Board Members present: Susie Smith, Jeff Osanka, Mike Dyer, Sandra Bishop, and Dorothy Anderson.
Others present: Randy Berggren, Cathy Bloom, Tom Buckhouse, Eric Hiaasen, Krista Hince, Garry Kunkel, Jim Maloney, John Mitchell, Mark Oberle, Jim Origliosso, Scott Spettel, Dick Varner, and Debra Wright of the EWEB staff; and Kim Kunkel, Minutes Recorder.
President Smith called the meeting to order.
OURCA POST-2000 POWER PURCHASE/INTEGRATED RESOURCE PLAN
Referring to a memorandum included in the meeting agenda packet, Resource Planning Analyst Jim Maloney said this work session was scheduled in response to a Board request for more "context" in which to consider the Oregon Utilities Resources Cooperative Association (OURCA) proposal. He said the work session agenda would include:
Mr. Maloney presented a brief overview of Board decisions made during the September 2 work session concerning the OURCA proposal, noting that Commissioners' suggestions were incorporated in updated versions of the six draft Policy Premises and three draft Fundamental Questions the IERP Will Address included in the aforementioned memorandum.
Referring to the revised Policy Premises, Vice President Osanka suggested reordering the items. Commissioner Dyer requested that the items be reordered such that item six becomes item one.
Mr. Maloney said that because of the nature and magnitudes of the uncertainties being faced, staff has proposed testing resource strategy options against alternative versions of the future (industry structure, market power prices, environmental regulations, etc.) via a scenarios analysis. A diagram illustrating how the results of the analysis could be assessed with respect to the policy objectives and other criteria was attached to the memorandum.
Referring to a series of overhead displays, Energy Resource and Planning Manager Scott Spettel presented a brief overview of a number of contingencies that have a bearing on the OURCA proposal decision, including Bonneville Power Administration's (BPA's) proposal to begin selling power to non-preference customers prior to 2000 if it has substantial unsold power.
With respect to the aforementioned proposal by BPA, Resource Planning Analyst Eric Hiaasen presented an overview of a memorandum highlighting those decisions made by BPA that will limit some of EWEB's post-2001 choices. He said these decisions include
He said these and other decisions made by BPA with respect to the subscription process raise the question of whether a subscription product will be available for EWEB.
Commissioner Bishop inquired as to whether entering into the OURCA contract will impact EWEB in terms of future determinations of stranded cost liability. Mr. Spettel responded that regardless of whether EWEB enters into this specific contract, the utility will be impacted by future determinations of stranded cost liability related to its power purchases in general.
Mr. Spettel reviewed several quotes for undelivered power as of March 3, 1998, noting that many entities refused to provide quotes relative to market prices for OURCA-similar products. Mr. Spettel observed that the BPA offer seemed affordable.
Vice President Osanka inquired as to whether the term "affordability" referred to the current or possible future product cost. Referring to an illustrative forecast of future prices, Mr. Spettel said that relative to EWEB's "medium" expectation, the BPA price offer is low.
President Smith inquired as to whether staff had insight into the possible relationship between BPA's price offer and an assumption on its part that public purposes are no longer a factor. General Manager Randy Berggren responded that by asking BPA to support public purposes while at the same time entering into a contract for lower-priced power, EWEB may be sending a mixed message to BPA. Mr. Hiaasen noted that the OURCA product is priced at the pre-cost-reduction level.
Vice President Osanka requested printed material regarding impact on prices.
Commissioner Dyer inquired as to whether there are reasons EWEB should not purchase the OURCA product. Mr. Spettel responded that due to the uncertainty of EWEB's power sales for the years 2001-2006, it is imperative that the OURCA product be resalable and competitive with power available on the market in the event EWEB's sales are substantially less than forecasted. Mr. Berggren noted that an additional reason to not purchase the OURCA product is that BPA may not be a partner of choice, given its past performance with respect to contracts as well as its position concerning public purposes.
President Smith said she supports participating in the OURCA purchase and thinks there is value in "hedging" a future risk.
Commissioner Anderson requested that during a future meeting the Board discuss its concerns regarding BPA as an organization and the relationship between BPA and EWEB.
The Commissioners expressed collective support for staff moving forward with the purchase of up to 25 megawatts of the OURCA product. Mr. Spettel said he would request Board approval of the purchase during that evening's Board Meeting.
The meeting adjourned at 7:20 p.m.