Board Members present: Dorothy Anderson, Susie Smith, Jeff Osanka, Mike Dyer, and Sandra Bishop.
Others present: Randy Berggren, Manda Bednarczyk, Cathy Bloom, Tom Buckhouse, Marty Douglass, Cathy Hamilton, Dick Helgeson, Dale Kessinger, Garry Kunkel, Roseanna McArthur, Kris Middlewood, Jim Origliosso, Scott Spettel, Dick Varner, John Yanov, and Krista Hince of the EWEB staff; Mark Rauch, member of the public; and Kim Kunkel, minutes recorder.
President Anderson called the meeting to order. Mr. Berggren requested that Dale Kessinger present a brief overview of the EWEB Open Access Transmission Tariff, formal discussion of which was deferred from the preceding Work Session to the January 6 Work Session.
EWEB OPEN ACCESS TRANSMISSION TARIFF
Referring to a memorandum included in the meeting agenda packet, Senior Rate/Financial Analyst Dale Kessinger presented background information and discussed the purpose of EWEB's proposed Open Access Transmission Tariff.
Mr. Kessinger explained that many customer-owned utilities are developing transmission tariffs because of pressure from existing or potential customers, regional transmission groups, rival utilities relying on the "reciprocity" dictates of FERC Order 888, or simply in anticipation of requests for wholesale wheeling at some point in the near future. He said EWEB's purpose in preparing a transmission tariff falls in the latter categories: to accommodate its participation in regional transmission groups and in anticipation of a request for service by other area utilities.
Mr. Kessinger stated that although EWEB is exempt from the open access filing requirements of FERC Orders 888 and 888-A, it is obligated under the NRTA and WRTA Governing Agreements to honor requests from other NRTA/WRTA members for transmission service and, within 120 days of such a request for service, to either have in place a tariff regulating the provision of transmission services or obtain an exemption from NRTA and/or WRTA.
Mr. Kessinger said that during the January 6 Work Session, he will review specific components of the tariff and the tariff schedule.
MINUTES
The Commissioners reviewed the minutes of the November 18, 1997, Session and Special Board Meeting, and the deferred minutes that were submitted in the meeting agenda packet of the November 4, 1997, Work Session and Regular Board Meeting, the November 13, 1997, Work Session, and the November 14, 1997, Work Session.
Referring to the final paragraph on page 3 of the November 18 Work Session minutes, Vice President Smith requested that sentence 2 be amended to read "She said that to the extent the Water Division budget is driven, in part, by EWEB overall costs, a discussion of the cost splits in joint administrative costs is appropriate."
Referring to paragraph 2 on page 2 of the November 18 Special Board Meeting minutes, Commissioner Osanka requested that sentence 2 be amended to read "Commissioner Osanka said he did not support staff's proposed letter which stated that the Board was satisfied with the response to the letter in question."
Referring to page 6 of the November 18 Special Board Meeting minutes, President Anderson requested that paragraph 1 be amended to read "President Anderson reported that she participated in the recent McKenzie Watershed Council Water Quality Forum, noting that an edited videotape of the event will likely be made available."
Vice President Smith moved, seconded by Commissioner Osanka, to approve the minutes of the November 18, 1997, Work Session and Special Board Meeting, the November 4, 1997, Work Session and Regular Board Meeting, the November 13, 1997, Work Session, and the November 14, 1997, Work Session, as amended. The motion passed unanimously.
CORRESPONDENCE
General Manager Randy Berggren reported that the December 5 EWEB Child Development Center silent auction was a success, earning just under its $5,000 goal.
Mr. Berggren reviewed draft agendas for the January 6, 1998, Work Session and Regular Board Meeting.
1998/1999 BUDGET AND WORK PLAN
Referring to a memorandum and attached 1998 Budget Proposal included in the meeting agenda packet, Mr. Varner presented a brief overview of proposed budgets for the Electric, Water, Steam Divisions and Labor & Benefits.
Referring to the discovery of an error in the budget system where an estimated $430,000 in expenditure items were getting summarized in the reports distributed to management and the Board, Commissioner Osanka inquired as to the impact this discovery, and the resulting changes to the Electric Capital and Water Operating budgets, has on the public hearing process. Mr. Varner responded that EWEB is under no legal obligation to conduct public hearings concerning its budget.
Commissioner Osanka clarified that Board approval of the budget does not commit the Board to approve the water rate increase assumed in the budget, but rather triggers staff to present to the Board a rate increase proposal. Mr. Varner said that is correct. Commissioner Osanka said it was his understanding that the rate increase proposal will include an identification of those items that will be cut if the Board opposes the increase or reduces the amount of the increase. Mr. Varner said such information could be included in the proposal at the request of the Board. Commissioner Osanka offered to make a motion to that effect.
President Anderson suggested the Board address such specifics after it learns whether EWEB will collect additional revenue sufficient to offset a rate increase. Vice President Smith said she was comfortable with the budget and expressed opposition to expending staff time on this matter.
Commissioner Osanka said he was willing to proceed with consideration of the budget, with the understanding that he thinks the proposed water rate increase is too high.
PUBLIC HEARING
President Anderson opened the public hearing.
Commissioner Osanka forwarded comments from constituent Carol Berg, 2200 Augusta Street, who perceived a link between two news reports televised that evening. The first report concerned EWEB's consideration of a water rate increase and the second report concerned a fatal bicycle/log truck accident on 79th Street which involved a 12 year-old Springfield boy whose mother had moved to the unfamiliar neighborhood because she was unable to pay the family's utility bills. Ms. Berg said she felt utilities need to be sensitive to the fact that people may be put out of their homes due to their inability to pay bills.
Having determined that no one else wished to speak, President Anderson closed the public hearing
1998/1999 BUDGET AND WORK PLAN
Commissioner Bishop moved, seconded by Commissioner Osanka, that the Board amend the 1998 budget by reinserting the $24,800 cut from the public affairs budget.
Commissioner Bishop said she made the above motion because she was uncomfortable with the process the Board used to make cuts in the Public Affairs budget. She requested that at the beginning of the new year, the Board address the issue of process and discuss the level at which the Board may be involved in individual departments.
Vice President Smith clarified that cuts were not made in the Public Affairs budget, but rather a $24,800 reduction to a proposed $75,000 budget increase. Vice President Smith proposed that for the upcoming budget, the Board define what is acceptable in terms of departmental budget increases. She expressed her opinion that it is within the purview of the Board to scrutinize a proposed increase of that magnitude. Vice President Smith said she would oppose the motion.
Noting that he would oppose the motion as well, Commissioner Dyer agreed with Vice President Smith's opinion that although the process was imperfect, it is within the purview of the Board to scrutinize significant increases proposed by departments.
Commissioner Osanka said he shared Commissioner Bishop's opposition to the process, given that no formal Board action was taken and yet the decrease appeared in the budget; however, while he opposes the process used, he supports the decrease to the proposed increase.
Commissioner Osanka proposed the following amendment to the original motion: that the Board not re-insert the $24,800 cut from the Public Affairs budget, but rather acknowledge that the process was flawed and commit to review it in early-1998. Commissioner Bishop opposed the proposed amendment.
Commissioner Bishop said she would accept the following friendly amendment to her original motion: that the 1998 budget continue to reflect a $24,800 reduction to the proposed increase to the Public Affairs budget; the specific areas of reduction be eliminated; and that the Public Affairs department determine the reductions that will be made.
The original motion failed, 3:2, with Commissioners Osanka and Bishop voting in support.
Commissioner Osanka explained that he voted "yes" as a statement of opposition to the process used to make the reductions.
Vice President Smith moved, seconded by Commissioner Osanka, to approve the 1998 Work Plan and Budget, as submitted in the document dated December 16, 1997. The motion passed unanimously.
Commissioner Osanka said his "yes" vote assumes that the water rate increase assumed in the budget is merely a proposal that is subject to public comment and consideration by the Board. He reiterated his opinion that the proposed water rate increase is too high and it is his hope that the Board will find a way to either reduce or eliminate the proposed increase prior to the rate process. Commissioner Osanka said he opposes including a subsidy for builders of low-income housing approved as part of the Systems Development Charge vote in December of 1996, and would like the Board to discuss the possibility of an electric rate decrease that would make a water rate increase more palatable.
WEYCO RATE CHANGES PURSUANT TO 1995 CONTRACT
Referring to a memorandum included in the meeting agenda packet, Senior Rate/Financial Analyst John Yanov requested Board approval of a rates proposal designed to reduce WEYCO bills by $1,506,000, effective January 1, 1998. Mr. Yanov noted that as the capability for segregating cost elements on customer bills emerges through the new Banner system, staff recommends that the Board reserve the right to perform a similar segregation of the Weyerhaeuser bill.
Vice President Smith moved, seconded by Commissioner Dyer, to approve the proposed WEYCO rate changes pursuant to the 1995 contract.
Commissioner Osanka inquired as to the effect of the proposed rate changes on other rate classes. Mr. Yanov said the requested Board action will have no impact on other rate classes.
The motion passed unanimously.
(The Commissioners took a short break)
COST MANAGEMENT STRATEGIES REVIEW
Referring to a memorandum included in the meeting agenda packet, EWEB Treasurer Jim Origliosso said that in response to Board direction, staff developed three customer rebate alternatives and calculated average rebates for different customer classes. Mr. Origliosso reviewed the proposed alternatives (Amount rebated = $1.5 million, $3 million, and $4.5 million) and their corresponding rebates, noting that there is some logic in supporting the $1.5 million rebate. He said $1.5 million represents about the same amount of revenue that would be collected over two years by a water rate increase of 6 percent. He said the $4.5 million level is an estimate of the outside limit of funds available for rebate, and $3.0 million is obviously in the middle. He said the proposed alternatives assume no retroactivity, averaging of the residential rebate amount, and communication of the rebate via bill stuffers.
Referring to the estimated average rebate of $11 for residential customers under the $1.5 million rebate scenario, President Anderson said $11 is an insignificant amount of money to many people. She suggested considering an alternative that would allow these funds to be used to help customers who are truly low-income. Commissioner Osanka said $11 might seem significant to customers struggling to pay their bills.
Commissioner Bishop said she supported the idea of issuing customer rebates until she read Mr. Origliosso's memorandum and realized that due to tremendous turnover in service connections and disconnections, there is no easy or inexpensive way to return the money to the customers to which it is owed. As such, the rebate would not be equitable. In addition, Commissioner Bishop said she has polled people in an attempt to gage the public perception of rebates in general and many people said receiving a rebate is upsetting because it indicates that they have been overcharged. Further, Commissioner Bishop said she does not think bill stuffers are an adequate means of communication by which to explain why the rebate was issued. Commissioner Bishop added that the cost of delivering the rebate in an equitable manner, locating the customers who paid the money, will be extremely expensive. Additionally, she said implementing the rebate will result in delaying the implementation of the Banner software system. She said this is an unacceptable alternative. Finally, Commissioner Bishop suggested that rather than expending time and resources designing a rebate, the Board reconsider the October 29 memorandum which proposes ways to invest the cash surplus to the benefit of EWEB's customers.
Vice President Smith conceded that while she likes the idea of a rebate, it does seem impractical. She said she was prepared to consider alternatives such as low-income assistance and those proposed in the October 29 memorandum.
Commissioner Dyer said he thinks the cash surplus belongs to the rate payers and should be returned to the rate payers. He said he would like to continue pursuing the idea of a rebate, perhaps in conjunction with another alternative.
Commissioner Osanka moved, seconded by Commissioner Bishop, that the Board instruct staff to go forward with the rebate proposal.
Stating that Board discussion was needed prior to issuing direction to staff, Commissioner Bishop withdrew her second to the motion.
Mr. Berggren said discussion of the October 29 memorandum will be included on the agenda of an upcoming Board meeting.
Vice President Smith moved to table discussion of the proposed customer rebate. The motion passed, 4:1, with Commissioner Osanka opposed.
ITEMS FROM BOARD MEMBERS
Commissioner Bishop announced that she attended a recent PPC meeting at which Mr. Berggren was presented an award for the best quote of the year for his response to whether he was interested in the lead job at the Bonneville Power Administration.
Commissioner Dyer reported that in working to develop a supplemental retirement plan for Mr. Berggren, he and Commissioner Bishop have engaged the services of Craig Smith, a lawyer specializing in such plans.
The meeting adjourned at 10:08 p.m.