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tv   [untitled]    May 2, 2015 11:00pm-11:31pm PDT

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2017. >> steve richie general manager for the water those are the emergency recollections by the water board we've included in the regulations this adds two items one that relates to temporary prohibiting potential water irrigation within 48 hours after rain event and requiring the hotels and molts not to have towel and not laundered daily two straightforward motion to be added. >> any questions or comments. >> i'd like to move the item. >> i'm call for public comment on this testimony seeing none i'll call for the question all in favor, say i. >> i. >> opposed? the motion carries next item. >> item 13 authorizing the general manager to seek the
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board of supervisors for the supplemental appropriations in the amount of $4 million for the hetch hetchy for the purpose of the temporary community crisis agreeing gas station program. >> good afternoon. i'm nancy with the chief financial officer this is for the appropriation requesting $4 million for the choice irrigation the fund will be transferred from the hetch hetchy fund to the cca program for in the morning 2 years and ask for your approval to the sfondz. >> questions or comments. >> i'd like to move the item. >> any public comment? mr. brooks are you coming up to speak (laughter) >> i don't leave so a anyway eric brooks clean
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advocacy we want to get this approved one of the colleagues couldn't be here why the city is charging the san francisco public utilities commissionenter interest i'm assuming this is common practice but noting nice not to be used to pay interest so if staff could be encouraged to answer that question. >> i think staff is going to answer that question. >> barbara hale general manager formal power it is common practice within the city. >> what it attempted to address one thing great set of payers they're two setsz of payers the multiple and the klein power sf payers have separate revenue
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streams and make sure we separately accounted for them thank you. >> yes. jason fried. >> jason fried the staff fully supports moving forward we understand that the trick or treat should our we use the cca program is a stand alone program and getting a great rate i'd like to borrow off that recite it is so, please do an amazing rated i urge you encourage you to move forward with that rate and it's a wonderful rate .8 something any other comments? i just have i'm going to vote for this i do not like the idea ever this slump but want the
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program off and running all in favor, say i. >> i. >> opposed? the motion carries north america please. item 14 working group in your opinion for the power business plan. >> finally wow. so commissioners were we pleased to present to you today, the first of two workshops that did you say discuss our power proposed business plan i'm sure you're aware of it as a century long track record of reserves for low cost power and on the important services to the family, however the power system is aging we're facing rising costs and increasing capital needs at the same time our revenues have not kept pace we're facing the long term agreement critical to our
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operations since i've become general manager it and a half years ago i've briefed you on the financial and funding concerns you have authorized raising rates for gentle fund customers as well as long term bonds for our upcoming capital needs first for the power enterprise awhile our financial plan is in balance by those rate increases and debt finances we can't continue on financial fixes we need a long term operating solution so in workshop one we'll describe our current business model and the fundamental changes in the operating environment and the opportunity to grow revenue and contain costs today one of the biggest obstacles is with he have in the excessive capacity and
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redundancy in our system relate to our committee needs as a result we're not maximize missing the value of our hetch hetchy power system in two weeks a second workshop will talk about potential business solutions our investment and resource needs and the improvements we hope to achieve i'd like to underscore we have a clear path forward our current operations are strong and we are determined to that i have it our operations to rebalance and right side our business to insure long term stability and looking forward to our questions and guidance with that, i'm going to turn it over to assistant general manager barbara hale to start the workshop >> thank you if i could have sfgovtv bring up
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the laptop slides as awe our general manager said we're about to go through workshop one the focus on right sizing the enterprise for long-term stability maximizing the hetch hetchy for san francisco so today's workshops we are going to go over how we do business and provided you the context and a little bit of history the challenges and opportunities at our next workshop on may telephone we're revenue the recommendations for how to do business in the future managing the risks that we face and the resources that we need to opportunities we face so today, we're our overview addresses as i said challenges and conditions and stunts and
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context some of that will be a repeat for some of you and some of you you may learner something new today with that let's do i have in you you know the power enterprise we sell 1 points 6 million megawatts about one million are sold to the customers lateral here in san francisco those are firmer obligations who are the customers and where are they our full service customers total one hundred and 50 megawatts you see on this slide which doesn't show up well on this slide presentation i apologize for that the one hundred and thirty megawatts of our load and our one hundred largest customers it is are spread if 3 areas of the city most are concentrated at
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the airport that's our demand what about our supply our power supply totaled 3 hundred and 95 megawatts a robust supply up country is where our renewable supply 3 hundred and 80 small qualified rubld and local in san francisco and this puts the picture of our supply and demand together what you see first are the stack of the 3 power hours kirk would do and mocking son and homage and the varying colors of blue represent the supply let's add on demand that orange line is the 3 one hundred and 50
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megawatts of firms that includes our responsibilities to mit. >> and i should point out you can see the gap in places between our supplies the blue and our demand the responsibility and that's where we make purchases and there's the market purchases overhead we have roar long in captivity and have more generation than need in the green box the electricity we sell on the market this is our expose supplies on balance 8 percent of our supply comes from the market and 92 percent from the hetch hetchy
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system it is a very important system to us and as we operate and maintain this electric business we have 4 gloelz in mind first, the compliance we have to stay in compliance with the recollections and second we want to professor the ability to continue to operate and maintain and improve the system while we provide safe and reliable and forcible service and make sure that are third, that we monoxide misses the value of the system to san franciscan they need to release the value of hetch hetchy system part of what we share and support community programs and other programs that the city values here in san francisco we have to continue to support the city and community goals to talk about more what we mean when we say community goals
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of our our 10 year financial plan we're projecting $2 million plus will come to san francisco is from our operations our low cost power we provide to the city our street lights and maintenance and operation and improvements our into and community and other benefits that brings us to the totaled of $250 million it's a long stand process of supporting the goals this is delineated in the 10 year financial plan so i'll take a pause to see if there's any questions about that part of history. >> do you want to hostile the
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raker act. >> just to talk about the raker act it actually i'll talk about that harlan i'll keep going we have a slide in the history section we're about to so it was in the flier in 1906 but that inspired the city founder to family to roll catalysts the thinking about reliable water supply and so that bore out in the package of the hetch hetchy bond authorizes in 1910 that allowed the city to begin to spend money on developing the system design and it was in 1913 as we talked about before that the raker act
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was passed here you'll see what are those raker act obligations it establishes rights goings-on and requirements on us our water and power operation the right to build the system the benefits that accrued in san francisco we provide power at 0 cost to modesto and turk lock and prohibits us from selling to wholesalers electrical to end use customers is unrestricted so we're not allowed to sell hetch hetchy power to pg&e because they're for profit we could sell it to palo alto they're not or sell it to an end use customer any end use customer can be a
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customer under the raker act it was foundational to the building and operation of the overhead hetch hetchy system we started generating electrical in 1918 with the early intact power how is it was that sales that revenue that helped us to fund the revenue for the system water didn't starter producing deliveries in san francisco until 1934 that was coyote quite a stretch of time a power system providing service and revenue that helped to fund the development of the overall hetch hetchy then 1923 with the construction of the dam and in 1924 our next power hours mocking son was became operational followed by holmes
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in 1960 and kirk would do in 19 was 9 by the time we built out as a power operation much like it is today where we've got 3 hundred and 80 meg watsz utilizing city owned this is a picture you're familiar with on our wall at 525 and our other brochures in a appealing way and for emphasis to draw out a couple of elements on the power side i talked about the hetch hetchy supplies on the extreme right the 3 hundred and 80 megawatts we didn't talk about the transition but you'll see
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the oakdale and turlock and the substation serving modus operandi even though and the one owned by penguin and those transition lines it get our power down into the bay area and from that point on pg&e owned transition lines to our customers here in san francisco the one hundred and 53 megawatts our transition where we interconnection in the middle the slide and to the extreme left any questions so far another pause moment to make sure i haven't lost you that's the operation of the system we say external highlights going from then to now things have changed let's talk about some of the
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changes and where the effect is on us thanks there's 3 major challenges 3 major categories of challenges the 3-d regulations our own first policy and the agreement within the industry derecollection there's a number of elements following the supply transition, and other elements we've talked about so electrical service is broken down into monopolies they're in control the distribution element in the in the formula and state recks your supply market are open and transparent today in a way not
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historically and the benefits of the sort of verbal integration utility have been reduced with the regulatory values and the purchases have been increased live market that didn't exist back when the hetch hetchy system was initially developed so let's dig deeper on the industry derecollection challenge first on the supply side we have wholesale market that transparent liquid and robust and m many of us remember the extreme left you see back in the early 2001 the energy crisis and the market starts it is a settle down and more oversight of the market in the current era
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09 did laced few years things have steady and transparent you pull a map up on our phone and see what the raised are today their liquid and transparent market us that presents a challenge we are the expose sales box we sell a lot of the electricity into the market for us that's a good and bad thing with we are selling we're looking at a flat steady low price and when wear buying we do but we - our budget is a based on a normal water year this assumes the expose sales and revenue and we stay it the third quarter of each fiscal year a list of (1) 400-0000 of anticipated revenue from those sales
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we don't have that rain if we don't have a low wholesale supply price we're not going to release that level of revenue that's the first functions the second is transition and as i mentioned transition emergency connections we have a number of them we are regardless of how far our power travels in our lines into the city are on our lions to the station the price is the same it's a postage stamp we move from our customers it is independent of the distance that has made it clear to us that some of the our transition lines we needed to get power to the customers are
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not necessary today to serve our customers reliably given the open assess to the transition grid and the postage stamp rated didn't matter if we bring our power from the power hours to the newark station in the middle on the bottom part of the slide we're paying the same price we're operating and maintain transition lines of acquit some distance from our mocking son power house into newark and so with the 3 connects we have to the grid that newark oakdale and warrensville we have options we don't necessarily need how you all the transition lines we have today that is a pressure on t us
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a challenge our transition assets maybe uneconomic for us to operation and the pg&e enter miblz with the transition serve only pg&e we pay pg&e for that service and have open access and pg&e has open assess requirements that works to our favor with the extradition of your interconnection agreement that presents an opportunity and moving to the expeditiously challenge our water first policy we have basically on the power side n an operating realty the water first policy reduce our operating operations responsiveness to the power needs because power is really
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treated as a biproduct of water delivery so as we see dissected our water neatest over generation and we're less able to match our supply with our demand less able to respond and in the swhoelt market we'll see a wholesale price spike if we're not in need of water we can't take advantage of the generation of sales into that favorable market because we are producing electrical as a biproduct of flowing of water for san francisco's citizens on the waterside as i say that's an operating realty only the power side and similarly our final
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external challenge is the water agreement that sets the investment priorities for us that settlement agreement classified assets in the on the hetch hetchy system is either joint or water and power and for joint assets determine that the assets would be shared the cost of those assets shared 55 percent on by power and 45 percent born by water again an operating reality we deal with but really it has the outcome of having water priorities drive the investment decisions on the hetch hetchy system heros a recap slide of the external challenges any questions on that report. >> i have one barbara.
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>> yes. >> the outcome that water priorities drive the investments could you explain that. >> well, for example as we look today at the mountain tunnel analysis what is driving the need to improve mountain tunnel are the water system needs we could afford, if you will, to take the mountain town hall from the power prospective take mountain tunnel out the service tomorrow if we plan for it the improvements could be made purchase power open the open market to replace the power we'll lose but awhile that's an option on the power side inacceptable on the waterside a decision how to implement that whether and how to implement
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that improvement is driven by the water needs and where we might choose on the power side to for example postpone an investment we have expose generation market prices for power are low and on the power side make a decision divorce of the waterside that is perhaps a pony time of an investment not a option we are a combination we have a responsibility to both our water and power customers. >> i speciality that i haven't heard it phrases is that way that's why i reacted it applies that power investments would stand behind water investments and that's not necessarily true if we choose that but we have the ability to bond those
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projects and bond those eir respect on the waterside it is not that water has priority unless we give it priority. >> i want to make sure we're on the on the same page the mountain tunnel is an example it brings water to mockingucosin you may choose to buy power somewhere but we locked both that deal the wholesale customers their paying 44 and the power company has to pay 55 so therefore someone has
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to pay the 55 or we go through the process of renegotiating maybe for an agreement i think that was what we're trying to illustrate whatever t is identified as joint under 834 you can't walk away from the power does the water wholesale customers can't pay for it so that is the challenge that we are bringing up. >> okay. >> how do we determine the 55 45. >> well, i wonder who was there around that time (laughter). >> i was there but i don't remember. >> again. >> let me try to take it then you can since you were there. >> so my understanding when we looked at all the assets power and water and joint and the
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expect was that a lot of the assets that benefit power they sized it to maximize the power generation so like mountain tunnel for example, they built it not for the amount of water be delivered but to maximize to generate in producing power there's a lot of assets that probably fall under that and so they felt that was you know benefit for the power and also customers are not benefiting from the power there was an effort to trying to determine each one of the assets what is the value as it relates to generating power for the power enterprise and how much for water so through a whole list of assets they came with the official category of