tv [untitled] January 24, 2012 1:48pm-2:18pm PST
the financial plan and the budget applying it to the capital plan you see for the next 10 years, the capital plan started out 63 short and that is solved by power bonds and power rates. the rates that were before you in november and december that allowed us to balance the financial plan -- this is a slide that will look very familiar to you. it brought on revenues of $2.3 billion and an annualizing one fully to $9.1 million thereafter. that allows for the startup of clean power san francisco and allows us to do bond funding, meet our uprooted reserves, however, it did not give us enough money to do everything so the cuts you had to take and deliberate on are there at reduced levels for energy efficiency and city-amount rate nobles.
-- city-owned real goals. it is balanced with relatively minor changes on slide at five. if i could start on the top at $204 million, you funded a great deal of street improvements and that country improvements. our adopted 12-13 budget was $179 million. the changes you will hear about today from our general assistant manager for power and water as well as the person who runs the hetch hetchy is theferc and nerc costs and then the water transfers. the additional capital investment -- as was the case with the water and sewer, the mayor's office has asked us to come forward with the bundling of the capital because the
capital that is before you is very large numbers, to bundle all of the capital and move that in tandem with the operating budget. you will hear both again today as you did for water and sewer. the positions -- you have added a number of positions over the past two years and those are already in the budget. very minor adjustments, a couple of transfers, and you will hear about those later in the presentation. the graphics are very similar. there in your supporting packet which you review each year, as is the capital plan summary which we will talk about later. every component of that capital plan, including that detail sheet by rampaging through for the viewing audience to reference -- with that, i will turn it over to the water department of upcountry discussion of the proposed budget.
>> good afternoon. on the general manager for water. if we could have the slides up. >> this part of the presentation is under hetch hetchy in back of all the large capital sheets. >> to carve out the water piece of this, this is the total budget here, the 11-12 budget with the reduction in capital projects moving forward into 12- 13 and reclassification, where projects need to be done on the water side or power side. these projects have been assigned in the adopted budget
to the water side as opposed to the power side, so our request we're going to take some and send them back the other way to the power side -- that shows the negative side there in the 12-13 proposed. the other two are increases for federal energy regulatory commission proceedings which i will talk about later. funds for the proposed order transfer with modesto irrigation district. 12-13, you see an increase in the programmatic costs and a reclassification between water and power. moving from the water side to the power side. on the operating positions, the and utilization that was just talked about from the increases we have had over the last two years and a transfer in from infrastructure onto the hetch
hetchy side. just to go over what we are talking about, this is the hetch hetchy water and power system. we were talking about the lower and bay area into the system, this starts hetch hetchy on the upper right and comes down all the way to the alameda creek siphons. again, the organizational structure, hetch hetchy water and power, a very large division run by itself and we are able to answer any questions you may have. again, is a large set of facilities we have. the three reservoirs, small regulated reservoirs, to switch yards and two substations. 160 miles of pipeline and 80 miles of tunnels.
50 miles of road and 170 miles of power transmission lines. every time i go through this lights, i'm struck by how much stuff we have out there. that's the nature of the hetch hetchy business -- keeping this stuff running because it provides the water and electricity that pays for the power side of things. coming to the generation, these are the powerhouses -- kirkwood, fall moccasin, this is where the money is generated for the power side of the operation. it is very essential to the operation over all. priorities for hetch hetchy water and power -- we are connected to the water improvement program, managing shut down, we just went through a such debt -- the ratio down at the hetch hetchy system and we had to bring it on quite quickly so we could shut it down for harry tracy.
turning on and off a large system is key to making it work. integrating those projects into the system is the real challenge on the operations side as well as the engineering side. a big thing on of hetch hetchy site is the federal energy regulation commission side for don pedro -- that is owned by the modesto and turlock centers and we are integral to those and help pay for all lot of the studies that will go into the ferc decision. we have been pushing hard for communication upgrades for compliance regulations that are out there. one of the things we have talked about a couple of times is the need to modernize our shop and powerhouse facilities to make sure a staff are supported up there and it in a safe and efficient manner. on the regulatory side, on the
power facilities, compliance is something that began starting in 2008 but has been growing steadily over time. as you saw in the updated report, we have entered an area where we are now a transmission operator. that is leading to an evaluation of all of the existing things we have to do there and it may mean we have to make some changes coming forward as we start to see what is happening there. again, the regulatory system has been changing on a regular basis and we have to deal with that. we want to limit our exposure to catastrophic events, which has been the essence of what this is all about. again on the water facilities side, complying with the regulations and making sure we do not have failures that are detrimental to the environment. to get to the budget, specifically, the significant changes on the operating side are four ferc support, this is
to support our share of the fishery studies for the new don pedro proceedings which will occur over the next two years and the results of these studies will go into the determination by ferc as to what needs to occur on the river and the licensing for the facilities. that is one specific request. the other is the $1.6 million requested funds that would go toward paying for the post 2 million gallon per day water transfer with modesto irrigation district. that would be an ongoing cost as far as the water reliability component. those are the two specific changes we would make this year. on the capital side, and we've talked about how to present this. very soon, it is time to pull out your 11 by 17 sheets which
is where all of the information lies. this is a very highlight sheet in terms of the slide. could you put the slide back up? there are certain changes here. the first one note is we have a reduction of the pipe line rehabilitation line which is actually line #47 on the capital improvement program sheet. that is a reduction of about $10 million because our assessment of the pipeline has proceeded more slowly than we would have liked because of what we had to do with the constraints we have had to work with so that both cost may be out there in the future. we have not been able to get to them and say we will accomplish them within the time line. the second set of changes are on line 84 which is actually on the second page pillhead -- second page.
hear, when we talked about modifying the capital program to capitalize those programs that are more critical than others, we proceed with the warehouse upgrade. these are critical to taking care of the operation and we are proceeding with a power house control room relocation within the facility. we are deferring the administrative offices and that it would be starting around your number eight of the program and we have deferred this for several e years over the cost of the program. we are acknowledging setting priorities between these is what comes down other changes -- what comes down. other changes -- we have highlighted those in great where it appears to reduce the budget but in reality, what those
numbers are in terms of reductions, they were funded in the first -- the last year we just dropped off of the 10-year. they were funded last year. those pieces of that have been completed. those are part of the highlights. it is not a proposed reduction on our part, we do not need that money any more. >> [unintelligible] >> yes. >> where is that? >> what is a pen stock? >> a pipeline that carries water from a higher elevation. it is where you get the energy to turn the turbines at the bottom. >> the approved change for $750,000? which line is that? 77?
>> that money was appropriated last year. we do not need that money anymore. we think that we may need substantial amounts of money into the future, going forward, into the tens of millions. >> the $60 million? >> yes. >> all right. thank you. >> we need to get you up to moccasin. it is impressive when you see it. going to the next slide, we have one particular change worthy of note. that is in line 8, the line item that was added. the activities were being funded out of the reflections of capital projects, but the program has started to come a little bit of age, where it deserves its very own mind item.
that she is about $3 million in the first year, increasing down over the next several years. many of them are four studies, training, and activities. that has become a very important line item for us. >> what is the update on the treasure island facilities? >> that would be on the treasure side. >> but there is a water implication. -- >> looks like there is a water implication. >> the treasure island facilities here. >> why are they in your budget? i am confused? >> that is the schedule that we have. >> that she was reorganized. it is all part of hetch hetchy.
the first part of the presentation, with the up country discussion, the second part is the eye and said the discussion. >> this will go back to item 7? >> yes. >> sorry. >> i always get confused by that also. up until a few years ago, hetch hetchy was really a separate organization. it has been reorganized over time. at one time it was anything on one side of new work that was considered part of the organization, this side was considered the other part. we have changed those things. the up country is supporting water and power. >> in terms of semantics, if we get confused, from a public perspective we could make it easier to understand what we are talking about. there is an issue that comes up.
>> yes. and if someone has a good suggestion? [laughter] >> we wanted to cover the budget briefly on the hetch hetchy side. i do not know if you want to deal with that presentation. >> what if we deal with the questions now? commissioners? ok. let's move forward. >> ok. >> the sales presentation is after the tab marked hetch toweo hetch hetchy water. >> that is to have numbered? >> 5. >> tab 1 is in the section
entitled [unintelligible] power -- entitled hetch hetchy power. >> pulled up to the slide on the computer -- >> recognize that you are in the right spot, then. >> [inaudible] >> thank you, commission. barbara hale, assistant to our -- assistant power generation. we have a pretty flat budget without much change from last year. very happy to answer any
questions as we go through. so, you see that we have our capital and program changes, where we are reducing our boat, if you will. by $22 million. the recall of assets from water to power reflected here as well, as mr. ritchie described. so, generally an overall modest change. in looking at the authorized positions, similarly pretty flat. look at the changes. not a lot to address their. here is my overall organizational structure. you see, from the boxes of activity, you can see where our operating funds are falling within the organization. you can see where the position loading is. notice the box on the extreme left. energy infrastructure planning
and development is where we implement energy efficiency and the renewables project. not a lot of operating budget there for 21 positions, but that is where a large part of our capital program dollars go, with energy efficiency investments, renewables investments, including go solar. we are sticking with our focus for priorities on providing high-quality service, planning for the future, and meeting those green and sustainable objectives that we have been talking about in our climate action plan and our strategic sustainability plant and the various policy directives that we have discussed with you over the years. on the topic of providing high- quality services, our focus is on the core activities as a utility with preventative maintenance programs.
as you know, we are also looking forward to a successful launch an operation of our cca program. planning for the future is largely focused on our efforts to adjust our operations to the changing regulatory environment that we are in and changing contractual agreement -- environment that we are in. as you know, our pg&e contract expires in 2015 and we are spending time and effort planning on how to replace those services and protect our existing customer base and the revenue stream that they represent, making sure that we are paying attention to those risk-management issues inherent in being an electric service provider. for our green and sustainable efforts, it is release starting first with optimizing our use of the hetch hetchy resources.
making sure that we are operating it under the water first policy, consistent with extracting as much value on the power side as we can. that is the coordination that we have between miss and offered's folks and our purchasing and scheduling groups that are doing the day-to-day activities there, and the coordination. this is, of course, our first year of compliance under the new renewable portfolio standard that the state of california adopted. we will be purchasing renewable products to cover any electric consumption from customers that is not met by our hetch hetchy system. >> can i ask you a question? >> yes, commissioner. >> it seems like clean power assets should be one of those boards. >> -- clean power sf should be
one of those boards. >> it should have shown up twice. >> will it? >> beg your pardon? >> will it? i do not know, i guess this is just presentation service, speaking about why we do the things that we do and it does not have it really in there. >> but it is a good reminder, even if it is not but physically on the page, to keep that in mind. here we have a quick summary of some of the changes. they are small numbers on the operating side. i will point out that the energy data system here, which is on a single item, is really helping us to address the performance benchmarking requirements that we now have where city buildings will be visible to customers to
see how well they do in energy performance. that is a city adopted program. it is also allowing us to integrate our systems, our data systems with the new information and systems that we are getting from pg&e, because they are implementing automated meters on some of our customer load, allowing us to integrate those data points better. looking at our capital requests and the changes there, you can see that the highlights are the trends bay transit center efforts, where we are working with the trans bay joint power authority load as a new customer, looking at reducing our ocean generation capital project as we complete the studies that had been on our to
do list. with the close of this fiscal year. >> on the trans bay transit center, often we have a capital or expenditure item and there is no relationship to bringing in new revenue. this one is actually offset. >> thank you. that is an important highlight. to relate this to the big sheet capital pages, if you have questions, i can point you to the right lines. with that, we have concluded a brief presentation that i have of our budget. happy to take any questions. >> the treasure island question? >> the treasure island question. >> yes. so, -- no? very good. questions, commissioners? no? ok. >> on the overall financial, the
10 year financial plan, that shows the rate increases over four years. >> that is right. behind no. 5 in the binders, that is where the 10-year financial plan was summarized before. that 10-year financial plan, you will recall, is the already adopted in door, already planned implementations to the degree that there is an additional brake increase in years five through 10, that would give us -- additional rate increase in years five to 10, that would give us additional capital programs. >> those rate increases do not recover costs. isn't that correct?
>> two parts to that answer. so, our costs right now in the model, because of the $90 million in cuts that you made to the capital, it means that total costs are $90 million last. so, if we redid the cost of service study now with a smaller capital plan, your costs have gone down because those have not been added back. so, when the last cost of serviced study was done two years ago, it was on a larger capital plan that had $90 million of higher larger investments in energy efficiency renewables. so, if the plan is to add those back at a future time, the plan is to have it go with it future rate increases to do cost recovery. >> without those added back in,
how close do we get? >> on average, we are recovering costs. that is on average. some customers are slightly below individual costs. >> and then the levels of reserve that you have down here are -- i do not want to put words in your mouth, but they are adequate for the anticipated level of debt issuance? >> in addition to the risk assessment that miss an effort and her staff did in last year's budget, which showed the amount of risk that would be before us is a powerhouse or generation unit were to go down. based upon that, we believe the output at this time. >> just to point out what the numbers are for those that are not able to see this, in 2018 we would be at the bottom of the
fund balance, 8.5% of our percentage of revenue. by the end be would be back at our 15% five goal, the goal for our fund balance. >> good. thank you. >> are there any further questions hetch hetchy for -- for any hetch hetchy water and power? our next item is to go back to responses to budgeting for sewage. >> at this time, i will take public comment. >> i guess that would be me. just one brief item on the moccasin penstock. i am glad that that was raised. i remember, and i am sure the president will remember, in the
late 1980's, early 1990's, there was a contract to do work on the moccasined penstock and it kept getting deferred because of needs to balance the capital programs. to the extent that we are finally doing work that has been deferred, this kind of relates to the overall hetch hetchy infrastructure needs. we should not defer those big items, even though they are big items, because that is what keeps the system running. it often seems easier to deal with water issues that are closer to the service area than water and power issues in the country, but that is what makes the whole thing work. i just wanted to take a moment to reference moccasined and stock and other things in the up country as not being things to