MINUTES Tuesday, July 11, 2006 1:30 P.M. City Hall, Room 400 1 Dr. Carlton B. Goodlett Place COMMISSIONERS The Honorable Richard Sklar, President The Honorable Ryan L. Brooks, Vice President The Honorable E. Dennis Normandy The Honorable Ann Moller Caen The Honorable Adam Werbach

DEPARTMENTS AND ENTERPRISES Water Enterprise Wastewater Enterprise Power Enterprise Infrastructure Business Services External Affairs Gavin Newsom MAYOR   Susan Leal GENERAL MANAGER Mary Y. Jung SECRETARY

ORDER OF BUSINESS:

1. Call to Order: 1:36 P.M.

2. Roll Call: Present – President Richard Sklar, Vice President Ryan L. Brooks, Commissioner E. Dennis Normandy, Commissioner Ann Moller Caen Excused – Commissioner Adam Werbach

3. Approval of Minutes

Moved by Vice President Brooks, seconded by Commissioner Caen, to adopt the Minutes of the June 27, 2006, Regular Meeting; passed (4-0) unanimously.

4. Public Comments

There was no public comment.

5. Communications

President Sklar asked for clarification on the status of the Fremont Valve House, referencing the meetings with the Fremont neighbors and their request for visual mitigation. Mr. Tony Irons, Deputy General Manager of Capital Projects, replied the suggestion to have the SFPUC fund a park, with the responsibility for maintenance be provided by the City of Fremont, was rejected by the City of Fremont because they believed the area was inappropriate for a park and were also unwilling to maintain it because they were not in a financial position to fund it. He reported SFPUC was going through all the obligations made to the neighbors, such as visual design problems and placement of the satellite dish, and the project was put out to bid. He expected the project to go forward on schedule.

President Sklar asked Mr. Irons to respond to the communications from Mr. Steve Lawrence, a San Francisco resident and member of the Citizens Advisory Committee, regarding the Water System Improvement Program. Mr. Irons replied he would. The Commission Secretary provided Mr. Irons with copies of the communications.

6. Other Commission Business President Sklar spoke about an article, “Global Warming’s Real Inconvenient Truth,” that appeared in The Washington Post and asked that copies be made and distributed to the Commissioners and staff. He recounted the article stated there would be significant levels of carbon dioxide by the year 2050 because of population growth, despite measures to reduce the use of fossil fuels. He stated this would be a recurring theme before the Commission, and the SFPUC should do its best to mitigate the problem. He stated that whether or not one believed that manmade carbon dioxide was the cause of the rising temperatures or whether it was natural and cyclical, one would have to deal with the consequences and they would be significant for San Francisco with respect to water supply and wastewater handling.

Vice President Brooks asked for information on the new wireless meter reading technology so that meter readers would not need to go to every house to find out customer usage. Ms. Susan Leal, General Manager of Public Utilities, responded the Information Technology and Customer Service Bureaus were involved with this and would supply the information.

Vice President Brooks asked about the status of the Wi-Fi contract and who had jurisdiction over its implementation. Ms. Leal replied no reports were issued from the Tech Connect Committee. President Sklar stated it was possible the SFPUC would not be involved with either the responsibility or obligation of the program. Vice President Brooks asked for a formal report at the July 25, 2006, Regular Meeting, and Ms. Leal agreed to the request.

7. Report of the General Manager

a) Water System Improvement Program

Mr. Irons replied to an earlier inquiry regarding communications written by Mr. Lawrence. He reviewed the letters and responded to the various issues raised. Mr. Irons reported one of the communications concerned the fourth barrel at the San Joaquin pipeline. He stated an alternative design which met all the requirements of the program and all of the service goals had been selected and was moving forward. Mr. Irons reported there was also a request that Mr. Josh Yoder, the Parsons Project Manager, address the Commission. Mr. Irons pointed out that Parsons was an advisor and it was more appropriate for the Commission to ask questions directly to SFPUC staff. In summery, he stated work on the pipeline was going well and was on schedule and on budget.

President Sklar commented that Mr. Lawrence’s request that Mr. Yoder appear before the Commission indicated Mr. Lawrence did not trust staff to fully inform the Commission. He stated he believed the Commission was receiving all necessary information and that Mr. Lawrence should be working with the General Manager’s Office before appealing to the Commission.

Mr. Irons addressed a recent newspaper article about problems with cement used in various City projects. He reported there was a recent accident in the Boston Tunnel caused by falling concrete which was the result of faulty cement. He assured the Commission that the SFPUC conducted testing on the concrete at the Summit Reservoir and all concrete was found to meet the specifications.

Mr. Irons informed the Commission about an Economic Analysis – Phase I that was completed and was now proceeding with Phase II. The study would go through the process of determining what recommended policy measures the Commission might take to mitigate the impacts of drought reduction and what the economic impacts might be throughout the region. He stated Ms. Leal was moving forward, but asked for direction from the Commission before proceeding further. President Sklar stated he was glad the SFPUC was moving ahead and asked Mr. Art Jensen, General Manager of Bay Area Water Supply and Conservation Agency (BAWSCA), if he had any comments.

Mr. Jensen stated BAWSCA made suggestions on the scope and thought it was thorough and covered the issues that were important. He believed the joint approach was valuable and agreed the consultants should do the work and go to the agencies for direction. Mr. Irons informed the Commission the proposed publication date for Phase II was November 2006.

b) Power Enterprise Update

Ms. Barbara Hale, Assistant General Manager of Power, presented her report, starting with 7 (b)(2).

2) Cruise Ship Terminal Shoreside Power Proposal

Ms. Hale presented on this topic along with Mr. Peter Daily, Maritime Director of the San Francisco Port; Mr. Michael Nerney, Maritime Marketing Representative of the San Francisco Port; Ms. Ellen Johnck, Executive Director of the Bay Planning Coalition; and Mr. Thomas Dow, Vice President of Public Affairs of Carnival Corporation & PLC.

Ms. Hale reported the program would lower diesel emissions at the Port by supplying green power to cruise ships docked at the City’s cruise ship terminal for a fee. She stated the City would pay for a facility that could provide such services. It was expected to cost $2 million and could be budgeted for FY 2007-2008. She noted cruise ships required 7-10 megawatts of power while in port – enough electricity to power 7,000-10,000 homes.

Public Comment:

Ms. Teri Shore, Friends of the Earth – Blue Water Network, stated she supported the program and applauded the SFPUC and the industry for pushing this project forward. She relayed she was interesting in working with the SFPUC staff on the project. President Sklar asked that staff examine ways to expedite this process and that the projected installation in 2009 seemed far too distant. He asked why, since the idea seemed to make infinite sense, it could not be implemented now at the present ship docking sites and then moved or re-installed when the new Cruise Ship Terminal is built. Staff indicated they would examine ways to get the project on-line at the earliest possible date.

1) Transmission Lines Cost Analysis Report

Ms. Hale and Ms. Karen Kubick, Infrastructure Development Manager, reported on the transmission and distribution assessment overview. Ms. Kubick stated the current PG&E/CALISO bill was $4 million a year for transmission services and expected the bill to increase after 2015 when the interconnection agreement expired. She proceeded with a PowerPoint presentation that addressed the question of the SFPUC owning its own transmission lines, which included the following: (1) Cost savings and benefits, (2) Bay Area power infrastructure, (3) Upgrades required to the current system from Moccasin to Newark, (4) Siting, planning, analyses, development, and construction requirements to San Francisco and San Francisco International Airport, (5) Municipal distribution system, (6) Proposed workscope, and (7) Benefits.

Ms. Hale reviewed the SFPUC’s current transmission and distribution system and addressed what was needed upstream and at Holm, Kirkwood, and Moccasin. She proposed a transmission and distribution study workscope, reviewed the costs (up to $196 million), and proposed a project schedule.

President Sklar referred to a list of four goals needed for implementing concepts such as public power discussed at the May 9, 2006, meeting and added a fifth goal which should relate to the costs of the projects – that they should not be subsidized by the taxpayers.

Vice President Brooks asked how much the SFPUC charged PG&E for right of way rights and asked if the fees could be raised. Ms. Leal replied she would ask the Real Estate Division to respond to the question at the July 25, 2006, meeting.

After reviewing the costs associated with building a transmission line, President Sklar compared the cost of the project at $196 million to the $4 million per year the SFPUC annually paid for transmission services and indicated building a new line should make economic sense. He said that just the interest costs on the debt to build the new line would dwarf the current PG&E fees. Ms. Leal replied she asked staff to talk to some of the other communities being served to see if they were willing to help pay for it.

When Mr. Barry Flynn, consultant with Flynn/RCI, was asked about the life of a transmission line, Mr. Barry replied “30-50 years,” but noted there were lines in use over 100 years old. Mr. Barry stated the price was high, and said there were three areas included in the discussion: (1) serving some of the load through distribution in the City, (2) upgrading the facilities that already exist to deliver to Newark, and (3) build a line from Newark to San Francisco.

President Sklar asked that the five goals be used in evaluating the feasibility of the project. He asked for information from other jurisdictions who have these same transmission line issues. Ms. Kubick agreed to supply this. President Sklar added the project needed to make economic sense and be a demonstrable benefit before any money was spent on it.

3) Tidal Power

Ms. Hale stated she was responding to Vice President Brooks’ request for more information on tidal power at the June 27, 2006, meeting. She reported the SFPUC had participated in a study that proposed tidal energy deployment east of the Golden Gate Bridge at a depth of 300 feet, generating 237 megawatts of potential energy which could service about 25,000 homes. The proposed pilot project would cost between $5 - $7 million and a 16.5 megawatt commercial plant would cost about $90 million, and entail an estimated $3.6 million a year in operations and maintenance. The cost per kilowatt hour is estimated at 6 cents. Ms. Hale stated the technology was conceptual and the turbines were precommercial.

President Sklar stated the SFPUC did not want to be the lead on this technology and asked what other companies and public agencies were working on this that could be potential partners. He asked Ms. Hale to report to the Commission soon with this information. Ms. Hale agreed to this.

c) Hybrid Vehicle Update Report

Mr. Scott MacDonald, Assistant General Manager of Business Services, reviewed a memorandum regarding energy efficient hybrid vehicles. He stated there were challenges in the replacement and purchasing program. His report included the following issues and challenges in the program: (1) The largest component of the fleet were trucks and there were no reliable hybrid trucks available until recently. (2) The City Distribution Division bought a hybrid truck and was in the process of developing performance tests to determine whether the trucks could meet the SFPUC’s needs. (3) There is a nine year replacement cycle, noting no car would be replaced before their cycle was up. He reported most cars in the fleet were purchased before Ms. Leal was appointed General Manager. (4) CNG vehicles were a challenge when used outside the City because there were a limited number of filling stations. (5) The SFPUC was moving forward with a biodiesel program.

Vice President Brooks asked if there were cost incentives to leasing vehicles instead of purchasing them and if the SFPUC had considered a leasing program. Mr. MacDonald replied studies have shown it was cheaper to purchase vehicles.

d) Southeast Community Issues

Mr. Tony Winnicker, Communications Manager, reported the SFPUC hosted an Emergency Preparedness Fair with the Department of Homeland Security and 30 nonprofits and organizations in the Southeast Community Center. He commended Mr. Sam Murray from his staff for his extra efforts to make the Fair a success.

CONSENT CALENDAR

8. Moved by Commissioner Caen, seconded by Commissioner Normandy, to adopt item (a) listed under the Consent Calendar; passed (4-0) unanimously.

a) Resolution No. 06-0112: Award Wastewater Enterprise, Repair and Replacement Program-funded Contract No. WW-399, Ivy Street and Van Ness Avenue Sewer Construction and Pavement Renovation, in the amount of $555,068, to Valletta Construction, Inc.

President Sklar took the agenda out of order and continued with the remainder of the meeting, starting with Item 12.

REGULAR BUSINESS

PROFESSIONAL SERVICE CONTRACTS

12. Discussion and possible action related to amending Agreement No. CS-733A, Geotechnical Services, Calaveras Dam Replacement.

Moved by Vice President Brooks, seconded by Commissioner Caen, to adopt the following resolution; passed (4-0) unanimously.

Resolution No. 06-0113: Approve Amendment No. 2 to Water Enterprise, Water System Improvement Program-funded Agreement No. CS-733A, to retain the services of Clarence Allen to serve on the Calaveras Technical Advisory Panel; and authorize the General Manager of Public Utilities to execute said amendment, increasing the agreement by $50,000, for a total agreement amount of $100,000, and with a time extension of 1,095 consecutive calendar days, for a total agreement duration of 2,555 consecutive calendar days.

13. Discussion and possible action related to amending Agreement No. CS-733B, Geotechnical Services, Calaveras Dam Replacement.

Moved by Vice President Brooks, seconded by Commissioner Caen, to adopt the following resolution; passed (4-0) unanimously.

Resolution No. 06-0114: Approve Amendment No. 2 to Water Enterprise, Water System Improvement Program-funded Agreement No. CS-733B, to retain the services of I. M. Idriss to serve on the Calaveras Technical Advisory Panel; and authorize the General Manager of Public Utilities to execute said amendment, increasing the agreement by $50,000, for a total agreement amount of $100,000, and with a time extension of 1,095 consecutive calendar days, for a total agreement duration of 2,555 consecutive calendar days.

14. Discussion and possible action related to amending Agreement No. CS-733C, Geotechnical Services, Calaveras Dam Replacement.

Moved by Vice President Brooks, seconded by Commissioner Caen, to adopt the following resolution; passed (4-0) unanimously.

Resolution No. 06-0115: Approve Amendment No. 2 to Water Enterprise, Water System Improvement Program-funded Agreement No. CS-733C, to retain the services of Eric B. Kollgaard to serve on the Calaveras Technical Advisory Panel; and authorize the General Manager of Public Utilities to execute said amendment, increasing the agreement by $50,000, for a total agreement amount of $100,000, and with a time extension of 1,095 consecutive calendar days, for a total agreement duration of 2,555 consecutive calendar days.

15. Discussion and possible action related to amending Agreement No. CS-733D, Geotechnical Services, Calaveras Dam Replacement.

Moved by Vice President Brooks, seconded by Commissioner Caen, to adopt the following resolution; passed (4-0) unanimously.

Resolution No. 06-0116: Approve Amendment No. 1 to Water Enterprise, Water System Improvement Program-funded Agreement No. CS-733D, to retain the services of Allen L. O’Neill to serve on the Calaveras Technical Advisory Panel; and authorize the General Manager of Public Utilities to execute said amendment increasing the agreement by $74,001, for a total agreement amount of $100,000, and with a time extension of 1,000 consecutive calendar days, for a total agreement duration of 2,460 consecutive calendar days.

16. Discussion and possible action related to amending Agreement No. CS-733E, Geotechnical Services, Calaveras Dam Replacement.

Moved by Vice President Brooks, seconded by Commissioner Caen, to adopt the following resolution; passed (4-0) unanimously.

Resolution No. 06-0117: Approve Amendment No. 1 to Water Enterprise, Water System Improvement Program-funded Agreement No. CS-733E, to retain the services of John J. Cassidy to serve on the Calaveras Technical Advisory Panel; and authorize the General Manager of Public Utilities to execute said amendment increasing the agreement by $74,001, for a total agreement amount of $100,000, and with a time extension of 872 consecutive calendar days, for a total agreement duration of 2,332 consecutive calendar days.

REGULAR BUSINESS

CONSTRUCTION CONTRACTS

Advertise

9. Discussion and possible action related to 525 Golden Gate Avenue.

Mr. Irons provided background information on the project, stating it was expected to cost $90-$100 million. He reported a project construction manager had been hired and would be working with the City’s Project Manager, Mr. Ed Lopez, commenting the SFPUC was not in the building construction industry. President Sklar asked Mr. Irons to come back to the Commission with a plan to hire a project and construction management firm to work with Mr. Lopez.

Mr. Irons agreed to this. Mr. Irons reported on the design development process and the financials, indicating the project would pencil out and result in savings to the ratepayers. Vice President Brooks commented the building should be a green building and also be able to operate after a major seismic event.

President Sklar asked for an update on the architect contract. Mr. Irons replied the Commission approved a sole source award of the design contract. President Sklar questioned this action and asked the Commission Secretary to go back through the minutes and find the agenda item and resolution from an earlier meeting that cautioned against sole sourcing further design work to clarify past actions regarding this property.

Moved by Commissioner Caen, seconded by Vice President Brooks, to adopt the following resolution; passed (4-0) unanimously.

Resolution No. 06-0118: Authorize the General Manager of Public Utilities to advertise for bids for the demolition, shoring and excavation work at 525 Golden Gate Avenue, to receive and evaluate bids, and to return to the Commission with a recommendation for award.

28. Discussion and possible action related to expenditures for property located at 525 Golden Gate Avenue.

Moved by Vice President Brooks, seconded by Commissioner Normandy, to adopt the following resolution; passed (4-0) unanimously.

Resolution No. 06-0119: Approve attached resolution allowing SFPUC to reimburse itself for certain expenditures associated with the acquisition, demolition, construction, reconstruction, installation, equipping, improvement or rehabilitation of an office building and related property located at 525 Golden Gate Avenue. Approval will allow the SFPUC to establish compliance with the requirements of the Treasury regulations and the Internal Revenue Code.

PROFESSIONAL SERVICE CONTRACTS

Award

10. Discussion and possible action related to Agreement No. CS-807, Document Preparation Services, Job-Order Contracting

Moved by Vice President Brooks, seconded by Commissioner Normandy, to adopt the following resolution as amended, increasing the not to exceed amount to $305,000; passed (4-0) unanimously.

Resolution No. 06-0120: Award Agreement No. CS-807 to the Gordian Group to implement a job order contracting system and authorize the General Manager of Public Utilities to negotiate and execute said agreement for an amount not to exceed $255,000 (based on the Department of Public Works’ current contract for license fees for three additional City Departments), and with a duration of three years, with two one-year options. Amend

11. Discussion and possible action related to amending Agreement No. CS-725, Environmental Services, San Francisco Electrical Reliability.

Moved by Commissioner Normandy, seconded by Commissioner Caen, to adopt the following resolution; passed (4-0) unanimously.

Resolution No. 06-0121: Approve Amendment No. 2 to Agreement No. CS-725, with CH2Mhill, which provides specialized environmental, consulting and power plant licensing services; and authorize the General Manager of Public Utilities to execute said amendment, increasing the agreement time by one year to conclude on August 22, 2007.

The Commission recessed at 3:35 P.M. and reconvened at 3:50 P.M.

CLOSED SESSION

17. Public comments on matters to be discussed in Closed Session.

There was no public comment.

18. Motion on whether to assert the attorney-client privilege regarding the matters listed below as Conference with Legal Counsel.

Moved by Commissioner Normandy, seconded by Commissioner Caen, to assert the attorney-client privilege; passed (4-0) unanimously.

The Commission went into Closed Session at 3:51 P.M.

19. Threat to Public Services or Facilities – Pursuant to California Government Code Section 54957 and San Francisco Administrative Code Section 67.10(a).

Consultation with: Agency Chief of Security concerning security of SFPUC Water and Power Systems.

There was no discussion.

24. Conference with Legal Counsel – Pursuant to California Government Code Section 54956.9(a) and San Francisco Administrative Code Section 67.10(d).

Present were: President Sklar, Vice President Brooks, Commissioner Normandy, Commissioner Caen, General Manager Susan Leal, Deputy General Manager of Capital Projects Tony Irons, Assistant Manager of External Affairs Laura Spanjian, Assistant General Manager of Power Barbara Hale, Utility Services Manager Marla Jurosek, Deputy Manager of Water Don Larramendy, Utility Specialist Manuel Ramirez, Legal Counsel Noreen Ambrose, Deputy City Attorney Theresa Mueller, and Commission Secretary Mary Y. Jung.

Moved by Commissioner Normandy, seconded by Commissioner Caen, to adopt the following resolution; passed (4-0) unanimously.

Resolution No. 06-0122: Best Western El Rancho Inn & Suites Claim No. 06-02532 / 06W0049; Filed April 5, 2006.

25. Conference with Legal Counsel – Pursuant to California Government Code Section 54956.9(a) and San Francisco Administrative Code Section 67.10(d).

Present were: President Sklar, Vice President Brooks, Commissioner Normandy, Commissioner Caen, General Manager Susan Leal, Deputy General Manager of Capital Projects Tony Irons, Assistant Manager of External Affairs Laura Spanjian, Assistant General Manager of Power Barbara Hale, Utility Services Manager Marla Jurosek, Deputy Manager of Water Don Larramendy, Utility Specialist Manuel Ramirez, Legal Counsel Noreen Ambrose, Deputy City Attorney Theresa Mueller, and Commission Secretary Mary Y. Jung.

Moved by Commissioner Normandy, seconded by Commissioner Caen, to adopt the following resolution; passed (4-0) unanimously.

Resolution No. 06-0123: Projection Video Services Claim No. 06-01449 / 06W0099-1; Filed December 15, 2005.

20. Conference with Legal Counsel – Pursuant to California Government Code Section 54956.9(a) and San Francisco Administrative Code Section 67.10(d)(1).

Present were: President Sklar, Vice President Brooks, Commissioner Normandy, Commissioner Caen, General Manager Susan Leal, Deputy General Manager of Capital Projects Tony Irons, Assistant Manager of External Affairs Laura Spanjian, Assistant General Manager of Power Barbara Hale, Utility Services Manager Marla Jurosek, Deputy Manager Water of Don Larramendy, Utility Specialist Manuel Ramirez, Legal Counsel Noreen Ambrose, Deputy City Attorney Theresa Mueller, and Commission Secretary Mary Y. Jung.

Existing Litigation: Pacific Gas and Electric Company v. City and County of San Francisco; U.S. Bankruptcy Court, Northern District of California, Case No. 01-30923-DM; Filed June, 2004.

There was no action.

21. Conference with Legal Counsel – Pursuant to California Government Code Section 54956.9(a) and San Francisco Administrative Code Section 67.10(d)(1).

Present were: President Sklar, Vice President Brooks, Commissioner Normandy, Commissioner Caen, General Manager Susan Leal, Deputy General Manager of Capital Projects Tony Irons, Assistant Manager of External Affairs Laura Spanjian, Assistant General Manager of Power Barbara Hale, Utility Services Manager Marla Jurosek, Deputy Manager of Water Don Larramendy, Utility Specialist Manuel Ramirez, Legal Counsel Noreen Ambrose, Deputy City Attorney Theresa Mueller, and Commission Secretary Mary Y. Jung.

Existing Litigation: Pacific Gas and Electric Company, Federal Energy Regulatory Commission, Docket No. ER05-1190-000; Filed July 1, 2005.

There was no action.

22. Conference with Legal Counsel – Pursuant to California Government Code Section 54956.9(a) and San Francisco Administrative Code Section 67.10(d)(1).

Present were: President Sklar, Vice President Brooks, Commissioner Normandy, Commissioner Caen, General Manager Susan Leal, Deputy General Manager of Capital Projects Tony Irons, Assistant Manager of External Affairs Laura Spanjian, Assistant General Manager of Power Barbara Hale, Utility Services Manager Marla Jurosek, Deputy Manager of Water Don Larramendy, Utility Specialist Manuel Ramirez, Legal Counsel Noreen Ambrose, Deputy City Attorney Theresa Mueller, and Commission Secretary Mary Y. Jung.

Existing Litigation: Pacific Gas and Electric Company, Federal Energy Regulatory Commission, Docket No. ER00-565-018, et al.; Filed November 1999.

There was no action.

23. Conference with Legal Counsel – Pursuant to California Government Code Section 54956.9(a) and San Francisco Administrative Code Section 67.10(d)(1).

Present were: President Sklar, Vice President Brooks, Commissioner Normandy, Commissioner Caen, General Manager Susan Leal, Deputy General Manager of Capital Projects Tony Irons, Assistant Manager of External Affairs Laura Spanjian, Assistant General Manager of Power Barbara Hale, Utility Services Manager Marla Jurosek, Deputy Manager of Water Don Larramendy, Utility Specialist Manuel Ramirez, Legal Counsel Noreen Ambrose, Deputy City Attorney Theresa Mueller, and Commission Secretary Mary Y. Jung.

Existing Litigation: Pacific Gas and Electric Company v. City and County of San Francisco; Federal Energy Regulatory Commission, Docket No. EL05-133-000; Filed June 29, 2005.

There was no action.

Commissioner Normandy was excused at 4:49 P.M.

Following the Closed Session, the Public Utilities Commission reconvened in Open Session at 4:51 P.M.

26. Announcement following Closed Session.

President Sklar announced the actions taken during Closed Session.

27. Motion regarding whether to disclose the discussions during Closed Session.

Moved by Vice President Brooks, seconded by Commissioner Caen, not to disclose the discussions during Closed Session; passed (3-0) unanimously.

There being no further business to discuss, the meeting was adjourned at 4:52 P.M.

Mary Y. Jung
Secretary