Board Members Present: Dorothy Anderson, Patrick Lanning, and Sandra Bishop. Vice President Peter Bartel was excused.

Others present: Randy Berggren, JoAnn Andersen, Tom Buckhouse, Ken Beeson, Marty Douglass, Dick Helgeson, Jim Origliosso, Roseanna McArthur, Dick Varner, Jim Wiley, and Krista Hince of the EWEB staff; Ruth Atcherson, City of Eugene Minutes Recorder; and members of the public.

President Anderson called the Regular Board Meeting to order at 7:33 p.m.

AGENDA CHECK

There were no changes to the agenda.

APPROVAL OF CONSENT CALENDAR

Minutes

• December 18, 2001 Work Session

Business Service Agreements

• K & D Engineering, Inc. - Summit Terrace 1325' Pump Station Design and Modification to the Summit Terrace 1150' Pump Station - Water Division - $69,914
  • Delta T, Inc. - HVAC Maintenance Program - Energy Management Services - Customer Service - $750,000 for five years, or $150,000 per year

Property Acquisition

• Facilities Services. Staff has tendered an offer of $350,000 to purchase a 65 acre parcel for a Clear Lake Substation site

Commissioner Bishop moved, with a second from Commissioner Lanning, to approve the consent calendar. The motion carried unanimously, 3:0.

ITEMS FROM BOARD MEMBERS

President Anderson discussed the turbidity that the construction of temperature controls at the Cougar Dam has caused. She noted that local residents are concerned and a representative of the Army Corps of Engineers (ACOE) from Portland, Oregon, will be meeting with concerned citizens on May 22, 2002, in Walterville.

Commissioner Bishop said that she had been reviewing the minutes of earlier meetings and had noted that a motion had passed in January of 2002 stating that the election of officers would be held after the general election. She felt that this should be reviewed and that the By-Laws may need to be amended. General Manager Randy Berggren agreed to review the By-Laws and determine if this was necessary.

CORRESPONDENCE

Mr. Berggren sought to confirm that a copy of a letter from Barbara Renson responding to a letter from Wes Chamberlain regarding the proposal made on compact fluorescent bulbs had been circulated to Board members.

Mr. Berggren stated that he had provided Board members with answers to the questions they had submitted to him regarding operating metrics. He asked Board members to apprise him of any further questions.

Mr. Berggren noted that he had distributed a copy of Lance Robertson's communication plan to the members of the Board of Commissioners.

Mr. Berggren said that, as part of the strategic brainstorming session, it had been suggested that the tiered rate be reviewed after having been utilized for a period of time to assess its effectiveness. He suggested, and President Anderson agreed, that it would be advisable to assess it in an upcoming meeting.

Continuing, Mr. Berggren stated that the June 4, 2002 Work Session would cover, in part, the operating metrics. He added that the Regular Board Meeting, also of June 4 would include the appointment of the at-large position. He said that further discussion of EWEB wind power would occur after being postponed previously. He also noted that the water bond issue would be discussed.

PUBLIC INPUT

Zak Vishinov left handouts regarding possible haze caused by a power plant in the Coburg, Oregon, area.

Ken Bussell, representing the Russell Creek Neighborhood Association, spoke at the behest of Ken Shelby. He requested that the Board of Commissioners wait to discuss the water service request from the armory until the current litigation regarding this issue has been resolved.

Gary Henderson reiterated Mr. Bussell's concern. He also recommended that the Board defer making a decision on this issue until the litigation is over.

ARMORY WATER SERVICE REQUEST

Dick Helgeson, Water & Steam Division Director, noted that action on this item was not anticipated until late summer or early fall. He added that the project is subject to several land use actions.

Mr. Helgeson provided the informational presentation, with the aid of overhead projections, as outlined in the attachment entitled Armory Water Service Request: Staff Background Presentation and the memorandum entitled Willamette Water Company's Request to Serve Proposed Armory Facility. He indicated, with the aid of a map, the areas that are served by the Willamette Water Company (WWC) and EWEB.

Mr. Helgeson noted, in response to a question from President Anderson, that EWEB is already contracted to supply water to WWC.

Mr. Helgeson said that the water demands to be made by the facility are significant, with peak demands on the order of 200 to 300 gallons per minute (GPM) and a rating for fire protection of 2000 GPM.

In response to a question from Commissioner Bishop, Mr. Helgeson stated that all of the customers in the immediate vicinity, with the exception of Lane Community College (LCC) are served by the WWC. He noted that the relationship with WWC began in 1972 and that EWEB can not give direct service to this area by contractual agreement.

Mr. Helgeson discussed the city policy that would need to be amended, noting that it was possible that staff could make a decision independent of city policy, but not likely.

President Anderson asked if the Armory would be financially responsible for tapping into the 20 foot water line that abuts the Armory property. Mr. Helgeson stated that the line is proposed to tap into the WWC line along Blumberg Road, noting that the lines would be transmission size pipelines.

Mr. Helgeson said, in response to a question from Commissioner Bishop, that the county has signed off on the jurisdiction subject to numerous conditions. He provided a copy of the county's ruling.

Ms. Bishop noted that EWEB has no obligation to supply water to WWC unless there is surplus water available. Mr. Helgeson responded that EWEB has surplus water almost every day. RTO (REGIONAL TRANSMISSION OPERATIONS) WEST - FEDERAL ENERGY REGULATORY COMMISSION (FERC) SUBMITTAL

Dean Ahlsten, Electric Engineering Manager, provided a brief overview of the regional transmission operations, with the aid of overhead projections, as outlined in the memorandum entitled RTO West Next Steps. He stated that staff was putting together comments relative to the security of the Trojan bonds. He submitted a draft of the comments that will be filed within the memorandum. He reminded all present that the due date for comments was May 29, 2002. He enumerated the EWEB board principles, as follows:

• The primary concern is the security of the Trojan bonds. Staff feels that this is the largest financial risk. He noted that there is a condition in the bond resolution that should all necessary actions in security not be taken the utility could be found in breach of contract.
• The Board expressed a desire to retain a level playing field in the market place.
• The Board wanted to insure equitable treatment for renewable resources in its market.
• The Board expressed a strong desire to maintain lawful control over the utility. Mr. Ahlsten noted that much of the control will be transferred to FERC at the federal level, the governance of which will be a private non-private organization likely seeking 501(c)(3) status. He added that a large concern lies with pending legislation along with comments into FERC from some of the filing utilities that would propose to pull some of the public consumer-owned utilities' generation resources under FERC jurisdiction. He said that this is a key area that EWEB will be commenting on to FERC.
• Another concern expressed on May 7 was that the RTO give due consideration to non-wire solutions to congestion problems and transmission constraints. He noted that the RTO only has "back-stop" planning authority that limits them to transmission solutions i.e. more transmission lines.
• It must be insured that nothing in the RTO system would degrade in any way the reliability of the EWEB transmission system. He related that there had been concerns expressed that centralizing control can jeopardize reliability.

President Anderson stated that this was an accurate representation of the Board's concerns. She asked how California could be kept from tapping into the hydro-electric system of the Pacific Northwest. Mr. Berggren agreed that this was a definite concern.

Mr. Ahlsten stated, in response to another question from President Anderson, that there has been a movement on the part of other publicly owned utilities to request that the BPA withdraw.

Mr. Ahlsten listed the general concerns expressed by northwestern utilities, as follows:

1) Does the RTO provide sustainable customer benefits? He noted that there have been a number of benefit/cost analyses, commissioned by RTO West and by FERC, that showed substantial savings to consumers in the long run. He added that there had been a rebuttal done by some of the stake-holder groups that challenged a lot of the assumptions that were used in the study and had resulted in a negation of the benefits.

• he start-up costs of this organization have been estimated to be $80 to $100 million and the ongoing operating costs in this organization have been estimated at $125 and $150 million per year.
• Tax liabilities are also a key concern as running revenues could subject the utilities to sales, property, and revenue taxes.
• There is concern regarding being controlled by FERC.
• There is concern that it will degrade the system liability.
• There is concern that this will create potential for market power abuses.

Commissioner Bishop strongly opposed FERC jurisdiction over public utilities. She felt that FERC does not do what it has been charged to do. She advocated positioning the utility to work to get the entire issue "off the table." Mr. Berggren likened it to having the "camel's nose under the tent."

Mr. Ahlsten stated that it was worth noting that the senate recently passed some legislation as part of the energy bill that brings NERC, WSCC and NWPPA under the jurisdiction of FERC with the intention of increasing reliability.

Mr. Ahlsten suggested, in response to President Anderson, that the staff and the Board review the what the points are specifically and see what points the utility can support and whether or not EWEB would be willing to sign on.

Commissioner Bishop expressed confidence that staff and the Board are unified on the policy issues involved in this issue.

Mr. Ahlsten stated that there will be a meeting of the Northwest Regional Transmission Association on May 30, 2002. He said that EWEB sits on this Board, which is dissolving, and some of the functions such as dispute resolution and coordinated planning will be moved to the RTO West. He added that he had registered President Anderson, Mr. Spettel and himself for a BPA workshop on RTOs on June 5, 2002.

Mr. Ahlsten suggested that the Board may also be interested in a meeting of FERC representatives, including the chairman, at which their proposal for market design and seams issues between adjacent RTOs will be discussed. He noted that the meeting will be held in Portland.

The Commissioners were in consensus on the approval of the comments to be submitted.

ITEMS REMOVED FROM THE CONSENT CALENDER

There were no items removed from the consent calender.

The meeting adjourned at 8:42 p.m.

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Assistant Secretary President