Board Members present: Susie Smith, Jeff Osanka, Mike Dyer, Sandra Bishop (after 6 p.m.), and Dorothy Anderson.

Others present: Randy Berggren, Ken Beeson, Tom Buckhouse, Garilyn Crowley, Mel Damewood, Marty Douglass, Cristina Evonuk, Dick Helgeson, Roseanna McArthur, John Mitchell, Jim Origliosso, Brenda Sirois, Ron Wilson, 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.

1999 WATER & STEAM BUDGET AND WORK PLAN

Referring to a series of overhead displays, copies of which were provided to Board Members, and a memorandum and attachments that were included in the meeting agenda packet, Water & Steam Division Director Dick Helgeson, Water Engineering Manager Mel Damewood, and Treasurer Jim Origliosso presented overviews of the proposed 1999 Steam Utility work program and budget, and Water Utility Operating and Capital Budgets.

Referring to the 1998-99 Water Utility Budget Comparisons (Accounting View by Function), Mr. Origliosso said that preliminary budget figures indicate a high likelyhood that the 1999 Water Utility Operating Budget can be balanced without an increase in rates. He noted that staff is expecting a modest increase in water sales next year, which along with the full-year effect of last April's 4.6 percent increase will help cover the cost of the initial 1999 work outlined in EWEB's Draft Water Supply Plan.

Referring to the Water Utility Capital Budget Comparison, Mr. Origliosso said the 1999 budget includes $3.2 million in capital improvement reserve funds. He said the projected year-end balance is $4.7 million, including all system development charge dollars. Mr. Origliosso said staff is projecting decreases in some activities from 1998.

Referring to the 1999 Steam Division Work Plan and Budget Summary (Division View by Program Area), Mr. Helgeson summarized that as in past years, staff is making a concerted effort to keep EWEB's fixed operating costs for the Steam System as low as possible, while maintaining reliability and a high service level. He said a reorganization of maintenance and supervisory functions in early 1998 allowed the Steam Division to reduce staffing by an additional 1.5 FTE, which along with other related efficiency gains has further reduced annual costs by about $100,000.

Mr. Helgeson said those savings should enable the Steam Division to achieve a balanced budget in 1999, even with the full elimination of the former electric generation credit. Mr. Helgeson said EWEB will continue pressing the City of Eugene to reduce in-lieu payments on steam sales to offset franchise fees for gas purchases. He stated that although staff is confident it can balance the budget for next year without an increase in base rates, customers will likely see a higher fuels charge due to a projected increase in natural gas for next year.

Commissioner Anderson inquired as to why training costs will increase. Mr. Helgeson explained that in general, EWEB's training budget for each division is based on an average of 40 hours class time per employee, per year. He said an examination of the "actuals" reveals that the Steam Division spends considerably less on training than is budgeted.

With regard to the proposed increase to the Steam Marketing & Customer Service program area, Commissioner Anderson inquired as to what functions the increase would support. Mr. Helgeson responded that the increase largely reflects the dedication of a higher percentage of Dennis Daggett's work hours to the Steam Marketing & Customer Service program area. He noted that the increase will also support specific goals and objectives to enhance service levels to Steam Division customers.

Vice President Osanka inquired as to the percentage of Mr. Helgeson's total work hours reflected in the Steam Division Budget versus the Water Division Budget. Mr. Helgeson responded that less than 10 percent of his total work hours are reflected in the Steam Division Budget.

Referring to the 1998-99 Water Utility Budget Comparisons (Accounting View by Function), and a series of overhead displays provided to the Board at President Smith's request, Mr. Helgeson next presented an overview of the Water Utility Operating Budget. He reviewed the specific Water Utility budget assumptions, sales/revenue assumptions, and cost assumptions. Mr. Helgeson reviewed the Water Utility 1999 work plan initiatives related to Operations and Maintenance and Capital projects.

Referring to the 1999 Water Division Work Plan and Budget Summary (Division View by Program Area), Mr. Helgeson reviewed budget summaries related to each of the seven Water Division program areas. The percent-change from 1998 to 1999 was described, as follows:

Program Area:

Water Division Operations -- All Programs (up 1 percent)

Water Division Administration (up 6 percent)

Water Planning and Engineering (down 1.6 percent)

Water Supply and Treatment (up 1.7 percent)

Transmission Pumping and Storage (down 4.2 percent)

Water and Construction Services (down 1.8 percent)

Water Distribution Operations (down 3 percent)

Water Management Services (up 23.9 percent)

President Smith suggested adding the allocated share of corporate administation costs to the 1999 Water Division Operations Budget Summary pie chart.

Mr. Damewood then presented a brief overview of the Water Division Capital Projects Budget Summary. The percent-change from 1998 to 1999 was reviewed, as follows:

Program:

Water Facilities Additions: (down 5 percent)

Water Facilities Additions/Billable (down 12.7 percent)

Mr. Damewood presented a brief overview of the Water Division Capital Budget goals and project highlights.

Vice President Osanka suggested that EWEB provide to interested parties, such as the City Council, an estimate of the cost of undergrounding facilities concurrent with water main and service relocations.

Vice President Osanka inquired as to whether any of EWEB's major capital projects are scheduled for the December 1999 or January 2000 time frame. Mr. Damewood responded that EWEB plans to begin its transmission project during the first six months of the year-2000. Vice President Osanka suggested that staff consider, as part of a contingency plan, what may go wrong in the first six months of the year-2000 that could impact EWEB projects.

Mr. Origliosso solicited feedback regarding the budget process in terms of format. President Smith said the overhead projections of key projects and issues is extremely helpful. She requested accompanying pie charts.

President Smith expressed interest in touring the Hayden Bridge water treatment facility. Commissioner Bishop suggested inviting interested City Councilors to join the tour.

The meeting adjourned at 7:25 p.m.