administration that wants to roll back clean water act standards. probably hadn't heard about that. didn't get a chance to weigh in on it. i don't think staff sin sync with the community -- is in sync with which he community. there's strong support for protecting the bay delta and tuolumne river but it's not reflected and i think staff is not giving you the credit you deserve as commissioners. >> commissioner: next speaker, mr. decosta.

>> we're glad peter is back and we needs commendation from you because he's a man that can connect the talks. when i come here my relationship is is for the indigenous people so for all the b.s. about the resolutions if the indigenous people are not at the table, who preserved and the land was pristine for 15,000 years and y'all failed to consult indigenous people they should be at the table because they can speak for the salmon and it's not a joke. this is a very spiritual thing. p.u.c. initially took a position was we'll go to court and whatever, that doesn't work. a good way is to embrace and

bring people together and come to a consensus which sfpuc is slow to comprehend. i toll -- tell you why it's slow to comprehend. spiritually the heart is not in the right place. it's all about money. if you take the reika act and those mission objectives haven't been fulfilled i'm not here to explain what it is. you dam the hetch hetchy reservoir. we're 160 miles away. who is telling whom what to do? some of you commissioners have

empathy but some of y'all know and that's why when you read the latest report from the united nations that over a million species will be extinct and realize about climate change and realize the indigenous people are now desperate and at one time i brought the indigenous people here in this room and they said the same thing. let us be at the table. because we respect mother earth. don't find a white man saying too many times i respect mother earth. what they respect is greed and we must change this philosophy. thank you very much. >> commissioner: thank you. are there any other public

comments? seeing none, you may continue mr. kelly. >> the next item is the quarterly budget status report, a.g.n. handler will give a presentation. >> commissioners eric sandler a.g.m. of business service. welcome commissioner maxwell and paulson. i'm here to give an update on the budget status of our various e enterprises. it reflects three-quarters of operations ending in march and the results are largely similar to what i described in the q2 report. we're positive net results for waste water and clean water program. we're seeing lower revenues for the threeient prizes or water

sales -- three enterprises of water sales largely the result of extremely wet weather. it rains a lot, we have demand expression on the water side. there's a lot of cheap power in the state so power sales are done. we saw this a number of times in the past and it's largely a result of hydrology. we're seeing demand expression with wet weather and more in the wholesale than retail. you see lower revenues. they've been of where -- offset in new service connections, land

sales, etcetera. we're seeing about $3 million in savings primarily from salaries but also from rebate programs. on the waste water side of the against, we see the impact of wet weather have you demand expression in water sales and sewer sales are based on metered water use. we have seen slightly lower revenues on the see sewer side and significant savings in the uses primarily salary savings and seeing the positive impact on the sewer side. we're seeing in terms of the power enterprise largely the same impact that we saw in q2. we're seeing a reduction of that $12.5 million or 6% in revenues and that's power sales revenues

water sales revenues and gas and steam. it's across the board. on the use side, basically flat on that budget. we have savings offset by higher power purchase cost and we procured power during the mountain project and power prices turned out lower in the winter than expect sod we had an -- expected so we had an increased cost in purchase power and in terms of the clean power s.f. program we're at budget in terms of revenues and meeting targets set for the various enterprises. the fund balance reserve policy with respect to the power enterprise shows a percentage that's 18% which is lower than

the 25% to 68% target however you adopted changes in the capital budget closing revenues to fund balance and we'll leave that target at the end of the year when it passes the policy target. that concludes my report. i'm happy answer questions. >> commissioner: one question. going back to page 6 maybe i slipped over it you said there were savings to wages and benefits based on? >> vacancies. >> commissioner: thanks. >> we're trying to fill them. we really didn't want those savings.

>> commissioner: thank you. any public comment? thank you very much. >> so the next item is the water enterprise capital improvement program quarterly report. dan wei. >> good afternoon, commissioners. today i'm going tuck about two programs the first is the water capital improvement program which is an ongoing 10-year program. the second is the water system improvement program and i'll pause between each for questions. so starting with our 10-year water c.i.p. a few highlights i'd like point out from the last quarter.

one is that we did complete construction of the snow water treatment plan system so it was ready to go in time for the shutdown which was a milestone to supply water and address the issues of concerning going into the shutdown. the construction project for pipeline number 2 was awarded so we're moving forward with that work. the watershed center long term improvement project is nearly complete and we have installed 7.8 miles of local water pipeline to date in this fiscal year and the anticipation is we'll install about 13 miles this year.

the long-term improvements includes two parts. the first part is nearly complete the construction is nearly complete and substantial completion is expected later this month. you can see the pictures of the exterior years in the past and this is where staff has been working. building and shops and internal systems and communications etcetera condition and we look forward to anticipating the watershed center within the next quarter. we look forward to that contract going forward as well. >> commissioner: can i ask a question about that. we haven't really been briefed where they stands. the last time was a year ago where we had a presentation on design and there was discussion

on changing design components and as time goes by things get more technologically advanced. how much of that will make it into the r.f.p. >> we can coordinate on that. i mentioned the activated carbon program has reached substantial completion and hand over to operations. we did not operate it during the shutdown but it was ready. the operation folks are ready to turn it on later this month and to be able to address issues and preemptively combat the issues

prior to serving up water the local reservoirs. ive wanted to highlight some dam projects and we've been looking forward to them since the incident in 2017 in orville and we resourc received letters to our facilities and we're taking a close look at the spillway and the dam itself, outlet tower and we do anticipate construction work there so right now we're in the planning phase and will go in the design phase in the next year or so. the san andreas dam one of the older facilities is a project we're doing work on in the planning phase.

we're doing hydraulic evaluation and we have the highest event you could expect in a major flood event and we want to make sure that spillway can hand that will flood. moving on to water supply issues and they investigate the potential for purified water in direct and indirect potable reuse we're expecting a review statewide and working with water agencies to develop potential opportunities to up to $15 million gallons per day of water with advanced technologies within 25 years. we're working with bosca and

other partner agencies on the program called portable reuse exploratory plan and purified water altern tiatives and an expansion in the east bay. we're working in a partnership between eight agencies and identify additional ways to move water within the region so -- >> commissioner: so these are all next steps? >> yes, things we're looking into. >> commissioner: thanks. >> finally the west side recycled water project is making good progress with new

facilities and that contract is advanced through the first four columns and the pump station and reservoir we expect to be awarded in the next quarter. the pipeline construction which is essentially complete to distribute the recycled water from the oceanside waste water treatment plan and the irrigation system retrofit to be able to supply irrigation water from this facility. with that i'd be happy to take any questions. >> commissioner: where the heck is the last one? >> oceanside waste water treatment plan. >> commissioner: in san francisco? tarabell. >> underneath the zoo.

>> commissioner: any public comment or comments? >> the next it is the water systeme is the water systm is the water system improvement program local and regional update. >> the program is 97% complete. you've seen the slide before so i won't dwell on it. as you know the project is substantially complete and it's been turned over to operations. the final construction completion is anticipated in june so they're working on punch list types of items right now. there's no quantifiable risk remaining in the contract and

the project's received a number of awards by the great work done by so many and thank you to this commission's support for all the good questions and support you have given over the years keeping the project to completion and it was great to see some of you out there and commissioner caen we're thankful for your support over the years but missed you. >> commissioner: and congratulations to you. it's been an incredible effort. thank you so much. >> thank you for that. and a subproject is the facilities at the alameda creek

diversion to take it through a two-mile tunnel to the dam. this project is essentially complete as well. final completion anticipated soon. we did wet tests when it rained in march and we didn't finish because we didn't get enough rain. the contractor's going to come back next winter to make sure everything's working properly. the system functional. we just want to make sure we do it with water. >> commissioner: that can't happen this year? there seems to be a lot of water? >> there is water but we want to test the systems when we get a lot of water coming through through the fish ladder, through the other outlet works over the top of the dam and make sure everything is working properly with respect to how much water goes through the various

components and at that time. >> commissioner: there's not enough water for the testing? >> commissioner: we'll have to get you more water next year. >> that's right. wife continued work on the revised draft and we will be recirculating that draft we don't have an exact schedule at this point probably this fall but we will not re-forecast until we have the project. the project schedule will be known once we get that draft

published and approved. and finally the other major project beyond the end of calvares and the alameda recapture project is in two phases. phase one is still in construction and we anticipate final construction completion this year and it's been delayed because of changes that needed to be made to the well station to address changes in chemicals from one to another preferred for safety reasons and a test is being developed in consultation with operations. and so the design is underway

for a portion of the project. there were comments about the project at the last meeting and we have been in touch with bosca and scheduled a meeting for june. we'll be meeting with them to talk with the status of progress of meeting the supply level or service goals and will report back to the commission after we meet with bosca. will that i'll be happy to take further questions. questions, commissioners. >> commissioner: any public comment or questions? thank you. when our water bond issues came on ballot in 2002, commissioner maxwell was a supervisor and was

very supportive and unique she's on the commission as the program is winding down. you've seen it all. >> i wanted to also point out that it's like the game of thrones, towards the end though i haven't really watched it but it relates to all the history we've gone through and the relationships over the way. it's amazing we actually went to the calvares to see how many retired folks came back even ed harrington came back and wanted to see the project because he with you part of of the process and it was amazing to see everyone come back for this major accomplishment of this

department. as dan said we have to give a lot of people credit who worked on it in the past. hats off to everyone who was a part of the whole process. >> commissioner: so my next and last item is the famous report that came out. the 90-day report on electricity service options. robert hill. -- barbara hill. >> clerk: assistant general manage for power. our report was published. i wanted to give you the findings. it reviews our 100 years of power service for residents, businesses. the challenges we've had in getting fair access to pg&e's grid to provide this service.

it highlights our shift in focus since the discussion with this commission and publication of our 2016 business plan and as it was enabled by the passage of proposition a in june of 2018, toward a more aggressive investment in building our own distribution systems and looks at the financial challenges that led to the filing of bankruptcy protection and the opportunities that presents nor -- for the city and three approaches with varying levels of independence. one would have us continue to provide pg&e to provide distribution service and second more independence would have us strategically invest in distribution the p.u.c. would own alongside paying peng&e to

service where we don't own our own facilities and finally, full independence where we pay pg&e a fair-market value and own and operate the systems serving all san franciscans. the report shows the potential for long-term benefits relative to the investment cost and risks and looks the full independence i just described. it provide that full independence option provides the most assurance for durable cost savings and cost-effective modernization of the grid and meeting affordability, clean energy, reliability, workforce development and equity. all that with the maximum community engagement and accountability.

and tfocus should be on acquirig the pg&e facilities. with that i'm take any question you have. >> who did the study? >> it's a staff report. >> internally with p.u.c. staff. >> and we worked with the city attorney on the project. >> commissioner: thanks. >> clerk: you're welcome. and this is a report relying on publicly available information. >> commissioner: is there costs.

>> the costs range from $25 million a year to a few billion. and how to those are structured? it would go to the prop a authority so revenue bond financed dependent on revenues received from providing electric service. >> commissioner: and paying pg&e for the distribution and if we were to make an offer, what would we offer and all that we'd take into consideration as we move forward. and we'll be working with the

city attorney to get more information as we plan to pursue this. >> we know today we estimate that about $300 million each year is paid by san franciscans for just distribution service from pg&e. on top of that, through state programs, pg&e charges san franciscans about $60 million a year for public purpose programs. the total revenue stream going from san franciscans to pg&e is estimated at $360 million. >> commissioner: and if we took it over? >> we're looking at could away ford to purchase the system and operate and maintain it. >> commissioner: at a competitive rate. >> yes, at a competitive rate. the analysis looks at the same revenue stream.

then of course as we dition into this deeper we need to be able to project out over time what kind of cost do we expect we would incur and revenue stream could we expect to see and expect revenue bond finance acquisition and pay for physical separation of the system we would be taking over from the system pg&e would retain. pay for the debt service. all the costs that come with this, could we afford it under that same revenue stream. >> commissioner: and a piece around the infrastructure and the condition it's in and safety and probably an additional track around the jobs fees. >> all the costs, could we afford them. that's the additional work we're engaged in. the continuing work. >> to follow-up on that, in the

report, which i have not read, the things the commissioner was asking in terms of workforce and the transferring of jobs assuming that happens as well as the viability of the infrastructure if it needs to be improved and what the costs is is substantial to evaluate and it's not been addressed yet. the workforce and viability. >> we don't know about the viability of the facilities we'd be purchasing it's difficult to get that from a desk top paper review. we can get a sense of the age of

facilities and such but really it will take more work on that to get a good solid number workforce we know what our workforce costs are we know what pg&e's cost and looking at a revenue stream we know compensate the workforce and want to make sure we're ready to make an offer who have the knowledge of the system and can help with improvements and knowledge of the improvement and customer base in san francisco they've been serving. >> >> commissioner: and i want to put a marker down when it comes to the benefits it would be a significant transition for folks in the pension fund that would

be knocked out of their current accruals to come into the system and i hope that is part of the total evaluation in who wants to work assuming this goes forward as opposed to staying with pg&e which is not just a for instance company. -- a san francisco company. >> it's not talked about a lot in our report but it's in the work plan for work. the other aspect with respect to workforce is the kinds of improvements we are talking about separation of the system improvements of the system to bring it up to good state of repair. all the city's workforce habits and requirements local hire and all that effort are capital improvement programs we envision would be part of any acquisition

effort. >> all these issues are manageable once we decide to do that? >> yes, it's manageable. i don't want to under state the complexity of this task. this is a heavy lift. this would be a big deal for san francisco. we're looking at our operational readiness and partnering with other city departments to look at the overall city's organizational capacity to take on the task. >> another consideration, how about if when san francisco and l.a. and others decide to go into this new business, what about the smaller municipalities, what would happen to them and may be stuck

with pg&e and maybe paying more because the larger customers aren't there. is there consideration to that or anybody else to consider that? >> we are including na in the scope of -- including that in the scope of our ongoing study and what is the affect on rate payers if it leaves the system. there's costs shared among the customers, if we take some of that away what will happen to those left and trying to understand the impact. we expect it will be an area of concern and interest for the california p.u.c. as they ray role in reviewing any acquisition like this and we'd be well prepared to address that. >> thank you.

>> at some point understanding internally what the impact would be and clean power s.f. wouldn't exist at a separate line of business but all be integrated. i think for the competition to have a clearer understanding of that to instill more kfrts in how we would manage and run it we have the benefit of performing the same businesses. not at the scale we would with this acquisition but we already have a customer billing and already have meter reading, transmission, distribution, outage response. we already do all those things. we have some capability so the issue is scaling it up and making sure the other city departments are scaling up with us. and yes the clean power s.f.

staff would be absorbed and integrated into this new public power utility. this local not for profit entity. >> commissioner: hetch hetchy too. >> yes. >> and this identifies issues that doesn't resolve them and the report acknowledges there's a tremendous amount of work that needs to be done and a serious offer let alone conclusion of the deal. i would like to see the work plan for addressing the issues

and as part of the work plan i'd like to see participation in the issues involved. and we need comment to be provided. and i would like to schedule an item on next calendar if we could to discuss that memo. it will help put the idea of the

context of what it means within the context of bankruptcy. we have considered this many times in the context of imminent domain municipalization. this is equally important to understand how that's different and what opportunities and challenges that may present for us. thank you. >> any other comments, commissioners? >> i'd like to highlight eight of the stuff we're doing so that we could be in a position to make an offer and so we may want to talk about reserving what we're doing.

>> it's privilege and confidential and we can discuss it in closed session. >> commissioner: that's what we need to figure out. >> that's what we cannot do and cannot be a case the program and analysis is done in secret and finished as a fully baked product. it cannot be that. we need to figure out how to stage our involvement so that is not what it turns out to be. >> any public comment and questions. >> that concludes my report. >> clerk: item 8 is the consent

calendar all matter listed c constitute consent calendar and will be acted on by a single vote of the commission. there'll be no separate discussion unless a member of the commission or public so requests in which it will be removed from calendar and considered a separate item. >> commissioner: commissioners, would you like to delete any item? and so the public, is there any item you'd like taken off the calendar? >> commissioner: may have a motion. >> i'd like to move the consent calendar. >> second. >> commissioner: all in favor? opposed? the motion carries. next item. >> clerk: applying to accept grant funds from the office of prevention and response in the amount of $35,000. >> i'll move the item.

>> second. >> commissioner: any public comment? any discussion? the motion carries. next item, please. >> clerk: item 10, approve the water supply assessment for the proposed 655 4th street project. >> there's similar projects. should we call them at the same time? >> commissioner: i'd agree with that. >> commissioner: very good. read the four items, please. >> clerk: item 11, approve the water supply assessment for proposed blocks of bluxome project and brannan street flower mart project and the a98

brannan street project. >> commissioner: thank you. >> commissioner: if you can address all of them together. >> i'd be happy to do that. steve richie assistant general manage for water. the water supply assessments are for four development project in san francisco. what the commission's obligation is is to basically require us to prepare water supply assessment and available water supplies are sufficient to serve the demand generated by projects of the specified size. that's what these are do -- to do and based on water management plans and documents that need to be prepared every five years and the next plan is due in 2020. and what those are is an assessment of all the known developments of the projections regarding populations and jobs over the next 5 years. those are done every five years.

they've had to be done since the mid '90s because of concerns development projects were assuming water was available and it may not necessarily be true. the urban water management plans are routine base documents but for certain size you're required to an assessment including an assessment of what the demands are for that project and how they may be over time. because they're fairly large size, we also have to build in a little unless of how the non-potable ordinance for san francisco may apply and that's part of the demand and supply assessment. we have to provide their water from the water water from their own facility in san francisco. in this case, two are new and two are re-doing previously

approved water supply assessments. the biggest change is inclusion of analysis of three potential scenarios relating to the bay delta water control plan i referred back in the early item. and those three snrcenarios is e water control plan as adopted and the voluntary assessments, neither is implemented. either the result of litigation. nothing is implemented. the second scenario is the bay delta plan is not implemented but march 1 version of the voluntary agreement for the tuolumne river is implemented. that's the second scenario and the third is the bay delta plan is implement and the march 1 agreement is not implemented. all three are possible outcome in the future. staff has been work closely with the city attorney's office with

us and the planning department to portray that uncertainty in the water supply assessment. i won't go knee -- into details but there's drafts for how they're presented now. these projects do have available water supply that particularly under the third scenario there would be more rationing required in dry years than what is our current level of service which is 20% rationing is the maximum we'd like to achieve. we feel the impacts of the bay delta plan at the highest amount would be more than that so it's presented that way. the other two versions, there is adequate supply available without increasing the ration will level above the 20% level. it portrays all these. these documents are intended to be a pore trarl -- portrayal of the context of how we have you demands within our system.

it's not intend tended to be decision -- intended to be a decision document whether we like or not that's planning department. these are put into the ceqa process the planning department is embarking on. it also doesn't change in any way the policies that this commission has adopted in terms of what our priority are going forward and our priority going forward for water supply are continuing to mede our contractual obligations to wholesale customers and the supply built into the water supply agreement 184 million gallons a day and 81 million a day for san francisco and the next priority is we'll meet our environmental obligations and have flows at whatever level necessary to achieve the biological objectives. then we get to further priority. one question out there as can we

make san josé and santa clara permanent customers. that's an issue just dealt with pushing that down the road a little bit. it's a lower priority than meeting existing obligations and want to make sure that's clear. fulfilling demands of existing customers and san franciscan our number one priority. so all that said, these are documents between degrees of reliability under the different scenarios in the future. and this will then be used by the planning department for their assessment of whether or not to pursue or how the projects should be evaluated in the ceqa process.

it's a long way of saying it's somewhat complex at times and that's the fundamental conclusion we've reached and there'll be more over time. for the new commissioners we see one every couple of months over time. they keep coming. i'd be happy to answer any questions. >> commissioner: we have a comment. i'd like to hear from the public before we get into it. >> commissioner: okay. peter druckmyer. >> clerk: since the items were called together it will be a longer public comment period. >> i'm back making up for last time. i sent a letter about this yesterday and i'll leave copies here if you haven't seen it. i think it would be a mistake to

approve water supply assessments at this point and encourage you to direct staff to meet with conservation organizations and the san francisco planning department to see if we can address the issues we have with the process. the water assessments look at the bay delta plan standards to be implements. and it says the sfpuc could not meet the projected demands of the retail customers including the proposed project. existing customers in foreseeable future development without rationing at a level greater of a maximum of 20% system wide rationing beyond 2020. the sfpuc estimates 30%

rationing across the retail service area. the standards were adopted. and there would be water shortage. and it will lead to more demand for water because of the severe jobs housing imbalance.

i mentioned the survey we commissioned last year protection of the bay. protection of the tuolumne. and next is affordable housing 88% of affordable housing for san francisco. for market rate 69%. for office space 40%. people are making the connection when jobs are outpacing housing it adds to traffic congestion and housing prices, etcetera. i think it would be prudent to see if we can work something out with the department. thank you very much. >> commissioner: commissioners. >> thank you.

. >> commissioner: i have a series of questions if you'll bear with me. let me restate a little bit of history. the water supply assessment came about 20, 30 years ago when east bay mud said they didn't have enough water to supply the valley a proposed development within their service area. that set off a fire storm that ended in legislation creating a two-step process. one for projects of a certain size that is the water agency had to assess and if they couldn't supply they had to say

how to meet them. you can't just say no and go away, you have to tell us what you'll do about it. the water supply assessment we're looking at is a product of that it's to answer the question, do you have enough water and start a process and inform the planning people with the answer and if the answer is no, start the second phase which is to assess what it would take to serve them. one question for the city attorney, i think the intent of the legislation is out of the water supply assessment would come a yes/no determination. is that in fact a requirement of law? we have to stay yes or no we do or don't have enough to water. >> the agency has to make a determination whether there'll

be sufficient supply available to supply the project over a 20-year period in single-dry and multiple-dry years. the phrase in the statute is sufficient. >> is that answer to that question a yes or no? it's sufficient or not sufficient? >> in the w.s.a. that's how we phrased it. >> commissioner: this doesn't come to a conclusion that says we have enough or don't have enough water. it says we can provide water is subject to rationing which is in excess of our current levels of service standard. that's a nuanced version of yes or no. it says we're not in a position to service beyond our level of

service goals or whereas what's in front of us legally sufficient? >> it doesn't speak to how much rationing you would impose but they clearly layout the supply shortfalls and are clear there would be significant shortfall under certain scenarios requiring rationing and the way to respond is through rationing. >> commissioner: >> offsetting any future rationing if there is a shortfall. however, none of those are sufficiently developed to have a completed ceqa document and often the agencies i'd foi what's in the pipeline --

identify what's in the pipeline that could meet that in the future. >> i'll take as an answer it's sufficient for us to fully inform the planning process as to the conditions underwhich -- under which we could provide water and this document is an attempt to meet that standard. >> i would not disagree with that statement. there's a structure developed for a water supply assessment. my question is is that structure the mandated structure or minim

minimum requirement for analysis done? >> it's a minimum and mandate. i'm not sure i'm following. >> as an example, the water supply assessment does a multiyear analysis of drought and it take three years. we use eight and a half years. if we chose to, could we provide input from eight and a half year analysis? >> you to do a 20-year projection. it include the design drought. and you guys are using the design drought to come up with your numbers. >> we are using the eight and a

half year drought scenario to inform the three-year requirement. the first three years would be the first three years of whatever drought scenario we had which would be an eight and a half year. that's to get to the end of eight and a half years is how you would act in the first three years. >> the last three years would look different? is that right? >> under the state board scenario it gets quickly up to a high level of across the board. by the time you get to that you're looking at the highest level of rationing. >> my impression was as we went out beyond the third year, those numbers got bigger? >> they may. i don't recall off the top of my head.

they may get bigger but they get big fast in the first three years and by the third year it's only a smaller increase in the last five years. >> commissioner: i have a concern. if the planning scenario being used for water supply assessment is different than the scenario we use in assessing the sufficient of our own water i would think that's a problem and any conclusion done on the shorter period would be misleading. >> i think the conundrum we're in there is and it's interesting because people have been critical of us for using such an extended scenario when the state only mandates three years which the state is now saying publicly we think people should plan for five years of drought and think some day you'll all catch up with us at eight and a half years which