Good afternoon.

Today's meeting of the San Francisco Public Utilities Commission will now come to order.

Ms. Zanir, can we begin with roll call please?

President Arce.

Here.

Vice President Leverroni.

Here.

Commissioner Jamdar.

Here.

Commissioner Thurlow.

Here.

You have a quorum.

All right.

Thank you, Ms. Zanir.

Can we please call the next item?

Actually, before we do, I do want to make sure that before we call the next item or

the first item, I would like to announce that the San Francisco Public Utilities Commission

acknowledges that it owns and are stewards of the unceded lands located within the ethno-historic

territory of the Muwekma Ohlone tribe and other familiar 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 Muekma Ohlone 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 we acknowledge and honor the fact that the Muekma Ohlone 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, public hearing and discussion, Hetch Hetchy Power and Clean Power SF Enterprise, Budget and Capital Plan.

All right.

Thank you, Ms. Lanier.

Do we have any discussion, comments, questions from the Commission on this item?

I don't...

What's that?

Oh, I jumped right to the discussion.

Looking forward to the presentation.

Thank you, Ms. Hale.

You threw me one for a minute there.

Thank you, Commissioners.

Barbara Hale, Assistant General Manager for Power.

I'm here to present the Power Enterprise Budget.

For your consideration, I'm going to first provide some context by introducing the team,

our programs, and the revenue they bring in, our cost drivers, our priorities for this

budget cycle, including climate action plan elements. With that context, then we will get

into the budget particulars, operating, then capital, the rates projected to support the

budgets, and then closing out. That's about 32 slides. I propose to pause for questions as we go

and ask for questions or comments as I transition from topic to topic.

So with that, may I have the slides, please?

Away we go.

So the power team is organized into five groups, each led by a deputy manager.

They're here today to hear your guidance and feedback and assist with any questions, so

please join me in recognizing each of them.

Moving from left to right on the org chart here, I have Chi Ao.

should be standing now. Yes, thank you, Chi. Chi joined our team just this year, this 2025,

to manage our engineering and field operations team. Then we have our program and services

division, which is currently a vacant position, expecting to appoint someone as acting deputy

manager shortly. Then I have Michael Himes, Catherine Spaulding in a new role that I'll

talk about later, and Pam Husing. Not shown here on our slides, so I just want to say quick before

I keep going that I really want to recognize this team. This is the team that really gets the work

done, the team standing here and the workforce that stand behind them. So I just want to publicly

acknowledge the great work they do and say thank you for bringing clean energy and public services

in an affordable way to our San Francisco residents and businesses.

Thank you.

All right. Thank you.

Yeah, it does kind of make you want to clap, right?

At least wave or say thank you.

Let's see.

The staff that you see on the org chart here

apply their skills to both the HETCHI Power Program

and the Clean Power SF programs,

and they charge their time accordingly.

So, for example, the Origination and Power Supply team that you see here reporting up to Mike, Mike Himes, are procuring power to meet electric demand and associated regulatory requirements for both the HETCHI program and the Clean Power SF program.

They're using the same tools and resources.

So we share skills and resources across the HETCHI and Clean Power SF org chart here, making sure that the benefiting rate payer is charged for the work.

And that attention to proper charging ensures fair cost allocation and supports our cost-based rate making for each of the programs.

So now let's get into a quick review of the programs.

Power Enterprise operates two programs.

San Francisco's retail electricity programs, Hetch Hetchy Power and Clean Power SF.

Two different business models.

Hetch Hetchy Power program is a publicly owned utility.

Included in the Hetch Hetchy program are our street and pedestrian lighting services.

The Clean Power SF program is a community choice aggregation program.

Power serves about 388,000 retail customer accounts.

75% of the electricity consumed in San Francisco is provided by us.

Each program has its own operating and capital budgets,

with street lighting, as I said, included in the Hetchy program.

The different program budgets are due to the fact that we have distinct rate payers in each program.

The Hetchy customer base is dominated by city and county services like Muni, SFO, the Zuckerberg SF General Hospital, City Hall, police and fire stations,

and a growing number of businesses and residents through redevelopment efforts like the Transbay Terminal, the Shipyard, Pier 70,

and the redevelopment portions of Treasure and Yerba Buena Islands.

They make up 8,000 of the accounts I mentioned, the 388,000 accounts.

Clean Power SF customers include residents like yourselves,

your neighborhood businesses, and large commercial customers like Salesforce Tower.

They make up the 380,000-plus Clean Power SF customer accounts.

The HETCHE program budget is about $262 million, and the Clean Power SF budget totals about $444 million this year.

Our customers benefit from local accountability and responsiveness, cleaner non-nuclear power supplies, and a dedicated, represented workforce.

More affordable power rates, more affordable and stable power rates.

Hetchy service to city and county of San Francisco customers, including our departments, lowers the cost of city services.

We project about $33 million in savings to general fund departments this year because they are Hetchy Power customers.

For our enterprise departments like the water, port, and airport, and our Hetchy commercial and residential customers, we project about $31 million in savings on their power bills this fiscal year.

That's $64 million saved in one year by having Hetch Hetchy Power Service.

Since 2022, Clean Power SF service to residents and businesses has saved San Franciscans about $120 million.

dollars. More affordable rates mean our customers have dollars in their pockets to spend on other

needs and desires. HETCHE is distinct here in that HETCHE is a growing program. We have

increasing number of customer accounts. When we started service in 2021, we had 2,122 meters.

By 2027, we're estimated to have 8,453 meters based on ongoing in-construction projects.

And I'd say that Clean Power SF at this point in time is facing some competitive headwinds for a year, maybe two.

The exit fee that our Clean Power SF customers pay to PG&E is expected to increase,

and the PG&E generation rates to decrease as the regulator shifts more PG&E generation costs to CCA customers,

squeezing our competitive margin.

If we do nothing to rates we control, Clean Power SF customer bills will be much higher than PG&E bundled customer rates.

So that's just by way of providing some context.

So let's discuss how much revenue we're taking in and how we are spending it.

Remember, customers from our January 12th hearing, budget hearing, the finance team shared that we have a total proposed operating budget for the agency of $2.2 billion for fiscal year-end 27.

From these expenditure totals, we're proposing powers rate payers fund $571 million in operating expenses and capital investments,

which amounts to about a 26% share of the agency total expenditure budget.

The difference between the rate revenue totals you see here and the budget proposals is the prudent use of fund balance to provide rate payer relief.

and I also just want to note remember that a portion of the Hetchy Power ratepayer revenues

fund the upcountry Hetchy Water and Power division activities you see the breakdown on the slide

100% of the power projects are paid for by power 55% of the joint by power and you'll hear from AGM

Ritchie on that division's budget requests how they will spend their their share of the power

revenues. Moving to power supply and costs. These are some of our highest drivers of our

programs. For our programs, we don't enjoy the same level of autonomy as our water and

wastewater colleagues. For both of our programs, we participate in the wholesale power market,

where prices vary, sometimes markedly, over time.

For our HETCHE program, we have to rely on PG&E for distribution service

to many of our HETCHE customers as they're connected to the PG&E-owned grid.

We pay the California ISO, the transmission system operator,

to move HETCHE power to our HETCHE customers.

And HETCHE wholesale costs to PG&E, sorry, HETCHE wholesale costs of PG&E distribution

and California ISO transmission are set by the Federal Energy Regulatory Commission.

So we participate there to protect our interests, but we're sort of takers of the outcome.

And all of our Clean Power SF customers receive PG&E distribution services as PG&E retail

customers paying rates and fees set by the California PUC.

These supply and delivery services are significant expenses for us.

We keep a close watch on them and we take actions to mitigate them in our daily work activities year over year.

You can see in the charts that for both programs, supply and delivery, the purple blocks are a growing share of expenses.

The other cost driver for HETCHI is capital investments, the yellow blocks on the left-hand chart.

Mostly made up of investments to connect our new customers.

Hetchy also is seeing some higher long-term sales, as you see on this chart, because we're growing our customer base and encouraging electrification, which increases the volume.

So it's not so much driven, that increase that you see over time, by costs.

It's more driven by volume changes.

We're seeing lower power supply costs projected out over time for both Clean Power SM and Hetch Hetchy.

And we're seeing also for Clean Power SF some increase in electric demand, some increase in load growth, not so much from growing the customer base, but more from electrification activities of the existing customer base.

So with that context, I'm going to move on to prioritizing our spending requests, unless there are any questions.

Questions, colleagues?

Vice President Leveroni.

Thank you so far.

Just looking at if I'm correct, last year, fiscal year end 2025,

we had combined the two about 680 million.

That sounds about right.

about right? This year,

am I looking at it correctly that you're mentioning

571, 572? Yes.

What I'm showing you there is

expenditure of electric revenue.

We are also spending down some of our

reserves on the Clean Power SF side.

I think that's part of what you're seeing in that difference.

Thank you.

Okay.

Okay.

So then moving on to priorities.

This should be a familiar slide.

You saw it at the initial budget hearing.

Power, like the rest of the agency, is keying in on financial stability, operational excellence, climate leadership, and people and community.

I'll discuss these broad priorities and the red boxed subordinate priorities

as they relate to the specific operating and capital requests I'm going to be presenting

through the rest of the day.

Power also has a long-term practice of relying on our levels of service goals

and our strategic planning exercise that we conduct each year.

POWERS develops through those processes some guiding commitments,

and from those exercises, I can see that those guiding commitments sort of roll up into the agency priorities.

Shown here is a summary of our key requests and how they relate to the agency priorities.

In addition, POWER's budget requests are critical to advancing the city's climate action plan by enabling significant investment in expanded electrical capacity and building and transportation decarbonization.

I'm going to have a separate slide about that towards the end of the presentation, but you'll see climate leadership as a key item highlighted throughout.

Now I'm going to move on to the budget overview.

Here's the HETCHE budget overview.

You're seeing here growth in the two-year budget, primarily driven by revenue-funded capital and debt service.

That's the $64.5 million, the growing orange block.

The positions requested are mostly focused on supporting that growth in the program

and managing the increase in the capital plan to build for and secure the revenue base those new customers represent.

For Clean Power SF, costs are relatively stable.

With purchased power costs, the orange block down slightly from prior years.

We've successfully built fund balance over the past three years, consistent with our reserve policy.

So now we're in a position to use reserves to absorb for our customers some of the increased costs PG&E is imposing on them.

One area with growth on this Clean Power SF chart is the customer programs, labeled programmatic projects.

On the slide, it's the blue block.

And those customer programs are really focused at some of our decarbonization, our electrification goals, and helping our income-qualified customers meet the desire to transition to cleaner energy in their homes and travel.

So that's the overview for the two.

So I'm going to get into some operating budget details now, starting with Clean Power SF.

And you'll see same format as I go through each of these.

I'm just going to move through them from left to right.

So starting here with customer programs,

funding that we're requesting here is for new and existing programs

promoting transportation electrification

to help our customers meet regional and statewide goals.

San Francisco has unique needs for electric vehicle charging.

because we have a prevalence of multifamily housing

and residents without dedicated parking,

that makes charging more challenging.

Funding also for new and existing programs

promoting building electrification.

The Bay Area Air District is working to phase out gas appliances.

We recognize that residents will need all the help they can get

to make this a smoother transition.

So we're helping through a bill credits program.

Started with water heating, which includes enhanced support for income-qualified households,

and working on supporting other uses like HVAC and cooking.

The funding we're requesting will also be for a new program to incentivize residential battery storage.

We have our longstanding support of local solar through the Go Solar SF program,

And we see battery incentives as a kind of a continuation and extension of that success.

Residential batteries will ensure customers are getting the most out of their on-site solar systems,

helping the grid avoid reliance on gas-fueled power plants.

It will also help households adjust to California's move to the solar billing plans

as the net energy metering approach for new systems comes into play.

On local workforce development, partnering with local bike shops to incentivize e-bikes.

That's our Electrify My Ride program, which has been a huge success.

Also working the workforce development area, our local solar installers.

on the GoSolarSF and the inverter replacement programs.

Those are programs that have a local workforce component, too.

We've found customer programs to really be a key tool for customer retention.

We're seeing more and more examples of individuals choosing to return to

or remain with Clean Power SF service just so that they can continue to access our programs.

On the strategic analysis, the next box over, we're requesting a principal strategic analysis manager to provide senior oversight, help guide our enterprise risk management, lead complex strategic analysis, and enable the team to more effectively support and contribute to our growing analytical needs as power business subject matter experts.

Power is a complex business, and we need to sort of step up on the analyst classifications to bring in some more talent.

We need to also fund battery optimization software.

These are the batteries here that I'm talking about, our utility scale battery storage projects that we contract with for service to our customers.

The commission approved a contract for these services.

We're adding more battery electric storage systems to our Clean Power SF portfolio, so we need more funds to cover the service.

We plan to come to you soon, as soon as the second meeting in February, to amend the contract that was already approved.

This funding would continue to support our reliance on that battery optimization.

And what that optimization does is it allows us to interact with the Cal ISO market in a way that really optimizes the use of those batteries to make sure we get the most out of them.

I'm ready now to turn to the Hetchy Power Operating Budget, so I'm going to pause and see if there's any questions on this.

Okay, thank you.

Actually, the question from Commissioner Thurlow.

Yes.

Apologies, Commissioner.

I think I'm asking a bookkeeping question here.

But when we look at slide 10 and it says there's a $6. million budget increase from prior years,

that is the customer programs that you were just describing, like the bike program, et cetera.

Where are you seeing the $6.1?

$6.8 million.

Oh, $6.8, yes.

Okay.

So that's the subset of programs that you just described.

And it's listed here under new proposals.

And I know this is a template for the rest of the budget conversations, but the new proposals at the end of the document don't capture the $6.8 million in total because they're actually just augmenting existing programs?

Is that why?

Because it seems like at the end of the document there are a lot of discrete new proposals, but I don't think this is captured in that.

Yeah, so I'm not talking about everything that you're seeing in the full published packet.

I'm giving you the highlights, the overview.

If you want to talk about something that's on a specific one of those other pages, we can do that.

But what you're seeing here is when it's talking about new proposals is new dollars.

Okay.

So it's in addition to a base budget.

A base budget that includes just increasing spending on existing programs.

Yes.

Okay, perfect. That answers my question. Thank you.

Okay.

And then we have a question from Commissioner Jamdar.

Thank you. Thanks, AGM Hale.

My question was, would it be possible at some point to see a breakdown of the customer programs that you have lined up?

I know you sort of referred to them quickly.

Yes, I have a slide that's a slide sort of on reserve.

Maybe at the end we can come back to that, if that's all right?

Just because it's easier to get to it?

Yes.

It's at the end? Thank you.

Thank you.

Hey, Jim Hale, I just wanted to say a quick comment that I, when you mentioned the e-bike program,

I met with Sierra Club, a group of Sierra Club leaders maybe a month ago,

and they really expressed support and appreciation for the e-bike program.

I know we're working with the resources we got, and I think it's a good funding that's been provided

and just know that if there's future opportunities to continue to build that as part of the sustainability work

and the electrification and all the other elements.

That was something I remember Sierra Club leaders brought to my attention,

that they really appreciate and support the e-bike program.

That's great. That's great to hear.

We have 13 new local bike shops signed up to participate with us.

So as we move through the budget process and get authority to spend more dollars,

we'll be able to ramp that program up and see more San Franciscans benefit.

Sounds good. Thanks. Any questions before we go to the next slide, commissioners?

Okay. Thanks, AGM Hill. What do we got? Slide 11 next?

Yep. So starting off with our engineering and field operations, that group includes our field crews, our asset management team, and our engineering team, our distribution engineers.

So what you're seeing here are, in the total, and let me give you just a quick breakdown.

It's really for spare parts for resilience and reduced outages, equipment and vehicles,

equipment like drones and docking drones docking stations for inspections vehicles for our

inspectors that will replace rentals we have a new position that converts a capital funded

temporary position to a permanent analyst to support pole attachments we have increased

demands largely from telecommunications carriers

to use our poles to attach antenna systems.

And that improves the wireless services for San Franciscans.

Customer programs is the next item.

Many of the same programs I mentioned for Clean Power SF

are also funded for HETCHI customers, like the e-bike program.

The focus really on our programs area for HETCHI is also on decarbonizing buildings and transportation.

And most of the increase here is for a revamped upgrade for savings program.

The capital plan management area.

At the first budget hearing, you heard about the agency efforts to improve capital planning and delivery.

The request you see here is part of the solutions that were identified through that agency effort.

It primarily covers the field manager 7 position, enterprise capital lead that you saw on the org chart slide.

Catherine Spaulding, who I introduced, is in that position.

And an enterprise budget lead, converting both of those from temporary to permanent.

The other AGMs will also have the same.

The other enterprise AGMs will have a similar request of you.

And this is really to better staff up and partner with the infrastructure division for planning and delivery of our capital program.

The next item then is our energy data systems and software enhancements request.

It's about $1.4 million.

That's mostly for improvements to the Hetchy electric billing system.

That's customizations, migration to the cloud,

and related upgrades to the customer web portal, the My Account,

where you log in to pay your bill electronically and view your bill.

Customer Service Bureau is managing this billing system improvement effort.

They have a filled, net-neutral, temporary employee.

We'd like to convert that position to a permanent IS business analyst.

We're requesting that change to retain a high-performing specialist.

This position will ensure billing improvements are developed, tested, coordinated across customer service, ITS, power, and accounting.

And then we have customer support request.

By 2027, our HETCHE accounts will have grown up to 8,453.

Our staffing of our customer engagement and customer service bureau both need to be augmented to address this new growth.

The request includes two positions for Power's team on customer engagement and two positions for the Business Services Customer Service Bureau team to answer the phone, utility service representatives.

It also includes some software upgrades on our Salesforce system to improve efficiency and customer experience, document the customer interactions.

Those increased costs show up in the second year.

So that concludes the HETCHI operating budget review.

Are there any questions on that part?

Colleagues, questions?

Moving on to capital then.

I see nods of no.

Ms. Hale, are we, I'm sorry, I'm just going by our roadmap.

If we're moving to, oh, capital plan.

Okay, we're still on 3A.

Technically, we're not on our, this is our capital budget, not our 10-year capital plan, which is the next item.

It's both.

It's both.

Okay.

So it's 3B.

Got it.

Okay.

Only because my script says commission discussion, open for public comment,

I'll look to our general manager or look to our deputy attorney.

Do you want to call for public comment on the operating budget component like in the script,

or do we want to continue and do it all after B?

I'll leave that to your preference, whatever you'd like.

Okay.

Well, maybe for AGM, would it be disruptive to the flow to take?

Whatever your pleasure.

Is that cool?

Whatever your pleasure.

Because it gives folks that might be here to comment a couple of chances rather than if they've got something on operating and something on capital,

they get a chance to talk about operating now and capital after.

Is it cool with colleagues?

Okay.

Ms. Lanier, can we take public comment on item 3A, our operating budget, before we go to 3B?

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 callers who have their hand raised?

There are no callers that wish to be recognized.

Thank you.

All right.

Thanks, Ms. Lanier, and thank you, AGM Hale.

At this point, we're looking at item 3B, which is our 10-year capital plan.

Very good.

We'll start off by talking about our capital plan priorities and our project drivers.

It's a continuing focus for power on strategic investment in transmission and distribution,

meeting customer needs as demand grows and new customers ask for service.

Unlike the other enterprises, if the investment is delayed or deferred, we lose the customer.

Most of the investments bring in more revenue, ultimately, so they're a good thing.

And some project costs will be reimbursed by the customer under the commission-adopted power rules and regulations.

For the first two budget years, power has worked to review and reprioritize our capital budgets from prior years before requesting new funding.

This is one of the most impactful things that the HETCHI power staff has done to decrease pressure on rates in the short term.

It's a total reduction of $204 million compared to our prior adopted 10-year plan.

You can see that while the power program has grown substantially compared to the prior 10-year plan, the prior 10-year plan being represented by this dotted red line, the bulk of the costs are in years 3 through 9.

The major increases in the proposal primarily are customer-related costs, particularly associated with new substation projects, and that's the blue blocks that you see there.

The next slide goes into details on the major projects.

again notice that we've tried to limit the two-year appropriation amount keep rates low for

rate payers and spend prior authorizations and uncopy an upcoming capital budget window

our focus on is on decarbonization like the carbon-free steam project and all these projects

bring customers clean energy i have a slide on each to follow and but you do see here the total

appropriation and total project costs built into the proposed 10-year plan.

So going through each in turn, the Spears Street substation. This project will serve port,

SF Bay Ferry, and Cordia carbon-free steam loads. The map shows PG&E Potrero substation

connecting to our proposed Spear substation.

Two possible routes from Protrero to Spear,

a water route in blue or the land route in green.

The Spear substation has a red solid line

showing transmission connection to the carbon-free steam sub

and the red dotted line to additional load along the port.

We cover all of the costs in the substation project

with no cost share, but expect proportionate cost recovery

in the transmission and distribution projects that will connect customers

to the substation. Our next

project is large load substation one.

We have received an application for service. It was submitted.

We are competing with PG&E on this project.

The customer, we understand, is evaluating information that they have

received from PG&E, and discussions with us are ongoing. The costs and timeline are subject to

change, but pending a decision of whether the customer will come with us and will build or not.

And we anticipated a decision together with the customer within a matter of months.

our next project is the bctd backup loop this is a reliability project it allows rerouting of

power in the event of a fault our bay corridor transmission distribution project includes the

davidson substation and that's what you see depicted here connecting customers both existing

customers like our Southeast Treatment Plant, operated by the Wastewater Enterprise, and

new customers located at the Mission Rock redevelopment, like Visa Global, the big new

apartment buildings that are there. They're all served off of this BCTD lines, and we

want to make sure we build in additional reliability for them.

next project is our west side sub we all know that there's projections for growth

in load on the west side we have facilities there like our oceanside plant that we also know

are going to need to have additional power feeds this substation is proposed to meet those growing

those projected growing needs.

Next up is grid connections.

This project funds the portion of an interconnection

to customer buildings that the utility is responsible for

when connecting to a Hetchy Power-owned portion of the grid.

So a ready example of that is our SF Water Division headquarters

at 2000 Marin that's under construction.

The utility portion of the upgrades necessary to serve that facility are paid for out of this grid connections line item in our budget.

It includes funding the connections to new substation projects that I just mentioned for customers that are not co-located on substation sites.

Next up are redevelopment projects.

This funding really builds the distribution backbone for large redevelopment projects like those at Treasure Island, the Hope SF projects.

It's the Hope SF project at Sunnydale that you see depicted here just recently energized a big accomplishment for the team this past year.

And so we need to make sure that we continue to fund our ability to meet these projects' needs.

Next up is the SFO substation.

This project improves the two substations that we own and operate currently

that serve San Francisco International Airport.

The load growth that you see, excuse me,

the need for the improvements of these substations is really load growth

driven by electrification of the airport's operations.

SFO staff is also working with us on an additional substation.

They've requested for redundancy.

That substation is not in the capital plan, as it would be paid for by SFO,

since they are the sole customer on that substation,

and it's completely redundant to the other two we already own and operate for them.

Carbon-free steam is our next item.

This is not a new project.

but it may be new to you, so I just want to take a minute to give you a little bit of the history on this.

For decades, many historic buildings in San Francisco, both downtown and in the Civic Center, have been heated with steam.

New buildings have also been added to the system over the years, like the federal building on 7th Street.

The city has both a customer and sort of an overseer role with the steam loop.

the steam is created at two locations and distributed through a district heating piping

system the owner operator of the system cordia has a franchise agreement with san francisco

and is a for-profit utility regulated by the california puc several city facilities and civic

center including this hearing room at city hall are steam customers hatchy power and our puc

audits team collaborate with the controller's office to review the franchise fee remittance

from Cordia each year. With this project, we've become partners with Cordia to convert the steam

manufacture process from natural gas to electricity. Cordia would become a Hetchy Power customer,

decarbonizing the steam manufacture process. San Francisco's Climate Action Plan identifies

decarbonizing the steam process as a high priority for San Francisco. The project also allows district

heating customers to decarbonize their heating, which is a more cost-effective, feasible approach

than electrifying heating at individual buildings. The project funds the work to plan, design, and

build Hetchy Power's share of the transmission connection from PG&E substation to Cordia's

steam plant downtown where step town facilities and connection to the plant would be constructed.

This would be a cost share project. We won't fund all of it. We will fund part of it through

this appropriation we're requesting. And then the next project is our public power expansion project.

You're seeing an overall increase of about $24 million to the 10-year request. The increase

is for planning, engineering work performed by infrastructure staff. We have an additional two

years on the total project timeline as well. We have seen some delays in the valuation proceeding

at the California PUC, but things seem to be getting some traction there now, so that's good.

And I just want to take just a minute to put these numbers in context. So, you know,

give you a sense of what the cost of the status quo is as opposed to investing in expansion.

So today, the city pays and has paid over many years about $25 million a year in wholesale

distribution charges from PG&E. PG&E requires infrastructure costs that aren't reflected in

that number, and PG&E requires cost of ownership and income tax component of contribution

charges, also not in this figure, on certain PG&E-owned infrastructure.

Then there's an additional $10 million per year in costs related to PG&E's disputes with

us over how to connect our customers.

Since 2018, we've been collecting data on that, and that's where we've arrived at this

estimated $10 million a year in costs.

There's over $43 million in additional project costs due to delays and unnecessary equipment.

About $27 million in lost gross revenue to the city as we pay PG&E in perpetuity for some of the customers that we have been unable to connect because of their rules that they're imposing on us.

So that just kind of gives you some context for some of the hard costs we see.

Of course, we see a lot of benefit to the acquisition of PG&E's assets and expansion of our public power beyond just saving those dollars.

It's clean energy at affordable rates, more reliable, accountable service.

So that's the capital request, and I'm going to move to rates.

I'll take a quick pause and see what questions there may be on the capital requests.

We do have a question from Commissioner Stacy.

Thank you, and thank you for all this information.

Could you explain a little bit the negative numbers on the three projects that you just walked through?

You have the redevelopment projects, the SFO substation, and the carbon-free steam.

Yes.

The impact to the 10-year plan is a negative number.

Is that because the money's already been spent or the project's been scaled back?

That's making sure we're right-sizing our appropriation requests to you.

So at the beginning, I mentioned how the first two years are lower,

and we saved about $204 million in those lower initial years over the 10-year plan.

That's because we've looked at improved figures for the cost of the projects you've listed.

and some refinement in the cost sharing.

So that's a decrease from the prior 10-year capital plan.

Yes.

Got it.

And I should also say, in some cases, it's a slower pace,

and so those costs may just be outside the 10-year window.

Just pushed out.

Yeah.

Okay, thank you.

Yes.

Commissioner Turlow.

I'm wondering a little bit about why the grid connections piece is zero

in the first couple of years.

Is that because it's related to other things in the capital plan?

Nope.

That's because we have appropriations that are sitting in that account,

and so we don't need more right now.

We haven't spent down.

We don't want to ask for money we know we're not going to spend.

Got it.

So we have enough to carry us forward for those two years,

and so we zeroed it out.

Got it.

So there's no scaling back in the rate of grid connections.

It's just the money is already available.

Right.

Right, and part of the fact that the money is available is because of a slowdown in development.

Okay, okay, perfect.

Thank you.

Vice President Leveroni.

AGM Hale.

On the page slide 16, major projects, we're listing the three columns of the dollars.

and following back up on the zero,

like so for the backup loop,

two years, zero, tenure, 233,

total cost, 238.

If I look at those numbers

and just do a simple subtraction,

is that what we already say have budgeted?

What's the correlation?

You're asking, I got us to the right slide, I think.

You're asking about slide 16?

16, and let's just look at the BCTD backup loop, zero, and 233, then total cost, 238.

Yes.

And I'm just looking at the difference.

Does that go back to we already have some budget numbers?

Right.

We're not asking for money for the initial year because we have some money already in

the account, and that's reflected in the total.

Okay, and so the total, yeah, so the total cost.

Cost for that backup loop would be 238, would be the number I would look at?

Correct.

Okay.

Okay.

All right, and then, I think this is already answered, but like, the impact to the 10-year

plan, that line, on each of the, when you go to the Spears Street substation, it has

the impact to 10-year plan. Is that just telling us what more or what less we need? Okay. Yeah. So

you already have an approved 10-year plan. How is this request different from that?

Okay. And then with these projects, are there any new, so these are, I'm thinking, existing

projects that are already in the plan. So it's a mix of new and existing.

Okay. So Spear Street is, let's go

back to the slide 16 and I'll just do this in a quick review.

Spear Street is existing. Large load is

not. BCTD backup loop is not

existing. Well, there's a little bit of planning dollars for

that project. And Westside Sub is

new, grid connections is old, redevelopment is old,

SFO substation is old, carbon-free steam is old

and so is public power. I shouldn't say old. I should say existing.

I understood. Okay. Yes. Thank you.

And I think

that gives me the...

Okay. Thank you. Thank you very much. You're welcome.

All right.

On to rates.

The only thing I was just going to say was that I really appreciate seeing the opportunity around the, I always know it as the Jesse Street steam loop.

That probably dates me, right?

It's not called that anymore.

Well, it's still on Jesse.

Okay, okay.

So that's right.

But it's been, I want to say, for like 15 years,

seeing an opportunity to advance some of our sustainability goals

and to have that partnership.

And so it sounds like that's in place.

Is that something we're going to see at a later date,

or is it already something we've approved to move forward to working together at Jesse Street?

Yeah, so we have it.

It's an existing capital project.

We're working with them.

We have a letter of intent to serve them that's been signed,

and we're just working through the details of how to implement that improvement.

It involves PG&E.

It involves us.

It involves Cordia.

Figuring out the land use, the sharing of costs is pretty well understood at this point.

We do anticipate coming to the commission and potentially the board on how we can effectively work with a private party like Cordia to efficiently construct at their facility.

I just want to say knowing that's been an opportunity I know you've been looking at for a long time and I know that they've

Probably had different ownership

Entities and such but it sounds like there's a group there that really wants to partner with us

And so just offering up to the general manager and into you at least at least this commissioner is excited about that

And if and when there's something we need to do to be supportive of moving that forward

Count me in and I'm guessing probably

Others of us as well

So thanks again.

This is a great presentation.

Commissioner Jamdar.

Thank you.

I just had another detailed question.

So the impact to the 10-year plan, those pluses and minuses, what does it level out to?

And is that the budget, the total expense budget?

That's the total capital plan.

That's 600 and something that you mentioned, right?

Our share of the total of the 10-year capital plan is two.

Sorry?

2.2 billion.

So the power's share of the 10-year capital plan.

Okay.

Okay, on the 10-year.

Okay, understood.

Say that again.

12.6 total billion for PUC.

12.6 total billion for PUC.

2.2 billion for power.

Thank you.

Any other questions, Commissioner Gemini?

Vice President Leveroni.

This is a general question to give me a higher look at.

On slide three, it states that we can or we are supplying more than 75% of the electricity consumed in San Francisco.

Correct.

Would we have the ability, if it ever would come up, to do 100%?

Yes.

Okay.

Yes. That's part of what the public power expansion program is about.

Okay. And then for now, the rest of the power that has to be supplied to San Francisco, let's say it is the 25% or something like that. Where does that come from?

Yeah, so that's supplied by customers who opt out of Clean Power SF, that they are supplied by PG&E.

And then the other group that is supplying, contributing to that 25%, are for-profit power providers that partner with customers who are large and able to participate in a state program called direct access.

Okay.

Thank you very much.

All right. Any other questions before we continue with the presentation?

All right. Thank you.

Okay. Moving on then to rates.

Starting with Clean Power SF.

So a hearing on Clean Power SF rates was noticed.

Noticed.

Towards the end, on the capital thing,

I have a comment.

We will have public comment open for you and any other members of the public probably shortly, just in a couple more slides.

We'll absolutely have public comment.

I have just a couple more slides.

That's why we have the two, for public comment on the operating and public comment on the Capitol.

So a hearing on Clean Power SF rates was noticed and is set for next Tuesday.

What you see here is a snapshot of what's coming.

we're proposing cuts to ensure clean power as service remains cost competitive with pg&e service

in the face of regulatory shifts of costs from pg&e to cca customers we're proposing to absorb

some of the pg&e cost increase our rate payers would otherwise pay by spending some reserves

you'll get this detailed a detailed presentation on on

Tuesday from the rates team.

And what you see here are the projections

of rates assuming the budget proposals I just reviewed

are adopted. So very modest generation rate average

increase of 1.4 to 2.1% over

the 10 years, well below inflation. You see the ups

and downs. Nope, you don't see the ups and downs for this one.

Oh, yeah, you do see the ups and downs on the right-hand side over a number of years.

And so here's some details of the 10-year rate plan, including the short-term projected bill comparisons for a typical residential customer.

Clean Power SF is shown on the left of this bill comparison, PG&E on the right.

While our generation rates are proposed to decrease in March and maintain that below inflation average increase over the next 10 years,

we project our customers will see bill increases given the increased PG&E charges for our customers.

But we're doing what we can to absorb them.

Moving then to HETCHI.

right-sizing the capital plan in the short term combined with reduced power costs allows the

HETCHI power program to raise rates by less in the short term than had been previously projected.

That's the downward green arrows you see on the right. Residential bills decreased from last

year's projection. It's a relatively modest 10-year average rate increase unchanged from prior

projections equaling 5.8%.

And then here's the rate

increase projection details.

That's on the right-hand side there is the new information on this

slide. So I'm going to move on to some

final thoughts on climate action plan goals at this point to be

responsive to Commissioner Jomdar's request and Commissioner Thurlow's as well

from the last budget hearing and in notes.

So here we have those points.

Every dollar in our budget is dedicated to successful implementation

of the city's climate action goals

because everything we do is about expanding the source of clean,

reliable, affordable energy in San Francisco.

On the energy supply front,

we're continuing to provide 100% renewable electricity,

helping customers make the transition to renewable energy away from gas in cars and buildings.

We have workforce is also a component of the Climate Action Plan.

It's included in the energy supply section of the Climate Action Plan.

And we're very much committed to a local workforce development,

building strong connections to the community we serve,

and training and hiring the skilled workforce we need to continue our operations

and meet our climate goals.

On the buildings front, all San Francisco buildings,

the goal is to be zero emission.

Some examples of how we're in the power sector supporting this

is our bill credits program,

incentivizing customers to switch away from natural gas

and to electric sources for their homes and buildings.

electrification roadmaps that we provide to affordable housing buildings

and the carbon-free steam investment capital investment we just talked about

on the transportation side the goal is to have 100 percent of cars in san francisco be zero emission

examples of that are how we're supporting customer incentive programs for electric vehicle chargers

The e-bikes program we just talked about, expanded electrical infrastructure to support electric vehicle charging stations, load growth and capital investment in SFO substations to support all that electrification.

These are all ways that the budget you see before you and the actions we take as a power enterprise support climate action in San Francisco.

A major, or rather an important part of meeting the Climate Action Plan goals is acquiring PG&E's grid assets serving San Francisco.

That will ensure that all San Franciscans receive 100% renewable electricity from the PUC.

That will lower rates by cutting executive compensation costs and profits on capital.

and reduce delays in electrification by giving the PUC direct control over grid upgrades,

modernizing the grid, and improving reliability and capacity.

So in closing, I just want to say that Power Enterprise's budget calls for the responsible stewardship

and investment of $571 million in annual ratepayer revenue.

Our purpose is to provide clean electricity for our quality of life in San Francisco and for a more livable planet.

With your support through our operating and budget requests, we will accomplish this.

Investing in infrastructure to capture load growth opportunities, funding programs to help customers decarbonize their buildings

and make the transition to cleaner cooking, heating, and operations,

recruiting and retaining a talented workforce

committed to delivering these services.

That concludes my presentation.

I want to pause a quick moment to say thank you

to the team that put the presentation together for me,

with me, and that's, if you'll just raise your hand,

Michael Clark, Emily Wang, Cody Hicks,

Catherine Spaulding is their leader,

and of course all the power managers that contributed.

So thank you for your time and attention.

Happy to answer any other questions you may have.

All right.

Oh, and I said I was going to show, sorry, I did all that.

I said I was going to show the program's detail, and I didn't.

If you'd like to take that, I can bring that slide up now.

Is that all right?

Yes, absolutely.

Is that all right with you, Commissioner?

All right.

That's right with us.

So you're looking at a slide now that shows the Clean Power SF customer programs.

each one is listed and the appropriation detail that we are requesting so you see

general program development and expansion and communication support at the top and then you

start to see the detailed programs electric vehicle charging rebates and technical assistance

residential battery storage rebates e-mobility that's evs and e-bikes all the detail here for

Clean Power SF. And then there's an additional slide, same

sorts of detail for the HETCHI program.

Happy to answer any questions you may have.

Thank you, AGM Hale.

Commissioner Jamdar, you're on the stack. Did you want to speak first or was that

carryover from your previous question? No, I just had a question.

We're in questions, right? Yep. Thank you so much. That was very helpful.

And I think that was the first time I was seeing the breakdown of the customer program.

So thank you for sharing that.

And if you can share that with us.

We will make sure the commission secretary gets those two slides so that they can be included in the record.

Perfect.

Thank you so much.

I'm also curious if some of the sort of the building decarbonization sort of programs that you're planning are in partnership with SFE,

because I know that the SF Environment team works on building decarbonization a lot,

and the Climate Equity Hub is serving low-income customers in San Francisco.

So I'm curious if there is an effort to sort of work in collaboration with their team.

Yes.

The Department of Environment is a great partner in helping market the programs we have, absolutely.

The Equity Hub will rely on the programs that we have

as part of the package of incentives that are available

to help support implementation of those equity hub decarbonization efforts.

For example, we partner with Department of Environment on a number of elements,

not just equity hub type things.

So in addition, we're working with them on an education program

to make sure the schools that have solar on them,

we really use that as a teaching moment.

Department of Environment is working with us on that,

educating K-12 students so that we bring up a community

that's ready to move with us in the transition to full renewable energy.

Great. Thanks for that.

And also curious, some CCAs across the Bay Area are sort of looking to virtual power plants and programs focused on that.

Is there a plan for Clean Power SF to offer any VPP programs?

Yeah, so we're looking into the virtual power plant opportunities.

we really see a need to get the devices, if you will, out into the homes and businesses,

get them decarbonized, and then we can have them be controllable and operate like a virtual power plant.

So for folks who aren't familiar with the term, the idea is you can defer the need for utility scale generation and power plants if you're able to shape the load, shape the consumption.

So a reduction in demand could be the equivalent of power from a power plant.

So if you have controllable devices in your home or business and can move your electric load to hours where electricity is more available, cleaner, lower cost, then you're operating like a power plant, providing those benefits to the grid.

So right now, we don't have a lot of devices that are controllable.

uncontrollable. We're trying to use our existing customer programs and the incentives to get folks

to convert to those kinds of programs, or those kinds of appliances, rather, so that we'll have

that foundation and be able to implement virtual power plant-like programs, ultimately. So we're

kind of in it for the long game, I guess, is more the answer, maybe, the more direct answer.

Thank you, Commissioner Jamdar.

We have Vice President Leveroni.

Thank you, AGM Hale.

Question on the, just looking at the Clean Power SF rate plan, and I know we'll hear more on that,

but we're looking at a potential 20% to 25% rate decrease.

Correct.

On the generation rates that we provide customers, yes.

Okay, so if I were to look at in those columns the January 2026 Clean Power SF IC 104, and then if I were to look at Clean Power SF January 2027-94, not quite the decrease yet.

So the decrease in generation costs would be implemented if it's approved on Tuesday

and goes through the full process and is implemented.

It will be implemented in March of this year.

And then so you would see that base come down.

Okay.

PG&E's, the cost that PG&E's imposed on Clean Power SF customers were implemented in January.

And so what you're seeing on this slide, for example, which is I think the one you were referencing, is the total bill, PG&E charges plus Clean Power SF charges.

Thank you.

Okay.

Thank you, Matt.

And then, not that I'm going to object to a 20, 25% decrease, but then that'll get the rate down.

And then I see the next year, 2028, we're going to try, it looks like we have to go up 8.5%.

Yes.

Not that we have to, but that's what is being projected.

And what's the theory in that as opposed to maybe leveling it out further down?

Really just trying to get a minimum of difference between ourselves, our total bill,

and the total bill if a customer was served by PG&E exclusively.

We just want to make sure that we're absorbed.

Since we have, let me remind you, we had lower power supply costs than projected,

so we had more in our reserve account than we need to meet our objectives.

that allows us to spend down some of our reserves and help our customers.

And so that's what we're proposing, and you'll see more of on Tuesday.

Excellent. Thank you.

Thank you, A. Jim Hale.

Commissioner Jamdar.

Thank you.

I also wanted to follow up on a question I'd asked last week about the work orders with SFE.

I know there's been a certain standing sort of scope of work with SFE.

Is that continuing into this budget, and did I miss it,

or is there any update on the work order?

Our Department of Environment work order,

I know, is lower than it had been historically.

I'm not remembering off the top of my head

exactly what year it went down,

but it's staying at that level.

Did I get that right, Ish?

One more quarter.

One more quarter?

It's expiring.

Ah, thank you.

Thank you for the question, Anna Duning, Budget Director.

I can speak to across SFPUC, we have a number of work orders with SF Environment.

They help us deliver a number of programs in power as well as in water and wastewater.

The last two years, there was a one-time limited agreement with SFE to help fund some of their

staff to write grants related to the climate action program.

That work order is expiring.

So that does represent a decrease from the current year to next year for that specific

program.

But other ongoing programs that we've had annually with them are largely staying the same.

Just out of curiosity, what was the amount of the work order for that particular one that's expiring?

I think it's around $370,000 annually.

Are they cool with that?

No.

They're a small department that's non-general fund, and they're mostly funded by grants.

And so their grants go up and down every year, and they use a combination of sources to fund a number of programs.

We have been very clear with them for the last several years, going back two years ago,

that this would be a one-time program and that we'd continue conversations to make sure

that we are getting the full benefit out of that work order.

determined that it wasn't the right fit anymore for the work that we need to deliver,

but we are maintaining some of the other programs and work orders that we have with them.

Got it.

I'll maybe follow up offline.

I'm curious, the other programs or grant work orders, those are remaining flat, though?

It's just this one work order around grants?

That's correct.

Yes.

Thank you.

Thanks, Commissioner.

Unless there's any other questions, I wanted to share something exciting.

Our general manager might have heard this, and maybe AGM Hale.

I got a message from former San Francisco Public Utilities Commissioner David Hochschild,

who's now the president of the California Energy Commission,

and it says it sounds like we're all going to be working together around approval.

Approval, they just approved this morning, pertinent to when you mentioned EV charging stations.

As we know, a big priority for Mayor Lurie to have lots and lots of charging stations to make EVs accessible

and charging readily available for everyday working people to encourage them to get into their EVs,

to get an EV and use it, especially fast charging.

Well, we got a message from President Hochschild that the California Energy Commission just this morning approved an additional 24 public EV fast charging stations at the SFO airport.

And so I just love seeing that collaboration and just thought kind of a full circle because we all have worked with him on stuff over the years.

And I have no questions.

I just want to say thank you for the presentation.

and unless there's any other questions, we could go to public comment.

Ms. Lanier.

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?

Mr. DaCosta.

There are areas that we live in,

and SFPUC was responsible for a blackout.

from a company because of a line that was inundated with water.

Everybody thought it was PG&E's fault.

For eight hours, we didn't have power.

This happened twice.

So we have to have this responsibility, you know.

I'm not for PG&E.

I'm for standards.

I'm for transparency.

We had this early on in the year 2002 when SFPUC dug conduits under force main and compromised it and took no responsibility.

And in this case, they took no responsibility.

responsibility. I know they spend millions of dollars, so what happened with that line

near Napoleon Street? Who's responsible for it? And I know that PG&E is suing SFPUC.

So we can talk about this, that, and the other thing, but we also have to be responsible,

and we have to have standards. Thank you very much.

Thank you.

Moderator, are there any callers who have their hand raised?

Ms. Lanier, there are no callers that should be recognized.

Thank you.

Well, then.

Item four.

Item four, please, Ms. Lanier.

Motion to continue to a special meeting notice for Thursday, January 29, 2026.

All right, colleagues, can we get a motion to continue this meeting to a special meeting

on Thursday, January 29th.

So moved.

Motion by Commissioner Stacey, second from Commissioner Jamdar.

President Arce.

Aye.

Vice President Leveroni.

Aye.

Commissioner Jamdar.

Aye.

Commissioner Stacey.

Aye.

Commissioner Thurlow.

Aye.

The motion passes.

Item 5.

Item 5, this meeting is recessed to 1.30 p.m. on Thursday, January 29th, 2026,

right here in City Hall, room 408.

Thank you all.

Thank you.