Board Members present: Dorothy Anderson, Sandra Bishop, Mike Dyer, Jeff Osanka, and Susie Smith.
Others present: Randy Berggren, Tom Buckhouse, Mel Damewood, Sandy DeLuna, Rob Dotson, Marty Douglass, Lynn Juilfs, Dale Kessinger, Garry Kunkel, Roseanna McArthur, Jean Meyers, Kris Middlewood, Mat Northway, Jim Origliosso, Rick Pieper, Steve Reed, Mat Sprecher, Dick Varner, and Krista Hince of the EWEB staff; Loren Ruark, Jennifer Winters, KVAL Television; various members of the public; and Kim Kunkel, Minutes Recorder.
President Smith called the meeting to order.
AGENDA CHECK
Vice President Osanka expressed concern that the Compensation Plan item would require more time than the amount allotted on the agenda. President Smith agreed to do a process check at the end of the allotted time if the Board has not yet concluded its discussion. President Smith determined there was consensus to approve the agenda, as written.
ITEMS FROM BOARD MEMBERS
Vice President Osanka expressed concern that the General Manager Salary Review item was not included on the projected meeting agendas for October. Noting that the item has already been deferred, Vice President Osanka requested that it be placed on the agenda of an October Board Meeting. Noting the number of other items the Board must address during the next month, Commissioner Anderson and President Smith expressed support for deferring the review. Commissioner Dyer said that although he was not interested in reprioritizing the October agenda items to accommodate the review, he thinks the review should take place as soon as possible.
Vice President Osanka moved, seconded by Commissioner Bishop, to include on the October 14 meeting agenda, in place of the Compensation Base Pay Structure item (if the Board takes action on the pay structure during the present meeting), the General Manager Salary Review.
Noting her concern that Mr. Berggren's contract had expired, Commissioner Bishop acknowledged that she was unfamiliar with the Board's usual schedule of conducting the review. Mr. Berggren clarified that his contract expired on September 1, and is now a 30-day, month-to-month contract. President Smith said it is not uncommon for the Board to conduct the review in late fall or early winter. Commissioner Bishop suggested that the Board schedule the review as soon as possible.
The motion failed, 4:1; with Vice President Osanka voting "yes."
Vice President Osanka moved to request that Mr. Berggren report to the Board at its next meeting the date of the meeting during which the review will take place. The motion died for lack of a second.
Mr. Berggren agreed to report to the Board at its next meeting the date on which the review will take place. Commissioner Bishop requested that the review take place prior to the end of the calendar year.
Noting that she had forwarded to staff George Grier's comments regarding the Water Resource Working Group's final recommendations, President Smith said she was interested in creating a "feedback loop" to ensure that such comments receive a response and that the role of the Water Resource Working Group is made clear.
MINUTES
The Commissioners reviewed the minutes of the August 11, 1998, Work Session and Special Board Meeting.
Referring to paragraph 2 on page 2 of the Work Session, President Smith requested that sentence 1 be amended to read "Referring to the Economic Downturn future, President Smith said she does not understand the connection between pricing and conservation and renewables."
Referring to the final paragraph on page 4 of the Special Board Meeting minutes, Commissioner Anderson requested that the following text be added as the final sentence: "Both Commissioner Anderson and President Smith pointed out that this statement was inaccurate."
Referring to the final sentence of paragraph 1 on page 4 of the Special Board Meeting minutes, Commissioner Bishop requested that "the citizens of Eugene" be replaced with "EWEB rate payers as well as large commercial water users."
Commissioner Anderson moved, seconded by Commissioner Dyer, to approve the minutes of the August 11, 1998, Work Session and Special Board Meeting, as amended.
Vice President Osanka argued that Commissioner Anderson's suggested correction to the Special Board Meeting minutes is inaccurate. He said he would oppose the motion.
The motion passed, 4:1; with Vice President Osanka opposed.
CORRESPONDENCE
Mr. Berggren reviewed a number of information items included in the meeting agenda packet, including
Mr. Berggren noted that he was invited and has accepted an invitation to serve on the Governor's committee on Willamette River restoration. He said the work will be challenging; however, this is a good opportunity for EWEB, as a purveyor of water, to assist in the passage of the Willamette River restoration initiative.
Mr. Berggren reviewed draft agendas for the October 6 Work Session and Regular Board Meeting.
PUBLIC INPUT
Rob Dotson, EWEB Electrical Operations employee, clarified that he was speaking for himself although he believes his views are representative of his work group. Mr. Dotson expressed concern regarding the fact that the proposed compensation base pay structure is set at the 55th percentile. He said Electrical Operations employees have a long-standing tradition of being compensated at the 65th percentile, which seems fair given the local cost of living and the degree of technical work performed by employees. Mr. Dotson said he was not sure how the merit pay provision will work in Electrical Operations given that historically all employees in that work group are paid the same amount. He said he believes the teamwork among work group members is better when the pay is equal and competition is not a factor. Mr. Dotson said he believes the best incentive for an Electric Operations employee is promotion.
Chris Horton, 1085 Calvin Street, requested that EWEB's new billing system be modified so that it is able to automatically transfer, and accept as payment, funds from a customer's account on a date certain. He said EWEB's billing department informed him that the system was unable to transfer funds on a date certain due to the utility's 28 separate billing cycles. He suggested that EWEB place on one billing cycle all customers who pay their bill via automatic transfer.
Mr. Berggren said he would look into the matter and issue a response.
COMPENSATION PLAN
Noting that during the preceding Work Session, staff reviewed the history, provisions, organizational process, cost impacts, and next steps of the proposed Compensation Base Pay Structure, Mr. Berggren requested Board approval of the proposed pay plan.
With regard to the comments issued by Mr. Dotson, a member of EWEB's line crew, Commissioner Dyer inquired as to the sentiments of EWEB's outside crews. Mr. Kunkel responded that it has been relatively quiet in the Electric Division. He said some employees have expressed concern regarding the change from the 65th percentile to the 55th percentile. Mr. Kunkel said the financial impact on those employees amounts to approximately 9 cents per hour and that work group is presently earning approximately 30 cents above market. With regard to the tradition that all journeyman line crew members earn the same amount, Mr. Kunkel said that tradition will continue until staff has evaluated whether another system might work in terms of awarding merit increases.
President Smith inquired as to whether journeyman line crew members receive performance evaluations. Mr. Kunkel said journeyman line crew members receive performance evaluations; however, the evaluations do not impact their rate of pay. Noting that EWEB is implementing a standard that demands exceptional work for above-market pay, President Smith expressed concern about holding different employee classes to different standards. Mr. Kunkel acknowledged President Smith's concern and said staff is aware of that issue.
Commissioner Bishop said it was her understanding that the Board has made no decision to include outside line crew members in any merit system adopted by EWEB. She said the line crews are a unique part of the organization and it will not work to place that work group into a competitive incentive framework. With regard to merit pay, Commissioner Bishop suggested that EWEB consider its outside crew members as a separate part of the organization for which "merit" may be awarded as a standard pay raise similar to increases awarded under current compensation structure.
Noting that the Board decided to base the compensation plan on both external competition and internal consistency, Vice President Osanka said he opposes the fact that 90 percent of the pay rates in the final plan are based on market data while only 10 percent are based on internal equity. He said 50 percent of the plan should be based on market and 50 percent should be based on internal equity.
Vice President Osanka stated that due to the distribution of redlined positions, totaling 84 among two employee groups versus only two among managerial positions, he thinks the proposed pay structure is fundamentally flawed.
Commissioner Anderson said she thinks Vice President Osanka has missed a basic point: EWEB's present system is badly flawed. She said the proposed pay structure will save both EWEB and its customers a significant amount of money over time. In addition, Commissioner Anderson said the market-based system is a more equitable way to determine employee salaries. She said that while she does not like redlining salaries, EWEB must decide upon a basic compensation premise the market-based system appears to be a sound premise. Commissioner Anderson stated that EWEB's administration of the pay structure is key to its success. Noting that she is willing to consider narrowing the 40 percent range width, Commissioner Anderson said that in general she thinks the proposed pay structure is a sound approach.
Speaking to Vice President Osanka's criticism of the fact that some high-end salaries will increase under the proposed plan, Commissioner Bishop clarified that EWEB's low-end positions are currently paid slightly above market and its high-end jobs are currently paid below market. She said the proposed plan is designed to diminish the existing disparity and align EWEB's pay rates with those of the market. She said that point should not be misrepresented.
Adding to Commissioner Bishop's comments, President Smith said EWEB has consciously created a 2-tiered system set at the 60th percentile for employees who earn less than $40,000 and the 55th percentile for employees who earn over $40,000 per year. She said that in doing so, EWEB has acknowledged there is value in the notion of "comparable worth" in terms of its tempering effect on the marketplace. President Smith said the 2-tiered system reduced the number of redlines that would have occurred if the 55th percentile was applied to all positions.
Vice President Osanka stated that the proposed compensation system is the first pay structure for which EWEB has utilized market data based upon national public and private salaries. He said this represents a significant policy change. Vice President Osanka said he doubts that average EWEB water and electric customers consider EWEB a private entity that bases its salaries upon the salaries of public and private organizations. He said EWEB customers probably assume that salaries are based upon those of similar entities. Vice President Osanka said the salary of EWEB's General Manager is based upon the salaries of other public agencies' Chief Executive Officers.
President Smith disagreed with Vice President Osanka, noting that EWEB has historically used a combination of public and private data to determine the salaries of its employees and develop pay structures. She argued that the decision concerning the salary of EWEB's General Manager and the decision regarding EWEB's pay structure are two separate issues.
Commissioner Dyer commented that although the proposed compensation plan is not perfect, it is a move in the right direction. He said that by adopting a market-based compensation plan, EWEB's salaries will be better aligned with competing entities and local businesses. He said failing to adopt a market-based compensation plan would be a disservice to EWEB's rate payers, citizens, and employees. In addition, he said failing to adopt the plan would skew Eugene's job market because individuals often compare the amount they earn to the highest paid positions in the community. These are often EWEB positions.
Commissioner Dyer expressed concern regarding the 40 percent range width as related to upper level salaries; however, he said he was intrigued by Ms. McArthur's contention that the 40 percent range width provides staff with the flexibility necessary to meet or exceed the market in order to hire an individual who would otherwise be difficult to retain. While acknowledging the value of such flexibility, Commissioner Dyer said he does not want the range width to expand to 45 or 50 percent. He said he was prepared to support the proposed plan.
Vice President Osanka argued that the General Manager's salary is relevant to the proposed compensation plan. He said that many institutions do not want the General Manager's salary to be less than the mid-point of employees' salaries. He said that given the mid-points reflected in the proposed plan, passage of the plan will increase the probability that the General Manager's salary will be increased.
Noting her support of the proposed plan, President Smith said the bottom line is that the market for this industry is difficult to compete with. She admonished staff to support the Board by checking in about the development of a monitoring system designed to ensure that the compensation plan is meeting the goal of bringing EWEB's salaries to the midpoint of market. President Smith stressed that the administration of the plan will determine its success.
Vice President Osanka requested that Commissioners respond to his assertion that approval of the proposed compensation plan will increase the probability that the General Manager's salary will be increased.
Commissioner Anderson said she does not understand Vice President Osanka's claim that approval of the proposed compensation plan will increase the probability that the General Manager's salary will be increased. She said the Board will determine the General Manager's salary based upon the market. Commissioners Bishop and Dyer agreed that the General Manager's salary was irrelevant to the present discussion.
Commissioner Anderson moved, seconded by Commissioner Dyer, to approve the proposed compensation base pay structure, with the understanding that staff will apprize the Board as to its progress in developing a monitoring system designed to ensure EWEB maintains its focus on aligning EWEB's salaries with the midpoint of market.
Vice President Osanka reiterated his objections to the proposed plan and expressed concern that the Board needs additional time to hear from "rank-and-file" employees. He suggested developing a non-administrative process in which employees may anonymously submit comments to the Board. He said this would provide the Board with raw data regarding employees' opinions. Vice President Osanka said he would make a motion to defer action on this matter in order to allow sufficient time for employees to submit comments.
Commissioner Bishop said that based upon the presentation and discussion that evening, she thinks that concerns raised by employees can be addressed in an effective manner. She said she was not inclined to delay this process any longer. Commissioner Bishop said she appreciated the testimony of EWEB employee Rob Dotson and was confident that if other employees were significantly concerned, they would have had the opportunity to testify.
Vice President Osanka argued that employees may be reluctant to speak to the Board. He said the fact that one employee testified before the Board does not prove that others would do so.
Vice President Osanka moved to amend the original motion by delaying action on this matter until October 14 and devising a process whereby employees' concerns may be offered anonymously, and comments are encouraged via a memorandum circulated to all employees. The motion died for lack of a second.
The motion passed, 4:1; with Vice President Osanka opposed.
Noting the late hour, President Smith suggested that the Board Priority Scan Update item be deferred. The Board expressed support for this suggestion.
ELECTRIC RESTRUCTURING
Referring to a memorandum included in the meeting agenda packet and a series of overhead displays, Senior Rate/Financial Analyst Dale Kessinger summarized where EWEB is in the rate review process, discussed what staff would like to do with regard to desegregating current electric rates and creating windpower subscription options, and updated the Board on the status of Portland General Electric's (PGE's) rate case currently before the Oregon Public Utilities Commission (PUC).
With regard to windpower subscription options, President Smith wondered what might happen if customers are signed up for 100 percent windpower and another desirable green resource is offered. She said perhaps EWEB should not allow 100 percent investment in windpower to ensure that such a situation does not occur. President Smith said it is a matter of how to "rearrange the deck" when another green resource becomes available. She said EWEB should state up front whether it will sell melded green resources as opposed to offering pure windpower. She said some customers may not want to purchase windpower that is diluted by other resources.
With regard to the City of Eugene's policy for electric restructuring, Vice President Osanka inquired as to whether the City has considered adopting a policy that opposes all restructuring legislation. He suggested that staff discuss the matter with City representatives. Mr. Kessinger said he would raise the issue with City staff. With regard to retail access, Mr. Kessinger said the City is generally relying upon the EWEB Board to establish a policy that is in the best interest of the community.
With regard to the PGE rate case, Commissioner Dyer inquired as to how customers could be prevented from returning to utility power supply after electing to go to market. Mr. Kessinger responded that the OPUC staff's proposal in this case is that a customer's election to go to market would be permanent. He said this stems from planning difficulties that result from not knowing who is and who is not a utility power supply customer. In addition, customer gaming may result if switching back and forth from market to utility power supply is allowed. Mr. Kessinger explained that EWEB supports switching provisions wherein customers may return to utility power supply at the highest incremental cost of the power that is procured for them. He said this will ensure that costs associated with procuring power for customers who switch back and forth are not forwarded to steady utility power supply customers.
The meeting adjourned at 9:55 p.m.