Board Members present: Dorothy Anderson, Susie Smith, Jeff Osanka, Mike Dyer and Sandra Bishop.

Others present: Randy Berggren, Gale Banry, Tom Buckhouse, Marty Douglass, Dick Helgeson, Libby Henry, Garry Kunkel, Kris Middlewood, Mat Northway, Cathy Royle, Scott Spettel, Bob Steward, Dick Varner, and Krista Hince of the EWEB staff; Chris Aetneave, member of the public; Kim Kunkel, City of Eugene Minutes Recorder.

President Anderson called the meeting to order.

MINUTES

The Commissioners reviewed the minutes of the April 14, 1997, Work Session and the re- submitted minutes of the March 14 and 15, 1997, Board Retreat.

Referring to the minutes of April 14, 1997, Commissioner Bishop requested that the attendance record be amended to reflect her excused absence.

With regard to the minutes of the March 14 and 15, 1997, Board Retreat, The Commissioners noted a number of errors and omissions and therefore agreed to revise their own comments and submit missing details for inclusion in the minutes. The Commissioners agreed to defer consideration of the March 14 and 15 minutes until such revisions are made.

Referring to sentence two in the final paragraph on page six of the minutes of the March 15 Board Retreat, President Anderson requested that "incremental" be replaced by "periodic."

Vice President Smith moved, seconded by Commissioner Osanka, to approve the minutes of the April 14, 1997, Work Session, as amended. The motion passed 4:0, with Commissioner Bishop abstaining.

CORRESPONDENCE

General Manager Randy Berggren reminded the Commissioners that a Board Retreat was scheduled for May 2 and 3 and reviewed materials included in the Board Meeting agenda packet.

Mr. Berggren reviewed draft agendas for the May 12 Work Session and Board Meeting.

Mr. Berggren reviewed the latest developments concerning the under grounding provisions being considered by the Eugene City Council. Mr. Berggren said that City of Eugene and EWEB staff had agreed to a compromise, subject to Board and City Council approval. The compromise calls for EWEB to install conduit crossings on the three major street reconstruction projects scheduled for this summer. Construction on the first project, Willow Creek Road from West 11th to West 18th, is scheduled to begin in lat May, and the plan would be for EWEB to install the crossings before then. Mr. Berggren said that Marty Douglass would be tracking the City Council discussion tonight. The Board agreed on the compromise approach.

PUBLIC INPUT

There was no public input.

LEGISLATIVE UPDATE

Libby Henry, Legislative Representative, prefaced the update by explaining that House Bill 2821 would allow all retail electric customers to choose one or more electric service suppliers by January 1, 2,000. Noting that although the Board had not issued collective support of retail access, EWEB will want to include in House Bill 2821 language preserving EWEB's authority to operate the utility. Ms. Henry presented an overview of House Bill 2821 amendments relative to the following three policy statements regarding local control of retail access: 1) EWEB retains authority to decide whether to authorize direct retail access within its service area; 2) Must not restrict EWEB's market activities; must allow EWEB to continue to recover its fixed costs; and 3) Legislation should contain provisions to ensure that social and environmental goals such as conservation , low income weatherization, and renewable development are supported during the transition to competition and beyond.

Commissioner Bishop inquired as to the possible ramifications of delaying the implementation date of the bill for public utilities until 2001. Noting that public utilities have resisted the establishment of an implementation date in general, Ms. Henry responded that such a delay was likely.

Commissioners stated that the following House Bill 2821 amendments were unacceptable and should be considered "stoppers:"

Section 6 (4): Every retail electric customer shall have the option of providing its own metering facilities, in which case, the retail electric customer shall not be required to purchase or pay for metering or facilities necessary to connect to an electric utility's facilities. (Anderson)

Section 7 (a): The existing electric utility shall be the default supplier for all retail electric customers in its service territory. . . (Osanka)

Section 11: Reciprocity. Every electric utility that sells or through a related party sells electricity to a retail electric customer of another electric utility in Oregon shall provide reciprocal services to any electricity service supplier or retail electric customer if requested. (Smith)

In response to discussion regarding Enron's interest in owning meters, Ms. Henry said Enron argues that it will target otherwise unwanted customers such as rural residents.

Commissioner Osanka stated that he was uncomfortable with the Exemptions of Public Records Law language. Ms. Henry responded that the law protects customers as well as service providers negotiating contracts in a newly competitive environment. She said no objections had been raised regarding the language.

With regard to Sections 19 and 21, Vice President Smith expressed concern that EWEB might have to redistribute funds from successful programs into other programs in order to meet the requirement regarding how the 3 percent statewide expenditure standard is to be subdivided. She suggested that EWEB propose including in the amendment a cafeteria of bona fide conservation and renewables options from which utilities may select in meeting the requirement. Commissioner Osanka suggested proposing that utilities exceeding the 3 percent expenditure rate be allowed to determine how the funds will be allocated.

With regard to Section 21, Low-Income Assistance, Commissioner Osanka pointed out the language of the bill that the Office of Energy could impose an energy sales tax to fund low-income home energy assistance programs. Ms. Henry confirmed that the imposition of such a tax was a possibility.

Commissioner Osanka inquired as to whether funds collected through EWEB's voluntary contribution low-income assistance program would count toward Universal Service Fund dollars to be collected through meters charges administered by the utility under Section 21. Ms. Henry responded that funds collected through EWEB's voluntary contribution low-income assistance program could be credited against the amount owed to the Universal Service Fund; however, funds credited to the Universal Service Fund would be sent to Salem rather than remain in Eugene for local distribution through the Energy Share Program. Commissioners Dyer and Osanka expressed support for distributing the funds locally.

With regard to the current politics of House Bill 2821, Ms. Henry reported that the bill in its present form cannot pass the House. She said that in order for the bill to receive sufficient support for passage, a number of "bottom lines" must be met. Ms. Henry said additional negotiation will be required and the Fair and Clean Coalition and State agency representatives are likely the only participating entities approaching support of the bill. She said it is unlikely that the Power Deregulation Committee will send an unpassable bill to the floor.

WYOMING WIND PROJECT

Ken Beeson, Energy Resource Projects Manager, prefaced his presentation by requesting Board approval of a resolution authorizing the General Manager to execute revised project agreements to allow EWEB's continued participation in the Wyoming Wind Project.

Mr. Beeson noted that EWEB, PacifiCorp, Tri-State, SeaWest, and Bonneville Power Administration (BPA) are currently working to update the project agreements and incorporate them into final contract form. Noting a change in agreement, Mr. Beeson said SeaWest has decided to proceed with installation of 84 turbines rather than 89. He stated that with the exception of the Power Purchase Agreement with BPA, which will be signed mid-year following the completion of an Environmental Impact Statement, the agreements are expected to be ready for signing within the next few weeks. Mr. Beeson noted that final opinions from both EWEB Special Counsel and Bond Counsel will be obtained prior to the signing of the agreement by the EWEB General Manager.

Referring to an April 24 memorandum entitled Wyoming Wind Project that was included in the Board Meeting agenda packet, Mr. Beeson presented an overview of the project and reviewed the status of permits, EWEB costs associated with the project, projected schedule, notable issues, work plan to market the project output, and justification for EWEB involvement in the project.

Noting EWEB's risk in participating in the project, Mr. Beeson said it is important that in building the substation and transmission lines the project owners proceed on a parallel tract with the project developer. He said in the event BPA does not move forward with the project or the Environmental Impact Statement is delayed, the project owners would be at financial risk. Mr. Beeson noted that if such events were to occur, EWEB would likely be able to recover a portion of its investment by salvaging materials.

With regard to the possibility that EWEB does not receive a $15 mill/kwh tax credit related to the project and therefore incurs increased costs, Mr. Beeson stated that such costs could be managed by effectively marketing the project output. He said staff would produce and submit to the Board by November a comprehensive work plan for marketing the output and a recommended product. Vice President Smith requested that the work plan include data regarding the number of kilowatts EWEB would have to sell in order to recover its investment.

Commissioner Osanka said he would support the project if it is made clear to the public that the project will be funded by EWEB's $150 million bond levy approved by voters.

Commissioner Osanka inquired as to the estimated life span of the wind turbines that will be installed. Mr. Beeson estimated that the estimated life span is 30 years. He noted that independent engineering counsel will review the design specifications from the turbine supplier and provide the project owner with a certification of quality.

Commissioner Osanka inquired as to whether EWEB would be responsible for the debt service on the turbines for those 30 years if the project were to fail. Mr. Beeson confirmed that EWEB would be responsible and said he was confident that the turbines and project would endure. Vice President Smith noted that wind power is a proven technology with an impressive record.

Vice President Smith moved, seconded by Commissioner Osanka, to approve the resolution authorizing the General Manager to execute revised project agreements to allow EWEB's continued participation in the Wyoming Wind Project.

Commissioner Osanka reiterated the fact that in approving EWEB's bond measure, voters authorized EWEB to take manageable risks such as the Wyoming Wind Project.

Noting that he had opposed the project when it was projected to break even, Commissioner Dyer said he was not now convinced that a $4 million loss is a sound financial move. He expressed concern regarding the response of the community to EWEB investing $12 million only to lose $5 to $10 million. Commissioner Dyer said the question is not whether EWEB will lose money, but rather how much. He added that wind power technology is not currently cost effective and said he would vote in opposition to the proposed resolution.

Vice President Smith indicated that she would support the proposed resolution. She stressed the importance of EWEB "stepping up to the plate" and engaging in a renewable energy project. Vice President Smith noted that the participating entities were investing a great deal to ensure the success of the Wyoming Wind Project and it is a project supported by the community. She said she looks forward to working with staff to develop marketing strategies and adding wind power to the growing list of EWEB successes.

President Anderson stated that while she appreciated Commissioner Dyer's comments, she thinks it is time to test the stated wants of the community.

Commissioner Bishop noted that although the project does not appear to be a sound financial decision right now, the future of the energy market is an unknown and wind power is a proven technology.

Commissioner Dyer expressed appreciation to staff for their dedicated work on this project

The motion passed, 4:1, with Commissioner Dyer opposing.

ITEMS FROM BOARD MEMBERS

Commissioner Osanka reported that he had received a fax from the APPA regarding a member utility's claim of a 50 percent increase in annual FERC fees due to costs imposed by the Department of Interior, U.S. Forest Service, and Bureau of Indian Affairs. APPA is soliciting information from other member utilities regarding similar increases. Mr. Kunkel responded that the fax had been forwarded to Everett Jordan who determined that EWEB has experienced a 10-year trend of increasing FERC fees driven not by FERC but by the costs of lawsuits filed by other agencies. He said EWEB may participate in a letter writing campaign in protest.

The meeting adjourned at 10:10 p.m.