million, that is above the operations. >> we were fairly cash rich because we have these reserves every year and we have not spent a lot of money on the assets, now we're starting to spend this. >> this current year was 64 million. we're spending about 30 million per year. >> is that the objective for the next 10 years as well? >> no, they tend to grow but not dramatically. >> this is a $10 million difference per year. >> every year, there's a shortfall. >> thank you. >> thank you. >> i knew that took awhile to set the stage for this discussion, thank you for your feedback. >> we appreciate it. >> the next item is fairly brief, on the 2010 water development report. >> we issue this every december. >> under the water supply agreement, we have limited the deliveries to san francisco and her wholesale customers. within that, we have several customers to supply guaranteed their two customers. these are what we refer to as interruptible customers. one of the things that the commission is aiming towards is whether or not to try to make san jose and santa clara personal customers. one is to evaluate if we are on track to maintain their ability in the interim. if not, then we will commence the process to talk about how you would actually cut that off. >> we are on track to achieve 2 and 65 million gallons per day -- 265 million gallons per day. >> thank you. questions or comments? >> the final item is the watershed and improvement program report. this is what you asked us to come back and talk about. this was adopted five years ago and we wanted to give you a status on where we are and how we're spending money to make sure that we take care of the watershed and i believe that mr. ramirez will be talking about that. >> thank you. i would like to start by recognizing our watershed and environmental program coordinator. she spends all of your time thinking about these things and i spent some of my time talking to her. i would like to take 5-10 million -- 10 minutes to provide some context. we want to provide the commission an overview of where we stand in terms of the accomplishments and also looking forward to the priorities. it very quickly, this is a key strategy on how we operate the strategy. this is one of many. the goal is to have natural resources which are critical to the system. that is a vast scale. the peninsula watershed, all three are encompassed in that description. i want to step through a very quick time line, if i could and some of those states are here on this slide. the history of the program goes all would back to the beginnings of when the bonds were on the ballot. one of them lines is very important to the origin of the program and this is one that highlights part of that. improvements included in the funding are those that will restore, rehabilitate, and restore the public his commission to provide water. we were not very creative and our description. that was taken right out of on line with an attached to the program. john ford to 2005, the staff is hosting workshops for the entire water system improvement program. as part of that, a lot of them come together. if collectively made recommendations in regard to the entire program and also some of the money in addressing the watershed. at the time, people were tossing around different kinds of numbers and all of this is happening very quickly at the end of 2005. when they adopted the final budget, they had $20 million. there was a concern on part of the nonprofit organization that this was a step in the right direction and perhaps not a sufficient amount of funding. as a consequence, following the commission, the line that was adopted as part of the program there. this is $20 million in bond funds. this can come from many places. in general, the idea was to have $50 million dedicated over the term of 10 years and that is when we would can track in the program. i would like to highlight another line from the report in terms of the overview and the intent of the program. we do lots of different things in the budget to protect land and natural resources. it is important to realize that this aspect was over and above our ongoing commitment and also our responsibility. this is on top of the effort negotiated to the water supply system. this is something that i wanted to highlight for the commission. i will quickly read this and try to cover some of the highlights. the managers and thousands of acres of public land to protect, maintain, and restorer national resources. in her to minimize the credit toward presence and affecting the water service ability. this has not been fixed and provides a broad guidance to minimize the watershed program which is an important long-term when skip level to keep this charity to meet the objectives. there's a lot of background and a lot of context at this point and the time line so that the commission had that moving forward. the report we provided covers previous five-years. i just wanted to highlight the three examples of what we're doing that i think reflects how this will lead to the ongoing activity and the significant efforts to implement stewardship policy. we have worked for the last four years on the national parks service and the u.s. forest service to look at the affect below our reservoirs on the system we are going towards making recommendations and we hope some time during the next calendar year pact that would be launched from the efforts we have had with the parks service. this was a time we met with our staff. this provides an update about where things stand and we are to for our next meeting to happen in march and that point and time we hope to have something to put forward as a recommendation. the funding for this effort has come from hetchy water and power. >> this is a place where anything can happen across the board including the watershed and in our mental program. at the meeting it is unique in many regards and one of them is if the watershed is protected, this is entirely in national park. only about 40% is protected. we own some of this and there is the california ranch lands but mumbai and large, a lot of it is private. we have been working with a local resource conservation district, all the players in the watershed to look for opportunities to look for landowners to protect those private lands. this is the agenda item 19 on the agenda today. finally, one of the things that people have noticed over time is that driving on the highway, there is a lot of brown all of a sudden. we have been affected by said in oak death. we have been able to partner with the u.s. forest service to identify the extent of this destruction on our property and take measures to protect some of those that are not infected. we have been very happy to report that. we have been able to do this so far. we are limiting the spread. there are experiments in california which would help construct what can be done at other places. this has big implications of the management. there is a lot of material on this and want to make sure that we're doing the right thing to protect the health of the watershed. this is a very big topic in that regard. we have broken this into $20 million of the bond fund and everything else. looking forward, what it would take to meet the objective of $2 million of the first 10 years. i would be happy to answer questions. >> why is the financing so back loaded? >> and we started the program, we did not have a lot of track record, especially on the watershed to pursue their protection. it is taken as a few years to really trust the players in that area and i think by and large the bond funds will be back with it because it has taken us this long to really get the momentum we need to have things come forward. i think that it takes a long time for this to happen. i cannot think of when the last time was that we action provided any force protection. this is really a brand new thing for the organization. we will make inroads with the public. >> do you feel confident that you can spend all this money after five years? >> i do. there is a chance that we would spend all of the money. we would like to be to leverage our funding and bring more resources and to get more done. and almost every case, we are working with other players to make things happen. we don't feel like we need to do this hot to the entire watershed. -- to the entire watershed. we want to make sure that investments are protected throughout the entire watershed. it is really critical that we recognize the landscape, not just our holdings. we would like to protect our investments. >> is this part of the budget? >> i imagine this would be part of the operations. >> when you purchase it -- purchases parcel, you probably need someone to go out there. >> we had a very good discussions about how much of the investment could be credited or be some kind of commitment. we look at the projects which we would consider to be unique, over and above our responsibility. in this case, there is a program that they came to present to the commission. that project is in this budget. our money that we provide to them, we cannot credit these investments towards the program. these are important for other reasons but we don't capture them cure. >> what will we be looking at for the next 5-10 years in conjunction with these purposes? will there be any increase in the budget as well? we will look at our land use policy, we will do what we want to do with this. >> want to develop the report. we don't track any land management. if those things change in this future, we can have a discussion about how we can capture those. we do have some of that now in the city. we do this a lot now in the the watershed. >> me can keep hearing on this, the pieces inside and out, that would be very helpful. >> it is exactly that, we're talking about the watershed. there many that should be taking care of the property in the city. >> where exactly is the lme watershed? >> the county line goes right across the reservoir. >> two counties are in the jurisdiction? who do we deal with? >> we deal with our program conservation district that has built some inroads over time as part of their ongoing efforts. what relationship do we have to the border supervisor's? >> we have many. this is just one of them and tell -- just one of them. >> we work with hagerty. but >> there is a committee that meets and we are there always when they talk about their programs in the watershed. >> any other questions or comments? >> public comment as possible. >> we will take public comment rain now on the general managers' report. hearing none, next item. >> next area it is that a water general managers' report. >> think you can tell normally i would have comments on some of the reports to you just heard but i will defer those. next time that we visit. these are related to the water enterprise budget. there are changes in rates and a number of things i would like to comment on. many people taking their time at the office to hear this. with respect to the testimony that will be provided, normally i would be an advocate. if i speak at all, i will speak last. >> next item, please. >> this is the consent calendar. these are considered to be routine by the public utilities commission and will be acted upon by a single vote. first, approve the plan specifications to award the contract job order contract on general engineering for a not to exceed the amount of $3 million to the lowest qualified responsible response a bitter, see our mounting construction. b, f except and work approved by anti-gay construction for water enterprise, water system improvement funded program. c, approved plans and specifications and award what -- was water in a prize, renewal and replacement program and part of public works pavement renovation. >> with any commissioner like to remove any of these items? >> so moved. >> seconded. >> the next item, please. >> the next item is regular business. item 10, discussion and possible action to approve the establishment of also interim supply allocations for section 4.02 of the water supply agreement between a sitting cabinet san francisco and also customers and how many county, san mateo county, and santa clara county. -- al-hashimi the county -- alameda county. the >> we have progressed to this issue over the past several months. first, the supply limitations itself provides for deliveries from the watersheds limited to only 265 million gallons a day. the projected demand for the wholesale customers but this was adopted as part of the position in october, 2008. the point was to allow the pc and customers to focus first on the recycle water, ground water, while minimizing additional diversity on the river. the purpose was to see what we could do. coupled with that is the environmental enhancement surcharge. this establishment's -- establishes the the imitations and what the commission is obligated to do is to break this up into individual supply allocations. beginning with next year, the wholesale water rates need to include a surcharge to enforce the surcharge. this would be levied only if the wholesale customers exceeded the limitation. what we have been working at is trying to work within the context and reaching customers. this is established in the contract as $81 million per day. this includes the demands of san jose and santa clara. they are interoperable. our whole guarantee to our customers is 184 billion gallons per day which includes the other customers but it does not include san jose and santa clara. to do the allocation, we have to shoehorn in san jose and santa clara along with everyone else. this presents part of the challenge that we have to deal with. when the other things is that we have more customers to protect customers of of the individual guarantees so that we have some, four in particular, who project more water than what they are guaranteed. those are the basic charges that we have to deal with. one of the terms and water sales agreement is that it shall be the responsibility of each customer to limit their supply so that this remains within the supply guarantee. in this case, the individual supply allocation has no explicit relation to the individual supply guarantee and several customers have identified that this is a very important issue. and how we deal with how we live within those means is very important. one other thing to know to is the contract which allows for transfers between customers. the wholesale customers can be those that transfer. they need to be for the remainder of the year. the public utilities commission must determine the ability to deliver that to the recipients. they stay in effect until 2018. we have discussed paris options with our customers. four options happen this fast, the first option we've looked at was taking our projected amounts from our customers. that the individual supply allocation and their projected purposes. we had a number that did not like that, particularly those that had a guarantee. we had a second version which was based on the individual supply guarantee. we will let the transfer work out to, if anyone, should it some of that extra allocation. we did that back in september and we got the feedback and we came back to the commisç on november 9, november 23, and we started to do a different version, which is utilizing projected purchases. the idea of a reserve was something that you could then use as insurance against unanticipated demand increase out there that could be allocated to whichever customer had that anticipated demand increase. and then, most