Board Members present: Jeff Osanka, Mike Dyer, Sandra Bishop, and Dorothy Anderson. President Smith was excused.
Others present: Randy Berggren, Dick Helgeson, Garry Kunkel, Jim Origliosso, Tom Buckhouse, Marty Douglass, Cathy Hamilton and Lamonte Smith of the EWEB staff; Tonie Nathan and Peter Bartel, members of the public and Kim Kunkel, City of Eugene Minutes Recorder.
In the absence of President Smith, Vice President Osanka called the meeting to order.
STRATEGIC APPLICATION OF ACCUMULATED ASSETS
Referring to a memorandum included in the meeting agenda packet, EWEB Treasurer Jim Origliosso stated that over the last several months, the Board has heard information about uses for approximately $9 million of accumulated cash in the Electric Utility. He recalled that the major topics presented to the Board were
Mr. Origliosso said the purpose of this Work Session was to summarize the discussion, generate several policy choices and evaluation criteria, analyze the policy choices, and develop some preliminary recommendations scheduled for Board consideration in June.
Mr. Origliosso presented a brief overview of how the Board Financial Policies and Operating Principles apply to the aforementioned application alternatives. He acknowledged that the judgement underlying the memorandum is that currently, with tax laws allowing EWEB to issue tax-exempt debt at a good rate, staff cannot make a sound argument in favor of using cash over debt to fund the utility's investments.
Mr. Origliosso presented an overview of the following proposed policy choices (accumulated assets application alternatives):
Referring to and reviewing the analysis of the policy choices and related matrix included in the memorandum, Mr. Origliosso explained that a simplistic rating scale was applied which assigns a high, medium, low, or neutral value to each cell, depending on the degree of perceived financial and non-financial benefit. He said initial ratings were reviewed by the financial staff and adjusted based on their input.
Referring to the "light" ($3 million) and "heavy" ($5 million) employee medical trust options, Commissioner Anderson requested that staff create a hybrid alternative which has funding at $3 million in equity investments.
With regard to the low-income assistance alternative, Mr. Origliosso noted that attached to the memorandum was Chuck Dalton's description of what such an alternative might look like.
In response to discussion concerning the proposed structure of the low-income assistance alternative, Commissioner Dyer said it seems as though EWEB would have to set up an additional level of staff in order to assess customers' eligibility for the program and to monitor their progress. He inquired as to whether EWEB can legally contribute cash to Energy Share, noting his preference for having an existing entity manage the allocation of aid.
Commissioner Anderson stated that she would like to set aside funds while developing a more solid low-income assistance proposal. She said it is not enough to simply pay low-income customers' bills for them. Mr. Origliosso clarified that staff is not suggesting that the accumulated assets must be allocated immediately, but rather are seeking a resolution of intent to allocate given amounts to specific purposes. He said this will enable staff to begin designing programs which will be submitted to the Board for review and modification.
Commissioner Bishop stated allocating EWEB's accumulated assets to low-income assistance seems appropriate. She echoed Commissioner Anderson's comment that simply paying low-income customers' bills is not helpful. She said she believes an assistance program can be established that is non-coercive and allows low-income customers an opportunity to contribute to the community in exchange for clearing their overdue bills.
In response to Commissioner Dyer's suggestion that EWEB contribute to Energy Share, Commissioner Anderson stated that she wants to develop a program that will continue, through education and referrals to social service agencies, to assist low-income customers to pay their bills.
Vice President Osanka suggested that in order to be persuasive rather than coercive, EWEB might establish as a requirement for continuing to receive the benefits of the assistance program, reductions of a specific level in participating customers' bills. He said this approach not only goes beyond simply paying customers' bills, but is consistent with EWEB's mission of energy conservation as well.
With regard to the rate realignment alternative, Vice President Osanka stated that if a cost of service study reveals a cost difference resulting from the subsidization of one class by another, the subsidized class should have to bear the consequences. Vice President Osanka stated that to mitigate the consequences undercuts the issue and prevents customers from knowing the "true story."
With regard to the rate rebate option, Commissioner Dyer said that while he suggested and supports the idea of a rebate, the proposed one-time rebate of $900,000 is too low. He said he would support a rate rebate in the range of $3 million. Commissioner Dyer proposed the following allocation of the $9 million of accumulated funds:
Commissioner Dyer said he is opposed to funding the land conservation trust.
In response to Mr. Berggren's solicitation of Board direction, Commissioner Anderson said she views the employees medical trust options as risk management and is leaning toward the "heavy" ($5 million) option.
Commissioner Dyer said that although he does not view the employees medical trust as risk management, but rather "pay now or pay later," he agrees such an investment will mitigate future costs.
Commissioner Bishop said the option she most favors is the employees medical trust. She said that philosophically, it seems that rebating the accumulated assets in such small amounts, given the high administrative costs, would be an irresponsible mismanagement of funds.
In the interest of time, Mr. Berggren proposed sending out to the Board a worksheet designed to assess Commissioners' funding priorities.
Commissioner Dyer stressed that the accumulated assets collected by EWEB were paid by owners and rate payers and the most appropriate allocation is a rate rebate payable to all customers.
The meeting adjourned at 7:30 p.m.