Enclosed is the FY 07-08 operating and capital project budgets for the Hetch Hetchy Water and Power Enterprises as recommended by the Mayor and approved by the Board of Supervisors.

Projected revenues to support the operating budget and capital projects total $131.4 million; $105.6 million from the sale of power and energy; $21.0 million from the sale of water; and $4.8 million from interest and other miscellaneous income.

The operating budget totals $102.2 million: a net decrease of $3.0 million over last year's approved budget of $105.2 million.  The net change primarily reflects decreases for purchase of power and one-time funding reductions for professional services.  Fifteen (15) new positions were added to Hetchy/Water to enhance the administrative and engineering activities of the organization and to increase the maintenance and rehabilitation of the existing infrastructure.  Nine (9) new positions were added to Hetchy/Power to support the retail, utility services and Community Choice Aggregation programs.

Hetch Hetchy's capital budget totals $32.0 million; $10.0 million allocated to the Mayor's Energy Conservation Program, and $22.0 million to support Hetchy's infrastructure.