Meeting productivity and . have not seen the full model

Tne SFPUC is claiming that 1. I have seen the complete hydrological model. Not so. They say I walked out of a meeting when this model was being explained to me. My questions revealed that the modelers had used a self-serving, self-selected "wet year" to develop a long-term future forecast of 265 MGD. Debate seemed futile. The environment was turning negative and marginal returns on staying there were negative.

I walked out of the forecasting meeting because the presenter was using one wet year to validate 265 MGD as a long-term viable forecast. The presenter did not seem to understand the need for a longer period of historical observations. All the sugar coating of a "representative year" made the presentation further implode and become less viable in my mind. I am not a trial lawyer. I am uncomfortable in that role. I quickly learned the major limitation of this model. It was as I suspected. It is not my job description to teach statistical techniques and further debate an indefensible assumption in what I perceived was not the most receptive environment.

I have never seen the full model as the SFPUC claim. Never! Some years ago, I was given, on request for the model, 50 lines of FORTRAN code as "the model." I asked a computer science friend to validate or invalidate my belief that this code, ASIS, was meaningless. He stated it was meaningless without the necessary parameters being passed from other parts of the model. He also validated my belief that they were "shining" me on.

In frustration, I also presented this FORTRAN code to a senior member of the Mayor's staff and explained in plain English how the missing parameters rendered these limited, unsupported, lines of code worthless. I am sure his recall will be available on request.

Then President of the Commission, Honorable Richard Sklar, circa 2004, asked me to evaluate the end-use demand models. He said these models cost $25MM and he was concerned. He gave me a box of glossy end-use forecasting brochures to review. No code. No algorithm. No model specifications. He asked my opinion.

Simply put - end-use modeling could possibly be a necessary (???) but certainly was not a sufficient condition to bet the future of SF's Hetch Hetchy system. I said I could not validate something without the actual algorithm (code) and doubted its value when it completely ignored price theory.

I gave two volunteer lectures on econometric forecasting to the SFPUC - one at the RBOC and the other at the TWG, plus writing extensively (volunteer) on the subject for Infrastructure Task Force in the 2000-2002 time frame. Now this econometric approach is apparently being implemented.

I guess we need to keep an eye on the ball and shoot the messenger?

Email exchanges with Michael Carlin GM-Water-SFPUC -- early April 19, 2009

Dear Michael - I read this at 5AM. I apologize for any slips in prose. I need to answer now.

Facts are:

1959/60-1983/4 On average: SF 100.8 MGD and the peninsula 125.5 MGD HH total 226.3 - Why did we assure the peninsula of 184 MGD in the 1984 MWSA? Why is this number sacred? Were we bullied?

More importantly -Why are we exacerbating this (1984) mistake in 2009?

In the MWSA between years (84 - 2009) the average takes were SF 84.5MGD, Peninsula 165.3, and SF total 249.9 MGD Where did the 18MGD + 9 MGD peninsula assurances come from?

Longer - term look at HH deliveries
1959/=2007/8

1959/60 to 2007/08	MGD	MGD	MGD
Mean	92.9	145.0	237.9
SDEV	12.1	32.4	29.4

Your own estimation of system reliability in 2000 was 239MGD based on 1921-1999 hydrology (now with global warming? - considerably less) and system integrity.

In the 2009 MWSA you give Santa Clara and San Jose (combined) 9 MGD (basically changing them from interruptible to non-interruptible) . This means the peninsula is now assured 184 MGD + 9 MGD = 193 MGD. If the system can only sustain 240 MGD, then SF gets 47 MGD. (long-term statistical means) -- down from close to 88 MGD. If we replace HH water with alternative supplies (5 times the cost of HH water) the cost at the SF city gate will increase by at least 20% and the SF water quality index will plunge.

I have correlated all my HH delivery with with Tuolumne River takes. The Tuolumne River does not have the average annual flows to support your forecasts and continuing peninsula expansion. Our junior riparian rights and lowered dam capacity make a long-term statistical average of 265 an aberration that must not be used in any contract.

I cannot accept their models until I have time to study their code and visit all their assumptions. Also, in the 2009 MWSA on "joint facilities," means joint ownership, and therefore you may indeed be inviting the peninsula under 1913 Raker Act to be co-trustees. It is clear that BAWSCA "whipped us at the line of scrimmage in all these (194 and now 2009) negotiations." I am going for a swim and church.

Please do not sign this MWSA asis. My comments above are done on rising and only touch the surface. BTW - what was sent to me by the "regression folks" was an absolute insult. Had they worked for me during my modeling days, I would have sacked them. I will do this regression analysis myself and write specifications as if this was for a CPUC filing.

I see BAWSCA has enshrined in the 2009 MWSA, 100% of the CIP/WSIP must be completed by 2015. Seems they have given you a "pass" on 50% by 2010 (AB1823). I don't believe 2015 is a possible final completion date. Thus BAWSCA's AB2058, AB1823, and AB2437 will ensure BAWSCA becomes the co-trustees with 70% governance?

Finally - State law (CEQA) demands (emerging body of water law) that forecast not only be made but must be accurate? 265 MGD is a statistical anomaly and should not be used as a system benchmark. I can read FORTRAN - so give me the entire program.

Please don't sign this agreement asis.

Cheers - Brian Browne
not edited

Carlin, Michael wrote:

Brian:

In preparation for the upcoming Transparency Group meeting, we requested our external hydrology expert to address the question of the sustainability of delivering 265 million gallons per day from the SFPUC’s Regional Water System. Mr. Steiner’s paper is attached for your review prior to the meeting. He will also be at the meeting to discuss his analysis and conclusions. We look forward to the discussion.

Michael

Brief on April 18, 2009 on Regression & Master Water Sales Agreement

Brief and quick comments for 4.18.09

Regression analysis
Using Sunshine I asked for the SFPUC's database/equations for estimating demand elasticities. What I received was the usual convoluted hodgepodge of disparate and unspecified spreadsheets. A challenge to figure out. Most regulatory oversight bodies would send this nonsense back and demand it be fully explained. They said they would do this in one page later. Yep! And the Hetch Hetchy system might really deliver on average 265 mgd (millions of gallons per day). More later.

Master Water Sales Agreement

It appears the General Manager is asking the SFPUC if he can sign this contract asis. In that it was sent to us as "final."

"Authorize the General Manager of the San Francisco Public Utilities Commission (SFPUC) to execute on behalf of the City and County of San Francisco, a Water Supply Agreement with the Wholesale Customers and negotiate and approve Individual Water Wholesale contracts with the wholesale customers whose contracts will expire."

The current split for allocating Hetch Hetchy water is 2/3rds peninsula and 1/3rd SF. The 25 years between the past and previous Master Water Sales Agreement (1984-2009) -- averages are 66% peninsula and 34% SF. The average delivered volumes for the inter MWSA period system were 249.9 mgd. For the 1959/6 - 2007/8 period the system averaged 237.9 mgd. SF averaged 100.8mgd and the peninsula 125.5 mgd. For the period 1959/60-1983/4, when the first MWSA was signed, the system on average delivered 226.3 mgd - SF took 100.8 mgd and the peninsula 125.5 mgd.



Q: In 1984 why did SF "assure" the 184 mgd based on historical or hydrological data? This number is now regarded as a perpetual commitment. Now in the 2009-MWSA the peninsula will really get promised 193 mgd. Read on.

The MWSA states:

"The phased WSIP variant adopted by the SFPUC in Resolution No. 08-200 limits total system deliveries from existing watershed supplies to an average of 265 MGD through to an average of 265 mgd through the year 2018." If 265 mgd is exceeded the SFPUC will collect an allocated Environmental Enforcement Surcharge and plow this back into designated watershed improvement programs in the Sierra and local watershed."

In the MWSA of 2009 the cities of San Jose and Santa Clara retain their temporary "interruptible status." Under the 2009 MWSA the SFPUC agrees to supply an allocated annual average of 9 mgd to these two cities. This is not part of the BAWSCA assurance of 184, The assurance for the peninsula cities is thus not 184 but in reality 193. There is debate among the negotiators to make San Jose and Santa Clara non-interruptible customers. This would mean they would claim to deliver more than 265 mgd.

Just say my statistics are correct and the system can only deliver 240 -- based on storage, riparian rights, system integrity and hydrology --- this means SF will go from an average of supply of 88 mgd (1984-2007) to a future supply of 47 mgd from pristine HH sources, however, SF will still apparently still be obligated to pay 1/3rd the total cost. Replacing HH water with alternative source water will increase our city gate whoolesale price by 15% - more now that we realize the volumes going to the peninsula are 193 mgd not 184 mgd. These numbers are both unrealistic. The split should be approximately 163 to 88.

Funding for jointly owned projects will be on a debt service other costs basis. Not the former "utility approach." More on this later. The big issue here is "jointly owned." It makes clearer with every line of the MWSA that we are indeed letting BAWSCA become a majority partner. Raker indicates we can be a cograntee with other municipalities. If we don't agree to such it is unclear that they automatically become a cograntee. If we share co-own system facilities it would appear that the 2009 MWSA gives BAWSCA a full management share. Read Raker.

The 100 percent completion of the CIP albeit WSIP albeit Variant remains 2015. No mention of AB1823 and now AB2437 with the 50 milestone of 2010. brian@h2oecon.com

Revenue Bond Oversight Committee - Minutes/April 2009

Response to my email on the minutes of 15 April 2009 (below). My main focus is the Master Water Sales Agreement. The sooner the better. I wanted extensive hearings by the RBOC at both the April and May meetings.

The Master Water Sales Agreement (MWSA) is between BAWSCA and SF as to how Hetch Hetchy water will be allocated, etc. I felt May was too late for the RBOC to do anything. The proposed 2009 MWSA split of 181 MGD (million gallons per day) for the peninsula (BAWSCA) and 81 MGD for SF is not sustainable based on the SFPUC/BAWUA (now BAWSCA) Water Supply Plan of 2000 or any relevant historical period (see below) from the Hetch Hetchy system.

The regression analysis has a very low priority (even though I have been harping about it for 9 years). We should all want to know what is in the MWSA and why?

• The assumption of 265 MGD is not rooted in science nor empirical evidence based on long-term historical HH deliveries.
• SF will have to cut back its current average water use to allow the peninsula to take more pristine Hetch Hetchy water
• SF will apparently use alternative water supplies (wells, desal, recycled, etc.), which are more expensive and qualitatively inferior to "free-up" HH water for the peninsulato HH water. HH water at the city gate is probably 1/5th the cost of these alternative supplies.
  

***************************************************************************

Statistical Analysis from SFPUC Data
	SF	Suburbs	HH System
1959/60 to 2007/08	MGD	MGD	MGD
Mean	92.9	145.0	237.9
SDEV	12.1	32.4	29.4
1970/71 to 2007/08
Mean	89.3	158.5	247.8
SDEV	11.4	18.1	21.2
1980/81 to 2007/08
Mean	85.4	164.7	250.0
SDEV	11.4	18.1	21.2
MWSA 1984/85-2007/08
Mean	84.6	165.3	249.9
SDEV	6.5	16.1	21.5
2002 BAWUA/BAWSCA and SFPUC
System reliability			239
MWSA Commitment	81	184	265

Chair Brown and Mr. Browne:

I have reviewed the tapes of the RBOC meeting of March 16, 2009 as
requested and would like to thank you for noticing my error.

I will be revising the minutes for 3/16/09 to note that Mr. Sweetland
was not present for the vote on the Master Water Sale Agreement and to
clarify the actions of the RBOC concern the Master Water Sales Agreement
hearing.

The 15 minute limit for the April meeting does not include public
comment.

The minutes will be amended to read as follows:
------------------------------------
Mr. Browne requested a presentation on the Master Water Sales
Agreement and the price of elasticity of demand.

Mr. Jones, seconded by Mr. Sutter moved to scheduling a hearing on
the entirety of the Master Water Sales Agreement in May of 2009.

Ayes: Chair Brown; Jones; Sutter
Noes: Rhorer, Browne
Absent: Sweetland

The motion to hold a hearing on the entirety of the Master Water
Sales Agreement failed.

Mr. Browne, seconded by Mr. Rhorer moved to schedule a preview
presentation on the Master Water Sales Agreement in April of 2009 not
to exceed 15 minutes including committee members questions and answer
period and to schedule a second hearing in May of 2009 for a
unrestricted and complete review of the Master Water Sales Agreement.

The motion to schedule a preview hearing in April of 2009 and a
complete hearing in May of 2009 on the Master Water Sales Agreement
passed.

Ayes: Chair Brown; Rhorer, Browne, Jones; Sutter
Noes: None.
Absent: Sweetland

------------------

Victor Young
Assistant Clerk
Board of Supervisors
1 Dr. Carlton B. Goodlett Pl., Room 244
San Francisco CA 94102
phone 415-554-7723
fax 415-554-7714

Complete a Board of Supervisors Customer Satisfaction form by clicking the
link below.
http://www.sfgov.org/site/bdsupvrs_form.asp?id=18548

Email to RBOC Clerk on Minutes of March Meeting

Victor,

Thank you. Comments on your minutes.

"Mr. Browne, seconded by Mr. Rhorer moved have a preview presentation on the Master Water Sales Agreement in April of 2009 not to exceed 15 minutes including committee members questions and answer period.



Ayes: Chair Brown; Rhoer, Browne, Jones; Sutter; Sweetland

Noes: None."
The following discussion on the minutes, definitely falls under "to the best of my recall" category. Please confirm with the audio tapes. I don't believe Mr. Sweetland, BAWSCA, was present for the MWSA discussion. I believe he left as this item was about to be discussed. As I recall we voted twice on the Master Water Sales Agreement as an agenda item? The fist vote for the MWSA as an agenda item for the May meeting may have been unanimous. I think there was a second vote for the MWSA for the April meeting, which might not have unanimous? Maybe after limiting it to 15 minutes? The dynamic of these discussions would appear important. The best way is to confirm all recall is to check the tapes, which I welcome for complete accuracy.

My concerns about limiting the discussion period for the April meeting were: 1. This is the largest contract SF will probably enter into, 2. These negotiations have been in secret, 3. I believe we are inaccurately forecasting volumes (and thus mis-apportioning supplies between BAWSCA/SF and thusly could possibly be in violation of various state laws calling for realistic forecasts). and 4. The MWSA must be signed by 30 June 2009 and our need to discuss is time sensitive especially in that we are the oversight body (ratepayer advocates) for revenue bond expenditures. The only time constraint (15 minutes), as I recall, imposed by the committee (against my wishes - as noted due to the 30 June 2009 signing deadline) was for the April meeting. There was no time limit set for this MWSA agenda item at the May meeting when the MWSA agenda item will again be heard.

On the 15 minutes time constraint, I believe the City Attorney, in response to an inquiry from the chair, stated that this constraint did not extend to public comment? Again - on all matters check the tapes. If you do, please let me attend this playing.

Best regards and thanks for your efforts,

Brian Browne

Pre-Reading for Master Water Sales Agreement Agenda Item

Reading for 4.20.09 Revenue Bond Oversight Committee

• Western Water Wars – Reason Foundation – Not good public policy to let Bay Area Water Supply & Conservation Agency take over San Francisco Hetch Hetchy system
• Westside Observer – Is the SFPUC falling behind schedule on its immense Hetch Hetchy Fix-Up ($4.4 B and climbing)?
  
• Email sent to key individuals warning of dangers of signing Master Water Sales Agreement ASIS.