Board Members present: Dorothy Anderson, Sandra Bishop, Mike Dyer, Jeff Osanka, and Susie Smith.
Others present: Randy Berggren, Shirley West, Dick Helgeson, Cathy Hamilton, Krista Hince, Garry Kunkel, Jim Origliosso, Scott Spettel, Ken Beeson of the EWEB staff; and Kim Kunkel, Minutes Recorder.
President Smith called the meeting to order.
AGENDA CHECK
Vice President Osanka requested that Correspondence be deferred until the end of the meeting to accommodate members of the public who were present for the public hearing.
President Smith determined there was consensus to approve the agenda, as amended.
ITEMS FROM BOARD MEMBERS
Vice President Osanka stated that the Lane Community College Board of Directors has decided to provide its Board members with laptop computers for use during meetings. He said the use of laptop computers will enable staff to send materials to Board members as requested during the course of a meeting and reduce paper use. Vice President Osanka suggested that EWEB consider making laptop computers available to Commissioners during Board Meetings.
Commissioner Anderson distributed copies of the McKenzie Watershed Council (MWC) Newsletter. Noting that the MWC will soon begin a macro-invertebrate study of the McKenzie River, Commissioner Anderson said she could provide a schedule of meetings to those interested in participating in the study. Commissioner Anderson stated that EWEB staff member Laurie Power has received the report stemming from a study of McKenzie River water quality that was conducted last year at the request of Senator Ron Wyden. She said the report is complementary toward the MWC and EWEB with regard to McKenzie River water quality.
MINUTES
The Commissioners reviewed the minutes of the July 7, 1998, Regular Board Meeting and the July 21, 1998, Work Session and Special Board Meeting.
Referring to the first line on page 5 of the July 7, 1998, Regular Board Meeting, Commissioner Bishop requested that the typographical error be corrected.
Referring to the attendance section of the July 21, 1998, Work Session minutes, Commissioner Bishop noted that her absence was excused.
Referring to page 3 of the July 21, 1998, Work Session minutes, Vice President Osanka requested that the following new paragraph be inserted between existing paragraphs 1 and 3: "Vice President Osanka stated his often-expressed position that there are sufficient qualified people in Lane County to fill all EWEB positions, and that he realized that was something that the General Manager has disagreed with in the past but that he still holds that as a position."
Referring to the first sentence in paragraph 1 on page 3 of the July 21, 1998, Special Board Meeting minutes, Vice President Osanka requested that "$150,000" be replaced with "$450,000."
Referring to page 4 of the July 21, 1998, Special Board Meeting minutes, Vice President Osanka requested that the following new paragraph be inserted between existing paragraphs 4 and 5: "Vice President Osanka inquired as to the size of the projected salary increases for those making over $80,000 under this plan. Ms. Meyers stated that some employees in that salary range would have increased pay of $10,000 to $15,000. Vice President Osanka asked how employees who make less than $40,000, and whose salaries are frozen, will feel when other employees making over $80,000 have a $10,000 to $15,000 increase. Ms. Meyers said that she would tell the employee that she was following Board policy."
Due to questions raised by Commissioner Anderson regarding the additional language proposed by Vice President Osanka, President Smith requested that the Board defer approval of the July 21, 1998, Special Board Meeting minutes pending a review of the audio tapes to clarify what was actually said during the discussion in question. (A subsequent review of the audio tape revealed that the following discussion took place:
Vice President Osanka: "What struck me was the current averages -- 87th percentile to the 25t h percentile for the $80,000 and up. Help me out in terms of the numbers. If the current -- say the $80,000 and up -- if the current average for our employees that are paid $80.000 and up is at the 25th percentile -- first, how fast would they be moving to the 55th percentile, and second, what would we be talking about -- what's the number for that class of persons at the 25th percentile and the 55th percentile broadly?"
Mr. Matcovich: Okay. To begin with, at the 55th percentile, you're going to have I would guess in the neighborhood of 15 to 20 employees who would be looking at some kind of a salary increase just to bring them up to range minimum. And from now on, one of our future (inaudible) decisions is how do we move people through the ranges. One of the team's assumptions at this point is that people who are low in the range would move at somewhat faster than the range in average would move, but it would probably take several years for someone to move from minimum to mid-point, even at an accelerated rate."
Vice President Osanka: "I guess I wasn't clear. What kind of salary increases, in terms of numbers of dollars would we be talking about for instance for the 15 or 20 that would have to have a salary increase to get to range minimum?"
Mr. Matcovich: "You're probably talking anywhere from, well in aggregate probably less than $100,000 total. For some positions that might be $10,000 or $15,000. For other positions, it might be a few hundred dollars."
Vice President Osanka: "So, then has there been any thought to -- because when we're red-lining some employees at the lower levels, to see some employees get -- some few perhaps -- get a $10,000 to $15,000 increase because of a new compensation plan seems like perhaps that might be something that would make some employees unhappy. Is there any mechanism that we might have to -- to put a curb on that -- on that -- that acceleration?"
Mr. Matcovich: "I think that your -- our assumption at this point is that you want to move to a market-anchored system, and our past practice has been that you would move people to the range minimum at the beginning and you pay whatever it takes to get them to the range minimum."
Ms. Meyers: "Jeff, what it sounds like to me is that if you take that position, you're kind of starting to put some caveats on exactly the decisions we make. And I think you need to be very clear and certain about the fact that at this point this Board has made a decision to have the market determine certain pay rates for certain positions. And to then make a decision, with all due respect, that you just made and then to top that off with some exceptions just is very inconsistent with the direction that this Board took.")
Referring to page 2 of the July 21, 1998, Special Board Meeting minutes, Vice President Osanka requested that paragraph 1 be amended to state "Vice President Osanka wanted to be sure that the minutes reflected that the reason that the Board had increased the General Manager's Supplemental pay proposal from $280,000 to $300,000 was in order to round it up to a nice even number."
Due to a question raised by Commissioner Dyer regarding the accuracy of the language proposed by Vice President Osanka, President Smith requested that the audio tape be reviewed to clarify what was actually said during the discussion in question. (A review of the audio tape of the June 16, 1998, Special Board Meeting revealed that Commissioner Dyer's actual statement was, as follows:
Commissioner Dyer: ". . .What I did, and what Sandra and I did, is we took $35,000 shortfall times eight years. That's $280,000. And we rounded it up to $300,000, and said basically that will be the value of this plan. That's the present value of the plan right now. . .")
Referring to the Correspondence section of the July 21, 1998, Special Board Meeting minutes, Vice President Osanka requested that the discussion between Mr. Berggren and him regarding "the Christmas tree comment" be reflected. (A subsequent review of the audio tape revealed that the aforementioned discussion did not take place under the Correspondence item during the July 21, 1998 Special Board Meeting).
Referring to paragraph 4 on page 2 of the July 21, 1998, Special Board Meeting minutes, Commissioner Bishop said it was her understanding that the Board had reached consensus regarding a proposed new Board policy wherein Board action on items not appropriately noticed as action items on the meeting agenda would be deferred in the event Commissioners expressed discomfort.
President Smith explained that it was Commissioner Anderson's understanding when she agreed to the policy, that only when a majority of Commissioners were uncomfortable taking action, would the Board defer the item until the following meeting.
Vice President Osanka moved, seconded by Commissioner Dyer, to approve the minutes of the July 21, 1998, Work Session, as amended. The motion passed, 4:0; with Commissioner Bishop abstaining.
Vice President Osanka moved, seconded by Commissioner Dyer, to approve the minutes of the July 7, 1998, Regular Board Meeting, as amended. The motion passed, 4:0; with President Smith abstaining.
PUBLIC INPUT
There was no public input.
TELECOMMUNICATIONS PROJECT PHASE I
Referring to a memorandum included in the meeting agenda packet, Energy Resource Project Manager Ken Beeson stated that the purpose of this presentation was to review the proposed EWEB Telecommunications Project Phase I, which provides for installation of approximately 70 miles of fiber optic cable and associated equipment linking together EWEB substations and the headquarters building. He said provisions are also included for leasing fiber to various local agencies. Mr. Beeson noted that a draft Business Plan for development of Phase I of the project was attached to the aforementioned memorandum.
Mr. Beeson said that during the September 15 Special Board Meeting, staff will request Board authorization to proceed with construction and implementation of Phase I of the Telecommunications Project.
Referring to a series of overhead displays, Mr. Beeson reviewed the following elements of Phases I and II of the project, reiterating that the focus of this presentation was Phase I:
Phase I: The Core System
Phase II: The Build-Out
Mr. Beeson presented an overview of the Phase I Business Plan, as follows:
Utility Applications and Customers
Products and Services
Organization and Authority
Structure and Operation
Phase I Estimated Cost
Mr. Beeson noted that the Business Plan includes provisions that will allow EWEB to work with individual agencies to develop customized applications. Additionally, Mr. Beeson said the Business Plan reflects EWEB's sense of caution regarding the feasibility of Phase II. Noting that EWEB considers the Telecommunications Project as a new business line, Mr. Beeson said the Business Plan is conservative in terms of projected revenues.
In closing, Mr. Beeson discussed the risks and opportunities posed by the Telecommunications Project. He noted that in the event the project is unsuccessful, staff is confident that EWEB can recover its investment by leasing or selling the fiber. Mr. Beeson stressed that this project is an opportunity to provide the community with a locally owned and managed broad band telecommunications infrastructure.
Noting that he has felt somewhat uneasy about this project since its inception, Commissioner Dyer said that although he believes it would benefit the community, the success of the project hinges on outside revenue. Commissioner Dyer said the Business Plan does not convey other entities' commitment to the project. Mr. Beeson said Commissioner Dyer was correct in that outside entities have not yet made financial commitments to the project. He said this is likely due to the fact that the project has not yet received Board authorization and is not yet operative. Mr. Beeson predicted that once the project is in place, entities that have indicated interest will commit to the project.
President Smith inquired as to whether letters of intent have been requested. Mr. Beeson said that although letters of intent have not been requested, staff could make an effort to obtain them. He said staff's perspective is that once EWEB determines the final costs, they can discuss with agencies actual lease costs. He noted that some agencies are still in the process of determining how they might utilize the telecommunications system. Mr. Beeson acknowledged the Board's desire for more assurance.
Referring to pages 10 and 24 of the Business Plan, Vice President Osanka expressed concern that EWEB's assurance that the utility will provide fiber optics to all persons and entities in the community as opposed to limiting access to larger entities is now being modified and qualified. He said he has justified his support for the project based on EWEB's commitment to build-out to all residential customers. Mr. Beeson said he thinks EWEB must install and establish Phase I of the project and then determine the most cost-effective way to proceed with system build-out. He noted that a number of uncertainties exist, including the changing technology and associated costs.
Vice President Osanka said that page 24 of the Business Plan outlines the purposes and goals of the project. He noted that goal 4 is to provide non-discriminatory, universal access to telecommunications services. He said his interpretation of that goal is that EWEB intends to provide telecommunications services to all customers. Vice President Osanka stated that if staff was reluctant to commit to providing telecommunications services to all EWEB customers, he would be reluctant to support the Telecommunications Project package. President Smith said the plan has always been to first develop Phase I and then build-out to all customers. Mr. Beeson agreed with President Smith.
Vice President Osanka said that including a residential pilot project in Phase I is essential to his support of the project. He said the pilot project was a fundamental ingredient of his support for the project, in that it demonstrates that residential build-out is EWEB's intention.
Commissioner Bishop said she shares Vice President Osanka's concern regarding the pilot project. She inquired as to when, assuming it does not take place during Phase I, would be the earliest opportunity to implement the pilot project. Mr. Beeson responded that once construction of the core begins, staff could turn its attention back to the pilot project. Mr. Beeson said he is interested in discussing with the Board the notion of utilizing a Federal matching funds program to pay for the pilot project. He predicted that by mid-1999 he will be prepared to speak with the Board in detail about the pilot project, and that by late-1999, the pilot project could be possibly operative. Commissioner Bishop stressed that the Board agreed to implement the pilot project. She said she would not have supported the project without such agreement.
Referring to page 9 of the Business Plan, regarding the Phase I provision for future connection of entities such as Lane Community College and local school districts, Vice President Osanka requested additional information regarding EWEB's procedure for determining which entities will receive services. He said a memorandum would suffice.
PUBLIC HEARING ON THE TELECOMMUNICATIONS PROJECT PHASE I
President Smith opened the public hearing on the Telecommunications Project Phase I. She requested that speakers limit their comments to three minutes.
Roxy Metzler, 43081 Deerhorn Road, testified that approximately 70 percent of residents in the Deerhorn Road area utilize on-line services. Noting that the Deerhorn Road area would be a good pilot project site, Ms. Metzler said residents are extremely interested in the project and hope EWEB is sincere about providing telecommunications services to all its customers.
Joanne Hugi, (address), identified herself as manager of the University of Oregon's Computer and Networking Program. Noting that telecommunications providers are not rushing to provide services to the Eugene/Springfield area, Ms. Hugi said citizens wanting such services must depend on such entities as utility providers. She said she is anxious for students, faculty, and staff to have access to the services EWEB is proposing to develop and supports the utility in moving forward with this project.
Shava Narad, (address), identified herself as the Technical Manager of Oregon Public Networking and said she shares the concern raised by previous speakers regarding the issue of universal service. Ms. Narad said Oregon Public Networking is interested in assisting EWEB with Phases I and II of its Telecommunications Project. She said that for between $50,000 and $70,000 per year, Oregon Public Networking could assist EWEB in obtaining the grants and other financial support necessary to make universal service possible. With regard to the proposed Business Plan, Ms. Narad advised EWEB to budget for marketing and community relations expenses. She said Phase II marketing and development must be conducted during Phase I. Additionally, Ms. Narad advised EWEB to attract a competitive local exchange carrier, such as Rio Communications, to participate in Phase I as opposed to involving only large carriers. Noting that large customers will be "picked off" by competitors entering the area, Ms. Narad stressed the importance of including system build-out as part of Phase I.
Nick Urhaeusen, 2058 Warren Street, stated that public versus private investment is unwise. He wondered whether members of the public will see a return on this investment, through dividends for example, if the project is a success. Mr. Urhaeusen said that due to the rate of technological advances, "current" technology soon becomes obsolete. He said EWEB is taking a gamble on uncertain results.
Dan Mulholland, Lane Council of Governments (LCOG) Telecommunications Manager, clarified that he was speaking as an individual as opposed to representing LCOG. Mr. Mulholland expressed support for EWEB's Telecommunications Project, noting that LCOG would benefit from the use of the higher-capacity fiber optic lines the project will provide. Noting that it was difficult to commit to the project at this time, given the unknowns surrounding the actual costs, Mr. Mulholland said he believes LCOG would utilize the system. Additionally, Mr. Mulhulen said LCOG considers the attribute of local ownership and control extremely attractive because it increases the likelihood that LCOG will have the ability to influence both the design and cost of the system.
Les Moore, Director of Computing and Information Services for Eugene School District 4-J, thanked Mr. Beeson and the project design team for including the school district in much of the design work completed to date. Mr. Moore said the school district would benefit from many aspects of the project, including the following:
Mr. Moore acknowledged that the school district does not currently know how it might finance participation in the project; however, he said that both leasing the portion used by the school district and bonds are possibilities.
Lewis Lyon, (address?), said it was likely that in EWEB's "early days," committed citizens took a "giant step" to establish EWEB for the benefit of the community. He predicted that the proposed Telecommunications Project will be also be viewed as a giant step by future citizens of Eugene. Noting that fiber optics are the future of telecommunications, Mr. Lyon predicted that due to the increased amount of video commuting that will take place as the result of the project, EWEB will find that the project conserves energy by keeping more cars off the road. He encouraged EWEB to look to the city of Palo Alto for revenue opportunity examples. Mr. Lyon said Palo Alto businesses "lined up" for the opportunity to utilize the telecommunications services.
Brian Brey, SELCO Credit Union Communications Network Director, suggested that EWEB set aside the paradigm of what services a utility should provide and become educated about the opportunities. Noting that SELCO currently lacks the band width necessary for certain applications, such as video, Mr. Brey said SELCO is excited about the technology EWEB's Telecommunications Project will provide. He warned EWEB against delaying the project because, given the high-level of demand for telecommunications services, it is likely that another entity will offer the services.
David Barajas, (address?) stated that he discontinued his employment at a large corporation over a year ago and now makes his living working on the Internet. He stressed the importance of moving forward with the proposed project. Mr. Barajas suggested that EWEB contact small providers, such as RIO.COM, that may be interested in connecting residential customers for a pilot project.
President Smith noted that a written publication entitled "EWEB Invades Your Privacy Through Technology," was submitted into the record by George Orwell.
President Smith inquired as to the Board's interest in receiving additional information from staff.
President Smith requested that a marketing and public relations budget be included in the Business Plan.
Commissioner Bishop requested that staff provide more certainty regarding whether EWEB will utilize internal or external consultants for the project. President Smith suggested that rather than assuming internal consultants will be used, EWEB consider what would be most cost-effective. Commissioner Bishop requested information regarding the external resources available to EWEB.
Commissioner Dyer said he was impressed with the public testimony. He said he is now more comfortable with EWEB's ability to market fiber optics and increased band width. He requested additional information regarding the level of commitment expressed by various entities.
Vice President Osanka requested that the Board consider writing a letter to the Internal Revenue Service (IRS) in support of Oregon Public Networking. Ms. Narad explained that Oregon Public Networking is requesting that letters be written to encourage the IRS to ensure that the individual reviewing Oregon Public Networking's case is technologically literate. She expressed her opinion that such a letter would be politically neutral.
Vice President Osanka requested that staff forward to the Board copies of the Wall Street Journal article regarding Palo Alto's telecommunications system. Additionally, Vice President Osanka requested that EWEB schedule additional public hearings so that knowledgeable users may inform and educate the Board regarding the latest in technology. Vice President Osanka said if, in fact, small providers are interested in connecting a small number of customers as a pilot project, there exists a stronger impetus for conducting a pilot project.
President Smith requested that staff provide responses to the questions and comments raised by those who testified.
With regard to Vice President Osanka's request for additional public hearings, President Smith noted that well-attended public forums were held. She said that evening's public hearing had been well-advertised. Vice President Osanka suggested that the Board consider scheduling information sessions so that interested parties and potential users might explain to the Board their intended use of the additional band width. He said this would ensure that EWEB has designed a system capable of meeting the needs of potential users.
KLAMATH FALLS PROJECT
Referring to a memorandum included in the meeting agenda packet, Power Management & Planning Manager Scott Spettel said the purpose of this presentation was to provide an opportunity for the Board to ask questions inspired by the previous presentation concerning the proposed Klamath Falls Cogeneration Project, and provide the Board with an update on OURCA utility members' discussions related to the proposed project.
Mr. Spettel said EWEB is moving toward expressing to PacifiCorp interest in the cogeneration project. He said EWEB must express interest in the project by September 4. Mr. Spettel presented a brief overview of a draft letter of interest and draft terms sheet.
President Smith inquired as to the possibility of incorporating into the terms sheet an assumption that PacifiCorp will perform according to an environmental package. Mr. Berggren stated that it would not hurt to include it in the terms sheet.
Vice President Osanka inquired as to OURCA members' interest in this project. Mr. Spettel said interest is strong.
The Board directed staff to move forward with expressing EWEB's interest in the project.
CORRESPONDENCE
Mr. Berggren announced that the FERC Ninth Circuit Court filing has been issued.
Mr. Berggren solicited suggestions for the date of an additional September Board Meeting.
Commissioner Bishop moved to schedule an additional Board Meeting for September 28. The motion died for lack of a second.
Following extensive discussion, President Smith requested that staff include in the next Board packet a matrix for September and the first two weeks of October. She requested that Commissioners indicate on the matrix the days they are available to attend an additional Board Meeting. She said the additional Board Meeting will be scheduled based on the date that accommodates the greatest number of Board Members.
The meeting adjourned at 9:40 p.m.