Published By: Commission
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MINUTES COMMISSIONERS The Honorable Ann Moller Caen, President |
DEPARTMENTS AND ENTERPRISES Water Enterprise Gavin Newsom Michael Housh |
ORDER OF BUSINESS:
1. Call to Order: 10:10 A.M.
2. Roll Call: Present – President Ann Moller Caen, Vice President E. Dennis Normandy, and Commissioner Richard Sklar
Commissioner David Hochschild was excused.
Public Comment:
No public comment was offered although a representative of the Bay Area Water Supply Conservation Agency (BAWSCA) requested that opportunity for such comment to made available following the budget presentations.
Commissioner Sklar asked and President Caen agreed that there be additional discussion of several unresolved Power Enterprise budget matters set for discussion between Noon and 12:30 P.M.
PUBLIC HEARING
3. Public Hearing to consider budget proposals for the Operating and Capital Budgets for the enterprises and bureaus under the jurisdiction of the San Francisco Public Utilities Commission for FY 2008-2009, and possible action. (Persons who are unable to attend the public hearings may submit to the City, by the time the proceedings begin, written comments regarding the subject of the hearing.) These comments will be brought to the attention of the Commission and will become a part of the official public record. Written comments can be sent to: Michael Housh, Commission Secretary, San Francisco Public Utilities Commission, 1155 Market Street, 11th Floor, San Francisco, CA 94103.
Staff Recommendation:
Consider the proposed Operating Budgets for the enterprises and bureaus of the Public Utilities Commission for Fiscal Year 2008-2009 for further hearings and possible action.
Acting Assistant General Manager for Wastewater Tommy Moala presented an overview of the proposed FY 2007-08 Capital and Operating Budgets for the Wastewater Enterprise focusing on the highlights of his first 115 days as Acting Assistant General Manager including the Agency’s response to the Cosco Pusan oil spill in the Bay, a Bay Keeper’s Lawsuit, and his work to keep the Public Utilities Commission’s leadership role in environmental stewardship in the Bay Area.
Mr. Moala then described in detail the program based budget proposals for Wastewater for FY 2008-09 highlighting his enterprises mission to protect the environment by safely collecting, conveying, treating, and disposing of wastewater. Mr. Moala first focused on conveyance improvements noting the budget identified where costs were and included efforts to reduce administrative cost by shifting apprenticeship and training programs among divisions. Mr. Moala reported that costs were mostly stable but that a major issue was addressing the first year’s $35 million debt burden.
Turning to improvements Mr. Moala reported that more work needed to be done to implement Maximo fully and address 70 vacant positions within the limits imposed by a salary savings requirement that would only allow 30 hires. In addition Mr. Moala addressed succession issues raised by the fact that nearly 40% of qualified positions were held by those eligible to retire in the near future. Mr. Moala proposed to address these concerns through a three year hiring program.
Next Mr. Moala presented an update on “state of good repair” efforts. In response to questions by President Caen focusing on explaining where program shifts between reports had created reporting anomalies, Mr. Moala showed what this really represented in terms of the actual program expenditures. Assistant General Manager of Finance Scott MacDonald showed where costs were shifted from one program segment to another sometimes resulted in these reporting anomalies. Vice President Normandy thanked staff for these detailed explanations as presenting a truer picture of what was actually being proposed to be spent.
Next Mr. Moala reported how he planned to address the impact of staffing shortages where they were hampering implementations of new requirements some of which could generate additional revenues. Mr. Moala then updated the Commissioners on progress of bringing the system up to the mandated state of good repair noting that the SFPUC had achieved about 32% of the needed job done.
In response to a question by Commissioner Sklar as to why this critical important inspection work was going so slowly, Mr. Moala explained the complexities of doing survey, TV inline inspections, and then undertaking repairs where needed, given limited staff available. Human Resources Director Michele Modena explained the various procedural and bureaucratic hurtles that slowed bringing more staff online to address this need. Commissioner Sklar urged staff undertake whatever steps were necessary including hiring contractors to perform this critical effort and significantly speed up getting this work done. Commissioner Sklar urged that staff not hesitate to ask for resources needed to do this as the Commissioners were quite willing to provide additional resources to get the job done at an accelerated pace.
Vice President Normandy asked if the delays were due in part to the work becoming more difficult and was told this was in part true. Commissioner Sklar noting that we had 1000 miles to inspect, clean, and/or repair, it was essential that the pace of this effort be speeded up and asked Mr. Moala to provide the Commissioners with an amount that would allow this to happen. Next followed a discussion about how the value of these assets was determined and how revenues, either bonds or commercial paper, could be generated to give enhanced priority to bringing the entire system up to the “state of good repair” that the Commission had mandated as the highest priority. Commissioner Sklar noted that at the current rate of line repair/replacement as well as with all of the needed work on pumping and plant facilities it would be decades before things were where they needed to be. Mr. Moala next explained how shortages in maintenance staff contributed to meeting these targets and walked the Commissioners through the steps he proposed to address this problem as well. Acting General Manager Tony Irons reported that this kind of assets management was a critical need throughout the SFPUC and that staff were aggressively pursuing building a complete picture what was needed across the board.
Next Mr. Moala described the developments on solid wastes disposal and outlined how this was being assessed in a regional plan that would accommodate our needs into the future given the increasing standards for higher treatment levels. Next Mr. Moala discussed the ongoing concerns with rust problems discovered in many of the digester covers noting that this problem was being identified as a new priority to fix.
Commissioner Sklar urged staff to begin wherever possible to use the expertise developed in the Water System Improvement Program (WSIP) to address the many longstanding issues of concern in the Wastewater Enterprise and then apply this developed expertise to the Power Enterprise as well. Commissioner Sklar asked about efforts to restore the SFPUC’s capacity to be able to perform any needed construction, noting that staff was absorbing skills and knowledge and were therefore able to take on a greater range of activities based on the background of this growing body of experience. Mr. Irons observed that with a clear vision for the future, a developed business plan, enhanced assets management and careful succession planning the agency would move successfully through this transition period.
Mr. Moala next presented some good news outlining the success of the Greasecycle pilot program to convert brown grease into usable fuel thus eliminating a serious disposal and system cleaning issue and creating a new renewable energy resources drawing on the millions of gallons of cooking grease generated by the city’s restaurants.
In answer to questions by President Caen concerning what could be done to expedite sewer cleaning and repair activities and Commissioner Sklar’s suggestion that if necessary to contract for outside help to speed up this essential effort, Mr. Moala proposed to look into what could be done and report back.
Commissioner Sklar next asked that action to eliminate as much as possible the odor problems emanating from the Southeast Plant as was promised to the community be given the highest priority. President Caen and Vice President Normandy agreed that this had been promised before and must be a priority to identify funds in the budget to do whatever was possible now. Mr. Moala explained that the solution to this problem was tied to the replacement of the old digesters and Mr. Irons outlined the ongoing steps to study what could be done immediately. Commissioner Sklar insisted that the funds be identified and reserved in this budget to do whatever work could be done this year to address the stench in the homes and lunchrooms of the neighborhood immediately. Mr. Irons noted that the direction was clear and that the steps to be done would be reported back to the Commission. Both Vice President Normandy and Commissioner Sklar were emphatic that staff made sure that the Mayor and the Supervisors understood how critical this priority was and that the Commissioners would support allocation of needed funding to get something done as soon as possible. Mr. Irons agreed and noted that the proposed capital plans would address the underlying issue of replacement of the aging digesters later. Commissioner Sklar reiterated that Commission’s direction on priorities as addressing the odor problem in the Southeast, speeding up efforts to achieve a state of good repair, which included taking whatever steps were needed to accelerate the inspection cleaning and repair process in the wastewater system.
The Commissioners took a brief recess at 11:10A.M.
The Commissioners returned to session at 11:20 A.M.
Infrastructure Assistant General Manager Harlan Kelly next presented an overview of the FY 2008-09 Support Bureau budgets. Mr. Kelly described the internal and outside staffing that were moving the Water System Improvement Program forward highlighting the various local and regional activities and reporting that 30% of the program projects were now in design. Mr. Kelly noted that heightened efforts were being made to tighten up the payment schedules and that the pre-qualification program for contractors was working well. Mr. Kelly reported that the partnering and design review process was in place to reduce risk for future problems and program delays. Mr. Kelly noted that the overall Project Labor Agreement (PLA) was operating well and that there was a cooperative attitude between Local 21 and staff in planning for staffing. Mr. Kelly next turned to the Humans Rights Commission (HRC) support for the Local Business Enterprise (LBE) Program to assist local small and disadvantaged business compete successfully to participate in the program. In response to a question by Commissioner Sklar, Mr. Kelly reported that the budgeted $1.5 million represented funding for Human Rights Commission (HRC) staff assigned to Public Utilities Commission projects.
Next Mr. Kelly addressed the cooperative relationship with the Department of Public Works (DPW) concerning work orders and outlined the operations of Fleet, Purchasing and mail processing which were followed by a survey of Department of Information Telecommunications Services (DTIS) costs. Mr. Kelly next turned to the small but active staff addressing right of way related issues. In response to a question by Commissioner Sklar, Mr. Kelly reported that 83% of the Infrastructure budget was related directly to the Water System Improvement Program and that there was an excellent cooperative relationship between the divisions. Next Mr. Kelly discussed the upgrading of Safety Officers for both the Water System Improvements Program (WSIP) and for the Wastewater Enterprise and noted that this function could be expanded to address similar needs in the Power Enterprise as it grew. Mr. Kelly next described efforts to restrain administrative overhead and reported that programs were within industry standards. Mr. Irons noted that the Infrastructure Division was in competition with private industry for skilled staff in a very competitive arena and that every effort was being made to address how to accomplish efficiently, small and specialized work that was sometimes more difficult than large amounts of non-specialized projects work equitably but not so as to operate at a disadvantage. Commissioner Sklar observed that doing as Mr. Kelly was, comparing apples to apples, was the fairest way to award the work. Commissioner Sklar asked if the Infrastructure customers were happy, and when informed that they were noted that the Commissioners were therefore happy as well. Vice President Normandy observed that over the years as the program grew that the staff’s abilities had improved by a quantum amount. In response to a question by commissioner Sklar concerning how difficult it was to obtain specialized staff, Mr. Kelly noted that the program was currently able to meet its needs and if necessary bring on specialized consultants. Commissioner Sklar then asked what percentage of work is allocated to staff as opposed to consultants and Mr. Kelly replied it was a 60/40% staff/consultant split with the consideration at a percentage of very specialized work was not included in the mix. He further discussed the amounts proposed to be paid to staff as opposed to consultants.
Assistant General Manager for External Affairs Laura Spanjian then presented the proposed External Affairs Budget. In response to questions by Commissioner Sklar, Ms. Spanjian identified the State lobbyist expenses as $200,000, the federal lobbyist expenses as $240,000, and noted that both contracts resulted from a request for proposals for these services issued in 2006. Ms. Spanjian next described the outreach activities for all of the enterprises, as well for responding to public records requests under the authority of the Sunshine Ordinance. Commissioner Sklar recalled the challenges in correctly identifying which community groups and individual to deal with in resolving some of the right of way issues in Fremont. Commissioner Sklar not finding the information included in the budget materials, requested that Ms. Spanjian provide the Commissioners with a detailed organizational chart with full information about each person and position, who does what, and expense for External Affairs. President Caen and Vice President Normandy recalled that a mere seven years ago there were no real functioning external affairs operation and that staff had taken up the challenges to represent the SFPUC in a multitude of arenas where the San Francisco Public Utilities Commission should participate in shaping policy.
Commissioner Sklar expressed serious concerns with a number of issues wondering if there was any real need for some of the lobbyist work being done. Commissioner Sklar asked why Real Estate was included in External Affairs and criticized what he felt was a pattern of inconsistent and conflicting messages staff presented at the Board of Supervisors when the Commission had made its position clear. Commissioner Sklar expressed dismay at with he termed a separate agenda from staff that undermined the direction set by the Commission and said that was unacceptable. Commissioner Sklar indicated that he would withhold his approval of this part of the budget until he had full information about all of the positions involved and what they were doing.
Vice President Normandy commented that there should be a move to correct any inconsistencies and that the Commission sets policies that staff would then carry out. Vice President Normandy expressed confidence that any disjoint could be remedied. Mr. Irons and Ms. Spanjian agreed to prepare and submit a detailed organizational chart for all of the positions and salaries in External Affairs. Vice President Normandy asked that attention be given to showing the value contributed by the lobbyists and to consider if our lobbying activities could be dovetailed with those of the City in general. Ms. Spanjian cited a number of grants received during the past year as a tangible benefit of their work on our behalf, and Water Enterprise Assistant General Manager Michael Carlin noted that each enterprise used the lobbyists to protect our Rights and had pursued effectively many beneficial goals for the entire agency.
As was proposed at the beginning of the meeting the Commission returned its attention to aspects of the Power Enterprise Budget of concern to Commissioner Sklar. In response to detailed questions by Commissioner Sklar, Assistant General Manager for Power Barbara Hale described and discussed the costs of transmission. In a related follow up question concerning an apparent conflict between a Board of Supervisor’s direction concerning a Newark to San Francisco Transmission Line and power for the proposed new Transbay Terminal complex, Commissioner Sklar noted that the Commission had its priorities, and that he wanted line items for funds identified for these purposes reserved in “buckets” of funds reserved in the budget.
In particular, Commissioner Sklar wanted to make clear that funds derived from the Transbay Cable Project were to be allocated in the budget for energy conservation in the Southeastern neighborhoods as the Commission had promised. Commissioner Sklar asked that funds identified in the budget for the proposed Newark-San Francisco transmission study and for power for the proposed new Transbay Terminal Project be set aside in a “bucket” reserve for future Commission action to assign use of these funds. Commissioner Sklar then requested a detailed report on the development in the Combustion Turbines (CT’s) Project and noted that it seem clear that this project needed to be reviewed and re-negotiated. Mr. Irons reminded the Commissioners that no Public Utilities Funds were being expended on this project and that it was expected that designated revenue available would be spent next year.
Next, Commissioner Sklar turned to questions concerning the Lennar/Hunters’ Point Project, suggesting that a review by an outside expert might provide options concerning this project given the Commissioners’ concerns with it. Next, Commissioner Sklar asked about income and expenses presented in the report on power services on Treasure Island. Ms. Hale explained the details of the report, noting differences in reported billings and collections and that the Island was paying their bills. Commissioner Sklar suggested that this be broken out as a separate account so that the information was readily accessible and noted then at least we were not going further into a hole. Commissioner Sklar requested a separate Treasure Island Report and President Caen suggested that the Treasure Island related information be presented on a single page to capture all of the needed information in an easily read manner.
The Commissioners then turned to a discussion concerning the apparent differing directions for uses of the funds generated by the Transbay Transmission Cable with Commissioner Sklar again emphasizing that the Commission had directed its use for energy conservation activities in the interest of environmental justice in the Southeastern communities. Commissioner Sklar asked that specific direction be included in the budget to allocate the estimated $3 million in revenues for this purpose. Mr. MacDonald explained that the revenues were being received over a 36 month period but those funds on hand could be so designated. Next the Commissioners returned to restate for the record the concept of a “bucket” reserve for the designated expenditures identified in the draft budget for the Newark-San Francisco Transmission line and the Transbay Terminal. Commissioner Sklar further noted that a separate “bucket” would reserve funds designated for the Combustion Turbines (CT’s) Project, and that there would be an intensive review of the status of the Lennar/Hunters’ Point Project in the next year to consider options there. Commissioner Sklar agreed that the proposed Civic Center “Green” district could go forward although reserving his and Commissioner Hochschild’s views concerning the need for its own transmission network.
Ms. Hale next described how her staff proposed to begin issuing work orders to General Fund Departments to assess power charges to these General Fund departments that were not currently paying for the power the Public Utilities Commission was providing to them. At a proposed initial rate of 5.5 cents per kilowatt hour charges that would then hopefully over time be incrementally increased to an 8.8 cents per kilowatt hour charge which was what the most recent cost of services study showed was the Public Utilities Commission’s actual cost. Commissioner Sklar noted that this collecting of City department’s power costs needed to be viewed as an essential conservation measure. Vice President Normandy noted that a phased in process would make it less painful for the departments to include in their budgets. Ms. Hale asked that the Commissioners consider as an option that revenues generated by these charges could be turned around and redirected back to the departments to promote energy conservation capital improvements. The end result of this, Ms Hale observed, would be to encourage and promote conservation, upgrade the city’s civic infrastructure, and reduce the Public Utilities Commission’s costs of providing power to these city departments. The Commissioner’s consensus was that this might be an effective approach to persuading the departments to actually pay for the power they received. Mr. Irons emphasized the plan to redirect into conservation regarding the charges to City departments be presented as a key element in increasing energy conservation.
Commissioner Sklar next asked further concerning the premium amounts the SFPUC was paying for renewables used to supply power in the fourth quarter of each year when the available supply of Hetch Hechy power was reduced instead of purchasing at lower cost available fossil fuel. Ms. Hale noted the “renewables” premium was in the $4 to $5 million range each year.
In response to questions concerning developing our own geothermal resources posed by Commissioner Sklar; Mr. Irons discussed the exploratory efforts underway, and Ms. Hale identified funds available through the Mayor’s Energy Conservation Account (MECA) and grants. Mr. Irons noted if this went forward it could become a national model. On this point Vice President Normandy urged that staff look around to see what successful models were already in place elsewhere that we could replicate. Mr. Irons observed that in that regard our Washington lobbyist had been very helpful. Vice President Normandy then observed that as new options became available, the Commission could review existing politics and set a clear direction for staff to pursue. Commissioner Sklar asked for and Mr. Irons agreed to provide detailed cash flow and balance sheets.
Mr. Scott MacDonald next presented a brief summary of the Support Bureaus operations, reporting small increases related to rent increases as well as information technology, data storage, and software costs. Mr. MacDonald reviewed proposals in the Water Enterprise budget for automated meter reading systems and in response to a question by Mr. Irons, identified that some would be battery powered as unlike power metering the water meters could not always be directly hooked into a power source. Mr. MacDonald then explained how the proposed drive-by monitoring system worked. Commissioner Sklar noted that other kinds of meters broadcast data by radio to a reporting center. Mr. MacDonald then discussed office rent increases at 1155 and 1145 Market Street and a mandated $900,000 contribution to Human Resources services citywide. Turning to billing services system upgrades, Mr. MacDonald noted their critical importance to providing good customer services and observed that they also supported system operations and data analysis. This system, he also noted, would better monitor and address leaks and speed response time for needed repairs. Mr. MacDonald emphasized the importance of increased funding for data storage, especially for ease of access to Water System Improvement Program (WSIP) information, a big concern of the City Attorney’s Office.
Mr. MacDonald concluded this report with an overview of vehicle uses and purchases. Responding to Commissioner’s questions, he reported efforts to expand use of green hybrid vehicles. Mr. MacDonald in response to a question by Commissioner Sklar as to why any non-hybrid SUV type vehicles were still being acquired, reported that hybrid trucks and utility vehicles were still lacking in sufficient power for safe use upcountry, but that they were being used in the City and were being tested for use in some watershed areas. President Caen noted the SFPUC could have both city and country trucks.
Mr. Tony Irons thanked Assistant General Managers and their staff for their hard work in preparing all of this important information and noted that the enterprises and support bureau’s reports were concluded.
Public Comment
Mr. John Hummel, a Redwood City resident representing BAWSCA, observed that the FY 08-09 budget proposal continued status quo and recalled from last year’s budget process Commissioner Sklar’s emphasis on presenting a by program budget this year. Mr. Hummel next noted the importance of Commissioner Hochschild’s asking where were water conservation activities specifically broken out and reported in the budget presentations. Mr. Hummel noted these as well as a wide array of other critical activities that did not show up in the budget reports and expressed hope that there be a better report of program detail next year.
Turning next to performance measures, Mr. Hummel noted BAWSCA’s long interest in quantifiable performance measures with consistent reporting so that there could be a tracking progress on the program as projects went forward to better understand exactly where various activities were. Mr. Hummel expressed hope that a metric could be appended to the figures so that they could be better understood. Mr. Hummel noted the impact of indirect costs generated by Infrastructure was not shown as being billed as with other bureau activities and suggested this might be useful.
Commission Discussion
Commissioner Sklar expressed regret at the very slow progress of shifting to a true program budget and noted that the related detailed overview reporting could not be effectively done until this was in place. Commissioner. Sklar noted that the Commission had pressed for this for the past several years with limited success, and expressed hope that more progress could be made next year.
Mr. Irons then asked the Commissioners if it was the Commission’s will to take action on the FY 2008-09 Budget at this meeting with the addition of notations that the funds reserved in the specific “buckets” be clearly so identified. In response to questions by Vice President Normandy, Deputy City Attorney John Roddy suggested that he and the Commission Secretary work together to identify each of the specifically requested changes.
In answer to a question by Mr. Irons if there had been change in the total overall amounts of the proposed budget as a result of the Commissioner’s input; Mr. MacDonald noted that while there were shifts within the budget, the overall total did not seem to have been changed. Mr. Roddy reported that the Commissioners’ retained the authority to direct staff to make changes in the budget even after they had approved a draft. After further discussion it was decided that in order that the budget documents accurately reflect all of the changes directed by the Commissioners during both budget sessions that this item be continued to the next regular meeting on February 26th. It was the consensus of the Commission that doing so was necessary so as to be certain that all of the various points raised by the Commissioners were fully addressed in a revised draft of the budget. President Caen noted a brief delay in submitting the approved budget to the Mayor’s Budget Office was not that significant. Mr. Irons and Mr. MacDonald agreed to deliver all of the requested reports, identification of funds reserved in “buckets”, and line item changes prior to the meeting date so that the Commissioners could enact a final FY 2008-09 Budget at their next meeting.
There being no further business to discuss on this day, the budget proposals for the Operating and Capital Budgets agenda item was continued to the next regular meeting of Tuesday, February 26, 2008, for final review and approval. This meeting was adjourned at 1:45 P.M.
Michael Housh
Secretary
