Board Members present: Dorothy Anderson, Sandra Bishop, Mike Dyer, Jeff Osanka (after 6 p.m.), and Susie Smith.
Others present: Garry Kunkel, Gale Banry, Ken Beeson, Mel Damewood, Marty Douglass, Dick Helgeson, Everett Jordan, Dave Koski, Roseanna McArthur, Mat Northway, Jim Origliosso, Dick Varner, and Krista Hince of the EWEB staff; and Kim Kunkel, Minutes Recorder.
President Anderson called the meeting to order.
Acting in the absence of General Manager Randy Berggren, Garry Kunkel, Electric Division Director, prefaced the work session by noting that it was the last scheduled formal review of the 1998/99 Work Plan and Budget. He said a public hearing on the Work Plan and Budget is scheduled for December 2 and adoption is scheduled for December 16.
1998/99 WORK PLAN AND BUDGET
A. Water Division
Referring to a the 1998 Budget Summary and a series of overheads, copies of which were distributed to the Board, Water Division Director Dick Helgeson said this presentation would include separate reviews of the operating and capital sides of the proposed Water Division budget.
Water Division Director Dick Helgeson presented a breakdown of the Water Division budget according to function and reviewed the following cost increase drivers:
Mr. Helgeson said the above factors were the primary contributors to the $562,000 increase over last year in the Water Division Budget.
Referring to the 1998 Budget Summary, Mr. Helgeson reviewed the Water Division budget specific to the following program areas:
Commissioner Osanka inquired as to the rationale for moving the Construction Services program into the Water Division. Noting that Construction Services was part of the Water Division five years ago, Mr. Helgeson said the goal of the transfer was a to establish synergy between the programs and eliminate duplication of services. Commissioner Osanka inquired as to the cost of the transfer. Mr. Helgeson said the transfer resulted in a $40,000 increase in the training budget; however, corresponding reductions prevent the transfer from impacting the net revenue of the Water Division. Mr. Varner clarified that the transfer has no impact on EWEB rates.
Commissioner Dyer questioned whether 14 percent accurately represents the Water Utility's contribution to EWEB headquarters costs. Mr. Varner responded that after the bonds are paid off, in 2,011, the Water Division will pay only its pro rata share of the organization's costs. He noted that staff is in the process of determining what portion of the headquarters costs to charge the Water and Electric Divisions respectively. Mr. Helgeson said staff will look into the issue of cost allocation.
With regard to new Environmental Protection Agency requirements pertaining to the provision of water quality information to customers, President Anderson inquired as to whether the watershed monitoring system would address those requirements. Mr. Helgeson said the new requirements are unique to the filtration plant which must conduct specific sampling to demonstrate that certain microbes, such as giardia, are not in the source water and that the filtration plant is capable of eliminating them.
Commissioner Osanka inquired as to the revenue increases associated with providing service to Hyundai. Mr. Varner responded that Hyundai will provide EWEB with approximately $670,000 in additional revenue and result in no more than $100,000 in incremental expenses. Noting that staff can provide the Board with more information regarding this matter, Mr. Helgeson said the revenues gained will far outweigh the incremental costs EWEB will incur as the result of providing service to Hyundai.
Referring to the Water Division Five-Year Capital Plan, copies of which were distributed to the Board, Water Engineering Supervisor Mel Damewood reviewed a prioritized list of rate-subsidized capital plan projects.
Mr. Damewood said the Water Division Five-Year Capital Plan includes the following categories:
Noting that the Water Division is seeking ways to decrease the amount of its rate increase, Commissioner Osanka inquired as to the consequence of delaying the pump station design projects until next year. Mr. Damewood responded that because the pump stations are old and dilapidated, delaying the projects would present a risk that the pump stations might break down.
Referring to an overhead display, Mr. Damewood reviewed pie graphs depicting the distribution of
B. Electric Division
Electric Division Director Garry Kunkel presented a brief overview of the 1998/1999 budget, noting that the 1997 estimated Operating & Maintenance budget was $73.1 million and the 1998 estimated Operating & Maintenance budget is $98.6 million. Mr. Kunkel said the three major drivers of the Electric Division budget are
Referring to the 1998 Budget Summary of the Electric Division, Mr. Kunkel reviewed and described a number of non-labor related budget items.
Everett Jordan, Generation Mangaer, presented a brief overview of the Electric Division Generation Program budget, noting that the 1998 budget presents no significant changes from the 1997 budget.
Dave Koski, Electric Department Manager, reviewed the Electric Division Distribution Program budget, noting that the 1998 budget reflects a net decrease from the 1997 budget.
Mat Northway, Energy Management Services Manager, presented a brief overview of the Electric Division Demand-Side Management (DSM) Program budget and reviewed the program's projects. Referring to an overhead display, Mr. Northway laid the 1998 budget over two DSM Resource Options charts depicting both the percent of revenue spent on DSM and the number of new customers served each year. He said it is his belief that the Electric Division will successfully maintain its current customer participation rate.
Referring to a memorandum from Jim Origliosso concerning the Electric Division's cash surplus, Commissioner Dyer suggested it was worthwhile to discuss EWEB's options regarding the matter. He expressed support for issuing to EWEB customers a credit or rebate.
Vice President Smith expressed interest in discussing the issue of a water rate increase and its administrative budget implications. She said that to the extent the Water Division budget is driven, in part, by EWEB's overall costs, a discussion of the cost splits in joint administrative costs is appropriate. Commissioner Osanka expressed support for discussing the issues raised by Commissioner Dyer and Vice President Smith.
The Board agreed to conduct an additional work session on November 26 at 11:30 a.m.
The meeting adjourned at 8:20 p.m.