[ gavel ] >> good afternoon everyone. i would like to call to session the regular meeting of the san francisco public utilities commission. today's date is tuesday, july 14th 0 , 2015. roll call, please. the mic isn't on? is it on now? did everybody hear what i said? >> president caen? >> here. >> vice president vietor. >> here. >> commissioner courtney. >> here. >> commissioner moran. >> here. >> commissioner kwon. >> here. >> we have a quorum. >> thank you. commissioners before you have the minutes of june 23, 2015. are there any additions or corrections? >> no, i will move approval. >> second. >> any public comment? all those in favor? >> aye. >> opposed? the motion carries. next item, please. >> item 4 is general public comment. >> i believe mr. decosta, are you to speak on item 4? >> commissioners my name is francisco decosta. and and i want you to know that i have done due diligence, attending many of your meetings before. i am pretty busy now, so i don't get too much time to come for the meetings. but as director of environmental justice advocacy, and as a representative of the first people, i want to address an important issue about water. and i think we should have a hearing that why in the year 2015 we continue to use clean drinking water from hetch hetchy to flush our toilets in the millions of gallons? one of the things that you commissioners have the authority to do, is to have a hearing. why are we building so many market-price condominiums, which are not being occupied? and some of them are being occupied where they waste a lot of water. where they use a lot of electricity. now in your deliberations, you will be talking about the drought. i have no control over mother nature, but we do have control over our old pipes that are leaking millions of gallons of water. and we do have the technology, realtime technology to monitor this, but we're looking the other way. while we're talking about other things, but not the relevant things about conservation. so daily, millions of gallons of water leach into our watershed, and we are not addressing it. so we need a hearing. we also need a hearing to find out why the big primes are kind of defaulting? you know, what is really happening at irvington and so on and so forth? so you know, i have a blog, and i can address most any issues that i want to. but it's all pertinent and relevant for me to come over here, and look at you in the eyes, to tell you that i am alive and kicking. i'm a little bit busy, but i'm alive and kicking. so that is good especially for small contractors. thank you very much, and go to the board of supervisors. >> thank you, and don't forget about us. >> i haven't. >> any other public comments? seeing none, the next item, please >> item 5 is communications. >> yes, commissioner moran. >> thank you. i have some comments on 5c and e. let's do the triple bottom line first. first of all, thank you for putting together that -- i think it not only explains the system well and gave some pertinent examples and i appreciate that. one -- well, two things. one is that i think it valuable to have those reports as they come up over time. because it's clearly an ongoing part of the management thinking process. but as these reports are complete and decisions are made, to include those in the quarterly reports. and my interest there is that we from time to time do make decisions that aren't the least expensive and we do it for a reason and we do it after a whole lot of thought. what those reports can do is document that thinking process. so that as -- for people who are interested in how we are making those decisions, if we ever get into a position where we need to defend those decisions we'll have a record that is publicly available to support that. another comment that i would like to make, it appears that the financial part of it is relatively insensitive to price. and i would like to urge staff to consider tightening up on that, and i can give an example of that from the report. lake merced early implementation plan. when you look at the cheapest and the most expensive, the most expensive is 41% more expensive than the cheapest. but it doesn't show up having either a plus or a minus indicator on that. and 41% is pretty significant. there are two reasons for that. one is the benchmark that you have built in is not the least cost, it's the average cost. that means whatever threshold you have, has to be twice as sensitive to pick things up. okay. and then on top of that, in order to have any plus or minus point, then you have to be 30% or more at variance from that average. that is a very high threshold and i think if you have, from low to high, a difference of 40 plus percent, that certainly ought to show up somewhere on the ranking. i will leave that to staff to give more thought, but it looked from the examples that you had here, that it was almost insensitive to price. i think it's important as we look at three bottom lines we really look at three bottom lines and not two of the three. so that is my thing on the triple bottom line report. and i was getting nodding heads that they can be included in the quarterly reports. thank you. the next one is on the construction manager/general contractor overview and again, i appreciate the work that went into producing that memo. i think it was reading the ordinance, the draft ordinance, when it came before us before is kind of heavy-slogging to get through and figure out what really going on and i think the memo really helped on that. i have a question and that is about the core contractors? i am not sure that i understand-- in fact, i am prettier pretty sure i don't understand what "core contractors" are and how they fit into the selection process. >> ivy fein, contract administration bureau. core contractors are key contractors that usually perform work such as mechanical, electrical, key parts of a project. and can be brought on -- brought on with the cm/gc as part of the team, or they can be on-boarded later. they go through a pre-qualification or an evaluation process of their qualifications before a core contractor can provide a bid, in the bid process; that bid is compared to a third-party estimate. if it's within certain percentage, usually around 3%, the project team may elect to use that core contractor's bid. if not, then it will be competitive bid, like all other trade subcontractors. >> okay. so as i understand it, then the advantage of having a core contractor come on early is that you have their knowledge and expertise, advising you about constructability. >> on certain key parts of the work, right. >> which is a huge benefit. >> huge benefit in the design process. >> and part of -- >> and construction. >> and part of -- under prior rule as i recall, if you were involved in design like that, you could then not bid on the final contract. that was deemeds a conflict of interest and we had to deal with that before. in this case, you are allowed not only to bid, but you are allowed as a core contractor to assume the work without competitive bid, as along as you are within 3% of the engineer's estimate. >> yes but i would look at the comparison to the third-party estimate that the core trade contractors bid. you know, it is sort of a mini bid process. you are right. but it's not just that a core contractor can submit a bid and we would move forward. there is validation of those costs. also, their role in the pre-construction phrase is very similar to the general contractor's role. where they are providing input on constructibility, maybe scheduling, you know, parts of that, but they are not the designer of record. >> okay. a couple of things come from that. one is that it looks as though, when you read through the management process that is in the memo, we put a lot of credence in the engineer's estimate. as a fundamental way of doing cost-control. one thing i would like from somebody and i don't know if that is from you or donna or kathy, but if somebody could go through for the last year and look at construction contract awards and look at the engineer's estimate, the high and the low bid, and provide that to the commission. that would be helpful. as a general matter, and i saw kathy just volunteer for that -- [laughter ] as a general matter, i am having discussions with staff and the city attorney to make sure that the new rules that we're operating under will be as protective as the old rules and while business practices have changed over the years, human nature hasn't. as public contractors and contracting entities, we need to make sure that the process is on the up and up and that it's trans[p*-rpts/] transparent and that we have administrative procedures to keep it that way. that is something that there is nothing on the calendar today to accomplish that, but it's something that i just wanted to mention, so everybody knows that is the thought process that i'm going to be going through with staff and our own procedures for administrating the new ordinance on contracting to make sure all of our interests are protected. >> can i make one suggestion to the information that you asked for -- you asked for the high and low bids and you also want the winning bid, which may not necessarily be the low bid >> okay. >> taking that into consideration there are other issues, too. the initial bid is different from the final bid. >> it's probably -- what i am trying to get at is our history with engineering estimates. how they comport with the market? because people bid what they bid for all different kinds of reasons. in some cases they just know that they have a strong position and can charge more and in other cases they really need the work and will bid less or the cost of materials goes down or they have a good supplier or whatever it is. so there are a lot of reasons for variation in there and i want to test of the proposition that an engineering estimate can be an effective cost-control mechanism. >> understand. >> thank you. that concludes my comments. >> any other comments on communications? our next item -- oh, any public comments? next item please. >> item 6 is other commission business. >> commissioners? yes? >> i did want to raise a couple of issues before we go to the screen, over the course of the past several years we have recognized employees and vendors at this commission with certificates and photos and everything. and that has been well-received. internally we have had a recognition program called the o'shaughnessy recognition program and i had an opportunity to have conversations with the general manager about potentially involving our commission in that awards program, expanding it and promoting it. because i think sometimes when you go through these economic expansions, you start to lose sight of the fact that the real asset and the real resource are the workers, whether they be our city employees or they be working with our contractors or other service providers. and i know that there are some fine-tuning that we can do, but i want this commission to be prepared and donna, if you would put the image up on the overhead? to be prepared the same way that the recreation and parks commission, for example, via the resolution process and the mayor's office, is celebrating its 7th annual recognition event for rec and park employees. and we have some elected officials who are participating and enthusiastically in these events and it goes a long, long way to give back to the employees in the city departments. i want the commission, obviously through you president caen to consider engaging me in a conversation, a dialogue about putting together a resolution that meets general manager kelly's need and potentially kind of blowing out for lack of a better term, our own internal awards, reaching out not just to the public employees, but the private sector employees. and on a personal note, it's enjoyable. it's appropriate for us to do, but it's always fun that we look forward to it. the commissioners look forward to it. and the mayors have always participated, but i just kind of want to give a head's up, that i'm going come at you guys with some kind of proposal. >> good. >> and everyone is invited to the event at the golden gate yacht club. thank you very much. >> we'll have one at our facilities. >> thank you very much. >> it's a very good idea. >> thank you, president caen. >> any other business? seeing none, next item, please. >> item 7 is report of the general manager. >> the first update i have four is -- for you is the drought update by mr. ritchie. >> thank you, steve ritchie assistant general manager for water. if we could have the slides please. to provide the latest information that we have regarding the drought. in terms of some of the -- routinely our levels of storage and hetch hetchy continues to be high at 93% capacity and water bank is starting to increase. we're releasing water that we are generating hydroelectricity at home powerhouse, providing drafting flows from the tuolumne river, but ends up in the water bank. so it's three-fer at this time. i don't always include this slide. this slide is the status of other california reservoirs. particularly of note, new molonas -- don pedro reservoir at 36% capacity and quite low, anybody have gone upcountry, and you see how low it really is and those reservoirs are extremely low at this point. so we're fortunate to have one that is much fuller. precipitation, i have included this chart because we do continue to get some storms upcountry. so the red line is current year, 2015. and we have gotten to the level we were at least year in terms of precipitation. not a great year, by well above 1977, which good news. i looked it up the snow pack, there is no snow. that is your answer. upcountry precipitation, you see in july we have actually done well, above median, .5". which is above normal for this time of year and we still have time left in the month with potential thundershowers out there. and locally, we continue to have no precipitation really at this time. some of the really good news is our customers performance on conservation. this slide shows total system deliveries and the green line continues to be essentially flat and well-below the reduction target, which is what the black dashed line is. that blacked dashed line represents a 14% reduction, systemwide. below 2013 demand-levels, and we're well-below that. so people are performing quite well throughout the system in terms of their behavior. in particular, within the city, is this is a new chart here showing the reduction in demand as a percent by month from the beginning of the year. the 8% requirement that came into effect june 1st, but you can see in april, may, and june, we have exceeded that 8%, and in june, we actually saved in san francisco 19.4% below 2013 demands. so conservation is really taken hold quite well. so people are going a really great job in terms of conserving. >> can i ask a question about that? the implications for our revenue, because we haven't really talked much about that, and we're so glad that everybody is conserving. but i do know that it does have an effect on our revenue? >> yes, it does. we talk about it every week and it has an effect not only on our water enterprise, but wastewater enterprise because the two are linked together as well as the power enterprise, because there is less water for hydrogeneration in the springtime and going into the summer. so yes, we have experienced a drop in revenues and we're using some of our reserves, and we're looking very oclosely at our budget and making sure that we stay within our budget means. as we prepare for the next two-year cycle, we are going to take into consideration how if the drought continues, what it's going to mean for our budget process as we go forward? >> at our next meeting get an update on had a? >> the budget projection numbers yes, we can get those numbers for you. >> thank you. back to the slides and i will change topic to one that is great interest interest of us the curtailment notices that state water board has been senting out. i included this slide as a general description of what their curtailment notices are. from the state water board that water is unavailable for diversion and the stated purpose of that is so that would water can be provided downstream for senior appropriators and senior riparian water right holders. the most senior in the system feel the pain last and obviously we're quite senior, but there are other people who are definitely more senior than us. the notices require that diverters file a culturalment certification form, indicating that they have seized diverting water, which we call the full natural flow at the point of diversion. the notices do not require release of previously stored water and anything already put into storage is not curtialed and that water is all available for our use and no concern that somehow that water would be taken away. the first notices were sent to the san joaquin river basin in april. more recently there has been a number of actions of interest to us, on june 12th, curtialment notices were sent to post-1914 water right holders. several partis to started to litigate, making various arguments. one of the key arguments there was no due process before the curtialment notices were sent out, because they seemeds very much like orders as opposed to notices. the curtial diversion including that for camp mather. we responded on july 6th and both of these items of correspondence are in your packets for you to see. july 10th, last friday, sacramento superior court issued a temporary restraining order. so the situation has been one we have been keeping real close track of. that court decision last friday, i think puts the state water board in a position of having to reevaluate how they are giving notices out and it's something that we'll watch very closely as things progress. so in summary actuallies, actually on the operations side, practically it may not make much of a difference because july 12th diversion into the system were about 230 cubic feet per second, but releases were about three times that much. so really water is coming in a little bit of water is coming in, but more than that is flowing out of the system. so, in fact, we're releasing about 500 cubic feet per second above our full natural flow. so more water is coming out of our system than the river tully -- actually would provide at this time of year. so if we receive a curtialment notice of effect the flow is already going down the river. so in summary, again, dry year, but hetchy has been doing good. water bank has worked well for us. as i reported last time, if we have a really dry year, we could run out. conservation is still [stkro-pbg/] and systemwide demand hasn't been this low since 1976-77. happy to answer any questions? >> i have one question about the water bank. what is the general plan about the water bank? do we have certain dates or certain amounts that have to be in the water bank? how does that work >> well, the two are 570 acre feet is the full capacity and we can't go below zero in the water bank. we got down to about 55,000 acre feet this year, the low-point of storage, but we feed water bank with the water we release from o'shaughnessy and release instream flows 500ique feet per second, as well as release from cherry, home powerhouse and we generate there. this time of year we start to feed water bank and bringing it back up again. we expect water bank, if it's a bad year, we expect it still to get up to about 160,000 acres feet. if it's a better year, the more the better. if it only gets to 160,000 acre feet as we take advantage of it next year, at some point it will get to zero next year, depending on exactly what demand is. so it's job for four years' running and that is really good. we are going to try to stretch it as along as we can, but that depends partly on nature and partly on culture customer demand. >> and partly on water management. >> well, all on water management. nature and our customers have big hands in this. >> thank you. any public comment on the drought report? >> certainly the next item i have is actually recognizing cheryl davis, who has decided to retire. and cheryl has been with the puc, if you didn't notice for 32 years. so she is one of those employees that actually knows a lot that has gone on and seen a lot over time. she has been with the city for about 34 years. but one of the things that cheryl did early on in her career here at the puc is actually she managed the customer service bureau through the last big drought and i remember that drought even though i wasn't working here. it was a tough time and she did an admirable job doing that. she has led our water supply and treatment division for a number of years. she has served you as assistanted general manager for operations and served you as the acting general manager for a period of time and finally what cheryl has beening is workforce development. not only just here in the puc, but across the bay area. she has been recognized by her colleagues at other utilities as being one that has brought them together in, i think, in a very significant way to bring this whole issue up to where it should be and the attention being paid to it. cheryl really has been the driving force behind it. so i'm very sorry to see her go, because it's truly a success. she ran an open house here last year and literally hundreds and hundreds of people attends those open houses. she has been recognized across our industry by different associations. she was actually a founding member of the water reuse association of northern california and president of that association for a number of years and very interested in diversifying our water supply as well and as been recognized by her colleagues as well for that. it's very sad