April 19, 2002

Meeting Information

MINUTES

Special Meeting

Friday, April 19, 2002, 2:00 p.m.
City Hall, Board of Supervisors Chambers, Room 250

Chair: Commissioner Gonzalez; Vice-Chair: Commissioner McGoldrick
Members: Commissioners Ammiano, Hall, and Schmeltzer
Alternates: Commissioners Peskin and Fellman

SPECIAL AGENDA

(There will be public comment on each item)

1. Call to Order and Roll Call

The meeting was called to order by Chair Gonzalez at 2:10 p.m.

Members Present: Chair Gonzalez, Vice-Chair McGoldrick; Commissioners Ammiano, and Schmeltzer. Commissioner Hall was noted present at 2:15 p.m. Commissioner Fellman was noted present at 2:22 p.m.

2. Approval of Minutes of the Public Hearing of March 22, 2002. Action Item.

Chair Gonzalez stated there was a motion to move the item. The minutes were unanimously approved with no discussion and no objection.

No Public Comment.

Public Comment Closed.

3. Interview of Applicants Who Responded to Request for Qualifications for San Francisco Local Agency Formation Commission Energy Consultant(s) and Selection. The applicants are:

· Flynn and Associates

· Henwood Energy Services, Inc.

· R. W. Beck

· EES Consulting

· Navigant Consulting, Inc. (withdrawn)

Chair Gonzalez stated Mr. Maynor, we were just speaking briefly a moment ago before the meeting began about some of the considerations that we should have a discussion about before we discuss this item.

Donald Maynor, Esquire stated it might assist you in asking questions and hearing the presentations of the various consultants, to give some thought as to what the study should look like-where you are going with the study. So, I put together a draft with the hope of having a "talking" document, and if it suited your purposes, if this is a document that captures the direction you want to go, then that may assist you in asking questions of the consultants.

Briefly, the idea in the Executive Summary is to address three key issues from the public hearing process that are driving the interest in this matter. That’s the high prices, the question of reliability, shortages, and also this matter of local control, being able to have some control over these programs. Then the question becomes when you look at "utility service" what makes up utility services? There are a lot of different pieces to it. What the study might do is help identify by looking at these various pieces, to what extent they are going to have an influence on those key issues.

Then you might want to consider what your options are with PG&E, having the City doing this, or to form a Municipal Utility-Utility District. By doing that, you could reach the conclusion that, if you want to pursue some of these issues because they are important to the City, what would be the best vehicle for doing that? The reason why the Executive Summary recommends this approach is that some of these issues are very complicated. Some of the testimony we have heard, you really cannot know the economic feasibility of doing certain things. For example, the FERC hasn’t decided how they are going to do transmission rates, or you don’t know what the PUC is going to do with respect to generation and power purchases. It may be impossible in a very short time period to answer all of the questions.

What I think you can do at this time is gather the information that you already have heard in the public hearing process, and identify the issues, how important they are, and to what extent the City of San Francisco could exercise its constitutional right to form a Municipal Utility or Utility District or just using its City powers to address some or all of these issues. I think that is the best thing a study can do is go through that and also, generally go in to each item and talk about what the implementation steps would likely entail as well.

Commissioner Schmeltzer stated I think that’s a good summary and a good start. It seems to me that based on the information that’s already out in the form of other public reports and on the information we already have in the record here, what we would really want to focus on is what would be involved in each step for generation, distribution, efficiency and conservation programs, and transmission. We need a study that would show the costs and steps necessary to take to provide those services and on each of those, which would require the fewest resources and the fewest further studies, and which ones would require the most legal and other resources.

Donald Maynor, Esquire stated it would depend on the nature of the item. Some of these would involve very complicated analyses like generation. If you would consider all of the generation options, and they change over time, it’s not always easy to do them. That’s why I wanted to emphasize creating the vehicle for pursuing these options as your first step, assuming that these issues are important to you and you want to exercise some self control in reviewing these issues. It may not be possible to do a thorough study on every one of these. I think we could describe generally how you would go about that, whether it would be a complicated study, and what that may involve.

Commissioner Schmeltzer stated that was exactly what she had in mind. What we want to do is focus on identifying what steps need to be done so we have a blueprint laid out because we have limited time and more limited resources.

Donald Maynor, Esquire stated I think when you get into feasibility studies and starting to cost things out, they become much more complicated and take more time. I’m not sure it is necessary for you to do those now. Having some general idea or a pretty good idea as to what that would entail would be very useful. That was the intent of this kind of study. We’ll talk about all these issues, look at the options and also tell you what the next steps would be to pursue them.

Chair Gonzalez stated what I hear Commissioner Schmeltzer saying is that, essentially, what we get back from our consultant we don’t want to simply be a rehash of what is available to us if we just went to the public library or made a request for certain documents. How can we be assured in this process of interviewing consultants that we not only communicate our interest in having a certain unique component in this study, but that we’re capable of giving them a directive that they will be able to understand and bring back to us?

Donald Maynor, Esquire stated let me give you one suggestion. I think I have told you in an early stage that my recommendation initially would have been to hire more than one consultant. After we met with the various consultants, I think that confirmed my sense that each one has some strength. I would like to bring the consultants in the room and go over the study and find out what kind of resources, what kind of ideas or thinking they would bring to bear. Not simply as you pointed out gathering information that’s readily available in a lot of these studies, but information that in particular is more locally specific to San Francisco and the issues they need to face. I think you’ll find in doing that, that some consultants will have a lot of information in a particular area that would be useful in an analytical sense, and others may only have the general information. You really don’t know until you sit down and get them in the room and say okay, here’s the scope of the study--whose got what, who has the capabilities? Let’s talk about, or brainstorm, in terms of ideas. One possibility would be to then come back to you with a proposal with what the study is going to look like, what it will cost, and who is going to be doing what. That was my thought on how to approach it.

Commissioner Schmeltzer asked are you speaking of a time other than today or beyond today?

Donald Maynor, Esquire stated yes. Let’s assume that you wanted to hire more than one consultant then the next step would be, what are they going to do, because they all probably want to do the whole report. It would be necessary to sit down with them and go over in view of what you decide today in terms of what the study should look like. We would sit down and go through it in some detail and talk about which consultant has readily available information, specific information, and ideas. There may be some areas where you would want more than one consultant to share their input. We would come back to you after that one meeting with a pretty good idea of an outline of who will be doing what and hopefully, they can come back with some cost estimates as to what it would cost to provide those elements of the study.

Commissioner Ammiano stated I like that idea because in going over everything and questioning and listening, it seems to me that more than one consultant is not necessarily a bad thing, particularly once we decide what area each would focus on.

Chair Gonzalez asked, Mr. Maynor how do you suggest we proceed on this?

Donald Maynor, Esquire stated my recommendation would be to have the consultants make a brief presentation regarding their qualifications. Hopefully, some of these comments were of assistance to you, and then you would be allowed to ask questions. Keeping it informal always works best. I know some of you have some prepared presentations, and others indicated they would be able to make their comments in a rather brief manner. Then following that, we could have a discussion and talk about recommendations as a result of the work that Ms. Miller, Ms. Young and I did in meeting with the consultants. We would share our thoughts and then you could make some decisions.

Chair Gonzalez asked shall we just go down the list? Was there any time constraint that we need to accommodate?

Donald Maynor, Esquire stated I believe Commissioner Ammiano indicated that he would need to leave at 3:30 p.m.

Commissioner Ammiano stated yes. So given the fact that we have about an hour and there are four consultants, about fifteen minutes would be appropriate.

Chair Gonzalez asked and is it your thought Mr. Maynor, that the decision about the consultant would be based on this interview alone?

Donald Maynor, Esquire stated you’ve been given some materials. By the way, we’re very pleased with the quality of the consultants. They are all outstanding. By the way, Navigant I should announce has withdrawn. I believe you have received a withdrawal letter from them. They expressed their regrets. We had some outstanding responses and the references all checked out very well. So I am not sure, other than the materials that you have seen from the process. I’d be happy to answer any specific questions you may have that came out of the interview process. Maybe it’s appropriate first to hear from the consultants.

Chair Gonzalez stated I think we can leave open the question of whether or not we feel that this interview alone is enough to make the decision. We can always invite individual consultants back or obviously, we can confer on this. When the individual party steps forward, perhaps you can tell us how long your presentation is. I think we can accommodate fifteen to twenty minutes. If Commissioner Ammiano has to leave, our alternate Commissioner is here, Diane Fellman. We would then be able to continue the meeting, and he can certainly see a replay of the presentations.

Donald Maynor, Esquire stated one other comment for the benefit of the consultants. It would appear that there’s going to be a lot of work to be done in the next two or three months. I think there’s a draft report that would be expected by the end of June. One question that you might want to consider is your ability to have available resources to commit to the project.

Flynn and Associates: Mr. Chairman, Commissioners, my name is Doug Boccignone. I am a principal with Flynn and Associates. We have prepared a presentation to guide our discussion to illustrate our expertise in the energy business, talk about what some of the key issues are, and how we might help the City address those. What I’ll do is give an overview of those key issues and of our experience. Mr. Flynn will come up and talk about specific examples of projects we have previously worked on and are currently working on for the City and other Bay Area municipal utilities in the energy business.

A key issue is the access to transmission, particularly in constrained areas like San Francisco for reliability purposes and also access to low-cost supply. There’s a couple of proceedings that are going on right now at the California Independent System Operator and also at the Federal Energy Regulatory Commission that are going to have dramatic impacts on the cost of delivering energy, particularly in constrained areas like San Francisco. The specific issue I think is going to be the proposed locational marginal pricing model, which is the standard preferred by the FERC, and the California ISO is supporting that in their market design efforts. That’s going to put a big need and also motivation to upgrade transmission to be able to access low cost power and find other ways to mitigate potential high market clearing prices, particularly in the Bay Area and the Peninsula.

The City has some experience with utility interconnection agreement issues going back decades to deliver the power from the Hetch Hetchy project to the municipal loads. If you go down the path of municipalization, there will be other interconnection agreement issues that will need to be addressed. Agreements with either the California Independent System Operator for the wholesale access tariff and or agreements with Pacific Gas and Electric. Of course any municipal utility has to deal with energy supply issues, investigate alternatives whether its conventional or renewable resources, conservation, federal preference power, and also third party contracts. A key issue given the volatile energy markets that we’re facing, is how do you manage the energy price risks that are out there in developing your portfolio supply resources? That kind of highlights as what we see as key issues. By no means is that an exhaustive list.

We’ve chosen to highlight those areas where we have the most experience and expertise and where we think we can help out a lot. I guess I would echo what Mr. Maynor said. I think it would be difficult to find any one consultant who can cover all of the issues that you need. In fact, we did not propose to cover all of the issues. I think where we add the most value is in providing strategic advice to policy makers and top management on energy-supply issues. We’ve been doing it for years. Mr. Flynn has over fifteen years of experience as a consultant. I have over eight years. We’ve both been executives of Municipal Utilities and also for private companies. Before I turn it over to Mr. Flynn, I would just highlight one other area, which is experience with formation of joint action agencies and operation of joint action agencies. I think there is a good chance that if you do go down the Municipal Utility route, it will involve some form of joint action as was anticipated in previous efforts. I think that’s an area where both of us have a significant amount of experience. I would like to turn this over now to Mr. Flynn. He’s going to highlight some of the specific activities that we’ve done and conducted for the City.

Commissioner Schmeltzer stated I understand you have experience with the City and County of San Francisco and have knowledge of the City system. Could you talk a little bit about it and whether there are any conflicts or other issues that might bring?

Mr. Boccignone stated I will turn that question over to Mr. Flynn, and maybe the both of us can answer that.

Mr. Flynn stated when we received the RFQ we wondered the same thing. We have been doing work for the City for six years. Basically, fought through the issues with regard to the work that we’re doing, which are basically the increase of reliability and reduced costs. Although we work with various City staffers, our contract is through the City Attorney’s Office. I checked it out with the City Attorney’s Office who thought there was no problem. We came to the conclusion that there was no problem and that our expertise and intimate knowledge of the City’s issues would be very useful to LAFCo.

Commissioner Hall asked, do you have existing contracts with the City now?

Mr. Flynn stated yes, I do.

Commissioner Hall asked, how many different contracts have you got going at present?

Mr. Flynn stated one contract.

Commissioner Schmeltzer asked, could you then just say what the contract is for?

Mr. Flynn stated it’s to work on areas where I am assigned tasks by the City Attorney’s Office. As I go through this next couple of minutes telling you the work I’ve done for the City, you’ll know specifically what we had been doing. This has been a multi-year effort. They are all not spelled out in the contract. What I’ve tried to do, and you can well imagine there may be twenty-five issues or more that we’ve been involved in so I am going to try to talk about the ones that I think are most critical to your efforts here at LAFCo.

As Doug explained, we are now currently representing a group of municipal entities that are worried about locational marginal pricing issues. That’s a current thing that is going on. Doug went to some meetings yesterday that are very important. Our experience in that area goes back a number of years. As to when the ISO was first formed as part of the initial architecture of the ISO, they proposed various zones, and there would be pricing based on each zone. They had a zone for the Bay Area, one for the Peninsula, and one for San Francisco. The prices would be set based on the marginal bid in each of those zones. At the time it went before the ISO, it was reduced to four zones. A couple of those zones were Humboldt and San Francisco. We were successful in working first with the Trustees Advisory Committee of the ISO and then with some FERC proceedings to essentially change the San Francisco zone from an active zone into an inactive zone. I know these are probably new terms. Basically, by making it into an inactive zone, we became sensitive to the same price that all of Northern California sees, rather than the one that was specific for the City.

I have represented the City in a number of stakeholder processes with regard to transmission. I would say that transmission has been one of the key focuses of our efforts for the City. One of those was the long-term study group to develop a long-term plan to serve the City that went on for a year and a half. It ended up supporting PG&E’s submitting or doing the permitting work to submit an application on the construction of a Jefferson Martin 230 KB line that would be a major increase to transmission in the City and a major increase in the reliability of the supply. PG&E intends to file with the PUC a Certificate of Public Convenience and Necessity later this year in September looking for an operation date in 2005.

Commissioner Schmeltzer asked, that’s the Jefferson Martin transmission line?

Mr. Flynn stated right, that’s the Jefferson Martin transmission line. That was a specific stakeholder group focused on the long-term transmission needs in San Francisco. There is also an annual process that PG&E goes through to try to determine what transmission is needed for their system as a whole. I have been participating in that process since it was started about three years ago representing the City’s interests to get additional transmission built into the City and also into the Bay Area of which the City is a part.

Right now, Flynn and Associates is representing the cities of Palo Alto and San Francisco in some discussions with regard to advancing a 2800 megawatt transmission addition into the Bay Area. This is something that PG&E in their long-term plans has recognized a need for. Load has dropped off. They are thinking it wouldn’t be needed right away. At the CPUC’s direction, PG&E is having discussions studying the economics of advancing that so that it would be constructed before it would normally be needed for reliability. Basically, what are the economics of building it quicker and what kind of savings would result?

I’ve been a member of the Planning Standards Subcommittee that develops the standards under which the transmission owners like PG&E test the performance of their transmission system. One of the standards that was created during that time period was the standard to depart from just looking at one generator out in one line out and saying you have to serve load under that situation to a separate standard for the Bay Area where they look at simultaneously having four generators out. That has resulted in an acceleration of transmission in the Bay Area.

We also assisted the City in a stakeholder process to determine the methodology of access fees or transmission costs in terms of recovering the embedded costs of that transmission. That has gone through many phases. The City proposed a methodology that would break the state up into areas and have a common access fee for each of those areas. The ISO ended up proposing to FERC something similar that called them tack areas, and the current proposal will transition into a statewide access fee over ten years.

You are probably familiar with the fact that on December 8, 1998, the City had a major outage. The whole City went down. Some people were out for as long as eight hours. The CPUC started an investigation in terms of reliability of supply to San Francisco. We had been assisting the City Attorney’s Office in representing the City’s interests as part of that proceeding. The proceedings had gone through everything from maintenance practices to protection system issues to design issues with regard to the adequacy of the transmission system. I believe it has resulted in PG&E proposing some changes in the way they do things. Specifically, have proposed a method of restoring load to the distribution system even if the total transmission system has not been brought back into service that I believe will decrease restoration time, make it quicker to bring the load back. They’ve also proposed what is called a remedial action scheme or a special protection system that basically will reduce the scope of outages if something happens above the normal planning practices.

Mr. Flynn stated the only other area I was going to bring out at this point in time is we have provided some assistance with regard to issues in terms of the current contract that San Francisco has with PG&E to deliver power from the hydro projects to the municipal load. Specifically, helped interpret that contract in the best way we could to try to make it operate under an environment of the ISO control of the transmission system that was never envisioned when the contract was negotiated. That about covers what I thought was the most important things that we have worked on that would be applicable to cost and reliability of service to the City that we think is part of the overall issue that you people are having to deal with. I would just reiterate to what Mr. Boccignone said and we told the panel is we could perform a critical service in some of the areas. We would not want to propose to do the whole study. Thank you very much.

Chair Gonzalez stated Mr. Flynn, the advice that you have given related to the municipal load, that was with the Turlock Modesto contract?

Mr. Flynn stated I was referring to the PG&E agreement, the transportation of the power from the hydroelectric project to Turlock and to Modesto and then onto the City to serve municipal load.

Chair Gonzalez stated I understand, we are talking about the same thing. That was advice you had given to our City Attorney then?

Mr. Flynn stated yes.

Commissioner Schmeltzer asked Mr. Flynn, you had said that you believe that your firm would be able to address parts of the study, but not the whole thing?

Mr. Flynn stated yes.

Commissioner Schmeltzer stated what we just discussed here was laying out the steps that would need to be taken for in a number of areas including generation, distribution, energy efficiency and demand reduction programs and transmission. So for each of those areas, which areas are you saying that your firm would be able to provide services to the City?

Mr. Flynn stated I would envision a team of consultants that could possibly add things in various areas. I would see our focus as being transmission and energy supply. Those two are intimately tied together. Because if you don’t produce the energy locally, you buy it someplace else, you have to get it to the City. I would say energy supply and transmission would be the areas we would propose to focus on.

Donald Maynor, Esquire asked would Mr. Flynn’s firm also have expertise in distributed generation?

Mr. Flynn stated yes, we have done some distributed generation studies. I would say the closest thing in terms of real experience was during the time I was director of Electrical Utility for the city of Santa Clara, we signed a steam sales agreement and installed three megawatt gas turbines to produce the first city owned electricity and sold steam to California Paper Company over a multi-year period. I would call that distributed generation.

Commissioner Fellman asked do you have any experience with municipal utility structures? I believe both of you have worked for municipal utilities?

Mr. Flynn stated yes, I was the director of Electric Utilities for the city of Santa Clara for ten years. During that time period many joint action agencies were formed like the MSR, NCPA, CCPA. Doug headed up the Resource Planning Department for the city of Palo Alto. So we both have been intimately tied in with the municipal community both from the standpoint of employees or executives with those entities. The majority of the work for fifteen years, I have been a consultant. I have also been with municipal utilities for the last six of those years where San Francisco has been a major client of ours.

Commissioner Fellman asked would you be prepared to assist the LAFCo in the process of analyzing the possible structures that could take place with regard to public power agency formation in the City and County of San Francisco? Would that be another area?

Mr. Flynn stated absolutely. That certainly wasn’t the focus of the six years of work we’ve been doing with the City. That’s been the City’s relationship between the hydroelectric capacity and its City load. In terms of formation of a district. Basically, those ten years as director of a utility, it was for a chartered city where we supplied all the distribution needs within that city. The particular form of a government that I was part of was a City Council, City Manager form of government. But to the joint action agencies, I’ve seen various forms where the City Council has a Utility Commission. There was a Utility Commission in Palo Alto where Doug worked. I would propose that we could provide some real experience in terms of sharing our thoughts on what worked best in certain situations. I don’t think there’s one way to do it. We have seen how it’s worked very well for some cities, certain kinds of structures. A lot of what you are dealing with when you are talking about structures in terms of what your alternatives are, are more legal than technical. So far, I would say a large part of it will come from Don Maynor or other kind of legal assistance. In terms of real world working experience, what we’re able to accomplish with a chartered city and what potential restraints we had, I think we could be very helpful in sharing those with the Commission.

Chair McGoldrick asked Mr. Flynn, how familiar are you with the PG&E bankruptcy case?

Mr. Flynn stated that has not been an area where we have spent a lot of time on. I’m maybe more familiar than you are. I don’t know how much reading you’ve done, but that is not an area where we’ve been hired to participate directly.

Chair McGoldrick asked my other question was how familiar are you with the California Public Utilities Commission’s policy regarding power purchases?

Mr. Flynn stated pretty familiar with that, and Doug is more familiar with regard to the proceeding and what’s proposed for the future in terms of having the what’s called the local serving entities. We always have these acronyms, like PG&E to go out and buy long term for the needs for their customers.

Mr. Boccignone stated clearly a key issue in California is how load serving entities meet their obligation to serve load. CPUC has been undertaking this process on the procurement side, and right now there is a big battle between the system operator, who wants to have what they call an available capacity obligation on all load serving entities and the PUC who wants to maintain state control. It’s not clear exactly how that is going to turn out. I think the one thing that is clear is that municipal utilities in the past and in the future have maintained and met their obligation to serve by putting in capacity that’s needed. The issue is if a MUNI is going to meet its obligation, but the majority of the load is served by a private utility and they don’t meet their obligation, then we’ve got a big problem.

Vice-Chair McGoldrick asked how do you understand the idea around the whole concept of aggregation?

Mr. Boccignone asked for retail aggregation on the retail side? Big history behind this.

Commissioner Fellman stated I think our emphasis is not just the retail customer but on community aggregation.

Mr. Boccignone stated I think clearly, community aggregation is an interesting option to be pursued because it doesn’t involve as many issues as acquisition of the distribution system, condemnation, and those types of issues. Clearly, an important factor that will affect the ability and the profitability of such an activity will be the retail rates that govern that. I think right now it’s not completely clear the direction that that’s going. It is going to take a lot of political pressure to get that shaped in a way that makes it feasible for communities to do community aggregation.

Chair Gonzalez asked Mr. Maynor, any other questions that we should ask?

Donald Maynor, Esquire stated I think the only question is your availability to expend some of your resources in the next ninety days. I think you have already commented on the fact that you are open to the idea of participating on a shared basis in this study. So availability of resources in the next ninety days?

Mr. Flynn stated we certainly are available to contribute to this effort and of course, even if you wanted to, we wouldn’t have enough time to put aside to do the whole study. If we were part of a team, we would not make a commitment to do more or to do a share as part of that team that we could not perform to meet your time

schedule.

Chair Gonzalez asked Mr. Maynor, do you think we should be inquiring specifically about a consultant’s previous participation in expert testimony around condemnation or anything like that?

Donald Maynor, Esquire stated that would be a second phase that would come out of this study. If you formed a utility and wanted to pursue some of those things, that would be a separate complicated feasibility study. Although I might add, some of the consultants have more expertise in an area that would be helpful in describing the process in the key issues. Again, getting some of the detail of what the process entails would be helpful.

Henwood Energy Services. Good afternoon. My name is Bill Pezalla. I am a project manager with Henwood Energy Services. I know that we’re pressed for time, so I will try to make the first couple of slides short. Henwood is a firm of about 200 consultants and other technical support people. We have offices all across the world in Australia, England, Atlanta, and our headquarters is here in Sacramento where about 150 of our employees are. We do a lot of work in the wholesale power markets, and you can see on our graphic here, different markets where we’ve analyzed all of the generation, transmission and other systems related to wholesale power supplies for areas all around the world. We do forecasts for wholesale energy prices for those areas. We do a lot of work in analyzing power markets and assessment of energy markets and their rules.

The initial tasks for Phase 1 of this project are to evaluate the risks, the benefits, and the feasibility of looking into becoming a utility. Electric utility operations have traditionally been vertically integrated. Start out with fuel procurement, generation, transmission, distribution and retail services. These can be looked at in a different way, such as power supply procurement and management and power supply issues of course are very big right now and management of those costs. Tied in with that is load forecasting and supply scheduling. Between these two are some of the major risk issues facing California. Additionally, elements of energy service require delivery facilities, revenue cycle services and settlements, customer services, and regulatory requirements.

Now the City’s issues are basically tied in with managing the energy costs invariability and volatility of the wholesale markets. The reason that the City would be interested in looking at these would be for current residents and for future growth and development here in the City. Lowering energy costs to maintain services within budget for the City itself is certainly viable. Creating self-sustained operations is certainly something you would want to look at from an economic standpoint. There is also the issue of the City’s interest in local control.

Now, once that we have looked at the different issues related to what the City’s interests are, we’d be able to look at the strategy. There is no one size fits all approach for doing this. Every City that you could look at in California has some different model, different method that is chosen. Those who have started new utilities, like Merced Irrigation District, who we helped put into business a few years back started with one large customer and grew from there. This City would be looking at something completely different with loads already established. The strategy selection process would certainly involve selecting the City’s key drivers. Trying to determine what the issues are for the City, trying to balance the economics, social and political factors that deal with all of the issues related to energy delivery and power procurement, and identifying the possible roles for the City. The City might want to do something different or not do all of the different parts of the value chain. Then being able to evaluate the different opportunities that are available.

We will now take a minute to look in depth at some of the key drivers in the political factors for the City. What would be the City’s long-term and short-term objectives for this program? Is this something just to get the City through the crisis that we’ve been under in the electric utility industry for the past year? Or is this a long-term viable project? What are the expected benefits from that? Certainly, what are the City’s risk tolerances? If the City decides to get involved in wholesale power markets, there is going to be some risk involved, same type of risk that faced PG&E and Enron and everyone else. What are the City’s available resources for this? What things does the City have now and does the City control that can be used to leverage going in to the power market? What are the constituents’ requirements and how much support does a move into the wholesale power market or electric utility have from the City constituents and the folks who live here? And the level of commitment.

As we look at these, we look at the possible City roles. The City could be a provider of specific parts of the value chain. It could be the commodity portion with fuel procurement and generation. It could be the delivery systems which PG&E is owning and operating right now. It could be in customer services. Of course, the City could look at facilitating actions by others such as in reduced risk through other types of plans such as figuring out how to help in right-of-way, planning, energy conservation, and load management. Depending on these drivers and strategies, the City could decide on certain sample investigations. A few of these could be looked at through a study like this and would include strategic alliance opportunities with other entities, economic or green power, such as the study that we helped Oakland perform over a year ago. The legal and political threats in distributed generation could help enhance power supplies. I will go ahead and turn it over to my associate Adrian Chiosea, so he could speak about some of the projects we’ve done around the San Francisco and the California area.

Good afternoon, my name is Adrian Chiosea. I’m a project manager with Henwood Energy Services. I’m here to give you a quick tour of some representative projects we’ve performed for various entities that qualify us to do this project. I would start with Merced Irrigation District. Bill already alluded to this--we’ve been the consultants that helped put them into the electricity business. We are the consultant chosen to do strategic planning for the Merced Irrigation District and actually, we came up with a detailed plan that would help them get into the electricity business from the beginning.

Commissioner Schmeltzer asked when was that?

Mr. Chiosea stated that was in 1995. We basically helped them construct a plan to use as little resources as possible at the beginning in order to get into the electricity business based on the fact that they had some resources available, and they could provide a lot of benefits to their customers locally. So, we helped them negotiate contracts with local utilities such as PG&E and also with Turlock and Modesto Irrigation Districts on an operation and maintenance program that wouldn’t oblige them to increase their infrastructure immediately and was a gradual process. Turlock actually took over the operation and maintenance of the system on behalf of the Merced Irrigation District. So, they don’t have to go into a hiring spree just to increase their personnel to serve all those new business needs. Also, we helped them write RFQs for power and helped them define interconnection agreements with the utilities that will help them interconnect with all the other parties in the region. Certainly, we support them with the regulatory and legal proceedings.

Commissioner Fellman asked under what authority was the Merced Irrigation District established? Was there an existing state law that allowed that area to become an irrigation district?

Mr. Chiosea stated I think it was AB 2638 that allowed them to get into the electricity business.

Commissioner Fellman asked how big is their service territory now? You said they started with one customer. How much have they grown in the last five years?

Mr. Chiosea stated I think they are serving about 70 megawatts of load and they are still increasing. We have still been in contact with them, and I know they started hiring the first people that would grow their department and load.

Our second project I would like to talk to you about is Presidio Trust. We’re the consultant chosen by the Presidio Trust to perform strategic utility business planning. As part of our assignment with the Trust, we developed energy strategic plans for them. For example, performing complex financial analysis that will allow them to determine utility rates that they could charge tenants at the Presidio. It’s like a micro-universe there at the Presidio. They look unto us to advise them based on their major strategic goals they have of being self-supporting and at the same time, being very competitive to provide those utilities.

Also, as part of that process of performing all of those analyses, we develop utility load forecasts for them that will project the kind of growth they should expect. In that regard, we work closely with their Planning Department to see what their strategic goals are and what kind of growth they should expect at the Presidio. We assist them with the commodity procurement process such as natural gas and looking at the alternatives they have other than PG&E, from whom they presently purchase power. Also, we have an assignment for utility easements at the Presidio grounds and on the Golden Gate Bridge.

Commissioner Schmeltzer asked is the Presidio Trust contract still underway or has it been completed?

Mr. Chiosea stated we are in the second year contract with Presidio Trust, and it is like a five year consulting assignment with annual renewal.

Commissioner Schmeltzer asked and the Presidio currently gets their power from PG&E?

Mr. Chiosea stated yes. Next assignment I would like to talk to you about is Hetch Hetchy Water and Power. We’ve done a lot of work for Hetch Hetchy Water and Power. The first assignment I would like to talk to you about is Treasure Island. Treasure Island was transferred, as you probably know from the Navy to the city of San Francisco. We’ve been the consultant to help them negotiate all the contracts for the transfer between the Navy and the City including Treasure Island and Yerba Buena.

Second assignment would be with Hetch Hetchy that was the Port of San Francisco, where Hetch Hetchy was looking into taking over the Port loads from PG&E. We helped them manage, construct, and configure the interconnection configurations such that they could serve all those Port loads. Hunter’s Point is another assignment with Hetch Hetchy in which we again look at the present condition of Hunter’s Point, all the environmental remedial actions that were needed there, and did a lot of utility studies for constructing an infrastructure backbone system so that Hunter’s Point can be redeveloped. Also the San Francisco International Airport, where we assisted in Hetch Hetchy for coordinating construction of a substation together with PG&E and taking transmission power from lines coming into San Francisco and serving additional loads at the San Francisco Airport.

The last assignment I would like to talk to you about is Oakland Base Reuse Authority. We’re the current consultant helping Oakland Base Reuse Authority (OBRA) manage the Oakland Army Base. We’re the program utility manager for OBRA. We started early with OBRA by defining the strategic options they have in the transfer of the base from the Army to the City of Oakland. We perform a lot of financial analyses again for determining the kind of freight and the kind of measures they have to take in order to comply with their two major goals, being self-sustaining and at the same time being competitive with the local utility providers. Also, we helped them procure commodity from WAPA, from East Bay MUD, and certainly from PG&E for natural gas. Also, we helped them in negotiating a contract. They have a partnership with the Port of Oakland in which they operate a base jointly so that they will lay out a road map for the future evolvement of the base as a joint corporation between two City agencies.

Commissioner Schmeltzer asked is this contract and the Hetch Hetchy contract both ongoing?

Mr. Chiosea stated no, we finished with Hetch Hetchy about two years ago while the OBRA is an active contract. We’re the utilities program manager for Oakland Base Reuse Authority.

Commissioner Schmeltzer asked, are there any current contracts that you have that might provide a conflict with the work that you would be proposing to do here?

Mr. Chiosea stated no, I am not aware of any conflicts.

Commissioner Fellman asked do you have any contracts with PG&E?

Mr. Chiosea stated I think we were previously asked this question. We looked into it and no, we have no conflicts of that nature.

Commissioner Schmeltzer asked, it looks like from your proposal that the two of you would be directing or conducting the bulk of the work that you would be proposing to do. Is that correct and your availability over the next two months?

Mr. Chiosea stated one of us would probably be the project manager of the assignment. But we have so many resources that we could bring into this assignment, senior people that worked for PG&E and for public utilities.. We have a wealth of knowledge and management in our company.

Donald Maynor, Esquire asked, does your firm have any difficulty with the idea of doing this on a team basis where we might parcel out different assignments to different consultants?

Mr. Chiosea stated we haven’t thought about that. It’s the first time we heard this idea, but I would say we wouldn’t have any conflicts. We would be willing to be part of a team.

Commissioner Schmeltzer stated thank you.

R. W. Beck. Good afternoon and thank you for this opportunity. I would like to introduce Ken Mellor who is a principal with R. W. Beck and would be co-project manager on this project. I’m Mike Bell and I’m the manager of our California operations and would also be co-project manager on this project. Ken and I have found in projects similar to this, a good approach has been to have the two most senior people with experience in this area in the firm. Our availability to quickly respond to questions or issues that may arise is enhanced by having both of us involved in the process. We’ll trade off here and try and work through this together.

Briefly, the history of our firm. We’ve been in business for sixty years, have 500 employees spread across the country and are recognized as experts particularly in the municipal electric utility arena. This next chart shows representation of capabilities that the firm has. You’ll see that it ranges from generation, transmission, distribution, distributed generation, renewable resources and on. We have a very wide breadth. Our firm was built within the electric power business and that is our core business.

I would like to spend a few moments on this particular slide. In the interest of time, I will try to be fast. What we would envision as Phase I would include public hearing support in terms of your ongoing public process. Very importantly, the risk benefit analysis, and I’ll speak to this in a little greater detail later. Our quantitative skills we believe are excellent and proven. I will give you some examples of that as we move forward. Most importantly, strategic options development. This process could lead in many different directions ultimately. We feel that our expertise in terms of structuring a solution that meets your needs and will be most responsive to the community’s desires is a strong point of ours.

With regard to the economic analysis and the quantification of alternatives, what I’m offering you here is an example of what we did for the East Bay Municipal Utility District. In that case, we looked at a wide range of options. As was pointed out earlier, there are many issues that are still up in the air and haven’t been decided. You cannot accurately quantify where an organization may be a year from now or five years or ten years from now given the uncertainty that is out there. What we tried to do with East Bay MUD was identify the key variables and then work through a range of options so we could at least place some dollars on where those options occurred as well as a range of possibilities as to how likely it is that you are going to see a tremendous upside or a downside. What this graph represents is basically a number of different financial runs that we constructed based upon the possible acquisition cost of the facilities in the East Bay area, a possible range of options for non by-passable charges that are being considered by the state and also a range in terms of power supply acquisition costs. As you can see in that case across the full breadth of possibilities, it looks like there are more opportunities to save money than to lose money. But their numbers are also quite large on each extreme.

Mr. Mellor stated I would also note on this that this is only one of the options that we looked at. We looked at other options of forms of municipal service provision including assisting through a direct access process, looking at facilitating renewable resources. This was just one option, but we’ve looked at a whole series of options.

Mr. Bell stated Phase II, which I believe Mr. Maynor described as a more detailed analysis we would envision would be started only if the LAFCo finds that it is worth pursuing any option further. That particular phase would be very much customized towards the City’s needs. I will describe the individuals that we have available should you get to that point, but that’s quite premature at this point in time. I am going to skip through a couple of slides here in the interest of your time.

Key personnel-both Ken and I would be devoted to the co-project management of this particular project. We have identified several areas that we see as being key in terms of personnel that we would devote towards this. One would be quality control. We would propose having a national director involved who has also been involved in large scale municipalization efforts across the United States. Another issue would be severance and transmission. We have individuals there that focus on transmission load flows and studies as well as costs of acquisition. Valuation, particularly if it were to go to Phase II would be very important. We have one of the few certified utility system appraisers in the United States on staff. Municipal operations in terms of how you would structure an organization, what would it look like, what type of expertise would you need to have run that organization? We have people available to evaluate that. Power market, which is extremely important because it is such a large component of the cost of power is an area where we have excellent expertise. Finally, financial and economic analysis. I believe, in the last slide, we offered an example of the types of expertise we have there.

I would like to speak for a few minutes about our related experience and actually at this point, why don’t I ask Ken to go through this slide and give you some examples of other work we have performed.

Mr. Mellor stated we have also mentioned a couple of times the East Bay Municipal Utilities District study. That is still underway. We have reached a stage now that is more the public outreach stage. As I mentioned, we looked at several scenarios, different business plans where the City could take advantage of its resources. They have hydro generation just as the City of San Francisco does. They also have some co-generation at their waste water treatment plant. So we looked at options. How could they optimize their energy use so that they got into operations analysis, and then how could they best apply the resources that they own to those operations and get the best final bang for their utility dollar?

The Port of Oakland is another ongoing project. In that case we have looked at their operations, their energy purchases, what they should do as far as future expansion. That covers the Airport, the Port, and what they call their commercial real estate area which includes Jack London Square. That project is just about at completion. In fact, we submitted the final report yesterday that will be distributed today, and then we will go again to the public process part of it.

The third is the city of Fremont. The city of Fremont is not in the public power business. They wanted to know what energy policy they should have. They were particularly concerned about rolling blackouts. They were concerned about how they could advance the ideas of conservation and demand site management in the city of Fremont. What could they do with their very large industrial customers to make sure that they were not out during rolling blackouts. We came up with proposals. We worked with a public task force including their large industrial customers to come up with an energy policy for the city of Fremont.

Lastly shown there is the city of Long Beach. Long Beach had the opportunity through a termination of their franchise to acquire the electric distribution system from the Southern California Edison Company. We did the analysis as to what the economics of that would be and then worked through the process and finally ended up assisting the city of Long Beach and negotiating future arrangements with Southern California Edison.

Just other municipalization projects we have worked on recently in California--city of Fresno, Delano, West Hollywood, Chino, Culver City, Alturas, Pasadena, Redding. We’ve done work for all of those on these issues in the recent past. City of Los Altos Hills, I think that is still onging.

Commissioner Schmeltzer asked when you say these issues, some of these are cities with municipal districts and some of them are not?

Mr. Mellor stated actually, the only two cities that are currently in the municipal business are Pasadena and Redding. Pasadena, they were looking at contracting their customer service aspects and actually a portion of their distribution system activities. We looked at contracting out as an opportunity to save money for the city of Pasadena. We also worked on some of those issues in the city of Redding.

Commissioner Schmeltzer asked for the other cities that don’t have districts, what types of issues were you working on?

Mr. Mellor stated in the City of Fresno, I started out as a prospect of looking at utility operations. It ended up with a project that is still underway looking at co-generation, working with the city, state, federal government and county and a very large public hospital combining a co-generation facility to provide steam and electricity to those areas out of the co-generation project. In Delano, they were looking at spot municipalization which is as a new area develops like a residential subdivision or a large industrial tract. That part being taken over by the City and operated as a City municipality acquiring power supply and just owning those little spots around the City as they develop. In West Hollywood, it was a municipalization study. We worked with the City Council and very quickly learned the City Council wasn’t very interested in doing it. It stopped right there. In the city of Chino we’ve been working again on new generation power development and spot municipalization studies. Culver City was a full munipalization study effort. That did not proceed and we’ve already talked about Pasadena and Redding. Mike, you might want to talk about Los Altos Hills. You are the general manager of that project.

Mr. Bell stated that’s something of a unique project. The city of Los Altos Hills was interested in improving their system via under-grounding. They were not successful in getting either PG&E or Pac Bell to underground much of that system since it is largely residential and not very large. They have embarked upon a path to construct an underground system that would serve both the electrical needs and the telecommunication needs within the City. This is not a comprehensive list. These are just examples.

Commissioner Schmeltzer stated we don’t need to go through it in detail.

Mr. Mellor stated I might mention Los Angeles Department of Water and Power, which is also currently a publicly owned utility. They were very interested in looking at different management and organizational structures. What we did with them is worked on different kinds of municipal ownership and governance to see whether there was a better way than they currently had.

Mr. Bell stated we believe that we are quite familiar with the issues here in the Bay Area with loads and resources. We are familiar with Hetch Hetchy and that project as well as the contracts associated there. We’ve looked at the PUC plan that was delivered to you a few weeks ago by Ed Smeloff and are familiar with that particular plan. We followed quite closely the 2001 ballot measure and that process. By virtue of the work that we have performed here in the Bay Area, we are also quite familiar with options that are available and with the system itself here in the Bay, most notably the transmission constraints and the potential for market power abuses via generation here in the Peninsula.

What I would like to close with is why we feel we are the best firm to perform this particular work. We feel we have got the best qualifications and experience, particularly locally. We know what to expect and have done successful work here. Our analytic capabilities again we believe are excellent and will suit you well particularly in terms of quantifying risk and reward and making decisions as to where’s an appropriate place to go and not to go. Again, familiarity with the Bay Area dynamics. Most important are our reputation for objective independent analysis. Oftentimes, particularly with regard to municipalization, we are advising clients of where they run the most risk and what they ought not to do as opposed to what they ought to do. So oftentimes, we will play a devil’s advocate and most clearly point out what can be done and what can’t be done objectively. You have got the corporate commitment of this firm. We’ve done a lot of that work. As I say, I run the practice here in California so we will make certain that you get whatever resources you need to accomplish your objective. With that, we are ready to start work.

To address some of the earlier questions particularly with regard to working with other firms. We do believe that we have all the skills to do this work ourselves. However, should the LAFCo desire to have other participants in the project, we would have no objection to that. We know everybody that you have assembled here in the room quite well, and I can honestly say that you got a good group of respondents. That would not present a problem with us. We would also commit to having a draft back to you in June and meet whatever time deadlines that you might have.

Vice-Chair McGoldrick asked would you anticipate needing much staff time from our City and County employees here, our LAFCo staff, that begins and ends with our Executive Director, Ms. Young?

Mr. Bell stated some time would be necessary. That would depend upon the ultimate scope. We also find oftentimes assistance with data collection. When we’re looking for information, it helps to have staff members that are available to perform that function. Also, with regard to the legal side of the questions, if Mr. Maynor or other attorneys would be available that would be helpful.

Vice-Chair McGoldrick stated I didn’t mean to exclude Mr. Maynor or Ms. Miller. I think of them as not City employees yet, but rather as staff that are helping with special expertise.

Mr. Mellor stated we find it valuable at the outset of a project like this to meet with the policy makers, interview those policy makers, find out what their objectives are so that we are working in concert with those objectives. We typically have what we call a straw-man process which allows us to see where there is consensus among those we have interviewed, where there is disagreement, and to be able to put back to the policymakers what the range of views are. That often helps us get a very good start in the direction of the project.

Vice-Chair McGoldrick asked have you had any work that you have done that your clients have not been necessarily satisfied with what you have produced?

Mr. Mellor stated we find our clients are usually very satisfied. I can’t think of one that is not.

Mr. Bell stated we also do a lot of repeat work. We look to develop long-term relationships and deliver on our projects.

Vice-Chair McGoldrick asked would you say that there is any weakness that your company has?

Mr. Bell stated I don’t believe so in this particular area. We’ve done a lot of this work in many different jurisdictions particularly here in California, and we believe we are well suited to do this work.

Vice-Chair McGoldrick asked in the area of energy efficiency and conservation, do you have a sort of thumbnail sketch or description of where you’ve been with that?

Mr. Bell stated we’ve got resources in Sacramento that have been involved in green power projects all across the state. We’ve got the expertise in renewable resources in that particular field.

Mr. Mellor stated I would also add another California project recently completed was for the Imperial Irrigation District, where we put out proposals for all of their conservation demand site management research and development and renewable resource programs and then evaluated those and helped them award the bids. We are very familiar with that side of the business.

Commissioner Schmeltzer asked do you have any current contracts that would potentially pose a conflict with the work proposed here?

Mr. Mellor stated the only contract that I would mention is that we are currently working for the Public Utilities Commission on the independent evaluation of their CIP.

Mr. Bell stated that shouldn’t present a conflict. We are presently engaged with the Public Utilities Commission.

Commissioner Schmeltzer stated thank you for that information.

EES Consulting. Good afternoon. My name is Alex Miller. I am managing director with EES Consulting, and this is Gail Tabone, Vice President with EES Consulting.

Gail Tabone stated a lot has been said by all the other different consultants today so I think we will try and keep things short. We don’t want to repeat what everybody else has said. I would start off by telling us a little bit about our firm. We are a firm of about forty professionals primarily focused on engineering and economics. We’re not a 200 or 300 person firm unlike some of the other ones. We are very specialized, very much a boutique consulting firm. We have about seven principals in the company. Two of us are here who are managing the work, managing the offices on a day to day basis and would be heavily involved in this project. We would probably bring in at least one other principal to work on this. We also have expertise in accounting and finance. We do some operational planning, expert testimony, regulatory work, all those things. One of our key focuses, especially in the last two years, has been municipalization and looking at different options for cities that are not already utilities.

As a small firm, we primarily work for public utilities. We mostly work for electric utilities, but we also work for water and natural gas utilities. We work for a lot of the cities and municipal agencies in California, as well as the rest of the west coast and from time to time other parts of the country. We generally do not work for the investor-owned utilities. We do not work for PG&E, Southern California Edison, STG&E, people like that. That’s just not our area. Some of our recent experience is very relevant to this because we are looking at the same issues for several different clients right now, and they are listed here. Coachilla Valley Association of Governments or CVAG is a group of cities in the Coachilla Valley, Palm Springs and some of those people who are looking at their options right now. They are served by Southern Cal Edison. We are just completing Phase II of that project and are at this point on hold waiting further instructions if they are going ahead or not. In their case, we have looked at a lot of different options from them, different organizational structures that would work, whether they should do aggregation, whether they want to do condemnation, what all of their different alternatives are, just as you are.

Two smaller cities in Southern California, city of San Marcos and Cerritos we have been working with separately and together. Both of them had committed to buy into generation resource at this point, and we helped them with that analysis and evaluation. The city of San Marcos is also looking at some creative ideas for forming a new municipal utility apart from condemnation. Norcal Electric Authority is in the three northern counties in California, and they have formed a joint powers authority to purchase Pacificor’s service territory within California. This is a consensual sale, but we have been the key consultant on that and have done all the work from the beginning, looking at the feasibility, and all the way through submitting it to the CPUC for approval, which is about to happen in the next month or so.

Finally, Truckee Meadows Water Authority is another recent client that we have had. They again, the city of Reno, Sparks and Washoe County formed a JPA to buy out Sierra Pacific’s water utility in the state of Nevada. We helped them all the way through the process working with another large consulting firm. Again, that was a joint effort as was Norcal Electric Authority. We worked with a team of lawyers, financial advisors, public relations people. So, when these things happen, it generally is a team effort and we’ve been involved as both a lead consultant and also as a smaller contributor to the process. Alex will talk a little bit about the scope that we had planned for this type of project.

Mr. Miller stated as was shown earlier and as was shown in your RFP, the risks, benefits and feasibility of municipalization are the overall scope of Phase I. You know the current issues and we’ve gone through these high rates and started with the nuclear plants, continued with the qualifying facilities, went on with the stranded cost recovery and then moved on to the DWR contracts, which we would have to deal with several years going forward. Reliability, obviously one of the biggest issues here. How to improve that is one of the reasons that this is ongoing.

A couple of other things that are really not really right in the scope of that needs to be looked at. One is AB 2266 which is known in the municipal community as the PG&E anti-munipalization bill. I do not know what’s happened in the last few days, but that was originally focused on Municipal Utility Districts and preventing in essence their formation. Moving into electricity services is something that would need to be watched as it could be easily expanded to include other forms of municipalization. There is a current plan coming out of the Mayor’s Office, which I’m sure you are well aware of. In terms of the risks, benefits and feasibility. I’m not going through an exhausted list, but here are a couple of thoughts.

This is a challenging process. If it gets down to municipalization, I think you were told early on that would be the fight of your lives. It’s also risky in the sense that in municipalization, just compensation for the assets can be determined either by a court or by the California Public Utilities Commission. At any time something is left up to the court, there is some risk of what the outcome might be no matter how much homework you’ve done. Another risk and we’ve seen this in other areas as well is the thought that government is taking over a private sector duty and responsibility and that is not in a sense really the point. The point is that there is very professional management. Many of us have done a much better job through the electricity crisis on a municipal electric side than on an investor-owned utility side. One thought to consider here is that having somebody on board that is in fact experienced at that as sort of an interim general manager, we found has helped making its way through these processes.

On the benefits. One of the major benefits is that municipal utilities have a cost advantage right from the start. A cost advantage is able to finance with 100% debt no higher cost equity and not paying taxes. So municipal utilities begin with a cost advantage over investor-owned utilities. Another benefit is and it’s been talked a lot about is local control. I will give you one more aspect to that. There is a public purpose charge that’s charged to all customers and right now that is collected by the load serving entities, PG&E here. That is then split up amongst the state and how it is used is determined by the California Public Utilities Commissions. If you municipalize here in the City, those funds would come to you or direct application in the municipal utility service territory.

Feasibility, in addition to looking at the economics and the potential options and ways to go forward. If it becomes a municipalization fight, support and staying power is extremely important. Getting support of the local community, a very close vote last time. Having a positive vote would help. But other ways to make sure that there is a willingness to stay in the fight would be vitally important in getting something done. And then, keeping an eye on the legislation. AB 2266 popped up just recently. Now there’s a community aggregation bill working its way through the legislation that has a chance to turn back in imminent domain proceedings the rebuttable presumption of higher value use. There’s lots of legislation also that needs to be watched and that could harm any of your ability to get something done here.

Lastly, we would need to sit down obviously, and everybody has said that, to develop a work plan. We don’t work without having a very detailed understanding of what we would want to get accomplished in some sort of detailed scoping document. We have in the past worked with other firms and if there are going to be other firms, it becomes even more important to figure out specifically and exactly what we all want to do. We generally work very closely because these types of things generally iterate through time.

Ms. Tabone stated let me just wrap up with a few key points. This is one of our key areas of work that we are doing. This isn’t just a small portion of our work. This is one of our primary focuses of our company right now. So, we’re very much looking at these issues for various people on a day to day basis. We would have principals of the company involved. This wouldn’t be delegated to analysts. It wouldn’t be delegated to mid-level engineers. This would be the principals of the company working on this on a day to day basis giving direction to the more analytical staff. We can do a lot of the different pieces. Again, we are much smaller than some of the firms you have talked to. I think our key benefits would be looking at strategies and alternatives, doing some pre-feasibility, looking at the rough numbers. Let’s not start off looking at a detailed study of every single item and what it may cost. Let’s look at big picture items. Let’s narrow it down to a couple of things and take on the next step. That’s consistent with what we do for all of our clients.

We don’t have any conflicts of interests. We don’t work for the investor-owned utilities here. We do work for other municipal agencies whether they are existing utilities or cities that are looking at becoming utilities. But again, none of them would create a conflict. In fact there are a lot of synergies with that because we are looking at the same issues for multiple people. Because we’re in the Pacific Northwest, we have much lower rates than those firms in California. We travel down here a lot. We spend a lot of time here, but, we don’t pay salaries here and we don’t own homes here. So, we can do things for a little bit less cost on a per-hour basis.

Vice-Chair McGoldrick asked have you been involved with any utility condemnation cases?

Ms. Tabone stated we have been. We have been looking at some that are starting. We’ve bee involved in some where there have been more annexations as opposed to a complete condemnation. As you may know, there haven’t been many of those in this country in the past ten to twenty years. We have been involved in some smaller ones and Gary Saleva, our president, has given expert testimony in condemnation for some cases in Oregon.

Vice-Chair McGoldrick asked as regards to fees. You would be coming down from the Pacific Northwest, how do you handle your travel time?

Ms. Tabone stated if we are working during our travel time, which we usually are, because we all spend a lot of time on airplanes we try to do as much work as we can. Of course, that is billable if we are doing work. If we are not doing work, going to and from the airport, the down time, we don’t bill for that.

Vice-Chair McGoldrick asked would you be anticipating needing to request much support from our staff?

Ms. Tabone stated I think the other answer is very similar to what we would say. We would really need to understand what it is you are trying to achieve and the policy direction that you want before we would proceed. But on a data-wide basis, we think there are a lot of sources for data and probably would do most of that leg work ourselves.

Vice-Chair McGoldrick asked are you familiar with the PG&E bankruptcy situation?

Ms. Tabone stated we are not representing anybody in that case. Of course being in the utility industry, we are following it pretty closely.

Vice-Chair McGoldrick asked what your familiarity might be with the California Public Utilities Commission regarding their power purchases?

Ms. Tabone stated we have had to look at that same issue for CVAG, San Marcos, and Cerritos so we are familiar with it, but again we’re not representing anybody in that case right now.

Chair Gonzalez asked could you tell me where your main office is located again?

Mr. Miller stated this would work out of my office in Portland.

Commissioner Fellman stated have you done any work for the City and County before or the San Francisco PUC with the Hetch Hetchy system?

Ms. Tabone stated no, we have not.

Chair Gonzalez asked and the Norcal Electric Authority is located where?

Ms. Tabone stated that is Siskiyou County, Del Norte County and Modoc County, the three northernmost counties in California.

Chair Gonzalez asked how long has EES been in existence, how many years?

Ms. Tabone stated twenty-three years. We have grown during that time. We started off as a small firm just in the Pacific Northwest, and we really expanded and work all up and down the West Coast on a routine basis now.

Commissioner Hall asked how long has each one of you been with EES?

Ms. Tabone stated I have been with the firm for fourteen years and one of the partners at this point.

Mr. Miller stated and I have been here less than a year, but I have been in the electric utility industry for more than twenty.

Ms. Tabone stated something to point out on Alex’s experience is that he’s been on the other side of the fence from some of these.

Mr. Miller stated I have worked for many years at Southern California Edison as Vice-President and Treasurer of the utility there, and I have worked for Pacific Corp in the Pacific Northwest doing a lot of property sales.

Chair Gonzalez asked if the Commissioners or Mr. Maynor had anything to add.

Mr. Maynor stated that he did not have any questions for the consultants.

Chair Gonzalez asked Mr. Maynor, what’s your opinion of how we should proceed? My thinking is that we should allow the various Commissioners time to review any information related to the selection, and perhaps make that decision at our next meeting. I know that I personally would like to consult with my own staff related to their opinions of this.

Mr. Maynor stated if it’s appropriate, I don’t mind commenting on some thoughts of Gloria Young and Nancy Miller when we did the interviews. Is that alright with the Chair at this time?

Chair Gonzalez stated that would be fine.

Mr. Maynor stated we were impressed with strengths in particular areas. Mr. Flynn’s firm obviously had the most intimate knowledge of San Francisco and was very strong on transmission. The Henwood firm didn’t talk much about this, but they have impressive market simulation computer programs that might be useful in doing risk analysis. They also have a lot of experience in not just the municipal market, but the larger market. That was impressive. R. W. Beck, as you could tell has the ability to do the whole package if that was something that the group wanted, and they’ve been doing some work with similar studies. There’s information there that would be readily available. EES also has experience doing similar studies. They are a smaller version of R. W. Beck and you get a bit of a Northwest flavor, and sometimes that could be helpful.

If I were picking a basketball team, I would want some of those folks on my team. I think I would like Flynn on my team on the transmission issues, and I would like to be able to use the Henwood analytical tools. I’m not sure I need both R. W. Beck and EES because I think there might be overlap. They both seem to have the general background to do much of it. I was just thinking about what your next steps might be. A couple of approaches. One might be to authorize the Executive Director to enter into contracts with three of the four, sit down and have a scoping study and get some cost estimates based upon what we worked out as a group as to what the project should like, who would do what, and what the estimated costs would be. Or, we could invite all four groups, if they would be willing to do that, sit down and have that same scoping study, hopefully very soon, and come back again with cost estimates to the extent that there was overlaps in areas where my firm can do that, and we get a sense what the costs might be. I like the idea of bringing in additional consultants in for several reasons. One, I think you broaden the scope of the different viewpoints. You have some peer review opportunities as well. Sometimes these kinds of studies can become political. You take away the ability to target the consultant as a problem because you have a little bit of a broader range.

Commissioner Schmeltzer stated my concern with having three or four consultants given our budget constraints, would be that we could use all of that time figuring out who’s doing what rather than getting a study done. I think the opportunity for overlap and to lose time on that sort of sorting when you have that many different people involved would be very high.

Mr. Maynor stated that may be the case after you had your scoping meeting and you couldn’t reach conclusions on it. On the other hand, we’ve learned a lot through the public hearing process in the last several months. But, these folks are in the business on a day to day basis. We’re at a certain level of information. They are on a much more technical level. It would be useful to hear their thoughts on not only the process, but on some of these issues. When you’ll get them in the room, you’ll hear some different viewpoints, which I think is very helpful. I am optimistic that we can parcel it out in one session and get a clear idea where the study should go. If it can’t happen, then you may be correct, that’s a problem. I wouldn’t anticipate spending days and many hours trying to figure out who is doing what and having overlap issues.

Chair Gonzalez stated I think that my own sense of this is that the ideal situation would be to have Mr. Maynor make a recommendation to us. I would also like our Executive Officer to make a recommendation to us. Between now and that next meeting, I think I would invite the members, if they have specific areas of inquiry that they want to flush out, to contact Mr. Maynor, and let him know what it is that they might be concerned about, and let’s flush that out. I’m a little bit hesitant to get terribly far along in trying to make a selection today, or to make that decision as to whether or not the scoping study should be bringing in more than one consultant. My instinct has always been that that would be the preferable way of going about it, but I also see the advantages of doing it differently. As you said at the outset, I think we have a number of consultants that are all very talented and can do quite a bit of work related to the kind of information that we want.

Commissioner Schmeltzer stated I think some of the San Francisco specific knowledge that some of the consultants have would be very valuable. I also think that there is a lot of valuable information or valuable experience in the room, and I could see the benefit of having more than one consultant. I would be concerned about having more than two. I think we would start to get into scoping problems in a process that we would need to move rather quickly along that we could very easily end up bogged down.

Chair Gonzalez stated I am proposing that we make a decision at a meeting sometime in the future, and we can decide when that meeting will be held. This idea of Flynn and Associates appears to have some knowledge of San Francisco that might make somebody favor them. That may be true. I certainly didn’t hear anything in the presentation that so impressed me about that, that I would make a decision based on that. If that really rises to a level that it gives them an advantage over others, then I want to see more about what they have done for the City and County before I am willing to cast my vote in that particular way. That’s not obviously something we have here today.

Commissioner Fell man stated I am concerned about our timing because we want to get a report done. We talked about a final product being delivered in June. We’re already at April 19 today. Everyone was kind enough to come today and give us their oral presentations. We have their documents. What I would like to do is have us establish a process for reaching a decision plus indicating a date as to when that decision would be reached. I can appreciate that we’ve heard the presentations, and you might want people to look at it further. I like the idea of having a recommendation from Mr. Maynor and Ms. Young, but I think we should get a recommendation for one approach if it’s two consultants or one consultant, but use the next couple of weeks to process that internally. I think we have a meeting scheduled, is it May 10^th? I think we should develop a process today even if we can’t reach a decision.

Chair Gonzalez stated I agree with you. I think my remarks about asking Mr. Maynor and Ms. Young to prepare their individual recommendations and what the scoping study in Mr. Maynor’s opinion would look like could be done between now and that next day. We can pick a new date today if we want to. There’s no problem with that. That just speaks to our availability. We can try to do this in the next ten days.

Mr. Maynor stated the other advantage might be to actually contact the consultants, share with them the Executive Summary, and get some feedback from them on what they feel they would be qualified doing and perhaps costing some of this out in the general sense. That might assist us in maybe reaching a conclusion that you don’t need three or two or one or what that might be. This is kind of an iterative process where we didn’t know exactly what the study was going to look like. When we met with these consultants, we couldn’t tell them exactly what the study was going to look like. So we got more information this afternoon. The next step that would be helpful would be to get a sense of what kind of unique information these people have. Maybe on further investigation, it may not be as unique as we thought. Or it may be something that is essential in making the study valuable. That might give us an opportunity to get more feedback than we already have.

Chair Gonzalez stated I want to hear from Commissioner McGoldrick and Commissioner Hall.

Vice-Chair McGoldrick stated I was just concerned about the timeline. I misspoke and said April 29^th. That’s actually a completion of contract negotiations target date that we had in our schedule of events, but we were not fixed on that necessarily. I was looking at the projected draft report due date as June 30 and trying to see if we can maybe speed things up a little bit. I think if we want to give whoever does this work the time, if we weren’t to meet again until May 10^th and enter into negotiations and spend a week or ten days on that, the next thing you know it’s the end of May. I don’t think we can feasibly expect a quality product. I think one of our possible outcomes for today’s meeting was that we would in fact make our final selection today. I don’t know whether or not Commissioners want to go back and reconsider that or consider meeting in another week, next Friday afternoon, or something like that. I can imagine we can be prepared by Friday.

Commissioner Schmeltzer asked do we have enough time to notice another meeting for next Friday? I don’t think that we do.

Monica Fish, Commission Clerk stated that it would have to be noticed by Tuesday.

Vice-Chair McGoldrick stated it would have to be noticed 72 hours before the meeting.

Mr. Maynor stated the other factor that Ms. Young asked me to share with you is that she is not obviously able to begin negotiations until you reward the contract. Then she has to get a budget approval. So your point is well taken. I wouldn’t go beyond next week.

Commissioner Hall asked could I ask you to repeat the process that you did a few minutes ago because that’s an interesting approach?

Mr. Maynor stated the idea would be to informally meet with the consultants, get a sense of what the study would look like, and hear some of their input as well. To see what extent they are interested in doing parts of the project, all of the project or whatever, and ask that they come back with some preliminary budget estimates given our time constraints. Then we would be in a position to come back to you with a little more information on how you might want to go.

Commissioner Hall stated he liked that approach.

Mr. Maynor stated that assumes we would have the cooperation of the consultants.

Commissioner Hall stated that what Mr. Maynor just mentioned is narrowing the scope down and meeting with the consultants in coming back to us with their input and some kind of cost estimates, if I am correct on that?

Mr. Maynor stated that the other option would be to as soon as possible next week to informally discuss with the consultants what we sense the nature of the study is going to look like and have them tell us what parts they would feel comfortable doing and get a sense of their input on what they think a study should look like. Also, give us some general cost estimates prior to Friday assuming you want to meet next Friday.

Commissioner Hall stated I like the approach, but first of all I am not interested in having three. Two would be a push. I would like to have one do the whole thing if possible. That may be the better way to go is two, but have them look at it in its entirety and then tell us if they can’t do it as they did today and what parts. I’m sure there are parts of this study that each one is more interested in than the other. I would like to have one do the whole thing, back up to two, but definitely not three.

Mr. Maynor stated part of the reason I want to talk to them is to find out how much is currently available. The advantage to perhaps having more than one or two or three is that one of them may have a lot of information on a particular issue that is sitting there, and you don’t have to ask somebody to reinvent that wheel. I don’t know to what extent that exists. That’s why I would like to have an opportunity to find out. It may well be that you would be better off with one, or you might be better off with three.

Commissioner Hall stated that’s fine. I like that approach.

Mr. Maynor stated the other possibility that was mentioned was the possibility of continuing this meeting until next Friday and then that might eliminate the notice process.

Ms. Fish, Commission Clerk stated the meeting can be recessed to a specific date and time.

Chair Gonzalez asked what is the problem with concluding the meeting and preparing a separate agenda for a different meeting?

Ms. Fish, Commission Clerk stated there would be no problem. We would just have to re-post and notice the meeting.

Chair Gonzalez stated when we have Committees at the Board of Supervisors, we could just as easily recess every meeting at the end and then continue it to some other date. The bigger question is whether or not we are available for next Friday.

Commissioners Schmeltzer and Fellman stated they were not available.

Vice-Chair McGoldrick stated if we were to discuss the possibility of making a decision today, it may help facilitate where we are going. We may have sufficient information today to be able to make a decision and move forward. I don’t know if any other Commissioners would like to express their feelings on that.

Chair Gonzalez asked Vice-Chair McGoldrick if he were available next Friday.

Vice-Chair McGoldrick stated that he would have to run down to his office and check his schedule.

Chair Gonzalez stated why don’t we recess the meeting for five minutes to find out who is available next Friday.

The meeting recessed at 4:15 p.m.

Chair Gonzalez called the meeting to order at 4:27 p.m.

Chair Gonzalez asked, Mr. Maynor, how much time would you need to be able to consult with the various consultants related to the scoping issue, and how much time would you need to feel comfortable making recommendations and presenting us different options about who we could select and what the configurations might look like?

Mr. Maynor stated I don’t think it is so much of a problem with me. I can get in contact with the consultants and have a mini scoping session with them. Then it is really a function for them to get back and let me know what areas they feel they are capable of doing, can get done in the time period, and some approximate costs, recognizing this is a very general sense. I can have those conversations early next week. Then it’s just a question of how soon they could back to me and then we would put together a presentation with a little bit more information for you.

Commissioner Schmeltzer asked then you would envision talking to them and having them get back to you after a period of time?

Mr. Maynor stated what I would do is give them the Executive Summary and maybe a matrix of issues, ask them some specific questions about what they feel is in their capabilities of doing in that timeframe, then to get back with some general time and cost estimates of what that would entail. This is not going to be the kind of scoping issue that would later take place after you negotiated with the contract, and I would mention that to the consultants. It is not a contract negotiation as much as it is to get a better sense of what the project entails, what their capabilities are, and what their sense of what the costs would be, in ballpark areas.

Commissioner Schmeltzer asked you would envision contacting them on Monday or sooner than that?

Mr. Maynor stated I would begin the process on Monday to the extent they are available. I would not know how long it would take them to get back to me with the information, their estimates, but I would begin the process on Monday.

Commissioner Schmeltzer asked, could we get an idea from the consultants about their availability early next week to respond quickly to a request like that? Could we go in the order that you presented in, and what you think your turnaround might be on that?

Mr. Boccignone, Flynn and Associates asked how long is the Executive Summary you want us to review?

Mr. Maynor stated it is not very long. It is more to give you a sense of what the direction and scope are, that it’s not going to be the kind of feasibility studies that some may envision.

Commissioner Schmeltzer stated it is about three pages.

Mr. Boccignone stated I think we could review that and respond in a day or two.

Commissioner Schmeltzer asked, Mr. Maynor, it’s about three to five pages?

Mr. Maynor stated it is three pages.

Mr. Boccignone stated I think if we could have a conversation early next week, we could get back within a day or two after that.

Mr. Pezzala, Henwood stated we are prepared to limit our scope to just wholesale power markets and prices for that. We would be available immediately to give you that information because we run that all of the time. So, we would be able to respond to the questions within a day.

Mr. Bell, R. W. Beck stated if the information is available on Monday, we could take a look at it and get back to you within a day or so with estimates and an understanding. That should not present a problem.

Mr. Miller, EES Consulting stated we could get back within twenty-four hours and if Don could e-mail the information over the weekend, we could get started quickly.

Mr. Maynor stated I will do that. I will make sure before you leave that I have your e-mail addresses, so I can do that this evening actually.

Chair Gonzalez stated colleagues, there is some issue about whether or not we could meet on Friday and Commissioners Hall, Schmeltzer and Fellman were not available for that. Do you want to suggest another date?

Commissioner Ammiano suggested Wednesday morning, April 24, at 8:30 a.m. It seems to be a time that everyone is available.

Commissioner Hall asked would the procedure you explained to me just before we took a break, is that now being short-circuited by having us meet here Wednesday? It sounded to me like you needed a week or two. Now it sounds like you can get it done in a couple of days. Are we sacrificing something here? I am not prepared to move that quick on this. I like what you said before we went on break. If that took a week or two, I am not bothered by it.

Mr. Maynor stated let’s see where the conversations go at the beginning of the week with the consultants. If it seems to me that more time would be needed, then I would get back to you.

Commissioner Hall stated if you feel comfortable that you are giving us the information that I need to make a decision by Wednesday, fine. If not, then I am going to vote to take more time.

Mr. Maynor concurred.

Commissioner Fellman asked, Mr. Maynor is part of your process going to be a recommendation from you and the Executive Director regarding a preferred approach or selection process with preferred candidates?

Mr. Maynor stated yes, if you would like that. The other option is to come back with the information that I have received.

Commissioner Hall stated I think we would be looking for some guidance there.

Chair Gonzalez asked, Ms. Fish, for a Wednesday meeting there wouldn’t be enough time to publicly notice it, would there?

Ms. Fish, Commission Clerk stated 72 hours would be enough time.

Chair Gonzalez asked is there any possibility we can meet the following day?

Vice-Chair McGoldrick stated just to be clear we won’t be recessing at the end of this item, we just won’t take no action on this item. We do have some other agenda items to deal with today.

Chair Gonzalez asked for another possible date.

A discussion was held about the various meeting dates to select from.

Chair Gonzalez stated I appreciate Wednesday is a good date, but I think we should try to select another possibility in the event Mr. Maynor needs more time. The other option would be a week from Monday in the event we couldn’t be prepared for Wednesday.

Commissioner Schmeltzer asked does that mean we have a Wednesday as long as Mr. Maynor can prepare. If not, we move it back to Monday?

Commissioner Ammiano stated that is what the suggestion is.

Commissioner Fellman stated I would just request that we know Tuesday by noon whether or not we’re going to meet on Wednesday or Monday.

Chair Gonzalez stated Mr. Maynor, in the event that we can’t make Wednesday, a quorum of the LAFCo will meet and simply adjourn the meeting and reschedule the meeting for the following Monday if that is going to be the time. We are going to go on to other business. To the consultants that came today, I want to thank you all for coming forward and for your patience. I think a little bit more of a deliberative process is a good thing on this item. I hope you are patient with us. I’m sure Mr. Maynor will let you know whether or not we will be hearing the item on Wednesday. If not, it will be a week from Monday.

Commissioner Fellman asked if we should take public comment on this item.

Chair Gonzalez stated there would be an opportunity for public comment later on because we haven’t taken any action on the item.

This item was recessed until Wednesday, April 24, 2002 at 8:30 a.m.

4. Discussion and Authorization to the Executive Officer to request release of reserves in the amount negotiated for the contract to provide energy consultant(s) services.

Chair Gonzalez asked Mr. Maynor, is Ms. Young with us? With Item No. 4, is that something we should just likewise continue to the meeting when we make a decision as to Item No. 3?

Mr. Maynor stated I don’t know much about Item No. 4.

Chair Gonzalez asked, Ms. Fish, can we continue the item then with Item #3?

Vice-Chair McGoldrick asked Chair Gonzalez, technically can we say rather than to continue that item, can we say rather than #8 being Adjournment, #8 will then be Recessed?

Chair Gonzalez stated we won’t be adjourning the meeting. We will be recessing it until Wednesday.

Ms. Fish, Commission Clerk stated this item could also be recessed until the Wednesday meeting.

Mr. Maynor stated with respect to this item, I think the authorization is for the Executive Officer to request release of reserves. She wants to begin the process. Is there a report in your packet on that issue?

Chair Gonzalez stated the only problem is I don’t see how we could be authorizing her without any estimates of what the costs are. So that even if we had selected a consultant today, we wouldn’t be able to take action on Item #4.

Mr. Maynor stated in view of the fact that we are having that meeting either Wednesday or the following Monday, the whole idea was to find out what those numbers would look like.

Chair Gonzalez stated this item would be recessed along with Item #3 for Wednesday. Ms. Fish, before we go into closed session, can we hear Item #7, general public comment?

5. CLOSED SESSION

CONFERENCE WITH LEGAL COUNSEL

Motion that the San Francisco Local Agency Formation Commission convene in closed session. Conference with Legal Counsel - Anticipated Litigation: Significant exposure to litigation pursuant to subdivision (b) of Section 54956.9. Claimant: E. J. Simpson (copy of claim Is available for public inspection) for the purpose of conferring with or receiving advice from legal counsel.

Question: Shall this Motion be ADOPTED?

PUBLIC COMMENT

No Public Comment. Public Comment Closed.

ADJOURN TO CLOSED SESSION

Commissioner McGoldrick moved to adjourn into closed session; Chair Gonzalez seconded. No objection.

After a closed session, if one occurs, the Chairperson shall (1) request the Legal Counsel to identify the subjects discussed in the closed session, and (2) direct the Clerk to report the vote taken on any motion in the closed session.

[Elect To Disclose]

Motion that the SF LAFCo finds it is in the public interest to disclose information discussed in closed session, and directs the Chairperson immediately to disclose that information.

[Elect Not to Disclose]

Motion that the SF LAFCo finds that it is in the best interest of the public that the Board elect at this time not to disclose its closed session deliberations concerning the litigation listed above.

RETURN TO OPEN SESSION FOR ANY REPORTABLE ACTION

Commissioner Hall moved not to disclose the closed session deliberation concerning the litigation listed above. Commissioner Gonzalez seconded. No objection.

6. Future Agenda Items

Chair Gonzalez stated I think we have discussed what is going to be heard at the next meeting.

7. Public Comment on Items not on the Agenda

Chair Gonzalez stated to the members of the public anyone that wants to can also address the items that we continued. So if you want to say anything about the particular consultants or Item 4, that would be fine since we didn’t take action on those items.

Dennis Mosgofian stated I didn’t realize that when you invited me to make comments last week, come back this week and make comments, it would be on the consultants. I do have a couple of observations on the consultants, and they are probably politically incorrect but I will make the observations. First, I noticed that the only one of the presentations that I heard was clear on public was the outfit from Portland. They were clear right from the beginning, and their presentation was simple and to the point about serving public utilities, not private-investor utilities. They don’t obviously have a conflict of interest. To me, that was impressive, although I suppose someone could say that there might be some bias there in favor of the public. Therefore, they would not be able to give such objective testimony or give objective analysis in the feasibility study.

I had a problem with a remark that was made by R. W. Beck. As somebody who has had over forty years of experience in the world that is included in a lot of debates and struggles--I have a problem when someone comes up to the microphone and says what we do is we like to play the devil’s advocate. I find it is always easy to tear down anything. It’s very difficult to build something up. It’s easy to destroy trust. It’s hard to build trust. When we’re trying to build something that will serve the best interest of the City and County of San Francisco and its residents, its businesses and its future, one needs to be thinking positively and not negatively. Even though R. W. Beck has performed a study for East Bay MUD, and I understand they have a good reputation. I have some concern about a firm that presents itself as wanting to play a devil’s advocate role. I think you can be objective and analytical and not play that role. I would have questions about that.

Chair Gonzalez asked Mr. Mosgofian, I don’t recall that particular remark that was made. Was it in the context of playing devil’s advocate with recommendations that they might be making?

Mr. Mosgofian stated he made it in the context of facilitating giving you an objective analysis of facts in this situation. That’s a method they use to get there. Don, I heard your proposal for hiring three out of the four. From my impression, from what you said both the Portland outfit and R. W. Beck are the equivalent of a general consultant and the others are more specific. I had some concern about why you wanted to include so many of them. When somebody needs to coordinate it all, I assume from your remarks that it would be either R. W. Beck or EES.

I was particularly appreciative of your remark, Supervisor Gonzalez, when you said that special knowledge of San Francisco should not rise to the level of a criterion by which the Commission would make a decision in hiring a consultant unless that knowledge is based on actual experience in having served the City, and you would want to look at it more carefully. That had to do with Flynn and Associates. Those were my remarks on this. I thought I was coming back today to say some of the things I had said last week. I know there’s a limit in the time I have here.

Chair Gonzalez asked you gave us your general impressions of R. W. Beck and EES. What about Flynn and Associates other than the remark about the San Francisco experience?

Mr. Mosgofian stated I missed a good part of Mr. Flynn’s presentation. I did hear something that bothered me. I think it was Henwood that said that they would bring in some senior people from PG&E as part of their consulting team. I wasn’t so comfortable with Flynn, but I can’t be so knowledgeable because I missed part of their presentation. My big concern here is who is going to serve the interests of San Francisco, and who is going to serve the interests of the private investors or PG&E? That would be the biggest criteria I would start from. Ultimately, if you are not interested in the primary purposes of serving the citizens and businesses of San Francisco, I don’t think you have any business in being in the process. Since we are evolving from last year’s campaign. We are not starting fresh. We are coming from a history.

Commissioner Fellman stated just for the record, I have familiarity with Henwood from my professional life. I was also puzzled by that comment. I think what he meant is that they have senior PG&E people who have retired from the utility and now are working for Henwood toward the Henwood projects.

Mr. Mosgofian stated I thought I heard a similar remark. I guess I was a little bit concerned too when someone asked how long have you been with EES? The woman said fourteen years and the other fellow said one year, and he came out of Edison. Now, I understand switching sides, but I have some concern, although their expression of interest in public was far clearer and stronger than the other consultants.

Chair Gonzalez stated Mr. Mosgofian, I think you are raising an issue as it relates to Henwood that we can clear up between now and Wednesday.

Commissioner Hall stated I think in going one step further than that, the EES person if I heard him right, was not only Edison but L. A. Water and Power and something else. He had twenty-one years of experience. Am I right?

Mr. Mosgofian stated that was a different person on L. A. Water and Power.

Commissioner Hall stated I think it was the same guy.

Commissioner Fellman stated we can look through the RFQ’s.

Chair Gonzalez stated that was Alex Miller and Gail Tabone, I think.

Commissioner Fellman stated I guess we could ask Mr. Maynor to highlight that particular issue when he comes back to us.

Mr. Maynor asked about the background with respect to working for private companies? I will follow up on that.

Mr. Mosgofian stated I was aware that you were all mindful of the need to not delay in this process because before and after you’ve made your decisions, there is a lot of work that the consultants have to do and have to get you a report back. I am just concerned that we all collectively not end up like we did last year with a study that is going down the line, and a lot of people in San Francisco waiting for a report to take a look at. This looks like the final report will be after the fact of the new Prop F, the new municipalization charter amendment that will already be cast for the ballot. I would hope that whatever you do, that you expedite the process without making mistakes. I appreciate your deliberation and carefulness.

Richard Ow stated, he is with People’s Budget, and I listened very carefully to all these competent consultants. They failed to address the people’s need. I realize some people do not have any problem paying their PG&E electric bill, but lots of our limited-income people, pensioners, and low-wage working people, their choice is go hungry or pay PG&E. In your final request for the result of the report, I hope that you establish or ask them to write so that all the citizens, every household, every small business can be able to pay their electric bill.

No further public comment. Public comment closed

8. Recessed

The meeting of the San Francisco Local Agency Formation Commission recessed at 5:15 p.m. to April 24, 2002 at 8:30 a.m. to discuss Agenda Items 3 and 4.

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