Good afternoon id like to call the order of regular meeting of United States constitution today is tuesday, september 8, 2015, roll call please. Commissioner president caen pr commissioner moran commissioner kwon and commissioner courtney is excused today. Thank you. Third item is the approval of the minutes of august 11, 2015, are there any corrects or additions to the minutes . Roll call second. Any Public Comment on the minutes of august 11th . Seeing none, ill call for the vote all in favor, say i. I. Opposed the motion carries item 4. Which is general Public Comment from the public and i have mr. Decostco first to speak. Id like to talk about a number of issues in general during the general Public Comment im very interested in really what is going to happen to mountain tunnel especially in light of el nino and how that is going to an impact so i really dont know any experts that know too much about el 99 having said that, we need to have some deliberations meaningful deliberations on mountain tunnel i read somewhere that now youre ready to expand over 200 million 212 million i read it somewhere so ill start with the marginal amount and then you know any way you look at it it is the money that has to be accounted for the full transparency before the constituents of San Francisco the second issue i have is about the covington tunnel we have to revisit it that so that we get a meaningful update im glad you know they have a project manager or maybe hes a higher title in wealthy i call him wade but im glad we have Small Business like him on calaveres im very interested to know whos our comboeft there how many studies linked to ohio dramatical have you done over in calaveres i know. A ill talk about the arching loft and found skeletons you must remember weve found human remains along our area the sfpuc and i represent the first people some point under the free speech of information act i have to go to a few meetings ill ask for the reports because it is important we remember that hetch hetchy the real area of hetch hetchy was stolen from the first people the folks we cant take it for granted we know in the 2015 it is still flush our toilets with clean Drinking Water thats a no no thank you very much. Thank you the next speaker is ann clark. Good afternoon, everyone im ann clark Vice President of the friends of camp mather im here to invite you to our september family tent it is going to be on september 22nd saturday thats a saturday at lake merced boathouse from one to 5 activities free a climbing wall and bouncing house and kayak in the lake theres lots of activities we really appreciate all the help and for the support from the commission and staff weve had to later than a lot about the events and truthfully youve been wonderful guidance for us we really appreciate theyre listening to us and helping us so dont forget us come on september 26th try to be there well look forward to seeing you on a personal note harlan kelly was a volunteer others camp mather and he and his family was there it was wonderful i i have to tell you truthfully when you know the boss is in town we have to behave my family said i by a preponderance of the evidence the best that week so harlan kelly you thank you and looking at to seeing. And my appreciation for the board for all youve done for us. Thank you very much. I want to extend our appreciation to you and the friends of camp mather now that harlan is a big fan were arguing who the bigger fan is of camp mather it wouldnt there without our help and support thank you pub. Thank you. Do we have any other speakers for Public Comment . Seeing none, next item, please item 5 communications. Commissioners any comments . I do have one buried under the annual electrical Resource Plan i see that under recollection number ten that our units are now qualified as green power im sure you want to Say Something ive been so anxious about this for years is this really true barb hale we of the through a process that certified the 3 kicker wood power hours for the eligible resources and the meeting will come to order. Is an unit those units are regarded by the sfavks as clean and green if any, that doesnt make all of mucosin. So mucosin is a low unit that janitors when were in a high water time of year. Oh, okay. So, yes, the kirkwood are the big units that qualify okay. So what percentage of our units now qualify. It is about thirty percent the power we janitor in an average water year as california compliant about 4 hundred and 50 thousand megawatt hours a year. So what did he say whats the possibility for the other 70 percent. Under californias current rules they dont qualify if we improve their performance theyre out put it is possible to have any incremental improvement qualify but not the units themselves. Okay. Okay. Thank you. How do you improve the out put for more water or efficiency. With changes to the turbine improvements to the efficiency of the units it is not the amount of water but rather the amount of power they are generate. Have we done any kind of cost benefit analysis of that. We havent done it strictly from an rp s on my team i everything it is a factor that is included in the Capital ImprovementProgram Assessments on an credentialal basis worth 15 a meg hour to be qualified as a california compliance renewable so you get about a 15, 12 to 15 megawatt when you take that killing water and have it california compliant. Weve been putting together our Business Plan for hetch hetchy it would be interesting to include this as a component and see if there is some savings or some cost benefit. Yeah. I think well definitely do that the challenge if we continue to have a dry year and investing the money and benefiting we need to be careful this is something well take into consideration the cost of rewidening versus the cost of additional output and the cost of receiving the hour. Well, i also think as we move into next years budget to look at all of those i imagine there is issues related to the water issues and the Business Plan as well maybe a few scenarios to look at it and this is a case of one of them. One of the things i mean the Business Plan calls for selling less and less energy on the market to whatever benefit will that diminish over time it has focused the language we use so we dont talk about the rp s power like 9 Green House Gas free that is a physical fact of it so we can do claim credit for it as we market a green product it qualifies as green not just qualifying as rp s under the subtly. Or the benefits. Except that and which is the key. Right. Okay commissioner any other comments i do have a call i think you wanted to speak to 5 c. Good afternoon commissioner Courtney Nicole cu for bosco i want to speak on the annual report a significant document 3 deserves pause for comment i applaud puck to complete the overall wissop on 88. 7 that is expressive ive watched it number slowly creep up over time and now for the time schedule is on schedule may 2018 for the budget 65 billion and i hope that that continues to be the case as we move through the last couple of years we certainly have challenged with the calaveres damn it is not yet through the construction phases but my hope is that we will make solid progress and courage the commission to focus on that is certainly helpful to your staff and help to the overall progress of the project thank you very much. We appreciate that thank you. The next item is other commission business. No . Okay next item, please. Item 7 is the bio annual Budget Development. Okay. Theres a little well role with that commissioner courtney and commissioners eric sandler assistant general manager and cfo i have a brief presentation here foyer you to kickoff the bio annual budget process so i have the agenda here the first 3 items to provide context for understanding how our venue budget fits in the planning activity and next item relatives to the considerations that are important for this particular bio annual budget period when i have here is the puc has a very integrated framework driven by Commission Policy the first to items as a capital doesnt even agency cpa Capital Planning is sdament involved with the planning so we have the first two items are Planning Efforts that are long term in nature the 10 year capital plan and Financial Plan they provide the long term visibility for the Capital Investment rates and charges trends so those plans to look into the long term future the next two items the operating budget and Capital Budget those really based on the Long Term Plan they set the stage for the next two years are that finally a number of rates and charts activities we have we those occur at different frequency i siding so we have rates and charges for Sewer Service that are on a multi year basis this last resetting process was a 4 years were in year 2 we have 3 more years of fixed ralth rates and charges the whole rates are set annually set by contract we have wholesale customers that represent the sales and revenue are responsible for the tracking of the amount of the costs to the stent that in any year actual collections different it is mixed up this is the nature the wholesale and prigs and retailed electrical rates are set annually so this next slide highlights the Budget Development calendar and what i pointed out were here in september kicking off the presentation of the commission the general manager are issue the instructions well vet the proposals to present to the commission during this time as well from now through december were going to be continuing the process that we started earlier in the year to review with you the Key Commission policies and receive from you any input changes you want to make to the policies the one is the Debt Management policy and the assurance policy and the communities benefits and the Environmental Justice we have a few more policies to cover and ear getting this on the forward agenda between now and december and then finally once the budget has been presented considered and individual through you it goes into the greater city process that is presented to the board for consideration and action so we have a budget policy framework this is what is used in discussing and communicating about the two year budget previously and on the left in blue are the focus areas the strategy sustainability plan on top of it is not in blue okay on and on on top of we have the various policy initiatives twentyfour hour utilities and Asset Management and Capital Investment and redevelopment one of the more specific to the Current Investments dealing with the city and the Workforce Development and perhaps in the section youll let me know when consider the budget to make any changes youd like. I wasnt following redevelopment it wasnt. How we develop with the development within the city. You can actually so like Treasure IslandDevelopment Authority board and hypocritical. Hunters point and i guess i dont understand maybe now is not the right time of the policy definition then. I think this is and thats a good question im trying to get our arms around what this indicates. I have the same question in my recollection when i came on the commission there already been a fair amount of work the commission did to begin those areas and whatever the logic was was lost to me i dont know what it was i wasnt here contaminate. We had a spreadsheet. Thats something we can work on to try to come up and explain that a little bit and get our input. The purpose is to give this more time going over each policy as it relates to the budget framework so maybe if we put that in the parking lot and come back and talk about each one of them to see if their relevant. There is actually, one of the items well be talking about is the Mission Driven budget thats one the Commission Policies that would be an opportune time to talk about the framework. Can we have the slides please. So the next slide relates to the considerations for the upcoming budget were inteven capital driven organization Capital Investments the way we finance it one of the largest components of the future expenditures and rates and charges so consideration of the Capital Budget is vital to frngd open understanding our long term and Short Term Financial picture some go that more topic is understanding what are the continued Drought Conditions mean for us as we manage in the short term and long term and medium term this is not a unique situation to the puc every Water District in california and the west is facing this on the plus side were well positions on the plus side unlike other agencies not to purchase extremely expensive supplies that components the challenges were facing reduced demand and potentially hard end demand in addition, we have retail water rates and harasses that you are set for 3 more years including that year and set on average demand a normal year demand what were seeing a level significantly blow that rates and charges the Commission Adopted for the 4 years work period so this next slide relates to Capital Investment and it is fairly busy ill try to unpack it what we have and this data is from the most relevance adopted capital plan on the excess the 10 year period if fiscal ye2025 Capital Spending relates to the colored bar the green bar is the Wastewater Capital Program the blue the Water Program and the yellow is the hetch hetchy Power Program so were talking about if you add those bars together as you can see if p that represents 8. 70 percent of the lawyers relates to the watermelon investment about 5. 7 billion and the remaining bid is split between water and hetch hetchy so this is the bars now if you look at the right act excess that relates to the red line that represents debt service 85 percent of the capital is for Long Term Debt that debt the way we finance it and manage interest during construction that debt service on that debt lags because of the boring and the Capital Investments as you can see the growth in the debt service over the 10 year period will grow from 312 million a year on the right action excess to 250 million to 2025 thats a large increase so the expenses in the future relates to Debt Services with the Capital Investment a comprehensive review and vetting and the capital plan is key to the managing the long term rates and charges. Is that ssi p and capital thats everything. Yes. Thats all Capital Investments of the puc. That weve currently budgeted for not mountain tunnel. It dont include 50 million from the capital that was approved in february this is all in one place we have a very Big Organization and investing a lot. And one of the interesting things can we have the virtual again . Is that right now the debt serviced are heal i didnt relate to the water but in 2025, 2026 equal between water and wastewater all right. Sorry all those questions. I do im trying to understand understand the math the finances but the bar didnt show the same kind of you know the blue bar is relating small and the debt service would be about equal. The Debt Services because of debt issue associated with the water system that debt goes on for thirty years it is a changing net as this number gets larger we we suspend 4. 4 billion that fell off the bar if you look at the previous 10 years the blue will be much hearier than the green now moving forward youll see the green. The green is smaller. I guess i should have classified i was talking about the mix in the red line which you dont thats what you dont see. Right. So weve talked about how important to manage Capital Expenditures how do we incorporate the impacts associated with this drought and the hydrologic long term and the next few slides focus on that one thing we know we dont know how this is going to progress so we we attempted to develop a number of scenarios to provide a boundary level of understanding what is happening over the next several years and constructed scenarios with the drought worsens and we looked at the demand profile that correspond and evaluated the reduced can understand of water and Power Production and taken inadvertent in a shortterm and medium to mitigate or do you want to this impact. So the first scenario here we have here is the drought end scenario ill orient us around the slide the access we have historical and projected fiscal years from 2003 to 2019 and on the y access the retailer water saddles expressed in