i'm here to present the 10-year financial plan to you. this financial plan is required by the city charter to the 10-year capital plan.

i think you are used to seeing this presentation. i wanted to highlight that we've actually undertaken a few tweaks to the financial plan. this is -- what you will notice in the attachment to the agenda item we have a narrative discussion and the 10-year plan. the underline policies and principles and some of the key analysis to the very and i hope and we've also made underlying changes in the sales volumes assumptions for the water wastewater and decreasing sales classes and future which which previously we had increasing sales volumes and the past few periods that i've been around and prior to that, has been flat sales. we're assuming some sales volumes reductions and water and sewer. >> why is that?

>> it reflects what we've been seeing. we think it's a prudent way to approach and the 10-year plan is to really look at what are the investments we need to meet service levels and what are the rate impacts associated with those service levels. so if you are slightly conservative approach but based on reality, looking at what are the potential rate impacts of the investments we're looking at. >> i'd love to better understand that from a policy perspective at another time. what the best guess is besides just trends around sales. i would imagine it's increased conservation which is great and i know the impact on the financials as well. so it would be nice to have a better presentation on why we're seeing these reduced sales and if we can really adequately project based on past. >> i think it's certainly

something we talked about when we put together the rate study, the water-sewer rate study. we looked at -- there was a detailed work done by the consultants to look at assumptions regarding water sales. it's notoriously difficult to project. you can look at a number of different models. sort of bottom's up and top down. you can look at projections -- well, probably happy to talk about it at a future date with the commission. there's a lot of interesting work. unfortunately, nothing's 100% conclusive. >> thank you. >> we thought for the purposes of financial planning, we're looking at the rate impact of capital investment. it makes sense not to bet on growth to get you out of making expensive decisions.

we made updates in terms of how we're modeling capital financing. we've incorporated the low cost financing we've secured from the state revolving fund and from the e.p.a. water infrastructure financing act. that had a mitigating influence on sort of the demand assumption. we've increased the issuance of power balance, percentage of prop a and reflected the classification changes that i talked about in the 10-year capital plan and we've also included in the discussion some down side scenarios so looking at what happens if water demand doesn't materialize at the levels we're talking about here and what it means in terms of future planning decisions. we've seen sales decrease half a percent annually. here is some of the data behind that.

we've incorporated into the plan fiscal year '19 projected results. operating in capital budget assumptions for fiscal year '20 and updated capital plan that we're talking about. i think importantly, what the capital plan incorporated here and and that information will be reflected in the next capital plan and have impact beyond this. the plan confirms the commission financial policies. the water side, you can see sort of the plot of historical and projected future demands for the purposes of financial planning. water demand planning will look different. you can see there's been a significant downward trend aggravated by the drought and some rebound. we're definitely below

historical levels. >> i have a question. i would assume that you've taken into consideration increased in population. >> yes. >> to what percent is that? >> i need to follow-up on the answer and i can e-mail the commission that. we've assumed at the rate study when we put before the commission last year. there was an assumption of growth and population and associated demand growth. demand elasticity of price. it's the net impact of all of those factors. i can get you the a assumption regarding population growth that sunday lying that. >> i'm surprised at the graph. we're looking at the 10-year period. and it would look at it.

it's population growth. i think everyone's struggles with these assumptions. here is the tabular presentation of the information in terms of sources and uses of funds on the net revenue line, you can see use of funds overtime. you will notice some significant negative in 1920 and '21 and '2e wholesale customers their balance and the balancing account. the average rate increase over this 10-year period is in the mid single digits so 6.2%.

it looks fairly similar to the 10-year plan you saw last year. we've incorporated the same items into the plan update and in particular, executed loan financing assumptions are included here. and the enterprise is meeting all the commission financial policies. here is the same volume graph that you saw with the water enterprise. going back to 2003 and our projections over the next 10 years. you can see that the average increase over the 10-year plan

horizon is 9.2% and that's as we implement the large sewer system improvement program. when you look at combined rates, water and sewer rates, you can see -- that's the column that is to the right of the green column. you can see the increases are still projected to be in the mid single digit levels. they're slightly lower in the near term than what we projected a year ago. that's the combined impact of more cost effective capital financing and the impact of the reduced water sales. the combined bill is increase interesting 2increasingfrom 2% m the sewer system improvement

projects. one of the things we usually present new information in terms of the percentage combined bill increase and also the actual dollars of the combined bill and what you can see is that the combined bill is projected to raise a few dollars less than we projected last year. here is our standard utility affordability chart cost combined service as a percentage of medicine yan house cold income. we pointed out the shortcomings of this approach and we're working on a number of affordability issues. we highlighted that during our rate study last year. one thing you may have remember, is that this line was right up against that combined bill was right up against the 2% or two and a half percent m.h.i. level last year and you can see it's a little lower.

the cost containment is really the result of our s.r.f. funding successes. so now let's turn to the power enterprise. we have sales volume growth assumptions. we have 2.8% and that, as a result of our activities developed new customers. we've incorporated the same sort of budget information as well as the capital plan. this projection reflects a reduced responsibility of the power enterprise to pay for mountain tunnel improvements as well as the ability to fund some of the local distribution, power distribution infrastructure from prop a. one of the notable things we have here are the projected power enterprise sales volume

and what is notable compared to water and sewer is you are seeing an increase. you can see it's been flat for several years and we have an aggressive program to expand service throughout the southeast corridor and acquire new customers. that's built into the 10-year plan. and so that's compared to about 1% annual increase in volume. we're looking at something closer to 2.8%. definitely this plan is based on increasing sales. here is the 10-year plan for the power enterprise, fund balance is greg over the two years based on the number of sales volumes. transfer customers are only included. some of these new customers are what we call transfer load meaning they're existing pg&e customers and they're coming over to us.

we've created criteria that guide whether we're going to include transfer load in the growth forecast. we are including them only once they have a control contract executed with us. redevelopment customer growth is based on construction schedules of various projects. current redevelopment projects include hunters point, trance bay transit center, candlestick, treasure island, and pier 70 and projected new redevelopment customers include pier 74, mission rock, pa trer owe, hope sf and sunny dale hope sf. >> chairwoman: what happens in 2026? >> let's see.

>> it's a modest negative net revenue. it looks like an increase in revenue funded capital. that is associated with reinvestment in the local distribution system. it's unlike the case in the water enterprise where the negative net revenue was the function of repaying the wholesale customers. this is a short-term mismatch between revenues and expenses. >> basically you will just eat into the fund balance? >> uh-huh. >> in that year, it will just eat into the fund balance but the next year you have a replenishment of 3.4 million. >> chairwoman: the net revenues have been pretty high and all of a sudden it falls off. >> exactly.

>> there's a step increase in the investment and revenue funded capital. in that year. it looks like it's the driver of that. here are the associated rates with that plan that include the half cent increase for general fund rates and a growing portion of the load for the power enterprise. as we add new businesses, this presentation becomes longer. [laughter] we have a discussion of clean power sf. the lead up to the final

enrollment 2019, the final auto enrollment, we have this plan fiscal year '19 projected results are fiscal operating budget and we have financial policies for clean water except during the ramp up period. 10-year capital plan for clean power will be included in the next 10 year plan we present in february of next year. when enrollment is complete. we have interesting volume graphs this year. here is the hockey stick of the growth for and that is a port analogy, i don't use many, right. we've experienced tremendous

growth in this business and it's been great to watch the team execute this significant prize. that would be a 385% compounded annual growth rate over the period. pretty impressive. we have he projects clean power for sf. we'll be updating these in terms of the rate information you heard from a.g.m. hill with respect to any impact as a result and the pg&e rate increase but as you can see, this doesn't -- obviously there are risks associated with this and there's a lot more clean power and rather than a monopoly environment and there's a lot of unknowns in terms of regulatory risks, et cetera, that we've been living through so this is

uncertainty with respect to these, obviously. that's my presentation. it went a little longer than i thought. i'm happy to answer any questions. >> i have a question. that last slide or the last presentation on clean power sf, i know that there's been some conversations about the possibility of the city taking on some of pg&e's assets, would that impact the financial projection this is that happens? >> i'll ask back bra hill. what we're modeling right now is the provision of energy which should likely look the same in whether we enter distribution assets or not or in terms of

costs. if we purpose an acquire the distribution assets of pg&e the projections will look different. >> it would be a consolidation and we would no longer have clean power. just with the customers in san francisco. >> would you come back to us. we're approving a 10-year plan now, right. >> it would look -- we would come back to you with something different. >> >> yes. very good question. >> any other comments? >> questions? >> >> any comments from the public?

>> i'd like to move the item. >> i'll second it. >> all those in favor. >> aye. >> opposed. the motion carries. >> next item, please. >> clerk: item 16 retroactive leah prove an agreement between the city and county of san from in a california independent system operator and authorization general manager to seek approval from the san francisco board of supervisors. >> i'll move approval. >> second. >> any discussion on this item? any public comment? all those if favor? >> aye. >> opposed. the motion carries. next item, lease. >> a mou between the sfpuc and the convention facilities government to install or energy

system at months coney west 373 howard street providing electricity to the facility. >> chairwoman: so moved. >> i'll second. i do have one question. and it looks like our financial staff has left. you may have to get back to me. it was a charter accounts small renewables and a bunch of numbers. so my question is, what does that mean? >> barbra hail, just just a reference to the particular capitol project line item in the power capital budget. so that's the chart of accounts is the new financial system jargon where the capital program dollars were assigned. it used to have a 518 blah blah

blah might have been more familiar to you. now that we converted to the f.s.p., this is the new one. you will see this all over. >> such a big number. >> right. >> part of it, i was wondering if this was a source of money. >> it's still our revenue. >> thank you. >> any public comment? do i have a motion? >> i need a vote. >> and we have a second. >> ok. >> all those in favor. >> aye. >> opposed. the motion carries. next item, please. >> item 18, authorize the general manager to request approval by the board of supervisors to accept and resources control board in the amount of $3,759,822.

i'd like to move the item. >> again. >> any public discussion on this? any further discussion by the commission? all those if favor. >> aye. >> opposed. the motion carries. item 19. >> clerk: authorization the general manager to negotiate and execute a so the cost share agreement for funding cost plan for the potential expansion of the reservoir for an amount not to exceed 300,000 with a duration of 16 months. >> i'll move it. >> second. >> any public comment on this item? all those if favor. aye. >> opposed. the motion carries. >> chairwoman: item 20. >> clerk: approval the selection of american water resources and authorization the general manager to execute agreement number pro0086 authorization

a.w.r. to market a voluntary water service and water sewer lateral insurance program to sfpuc residential customers in san francisco and exchange for payment of 3.61% per month to the sfpuc for each enrolled customer with a duration of four years and anticipated revenue to the sfpuc of one million or more. >> good afternoon, commissioners. so yes, this item is one we've been working on for well over a year now. we're pleased to bring this to the commission finally. it's an important next step on activities we have related to our over all lateral program for the wastewater enterprise. just for context, there are about 110,000 individual residential sewer service laterals that are in service in the city today. like many communities around the state, we're becoming more and more aware of what a critical

role the sewer latter als play in the reliability of our system for a host of reasons. so the lateral insurance program is one important next step and i'm going to have michael tran walk through the brief presentation we have for you on this topic and we'll be happy to answer anymore questions. thank you. time good afternoon, commissioners, my name is michael tran. i'm anen geni cavitt with the a. i will present the professional services 86 the residential water service and sewer lateral line protection marketing

program. -- >> can we get the slides, please? >> i'm going to direct your attention over to the slides as the broad overview of the collection system. this is a great exhibit that illustrates how it functions. 90% is the combined sewer system. it means that wastewater flow from properties is collected in the same set of pipes that collects rain water. emily how it functions is through main sewers, it's flowing to storage boxes which is eventually pumped to the treatment plants. under a major storm, it will discharge from designated locations throughout the city. there's a thousand miles of sewer mains and 700 miles of sewer latter als. specifically for this project

serviceprojectthere's 11,000 ace he wileligible. that number was resulted based of two inch of water service levels and smaller. what is important about the latter als is that most people don't know about what their responsibilities are for the sewer service and for the water service laterals. as greg mentioned earlier, the public works is undergoing an update and -- the p.u.c. actively replaces lower laterals if structural defects are found. water service laterals are a

little bit clearer as far as responsibility from the meter to the water main. it's owned and maintained by the p.u. crossroads whereas from the meter to the property is privately installed, maintained and rehabilitated. and most homeowners are unware until it's too late. until they see sewage through the discharge on the ventilation trap on the sidewalks. as far as the typical household configuration, this picture illustrates how the curb line

delineates. it's clear for the water service lateral ownership and maintenance. it gets more complex though it's warranted another slide. a little more detail as far as the typical configuration of the sewer lateral. what we identify as the lower lateral and i apologize the font is coming up funny on the powerpoint. the curb line is the delineation mark and the lower lateral and it's responsible for inspection and maintenance by the property owner while the p. u.c. repairs and replaces structural defects.

the p.u.c. has no jurisdiction in this area. it authorization them to use the logo on communication and outreach efforts to p.u.c. in the city. it offers a low cost owner to enroll into help supplement the costs with replacing the upper lateral for both water and sew sewer. american water resources will have their contractors televise as the p.u.c. standards for the lower laterals for the sewer lower laterals. those items would be transferred to the p.u.c. this contract allows for a $3.6t

$1.9 million total and the chart he will straits the cost for each one of the monthly subscription rates. it's $4.41 for coverage and an optional combined sub description of $12.99. there's a handful of benefits to this program. american water will administer a independently. there will be limited p.u.c. support for this. there's no pre enrollment continues aside from a 30-day wait period. and american water services will directly bill from potential customers. little more information about the contract timeline. this was advertised in january of 2018. the opening date was march 2018.

and there were two bidders. there was american water resources and home serve. and the process included both written evaluation and of course cost and the revenue component. american water resources would be identified highest propose o'er and we can seeking border supervisor approval on target north may of 2019 and we are targeting notice to proceed from june of this year. what we are asking sout is suppf the award to american water resources. >> thank you for your presentation. i think that i'm one of the lateral 110,000 people with my house. i think my lateral is attached to a lateral if that's possible. i know it's possible because that's my situation. in 245 case, am i the

responsible homeowner or is it only until the homeowner's lateral that i'm connected to and how would the insurance cover the lateral to lateral people like me. >> that's a very good question. >> thank you. >> it is a slightly a tip i canaitypicalconfiguration. they have laterals that meets current building codes at this time. there would be some sort of communication between the insurance program and they will provide some guidance of how to bring it back up to code or to provide guidance as far as how to proceed. >> it might need to be taken off line but it sounds like the unique customers like me would actually probably need to pursue an upgrade or a replacement letterral in order to qualify for the insurance. do i have that right?