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

Others present: Randy Berggren, Ken Beeson, Tom Buckhouse, Chuck Dalton, Marty Douglass, Cathy Hamilton, Dick Helgeson, Garry Kunkel, Roseanna McArthur, John Mitchell, Mat Northway, Dick Varner, and Krista Hince of the EWEB staff; member of the public; and Kim Kunkel, Minutes Recorder.

President Anderson called the meeting to order.

MINUTES

The Board reviewed the minutes of the September 2 Regular Board Meeting, the September 16 Work Session and Special Board Meeting, and the re-submitted minutes of the August 19, 1997, Work Session.

Referring to the first sentence in paragraph 3 on page 1 of the minutes of the September 2, 1997, Regular Board Meeting, President Anderson requested that "proceed" be replaced with "preceed." Referring to page 3 of the aforementioned minutes, Commissioner Bishop requested that paragraph 5 be amended to read "Commissioner Bishop expressed support for cutting EWEB's risk and signing the proposed agreements. She said it is important to get back the reimbursement offered now and invest it in other alternative resources rather than wait for a return on investment in another unproven geothermal project. Commissioner Bishop stated that, in her opinion, determination of whether or not a geothermal project is renewable must be made on a case-by-case basis."

Referring to the final paragraph on page 2 of the minutes of the September 16, 1997, Work Session, Vice President Smith requested that sentences 3 and 4 be amended to read "Vice President Smith suggested that it might make sense to fund the first phase of the project through a Uniform Revenue Bond Act (URBA) rather than a bond measure because it would be relatively small and related to EWEB's business functions. In addition, she suggested that obtaining an estimate for Phase Three, residential build out, and combining Phases Two and Three in one election might assist the public in understanding the project as a whole and result in increased community support."

Referring to paragraph 1 on page 1 of the September 16, 1997, Special Board Meeting minutes, President Anderson requested that sentence 2 be amended to read "Noting that she had been absent, President Anderson requested that the minutes of the September 2 Work Session be amended to reflect that the meeting was called to order by Vice President Smith." Referring to page 5 of the aforementioned minutes, Commissioner Bishop requested that paragraph 4 be amended to read "Noting that she was impressed by her recent tour of EWEB's Steam Plant, Commissioner Bishop expressed interest in encouraging use of steam at the new County juvenille facility." Referring to paragraph 5, Commissioner Bishop requested that sentence 1 be amended to read "Commissioner Bishop expressed concern and requested Board action regarding the recent changes in the City's permit system, noting that potential EWEB revenue implications will be passed on to rate payers."

Referring to the final sentence in paragraph 4 on page 5 of the September 16 Special Board Meeting minutes, Mr. Helgeson requested that "$750,000" be replaced with "$250,000."

Referring to the minutes of the August 19, 1997, Work Session, President Anderson noted that she had been present and called the meeting to order. Referring to the final paragraph on page 1 of the aforementioned minutes, Commissioner Bishop requested that sentence 2 be amended to read "The prework exercises generated input regarding the following topics. . ."

Vice President Smith moved, seconded by Commissioner Osanka, to approve the minutes of the September 2 Regular Board Meeting, the September 16 Work Session and Special Board Meeting, and the re-submitted minutes of the August 19, 1997, Work Session, as amended. The motion passed, with President Anderson abstaining with regard to the September 2 minutes and Commissioner Dyer abstaining with regard to the August 19 Work Session.

CORRESPONDENCE

General Manager Randy Berggren reviewed a number of information items included in the meeting agenda packet and reminded the Board of the Special October 8 Work Session on EWEB's compensation plan. Mr. Berggren reviewed draft agendas for the October 21 Work Session and Special Board Meeting.

Addressing a separate issue, Energy Resource Projects Manager Ken Beeson displayed a series of slides depicting the recent Wyoming Wind Project ground breaking ceremony and circulated the ceremonial shovel. He reported that approximately 200 persons attended the festivities.

In appreciation for his willingness to forgo the ground breaking ceremony so that she could attend, Commissioner Bishop presented to Commissioner Osanka rocks from the project rim. Commissioner Osanka commended Mr. Beeson for his significant contribution to the success of the project.

PUBLIC INPUT

There was no public input.

ANNUAL REVIEW OF THE GENERAL MANAGER'S PERFORMANCE AND COMPENSATION FOR 1996/1997

Acting Human Resources Manager Roseanna McArthur reported that an annual review of General Manager Randy Berggren's performance and compensation took place during an Executive Session immediately preceeding the present Board Meeting. She said the Board's review of Mr. Berggren's performance was generally positive and Commissioners indicated strong confidence in Mr. Berggren's ability to lead the organization. Ms. McArthur solicited comments from the Board.

President Anderson reiterated that the Board issued Mr. Berggren high marks for his ability to continually learn and be open and supportive to both employees and Commissioners. She said the Board also discussed the continuing challenge of EWEB's relationship with the City and EWEB's compensation plan."

Vice President Smith stated that given the changing business environment of the industry, it is paramount that Mr. Berggren remain General Manager of EWEB. She suggested that the Board consider its ability to retain Mr. Berggren given the competative adventage of similar utilities.

Commissioner Osanka moved to defer action on the salary proposal to the October 21 Board Meeting in order to provide sufficient notice to obtain public input on the matter. The motion died for lack of a second.

With regard to the importance of retaining Mr. Berggren as EWEB's General Manager, Commissioner Dyer noted the likelihood that Mr. Berggren could secure a larger salary elsewhere if he so desired. Stating his preference that Mr. Berggren remain at EWEB through retirement, Commissioner Dyer expressed support for developing, in concept, a supplemental retirement package that is significantly "back-end loaded." He urged the Board to consider developing such a retirment package prior to the finalization of Mr. Berggren's renewal contract next year. President Anderson expressed support for Commissioner Dyer's suggestion.

Commissioner Bishop said it is her position that Mr. Berggren is currently underpaid given the extreme changes and considerable uncertainty EWEB faces in the future. Given that Mr. Berggren's salary alone is inadequate, Commissioner Bishop expressed support for developing a supplemental retirement package such as that suggested by Commissioner Dyer.

Commissioner Osanka said there is a philosophical problem in continually attempting to match other institutions' General Manager salaries, noting that as EWEB increases the salary of its General Manager, other institutions follow suit in an ongoing cycle. Commissioner Osanka said that in determining the salary of its General Manger, EWEB should consider the average local income. He said that if the average anual income of people in this community is $25,000, paying a salary of four times that amount to EWEB's General Manager is tremendous.

President Anderson stressed that the Board must consider the future health of EWEB and echoed the point that Mr. Berggren could secure a greater salary elesewhere.

Vice President Smith inquired as to whether Commissioner Osanka had a dollar amount in mind. Commissioner Osanka responded that he did not. He said that is why he supports public participation in this matter. Vice President Smith argued that the public has no knowledge of Mr. Berggren's performance on which to base salary recommendations. Commissioner Osanka responded that citizens' world views are as valid as the Board's sophisticated performance evaluation.

Noting that in comparison to other public utilities EWEB is an anomoly in that it is large, complex, and has three separate utilities, Commissioner Bishop said considering the average salary of other public utilities' General Managers would be an unreasonable comparison. She said EWEB should consider the average salary of private utilities' General Managers both regionally and nationally. Commissioner Bishop said that while she appreciates Commissioner Osanka's concern regarding how rate payers view the salary of EWEB's General Manager, she thinks this decision and its consequences ought to be the responsibility of the Board as it is directly related to the stability of the utility. She said the Board is elected to make these kinds of decisions.

Commissioner Osanka explained that his position is in response to his perception of the community's reaction to EWEB's last General Manger salary increase. He said the early- to mid-October announcement of the General Manager's salary increase reportedly reinforced some people's belief that public employees are paid too much, thereby prompting them to vote for the property tax measure.

Commissioner Dyer moved, seconded by Vice President Smith, to increase the annual salary of EWEB General Manager Randy Bergrren to $115,000 and develop within the next six months a supplemental incentive package for long-term retention.

Vice President Smith acknowledged that she is uncomfortable having no objective process by which to determine Mr. Berggren's salary; however, she said EWEB is in a competitive enviroment and must offer a competitive salary.

Commissioner Bishop inquired as to the portion of the budget from which Mr. Berggren's salary is derived and how much leaway, in terms of dollar amount, the Board has in determining his salary. Mr. Varner explained that EWEB has a 33 million dollar compensation budget encompassing all its employees. He said the salary decided upon by the Board will not likely tip EWEB's compensation budget one way or the other.

Commissioner Osanka said that in fiscal matters, it is the duty of the Board to be as tough as possible and consider budgetary constraints. He said he is concerned that the Board is weakening its bargaining position six months prior to the negotiation of Mr. Berggren's contract. Vice President Smith said it seems that while Commissioner Osanka views Mr. Berggren as fortunate to be employed at EWEB, the remainder of the Board perceives EWEB to be fortunate to have Mr. Berggren as the utility's General Manager. Commissioner Osanka stated that if EWEB is indeed more like a family than a business, it is the Board's duty to convey to the community this aspect of the utility.

The motion passed, 4:1; with Commissioner Osanka opposed to grant Mr. Berggren an increase in salary to $115,000.

The Board agreed that the effective date of Mr. Berggren's salary increase will be September 1, 1997.

NETWORKING FOR YOUTH PROGRAM PROPOSAL

Referring to a September 30 memorandum included in the meeting agenda packet, Customer Relations Manager Chuck Dalton announced that EWEB has pledged to the October 10 "Youth Pledge Summit" $1,000 and will hire some low-income youth from the Looking Glass Job Center's Summer Youth Employment Program next summer. Mr. Dalton introduced Looking Glass Job Center Director Cheryl Swanger.

Mr. Berggren said this is a great opportunity to help local youth by providing them with work experience that will assist them in becoming employable.

Referring to the Looking Glass Job Center program, Commissioner Dyer inquired as to how participating youth are selected. Ms. Swanger responded that participating youth are 14 to 21 years old and are recruited by high school counselors. She noted that participants are pre-screened prior to being assigned to a work site. She clarified that Looking Glass Job Center subcontracts with the Private Industry Council which pays the salaries of job center participants.

Commissioner Bishop expressed support for EWEB's contribution to the Youth Pledge Summit and partnership with Looking Glass Job Center.

ELECTRIC SYSTEM REORGANIZATION RESOLUTION

Referring to an October 1 memorandum included in the meeting agenda packet, Fiscal Services Supervisor Dick Varner reviewed background information and requested Board approval of a resolution directing the reorganization of the Electric System. He explained that upon passage of the resolution, Bond Counsel will execute an opinion which articulates the impact of the reorganization action on the Trojan Resolution. Mr. Varner said that once that is complete, EWEB will so notify the Trojan bond fund trustee and the Bonneville Administrator.

Vice President Smith moved, seconded by Commissioner Osanka, to approve the resolution providing for the reorganization of the Electric System. The motion passed unanimously.

NEW CITY OF EUGENE RIGHT-OF-WAY FEES

Referring to an October 3 memorandum included in the meeting agenda packet, Acting Public Affairs Manager Marty Douglass presented an overview of City of Eugene Right-of-Way Permit Fee Changes and the impacts on EWEB. He said that essentially, EWEB is going from a situation in which it previously paid nothing for the routine right-of-way excavation work undertaken as part of its daily operations and which was covered under a relatively low cost blanket permit that was routinely managed without much interaction with the City, to a situation in which that routine work is now covered in the administrative rules which require that any activity undertaken within a blanket permit be assessed a minimum fee of $50 per excavation. If a particular activity involves multi-utilities (water and electric, for example), each activity is assessed separately.

Mr. Douglass explained that also included in the rules under blanket permits are some reporting requirements in which EWEB must record and track all its activity in the right-of-way and submit a monthly accounting of that work. Consequently, EWEB incurs additional administrative activity in conjunction with these new requirements. In addition, Mr. Douglass said there are separate permits required for larger excavation projects undertaken by EWEB, which run between $160 and $550, depending on the number of feet of trench EWEB digs and the number of utilities involved. The previous cost for this type of permit was $5.

Mr. Douglass explained that any excavation work undertaken as part of its routine work, such as making water service repairs or repairing feeder duct in response to an electric outage is considered blanket permit work and not billable. He said the estimated annual EWEB costs involved in the new right-of-way fee amounts to about $80,000, although about $30,000 of that amount can be billed to the developer. Mr. Douglass said that under the previous permit regime the cost would be about $4,000. He said staff will have the opportunity to present its continued concerns to the City within the next few weeks.

Commissioner Bishop inquired as to by whom this administrative rule was developed. Mr. Douglass responded that the administrative rule was developed by City of Eugene Public Works/Maintenance staff.

Commissioner Bishop inquired as to whom EWEB is currently negotiating with. Mr. Douglass responded that EWEB is negotiating with Public Works/Maintenance staff. Commissioner Bishop suggested that EWEB negotiate instead with City Manager Vicki Elmer or an appointed staff member. Mr. Douglass said EWEB can communicate with Ms. Elmer via written correspondence or a personal meeting.

Water and Steam Division Director Dick Helgeson said that while EWEB does not favor picking up the extra costs and taking on the administrative burden associated with the new administrative rule, EWEB's interests are better protected by the City's management of the right-of-way.

Vice President Smith inquired as to whether EWEB staff has been shown a cost of service analysis. Mr. Helgeson said he was confident that the City had engaged in some process by which it determined the new fees. He said staff can raise the issue in its next discussion with City representatives.

Commissioner Osanka said he wanted the Board to authorize a letter from EWEB to the City protesting the fee changes. Stating her opinion that the Board currently lacked sufficient information to write a protest letter, Vice President Smith suggested that she and President Anderson express to the Council Committee on Telecommunications EWEB's lack of understanding regarding the amount of the fees in relation to the actual costs incurred by the City.

Commissioner Bishop argued that by taking no action, the Board is essentially condoning the new fee. She said she thinks the fee change is nonsensical given the "publicness" of both entities. President Anderson suggested that Mr. Berggren sign a letter to the City requesting an itemized list of the costs related to the new fee. Noting that she would like to communicate with the City Council concerning this issue, Commissioner Bishop suggested that by October 21 staff draft and Mr. Berggren sign a carefully worded letter to City Council stating that EWEB does not understand the fee change and requesting that Council delay implementation of the final rule until the matter has been fully negotiated.

President Anderson said she would like to brainstorm items for which EWEB receives no reimbursement from the City. Mr. Berggren suggested that President Anderson contact Mayor Torrey regarding EWEB's desire to explore its relationship with the City. Commissioner Osanka suggested proposing to the Mayor that EWEB and the City schedule joint bi-yearly meetings.

Noting that she will make a motion during the October 21 Board Meeting that the Board send to City Council a letter opposing the new right-of-way fee structure, Commissioner Bishop invited staff to begin drafting such a letter.

1998/1999 WORK PLAN AND DISCUSSION

Referring to an October 2 memorandum included in the meeting agenda packet, Fiscal Services Supervisor Dick Varner distributed and reviewed budget and work plan packets. He requested that Commissioners review the document and identify areas for which they want additional information. Mr. Varner said that beginning October 15, staff will begin meeting with individual Commissioners to review their questions and comments regarding the budget.

ITEMS FROM BOARD MEMBERS

Commissioner Bishop reported that she recently met with Water Management and took a tour of the meter shop. She said EWEB is testing the life spans of a number of different meters through an accelerated aging process. Referring to a memorandum from Dale Kessinger that was included in the meeting agenda packet, Commissioner Bishop said the recent change issued by PGE with regard to its conditions for allowing public-owned utilities to compete in the provision of electric services may be of interest to EWEB.

The meeting adjourned at 10 p.m.