Board Members present: Dorothy Anderson, Peter Bartel, Susie Smith, Patrick Lanning, and Sandra Bishop.
Others present: Randy Berggren, Dean Ahlsten, Jo Andersen, Ken Beeson, Kathy Gray, Dave Koski, Marty Douglass, Dick Helgeson, Jim Wiley, and Krista Hince of the EWEB Staff; Joe Sams, City of Eugene Minutes Recorder, Lance Robertson, Register-Guard, Frank Nearing, KLCC-Radio; KMTR, KVAL, and KEZI new stations, and members of the public.
President Anderson called the Special Board Meeting of the Eugene Water & Electric Board (EWEB) to order.
AGENDA CHECK
President Anderson said that item number 12 (Resource Plan update) was being dropped from the night's agenda. She also noted that item 10 (U of O & Willamette Industries Power Sales Contract) was being moved up to the first item of business.
UNIVERSITY OF OREGON AND WILLAMETTE INDUSTRIES POWER SALES CONTRACT
Scott Spettel, Power Management and Planning Manager, said that staff was asking the Board to give the General Manager authority to enter into retail power sales contracts with the University of Oregon and Willamette Industries.
Mr. Spettel said that the net effect of the contracts would be that Willamette Industries current rate would increase by two percent and the University's current rate decreasing by three percent.
Vice President Bartel, seconded by Commissioner Smith, moved to give the General Manager authority to enter into the contracts with Board approval.
Commissioner Smith noted, for the public, that the Board had just completed a Work Session on the contracts. She said that both of the contracts contained a cost increase that was appropriate and proportional to the costs of serving the facilities.
The motion passed unanimously.
APPROVAL OF CONSENT CALENDAR
RESOLUTIONS:
BUSINESS SERVICE CONTRACTS:
Contract Extension
Commissioner Bishop pulled item 9 for discussion.
Vice President Bartel, seconded by Commissioner Lanning, moved to approve the items on the consent calendar. The motion passed unanimously.
CORRESPONDENCE
General Manager Randy Berggren said that he was finalizing a location for the Board retreat to work on strategic pro forma work. He said that he would leave place holders throughout the year so that there was a better view of when the Board could get together for a retreat and plan their activities. He said that there would be an informal dinner meeting and then a day to a day and a half retreats two to three times a year.
Mr. Berggren reported that a public meeting had been scheduled for January 31, at Westmoreland Elementary School to discuss the construction of a second water reservoir to be built adjacent to the City View Reservoir.
Mr. Berggren reported that on January 17, there would be a meeting at the facility with Senator Ron Wyden and some area utility managers to discuss the power market.
Mr. Berggren said that he would bring a draft of the Umatilla Development Agreement to the first February meeting.
Mr. Berggren reported that on January 17, there would be a hearing in Portland around hydro relicensing.
Mr. Berggren said that the February 6, 2001 meeting would have an update on the Telecommunications Phase II work, a public hearing on the rate proposal, and requested action for an electric rate adjustment.
ITEMS FROM BOARD MEMBERS
Commissioner Smith stressed the importance of public outreach that wind power rates were not increasing.
Commissioner Bishop reported that there was a request from both the City and the County that EWEB brief them on the current energy situation. She acknowledged that there had been a lot of confusing media coverage and stressed the importance of getting real facts to people.
PUBLIC INPUT
Michael McGrath raised concern that the rate increases were due to the instability of the California Market. He opined that there was an artificial scarcity of power and added that it was a good time to educate consumers on the benefits of a public utility.
Commissioner Smith said that part of the scarcity was due to the record low snow pack and expected low runoff.
GENERAL MANAGER COMPENSATION
Jean Myers, Human Resources Manager, provided a presentation on the General Manager's compensation, (including deferred benefits), and compared that compensation against the market midpoint. She noted that there would need to be a 7.3 percent increase to bring the General Manager up to the average.
In response to a question from Commissioner Smith regarding the average increase company wide, Ms. Myers said that the average increase was 4.4 percent for employees and 4.8 percent for management.
President Anderson stressed that Mr. Berggren did an excellent job but raised concern over coming rate increases. She suggested a four percent increase.
Commissioner Smith noted that anything less than 7.3 percent would lose ground with the rest of the market. She said it was important for the Board to be clear that if our goal is to maintain salaries competitive in the market, taking a salary action that does not keep Mr. Berggren in the market will create a gap that will widen over time. She stressed that, over time, compensation needs to be at least market rate to maintain excellent staff. She also suggested that the Board needs to strike a balance between regional utility market place and the local community concerns for public sector salary because of this, she suggested a 4.4 percent increase as a parallel of the average granted to the rest of EWEB staff.
Vice President Bartel noted that there were a number of employees making as much as Mr. Berggren and that there was one, at least, who made more. He commented that supervisors generally made 10-15 percent more than employees and stressed that paying less than market rate could become a systemic problem.
Ms. Myers commented that Mr. Berggren was rated as an outstanding employee and should be eligible for a 6-9 percent raise. She suggested adjusting the General Manager's salary to the market midpoint rate from year to year.
In response to a question from Commissioner Lanning regarding the percentage of the annual budget for staffing, Dick Varner said that it was approximately 25 percent.
Commissioner Lanning stressed the need for stability in the organization and commented that stability could not be contained by paying less than market rate.
Commissioner Bishop suggested being more conservative because of the instability of the current market. She suggested a 3 percent increase and a re-evaluation in the next year.
Vice President Bartel stressed that the facility was only as good as its employees and added that pay increases were a cost of doing business. He said that the current situation EWEB enjoyed was due to Mr. Berggren's outstanding management and suggested a 7.3 percent increase.
Commissioner Smith raised concern that such an increase would be impalatable to consumers who were about to receive an increase in rates. She suggested 5.6 percent as a compromise.
Commissioner Bishop reiterated her suggestion of a small increase to be re-evaluated in the future.
Commissioner Smith, seconded by President Anderson, moved for a 5 percent pay increase for the general manager. The motion failed 3:2 with Commissioner Smith and President Anderson voting in favor.
Commissioner Lanning, seconded by Commissioner Smith, moved for a 6 percent increase retroactive to January 1, 2001. The motion passed 3:2 with Vice President Bartel and Commissioner Bishop in opposition.
Vice President Bartel expressed his dissatisfaction with the way the compensation question was handled and suggested finding an alternative way to handle it in the future.
2001 REVENUE REQUIREMENTS/RATE ADJUSTMENTS
Dick Varner, Fiscal Services Supervisor, provided a presentation on rate adjustments. He said that the rate increase drivers were the low level of precipitation for the year, the resulting low snow pack, poor stream flow, and the tripling of wholesale power costs over the previous four months. He said that the baseline scenario showed a $27 million need for funds that was over and above what current rates would deliver. He said that staff was proposing a 15.5 percent increase to cover that scenario with an option to increase again in October. He outlined alternate scenarios that staff was not recommending.
Mr. Varner said that staff was looking at varying levels for residential rates whereby the more energy used the more the rate would go up. He said that there would be a potential no increase for low electric use customers. He said that this would send a very significant message to high end customers that they should conserve energy.
PUBLIC HEARING ON 2001 REVENUE REQUIREMENTS/RATE ADJUSTMENTS
President Anderson opened the public hearing.
Moshe Immerman began by thanking Mr. Berggren for his outstanding work. Speaking to the revenue requirements, he emphasized that global warming needed to be part of the discussion.
Mr. Immerman said that large load growth needed to pay for its own power. He said that this would send the appropriate signal to customers. He said that the snow pack would continue to shrink in the future and stressed the need for an aggressive conservation program. He suggested a three percent increase, on top of the suggested increase, to pay for conservation programs.
Misha Seymour expressed his unwillingness for a residential rate increase. He opined that industry should be made to cover the balance of power costs. He also expressed his dismay that more people did not show up to voice their opinions on the issue.
Jake Elston spoke as the Willamette Industries plant manager. He said that the plant needed a lot of electricity and assured those present that industry was already paying its share for electricity. He urged the Board to find creative ways to ease the cost burden on its customers. He complimented EWEB staff for their work in an unstable market.
President Anderson closed the hearing.
Commissioner Smith stressed the importance of conservation efforts.
Vice President Bartel called for more information from staff on what the impacts of a rate increase would mean to low cost housing. He urged discussion of keeping impacts to low cost housing to a minimum. He reiterated Ms. Smith's comments on the importance of pushing conservation efforts.
Commissioner Bishop clarified that the 15 percent increase was until October when the situation would be assessed.
In response to a question from Commissioner Bishop regarding what would happen if the Board adopted a lesser rate increase, Mr. Varner said that the only additional money that the Board could use would be to tap capital improvement reserves or use bonding authority to bond for capital.
Commissioner Bishop expressed her discomfort with a double digit rate increase. She said that she was skeptical about all the predictions being made. She said that she would tend to look for the absolute least amount of increase that would allow the facility to function. She commented that residential users had no disincentives to use more power. She said that she was in favor of the block rate proposal presented by staff.
Commissioner Lanning stressed that the community needed to be able to afford to meet its basic needs.
Commissioner Smith said that she had concerns with a double digit rate increase but the utility was in a realistic circumstance.
In response to a question from Commissioner Bishop regarding the amount of EWEB's load that was self generated, Mr. Varner said that the figure was 30 percent.
Commissioner Bishop stressed the importance of developing a means to generate power.
LARGE GENERAL SERVICE CONTRACT SERVICE RATE SCHEDULE REVISIONS
John Yanov, Senior Rates/Financial Analyst, provided a brief presentation. He said that staff was proposing a revision from 10 to 5 megawatts for the standard general service contract with February 1, 2001 as an effective date.
Commissioner Smith, seconded by Vice President Bartel moved to follow the staff recommendation as proposed. The motion passed unanimously.
INVESTMENT ALLOWANCE FOR ELECTRIC FACILITIES
Dave Koski, Electric Operations Manager, provided a brief presentation on the investment allowance. He said that staff was asking for approval of recommended changes in the customer service investment allowance.
Vice President Bartel, seconded by Commissioner Lanning, moved to approved the staff recommendation as proposed. The motion passed unanimously.
ITEMS REMOVED FROM CONSENT CALENDAR
In response to a question from Commissioner Bishop regarding item 9 of the consent calendar, staff said that it was based on competitive bids from qualified rehabilitation facilities.
Commissioner Bishop suggested holding bidding on the open market and leaving the decision up to qualified rehabilitation facilities to invoke state law.
Vice President Bartel, seconded by Commissioner Lanning, moved to approve item 9 of the consent calendar. The motion passed unanimously.
The meeting adjourned at 9:45 p.m.
_____________ ______________________________________
Assistant Secretary President