Board Members present: Susie Smith, Mike Dyer, Sandra Bishop, Dorothy Anderson, and Peter Bartel.
Other present: Randy Berggren, Cathy Bloom, Sandra DeLuna, Marty Douglass, Dick Helgeson, Dave Koski, John Mitchell, Dick Varner, and Krista Hince of the EWEB Staff; Frank Nearing, KLCC-Radio, Lance Robertson, The Register-Guard, members of the public; and Daniel Lindstrom, Minutes Recorder.
President Smith called the Special Meeting of the Eugene Water & Electric Board (EWEB) to order at 8:10 p.m.
AGENDA CHECK
President Smith determined that there was consensus to approve the agenda as distributed.
ITEMS FROM BOARD MEMBERS
Commissioner Anderson reported that she and other Commissioners had received copies of a report prepared by the Friends of Eugene regarding the cost of growth in Oregon. She explained that the report provided details of the payment of expansion costs by developers, property owners, utilities, and the public. She said she would make her copy of the report available to commissioners, staff, or others interested. The other commissioners reported that they had already received copies of the report.
Commissioner Bartel reported that he had attended a presentation on wellhead protection by the Springfield Utility Board and had gained valuable information which would be useful as EWEB implemented its water supply plan.
APPROVAL OF MINUTES
Commissioner Bartel, Commissioner Bishop, and President Smith requested that paragraph 3 on page 3 of the minutes of the February 2, 1999, Work Session be changed, as follows:
In terms of several other discussion points,
The Commissioners
determined discussed
that environmentally superior power
generation potentially
includeding
the use of renewables meeting certain criteria, such as
high-efficiency natural gas with environmental features
and mitigation; and the use of
other generating sources such
as fuel cells and methane; and distributed generation.
President Smith determined that there was no objection to the requests and stated that the minutes were amended.
President Smith requested that sentence 4 of paragraph 4 on page 1 of the minutes of the February 2, 1999, Work Session be changed, as follows:
This draft Composite Strategy was included in
to his memorandum dated
January 28 distributed with the agenda of the meeting.
President Smith determined that there was no objection to her request and stated that the minutes were amended.
Commissioner Anderson requested that paragraph 3 on page 7 of the minutes of the Regular February 2, 1999, Regular Meeting be changed, as follows:
Commissioner Anderson said that some
other utilities which had tried incremental pricing for
environmentally sound power had discovered that many businesses
decided to use it and advertise that they were doing so. She said
another factor to be understood was that it appeared the State
of Oregon would soon Legislature might
permit commercial customers in EWEB's service territory
to have access to power sold by other power
providers. She said competitive pricing would be required to keep
many customers.
President Smith determined there was no objection to the request of Commissioner Anderson and stated that the minutes were amended.
President Smith requested that sentence 2 of paragraph 1 on page 10 of the minutes of the January 19, 1999, be changed, as follows:
It He said it could
create significant accounting problems for EWEB.
President Smith determined there was no objection to her request and stated that the minutes were amended.
Vice President Dyer moved, seconded by Commissioner Bartel, that the minutes of the February 2, 1999, Work Session and Special Meeting be approved, as amended. The motion was adopted unanimously, 4:0:1, with Vice President Dyer abstaining from voting.
Vice President Dyer stated that he had abstained from voting on the motion because he had been absent from the January 19, 1999, meetings.
CORRESPONDENCE
General Manager Randy Berggren noted that a collection of material related to electric industry restructuring had been distributed with the agenda of the meeting. He pointed out that the collection included
He suggested that Commissioners request additional information regarding any of the subjects covered by the material.
Mr. Berggren noted that a memorandum dated January 27 from Y2K Project Manager Kevin Fahey providing an update on the Year 2000 Project had been distributed with the agenda of the meeting. The memorandum invited Commissioners to visit the EWEB website or call Mr. Fahey for additional information.
Mr. Berggren noted that a memorandum dated February 9 from Facilities Director Tom Buckhouse with the 1998 Headquarters Site Master Plan Review Staff Assessments attached had been distributed with the agenda of the meeting. He said the plan would be reviewed by the Board at its meeting scheduled for March 2 when it was hoped Commissioners would suggest a process for dealing with policy on the topic.
Mr. Berggren noted that copies of a letter dated January 21 from David Boergers, Acting Secretary of the the Federal Energy Regulatory Commission (FERC), recommending a consultation on the effects of Endangered Species Act listing of the bull trout, had been distributed with the agenda of the meeting. He said the letter was the beginning of a formal process which could have significant impact on EWEB McKenzie River projects. He said staff was analyzing the letter and preparing a response. He said the issue would be returned to the Board at a later date.
Mr. Berggren reported that the March 2 Work Session would provide a Compensation Plan update and that the agenda of the Regular Meeting would include adopting a resolution commending Bill Eaton, receiving a report from State Lobbyist Jim Whitty, reviewing the Headquarters Site Master Plan, and approving wind power rates.
Mr. Berggren suggested that a Five-Year Financial Overview originally scheduled for the February 5-6 Board Planning Session be considered at a Special Board Work Session. Commissioners agreed to hold a special Work Session at 6:00 p.m. on March 9 to consider the overview.
PUBLIC INPUT
Moshe Immerman, Post Office Box 741, Eugene, observed that although EWEB was a public utility, its Board of Commissioners often acted as if it was administering a private corporation. He suggested that holding the annual review and performance evaluation of the General Manager in executive session was an example of his observation. He said the salary and employment contract of the General Manager were in the public interest and that citizens were the ultimate employer of EWEB staff. He also said he believed a policy should be established to forbid the General Manager from establishing secret Memoranda of Understanding.
President Smith said she found the testimony of Mr. Immerman difficult to understand because she did not believe the Board ever acted in the way he had suggested. She said that, to her best knowledge, there had never been a secret EWEB Memorandum of Understanding. She stated that there had been no discussion of the salary or contract of the General Manager during the executive session of the Board.
Jeff Osanka, 1742 Skyline, Eugene, said that he wanted to provide the Board with insights gained from his four years of experience as a former member of the EWEB Board of Commissioners. He said he hoped the Board would publicize the contract and salary of the General Manager before they were adopted and that it would allow the public to comment upon them. He stated that if such public comment was not permitted, he wanted to be on record as opposed any increase in the compensation package of the General Manager because he believed it was currently adequate. He said he would withhold comment on the evaluation of the General Manager until after he had received a report promised by the Human Resources Manager in October regarding investigation of allegations made by a former EWEB employee.
STATE OF THE UTILITY
President Smith presented her 1999 Annual Message to the Board. She said that, in 1998, EWEB had made great progress in responding to what customers say is important--concern for the environment, pursuit of conservation and renewable energy resources, being community focused, and increasing cost control.
President Smith said that concern for the environment was shown by the Wyoming Wind project; and by a land trust resolution allowing for the purchase of land along the McKenzie River to protect fish and wildlife habitats, water quality, and future recreational use.
President Smith said conservation over 20 years had saved as much energy in Eugene as was produced each year at the EWEB Carmen Smith generation facility, annually saving $5 million in wholesale power purchase costs. She said $60 million had been invested in energy efficiency in Eugene's homes and businesses during that same time.
President Smith said that EWEB's community focus was evident in the "A Tale of Two Rivers" education program funded by its Education Grant Program, in the development of a comprehensive water supply plan, and in open houses and public meetings scheduled to gather citizen comments.
President Smith said EWEB addressed cost control by its emphasis on fiscal management, and maintaining stable rates. She said the new employee compensation plan was intended to be more cost effective, fair, and based on market comparisons and performance management.
President Smith said that EWEB was committed to be ready for the Year 2000 with a 1999 review of computer operations, data exchanges, and all equipment with date-sensitive microprocessors. She reported that the Board approved action plan to expand the water system would meet growing needs. She said ways to assure and enhance electric, water and steam supplies in changing conditions would be necessary.
President Smith said that challenges in 1999 would include changes made by the Oregon Legislature to restructure the electric industry, implementation of an energy resources plan, improving water transmission and distribution facilities, and development of the telecommunications project.
REVIEW OF GENERAL MANAGER'S PERFORMANCE AND COMPENSATION
Human Resources Manager Sandra DeLuna reported that the Annual Review and Performance Evaluation of EWEB General Manager Randy Berggren had taken place during a Special Board Meeting held in Executive Session at 5:30 p.m. on February 16, 1999. She stated that the Board had a healthy discussion with all Commissioners and the General Manager present and participating freely.
Ms. DeLuna stated that the general nature of the review and evaluation had been favorable. She said the General Manager was given special commendation for his ability to manage complex projects such as the Compensation Project and issues related to industry deregulation, financial management, and risk management. She said appreciation was also expressed for his leadership skills, respect by industry peers, and integrity. She said an ability to seek solutions to problems, and uphold public processes were identified as strengths.
Ms. DeLuna said that areas identified for improvement centered around building stronger board and staff relationships.
Ms. DeLuna reported that goals set during the review included
She said the goals would be clarified, summarized, and brought back to the Board for further consideration.
Commissioner Bishop emphasized that the Board would next consider the goals reported by Ms. DeLuna in a public meeting.
President Smith shared quotations which she said summarized feelings of Commissioners at the end of the evaluation:
President Smith reported that Vice President Dyer and Mr. Berggren had discussed the current Employment Agreement between EWEB and the General Manager and prepared a draft revision proposal which had been distributed at the beginning of the meeting. She noted that there were two significant changes proposed--a seven-year term from January 1, 1999, through January 1, 2006; and a shift from being provided an EWEB vehicle for use on business to being provided a car allowance of $400 a month.
Commissioner Bishop asked why a seven-year term was being proposed. Mr. Berggren replied that he had requested that the contract be extended until 2006 because recent Board political volatility had led him to be concerned that the significant changes which could take place in Board membership in the next several years might create an unstable situation which could be ameliorated by a contract that coincided with his deferred compensation plan.
Commissioner Bishop asked why a car allowance was being proposed to replace the use of an EWEB vehicle. Mr. Berggren replied that he had requested the change because it would allow him to avoid the increasingly complex reporting requirements and limitations in the use of a company-owned vehicle. He said the proposed rate would likely be less than the EWEB reimbursement for miles he regularly drove on business.
President Smith asked if the proposed car allowance would be adequate in future years. Vice President Dyer suggested that review of the allowance be included in the annual salary review. He said he agreed that record keeping rules and insurance restrictions on permitted riders in company-owned vehicles limited their value.
Vice President Dyer noted that extending the length of the proposed contract did not change the ability of the Board to terminate the employment of the General Manager.
Commissioner Bartel asked why the proposed contract did not include a provision for it to be retroactively effective to September 1, 1998, when the previous employment agreement had expired. President Smith pointed out that the existing contract provided that it should continue on a month-to-month basis until action was taken to either renew or not renew it.
President Smith invited Commissioners to discuss the proposed contract.
Commissioner Anderson said that she had "no problems" with the proposed contract and that she believed it was a wise suggestion to extend its term until January 1, 2006. She suggested the provisions for an annual review and termination of the employment agreement gave EWEB adequate protection.
Commissioner Bishop said that she was concerned that the proposed contract set October or November as the time to enter into negotiations to renew the contract. She suggested that it might be beneficial to set the beginning of negotiations for earlier in the year. Ms. DeLuna replied that she agreed the traditional holiday season might create difficulties for being able to schedule contract negotiations, but that she felt scheduling the beginning of negotiations too far in advance of the end of the contract might also create a lack of urgency.
Vice President Dyer suggested that the proposed contract be altered to set the time of the beginning of negotiations for renewal during the third quarter.
Commissioner Bartel said that the employment contract appeared to contain mostly "boiler plate" provisions and that extensive negotiations would not seem to be required. Commissioner Bishop said that she agreed, but that she believed the negotiations should be completed before the contract expired.
Commissioner Anderson said that she believed it would be helpful to settle any contract negotiations before the Board began work on the annual budget. President Smith said that she agreed.
President Smith determined there was consensus to amend the first sentence of Agreement F of the proposed contract, as follows:
If parties choose to renew the contact, they shall enter in
negotiations to renew this contract during October or
November the third quarter of
2005.
Commissioner Bishop suggested that Agreement E.2 in the proposed contract be changed, as follows:
EWEB, upon majority vote of the Board of commissioners, may
terminate this contract for just cause. The General Manager may have
the issue of whether just cause exists determined by arbitration
pursuant to ORS 33.210 through 33.340 (cost other than attorney's
fees to be born equally by the parties). The arbitrator shall
determine just cause consistent with generally accepted employment
practices in the local municipal government. If just cause
is found to exist, EWEB shall have no responsibility to pay Randy L.
Berggren any compensation after the termination date.
Commissioner Bishop said that she favored deleting the reference to local municipal government because she did not believe there were consistent practices among such employers. She said she also believed that citing state law regarding just cause for termination was adequate.
President Smith suggested that the sentence proposed for deletion by Commissioner Bishop be retained, except for its ending phrase "in the local municipal government." Commissioner Bishop agreed that the suggestion of President Smith would meet her concern.
Vice President Dyer asked if there were "generally accepted employment practices." Ms. DeLuna replied that there was a generally accepted body of such practices and that "just cause" was well defined.
President Smith determined that there was consensus to only delete "in the local municipal government" from sentence 3 of Agreement E.2 in the proposed contract.
President Smith determined that there was "comfort" with the proposed change to provide for a car allowance payment for use of a personal vehicle by the General Manager on EWEB business.
President Smith determined there was consensus to add a sentence to Agreement C.1 of the proposed contract, as follows:
The car allowance shall be reviewed annually.
President Smith invited Commissioners to discuss the salary component of the proposed contract. She referred to a memorandum from Director of Corporate Services Roseanna McArthur dated January 28 regarding General Manager evaluation and contract renewal distributed in advance of the meeting. Surveys of salaries of general mangers of Northwest public utilities and a "market survey" regarding the General Manager's salary were attached to the memorandum.
President Smith reminded Commissioners that the current compensation of Mr. Berggren included an annual base salary of $115,000 and a $35,000 annual deferred compensation plan. She noted that survey data provided by Ms. McArthur showed that the 50th percentile salary of public sector parallel management employees was $149,700 and that the 50th percentile of a "blended" comparison used for other EWEB employees was $180,200. She added that the 55th percentile comparison of public sector managers was $165,000. She said the compensation of other EWEB employees was tied to the 55th percentile of "blended" comparisons.
Ms. DeLuna said that "blended" comparisons were used in determining the compensation of most, but not all EWEB employees.
Commissioner Bartel asked for an explanation of data provided by Ms. McArthur entitled "1998 General Manager Salary Survey." Ms. DeLuna replied that the data provided information about salaries of general managers of utilities in the northwest and was prepared each year for Commissioners. Vice President Dyer added that responsibilities of the general managers included in the data were not comparable and that salaries paid did not appear to correspond to such responsibilities.
President Smith noted that the proposed contract contained no suggestion of a salary for Mr. Berggren.
Vice President Dyer discussed salary comparisons included in the data provided by Ms. McArthur. He suggested that a $3,500 increase in General Manager base pay be considered for 1999, effective January 1. He said such an increase would amount to approximately three percent of current base pay and would raise the compensation package to between the 50th and 55th percentile of "blended" comparisons.
President Smith said determining the salary of the General Manager involved deciding between what Mr. Berggren "was worth" to EWEB and what "was appropriate" for a public agency. She said she believed the suggestion of Mr. Dyer was prudent and "sort of" tied the General Manager to the newly established EWEB Compensation Plan. She said she was concerned that no opportunity for a merit increase was available to the General Manager and suggested that consideration be given to adding such an opportunity in 2000.
Commissioner Bishop said she did not support tying the compensation of the General Manager to performance goals. She said the unique nature of the General Manager's role and the uncertainty of utility operations made her question whether such a plan was appropriate.
Commissioner Anderson said she would support investigating whether it was feasible to tie achievement of goals to the compensation of the General Manager.
Vice President Dyer reminded Commissioners that goals for the work of the General Manager were being developed. He said he believed they should be considered in evaluating performance. Commissioner Bartel said that he agreed.
Commissioner Bishop said that she was not advocating that there be no goals for the work of the General Manager, but that she was hesitant to tie a compensation package to outcomes related to them.
President Smith said she believed continuing the discussion regarding goals and the General Manager's compensation plan could be productive. She asked if the Board wanted to postpone action on the proposed contract and the suggestion of Commissioner Dyer regarding an increase in pay for 1999.
Commissioners discussed the value of continuing the discussion and came to a consensus that it should take place in the context of preparing for the annual performance evaluation of the General Manager scheduled for December 1999.
Commissioner Bishop said that she agreed with the consensus, with the caveat that information regarding it needed to be distributed in advance of the meeting in which it was scheduled to be discussed and that the public be given opportunity to make comments. She said she believed a document such as the General Manager's contract was too important for the Board to be expected to review at the same meeting at which it was distributed for the first time. She said that, in the future, she would not take action on important items not presented to the Board in advance of the meeting. She said she wanted to avoid rushing to any decision, but that she believed renewal of the General Manager's contract had already been delayed for too long.
Vice President Dyer moved, seconded by Commissioner Bishop, that the proposed revised contract with General Manager Randy Berggren be approved, effective January 1, 1999; inserting $118,500 in the blank in Agreement B.1 as the base salary; amending Agreement C.1 by adding the sentence "The car allowance shall be reviewed annually;" amending sentence 3 of Agreement E.2 by deleting "in the local municipal government;" and amending the first sentence of Agreement F to indicate that negotiations to renew the contract would begin during the third quarter of 2005.
The motion was adopted unanimously, 5:0.
UNDERGROUNDING TASK FORCE REPORT
Public Affairs Manager Marty Douglass referred to his memorandum dated February 11 regarding the agreement reached between representatives of EWEB and the City of Eugene regarding the undergrounding of utilities. He noted that the Articles of Agreements developed by the Underground Task Force were attached to the memorandum. He reviewed background information contained in it and noted that the agreement included the following provisions:
Commissioner Anderson said that she had not believed as successful an outcome as was achieved could have resulted from the work of the task force.
Commissioner Bartel said that he appreciated the report of Mr. Douglass. He said he believed undergrounding of utilities involved more than aesthetic issues. He said he was interested in the cost of maintaining undergrounded utilities in comparison to those above ground. Electric Operations Manager Dave Koski said that approximately $875,000 was annually budgeted for above ground maintenance. He said that the cost for underground maintenance was more difficult to determine, that tree elimination costs were not calculated, but that $164,000 was spent in 1998 for locating costs. He also reported that $2.5 million was budgeted for extension of underground utilities and $600,000 for above ground utilities in 1999.
Commissioners discussed the report and expressed appreciation to members of the Underground Task Force for their work.
Commissioner Dyer moved, seconded by Commissioner Bartel, that the Board approve the Articles of Agreements between the City of Eugene and the Eugene Water & Electric Board regarding undergrounding of utilities dated December 28, 1999, and that the General Manager be authorized to sign the agreement.
The motion was adopted unanimously, 5:0.
1998 YEAR-END FINANCIAL STATEMENT
Assistant Treasurer Cathy Bloom referred to her memorandum dated February 10 regarding the results and impacts of fourth quarter financial statements distributed with the agenda of the meeting.
Ms. Bloom noted that her memorandum pointed out that the Electric Utility ended the year with lower revenue than in 1997, largely because less power was purchased by EWEB's two largest industrial customers than anticipated. She said the deficit of $1.5 million created by lower revenue and higher than anticipated power costs contributed to the low cash position of the utility, which was corrected by transfers from its operating and capital improvement reserves.
Ms. Bloom reported that the Water Utility ended the year with a profit of $2.7 million, largely because of higher than forecasted sales in the summer and system development charges received.
Ms. Bloom distributed paper copies of overhead projection slides prepared to analyze financial results of the electric, water, and steam utilities. She reviewed information contained in the slides, as follows:
Electric Utility
Water Utility
Steam Utility
Ms. Bloom stated that audits of the 1998 financial records would begin during the week of February 22 and that reports were expected to be issued during March. She said that new information received regarding General Accounting Standards about disclosure of liabilities related to Year 2000 preparations suggested that a "qualified opinion with a scope limitation" rating would be given to the audits of all public agencies. She said the reason for the less than unqualified opinion was that it was not possible to fully assess readiness for Year 2000 issues. She also said that since the rating would be given to all, it would not likely affect qualification for bond interest rates, but could lead to uninformed negative public opinion.
The meeting adjourned at 10:20 p.m.