Thank you.

Thank you.

Order.

And as Ms. Lanier returns, I will call for the roll call.

President Arce?

Excused.

Vice President Leverroni?

Here.

Commissioner Jamdar?

Here.

Commissioner Stacey?

Here.

Commissioner Thurlow?

Here.

You have a quorum.

Thank you.

Item to read the next text.

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 ethno-historic territory

of the Muekwa Ohlone 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 Muwekma Ohlone Tribes 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 Mawekma 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 3, approval of the minutes of January 13, 2026.

There was a correction made to item number 17,

stating that there was no announcement following closed session.

Are there any corrections to the minutes of the January 13, 2026 meeting?

Go ahead.

Kate?

Thank you.

Commissioner?

Ms. Lanier, I just wanted to clarify, what is the correction on Item 17?

That there's no announcement following closed session?

I think what we did is we announced that the Commission took no action during closed session.

That's what the minutes should read, right?

Yes, thank you.

Thanks.

So with that correction.

Okay.

Are there any further corrections to the minutes of January 13, 2026?

Ms. Lanier, to open to public comment.

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?

Ms. Lanier, there are no callers that wish to be recognized.

Thank you.

I request a motion and a second to approve the minutes as amended of January 13, 2026.

Motion to approve minutes as amended.

Second.

President Arce excused.

Vice President Leveroni?

Yes.

Commissioner Jamdar?

Aye.

Commissioner Stacey?

Aye.

Commissioner Thurlow?

Aye.

The item passes.

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.

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.

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

I have Francisco DaCosta.

Commissioners, I'm one of the few that comes in person so that I can address y'all.

and the main reason that I do that is

because I have the empirical data

and what I'm seeing is that

the commissioners

address certain issues or most of the issues

in a very general way

and we cannot do it anymore with climate change

and with our infants dying

and with the quality of the water,

not that we deem it what it should be.

And when we come and speak truth to power,

some of y'all don't like it,

but you know, the truth is the truth.

And we are now witnessing

no standards in our reservoirs.

I don't have to come and tell you what is happening with our reservoirs.

How are they cleaned?

How excess hydrogen chloride is inserted into the water?

How millions of gallons of water are spilled because of not adhering to standards?

to be a commissioner and to do an its assessment on our water system and our sewer system

is a very difficult job.

And we should have certain consultants or experts to inform you all about that.

Thank you very much.

Thank you.

Ms. Jean L.

Good afternoon, Commissioners.

I am wondering if you're aware that the SFPUC has a broken water meter transponder issue.

I'm guessing you do.

It's costing me hundreds of dollars with no end in sight.

and your staff says there are lots of broken meters, not enough units to replace them,

and not enough staff to replace them. How do I know this? In October, my bill went from $140

to $375, more than double, from less than five units a month up to 11. I called the plumber and

spent $1,000. That's a tangent I don't have time for. In November, after the fix, the same bill,

$376, 11 units. I called customer service, waited 45 minutes to talk to a nice person who explained

a work order for my transponder was filed in October, a year ago. No, last October. The SFPUC

was guessing my water use. She thought it was too much. She elevated the concern. The December bill,

the same. 11 units, $386. I have paper bills here proving that for the last five years,

I've gone over five units a month once. What the heck is this gas based on?

End of December, my cell phone rings. Unknown number. I answer it. You're not supposed to.

That's how you get your voice ID stolen. It's the SFPUC. Unknown number? Do you want your people

to talk to people? Come on. He explained that my transponder hadn't actually worked in a year,

that you'd been guessing for a year prior, and that you'd been guessing under because you got

a reading from my broken meter in October. So he assumed that you doubled my bill to recoup the

money that you had lost. We agreed you had likely recouped the money, but no estimate on a fix,

no estimate on when the bill would change, maybe go back to normal.

My January bill, higher, tripled.

14 units, $445.

Thank you for your comment.

It takes you a year to figure out I have a problem.

I should have a year to pay you back.

How many people are you doing this to?

Item 5, report of the general manager.

Thank you, Ms. Lanier.

Item 5A is overview of SFP use.

I'm sorry.

Did we do public comment?

I'm sorry, remote public comment.

Moderator, are there any callers with their hand raised?

Ms. Lanier, there are two callers

that wish to be recognized.

Thank you.

Caller, I've unmuted your line.

You have two minutes.

Good afternoon, this is Peter direct by our policy director for Yosemite rivers alliance.

In October, you received a water supply update from staff and you asked good questions like how often is designed up drought reviewed and when was the last time?

The answer was never now a lot has changed since the early 1990s when the design drop was conceived. We live in a totally different time now.

The demand has dropped from a high of 293 million gallons per day to less than 200 mgd

for the past 11 years.

The Water First policy has been extremely successful.

And the long-term vulnerability assessment shows no clear change in average precipitation

as a result of climate change.

Now, you might be surprised here that the design drop was never adopted by the Commission.

Now claims it was adopted through the water system improvement program resolution in 2008, but there's no mention of the design drop in that resolution.

So then they claim the design drop was mentioned in the programmatic EIR for the water system improvement program.

And therefore it was adopted. It doesn't work that way. If the design drop makes sense, then the commission should have shouldn't have a problem reviewing it and amending it if justified.

Now, staff is not going to drive a discussion, but the transients must direct it.

This is an opportunity to show leadership that looks out for ratepayers and the environment.

Please take action.

Thank you.

Thank you, caller, for your comments.

Caller, I've unmuted your line.

You have two minutes.

Hello, caller?

I don't know if this was me or not.

Yes, you are.

Okay, Natalie Shuttleworth, and I am calling about solar.

Am I calling at the wrong time?

This is for public comments.

Okay, public comments.

So I am a early adopter of solar because it was the right thing to do for all the reasons

I don't need to recount to everybody in this group.

But on 2015, December, I not only put solar with extra capacity on my roof,

but I put a new roof before it was needed, and I did a cool roof.

So all of this was because it was the right thing to do.

And the notable thing about rooftop solar is, number one, it provides power where it's going to be used.

You don't need distribution.

You don't need storage, but you can get a battery backup for storing.

So you're actually saving the grid from having to expand and having to produce more distribution.

To penalize people who did that early on is the wrong thing to do.

So I really request that you revisit some of the proposals that would increase the cost for some of us

who early on spent many thousands of dollars and did the right thing to help the world,

the country, the city, and so forth by producing power where we use it.

Thank you, caller, for your comments.

Ms. Lanier, there are no more callers that wish to be recognized.

Thank you.

Do we have another person who wanted to speak under public comment,

or was that for another agenda item?

The gentleman with the PowerPoint? Seeing none. This is on general public comment, not items on the agenda. Correct. Item 5.

Item 5A is an overview of the SFPUC Wholesale Customers Water Supply Agreement and the Bay Area Water Supply and Conservation Agency.

Allison Costuma and Steve Ritchie will be presenting.

Thank you.

Good afternoon, commissioners.

Thank you for the opportunity today to overview our wholesale customers,

our water supply agreement, and our relationship with BOSCA,

the Bay Area Water Supply and Conservation Agency.

May I have the slides, please?

So first and foremost, advancing the slides,

Just as a reminder, we operate, San Francisco PUC operates the Hetch Hetchy Regional Water System.

It serves almost 2.7 or above 2.7 million residents and thousands of businesses in four Bay Area counties.

What's unique about this system is, number one, we deliver potable drinking water, finished water, to our wholesale customers.

We manage that drinking water quality regulation and adhering to all of those standards.

This map, if you've seen it before, actually shows how much reliance of those wholesale customers is on this system.

About 21 of our 26 wholesale customers covered by the contract receive more than 60% of their water from the system.

So it is really relied upon by the Bay Area counties we serve.

Additionally, I'd like to just mention that they do purchase approximately two-thirds of the water delivered by the regional system

and pay for two-thirds of that via the mechanisms of the contract.

As a brief history, Spring Valley Water Company, of course, was the predecessor to the Hetch Hetchy Regional Water System.

The assets of Spring Valley were purchased in the 1930s or in 1930 by the city, and they continue to serve our regional customers.

Both Spring Valley and the regional system have served customers outside the city throughout their history.

In addition to the wholesale customers, we actually serve suburban retail customers in pockets outside of the city.

The water supply agreement originates from litigation filed by the city of Palo Alto in the 1970s,

and that litigation focused on unfair wholesale rate-setting practices.

The litigation was resolved in 1984 as a settlement agreement and master water sales contract.

Our current water supply agreement is the successor contract from 2009 that was agreed upon.

And we have had some amendments since 2009 to adjust administrative procedures in the contract.

This contract expires in 2034, and it has two five-year extensions.

I'm going to go over a few key items in the contract.

Obviously, the contract is quite large, so there are a lot of details, but these are the highlights.

The contract does include what's called the supply assurance.

It originates from the master settlement and water sales contract.

That is a supply assurance of 184 million gallons per day to the wholesale service area,

excluding San Jose and Santa Clara, who are not party to that litigation and are considered

interruptible customers under the contract. That is then divided into individual supply guarantees

amongst 23 of the wholesale customers. That was negotiated amongst them. The one, so where San

Jose and Santa Clara do not have an individual supply guarantee because they are interruptible,

And the third is Hayward, which does not have an ISG.

The contract actually stipulates if Hayward's purchases begin to push total purchases of the wholesale customers above 184,

there's a mechanism in the contract to push down purchases of the other wholesale customers.

And that, again, is part of the contract negotiated amongst the wholesale customers.

The ISGs, individual supply guarantees, are very important for urban water management plans and for land use for the planning agencies that the wholesale customers are associated with.

I will come back to this, I'm sure, if there are questions, but this is a brief look at where we are with 2023-24 purchases.

the individual supply guarantees of the individual customers, and their current projections for 2050 purchases.

And what I'll just call out is there are several that start to approach their actual ISG with their projected purchases in 2050, Sunnyvale being one.

Let's see if I can point.

Can't see there.

Sunnyvale and Daily City as examples.

And in addition, at that 2050 point where you see a significant amount of green, where the orange bar does not reach the top of that green, they actually have space in their individual supply guarantee even at that 2050 projection.

So that Palo Alto, Redwood City both appear to have capacity based on their projections.

Other key elements of the water supply agreement include numerous elements pertaining to accounting and rate setting, including asset classifications.

As you know, portions of the system are considered power portions, water only, and some are considered joint, which splits the asset and how we account for costs of maintaining and operating the system.

We have four wholesale customers who have access to other water sources, water supplies, imported supplies.

So that is Alameda County Water District, Mountain View, Sunnyvale, and Milpitas.

And those are either Valley Water or the State Water Project.

The last part here is also Attachment H is the Water Shortage Allocation Plan.

It actually is our drought plan, and it dictates how we divide what water is available between the retail and the wholesale allocation in times of drought.

The wholesale contract also outlines water conservation expectations of the wholesale customers, as well as their effort to use local sources.

There are two sections of the contract specifically I've called out.

They are both in 3.06.

3.06C is the first.

It says that all wholesale customers are obliged to comply with state and federal water conservation requirements and use recycled water if available.

This was specifically called out to ensure that the system, the regional system, was not barred from state or federal grant funding because of the actions of any of the wholesale customers.

customers section 3.06d actually also indicates that the wholesale customers

and San Francisco each agree that they will diligently apply their best efforts

to use both surface water and groundwater sources located in with within their

respective service areas and available recycled water to the maximum extent

feasible with considerations as you can see listed shifting on just to a little

bit of a history of BOSCA, the Bay Area Water Supply and Conservation Agency. The wholesale

customers have met since the 1970s as a group. They originated as the Bay Area Water Users

Association, BAWA, starting in the 1970s. In 2002, under state legislation, AB 2058,

Lou Papin was the author. The Bay Area Water Supply and Conservation Agency was formed as a

special district. Bosco currently represents the interests of the 26 wholesale customers,

the Bosco member agencies, in discussions with the PUC. I've also called out here a bit of the

content of that assembly bill. It did specify that it would establish a multi-county agency

authorized to plan for and acquire supplemental water supplies to encourage water conservation

and use of recycled water on a regional basis and to assist in financing the essential repairs

and improvements of the San Francisco regional water system, including seismic strengthening.

Additionally, it did need for coordinated planning, implementation of strategies for water supply,

conservation, recycling, and repair and improvement.

So this was all motivated and actually originated around the time of the water system improvement program.

Bosca's board is composed of officials appointed from the 26 member agencies,

along with nine staff members led by CEO Tom Smegel.

He's here today. He has a presentation.

That board meets every two months, and in the intervening months, they have a board policy committee that meets.

BOSCA also meets regularly on a monthly basis with the member agencies at a staff level to discuss items of shared interest.

Most important, I think, to us is BOSCA provides the PUC a single point of contact for water supply demand and planning data for the wholesale service area.

They also have efforts and programs to support the regional system, providing various efficiencies.

If you know the wholesale customers, we have a variety of sizes amongst those wholesale customers.

Some are small, some are quite large.

So they assist with reporting requirements, water supply planning, conservation services

that are under various mechanisms for the wholesale customers to take advantage of.

They also provide efficiency throughout the region by assisting in negotiations across the member agencies, including with the water supply agreement amendments.

BOSCA focus areas that they identify is participating in the Bay Delta Water Quality Control Plan update to ensure their member agency interests are represented,

participating in FERC, relicensing, administering revenue bonds that they actually issued in order to pay back debt to the PUC capital debt.

So they have a bond that they are repaying.

They oversee WISOP, the 10-Year Capital Plan Program, the Asset Management Program, and Emergency Response,

as well as their own long-term water supply strategy.

They support near-term supply solutions for members taking actions to promote, protect members' water supply, financial interests, and administration of the WSA.

So they are the main conduit of any items related to the water supply agreement.

And they support members in receiving water quality notifications and information given the reliance on the regional system.

And I am happy to answer any questions.

Thank you.

Thank you, Ms. Katsuma.

General Manager and colleagues for arriving late.

Questions?

Commissioner Stacey, I know this has been a presentation of particular interest to you

and something that you've asked for us to go through.

So thank you, General Manager Herrera, for bringing this before us.

Commissioner Stacey.

Thank you, and thank you to the General Manager and Ms. Katsuma.

I had a couple of questions about the wholesale customers' development of these alternative water supplies,

surface water, groundwater, recycled water.

We have heard about a couple of projects that San Francisco has been involved in.

Are there other projects that the individual wholesale customers are pursuing that you're aware of?

Yes, I think one of the best ways to point for, to detail information about this is our alternative water supply plan.

That data was presented in July or June of 24.

But it does at the back of that plan detail the work done already, the water supply sources and spread in the various member agencies and the projects that they are looking to work towards.

So there are various. Recycled water are already in existence for irrigation purposes.

Some use groundwater. Several are using groundwater. Palo Alto as an example.

There was another that have groundwater wells that are either constructed or intended to be built for emergency backup purposes.

So there's a variety of detail that was all laid out in those agency profiles in that alternative water supply plan.

I would also mention, in addition to that, Bosca does an annual survey each year.

Their latest is from 23-24 because they need to close the year and compile the data.

And that does, by agency, give a profile of what their water supply mix is beyond the regional system

and details recycled water and other sources.

Oh, it would be interesting to see that report.

I didn't go back and look at the alternative water supply report for this meeting.

But I do remember that there was a daily city project that San Francisco was working on that's now been deferred.

I remember also that there was a Palo Alto, maybe recycled water project that had been, I think they just determined not to go forward with it.

There was interest, and I don't know if Mr. Ritchie would like to refer to more details on the various projects,

but yes, in the capital plan now we have Pure Water Peninsula that remains.

But if, Steve, would you like to add anything on the projects that we were looking at and where the status is?

Yes, Steve Ritchie, assistant general manager for water.

Yes, the Daly City project was one where it just appeared that with the cost increases we were seeing there

and the amount of water that could be delivered by that, it wasn't feasible at this time to move forward that project.

The Palo Alto project was an interesting one that, you know, there's a lot of history behind that,

but that was basically done in conjunction with the Santa Clara Valley Water District,

which is not their water purveyor, but they did enter into an agreement for Santa Clara to use, you know, wastewater from Palo Alto.

But again, that project they determined was not feasible to go farther with.

There's lots of little history there we could talk about sometime, but again, it was one that just didn't pan out.

Okay. Thank you.

And Mr. Smagel, I don't know if you have information that you want to add or if you want to do that later.

I'd be interested in your perspective or your information, too.

So I signed up to make a comment after you're done with these folks.

But I do have, we do have a couple things to add.

One is, and I have a handout, Ms. Linear, I don't know if I can offer this to you.

I think I made enough copies for those of you in the front.

Thank you.

So I won't go through all of this, but what we show is that we have substantial conservation programs through Bosca,

and each individual agency also has their own conservation activities.

In addition to that, in 2022, we did an exercise to identify all of the alternative water supply projects that each of the agencies was working on.

And you'll find this detail.

I won't go into great detail about it, but it's listed here in a pie chart about what kind of activity it is and on a map of where these activities are.

There were about 50 identified in 2022.

And then as part of the 2050 strategy project that Bosca has undertaken, we are continuing to identify new projects that could be regional projects, as well as identifying additional projects since 2022.

And so that total list is now up to 70, I think 70 projects.

And they encompass primarily recycled water, groundwater projects.

But you can see there's a lot of other potential projects in there and other projects that we're examining as part of that strategy 2050 project.

So I hope that's helpful.

And I do believe you'll see in my presentation in a few minutes that, in fact, we're making great strides toward reducing the growth of water demands in the region.

the region. You'll see that in a second. Thank you. I could also see that decreased demand in the

chart that you provided us that shows sort of the difference between demand and the individual

supply guarantees. Yes. I'm wondering, especially given some of the

wholesale customers, there is a fair amount of room to move in between demand, future demand,

and the individual supply guarantees. Is there a way to right-size those individual supply

guarantees? I suppose the water supply agreement could be amended in 2034, if not sooner,

if everybody agreed to it.

It just concerns me that there is that difference

and that it may lead to some pressure or uncertainty in planning for the PUC,

and I also wonder if it acts as a disincentive of sorts

for the individual wholesale customers to develop alternative sources,

although it does sound like there are a number of projects on the drawing board at least.

I will mention several of the amendments that we have done have been on the contract, have intended to ease the process of potentially transferring portions of individual supply guarantee to other wholesale customers that may have a greater need or a demonstrated need.

So I think we're open to thoughts on this, but it is under the contract as it exists today.

I think it would require contract changes.

So certainly more we could chat on.

Thank you.

Mr. Smigel, did you have something to add?

Thanks.

Just to add some context there, the individual supply guarantees were as a result of looking at the demand in 1999 or so, that time period.

So what you see in the gaps in some of those agencies is a drastic amount of water conservation and alternative water supply usage.

In many cases, the usage that those agencies demand now from the system is as a result of these other sources,

which may or may not be more reliable than the San Francisco system.

I think we consider the San Francisco regional water system to be the most reliable supply among all the supplies in the area.

And so it's not necessarily indicative of what might happen in a stressful time.

In a drought, for example, the Palo Alto might end up using more water,

given that other sources that they have might not be available to them.

And so I do want to provide a little bit of caution on seeing those gaps in a normal year

and assuming that that is something that could be used for other purposes.

Thank you.

Thank you.

That's it.

Thank you, Commissioner.

Commissioner Thurlow.

Thank you for the helpful presentation.

I have a question that's a little bit related to Commissioner Stacy's question about planning,

and it's can you help me better understand why some of the wholesale customers have minimum purchase agreements?

What incentivizes that, and is that something that can be expanded?

Like how do we treat that and think about that?

So the four minimum purchase customers that we have, they have a minimum purchase because they have access to other imported supplies of water.

Alameda County Water District, as an example, they have the ability to purchase state water project water directly, again, which would be an untreated supply.

It would not be a finished drinking water supply.

So the minimum purchase mechanism was established to ensure that they did not source shift to take advantage of pricing or other differences.

It was partially to protect the system.

So you may not have been here.

We just did an amendment to adjust the mechanism for the minimum purchase quantities in the contract to reflect a recognition.

Mountain View is a different example, was paying almost $4 million a year for minimum purchase required water that they were not actually using.

So they were paying $4 million to the system for water they were never using and was not being used by the system.

But it is intended really just purely because they had another source that they could purchase from,

and it is to protect the system, ensure that they didn't shift away.

Thank you.

thank you miss Casima and so in in layperson's terms the graph with the different jurisdictions

and the blue and the green maybe we could put that up on yeah can we bring up screen the different

city so here you go in layperson's terms is there some takeaway that this represents some

water that was either delivered or supply that was accounted for that actually wasn't used?

So the green in all of this, so the blue is their actual purchases in 23-24. So that is their most

current reported purchases from the system from Boscus data from their annual survey. The green

is the space that they have to grow, but it is not water used. The orange line is merely what

they projected as their 2050 purchases off the system. So they're below many of them.

Almost all of them are below their individual supply guarantees. Some are getting very close.

Parisma, as an example, about seventh, eighth from the right.

Parisma is very small.

They are pretty consistently very close to the top of their ISG.

And I know that we have our agreement with Bosca, obviously, and Commissioner Stacey mentioned the year 2034,

unless we came together, worked with Tom and Bosca and wholesale customer partners.

I might just be being a little bit blunt with my assessment to kind of like try to get things more aligned,

or I think, as you said, try to get this right between now and 2034 with respect to some of the maybe more accurate projections.

Whatever it is that Commissioner Stacey was referring to about looking if there's some changes we can make mutually, collectively bargained,

as the ratepayer advocate on this commission,

does that potentially have implications of saying that we can maybe look

and revisit some of our anticipated investments around alternative water supplies

or some of our capital costs that we know are driving the projected rate increases in future years?

So I'll provide a couple of responses, and if Mr. Ritchie wants to add.

So the contract does expire in 2034 with two five-year extension opportunities.

We do know that there are currently items within the contract that do require an amendment due to the dates associated with them.

We have a 2028 decision point for San Jose and Santa Clara.

So we already anticipate another amendment package coming before the commission and the wholesale customers.

The period of time that it takes to negotiate amongst 26 and San Francisco's interest,

The last one took at least two years,

so the likelihood I would say is probably more likely in the 2034

at the point that the contract is being chosen to be extended or not.

But I'll let Mr. Ritchie add anything.

Yeah, one thing I would add very particularly is, as was pointed out,

San Jose and Santa Clara do not have an individual supply guarantee,

and they are what we've called interruptible customers,

that they could be technically cut off from the system.

One of the ways for them to become part of the system

is to get a transfer of individual supply guarantee to them,

but they're not part of the, call it the ISG family.

They're not part of the supply assurance,

but there certainly is a lot of available guarantee that hydraulically could cover their needs.

So finding a way to normalize that would be a really at-laudable goal for us

and one we've been thinking about and working on.

We're starting to talk about are there creative ways that we can force the issue a little bit more

as opposed to waiting for the contract amendment

and then kind of duking it out a little bit

because everybody is very jealous.

One of the things that each of the customers thinks is,

okay, I'm a city council member in some city,

and we've got some available supply that is available for our future needs.

Do I want to give that away?

Do I want to sell that?

And those kind of questions have led people to say,

no, I want to keep it just because.

And I think maybe we're moving to a time

where we can kind of get past that

and say can we share the water a little bit better.

And then if we did come together

before the formal renegotiation

to make some changes mutually agreed upon,

do you think that that could have some positive impact

on capital side and thus positive impact around rates?

Well, in the case of San Jose and Santa Clara, one version of that is, sorry, you don't get part of this,

so a project or projects have to be developed that will develop additional supply for you.

And then the question is, well, should you really develop that additional supply,

either through San Francisco's means or through their means,

when there is this pot that could be available if people wanted to agree to a contract amendment

or some other mechanism.

There may be other mechanisms that we may be starting to explore.

Okay.

Great.

Thank you, AGM.

Richie.

Thanks, Ms. Kastema.

Unless there's any, there is further questions.

Apologies.

I was hogging the microphone.

Vice President Leverroni.

No problem.

With the talk of density in the state as well as locally,

and probably also talked about in the local communities

about more density beyond the state,

is that built into these figures if they think

that there's going to be an impact,

that there's going to be more faucets that we're going to need?

I would respond with the fact that the individual supply guarantee for the wholesale agencies is how they address, you know, basically the impact of development in their areas, right?

That they have a certain amount under the contract that they are guaranteed, and they look at their development.

Their planning agency looks to check to see that they have supply.

I will add that, again, this is part of the profiles in the Alternative Water Supply Plan.

We have seen significant water conservation savings, reductions of their residential gross per capita per day, GCPD, from almost all those wholesale customers, and they have been significant.

I believe that you'll hear some from Mr. Smagle when he presents on the region as a whole.

But the individual customers, many of them have reduced since 2010, as an example, with some fair success double-digit reductions in their individual demands.

And that is partially due to infill and densification within the available space.

So and then if we I guess this may be a little more far-fetched if we did have to increase

supply of water would that entail if that ever came to fruition it looks like it's moving in the

other direction but if it ever would that entail more construction to improve our system in order

to provide more water, or is our system and what we're continually doing to help move it along,

is that sufficient that if we needed to supply more water, if we had to?

So I would just add, and I'll let Mr. Ritchie add if he has anything,

but our levels of service goals do, that is the guidance point for all of our work

and maintenance of the system and capital projects.

Those level of service goals do have an expectation of delivering to the wholesale customers

and certainly resilience in the system and the ability to serve.

And I can't recall, does it have 184 in the level of service goals?

Yeah, the water supply level of service goal is providing 184 million gallons per day.

So physically, we can do that many times, but there are limitations on it.

So it depends on where that water supply would come from.

If it's something that could come from the Tualany River, for example, a lot of the plumbing is set up to take care of that.

If it has to come from some other place, that means building more plumbing, more treatment, different things that would have to be developed for it.

So it really depends on if you needed more supply, what the source of that supply would be.

Thank you.

Commissioner Stacey.

Thank you.

President Arce, just the questions that you raised about whether the individual supply guarantee affects our rates and our planning.

I remember from the alternative water supply reports, Ms. Kothari always emphasized that they are very focused on planning for demand, that when we look at alternative water supply, we're not attempting to go to the upper reaches of the individual supply guarantee.

In my mind, the individual supply guarantee adds uncertainty to the SFPUC's ability to plan and potentially creates this disincentive to look to other ways to find water.

And I appreciate Mr. Ritchie's comment that nobody wants to give up their rights to water.

I mean, that's the entire Western United States negotiation at this point.

But I do, and I also want to say that I appreciate the level of conservation that's going on among all the wholesale customers and San Francisco.

that even though development is occurring, we don't necessarily see the demand that we originally anticipated

because we have these great conservation measures that I hope we continue to develop on every front.

But to me, these individual supply guarantees feel a little dated

because of those great conservation efforts

and the sort of lower per capita demand

that we see continually happening.

And so that's really my concern

with the individual supply guarantee

is the element of uncertainty

that it brings to that planning process.

But I do remember Ms. Kothari being very clear

that we're not planning alternative water supply for those high-end predictions

that we're really focusing on demand and responding to that continually changing demand.

Right. Yes. Plan for obligations, build for demands, right?

There you go.

So projects don't come forward to actual fruition to be constructed or built

until demands are really showing that that is needed.

But, yes, we're cognizant, I believe, of the supply assurance in our examination of what is needed,

but it is really on demands and what is projected and building for when it is actually needed.

So, yeah, thank you.

Thank you so much.

And thank you for this presentation.

I really appreciate it.

All right.

Thank you, Ms. Kassma.

At this time, Ms. Lanier, can you please call public comment?

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?

Hi, it's Tom again.

I just, in reaction to the conversation about the ISG, I just want to remind the commission that the negotiation that you're talking about would be not with Bosca.

Bosca is a conduit.

It's a 27-party negotiation.

And those parties that you might feel have too high in ISG might not feel that way themselves.

And so a couple of other points that I would make on that front.

One is that the city of San Francisco is using far less than what it has been designated under previous incarnations of the water supply agreement.

I think that number is 80 or so, and I think the most recent demands have been about 50 MGD.

So that's certainly another poster child for conservation and activities like that.

And then, yeah, I think that's what I wanted to say about that.

Thank you.

I look forward to talking to you in about 30 seconds about the next item.

Director Smeagol reminding us of the old adage, physician heal thyself.

Any other speakers from the public?

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

We have another speaker. One moment.

That was a good presentation, giving us an idea of a little bit of the chronological history of water.

but there are other areas like Sunol

where trucks go and fill silos

and we need to find out those agreements

let's not hide

things like that

and we mentioned about San Francisco

we like to conserve water

The other thing is that we forget about the Reker Act and how it was decided by this city and the very powerful Congress people to deprive the indigenous people of their water and their resources and their land.

the flooding of Hachachi Valley

one of the most beautiful valleys in the world

and what we are doing to the salmon

and what we are doing with the Tuolumne River

there is an element of greed

that a segment of the population takes for granted

it. But the population should also have empathy, and that's missing in this discussion. Thank

you very much. Thank you. Any further speakers here in the room? Seeing none, moderator,

are there any calls that have their hand raised? Ms. Lanier, there are two callers that wish

to be recognized. Thank you. Caller, I have a minute on your line. You have two minutes.

Thank you. This is Peter Dreckmeier, Yosemite Rivers Alliance.

As you heard, the water supply agreement was recently amended, and the amendment includes reducing minimum purchase obligations for four customers.

If those four agencies were all to decrease their purchases to the new minimum, the SFPUC would experience a loss of 6.34 million gallons of sales.

At $2,500 per acre foot, the total revenue loss would be almost $18 million per year.

That's a lot of money.

Now, this isn't an opinion, simple math calculation.

This is likely at least one reason why SF rates are now projected to be higher than last year's

projection, and wholesale rates are now projected to increase 7.6% and 7.2% over the next two

years, whereas last year they were projected to increase only 1% and 1.2% for those same two years.

Now, if this information is new to you, you might ask why. Thank you.

Thank you, caller, for your comments. Caller, I have a minute you're lying. You have two minutes.

Hi, this is Dave Warner. Thank you all for your service. I'd just like to add to Mr.

Dr. Dreckmeyer's comments, this came up in the last Bosca meeting, and the explanation we heard from

the SFPUC was the reason for this increase growing from the wholesale increase growing from 1%

projected for starting in July to 7.6%, and then the following year growing from 1.2% to 7.2%,

as you can imagine, very large wholesale increases that the Palo Alto council member or Bosca rep was

quite surprised. I think most people were surprised. But the reason I bring this up

is that the explanation that was given for these increases were the demand, the summertime demand

was quite a bit lower than expected, and so rates had to go up. Well, that is a huge jump, 6%. But

my point here is, you know, there are not, including the demand projections that you've seen, there are

There are also demand projections that say if trends continue based on a regression analysis that looks at drought duration, demand could be substantially lower.

And my point is that I hope the SFBC would do a financial analysis to say what would the business look like, what would their situation be if demand had dropped for the whole regional water system by, say, 15% or 20% below where it is today,

which seems to be a realistic possibility, which I think we should be prepared for.

And I have not heard any action to do that.

Anyway, thanks so much for serving.

That's it.

Thank you, caller, for your comments.

Ms. Lanier, there are no more callers that wish to be recognized.

Thank you.

General Manager?

Thank you, Ms. Lanier.

For item 5B, and in light of just that last presentation and some of the public comments that we have heard today and other days,

I just wanted to sort of let you know more broadly what we have in store for 2026 in terms of demand planning and the like,

and its impact on how we do our business.

The SFPUC staff, including scientists, hydrologists, engineers, and planners, continually are engaged in one aspect or another of long-term water planning,

and at the same time are performing real-time operations analysis and planning for current conditions.

For San Francisco, water planning involves many different factors, such as water storage conditions,

hydrologic conditions, water availability, water demands, including environmental obligations,

and supply obligations to the irrigation districts and our wholesale customers.

Against this ever-changing landscape, the strength and resilience of our system are tested against our design drought.

This year is a year for the development and submission of urban water management plans.

As a result, both the SFPUC and our wholesale customers have been exploring various demand scenarios.

Thus, it is timely to provide the Commission with a focused presentation on a variety of

water conditions for water supply planning, including operational considerations.

We will look at water availability under different scenarios, including the Healthy Rivers and

Landscapes Bay Delta Alternative, water demands and obligations, and the length of design drought

to ensure that the SFPUC can operate its system and meet its water quality, delivery, and

environmental needs.

Later this year, we will present to the Commission at a public hearing information on these situations,

and we look forward to considering comments from the Commission, Bosca, interested stakeholders,

and the public following those presentations so that we can continue to use the best information

we can as the basis of our long-term water planning.

Thank you.

Thank you, Mr. General Manager. And with that, concluding item 5B, or are we?

I think you may have to take public comment.

Public comment, okay. Understood.

Is there any commission discussion?

Commission discussion, colleagues? Seeing none, can we take public comment, Ms. Lanier?

Absolutely.

Oh, Vice President, oh, Commissioner Stacey.

I just wanted to express my appreciation for that ongoing and continual analysis that goes on within the department,

and I really appreciate having that discussion at a public hearing.

So it's great to hear, and thank you for all of the ongoing work all the time.

Thanks.

I just wanted to underscore what Commissioner Stacy said.

All right.

Thank you.

Can we take public comment, Ms. Lanier?

Yes.

remote callers please raise your hand if you wish to provide comment on this

item are there any members of the public president wish to comment seeing none

moderator are there any college who have their hand raised miss linear there's

one caller that wish to be recognized thank you caller I've unmuted your line

you have two minutes this is Dave Warner again I would also underscore

Commissioner Stacey's comments and General Manager Herrera's comments that such a sensitivity analysis is terrific.

I would also add one step further, as you had seen in the letter from me earlier this month,

regarding the Metropolitan Water District of Southern California,

where not only did they look at different demand scenarios, but they looked at the financial impact of those demand scenarios.

And so would strongly encourage to add the financial impact analysis also so people have some understanding of what the consequences might be.

And, of course, the worst case scenario, or maybe not the worst case, but a bad case scenario is what happened to the San Diego County Water Authority.

And just the earlier we can understand that risk and have, you know, clearly delineated plans, I think the better off we are.

But at the same time, I really want to say thank you to General Manager Herrera for doing this and really look forward to this later in the year.

Thank you.

Thank you.

Ms. Lanier, there are no more callers that wish to be recognized.

Thank you.

Item 6, Bay Area Water Supply and Conservation Agency Report.

Good afternoon, President Hercé and Commissioners.

I feel like we could have done this earlier and maybe saved a couple of questions.

Could I have the slides up, please?

We're a little bit ahead of San Francisco in terms of planning for the urban water management plans.

We conducted our demand study, and I think San Francisco's demand study will be done shortly.

But I wanted to present you the results and talk to you about the process

so you could understand what's going on with the wholesale customers.

So we do this every five years in alignment with urban water management plans.

And the primary purpose of this is to agree on a set of assumptions about growth and other demographics

and identify a regional demand forecast.

And that goes to your staff to help design the risk analysis that was just talked about

and further inputs to the urban water management plans for the 26.

I will say that this study is a general study with specific consensus assumptions,

and each agency in the preparation of its urban water management plan can make different assumptions

and can change these because they have about six months between when this came out

and when their management plans come out.

So this is a graph of what has transpired in the last 30 or 40 years

in terms of the suburban demand.

This is what our demand would look like without any conservation.

You can see it would grow from about 180 now to 238 MGD.

However, we know that there are conservation measures that are taking place.

We call those active and passive.

Passive is the turnover in appliances to new, more efficient appliances.

Active are those promoted by the agencies and rebate programs and the like that get things retrofitted into people's houses.

And so our total demand from the 26 agencies is estimated in 2050 to be 222 MGD.

and just to give you a point of comparison that 222 mgd in 2050 is about 13 percent less than our

estimate for 2045 in the last demand study that we did in 2020 so the considerable drop in demand

from the last study and some of the reasons for that have to do again with conservation

and water use efficiency throughout the region.

The drivers here are growth in customers.

So we see an increase in our customers by about, I think it's about 30% in the planning period,

and growth of water demand is much less than that because new customers would be expected to be those multifamily,

high-efficiency customers.

we'd have all new appliances and very little outdoor water use our residential

per capita use for the region has come down dramatically over the years and

will continue to fall in our estimates and you can see that by 2050 we estimate

44 gallons per capita per day that that's really remarkably low and that's

lower than what I believe San Francisco is right now and so the big important

item for our coordination with San Francisco is what we expect the demand to be from the San

Francisco Regional Water System. And here we anticipate a demand of 148 MGD as in comparison

to the 184 supply assurance that we talked about earlier. Remember, though, that this is a medium

term forecast. And though this demand is going up slowly, we expect the water system to be there in

perpetuity and so the the 148 is not a permanent expectation of ours it's it's

expected that we would continue to look at demands every five years on

into the future and this number could continue to grow into the future as well

we did not want to leave with one central estimate without looking at

sensitivity and I know we talked about sensitivity earlier sensitivity is

important to understand different demographic projections whether it's the

economy or inflation the cost of water population those sorts of things and so

we set about creating a scenario analysis we invited stakeholders and

including mr. Warner mr. Reckmeyer to participate in this conversation about

what the scenarios might be and we came up with different scenarios around our

central estimate of 222 mgd of demand for the wholesale customers and so we

looked at a high estimate which would be booming economic growth data centers

using a lot of water things like that a moderated high that might be a little

bit less than that we looked at the trend analysis and that's what I think San

Francisco uses so the trend would be trends in population that have been

going on, not the future trend that we expect through Plan Bay Area and that sort of thing.

And then we also looked at more aggressive conservation negative outcomes in terms of

the economy and in terms of population growth. And you can see that there is a wide spectrum

from a max of 266 MGD to a minimum of 157 MGD in the scenarios that we planned out.

And so that is just to be aware that all plans are going to end up being incorrect.

All of these projections are not going to come to pass.

So we tried to get an envelope to see where those projections might come.

But just some takeaway bottom line, we do see a 37% increase in population as our planning assumption here,

with resulting water demand being relatively flat, even considering that increase in population.

Passive conservation savings is a big deal, and active conservation, it reduces our demand

by about 7% in those upcoming 25 years.

And we talked about this before, but we continue to rely on the regional water system for the

supply guarantees that it provides.

One thing that I did remember from my earlier comments, and I apologize for inserting them

here, but one thing that this continuing reduction in per capita demand shows is the potential

for demand hardening.

It shows the potential that in a drought, when we're called upon for a reduction, the

agencies in Bosca may not be able to respond effectively to that call.

The reliability standard that is in the current contract calls for a maximum of a 20% reduction

due to drought.

And I am concerned that over time, as we develop into this future, we may find ourselves in

a situation where we are not able as a collective whole to get to that 20% value with high efficiency

future growth.

And so I just want to throw that out there when we're talking about changes to the contract,

that might be something you'd have to look at in the contract in the future as well.

So that is the end of my report.

I'm happy to take any questions or comments.

Thank you, Mr. Smigel.

Questions from the commission?

Commissioner Thurlow.

I have a question about the scenarios that you presented and whether or not sort of from the lowest to the highest usage scenarios, the fraction of the water coming from the PUC is fixed, or how do you think it varies as a function of those different scenarios?

That's a good question.

Unfortunately, we didn't do that.

We didn't ask the agencies that question with respect to the scenarios.

I would suspect that it would be relatively constant because, again, it is the highest quality water and it is the most reliable water.

So I would suspect in those instances it would be relatively unchanged in comparison to the overall change in demand.

Commissioner Stacey.

Thank you, and thank you, Mr. Smego, for that presentation.

I guess I just wanted to emphasize your point that as these conservation measures take effect,

the dry year, the ability to further reduce usage in a dry year is going to be increasingly difficult.

That's something that we've talked about in the past, both in San Francisco and among the wholesale customers as well.

in my mind one of the important reasons to develop alternative water sources is for that dry year

and the many dry years that we may be facing.

I think between the uncertainty ahead with climate change

and even changing water policy in the western United States

that is going to affect the SFPUC, the Tuolumne River,

all of the river systems in California and the western United States,

we really do need to, even in the face of decreasing demand

and what looks like adequate water supply in a normal year,

we really need to think about those dry years

and how we increase our resiliency during those dry years.

But I certainly understand your point that as we get better at conservation,

it's going to make the drought reductions that much harder to attain

and something to keep in mind.

Thanks.

Thank you.

All right.

Further questions, comments?

Seeing none, can we take public comment, Ms. Lanier?

Remote callers, please raise your hand if you wish to provide comment on item 6.

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

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

Ms. Lanier, there are two callers that wish to be recognized.

Thank you.

Caller, I'm unmuted your line.

You have two minutes.

Thank you.

Peter Drechmeier, Yosemite Rivers Alliance.

I'd like to compliment Bosca and their consultant for doing a good job

especially the sensitivity analysis.

You saw that their projected baseline for 2050 is 222 MGD,

of which 148 MGD would be purchased from the SFPUC,

and that's way below the 184 water supply guarantee.

Now, the baseline demand projections have historically been at least 20% above what the actual ended up being.

And that's in a relatively short timeframe as you go out, they're even more off.

But even over the past three years since the last demand study, they were way off.

So it's really important to look at some of the lower numbers in the sensitivity analysis.

Now, 157 million gallons per day, that's a lot less water purchased from the SFPUC.

You should ask for that number.

The difference for the baseline was 222 MGD overall, 148 from the SFPUC.

With 157 overall, the purchases from the SFPUC are going to be way under 100 MGD.

Now, what number will be used for the SFPUC's master urban water management plan?

Likely the baseline figure.

Now, staff acknowledges the urban water management plan numbers aren't projections.

They're really an outside envelope.

No matter what they tell you, they use these figures for planning purposes.

The Alternative Water Supply Plan is based on the Urban Water Management Plan numbers.

It inflates the amount of perceived alternative water supply that the SFPC might have to build,

and that cost would be staggering.

So this is either terrible planning or manipulation of data for political purposes.

Thank you.

Thank you, Caller, for your comments.

Caller, I'm immune at your line.

You have two minutes.

Hi, this is Dave Warner. I would also like to thank Mr. Smegel for a good presentation and a good summary of the analysis, the demand study.

Unfortunately, demand hardening is a pet peeve of mine.

And I understand anecdotally how people can think there's such a thing as demand hardening or that we might be getting close to it.

But let me give you a few data points.

The SFPC in 2007 said demand hardening was a real thing and it was about to occur.

Los Angeles today is talking about demand hardening. I have a hard time with that one.

But then data-wise, there was a 2015 paper that looked at a number of southwestern water agencies,

and they found no sign of demand hardening. They actually found very good response to

public efforts to reduce demand, and they said that was a very big one.

I also did an analysis of how demand changed in the last drought from the wintertime to the

summertime. And remarkably, if you expected to see demand hardening, I would have expected

wintertime demand to not decline as much as summertime demand. But that wasn't the case.

Wintertime demand declined by the exact same or just virtually exact same percentage as summertime

demand. So we just haven't seen that yet. And we don't have any data-oriented indicator that says

WE'RE ABOUT TO HIT IT. SO I'D JUST BE CAUTIOUS ABOUT BANKING ON

DEMAND HARDENING AND, YOU KNOW, IF IT DOESN'T HAPPEN, THEN OUR

FINANCIAL SITUATION IS EVEN WORSE. OKAY. THANK YOU.

THANK YOU, CALLER, FOR YOUR COMMENTS.

MS. LANIER, THERE ARE NO MORE CALLERS THAT WISH TO BE RECOGNIZED.

THANK YOU. ITEM 7. ITEM 7 IS THE CONSENT CALENDAR.

CONSENT CALENDAR ITEM 7C HAS BEEN REMOVED FROM THE COMMISSION

CONSIDERATION. TODAY THE COMMISSION HAS ASKED TO CONSIDER

for approval consent calendar item number 7a 7b 7d and 7e commissioners

questions comments on the four items which are currently on the consent

calendar mr. Stacy thank you I have a question about item 7b there are four

contracts on item 7B, I think for a total of $32 million, if I've read that correctly.

One, there are some descriptions of the scope of the contract that are fairly general in nature,

and I was wondering if you could give us a little more detail on what wastewater services,

stormwater services, operational strategy services, and health and safety services might be?

Just to give us a sense of what these contracts will involve.

Sure. Good afternoon, Commissioners. My name is Paulson Yeun from the Wastewater Enterprise.

And to answer your questions, these are as-needed contracts. So this is the next batch of contracts

that we are continuing for the following five years.

And the work is broad because it's as needed,

so we're trying to anticipate demand and priorities.

So, for example, wastewater services would include work like condition assessment,

collection system renewal planning.

Stormwater services would include work like low-impact design,

stormwater policy planning. Operational strategies include things like organizational development and

management. So those are kind of what we're looking at in terms of this is the type of work

that we're anticipating for the next five years. So hopefully that can answer some of your questions.

Yes, thank you. So it's really helping you sort of not only assess the condition of the assets, but also to think about how to prioritize projects or how to implement projects from a technical perspective as well as a priority perspective.

Am I understanding that correctly?

That's correct.

That's correct.

So we work from planning work to actually possibly technical work,

depending on the needs and priorities of the wastewater enterprise.

And the category of health and safety services, what kinds of services would that include?

Is that like worker safety?

Let me see.

So for, I'm sorry.

So Joel Prather at WESO, our assistant general manager.

Some of the health and services supplemental work that we had done at the plants was identifying

confined space areas and trying to map those out and other real specific short-term needs

where we had expertise come in to supplement our staff.

It made the most sense for the duration of the exercise and the expertise that we needed.

Okay.

Thank you. I think I got that.

All right. Any other questions?

On the consent calendar, four items.

Can we take public comment, Ms. Lanier?

Remote callers, please raise your hand if you wish to provide comment on item 7.

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 that wish to be recognized.

Thank you.

All right.

Can we have the next item, Ms. Lanier?

Would you like to take a vote?

Oh, I'm sorry.

We have to approve our consent calendar.

I said, wait a second.

I just skipped a very key item.

Request a motion and second to approve the consent calendar items.

Can I get a motion to approve the consent calendar, colleagues?

So moved.

I think we're approving items 7A, B, D, and E, but not 7C.

Is that correct, Ms. Lanier?

That is correct.

Thank you.

Commissioner Stacey has made a motion to approve consent calendar items 7A, 7B, 7D, and 7E.

Do we have a second?

Second.

From Vice President Leveroni.

President Arce.

Aye.

Vice President Leveroni.

Aye.

Commissioner Jamdar.

Aye.

Commissioner Stacey.

Aye.

Commissioner Thurlow.

Aye.

The item passes.

Item 8, public hearing to consider and possible action to adopt rules and regulations governing

procedures for submitting written objections to proposed water and sewer fuser charges.

Good afternoon. Laura Bush, Deputy CFO. So I don't have a presentation today. Hopefully

this is a pretty clear item. It's a great opportunity to improve our rate setting process

as a result of a change in state law that occurred in 2023. So as you know, we're planning to adopt

two years of water and wastewater rates at the April 28th Commission meeting. We set water and

sewer rates to recover the cost of providing service, and those rates must comply with Proposition

218 of the California Constitution. So under Prop 218, ratepayers currently have the right to submit

protests to propose rate changes. However, that process does not require protests to raise

substantive legal issues, and it does not require PUC to respond currently. In 2023, the state

legislature adopted new laws which authorise public agencies, including us, to adopt an

administrative exhaustion of remedies process for adopting changes to water or sewer rates.

These new laws allow ratepayers to submit written objections that raise substantive legal concerns

about proposed rate studies or sewer and water rates,

and they require the agency to provide written responses

to those objections before the rates are adopted.

The goal of this is to improve transparency,

public engagement, and clarity in the rate-making process.

The new laws also establish that submitting a written objection

is a prerequisite to filing a legal challenge to rate action,

as well as the types of evidence that may be admitted in the courts.

By creating a clear process for raising and responding to legal issues early, these rules will help resolve concerns before rates are adopted and reduce the likelihood of subsequent litigation.

Staff have prepared the draft rules that establish this written objection process for the Commission's consideration today.

The draft rules define who may submit an objection, what constitutes a valid objection, and the time frame for submission, specifically within 45 days of SFPUC mailing the notice required under Prop 218 to notify PUC's customers of the proposed rate changes.

Before concluding the Prop 218 process hearing, PUC staff will present all written objections and PUC responses to this commission for consideration.

So in summary, these draft rules would implement new state laws, strengthen procedural fairness,

improve transparency, and help us avoid future litigation by ensuring legal issues are raised,

addressed, and resolved through a more structured public and legal process.

I hope this makes sense.

Thank you very much.

All right.

Thank you, Deputy CFO Bush.

Is there any questions from the commission?

If not, we can take public comment.

Thank you.

It all makes sense.

Remote callers, please raise your hand if you wish to provide comment on item 8.

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 that wish to be recognized.

Thank you.

Colleagues, can we get a motion to approve item 8's rules and regulations?

Motion to approve.

Motion to approve.

Second.

Second from Commissioner Stacey.

President Arce?

Aye.

Vice President Leveroni?

Aye.

Commissioner Jamdar.

Aye.

Commissioner Stacey.

Aye.

Commissioner Thurlow.

Aye.

Item 8 passes.

Item 9, public hearing to consider adopting schedules of rates of the San Francisco Public Utilities Commission,

Power Enterprise for Clean Power SF, Power Service in San Francisco to be effective March 1, 2026.

All right.

May I have the slides?

All right.

Good afternoon, commissioners.

My name is Matthew Freiberg.

I'm the rates manager with SFPUC, and I'm here to speak with you today about the proposed

mid-year rate adjustments for Clean Power SF.

Before I jump into my presentation, I have a really brief agenda here.

I'm going to provide some background on the rates setting process and the landscape for

Clean Power SF, the proposed Clean Power SF rate plan, including what we're proposing

for this year, and the subsequent adjustments over the next 10 years.

For those of you who are not familiar with the way Clean Power SF rates are set and the bills that are charged to our customers,

I have a brief overview slide of that before we jump into a couple slides on the proposed bill impact from this recommendation.

And then I'll close with a final summary of our proposal and a slide on our outreach activities.

So in 2022, SFPUC completed its most recent power rate study.

Around that time, we also established a new financial policy, which established a 150-day

minimum days cash on hand threshold, as well as a 180-day cash on hand target.

Following the completion of the rate study, we used the findings of that study as the

basis of approving rates packages for fiscal years 23, 24, and 25.

You may recall last year when we came to consider our rates package for Clean Power SF, we

we recognized that we were going to achieve that 180-day cash-on-hand target without having to adjust rates.

We were considering a couple of different options at that point,

where we could either adopt a rate decrease and have a gradual rate increase following that,

or we could take a wait-and-see approach and hold rates flat for as many as four years

and then gradually increase rates after that.

The idea was that we were going to see what happens with power markets.

staff's proposal at that time the commission agreed that we should proceed with the wait

and see approach which brings us to today there are a couple of things that have changed

significantly for the financial position for clean power sf and for the way customers receive bills

first on january 1st of this year pg needs significantly increase their bills

or increase their rates that impact the bills that our customers pay this is through an increase to

the delivery charges and the power charge and difference adjustment. I have another slide on

this next to talk more about that. But second, power supply costs for Clean Power SF have really

declined significantly, and this is resulting in us growing fund balance faster than we had

originally projected. And as you're all aware, affordability is really central to SFPUC's

planning process. The combination of rate increases from PG&E and the higher than projected

fund balance positions us to offer lower generation rates to our customers in an attempt to offset the

increases by PG&E. So this slide here provides an illustration of some of the main impacts

or the main drivers of PG&E rate increases and I've taken rates back to 2023 just to provide

some perspective in context of what how big of a changes are. On the right you see PG&E's

residential delivery rate is going back to 2023, and you can see that it's gradually gone up over

time, and on January 1st, they increased their delivery charges by about 6%. The more significant

impact is what you're seeing on the slide on the left. That's the PCIA, and you see the PCIA has

jumped up and down a bit over the last couple years. It's a pretty complicated mechanism that

drives the calculation of PCIA, but you see in 2026, it increased by around 400%, and that's

what's really hammering our customers right now.

So this is our proposal to deal with the rate increase from PG&E.

And this slide's a bit complex, so I'm going to take a moment to orient you all to it.

The chart here you're seeing with the purple bars, that's the projected year-end fund balance

for Clean Power SF for fiscal year 26 through 2026 through 2036.

The dashed lines that you see are our fund balanced target.

So the black line is the minimum, and the dashed yellow line is our target for 180 days cash on hand.

The table below shows the percent change that we are projecting for each of these years,

as well as a translation of that end-of-year fund balance to actual days cash on hand.

So the proposal we're bringing for you today is to be effective on March 1st, a 25% decrease in residential and large commercial rates.

Those are the customer classes that are experiencing the most significant bill impact from PG&E's rate increase,

so we're giving them a slightly larger rate decrease.

All other customer classes will have a 20% decrease.

We're also in the middle of completing an update of our rate study,

so it is possible that we may come back to you before the end of the fiscal year

with a revenue-neutral structural adjustment to our rates,

but we're not ready to make a decision on that right now.

What comes with this rate decrease is what we also talked about last year.

There will have to be a bit of a rebound in rates,

but even though you might see percentages that look a little bit high,

it's coming off of a significantly reduced rate base.

This site here just provides some perspective about how customers are billed for power use.

As a CCA, we are very tied to PG&E.

We set our own generation rates, but that's the only portion of the customer bill that we can control.

And what you see in the stack bar chart, the green piece on the left,

that's the generation portion of the bill for Clean Power SF customers.

That's what we control. It's about 28% of the overall bill.

of the overall bill.

The remainder of the bill, which is comprised of delivery

charge, which is the gray portion,

you see is the same for both PG&E and Clean Power Self

customers.

There's also the PCIA and other fees,

which you see in the light blue.

So you see it's about $9 for us.

And in this chart, you see it's negative $2 for PG&E customers.

So this slide is an expansion of what we just looked at.

And I wanted to show you that before I jumped

into all the numbers on this page.

So this shows the monthly bill comparison

for a typical customer on our ETOUC rate,

and that's the most common rate for our residential customers.

On the left, you're seeing the bill comparison for July 2025,

and this carries through to the end of calendar year 25.

And here, despite seeing a lower generation rate than PG&E,

you can see we have $36.

Their combined generation bill for PG&E was actually $40.

But the negative PCIA that PG&E was experiencing

brought their bills down slightly.

Then we step forward to January, which

is where we find ourselves now.

The delivery charges in PCIA have increased dramatically.

It's increasing our customer bills by about $11 a month,

or 12%, while PG&E also decreased their generation

rates.

So our proposal here is this third grouping.

For March 2026, our recommendation

is to bring our generation rates back down below PG&Es again.

However, you'll still see there is a rate differential

because of that PCIA difference of $11.

And then lastly, you see January 2027.

The projections that we're receiving from our consultants

indicate that the PCIA differential

is going to decrease, bringing our rates more in alignment

with where they've been in the last year.

So this bill comparison slide here is for small commercial.

And you start to see a very similar trend.

Even after the recommendation, our small commercial customers

will have slightly higher bills than PG&E.

But as the PCIA differential is muted,

we'll see that our customers on green and super green rates

are projected to experience lower rates or lower bills than PG&E.

And it's a very similar story as we move up to our larger customers.

Here's our medium commercial.

Same idea here.

We have slightly more expensive bills after this March decrease.

And then we are lower than PG&E.

It's projected to be lower than PG&E in January.

So coming back to our overall rate proposal here,

we're proposing a 25% reduction for residential rate tariffs.

a 25% reduction for large commercial rate tariffs,

and a 20% reduction for all other rates.

The goal here is that we want to bring down rates for our customers

in light of PG&E's recent rate increases.

We want to take advantage of the reserves that we have billed

and the improved financial performance that we have observed in the latest year.

But these rate reductions will require future rate increases

to continue to align our revenues and expenses in the long term.

And lastly, I wanted to just, I'm not going to go through this entire table, but I just wanted to highlight the communication efforts that we were taking.

If we have a rate decrease or a rate increase, it's really important for our customers to understand what we're proposing and how it's going to impact their bills this year and into the future.

So we've had a number of public meetings on this topic.

We've had two recently on specifically this rate reduction, but we've had multiple rate fairness board meetings where the public is welcome talking about our rate study.

We also have a number of touch points with customers, both direct and indirect, planned between this month through March.

And that concludes my presentation, and I'm willing to take any questions.

All right. Thank you, Mr. Freiberg.

Questions? I see Commissioner Jamdar is up first.

Thank you for the presentation, Mr. Freiberg.

I have a question about the sort of small increase that,

despite the rate decrease for Clean Power SF customers,

we will still experience until January of 2027,

I think across rate categories.

Do you expect that slight difference overall in the bill

compared to PG&E's overall bill to result in a loss of customers

or the anticipated outcome is that it should be small enough

that people will not do that?

Yeah, so we have one of the lowest opt-out rates of any of the CCAs across the state, at least as far as I understand.

We have about 5% opt-out rate.

We've historically, in the past, we've been cheaper than PG&E and more expensive than PG&E.

The differential that you see between January and what we're proposing for March is the largest differential.

but we make a point

and we think that our customers are responding

to the fact that it's more than just the bills.

There's a greater value proposition

with Clean Power SAF.

We provide local power.

We provide greener power than PG&E

so it's more than just dollars per electron.

It's also the broader value

of what Clean Power SAF provides our customers.

Vice President Leveroni.

On the 180 days of cash on hand, what's the magic behind that number of days?

Why not 90 days?

Why not 365 days?

So the other enterprises have a 90-day cash on hand minimum.

Oh, I think I can go.

Yeah.

But yeah, so all the other enterprises have a 90-day cash on hand financial target.

for the power enterprise.

Market prices are a lot more volatile.

So we recognized that we needed increased risk coverage

with a higher fund balance minimum.

And I believe we looked around to other agencies

to see what they were doing as well,

and 180 days seemed like the right amount.

Thank you.

Commissioner Thurlow.

Okay, quick follow-up for that one.

Are there implications, like credit implications, for having not meeting the target fund balance in, you know, in future years, which we see projected?

No, I don't. So Clean Power Cef doesn't have any debt right now.

So there aren't any credit implications for them at the moment.

This is also a self-imposed threshold.

So there isn't any implication there as well.

Our financial policy does allow us to go below the 180-day threshold for three years, as long as we don't go below the 150 days.

You want to add to that?

Okay.

Just to add, I know Matt said that Clean Power Staff doesn't currently have any revenue bonds or debt, although it is a rated entity.

And those metrics, 180, 150, were chosen also in collaboration with our advisors on debt and the rating agencies.

So it was very deliberate.

Okay, excellent.

Thank you.

And then I have a question about the PCIA.

Just structurally, I don't quite understand the relationship between the PCIA charge that Clean Power SF customers are seeing on their bill relative to what PG&E customers are receiving back or not receiving back.

It seems like the signs should at least be related to one another at any given point in time, and I can't quite understand why they're not.

The PCIA is really complicated.

And even when I was first starting to work on power items,

people were telling me there were like a small handful of people

who truly know how the PCIA is calculated.

This is something that is done with the CPUC.

But generally, the PCIA is there to effectively make PG&E whole

for investments they made in power purchase contracts

and other infrastructure,

anticipating that those customers that left PG&E for a CCA,

so they made investments anticipating those customers being there.

When they left to join a CCA, they lost that revenue,

so the PCIA is to help them shore up some of that revenue loss.

The negative PCIA is a bit of an anomaly for PG&E.

They were effectively overbilling their customers for a couple of years,

and that negative is to provide their customers with a credit.

But what that does is it does look bad when you look at the rate comparison overall in the short term.

That's why that PCA is projected to go from a negative to a positive for PG&E in the coming years.

Okay, that's very helpful. Thanks.

Commissioner Stacey.

Thank you.

I had a question about the PG&E delivery costs.

Are those also reviewed by the CPUC?

Yes.

And for both the PCIA and those delivery charges, does the, I think I'm remembering that the SFPUC also participates in those processes at the CPUC.

Is that right?

Yeah, I don't know if it's, yeah, okay.

I'm getting a guess, yeah.

So we're involved, and there's also the CalCCA, which advocates on behalf of the broader CCAs across the state.

Thank you. And I was interested in what feedback you've gotten at the rate fairness board hearings.

We did receive some correspondence about people who were happy to see the rates decreasing,

but were there other issues that came up at the rate fairness board hearings or feedback that the PUC got from the board?

I believe the Rate Fairness Board was planning on submitting a written summary of their discussions with the package.

I don't know if that came through, but generally the takeaway, and I hate to speak for them,

but I'll do my best summary from what I heard from my perspective.

They're generally in support of the proposal.

there were questions about if why we have 20 versus 25 20 and 25 percent split why

not the same for everybody what about different discounts do we want to go for

a steeper discount or do we want to go for a more gradual discount and less of

a rebound and then we had some robust conversation about the variety of

strategies that we had explored so we didn't just pick 25 and 20 percent out

of the air, we looked at I believe nine different scenarios for how we could implement this

rate decrease and subsequent rate rebound.

And this is the one that we felt was the best at providing benefit for our customers without

having a dramatic rebound and also provided us with comparable cost competitiveness with

PG&E similar to what we've experienced in the past.

Vice President Leveroni.

Just one more question on the rate decrease, very applaudable.

The reserve that we now are is up to the sixth month,

and then I see a 28 potential 8.5% increase, obviously on a lower amount,

so very okay, I would think.

But is the increase at that level because we're anticipating that we're going to have to build our reserve back up?

Go ahead.

Yeah, so if you can bring up the slides again.

So going back here, you can see that our projection for the end of fiscal year 26 is 262 days cash on hand.

And we're bringing that down, and in fiscal year 28, we hit the 185-day cash-on-hand threshold.

And without that 8.5% rate increase in 29, we would need a much more significant rate increase in 29

to stay above that 150-day cash-on-hand.

So the plan for the rebound rates is intentionally set to keep our rates as low as possible in the intermediate rate-setting period,

so that we stay below the 180 days for three years in alignment with our financial reserve policy,

and then resume being above the 180 days.

Thank you.

And just to add to that, even with this rebound, our customers' generation bills are not anticipated to return to the present level until around 2031,

and they'll still be cheaper than they would have been under the prior plan.

I do have an alternative slide on that if you want to see it.

It's in the back.

Actually, if you have the alternative slide, why not just take a minute?

Yeah. So just visualizes that last little piece I was trying to make. So the blue bars on the left are the bills that result from this rate plan. The yellow bars on the right are the typical generation bills from the wait and see approach that we talked about.

So you can see after the 25% decrease for residential bills, we go from an average of $36 a month to $27 a month, and we rebound.

But you don't actually see us getting back to near the $36 level until 2031.

Bills don't actually become more expensive until 2033.

but if you look at the cumulative savings over that time customers even

after bills are more expensive still will save over $300 cumulatively over

that 10-year period in utility bills is it possible to get a copy of that slide

yeah I can send an updated version of slide deck to to miss Lanier and we'll

have it add to the public record thank you thank you very much all right see

Seeing no other questions from commissioners on the stack, can we go to public comment?

Thank you, Mr. Fiber.

Remote callers, please raise your hand if you wish to provide comment on item 9.

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

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

Ms. Lanier, there are no callers that wish to be recognized.

Ms. Lanier, we do have a member of the public who would like to speak.

Good afternoon, Commissioners.

Ann, on March 1 of 2026, we're going to have a fixed charge through PG&E that increases our bills by $24.

dollars. And so the comments about how generation continues to be diminished as a part of our bill

is a direct result of the increased costs of transmission and distribution. And also the PCIA,

which allows PG&E and the investor-owned utilities to have essentially a departing load charge.

So if you don't buy from us, we get to recapture that revenue.

And so you'll hear me in the next item,

but I would like to propose to the commissioners

that Behind the Meter Generation supports reduction

of those transmission and distribution costs,

which supports reductions in bills.

And that is an alternative that I'd like the commission to consider.

Thank you.

Thank you, Ms. Cotter.

All right.

We already turned to the remote?

Okay.

Then at this time, we are having the opportunity to adopt the schedule of rates that Mr. Freiberg has presented.

And so can I get a motion to approve the schedule of rates?

Move to approve.

Commissioner Stacey moves.

Second.

Vice President Leveroni seconds.

President Arce.

Aye.

Vice President Leveroni.

Aye.

Commissioner Jamzar.

Aye.

Commissioner Stacey.

Aye.

Commissioner Thurlow.

Aye.

Item 9 passes. Item 10, public hearing to consider, public action to approve the proposed electric schedule NBT Clean Power SF net billing tariff, a revised electric schedule NEM Clean Power SF net energy metering, both to be effective August 20, 2026.

Thank you. And if I could have the slides up, please. Thank you.

Good afternoon, Commissioners. I'm Andrew Bevington, Clean Power SF Customer Solutions Manager.

Today, we are asking for your support and approval of an important change in how Clean Power SF manages our rooftop solar program,

seeking to align how we compensate our rooftop solar customers for their energy with the needs of the grid

while continuing to support the city's affordability and electrification goals.

I'm going to kick things off with a refresher on our existing rooftop solar program, Net Energy Metering, or NEM.

Essentially, this is how customers with onsite generation, like solar, are compensated for

the energy that they produce.

Under NEM, if a customer can't use all of their solar power onsite, it can be sold back

to the grid.

Customers are compensated by Clean Power SF for this energy at their prevailing retail

generation rate.

What we'll be discussing today is focused on how and by how much those customers are

compensated.

Here's an example of how this works.

This is illustrative and meant to show how much energy a typical rooftop solar system

produces and how much energy a home uses throughout the hours of the day.

So we'll start with the x-axis.

This shows the 24 hours of a day.

The y-axis shows the kilowatts of energy demanded or produced.

The green line shows how much solar energy production changes over the course of the

day, rising and falling with the sun.

The red line shows how much energy that the home uses.

Whenever the green line is above the red line, the difference between the two is the solar

energy that the customer cannot use, and this is exported to the grid.

This is the energy Clean Power SF compensates a customer for under NEM.

The areas under these lines are the same.

However, the time of day the energy is produced and used are quite different.

Rooftop solar customers sell excess energy in the middle of the day when the sun is shining,

but not in the evening, which, as you can see in the red line, is also when the average home uses the most electricity.

Folks are getting back home from work.

They're turning on their heaters.

They're cooking dinner, et cetera.

So why is this a problem?

Here's another chart to illustrate.

Once again, the x-axis is a 24-hour day.

The y-axis is now dollars per kilowatt hour.

We have two lines here.

So the first, the dark line, is the retail rate.

This is what Clean Power SF currently compensates customers at under NEM.

Below it in blue is the average wholesale market price of electricity.

As you can see, the wholesale market price fluctuates throughout the day.

It drops in the middle of the day as solar production across the state increases, then

peaks in the evening when demand is highest.

So the problem is, currently we pay on the dark line for exports.

This means Clean Power SF is paying three times the value of a kilowatt hour from a

rooftop solar customer than we would pay for the same kilowatt hour on the energy market.

This practice costs rate payers as a whole more.

Second, this NEM rate also incentivizes customers to sell their energy back to the grid when

it would be more valuable for Clean Power SF and the grid as a whole if that customer

instead used that energy to offset their energy usage, especially in the evening when solar

is no longer available and energy is more costly.

To illustrate what I mean by that, this slide shows the direction we want to push customers

toward.

Ideally, rooftop solar customers should be using as much energy as possible on site.

Rooftop solar customers should use the energy they produce in the middle of the day to charge EVs,

to preheat heat pump water heaters, or to charge batteries.

The consequence of that is a drop in demand in the evening after the sun has set.

Using heat pump water heaters and batteries that are powered in the middle of the day by rooftop solar

means the home buys less electricity from the grid in the evening.

when grid energy costs the most and is the most polluting.

We can use how we compensate customers for the energy they sell back to the grid

to incentivize this behavior and increase the value of rooftop solar for everyone.

Clean Power SF staff are proposing the solar billing plan to accomplish this.

It has five major elements.

First, aligning our compensation for rooftop solar more closely with market value.

We would be using the CPUC-approved avoided cost calculator,

the same tool used by PG&E and other CCAs around the state to determine this value.

Second, we would add a per kilowatt hour local energy credit

to account for the value of San Francisco-specific generation.

We would also provide an additional equity credit to low-income customers.

This would be determined by whether or not a customer participates

in the CARE or FERO low-income discount programs.

Critically, we would continue to charge customers the retail rate for energy they consume from the grid.

This would make it more valuable to save or use the energy generated to offset a kilowatt hour at home

than it would be to send that kilowatt hour back to the grid.

And finally, we propose to limit these changes to qualifying systems approved after April 2023

or that have been receiving service on NEM for 20 years or more.

This slide shows some of the CCAs that have already adopted a version of the solar billing

proposal. In the Bay Area, Clean Power SF is the only CCA that has not yet adopted a version of

SBP. In developing this proposal, we engaged in an extensive public outreach process, including a

public workshop and public comment period. Some major themes in the comments we received included

concerns about reducing the value for existing system owners.

Note that systems with interconnections approved before April 2023 will stay on the old NEM

approach for 20 years.

We also heard both support for and concern about the fairness of the proposed equity credit.

There is president in California for using ratepayer dollars to support low-income customers,

particularly the CARE and FERRA discount programs.

But within the SFPUC, the GoSeller SF, and inverter replacement programs are other examples of this.

There was also discomfort with using the CPUC's avoided cost calculator as proposed by staff.

The avoided cost calculator is the same tool that PG&E and every other CCA that has transitioned to SVP uses to determine the new hourly wholesale value of the credits.

It calculates avoided cost values for entities operating in the energy market in Northern California.

And it is reviewed extensively in a public process and subject to update every two years.

By aligning our valuation with the avoided cost calculator, Clean Power SF's valuation

will be in sync with the rest of the state and the energy markets that we operate in.

And as I explained earlier, we have also proposed additional credits to address San Francisco's

specific conditions and values.

Lastly, we heard strong support for battery storage and other incentives.

In addition to expanding our existing incentives to install heat pump water heaters, Power

staff are working on a battery storage incentive which will be offered in 2026, around the time

that we are proposing SPP would go into effect. Over the past year, staff have worked to ensure

that there are many opportunities for public engagement, beginning with a roundtable with

the local solar industry in late 2024, and webinars, workshops, and public meetings throughout

2025. And I won't go through all of the items on this slide. Should the Commission adopt

this proposal, it will come into effect in August 2026, and this will provide several

months during which Clean Power SF staff can conduct public outreach and education on the

upcoming changes.

So I'll just close out with a summary of the changes we're proposing.

Most notably, a change from the retail-based compensation of NEM to an hourly rate based

on the market value of energy to Clean Power SF rate payers.

In addition, we're proposing to add a local energy credit that provides additional value per kilowatt hour,

an equity credit to provide additional compensation for low-income customers,

and finally a change in how we calculate the value of net surplus generation to customers that send more solar energy to the grid

than they use from the grid over the course of the year.

And just a final note, and just to reiterate, this will be limited to rooftop solar customers

whose systems are also on PG&E solar billing plan, meaning systems approved after April 2023,

or that have been on NEM for more than 20 years.

And I'll note this is based on the interconnection date,

so should a customer make significant changes to their rooftop system

sufficient to require a new interconnection,

then they would also be shifted to SBP.

I just wanted to be clear about that.

Thank you very much, and I'm happy to answer questions.

All right. Thank you for the presentation.

Colleagues, questions?

Vice President Leveroni.

I'm sorry.

You were kind of going faster than I can think.

I'm sorry about that.

No, not your fault.

Not your fault.

A little slow up here for me.

If you could just maybe, for me,

dumb it down a little bit as far as, you know,

almost like the cliff notes to all of this?

Yeah, of course.

So I guess a way to think about it is

Clean Power SF buys power on a wholesale market

that represents Northern California generally.

Right now, we provide rooftop solar customers

with compensation based on their retail rate.

So however much you pay for a kilowatt hour of energy,

that's how much we pay you

when you export that kilowatt hour of energy back to us.

So what we're proposing here is to bring what we pay

more in alignment with the regional market

with some additional bonuses

like the local energy credit

that will provide some bonuses above the regional price

as well as an equity credit

with the objective of two things.

One, bringing what we pay for energy

more in line with what we pay everybody else for energy.

But more importantly,

to encourage customers to,

rather than exporting energy,

use their energy on site.

Does that make sense?

So now you're, say you generate a kilowatt hour

at 1 p.m. If you save that and avoid using a kilowatt hour at 6 p.m. rather than selling it

back to the grid at 1, that's more valuable to you. And I think that's the important thing to

emphasize. What we're trying to do is set the financial incentives in such a way that we

encourage on-site storage of energy or use of energy rather than selling it back.

Hopefully that makes sense. No, thank you very much. That does.

Commissioner Thurlow.

Thank you for the presentation.

I'm wondering a little bit how many customers are impacted by the new fee structure,

and roughly speaking, for a typical customer, what's the magnitude of financial impact that they'll face

in the near term before they make adjustments for things like on-site batteries?

Okay, yeah.

So I'll break that into two pieces.

So first, to deal with the customer count.

So we have between 13,000 and 14,000 NEM customers total.

Of those customers, most of them have put in their systems well before April 2023, so they're not going to be immediately impacted by this change.

But we have 741 customers who did have their systems approved after that date, and they will be impacted by this shift.

So we're talking about 741 systems out of 13,000, 14,000-ish.

Does that make sense?

Yeah.

Okay.

Your second piece, and could you remind me of the question again?

It was, you know, roughly speaking, what's the financial impact to these customers?

Obviously, there's a broad range.

Yeah, and I think it'll vary on the customer's current rate.

So under the current NEM scheme, customers are compensated based on whatever their existing retail rate is.

So you may be a customer on ETO-UC.

You may be a customer on ELEC.

All of those rates have different prices and different levels.

So the impact of the change will depend on what your old rate was.

Under SBP, customers have to be on the E-ELEC rate.

So that's one thing that will impact the total cost impact of that shift.

But secondly, they'll also see a hit.

Customers will generally be compensated less than they were under retail in, retail out.

So I can give you most customers are going to be E-ELEC customers,

or I should say all customers are going to be E-ELEC customers.

And the monthly impact is about $21.16 per month.

Okay, that's really helpful to know.

One additional follow-up question on that is where did the cutoff date in 2023 come from?

Like what differentiates people who – was there some greater awareness of the fact that the rules could change?

So April 2023 was the cutoff date that was set by the CPUC

when they approved the solar billing plan that PG&E

and as well as other IOUs operate.

So essentially what we're doing with this proposal is right now

customers are served on the PG&E side of the bill,

the T&D side of the bill,

if their systems were approved after April 2023.

Those customers are under this pricing scheme on the PG&E side.

But on the Clean Power SF side, we're still serving them under the old NEM approach.

This proposal will take the Clean Power SF side of those customers' bills and align it

more closely with the PG&E half.

So the date was selected to align with PG&E and kind of make it simpler for customers

to kind of understand what's going on.

They don't have two separate systems going on on their bill.

Perfect.

Thank you.

Any questions?

I have one. The general manager and I didn't get to have our pre-commission kind of going

over stuff that we usually do, and I'll ask the question of you that I was thinking when

I went through the file. Well, A, I was excited to see that we're having a net billing program.

I didn't realize that this would be coming up. And when I read through the file, which

was pretty extensive, I didn't see any letters of support or against. Is there any opposition

to this proposal here, or have you been able to get everyone on board?

And full disclosure, I worked on GoSolar SF 1.0 in like 2007 to 8,

which is like a year-and-a-half-long process,

probably a half dozen hearings right here to get everyone on board,

all the stakeholders to do this right.

So is this fully baked? Is it good to go?

Are we going to expect any?

We got everybody on board?

Well, so that's a good question.

We did go through a public comment process, and we received 116 public comments.

I'm not going to hide that we got a lot of criticism for this proposal.

We have heard significant oppositions, particularly from the solar industry.

And I think a lot of concern, especially around the impact to the number of folks who will

be financially for whom it makes sense to put in rooftop solar system in the future.

This makes rooftop solar less valuable.

And I think there's a lot of concern around that.

The investor-owned for-profit utilities sought to destroy rooftop solar with net energy metering

proposals at the CPUC that were significantly opposed by an array of stakeholders.

We do things different as a public utility.

We're better.

We're better.

I'm hoping you'll tell me the opposition has been addressed and we're everyone on board

because I don't want to do what the for-profits did and try to run something through against

an over-opposition.

Yeah.

Have we been able to resolve the opposition concerns or are we facing opposition on this

vote today?

I feel like the opposition concerns, particularly around how we reinvest the savings that we're

going to see, that Clean Power SEP ratepayers are going to see from this into programs like

heat pump water heaters and battery storage, address some of the concerns around the impact

to their businesses, and to local jobs.

That said, there will be continued opposition.

How many comments did we receive?

116.

How many were supportive and how many were opposed?

The majority were opposed.

I don't have exact numbers off the top of my head.

Where can we see the letters?

We can provide those.

They're not in the file?

They're not in the file, no.

Okay.

Anybody else?

Commissioner Jamder.

Thank you, President Tarsay.

I'm curious, you've listed the other CCAs that have adopted.

Is this NEM 3.0 or just another name for it?

Yeah, this is, I think that's one term.

It's been called the solar billing plan.

That's kind of the public term that we've been using for it.

NEM 3.0, it's also been referred to as the net billing tariff.

And so my question is, is this sort of an inevitable decision that we have to take, or can we opt out of it?

What are the sort of pros and cons?

I'm not an expert on solar, so forgive my ignorance.

But, yeah, I'm just curious, since there is quite wide adoption by other CCAs,

and it seems that the CPUC has just altered the value of NEM, so there's little we can do about that.

Where does that leave us, I guess?

So Clean Power SF and other CCAs are not required to take any specific action by the CPUC.

We are able to set our own rates and our own tariff in this respect.

But I think it's important to highlight the fact that this aligns our financial incentives for rooftop solar customers

with the long-term needs of the grid.

that if we take no action and continue NEM 2.0,

we do not effectively incentivize customers

to move away from exporting extra energy onto the grid

and towards using it on site.

And in the long term, that will lead to increasing costs

for clean power SF rate payers

for energy that could otherwise be obtained much more cheaply.

which is essentially the introduction of batteries

and distributed energy resource management sort of infrastructure

that eventually can help lower rates.

I guess my question is, is this where the trend is

and is this where the sector is headed?

So, yeah, I'm just curious about, yeah, I don't know, Mike, if you want to.

Good afternoon, Commission.

Michael Himes.

I'm the Deputy Assistant General Manager for Power,

responsible for Clean Power SF and our power supply?

To answer your question, yes, this is the direction that we're heading.

And what I want to center the conversation around is aligning our compensation with avoided

costs.

And by doing that, we're sending a signal to our customers to encourage behavior that

is beneficial financially to the whole customer base.

If the SFPUC and the city want to support solar,

there are lots of different ways to do it.

President Arce mentioned Go Solar SF,

a very successful program where we invested more than $30 million

to bring down the first cost of solar in the city.

We've been continuing to run that program,

but it has tapered off as the economics of solar have changed.

As we looked at this situation, we thought we want to help the city transition to 100% clean energy 24 hours a day.

That's part of our long-term vision.

In order to do that, we need to move more of the kilowatt hours from the middle of the day to the evening.

So encouraging our customers to continue to export to the grid is sort of running against that objective.

As Mr. Bevington mentioned, one of the other initiatives that we have underway is to incentivize batteries.

One measure that could be done to help customers with this is to install a battery in conjunction with the solar

so that they can store that excess energy, they can discharge it in the evening,

they can keep some on reserve in case we have a power outage in the city, which we've become more familiar with lately.

Unfortunately, without a battery, a solar system provides no additional reliability to the end-use customer.

So what we're trying to do here is really direct our policy to the future.

I totally, we as staff acknowledge that this is a change, and there are folks who don't like this change.

But we are committed to local solar, and we're committed to seeing this work.

And I think that there are complementary measures that we're pursuing that will help sustain the industry over time.

Could you elaborate on the battery incentive program?

Because batteries are expensive.

And so is it a significant incentive or is it just like $500?

Is it significantly impact?

The program is under development.

but what we're trying to do is align the rollout of the program with the commencement of this change,

if approved by the commission.

Happy to come back at a future date and share more information about what we're proposing to do.

Thank you.

Commissioner Stacey.

Thank you.

I just wanted to make a few comments on this rate change.

and we did get a few letters in the last few days

about people who were concerned about sort of the rules changing

for those who may have installed solar.

And I think I get comfort for the 20-year program

for people who installed solar prior to, I think it's April 2023.

The information that you gave us today in response to commissioner questions

also, I think, is an important one to know about why you chose April 2023, that you're aligning

with the PG&E changes and that it aligns with other CCAs. I think this commission also has to

think about the cost to other customers of overpaying, that it affects the rates for everybody

to the extent that we're paying more than we're getting for that solar energy.

And finally, I think it is really important what you've both just articulated,

that we need to think about the future and that we're putting in place with this change

incentives for people to distribute our use of power better throughout the day

and also to put in place incentives for battery use.

I hear the fossil fuel industry talking all the time about how we still need fossil fuels for that time of day.

And to the extent we can redistribute our use and use batteries, we don't need fossil fuel.

And I think that's a really important long-term goal that we should be working towards.

And so I really endorse that aspect of this change in the structure.

So I know there was, it sounds like you got a lot of comments from people opposed to the change,

but I think from a policy perspective, the way you've done it and the effect on all the rate payers

and the future-looking nature of this policy

are all really important things for this commission to think about.

And I really want to emphasize that part of this decision.

So thank you for all of that work and being really clear about it.

I think for me, I've come so pleasantly and gratefully used to the general manager and

our team bringing us stuff that's so tight.

That's like it's there.

We ask our questions.

We kind of try to see if there's anything we're missing.

and I have felt so comfortable in every single vote from presentations,

from the general manager and staff.

Like you've worked hard to build consensus by the time we're getting up here,

essentially after all this time with the 10-minute presentation to vote yes and approve.

I really want to know about the opposition.

I see someone here who I've known for a long time,

who I don't know if you're here for this or another item

or you spoke on the other item, Ms. Cotter.

But I see someone who's a nationally recognized leader on solar

who was there at the California Public Utilities Commission

alongside environmentalists, advocates for solar industry,

an array of stakeholders who opposed the California PUC's vote

on net energy metering that folks point to as completely killing rooftop solar.

I do think we should and must enact a net metering program of our own.

The question is, do we have to prove it today?

Are you asking us if...

I'm waiting, I'm like, I'm 50-50 as to whether or not we're going to hear

you're good and other folks are good or who this opposition is i haven't even heard

for the first time beyond 160 comments the majority of which are opposing the vote you're

asking us to make my question is we clearly want to go this direction i think my colleagues say it

but if we're about to hear that some of the opponents are in the room

asking us to do the same thing that we disagree with the state puc that we're now dealing with

I'm not going to be comfortable to support this today.

I would respectfully ask that we take time.

But I could be wrong.

I don't know if anyone else is here to let us know,

but I want to see the letters.

I'd like to know what the opposition is.

That's why I went to the file.

I didn't see anything.

But maybe we'll know more very soon, doing public comment.

Commissioner Stacey.

Sorry, I forgot two comments.

I wanted to support Commissioner Jomdar's interest in looking at what the battery program will be

and what the incentives will be.

And I also think that the Rate Fairness Board's recommendation to see what effect this has in the future

of installation of solar, I think that will be important for us to track as we go, too,

that there's loss of tax credits for solar.

It will be interesting to also follow that information, what effect this change may have on future new installations of solar and how it's gone up and down.

And I know there are more than a few factors that affect that, but it would be interesting to track that as well.

So Commissioner, with that last comment, are you recommending that if the commission were to adopt such a change that we would be reporting back on the state of the market?

I'm not clear on what that request would be.

I assume that the PUC does track how many new solar installations there are.

and I would like to hear, even if it's just a report that you include in the agenda,

what that trend looks like after a year if this policy is implemented

and what there may be other, I'm sure there are other factors

that affect the decision whether to install solar.

So I don't know that I need an active report.

have you come back to the commission,

but it would be interesting just to see the numbers

on a comparison basis, maybe a year out from now.

And I don't remember the details

of the Rate Fairness Board's proposal,

but I think that was one of their recommendations

that we track what the future solar power installations look like.

Yeah, and we do get that information.

As Mr. Bevington reported, we have statistics on the rooftop solar customers that we're serving,

and so we can definitely do reports of that over time.

In fact, we do provide to the commission annually what we call the NEM share report,

and we've been doing so for several years,

and that report includes some of this information that I think you're looking for.

Great.

Thank you.

Commissioner Jamdar.

I just have a procedural question.

This item is showing up as a public hearing on the agenda,

and it recommends possible action,

so we don't necessarily need to act or approve the item today.

Is that how it works?

You don't have to, no.

But that is the request of our staff.

It is, though. Okay.

But it's up to the Commission to decide how you'd like to proceed.

I guess it's showing up as a public hearing versus just approval off.

So I'm curious how it's the first time I'm encountering that.

So, okay.

Public hearing to consider possible action.

We thank you for your hard work.

I am waiting with bated breath to hear if there's anyone going to speak on this.

And unless there's any other comments, Ms. Lanier, can you please call for 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?

Please step forward.

Charles Adams, Albion Power Company.

We've been doing solar in the city for 20 years, and were there when CCAs were formed.

It's important to understand that net billing policies based upon the ACC, the Avoided Cost Calculator,

of which this presentation was based, have been voted down 12 to nothing by the California Supreme

Court as unlawful for not accounting for the true value of rooftop solar. Policies based upon this

regulatory capture misleading calculator are going to be headed back to the CPUC this summer.

It is prudent to wait at a minimum for the outcome before adopting this calculator.

San Francisco's main street economy, LBEs, unions, residents, and commercial businesses are ready,

willing and able to contribute to the CCA solar economy. For that to happen, there must be a proper

accounting for the true value of rooftop solar that is absent in the ACC, much of this dealing

with transmission, distribution, and the destruction of the environment. The true cost shift here is

away from local communities to utility cost-plus infrastructure projects, and the overbuilding is

an overpurchase of empty credits from solar farms hundreds of miles away. Many utility solar farms,

particularly incentive-driven credits from Kern County,

are from the eastern side of the Sierra Nevada mountains

and are frequently curtailed due to lack of transmission.

That is your duck curve.

Rooftop solar is built and used at the point of consumption

in San Francisco's community side of the substations.

There's a lot there using the existing infrastructure of San Francisco buildings.

Local energy is much cheaper for society, even if not recognized in contracts.

We have built your utility solar farms and know them to be environmentally catastrophic in perpetuity.

The U.S. is 5% of the world's population using 25% of the world's energy.

The most efficient means of carbon abatement is load reduction.

These are ACC emissions.

Local economies are being excluded, forcing rooftop solar into an outdated model.

Thank you for your comments.

Thank you.

Thank you for your comments.

J.P. Rappaniani, Citro Power, a local contractor, employee-owned company, been doing solar for

six years in San Francisco under our own flag. I sat in on the meeting last week or a week

and a half ago for the Rate Fairness Board to try and understand the methodology behind

the reduction in rates for those producing solar, my clients. We did about 120 clients

in 2025. Just to talk about battery incentives, I'd say only three of them didn't get batteries

with the solar. So, you know, it's not as if solar is being installed by itself. We are creating

energy storage systems every single time. In any case, I have serious issues with the methodology

used by the Rate Fairness Board.

I asked them point blank, where is this data coming from?

Where can I find it online?

Showing that, and I quote,

there's an overbuilding of residential solar,

creating a surplus of electricity that causes shut-in of low-cost utility scale

during peak production hours.

So what they're weighing is what is produced here locally,

and that being more expensive when compensated directly to San Franciscans.

As Charles of Albion was saying, it is true local generation.

Versus us purchasing credits or energy from solar farms,

doing this transfer credit thing to lower bills.

I mean, yeah, value isn't just dollars and cents here.

It's also where the power is vested in.

I'd rather see local San Franciscans and businesses get compensated directly

for what's being produced here, rather than third-party corporations operating solar farms.

And then worst of all is, of course, the fact that this increases reliance on PG&E's transmission

lines, on their infrastructure, completely against the direction we're trying to go as

a city and engender our own energy independence.

Thank you very much.

Thank you.

My name is Janine Cotter, and I'm with Luminol.

We've been around San Francisco for over 22 years.

When voters voted for Clean Power SF to have local generation,

my colleagues and I build rooftop solar.

That is the only local San Francisco generation.

That is it.

If we build out entirely San Francisco, according to the San Francisco Department of the Environment, we take care of 5% of the load.

5% of the load.

So we are small local companies.

We're working with our clients to build systems that are clean energy that goes to their neighbors in San Francisco.

That curve is not a reflection of San Francisco.

That curve is a reflection of the state of California.

But in San Francisco, where we are unique, we are here discussing whether we underpay local clean energy generation.

And that feels wrong to me.

I have here seven letters from clients that submitted them today that I said that I would bring their comments in.

And I also have some of the information in terms of the vehement opposition to this proposal.

You know, as Charles said, the ACC is something that was structured by the CPUC and investor-owned utilities that have foisted the PCIA on the cost onto clean power assets.

Ms. Cotter, unfortunately, under the Brown Act, we can't allow it.

We have more time than anyone else.

But I do want to ask you, do you support the action we're being asked to take today?

I do not.

Thank you.

Thank you.

MR. Mr. President, some of the issues that were...

Oh, I'm sorry.

I didn't see you.

I apologize.

AM I good to go?

MS. Please begin.

AM I good to go?

MS. All right.

Good afternoon, commissioners.

My name is Julian Alotti from Sutro Power.

I appreciate the intent behind item 10 and the effort by staff and the Rate Fairness Board

to provide rates that are competitive to PG&E.

I'd like to offer a clarification regarding the first point

in the Rate Fairness Board's draft comments,

which states that the current retail net billing methodology

has contributed to overbuilding of residential solar.

My concern is that this conclusion

appears to rely on California-wide system data

rather than San Francisco-specific study.

While over-generation and curtailment issues are documented in different parts of the state,

San Francisco has materially different characteristics, including lower rooftop solar penetration,

significant shading, multifamily housing constraints, and a comparatively small contribution to midday production.

It's not clear that residential solar in San Francisco has produced the same over-building dynamics seen elsewhere in the state.

Absent San Francisco-specific data demonstrating overbuilding or local overgeneration impacts,

I believe that statement may be incomplete as applied to this jurisdiction.

I would encourage the commission and staff to clearly distinguish between statewide trends

in San Francisco-specific evidence when evaluating and justifying changes to local solar compensation structures.

I would like to see a study on local generation. Thank you.

Thank you.

My name is Marianne Rodriguez, and I joined the solar industry in San Francisco in 2010.

And, President, I remember seeing you at the Solar Task Force and Gold Solar SF meetings.

Did I have my long hair in those days?

You had a baby with you.

I know that.

Oh, that's great.

Sorry to interrupt.

But I'm here to say quickly that PG&E and the other investor-owned utilities have been extremely effective in overpopulating the information airwaves to the point that our own PUC is not really understanding the value of solar,

such to the point that you're seeing this recommendation today that is pretty much a Xerox copy of what the investor-owned utilities got approved at the state level.

that's resulted in the collapse of the solar industry outside of San Francisco.

We're different here, and we don't have to make that decision.

We just don't.

So I encourage you to reject this and think about what the real value of the energy is.

Thank you.

Thank you.

Any other members of the public?

Mr. President, there were some comments,

and I just thought it would be helpful for staff to provide you some additional information

to address some of the concerns that were raised by members of the public.

Okay. Would you like to do that before or after we see if there's anyone on the line?

Yes.

Okay. Thank you, Mr. General Manager.

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

Ms. Lanier, there's one caller that will should be recognized.

Thank you.

Caller, I'm unmuted your line. You have two minutes.

Yes, this is Natalie Shuttleworth.

I'm a homeowner, and I implemented rooftop solar in late 2015,

along with a cool roof because it was the right thing to do.

Other speakers today have made really good points that I don't want to repeat,

but bottom line that the place to generate power is where it will be used locally.

So to have rooftop solar for someone who's going to use it mostly is the best thing to do.

It removes the need for distribution or for extending distribution.

And I would say that before approving this proposal today, there should be available clear incentives for people to add batteries, for example, in order to spread out their consumption to the times of day when they need more consumption locally.

So I would just add that.

But I would urge you to vote down this proposal because it is not appropriate for San Francisco,

as the last two people have mentioned, versus looking at data from the entire state.

Thank you, caller, for your comments.

Ms. Lemire, there are no more callers that wish to be recognized.

Thank you.

All right.

Thank you all.

Commissioner Stacy, you're first on the stack.

Oh, I apologize.

The general manager would like us to hear some comments or responses from Mr. Himes.

Thank you, President Arce.

Michael Himes, Deputy Assistant General Manager for Power.

First of all, as we were discussing before and based on the public comment,

we understand that there are concerns about the proposal.

As Mr. Bevington mentioned, we've engaged in about a year-long process of dialogue

with the local solar industry, customers, various NGOs.

One of the challenges that we're going to face here with this proposal is

anything below retail rate compensation is going to be viewed as a reduction in compensation for solar customers.

I think the facts that we're facing is that a retail compensation exceeds our avoided costs significantly.

We're also challenged by the fact that Clean Power SF, as a CCA, is a partnership with PG&E.

PG&E is the delivery provider.

They manage the distribution system, the transmission system.

and they also charge our customers for those services.

In the context of rooftop solar, PG&E is responsible for compensating the customer for the delivery,

the transmission and distribution benefits provided by that energy to the grid.

The California PUC's decision addresses that portion of the service.

The portion that Clean Power SF provides is the generation supply.

So our proposal is to sync up the compensation we're providing for the generation supply with the avoided costs.

Now, we don't dispute that there are distribution benefits to installing local solar,

but those distribution benefits don't accrue to Clean Power Sets ratepayers.

They accrue to PG&E.

So unless PG&E is compensating the customers for those benefits, they may not get them.

but what I'm hearing is a request for Clean Power SF to subsidize PG&E's delivery benefits.

This is going to be one of the benefits in the future of San Francisco acquiring the distribution system,

is that we can think very carefully about the distribution benefits.

But Clean Power SF is a different model.

We just provide the generation supply.

So it's one point that I want to make.

The other thing is the methodology we're proposing is sound,

and it's based on generation avoided costs.

We presented to the stakeholders.

We heard concerns.

We came back together.

And out of that discussion, we proposed a local energy credit.

So one of the things that we did is we looked at the California independent system operator energy market.

And San Francisco, because it's transmission constrained, does have a higher energy value than the rest of Northern California.

So we've accounted for that pretty generously, actually, in our proposal.

So I wanted to make those two points.

I understand that a couple of the commenters felt that data wasn't provided.

We're more than happy to provide any data that they're looking for.

And in my conversations with staff, I was told we have provided data.

It's not clear to me maybe it's not what they're looking for, but we're happy to have any follow-ups with them to clear that up.

And I do want to emphasize that we prioritize transparency, and we've talked about different ways to reflect this proposal, if adopted, in our materials on our website so that customers understand what this looks like, because it is a little bit more complicated.

And so we're in the process of coming up with some of those ideas now.

Thank you so much.

Thank you both.

I know that Commissioner Stacey has a question or comment.

Thank you.

I had a couple of questions for our speakers.

And the first speaker, you showed us solar projects, large solar projects, not based in San Francisco.

I'm not sure I understood your point.

Is it that those large solar projects would become more prevalent if we decrease the amount that we're compensating local customers for?

I didn't understand the connection between those large.

Yeah, in meeting things like 100% clean energy and goals like that, you're buying credits.

You're buying credits often from Kern County.

You're buying credits from solar farms.

And you're talking about adopting policies right now that you don't need to see a year's worth of information a year from now.

You know what it's going to do to rooftop solar based on what's happened to the state and the CPUC.

It's cratered.

Most companies are out of business.

We consider that regulatory capture.

It's going to get back to the CPUC.

If you had looked at any of the information the Supreme Court looked at, you'd vote unanimous just like they do.

The Supreme's voting unanimously is very rare.

So the ACC that they're talking about when they're saying it's based on avoided cost,

it doesn't consider distribution, transmission, things like that, that are two-thirds of every bill.

We understand the difference between what you're doing with generation and what PG&E is doing.

But you're buying credits from solar farms to say that that is clean energy.

Those things are environmental catastrophes.

We've built them.

But that, to me, seems like a separate issue.

What we're talking about today is how we compensate customers in San Francisco who install solar on their roofs, right?

But that's relative to your 100% clean energy goals.

If you're saying, and that has a lot to do with the duck curve, if you're saying your 100% clean energy goals are satisfied because you have credits from somewhere else,

and you're saying you don't need the local solar, and that plays into the ACC too.

You're pretending, or the ACC is pretending that they're that much cheaper.

That's part of the CPUC's argument.

That's not true.

They are credits.

They are credits where much of the energy is being sent to Arizona

because you can't get across this.

Again, you have clean energy goals here that are part of solar.

They're part and parcel of solar.

You have clean energy that's being sent to Arizona.

That's one of the articles we brought up from the LA Times, because you don't have the transmission,

and the transmission is what's going to bankrupt the state.

The transmission for all of them, and you don't need transmission for rooftop solar.

It goes to the neighboring building.

You don't need to destroy the environment for rooftop solar.

You don't need new structure.

You don't need new wires.

You don't need new poles.

That is very significant, and that, I was here when CCAs were formed.

It was in this building.

That is so much of it's very hard to see this conversation.

Anyway, please.

OK, one other question for you.

You talked about something coming back to the CPUC this summer.

That's correct.

The calculator that they used, the avoided cost calculator,

was voted down 12 to nothing.

It went to the appellate court.

It went to the Supreme Court.

The Supreme Court of California voted this.

A big part of your plan is not accounting for the distribution, transmission, and environmental benefits of rooftop solar.

This will be back before the CPUC.

Please look it up.

This will be back before the CPUC this summer.

And they're going to say, you look at it again.

12 to nothing.

It wasn't a split vote.

Okay.

Thank you.

Mr. Hyams, could you talk a little bit about that CPUC issue?

Yeah, my understanding, actually, the Supreme Court has pushed it back to the appellate court for further review.

I don't believe it has yet been rejected by the appellate court.

It may be that the speaker is anticipating that it will be, but my understanding is that's where the situation stands.

Okay, thank you.

And I had another question for the solar providers.

Do you have any sense or can you give us kind of a ballpark figure on what this might mean for an average San Francisco rooftop project?

What might be the sort of reduced incentive for that project that goes on somebody's rooftop?

Can you give us a sense of that at all?

I don't have a sense of what that.

I think that that would be really helpful to have information on in terms of the net energy credit or the NBT.

There are like 400 different hourly credits depending on what time you export.

And that's what you're relying on.

Is that correct?

Yeah, please.

And then I can tell you that with the loss of the 30% time,

I mean, one thing is about the rates, right,

and fairness for all rate payers.

Another issue, and then you could bifurcate and say it's a different issue

about whether or not we should have local solar in San Francisco at all.

And the economic benefit of that,

or the fact that the voters voted for local generation.

Local generation.

We do that.

And I think that that would be my comment.

You asked for questions about the impact of,

I think you asked a question about the impact of NBT on solar.

I can show you that.

So before President Trump and the Republican administration passed the one big, beautiful bill that ended the 30% tax credit for residential solar,

this is where San Francisco was in 2025 in terms of permits that spiked once the 30% tax credit

went away it was an artificial spike because people were trying to get in to get the 30% tax

credit so for local solar installers you know we ran into a wall as fast as we could but that

should give you an example of what the impact is and what it might be in San Francisco.

Thank you.

Mr. Himes or Mr. Bevington, did you have something to add?

Michael Himes, Deputy AGM for Power.

I want to just speak to the local power element of Clean Power SF.

local investment is a one of our sort of pillars for clean power sf and we've done that with

programs like go solar sf we've done that with our support for behind the meter solar to date

we are working on new solicitations to build out more solar on our local reservoirs

And we've framed this around a more robust sort of behind-the-meter energy system that would, in conjunction with battery incentives, would help us move some of the solar energy into the evening, right, and help us deliver 100% clean energy 24 hours a day.

So I think that this proposal is very much centered around sending a signal that helps create a robust, long-term, local environment for clean energy.

If we compensate, just sort of taking this to a hypothetical, if we were to really scale behind the meter solar to, let's say, 20%, 30% of the city,

and we were compensating them at the retail rate,

we would have to increase our rates, okay?

Because we would be no longer,

we would be compensating way above our voided cost.

So there is a limit to how long we can do this.

I think one of the commissioners asked sort of a comment

or made a comment about, you know,

is this sort of inevitable?

At some point, you can't continue to compensate

at retail rates.

It's an unsustainable business model.

I fully support local solar, and I fully support many of the points that the local industry are making.

I don't believe that the rate that we compensate for energy delivered to the grid should be the way that we support this industry.

Thank you.

For me, we're on the right track.

And I know a lot of work, a lot of great and important work has gone into this.

We need to continue to go this direction.

It's been a year outside of the commission, a year of work outside the commission.

But something this big and this important is going to take work at the commission too.

I want to know where the advocates, I want to know where Sierra Club,

I want to know where the solar advocates who, alongside a lot of the faces in this room,

I know, Ms. Cotter, full disclosure, we've known each other for a very long time going back to GoSolarSF, as I mentioned.

But I recognize their faces when they were in front of the California Public Utilities Commission similarly opposing a proposed action.

Right now we just learned about 160 comments that are more opposed than support.

The comments in the room are all opposed.

Let's take the time.

Let's keep working.

We believe in the general manager and all of you to work together.

And then let us – I'm going to read every – once I get those comments, I'm going to read all of them.

And I'm going to read all of the stuff that we just got today and make my calls.

We'll pull the item.

Thank you.

I just want to be clear that we have put a year's worth of work dealing with that.

And there is going to come a time, Mr. President, where a decision has to be made.

But we will pull you in.

We want to.

It needs more than 10 minutes here.

And if there's opposition, we've got to know about it ahead of time.

I apologize.

I have to return to a work item that has occupied me since 530 a.m.

And I'm going to hand the gavel back to Mr. Leveroni.

We don't have to take any action on this, Ms. Lanier, so we can call the next item.

Thank you, Mr. General Manager.

And thank you all for your hard work.

I do have a request.

General Manager, you just said you would pull the item.

I would feel comfortable continuing it to a date certain, if it's a month out after we finish the budget.

I don't feel – I don't want to lead anybody down the road here.

I don't want to, I'll be back to you, but I don't want to set a date certain here right now

when we don't know exactly what is going to be entailed, Commissioner.

But I will, at our next regularly scheduled meeting, I'll give you a timeline as to when we'll bring the item back here.

Okay.

And then that will involve also noticing the public again about the future hearing.

Yeah.

Is that?

Okay.

Okay.

Thank you.

Thank you, Mr. General Manager.

Thank you. Thank you all.

Item 11.

Approve an increase of 208 calendar days to the duration contingency for contract number HH-1009,

San Joaquin Pipeline Valve and Safe Entry Improvements, Phase 3, Tesla Surge Tower with Mountain Cascade Incorporated.

Good afternoon, Vice President Pavarone and Commissioners.

Jimmy Leung, Project Manager of the San Joaquin Pipeline VARF and Safe Entry Project.

I'm here today to request your approval to increase the duration contingency for contract HH 1009.

The San Joaquin Pipeline VARF and Safe Entry Project is critical to protecting the safety of our staff

and ensuring long-term reliability of Hatachi Regional Water System.

The San Joaquin pipelines are the backbone of the system, delivering drinking water to the Bay Area.

Some of the pipelines are more than 90 years old.

To keep these pipelines operating safely, SSPUC crew must enter the pipelines to perform inspections, maintenance, and repairs.

The project is being implemented in multiple phases.

Phase 3, which is the subject of this contract, involves construction a new surge tower at Tesla Portal.

This surge tower protects the pipelines and workers by safely managing the surge pressure

that could otherwise overstress the system during valve operation or unplanned events.

This commission awarded contract HH1009 two years ago in January 2024

Since then, the work has progressed well

and the search tower was completed last year in August

A month later, a one-inch PVC sampling line installed under this contract ruptured

The contractor immediately stopped the leak

staff conducted a post-incident investigation.

Based on the investigation, staff determined that replacing the PVC line with stainless steel

is the prudent and permanent solution to prevent a similar failure in the future.

For safety and system reliability reasons,

this repair must be performed during the planned winter system shutdown,

which is currently underway.

So staff is requesting an increase of 208 calendar days

to the duration contingency,

bringing the total duration limit to 765 calendar days.

This work can be complete within the existing cost contingency

and no increase in cost contingency is requested.

Thank you for your consideration.

I'm happy to answer any question that you may have.

Commissioners, any discussion?

Seeing none, Ms. Lanier.

Remote callers, please raise your hand

if you wish to provide comment on item 11.

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.

If I can call a request for a motion.

Move to approve.

And a second.

Second it.

President Arce is excused.

Vice President Leveroni.

Aye.

Commissioner Jamdar.

Aye.

Commissioner Stacey.

Aye.

Commissioner Thurlow.

Aye.

Item 11 passes.

Item 12, communications.

Any discussion on our communications agenda there?

Seeing none.

Item 13, items initiated by commissioners.

Commissioners, any items to initiate for future discussion?

item 14 public comment on matters to be addressed during closed session remote

callers please raise your hand if you wish to provide comment on item 15 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 mr. Lanier there

are no callers in the queue thank you may I have a motion on whether to assert

the attorney-client privilege regarding the closed session matter.

Move to assert the privilege.

Second.

President Arce is excused. Vice President Leveroni.

Aye. Commissioner Jamdar. Aye. Commissioner Stacey. Aye.

Commissioner Thurlow. Aye. The item passes.

Thank you.

Thank you.

Thank you.

Thank you.

Thank you.

Thank you.

Thank you.

Okay.

Okay.

Item 16, announcement following closed session.

The commission is recommending that the board approve the item referenced in item 15.

Item 17, motion regarding to disclose the discussion during closed session

pursuant to the San Francisco Administrative Code.

And I request a motion not to disclose discussion during closed session.

So moved.

President Arce is excused. Vice President Leveroni?

Aye.

Commissioner Jamdar?

Aye.

Commissioner Stacey?

Aye.

Commissioner Thurlow?

Aye.

Item 17 passes. Item 18, adjournment.

This meeting is adjourned.

Thank you.

Amen.

,"

Thank you.