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tv   SF Public Utilities Commission  SFGTV  February 14, 2020 5:30am-7:31am PST

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>> good afternoon. i'd like to call to order the regular meeting of the san francisco public utilities commission. this day is tuesday, february 11, 2020. roll call, please. [ roll call ]. >> before you have the minutes of three meetings, we will take
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them individually. the first, january 23, are there any additions or corrections to the minutes? >> move approval. >> second. >> any public comment on the minutes of 23 of january? hearing none, all those in favor? >> aye. >> opposed. the motion carries. secondly, the january 28 minutes of the regular meeting. are there any additions or corrections? >> second. >> public comment on the minutes of january 28. all in favour? >> aye. >> opposed? the motion carries. lastly, the minutes of january 30, which was the special budget hearing number four. any additions or corrections?
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>> move to approve. >> second. >> public comment on the minutes of january 30. all in favour? >> aye. >> opposed. the motion carries. next item, please. >> item 4 is general public comment. members of the public may address the commission on matters that are within the commission's jurisdiction and are not on today's agenda. >> president caen: so i have two speaker cards in front of me. the first mr. pecasa. >> commissioners, my name is francisco de kosta. one of the positions i had in my life is i was six army and procedural san francisco
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congressional liaison. when i did that job, i had to interact with congressmen and senators from this great nation. i learned a lot. you know, my heart is heavy because as a citizen, i come here to monitor some of the projects as best i can. i'm not paid to do it, nor will i receive remuneration for that type of work. but it saddens me that in the southeast sector of san francisco, people are suffering. the san francisco public utilities commission profits a lot from what is happening in
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the southeast sector. there are designs that are brought so that housing can be built, recreation centers can be built, a lot of money spent on art while our children die. our children are dying. our elders are dying. some of them are pushed to live on the streets of san francisco to die. and i know every human being has a conscience. you don't have to read some law or some book. your conscience will tell you what is right and what is wrong. now finally it has come to my attention many times, but now more common, people reaching out to me and saying about the corruption that's going on in
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san francisco public utilities commissi commission. and i've never done this before, but i reached out to two elders who know a lot about the san francisco public utilities commission so they can read what i get, so they can do something and put this thing on track. we are not supposed to spend taxpayers' money on having a picnic and having a special thing offsite and spending thousands of dollars. that's wrong, simply wrong.
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>> president caen: the next speaker peter drakmeyer. >> hello. peter drakmeyer with community trust. if i could have the overhead. i came across a chart with different demand projections. it's interesting. i put that red dot to show what demand is now. if you look at four studies that went out in 2020. they range from 350 million
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gallons per day to 450 million gallons per day. we looked at what would happen if the sfpuc contributed for two years and then maybe we got nervous and hit a third year of drought. you could make it through the design drought, 8.5 years. so now is the time to make that decision for this year. we're in february. it's the beginning of the o outmigration of the baby salmon. last year sfpuc entitlements were enough to last seven years. we came into the system with
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full storage. the alternative is what happened in 2012. 2011 big water year. 2012 i think the unimpaired flow was 12 or 13%. that continued for another four years. we averaged 12% unimpaired flow and then in 2017 had to dump that water. the unimpaired flow was 79%. here is an opportunity to avoid that, but we have to act quickly. thank you. >> excuse me, through the chair. i know that we don't have an agenda today, but i would like at the next meeting to get a response to that possibility. and if that is, indeed, something that we could do while staying within the design drought scenario. >> yes, we can provide that for
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you. >> thank you. >> i would just like to comment that the data is quite old. one back to 1969. thank you. all right. any other public comment? next item, please. >> clerk: item 5 is communications. >> president caen: commissioners, any comment? i had a comment on item h, the sewer inspection. why can't we be like 2016/2017? we're way behind on that.
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i'd like to know why. >> good afternoon, commissionerings. greg norby, assistant general manager for the wastewater enterprise. commissioner caen, you're referring to the last row of numbers, the pipes replaced? so this chart in front of you, this is information on miles that have been put out to bid or into construction so they're not actually miles completed. what you're seeing is a -- essentially the impact of a couple of considerations here where if you look at the bigger picture and we're considering changes to this report for future versions to address this, we've wrestled with whether it makes more sense to share with the commission the contracted mileage that's been achieved each year or the completed construction mileage, because they do vary.
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for example, i think this is one we've noted in the past. we've had a significant portion of mileage tied up in the joint projects, like vanefs and m.t.a. so those we book the credit in a sense for when they go out to construction, but the timing of that getting completed can be substantially delayed depending on the timing of those projecs.s so if you look at a running average of the last approximately three to four years, we're just below the 15 mile target and this data doesn't quite convey that. i'll put it that way. does that answer your question, commissioner? >> president caen: right. and it's going to be an ongoing problem? >> correct. >> yeah, that's why -- i think i mentioned this before that we're thinking about moving towards how many miles we're contracted
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out. because if it's a joint project and it's delayed a year, we can't book that mileage on sewer replacement until it's actually installed. as long as we're contracting out 15 miles a year, eventually you'll get down to a year after. that's sort of what we're going to move more towards or keep track of both probably. >> yeah, perhaps in your reporting to separate that. >> that's what we talked about. so for your next quarterly report on this, you're going to see a modified version of this table, both contracted out that fiscal year and completed that fiscal year. i think that will give a more complete picture. the bottom line is we're right between 13 and 14 miles per
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year. >> anything else? next item, please. >> clerk: public comment. >> president caen: seeing none, we're moving to the report of the general manager. >> good afternoon. the first item is the bay delta water quality control plan update, steve ritchie. >> steve ritchie. what i'm going to present today is information that was presented by the two secretaries of the california inspection agency and the california e.p.a. to a group of stakeholders last tuesday. it was kind of the biggest --
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the very statement on the voluntary process. so i'll be presenting the information here. a lot of it, we're still delving into the background of it and what supports it. there are a lot of unanswered questions as well, but we wanted to share this with the commission so you had the sense of how the conversation seemed to be proceeding with the state. so we've been working on refining agreements. this is one of the statements of recovering fish populations than regulatory requirements and less social and economic combam intacts. the refind agreement that will be talked about will build a
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package that the state believes will be scientific and legal adequacy. we have collectively made progress towards securing the assets that are required. the state agency team performed a preliminary assessment in what they believe is needed for scientific adequacy to implement the bay delta update. the framework will be displayed in a couple of tables following this, but it requires 900,000 acre feed for new flows of the environment above existing conditions, dry and above normal water types and several hundred feet to help recover fish populations. restores over 60,000 acres of new habitat from targeted improvements and tributaries to large restoration in the sacramento valley. enables new collaborative science hub, expands tools to
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recover fish populations and more adaptiveness to changing fish. and also gets water and habitat quickly. it enhances a goal to achieve a doubling of the salmon populations by 2050. this slide shows how this state is improving. increased flows above the base line inset. the sand flows from the sacramento inset and then the exporters. each one of these columns represents a different water year type. c is critical, meaning the driest years. d is a dry year. b is a below normal year. w is wet. going through that in the top
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lines, in the sanjoaquin basin. you'll note that there is 63,000 acre feed of critical year water. this line is intended to be water purchases from willing sellers. i would call it a public number that that is what is needed. when we get to the money piece of this presentation, you'll see there is money set aside to try to acquire water from willing sellers. again, the exporters being the state and federal water projects have a small amount that they're contributing here to the subtotal of new outflow above baseline. then the next line is new water
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projects and programs. this is the notion there will be money available to build new projects and develop new programs for water that can be shared between water users and the environment. so the green line then is total new outflow above baseline for years 1 through 8. because the next line, exporters, spring baseline maintenance is the amount that the exporters believe will be able to be made available eight years from now. so that's where you get another increment of water. all this leads to what the total new and reoperated levels. the bottom is the state team adequacy target. i would suggest the state team suggested those numbers, but did not provide any backup as to where those came from. both of these are the water elements discussed last tuesday.
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again, you have the area of the whole area that we're working in, acres pursuant to the planning agreement, which is where we were at in march of 2019 and then additional acres per the framework to support more than 50% of the doubling objective. quen the san joaquin basin talk about the new agreement numbers. the state agreement says we need 246 additional flood acres. the san joaquin basin is where you see large, large amounts of acreage for different types of habitat. that's just another indication that within the bay delta system, the sacramento side is kind of the big area of opportunity. and then the last line is called
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the north delta marsh. various scientists have been proposing for quite some time that the prime habitat that can be developed that might help the system would be in the north delta area and close to suisun marsh. these are habitat improvements that would be coupled with the improvements the state is suggesting would be appropriate. going back to text, the governance science and adaptive management is a key part of this. the government department to increase flows and develop strategic plans and annual reports. this is basically how this whole thing would be managed, would have dedicated staff and would have an environmental water
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trustee, which would be someone responsible for making sure the waters show up. a comprehensive science program guided by structured decision-making process to determine and/or to adjust flow and non-flow measures. when we say non-measure measures we mean habitat development. and to test specific outcomes, learn from those experiments, and facilitated habitat and transparent process. the idea is you would do better in the future based on learning from the past. this is a total of $5.2 billion. $280 million for science and adaptive management. $1.7 for habitat restoration. $1.6 billion for new waters and
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programs. $1.2 billion for water purchase willing sellers. voluntary fallowing would require $416 million. so we're talking about a massive program in terms of funding to accomplish all of these purposes. >> quick question, what is fallowing? >> that is someone who has an annual crop and they would take their planting out of production. the water used there to raise the crop would be devoted to the environment. >> thank you. >> sorry, i have a question on that one too. where do these billions come from? >> well, that's the next slide. there are three elements to that. the upper element is the federal government funding of $740 million. the rest, and i guess it's interesting that they chose red for the color of it would be
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$2.3 billion coming from water users. that would be some sort of dollars per acre foot that would be collected in some way. we're still trying to understand exactly what that means and what the implications are for us. it's not clear because we're already willing to commit $78 million for the habitat for the tuolumne river. how that fits in is not clear. the state government would contribute $2.2 million. i think that red arc would be some kind of a combination of new fees or voluntary funding from water agencies to actually help complete this package. and i should say, the presentation by the state, a lot of this was brand new for virtually everybody in the room. so this is very, very new stuff.
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i'll talk about where we're headed when i get to the conclusion. on implementation, the voluntary agreements would remain in effect for a term of 15 years. the state water board will work with folks to ensure accounting procedures to ensure the flow is materialized. they will use their legal agreement against other purposes. non-signatories to the voluntary agreement would be subject to the state water board's regulatory requirements to achieve unimpaired flows. the last bullet is one we've talked about here. the state team would work with willing participants to expedite participation in 2020 or as soon as possible following applicable environmental review, et cetera. the idea of early implementation. again, as we've talked about it, needing some clear signal from the state that we're all kind of marching down a similar path. they've put that forward there as a statement.
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this is the recognition by the state that there's a lot of work ahead to finalize the voluntary agreements, finalizing them for pumping roles and working with our participants to refine the framework to finalize the outstanding governance, policy, and legal issues and submit the proposal to the state water board for a third party review, state review, and public consideration. so after the state released this, the final slide is what was in a joint irrigation district and sfpuc statement on the announcement, which is in effect -- we appreciate the government's leadership on this, we appreciate folks are working hard. we think we've got a good voluntary agreement to fit into this. we look forward to analyzing all the information and understanding what the implications are for us. since last tuesday, we've had no contact with the state in
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particul particular. the state, frankly, as we understand it is busy in conversations with the federal government about state valley project and central valley operations because that is a big deal that fits into the middle of this and is far from settled at this point. this is to make sure the commission is aware that after pretty much silence since about mid-october, the state is kind of moving things along now. there's something here to grapple with. we're trying to understand the implications for us and hopefully can move forward productively with the state and hopefully answer any questions about it i can. a lot of it i can't answer. >> so how does this differ from the p.u.c. model, if you will, or not necessarily model, but the p.u.c.'s proposal and position? >> the p.u.c.'s proposal and
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position can fit into this. we're trying to figure out exactly how and if maybe a real key question is if it fits in nicely and the state says on top of that we want to charge you $10 per acre foot to put that much more money into the system. we just don't know what's envisioned in the package. this is a huge amount. >> just at the super high level, there was this question around 40% release, which is where the state -- where we last left the state. does this reflect that continued commitment or has that -- >> this is different than the 40% impaired flow. this is really at -- on the one slide it showed different year
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types you would be looking at different quantities of flow. i don't know if anybody has run the calculations to see what they constituted unimpaired flow, but it's not the same type of block of water that we were talking about with the regulatory action by the state. it's -- i would say -- but it's still a lot of flow. >> and more than we had counter proposed? >> well, we had proposed a certain amount of flow for our contribution to the system from the tuolumne river. this is the state looking at the whole picture, you know, the sacramento basin and the whole san joaquin basin. that's what i tried to say more than once, we're a fairly small part of the bigger picture. this is looking at bay delta outflows. how much is going into the delta and how much is coming out the other side of the delta as opposed to the tributaries. >> to stay on the high level, the request -- our concerns
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around the 40% and what that might do particularly in times of drought seems like this new direction somewhat addresses those concerns, but you haven't really done the calculations yet. >> yeah, we have to look behind every one of these numbers and see how they were developed, what they mean, and as i said, our proposal -- it can fit right into this. it looks like it does to some extent, but you have to peel back all the layers of the onion to know for sure if there is anything -- additional obligations that would be imposed on the p.u.c. as part of this. >> i am at some point going to be curious about the level of detail. i mean, i do remember a conversation we had around the doubling of salmon, for example. that was sort of discouraged and we had talked about whether baseline could be established and whatnot. i was pleased to see that back in here, but don't understand
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what that means. some of this stuff would be great once you guys have had a chance to digest and understand it because there's so much in here to present a deeper level of what those numbers mean, what the implications are specifically for our system and meeting our apply demands. >> absolutely. i think that's our obligation to the commission to make sure we can talk about what it means. we want to make sure we got it clearly in front of you as part of this update that something has happened, boom. a big rock hit the pond and ripples are going in every direction. we need to find out where those ripples are going to go. >> are you saying their proposal is less than that was previously? >> it's different. >> it's not less than 40? >> in terms of the pure volume of water, that's not the important question. the important question we've always pushed is when it occurs in the system and what is being used to accomplish in terms of
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biology. >> we've been presented with what they presented you. but those questions of where we were and our level of concerns, because of the 40% and now the new scenario, when will we be able to receive that level of detail? >> it will take a little time to get that together. we're trying to understand what the state meant by this and what the implications are and how we can talk about that with the commission and others so we can get to informed decisions throughout the whole process. >> so for this year in particular, we had the possibility -- because it's a wet year, we don't know yet. when we made the decision for the opportunity to release more water for the health of the fish, would we then refer to this chart and say, okay, well it turns out this is a d or
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whatever it was. so therefore in order to maximize fish health or forward the objectives of this proposal, we're going to release this amount? >> yeah, we can present how this would fit into that. just f.y.i., in case you didn't look at the item in the water conditions update, it's looking like a d at this point in time. >> commissioners, i do have a question on slide 5. they're proposing to increase the flood plain 246 -- >> that's correct.
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>> how was that done? >> basically what we would have to do is look at that number and if that is all for the tuolumne, figure out what kind of constraints we had there, partly in terms of land ownership, partly in terms of physical impediments. i know we've had a little conversation with them that if we were unable to accomplish flood plain habitat that was desired on the tuolumne, we would look at the lower san joaquin down from the tuolumne as well. it could be as simple as working with a land owner to move a levee back and create a larger area and pay for that easement or purchase or whatever to accommodate it. that's the kind of thing that that would envision. >> well, as the vice president said, there is a lot here to
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understand. we might have to have another run-through. >> i think we'll definitely need another run-through with what we know about it and what these numbers are and what they mean for us. >> right. and i always would be curious to know who the other people are involved with the various rivers that come into the delta and how they're represented right now. i know how we're represented, but i'm not certain about this. >> i would say some of the biggest participants are the state water contractors and the central valley contractors. the state water contractors is metropolitan water district of southern california, santa clara water district. they are the single-biggest diverters out of the system. >> okay. any other questions from the --
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any public comment? peter. >> thank you. peter drakmeyer, tuolumne river trust. so i haven't had a chance to see the details. i don't think they're available to just broad general members. a concern we had last year, and you might remember the report that environment put out called smoke and mirrors and found a number of flaws in the process. for example, double counting water. assuming that water that's already required or funding or habitat restoration would be lumped into this, but that's already committed. we'll have to take a look at that. the process has been disturbing. tuolumne trust has not been at the table. they are six environmental groups. a little over a week ago there was what i heard described as a
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backroom deal and that worked against the arrangements of the voluntary agreement. that was not supposed to happen. at that meeting, two of the six environmental groups were maybe peeled off to be at least somewhat supportive of this announcement last week. when the other four groups heard about that, they were pretty upset. they were told there was going to be no media around this, but at the meeting last tuesday that was just referenced, before that meeting even started there was a guest editorial from the governor and a press release that went out. what i've heard is statements made at that meeting by the two environmental groups that had been peeled off seemed very scripted. there were a lot of people asking, hey, is this a good thing or not?
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there was a lot of politics and creating an image that was happening. with the delta reform act of 2009, the first thing that came out of that was a flow criteria report. in 2010 that report found that for the san joaquin basin, we would likely need 60% of unimpaired flow. that's what the science tells us. when the draft substitute environmental document came out at the end of 2012, it recommended 35%. there were a lot of good comments made. it was very controversial. the state water board said we really need to flesh this document out. when they came back in 2016, it was up to 40%. they didn't drop it and it went up. the good thing that's proposed by the state water resources control board is that there's adaptive management. if non-control measures aren't working, it could go down to 10 or 20% or if not, up to 50%.
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what's the backup if these plans fail like every other plan that's happened in the last three or four decades. that's our real concern about the voluntary agreements. thank you. >> president caen: any other public comment? mr. kelly. >> clerk: the next item is cleanpowersf update. michael hines. >> good afternoon, commissioners. michael hines, director of the cleanpower program for the power enterprise. i'm here before you today for our quarterly cleanpowersf update. if i could have the slides, please. thank you. i will cover our enrolment and
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service statistics, what's been happening since our last report, and what's coming up between now and the next time we report to you. our service to cleanpowersf customers continues successfully. we are now at 3.7% of our accounts on the uptick. however, our super green product enrolment has also increased and we're now serving 2% of our active accounts with 100% renewal power. it was 1.8% last time. we've again increased there, hit a little bit of a milestone. from an energy sales standpoint, that's now more than 4.5% of cleanpowersf annual sales that is 100% california-based renewal energy.
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so what's been happening. first, i would to highlight that we have executed a couple renewal energy contracts since our last update, expanding our commitment to new solar and wind power in california. in december the general manager executed an expansion of the voyager for the wind contract project that was initially executed in 2018 for 47 megawatts, increasing the total combriment from cleanpowersf to 110 megawatts of new repowered wind and energy capacity in california. that project will come online in phases starting in december of this year and should be fully operational by the middle of 2021 calendar year. we also executed a new contract for energy from 100 megawatts of new solar from the maverick 6
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solar project. this project is expected to start operations in december of 2021. all in all, that's four long-term contracts of 15 to 22 years in duration to buy renewal energy from 2b constructed plans in california from our cleanpowersf customer base. that's 372 megawatts of new renewal capacity that will get built in california as a result of our cleanpowersf energy contracts to date. those plants will produce a combined 1 million megawatts of energy, which represents about a third of cleanpowersf's energy needs, given its current enrolment. >> all four of these are in california? >> yes. >> where are they? >> these four are located in southern california, which is also part of the reason why we've been focusing on northern california procurement, bay area
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procurement. and our most recent solicitation issue was focused on this region. so we're working now on the next batch of contracts that will build capacity around and within the bay area. with add-back funding from the board of supervisors for this current budget cycle, our staff has also been working on a cleanpowersf equity project. the purpose of this project is to develop a policy framework that embeds an equity lens across cleanpowersf policies, programs, and business practices. systematically applying an equity lens will help us ensure that factors such as race, income, gender, language, and employment status, for example, do not determine access to or the quality of clean surgery services within our community. a working group of sfpuc staff
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that has been developing the framework is planning an outreach and engagement with stakeholders to get feedback on the proposed framework when ready. after incorporating stakeholder feedback, we intend to bring the policy forward for adoption before the end of this fiscal year. we're excited about this and hope it's a model not just for our business but also for other communities. so what's coming up? when we presented to you in november, our last update, we gave you a heads-up that we would be coming back soon with a cleanpowersf rate action. we now have more clarity regarding pg & e's power. we want to show you the rates
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after accounting for the exit fee that our customers pay pg&e. we're now expecting for 2020 a 4% increase in pg&e's -- sorry, i said that wrong, a 4% decrease in pg&e's generation rates and a 20% increase in the pcia to be implemented as soon as april. with no cleanpowersf rate adjustments, we estimate our customers will be paying 4 to 6% more for their generation costs than they would be with pg&e. to help our customers manage these changes, we're planning to bring our rate action to you at the next commission meeting on february 25. the action will be consistent with previous commission rate actions for cleanpowersf to support cost recovery and overall program competitiveness. >> do we have any method of
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challenging the pcia? i mean, it's getting outrageous. i mean, it's always been outrageous. it's now even more outrageous. >> yeah, there's ongoing proceedings at the california p.u.c. admittedly, they're very slow and they don't always go in our favor. so it's a challenging process, but it's a process we continue to remain engaged in. we have to. we're also in discussions with other communities, other c.c.a.'s about potential solutions that at a minimum address the volatility that we've seen in the pcia that affects our planning process, but maybe more aspirationally driveways the methodological
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things that we think unfairly collects from our customers through the pcia. >> well, i would imagine that this is based on the fact that they have these contracts that they buy, and therefore they assume they have the customers and then they don't. am i correct in that? >> you are correct. these costs are recovering commitments they made prior to the customers leaving. >> i know, but how long is this going to last? >> well, it will last the length of the commitments. some of those commitments are 25 years. so we're looking at for our customer base at the far end 2040, in that range. that sounds bleak, but the positive here is not all of their projects are that long. some are five years or 10. so there's a variety of terms of contracts and commitments that they had made prior to us
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forming our c.c.a. program. as those end, the costs associated will get pulled out of the calculation. so it will decline. the other potential i guess hopeful way of looking at this is that as the costs of our energy supply increase over time, those contracts will look more favorable. there's some expectation that that will happen, especially when pg&e retires the diabolo power-plant in 2025. that's going to cause the need to build again. that could drive up the value of the existing resources. that's something coming up that we're looking closely at that could actually be a positive on the pcia. >> i have a follow-up question on that because i thought that -- i didn't think that the pcia was actually directly connected to stranded assets or
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whatever -- isn't that what they call them? >> the idea is not to strand them. they're not stranded because of the pcia really. >> so there is a direct connection to the assets, the pcia? because i thought that sometimes there was a question about that and they would raise the pcia and it was like, wait a minute now, is this being used to fill some other financial gap that -- not to be skeptical, that pg&e needs, or is that 20% actually directly going to the asset relationship? >> well, it's to recover a specific pool of assets that were committed to prior to the departure of our customers. >> right. >> to be clear, the pcia recovers the out of market, the above market portion of those commitment
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commitments. so the idea is if they have excess energy, pg&e, as a result of the departure of the captures, they would sell it, liquidate it in the market. if the market value is lower than the cost of their commitments, they need to recover that difference and it's that difference. but there are a lot of -- you know, the devil's in the details as always. and there are components of the method that we'll continue to push back on that i think ultimately harm c.c.a. rate repairs and are arguably unfair. >> but how do we know that they don't continue to buy these long-term contracts and this can continue for ever? >> well, there are ongoing proceedings at the california p.u.c. -- first of all, they have to approve new contracts and pg&e has to justify any new commitments.
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pg&e's sales are going in the opposite direction. they've been shrinking. so it's been very clear and pg&e has been quite clear with the commission that it doesn't need to procurement and is long. so really the focus has been what do we do with these resources that pg&e has contracted for. that's the topic of the current phase of the proceeding is might we be able to allocate these resources to c.c.a.s so the customers get the full rate value of those commitments in a manner that is an improvement on the current situation. >> could we purchase the contract? >> that is possible. it might also be possible for the city to take on specific contracts or a share of their portfolio. so all of these options are
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being explored in the current proceeding. okay. i have one more thing. as we discussed last meeting, our staff has been working on the preparation of an integrated resource plan, or i.r.p. as a reminder, cleanpowersf is required under state law to prepare an i.r.p. every two years and this plan must be approved by this body and submitted to the california p.u.c. for certification. we have some scheduled changes to share here today that have come up since the last commission meeting. first, the california p.u.c. has extended the due date for the california i.r.p. some additional time to incorporate final guidelines
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coming from the california p.u.c. over the next couple of months. we are submitting for your approval later in this meeting cleanpowersf capital plan that was presented to the commission at the budget workshops on january 30. that was of course informed in part by the local renewal energy planning work that we reported at the last meeting on january 28. we'll be delivering a draft of the written report later this month. and the california p.u.c is expected to issue its final guidelines in march. we will make any changes to the i.r.p. based on those guidelines. and our planning stakeholder engagement starting next month through may. we'll then incorporate feedback we get. we intend to submit our draft
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i.r.p. to the commission for approval during a meeting in may. so that's the schedule and i'll wrap up there. if you have any other questions, i'm happy to address them. >> i do through the chair. so stakeholder engagement, who are the stakeholders? >> so we are going to be presenting to our c.a.c. we will be presenting here to this body the work being done in advance of bringing you a draft report to get feedback from you and also from any members of the public. we are pulling together sort of a round table workshop, two meetings, with community and environmental stakeholders to occur. we're targeting i believe early march for those. we also plan to present to the
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local agency formation commission. those are some of the things that i remember off the top of my head. i'm happy to share some correspondence. >> with the rwanda table, i would like to see a list of people you're engaging. >> sure. >> thank you. >> president caen: any comments or questions? any public comment? thank you. >> clerk: the next item is update on pg&e bankruptcy and city acquisition offer. >> this is the time set aside for an update on the pg&e bankruptcy and the city's acquisition offer. i'll provide an update on four topics, the bankruptcy case, our frc and california p.u.c., regulatory activities, our legislative activities, and our internal work.
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first off on the bankruptcy, we've previously discussed at the january 23 meeting that pg&e announced that it had reached an agreement with their note holders' committee that the note holders' committee will withdraw their alternative plan and support the pg&e preferred plan on friday, january 31, since we met last, pg&e filed more details of this newest pg&e-preferred plan in both the bankruptcy proceeding and at the california p.u.c. at the california p.u.c., pg&e filed testimony that supports the preferred plan and addresses compliance with the ab-1054 requirements. just as a reminder, those requirements are fair treatment of victims and rate payers and employees with pre-petition and wildfire claims being satisfied, continuing climate change progress, demonstrating how the plan is neutral on average to
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rate payers, and how the plan gives for rate affordability going forward. the pg&e testimony describes this newest pg&e plan. it states on a number of important issues, including some of those ab-1054 issues i just highlighted, that it will provide information and detail after it emerges from bankruptcy. sort of a to be decided or placeholder response in its testimony. so there really isn't content there for us to address as to whether they're in compliance with the ab-1054 requirements. so we're following that case. together with the city attorney, we're evaluating how we're going to engage, what our level or form of engagement will be in that case. as you've likely seen in the press, the pg&e testimony, though, does make it clear that pg&e and its parent corporation will hold much more debt than they did prior to going into
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bankruptcy. they'll be much more highly leveraged. the california p.u.c. will need to evaluate what that may mean for pg&e's ability to meet the 1054 requirements. we do know that the pg&e is increasing rate increases, not in the context of the bankruptcy plan itself, but generally. pg&e made a number of additional filings for cost recovery just last week at the california p.u.c. these applications to the california p.u.c would allow pg&e to increase electric and gas rates to pay for higher-than-expected insurance costs that they're currently experiencing, fire prevention work, and responses to some events that they regard as extreme weather events. pg&e has estimated that the average residential electric customer monthly bill will increase $5.70 for the fire prevention and extreme weather
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event cost for 17 months. they've estimated that the insurance costs will raise residential gas billsedly $5.70 a month for one year. those expected recently filed costs are in addition to their general rate increases. pg&e is seeking in yet another application before the california p.u.c an additional $5.69 a month indefinitely to cover their general expenses. so that's the p.u.c. activity that we're tracking with respect to pg&e and its costs and service. on friday, february 7th, we filed a protest with one of pg&e's federal regulators, the
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federal energy regulatory commission. this protest addresses issues we've had with pg&e's recent compliance filing on its treatment of city load that's connected to its grid under the wholesale distribution tariff that pg&e has on file at the regulatory commission. it's under this tariff that we receive service from pg&e and serve most of our 150 megawatts of the customers. it's pg&e's treatment of us under this tariff that has resulted in the numerous -- i think we're over 70 distinct disputes we have with pg&e. pg&e is delaying in making more expansive critical city projects. so we will continue to protect the city's interests in obtaining open and fair access to distribution services, to its distribution system, excuse me, in this federal proceeding. the third topic was legislative. last meeting i reported that the
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securitization bill was introduced by senator weiner, sw-04. this would reduce debt service coverage that's required by our investors. if passed, agencies like ours would use this authority to make power systems more resilient, safer, cleaner by financing things like storage and renewal generation or combinations of those two, distribution system, conviction, or improvements. so staff have continued to work with stakeholders to garner this bill. we see this as great to lower the cost to take these important steps on infrastructure and investment. senator weiner has also introduced a bill to transfer this into a state-owned public
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utility. the bill language became public a week ago monday. this is a complex legislation. we're reviewing it and intend to work with the senator's office to make sure that the outcome there is compatible with our efforts on the acquisition project. finally, on the internal front we're continuing to work on our operational readiness. we're evaluating legislation, as i just mentioned, and our participation in the california p.u.c's bankruptcy case. i wanted to highlight, though, that we have also implemented a new website. this website will help educate people about our efforts and the benefits of our power work. the website is and i encourage you to check it out. i'm happy to take any questions you may have. >> i have a question.
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if i get this right, next commission you're going to come with a rate proposal adjustment? >> correct. >> meanwhile, pg&e is doing all kinds of stuff, they're going to increase pcia and generation rates. it also sounds like they're going to be increasing rates related to their payout, their bankruptcy. >> yes. and i think those increases i highlighted in my comments to you will show up on the distribution side of the bill. so the part of the bill that cleanpowersf customers pay will be impacted by those increases. again, it's on the distribution side of the bill. it's the part of the bill that our customers pay to pg&e. >> but the bottom line, is it a wash or are we going to increase just to decrease in two months once these new pg&e charges take effect? >> no. so these new pg&e charges are going to take effect on the
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distribution side of the bill. so regardless of what we do with cleanpowersf, which is a supply side offering, rate payers will face these rate increases, assuming the cleanpowersf adopts them or some portion of them. >> i guess i'm missing something. sonchts so we'll still be cheaper than pg&e because the distribution will appear on their bill, their customers and our customers. remember, we're only focusing on supply. and the supply that we purchase is cheaper than what pg&e supplies. even we absorb the pcia and it's still cheaper. but the distribution is -- they charge their customers and our customers. that's what you see and nancy and i had a conversation earlier today. that's where pg&e is moving
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towards because these come out and they're making money moving the supply around. >> okay. thank you. >> thank you. >> president caen: does the consumer look at the total bill? they don't separate these things out. >> they probably would be unhappy that the bill is going up, but it's going up on both sides. so it's not like only us. our bill is going higher and we have to absorb it, it's going up on everyone. >> yeah, so everyone is going to see the same increase on the distribution side. then we are responsive on the supply side to make sure that our supply inclusive of pcia is still cheaper than pg&e. so you're right, commissioner, everybody's bills are going to go up because of distribution costs going up. when you look at the total bill for a cleanpowersf customer and a pg&e-bundled customer, pending
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your action on the rates proposal we will bring to you next meeting, the cleanpowersf customer bills will be lower. >> right. >> yes. >> thank you. >> commissioners. >> they'll be lower but higher than what they're paying. >> right. >> and money is going to pg&e. >> i have a question. is there going to be a summary document of all this stuff i presume prior to whatever we vote on? >> yeah, when we come to you, we'll show you the increases on the distribution, what -- how much our supply is increasing and what the pcia is and compared to our bill -- their bill versus our bill. we'll provide all of that for you. >> including maybe how it looks on the bill? >> yes.
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>> president caen: i'd like to call for public comment. seeing none, let's continue. >> clerk: next item is water supply improvement program. katie miller. >> good afternoon, commissioners. i'm katie miller. i'm the acting director for water capital programs. this is the position that was formerly held by dan wade. i'm happy to have the opportunity to present to you the status of the water improvement system program that was reported in our last quarterly report. the report covered the period from october 1, 2019, to december 1, 2019. so i'll quickly go over the overall program status and then give you some highlights of projects that are still in design, construction, and close-out. as you recall, this includes 87
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regional and local projects and five local supply projects, with a total cost of $4.8 billion. at the close of the reporting period, $4.5 billion was expended, representing 95% of the budget. to date 76 projects are complete, two are in close-out, six in construction, and one in final design. i'll share highlights of these projects still underway. the alameda creek recapture project recirculates water from the alameda creek. we made great strides during the last quarter, the recirculated environmental impact report was published and comments are being collected in this quarter. with significant progress of
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this phase, the project is confident this will move forward through design updates and into construction in 2020. the photos here show alameda creek as well as a rendering of the final pump station. the redesign work in order to accommodate some of the comments from the environmental impact report as well as some design code updates is ongoing. the next project is the regional groundwater storage and recovery project. this project is 97% complete at the end of the quarter for the phase 1 construction project. the photos here show the coma water well on the left and the park plaza project on the right. although substantial completion was achieved on december 1, 2017, key construction work is being implemented, including modifications to pumps, treatment systems, flow
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measuring, and control systems. seven-day testing at all the wells will be initiated in this quarter and has, in fact, begun in january. the groundwater storage recovery phase 2 subproject is in the planning phase and is 20% comple complete, including progress on the conceptionual engineering report for the antonette lane well in san francisco. the next project almost in completion is the fish passage facility. construction is 99% complete. the contractor is submitting close-out documentation. there is a little bit of testing left to do. one of the tests that needs to happen is during wet weather and wet flows. so we're looking for some rain so we can do the wet weather testing of the facilities and make sure it works at high
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flows. we hope for water. also the repairs that are made to the debris and rake and rack system will happen over the spring and summer. this project is still on schedule to be closed out in december 2020. as you may be aware, we have several regional close-out projects that are smaller projects to complete the different parts of the regions. steady progress was made for san joaquin, bay valley. in the san joaquin region, two job order contractors came on board, but it was discovered that the solar power facilities have batteries that require a 30-week lead time. so the construction was put on hold until those batteries arrive and then it will resume. and this project will still stay on track for a completion in the
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end of 2020. the sonoma valley regional project primarily consists of pilot testing for the system of the water basin. the mobile plant was conducted and testing is underway. for the san antonio backup pipeline, a carrier system for the sodium hypochlorate was not completed, but now a j.o.c. was completed and on target for completion. >> what's that? >> a job order contract. these are small contracts that are $600,000 or less that are much simpler to put in place for small jobs. >> got it, thank you. >> for the bay division region,
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a couple of things that happened is an erosion ditch, a b ditch and also some damage on the erosion that was observed. and in the peninsula, there was significant work at water crystal springs dam. the basin-connecting channel was a follow up project that is 75% complete. for the bridge replacement and you will recall that was a joint project with san mateo county. there was a gap in the parapet wall. that should be done by this june. finally, at the harry tracy
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water treatment plant, new mixers were put into the equalization basins and those are working successfully. so that project is in close-out. and then all of our favourite projects. i know you heard quite a bit about this. the contract in the last quarter was officially completed and the finish-out items will be completed by 2030. i wish to acknowledge the leadership and technical expertise of dan wade who led this project to successful and completion. i look forward to bringing this to a successful close and leaving water's future and the programs effectively and with excellence. i'd be happy to take any questions.
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>> president caen: that was very nice to hear about the very end of all these things. so now we have to look towards the raising of calaveras. >> that's right. >> president caen: any public comment? thank you so much. >> thank you. >> i have one item that's not listed here that i was asked to comment on. as you've probably read in the paper about the situation that happened at public works. i just wanted to shed some light on our working relationship with public works. so we do do projects with them, but they're low bid. they provide engineering and
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architectural services for us. they work with us as it relates to street cleaning and with a lot of our green infrastructure we work with them to clean that. so we have a great working relationship with them and we'll continue to do so. but as far as our house is concerned, i just wanted to ensure you that most of or the majority of our contracts are low bid. we do have some alternative that is prescribed in chapter 6 that is not totally low bid, but it is a formula that we have independent panel grading. it is transparent and you can ask sunshine for the data on it.
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the only thing is sole sources emergencies. we have few contractors, but call them to see who has the equipment so they can come out immediately. then there is stuff that is delegated to me. and i talk to the -- and the commission president to make that more transparent of what is delegated to me, but most of the things that are delegated to me also go through a process. that is small and just don't come to the commission. so we're going to give a report to all the themes that were delegated to me and let you know who was the low bid, how many bidders there were, so it will be totally transparent to everyone here what we are doing. and then the last thing is the controller has requested from all the departments about status
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of non-profit organizations and how different city departments interact with them. so they're looking more for friends of because they partner and they help the city do certain things. so we're participating in providing them information like that. so most of the non-profits we work with are -- we give grants to non-profits to do equal literacy work. you know, they help do barrier removals that the unions don't do. so we do a lot of things with the non-profits. so we are going to provide that to the controller so that we can be totally transparent. so i just wanted to let you know that we are making clear and
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trying to be as transparent as possible how we run our operation. >> i would like to thank you very much for that. the department of public works, do they have a commission? >> no. >> they don't and i've been at the public works for 12 years. i would say that most of the work that public works do from the engineering side, they work for a department that has a commission. and they're performing work at the direction of departments, like the fire department when they do fire stations, police stations. they do work for us. so for them to have a commission, deciding what -- the priority that they're working on that all these other commissions are giving could be problematic. the other thing is having the
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commission to decide what communities get what resources and you have to wait until a commission meeting to decide that is very challenging. when we had the 1989 earthquake, i remember the director of public works, he was in charge of the whole effort at the marina. so there is an operation component where it's just -- i think it's difficult to have a commission over when you're head of operations for the city. that's my opinion. >> i think it makes sense since a lot of the work is done through city agencies that have commissions. so there is oversight there. >> yeah. >> thank you. >> president caen: good point. yes. >> thank you for that report. and one of the things we have talked about quite a bit is we live or die on the trust of our
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rate payers. and like it or not, you know, what's been reported reflects on us and we have to recognize that. i think we have a whole slug of standards and procedures that protect the integrity of what we do. [ please stand by ]
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>> yeah. i definitely will provide what we come up with on more opportunities to be transparent. but we are reengaging the fraud
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protection because we had incidents ourselves about fraud in our organization. when you have 2600 employees at all levels, you know, we're trying to make sure they're all aware and you understand that we have zero tolerance for that type of behavior. and so we're going to do the training, we're going to try to make sure they understand the policies and the procedure. >> and to the extent that temptation flows from money, we spend more of it than almost anybody else, so i think we just have to be extra careful and extra vigilant and extra assertive in our providing, you know, proof and transparency. >> and when you mentioned low bid, how is low bid another
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form of protection? >> so when you have multiple bidders, there is a competition, right? so you get to see what the industry price is versus if you go sole source. you have an opportunity, you know, to collude in a sense. but you have situations where a couple agencies collude and get high bids because they know someone's going to get it. but high competition, these contracts want to get the contract so they can work and continue because they have their staff and stuff like that. so the high bid is probably the safest way to go about it, or the alternate delivery method where it has bids, but it has
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other criterias, which is ascribed in the r.f.p., and you just make sure you follow it. when you start deviating from it, that's when you can get yourself into trouble. so we comply strictly by our policies and procedures and contract documents. >> thank you. >> we do have a contract office that is involved in making sure that those procedures are followed? >> yeah, and i rely heavily on i.b. fine. she's a police officer -- just a couple incidents she's had to bring to my attention, but she handles everything really well. >> she certainly does. i did call the general manager, and we talked about this as an
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outflow of what happened with d.p.w., and it -- it's a good wake up that we look at our systems, which we're doing. and as you stated, we are a very fine, well-knit procedure for contract. we follow this as commissioners, and in our material, you will see the different material, the agencies, and the bid, and it's all very clear, and it's all very fair. and mr. kelly has suggested that there is a range of contracts that a general manager can deal with. i believe it's -- is it under
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$500,000 or $1 million? >> $1 million. >> and mr. kelly said he would report out for that, so that's the only thing that wasn't clear for this commission. >> yeah. i just want to make sure that those contracts go out for process. it's not like i handout $1 million, so don't anybody call me. >> his number's not posted. all right. so that concludes your report. >> comment? >> public comment? >> seeing none -- >> that concludes my report. >> next item, please. >> item 7 is new commission
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business. >> yes. i would like to have an update on our fire strategy and the -- on the peninsula before the fire season. fire season is in june, so if we could have that before that? >> yes, i'll do that. >> any public comment? next item. >> item 8 is the consent calendar. all matters listed here understand constitute a consent calendar, are considered to be routine by the san francisco public utilities commission and will be acted upon by a single vote of the commission. there will be no separate discussion of these items unless a member of the
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commission or the public so requests, in which question the matter will be removed from the calendar and considered as a separate item. >> commissioners, any removal of items? public? i'll entertain a motion. >> move to approve. >> second. >> all in favor? opposed? item carries. next item, please. >> clerk: approve the plans and specification and award contract db 129.1 bay corridor transmission and distribution, in the amount of $24,058409 and with a duration of 396 consecutive calendar days, to the responsible bidder submitting the lowest ossive bid.
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mitchell engineering, to install electrical conduits, electrical vaults, and fire suppression pipelines on the terry francois boulevard between mission rock street and warriors way. this section constitutes the approval action for the project for the purposes of ceqa, pursuant to section 31.0 2k4shd of the san francisco administrative code. >> do you know if it's on 22, 23, mariposa? >> right now, it's a little bit west of terry francois
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boulevard. >> thank you. any other questions? >> this is literally digging up terry francois? >> yes. >> it's not any other street? >> no. >> yeah. that was my concern, because -- thank you. because i ride down there all the time, and i'm thinking, you're going to dig it up again? but it's further down. >> yeah. >> thank you. >> any public comment? commissioners? may i have a motion? >> so moved. >> second. >> all in favor? opposed? motion carries. next item. >> clerk
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>> clerk: [agenda item read]. >> this item was actually something similar before you at the last commission meeting. we had put out a request for proposal to hire three consultants. we had a protest against the -- one of the consultants, g.e.i. we've resolved that protest. i'm working with our city attorney's office, and so now we're before you, asking you to award the third contract. >> i'll move the item. >> second. >> any public comment on this item? all those in favor? opposed? the motion carries. yeah. i thought i saw this item before. >> clerk: item 11 is adopt a finding declaring as exempt surplus land portions of the unimproved property owned by the city and county, in
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sunnyvale, santa clara, commonly known as a portion of manzano way, and authorize the city's director of property to execute a quitclaim deed qiing the existing restreet to the cy of sunnyvale. >> commissioners, we're selling this item for $1 million. >> commissioners, motion? >> i'll move the item. >> second. >> all in favor? opposed? motion carries. we will hear 13, 14, 15, and
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then item 12. >> correct. we will hear 13, 14, 15, vote on 13, 14, 15, and then vote on 12. >> clerk: okay. [agenda item read]. >> item 14r, discussion and possible action to adopt the
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san francisco public utilities commission ten-year capital plan, and item 15, discussion and possible action to adopt the san francisco public utilities commission ten-year financial plan. >> commissioners, we started this in july, and it's been the work of the whole organization, but i wanted to ask the budget financial planning team to please standup. no shyness. [applause] a lot of long hours, a lot of hard work, so we're addressing
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13, 14, and 15, and then 12, and i'll address them in reverse order, 15, 14, 13, and 12, and hopefully, you won't go to sleep. these plans cover the fiscal year 2021 to fiscal year 2030. and the financial plans are required by the city charter, and the city charter was amended in 2002. propositions a and propositions e passed, which really provided the p.u.c. powers to execute large capital bonds, authorities to set rates and charges, and it came with a number of planning requirements as well as oversight requirements. and the oversight requirements were to prepare five-year
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capital plans and ten-year capital plans, and when you're preparing capital plans, you want to have some oversight in terms of what you're making in terms of rates and charges. this isn't different in terms of other water and wastewater agencies. they look at the five-year picture and the ten-year picture, so the city is on, i would say, the progressive end of capturing, and it's because of this requirement. now, how do we appropriately inform the public and the commission about the potential rate impact? the way we approach it -- there are many variables here, but we try to approach it from a conservative approach. i wanted to spend a moment talking about the inputs and
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the constraints and the outputs of these plans before i get into them specifically. so the inputs are the proposed operating -- biennial capital operating budgets that we have before you, any adopted rate increases, and sales volume assumptions. so those are the major inputs. when you look at the constraints of the financial plans, you need budget constraints and uses. the constraints are around ensuring credit resources, so your revenue and sources, not your uses, and that you meet certainly financial policies adopted by the commission to ensure that our enterprises are well rated from a credit perspective and can actually access capital investments that we propose to make, and those
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are fund balance and reserve policies that make sure that we have at least 90 days of operating finances on hand. there are debt service policies that ensure that we are taking in enough money relative to our debt service liabilities in each year, and then, there's a metric of how much of our capital plan is reserved, and those are the big constraints. and then finally, the output is how much money do you need each year to meet all those requirements. and if you take that revenue requirement and divide it by your sales volume, you get the rate increase. and that's the structure of the plan. one of the enhancements that we tried to do this year is to look at some sensitivities
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around a major function. so we know these forecasts aren't going to play out as we're -- to the tee as we're expecting. it's very possible to look at a forecast and think oh, that's absolutely going to happen. so we're looking at provide some sensitivities, and we've done sensitivities with respect to sales volume. we make some conservative assumptions with regards to sales volumes, but what happens if it looks a little better? because we think it's important not to anchor on any particular assumption. let's see...also, i wanted to highlight that there is a document -- so this isn't just a series of slides, there's a document attached to the agenda item, which is the full text of the plan which describes in detail some of the things that
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i'm going to cover. so with that long preamble, t let's get into the plan. so the basis for water and wastewater assumes a sales decline of .05%. there are two more years of retail rate increases that have been adopted, and the plan conforms with the policies, debt service coverage and financial plan. >> i'm sorry. can i ask you a plan about the water?
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>> sure. >> so we heard a plan that the state seems to be making some moves, and i'm just wondering if and when that happens if that's going to have implications on the budget? >> on the budget or on the sales volumes? >> no, not so much as the sales volumes as, you know, the budget. so i saw something that said that water users are going to have to pay more. >> yes. i think that there's a certain amount -- there's some early implementation projects that steve has reflected in the water enterprise budget. you heard about those. i think some of the long-term effects in the settlement haven't been considered -- >> so if we approve the budget today, does that then appear, like, in the rate package that comes before us or in two years or in ten years. >> steve mitchell, assistant general manager for water.
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i think the thing that would have a material impact would be if there was a dollar per acre-foot charge that was leveed on all users throughout the system, and there's no information recording timing of when that would happen or when it exactly would be. there would be a process involved in that. but when it comes clear, we'd have to come back -- and i find this highly unlikely, if it started january 1, 2021, we would probably be coming back for a midyear budget adjustment. >> okay. thank you. >> may i have the slides, please. so slide five shows historical and projected retail and wholesale water sales volumes, and you can see sort of -- it's the base case volume projections, which assume a
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half a percent decrease each year going forward. and you can see, here's the upside volumes with the retail sensitivities. the base is 57.4 m.g.d. and the wholesale is 57.1 m.g.d. and this is the performance of the base case pro forma. the sources, you can see, contain -- is it advisable on
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yo -- visible on your screens? it contains wholesales, miscellaneous, and operations and maintenance, the hetchy transfer, which is funds going to hetch hetchy water and water to pay for the water and power assets in hetchy. debt service, revenue funded uses, and then, you can see sources minus uses. and in these first few years, you'll notice that there's some negative numbers. and what that reflects, there's a balance due to the wholesale customers, and we're earning interest paying them back over time. you can see the retail increases and the projected
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wholesale rate increases over that time. the items shaded in beige are actually adopted rate increases. and then, you see the credit metrics and the constraints at the bottom, and you can see funds at the bottom. so i i think some things i'd point out is the -- [inaudible] >> so you know higher sales volume can mitigate the impact -- you can see how that results in, you know, a lower estimate of the rate impact. >> you said we were paying back. what are we paying back? >> yes. so the wholesale customers, what we -- the way we set their rates is we estimate what the
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revenues -- what their share of the expenses will be, we estimate sales volumes, we set a rate for them. at the end of the year, we look at what the actual expenses will be -- were, and what we collected from them. and if we overcollected, we owe them funds back. so we, for a number of reasons, but in part to a large degree because we have been so successful refinancing our debt over the last several years, we ended up recollecting to the whole sale customers, so we are refunding it in the way of lower rates. >> that goes out six years? >> not all of it -- yes. not all of this is a secure -- is wholesale customer -- it's really -- it's primarily the
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first two years. but not all of that -- yes. you can see that the rate increase in the first two years is zero. it's about a 60-some million dollar credit. so let's turn to the wastewater enterprise. from a sales assumption, it's the same assumption as our retail water system. meter metered volume -- wastewater discharge is measured as a metered volume, so that's why it's parallel -- [inaudible] >> oh . the same assumptions in terms of expenses. one of the things that we do assume are the favorable terms on our executed federal and state loans, so we don't use a
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long-term planning estimate, we use what those terms will be. and it's in connection with financial policies. this graph is the discharge volumes for wastewater, and this graph is the base case versus the upside case scenario. and then, here, we have the pro forma. and i think, you know, the things i'd point out in this pro forma are that the average retail rate increase under the base case assumptions are 7.5%. under the upside assumptions, it's 6.5%, so again, you can see how the assumptions that you make with regards to sales
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volumes can really influence the results. this is a very -- you can see the metrics are quite strong in the wastewater enterprise, and that's important because it will be quite leverage as a result of the bonds associated with ssip. now what we have here is, you know, if you take those water and wastewater pro formas, and you look at the percentage increases for water and wastewater over time, you can see that the rate increases -- the increase in the combined bill is in the high to m mid single digits and decreasing over time. >> i have a question on the last slide? >> yeah. >> why do we show negative net revenues starting in 26? >> so that's largely because of the increase in revenue funded
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capital. so we're accumulating -- it has to do with the -- when you have increasing debt service, and you're trying to maintain a stable debt service coverage metric. so you end upsetting rates as you meet your debt service coverage ratio that generate enough funds that you can use a significant amount to cash fund your capital plan, and so that reflects the build up of cash in the reserve. you can see we reach a high level of about 100% of operating expenses as reserves, and it's the spend down of that. >> oh, i see. >> it's an interesting optimization when you're trying to solve a multiconstraint
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situation. so again, on slide 13, here's the combined bill, the percentage increase, and the combined bill over time. and then, on slide 14rks you can see -- on slide 14, you can see what's driving that. that's largely the wastewater capital plan that's driving the increase. >> so in 15 years, it doubles? >> yes. >> now, i wanted to elaborate a
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little bit on that because one of the questions, i think, commissioner maxwell, that you had posed during the budget presentations we went through, as we go through this affordability, what are some of the levers that we have. what we have here is a graph of the information on the prior page, and what you can see is a combined bill of a percentage of median household income overtime. we've had discussions of that being a gross metric and not necessarily of the impact of the bill on all of our customers, but for a second, let's look at this. as i mentioned, the combined bill is $122, about $122 per month currently. when you look at the 2030 number, you're looking at $236 per month. and you can see visually how the ssip or the sewer bill is
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what's really driving that increase, although the water bill is also increasing. now, if you look at the blue section here, about 75% of the blue section is a reflection of already incurred debt for wesip, and operating decisions, for example. so if the commission were to make decisions on budget or operating expense, about 25% of that slice is avoidable. if you look at wastewater, about 60% of that slice can be spread out, mitigated. your future decisions as a governing body can affect about half of that future cost. >> one question, again.
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could you repeat what the red line is, the affordability target. is that based on the median household income? >> yes. 2.5% of the median household increase, assuming there's a 17% increase of the median household income. >> why is there such a difference? >> it's because it's so big, and much of it hasn't been committed yet. any other questions for this? i think it's a helpful slide for me, as we look how to focus our attention. so now, let's move to the power enterprise. this -- so when we look at power and clean power, we're
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looking at slightly different -- we're not looking at necessarily mature monopoly service areas. we're looking at slightly different business environments. we're competitive with pg&e, we have a number of regulatory issues that you, for example, talked about earlier, you heard about from mike and barbara with nonmarket issues, like the pcia. so our assumptions here with the power enterprise are for a 1.8% annual growth rate average over the next ten years. and you may be wondering in we would make assumptions, and we're looking at really specific customer acquisition. and we believe that this is a
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conservative estimate of customer acquisition. so the largest driver of this particular low growth is growth in existing customer, the airport. and then, there's also some transfer customers included as well as growth in the redevelopment service areas. but most of this case-based growth is associated with the airport. we assume a 1 cent growth in the annual power rate and 3% increase from long-term customers in what we perceive to be the growth rate. we have a lot to cover, so i'll
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move a little bit more quickly. this is a base rate 1.8% annual increase. here's a downside projection to ensure that some of our airport load doesn't materialize. it's about a 2% reduction versus the base case. and then, there's an upside projection that assumes that there's much more growth in the redevelopment service areas. it's about 1% above the base case. now, one thing i'd like to point out, and i know that barbara is probably saying eric, point this out. the base case assumes that we will make the proper investments to carry load. so if we see a downside, we
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would need to mitigate the investment. and here's the base case pro forma. i know that one thing that we mentioned was when you appointed funds for the acquisition project earlier this year, it seemed as if the fund balance requirement wasn't going to be met. i want to assure you that estimates are going to be meeting the target for the fund balance enterprise this year, and you can see that the projected pro formas going forward meet all of your financial requirements. now we turn to cleanpowersf. so we have on the base case pro
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forma, we have a half percent annual sales growth volume over the next ten years. this reflects completion of major customer enrollment. we've incorporated in the plan all of the assumptions that you -- regarding the budget and the ten-year capital plan. it's the first year of a capital plan for clean power, and same assumption -- because rates track pg&e, we've made a similar assumption with our power regarding pg&e rates. so the base case shows a growth here so 3,105 -- to 3,105 gigawatts by the end of the period. i think there are a number of large customers that we haven't
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enrolled in cleanpowersf. that would generate another $518 million over the same period, so another opportunity there. here's the base case pro forma. i think one of the things to point out is that all of the -- currently, all of the capital investment for clean power is modell modelled as revenue funded, cash funded. we are looking to seek a credit rating for the clean power enterprise that would allow us a little bit more financing flexibility. >> when is that going to happen? >> we're still working out exactly -- probably by the end of this calendar -- yes, the end of this calendar year. okay.


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