next item. >> clerk: the next item is a quarterly budget status report. >> commissioners, eric sadler, cfo. i have a quick quarterly budget status report. may i have the slides, please? and this represents, this is the second quarter budget status report and reflects results through december 31, 2018. let's see, we have positive net results projected for wastewater

and the cleanpowersf enterprise. we're experiencing lower revenues in three enterprises, so modest decline in water sales, or modest lower water sales revenues versus the budget, same with sewer, and a little larger reduction in power revenues versus the budget. the financial results meet coverage and reserve policy targets except for the power enterprise, where the fund balance is projected to not meet the operating reserve minimum due to the low revenue. just to touch briefly on each enterprise, we're experiencing lower water sales, partially offset by one-time nonoperating revenues, so the lower water sales are a result of the wet weather. you will notice that we actually saw an increase in revenue on the wholesale side, but that's largely because of minimum purchase requirements from three

wholesale agencies that we recovered in fiscal year '19 that relate to fiscal year '18, slight reduction in retail water sales, and a small increase in nonoperating revenues and that's water installation service charges, so we had more water installation service revenue than expected. on the wastewater side, slightly lower revenues because of lower retail water volumes and billed sewer volumes, and we have a savings of about $4 million, largely due to salary savings from vacant positions. on the power side, we're seeing reduced power, water, gas, steam sales revenues partially offset by cost savings. the power sales revenues are about $10.1 million below the budget, and it's primarily from slightly reduced retail municipal energy below the forecast and largely related to

delayed transfer loads, meaning customers who transfer from pg&e service to sf p.u.c. service. those transfers happened slower than expected, and also we had budgeted for a recovery from transmission revenues from the district, presupposed a finalization of settling some of the contract issues with the districts that has not materialized, so we're seeing lower revenues. on the usage side, we're seeing a reduction in steam and gas expenses. that's largely an offset. that's a pass through item. we're seeing a reduction in transmission and distribution costs of about $1.3 million, and then higher power purchase costs, largely because we needed to purchase replacement power because of the shutdown from mountain tunnel. in terms of cleanpowersf, we're

seeing a savings of about -- our revenues are pretty much on target with our budget. on the uses side, we're seeing about $2.5 million in savings on our operating budget, and then we expect to realize the $22.1 deposit to reserve funds, so good news there. here are the financial ratios stack up versus the commission policy. you can see on the power enterprise, the fund balance reserve is 20% versus the 25% minimum. what i will note is that the action that you took last commission meeting with respect to the capital budget included the appropriation of some funds that actually it was $15 million will go to the fund balance reserve, so you'll be above the commission's target for that reserve level.

so that concludes my report, and i'm happy to answer any questions. >> one question, if i might. the -- you showed that the cleanpower, there was some savings and salary levels. is that a problem? in that are we unable to hire people that we need for that program? >> if i could ask a.g.m. hill to come on that. >> thanks for the question. i think we're doing okay on hiring for the cleanpowersf program. one area where i would say we are challenged is in getting strong expertise in the origination in power supply area, managing the portfolio. we're finding that that's a skill set that's remuneration levels may outstrip us in the market, so that's been a challenging area, but it's

really more an issue that the city's seeing, that we're seeing citywide, or at least agencywise, that it takes a while to fill vacancies. it's not that we're unable to. it's just the city end of the process. recruitment's not the issue, except for that one exception. >> okay, and, obviously, that's a pretty key function. >> yes. >> and if we need to be making adjustments to compensation levels, we shouldn't be shy about that. >> yeah, thank you for that encouragement. we do have a proposal that's winding its way through the process in the city to adjust the classification to meet that. >> great. >> thank you. >> thank you. >> i do have a question. where do you see the power sale revenues going in the future? >> i think we see the power sales revenues for the element that is a result of the, i think it's about $5 million reduction

versus the budget with respect to district sales. that will be ongoing. the rest of the reduction will be recovering for the rest of the year. >> okay. commissioners, any other questions? any public comment? >> clerk: next update is hetch hetchy capital improvement program. dan wade. >> good afternoon, commissioners, dan wade, director of water capital projects and programs, infrastructure division, and today i'm pleased to report on

the second quarter of fiscal year 2018-2019 for the hetchy capital improvement projects. and i'll just say up front that all of the projects are on schedule and budget as the end of the reporting quarter. now, there have been a couple of things that have happened since that time that i just want to make you aware of. one is that the contractor for the home power house rehabilitation project submitted a time extension request, so that's currently under review by the project team, the construction management team, so we'll come back with a status update on that in the next report. and then also on the kirkwood pennstock project, the procurement of the couplings for the pennstock was extremely challenging, so there will likely be a time extension on that project, as well. but as of the end of the reporting quarter, those were under evaluation.

and so moving to highlights of the reporting period, several fairly significant things happening this last quarter. one is, of course, the 2018 mountain tunnel interim repairs. as of the end of last quarter, we were still preparing for that shutdown and preparing to do those repairs. since that time, of course, the work is done and the shutdown is complete. and so i'll be able to say that again next quarter. the mountain tunnel improvements project, which is the large mountain tunnel project that's been going on for six years once we are able to obtain ceqa certification and permits and so forth, should all of that go as planned and requested, we would expect to advertise that project later this year. but as of the end of the reporting quarter, we completed the 65% design and incorporated comments. the one royal substation rehabilitation project, which is a design build contract in the

last quarter, they'd completed the 100% plans and specifications and had started the four-month shutdown for construction on that project. and then, lastly, the 2018 march storm damage emergency repairs project, which actually several emergency contracts that we issued last year, that i'm sure you remember well, we've -- at the end of the calendar year, we obtained substantial completion on the majority of the work, and so we were able to actually fill the reservoir to elevation 905, which is not full, because there's still some work ongoing, but we expect that in april we'll be able to fill the reservoir, the remainder of the way. and so just a few slides, you know, just to reiterate on the mountain tunnel interim repairs, and we call this phase two, because phase one was in 2017, which is the first phase of the critical repairs to fix defects

in the tunnel. in this latest phase, we continued the repair, the liner defects in the lower portion of the 19-mile long tunnel. we initiated the contact grouting between the liner and the rock to get intimate contact between the liner and the rock, the concrete liner, which makes a more sound structural section. and then we paved 5,000 feet of the tunnel invert for access improvements, and the shutdown, as i said, is now complete. there's still work ongoing to close out this contract, but it was very successful, and we'll be able to report a little bit more on that next quarter. for the warnerville substation rehabilitation project, we did issue notice to proceed and started that four-month outage on october 1. a lot of work has taken place,

both last quarter and in the current quarter, which is almost done, because we're here late in the quarter to report, but we performed factory acceptance testing, circuit breakers, other electrical equipment and control rooms for the transformers in the last quarter. and then for the kirkwood power house bypass repairs, the water turbulence damage in the bypass chamber was repaired as part of the mountain tunnel project. the steel lining had been ripped out and corroded, so we were able to install steel plates to repair that. and so that was a critical piece of work that is now complete. lastly, the interim repairs in moccasin reservoir, as i said, are substantially complete except for some ongoing work that we expect to finish this year, and with that i'd be happy to take any questions. >> president caen: questions, commissioners?

any public comment? >> commissioners, i have nothing against wade's comments and presentation. but chronologically speaking, the first inspection done by mountain tunnel by jacobs, i need some of you commissioners to review that document. the first inspection. and how much they charged us. and why is it at the tail end we found out all these defects, and then we had two options, one option was to fix the tunnel, as has been described by wade, and the second one maybe to dig a

new tunnel. and we chose not to take that route. so again, chronologically speaking, we need to go to the source, because on the commission you have a few commissioners who have what i call institutional memory and experience. we need to fall back on that, so that those type of mistakes are not repeated. now, that similar mistake was repeated on -- where we found fissures and we had to remove over 1 million tons of dirt, et cetera, et cetera, et cetera. and that is for those who pay attention to what is happening when a project starts initially, how the votings are done, who

have access to the results of the borings, all this takes a lot of work, and not too many people are interested in doing it. because when presentations are given, of course, wade was not there, he came later on, you know, somebody stitched the clothing and wade had to come and do the repairs. and he's done a pretty good job. i have nothing against his presentation. but i say is that when we allow this huge firms like acon, urs, jacobs, to conduct these evaluations and charge us a lot of money, and then we have to revisit this and spend more money, then we are not doing justice to the taxpayer. that's all i'm saying. and i may be wrong. and if i'm wrong, then i'm

wrong, but that's how i think. i like to look at the project from the beginning and see if due fairly and justice was done. thank you very much. >> president caen: thank you. >> good afternoon, commissioners, nicole sankula. ceo. first, thank you, dan, for his presentation and the work going on on the cip. i was excited to watch as the process went on this year. i did want to call to your attention, though, that i think is missing and you need more information on. the quarterly report in the cover letter did talk about summary information about the work going on at moccasin. the moccasin emergency repairs, the interim repairs, and then there's also the long-term repairs at moccasin, and yet the

quarterly report is not complete in the information it provides, i believe, because how this project showed up. obviously, it was a year ago this month when we had the emergency situation, the p.u.c. acted appropriately, promptly, and quickly to deal with it, but it's now a year later. this is going to be a significant project moving forward, and the question should be, what is the scope, the schedule, and the cost for all those pieces together? how are we dealing with them in the intervening period until we incorporate them fully into the cip, and providing that information to you, to bosca, and to the water customers. so i would urge the commission to request that staff provide you a written report about the grouping of moccasin repair projects so that you fully understand the status of where they are at today and where they plan to move forward. thank you. >> president caen: thank you. is this a possibility?

>> i would say that we would work with bosca to figure out how we can group it in a way that makes sense. >> president caen: any further comments? next item, please. >> clerk: the next item is a sewer system improvement program quarterly report, and then i think we will also do the water -- wastewater enterprise capital improvement program. is that right, howard, you're going to do both? okay, we'll do one at a time. okay. >> slides, please.

good afternoon, president caen, commissioners. howard fung, senior project manager, southeast plant, and acting director of wastewater capital programs. i have two brief reports for you today. the first is the ssip quarterly, followed by the wastewater enterprise quarterly report. the 70 projects in phase one representing $2.79 billion is currently 28.4% complete, with $718 million expended at the close of december. at the quarter ending october, we were at 26.4%. this quarter we were able to progress one more project into close out and complete another. currently, there are 12 projects in construction represented in green, 14 projects in design, which is still the largest piece of the pie in blue. i'll give highlights of a few projects in the upcoming slides.

as a reminder, head works is where all the sewage flows into southeast plant, and, arguably, the most complex project in the ssip. the project is broken into four scopes of work, as shown. scope one, site preparation is currently in construction. the photo shows some of that progress. scope 2a, upgrades, and tp was issued in december. majority of the work packages have now been bid out and awarded. scope 2b and c, the influence pump station, completed 35% design during the quarter and are working towards 65%. we are seeing some cost estimates trending higher as the design progresses. scope 3, main head works, we completed 100% design during the quarter. the first series of construction work packages were released out to bid in january, and ntp is expected by next month.

similarly, we are seeing sms trending higher. we will know more when we actually receive the bids from the first series of work packages. the biosolids team is working to wrap up design and start construction later this year. the project is showing a delay in construction start due to recent field investigations that have uncovered groundwater, watering issues, utility conflicts, and related challenging site conditions. additional time is needed to evaluate and develop strategies with the cmtc contractor and to address these challenges prior to starting construction. as well as to develop details, cost estimates for these strategies and solutions. these are foreseen conditions will likely result in the extending -- in extending the construction completion by one year. however, the project team is continuing to look at ways to

recover and will be providing future updates. on the dry weather pump station project, the existing pump station will be replaced with a new pump station to accommodate the anticipated mission bay flows, including flows from the new chase center stadium. the scope includes demolishing the existing, building a new pump station meeting current building and seismic codes, making utility upgrades, upsizing the existing dry weather force main and various other site improvements. i will mention later, but this is one of the projects that is showing a budget variance. the baker beach screen street project is the second to the last gi storm water management projects to go into construction. this project will help manage storm water and combine sewage discharges in the area around baker beach. this project has two areas of focus, along el camino del mar

between 32nd and 34th avenue, along seacliff avenue between 25th and 26th avenue, and in addition to the terraced rain gardens at the baker beach on tgnra property. we have applied for and been successfully awarded a storm water grant from the state water board in the amount of $3.7 million. this item was approved at our last commission meeting, and later today we will have a project related mou with rec and park for your approval. this timeline shows how some of the other major phase i projects are progressing. the red line shows us where we are as of quarter ending december. excuse me. on this slide i just want to point out there are several other projects at southeast plant. gaffe handling, 521, 522 upgrade

projects are already well into construction. the seismic reliability improvements in southeast plant power feed projects are scheduled to start construction later this year. west side pump station reliability improvements is one of the projects where the bids came back significantly above our construction budget, so we're looking at options to rescope and bring that cost back on track. and, lastly, the central bay side system improvement project is at 35%, while we're working to finalize the property procurement with caltrans. this slide shows our cumulative outreach through december and a few photos for recent events. our outreach efforts at the conclude of 2018 were focused at tabling at various holiday events like the annual health and harvest fair and at the winter wonderland. we used these opportunities to engage and educate stakeholders

by offering prizes when they spend time with us learning about their sewer system and inquiring about our upcoming projects. this concludes my ssip quarterly presentation. i'd like to go over the significant variances, the red dots, from the ssip quarterly report, followed by the wastewater enterprise quarterly report. >> president caen: before you do that, could you repeat what you said about why we have added another year to the biosolid project? as i recall, quite some time ago we already added another year, so now we've added two years. >> we have a delayed construction start of one year, and we anticipate that impact ripples through, meaning that we will also have a delayed completion of one year, as well.

so we've done some preconstruction investigations, and we've uncovered some groundwater impacts and some utility impacts that we need to address, so we're taking some time now to properly address that before actual construction starts. so we are taking some time to incorporate those changes. >> president caen: take that long to investigate these problems? >> it's a big project. >> but also with the designer, how you do water in a safe way to put the digesters in, so they have to change the plans before you bid them out. it's sort of a ripple effect, because you don't want to be in the middle of construction when this stuff happens, and that's one of the good things about having a cmgc, is when the contractor's out there, when they do these borings and they identify that you have, you know, high groundwater table, then you anticipate it, then it

gives us time before they bid the packages out to make some adjustments before we bid it out. going to save us money. the other thing is that, you know, the tariffs as far as the biddings are concerned, has really impacted a lot of the bids that we received, so gives us time to really adjust our packages and see what strategies that we can deploy to try to reduce the cost. because we're mindful of the cost and also the time, so we're trying to balance both of them. >> president caen: well, disheartening, but i guess i have to accept it. >> thank you. moving forward, we have four ssip projects that are now forecasting cost variance of more than 10% above their approved budget and nine projects that are forecasted schedule variances beyond their approved schedule by six months or more. i'll quickly go over them. the 15th avenue storm water

detention project is one project that has a budget variance of $14.7 million and a scheduled variance of one year. the scope on this project needed to be changed significantly due to constructibility challenges. the scope will now capture storm water upstream of the area and will convey them into collection system through a new storm water sewer on vicente street to 35th avenue. the other three projects that show budget variances include the osp digester gas utilization upgrade project. the $8.5 million budget variance reflects higher costs from low bids received, as well as the mariposa driveway pump station and improvement project with the $3.7 million variance. and lastly, the kansas and marin street sewer improvement project reflects a $6.7 million variance. this project needed to change the construction tunnelling methodology due to constructibility concerns.

as for the other projects that are currently behind, the sep 521 and 522 disinfection upgrade is seven months behind due to limited plant shutdowns and additional mechanical/electrical scope. sep seismic reliability and condition assessment improvement is nine months behind due to additional seismic analysis. due to a stainless steel material delivery delay. north shore pump station wet weather improvement is six months behind to coordinate and incorporate the new dcs integration requirements. mission bay loop and taravale sewer replacement are one year and six and a half months behind, respectively. we're subject to their schedule and their progress. folsom area project is one year

behind due to the delay in the consulting contract due to the complexity of the project and coordination with the stakeholders. and finally, as i mentioned before, southeast biosolids digester facility is one year behind. all the other wastewater capital projects outside of ssip are on budget and on schedule. this concludes my report. happy to answer any questions. >> president caen: yes. >> i have a question just so i can kind of understand how the process goes. so a project like rawona, for example, you said is $14.7 million, i believe, off budget of a variance, which seems like a pretty big amount to me, and i'm wondering what the process is then to rebid that, not so much rebid and rescope it, but, you know, i have an interest in green infrastructure, for example, and triple bottle line, so to make sure that environmental and social benefits are considered when there's a rebudget and a

reprojection of a project, especially of that magnitude. and i guess i just don't really understand the process of deciding how to shift gears and if the triple bottom line analysis then kicks in again. i'm assuming it happened the first time, but if it kicks in again to make sure that we are, indeed, meeting our targets and really maximizing social and environmental benefits in addition to the great infrastructure piece. the first part. and then the second is kind of specific to the green infrastructure potential, because i know that that site in particular has a lot of challenges, and it's always struck me that if we even could do one piece of that as green infrastructure, not just for modeling, but since we've had such positive performance results from some of our green infrastructure sites, how that decision gets incorporating and/or implemented.

sorry for the long question. >> very good question. in terms of green infrastructure, this project does have a lot of stability concerns with the original scope, and i think when we looked at it, we were concerned about some of that constructibility, so we did look at that and didn't think that was a good approach. with regard to the triple bottom line, we can certainly look into that. >> i just wanted to say, we actually use the triple bottom line to identify the project, and, you know, we looked at what the costs, what the impact with the environment, and, you know, then also for, you know, the people, the community, and so -- but i guess the question is, that if it comes in over budget, what we normally would do is

look at how can we bring it within budget, you know, the original budget that we assess when we use the triple bottom line, so i guess the question, do we assess the triple bottom line and maybe it's not worth doing the project? >> or you start to get greater impact or results now that it's costing an extra $14 million, does that then mean that you might be able to realize additional benefits in one of those three categories? >> well, i mean, we can probably talk more offline, but, you know, when you, you know, evaluate the alternative projects, you consider costs as one of the features, and if you would have known that this would be $14.7 million more, it may not have been your -- one of your choices.

and so -- but, you know, given the fact that you've, you know, went down this, you know, to identify this project, i think before we, you know, just totally not do it, we need to see, you know, what we can do as far as design or improve the, you know, the removal of, you know, flows out of our sewer system before we give up on the project. >> i wasn't proposing giving up on the project. i was just proposing with $14.7 million variance, it's almost worth rescoping it. >> exactly, yeah, yeah. and that's something that we're -- >> we can certainly look into that. >> that would be good. and then, you know, on the green infrastructure, i think it would be great in the next -- i'm not going to be at the april 9 meeting, unfortunately, but possibly after that meeting it would be great to get an update where we are in the early

implementation projects and what the strategy is to replicate, roll those out, expand those, some of the performance results, i don't think we've had an update lately on the chair. i think it would be great to get an update on that. >> sure. >> thank you. >> president caen: any other comments? >> can i also -- i just wanted to maybe bring this up. one of the things that i do find, feel that is important and gets to the triple bottom line is that, you know, we're in the process of doing $2 billion in a community that we impacted, and one of the things that i feel pretty passionate about is that we want to make sure, you know, communities that have been impacted participate in building this system or this project, and so what i would like to do is, as part of our presentations in the future, i wanted to make sure that we identify how many

local businesses in san francisco and the community have participated and what they are doing to make sure it's meaningful and that we're not giving things away, but they are actually making contributions. and then also the local residents, number of folks who live in there who are actually working on there to make sure we highlight that, because i'm letting all the project managers know that we need to do it in a way that is meaningful for the community, because the community has said that in so many ways that they've been impacted and they want to make sure they participate in building it. the other thing that we're going to do more of is we're going to make sure that we provide information to anyone who, in the community, and so at 1800 oakdale, we're going to have an office there, where folks can go at any time to find out what's happening. we have a place that -- thank

you, mark, that will help contractors and, you know, kind of get them ready for upcoming opportunities, but just folks wanting to know what's going on, especially not at the treatment plant, but also at 1550 evans, you know, what is the plan, chas the schedule, so we're going to make sure we highlight that and open it and make sure anyone in the community, if you want any information about anything to do with these projects, that you can go there. so that's something that i really want to make sure that is out there so information can be provided to whomever would want that information. >> president caen: well, i don't know how my fellow commissioners think about this, but i'm very dismayed at this report, and it seems to me that we have not been really apprised of this information to date, and i would

like perhaps more of a monthly, not as extensive as this, but a monthly report on where we are. starting on page 11, under the topic of "projects not within budget and/or scheduled." the ones you named, of course, they are all here, too, but i was really surprised at the forecasts for a lot of the project schedules have been increased greatly. i understand more about the costs going up simply because of tariffs and so on and so forth now, but in terms of the project moving forward, it was very disappointing to see. so if we can somehow -- not as extensive as this, but i'd like to keep us more up to date. >> yeah, i totally agree that a

quarterly report, you know, i think given the fact that, you know, i think you and i really want to make sure that this gets done, but these projects are very challenging, because it's not that you're in a new site, you know, and you're building something that -- i mean, you're actually operating the plant. probably the most complicated, because you have flows coming in while you're building the new head works, and the digesters are a little easier, because you're building digesters in another location before you have to switch it over, so that's a little easier. i think head works is really complicated, so we would love to show you what the risks are, because they are -- both projects have their own risks, and what we're doing is trying to mitigate the risks, but, unfortunately, some of the risks we are unable to mitigate as much as we thought that we could, but we would love to sit down and go in a deeper dive and

maybe do a risk assessment of what the risks are on these projects so that you know it's not really simple. there are risks associated with it, and it could be from material costs, to labor shortage, to community acceptance. one situation where we department have folks from the community and we tried to bring trailers in. the community pretty much, you know, stopped the contractor, because they didn't see folks out there. so that's why all this stuff is really important that we integrate everything, so that we are able to deliver these projects. so what i would like to do is kind of come up with a monthly update on all the key areas that we feel that could impact the delivery of these projects. >> president caen: i would appreciate that. >> and i would love to take you down there once a month and revisit some of those, you know, lovely eateries out there, that we're hoping all the workers will support, as well.

>> good. >> we have a date? great. >> president caen: thanks. >> perfect. >> thank you. >> president caen: thank you very much. is there any public comment on this? >> so to the people at home, i want to tell you all that this is a $10 billion project, and $10 billion is a lot of money that we, the constituents of san francisco, have to pay attention to. so as you have heard today, when early on there was some delays within opinion in a very rude manner tried to be polite. when you are polite and when you let things go, and some people take advantage of the situation at hand. it pains my heart, and to you folks at home, that we have had

astute workers like tony florence, tommy miola, karen cubic, mark harris, who came up the ranks, suget singh, who paid off all the project managers, they are no more with the sf p.u.c., so there are some people in the sf p.u.c. who think and maybe endorse that institutional experience, memory, and help is not needed. so what happens when you bring newcomers onboard? it takes them a good three, four, five years to understand the situation at hand. and for the people in the bayview hunter's point, i have been working, trying to do my best, but i have to slow down,

because after 40 years, i cannot do this a lot. so i cannot attend the meetings, because we used to come here, we used to plead, beg, and people don't listen. these are billions of dollars now that have to be expended because the price of steel has gone up by 25%, material, all sorts of material have gone up, and again, initially when you scope, do the scoping, those are the people who have to do a lot of work, cannot come afterwards and say, oh, we need to do dewatering. we put the blame on the millennium tower because of dewatering and whatever. we have to do things in a proper manner with standards. initially, when everything settled down and people got the community benefits, somebody

decided to send $200,000 for green for all. that tells you that gives you a type of mentality of how serious you are with the project. so thank you very much. >> president caen: thank you. any other public comment? does that conclude your report? >> did you -- you're finished? okay, yes, that concludes my report. >> president caen: next item, please. >> clerk: item 8 is an sfgreascycle program update. >> good afternoon, president caen and commission. our assistant general manager of wastewater, greg norby, has asked me to come and speak to you for a few minutes about the success and sunsetting of the sfgreascycle program. my name is cary bing, the

business services manager for the wastewater enterprise, and also have the privilege of founding and supporting the sfgreascycle program for its 12 years. the program is started by the sf p.u.c. back in 2007 as a response to restaurants complaining that they had no way of disposing of their cooking oil. operations crews were often diverted from preventive maintenance and instead sent to reduce blockages in the sewer system from cooking oil ending up down the drain from residences and restaurants, so a program started to have city employees actually hand collect cooking oil from restaurants and residences and convert this cooking oil into biodiesel, which was then converted and brought back to san francisco

city fleet for many years. we had over 1,100 restaurants participate in the program. we've collected over 3 million gallons of cooking oil for conversion, and in the process we've generated over $5 million in revenue from the sale of the cooking oil to local bio diesel manufacturers. so it's gained national recognition time and again as a very pro business, pro environment success story. during that same time, there are a few other changes that have happened. one is san francisco has the fats, oils, and grace ordinance in 2012 regulating restaurants and working with restaurants to help them better manage their grease. inspectors now go out and work with restaurants to monitor and track the proper management of grease. the second is san francisco's fleets have shifted away from using 20% bio diesel to using

100% renewable diesel, and that's at a scale that local bio diesel companies could never provide for the needs of san francisco fleets. and then the third consideration is that through this effort there have born a number of small businesses in san francisco that are in the grease hauling business now, that are very responsible, very regulated, and they do collect and convert the cooking oil to bio diesel and other fuels, and they've developed a long track record for this activity. so we found ourselves now competing with these very businesses that are doing the right thing and as in 2007, when we stepped in to address the marked failure in a pro business fashion, we're also now recognizing when we should step back and hand over these activities to the private sector. so we're intending on repurposing our vehicles for

sewer operations crews, and repurposing crews for catch basin cleaning and other preventive maintenance activities, and i just personally want to say thank you very much to everyone on this commission for all the support. it's a really good story and it's good governance. i'll take any questions if you have them. >> president caen: question, so do these companies charge to pick up the grease? >> they don't. they don't. and that, a lot has to do with the fact that there's now a market for this material that was once a waste. >> president caen: so the restaurant, there's no reason why a restaurant wouldn't participate? >> no reason. they have to pay for their large grease capturing device cleanings, but the cooking oil is often sold to local and

regional producers, so they make money on the back end. >> president caen: i don't want them to revert back to just tossing them down the drain. >> neither do we, so we'll still be very closely working with the restaurants and also be continuing our residential program. >> i guess also from the environmental perspective express appreciation, because being able to create a market for waste, i believe, is one of the ways we really need to head for the future of the planet and our city, so i just want to thank you for blazing the trail and creating such a successful program. so thank you very much. >> thank you, commissioner. >> the other thing i want to mention, we still have our inspectors, right, working with public health? >> yep. >> so by us not picking it up and depending on someone else to pick it up, we still have our inspectors to make sure that they have grease traps and things of that nature, right? >> yeah, thank you. we, in addition to our inspectors, we're also -- we've

become very savvy at working upstream of blockages, handing out door hangers and talking to residences and businesses upstream about behavior change to prevent blockages at the source. thank you for your time. >> president caen: thank you for the presentation. do i have any public comment on this? next item, please. >> clerk: item 9 is a bay area water supply and conservation agency update. >> good afternoon, commissioners, again, nicole sandkulla, basca ceo.

so i wanted to take my time today to provide you an update on our efforts to secure long-term water supply, reliability for the wholesale commerce and their water commerce. as you know, your level of service goal, your commitment to them, is shortages of 20 -- no greater than 20% systemwide, and for the bawsca agencies, because of how we share those supplies during drought, that means a 26% cutback to the bawsca agencies. early on after you adopted that level service goal, collectively they decided they wanted to investigate and invest in a greater level of reliability. that's really where this strategy effort comes from and its focus, and that dry year yield, when we released our report in 2015 to get to a 0% shortfall was 48,000-acre feet. obviously, that's 100% reliability, but it gave us some kind of target to start with.

we also recognized back in 2015, as we have now become even clearer these days, there's a lot of unknowns, about climate change, demand, regulatory and environmental constraints, and all of those things are still with us today and things that we're working with. so the desires to continue to look at new supplemental supplies. i've talked to you about the demand study, so that's going to go ahead and address one of those unknowns, certainly, and you've heard from your staff about expansion and i've talked about that, as well, we're participating that. i want to talk about the pilot water transfer that we've been working on. so in 2013, we released a report with east bay mud on a pilot water transfer plan partnership with them to implement a transfer that was going to test both the physical and institutional aspects of the transfer. this would be utilizing the existing intertie between the san francisco system and the

east bay mud system in hayward. physically, that intertie existed, but using it for a pilot transfer hadn't been done before and wasn't anticipated as part of the project when it was developed, so this was a test of that to see if that obvious answer, which everybody was pointing to at that time, was actually feasible. we have found some very interesting things over the years in trying to work through this. most importantly is that during the drought we were prepared to have an agreement with a buyer going in the middle of the drought, and the federal government, who owns a piece of the connection off of san francisco's south canal, the folsom south canal connection, said that they would not approve us using that facility during a drought, because we were not a bureau contractor, so that pretty much stopped that effort during the drought, but also an interesting lesson learned. so what are we doing now? how do we move on from this? we're continuing to talk with

east bay mud. that component of the existing intertie in hayward is certainly very interesting, but east bay mud actually has access to multiple supplies, so we were thinking about this a little differently. when we were talking earlier in 2012, we were looking at taking water off the sacramento river at their freeport takeout, but the majority of their supply comes from the river, they have an upstream source like you do, primarily sierra sourced, and upstream of east bay mud is amador water agency. their watershed coincides with east bay mud's, and they get water also off the mokelumne river, and they are interested in testing this concept. they have -- they retail to areas in amador county, and they have conserved water that they have proven a conservation for and the ability to transfer, so that's what we're trying to take advantage of here.

so we are moving forward with them on a pilot water transfer. it would be for 1,000-acre feet. the point of delivery actually from amador, our point of delivery would be into east bay mud's party reservoir, so kind of their key facility where they get their water supply, and then the water would be transferred via east bay mud's facilities, their mokelumne aqueducts into their service area and make its way all the way down to hayward. and then it would be delivered to the bawsca agencies via that hayward intertie. the delivery window, we're looking to time this with the next mountain -- actually hetch hetchy shutdown in november 2019. been working closely with your staff on that, and getting all the agreements associated with

this, because there's certainly agreements with amador, agreements with east bay mud, you, and the city of hayward to make this work. and, you know, i've had to think back and kind of reconsider is this still worth it? obviously, it's been a significant effort, but the bawsca board and i remain committed to it. [ please stand by ]

>> it continues to raise a question of what our future demands will be and how that

will be important to our future decision making. with that, that concludes my comments. >> thank you so much. i think the water transfer pilot is very exciting, and i'm all paying and believe we will be able to learn a lot from what you learn, and i know we are heading into further deeper conversations about water supply and i would hope that from the p.u.c.'s perspective, even as you are undergoing your project and your learnings that we could deeply explore water transfer, and what we could do to really maximize both conservation and supply. i appreciate your bringing it to life, and if there's a way that

we can at least have the conversation and explore the possibility of these water transfer mechanisms and understanding the differences in our situations, it could be very productive all the way around. >> what is the current status of that? >> hayward has concerns, gratefully about the impact on their system in a nonemergency situation, however, they are supportive of the pilot and we are putting into place monitoring efforts with them, that will help them during the time of the pilot. they contest what is going on with their system pressures which is part of their concerns, and they had never done that

before in prior use of the inter- tied for emergency purposes. this is going to allow them to more fully understand the impact on their system as well, and they are now supportive. >> you're welcome. >> any other comments or questions. >> thank you very much. >> any public comment? >> thank you. i want to thank many for pursuing this effort, which must be frustrating to just move a little bit of water a little bit differently, there's always something changing in california water. we worry about fire sent earthquakes and environmental protection and all these things, it's great to be able to do things differently even when there are so many institutional constraints and so forth, so i hope you folks will work with