mr. rydstrom on financial issues and rate setting. part of that had to do with water savings and how that affects rates. part of it has to do with how to explain rate increases to customers. i wanted to offer my suggestions because we are some of your customers, and the explanations from you would be useful as well. first of all, on the matter of conservation, excellent graphics here today show you what is happening with water use. i believe all those represented county feeders, for example the consumption by san francisco. that was how much water flowed across county lines into san francisco. i am a date to junky like commissioner -- a data junky like commmissioner moran. i would love to see more data. but there's a lot lost in that. the data are complex and confusing as well. we have one agency in palo alto that is a multiple-utility agency. they have waste water, garbage, gas, fiber-optic. they cover all the utilities in palo alto. there were trying to make use of their data across different utilities to see if they could sort out

mr. rydstrom. hi there any other comments? -- are there any other comments? commissioner: what is your name again? >> kerin. --karen. we have a series of other cities and counties that are a part of our client base. commissioner: given what we are going through now, it is very commendable in terms of what you have been able to achieve. have you seen a clean audit than this? -- cleaner audit than this? there is no other agency that has had such a commendable review, is there? >> there are other agencies that have no audit findings, so -- commissioner: you are being very noncommittal, as an auditor should be. a job well done. >> it is my understanding that that company audited nanny in the past, so they have a huge client base. >> yes. president vietor: thank you very much. the general managers' report, i believe. -- manager's report. secretary housh: there has comments that have been made about wanting to have a pre- discussion. we also will be going to staff with recommendations, so we wanted to show to you what we are looking at in terms of the priorities th

mr. rydstrom walk through some of that. >> there are some extras here for the public, as well. i would like to walk you through a couple of refreshers slides, and this will be mr. torres' first. commissioner torres: i will not be the excuse for a longer meeting. i am a fast learner. >> key policy initiatives to prepare the budget with, and we have included that here. we want to make sure that we come back to you in january and give you the budget documents presented in a way that you find most useful. i would like to mention that mr. harrington mentioned that in some ways, our budget may seem a little boring over the next couple of years because we of the operating under a relatively flat operating budget, and that is because we have had to bridge lower sales for water. if you look at our two-year budget that was adopted, it is growing to $860 million that we have adopted already for the two-year budget cycle. just a refresher, $75 million of that growth is planned debt service for the water in. program. the other $25 million is all cash -- capital. particularly in streetlight p

mr. rydstrom, once again. commissioners, any questions? bravo. >> and thanks to charles, too. >> thank you, charles. we really appreciate it. any public comment on the general managers' report? hearing none, at next item please. please. >> the next item would be the

mr. rydstrom about the quality of the utility and its costs compared with other utilities. with regard to objectives, the first step really is to establish the total costs of the power enterprise. we developed a model to address that. secondly, it is to allocate those costs to customer groups and categories. part of that process is using a revenue requirement model, what we call an enterprise model. we look at the whole power enterprise, its production cost, its financial cost, and understand the drivers of those costs. we feel in our work it is important to stress the cost and revenues. we work with power enterprise to do that. when i say we stress test revenues and costs, i am talking about what mr. harrington talked about. right now, you have a very high water year. you want to know what that does to revenues or city's sales. at other times, you have a very low water year. you want to know what that does to revenues or costs. we work with power enterprise to do that. the model we developed with them involves setting rates for irrigation districts. you know the long-term

mr. rydstrom said -- we should consider that the sale of water or the purchase of water, the commodity portion of their budget is often only about one- third of their budget, so even if we are reducing the rate increase, it is one-third of their budget, so it includes all of the rest of the things, but we have already cut 4.6% acela rizzs, so we are already furloughing people. -- but we have already cut 4.6% in payroll. this is something we do not normally choose to do, and we will probably be coming back to you with additional cuts. they will try to stay within those parameters. you may have to decide in january whether the cuts will presented to you are more than you want to see and whether we want to revisit something else, like different things with the rates, because we are looking to be able to stay within the revenue side. the water budget will monday it to stay flat. just to present that out there. >> and we will roll that through the next tenure so you can see that. >> i think this, and probably applies equally -- this, and probably applies equally. -- this comment probably applies eq

mr. rydstrom? >> todd rydstrom, assistant general manager and cfo. i have the next two items on the general managers' report. i know this commission and commissioner moran have been looking to us to provide additional succinctly worded accomplishments and efficiencies. what is before you in your packet is a document, 18 pages. i will put it on the overhead briefly so the public can see the front cover. what this document does is it summarizes the hard work of two individuals in particular, if i could ask them to stand briefly. ty june from communications, and francis lee, the deputy cfo. it is really a code -- an accomplishment. we have come before you and we have documents earlier on your calendar. you received a comprehensive annual financial report. this is that detailed reading of 245 pages that i find to be very interesting, including 10- year histories of operations and key statistics. this also is france'es lee's had work. we submitted that for an award. to assist -- to distill this big document into 18 pages that are more user-friendly that w