Board Members present: Susie Smith, Jeff Osanka, Mike Dyer, Sandra Bishop, and Dorothy Anderson.
Others present: Randy Berggren, Gale Banry, Manda Bednarczyck, Ken Beeson, Tom Buckhouse, Marty Douglass, Paula Fleitel, Cathy Hamilton, Everett Jordan, Garry Kunkel, Roseanna McArthur, John Mitchel, Mat Northway, Jim Origliosso, Debra Wright, and Krista Hince of the EWEB staff; Peter Bartel, member of the public; and Kim Kunkel, Minutes Recorder.
President Smith called the meeting to order.
AGENDA CHECK
Referring to agenda item 7, General Manager's Contract Review, Vice President Osanka stated his opposition to taking Board action during a meeting in which initial discussion of an issue takes place. President Smith suggested including in the agenda discussion of Vice President Osanka's concern.
President Smith determined there was Board consensus to approve the agenda, as amended.
ITEMS FROM BOARD MEMBERS
With regard to the Board's decision, made during a subsequent meeting, to authorize staff to proceed with intervening in the FERC lawsuit, Vice President Osanka recalled his request that staff return to the Board prepared to discuss the specific points in which EWEB would intervene. He recalled that the Board was to then take action on each specific point of intervention. Vice President Osanka stressed that such a discussion and action must occur during a public meeting of the Board.
Commissioner Bishop announced that Commissioner Anderson was recently awarded the City Club's "Turtle Award" for "sticking out her neck" in service to the community.
Vice President Osanka requested that the Board take action on the issue he raised above.
Vice President Osanka moved that the Board, as interveners in the FERC lawsuit and in accordance with its discussion at the time it issued direction to staff, proceed to review and formally decide whether it will intervene on specific points. The motion died for lack of a second.
Commissioner Bishop stated that she was impressed by the quality of EWEB's annual report which was developed in-house. Commissioner Bishop reported that she had attended a neighborhood meeting during which Ken Beeson gave an impressive presentation on EWEB's Telecommunications Project.
MINUTES
The Commissioners reviewed the minutes of the June 2, 1998, Work Session and Regular Board Meeting.
Referring to pages 2 and 3 of the Work Session minutes, President Smith requested that the "strategies" proposed by staff and Commissioners be referred to as "potential future scenarios."
Referring to paragraph 1 on page 5 of the Regular Board Meeting minutes, President Smith requested that sentence 1 be amended to read "Noting that the smallest proposed allocation was for low-income assistance, Commissioner Bishop stressed that EWEB should look beyond direct financial costs and savings when considering the value of its investments."
Referring to paragraph 5 of the Regular Board Meeting minutes, President Smith requested that sentence 1 be amended to read "President Smith proposed that EWEB's remaining $6 million in accumulated assets be allocated as follows: 1) $1 million into renewables fund; 2) investment in low-income assistance (e.g. education, weatherization grants). . ."
Vice President Osanka moved, seconded by Commissioner Bishop, to approve the minutes of the June 2, 1998, Work Session and Regular Board Meeting. The motion passed, 4:0; with Commissioner Dyer abstaining.
CORRESPONDENCE
General Manager Randy Berggren reminded Commissioners of the Special Work Session scheduled for June 23.
Mr. Berggren reviewed draft agendas for the June 23 Special Work Session and July 7 Work Session and Regular Board Meeting.
PUBLIC INPUT
There was no public input.
REVIEW OF GENERAL/SPECIAL LEGAL SERVICES
Mr. Berggren introduced this topic, noting that it was included as an agenda item in response to a request for information issued by Commissioner Bishop during the March Board Retreat.
Referring to a memorandum included in the meeting agenda packet, EWEB Risk Manager Debra Wright explained that although it is customary for the EWEB Board to periodically review the services of its consultants, service providers, and outside professionals, this has not been the Board's practice with regard to legal counsel.
Ms. Wright stated that the Board's current legal counsel has provided continuity which has spanned several administrations. She said the issue of relicensing illustrates the value of this continuity.
With regard to a public agency using private consultants on a long-term basis, President Smith explained that her concern is whether EWEB is acting as "good guardians" of the public process by conducting periodic reviews of competitive proposals.
Vice President Osanka stated that he shared President Smith's concern. He said EWEB should address the issue of whether EWEB's legal counsel have conflicts of interest. He said EWEB should inquire as to the identity of other clients served by Cable and Calkins. Mr. Berggren stated that attorneys must declare to their clients all conflicts of interest. Mr. Berggren said he was unaware of any such declaration ever having been made by EWEB's legal counsel.
President Smith said she would prefer that EWEB make an overt decision to continue retaining its current legal counsel based on the value of the aforementioned continuity.
Commissioner Bishop clarified that her questions concerning EWEB's legal counsel, raised during the March retreat, stemmed from her desire to address the public concern that a practice within a public agency such as EWEB is on "auto pilot" due to a lack of periodic review. She said that without a periodic review, EWEB is unaware of the availability of comparable services at competitive prices. Commissioner Bishop acknowledged that a periodic review process might result in EWEB retaining its current legal counsel.
Commissioner Dyer said that due to time it would take for new legal services contractors to become educated regarding the issues facing EWEB, barring the presence of a serious problem involving the utility's current legal counsel, he was hesitant to consider a change in these services. Commissioner Dyer stated that historically, his concern has been whether EWEB should hire in-house legal counsel or contract out for legal services. He suggested that an in-house "gate keeper" could determine whether internal or external legal services were needed
Commissioner Bishop reiterated her earlier statement that conducting an open review process may result in no change to EWEB's current legal services. She expressed support for a formal review process, such as a Request For Proposals. Commissioner Bishop explained that she is uneasy about the "old boys networking" feel that accompanies this type of contracting.
Mr. Berggren stated that staff could develop a Request For Proposals process and criteria that would speak to critical issues such as continuity of relationship. He said this would be done not as a challenge to the competency of EWEB's current legal counsel, but rather as a matter of process.
Noting that the EWEB Board is a contract review board, President Smith said there are situations in which the Board exempts itself from processes such as formal review due to findings associated with criteria that are linked to EWEB's organizational need to effectively meet the needs of its customers. She said the matter at hand is an example of such a situation. Noting that EWEB is clearly benefitting from the expertise of its current legal counsel, President Smith suggested that the utility be candid with the public by stating that for a variety of reasons, all of which would be developed as criteria for an RFP process, EWEB is electing to maintain its contractual relationship with its current legal counsel.
Commissioner Bishop requested that staff provide information regarding EWEB's legal services contracts outside of General and Special Counsel.
GENERAL MANAGER'S CONTRACT REVIEW
Commissioner Dyer explained that the proposed supplemental retirement plan for EWEB's General Manager, developed by Commissioner Bishop and him, was the result of a discussion that took place last fall during a Board review of Mr. Berggren's compensation. Commissioner Dyer recalled that, based on his notion that Mr. Berggren's salary was significantly below market, he had suggested that the Board develop a vehicle by which to compensate Mr. Berggren for the difference between his actual salary and market value.
Referring to information compiled by EWEB Compensation Plan Consultant Chris Cardwell that was utilized in the development of the proposed supplemental retirement plan, Commissioner Dyer explained that Mr. Berggren's market value is in the $140,000-$155,000 per year range. He said that based on a market value of $150,000, Mr. Berggren's current annual salary of $115,000 is $35,000 below market. Commissioner Dyer stated that it is politically unfeasible to raise Mr. Berggren's salary to market level at this time; however, because it appears to be agreed among a majority of the Board that Mr. Berggren's continued presence at EWEB is critical to the utility's ability to remain competitive, Commissioner Bishop and him are proposing a supplemental retirement plan based on a $35,000 shortfall over the next 8 years. He said the plan binds Mr. Berggren to remain EWEB's General Manager through January 1, 2006.
Commissioner Dyer presented a brief overview of the proposed supplemental retirement plan, classifying it as a "non-qualified deferred compensation for a public agency." With regard to how the plan will be accounted for in EWEB's budget, Commissioner Dyer explained that it will appear as a liability beginning January, 1998. Beginning January, 1998, and repeated every January through 2006, $35,000 plus 8 percent will be added to the "account." Mr. Berggren will become "vested" if he remains with the utility through January 1, 2006 or becomes deceased. In the event Mr. Berggren is terminated from his position as General Manger for reasons other than "just cause," he will receive the amount that is in the account at that time.
Commissioner Bishop added that from her perspective, a driving factor for developing this plan was that EWEB is entering an uncertain future due to deregulation. She said development of this plan is her attempt to control some of the uncertainty by ensuring that EWEB will continue to be managed soundly. She said she views the supplemental retirement plan as a business investment.
Vice President Osanka stated that when the Board establishes the salary of the General Manager, it utilizes an list of names and salaries of local individuals in similar occupations. He said he does not see from where the numbers reflected in the proposed supplemental retirement plan are derived. Vice President Osanka said he assumed the numbers used to develop this plan are based on national rather than local salaries. He stated that the Board has traditionally used northwest and, when possible, Lane County figures as a basis for comparing General Manager salaries.
Commissioner Dyer stressed that for a position such as Mr. Berggren's, the national market must be considered. He said the Board considered the salaries of local General Managers and Chief Executive Officers when establishing Mr. Berggren's salary for the purpose of political expediency. He said those local figures do not represent Mr. Berggren's actual market value; however, the proposed supplemental retirement plan does.
Vice President Osanka argued that approving the proposed plan would, in effect, shelter from public discourse the matter of Mr. Berggren's true salary. He said that rather than proposing a change to Mr. Berggren's salary and inviting public comment, the Board is increasing Mr. Berggren's salary in this manner. Commissioner Bishop noted that the proposal was prominently featured in the Register-Guard. She suggested that if members of the public were concerned about the proposal, they would be present that evening to offer comment.
With regard to the 8 percent interest that will be accrued as part of the proposed plan, Vice President Osanka suggested that it be clearly listed in the package as an expense. In addition, Vice President Osanka stated that to provide the public with an understanding of the General Manager's full compensation, the plan should include documentation of Mr. Berggren's present compensation, including salary and all benefits. He inquired as to why such information was not included as part of the plan. Commissioner Dyer responded that such information was irrelevant to the proposed plan. Commissioner Bishop stressed that the proposed plan is not part of Mr. Berggren's employment contract, but rather a separate, supplemental legal document.
Commissioner Anderson expressed appreciation for Commissioner Dyer's and Bishop's efforts. She said the proposed supplemental retirement plan is an enormous benefit to EWEB in terms of the security it provides the utility and its customers.
Commissioner Anderson moved, seconded by Commissioner Bishop, to approve the proposed Supplemental Retirement Plan for EWEB's General Manager.
Vice President Osanka stated that he was troubled by Commissioner Dyer's earlier statement suggesting it was politically unfeasible to raise Mr. Berggren's salary at this time, and that the process of comparing local General Manger and CEO salaries was used only for the purpose of expediency. Vice President Osanka stated that his constituents commonly express concern regarding the high salaries paid by EWEB. He said this proposal adds fuel to that existing fire.
Commissioner Bishop clarified that the proposed supplemental retirement plan does not raise the salary of EWEB's General Manager. She stressed that it is a supplement to Mr. Berggren's retirement plan.
Vice President Osanka reiterated his contention that the proposed supplemental retirement plan increases Mr. Berggren's compensation.
Commissioner Anderson called the question.
The motion passed, 4:1; with Vice President Osanka opposed.
President Smith expressed appreciation for Commissioner Dyer's and Bishop's efforts.
WIND POWER MARKETING PROGRAM UPDATE
Energy Management Services Manager Mat Northway reported that EWEB's Wind Power Marketing Program project, which will market power from the Wyoming Wind Power Project, is proceeding as scheduled.
Mr. Northway reported that in April EWEB conducted three focus groups to solicit feedback from customers regarding their willingness to support renewable energy. He said highlights of the focus groups included:
Mr. Northway stated that based on past surveys and information gained during the aforementioned focus groups, on June 3, EWEB staff hosted a customer open-house designed to convey the benefits of wind power as an energy resource product and explain the purchase options available to residential customers.
Mr. Northway said staff is currently working on EWEB's wind power marketing plan. He said EWEB will conduct customer outreach and promotion its wind power product via bill stuffers and various facets of the media. He say EWEB may spend $80,000 on outreach and promotion during the first year of its marketing effort.
President Smith suggested that rather than spending $80,000 during the first year, staff consider phasing in its marketing efforts. She said a methodical approach would provide a measure of customers' responses to EWEB's marketing approach and reveal what is effective in terms of promoting this product.
Vice President Osanka said EWEB may want to consider a secondary marketing plan that dedicates invested funds to the purchase of additional wind turbines.
The meeting adjourned at 9:20 p.m.