SFPUC Power Business Plan POWER ENTERPRISE BUSINESS PLAN 2016 | Seite 2

Dear Customers, Commissioners and Stakeholders, POWER ENTERPRISE BUSINESS PLAN 2016 As presented in Public Workshops held April 28 and July 28, 2015, and available for viewing at sfgovtv.org. The city of San Francisco depends upon the SFPUC’s Power Enterprise to provide 100% greenhouse gas-free power for all of its municipal facilities. Our power supply is one of the cleanest in the nation, and that has enabled us to become a leader in carbon emission reduction. It is an exciting time for the Power Enterprise. We are now serving clean Hetch Hetchy electricity to residential and commercial customers in the Hunter’s Point Shipyard, creating the very first greenhouse gas-free community in San Francisco. Our legacy began in 1913, when the Raker Act granted the city of San Francisco the right to build and operate the Hetch Hetchy Water & Power System. Since its completion, this system has benefited San Francisco with a steady supply of clean water and power. It serves the same benefits to the Modesto and Turlock Irrigation Districts. Electricity sales supported the cost of initial construction and ongoing build out of the joint water and power system. The Power Enterprise has gone on to provide significant additional city benefits which have helped to increase energy efficiency and diversify our power portfolio. Nevertheless, the existing Power business model is functionally and operationally out of balance. Our sales cannot support the increasing costs of maintaining our infrastructure. We are at risk of losing our highest-value customers unless we ensure a level playing field with PG&E and prioritize investment in distribution infrastructure in San Francisco. Supplies exceed customer demand. Transmission redundancies, distribution cost uncertainties, and operational inefficiencies are leaving market opportunities untapped, putting long-term financial stability and critical City energy programs at risk. This Power Business Plan recommends six operational strategies to provide lasting, long-term financial stability. These recommended strategies are designed to ensure the Power Enterprise continues to provide high-quality service to current customers, while positioning the Enterprise to grow our customer base. Simply, we need to add new customers while containing costs to achieve financial security. Our Utility Systems Water Delivering high quality water every day • 2.6 Million People • 217 Million Gallons per Day (MGD) • 1.6B kW hrs of Clean Hydroelectricity • 167 Miles Across the State • Gravity-fed Power Sewer • 100% of San Francisco’s Municipal Load • 3 Treatment Facilities • 380.5MW Hydroelectic Generation • 1,000 Miles of Pipes • 10.8MW Solar and Biogas Generation • 85 MGD Treated Dry Weather • 45,000 SF Street Lights Powered • 575 MGD Treated Wet Weather • 160 Miles of Transmission Lines • 40 Billion Gallons Treated per Year Generating clean energy for vital services Protecting public health and the environment As communities worldwide struggle with the impacts of climate change, maintaining the fiscal strength of our clean energy portfolio is crucial in addressing these challenges in San Francisco. While other utilities move toward cleaner energy, Hetchy Power has already accomplished this goal. Our mandate is to protect the long-term financial stability of this vital source of power for San Franciscans while ensuring our investments support our local economy. Harlan L. Kelly, Jr. General Manager Barbara Hale Assistant General Manager, Power Enterprise SFPUC Power Business Plan 2016 01