Transcripts For SFGTV Government Access Programming 20180102

Transcripts For SFGTV Government Access Programming 20180102

Based on high rate treatment if we wanted to move in that direction to reduce the amount of volume so we can treat more and that was really the indication of the size. And then, you know, as part of phase two, if we want to move into construction, we will come back to you to present what the budget is. I think one of challenges is that the actual location of some of the shafts for the tunnel, that is somethinging were trying to finalize before we move forward. Were planninging to come back and one of the things that we to do, based on the last conversation that we had, is really talk about what were trying to solve with the Sewer System Improvement Program. You know, its broken down into three components. One is the treatment. One collection. And one is program matic stuff. And i know that collection is where Green Infrastructure is, you know, the main force of Green Infrastructure. And some of that is not only in the Sewer System Improvement Program but is really in the whole waste water capital. So, one of things that we would like to do is just talk about the whole waste Water Capital Program because there is a lot of things that you may be interested if it is not in the sewer system but a 10year plan. That would be great. We just wanted the. When you focus on just the sewer system and improvement program, you miss all the other things that were working on that is probably equally important and kind of get a sent of how all that is tied in. That would be great and im hoping with the budget hearings, taken from a dollars and cents perspective, in addition to programatically to understand the Bigger Picture would be helpful. We have an opportunity. Were meeting with spur yeah, toper. Yeah. What well do is talk globally first because if you just focus on what is in the Sewer System Improvement Program and not look at the whole thing, you kind of miss all the things that were doing on Climate Change and so right. That sounds good. One other question, too. I have heard through some of these other conversations about Green Infrastructure, about the high cost can of the early implementation projects. Id like to get a better understanding. I heard it was three times as much as some g. I. Projects in other places. I dont really have an understanding of if thats true or not or what that means why. Im most interested in if thats really true, then it has been quite expensive. Why . And we dont have to answer that right now, but as part of these conversations and whether it is on the ssip or capital side as we move into more money talk in the new year to really understand what that is. Is it an efficiency issue, a charging issue, contracting issue or what . And just through the general manager, theres been a lot of Lessons Learned so we do a correspondence or follow up with a presentation and pull in sarah and our g. I. Team. That would be great. Thank you. Any Public Comment on this item . That actually concludes my report. Thank you. Thank you. Next item, please. Item eight is the annual financial audit report. Good afternoon gefrn, president and commissioners. Nancy hom. Im joined here today by my colleague lisa avis, managing director for kping who will later deliver the second portion of this presentation. Im pleased to report to the commission that the sfpuc issued its fiscal 20162017 audited Financial Statements on november 8, 2017. This is also the first year that the clean power s. F. Program reported its own set of Financial Statements as a subfund within the hetch hetchy enterprise. Kpmg note add clean audit with no material in the Financial Statements. In summary, the awe to objectives were to obtain reasonable assurance that the Financial Statements were free of material misstatement, but not to express opinion on the effectiveness of said internal control. They evaluated appropriateness of accounting policies and reasonableness of significant accounting estimates used as well as those presented in the statements. Notable highlights include, again, this is the first year for clean power s. F. To present their operating results separately and there were no material misstatements and no internal control deficiencies for the nineth con tive year. We think that all p. U. C. Staff that provided financial and operating information to auditors in a timely manner, especially the Financial Reporting and ledger team in finance and the entire clean power s. F. Team. We also thank kpmg for the courtesy of their audit team and timely completion. Add this time, id like to introduce lisa avis, managing director of kpmg who will deliver the presentation of the audit results. Welcome. Good afternoon, everyone. Again, lisa avis with kpmg. So you have our presentation here in front of you. So, when were here, that means another audit is done and in the books. We received full cooperation from p. U. C. Management and staff and because of that full cooperation, we were able to issue within the set time line. And as stated, we usual ewe add clean opinion on the Financial Statements which means that they are fairly present as of june 17, 2017. Ill go throughout the highlights of presentation. On slide two here, as ms. Homs stated, our responsibilities under generally accepted auditing standards and government auditing standards is to consider internal control. We do not do an audit over internal control. But in accordance with government auditing standards were required to consider it. Should something come to our attention, we are required to report it to you and nothing came to our attention that would merit that level of reporting. We design and implement our audit providers to gain reasonable assurance that the Financial Statements are free from material misstatement and also in accordance of government auditing standards we have to consider the entity of compliance with laws and regulations as it relates to these Financial Statements and we opine on the Financial Statements based on the results of our test work. We issued two reports over the Financial Statements and unmodified or clean opinion on the entities, water, waste water and hetch hetchy water and clean power. Not listed here but it is on the next slide. And we also issue a report on internal control. Its sort of like a negative assurance report in that nothing came to our attention that was a Material Weakness or significant deficiency in the design and control. And we are independent of not only p. U. C. , but the city as a whole as it relates to our professional standards. We reviewed p. U. C. s significant accounting policies. They are described in a footnote. Based on our analysis, not only are they in accordance with generally accepted accounting princele s, but they are consistent with industry practices and standards that weve seen in other utility entity tas we audit. The Financial Information was first available in may of 2016. And so this is the first year that weve had a full year of activity to report in the separate fund under hetch hetchy. There are some accounts that are a little more challenginging to audit during the audit. It is not like revenue or expenses where we can vouch information to thirdparty invoices. But there is accounts such as the damage and claims liability, workers comp, pension liabilities that require estimates in order to present them as of june 30. And so we used our actuaries and other audit procedures and came to the conclusion that the liabilities were fairly stated without management bias. We have to consider management override of controls. It is a risk of fraud and nothing came to our attention at p. U. C. This is a rebuttal risk that we have to consider under our governing body. Management is in a unique position because they have oversight over records and journal entries. We performed a number of procedures. Nothing to report and nothing came to our attention. As stated, there were no audit adjustments noted, no term weaknesses or significant deficiencies. We did not encounter any disagreements or difficultis with management. As i stated, we did receive full cooperation. There are new accounting principles and standards that come up every year and we had no concerns regarding the principles in the current year and to the best of our knowledge, management has not consulted and tried to obtain other opinions during the fiscal year. No significant matters were noted and no instances of noncompliance were noted as it relates to the Financial Statements. There were no major issues that were discussed with management prior to retaining us as auditors. At the end of our audit, we receive a representation letter from management that the letter outlines things that they take responsibility for, such as fair presentation, the Financial Statements, compliance with laws and regulations. So, we have that signed document within our file. And we also execute add letter with the Controllers Office as part of our audit engagement. With that, are there any questions . As it relates to the audit . [please stand by] of financial for those that have seen the Hetch Hetchy Reservoir its severe but it got worse the next year theres just not a good picture of that compared to this one. Those are conditions we hope not to see again. Our objectives for water supply adopted in 2008 by the commission is to survive a specific eight and a half year plan scenario from 1987 to 1992 followed by 197677 backtoback with no more than 20 rationing. Theres a lot in that and that means at the end of the drought were down to zero water. Thats survival. Thats not being able to do anything else in the future. Thats a whole other question but thats the basic scenario. And its shown graphically here we start out with 1. 68 million acre feet and then you see along the bottom line theres a series of fiscal years with 86 to 76, 77 following that. The blue line shows the decreasing level of storage through the end of the year. As we got to Different Levels of storage available to us because ours say storagebased system, you end up with a new level of rationing as it gets worse and worse. Interest in the middle of 1988 we go to 10 rationing. In the middle of 1990, 20 rationing and this goes to 25 rationing because we still have a small bit of drought supply, 2 million a day of drought supply we havent achieved wed have to go through as we go to the next to the last year of the drought. This ends with this sequence with us getting to del dead pool and that means theres some left in the reservoir but you cant get it out. You throw a hose in and pump it out in an abnormal way but it cant be released through normal mechanisms. This is how we track our work over time. So for the last drought, we followed this basic scenario of getting to higher levels of conservation driven by state water board measures and i was asked by a conference what would have you done different if you had known we were getting into this drought and my answer is nothing. This droughtplanning scenario serves us extremely well to meet obligation to our customers here in the city and outside. Which means, if the drought isnt that severe, yes therell be some water left over but we dont really know for sure about that. That led me as we prepared our comments to the state on the Water Quality control plan to look at more documents. There was a declaration by the general manager at the time when considering the factors associated with the citys entitlement to water and systems and consequences of just being wrong is the forecasting the leng length the drought, i cant not say they were overly conservative. I like to cite a sitting commissioner and former general manager who is the general manager through the 8792 drought and that was a horrific period for water managers in california. Thats what we used going back to 1994 our droughtplanning process adopted as part of the water improvement program. We can look at other alternatives but its a matter of how much risk were willing to take on. Thats a very important question for us to consider. I wanted to summarize what we do, why we do it and how we have used it so far. Are we going to a new drought . Could be but were prepared for it. Thats our response, being prepared as if were getting into a long period of drought no matter what. We plan that way. You saw this being drawn down and it gives me a twitch. If it rains in january well shut the project down and take the water. Its more important to get the water than to finish that. We can do that at a later time. Well have to balance that risk though. And its in our planning scenario and well be happy to answer questions. Commissioners. On the drawdown, that affects and its on the progressive curve you showed. Hows that affect your firstyear actions if it turns out to be the first year of a drought sequence. And if droughts dont last longer, does this change your thinking about a firstyear event . Not particularly. We talked about the eight and a half year planning sequence but i think whats built into that is the first year assumption that youre probably not going to over react because you dont know youre in a drought. When we talk about operationalizing new projects we assume that is going to cover a seven and a half year period and kick in at the end of the first year when we say, gosh, that was dry. We have to act as if were in a drought sequence now. In this case that would take us down 200,000 or 250,000 acre feet of storage which is halfway down the first decreasing year. It would accelerate us getting into a firstyear drought is what it would do for us. It does give you less resource if you were to in fact enter a critical period thats correct. Feel the loss of that but at a later year . Yes, it would. You brought out one comment. The picture at the beginning of oshaughnessy as the island was appearing, brings me flashbacks and nightmares and that. It was a very serious time and that be resulted in a bunch of things. It resulted in changing our operations so we were without any ambiguity of waterfirst operations and power would not be generated in a way that would compromise our long term ability to produce water ability and prompted an extensive and deep analysis of what our hydrolgy can be operated in order to maximize our resiliency, if you will, during a drought sequence. So when you look at the curves you have and the rule curves we have in place, that was the product of deep and sober thougthought and modelling and consideration. The policies that were generated were not without cost. They cost us in our ability to generate power. They cost us in our ability to certify water supplies. Theres no part of that thats back of the envelope calculation. Theres no part of that is aimed at anything other than preserving the ability to serve in a reliable and responsible way. I do get concerned when numbers are cited out of context. That impugning and integrity of the planning process and i take that personally. I think what san franciscans can be confident in and what our wholesale customers can be absolutely confident in, is that the operating criteria were using and the planning criteria were using are not scare tactics and they are not conveniently conservative numbers. Theyre very carefully derived numbers and cognizant of the cost in terms of money. In terms of social impact, in terms of economic viablity viability of the area and there are serious feelings. I wanted to share that with you. We had other numbers presented today that would cast that in a less than serious light. I think thats important to discuss. Commissioners, anything else . Thank you. We have two gentlemen to speak on Public Comment on item number nine. First is mr. Peter dreckmyer. Welcome back. So its interesting that mr. Morans quote from 1994 suggests that people were saying the drought plan at that point or whatever management of the system was 14 years before the 2008 design drought. I would beg to differ with you, mr. Moran. I think the design is arbitrary. Its two droughts combined. I dont think theres Science Behind that. In 2009, the state adopted the coequal goals of ensuring reliable water supply and protect the eco system. I think San Franciscos a little behind on the second of those. I will give you credit. In the upper tuolome Stakeholder Group meeting on friday, its people from state and federal agencies and ngos talking about biology. Its a great, constructive collaborative process and we need Something Like that for the lower tuolome and there was a Climate Change study. I dont think any of that was reflected in the design drought. If the concern is Climate Change, why dont we look at the science. It will affect things in positive and negative ways. The first 2400css belongs to the irrigation district and between april and june the climate study said more precipitation will fall as rain and not snow and the snow will melt earlier shifting to the season when it benefits the fpuc. The last year was the second wettest year on record in the Tuolumne Water shed but yielded the most run off ever probably because of the fire and less taken to vegetation. Thats probably what well see in the future and it does have a positive as far as the water supply, negative for the environment. I hope the state will do more. The proposals focus on measures. We dont see those working in the absence of higher flows and sfpuc hasnt supported the idea of if the measures dont work we need more water. Thats Adaptive Management and we hope to see that and there was an agreement in 1995 that said the state a

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