Transcripts For SFGTV Government Access Programming 20180126

Welcome, everyone. Good afternoon to the january 23rd meeting of the San Francisco Public Utilities commission. Madame secretary, role call, please. President kwon, Vice President courtney and item three . Item three is approval of the minutes of january 9, 2018. We have a motion for that. So moved. Ok. Second. Any discussion, commissioners . Is there any Public Comment . In all favour . Ae. Opposed . It passes. Item number four is general Public Comments. So members of the public may address the commission on matters that are within the commissions jurisdiction but are not on todays agenda. So, do we have any folks from the public who would like to come up . Ok. Item five. Item five is communications. Any discussion, commissioners . Any Public Comment . Item six. Item six is other commission business. I have one item. I just i know that were in the midst of budget hearingses and i just wanted to make sure that the Green Infrastructure offline meeting that we had requested will happen before our february 13 date. Yeah. Were actually trying to schedule that. I know brian and team is putting everything together. To have an offline conversation with you. Brian henderson, acting a. G. M. Were looking at trying to schedule for friday. This week. Friday this week. Ok. If you could let us know sooner rather than later. Because i dont know if friday this week will work. Well be prepared by friday and schedule anytime between then and great. So if we could get that scheduled, that would be great. Thank you so much. Yes. Im sorry. May i go back to communications under water supply conditions . Of course. An item and then go back to it. That all right . Someone call for Public Comment . Any Public Comment . Ok. Seeing none. My question is why to steve why is the cherry reservoir so low . I probably should know the answer to that. But it doesnt come into my mind. Steve richie. Assistant general manager for water. Cherry reservoir is on the way back up now. We lowered it to 5,000 acre feet to do work on the valve that are at the bottom of the front of the dam. And we just replaced the butterfly valve adjacent to the reservoir so those are now sealed up so we can begin bringing up the reservoir. Well be replacing two valves in front of those that are downstream of the butterfly valve. But we got through that first chunk of construction so we can begin filling the reservoir and it is starting to fill up. Thank you. I just noticed that it was very low. Ok. Number six . Other commission business. Is there any discussion from the commissioners . Any Public Comment . Ok. So item number seven. Im seven is report of the general manager. The first item i have is a clean power s. F. Update. Barbara hale, assistant general manager for power. On enrollment, we have no change in statistics since reporting january 9. Were sefrk about 8500 customer site. Our optout percentage is 3. 2 . The super green upgrade rate continues to exceed our optout rate at 4. 1 of our customers. So things going smoothly there. Looking ahead our next small enrollment will be april 2018. Were closing the wait list now. And submitting the enrollment information to pg e this week. So moving ahead with that small enrollment. Meanwhile, were continuing to prepare for our big enrollment in july. That includes contracting for growth. Well be coming back to you on february 13 for supply contract authorization. We will bring along with that the portfolio assessment and Risk Management portfolio assessment and proforma results. And we are also before the board of supervisors today on our ordinance. You recall that on november 14, an ordinance was introduced at the board requesting that the board provide a limited delegated authority to the p. C. To enter into supply contracts that would support completion of the programme enrollment. The delegated authority described in that ordinance would include annual expenditure limitations and conditions imposed by the commission on the general manager. That ordinance is at the full board today for its second reading so were on course for adoption of that, which gives us the Necessary Authority to move forward with supply contracts. And then, of course, were also before you with our bank credit facility. That is an action item today, item 11. With respect to legislative and regulatory activities, i can report that we are at the capital with cal c. C. A. For lobbying days tomorrow and thursday. The focus there is to educate and raise awareness about Community Choice interest in advance of the next legislative session. Make sure that folks are aware of our interest on local energy agregation programmes. And then, you know, the regulatory activities are largely consumed by our pcia efforts. The cpuc held work shops on january 16 and 17. On that exit fee reform, were now preparing testimony, getting ready for hearings on that case. Weve been in strong collaboration with cal c. C. A. , the rest of the Community Choice aggregators that are operating in the state and planning to operate. So were putting together a nice team, a good approach, i think. The staff of the cpuc, i mentioned last time, a draft resolution on Resource Adequacy in december and i just wanted to report that weve been active on that. The stated objective of that resolution is to avoid cost shifts from departing customers to remaining customers. Remaining utility customers by aligning the expansion of c. C. A. S and the startup dates of those expansions and new programmes with the p. U. C. s planning cycle for setting resource a adequacy obligations. We filed comment and reply comments both as the city on our own and in collaboration with cal c. C. A. So everything has been submitted to the cpuc for their consideration. Theyve indicated that they intend to take action on february 8. We dont know what that action will be at this point. So, were keeping our ears to the ground on that. We have been invited to participate in a conversation with the cpuc Energy Divisions Energy Director about the resolution, together with the utilities and other interested parties tomorrow. In sacramento. So i understand the focus of that conversation will be to talk about potential solutions. Its not clear if those potential solutions are expected to be implemented in the resolution or in some subsequent, more formal proceedings where well have more of a chance to air our ideas and our interests and our concerns. Another area weve been following is the solar choice and green Tariff Programme and well be submitting comments that address cost responsibility and allocation issues soon and that application that they filed. With that, ill take any questions that you may have. Yes. Thank you. I know that you are going to be giving us information on my question from last time around. Sort of i think i was couched it as demographics. But it is really around like who is our Current Customer base and then as we look towards this big push in june, where is that really being targeted towards, and just to build on that for when you do come back, im really curious about these bigger developments that are coming online. Like commission rocks, like we know sales forces enrolled in clean power. So, what are the other big opportunities, if you will, shipyard, Treasure Island that were really tracking and what are the efforts that were making to capture them as part of the Clean Power Programme . I just want to be clear. Those are part of the Business Plans. So, theyre planned to be hetchi customers, not s. F. Power customers. Theyre going to pay retail so you understand that hechi is 100 greenhouse gasfree where as clean power you start off at 40 and then you have an option to pay more to be 100 100 . The hec hi, helps pay for the infrastructure where as clean power s. F. Is just a margin that we just get on a generation portion so, i just wanted to make sure that we are all clear as commissioners that our core sbiz our hechi and clean power s. F. Is for the customers that we cant bring under the hechi to provide an opportunity for them to get 100 renewable or 40 , which by 2020 will get up to 50 of our basic offering. Yeah. And the other thing i want to point out is, you know, c. C. A. Is still risky right now with the pending legislation for the exit fees and all that. So, you know, and i know that is a challenge because when we talk about our power enterprise, we have two products or two Major Products and one is hechi where we actually give you the bill, the bill is a hechi bill. Therefore, we have the distribution and were able to distribute it to a build where as were part of the pg e bill which is just a generation piece. And the bigger margin is with the hechi. I thinks more, which i dont understand, is sort of the strategy behind and i understand that. But does that mean were always offering hechi . Irs typically what we try to do, so were clear, we provide hechi to our general Fund Departments and airport and the municipal customers because we have an opportunity to give them a price reduction. Where as in we actually provide them with the bill. We look at opportunities to hook up. Development because there is a larger area because we have to make an investment in the Union Facility or we can grandfather certain folks in to our hechi, but if folks who we cant get or make a hechi customer, we provide clean power s. F. As another alternative. So its a secondary sthafs we provide. And commissioner, id be happy to have a set aside meeting where we can do a dive again into the Business Plan where we talked about this to give you a little bit in the context of the budgets and how were approaching the kinds of customers you are talk about. Maybe it is part of the budget conversation to understand where the benefit really is in the offerings that were making. Thank you. Thanks much. Thank you. Any Public Comment on this item . Ok. Seeing none, next item, please. That concludes my report. [laughter] ok. Comment on the report. Please. I kind of got lost a little bit, too. If there is any way for us to get a graphic because i thought i had a real clear understanding and then i didnt. Is it possible for us to get a graphic prior to the next budget meeting . So i so that im clear on what we need to provide to make things clear, i mean one of the things that we could do is give you an update on the power Business Plan which talks about pier 70, mission rock. It talks about all the development that well pursue as hechi customers so we can definitely provide you that but it is in the Business Plan which i think you have a link to. And then we talk about the municipal customers, city hall and all of our customers that we have under hechi. Like, you know, the rec centres, the hospitals. Those are hechi customers. And then all the other customers there is few exceptions, but all the other customers are clean power s. F. So, maybe what we could do is maybe on one map show you the areas where theyre hechi and making the investment to do the distribution and hook customers directly up with hechi and then writs not possible that were offering clean power s. F. I think to the point of a simple visual without getting too deep into it that shows overall city use and need of power, how much of it is hechhechi and how much of it is clean power and breaking it up into municipal buildings, residential customer, commercial customer, new developments and projected growth. Something like that that just captures it in one vishlg i think would be helpful. No, we can actually do that. That would be great. That would help get us grounded. And because of this growing new line, i dont get a sense of when a new Development Comes on, do you first offer them hechi because of the distribution question or whie. S and if not, is there opportunity to choose clean power and why would choose that instead. Does that make . Ens yeah. Any other discussion . Thank you. Any other Public Comment on the g. M. s report . Next item, please. Item eight is the water supply and Conservation Agency report. If i could have the slides, please. Good afternoon, commissioners. Happy new year. I didnt get a chance to talk to you at your last meeting. My comment will be brief today. I just recently showed this slide to my board in their continuing interests in trying to track what is going on in the service area with drought rebound. So just as reminder, the top blue line is the 2013 months by month use. All supplies for the agencies. The total use, the bottom red line, is the last full year of the drought. And then the green line is the current 2017 use. Not on a calendar year basis. So, the most recent data is for november 2017 and that water use shows us 13 lower than the predrought use in 2013. And really trending downward back to that redline, which is quite interesting and something were continuing to watch and the ongoing question is how much rebound do we end up having if anything in the wintertime. One of the things we are starting to see is a little bit of spread between total water use and savings, and water use and savings, meaning theyre using slightly more p. U. C. Suspect please than they usually do. Two thing were investigating for this. Theres northern san ma toy yo county that are taking supplemental surface supplies and in november they were all taking that water. So that impacts that. The other thing is there are four agencis that have put in a minimum purchase requirement from you and they have all been put on notice as of this july that they have to achieve that. Each and every one of them is making when they have a choice to make, purchasing more p. U. C. Water in an attempt to meet that minimum purchase requirement. Overall for fiscal year 1718 to date, we have a 30 reduction. So still continuing to see a significant water use reduction w. S, that ill conclude my comment and take any questions you might have. I have a question. What are the four agencis that had the minimum requirement . Alameda county water dlaikt serves free monlts, union city and newark. City of melpides, city of sunnyvale and mountainview. Why is that . Theyve had an original purchase contract since 1984 and the reason is those agencies have access to another significant imported supply. Primarily water through the department directly or the other three have access to imported supplies at the Santa Clara Valley Water District brings in. Because theyre in santa clara county. The thinking in 84 was actually it predated that when you went and did your bonds for new don pedro, the proof of the commitment that you had a Customer Base to repay the bonds and so those agencies that had a choice had to say, look, i promise to buy a minimum amount, basically guaranteeing a revenue stream. So, that was the reason for that. And it has been carried over from their individual contracts before the 84 contract, the 1984 contract and the 2009 contract as well. Thank you. I wasnt aware of that. Commissioners, any other discussion . Thank you, nicole. Thank you. There any Public Comment on this item . Ok. We move on to consent calendar. Item nine is the consent calendar and today we only have one item. Approve the plans and specifications and award contract number ww637 in the amount of 4,107,083 to the lowest qualified, responsible and responsive bidder, shaw pipeline. Id like to move the item. Second. Any discussion, commissioners . I would just like to say that its nice to see that shaw is still participating in a lot of our projects. And doing so for many years. Any other Public Comments on this item . All in favour . Aye . Opposed . All right. Carries. Next item, please. Item 10 is public hearing. Approve the revised super green rate premiums for the clean power s. F. Programme and proposed modifications to the clean power s. F. s net energy metring tariffs to be effective march 1, 2018. Today we have a few small changes to the programme to stay competitive. These changes that were proposing would be effective march 1. So you see in the action item changes that are programme matic and changes to rates. It would affect our net energy metring programme. That is the programme that provides bill credits to clean power s. F. Customers that own solar panels on their roofs. And then changes to the rates would be to reduce the supergreen rate premium. Im going to give you a little bit of context for these actions. Our objectives with these rate changes are to streamline and simplify the net energy metring programme. We want to we want to make sure that the programmes user friendly and administratively efficient. Especially in advance of enrolling the rest of San Franciscos net energy metring customers citywide. And then we want to ensure that our supergreen programme rates recover costs and remain competitive with the solar Choice Programme that pg e runs, thats their 100 renewable product offering. Pg e is expected to update their generation rates on march 1 of this year. Theyre proposing to increase their spending on the rate class, to increase the power charge and indifference adjustment, that exit fee we talk about by about 12 or 14 . Again, depending on the rate class and significantly reduce their premium for their solar Choice Programme. We dont know yet what the final rates will be but we have been planning and using the pg e projection. We may come back to you later in march with proposal on the green rates depending on what happens at the cpuc with the proposal that pg e put before them. And we would do that to the have the rates that are effective july 1 to be sure that customers that are enrolled in the programme in july with that new big enrollment of this year arent paying higher bills by being enrolled in clean power s. F. So there may be some more rate action. At this point, were making some proposals to you to make adjustments that would be effective march 1. So that provides you with some context for the change and i want to do a little bit of more detail on the programmatic change and then deputy c. F. O. S Charles Pearl will share a deeper dive on the actual rate changes that are before you. So on the net energy metring programme, were proposing three changes that are really rooted in the experience we gained, having operated net energy metring programme for over a year now. Year, year and a half. First off, were proposing to offer one Compensation Rate. For customers who, who i call spill energy on to the grid. If theyre generating more than theyre actually consuming over the course of a year, we pay them for that. Were proposing to offer just one Compensation Rate now, which would be the average supergreen rate for all that annual surplus energy. What we have been doing is offering two different rates depending on whether a customer surrenders their Renewable Energy credits to us. That process has been administratively cumbersome. Its hard to explain to customers. Often times they dont know if they own the Renewable Energy credits on associated with their rooftop system. And so were not really getting a lot of value out of that. The state doesnt allow us to count those Renewable Energy credits as part of our compliance to the renewable portfolio standard so we dont get economic value for it either. Seems to be just frustrating customers and so we decided lets simplify the programme and were proposing to use just one Compensation Rate and that would be the average supergreen rate for all of the annual surplus energy. The second change were proposing on the net energy metring Programme Goes to the method of compensation. So i told you what the value would be. The supergreen rate. Average supergreen rate. Now how are we going to realise that for our customers . Were proposing for the net plus compensation via a bill credit by default rather than a check. So that kind of flips the programme. We had been providing it as a check. That becomes administratively cumbersome. It turns out the city requires our customers to register as vendors in other words for us to pay them to give them that rebate check. Or pay them for that net surplus energy. We recognize that some customers may still prefer a check and so were going to retain that option. But the default will be youll get your annual surplus compensation credited to you on your bill. And then the final change, to the net energy metring programme that were proposing, is to roll over the credit balances for new customers with less than 10 months of participation in the clean power s. F. Programme. Were proposing that to make sure that customers dont lose any value when theyre transitioned into clean power s. F. So were putting a 10months period on the photo so the credit value will be retained over that 10 months. So that covers the programmatic change and with, that ill hand the microphone over to deputy c. F. O. Charles pearl. Thank you. Good afternoon, commissioners. The other piece of whats in front of you is related to the rate side of the Clean Power Programme. So this item, its what we consider to be an intra year rate change. We when we last talked to you about rates for clean power, it was to establish rates for the beginning of the fiscal year. And we will still do that for the upcoming fiscal year the 19 and youll hear from us in a couple of months after we get through the budget process first. So, the now entertainment tonight canada, part of the mostwatched Entertainment News franchise in the world. Programme folks wanted to have an adjust tonight the premium or the difference between the supergreen rate and the basic green rate and that difference that change that is being proposed here is to respond to a proposed pg e solar choice change. With the intents being that we want to keep our programme competitive. And so what is included in the item before you is a reduction in the supergreen premium for residential customers from the current two cents to one and a half cents and the supergreen premium will be reduced from 1. 4 cents to one cent. So, that change is, as ms. Hale mentioned, proposed to go into effect on march 1. The value of that change is about 137,000. The programme has sufficient reserves to cover the cost of this change and, of course, we will roll this into our rates package that we come forward to talk to you about in the next couple of months. As ms. Hale mentioned theres also Administrative Changes included in this item. Also i wanted to let you know we did speak to the rate fairness board on the 19th last friday about. This they didnt seem to raise any concern about this proposal in front of you. And then lastly we will make sure that any changes that are reflected in this change are reflected in the next rate update that well provide you in march. With that, im happy to take any questions. I have a question. How are we going to absorb the 27 reduction in revenues . The programme has sufficient reserves to cover this. And as i mentioned, it is about 137,000 on an annualized basis so our programme reserves will be sufficient for that. Like i said, well when we adjust rates for the upcoming fiscal year, well make sure to look at both green rates and super green rates to see if they need to be adjusted based on the rate proposal from pg e. Ok. Something that comes to me, i can see this spiral going that we have to always stay competitive to pg e. But theyre larger and bigger and i just would like to have your feelings in terms of the future and how we can withstand these reductions. Yeah. I think that this will be something that well need to take a look at as were working on the next set of rated adjustments for basic green power. We need to make sure that it will be very competitive. We continue to see competitive pricing in terms of our bids that were getting. And i can assure you that whatever we present will not only tie with the budget that were going to be talking to you in more detail on thursday, but also as it relates to the rates that were going to propose to you. Everything will be in sync. I cant speak to exactly how that will look as of right now, but we will work through those details. Maybe you want to get up and talk to this, but we were very mindful. Were trying to be competitive that pg e have the ability to maybe subsidize the rates because they have a larger rate base. And so were very concerned about that. And were robert can talk about all the efforts that were doing to make sure that that doesnt happen. But we will try to be as competitive as possible. However, if it gets to a point where their price is lower, then we would probably have a more expensive product versus going in the poor house. And i would add that this is a programme thats providing better value to customers, that value comes in the form of rates but also comes in the form of product and responsiveness and the ability to know that what you are spending on your electric bill is reinvested in San Francisco by San Francisco. So, it is more than you know, were actually talking about this clean power s. F. Programme as more than just a rates value. Right . Its important for us to be affordable and conscious of that. But youre right. Were not were not designing this programme to chase pg es rates. The rate changes that deputy c. F. O. Pearl described to you are just to the supergreen component of our rates, not to the green Customer Base. Remember that 4. 1 of our customers are in supergreen. So, when you reflected back, 27 , that sounds big. Thats a 27 reduction on a very small portion of our Customer Base. Just keep that in context as well. Ok . But if were successful with the Supergreen Products and programme, obviously this would be a growing pentserage. Absolutely. As we grow and become a more robust organization, well have a reserve and weather the ups and downs of whats going on where pg es rates. As i just described, pg e has proposed generation rate increases in march. Theyve also proposed pcia changes as well. It is a sort of roller coaster of rate changes and effects that flow through to our programme and the competitive view of our programme. At the end of the day, customers pay bills, not rates. So, what is going to matter is the bottom line on that bill. And were very conscience of that. As we procure more energy to grow our programme, were paying very close attention to the cost profile and running the proforma to make sure that all costs are covered by the rates we are charging. So that we are meeting ours revenue requirement from this Customer Base with no subsidies from our other electric rate payers. So, is there any other other downside, besides this potential future guessing game at this point, i guess. Or like from an optics perspective that is there a downsides in setting these rates, reducing these rates . We dont see a down psi. You know, we are staying competitive, which i think is important for continuing to market the supergreen component of this programme. The object civ to grow that component of our programme. I think staying competitive is attractive and thats part of what is accomplished with the reductions that were just described. But, again, were still covering our costs so i think were overall good and have the right balance. The other thing i would add is with the green product, its optout. But for supergreen, you have to optin. And if there is a solar choice that pg e is offering that is cheaper, then when you start looking at your options, you may choose to go with pg e options. So, i think that is why we really want to be competitive so that we can have both and supergreen customers. And then, of course, were staying active at the cpuc to make sure that the rates that pg e is charging are cost compensatory and theyre not subsidizing across rate groups that. Was the regulatory item i mentioned in the clean power s. F. Update. Were seing their current supergreen rate dos not account for all the costs to provide that sorry, im saying is supergreen. Solar choice service. And thats problematic. So we are advocating at the cpuc to make sure that all the costs of the solar Choice Programme are being borne by solar choice customers. Ms. Hale, can you comment on other c. C. A. S, how theyre dealing with their rates and pg e . Mmhmm. So im seeing as i work with the other c. C. A. Directors, im seeing that all of them are talking about rates and their programmes as being competitive. Recognizing that through the course of a year, they are not always going to be charging a rate that results in a bill that is lower than if a customer had stayed with pg e. There is a general recognition, i think, within this growing second is to of the industry that the growing proposition offer a customer is more than just that bill component. It really comes down to broader services as well and responsiveness to customer needs, that local investment is key for all the other c. C. A. S as well. The other c. C. A. S dont have as high a Participation Rate in their 100 offering. So they arent as active in a debate were engaged in on the solar choice offering that pg e has. Interesting. I would also mention that the im talking a lot about when you are asking me about the other c. C. A. S, im mentioning primarily pg e with respect to the solar choice. Edison, Southern California edison and San Diego Gas and electric have both requested authority to close their 100 offering programmes in their service territories. They have such low participation, theyre saying it is not worthwhile for them to continue their programmes. Thank you. Commissioners, anything else . Move the item. Second. Any other discussion . Any Public Comment . Thank you, president kwon and commissioners. Happy new year. 350 bay area. We definitely support this and i support everything that ms. Hale said. I wasnt planning on speaking, but to commissioner caens point, about the spiral, i think it does bear, you know, just elaborating a little bit more. Were in a bit of a unique situation because a lot of the other c. C. A. s roll in their whole Service Territory within six monthings or a year and so there is kind of this critical period where folks are us us is susceptible, if you will, to the choice and opting out of pg millimetre e which is a pretty beefy choice which is whats in front of them. Were in a situation where, for multiple years, people kind of think of clean power s. F. As an optsin programme because that is how it is for folks, except in certain neighbourhoods right now. Until the remaining traunches of folks are rolled in citywide, it leaves us susceptible to pg e marketing and their plans. As people look to go 100 renewable and google that, if they dont know about this programme, theyll hopefully find two choices if not just theirs through Search Engine optimizization and then theyll have a choice to make. We dont want them to make that choice. We want them to be in something that makes them happy and is local and puts money back into the community instead of shareholder dividends and executive compensation. We really need to get the rollin happening as quickly as possible and i just wanted to say this is why one of the reasons why weve been advocating that all along. Very supportive of the p. U. C. And cal c. C. A. , you know, fighting at the california p. U. C. And at the legislature, but ultimately as long as the utilities are able to set the ground rules that we have to play on, in my opinion, at the california Public Utilities commission and through certain legislative offices, were going to continue to face this reactive roller coaster, spiral like you are suggesting. And i think anything that we can do to increase political pressure and bring kind of the full weight of the city and county to bear on the california p. U. C. And the legislature, we have a much larger hefts than any of the other operating c. C. A. S. L. A. County will obviously dwarf us. But as of now, i feel like we in Alameda County have a big voice. Lastly, you know, reducing our exposure to the market where we need to buy energy to spend money and create costs for the programme. That is really the other way off of this hamster wheel and that is why were advocating for sklerltsd local bill. Once we have products Generating Energy and we can sell that to folks and dont have those extra costs we wont be subject to market change. Thank you. Thank you. Next item, please. We need a vote. Oh, we need a vote. Lets vote. All in favour. [laughter] aye. All opposed . Next item. Item 11. Approve the form of a Credit Agreement and associated Fee Agreement with j. P. Morgan chase bank a nottoexceed commitment amount of 15 million and term up to six years to provide clean credit support of the s. F. Power programme and execute the Credit Agreement and associated Fee Agreement subject to board of supervisors approval. May i have the slides, please . Commissioners, eric sandler, c. F. O. Of the p. U. C. Im here to talk about a proposed Credit Agreement supporting citiwide roll out of clean power s. F. I wanted to spend a few minutes what i wanted to talk about today is first our initial launch Financial Strategy, talk about the growth plans and our Financial Strategy for growing this programme and then get into some of the specific terms of the agreement. So, you may remember that september 2015, we were trying to organize clean power s. F. As a separate entity with its own sets of revenues, expenses, assets and liabilitieses. In order to with a separate net revenue pledge from the power enterprise in order to establish a ratable credit going forward. And what this meant was, as i mentioned, separate accounts as well as an endenture that, for the power enterprise that excluded can clean power revenues and expenses. When we were talking to banks and we went out with an r. F. P. , no banks were willing to extend credit to clean power on its own. And so it required limited Financial Support of the power enterprise. And that support came in the form of an 8 million loan as well as a very subordinate backup security pledge for letter of credit that was issued by j. P. Morgan on behalf of the power contrapartis that we signed contracts with in order to provide launch power for the programme. On may 9, 2017, you approved a citywide plan to roll out service to the entire city. Over a multiyear period. Wi are continuing to build a plane and strategy in support of that. That growth plan that identified the need for letters of credit to provide collateral to power contra parties like the like during the launch as well as a potential need for working capital. And so we went out with an r. F. P. To banks again for this type of credit facility. And the goal was to try to have these agreements be nonrecourse to the power enterprise and only clean power s. F. Revenues and where as in 2015 we were not successful and no bank was willing to loan clean power s. F. Money, there time around there were several banks willing to offer credit on a nonrecourse basis and j. P. Morgan offered the best terms sorry. Why was that . Why do we think that they were why did it change . Because revenue was starting to come in or i think it was multiple thing. One was a track record. We had year track record of history for clean power s. F. And theres been a lot of growth in the c. C. A. World. And there were a couple of banks that really wanted to jump into the market opportunity. So, there were many more banks unwilling to do it than there were willing to do it. In 2016. This year. This year. So, what we have before you is a Credit Agreement that is nonrecoursed to the power enterprise so its recoursed solely to clean power s. F. Revenues. It is for an amount up to 150 million total. It is a term of three five years, sorry. Credit capacity can be used for multiple purposes. To issue letters of credit to provide power contracting, security obligations and then also as i mentioned to provide working capital. It is recourse only to clean power s. F. Revenues and the cost depends on particular a particular use that we require of the facility and that also the Debt Service Coverage ratio of clean power at the time. So there is an undrawn fee for the total amount of the facility which is 50 basis points. There is a feeze for any letter of credit that is issue on behalf of power contracting, counterparties which ranges depending on Debt Service Coverage of the enterprise and then there is a charge for revolving credit which is based on one month libor, plus a spread. This agreement is not unlike many of the other Credit Agreements that we have for the water and waste water enterprise. It contains a number of covenants and commitments that we make, that the commission makes to counterparty. And the covenants that weve made are consistent with the clean power business practice policies as well as the commissions reserve policies that its established. I wanted to highlight three of the covenants. Youre familiar with debt service covenants and waste water and set rates and charges to meet Debt Service Coverage level of 1. 25 and the Commission Policy is 1. 35 . This particular covenant in this agreement is to set rates and charge for a target of 1. 1. And then if the Debt Service Coverage target goes below 1. 05, that is considered an event of default. If there is a required minimum debt Service Level in other words to initiate l. L. O. C. S and extend credit and that is at 120 and then at a level of 150 we start to benefit from reduced pricing. Now ill just mention that the, you know, when we look at the base case performa for clean power s. F. And even when we look at sensitivities, were seeing debt coverage raich ratios of 150 to 30. The next series of covenants relates to reserves. The agreement builds on the business practice policies of clean power s. F. Which are an operating reserve of 90 days expenses and sa Rate Stabilization reserve of 15 of revenues. The ko f nanlts requires that any excess revenues or 80 of excess revenues be dedicated towards those reserves to meeting those targets. And then there is a test in your 2021 and 2122 that we need to meet 50 of the proforma or 80 of the performa in 2022. And we have done Sensitivity Analysis and in downside scenarios were meeting those targets. But it is important to mention that this Credit Agreement doesnt do away with the risks, the underlying risks in the c. C. A. Business in clean power s. F. As we discussed, the business is still exposed to market and Regulatory Risk and we have the mitigations that we deploy ands a. G. M. Hill talked about those when you had your initial launch for clean power and well be talk about those again next month, february 13. Looking at how we manage the various risks of the programme. And weve run a number of sensitivity analyses with a Third Party Financial consultant to make sure that we meet these tests that were covenanting to under a range of scenarios. So what happens if we dont meet the financial targets . Well, a failure of covenant results in a suspension event which means theres no more credit extended beyond what has already been extended. There are not meeting the reserve targets which i talked about. Which is 50 and 80 of our proforma levels or dropping below 1. 05 Debt Service Coverage. Considered an event of default. In that case, we would meet and confer with j. P. Morgan, reestablish a baseline and renegotiate the terms of the agreement. What is important to note, that in all cases, this is not recourse to the power enterprise. The rest is its own inspects financial operation. So the forms of the document before you are one, the form of the Credit Agreement and it takes sets forth the terms of the agreement including repayment terms and includes the form of an irrevocable letter of credit issued to central power. Power sales, counterparties. It also contains the Fee Agreement and the terms of which are i specified a little earlier. So the requested Commission Action is to approve the form of the Credit Agreement with j. P. Morgan for not to exceed amount of 150 million. And to authorize the general manager to negotiate final terms and execute the Credit Agreement. Now this agreement wouldnt be signed until we were at the point of executing power purchase agreements that would come before you in february 2013. Or february 13. Next month. That completes my presentation and im happy to answer any questions. Commissioners . South carolina i have a question on how this relates to the proposed power bond Charter Amendment. Does that need to go forward in order for the power enterprise to issue bonds or is that a separate . That is a separate clean power is a separate financially inspects revenues and expenses. So clean power can go ahead and do that without that Charter Amendment . Clean power s. F. Has there is the authority to issue bonds for clean and Renewable Energy. Clean power s. F. , however, does not have a Credit Rating currently. [please stand by] [please stand by] entering into longterm contracts. I think what you are referring to, if we get to the point where we are purchasing renewalable projects to provide power, then i think that will, i guess, the question is, can we use for like Revenue Bonds to build infrastructure, and my understanding, clean power, we have ability to build clean power. We have the authority to issue bonds to finance clean power facilities, or renewable facilities. Right now, without a Charter Amendment. Cleanpowersf does not have a Credit Rating. We dont, s. P. C. , apples and oranges to be able to we dont have the revenue to be able to issue bonds to build infrastructure for the power side. We dont have the authority. Thats why we were looking at a Charter Amendment. Exactly. I just want to make sure the Charter Authority needed is for the distribution. You know, to fund the distribution, so assets. Barbara, you want to take a shot at sorry. Just, i guess i just want to provide some more context. So, power enterprise. We have existing authority as an enterprise to issue bonds. Thats for replacement of facilities primarily, right . And then we also have the authority that c. F. O. Sandler was referring to for issue bonds for clean power facilities, for renewable facilities and conservation facilities, ok . What the bond measure associated with the Charter Amendment would allow us to do, so the Charter Amendment modifies our Bonding Authority to allow us to use Bonding Authority for new facilities. It doesnt specify what they are, so yes, it could be distribution as the general manager just mentioned. It could be other facilities. It could be clean power. It could be clean power. We already have that authority. We already have authority for new clean generation, right . What we are missing, the gap we are trying to fill with the Charter Amendment is the rest, you know. All the other things that we need to invest in in order to serve our customers with clean power, you can have a generator that generates clean electricity. If you dont have the transmission and distribution facilities and the transformer, you cant provide the service. So we have gaps the Charter Amendment is intended to fill. The authority is power enterprise authority, so its not specific to clean power assess program or the hechi power program. Assuming it will get adopted, available for use by either entity. A challenge will be we dont have a Credit Rating for cleanpowersf, we need to get that in order to use that capacity, ok . So, hopefully that helped clear things up rather than cloud it further. Because im, you know, its helpful, thats the first ive heard and i dont know if any other commissioners understand this Charter Amendment that we are going to be considering and looking at. I understand, and i dont know if it comes for a vote or review by this commission, but in