Board Members present: Susie Smith, Dorothy Anderson, Peter Bartel, Sandra Bishop, and Mike Dyer.

Others present: Randy Berggren, Manda Bednarczyck, Ken Beeson, Tom Buckhouse, Mel Damewood, Marty Douglass, Cathy Hamilton, Dale Kessinger, Garry Kunkel, Jim Maloney, Roseanna McArthur, Kris Middlewood, John Mitchell, Mat Northway, Jim Origliosso, and Krista Hince of the EWEB staff; Moshe Immerman, and Lance Robertson of The Register-Guard, members of the public; and C. Daniel Lindstrom, Minutes Recorder.

President Smith called the Special Meeting of the Eugene Water & Electric Board (EWEB) Board of Commissioners to order at 7:40 p.m.

AGENDA CHECK

President Smith noted that there was a revised meeting agenda distributed at the beginning of the meeting which added an item entitled "Correspondence."

President Smith determined there were no requests to revise the agenda that there was consensus for its approval.

ITEMS FROM BOARD MEMBERS

Commissioner Anderson reported that she had attended a Public Employees Retirement System (PERS) Administrative Hearing on January 12 with Treasurer Jim Origliosso. She said the purpose of the hearing was to seek reconsideration of decisions made about the EWEB PERS rate for 1999. She said requests for reconsideration by EWEB and the City of Portland had been granted, but that similar requests by Lane County and the City of Eugene had not. She said the experience had been interesting and that she better understood the issues involved after having attended.

Commissioner Bishop reported that on January 14-15 she had attended a conference entitled "Buying and Selling Electricity" in Seattle. She said the experience was very informative and had dealt largely with buying and selling utilities and territory.

Commissioner Bishop reported that the Clatskanie PUD public power association had invited EWEB Commissioners to a reception and meeting in Salem and that she would attend.

APPROVAL OF MINUTES

Commissioner Anderson requested that sentence 3 of paragraph 1 on page 3 of the minutes of the January 5, 1999, Work Session be changed, as follows:

He said that contracts with current employees likely be limited changes which could be made in benefits to those who would be hired in the future, but would provide long-term relief.

President Smith determined there was no objection to the request of Commissioner Anderson and stated that the minutes were amended as requested.

Commissioner Anderson requested that paragraph 5 on page 3 of the minutes of the January 5, 1999, Work Session be changed, as follows:

President Smith suggested that PERS issues be raised at the EWEB Legislative Luncheon scheduled for January 5 6.

President Smith determined there was no objection to the request of Commissioner Anderson and stated that the minutes were amended as requested.

President Smith requested that paragraph 3 on page 5 of the minutes of the January 5, 1999, Regular Board Meeting be changed, as follows:

Commissioner Bartel said he would appreciate time at the retreat being devoted to presentations from staff about the purpose and condition of EWEB, as well as time for the Board to discuss priorities.

President Smith determined that there was no objection to her request and stated that the minutes were amended as requested.

President Smith requested that sentence 2 of paragraph 6 on page 9 of the minutes of the January 5, 1999, Regular Board Meeting be changed, as follows:

She said an example of her satisfaction was that she endorsed recommendations of the plan regarding deep further exploration of aquifer water sources, although she was initially hesitant to consider such an option.

President Smith determined that there was no objection to her request and stated that the minutes were amended as requested.

Commissioner Dyer moved, seconded by Commissioner Bartel, that the minutes of the January 5, 1999, Work Session and minutes of the January 5, 1999, Regular Board Meeting be approved, as amended. The motion was adopted unanimously, 4:0:1, with Commissioner Bishop abstaining from voting because she had not read the minutes.

CORRESPONDENCE

General Manager Randy Berggren noted that a schedule of February Board meetings had been distributed to Commissioners at the beginning of the meeting. He said plans were continuing to hold the Board Retreat at the Hilton Hotel February 5 and 6. He said that a process to evaluate performance of the General Manager would was being changed from the February 2 meeting to February 16, noting that the Board would be having a retreat on the 5 & 6 of February and that there was too much happening that week to properly prepare.

PUBLIC INPUT

President Smith determined that there was no one present wishing to address the Board.

EVALUATION CRITERIA FOR THE GENERAL MANAGER

Director of Corporate Services Roseanna McArthur referred to her memorandum dated January 7, regarding the evaluation of the General Manager in 1997 mailed to Commissioners. She also referred to her memorandum dated January 14, regarding the performance evaluation process for EWEB managers. She noted that attachments to the memoranda could serve as the basis for Commissioner deliberation about General Manager evaluation criteria.

Commissioner Dyer said that he appreciated the copy of the EWEB employee evaluation form but that he really liked the GM Evaluation criteria because of its broad scope and flexibility.

President Smith said that she appreciated the format of the Supervisor Performance Evaluation document attached to Ms. McArthur's January 14 memorandum. She suggested that its provision for recording performance goal agreements was valuable and might be used in the evaluation of the General Manager.

Commissioner Bartel said that he appreciated the work of staff in developing a new performance evaluation process for managers. He said he felt it would be positive to have consistency in evaluation procedures throughout EWEB.

President Smith determined there was consensus to use evaluation criteria developed in 1993 and used in 1994, 1996, and 1997 for the 1999 evaluation of the General Manager scheduled in February. She determined there was also consensus to consider criteria included in the document entitled "EWEB Supervisor Performance Evaluation" distributed by Ms. McArthur in the evaluation of the General Manager.

Ms. McArthur suggested that the evaluation process used in 1997 be followed in 1999. She said that the evaluation would take place in Executive Session; that the General Manager would make a short presentation about each criterion; that the Board would provide its evaluations, comments, and concerns about the criteria; and that salary considerations based on the evaluation would take place in the scheduled public meeting session. She said she would be available to Commissioners regarding the evaluation until February 16.

WIND COST OF SERVICE STUDY

Manager of Energy Management Services Mat Northway stated that the EWEB Wyoming Wind Power Generating Project was scheduled to be operational February 15. He said that the Bureau of Land Management "sign off" on the project had not yet taken place and that there were minor mechanical alterations being made to turbines. He said that a three-week test of the billing system would begin on January 25, that customer service training would begin in the last week of February, and that power from the generators would be available beginning March 1.

External Communications Coordinator John Mitchell said that marketing of Wind Power would begin modestly. He circulated a copy of a "bill stuffer" publicity piece, and sign up and acknowledgment cards to be used in the project. He explained that the project would be featured in the next issue of Pipeline.

Senior Financial/Rates Analyst Dale Kessinger referred to his memorandum dated January 14 regarding Wind Power Pricing and Cost of Service distributed with the agenda of the meeting. He noted that it reported a methodology for calculating rates had been developed which allowed price stability, low prices, no negative cash flow after the first year, no wide swings in price, and a "tracking account" balance of zero in the last year of the life of the project.

Mr. Kessinger displayed a series of charts which portrayed annual Wind Power costs and various scenarios considered to accomplish their recovery--levelized pricing, five-year moving average pricing, and three-year step pricing. He described the strengths and disadvantages of each scheme. He noted that the step pricing plan adopted allowed an attractive starting rate, and provided for a 4.5% increase every three years, which was lower than the anticipated increase in purchased power. Mr. Northway added that the rate illustrations attached to the memorandum of Mr. Kessinger did not include a $0.02 wire rate charged on all EWEB delivered power.

Mr. Kessinger explained that the project would allow four options for residential customers--receiving 10% Wind Power, 25% Wind Power, 50% Wind Power, or 100% Wind Power. He said that General Service customers were only offered an option of receiving 10% Wind Power. He reviewed Wind Power billing examples attached to his memorandum.

Commissioner Anderson asked if additional turbines would be added to the project if EWEB customers requested a larger supply of Wind Power than was available. Mr. Northway explained that the offer to receive power from the project would be made incrementally, using the billing cycle. He said commercial customers would receive the offer of Wind Power last, to ensure that all residential customers had an opportunity to participate. He said that the initial size of the project had been calculated on the experience of other utilities with similar projects and that over-subscription was not likely in the early years of its operation. He said that if over-subscription to the available power did occur, staff would return to the Board for advice. He explained that increasing the number of turbines in the Wind Power project to meet demand would not likely significantly affect rate calculations.

Energy Resource Project Manager Ken Beeson stated that if there was a larger request for Wind Power than was available, it would be possible to negotiate purchase of wind generated power from other sources.

Resource Planning Analyst Jim Maloney stated that the US Congress was considering legislation to extend tax credits for wind generated power for an additional number of years.

Commissioner Dyer said that anticipated customer cancellation of Wind Power should reduce pressure to enlarge the project. Mr. Northway added that subscriptions would be limited to 85% of capacity in the first year and that marketing would be low-key in the initial stages of the project.

Commissioner Bartel said that he appreciated the quality and clarity of the initial Wind Power marketing brochure, but that he was concerned that customers were not aware of the number of kilowatt hours they used. Mr. Northway replied that the brochure would be delivered in the same envelope as a bill which would identify the number used.

Mr. Kessinger said that staff had been concerned that customers might be confused about "average use" examples included in Wind Power marketing material. Commissioner Bartel said he agreed and recommended that ranges of use be included in examples identified.

Commissioner Dyer said staff had been conscientious about Board concerns regarding Wind Power throughout its development. He expressed confidence in the marketing plan staff had prepared and said the project was intended to be a pilot which would determine what customers wanted as power sources.

Commissioner Bartel suggested that new ventures needed to be adequately supported to ensure success. He said he wanted to "keep his eye on" the project, especially its budgetary aspects .

President Smith suggested that a chart showing subscription of Wind Power be created for the EWEB lobby. Mr. Northway said that the project had quarterly penetration targets and that reports on whether they were achieved would be made to the Board.

Commissioner Dyer noted that proposed rates showed that a customer choosing to receive only Wind Power would be paying approximately 75% more than a customer choosing to receive none.

President Smith suggested that alternate marketing of Wind Power be provided for customers utilizing the EWEB direct-pay option. Mr. Mitchell replied that information would be available in regular and special EWEB displays, as well as the Home Shows coming up in March and other EWEB events. Mr. Northway said that the Pipeline delivered to all customers would feature Wind Power in its next issue. Mr. Kessinger said that other promotional items were also being considered such as vehicle bumper stickers, electric switch plate covers, and various handouts.

Commissioner Dyer asked for an explanation of why first year loses in Wind Power were not accumulated to be recovered by rates. Mr. Kessinger explained that the EWEB Budget planned to subsidize the project for the first three years by absorbing its surplus power into the general power system. He noted that the projected rates calculated that the project would break even in its second year.

Mr. Kessinger said that the Wind Power project was always considered a pilot and that it was intended to accomplish more than produce resources and recover costs. He explained that it was an attempt to test EWEB's ability to market a differentially priced renewable energy product and recover its cost.

President Smith said that she appreciated the comment in the Wind Power marketing brochure that EWEB's current power sources were from a "clean mix" of generation sources.

Commissioner Bishop said that she appreciated the level of staff competency in developing the Wind Power project and its cost of service study. She acknowledged the General Manager's earlier comment and agreed that since the proposed cost schedule had to do with rate setting, it needed to be acted on by the Board at its next meeting, following appropriate public notice and participation.

President Smith determined there was consensus to approve the suggestion of Commissioner Bishop.

The meeting adjourned at 8:50 p.m.