>> welcome to the third budget hearing. madame secretary, please call the roll? >> president moran: here. >> vice president ajami: here. >> commissioner maxwell: here. >> commissioner paulson: here. >> madame chair, we have the quorum. >> great. before we start, mr. harrington has an announcement to make. >> commissioner harrington: thank you, chair. good morning, commissioners and staff. i have sad news that morning.

i'm resigning in the p.u.c. immediately because of a conflict that just arose. i want to take a moment to tell you about it and say goodbye. as some of you know, i have property in the county and that incurred damage in the fire including losing a house. i was one of 70,000 people who filed a claim for damages as part of the pg&e bankruptcy case. after hearing little or nothing about the claim, i received a preliminary payment award on the claim. i'm told even though the decision to award the claim is from a bankruptcy trustee, i have a conflict with any matters related to pg&e. this would mean i would have to recuse myself from a major part of the activities, including even this budget hearing. obviously, the p.u.c. power

enterprise project have continuing and difficult decisions to make related to pg&e around even though i would not let it cloud my opinion, if i had to recuse myself from all discussions related to pg&e, it would hard to be a worth while commissioner. also to stay on the commission with a potential of conflict, might lead pg&e to be able to challenge our future decisions. i'm reluctantly resigning. i wanted to tell you how much i've worked with you on the commission. the staff are a great group of people. i've been impressed by the quality of the constituents in the environmental community who push us to do better. we're lucky to have such people to work with. i wish you the best. it's been a joy to work with you. thank you. >> thank you so much, mr. harrington. this is definitely a sad day and sad to see you go and i want to

personally thank you for your service and all the wisdom that you provided to this commission. since this is an announcement and not a discussion item, unfortunately, we can't have a broader discussion about this, but you'll be dearly missed and thank you so much. madame secretary, could you read the next item. >> item due to the ongoing covid-19 health emergency and the recommendations by the san francisco public health, any emergency orders of the governor and mayor concerning social distancing. this meeting is held via teleconference and televised. i would like to extend our thanks to sfgovtv for their assistance during the meeting. if you wish to make public comment on an item, dial 1-415-655-0001. meeting i.d., 2480 234 5422 # #. to raise your hand to speak,

press star 3. since this is a special meeting there will be no general public comment period. public comment will be at the conclusion of the item on the agenda and you must limit your comments to the topic. if you do not stay on topic, the chair can interrupt and ask you to limit your comment. please address your remarks to the commission as a whole and not individual commissioners or staff. i want to announce item 4, the wastewater was completed at the special budget meeting of january 14 and will not be heard at today's meeting. madame chair? >> thank you so much. i would like to announce that the san francisco public utilities commission acknowledges that it owns and are stewards of the unceded lands in the territory of the

ramaytush ohlone tribe and other descendants. the san francisco has -- sfpuc recognizes that every citizen residing in the greater bay area has and continues to benefit from the use and occupation of the ramaytush ohlone tribe and lands since before and after the san francisco public utility commission's founding in 1932. it is vitally important that we not only recognize the history of the tribal lands on which we reside, but also we acknowledge and honor the fact that the people have established a working partnership with the sfpuc and are productive and flourishing members within the san francisco bay area. madame chair, please read the

first item. sorry, madame secretary. >> the first is the summary of budget hearing questions: >> yes, madame secretary. we will have charles pearl and laura bush discuss responses to your budget questions that occurred during the course of the last meeting. >> good morning, commissioners. welcome to budget hearing number 3. we very much appreciate all of the comments that we received over the past two hearings. and just wanted to remind you a lot of great work has gone into the budget development both on the operating side and the capital side. and we very much appreciate your input and believe me, we're gathering all of the comments and we're incorporating those as we can as we go through this.

for this first part of our conversation today, we felt it was more helpful to organize the response to the comments and questions by putting together a few slides for you. so i'd like to just walk you through those today if i could. so, commissioners, here are the sort of main areas we heard comments and questions around primarily at the last meeting, but just wanted to touch base on these three areas with you this morning. again, the change for wastewater and water that is on deck for next year will provide a little more background and context for that. the capital plan development approach that the agency has for this cycle, again, providing more details around the unfunded portion of the plan and, frankly, what are we going to do about it, is the comments i

heard and we'll provide more color on that. and then there was a request for providing the details around the financial plan. just as a reminder, i provided you an overview of this on the 7th, but there were questions and comments around the detail and we'll provide those as well. we'll provide all of the information on the plan and i'll go through a fairly lengthy presentation on the 8th of february when this is up for review and approval. next slide. so, the first thing we heard over the past couple of meetings is the 0% rate change for water and wastewater. and just wanted to talk through a few points there. the decision to not have rate increase for water and wastewater was made last summer as the agency work begun, just

getting under way now on the service study. as you may, know, the service study helps to form our rate setting, so we're working on the power cost of service study that will inform rates for the next few years. for power, once the financial planning team is done with that work, they'll turn to the water and wastewater cost of service study. so that hasn't gotten under way yet and we'll definitely engage you all in the development of that cost of service study and the rates proposal over the next year or so. c.f.o. sandler presented this to the commission at the budget kickoff on 9/28. we didn't make this decision lightly, commissioners. we, of course, wanted to make sure we're balancing the needs of the agency and the resource needs of operating and capital along with the public trust and ratepayer affordability issue. we wanted to make sure we're doing right by the ratepayer and

the ratepayer funds that we have in our care, but also that we're providing sufficient resources for the agency to do what it needs to do to deliver the reliable service that we have. just as a point here is that once we get into the rate study, we fully expect that the consultant will see the fact there was no rate increase for 23 at that point and the recommendation will be a slightly higher increase, perhaps something towards double the rate of inflation or so, for fiscal 24, so we're expecting and projecting in our financial plans a retail rate increase between 5% and 6% in 2024 to catch up for the zero we're seeing last year. and this allows general manager herrera to become familiar with the rate-setting process. it's actually quite complicated.

we want to make sure he's provided guidance. and if we need new strategies, we're working with him on that. that all together was the reasons and the rational for taking the rate pause for next year. the next item in the summary focuses on comments and questions that we heard around the agency's capital plan as presented to you so far. a lot of great work as i mentioned at the outset has gone into the development of, this but really the focus over the planned development has been on these three areas. of course, meeting the investment needs of the agency, we want to make sure we're maintaining our system and putting in new investments for our infrastructure to, again, become that utility of the future. we want to make sure we're ready to deal with the unexpected and to be as resilient of an agency as possible. we, of course, want to make sure

we're using ratepayer funds efficiently. we want to program the funds that are already in place before we ask for additional. that's a standard thing we do every year, but in particular this year, we wanted to make sure we were using up those appropriated funds. and then affordability. we want to make sure that as this agency recovers from the pandemic over the next few years and our customers also recover their pocketbooks and their own well-being over the next few years, we want to make sure we're balancing our cost and rates as we can. next slide. so with all great laid plans, we had a number of challenges. i already talked through this with you a lot, but quickly, we reviewed the unaccumulated unspent funds as i just mentioned and we developed spending plans around the existing budgets that we had.

and where we could, we moved unused funds around so we could use those for fiscal 23 in terms of developing a lower budget request for you. our infrastructure team was charged with examining the level of resources available to execute existing projects and new project spending proposed over the 10 years. that review resulted in some years having almost 50% more spending being proposed than the ability to deliver on that proposal. meaning, we were asking for project appropriation spending here, but we only have staffing to handle, you know, in some cases 50% of what was being requested. commissioners, we had multiple rounds of reviews and we, of course, tried to better align

the proposal with the reality of deliverability and the ability to perform on our projects. and so we made a decision. we didn't want to cut the plan. we didn't want to just fund it to make it -- i don't know to gloss over the issue. we wanted to show the issue and bring it to your attention and the public's attention. we want to have the conversation in an open way and tell you what we're going to do about it in terms of the deliverability question. we also, in terms of costs, had an almost 10% increase in the planned costs over the 10 years. again, inflation increased in need and scoping increases. and then across the three enterprises, fourth including cleanpowersf, we have hundreds of projects to review and we, as

an agency, realize that's a lot. so we understand that we need to do better in terms of prioritization of our projects. what is most important? what is the criticalality of the infrastructure we're looking at in terms of rehabilitation or building? so creating those tools is going to be a key thing we'll work on as well. so the reality of this work, this just shows the competing challenges we had, you know, pushing up the capital plan in terms of costs. of course, growing needs, inflation, prioritization, difficulty, everything really makes it into the plan but, of course, pushing back on that are the constraints that are sort of inherent in this conversation. i already talked about deliverability. rate affordability, doing right by the ratepayer.

we want to make sure we can afford what we're planning to do over the longer term. and then budgeting efficiently, you know, if we have a $5 million project but that's being budgeted in one year, why would we do it that way? why not budget it over the five years? these are the things we wanted to share with you and the ratepayer in this forum and tell you what we're going to do about it. so here's the unfunded portion of the capital plan. i wanted to focus on -- we've already talked about the overall capital plan in the first column here, $9.9 billion, again, over 10 years. so, yes, it's a lot of money, but, again, it's over a 10-year look-forward. and the unfunded portion is about 13%. you'll see the main pieces in wastewater about $975 million. most of the $1.3 billion is in

wastewater. but there is 2 -- a little -- around $200 million in water and $500 million in power. and this is -- our focus here, of course, will be to -- as we move forward with the next version of the capital plan -- looking at not only how we're going to handle this unfunded piece, but more specifically, you know, what it will cost if we needed to do this work. and how we would incorporate this into our planning. so what's the implication of having this unfunded portion of our capital plan? well, firstly, all of our capital plans are a snapshot in time. they evolve as our infrastructure and planning needs change and as cost estimates are refined. we, of course, update them, the capital plans, every year.

you have a chance to see this update every year and what we're showing you this year is not only a plan that is larger than what you saw a year ago, but one that is what we're calling about 13% of it is unfunded. so i'm hoping to describe to you about, first of all, what it is and what we're going to do about it. it's an imbalance between available sources and uses. just a reminder, the upcoming year is balanced, so we're not talking about any issues with next year. this is fiscal '24 and beyond, so the remaining nine years of the 10-year. we wanted to bring all of the infrastructure needs to your attention. that's why we are showing you the entire capital plan. the a.g.m. and the project managers thought it was critical important for us to share all of the information with you as we usually do, however, we wanted

to make sure we were highlighting the constraints that not only the p.u.c., but many large agencies have with the notion of deliverability, what can we get done in affordability. with capital costs being the largest component of our spending, commissioners, we wanted to pause here and say that we understand that first of all, we've done a lot already, this plan talks about a lot of capital in the pipeline and there is even more beyond. so it's a lot of expense, the lot of responsibility and a lot of execution and we want to make sure we have our ducks in a row to provide confidence that the plan can be executed. so there was a question that was raised around what portions of the capital plan could be considered as unfunded. and while we don't have a sort of line in the plan to say, you know, the project is above the

line are funded and the projects below the line are not funded, it's not that black and white, we did reach out to the a.g.m. and project managers to provide color here. again, if we were to say the unfunded portion is being removed from the capital plan -- which is not what we're saying -- but if we did, on the wastewater side this would mean reducing the biosolid project scope, looking for deficiencies, defers ging the starting of projects. which is all the main replacement work. and so, a lot of times when you're looking at a particular year, for example, and there is more need than available funding, one of the levers that we have typically is time. and so we look at the criticalality of that need. maybe it can be delayed a year. maybe it can't.

but it's a lot of, you know, those sorts of questions come up. and so moving around the schedule is one way that is -- or perhaps drawing out the schedule is one way that is offoften looked to for solving issues. on the water side, it would mean main replacement in the latter years of the plan, also perhaps deferral of the meter replacement project. on the power side, it would mean reduction in the retail distribution investments that is critical for the growth of the load that we shared with you. none of these are things that we're recommending, we just wanted to be responsive to the questions around what portions of the capital plan that you've seen is -- you know, potential for removal if we were to have,

you know, sort of be forced into that. and i think -- sorry. so, what are we going to do about this? that was another big question we heard. well, work picked up with the executive leadership and will be spearheaded by deputy general manager carlin as well as chief of staff, friend. this is an effort that will have that executive leadership sponsorship and will be across the agency in terms of developing a core working group of internal stakeholders to look at this question around deliverability. we have some great recommendations from our consultants that did work about a year and a half ago on capital

planning improvements that will be considered. we will be developing strategic discussions for betting, new infrastructure needs and we'll need to make decisions on those. what i mean by that, is if many cases rebuilding an existing piece of infrastructure, it's somewhat of an easier decision, it's just more or less on timing and approach to it. however, if we're talking about a new piece of infrastructure, that typically involves a little more involvement in terms of strategic, not only location and placement, but rational and how does that add value to the service delivery? so, there is a significant piece of strategic conversation that will also need to be teed up in part of the work over the next year. we will be developing a plan

updates for next year. -- at the end of the work, so the work will continue over the year. our proposal to you today will be that once we come back in fiscal '24 for that capital budget request, for the second year of the two-year budget, not only will that year be balanced, but all of the rest of the years will be balanced as well. and we will work through this question around deliverability. that's our goal. i won't go over the other bullets on the slide, but clearly, prioritization, deliverability review, looking at funds and resources and rates will be a big piece of it. as well as we also heard low-cost financing or alternative funding mechanisms. we want to leverage those as much as possible, not just rely on revenue bonds but other funding sources.

so we'll pursue that as a piece of the conversation. lastly, in terms of capital. a short reminder of the great work that's gone into this. so far, you know, we have a process change before us. we get that change is difficult and we will work through it. i have confidence. and we feel that this will benefit the agency, not only from where we are today, but as we pursue executing a fairly significant and large capital program over, not only the next 10 years, but beyond. i do have confidence that, you know, we will work through the issues. and that this, again, when we come back to you a year from now, that we will, you know -- that goal of being the -- of the future, having support through an effective and efficient

infrastructure planning effort is our charge. that's our goal. so, moving on to the last piece of the overview this morning. we heard that the financial plan details were -- would be helpful at this stage. just as a note, commissioners, we -- not the last cycle -- budget cycle, but previous to the last budget cycle, we had included financial plans as a piece of each enterprise overview, so when you heard from the a.g.m. then we would walk through the financial plan of that enterprise. what we heard in the last cycle was, we were being somewhat repetitive, so we tried to streamline the presentation of all of this information and you'll see it's a lot of

information. happy to put this back into each enterprise hearing if this commission feels that is helpful, however, we will provide complete narrative on our financial plans on the 8th of february. we will provide not only a written report, it's a fairly significant lengthy report that you will get that will talk about all of the assumptions of the plan, but also the details of each plan. so, anyway, whatever input you wish to provide to us in terms of information, we're all ears. so this slide here, we had a request to not only show -- which i shared with you on the 7th of january -- the sales volume projections for water, the request was to show the sensitivities. so that's what the shaded areas represent. and so, again, the dotted -- the solid line represents history,

the dotted line represents projection. we -- we don't have a crystal ball here, so we're not assuming the dotted line is the reality, but we're assuming the reality will be in the shaded area that you see. in many cases it's a plus or minus, but on the retail side, it could potentially be below or a reduction if conservation is greater than anticipated or recovery doesn't come back to where our plans assumed. the other request we'll provide on the 8th of february is the additional layer of water supply as being a measure and comparative to what you see here. and this is being historical sales volume numbers. so we don't have that for you today, but we haven't forgotten about that request. you'll see that on the 8th when we present the full financial plan to you.

so, commissioners, here's our financial plan. i appreciate a lot -- it's a lot of numbers. i'm not going to go through all the details, and i'll have an overview on the 8th of february. but to orient you and the public to what you're seeing here, many columns representing our 10-year view, beginning with next year, fiscal '23, we start with the beginning fund balance, which is our savings account essentially. that's how much money we have in our -- in the bank so to speak. it shows sources which are all of the revenues coming in. uses, all of the spending going out. and then the net revenue row is the difference between the sources and the uses. so pluses and minuses. below that is the ending balance, which is just the math

between the pluses and the my -- minuses above. you'll see rate increase proposals -- sorry, projections for retail water customers and wholesale water couple -- customers. you will see the 0% for retail for fiscal '23. below that you'll see a projected wholesale rate increase of just under 16% for fiscal year '23. and then subsequent to that, you'll see the projected rate change for years that follow. below that, you'll see additional metrics. we have -- which ties back to all of our policies. i'm happy to describe these to you, but suffice to say, all of the projections you see here meet our financial policies as they currently exist.

and we would put -- well, we wouldn't show this to you if they didn't, but ultimately, if they did, i would make sure you understood what that meant. then below that you see the coverage numbers. so, again, coverage is -- i'm sorry -- sales volumes. so coverage is where you see debt service, that's the minimum amount of savings account we need to have in fund balance to cover our debt service requirements. and that's a promise we've made to our bond holders in terms of having a certain amount of reserves available for the unexpected. we've made commitments to our investors to repay that. and those numbers that you see there under the debt service coverage numbers can't go below 1.1 or for current coverage or

1.35 for indenture coverage. it's a promise we made to bond holders. >> i have a question here. so, you have fund balance as percentage of operational expenses, 50% on there, let's say the year 2023. can you explain that to me a little bit more. does that mean that you spend about 50% of our funds on the operational expenses? or is it the other way around? >> no, this is -- so, we have a minimum -- we have a policy that says that our fund balance can -- needs to be within a certain range of about 90 days of operating expense. and it can't go below -- it can be within that range, but it can't go below the 90 days of expense. so what this is saying is we, you know -- we have a big fund balance really.

50% is a big number and we can, you know, we can cover half of the operating expenses in that year with the existing fund balance. so that's actually a pretty good amount of fund balance available. if for whatever reason we stopped receiving cash tomorrow, the water enterprise could go half a year essentially and still cover its operating expenses. >> vice president ajami: got it. >> sorry, i'll -- before i move on, the very final rows there are sales volume estimates. and that goes back to the chart that i just showed you. and then the very bottom is single-family residential water use, which does trend around a little bit. and with conservation, we're expecting a slight dip in usage

from a unit perspective. so this is the use of water by households per month. >> vice president ajami: one other comment, question, i have here is, maybe i mentioned this before, i would love to somehow see the sort of like -- the costs broken down to like the, you know, variable costs we have and fixed costs we have. and i know it's not very -- it would be good to have that separation to understand. >> yep. >> vice president ajami: how all these numbers, depending on which side you're looking at, how they relate to each other. >> yeah, commissioner, we will -- so we're happy to do this as part of these conversations. i just want to maybe suggest that providing you those details as a piece of our cost of service study, with power coming up in a few months, you will --

believe me, you will get a chance to see all of the details around cost, the power enterprise and clean power as a program, what are the costs, how are those costs being allocated to various customers and lastly how does that get translated into rates. and those are the three steps around the cost of service studies. so you'll be able to see the details you asked for. but we're happy to do that even as a piece of this exercise here if that's something you would like. >> vice president ajami: i think, timewise, i don't feel it's critical for right now. i would just like for us to have a broader discussion around how our costs is divided into these different buckets. >> that's great. and just quickly before we move on. there was a question around the unfunded piece of the capital plans. so, water has little over $200 million of unfunded capital, so

what this financial plan shows is funding the funded portion of the capital plan, but water has about 10% of it. capital plan unfunded, $210 million. if we were to insert that funded portion into this plan, that would be about an additional $8 million in debt service, which is -- it's not that significant of an increase. it's about a 2% increase overall in terms of debt service. what that would translate in terms of rate is about additional 2% increase in the rates for both retail and wholesale over the this 10-year period. so even though the dollar amount, $210 million sounds like a lot, once you average it in over a 10-year cycle, not that great. this is wastewater. i won't spend a lot of time on

this. i already described the details here, but just quickly, the dip that you're seeing -- that we're seeing currently in terms of sales volumes, it's interesting to think of wastewater sales volumes, but again, it's a function of water sales and how much of that water goes down the drain essentially is how the math works. but the recovery is the piece that is tracks similarly to the water. next slide. so here's the 10-year plan for wastewater. again, i won't walk through the -- sort of the layout. it's similar to what you saw with water. if we -- the unfunded piece, however, is a bigger story here. so if we were to fund the unfunded portion of the wastewater capital plan which is fairly significant -- it's $975 million -- that would result in

an approximate $29 million of debt service by the 10th year, which is almost a 10% increase in debt service. probably not a lot and we will figure out how to make that work as it relates to biosolids for sure and the rest, however, what that would translate into, you'll see the average rate increase here. it's a very -- i don't know, two-thirds of the way down, 0% for 23, 8% for 24. and then 7s and then dropping down to 6s and 5s by the end of the 10 years. that averages 5.8% or so over the 10 years. and if we were to incorporate the unfunded portion into this story, that would be an approximate additional 5% rate increase over the 10 years. about a half percent a year or

so. so all of the numberings you see there would go up about a half percent or so each year to cover that. but, again, our goal is to work through the questions on deliverability. again, not simply to appropriate these dollars as -- have more thought put into it. and more than likely it will result in a longer timeline for execution of our capital plan. but we'll come back to you and tell you about what that means. commissioners, this is where we get into the affordability conversation. and so, again, if we wanted to look at what the impacts of the bill are, in terms of the affordability goal, so the commission does have a level of service goal associated with affordability that says the water and wastewater bill combined cannot exceed 2.5% of

the median household income in san francisco. and what this shows is that the at 1.6%, we're currently well below the 2.5%. what this doesn't show is that the median house income in san francisco is very high. -- and growing. and as that median household income grows roughly 3% or so every year, it sort of masks the issue around, you know, is our bill affordable? what is the impact on our customers? yes, we're well below that dotted line threshold, but it's growing, as you can see. it's growing from what we are currently 1.6% over the next 20 years or so -- which is a long time, but regardless over the next 20 years we grow to about 2%. but i'll suggest a different view. we're going to bring back some

things to you, commissioners, during this year, to talk about affordability or affordability in a different way. so stay tuned for that. but the next slide will -- i'll share with you the bill impact, which does help you see what is before us in terms of cost. so this is the bill. and it's a 30-year look. i appreciate that's a long time. but we wanted to show the historical as well as the 10-year plan which is the middle of what's before you and then beyond. so we've gone from $60 or so in 2010 to about $147 currently. that's about 145% increase or so over 12 years. now we have had significant debt issuance for our water system

improvement program, our sewer system improvement program. a lot of great work has gotten done. this has made very clear to the voters when they approve the propositions allowing the debt back in 2002, so all of these things are -- the money has been well spent for not only our operating needs, but our capital needs as well. and we have a lot to show for that. you will see a dip in the bill in the next couple of years. that is the assumed water conservation due to the drought emergency and what is before our customers. and, of course, recovery from that. but over the next 10 years, so, again, from 2022 and '23 up to 2032, you'll see an increase of about 45% in terms of this bill.

-- amount. so moving from $147 combined bill up to $212 by 2032. if you look at simple inflation over that time, again, roughly 3% or so a year, that's about 30%. that describes about 30% of the 45%. but overall, significant capital funding is happening during that time frame as well. so, it would be about 15% of the overall 45% change funds as you can see, pretty incredible investments that we're making on the wastewater side and the green portion there. and this is about, overall, about 4.5% average bill change every year. which is a little higher than inflation, but something that we

can point to in terms of the infrastructure work. and beyond 2032, sort of to the right side of the $212 amount that you see there, it's almost the same trend line. it's slightly less, but we're making assumptions, not only with information that we have for project proposals that are beyond the 10 years, but also general inflation assumptions will, again, continue roughly at the 3% rate. so, again, wanted to show you this whole look. water and wastewater bills have roughly doubled over the last 10 years or so. and, again, when you compare the 2012 average single bill of $74 to today's $147 that you see

there. here's the moving on to power, again, we shared this with you. on the 7th, wanted to provide it here again as a reference point in terms of what's driving the revenue growth that you'll see in the financial plan on the next slide. so next slide, please. so, again, commissioners, here is the hetch hetchy water and power 10-year financial plan. you'll see a fairly significant growth in revenues in terms of total sources growing about 73% or so over the 10 years. a good portion of that, about 53% of the 73% or two-thirds or so of that growth is due to load growth. so that's new customers or existing customers increasing their power demands, primarily in the latter six, seven years

of the 10 years. about 20% of the growth in revenues is coming from rate increases. and this is something that we will continue to work on in terms of the household service study coming your way shortly. we'll be making proposals on rates to move away from what we currently -- how we currently talk about our customers as being enterprise, municipal customers, general fund municipal customers, you know, retail, redevelopment customers. we're going to be standardizing those customers into typical customer classes. so i won't go into that here, but you will see sort of a rebuilding or retooling of our -- of our revenue story for the power enterprise coming out of the upcoming rate study.

power enterprise had a little over $100 million of unfunded capital if we were to fund that here, that would add about $4 million of debt service cost. which is about 10% or so increase on the debt service numbers that you see. you do see a fairly significant increase in debt service. it starts at about where we are now at 4 million and that grows to about $47 million by the 10th year. that is getting a lot of important, critical infrastructure work done and we're going to be using the ability to fund a good portion of it. you also do see increase of revenue-funded projects as our loads grow. as we have load growth and new customers and growth of existing customers coming online, we will leverage those revenues into

funding additional -- so you'll see revenue funding capital growing as well by the time you get to 2026, 2027 and beyond. so a fairly significant increase in cash-funded capital as well. and then in terms of rates, if we were, as i said, growth of around 20% or so over the 10-year, in terms of rates, if we were to fund that additional $104 million in unfunded capital, that would -- it wouldn't add a lot. it would be about 2% increase in the rates over the 10 years. not a large increase. it goes back to deliverability. we want to make sure we're budgeting the funds when we need them. >> so this whole fund balance operational expense, i notice that in every one of the enterprises is a different

percentage. is there like -- is there a rule we have to follow? is there like industry standards that we have to follow? is there some form of a thing that you're following or is it more like, you know, ad hoc, making that decision? >> yeah, we have a policy that it really is based on that 90 days threshold that i mentioned and so, again, we want to make sure, should the unexpected happen, you know, we are able to pay the bills so to speak and so that's roughly 25%. we don't want to go below that. however, if we also want to make sure that the fund balance doesn't get too big. so the fund balance as a percent -- and we can share the policies with you, commissioner, so you're familiar with these. i believe that threshold is 68%

as sort of being the upper limit. so if we have a fund balance that is greater than the upper limit, then we should be talking to you about lowering rates and programming those funds in a way that makes sense. so, again, it's sort of a floor and a ceiling. anywhere in between, okay. prefer to be at a sweet spot in the middle, but don't want to be too low, don't want to be too high. that's the goal or one way of looking at it. >> vice president ajami: great, thank you. >> sure. again, here's clean power. the last couple of slides is clean power. again, i shared this with you on 7th. load and then the financial plan

on the next slide. fairly strong fund balance. fairly stable sales levels. and the real, i guess, you know, point that i would raise is power supply is our largest component of cost. we currently contract for the power supply. the goal over the longer term is to bring -- is have some local generation invest in generation that's here, you know, close to the -- close to san francisco, close to the bay area that we own. those will be sort of the shift over time that you will see. that some of our contract energy will be owned generation through

renewable sources. so, i'll provide a little more color on this when we go over the financial plans on the 8th, but i just wanted to, again, share with you the view for cleanpowersf as well. so that's the end of the overview. i'm happy to take your questions and comments. and go from there. >> vice president ajami: thank you so much. any comments, questions? >> commissioner maxwell: yeah, thank you. thank you for that. it was very helpful. i really appreciated it. i just have a couple questions. could you give me an idea, when you say reduce the biosolids program, could you give me an example of what that would mean? -- if you had to reduce it? >> yeah, i think -- i think -- we know we need to do it.

i don't think there is any question around that. i think it would be around looking for different approaches, maybe different contracting methods, perhaps looking at different methods of involving maybe public-private partnerships and aspects of it, perhaps. or just looking at the schedule. getting things done over a longer period of time. again, not saying we're suggesting that. again, this is the feedback we got from the wastewater team in terms of if we had to. >> commissioner maxwell: there was one project we did, we combined -- or we didn't move something and it gave us over -- a great number of relief. i think it was a small building. is that the kind of thing you're talking about? >> yeah, i think, again, it would be, you know, looking at the aspects of the southeast

plans, trying to get a sense of, you know, are there nice to haves included in the plan, must haves and getting a sense of whether we want to continue with those nice to haves. not suggesting that is what is happening, it's just a question we wanted to be responsive to the unfunded portion of the wastewater plan. >> commissioner maxwell: thank you. when you mentioned prioritizing and difficulty. what are some of the difficulties in prioritizing? i mean, is there a criteria that you start with, or do you have one and go from there? >> yeah, that's a good question, commissioner. i think -- i think, again, being a large agency, we approach project needs perhaps differently across the agency. and i think one thing we could

do is provide our project managers and a.g.m.s a tool that provides a little more consistency around prioritization. one idea there is to make sure that we are, you know, doing risk management analysis to say, okay, i need to do these, you know, 20 projects, how do i choose, you know, amongst them? one idea is to look at criticalality. how important is the work to service delivery? and that might be an easy way of saying, all right, i know i need to -- this one -- you know, this piece of infrastructure is in desperate need of replacement. we have to get this one done first. the state of repair is beyond useful life that sort of thing. i'm not saying they're not happening now, i'm saying we can do better in providing that information to the project

developers and managers as we make decisions on which projects get funded and when. >> commissioner maxwell: you mentioned that something could happen that could force you to re-look at some things. i was wondering what would that thing be that could force you to have to do something that you weren't expecting to have to do? >> oh, well, in terms of capital, unfortunately, a lot of times once you start digging in the ground, you find things you don't know are there. so, you know, i guess the idea is when you're renovating a house, you don't know what is behind the wall until you open it. so it's a lot of that. it's once we start getting into things, there may be complication we didn't fully state. >> commissioner maxwell: yeah, it seems to me the whole biosolids project has a lot of

that, okay. so all right. thank you. >> you're welcome. >> thank you. and, charles, thank you for this presentation. i think the presentation that you made a couple of -- i guess it was last week -- we had a lot of discussion the unfunded capital in all of that and i think it was important to put that out there in terms of full disclosure. you know, the tendency had been back in the old days, he went through some of the same thinking and solution was you just put things out beyond and they kind of disappeared from public sight. so from a full-disclosure standpoint it was very important that you have that.

the problem, of course, with full disclosure, you tend to scare people. and which is why bureaucrats usually don't do that. but it is important. and i think the reaction you heard from this commission -- i hope the takeaway the staff has is that as we go through this process, on the top of the list has to be maintaining our ability to do the job and to maintain the infrastructure and to not get into a position where we're putting things off, putting things off, putting things off. we've been there. we've recovered from that. we need to not go back there. and i hope that you heard very strong signals to that effect. >> yes. >> the other thing that is part

of that is that to the extent that you're balancing against constraints, it's important to also examine those constraints and to challenge them. and if it's a question of maintaining economic equity, then we need to look at that and see what that demands of us and see if some of the constraints that appear to be on us are perhaps more flexible than they would first appear. i think with our capacity to perform, that has a very particular, you know, resonance at the moment given the state of the economy and all of that, but where we have performance issues, we need to take a hard look at those as well. and if that -- if those constraints are keeping us from doing what needs to be done, we need to figure out how to remove

those constraints as well. i am impressed and encouraged by the nature of the thought that you're going through in terms of how you look at these things. i think it is -- we suffer from a lack of bottom line, you know, private industry has the -- that helps bring clarity to a lot of decisions, we don't have that. and we have to substitute a brute force analysis and discipline to get us to the same place. and i heard a lot of that in our discussion. that is encouraging. this is a work in process. and i think the work that you do over the next year, the work at the commission, will certainly deal with those issues. and i think the commission has made itself pretty clear as to

the kinds of things we'll be looking for. >> thank you. >> madame chair, if i might. i just want to jump in for a second. just to talk to president moran and commissioner maxwell and the rest of you. thank you very much for your comments. we appreciate those questions. and we've appreciated the discussion, the dialogue that has occurred over the course of the last week in terms of putting forth a challenge to us to sort of examine a variety of issues. and i just want to reassure you and compliment also our staff. when they first -- when i first started and they came to me talking about how they wanted to change our approach, you know, they, i think, anticipated some

of the concerns that you have voiced. but i encouraged them to view this as an opportunity and i think that what you're -- what you are hearing from the entirety -- what charles has encompassed in the feedback he is getting from a.g.m.s, is how we view this as an opportunity to rise to a challenge. and that is based in transparency. commissioner moran, you alluded to the fact that sometimes bureaucracies don't want to be transparent and share challenges. that is not something that charles and his staff, our a.g.m.s, or i are going to engage in. we raise this with you so it is being done in a public fashion, a transparent fashion, that we're acknowledging the challenges that we have, but

also demonstrating our approach and our commitment to working through those challenges and to demonstrate we're up to the challenge to make sure that we have the public's confidence in hitting, you know -- commissioner, you talked about profit as a motivator in the private sector. what is it that we have? what we have as a motivator and what the public expects from us is to deliver and to have a system that works for them that doesn't break the bank and their pocketbook. and how we -- how we sort of navigate that challenge and balance all those is for all of us to do collectively. but, our number-one goal is to deliver for our ratepayers a system that doesn't just survive and limp along but that thrives

and demonstrates that we have a utility of the future. that the public can be proud of and that they know their money went to build a system that works for them better than folks might see anywhere else. that means it's a challenge for all of us. we're prepared to live up to that. and commissioner maxwell just raised some questions about -- legitimate questions -- about she wanted examples about biosolids and our projects that are going on down in the southeast sector of the city. and, commissioner maxwell, i know you've taken a special interest in these and in terms of your updates, i think you've seen how our staff is prepared to face those challenges. change the way we do things and accept responsibility for things that didn't go well in the past. but it's all geared toward living up to what both you and

commissioner moran have alluded to and what your expectations are. i can tell you that staff is up to that challenge and that is something that we're going to work with you on over the course of the next year, to demonstrate to the public that we have an approach that is designed and ready to meet those challenges. >> vice president ajami: great. thank you. actually, i have a couple of things i wanted to mention. one is as part of the discussion we were having, you know, you've heard me saying this during the last year, i'm a big fan of envisioning the utility of the future rather than just doing what we've been doing forever and i think as part of that, i really would like us to be a little bit more strategic about this cost enterprise collaboration or cooperation or strategic planning and a lot of that can come from the finance

side. right? what you're funding, how you're funding it, how does it work. and i think this is an opportunity for us to sort of create a vision around that. and i know and i understand we have very specific buckets that are operating in silos and that actually a lot of times keeps us from intermingling in a more effective way, but maybe we have to actually think about that, so i wonder if, you know, there would be an opportunity to make that happen. the second thing is, i appreciated your comments about risk assessment and i think sophie also mentioned that. i think when we're talking about risk assessment when it comes to these projects, i want to challenge you to think about it again in a more futuristic way instead of historical context on risk. i'm not saying we should leave

our experience behind, because it is extremely important and valuable and many times like we have been here, we don't want to be here again. a few of those comments around the liabilitied and cost service and not operating and maintaining our system and the cost of that ultimately. so i think we definitely don't want that to happen, but we want to make sure we're incorporating future risks that is not currently as well assessed in the way we do risk assessment on these projects. part of that is this relationship between reliability and demand. we're a very reliability-focused industry. we want to make sure we have reliable services, we invest enough in infrastructure that we then have reliable services and

often there is challenge with, oh the demand is changing and it's going downhill and we have all these investments made up here to have reliable service that we need to operate and maintain. so there is this conflict that conventionally we have not been focused as much on, partly because we're an industry that is very much focused on reliability and supply. and i've said this in many different ways, but i would like to bring it again to you. i think there is a conundrum that we have to add risk somehow. so those are three points i wanted to make. one question for you i have is around this unfunded capital. i'm wondering, when we were at the beginning or in the middle of the -- was the amount of unfunded capital that we had --

was it larger, smaller? i'm trying to understand the wastewater piece -- are we seeing such unfunded capital because we're at the beginning, we haven't figured the whole thing out, or is it just by the nature of the wastewater investment process? so that's my question for you. >> okay. so, commissioner, we have not had an unfunded portion of our capital plan since i've been at the p.u.c. we typically bring to the commission a fully balanced plan, meaning whatever is proposed has a funding source and there is no unfunded piece. we have in the past had something called candidate projects which are more ideas or sort of initial, you know, thoughts around what might be out there on the horizon that we need to take into account. we have had that in the past.

and you might hear that from barb today, a.g.m hill related to power, some of those candidate projects which are again a need that is generally described. but not yet in our plan. and it's sort of an incubator and we'll work with the power team to figure out how to incorporate that into subsequent plans. in terms of -- so, in terms of -- that was all funded. we had tremendous partnership with the wholesale customers who as you know paid two-thirds of the cost of the water delivery. it's very, very -- sorry, i got that reversed. two-thirds of the water. on the wastewater side, it's a different picture, different story. it's all of those costs for sip are on retail customers.

we don't have wholesale customers that are part of the conversation. we have small agencies south of the city which do use our plan and we do contract with them, but it's a small increment. the issue with wastewater really is one around deliverability. and it's trying to get a sense of here's the need, we need to move forward with these contracts. of course, biosolids will move forward and be completed over the next few years. head works will as well and other aspects of s.i.p. will move forward. it's more about figuring out how to get the job done. that's why we're calling it unfunded now. we could and will add appropriation as we need to, to execute the contracts as the capital budgets come forward for administration, but we really need to crack the nut around deliverability, how can we get this work done? and that's really the main piece there. you know, again, why budget a billion dollars when you can't

literally get a billion dollars worth of additional work done in that year? that doesn't make sense. that's the charge. that's what we're working on over the next year. we will come back with a balanced story for wastewater. again, it might be stretched out over the next few years. in order, to again, be able to get the work done each year. >> vice president ajami: thank you so much. any other comments, questions? okay. so, i think we can move on to the next item? >> we need public comment. >> vice president ajami: yes, thank you. >> members of the public who wish to make two minutes of public comment specifically on item 3, the summary of the budget hearing questions, dial

1-415-655-0001, meeting 2480 234 5422 # #. to raise your hand to speak, press star 3. again, this is only on item 3. >> there are two callers in the queue. first caller, your line is open. you have two minutes. we're having a hard time hearing you. are you there? >> can you hear me now? >> loud and clear. >> okay. it's david pilpel. good morning. i'm still stunned at

commissioner harrington's sudden resignation. he's a great public servant and a good friend and just as trivia, i think he was the perhaps longest serving member of the residential refuse and collection board both in its capacity as city controller and general manager p.u.c. so on item 3, i looked back at the september 28, 2021 agenda and minutes relative to item 7b. i didn't see any discussion of rate freeze being proposed. please post or send me a copy of the power point which is not -- still not available on the web in connection with that item 7b from september 28, 2021. despite the lengthy discussion just now, i still don't know what staff has as the direct fiscal impact of the proposed

rate freeze along with new assumptions about less water and wastewater use in the coming year. i think that delta should be able to be calculated. i'm assuming it's in the -- you know -- i don't know 10 to $20 million range. something like that. i have no idea and i'd like to know what that is and how, besides the capital program, how that affects the debt repayment, debt service costs, ratings. all of that was based -- i thought all of that was based on a certain level of revenue anticipation. and just finally, to lighten things a little bit, in some previous years during the budget hearings, i asked a question and it ended up on the tracking chart with my name listed under commissioner's, which i thought

was absolutely hilarious. but that was just intended to lighten the mood a little bit this morning. all right. thanks for listening. >> thank you for your comments. next caller, your line is open. you have two minutes. >> good morning, commissioners. nicole. c.e.o. i appreciate the additional detail regarding the funding issue with the 10-year cip, including the detail of the unfunded portion of the water cip and its implications. [indiscernible] future acting engagement with the p.u.c. staff and commission as you address the -- over the next year and hopefully address this issue with success. because that's really our goal, right? is getting success. i am very concerned that a

graphic showing projected retail and wholesale water sales projections continue to show only projections generated by the financial team. this graphic has been problematic in the past and i -- we are continuing to use it. we know the figures on the slide do not reflect any of the planning done as part of the water management plan or other plans adopted by this commission or the elected bodies of the agencies. and i think you're giving disservice to yourself, the public and those watching this, from that perspective. i don't disagree there are difference, but i think we need to do a better job of providing that broader envelope, understanding there is uncertainty moving forward. lastly, i too am stunned by commissioner harrington's

announcement. i will reach out to him personally. he has really provided such significant benefits to all of the water customers in the region. and he will be a loss for the commission. thank you very much. >> thank you for your comments. madame secretary, there are no more callers in the queue. >> secretary: thank you. public comment on item 3 is closed. >> vice president ajami: thank you so much. could you please read the next -- any other comments, questions? okay, so we move on. madame secretary, could you read the next item. >> secretary: announced at the beginning of the meeting, item 4 was completed during the meeting of january 14th and will not be heard today. the next order of business is item 5, the hetch hetchy power enterprise, including cleanpowersf presented by a.g.m.

barbara hail. >> time to talk power. so let's go to slide number 2, please, lee. today i'll provide an introduction for some context. describe our challenges and how the budget requests before you help mitigate our challenges and present solutions. power enterprise operates san francisco's two retail electricity programs and operates and maintains our street and pedestrian lighting systems. our hetchy power program i the publicly owned public utility, our cleanpowersf is community choice aggregation program. power serves about 385,000 through these two programs. 70% of the electricity consumed in san francisco is served by

us. each has its own capital budgets, with the lighting responsibilities in the hetchy program. the different program have different ratepayers that are distinct and, therefore, different budgets. so we have this one enterprise operating two programs with two budgets. there is no commingling of funds. the hetchy customer base is dominated by city and county services, like san francisco muni, like the airport, general hospital, police and fire stations, libraries, and a growing number of businesses and residents through redevelopment efforts here in the city, like the transbay terminal, the shipyard at hunters point and pier 70. they make up 400,000 hetch ye power. cleanpowersf include residents like yourself. your neighborhood businesses and

larger commercial customers like sales force tower. they make up the 380,000-plus cleanpowersf accounts. the hetchy program budget is $140 million and cleanpowersf budget totals $230 million this year. so how does that fit within the proposed p.u.c. budget allocations? let's go to the next slide. you'll remember, commissioners, you saw this pie chart on the left january 7th when charles and laura reviewed the proposed budget. we have the total proposed operating budget for the p.u.c. of $1.6 million here. power share combining hetchy and cleanpowersf proposals is 27% of that $435 million. excuse me -- $435 million of that $1.6 billion.

what you see on the pie chart, you can see what a large portion the purchase of power is. charles alluded to that earlier. 78% of the funds go to the purchase of power. and laura described it as a major driver of the 8% increase in the agency budget. so purchase of power includes more than just kilowatt hours. it includes transmission and distribution services at rates and products at market prices we have limited ability to influence. that leaves about $95 million to support all other operating and capital costs for the two programs, including street and pedestrian lighting. in addition, the proposed agency budget has about 30% of what hetchy power ratepayers contribute dedicated to upcountry uses.

that's the light blue splice on the pie on the left. the hetch hetchy water slice. those funds, those ratepayer funds, payment of power bills, contribute to the capital needs, the o. and m. needs, the cost of hetchy water. that's about $46 million in power revenues that is not included in powers operating budget that we're reviewing today. so i just want to be clear about that. power revenues would finance in addition about $495 million of the $974 million hetchy water capital program that charles just summarized. that's just over half the plan. the next slide shows the organization that operates these two programs. the power team is divided into four organizational groups, each

led by a deputy manager. they're here today. i've asked them to come off video mute so you can see them as we talk. and they're here to hear your guidance and feedback and assist with any questions. please allow me to introduce each of them. we have our deputy manager of operations ramon. responsible for all of our utility feild services, the line workers, crews in the streets, distribute systems, maintaining our streetlights and pedestrian lights. managing that supply portfolio. the distribution engineering folks who handle all the design of those systems, we -- our utility field service workers are working on, also reviewing private proposals for

streetlights. they're associated with redevelopment projects. and overall asset management. then we have our deputy manager of programs and planning, catherine spalding. catherine is responsible for our customer programs and redevelopment work. customer engagement, really on the front line of meeting customer needs and ensuring customer satisfaction. all the solar and storage and energy efficiency programs that we implement on city departments, buildings and properties. also our regulatory and legislative staff. these are the folks who advocate on our behalf in the various venues that set the rules. and then the finance and admin team. the folks who helped put together this budget and make sure we meet our invoice and procurement needs. next is the deputy manager mike

hyams. he birthed the program back in 2016. he manages the operation staff and the customer solution staff dedicated just to cleanpowersf. we have aura director of federal agreements and acquisition, pam housing. they handle interactions with pg&e in regulatory settings. with respect to the various agreements. and frankly, disagreements we have with pg&e in those venues over the service we receive from them for primarily for distribution service. so the rules of engagement there. she and her team are also the folks who have put together the acquisition analysis and continue to refine that analysis and work on that project.

the staff apply their skills to the distinct programs, the hetchy program, and the cleanpowersf and charge their time accordingly. that relatively small number you see under mike's name isn't everyone who is working on cleanpowersf. a good example is our demand forecasting function. the demand forecasting staff report up to ramon. they forecast the hetchy load. they forecast the cleanpowersf load. and are using the same tools and resources to complete that path. so we're leveraging skills and resources across power enterprise to support both programs and striving for financial efficiency in doing that. the functional responsibilities roll up in the budget as shown on the next slide. thank you, power team. the power budget is divided into

these five functional areas. the areas have shared by cleanpowersf and hetch hetchy as i mentioned before, with the exception of power transmission and power distribution. by statute, those functions are performed by pg&e and paid for by the cleanpowersf customers directly to pg&e. power has drafted detailed levels of service performance metrics for each area. we heard earlier in the workshop, an interest in having those presented to you and we're happy to move forward as you requested at a future meeting. we're measuring our efforts and holding ourselves accountable. our next slide shows the results. you can see how we performed over the past fiscal year, 2021, i should say. we didn't meet all of our levels of service goals, primarily because of staffing shortages, the covid limitations impacting

our ability to really engage with the community. we expect to see a little more on the metrics next year when we collect data, but we don't have a staff and are in a mode of rebuilding in that capacity. the proposals attempt to meet the risk by bolstering staffing and customer connections and budgeting for a staff augmentation contract to make sure we meet our levels of service where vacancies exist. this informed our budget proposal and so does the annual planning process. we're using this process to identify priorities. we can't do everything. so we want to make sure we identify the most important things to accomplish and make sure we have the resources to do so and we follow up. this effort increases transparency, accountability through -- to each other

throughout the p.u.c. and our communities of interest and our customers. we want to be able to effectively communicate this, all key to improving staff edge game and satisfaction. that process led to these seven priorities outlined on slide 10. and if you'll go ahead and click through and have them all present, lee, they are our guiding priorities for the year. climate change, our 100% renewable system, serving our customers, customer retention, making sure that we have a stable customer base, reduce our costs, prepare for acquisition of the pg&e assets. customer satisfaction. really serving as the energy advisor. i mentioned how we rely on the same staff for both program areas, same resources for both program areas. that's something we're

constantly looking at improving on an refining. racial equity. a relatively new part of the planning process that is so important, implementing our racial equity action plan. rates. that's where we achieve our affordable rates in 2022 and identifying and safeguarding revenue opportunities and customer growth. these aren't entirely new. they should be familiar to you. they build off of our business plan and the city and agency priorities much like our accomplishments from this last year. i want to highlight just three accomplishments before we dive into the budget proposal. we've energized our new main electric circuit and switch gear on treasure island and set up a newly constructed 480-unit residential building on yerba buena island with electric meters, integrating it into our

billing system. we've continued our progress and expected completion to energize our bay corridor and transmission distribution system, including our new substation. that's still under construction in the southeast sector. very excited about energizing that facility, those facilities in the spring of 2022. and then cleanpowersf signed a new contract to support our grid reliability. these 2021 accomplishments are consistent with our guiding priorities for customer retention, satisfaction, revenue and climate change. while we celebrate these accomplishments, we know we have challenges and our budget proposals help to mitigate and solve for them. we have five challenges. we're focused on addressing with these budget proposals. it's first on the screen. our temporary positions and

vacancies. overall, nationwide, there is a shortage of electrical workers and engineers. that's contributing to the 45% vacancy rate you see in power. staffing levels is minimal. we have the same staff that perform our preventative maintenance, respond to emergencies, provide support. cleanpowersf as i mentioned are growing that -- that program has grown since may of 2016, but it's really become quite a training ground for the other growing community energy programs in california. i know at least four of them that have recruited away our staff successfully. we have held off a number of them as well. i'm happy to say we have competed successfully to retain some of those staff, but it's a tough challenge. we have a changing workforce, changing set of expectations for them, especially regarding workplace flexibility as we

emerge from covid, sheltering. the city's policies limit our -- and the city's competitiveness in the labor market and we're confronting some of that. we also have a long process for recruiting and hiring staff. it's already been highlighted so i won't belabor that point. we've trained and invested in our staff, but they're not going to stay in the power group if the position they're in is temporary. if it's a limited term position. they'll jump to another department as soon as a permanent position arises or another opportunity outside the city. that's the basis for our position conversion request in our proposals. a key part of the solution to this problem. so our next key challenge is the cost of power. i know i'm talking a lot about cost of power today, but as i

mentioned, it's a large part of the agency costs. here's another reminder from the presentation that charles and laura provided, looking at the total pcu uses. energy accounts for 21% of the p.u.c. uses. on the right, you see how that energy slice breaks down. 61% for the direct cost of electricity, capacity and other reliability products. 35% purchased transmission, distribution and related products. and 4% is a pass-through of the gas and steam purchases that other departments make. that direct cost of electricity, that 61% price is really dominated by cleanpowersf long and short-term power purchases. resource adequacy products, all

are procured. replacement energy for hetchy power when hetchy generation is not available is also captured here in this yellow electricity slide. that availability can be unpredictable, further impacting our ability to control costs. that 35% slice, transmission, distribution and related products is really attributable to mostly hetchy, but also cleanpowersf, for tariffed charges for the use of the transmission system and for hetchy for the use of the pg&e-owned distribution grid. on the next slide, you see the cost of energy accounts for 78% of the combined power enterprise budget costs. these costs are driven by market

conditions largely. another driver is the ever-changing california public utility mandate from cleanpowersf, which includes reliability product purchasing, targeted, long-term supply contracts that need to be met on set deadlines which, of course, influences our leverage in -- as a purchaser. the hetch hetchy growth and costs that you see here is partially due to the increasing costs from pg&e for the use of its distribution system. so i'm referring there to the top bar chart and the green slices. that growing green bar on the top chart. this increase over time reflects the projected low growth that charles talked about. so, what you're seeing here is

both a unit cost increase and a variable increase as we succeed in growing our customer base. a mitigation to address these costs for both hetchy and -- protect our interests in regulatory venues. where these tariffs and requirements are set. primarily the california p.u.c. and the federal regulatory commission for the hetch hetchy power utility. this work is performed by power staff in partnership with the policy and government affairs team in external affairs and our city attorney. another mitigation for hetchy is ability to fund grid connections. like our bay corridor project i highlighted under accomplishments and the full purchase of the pg&e grid serving san francisco, both solutions are proposed in our capital plan and will be addressed further as i get to that. and for cleanpowersf, our power

supply portfolio risk management strategy illustrated on the next slide, slide 16, addresses this challenge. to mitigate costs, we ladder our purchase commitments. in this example, the red bars represent our forecasted program demand per year for the next 20 years. this is the total cost of energy we would anticipate needing to serve all cleanpowersf customers through full enrollment, and beyond. the blue bars represent the cost of forward or future supply contracts we execute to serve our customers at any given time. the blue bar steps up and then steps down before plateauing. this laddering structure allows cleanpowersf to minimize our exposure to market volatility in the near term by not

overcommitting long-term. minimizing the size of future commitments that we may be responsible for if demand or supply technology change drastically. it helps us with the future look that you were talking about, commissioner ajami. this is a rolling process, which means we purchase additional power for this program every year. we have a pretty heavy workload and our power supply procurement group to mitigate our supply costs risks. that team is constantly issuing requests for offer into the marketplace to see if we can get a good strike price and meet our customers needs, close the gap between the current supply commitments and our projected demand. we perform our long-term contracting work in partnership with the contract admin bureau, policy and government affairs and the city attorney. our next slide brings us to our

third challenge and that's the wholesale distribution costs that we incur just on the hetchy side. mitigation and solution is controlling the grid, pursuing the customer retention and revenue-guiding principles priorities that i talked about earlier. illustrated here is a view of our customers grid connection status. those connections with the heaviest reliance on pg&e and the pg&e-owned grid are the most at-risk shown in red and yellow, bordered with the darker black pac-man shape. these connections, those are the connections -- sorry -- the grey then are the connections with no reliance on the pg&e-owned distribution grid. and they're the most secure of our customers.

you know, pg&e writes and administers this tariff, so it controls our access to the distribution grid. it controls the terms of the service. pg&e writes and administers the tariff to its benefit. it controls access to information on grid capacity, so it's challenging for us to see where there is room on the grid for us to connect additional loads without having to increase and build the capacity. pg&e also is able to control the timing of improvements and imposes delays on our efforts to connect our customers. our mitigation for this distribution costs and access challenge is to own the grid through the grid acquisition process and to invest in distribution that the city control, putting more customers in the grey on this pie chart away from the red and yellow

categories. we're going to talk here about rates. another one of our key challenges. for the hetch hetchy power utility we need to understand our costs and set rates to cover those costs with attention to affordability and competitiveness. unlike water and wastewater, we are not a monopoly. so affordability is a shared goal between the three enterprises and competitiveness is something that we have to pay particular attention to. historically, we've tracked our pg&e -- our rates to pg&e rates and provided a discount that benefitted the general fund. in partnership with finance, we're in the midst of a cost of rate study that will address the challenge. do the rebuilding that charles spoke of.

that is establishing the cost of service for cleanpowersf, as well as are re-look at the target policy and added -- how little we control much of the bill our customers receive. on the top, that green top bar, that's our affordability lever. it's ranged from 19 to $24 on average -- for an average monthly customer. average monthly household. -- residential customer. and you see the pg&e charges in blue ranging from 43 to $60 for the same customer over the same period, driving the total bill up. pg&e charges are craned 40% -- increased 40% since 2016 when the cleanpowersf began serving customers. annual rate of almost 8%.

cleanpowersf rate-setting has taken into account changes in these fees, however, it's critical for the financial stability of the program to divorce from pg&e from the component in particular, that darker blue portion on the bottom, and the focus here really for the cleanpowersf program should be on cost recovery consistent with the city charter. and that's the focus of the rate study which the finance team will be bringing to you in the spring with implementation planned by july 2020. the next slide brings us to the final challenge which we're referring to as the build imperative. increase our net revenues from full service retail sales to investment in the distribution grid. the strategy will allow us to retain existing customers and

advancing san francisco's environmental initiatives and innovation. and we've been executing on that strategy with the commission allocating dollars to the power capital plan for distribution grid investment. this next slide shows the hetchy load growth in our plan. that's achievable through distribution grid investment. and this is very consistent with the same information charles just provided you. you see our opportunity here to increase our load growth. our existing load shows below the yellow line. the anticipated line is the black dotted line above it. as i said, consistent with what charles presented just moments ago. the capital plan project and you distribution services secure that load. and there is potential for more growth. we have to be strategic though about where we make those investments, where we spend our

limited hetchy resources. the next slide shows this criteria we use to assess our options. really what we're saying here is, is the opportunity, this investment opportunity, functionally relevant, economically justifiable, technically viable and socially responsible? does it move us away from reliance on the pg&e-owned grid in a financially responsible way? while meeting our grid modernization, economic growth, equity and sustainability goals? this is the criteria we are using and will continue to use as we work on the capital plan. here's the highlights and overview of where we have landed so far in that effort. next slide. slide 24, please. so here's an overview. our acquisition positions and capital budget will help us

ensure our long-term independence from pg&e and develop a city-controlled grid. redevelopment position are included in our proposal to help support our capital project growth and growth of our load. our core customers capital request help us maintain services and connections to our existing customers. our position requests help us retain talent and support growth of our business. that's largely the temporary to permanent position requests that i alluded to earlier under that key challenge. our next slide shows our growing -- growing our revenue as our responsible management, staying with the agency theme. you can see here, we have the cleanpowersf renewable energy

program growth. we have our redevelopment projects where we are able to serve growing customer needs. alice griffith, candlestick point, treasure island are great examples. our core customers projects are listed separately like substation improvement, grid connections and intervening facilities. those are all proposals to build new infrastructure that addresses the growing needs of existing and new customers. then we have our power asset acquisition analysis work that we talked about quite a bit. and our distributed energy resources work where we're implementing the city's climate goals with rooftop solar and storage at city facilities,

energy efficiency improvements, targeted primarily at general fund departments. then you see also our operating proposals four positions to staff that federal agreement and acquisition team. we've been using positions borrowed from other parts of the organization. that's just not sustainable for long-term, so we need to take temporary positions and make them permanent. we have $1.8 million also in the budget under proposal 32. they're really right-sizing the appropriations for services for other departments. these are not really impacting our overall revenues, overall costs rather, these are appropriations that match the revenue coming in for these services that departments are seeking from us. and then we have some additional funding for the $700,000 to

cover our increased insurance costs. and then our next slide shows our access and affordability efforts. -- that are incorporated into our budget proposals. you see the cleanpowersf customer programs, additional funding to meet customer program needs. you'll see an overall presentment of our customer programs work at our next commission meeting. it's one of our presentations that we'll be making at that meeting, so you'll get a deeper dive then as to what the programs them themselves are. we need additional funding for ongoing implementation and growth of those programs. we have our transmission and distribution project where we're asking for planning money so we can continue to serve our

affordable housing customers. these operating request that you see helps us keep rates affordable by potentially generating some outside revenue from the transmission lines that we own that could ease burdens on our ratepayers. and then next, we are supporting people and community with these proposals. here's where you see our streetlight capital requests and a request in the outer years of the plan for a new home for our utility field services team. they're currently leasing space from the port. so we're looking at planning for the future there with that proposal. we have then these operating proposals as well. the new positions for hetchy to help with retention and keep up with growth in our business.

we have $3 million in a staff augmentation contract that i mentioned earlier that also helps us improve our levels of service -- helps us meet our level of service targets in the event we're unable to fill our vacancies, due to the capacity challenges we're facing in those -- those trade classifications. and then we have $900,000 to replace eligible vehicles and provide staff with appropriate equipment for safe field work. then our million to actually make a move for the utility field services yard in the event their lease expires. it's scheduled -- it was a five-year lease with the port having the option to terminate, so we want to have some funds available in case we need to act quickly to follow through on our lease terms. and then, of course, we'll have

continuing implementation of our racial equity action plan. i think then that brings us to our candidate capital projects. and what you see here are the projects that charles referred to earlier. i'm highlighting these projects as we continue to learn more about the customers' needs and develop timelines. their needs and timelines really are what drives the timing of these projects. our needs to invest in projects. these projects didn't make it on to the capital plan with funding, but as we look at the customer needs and the development timelines of those projects and others on the capital plan with funding, we

may find that these rise in priority relative to the other projects on the hetchy capital plan. so we wanted to get them on the plan, even though they have no funding because they're currently screening is lower priority, but that could change. so, we have s.f. port substation to help support growth of load in that sector of the city. we have the oakland port, 25kb line to help support growth to the treasure island and yerba buena island development if load grows at a faster pace. we'll need to shift funding around to fund this project. we have electrification. that's -- that program captures, for example, sfmta buses being converted to electric. we're going to need to invest in the electric grid to support

them. and converting the loop that serves the city from natural gas boilers to clean electricity boilers. we've been in conversation with the utility that operates that, they're very interested in decarbonizing. that's a city goal and we'd like to partner with them to meet that change. so, including these projects on the plan, flagged them for your awareness and provided some flexibility as we react to changing customer conditions. charles alluded to alternative financing opportunities. we're definitely talking with his team about how we can expand our capacity for projects like this by looking at alternative financing. let's turn now to the next slide where you see all of those requests in the traditional

finance viewpoint. so you have capital and purchase of power listed here in the blue and at the bottom, peri winkle on the bottom. the top is where you see the biggest changes. where the tariff and transmission costs show up. and they're showing the biggest increases in the uses of funds. our next slide shows the same dollars, same information -- excuse me -- in whole dollars. note the revenue-funded capital and power purchase and distribution lines, where you're seeing once again the largest changes. and in the second year, asset management, that category captures the staff augmentation contract i mentioned to make sure that we can access private sector resources if we're not able to meet our needs with

additional hiring. the next slide then summarizes the hetchy position request. this is predominantly a conversion of temporary to permanent project-funded positions in the first year to improve retention, as we've been talking about. staffing the federal agreement acquisition team and keeping pace with our growing business. these positions include electrical field crew classifications, engineers, analysts. now, i'm going to switch to the same depiction for cleanpowersf. slide 32 shows the purchase of power class increase that we talked about and some increase in bureaus to better reflect the actual costs in the support cleanpowersf receives from hetchy and other parts of the p.u.c. and now on the next slide, we

have the same information in numbers. again, the largest driver being that purchase of power item. you see the cleanpowersf position, there is one operating position being requested to support accounting. there is a fairly heavy workload on financial reporting that this -- that the finance -- the accounting team has identified as a need for additional position. so that's what you see here. and now let's switch is to the capital slide. [please stand by] [please stand by]

end and ready for any questions

or comments or guidance you may have for us. thank you. >> thank you, barbara. >> i have a question. and by the way, this is the general manager. thank you for a very succinct presentation that talked about not just rationales of interdepartmental workings but doing what we're charged with doing this month and that is crunch the numbers and see where the needs and how the budgeting works over a one-year up to sometimes up to 40 years worth of projections and have you. my question is a little bit more in the weeds and the reason i'm asking because it comes up all

the time and everybody including our new general have talked about how this is an issue throughout the city and to get to it i'd ask this question myself before the difference between a permanent position and temporary position to say nothing about part-time positions. the temporary positions when you talk about people poaching from the department and asking from your point of view not philosophical point of view of permanent positions and the issues of difficulties sometimes work for a public agency opposed to the private sector and your

perspective when a position is created as a temporary position and where it should or could go to a permanent position because that's been a complaint throughout the city i've heard and it's not just a p.u.c. thing but from your enterprise without getting too much in the weeds explains what that means in terms of being able to get the talent retained and what that obstacle is. >> from my perspective, commissioner, thank you for the question. temporary positions make a lot of sense when you have a particular project or task that needs a level of effort that requires a full-time position but not a task you expect to have as a continuing responsibility. i think that's the best fit for a position like that. when we first began the work we

weren't sure where it was going to lead us and whether the analysis would say do it or don't do it, do something else. and we're heavy in that work load so we're looking to convert the position are temporary and full positions because we know it's a work load we know will persist beyond the three-year period of a limited perm position. >> to the enterprise wants to convert from temporary to permanent, what would an obstacle, in your opinion, be to make it happen as fast as you believe it is needed once you identify this is something we need to have that's real? what would be an obstacle that would need to be overcome? and from your point of view, specifically, though i know it's an issue city wide. >> i think for our engineers, one of the obstacles to overcome

having the electrical engineering capacity in the marketplace. similar capacity issues exist up our craft our local 6 representative workers. we don't have anybody on the bench. they're just not out there. we go to them and say, let's partner on recruitment and it's just not there. those are some of the basic capacity issues that will be a challenge in filling those positions as permanent. we also have some challenges with respect to compensation. pg&e compensates their bay area workers and line workers with a premium to keep them in the bay area recognizing the higher cost of living. we don't do that so it's very hard to compete particularly for folks who are already here with this skills and abilities.

that would also be the capacity issue, the compensation issue are hurdles for us in filling those permanent positions. >> and the last question based on what you just said and that is that if somebody is going to say they're an electrician in a temporary position and convert to a permanent position there's an implication the temporary position was filled by somebody who didn't have the skills to be converted to a permanent position. that's what it sounded like. >> forgive me for that impression. any classification, you use the electrician's example whether on a temporary or permanent position they still have to meet the minimum qualifications of the classification. >> okay, i'll leave it at that.

thanks. >> thank you. >> any other questions? go ahead. >> thank you, barbara. a couple questions. first of all in the clean power s.f. arena what portion of eligible customers have been enrolled and i don't know if enrolled is the right word but have we extend the offer. how much is that is left to be done? >> very little. the part of the challenge that we face in the clean power s.f. enrollment is how much turnover there is people move around the city a lot, a lot of renters

moving. we have a lot of that keeping us continuously enrolling though we have 99% of the eligible customers enrolled. >> and is there a category of customers that aren't enrolled or just across the board? >> there's no category of customers that aren't enrolled that are eligible. there are customers that aren't eligible. we may have some large commercial customers we have not yet reached out to understanding they are eligible for other programs as an alternative too pg&e generation service and the timing of those communications is often driven by the regulatory enrollment calendar for that sector. >> okay.

that leads to the next question about your projected load growth. can you give us a little bit about what is and not in that think street lights and traffic signals as one disputed areas and we have assumption about the rapid project coming online and how are the projects doing? what uncertainty in our projections is there? >> i'll start and i may look to christina corero because she's been engaged in those projections as well. with respect to redevelopment and where we're seeing growth, i think we were frankly a little

bit surprised at how at the pace of construction not really slowing down with covid. we thought it would and now it's not so we're restoring some of that load growth in the draft financial plan. those developments are primarily along the southeast water front. i'm talking in particular about things like pier 7 and mission rock. the facilities there. there's a building under construction and it's already rented. we know it's a real thing we know the load will show up. it won't be sitting as a vacant building. that's responsive to the redevelopment question. with respect to our other hechy load you're calling out a

vulnerable piece of that load including street lights, all kinds of things the city has. and services. they're so small traditionally pg&e has not required they be metered and now have asked for authority to terminate that service. it doesn't mean they would no receive service but they no longer receive service from us. they'd become a pg&e customer. it's a competitiveness move and goes to the issue of control of the grid means you can benefit yourself. so we're seeing a reduction in our 10-year financial plan projections associated with loss of that load.

>> so we're projecting the loss of that load? >> i believe that's correct. christina, is that correct? >> correct. >> is that a positive or negative effect. >> we lose the need to service which means we lose some of our costs -- we reduce some costs but i believe those customers are contributing and not a financial burden to us. it also means we then have kilowatt hours that are going to go to them available for someone else as our load grows, we're absorbing that kilowatt hour and we also have opportunities to sell that power on the wholesale market if our retail customers don't need it and so there is that dynamic. christina, am i correct that we

are on net seeing a loss in revenue? even when we account for the reduction in cost to serve those customers? >> that's correct. there is some loss. it's very minimal when you think of the net margin that's generated from various customer classes. the loss is minimal for this particular customer group. >> okay. so they have basically been recovering their cost of service? >> the question -- the question of recovery cost of service is a mixed bag as far as this particular customer i would say yes. >> okay. so the impact of that is less on that than it would be on the general fund, is that right? >> i believe that's correct. we're estimating that the general fund supported portion of that unmetered load is going to cost the city around i think

it's $4 million, $4 or $5 million. and that cost assumes that then those customers are being charged pg&e rates for their service opposed to our lower rates from the hetch hetchy program. >> okay. if you were to add a shaded area on that to reflect uncertainty i'd be interested what that will look like. >> we'll have that in our 10-year financial plan write-up. there's sensitivity scenario we run and it's very much depend in the upon the specific enterprise and what kind of risk-reward opportunities there are. >> okay. thank you.

>> thank you. it's been a challenge thank you for all you do. the 30,000 street lights are -- >> the unmetered load commissioner moran was just highlighting. >> has that happened to other unmetered loads we have at this time? >> they're proposing to do that to all unmetered load at this time that we have. they are planning to convert the decorative street lights to pg&e service and terminate our ability to serve them at a later date after they get california p.u.c. approval to implement a new tariff to serve that type of light. there's an expensive light to

serve and their current tariffs i anticipate won't cover their cost so they won't take them until they can get full cost recovery by charging more. >> and so then it's just the unmetered load and that's basically what you've given us here? >> yeah. the unmetered load is what they made a formal termination of service and the other loads we talked about on that pie chart, the unmetered load with the dark red and there's some other red and yellow that's metered but at risk because of the type of connections. the way they are connected to pg&e's grid. it's not that they're not metered, it's the rest of their connection. >> so the noticing would affect our bottom line? >> absolutely. >> what is their argument to ferc? why is this being done?

why do you want the unmetered load when historically i believe we have had it, is that true? >> that is correct. historically we have had it. they have argued that as a utility service provider, we should have separation between our systems theirs and ours. they have not made an safety or reliability argument with this load that's plausible. they serve a lot of unmetered load in other cities but don't allow it to be served by another utility without meters. so it's really a policy call on their part for how they want the business arrangement to work. >> and you're assuming since you're taking it out of our budget that they're going to win? >> we'll see.

the challenge with ferc is when the utility like pg&e asks to do something as pg&e has, subject to they ask for it to be implemented subject to refund, ferc often says yes. now, we all know you can't refund the service when we're talking about this kind of thing. it's not a good fit for the way the ferc rules are structured but it is how pg&e has moved forward so we know we're at risk for pg&e saying yes, sorry, ferc saying yes to pg&e. ferc does is a practice of suspending that request of the utility for up to five months. we are hopeful that they will either grant our right or request they dismiss pg&e's termination request or in the

alternative, give us the five months to argue about it some more and demonstrate they should say no to pg&e. >> thank you. >> in your employees you need 45% down and racial equity, do you think this is a great opportunity then to and how are you going about looking at this? >> i'm hopeful this is an opportunity for us to improve our recruiting so we do have candidate pools more diverse so we do have the opportunity to fill these vacancies with a workforce that's more reflective of the rate payers we serve and it comes down to recruitment efforts. >> how are you planning, what is your strategy, have you gotten the strategy or are you working on the strategy? >> we're working on a strategy.

it will involve recruitment from historically black colleges, recruitment through alumni associations that are affinity groups. those sorts of tools we'll use. we also have a lot of diversity within the p.u.c. and i'd love to see us better tap knows networks. when you talk to folks about jobs they get they're not often saying they found out about it from a job board but from a friend. i'd like to see us do more with our tools and employee to employee to make sure those opportunities are getting out there to more diverse candidate pools. >> so are you also and how are you then working when those people come in since they're not there now, they will feel

comfortable and valued? >> right. this goes to the inclusion part of the effort. we have a regular meeting among our power people of color already. we're looking to them to help address the needs thoughtfully in culturally competent ways and looking to include more engagement surveys and working with survey questions to help get at what's work and not working. very interested in informal buddy systems to help folks feel connected. super hard in the hybrid environment. even harder than it was before to feel engaged with your colleagues to get to know each other and to know who you can

rely on to answer simple questions about the workplace. looking to do that to shift the culture to more of a partnering. >> do you think it would be helpful if there were a program, an h.r.c. and some way you can go to and people can make come up with a strategy for you and help you out. do you think it's helpful so it's not on each individual enterprise? >> we all have a collective racial equity plan to make sure we're not in the silo doing our own thing and not benefit from the ideas of others. we want to leverage across the enterprises. >> do you think then it would be helpful to have a place or system to go to that could help because you're already strapped. you all need some help in doing

that so thank you that's just -- i wanted dennis to hear. thank you. >> i actually have a little bit of a different question. i think a lot of the questions have been raised and touched on some of the concerns i had but maybe a question that's like a suggestion, under redevelopment side, have we looked to like leaving roofs like creating more of equally distributed to avoid the transmission costs? especially like in all parts of the city, i guess. >> yeah, so i mentioned the distributed energy research project team that does do that on city-owned facilities.

we're also before the california p.u.c. for the clean power s.f. team looking to implement a community solar program that will allow us to pay people to use solar they put on their roofs and then serve other customers not just them. we do have ideas like that in the works. >> okay, good to know. that's how you get around some of the transmission issues you're having. >> i have to say, commissioner, when we don't own the grid the systems are connecting to it's very challenging. we had an agreement pg&e requires us to sign because we're putting solar on the roof of marina middle school. they're not allowed to export

any power onto the grid. as the are constraint we face. we don't own the grid so they're saying it's our grid, you're not allowed to spill energy on to it. we may have a big roof and a lot of solar potential but have to size it to the load on site. we can't say right down the road is mosconi playground and the rec center. can we throw energy that way? we can't. if we owned the grid, those sorts of things would be available and that's what's driving it. >> that's a great idea but maybe on the other side is marina high school or middle school is using a lot of energy itself.

it's partially going off the grid in a way to provide a way to slowly putting all these roofs to work. it would be great to use all that space to generate electricity. >> in that scenario we have to partner that with storage to meet the need around the clock because you're not really avoiding any special transmission cost if you don't do that distribution or transmission cost if you don't do that. >> and on the new resources available in charging stations, how are we thinking about that and combining that with renewable energy and on site renewable energy and storage? i know in some parts of the city

that are being developed we have our own opportunities to not necessarily think about that but on the other side of the city they have a lot of legacy infrastructure and connected to the system, are you thinking about the process? >> we are and we did do the police academy, for example. legacy customer put a solar carport over their parking area. we partnered with that storage and testing to see how that's going to work. that's the largest system we've installed and expect there will be electrical vehicle charging there as well. now, because we don't own the grid we're having challenges there but yes, we're looking at those opportunities. as the city is directed on the

city fleet change there'll be more electric vehicle program opportunities and looking at our rate study work so we'll not just the infrastructure but programming behind it for consumer to embrace the opportunity. >> one quick comment i have for you is obviously we are growing as an enterprise and utility. there's so many best management practices out there and there's an opportunity to set ourselves up for the future rather than the past. i think i want to make sure as you're putting budgets together

and think about investment and capital programs and financing, all of those are much more forward looking rather than depending on our conventional wisdom in the field. i know you mentioned about alternative financing and there's opportunities that hasn't necessarily been picked up in the waste water sector but i'm hoping and i'm glad to hear they're looking into that and setting up an example utility as from a financial budgetary and rate setting process as you're looking at it from that direction. any other comments? go ahead, please. >> just one other question. on slide 25 you have about $12

million a year on facilities. is that a catch-all for all circumstances where we think pg&e is going to require additional facilities or a more specific program of building alternative solution tasks. >> happy to dig deeper in the slide 25 and this is to address conditions for existing customers. the red-yellow part of that pie we talked about the at-risk customers as they improve their facilities. either they're putting in electrical charging stations and following directives will affect them and pg&e will not continue to allow us to serve if we don't

under the distribution tariffs. that's what the intervening facility dollars are intended to target. grid connections is where we're targeting new customers or existing customers approximate to an infrastructure we already built like our transmission and distribution project where they're not necessarily doing something that is causing a switch in the arrangement with pg&e but it may be prudent for us to take the initiative because we know their load is growing and know we have an opportunity to use that grid we already invested in to protect that load. >> the specifics are not identified but is a category of cost we know we'll be incurring on ongoing basis?

>> and in the sheets you see that information but yes, i didn't dig into it in presenting it to you here but that is our intention in those and those all role up to the same control items so if we need to move money around because things are happening and need flexible, we'll have that to pull money for intervening facilities for grid connection or vice versa we'll be able to do that. >> thank you. >> any other questions. thank you. we'll go to public comment. madame secretary, could you please call for public comment. >> for public who wants to make two minutes of comments on the hetch hetchy enterprise and clean power s.f. call

1-415-655-0001 meeting i.d. 2480 234 5422 ##. to raise your hand to speak press star 3. >> do we have any callers? >> there is one caller wishing to be recognized. hello, caller, i've opened your line. have you two minutes. >> can you hear me now? >> loud and clear. >> david philpow. i have 2:3 minutes of comments and if you can allow me have seconds and thanks to barbara's great team and barbara carr and

rosie scott. she's so radiant we should be able to generate solar power from being near her. i commented on moving hetch hetchy water under the iso power cost and disincentives to transmission line maintenance. on the capital program, i agree that the sunset reservoir south basin should have solar generation which may require replacing the roof to have a stronger foundation to support solar panel on the south basin. i'd like to see a new power line from newark to san francisco, on land, under water or some combination. that's a high priority for me. i'm not electrical engineering expert but transmission loss allows for more generation so we're not transmitting from far

away and losing some amount in the process. wondering if the new southeast waste water digester project is included which is intended in part to reduce the waste water enterprises long-term power needs. there should be a proportional approach to intervening facilities. i think a greater load needs more grid protection and smaller load. less grid protection by the way of intervening facilities. i support increasing the general use rates to generate at least the cost of service or foully allocated costs including maintenance and the state of good repair, etcetera. to promote conservation. all rates should default to time of use rates with limited exceptions. >> two minutes. >> i'll think about the new position request.

i support most but not sure if all. i'll look at those and pages 123 to 125 and page 157 julia alman is misspend and if i had more time i'd discuss the street light acquisition and all metered approaches to that. thank you for listening my comments and i may send a summary but thank you for the time you took the time for listening to me. thanks again. >> thank you for your comments. madame secretary, there are no more callers in the queue. >> public comment on item 5 is closed. >> thank you, so much. colleagues, any other comments, questions? if there's no more questions, please read the next item. >> point of clarification, we're

concluded with item number 5, the hetch hetchy power enterprise. therefore we do not need item 6, a motion to continue the meeting to january 27. >> so we can the adjourn the meeting at this point? >> yes, i'm sorry. >> perfect. thank you so much everyone. this past three budget hearings have been very illuminaing and informative and appreciate the staff's work on working so hard to putting it together and bringing all the information to us and with that i think you're adjourned for today. thank you. >> thank you.

>> important inform keep the drains clear it impacts the flooding in the environment and the neighborhoods. >> hopefully, we'll have another rainy season that is important people keeping up tare trains 72 hours one thing to captain about things but take

responsibility. >> we will in the best city in the world keep it clean. >> i invest a live-in san francisco for 38 years and proud owner of here. >> if we chip in i'm daniel a small business owner in the tenderloin and named in any drain after any boss. >> wear gloves. >> i'm diane this is kay we're in the golden gate hewitt's area

>> it had been rain for several

days. at 12:30 there was a notice of large amount of input into the reservoir. we opened up the incident command and started working the incident to make sure employees and the public were kept were safe there is what we call diversion dam upstream of moccasin. the water floods the drinking water reservoir. we couldn't leave work. if the dam fails what is going to happen. >> we had three objectives. evacuate and keep the community and employees safe. second was to monitor the dam. third objective was to activate emergency action plan and call the agencies that needed

contacted. >> the time was implement failure of the dam. we needed to set up for an extended incident. we got people evacuated downstream. they came back to say it is clear downstream, start issuing problems and create work orders as problems come in. >> powerhouse was flooded. water was so high it came through the basement floor plate, mud and debris were there. it was a survey where are we? >> what are we going to do to get the drinking water back in. >> we have had several emergencies. with each incident we all ways operate withins dent command open. process works without headache. when we do it right it makes it easier for the next one.

>> we may experience working as a team in the different format. always the team comes together. they work together. >> our staff i feel does take a lot of pride of ownership of the projects that they work on for the city. we are a small organization that helps to service the water for 2.7 million people. >> the diversity of the group makes us successful. the best description we are a big family. it is an honor to have my team recognized. i consider my team as a small part of what we do here, but it makes you proud to see people come together in a disaster. >> safety is number one through the whole city of san francisco. we want people to go home at the end of the day to see their loved ones.

we don't want them hurt. we want them back the next day to do their work. >> there is a lot of responsibility the team members take on. they word very -- they work hard. they are proud of what they do. i am proud they are recognized. >> shop and dine in the 49

promotes local businesses and challenges residents to do their business in the 49 square files of san francisco. we help san francisco remain unique, successful and right vi. so where will you shop and dine in the 49? >> i'm one of three owners here in san francisco and we provide mostly live music entertainment and we have food, the type of food that we have a mexican food and it's not a big menu, but we did it with love. like ribeye tacos and quesadillas and fries. for latinos, it brings families together and if we can bring that family to your business, you're gold. tonight we have russelling for e

community. >> we have a ten-person limb elimination match. we have a full-size ring with barside food and drink. we ended up getting wrestling here with puoillo del mar. we're hope og get families to join us. we've done a drag queen bingo and we're trying to be a diverse kind of club, trying different things. this is a great part of town and there's a bunch of shops, a variety of stores and ethnic restaurants. there's a popular little shop that all of the kids like to hang out at. we have a great breakfast spot call brick fast at tiffanies. some of the older businesses are refurbished and newer businesses are coming in and it's exciting. >> we even have our own brewery

for fdr, ferment, drink repeat. it's in the san francisco garden district and four beautiful murals. >> it's important to shop local because it's kind of like a circle of life, if you will. we hire local people. local people spend their money at our businesses and those local people will spend their money as well. i hope people shop locally. [ ♪♪♪ ] a city like no other, san francisco has been a beacon of hope, and an ally towards lgbtq equal rights. [♪♪]

>> known as the gay capital of america, san francisco has been at the forefront fighting gay civil rights for decades becoming a bedrock for the historical firsts. the first city with the first openly gay bar. the first pride parade. the first city to legalize gay marriage. the first place of the iconic gay pride flag. established to help cancel policy, programses, and initiatives to support trans

and lgbtq communities in san francisco. >> we've created an opportunity to have a seat at the table. where trans can be part of city government and create more civic engagement through our trans advisory committee which advises our office and the mayor's office. we've also worked to really address where there's gaps across services to see where we can address things like housing and homelessness, low income, access to small businesses and employment and education. so we really worked across the board as well as meeting overall policies. >> among the priorities, the office of transgender initiatives also works locally to track lgbtq across the country. >> especially our young trans kids and students.

so we do a lot of work to make sure we're addressing and naming those anti-trans policies and doing what we can to combat them. >> trans communities often have not been included at the policy levels at really any level whether that's local government, state government. we've always had to fend for ourselves and figure out how to care for our own communities. so an office like this can really show and become a model for the country on how to really help make sure that our entire community is served by the city and that we all get opportunities to participate because, in the end, our entire community is stronger. >> the pandemic underscored many of the inequities they experienced on a daily basis. nonetheless, this health crisis also highlighted the strength in the lgbtq and trans community. >> several of our team members

were deployed as part of the work at the covid command center and they did incredit able work there both in terms of navigation and shelter-in-place hotels to other team members who led equity and lgbtq inclusion work to make sure we had pop-up testing and information sites across the city as well as making sure that data collection was happening. we had statewide legislation that required that we collected information on sexual orientation and our team worked so closely with d.p.h. to make sure those questions were included at testing site but also throughout the whole network of care. part of the work i've had a privilege to be apart of was to work with o.t.i. and a community organization to work together to create a coalition that met monthly to make sure we worked together and coordinated as much as we could to lgbtq communities in the city. >> partnering with community

organizations is key to the success of this office ensuring lgbtq and gender nonconforming people have access to a wide range of services and places to go where they will be respected. o.t.i.'s trans advisory committee is committed to being that voice. >> the transgender advisory counsel is a group of amazing community leaders here in san francisco. i think we all come from all walks of life, very diverse, different backgrounds, different expertises, and i think it's just an amazing group of people that have a vision to make san francisco a true liberated city for transgender folks. >> being apart of the grou allows us to provide more

information on the ground. we're allowed to get. and prior to the pandemic, there's always been an issue around language barriers and education access and workforce development. now, of course, the city has been more invested in to make sure our community is thriving and making sure we are mobilizing. >> all of the supervisors along with mayor london breed know that there's still a lot to be done and like i said before, i'm just so happy to live in a city where they see trans folks and recognize us of human beings and know that we deserve to live with dignity and respect just like everybody else. >> being part of the trans initiative has been just a great privilege for me and i feel so lucky to have been able to serve for it for so far over

three years. it's the only office of its kind and i think it's a big opportunity for us to show the country or the world about things we can do when we really put a focus on transgender issues and transgender communities. and when you put transgender people in leadership positions. >> thank you, claire. and i just want to say to claire farly who is the leader of the office of transgender initiatives, she has really taken that role to a whole other level and is currently a grand marshal for this year's s.f. prize. so congratulations, claire. >> my dream is to really look at where we want san francisco to be in the future. how can we have a place where we have transliberation, quality, and inclusion, and equity across san francisco? and so when i look five years from now, ten years from now, i want us to make sure that we're continuing to lead the country in being the best that we can

be. not only are we working to make sure we have jobs and equal opportunity and pathways to education, employment, and advancement, but we're making sure we're taking care of our most impacted communities, our trans communities of color, trans women of color, and black trans women. and we're making sure we're addressing the barriers of the access to health care and mental health services and we're supporting our seniors who've done the work and really be able to age in place and have access to the services and resources they deserve. so there's so much more work to do, but we're really proud of the work that we've done so far. [♪♪]