"culturewire." >> good afternoon. today is friday, april 25, 2014 and welcome to the local agency formation commission. my name is john avalos the chair of the commission, joined to my left by london breed, the vice-chair. and commissioner eric mar and to my right by commissioner hope schmeltzer. the clerk of the committee is alisa miller and i want to thank sfgovtv staff who are broadcasting today. madame clerk, could you please call the next item. >> roll call, would you like me to call the roll. commissioner avalos? >> here. >> commissioner breed? >> breed is here.

commissioner campos? campos absent. commissioner mar? >> here. >> mar here. commissioner schmeltzer >> schmeltzer here. >> mr. chair, we have a quorum. great. let's go to our next item, please. >> item no. 2, approval of the lafco minutes from the january 24, 014 regular meeting and march 3, 2014 special joint meeting with the san francisco public utilities commission. >> colleagues my comments or questions of the minutes? okay. seeing none, we can open this item up for the many people who are in our audience -- wait, there is no one there. welcome. and we'll close public comment. colleagues do we have a motion to approve the minutet minutes? motion from commissioner breed and seconded by commissioner schmeltzer, without objection. next item, please. >> the community choice aggregation activities report.

a, status update on the cleanpowersf. b, status upare date on the proceeding at the california public utilities commission and c, status update for the request for proposal to provide build-out strategy and plan for cleanpowersf energy-efficient, facilities and local jobs policy. >> we have a presentation from barbara hale. >> thank you, commissioners, assistant general manager for power. as you know, assembly member amaino introduced a bill that would allow the city to join a joint power authority and also allow certain over-the fence-transaction of electricity to not be regulated. that bill was heard in assembly utilities commerce committee on monday with the vote being picked up at the end of the

hearing and moves on to its next committee, which is the local government committee. i understand actually mr. fried was there. i was not. so he may have some additional input for you on that piece of legislations. the second piece is assemblyman bradford's ab 2145. this bill would change the opt-out process that is currently part of the community choice aggregation law and regulatory regime to opt-in process. the bill was not addressed at the hearing on monday. we have not heard if or when chair bradford will be putting it back on the calendar. so that one is lying to the side at this point. >> is there a position the public utilities commission have a position on that or the mayor's office? >> the public utilities commission has not taken a

position on either of these bills. >> do you know if the mayor's office has? >> i don't believe they have taken a position on either bills either. >> there was a vote that happened at the air district and was added to the -- the vote was added to -- we already had our discussion about the bills that we cared about in sacramento, but this one was wasn't on the list and interest to note that roger kim from the mayor's office on the air district board and interesting to see that the administration was not taking a position against, but i'm not sure they are for. it was key that i know mayor lee had suggested he would be

in favor of an opt-in process and it seems like in sacramento, people who are in favor of that are really connected to the private utility generators. >> i know that there was -- >> commissioner schmeltzer. >> excuse me. >> is this something we can bring back on our next agenda as far as an action item to take a position on? would the other commissioners be in support of that? >> i think so. miss miller. >> yes, i would like to say that opposed positions have been entered by the league of california cities and the board of supervisors csac and i think the board is scheduled to be heard on the 28th, next monday. >> that is its first committee? >> yes. >> commissioner breed? >> yes. i was wondering in the interest

of time, could we direct the executive director to prepare a letter expressing that. clearly we could all express what our concerns are as it relates to a bill like this passing and how it could possibly impact the program and what the concerns are from our perspective based on what you are trying to do with clean power in san francisco. >> yes, you just direct me to do that and i will do that. >> mr. chair, i would like us to direct the director -- executive director, i'm not sure, are you are our lawyer? >> interim. >> interim executive officer. >> thank you, miss miller. >> you are welcome >> if you could please move forward with a letter in haste

and get that to the folksing on the committee and address it to mr. bradford, assembly member bradford as well. >> thank you. >> we have consent on that. okay, colleagues. >> i fully support that. i think it is often useful for the committees to have a formal action letter of support or opposition from board or commission. so i would hope that we could still bring that back next month and in the interim have a letter. >> okay. will do. >> and can i just add, can we make sure that we include in the letter specifically our desires to implement this program would not financially impact low-income communities, meaning no fee or anything -- i don't know if you want to put that level of detail, but i think it's important that we highlight how this program will not negatively impact

low-income families. >> right. i will add in that we have encompasses the care program. we have a lot of ways of actually helping low-income families with this program. >> great, thank you. >> sure >> mr. chair, the mayor's position on the bradford bill, i did ask roger kim in the mayor's office and my understanding is that they are not actively promoting a support position, but i'm not sure what that means, but at least that was communicated to me, that they are not promoting our supporting it according to what they told me. >> thank you. miss hale. >> regulatory update. focusing on the activities at the california public utilities commission around the green tariff proceeding, where pg&e has proposed to implement a program allowing customers --

electric customers to choose to join tariff programs that relies on a greener resource portfolio. the administrative law judge recently asked pg&e to sponsor a witness to answer questions about the community renewables program aspectful their green tariff offering. this is where -- this is the part of the program that would allow customers to subscribe to a specific project in their community; that is less than 3 megawatts in size as opposed to the original offering to subscribe to a portfolio of resources. this is an aspect of the program that pg&e was instructed through sbe 43 to include in their offering. it's an aspects of the program that we have been very supportive of and have offered to present expert witnesses on

how that program would work. we're very interested in being able to utilize that aspect of pg&e's program to implement community renewables here in san francisco. the schedule for that proceeding has briefs on this aspect of the case due the first week of may. and so looking at the calendar, and the cpuc's rules we would expect a proposed decision by late-may/early-june on both the green tariff program as pg&e had proposed it, and the community renewables component of it that was directed to be included through sb 43. sb 43 also directed the california puc to issue a decision by july 1st. so early this summer we should see some decision from the public utilities commission of california that tells us what the shape of this green tariff

program will be and available to pg&e customers here in san francisco. thank you. >> thank you, i don't quite understand how the green tariff program works with what you described as the community renewables program. >> to propose programs that would allow for community renewables. it's very much mimicking a program that is already underway in southern california that was sponsored by san diego gas and electric company. pg&e did not include that kind of an offering in their initial application to the california puc. a number of parties, including ourselves, suggested that there should be such a component to their program. it wasn't until sb 43 went through the legislative process

and was adopted that pg&e then in compliance filed a proposal to incorporate a community renewables piece into their green tariff offering. so it would allow customers to not just say that i want into the green tariff program, but also to say i support and want to subscribe to a particular project. and how that -- the details of how that would take shape is what is being discussed at the california puc now and that pg&e has been directed to present a witness on. so parties can better understand through the hearing process what pg&e is proposing and how it would work. >> and what is the -- is there an added rate for the green tariff program? >> that is one of the components that is being discussed at the cpuc. pg&e had proposed a separate

rate for the green tariff program that would be higher than the rate that other customers, who don't subscribe to the program would pay. whether the community renewables program component of the green tariff offering would have a separate rate component is still being discussed at the california puc. >> thank you. >> you are welcome. >> so miss hale at our joint lafco public utilities commission meeting there were a number of requests that i had made for information. i have not received any of them and i wondered if there was an innocent intention to delay getting them to me and it's kind of shocking not fulfilling those requests and what the delay is all about.

>> my apologies for the delay. i signed the time response to the series of the questions that were posed this morning and should be the lafco commission secretary should be receiving today. >> could you summarize those for me. >> would you like me to go through each? >> please. >> the first question was that we describe our purchase of power that was made this year. and any planned purchases for the balance of the year and to provide a copy of our energy-trading policy. so we have made some purchases this year and we made purchases this year in part because we were asked to deenergize our system during the rim fire and we made purchases during that time. we also had some maintenance work on the switch yard upcountry that caused us to make a purchase to replace the power that wouldn't be delivered because of that.

>> could you say who the purchases were from? >> yes, our purchases -- our purchases totaled in terms of dollars -- well, i can tell you that we purchased from next era, from edf, from constellation, and that was between august and the middle of february. and i actually don't have a total for these purchases, but ballparking what i am looking at here, i would say it was around $2 million worth of purchases. you also asked us to describe the history of purchases and sales over time, including during drought periods and to provide an historic generation by year chart, highlighting

droughts. so what we have provided is a chart that shows our hetchy generation for each year going back to 1921. the chart highlights 11 years that qualified as drought years since 1921. and and we have identified during the last five years the various counterparties we have made purchases from. those were the california department of water resources, city group, constellation, edf, modesto irrigation district, next era, florida power light -- energy power marketing and turlock irrigation district and we also identified for you the

partis that we sold hetch hetchy power to. and those were some of the same i just mentioned, along with the north california power agency, seattle city light, silicon power valley, the city of santa clara's publicly-owned utility. the western area power administration, sierra-nevada region. and we also resold some of the power that we purchased to edf trading? >> who is edf. >> they were historically electricity de france. >> i'm sorry? >> they are french? >> yes. >> okay. >> originally. >> and then our power purchases, what kind of power did we buy? was it renewable? was it fossil fuel-based? ? >> so we were typically in

this era making system purchases, so particular facilitis are not identified when you make a system purchase. i can tell you for some -- for most of please entities it would be a blend of fossil and non-fossil resources that they would be relying on. >> and was that a consideration by the public utilities commission or that was just done to purchase what is made in-house without their approval of your board, your commission? >> staff has the authority to make necessary transactions to meet our electricity needs on a short-term basis. these were all transactions within the discretion that is exercised by staff. we have historically made specific purchases from specified resources and in particular we made purchases of

geothermal power and presented that to our commission. those were purchased that although they weren't required to go to the commission, because we were making that commitment at a price that was above market, we did bring it to them. we paid about a $15 megawatt per hour premium at that time to purchase renewable power. that was a purchase that 50 megawatts over a three-month period. >> which is what? about a $1 that our not-to-exceed rates were proposed in august? that was 20 megawatts, this is a premium that seems higher. >> when you purchase from a specified resource, that is renewable, you are paying a premium for above-market typically and that is

recognizing the value, the enhanced value of the resource that you are purchasing because it's greenhouse gas-free and meets rps requirements. when we made that purchase at that time, the rps requirements were not in place and we elected to do that at that time. you also asked us to describe our reliance on renewable energy credits. and there is a table included that you will see includes what our generation is along with the purchased renewable energy credits that we utilized. we participate in the western regional sort of accounting system, if you will, for renewable attributes, renewable energy credits. we do have some assets that qualify. in particular we have a small

hydrounit or moccasin unit and sunset generation facility, the five megawatts of solar and we have our southeast cogen facilities both at the southeast plant and at our oceanside plant. and then we have numerous solar facilities that are roof-top solar facilities. for example, on moscone, on the chinatown public health center. all of those facilitis that on davies symphony hall, all of those facilitis with solar on the roof we have registered through the system and we're able to account for the renewable attributes of the electricity generated from those systems. we register them and we utilize those renewable energy credits to cover the system purchases that we make when our hetchy

generation is not available to us. so that allows us to -- if you will, green-up purchases that are not otherwise specified as renewable. we also have made some purchases of renewable energy credits in the market to make sure that we have sufficient renewable energy credits available to us to cover any system purchases that we might need to make. we purchased biomass and wind from various facilities in california and in the west. and at the time of this reporting we totaled between 2011 and 2012 a balance of renewable energy credits of 53,544 megawatt hours. we utilized for our own rps

compliance 80,185 and that is drawn from that mix of renewable energy credits that we generated and owned and those that we purchased. >> this is certainly not asking you to speculate on this hypothesis. >> yes. >> so does the commission have any qualms against using public utilities commission purchasing electricity on the market because they did express those qualms when they came to cleanpowersf. what is the difference, you think? >> i think the fact that our underlying resource is 100% greenhouse gas-free. through our own hetchy system and because we have more of that power than what we consume, our ability to be a net contributor to the

greenness, i think, is an influencing factor on their comfort of using renewable energy credits to cover those intermittent purchases that we make, when the supply is below the demand in a particular moment in our supply-demand balance. >> it seems like for cleanpowersf ultimately our buying power comes from the fact that we actually generate our own renewable energy. you see that as a stark difference? >> i think part of it is it's tough -- it's tough to educate folks about these differences. and i think some of the commissioners expressed concern about renewable energy credits because it's difficult to explain to call a product 100% renewable and then to have the renewable energy credit component to it, i think is difficult for lay people to get their head around. and in a program. >> i guess you could say the same thing about a lot of ways

that electricity is generated layperson can't explain that either. >> i find myself have difficulties at times explaining it and it's a complicated commodity. the fourth question was how much revenue is projected to come from new customers within our financial plan? and you will see in our response we have provided a table that delineates the customers and when we would expect the new load to come on and what the revenue associated with that new load is. suffice it to say that when you look at the annual totals, not specific to customer by customer, but just to summarize the annual totals start are a little over $3 million. they stay at about that level until fiscal year end 2017,

when they climb to almost $4 million in fiscal year-end 2019, a little over $5 million and the balance of the 10-year plan you see a total of $48 million in additional projected revenue from new customers served by san francisco public utilities commission. the next question had to do with what the rationale was for the split of 55/45 overall? and how does it apply to the mountain tunnel asset in particular? we were also asked to provide a copy of the wholesale water agreement, which you will see that we have included a link to. the 55/45 split just to refresh your memory is associated with how we account for the costs of operating a joint system, a system that produces both water

services and power services. it's one system, many times one in the same asset is serving two purposes. other times, assets are strictly dedicated to providing water service and districtly dedicated to providing power service, but those providing both components we split those costs between water and power rate-payers. 55 to power and 45 to water. that is an historic -- that is an historic method that has been applied to the hetch hetchy system for all upcountry facilities. we arrived at that method -- it's referred to as the separable cost methods where you look at what it would have cost to provide the water

service separate from the power service or the power service separate from the water service and see how the costs would have broken out? when we performed that analysis some years ago, utilizing consultants, we arrived at a figure -- a split, went into negotiations with our wholesale water customers, who also had views on how these asset costs should be shared and arrived at the 55/45 split. this is a method -- the separable cost method is used by the federal energy regulatory commission and other municipal utilities with joint asset as components of their service. it's a recognized method. >> it's not a required method though? >> no, and it's not the only method. it's one of the methods that is used, but it is a commonly used method across the nation for

allocating costs. >> why wouldn't you -- in a simplified world the layperson would probably say well, what is the revenue or the volume, measuring the volume that we generate from electricity and revenue that we generate from water? is this method that you just described comparable or some other based on volume and cost would yield a completely different outcome in terms of the split? >> so the method that you just described is recognized in the industry as the "propositional benefits method." it also is of reasonable approach to allocating the costs. would it result in exactly the same outcome? no. is it a better or worse outcome? we would have to look at that again. it was one of the methods that

has been considered -- had been considered historically when the puc settled upon using the separable costs method. >> i would imagine that the great volume of resource that we yield from the tunnel would be more on the water side than the energy side. i mean water and electricity are very different things, but as resource, there is probably many more people in the bay area who get benefit from the water then get benefit from electricity. so you could look at it that way. >> sure, you could. >> with the bulk of the percentage or proportion on water versus energy. >> and just so i'm being clear in describing to you the method that we are using, while each asset is categorized as either a water, a power or a joint water and power asset, the sharing of