Please.

President Stacy.

Here.

Vice President Arce.

Here.

Commissioner Jamzar.

Here.

Commissioner Leveroni.

Here.

Commissioner Thurlow.

You have a quorum.

Thank you.

Before calling the first item, I'd like to announce that the San Francisco Public Utilities Commission acknowledges that it owns and are stewards of the unceded lands located within the ethnohistoric territory of the Mawekma Loney tribe and other familial descendants of the historic federally recognized Mission San Jose Verona Band of Alameda County.

The SFPUC also recognizes that every citizen residing within the Greater Bay Area has and continues to benefit from the use and occupation of the Mawekma Alonee tribe's aboriginal lands since before and after the San Francisco Public Utilities Commission's founding in 1932.

It is vitally important that we not only recognize the history of the tribal lands on which we reside, but also that we acknowledge and honor the fact that the Mawekma Loney people have established a working partnership with the SFPUC and are productive and flourishing members within the many greater San Francisco Bay Area communities today.

Item three, approval of the minutes of July 8th, 2025.

Commissioners, are there any corrections or comments on the minutes?

Seeing none, let's take public comment.

Remote callers, please raise your hand if you wish to provide comment on item three.

Are there any members of the public present who wish to comment on this item?

Seeing none, moderator, are there any callers who have their hand raised?

Ms.

Lanier, there are no callers in the queue.

Thank you.

Thank you.

Commissioners, could I have a motion and a second to approve the minutes?

Motion to approve the minutes.

The last meeting.

Second.

Thank you.

President Stacy.

Aye.

Vice President Arce?

Aye.

Commissioner Jamdar.

Aye.

Commissioner Leveroni.

Aye.

Commissioner Thurlow.

Aye.

The item passes.

Thank you.

Before calling general public comment, I just want to acknowledge Ms.

Lanier today.

It is your first anniversary today or sometime this week since joining the SFPUC.

And I just wanted to say thank you for your service.

How glad I am that you're here and how well you've served the commission with always thinking about how to improve and streamline our procedures.

So thank you.

And I'm glad you're here.

Item four, 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.

And the commission values civic engagement and encourages respectful communication at the public meeting.

We ask that all public comment be made in a civil and courteous manner and that you refrain from the use of profanity.

Thank you.

Remote callers.

Please raise your hand if you wish to provide comment on item four.

Are there any members of the public present who wish to comment on this item?

Seeing none, moderator, are there any callers who have their hand raised?

Ms.

Lanier, there are no callers in the queue.

Thank you.

Item five, report of the general manager.

Thank you, Ms.

Lanier.

Item five A's annual capital financing plan for fiscal years 25-26.

And Nikolai Skloroff will be presenting.

Good afternoon, Commissioners.

It's always a pleasure to speak to you and particularly on an agenda item where we don't proceed with a stack of uh legal documents that you have to review.

This is simply an informational item.

Each year for the past 10 years.

Uh the SPC staff has prepared this report to you at the beginning of each uh fiscal year.

As you know, in February, you uh prepare uh you approve the uh 10-year financial plan that outlines the financings that are going to be undertaken for the next decade.

What we do at the beginning of the year is make this presentation to you uh to allow you to anticipate the large commitments that we will be bringing before you over the course of the year.

With that, if I could uh pull up the slides, please.

Uh what we try to outline for you is each of the major commission agenda items that we'll be bringing before you for the year.

We're always guided by our debt policies.

I have two members of my team here, Eric and Giselli, who have helped prepare this presentation.

As you know, the SFPUC has substantial debt outstanding, about 10.7 of uh borrowing that we've uh undertaken.

In addition, we have some uh undrawn amounts under state and federal loans as well as our commercial paper program.

And as you approved in February, we have about 11 billion dollars of capital to undertake for the next 10 years, and that's the heart of uh what we are going to be speaking about, about 10 billion dollars of borrowing that will be undertaken over that period.

This uh chart uh presents to you the borrowing that we currently have outstanding.

As you can see in the orange, most of our borrowing is in the form of revenue bonds under the three enterprises.

Each enterprise has its own bond program.

We also have uh substantial WIFIA loans for our wastewater uh program and smaller state revolving fund loans for each of those programs.

This gives you a more detailed view of all of our debt as of uh June 30th, together with the amounts that have yet to be drawn on those various programs.

Another important item that we speak to you about each year and address over the course of the year are the bond ratings on each of our uh four uh each of our programs.

We have three uh bond programs that are rated, uh water, wastewater, and power, as well as Clean Power SF has a rating, although does not yet have any outstanding debt, but that rating is significant in our ability to procure power at uh most favorable costs.

Uh as uh outlined in the city charter, the SFPUC is required to set rates to maintain high ratings.

Of course, there are many factors that determine our ratings, some of those beyond the control of management in this commission, but it's been our practice to maintain high ratings, which have given us access to low rates, and we currently have high ratings.

We do have two ratings with SP that are on under negative outlook, wastewater and power.

Uh we are currently in discussions with SP and FITCH doing their annual surveillance reviews of our power ratings, and we expect to come back to you with the results of those conversations.

While you see us mostly when we come to you for approval for new financings, and that is an important part of uh what we do, obviously, what we are trying to do is make sure that the funds are always in place to keep the hundreds of capital projects across our enterprises underway and funded uh first to allow us to approve contracts and then to actually expend money on the work that is being done.

But out of view is where we do much of our work in terms of managing the this large program that's already underway.

Uh presentation of information to the marketplace, information for the rating agencies and investors, keeping our commercial paper program uh rolling constantly uh throughout the year.

We're doing this in the environment with uh very unstable interest rates as uh we've discussed in the past.

We've been experiencing a lot of volatility, and that uh determines what we will do over the course of the year.

In particular, as we are borrowing new money, we're always re-evaluating the opportunities to save money by refinancing as well.

So for the year ahead, here are the major things that we will be bringing to you.

One of the important things we've been working on is a uh update uh to our debt policy to reflect current best practices, reflect changes that have occurred here at the PUC, and also to better uh synthesize between policies and procedures.

We'll be bringing that to you in the first quarter.

We'll also be returning to you with amendments to our municipal advisor contracts.

These are the folks who have a fiduciary interest and advise us as we uh prepare our financings and manage our outstanding debt because of the growth of our program, because of the new things we've been doing, whether it's applying for Army Corps SWIFT P loans, uh pursuing Los Alcaras uh financing.

Uh we've had more costs uh for financial advisors than had been originally anticipated, and so we'll amend hope ask to amend that contract and then provide sufficient time for new RFP to be issued for financial advisors.

Um we will uh be returning to you also in the first quarter with an uh additional loan under our master agreement with WIFIA.

A key area that we'll be uh returning to you for is letters of credit.

We have several letters of credit that need to be renewed, and as you will recall last year, uh the Board of Supervisors granted the SFPUC the authority to expand the interim funding program by 950 million.

We expanded the water and power uh programs, and this year we would like to use some of that authority to expand the wastewater program.

That will allow us to release controllers' reserves through the fall, and then in the spring, we will return to you for a wastewater bond transaction, and that will be the only bond transaction that we expect to issue this uh current year.

Uh we will, as we did this year, uh return to you as well for uh a review of our disclosure obligations with our uh disclosure council prior to that bond transaction and uh we have some smaller uh loans as well.

Hopefully, by the end of the year, we will return to you for approval of that Army Corps of Engineers uh SWIFT P loan, which is very similar to a WIFIA loan.

Uh we've been approved to apply for up to 615 million, but uh are in discussions with the Army Corps today about uh the bonds.

Um lastly, uh we'll continue to manage our interest rates in this dynamic uh environment that may mean presenting to you additional refunding opportunities if those become available.

Uh certainly we are going to continue trying to manage the mitigate the risk of our build America bond subsidy, uh and we have some additional financing uh potentially for that.

Uh and lastly, we will continue our green bond reporting and are looking at potentially expanding that over the next year together with uh uh a new debt annual debt report that would replace uh the annual report that the RBOC had previously uh published in the past.

And with that, I'm happy to take questions.

Thank you so much.

Uh Commissioners, questions or comments, Commissioner Arce.

Um, thanks, President Stacey.

Thank you for the overview and and walking us through all the all the um the landscape of the capital financing plan.

I was just wondering on slide, I'm sorry I didn't catch the number, but it's uh it begins with four wastewater and power, it might be slide eleven.

And if I could have the slides again on it's the wastewater and power transactions, and so I think the context there was you were saying these are the only transactions, I think it's 11, Tiffany.

Um the only transactions planned for in the upcoming horizon for wastewater.

And so are these particular transactions designed to refinance that existing debt and bring down the wood repayment in in interest over the long term?

I was going through that very quickly.

Let me uh slow down and and explain it a little better.

The um there are two pieces.

First, we will be uh coming to you with uh our interim financing program, the letters of credit for our commercial paper.

Um, we expect that first we will come to you for a portion of the wastewater uh capacity.

We have 500 million dollars of untapped capacity from the Board of Supervisors.

We expect to use perhaps 300 million of that this year.

Um what we want to do with that authority is um access it incrementally so that we're not affecting our pricing for our credit facilities.

In addition, for both uh uh wastewater and power, we have uh credit renewals, which are these letters of credit typically are entered into for three-year periods, and so we're constantly renewing those each year.

We have several that need to be renewed.

Then separately, we'll come back in the spring with the one and only bond transaction, and that will be the wastewater bonds that are already called for in the 10-year plan.

Okay, got it.

The only reason I locked on to that item was just having been in multiple conversations at the commission and um I was with Steve at uh uh AJM Ritchie at the Bosca board meeting to kind of just listen in and kind of hear what folks are saying and folks are definitely paying attention to the impact, at least in San Francisco, for the wastewater capital um expenditures and the capital plan and its impact on rates for the long term.

So just appreciating um and probably we'll end up kind of focusing here and there, and you know, hearing wastewater as something that seems to be one of the big drivers of when we look at long-term rate setting and alignment with our affordability goals and targets is something that just kind of jumps out of me.

That's the only reason I locked onto that one for wastewater.

Yeah, and you're not seeing water on here, not because we don't have capital projects underway, but we just completed the water financing in June, so we won't be coming back for borrowing for two years for that, but for wastewater, it's been a while since we've done new money borrowing, and uh it's obviously a program that um is uh well underway and and has costs.

All right, thank you.

Commissioner Leverone, this is informative.

Just a couple of clarifications.

Uh one is there a reason for what uh Fitch ratings, not rating uh the water enterprise and wastewater enterprise um as well as a clean, well, clean power, I understand.

Uh these were decisions that preceded me joining the SFPUC, but what I can tell you is that for large programs, it's typical to have at least two ratings.

There are some uh enterprises that choose to have three or even four uh ratings.

We have we have chosen historically to only have two ratings.

There is an investor need for a minimum of the two.

Beyond that, there's a lot of work that goes into each of those relationships, and then historically they made decisions about which rating agencies would be advantageous to have relationships with.

And then with the SP, it sounds like you're working on whatever issues or questions that they need to get comfortable with us on changing the negatives to a stable or and to highlight this for you, this was rather unusual uh uh action by a rating agency.

Um, and I say this as someone who was with a rating agency early in my career, um, typically when uh rating agencies make a change in a rating, uh that it follows conversations with the issuers.

Um in the wake of the wildfires in uh Los Angeles, SP took action across many uh power entities and put them on negative outlook, um, and then began the conversations after that.

We're having those conversations now, and they're very focused on wildfire uh risks.

Okay.

And then on slide three, I just was the future debt issuance.

We're at a with the untapped dollars, we're at about 13.1 billion uh that's available to us uh that we already have outstanding.

Are we looking at in the next 10 years possibly another 10 on top of that?

So we would be at 20, possibly at 23?

Yes.

Uh now, of course, because we've been issuing bonds historically, those bonds are constantly being repaid as well.

So it doesn't mean that our debt will increase by another 10 million.

It means we'll undertake 10 million of borrowing.

Recall also that we've done several refinancings where we've been able to reduce the amount of outstanding debt.

So there is both ebbs and flows in this.

So similar to what happened this last time when you did a great job when on the 50s, was it like 53, 56 billion million that was saved, that that would then be able to be used for other debt going through the city?

So it's staying level, but.

And for example, with our build America bonds that we refinanced uh based on your approval in in May, um, those bonds had originally included what what's called a debt service reserve fund.

Basically, SFPUC had borrowed 10 percent more to put into a reserve fund to secure the bonds.

And since that was a common practice in the marketplace and a common practice for the SFPUC in the past, but now because of our high ratings, rating agencies and investors have gotten comfortable, we don't need to do that.

So when we were refinancing, we were able to reduce the amount of outstanding debt uh by releasing those funds.

Thank you.

Commissioner Jamdar.

Thank you, President Stacey.

Uh, to follow up on Commissioner Leveroni's question, does the negative uh rating on the wastewater enterprise going to imp it will it impact the ability to have new credit uh sort of facilities for that enterprise, or how much will that impact?

So um thank you for that question, Commissioner.

I spoke to you about the negative um uh outlook for the power.

Let me talk a little bit about the negative outlook on wastewater.

When we came to the rating agencies with our last transaction uh last year, um, they did apply a negative outlook.

The principal reason was um the concern by SP, and I want to highlight that Moody's confirmed their rating, SP confirmed their rating, but applied a new outlook to the rating.

Um that negative outlook was based on the fact that our projections for debt service coverage were declining over time.

Um with uh the direction of the general manager and the CFO, uh the entire team has been working on developing stronger debt service coverage.

That was reflected in the 10 year plan that was presented to you in February.

Um as a result of that, I think we were all gratified that when we went for the ratings for the water enterprise we were able to maintain those and not uh see any negative impact.

SP, as we've described before, has over the past year published a number of reports uh raising concern about the entire water sector, and by that I refer to both water and wastewater together and have applied a negative outlook to the entire sector.

So it's not just the SFPUC, although obviously we also have uh factors that are specific to us.

But our our hope would be that the stronger projections that we've uh presented already and the work that is underway for the 10-year plan that will be presented this coming February will help us in addressing the rating agency's concerns when we come for the bonds next spring.

Thank you and your team for a very informative as ever presentation.

I had a couple of questions, and I think uh you answered it on slide three when Commissioner Leveroni asked the question, the excluded amounts of that 10.7 billion dollars of outstanding debt, so they would be uh when we draw down on those three different sources, they would be additive to the 10.7, or would they replace any of that 10.7%?

They would be additive.

It's all additive.

Uh and maybe just to clarify, so we apply for loan amounts from WIFIA and SRF.

Uh those are reimbursement programs.

So we we first fund those costs, and then we ask for the reimbursement.

So we know how much we're gonna borrow, and we know what the interest rate is on those amounts, but we haven't actually borrowed, and that's what those undrawn amounts are, the portions that we haven't actually drawn on.

Got it.

Thank you.

And I had a question about the future of green bonds with the sort of anti-environment trend uh of the federal government lately, will that affect the availability or um our ability to fund using green bonds?

Uh maybe that's too conjectural.

Well, I think I think this is a matter uh that is uh being discussed a lot in the marketplace uh currently.

Uh clearly the view in Washington is very negative as it relates to acknowledging climate change and certainly anything proactive like green bonds.

At the same time, um it's also true that particularly uh international investors, but also particularly younger investors are are still concerned about sustainability and climate change.

And um uh unless, of course, you have a different direction for us, it's our intention to continue to do whatever we can to bring additional buyers to each of our transactions, including uh green bonds and and providing information about green bonds.

I should also highlight that as a separate question.

The SEC, even in this environment, um has been very clear that uh as issuers, we have a anti-fraud responsibility for disclosing the risks of climate change.

And I think it's fair to say, you know, I spent most of my career not as part of the SFPUC, and I would have said this to you before joining that the SFPUC is known for being uh a leader in terms of disclosing and um addressing uh climate risk.

I'm glad to hear that.

And I also uh think it makes complete sense to bring as many buyers in as many different ways to the table as possible.

So I appreciate that effort.

Uh Commissioner Leverone.

Um just one last question on my part.

Um are we, like with our letters of credit, lines of credit, are we uh in line with all the covenants from the institutions that they may have for us?

Yes, we we have to report to them regularly and uh we are constantly renewing those as well.

Thank you so much.

Uh seeing no further questions or comments, let's take public comment.

Thank you.

Remote callers, please raise your hand if you wish to provide comment on this item.

Are there any members of the public present who wish to comment?

Seeing none, moderator, are there any college who have their hand raised?

Ms.

Lenaret, there are no colleges with their hands raised.

Thank you.

Thank you.

Madam President, that concludes my report.

Thanks.

Item six.

Consent calendar.

Commissioners, any comments or questions on the consent calendar?

No.

I I did have a couple questions on 6E, and just a small clarification on 6F.

On 6E, the awards to the four environmental consultant companies, um, it looks like each of those companies work on an as needed basis.

And so I think when you have a particular project, you look to the expertise and the availability and the cost of the individual uh as needed companies.

Is that right?

Hello, Ms.

Frye.

Thank you for being here.

Uh good afternoon, President Stacey.

Uh yes, Karen Fry Environmental Management and Infrastructure Division.

So, yes, each of the um uh firms that have a contract with us have a number of different uh subconsultants and LBEs on their team.

Uh so when we get a new project or a new task, we first look to see if we have the expertise in-house and availability to do that work, and if not, then we go and look at our as needed contracts and we look at you know what specific expertise is needed, which firm has that expertise, and we do specifically look at LBEs and their capabilities.

Thank you.

I'm I'm glad you mentioned LBEs in particular.

Uh I was looking at some of the numbers, and three of the four firms came in with uh expected LBE percentages higher than the thirteen percent minimum.

I think Woodward Woodard and Curran and ATS joint venture came right in at 13 percent.

Panorama came in at an ambitious 27.5%.

Kudos to them, and they are already exceeding um that expectation.

But I note that um the other three are below their projections, and ESA and Woodard and Kern in ATS joint venture are significantly below their LBE percentages.

And I could see through the memos that you have worked a lot with the contract monitoring division and you've worked with the individual consultants to try to make sure that they're fulfilling their commitments to hiring LBE um subcontractors.

When you decide to award on an individual project, do you consider it sounded like you do consider uh the types of LBE subcontractors that may be included in a particular project?

Is that right?

Yes, exactly.

Um we have uh a lot of different uh disciplines on this contract.

So we'll have biologists, paleontologists, air quality, noise, there's a lot.

So we have uh if we have a need, we can find a team that actually has an LBE that can perform that work, um, and then we can actually direct that contract work to that particular prime.

So that does happen often.

Uh and I have a recent example.

We had a hasmat phase one report and it needed to be done, and there was one firm that had an LBE that can do that work.

So we directed that work to that firm specifically for that LBE, even though other firms could have done the work.

Great.

So yeah, I'm glad to hear that.

And I hope that ESA and Woodard and Kern and ATS joint venture will continue to focus their efforts on uh including LBEs in the work.

Yes, we will be working with them to do that.

Um one point I will make the Woodard Curran ATS joint venture, the JV partner, ATS is an LBE, so they have a requirement to get a certain amount of the work.

We actually exceeded the work for that JV partner.

So uh we we have been directing work to that firm.

It looked like from the reports that their LBE compliance thus far was pretty low, 3.7%.

Yes, because so their JV compliance part is separate from their LBE got it compliance part.

Got it.

So the LBE JV partner were exceeding, but for the other LBEs we were not.

Great.

So, but we'll work with them to make sure we get that.

And thank you for clarifying that.

Yeah.

I appreciate it.

Thanks.

Okay, thank you.

And then I had oh commission uh Vice Commissioner Leverone, I see your name up on the screen.

Is that from the last time?

Okay.

Vice President Arce.

Um thanks, Chair Stacy.

The question I had was just piggybacking off with some of the President Stacy had said.

Sorry, I was trying to catch you as you were before you sat down.

But it was just um something that I was asked, something I was asked in a community meeting, and I think that just opened the question just opened up the door to try to get the answer because I couldn't answer it.

When we're looking at the LBE components of uh this or any other contract, the LBE certification work happens at the contract monitoring division over within the city administrators office.

Is that is that the right answer?

I was asked who's certifies, and that's their role.

That's correct.

And then do we do we play any additional role in terms of some of our hyper-local contracting goals or any other additional kind of certifications in-house over at the PUC or we just simply rely on CMD for that component?

I believe we're just relying on CMD, unless Kindra wants to correct that, but that's my understanding.

That that kind of was my answer, but with the caveat that I wasn't certain that, but at some point I try to find out and here it is.

So thank you.

Yeah, yeah.

Of course.

Thank you.

And then I on consent calendar item six F, it's sidewalk uh restoration work.

I remembered uh that the commission a few months ago approved an extension of a contract for sidewalk restoration work.

Is this the contract that replaces that contract that we extended or is this something different?

Yeah, hello crucifix are built in, as a manager, Services Cor Division.

This is the the replacement contract to take it for the next three years.

Okay.

Great.

Thank you.

That's it for me.

Uh let's take public comment on the consent calendar.

Please raise your hand if you wish to provide comment on item six, the consent calendar.

Are there any members of the public present who wish to comment on this item?

Seeing none, moderator, are there any college who have their hand raised?

Ms.

Lenner, there are no callers with their hands raised.

Thank you.

Thank you.

Commissioners, if there are no further questions or comments, uh could we have a motion and a second to approve the consent calendar?

So moved.

Seconded.

Thank you.

President Stacey?

Aye.

Vice President Arce?

Aye.

Commissioner Jamdar?

Aye.

Commissioner Leveroni.

Aye.

Commissioner Thurley.

Aye.

Item six passes.

Thank you.

Item seven.

Approve the water supply assessment for the proposed Freedom West 2.0 project.

Good afternoon, Commissioners.

Steve Richie, Assistant General Manager for Water.

Today you have before you actually two items seven and eight, and I'll talk about each one separately.

But there are some comments that will apply to both.

Item seven is the water supply assessment for the Freedom West 2.0 project.

What a water supply assessment is basically an approval by the commission of a water supply assessment of a project and how much water it's going to use and how it's going to use that.

That is approved by the commission, and then it goes to the planning department for use in the CEQA process.

So you're not being asked to approve the project, you're just being asked to pass on to the planning department the document that they will use in the process of reviewing the uh the project under CEQA.

This is part of the overall program for assessing water supplies for new developments.

The base document that's referenced in the documents here is the urban water management plan, which is a broader document looking at all of the proposed developments.

The next one actually is coming up next year, so you'll see a new urban water management plan next year that will look at a broader suite of things, and then as individual projects come forward, uh if they have in these case uh a number of housing units that's greater than 500, uh then they require an individual water supply assessment in addition to the analysis that was provided on the on the overall level of development out there.

But again, this is not passing judgment uh on the project itself.

Uh this is merely moving that uh document forward for sequel analysis.

Uh this dates back to the 1980s when the the uh the legislature passed laws that basically said you know people should stop just approving projects without knowing if there's enough water for it.

Uh and that's what these documents basically do.

And I'd be happy to answer any questions.

This one, by the way, is about 2300 units.

This is a pretty big project.

Uh, but again, uh all the new projects we see these days have very low water use on a per capita basis.

Uh so uh we feel you know very comfortable in uh recommending that this is uh one that should definitely be passed on.

Thank you.

Uh Commissioners, questions or comments?

Commissioner Thurlow.

Um one thing that I wonder about is when these projects come forward, we have really, it seems like low-use water for all of these units.

When the projections are made for the demand that we see, are the new units in those um multi-unit housing projections all assumed to have sort of comparable levels of low water usage per unit, or are these or or is there sort of is it based on like historical amounts of water usage per unit?

They're normally very low water level use uh across the board.

Uh the plumbing code requires just very low water use uh fixtures at this point, so new developments all have that in addition as a separate requirement uh under separate code sections in the city, we actually require that people evaluate on site water reuse uh for developments of a certain size.

Uh so those might actually have an extra level of uh you know self-containment as you as it were of the water use, but uh the the basic water use per unit is roughly about the same in all of these units.

And it's sort of consistent or lower than the projections used to sort of anticipate citywide water usage in the future.

Yeah, these are all you know, you know, San Francisco has invested in water conservation for years, and we will continue to, um, but a lot of that was just cat, you know, was moving forward where ultimately the what the plumbing code has caught up uh and then just low low water use you know fixtures just are the norm now.

Uh it's it's really incredible, you know, how low water use has gotten on a per capita basis.

Thank you so much.

And I I had a question uh Mr.

Ritchie on the um the conservation measures that will be needed during dry years under scenario two, it looks like uh we would still have uh water use reduction of no more than 20% system wide, and then under scenario three, we would have a water use reduction system wide of up to 36 percent.

When projects, these new projects that come in, both item seven and item eight today, with so much conservation already in place.

Are you expecting these projects also to be able to further reduce?

Um no, those numbers are uh for system wide, so uh I think we we grappled with this issue pretty uh extensively a couple of years ago.

Does this mean you know these really low water users have to reduce even more?

Uh and the answer is no, they're already about as low as they can go.

Um we do have uh uh as part of our agreement with our wholesale customers uh that any time that we call for uh reduction in use system wide, we actually will call for at least five percent in San Francisco.

So frankly, because uh you know nobody nobody wants to not be trying to use less uh in a drought if there's really a drought on.

So that's where we came up with that 5% number, is kind of the the minimum that everybody should try to achieve uh in a drought in San Francisco.

But those numbers of 20% and 35% would apply system wide, and there's much greater opportunity for conservation in the wholesale customer area.

Thank you.

Uh Commissioner John Darr.

Thank you, President Stacey.

Um, AGM Ritchie, I have a question kind of covering both of these items and a little more general.

Uh the recent uh sort of exemption uh on sort of residential projects from CEQA.

Would that impact this kind of a alternative water supply study uh in the future?

So is this the last couple or um this?

Yeah, this is not actually an alternative water supply study.

This is just basically, you know, what their what their uh the assessment of what their use will be uh that's just built in, like I said, it's it's frankly built into the plumbing code now.

Uh so um I don't know, I haven't I we haven't looked at, you know, will there be a change in the request for water supply assessments relative to the SEQA process?

Uh it affects the SQL process overall, which I'm not an expert in.

Uh so it it it may continue that we still have to do these, uh, you know, that they're not a problem to do, uh, but the sequel process itself, yeah, that is obviously in a little bit of flux with uh the changes in legislation going on.

And what is the approximate cost of doing uh an assessment like this?

Uh I couldn't tell you that.

I will might look to.

Do we have any idea what what uh WSA costs?

Well, I meant probably more what the what the developer has to do.

Yeah.

We should have a description.

Got it.

Yeah, so it's it's we have to put in our staff time to you know put the documentation together.

The report is actually produced by the developer, and that's generally part of their overall project description.

So it's not really much of an extra cost.

Uh it's just the statement that uh you know it needs to be done as part of the project uh description.

Okay.

I had a follow-up question to Commissioner John Dars.

Um my recollection is that there is a requirement to do the water supply assessment, both in CEQA and state law separate from CEQA.

Am I remembering that correctly?

Um, the basically the water supply assessment is focused on doing it for CEQA purposes.

It's it's its own code section, but it says do it for CEQA purposes.

I see.

Okay, thank you.

Uh Commissioners, if there are no further questions, uh Ms.

Lanier, let's take public comment.

Remote callers, please raise your hand.

If you wish to provide comment on item seven, are there any members of the public present who wish to comment on this item?

Seeing none, moderator, are there any callers who have their hand raised?

Miss Lanier, there are no callers in the queue.

Thank you.

Commissioners, could I have a motion and a second to approve item seven?

So moved.

Seconded.

Thank you.

President Stacy?

Aye.

Vice President Arce?

Aye.

Commissioner Jander.

Aye.

Commissioner Leveroni.

Aye.

Commissioner Thurlow.

Aye.

Item seven passes.

Call item eight, please.

Call the item.

Yeah, go ahead and call the item.

Item eight.

Approve the water supply assessment for the proposed one oak street project.

And Commissioner Thurlow would like to make a comment before the staff presentation on agenda item eight.

Before we consider item eight, out of an abundance of caution, I would like to disclose a professional relationship under section 3.214 of the San Francisco campaign and governmental conduct code.

Item eight involves consideration of a water supply assessment for the One Oak Street project, which is being developed by Emerald Fund.

Mark Babson is a principal with Emerald Fund, and Mark and I have volunteered on occasion on a committee together at our children's school.

Thank you.

Mr.

Richie.

Alright.

This water supply assessment is for the separate project, the one Oak Street Project, which is actually a much smaller project.

It's along Market Street.

And in this case, they are have about 541 dwelling units.

So it's just above the threshold for needing to do a water supply assessment.

So all of the comments that I made previously apply to this development as well.

Thank you.

Commissioners, any comments or questions on item eight?

Seeing none, let's take public comment, Ms.

Lanier.

Remote college, please raise your hand if you wish to provide comment on item eight.

Are there any members of the public present who wish to comment on this item?

Seeing none, moderator, are there any callers who have their hand raised?

Ms.

Lanier, there are no callers in the queue.

Thank you.

Thank you.

Commissioners, could I have a motion and a second to approve item eight, please?

So moved.

Seconded.

President Stacy.

Aye.

Vice President Arce?

Aye.

Commissioner Jamdar?

Aye.

Commissioner Leveroni?

Aye.

Commissioner Thurlow.

Aye.

The item passes.

Thank you.

Item nine.

Approve amendment number three.

It's a contract number PRO.0152, power scheduling coordination, and related support services with APX Incorporated.

Good afternoon, Commissioners.

My name is SUNY Jones, and I'm the manager of wholesale retail services for the Power Enterprise.

Could I have the slides?

Thank you.

Okay.

The proposed agenda item before you today would approve amendment three of the power scheduling coordination agreement between the San Francisco Public Utilities Commission and APX.

This amendment increase, this amendment increases the not to exceed amount by $3.1 million for professional services and $363 million for pass-through charges.

Additionally, staff request a three-year extension for a new contract term of eight years.

We are requesting amendment three prior to issuing a new RFP or an RFO because we believe that prior to issuing a new RFO, the SFP should build up and enhance internal expertise and in-house capabilities.

We believe these improvements will streamline the new RFO and make it accessible to a broader range of potential bidders.

So in slide one, we describe the reason the SFPUC requires a scheduling coordinator.

As you may know, HeCHECI and Clean Power SF transmit power via the California Independent System Operator or the CAISO.

To participate in the CASO market, you must be a CAISO certified scheduling coordinator, or you must contract with the certified scheduling coordinator.

The SFPUC is not a CAISO certified scheduling coordinator, so we contract with APX for that service.

The next slide describes the CAISO pass-through costs that are invoiced by the CAISO and paid by APX on the SFPUC's behalf.

The SFPUC incurs CISO costs for participating in the CAISO energy market.

These pass-through costs are fixed and non-negotiable in any scheduling coordinator service scenario.

Some of these costs include charges for transmission, charges for electricity, and charges to maintain grid reliability.

These are pass-through cost only, and APX does not charge the SFPUC additional fees for the service.

The next slide outlines the previous amendments to this contract and the justifications.

An important point to call out here is the extreme increase of 636 million in the second amendment.

This was due to a significant and unforeseen increase in energy market prices.

These market dynamics were beyond the scope of what was anticipated at the time of the original contract, at the time the original contract amount was negotiated.

This amendment provided the necessary additional funding to ensure uninterrupted service and compliance with operational requirements.

The main drivers for these higher than expected prices were supply chain delays, global energy shortages, trade disruptions, the Ukraine war, and extreme weather.

For some context, in 2021 and 2022, Clean Power SF's KISO pass-through increased 197%, and Hedgehog Power increased 67%.

As mentioned earlier, if the Third Amendment is approved, the increase and the extension, we plan to use this time to strengthen in house capabilities and build additional in-house expertise to streamline and simplify the RFO process.

To accomplish this, some initial steps include working with the Moccasin Power System operators to install automated systems in the powerhouse.

APX currently manages these automated systems for the power system operators, and installing these systems locally will further the SFPUC's in-house capabilities and allow additional independence.

In this slide, we summarize the contract and its amendments.

While we recognize that the overall financial scope is considerable, it is important to underscore that the vast majority of these costs are the CISO fixed non-negotiable pass-through charges.

In our last slide, staff is requesting the commission to authorize the SFPUC general manager to increase contract capacity and add 3.1 million to professional services and 362 million for KISO pass-through charges for a total not to exceed an amount of 1.26 billion.

This is the end of our presentation.

Please let me know if you have any questions.

Thank you.

Thank you.

Commissioners, uh questions or comments.

Commissioner Leverone.

KISO.

If you could maybe get a little uh more of an explanation of what that is and why we need to belong and why we don't have internal.

So the California independent system operator controls the Western grid, the whole transmission and the western grid, so California, Southern California, and in order to participate in the energy market, you have to be a market participant in the ISO.

So and in order to participate in the ISO, you have to have a scheduling coordinator or be a or be a certified scheduling coordinator.

If for some reason we wanted to have it sounds like we might be moving to have our own.

And the CISO pass-through costs, whether we were at our own scheduling or not, those would never change.

Whatever it is, it is they're based on, yeah, they're based on market prices, and they're based on cost to do business with the ISO or duct cost to do uh energy trading and purchasing in the ISO.

Okay, thank you.

Uh Commissioner Thurlow.

Thank you so much.

Thank you.

Um, the mic's not on.

Mike's not on, sorry.

Um, my question's related to the professional service fees, which seem like they've gone up from uh on an annualized basis from the existing contract.

Um, is I'm wondering why that is, and also is part of is part of the goal to reduce the overall complexity associated with the contract so that you have more potential bidders, and are there more potential people to bid?

There are potential bidders, but part of the problem or is part of the problem that I just described, us not being having our own powerhouse automated, APX takes care of a lot of that, and a lot of bidders are not interested in taking on that responsibility.

We have some issues with credit and cash flow that also APX takes on that we don't have, you know.

But we think that if we could just kind of beef up in-house, we could attract more bidders.

And as oh, I'm sorry, and as far as professional services, you know, that's just the admin part of being a scheduling coordinator.

It's the they filter information down to their customers.

The ISO won't talk to you directly if you're not an SC, so you have to go through a register uh registered ISO SC to get all the communication that you need from the ISO.

Okay, perfect.

That makes sense.

Thanks.

Um, I had a couple of clarifying questions.

Most of the costs of these pass throughs are then passed on to the customers, right?

So if somebody's we pay these costs that SFPUC pays these costs up front, but then the command of the operating budget, if that's so is it for power that we sell and power that we use?

Is that right?

It's any kind of any kind of transaction within the ISO, buying, selling energy, transmitting energy, uh scheduling load.

It's it's every type of transmission that that we that we do in the ISO.

Okay.

And then uh you commented on this a little bit just in response to Commissioner Thurlow's question on page two of your staff memo, um you uh discussed that the pros the proposed amendment will provide continuity of service while the SFPUC strengthens internal capacity and expertise, and then it goes on to say enhancing in-house resources will allow the PUC to refine the scope and technical requirements, and is expected to result in a more competitive and diverse bitter pool.

So, is APX their through their professional services contract?

Are they helping to educate and train the SFPUC?

They are offering to help us get better at doing some of these things more independently.

I see.

And uh you also mentioned in the memo that it makes more financial sense at this point to use APX than to our ourselves certify.

Um, well, we're not ready to certify, so we would have to use APX, and even even after APX, we will still need a scheduling coordinator for a number of years.

But as I said, our long-term goal would be to try to move into being our own scheduling coordinator.

I see.

But there's a lot to that.

And can I ask you, I what what are some examples of the kinds of expertise that you need to develop in-house with so I mentioned a little bit at the Moccasin Powerhouse, there's these automated systems that they don't have installed in the powerhouse, that APX actually takes on that responsibility for them.

So if we could get those kind of systems installed in the powerhouse, we could take that language out of the RFO.

Those kinds of things.

And there's a lot of other like smaller things, but those are the two the two larger hurdles.

And when we did go out for the last RFO, I did speak to some of the people that I thought were gonna bid in, and those were some of the reasons that they weren't interested in taking on those kinds of responsibilities.

I see.

So as the PUC takes on more of those responsibilities, then it may be possible to attract more better.

Exactly.

Yeah, sure.

Yeah, thank you.

Good afternoon, Commissioners.

I'm Catherine Spaulding, Deputy Assistant General Manager of the Power Enterprise.

I think too, some of the questions that you've been asking are around what do we need to do specifically within the Power Enterprise so we could become our own scheduling coordinator in the future.

So as Ms.

Jones was explaining, we're not quite ready.

Um, one thing we would have to do is set up a 24-7 scheduling, real-time scheduling desk.

Right now, that doesn't really make sense for us in terms of the time and resources in order to get that up to speed.

Um, the other key thing that we are actively working with the controller's office and with the SFPUC finance is um a direct debit um capability because the Cal ISO requires payment within seven days.

And if you don't make those payments right on time, you're out, you're penalized.

It's extremely high risk for our operations, and so because of the way the city operates and the way we issue payments, we're not able to be responsive, having a direct relationship with the Cal ISO.

This is really the primary reason why we have to contract out for those scheduling services right now.

But this is something that we are um as we are growing and maturing as an enterprise.

This is something that we are um seeking to solve, um, but we're not quite there yet, which is why these proposed um amendment for an additional three years is before you for consideration today.

Thank you.

Thank you.

Commissioner Jamdar, did you have questions or comments?

Um, I have a quick question about how this impacts rates.

So clearly, this cost of Kaiso passed, but the costs have gone up over the years.

Uh the rates have not gone up for the current year, as we heard a couple of months ago.

So where is this?

How is this accounted for?

This increase was just something that was anticipated and was therefore just part of projected rates.

I'm just curious how this unexpected it was a 200% increase in the last five years.

Is that likely to lessen over time or expect it to sort of stay on the steep in class?

Oh no, well, I will say that that second amendment that we pointed out was very extreme.

And then when we did do the numbers to come up with the third amendment, it was it's stabilized quite a bit.

It's it's no it's it's it's more what we expected than that second amendment that just kind of was unbelievable.

But no, the third amendment when we did the calculations, it's it's a lot closer to, you know, it's still more every year, but it's less than way less than the 147% that the second amendment.

So it is stabilizing, but it is but these these costs are still volatile, and you just really can't project them at all.

So, Neil, go ahead.

Thank you.

Barbara Hale, Assistant General Manager for Power.

Uh, these costs have been incorporated into our financial forecasts and in our rates.

Uh all participants in the California ISOs, all utilities and load serving entities like CCAs, the investor-owned utilities, the public power utilities, all are seeing the same market prices, all are experiencing the same um Cal ISO pass-through charge obligations.

So I think uh as the market moves, so do we.

Um, but we're all part of that collective.

So uh our affordability, while it might be challenged, our competitiveness is uh gonna float with everyone else as the market changes.

Uh, but to your specific question, these costs have been forecast into our rates and are accounted for in the rate adjustments that were made by the commission uh a couple meetings ago.

Both for Clean Power SF where there was no adjustment and for Hedouchy Power where there was.

And IOUs pay this rate as well.

Investor owned utilities in California have been required to participate in the California ISO, and so yes, they pay these same California ISO charges.

Thank you so much.

Okay.

Thank you.

Thank you.

I I had a follow-up question to something that Ms.

Spaulding said.

So because the city can't respond quickly enough within that seven-day period to pay those costs.

Does the PUC then pay the total amount to APX up front and then APX pays it out as the costs come due?

The opposite is true.

APX floats this for us, knowing that we will pay it.

Got it.

Thank you.

Yeah.

Thank you.

Commissioner Thurlow.

Do we then, when you have massive increases in charges, there's no interest related cost associated with them floating that for us?

That's correct.

Okay, that's in interesting.

Yeah, and we we have a an arrangement for a collateral with them, so they know we're good for it.

Okay.

And they will call that current as the market moves up unexpectedly, they will call they will give us a call for collateral and we'll have to pony up more dollars to cover them for that float.

Okay, okay.

Interesting thanks.

Thank you.

Thank you.

Thank you.

Let's take public comment on this item.

Remote callers, please raise your hand if you wish to provide comment on item nine.

Are there any members of the public present who wish to comment on this item?

Seeing none, moderator, are there any college who have their hand raised?

Ms.

Lenirit, there are no callers in the key.

Thank you.

Thank you.

Commissioners, could I have a motion and a second to approve item nine?

So moved.

Second.

President Stacy.

Aye.

Vice President Arceus.

Commissioner Jamdar.

Aye.

Commissioner Leverone.

Aye.

Commissioner Thurlow.

Aye.

Item nine passes.

Thank you.

Call the next item.

Item 10.

Approve and authorize the general manager to execute a funding and license agreement with San Francisco Unified School District for the construction operation and maintenance of an on-site solar photovoltaic system at the mission bay school.

Thank you.

Did you have a comment?

Yes, President Stacey.

I wanted to disclose for the second time because this came up on another item with the San Francisco Unified School District.

Wanted to disclose that my wife is a member of the San Francisco Board of Education and thus uh member of the oversight body of the counterparty to this agreement.

San Francisco Unified School District.

So I would respectfully like to recuse myself from the vote as well as the discussion today.

Uh thank you.

Commissioners, I think we need a motion and a second to recuse Commissioner Arce.

Is that correct?

City attorney, yes.

Motion to recuse Commissioner Arcee.

Second.

President Stacy, aye.

Commissioner Jamsar?

Aye.

Commissioner Leverone.

Aye.

Commissioner Thurlow.

Aye.

The item passes.

Thank you.

Commissioner Arce is excused.

Welcome.

May I have the slides, please?

So good afternoon.

I'm Jamie Seidel.

I'm the manager of the distributed energy resources projects group and Power Enterprise.

I'm here today to present a funding and licensing agreement between the San Francisco PUC and the San Francisco Unified School District.

But before I do that, I'd like to give you a little background on what my team does.

The DER projects teams does in Power Enterprise for our Hedgehogi Power customers.

So we deliver renewable energy projects such as solar and energy storage, energy efficiency, including lighting and mechanical retrofits, electrification, such as replacing gas-fired equipment with electric heat pumps to provide cooling and heating needs for our customers.

So the unified school district is currently building a new elementary school in the Mission Bay neighborhood located at 1415 Owen Street.

And SFPUC proposes to partner with them to fund and own the solar electric project at the school.

The agreement is for 30 years and requires approval from the board of supervisors per the city charter.

And the life of the agreement is intended to track with the life of the solar asset, which is 30 years.

And the environmental impact report was approved by the school district in June of 2022.

So construction on the school started in January twenty-four by the school district, and the solar construction started in February twenty twenty-five.

It's 90% complete, and commercial operation is pending final electrical connections, and the PG and E solar interconnection approval, which is estimated for fall twenty twenty-five.

And just on a side note, wanted to let you know that the school district proceeded with the construction of the solar pending the approval of this agreement at their own risk because they need to install the solar per Title Twenty Four energy code requirements.

So I'm happy to answer any questions that you might have, and thank you for your time.

Thank you.

Commissioners, comments or questions on this project?

No.

Commissioner Jandar?

The only comment is we should pass it in a hurry.

The more solar panels, the better.

Thank you.

Yes.

I had a question.

It looked like from your staff memo that the power generated by these solar panels will be fed into the PGE grid rather than used on site.

So depending on the load of the building at the time, if there's heavy load at the facility, the solar electrons get used at the school.

Great.

Thank you.

Let's take public comment.

Remote callers, please raise your hand if you wish to provide comment on item 10.

Are there any members of the public present who wish to comment on this item?

Seeing none, moderator, are there any callers who have their hand raised?

There are no callers in the queue.

Thank you.

Thank you.

Commissioners, could I have a motion to approve this item?

Motion to approve item 10.

And second.

Thank you.

I forgot to mention the second.

President Stacey?

Aye.

Commissioner Jandar?

Aye.

Commissioner Leverone?

Aye.

Commissioner Thurlow.

Aye.

The item passes.

Thank you.

We'll wait for Vice President Arce to join us.

The doors open and you can just listen to the doors.

There used to be a TV in that where you can listen.

Item 11, communications.

Commissioners, any comments or questions on the communications this week?

No, thank you.

Item 12, items initiated by commissioners.

Commissioners, are there any items to initiate for future discussion?

Seeing none, I will adjourn the meeting.

Thank you.