>> president moran: san francisco public utilities to order. please call the meeting to order. [ roll call ] >> clerk: this meeting is held in person at san francisco city hall authorized by the california government code. i like to remind all individuals present that all health and safety protocols and building rules must be adhered to at all times. hand sanitizers stations are throughout the building.

we welcome the public's participation during public comment periods. for each item the commission will take two minutes of public comment, first from those attending the meeting in person and then from those attending the meeting remotely. members may provide remote public comment by dialing (415)655-0001, meeting i.d. 2480 482 7144 # #. press star 3 to raise your hand to speak. please note that you must limit your comments to the topic of the agenda item being discussed, unless you're speaking under general public comment. we ask that public comment be made in civil and respectful manner and you address your remarks to the commission as a whole. on behalf of the commission, i like to stand our thanks to sfgov tv staff for their assistance during this meeting.

>> president moran: thank you. before calling the first item, i like tenants that the -- announce that san francisco public utilities commission is on unceded land of the indigenous tribe. sfpuc recognizes that every citizen reriding within the greater bay area continues to benefit from the use and occupation of the aboriginal land since before and after the san francisco public utilities commission founding in 1932. it's important that we not only recognize the history of the tribal lands on which we reside but also we acknowledge and honor the tribal people , next

item. >> clerk: next item is item 3, adopt renewed findings under state urgency legislation to allow hybrid in-person meetings during the covid-19 emergency and direct the commission secretary to agendize a similar resolution at a commission meeting within the next 30 days. >> president moran: please open public comment. >> clerk: members of the public who wish to make remote public comment on item 3, please press star 3 to speak. >> there are no callers in the queue. >> clerk: public comment on item 3 is closed. >> president moran: thank you. commissioners, may i have a motion and a second? >> second. >> president moran: roll call

please. [roll call vote] you have three ayes. >> president moran: the item passes. item 4 is the approval of the minutes of may 10th. are there any additions or corrections from the commission? seeing none, please open up for public comment. >> clerk: members of the public who wish to two minutes of remote public comment on item 4, please press star 3 to speak. do we have any members of the public present who wish to provide public comment. are there any speakers with their hands raised for item 4? >> no callers wishing to be acknowledged at this time. >> clerk: public comment on item 4 is closed. >> president moran: thank you. on the minutes, may i have a motion and a second. >> move to approve. >> second. >> president moran: roll call. [roll call vote]

you have three ayes. >> president moran: the minutes are approved. before we get to item 5, i like to announce that item 18 is going to be continued to our next meeting. with that, next item please. >> clerk: next item 6, communications. >> president moran: are there any questions or discussion on items that have been provided in communications? >> commissioner maxwell: 6e, one water s.f. 2020. i have one question. that was have we created in new green jobs? i saw that we created new videos

or tech and tech and education for our employees. we've done some training with students. have we created any new green jobs and is that something that we could consider looking at as far as onewater is concerned? should i repeat? >> yes, please. i apologize. >> commissioner maxwell: i appreciated the brochure. i'm glad to see the work we're doing. i had a question regarding, have we created new new green jobs.

when you think of onewater, is that an opportunity that we could -- i know we've created new videos and techs for employees. we had project pool training for college students and high school students, what about creating jobs? have we done any of that? is that something that we can consider being part of onewater? >> i don't have a direct answer to that question. certainly, we can explore it. hopefully, we are creating some additional green jobs. it will be nice to quantify that. i think that's a fair question. we will make sure that we pull that together and if we need to tweak a little bit to help work on the green jobs front, we can do that. >> commissioner maxwell: great, thank you. >> president moran: commissioner

paulson? >> commissioner paulson: quick comment on item 6f. very pleasing to see the numbers looking so low and responsible. i want to comment on the report on 6f, thank you. >> president moran: any other comments from the commission? let open up for public comment. before we do that, we seem to have skipped over item 5 we'll come back to that we have and take public comment. >> clerk: apologies for that. item 6. members of the public who wish to make two minutes of public comment on item 6, communications, please star 3 to raise your hand to speak. do we have any members of the public present wish to provide comment on item 6, communications? seeing none, do we have any members of the public with therapy hand -- their hands raised? >> there are two callers in the

queue. >> clerk: this is on item 6, communications. >> caller: good afternoon. i'm policy director for the tuolumne river trap. i had comments on the advance calendar. as i said before, i'm pleased that it now lists outstanding request from the commissioner. what it needs is a date that the request was made. it needs a date estimated day of when we can expect the request to be fulfilled. i ask you to include that in the advanced calendar. couple of items that are missing. the request that ed harrington made to include environmental metrics similar to the water supply update. this did come up two meetings ago. we were told there will be

something at a last meet and this meeting. it hasn't happened. once again thing are flips. it will be important to have a date. also, on february 22nd, president moran requested a schedule for unfinished business related to the workshops. the schedule should be a pretty quick job. it's been more than three months. can we add that to the advance calendar? otherwise, we see things slip away from us. last year, we tried to get good demand projections in the urban water management plan. instead we got a schedule that came out later. we had a great demand workshop. i like to remind you that resolution 21 from november 9th is to improve relationship with non-government

organizations. this will go a long way. we like to see request fulfilled. this item is on your agenda. i ask that you discuss it. >> sorry your time has expired. next caller. you have two minutes. >> caller: i'm the president and executive director of california outdoors. actually, i was going to ask about item 5. i'll come back to that. i wanted to say that i second everything that peter just shared with you regarding the advance calendar. thank you. >> thank you. there are no more callers in the

queue. >> commissioner paulson: i think we need to go back to item 5 for general public comment. >> clerk: public comment on item 6 is closed. >> president moran: please call item 5. >> clerk: item 5 general public comment. if you wish to make two minutes general public comment on matters within the commission's jurisdiction and are not on today's agenda, please press star 3 to speak. do we have any members of the public present who wish to provide general public comment? are there any members of the public with their hands raised? >> there are two callers in the queue. >> caller: i'm speaking on my own behalf. former commissioner ed harrington stated that 30 years ago that p.u.c. had no debt.

currently, a member of the p.u.c. sits on the m.t.a. revenue bond oversight committee. this seat was formally held by kathy howe. it's currently held by the p.u.c. deputy c.f.o. the p.u.c. deputy c.f.o. stated that he managed a $6 billion debt portfolio. there were gasps and responses. tomorrow at the board of supervisors budget appropriations committee meeting, agenda items 8-14 are related to the p.u.c.'s finances. these agenda items represent hundreds of millions of dollars of debt. this begs the question. if the p.u.c. default on any of its revenue bond and debt portfolio, would the city be liable? if the city is not liable, why not? new subject, yesterday, there

was media coverage about a meeting of water agencies with governor newsom. since the meeting was closed to the public and media, i'm urging the p.u.c. to report on it during the commission meeting today. thank you. >> thank you for your comment. >> caller: good afternoon president moran and commissioners. i'm jeremy pollack. i'm calling regarding a letter that a lafco chair just sent prior to this meeting. letter is requesting that the p.u.c. and lafco renew our memorandum of understanding.

that m.o.u. was focused on the launch of cleanpowersf. it was established at a time back when there was a debate on whether or not san francisco should have a community aggregation program. now the landscape shifted significantly where cleanpowersf is successful, sustaining program with over 400,000 customers. the mayor of the p.u.c. and board of supervisors are all united in pursuing the mission of pg&e and meeting the climate goals. lafco continue -- continues to provide oversight of cleanpowersf. we had opportunities for cleanpowersf to present and to the board of supervisors to give input. i appreciate working with director heinz on scheduling a calendar to give structure to cleanpowersf oversight and lafco

and. i'm looking forward to participating in the r.f.p. process. i met several times along with chair chan and her staff with mr. heinz and we met with the assistant general manager to discuss this topic on renewing our m.o.u. chair chan, having sent a formal letter to general manager herrera today. i would appreciate the opportunity to discuss this topic. >> thank you for your comments. there are no more callers in the queue. >> clerk: thank you. general public comment is closed. >> president moran: thank you. that brings public comment to a close. >> clerk: item 7 is a bay area water conservation agency update. sandkulla?

>> good afternoon president moran, members of the commission. thank you for the opportunity to speak today. as you recall, i have asked the commission twice recently, and once more for the -- to protects the current water supply for tuolumne river. it is reasonable to ask about it. i assure that my request is not out of curiosity. it is very important for bawsca's constituents to maintain a water source and approved by the california state water resources control board. therefore, it is reasonable and responsible for bawsca to ask for your plan. as your largest customer, bawsca's constituents are paying

but $300 million for the water supply that you provide to the tuolumne river and the local watersheds. which represents their share of the operational cost to the system and the $5 billion program to rebuild your 165-mile regional delivery system. bawsca's constituent's well-being depend on your supplies. as the water provider for bawsca's constituents, the environmental environment have the commission's responsibility. your water customers require this information so they can protect their economic well-being with a high quality water supply. they must know how their communities with provide increased affordable housing to be approved and built. bawsca's constituents will pay their fair share of cost. they must be part of the underlying discussions and decisions to provide it. as bawsca has has been in the

rebuilding program at the regional hetch hetchy water system. because what, however, is --bawsca is concerned that the commission may not have a strategy. while bawsca understands that is a complicated issue that requires time to resolve and negotiate an effective solution, it's clear that too much time passed on this effort without achieving critical results. the negotiations need to be expedited to ensure success. it is important that bawsca know what the p.u.c. is doing so they can reassure its constituents. bawsca wants to be involved in rebuilding your regional water system. thank you very much for your time today.

>> president moran: thank you very much. next item please. sorry, public comment please. >> clerk: members of the public who wish to make two minutes of remote public comment on item 7, the bawsca update, please press star 3 to speak. do we have any callers with their hands raised? >> there are two callers in the queue. >> caller: my name is dave warner from palo alto. thank you for your service. i want to let you know that last weeks bawsca's board meeting there was a strong turnout opposing bawsca's participation

in the legal work. the item that brought and the attention was an increase to the assessment that the bawsca agencies paid to fund bawsca. a portion of the increase was used to pay for legal fees associated with bawsca's opposition to the plan. 21 people made public comments, including a number that spoke multiple times. the gist of the statements that is we are being assessed, a rate increase to pay for litigation that we don't want. it was remarkable evening. hearing from many respected people with a consistent message. it's also worth noting, there was no public comment in favor of the litigation, nor the assessment increase. in the end, the board still audit pass the assessment increase. while the good news is, you didn't have to sit through the public comments. the point is, the bawsca meeting was an example of you having a

strong environmental constituency concerned about the health of the tuolumne and the bay-delta. if you sat through the meeting, you will be impressed by the speakers. thank you. >> next caller . you have two minutes. >> caller: peter drekmeier again. i like to support bawsca request for the security. i can understand the frustration. staff has not responded to us and have not responsive to you, commissioners. that's a real problem. what needs to happen, you need to get clear on demand projections and drought planning and from there, if there's a deficit, figure out a we to -- a

way to fulfill that with alternative supplies. we supposed to start this conversation following the workshop, that was seven months ago. we need to settle the question about the design drought. we argued for a long time that it's too conservative. long-term vulnerability investment suggest it's unnecessarily conservative. yet, we're not moving forward. demand projections, same thing, the graphs that was requested in january, comparing to finance division and projections those with the water supply. that was in january. here we are, we heard nothing about it. even though it's on the advanced calendar. regarding the design drought, if you simply direct staff to respond to our information requests, that will go a long way. what we're setting ourselves up for now is we're going to wait longer for the schedule to come out, and then the staff is going to present something to you. you will say, we need some

answers to questions. you'll ask them the questions we asked. it will be a year later. this is a pattern. we try to be helpful to give you some insight into here's what you need to know. it takes so long. again, please listen to ms. sandkulla's request. we are happy to participate in such a process. thank you. >> thank you for your comments. there are no callers in the queue. >> clerk: public comment on item >> president moran: commissioner s any further comments? seeing none. item 8, report of the general manager. >> thank you mr. president. first will be drought update from steve richie.

>> good afternoon commissioners. steve richie assistant general manager for water. we do have a slide. i want to jump straight to the reservoir storage slide. this is the may 16th data for our reservoir storage. it shows hetch hetchy at 341,00. our expectation is hetch hetchy will fill roughly about june 1st of this year. cherry will fill roughly about the same time. we do expect water bank will not fill. it will be in the 300,000-acre foot rank. again, other california reservoirs, i hate to say the

same each time, but, the low state of shasta have the state focused on those things and the need to make sure that we are achieving water savings statewide. question came up about the meeting yesterday with the governor and his staff. the california drought monitor hasn't changed. it still is the majority of the state in extreme drought and the rest mostly in severe drought. conditions are severe. there's no doubt about it. hetch hetchy precipitation has leveled off here in the month of may. we don't expect there to be much of anything for the rest of the year.

on the snow pack, it is almost on. we will be seeing much more in the way of additional water in the system. water available to the city, again, this year, has been doing much better than the last couple of years. despite that it's been a dry year, at least relative to our water supply, it's been beneficial. as you can see from this chart, we actually have received so far, 184,000-acre feet just based on the last week, that's gone up to 198,000-acre feet. that's water that can feed the water bank. precipitation, again, we dropped off now towards the end of the year. may almost had no precipitation in it.

you can see from this chart, california shows no precipitation either during this past week or during the next week. we don't expect there to be much. this slide is the one that where we have to pay attention to for the rest of the year, which is what total deliveries are. this shows that total deliveries, shown by the green line, dropped it about 193 million gallons a day two weeks ago. they are starting to align with the orange line, which is 2015 demand. that's really the target we're aiming for, if we can stay close to that line, that will achieve 10% reduction that we talked about. demand did rise last week to about 202 million gallons a day. it's still in the same range but little higher than we like to see. that's our goal for the rest of the summer, is to see us stick fairly close to no american --

no more than about 2 million gallons a day. i will be happy to answer any >> president moran: commissioner s any questions for mr. richie? seeing none, thank you very much. >> clerk: members of the public who wish to make public comment on item 8a, the drought condition update, please press star 3 to speak. seeing none. do we have any callers with their hands raised? >> there are two callers.

>> caller: i've been listening to your meeting. even though, you know, mr. richie has given a good presentation, the reality check is, how are we going to conserve water in the future? we need to [ indiscernible ] how are we going to conserve water in the future? are you working with the planning department? are we going to be building skyscrapers -- 3000, 4000 units?

we have to look to the future. in the past, there was water. somebody stole it. they are wasting it. mr. richie's presentation is just telling us about today. are you commissioners going to be dealing with the future. thank you very much. >> thank you for your comments. next caller. you have two minutes. >> thank you, peter drekmeier. i sent you a letter yesterday with a graph that i thought might be helpful. it's the tuolumne river water

available. you can see, once again, how much water needed to fill the storage. it also shows comparison of where storage is today to the average. the average is probably a more realistic goal. half the time, it's going to be above average and half the time before. we're not that far from the average right now. it's often overlooked just how much storage the sfpuc has. the other component is showing how much water is in storage. you see there's more than four years worth of water in storage. if you find this to be helpful, i encourage that you request it be part of the water supply update. thank you very much. >> there are no more callers in the queue. >> clerk: thank you. public comment on 8a is closed.

>> item 8b is a quarterly audit and performance review report. >> good afternoon, commissioners. i'm irella blackwood. thank you for having me today. currently the p.u.c. has a portfolio of 33 audits. 40% have been completed to date. we currently have 34% that are upcoming and 28% that are in progress. since our last commission meeting, the agency has completed phase one of its revenue bond audit program.

the issuance date of the audit was february 9, 2022. the objective of this phase one of the revenue bond audit was to determine whether project funds were allowable under bond resolutions laws and appropriate regulations. the audit examined whether project funds were supported and assigned -- allocated to the correct project. as of june 30, 2021, 31 bond series were issued. the audit concluded increased visibility over bond proceeds. there was a period of lack of functionality of the quality assurance audit function. sfpuc concurred with the recommendation and actively addressing the recommends. our agency is making tractions on closing recommendations from past audits. currently, we have a total of nine recommendations open across

two different audits. which are in progress for completion. target date will be by the end of the calendar year, this year, december 31, 2022. the current list of this quarter's audits includes the cleanpowersf privacy audit, green e-verify case audit, a 2021 revenue lease audit and information technology operational technology network audit and interim audit of the 2021 financial statement. our staff will continue to keep the commission updated on the audit bureau and the audit results. with that, that concludes my update. i'm glad to answer any >> president moran: commissioner s any questions. >> commissioner maxwell: i believe you're new to the p.u.c. i like to welcome you. we look forward to working with you. >> thank you so much commissioner maxwell.

>> president moran: public comment? >> clerk: members of the public who wish to make remote public comment comment on the quarterly audit performance review report, please raise your hand to speak. >> there are no callers in the queue. >> clerk: public comment on 8b is closed. >> item 8c is a quarterly budget status report. laura bush. >> hi, everybody. laura bush, p.u.c. budget director. i'm here to present the third quarter of fy '21, '22 results

to you. so, overall, we have positive operating results projected for power and unfortunately, operating shortfalls projected for water wastewater and cleanpowersf. water and wastewater, revenues are down significantly from budget due to the impact of water conservation efforts, due to the drought. this is offset by the surcharge in april 2022. in addition, we're seeing economic recovery from covid, negatively impacting our volume. we set the budget about a year ago and recovery is not taking place as quickly as we'd hoped. we are seeing positive changes from q2. wholesale sales are higher than projected in quarter two. as a result, water revenue has

improved but wastewater has worsened since last quarter. in cleanpowersf, during the second quarter, the. budget was amended by $35 million to incorporate rate increases and offsetting higher cost to power purchases. however, cleanpowersf revenue projections has worsened due to some additional rate changes to remain competitive with pg&e. in addition, expenditure projections have increased. the department will seek another budget amendment in q4 of approximately $7 million to increase expenditure authority, which is reflected as a variance this q3 report. power, higher revenues showing increase in energy prices. despite the shortfalls that we're projecting in wastewater and cleanpowersf, financial results are projected to meet our policy target and we'll be

able to cover any deficits. going into enterprise by enterprise and water, we have a net operating result of negative $26.6 million. [ indiscernible ] drought conservation looking better on the wholesale side versus q2. on the use side we're seeing $9.6 million from cost savings. wastewater, net operating results of $27.3 million. we having an $8.6 million reduction to fund balance due to legal settlement relating to

2014 storm. this came out of fund balance per the annual ordinance. we're able to do that. operating budget sources side, down $37.7 million. on the uses side, $8.6 million of cost saving largely from salary and benefits. power, $18.9 million. this is driven on the sources side by $11.5 million positive variance due to higher rate and volume. on the uses side, we are seeing $7.4 million in cost savings,

which is driven by [ indiscernible ] slide 8, we have a net operating result of negative $4 million. the cleanpowersf budget was revised upwards by $35 million in quarter two to improve the energy rate increases. on the sources side, from there, we are down by $1.2 million. on the uses side, expenditure projections increased as a result of resource adequacies to offset the budget. time lags, invoices and renewable power purchases agreement prior additional payments this fiscal year. these are offset by payments

made to the kiso. the result of this is that we are seeking additional budget authority of approximately $7 million in order to have the ability to extend these amounts this year. this is reflected in the variance column in today's report. lastly, the additional costs are offset by benefit savings that are happening because of vacant positions. all ratios are on target to meet sfpuc policy. we have new addition to the quarterly reporting. we have a new cleanpowersf reserve fund balance reserve policy and requiring the reserve to be at least 50% of operating

cost within three years with the policy adoption in april. we're going through to report this ratio moving forward. that concludes my presentation. >> president moran: commissioner s any questions? seeing none, thank you very much. >> clerk: members of the public who wish to make public comment on 8c, the quarter budget status report. please raise your hand to speak. seeing none. are there any callers with their hand raised? >> there's one caller. >> caller: this is peter

drekmeier. remind you the workshop last july on water demand management, we were explained a formula by your staff that for every 10% increase in rate, we might expect a 2% decrease in demand. the rates for bawsca agencies are going to be going up 30% in the next two years. we might expect 6% decline in demand. i hope that gets worked into future budgets. as prices go up, demand goes down. you have to charge more per unit to cover fixed costs. this is going to be a pattern for the next decade or more. that's why demand is never going to reach the level in the urban water management plan. thank you. >> there are no more callers in the queue. >> clerk: public comment on 8c

is closed. >> 8d is water enterprise capital improvement program quarter report from katie miller. >> good afternoon. i'm katie miller, director of water capital program. i'm here to provide an update on the status of projects in the water enterprise c.i.p. as of end of the 3rd quarter in march 2022. this slide shows the status of the 36 projects in the program with a total budget of $2.7 billion, including 25 regional and 11 local projects. expenditures of the close of the reporting period were 946 million expended with $43 million expended during the quarter. the program achieved 34% completion. this table shows a summary of the program costs forecast by

categories for all active projects. all of the variances shown here are from previous quarters. most are related to the lining of the program to align with the fiscal year '23 to '32 that was approved in february. there were no new cost variances during the 3rd quarter. this pie chart shows the total current approved budget for the 25 regional projects, in each phase of the program as of marc. the number of projects currently active in each phase is shown in parenthesis. 10 out of 25 projects are in the planning phase. during the quarter, two projects moved from planning to design, and one project moved to bid and award. now i'll share highlights for just two projects. the harry tracy water treatment plant capital improvement project, is to replace the filter underdrain systems. this project completed 95% and

100% design during the 3rd quarter, and was advertised in april. this project is ahead of schedule by several months. for the as needed pipeline repairs as well as the bay division pipeline 1-4 projects, these projects are similar in nature. a single contract can be used to complete both projects. as needed repair project, is to shut down pipelines, perform condition assessments and repair pipelines as needed. the bay division 1-14 lining repair work can't be performed using the same contractor. over the past two years, the sfpuc staff formed the safe pipeline isolation working group to analyze how to safely perform work within a pipeline.

during the past quarter, this group published guidance -- sorry, i need to go back. i apologize. i got ahead of myself. during the past quarter, this group published guidance on isolating pipelines. this is actually huge accomplishment to comply with cal osha regulations. these projects benefited from this guidance and the project team have selected to use double valves for isolation. this will add cost to pipeline projects, we will need to install a second valve. it will ensure safe working conditions for all maintenance projects going forward. now, i will shift to the local program. this slide shows that the current approved budget for the

11 local projects in each phase of the program, as of march 31, 2022. more than half the budget has three projects with multiple phases including the main replacement program and the emergency fire fighting water system projects. there were no new variances during the quarter for the local projects. now i like to highlight the emergency repair project. which was funded by borrowing from project budgets within the local water c.i.p. this slide shows on august 23rd, there was a large main that failed. it resulted in flooding. you authorized a emergency contract for $20 million, which has been under way for the last year. this included tree removal, slope stabilization and site restoration. the current status of this project is the project team is performing final walk through

with a contractor this week for the concert field part of the project. you can see the slide on the lower left is a completed area with new turf and full restoration. the restoration of the hillside and tennis courts will take little bit longer. it's all expected to be completed by summer of next year. the festival will go on and everything is ready to turn over to them this week. all within the project budget of the $20 million. i like to acknowledge the project team who really did a remarkable job to get this done. molly vora from our group, wells well as our contractor. this team work closely with rec and park department for very

fast decision-making and restoration work to assure that the festival could proceed on schedule. >> president moran: thank you very much. thank you to the team. commissioners, any questions for ms. miller? thank you very much. public comment please. >> clerk: members of the public who wish to make public comment on 8d, please star 3 to raise your hand to speak. seeing none. is there any callers with their hands raised? >> there are no callers wishing to be recognized. >> clerk: public comment on 8d is closed. >> 8e is a quarterly report. >> thank you very much. i will provide a brief update on the status of the water system

improvement program for the 3rd quarter. these pie charts show the program is 98% complete. during the quarter, the dam replacement project moved to completion. $7 million was spent by the program during the quarter. this cost summary shows status of the four active projects that are reported in section 5 of the report. there were no new cost variances during the quarter. some recent achievements that happen the during the quarter on prim 26th, you all approved the march 2022 revised water system improvement program. there was no change to the program budget of $4.8 billion. there were some modifications to scope, schedule and budget to the four remaining construction

projects and three support projects. we will report these changes to the state in june. for the calaveras dam replacement project, it was approved for close out by the commission in january. this project was fully completed and closed out on march 31st. now for couple of project highlights, good progress was made on the alameda creek recapture project, which is in construction. however, some construction challenges emerged during the quarter. there was some corrosion found in the connection pipe, that will be used to connect the project to the water system. in addition, there was some additional erosion that was discovered in the quarry. these are resulting in redesign of the pipeline in both the front end to avoid the erosion

and back-end to avoid the corroded pipe. this is being done and will be done by change over. next quarter, i'll be reporting on changes to the forecast from this. for the closeout project in seminole valley, we completed all the original subprojects. we added the remaining work from the fish passages facility. this is being done by job order contract. this is to modify the power supply system, replace the battery bank and realign several valves. this work was taking longer than usual because of procurement. we moved it to the closeout project. finally, the watershed and environmental improvements project, you all approved purchase of the 653 acres of watershed land in december 2022. that final purchase has been

completed. this project will close out. that completes my presentation. i will be happy to take any questions. >> president moran: thank you. commissioner maxwell? >> commissioner maxwell: can you explain little bit more on the procurement problems? >> sure. some items we were finding covid related and things related to manufacturing overseas for the most part, lithium ion batteries in particular, that is what was in this case. sometimes steel, we're having some issues procuring. in certain cases, valves are taking a long time. everything is taking longer than usual. but there are particular items that are taking especially long time. >> commissioner maxwell: how

does covid affect that? >> i believe it's when a lot of the factories shut down initially in china and other places overseas. they just never quite got it back together. i believe that is coincided with a real uptick in infrastructure projects all over the world. we may have hit this anyway. for example, batteries and lithium ion batteries in particular. there's a big turn to battery-operated systems over gas-powered systems. there's a big rush battery systems. once the factories close down and get things restarted with the lack of labor, it's impacted everything. >> commissioner maxwell: have prices gone up? >> yes. prices have gone up significantly. i think we've all seen the inflation, which is shown to be 8%. we had lot of our contractors talk about very significant

price increases. >> commissioner maxwell: i seen this, i heard about covid and they are saying it, we are seeing record profits being made by a lot of corporations. i'm just wondering, are we checking into how much of that is real? lot of people saying, look, we might as well take advantage of it. that's happening. that is a real issue that's happening. are we doing anything to make sure that those -- since we're all expecting it, we say, oh, okay. are we doing anything to make sure that is real? >> i know that when we do get construction change orders or requests for information, we do price check to other vendors, just to assure those prices are reasonable that contractors are

asking us for. we also talk amongst industry professionals to see what's happening with other agencies in their construction projects. we're at least checking at that level, kind of the local level. >> commissioner maxwell: that's something, thank you. >> president moran: commissioner paulson? >> commissioner paulson: sound like it's going into the weeds. could you explain very high level, difference between where a change order and a contract goes into the stuff that you just described? you were on some of the -- i don't know if it was the alameda creek recapture or some of the corrosion stuff, you mentioned we're taking care of this with a change order. can you explain? >> these are unforeseen conditions that we did not

>> commissioner paulson: embedde d in the -- >> there's a lot of reasons for those. when we encounter conditions that are different than what we thought they were and design, sometimes it requires a design change. if we have to do that design change, there's a change impact to the contractor. the contractors is entitled to say this is the financial impact to me for that change. then we evaluate that and we negotiate and we come up what we think is fair and reasonable to compensate the contractor. that's done through the change order process. >> commissioner paulson: i understand that in general. somehow between doing this through a contract versus a change order. may be i'm a little confused by that. >> we already have the contract. >> commissioner paulson: all of this stuff is basically change order stuff.

>> yes. change order to the contract that's already in construction. it's unfortunate when we're already in construction. >> commissioner paulson: okay, thank you. >> president moran: thank you. i have one question on the alameda creek recapture project, the picture there of the pipes. that's pre-stressed concrete pipe? >> it looks likes pre-stressed concrete pipe. it's not. it's a steel pipe. it's pretty good gauge. i think it's eight gauge steel. but it is wrapped with metal wrap. this is from 1960s. i don't know that the wrap is giving it that much more strength. but it is something they were trying at the time, about the same era as pre-stressed concrete. the wrap is insignificant to the strength of the pipe. >> president moran: the reason i ask, we had fair amount of prestressed concrete pipe. some of it did not do well.

we spent lot of time looking at protective measures in terms of protections and others. the concern, obviously, is this a warning sign that needs more attention or not. >> yes. you are correct. we do have several condition assessment efforts going on for the pre-stressed concrete pipe in our system that we know about. this was an older, unused pipe. it's only several thousand feet long that connects to a part that isn't used. i believe we used this to bring in water from the zone 7 in the '60s or '70s. we didn't know what this pipe was. we're looking to do more condition assessment work to assure it is going to be a reliable pipe for us. >> president moran: commissioner

maxwell? >> commissioner maxwell: where is zone 7? >> it's alameda county water district, livermore valley. >> president moran: it's a flood control district. they also gotten into the water supply business. >> i may not have gotten that exactly right. [ laughter ] it was some type of water supply pipeline at one time. it has been out of use. >> president moran: thank you. any other questions? seeing none. please open for public comment. >> clerk: members of the public who wish to make two minutes on 8e, please press star 3 to raise your hand to speak. do we have any members of the public present who wish to provide comment on item 8e?

seeing none. do we have any callers with their hands raised? >> there are no callers in the queue. >> clerk: thank you. public comment on item 8e is closed. >> before i conclude my report, just couple of items. number one, i noticed laura bush has left but oaters from the business and finance team are here. i want to compliment them. before the board of supervisors, on budget process, tomorrow for our second hearing. i want to applaud all of their hard work, working with our assistant general manager for really doing a fabulous job carrying out the budget that you all approved. secondly, mr. richie, as you know, we have ongoing conversations with the state. mr. richie alluded that we had one of those yesterday, as part of discussion about water issues. which he'll be talking about

later in our presentation. two other items and most importantly, i just completed six months being in office. just evaluating the organization and where we are, ensuring that we carry out your vision of being good stewards of our water supply but also, good environmental stewards as well. i take that very seriously as i note the rest of our employees do. two items that we're doing to sort of further the discussion, ensure that we are working with all our partners in a community to focus on ensuring that we have an adequate environmentally sensitive water supply. one, you may be aware that prior to 2018, we hosted something called the bay area water

stewards program. which had the p.u.c. engage with stakeholders, n.g.o.s to discuss water issues and to have a platform where we can share ideas and input. i decided to reinstitute that program. we're having our first meeting on june 2nd, i believe. secondly, just as importantly, we've heard lot of discussion about the great work that all of you did on workshops. i agree that work needs to continue. after discussions with president moran, we decided, i decided in conjunction with his desire, i think all of our desire, to headache sure -- make sure we're building that credibility and relationship. we are scheduling a design drought workshop for august 26th as your regular

scheduled commission hearing. we'll be working with staff and other participants in the community to make sure that we have a forum that allows for robust discussion of the issues. we'll be preparing for that. talking about format. we are -- we are going to have that design drought workshop on august 26th. i want to thank president moran for his working with the staff to make sure that everybody makes this a priority. he deserves lot of credit for his forsight in working with all of us to make sure we get this on the calendar. >> president moran: commissioner s any questions or comments? >> commissioner maxwell: it's going to be during our regularly scheduled meeting? >> yes. >> clerk: mr. general manager. you meanwhile august 23rd?

is our regular meeting. [ laughter ] >> okay, there you go. yes, i screwed up the date. the 23rd. apologies. >> on the second of june, few days from now, what does that look like? >> that's a zoom meeting for us and n.g.o.s and other organizations that we have invited to participate. this is going to be a kickoff to start a dialogue on water issues. it will be one in a series of conversations that we're having with organizations around the bay area. talking about issues and how we can help each other. >> working off the pre-2018 list update? >> correct. >> president moran: any further questions or comments? public comment please.

>> clerk: members of the public who wish to make general public comment on item 8f, please press star 3 to speak. seeing none. do we have any callers? >> there's one caller in the queue. >> caller: this is peter drekmeier again. i want to thank gm herrera for making himself available for the last few months. we had a meeting. we're pleased that this is going to be expanded to a larger group next week.

people are looking forward to that. also, great to hear that there's something on the agenda to revisit the design drought on august 23rd. it seems to me these months between our meeting next week and august 23rd are great opportunities for us to flush out a lot of information and details, so we can come in that meeting with a better understanding and make some decisions. this reminds me of the workshop on water demand that president moran chaired last year, where he put lot of effort into determining where we had agreements and where there were some differences. he was gracious in listening to us about what we wanted to see get out of the workshop. i thought the work shop was great. we made good progress there. i think that's a good model for

moving forward. president moran will be great to engage you in any discussions that are happening leading up to august 23rd. thank you very much. >> thank you for your comments. additional callers have joined the queue. >> caller: commissioners, one group or one entity that you live out are the first people. you have to make amends. the way you do that is by listening to those who's land this is. what was presented over 23,000

years, but destroyed in 200 years. think about that. we need to give them an opportunity, the first people to speak their minds, as we did some years ago. don't make promises and don't keep them. we have peter and some others who speak truth to power. we've been listening to them. i've -- i've been listening to them. you don't execute what they have to say. somebody doesn't have their heart in the right place. time has come to listen to the first people.

they need to be brought to the table. the time is right for such a dialogue. thank you very much. >> thank you for your comments. there are no more callers in the queue. >> clerk: public comment on item 8f is closed. >> president moran: any other comments from the commission? next item. >> clerk: item 9, new commission business. >> president moran: any new commission business. next item. >> clerk: item 10, consent >> president moran: commissioner s any items you like removed from consent calendar? seeing none, please open this for public comment.

>> clerk: members of the public who wish to make remote public comment on item 10, the consent calendar, press star 3 to raise your hand to speak. seeing none. do we have any callers with their hands raised? >> there are no callers in the queue. >> clerk: thank you. public comment on item 10 is closed. >> president moran: may i have a motion on a second? >> commissioner maxwell: move to >> commissioner paulson: seconde d. >> president moran: roll call please. [roll call vote] you have three ayes. next item. >> clerk: mr. president, would you like for me to call items 11 and 12 together? >> president moran: yes, please. >> clerk: item 11 is a public hearing to consider the adoption

of schedule of rates, fees and charges of the san francisco pup utilities commission, power end for cleanpowersf in san francisco to be effective on or after july 1, 2022. item 12 public hearing to consider the adoption of rates of the san francisco public utilities commission for hetch hetchy power service beginning on or after july 1, 2022 and july 1, 2023. >> good afternoon president moran and commissioners. general manager herrera and counsel. i'm a principle revenue and rates analysis with the team here. i'm here to present the results of the power rate study to adopt power rates for fiscal 2023 and 2024 for hetch hetchy as well as for fiscal 2023 for

cleanpowersf. we will go through the power rate study. the goal we've kept in mind and rate study process itself. we'll dive specifically into cleanpowersf as well as hetch hetchy power, rates proposals the key takeaways ands bill impacts. starting with the rate studies overview, the sfpuc as an agency is required by the san francisco city charter, to perform a power rate study at least every five years by an independent rate study consultant. i like to thank and acknowledge our consultants who put in a lot of work on the power rate study.

this is hetch hetchy's power third rate study since the city charter requirement. it's cleanpowersf's very first power rate study since the program got implemented in 2016. we began this power rate study in november 2020 with our consultants on board in march 2021. the rate study is a complex model that incorporates lot of analysis and data and information including customer usage data and customer profile, our budget which includes our operating expenditures as well as the capital plan. we also consider internal and external scenario such as drought and power supply market and recovery from covid from our customer load as well as compliance with financial policy, such as the fund balance policy reserve that sfpuc has

adopted. there are many goals that we've kept in mind. i like to highlight three. which the first is to ensure that our financial health over the long-term is sustainable and healthy for the power enterprise. what this means, rates are designed to recover the cost it takes to provide reliable power service to our customers. i'm glad to say that we will no longer be following pg&e's multiple rate changes throughout the fiscal year. we also, prioritized the needs of our customers. the big key change for hetch hetchy power is to standardize all of our rates schedule to standard customer classes. this also give us an opportunity for cleanpowersf to analyze its customer usage and profile and its first power rate study. lastly, we also wanted to ensure

that this power rate study gives us a path to transition our power service to 100% renewable power by the year 2025, to align with the city's climate action goals. this gives and overview of the process itself which can be parsed out in three phases. first step is to gather our revenue requirement, we determine what it cost for us, the total cost that it takes for us to store power to our customers. steps 2-4, takes this big bucket of revenue cost and distribute them for power supply as well as what it takes to get this power to the doorsteps of our customers. it's further classified into specific costs of demand, energy

and customer cost, which we allocate appropriately to different customer classes and what it cost to serve these different classes. last step is the design rate. we make sure to design rates by taking into account the impact it will have on our customers in the way we design our rates. we'll dive now to specifically into cleanpowersf's key rate takeaways. we as staff are proposing that we adopt one-year rates for this upcoming fiscal year '23 for cleanpowersf. which will give us an opportunity to reevaluate the total cost of service in the second year, considering the supply market. we've also minimized these rate changes for our customers.

that means we are only setting rates based on our cost of service for one time per fiscal year and will no longer follow pg&e rate changes. our rate for cleanpowersf, i'm glad to announce, they'll be decreasing from the current effective rates. which means compared to applicable counterpart pg&e rates, we'll be seeing lower rates for the upcoming fiscal year. this rate study also ensures that cleanpowersf is on its path, on the path to build its reserve up to 180 days as required by the fund balance reserve policy. the next two slides show you the bill impacts these proposed rates have an our cleanpowersf customers. the first slide is showing an average residential customer who

is on one of our time of use rates. we'll show you what the bills are with a current effective rate and what the bills will be with the proposed rates on the right-hand side. i like to remind our commission that the green portion on the right-hand bars, are the only portion of the bill that cleanpowersf controls. the proposal for this specific time of use rate show a dollar savings for cleanpowersf customers, both from the current effective rates as well as compared to the rates that they are pg&e customer. the next slide shows an average small commercial customer's bill. as you can see, they will see an average of about $20 savings on their bill compared to the current rate as well as compared

to the pg&e rates. pivoting to hetch hetchy key rate takeaways. staff proposing rates to be adopted for next two fiscal years. the biggest takeaway for hetch hetchy is the standardized all of our rate schedules and classes into modernized structures based on the cost to service. what this means, our general municipal customers, who currently subsidized, will see three cents per kilowatt hour effective annual rate increase. we're consolidating our enterprise and retail customers so their rates are the same by end of the second year in fiscal 2024. which bring us all of our rates really much closer to the cost of service by the end of the

second year. customers may see their bill increase or decrease, depending on their rate schedule. general use customers and retail customers, will see a rate increase, whereas our enterprise customer will see rate decreases. all the bills depend on how a customer uses their power. i'm glad to say that for hetch hetchy power, all of our proposed rates in thefection tw- next two years are lower than the current pg&e rates. we've also designed rates in a way where customers will see a smooth change over the next two years instead of seeing spikes and dips in their bill. we tried to design rate -- we have designed rates for most of our retail customers. if they do see an annual rate increase, that it is capped at 10% or less. last three slides show you the cost of hetch hetchy customers

and how the proposed rate compare to the current rate as well as to their counterpart pg&e rates. the middle box shows you the two bills for the next two years and customers will see an increase in the first and or second year. still the rate is capped at 10%. it is also lower than the pg&e rate, which is the farthest right graph on the next three -- [ indiscernible ] that concludes my presentation today. thank you for your time. thank you for your consideration. i like to quickly acknowledge, all of our staff from hetch hetchy and cleanpowersf and outreach and team who collaborated with us and outreach processes, as well as

our executive team who's given us multiple inputs during this steering rate committees. i'm here to answer any questions. or i can wait until mr. howard ash goes through his presentation. he's a chair of the rate fairness board who will be presenting the rate fairness board's recommendations. >> president moran: thank you very much. commissioner maxwell? >> commissioner maxwell: thank you. i want to thank you for your presentation. it was energetic and clear. it shows an enthusiasm that i really appreciate for something that can be kind of boring. [ laughter ] thank you so much for that. my question is, how are we able to achieve the lower rates lower than pg&e? how are we able to achieve that?

>> our cost to deliver service is different from the cost that pg&e has to deliver power to their customers. know probably have more capital assets and so forth. this is the power rate study. this is an opportunity to analyze our own cost to deliver power to our customers instead of following the ups and downs and being misaligned with our costs. >> commissioner maxwell: they may have other things that they are adding that we don't have. >> president moran: they have something more something we do? >> they may have more assets. they have bigger areas. >> commissioner paulson: thank you. >> commissioner maxwell: how on the cleanpowersf, you said that we're going to do one-year rate and then are we going to -- are

we doing that initially and we're going to look at two-year rate like hetch hetchy? >> right after this week, we'll be starting the planning phase to do another power rate study, so we can come up with power rates for fiscal year 2024. that gives us an opportunity to reevaluate the cost of service as the power supply market is a little uncertain two years out of the future from now. >> commissioner maxwell: with the cleanpowersf, the one year will probably temporary? >> the one year is for this upcoming fiscal 2023. then we'll have rates ready before the fiscal 2024 begins.

>> commissioner maxwell: thank you. thank you again for your presentation. >> president moran: thank you. then from the rate fairness board? we have a presentation? >> i like to present mr. howard ash. he'll be presenting the cost of the rate fairness board. >> good afternoon, commissioners. my name is howard ash. i serve as chair of the rate fairness board, which was established almost 20 years, prop e in 2002. it's been a while since i been here. it's nice to be here.

the civilians we have had some -- i'm a charter member of the rate fairness board since 2004. we had some problems getting and maintaining commercial representatives representing large commercial and small business representatives on the board. we got a good group now. there's been lot of turnover in the last year or two. they've been all engaged and very good for the process. this is just out of the charter where we were established in 2002. we're here to review the 5-year rate plan. we had six, seven or eight

public hearings all based on the power rate proposals in the last several months. we can provide recommendations. there's a lot that goes into rate fairness that we try to take into consideration as we evaluate the staff proposal. this next slide, i want to say that, taking a longer term

perspective and president moran you will understand this, we trying to get to this. the bake goals that we're trying to get to is to get the enterprises on financial stability and financial independence, that we have traditional utility rate classes. we tried to simplify things. just to give you a little bit of a historical perspective about where we've been with the utility rates and where we are now. there were money was going back-and-forth between departments and the general fund. we didn't have a conservation rates. we didn't have low income rates back in the day. all of this, especially on the water and wastewater side, we've gotten there. we are relatively earlier in that journey on the power side. i think these rates get us closer to where we want to be.

finally, overall, on the hetch hetchy and the cleanpowersf programs, the we think that the short rate periods are appropriate given the volatility and the price and the power market. typically in wastewater, we had four and five-year rates. they don't have the same volatility for the power commodity. we're okay with the short periods. we though that the staff has got the tools from their own internal tools as well as what was provided by the consultants. they'll be able to do these mini rate studies in the coming years, so there's not a big expenditure of time and effort. the processes are in place develop the rates for the next three and four years after these initial rates are in place on

both hetch hetchy and cleanpowersf. we want to separate the rates. they got different costs and different set of customers and different business models. the general trend is where we want to be. we're going to continue the low income rate programs. especially now. moving to hetch hetchy power, specifically, we like the move away from -- the move towards more generalized, more traditional utility rate classes -- residential, commercial, industrial, etcetera. on the whole residential side, we're creating the rate types or the rate design that we have for everybody else.

we used more power in the winter because the electric heat and actually not the heat in my house, electric fan has to move the warm air around. we're outing the pg&e blocks for electric and gas. that's new as well. the tier 2 has been expanded. lot of these details were very reasonable to us and very good for the customers. it tends to lower some of their rates compared to what they would have been. as i say, you gotten this in your package, all the time of use. we've got a pilot for electric vehicles. in general, we concur that the staff's proposal gets us in the direction to where we want to be

and thieves all of the rate fairness objectives. we do note that the staff proposal for the airport, the airport is a big customer. we have to take money -- revenue away from that. that's one of the inevitable parts of moving across the airport. they are kind of unique enterprise. this is just the way the chips fall. finally, on the next slide, we've got about cleanpowersf, as staff mentioned. this is the first real rate study for cleanpowersf. i want to emphasize, we like the fact that we're moving away from following pg&e rates up and

down. that the cost for the power will be based on cleanpowersf's cost. i think that was the real impetus of the implementation of the program. few other things we got simplifying the super green program. we know that the rates in place are building towards the desired fund level balance for both clean power and hetch hetchy. finally, big thank you, staff was very good. our board members were very good, they are very engaged to ask the right questions. i think we succeeded in providing the service that -- although we did not have a lot of public comment during our meeting. we are the forum for that. we are the forum for sunshine on the p.u.c.'s rate making process. we're there and we know more of

it's coming as we say we've got redo some power rates in the next couple of years. there's even some water and wastewater rates. we're happy to serve. as staff mentioned, consultants very good. they got 170-page report somewhere on the website. i think it's very thorough and easy to understand. i'm happy to answer questions as well. >> president moran: thank you, mr. ash. >> commissioner maxwell: i want to thank you for your service. it's volunteer. thank you for all the work and the effort that you all put in. >> my pleasure. >> president moran: i have two questions. one very particular one very general. i don't know who should respond to them. on the very particular one, the cost allocation model.

i'm interested in how detailed that is and very specifically, are we able to tell the cost that are allocated to our transmission lines as a group and to our transmission lines individually? >> we are able to tell the cost it takes for the process. i'm not sure if by individual transmission line, if you mean each transmission line [ indiscernible ] we have a cost aggregated for the cost of transmission. we're able to tell it from the model. >> president moran: i appreciate that. if somebody can get back to me with a level of detail that you have on that, i would appreciate that. other question is far more

general. that is that we are changing the business model pretty significantly. this has been going on for a while. we work very hard to have the ability to charge market rates for our power. >> one of the key goals is the power rate study is to move all our customer costs and transition them to the cost of service. we are doing it in a way where it covers, recovers our physical

year revenue requirement as a whole, to provide service to our customers. it does reallocate some of the costs based on the cost of service. as a whole, we are recovering the total revenue that we need per fiscal year. >> president moran: this is a question that maybe not in the context. as we change what class of customer gets pays more or less for their power, that changes our competitive posture within the marketplace in general. i guess my question is, from a business standpoint, how do we think about that change in our competitive position? what are the reasons for that? do we think that's a good thing

and bad thing and why? >> i can answer this. we have designed rates for all of our customer classes to be competitive. all our rates both for cleanpowersf and hetch hetchy power are currently lower than the comparable counterpart if they were to go on. we have designed rates in ways to recover our cost of service as well as to be competitive. >> i wanted to add to the conversation and try to answer the question that you have, commissioner moran. when you ask about

competitiveness and this historical ability to charge rates that reflect the market, in the context of this rate study and the objective that we are pursuing to identify the cost of service, charge rates that recover that cost of service. we're operating within the business environment in recognizing what are competitors doing? we are stepping away from charging rates that follow pg&e. however, we need to acknowledge and it's also within the rate study report that our consultant have worked on. the competitive nature of our bills in comparison to pg&e. probably not a direct answer to your question. we can definitely follow up. there a recognition of the overall environment that we have

to operate within and hetch hetchy power and cleanpowersf, need to compete head-to-head with other electric providers. >> president moran: thank you, mr. ash? >> as long as i'm here, i'll weigh in. your comment about competitive rates, i think the excess power that hetch hetchy may have, i assume is being sold at market rates. that's revenue coming into the enterprise. if power prices are high when hetch hetchy is long, that means lot of revenue. that will tend to reduce the amount of revenue that the enterprise needs to get from its customers. i don't think that enterprise is in the business of giving away

power when it's valuable. they are in the market. before response to commissioner maxwell's question about pg&e cost, the investor on utility, they have profits that cleanpowersf doesn't have. they have to pay state and local income taxes on that profit. all of that money gets collected from their customers. the cleanpowersf does not have that. that's a built-in discount on the cost. that's one of the reasons why cleanpowersf is able to charge rates that are little bit less than pg&e. >> president moran: thank you. any other questions or comments? seeing none, thank you, all. let's open for public comment. >> clerk: members of the public who like to make public comment on items 11 and 12, please raise

your hand to speak. do we have any callers with their hands raised? >> there are no callers at this time. >> clerk: public comment items 11 and 12 is closed. >> president moran: thank you. we will take separate motions on each of these items. for item 11. >> move to approve. >> second. >> president moran: roll call please. [roll call vote] you have three ayes. >> president moran: item 11 passes on item 12, a motion and a second. >> commissioner maxwell: move to approve. >> commissioner paulson: second. >> president moran: roll call. [roll call vote] three ayes. >> president moran: item 12

passes. thank you, all. next item. >> clerk: item 13. approve the terms and conditions of an authorized general manager to execute a lease between the city and county of san francisco and hungry kitchen llc for a five-year term for $8400 rent, 3% annual rent increases subject to the city right to terminate after the second year of lease term. >> good afternoon. i'm pleased to present the second lease at our upcoming 1550 evans community center. i'm here to answer any questions. >> president moran: thank you. commissioner maxwell? >> commissioner maxwell: i'm sorry, i didn't read all of it. i want to know how long are the leases? how did you select these

particular people? >> we had a robust request for proposals. we received several proposals. a selection committee comprised of two sfpuc representatives, community members, southeast community facility member who recused from the recommendation, voted on the proposals. hungry kitchen was by far the highest scoring respondent. after that, staff took in recommendation to the southeast community facility commission, which recommended that your commission approve the lease. the rent is based upon 50% of fair market value. >> commissioner maxwell: did they bring any taste? >> we didn't do any tasting

because of covid. we were all disappointed by that. >> commissioner maxwell: are they located in the city? >> they are located in the city. it's an experienced operator, hungry kitchens has the concession at a the palace of fine arts. it also has a food truck elsewhere in the city. >> commissioner maxwell: are they located in the city? >> yes. >> president moran: commissioner paulson? well done. okay. let us move to public comment. >> clerk: members of the public who wish to make remote public comment on item 13. please press star 3 to speak. seeing none. do we have any callers with

their hands raised? >> there are no callers in the queue. >> clerk: public comment on item 13 is close the. >> president moran: thank you. >> commissioner paulson: the checklist of 100 questions and they got a 93 and the next one is a 60 something. is that a boilerplate checklist? >> it's not a boilerplate. this is a brand new facility. that being said, real estate services does issue r.f.p.s. this review was -- r.f.p. was issued with our city attorney's office. it's an r.f.p. written by real estate services in conjunction with the community benefits group, which is programming the 1550 evans facility and also based upon significant ongoing comment from the city attorney's

office. >> president moran: further discussion? seeing none. we already did public comment didn't we? may i have a motion and a second? roll call please. [roll call vote] you have three ayes. >> president moran: item 13 is approved. thank you. next item. >> clerk: item 14. approve and recommend to the board of supervisors the conditional termination of certain sewer and water easements located within park merced and lake merced boulevard brotherhood way to execute the interim easement agreement and certain quick claim deeds.

>> good afternoon, michael carlin deputy general manager. you can see that we're abandoning some easements that we had so the developer can move forward. , at the same time the developer will relocate in the public right-of-ways. i seek your approval to move forward. >> president moran: any questions for mr. carlin? public comment please. >> commissioner maxwell: i do have a question. mr. carlin, you say that the developer is going to pay for us to relocate our assets? >> as part of the development agreement, as we do all these developments when the developer comes in, they replace all the sewer and water assets that need to be replaced.

they will pay the cost to move those. >> commissioner maxwell: good, that's something that they as a cost of doing business? >> it's part of the development agreement that we negotiate with each developer as we go through this process. >> commissioner maxwell: have we found any problem with them saying it's too much? >> always, we say no, you're going to do it. >> commissioner maxwell: thank you. >> president moran: thank you. any other comments? public comment piece. >> clerk: members of the public who wish to make two minutes of remote public comment on item 14 please press star 3 to speak. are there callers with their hands raised? >> there are no callers in the queue. >> clerk: public comment on item 14 is closed. >> president moran: okay. >> commissioner maxwell: mr. cor

lin, how much does it usually cost? i know it will probably depend on how long and how much. relatively, how much does that add to the cost of development in san francisco? >> i can't to that off the top of my head. the total cost of development is kind of all in cost like building the buildings, housing, streets. >> commissioner maxwell: would you say it's millions? >> absolutely, it's millions of dollars. i can't say exactly. >> commissioner maxwell: i wanted to -- the cost of doing business if developers figure out how to do it. >> it depends how much affordable housing is involved. for your balboa development site that we sole, it's 50% of affordable housing.

that was a good deal for us to increase the affordable housing in san francisco. we took a little bit of a discount on the land purchase. that's how we balanced it out. >> commissioner maxwell: thank you again. >> president moran: okay, thank you. we have had public comment. motion and a second. >> commissioner maxwell: moved. >> commissioner paulson: second. >> president moran: roll call please. [roll call vote] you have three ayes. >> president moran: item 14 passes. next item. >> clerk: item 15. public hearing discussion and possible action to adopt a systemwide water use reduction of 11% compared to baseline water use during fiscal year 2019-2020, systemwide reduction associate with shortage level two of the water shortage contingency plan in alignment

with state requirements. >> good afternoon. steve richie assistant general manager for water. i will be talking about moving water shortage level two over drought contingency plans with reduction of 11%. on november 23rd, the p.u.c. declared water shortage emergency. the emergency does remain in effect until rescinded by the commission. since then, overall drought conditions continue to persist throughout california. around prim 15th -- april 15th, p.u.c. issued availability estimate for fiscal year 21-22. hetch hetchy is expected to fill this year.

therefore, water use reductions continue to be necessary. little bit of background here, on march 28th, the governor issued executive order direct state water board adopt regulation and respond to actions. state water board is considering those today. i just got an update to make sure i understood. their action need to go to the office of administrative law to become regulation. yesterday governor newsom called a meeting with the california urban water agency.

they are the 11 largest urban water suppliers in california including metropolitan water district seven california, san diego county water authority, san francisco, east bay mud, santa clara valley water district and contra costa water district. basically, the governor was there to basically send a message that the urban response statewide, if you followed that on a month by month basis, it's not been what they have been looking. 73 really wanted to emphasize that the next 60 days are important to show that we will be achieving results, which i think we will. we emphasized our low per person usage in both san francisco and the wholesale area. today's action by our commission, will be proposed and we expect to move to level two.

that's going to be consistent with pursuing that low per capita usage. it's one of the things that's difficult for us, is percentage reduction against a particular base year. if we were to move 20% reduction, you will see later in the presentation, that will put us on to a very low per capita basis. at the meeting yesterday, all of the agencies talked about all the things that they were doing to try to improve performance. i think there were good messages from all of the urban agencies. certainlial commitment by all to work together and work with the state and get back together again with the governor in about 60 days to see where we're at.

the fatigue was setting in. drought has become almost a common place thing in california. this isn't just normal drought condition, this is a serious drought for the state water project and the central valley project. they've been the ones who has been lagging reduction in water use, metropolitan started to take actions to improve their performance dramatically. overall, it's worthwhile. we were there representing san francisco. it was a productive meeting. the proposed action today, we're recommending the commission approve moving to level two of

our contingency plan. increasing the 10% systemwide water use reduction to 11%. which seems like a little bit. that's just the threshold level 2. it could go up to high as 20%. we think this is a challenging goal for us to meet. it's moving from overall system use goal. that means that we get an allocation 62.3 million gallons per day and the wholesale customers get 110.7 gallons per day. little bit reduction for san francisco but we still remain at 5%. but the reduction for wholesale customer will average about 14%.

what that means for individual wholesale customers, the way they allocated among themselves, some are as low as 7% reduction. larger per capita water users would have to save more than those who have demand level similar to san francisco's. the whole reduction would take effect july 1, 2022. really to achieve that, the thing that's become very clear to us, we made systemwide demands low. it's really limiting outdoor irrigation. that's the big deal for our service area if we can share that peak out from the summer, we'll get these numbers. in 16% reduction to the wholesale means reducing per

capita average. [ please stand by ] -- for the wholesale customers we sehave a letter tomorrow confirming the action by the commission. and bosco will write back and affirming the tier two factors under a continuing shortage,

among their members. and so on may 27th, you know, the day after tomorrow, we would issue new monthly water budgets with update to the tier two allocations. and on august 15th the first water budget report, on july 22nd usage under the 11% reduction. and, of course, we'll be continuing and probably enhancing the drought outreach campaign. again, emphasizing reducing outdoor water use both with us but also in cooperation with some of the other agencies to make sure that we really get the message strong out in the bay area. and i'd be happy to answer any questions. >> thank you, commissioner maxwell. >> commissioner collins:: i havo everything that i can. i use my bath water from my toilet and i'm just going all out. and so is there any way that we

in our bills what two gallons would look like. is there an idea that if you do this, you save two gallons. just to give people some idea and, i mean, maybe even, you know, lawn watering and i remember a lot of people changing their lawns to drought resistant. but is there any campaign that we are thinking about that could give people a better idea what they could do? >> well, i think we'll be talking with our present communications about how best to achieve that. certainly, what is adopted is outdoor watering no more than twice a week and that's one action that people can take. and two gallons per person per day is one less flush a day. so that would be, you know, a way to get at it.

that's true, two gallons per flush. >> so some have three to five gallon toilets. so everybody flushes one less time -- i don't know if i want to go on television saying this all over the place -- but that would be a way to get there. >> because people need an idea. >> i agree. and the percents mean nothing to our wholesale customers many times and even the per capita numbers but what is the action that i can take. and reducing outdoor irrigation is the biggie, if that can be done that would make an impact. so, i will say that my personal use we have a bucket in the commission so anytime that we rinse lettuce, the water goes into the bucket and it goes for irrigating the container plants on the terrace. it's automatic. and it's left over from the old drought, it's there. >> it's a good reminder. >> if i might, commissioner

maxwell, let me just say that our communications team, working with mr. richey and our finance team in terms of outreach over time, whether it be our customer assistance program or drought education has been has been really been cutting-edge in terms of outreach and multilingual and a lot of digital, but i think that as this evolves, that we -- we always look to tailor our message for whatever the changing circumstance is and the program is. so you can rest assured as we head into a tier two type situation that we'll be working with mr. richey to sort of tailor the message that maybe we have to adjust it. i'm sorry? >> commissioner maxwell: one less flush, i thank you. >> water your tomatoes. >> some of us think as buying

wine as a water transfer transaction. just one comment -- i seem to remember a prior time when we were going through this that on the website where you could track your personal usage on a daily basis and this was an able-bodied automatic meter reading that we do, that may well provide some opportunities for answering those very specific questions, besides what everybody should do, what should i be doing and how am i doing against target. and the other thing that occurs to me is that i think that studies have shown that the biggest motivating comparison in there is how you compare to your neighbors. there's just an element that you don't want to be the worst on the block. and if we have the ability to do that or how you compare to people with, you know, similar water use profiles or something, tools like that on the

information page, i think that it will make it easier for people to have a sense of what this really is. i love the one less flush. i mean, that is about as real as it gets but anything else that we can do, i think that it would be. >> we did use that in the last drought and my account still exists and our communications team is actively looking at things to do with that. at that time we had the green bar, you know, if you were above the green bar you could probably do a little bit better. if you're below the green bar, you're doing great, keep it up. that was the average for the household size. but i'm sure that -- they've always got bright ideas so i'm sure they have already looked at that and already taking action towards that direction. >> president moran: let's go to public comment. >> clerk: public comment on item 15, press star 3 to raise your hand to speak. do we have any members of the

public present to provide comment on item 15? >> caller: good afternoon commissioners. bosca is pleased to support the action today to adopt system-wide reductions of 11% in alignment with the state requirements and the p.u.c. level plan two. in accordance with how we share water with san francisco, your action today as mr. richey mentioned will result in the bosca agency and their customers achieving water reductions from 7% to 34%. bosca supports the need for voluntary actions to make greater water use reductions. today bosca suggest to its 26 member agencies and their customers to consider reasonable reductions in their already very low water use, one of the lowest in california. bosca's work plan is on water conservation and as part of our strong descriptive name which

the california legislature gave us 24 years ago. therefore, it is a part of our mandate and our strategy. this is important for us now as we embrace the water use to be reduced by at least 15%. this is a very difficult target for our member agencies and their customers to meet. and they haven't met it yet because they already have responsibly one of the lowest per capital use water levels at 66 gallons per day. really second only just to you. and yet all of us are striving to meet the governor's target and the requests by the puc for further reductions and bosca member agencies will continue our efforts to work with kuchtd more this is summer to achieve these savings. thank you for your leadership in this, i appreciate it. >> president moran: thank you. >> clerk: mr. moderator, do we have anyone with their hands raised? >> madam clerk there, is one caller in the queue. caller, i have opened up your

line. you have two minutes. >> caller: thank you, peter drekmar. so it's a state requirement to move to level two, water shortage contingency plan and that makes sense that we all share in the sacrifices, if you want to call it that. but you ask if it is really necessary for puc and bosca to ration at this level and my answer is, no, because there's a lot of water in storage and the p.u.c. has really amazing water rights and averaging one year and even some below average years. so, you know, i think that san francisco should be really be proud of low per capita use. and that's largely due to the p.u.c. programs and actions, so congratulations on that. and the bosca territory, there's more room for improvement but

they're doing pretty well too, and i have to give them credit that they're taking this drought seriously and addressing publicity and so good job, bosca. and a will breakdown between retail and wholesale is fair, given the per capital use president moran you asked kind of peer comparisons. and we have a program called water smart, i am not sure that we do anymore, but on your bill you would get a comparison to your neighbors who live in similar situations. and, you know, if you're doing really well you get a smiley face and if you need short-term improvement that might be a frowning face, that might be something to look into. i think conservation is obviously very important. and it helps us to stretch out water resources for times when there might not be enough. but it also can benefit the

environment. unfortunately, it doesn't talk about that before, and we really need to address that because that's a real -- >> thank you for your comments. sorry, your time has expired. madam secretary, there are no more callers in the queue. >> clerk: thank you, public comment for item 15 is closed. >> president moran: thank you. any additional comments from commissioners? seeing none, a motion and a second please. >> move to approve. >> second. >> president moran: roll call. >> clerk:[roll call] item 16, approve two credit facility agreements for the interim funding program of the wastewater enterprise. >> president moran: mr. pearl. >> good afternoon, commissioners, charles pearl, deputy cfo. before i jump into my item i wanted to introduce our new capital finance director, nikolai scarloff, you could

stand up. nikolai joined us last week and he comes to us from the city of san jose where he led their debt and treasury group there. and has more than 20 plus years of public and private -- public sector finance experience. so next time that we have a capital finance related item he will be here talking with you. so i just wanted him to give a quick wave. >> president moran: welcome. >> so this item before you today, commissioners, it is to approve the replacement of two of our expiring credit agreements. again, commissioners, just as a reminder, our interim financing program also known as our commercial paper program, is a very important part of our overall project financing that we have here at the sfpuc. so this is a part of that. so if i could have the slides, please.

just again quickly, a brief overview of our interim financing program to refresh your memory on that and then i'll go into details on the two agreements that we're swapping out that are expiring. and so here is our interim funding program for our wastewater enterprise and a $750 million program. again, commissioners, this is the parking lot so to speak as projects spend their money, and we use our commercial paper program to pay the bills. and then when we come to you for a revenue bond financing we refund these expenses into that revenue bond. and so, again, this is a short-term parking lot, and this commercial paper from maybe a year or less -- or in between our revenue bond transactions. so, here we have five agreements along with a revolver, six total. the two agreements that are highlighted are the ones that are expiring.

and just as a reminder that we shared this with you in our capital financing plan for the current year that these renewals would be coming your way. so the first one, just to quickly walk through with you -- we did a competitive selection of banks that are in the overall pool. and we had -- we sent this request to 18 banks and we had seven responses which we felt that was a fairly robust competitive selection. we had a lowest cost response from t.d. bank and so their fee actually is coming in below what our current fees are. so not only are we getting what we think is a good deal here but the costs will actually be going down, not just for this agreement but for the next one as well. it's a five-year term and it has the option for an extension,

should the business conditions warrant that once we get to that point. and strong credit ratings, short-term credit ratings as noted here, and all of these costs are funded in our wastewater capital budget. the second item is for our series a-7, again, wastewater commercial paper program. this is with suma toma banking corporation for $100 million and it's a letter of credit. again, a five-year term. this fee of .3% actually -- it came down only nine basis points from 39 basis points to 30 basis points, but nine baseit points reduction, it's almost a 25% reduction in the fee. so there is quite a bit of competition right now in this space and so we took advantage of that by doing this competitive selection.

again, fairly strong credit terms that the bank has and, again, and this is also funded by our -- our wastewater enterprise capital budget. lastly, commissioners, there are a number of documents that are in the packet for your review. again, we're approving these today as to form, and you're authorizing the general manager to finally execute these trans transactions. once we get to the closing we have an agreement and a fee letter for each of the two banks. these, again, are just amendments and there aren't any significant changes to those agreements and as i mentioned the fees came down for both. so we feel that this is a pretty good competitive selection before you today. and then the offering memorandum, this is a revised document that is used to market our commercial paper when we actually go out to the marketplace and issue commercial paper. this offering memorandum is used

for, you know, banks and investment firms and those sorts of things that want to buy our commercial paper. so that's what the offering memorandum refers to. with that i'm happy to answer any questions. >> president moran: thank you, commissioner maxwell. >> commissioner maxwell: what is bringing about this market that people want to get this paper and, you know, the rates are low and -- well, you know, at least competitive. what do you think that has brought that about? >> i think there's a few things and i think that the sfpuc is seen as a quality credit. i really truly feel strongly about that, that, you know, maybe other agencies aren't as -- don't have as strong of a credit story as we do. so we have a strong position in the market. and there's a lot of competition right now. there are a lot of agencies that

are looking for these sorts of agreements and we are just positioned well to make that ask and to get a lot of responses. i think that it was actually really good timing. we did this solicitation before the interest rate increases that you've heard about over the past month or so, so this we have been working on for the last three or four months, actually. so it was pretty good timing as well. that helped, a little bit of luck i guess is what i'm saying >> commissioner maxwell: it was mentioned today earlier that there's a lot of this kind of work being done and so do you think that maybe a lot of infrastructure, big infrastructure projects, do you think that that has something to do with it. >> i think that these banks are looking for business and they do perhaps see opportunities out there with the new infrastructure bill and all of that sort of -- you know, coming

their way. and perhaps part of their motivation to lower their prices is to get in good favor with agencies like us as well. i'm not presupposing that is what is driving it. >> commissioner maxwell: okay, thank you. >> president moran: any other questions, seeing none, public comments please. >> clerk: members of the public who wish to make two minutes of remote public comment on item 17 raise your hand to speak. do we have any members of the public present who wish to make public comment on item 16? seeing none, mr. moderator, do we have callers with their hands raised? >> ms. secretary, there are no callers in the queue. >> clerk: thank you, public comment on item 16 is closed. >> president moran: thank you. may i have a motion and a second. >> cle

>> president moran: roll call. >> clerk: [roll call vote] >> president moran: next item, please. >> item 17, for a dooration of 13 years and six months with no change to the contract amount and authorize the general manager to execute amendment number four. >> good afternoon, commissioners, the project manager infrastructure division the agenda item before you is requesting your approval of amendment number 4 to agreement cf109, specialized engineering services for recycled water projects. this amendment would increase the contract duration by 18 months to 13 years and six months. previous amendments to the agreement cf109 have increased capacity and duration. the second impact was from nine years to 12 years and we osh tained approval from both the commission and the board of

supervisors for that change in accordance with the city charter. this previous time extension approval from the board carries forward to cover this current request. this fourth amendment is for time extension only which is needed due to the delay in the construction completion of the recycled water treatment facility. the primary services being provided by the consultant in this final phase of the project are to support the sfpuc in the commissioning of the new facility, providing technical expertise and supportive staff as they learn to operate the new facility, and completing final facility documentation such as standard operating procedures. since this work is directly tied to the construction and commissioning of the new facility, the agreement duration needs to be extended so that the work can be completed. i'll take any questions. >> president moran: any questions or comments? seeing none, congratulations. public comment, please. >> clerk: members of the public

who wish to make two minutes of remote public comment on item number 17, please press star 3 to raise your hand to speak. do we have any members of the public who wish to make comment on item number 17? any members of the public with their hands raised? >> madam secretary, there are no callers in the queue. >> clerk: thank you, public comment on item 17 is closed. >> president moran: thank you. may i have a motion and a second please. >> approve. >> second. >> president moran: moved and seconded, roll call. >> clerk: [roll call] >> president moran: and item 18 is continued on our next calendar. and i with the order of the call of the chair we have no further business before the commission. this meeting is adjourned. thank you all.

>> providing excellent customer service to each other so that we can succeed together.

because we're a small division out here, and we're separated from the rest of the p.u.c., a lot of people wear a lot of different hats. everyone is really adept not just at their own job assigned to them, but really understanding how their job relates to the other functions, and then, how they can work together with other functions in the organization to solve those problems and meet our core mission. >> we procure, track, and store materials and supplies for the project here. our real goal is to provide the best materials, services and supplies to the 250 people that work here at hetch hetchy, and turn, that supports everyone here in the city. i have a very small, but very efficient and effective team. we really focus hard on doing things right, and then focus on doing the right thing, that benefits everyone. >> the accounting team has several different functions. what happens is because we're so remote out here, we have

small groups of people that have to do what the equivalent are of many people in the city. out here, our accounting team handles everything. they love it, they know it inside out, they cherish it, they do their best to make the system work at its most efficient. they work for ways to improve it all the time, and that's really an amazing thing. this is really unique because it's everybody across the board. they're invested it, and they do their best for it. >> they're a pretty dynamic team, actually. the warehouse team guys, and the gals over in accounting work very well together. i'm typically in engineering, so i don't work with them all day on an every day basis. so when i do, they've included me in their team and treated me as part of the family. it's pretty amazing. >> this team really

understanding the mission of the organization and our responsibilities to deliver water and power, and the team also understands that in order to do that, we have a commitment to each other, so we're all committed to the success of the organization, and that means providing excellent customer service to each other so that we can succeed

(♪♪) [applause] >> thank you, lion dancers. [applause] you know it's a special occasion in san francisco anytime that you see the lion dancers here. and we are certainly celebrating a special occasion today. so it's so wonderful to see everybody. the weather is wonderful. the pre-program with all of the skaters is wonderful. and it's great to see everybody here today. and you know what we're celebrating, right? [cheers and applause] we are celebrating because this 3.3 mile stretch of road behind