Board Members present: Susie Smith, Mike Dyer, Sandra Bishop, Dorothy Anderson, and Peter Bartel.
Others present: Randy Berggren, Terry Bequette, Deborah Brewer, Tom Buckhouse, Sandy DeLuna, Marty Douglass, John Femal, Dick Helgeson, Libby Henry, Everett Jordan, Dale Kessinger, Garry Kunkel, Kris Middlewood, Mat Northway, Jim Origliosso, Lorri Asher, Dick Varner, Debra Wright, John Yanov, and Krista Hince of the EWEB staff; Jim Whitty, EWEB Lobbyist; Eric DeFreest, Calkins & Calkins, General Counsel; member of the public; and Daniel Lindstrom, Minutes Recorder.
President Smith called the Work Session of the Eugene Water & Electric Board (EWEB) to order at 5:40 p.m. She announced that she would be required to leave the meeting for a period of time shortly before 7:00 p.m.
General Manager Randy Berggren referred to a draft document entitled "1999 Board Goal Themes and Proposed 1999 Goals for the General Manager." He reminded Commissioners of his March 16 presentation regarding goals which had been identified at the Annual Review and Performance Evaluation held on February 16. He said he had refined the previous presentation and more clearly identified Goal Themes and Priority Goals, as follows:
Priority Goals for 1999:
A. Board approval of a Construction Work In Progress (CWIP) policy and reporting procedure by July 1999.A. Implementation of Total Compensation Plan (TCP) milestones:
- Completion of the base pay merit application by July 1, 1999.
- Implementation of an incentive pay mechanism by July 1, 1999.
- Implementation of monitoring systems/Board reporting for TCP status.
A. No significant interruptions in critical EWEB services or activities as a result of Year 2000 issues.
B. Board adoption of an Electric Integrated Resources Plan by August 1999.
C. Implementation of Water Supply Plan milestones for 1999:
- Initiate construction of water transmission line.
- Perform initial exploratory work on ground water
- Initiate design of Hayden Bridge Addition.
- Board approval of financing strategies to fund the Water Supply Plan.
A. Implementation of Telecommunications Project - Phase I.
- Phase I core system operational by December 31, 1999.
- Board approval of a Telecommunication Residential Pilot Design.
- Implementation of monitoring/Board reporting for Telecom system operation.
A. Implementation of the Foote Creek Wind Project.
- Project operational by June 1, 1999.
- Retail Wind Subscription Offering initialed by June 1, 1999.
Priority Goals for 1999:
A. Revision and update of Board Financial Policies by October 1, 1999.A. Board acceptance of a five-year strategic direction by October 1, 1999, which responsibly balances:
- Rate and charges limits established by the Board
- Board Operating Principles.
- Resource constraints on the organization.
- Operating and financial risk in the business environment.
A. Board adoption of the Year 2000 Budget and Work Plan.
Priority Goals for 1999:
A. Identify and implement strategies that demonstrate an understanding of challenges faced by women at EWEB within 12 months.A. Develop and start apprenticeship initiatives for supporting professional/vocational skills development within the community within 12 months.
Priority Goals for 1999:
A. Provide active participation and leadership on the WRI Board for the Southern Willamette Valley and EWEB interests.A. Network with other entities in the community to coordinate activities on the WRI.
Mr. Berggren reported that Commissioner Bartel had proposed that a goal related to development of a review of the EWEB Site Plan discussed on February 16 should be added to those identified. He suggested that it be added to Goal Theme 1, which dealt with major project activities.
Mr. Berggren noted that he had included statements from Commissioners which had led to the proposed Priority Goals identified in the draft document.
Mr. Berggren also noted that he had identified proposed Priority Goals for which he would take major responsibility, as follows:
Mr. Berggren stated that his identification of goal themes and grouping of priority goals had not been confirmed by the Board, but that status reports and conversations regarding them had been scheduled for impending meetings, were being used to give guidance to the Executive Management Team, and were giving guidance to his personal goal setting process.
Commissioner Dyer asked if it would be possible to accomplish the goals within the time lines provided. Mr. Berggren replied that completing the goals were included in work plans, that each goal had senior management sponsorship, and that many were essential elements in EWEB operations. He noted that the priority goals in Goal Theme 3 and the first in Goal Theme 4 were new and might require as much as 10 percent of his time.
Commissioner Dyer stated that he believed the goal statements were comprehensive and to successfully complete a majority of them would lead to "a pretty good year."
President Smith said she appreciated the draft goal statement. She recommended that the proposed goal related to a Site Plan be provided more clear definition. She suggested that an assumption in Goal Theme 2 that a strong working relationship with the Board would result from completing certain job tasks might or might not be true. She suggested that efforts to rebuild the Board and its relationship with staff be separately addressed. Mr. Berggren agreed.
Mr. Berggren asked if formal Board action was necessary to approve the goal statement. President Smith determined there was consensus that such action was not needed and that informal acceptance of them was given.
Commissioner Bartel said he supported and appreciated the effort to develop goals. He suggested that the statement was ambitious, but would be an indicator of Board intentions. He said he was strongly interested in the incorporation of Site Plan development into the goals.
Commissioner Bishop said she agreed that Site Plan development should be included in the goals, but that she was unsure of how accomplishing it would be measured or how often the goals should be considered by the Board. Mr. Berggren replied that he had tentatively scheduled consideration of goals at two meetings to be held in 1999, but might revise the plan to schedule such consideration on a quarterly basis.
Commissioner Bishop said she felt it was important to note that the goal statement was not tied to any General Manager pay package incentive. Mr. Berggren replied that he agreed the General Manager was outside the merit pay plan adopted by the Board, but suggested that the goals presented expectations and that achieving them could lead to judgements about his worthiness in the position.
Mr. Berggren stated that he had asked for staff review of the EWEB Education Grant Program. He said he had requested proposals to shift the basis for determining allocations to school districts in the program away from previously used formulas of Contributions in Lieu of Taxes (CILT), and to provide the Board with increased flexibility in dealing with it. He said "political issues" created by the proposed changes were not intended, but would need to be faced.
Public Affairs Manager Marty Douglass stated that no action on program change proposals would be taken until a May meeting of the Board. He reviewed background of the program contained in an April 14 memorandum from Community Education Coordinator John Femal distributed with the agenda of the meeting.
Mr. Douglass said the proposal was a five-year "road map" for the program which provided funding to four area school districts to encourage development and implementation of a curriculum related to EWEB's mission. He said the current program had begun in 1995 when voluntary CILT payments to school districts had been eliminated by voter approval of Ballot Measure 5. He said recommended revisions included changes to the allocation formula which resulted in reductions in distributions to the McKenzie and Springfield school districts and increases to the Bethel and Eugene 4J districts.
Mr. Femal said his memorandum was both a report of the current status of the Education Grant Program and description of the proposed five-year plan. He said the program had done well -- created good partnerships with school districts, developed excellent curriculum, and benefitted the community. He pointed out that the program was an example of an EWEB Operating Principle:
The Eugene Water & Electric Board operates so that customers and the community benefit from public ownership of energy and water utilities.
Mr. Femal reviewed issues related to the program and recommendations made by staff contained in his memorandum, as follows:
Issue #1: At what level should the EWEB Education Grant Program be funded?
Recommendation:Continue funding at nearly the same level we have funded this program over the past four years: $680,000.
Issue #2: How should funding for the program be allocated within the utility?
Recommendation: Internal funding for the program should be the same as other Corporate Services. The administrative split in current use by Corporate Services would apply to the EWEB Education Grant Program. (At an 86 percent electric/14 percent water split the respective contributions would be $454,800 for electric and $95,200 for water.)
Issue #3: How can the EWEB Education Grant Program allow for more flexibility in funding education projects and be responsive to new education opportunities?
Recommendation: Create an EWEB Partnership in Education Grant Account to provide more flexibility in directing the support for education activities and take advantage of near-term education opportunities.
Dedicate $100,000 of annual EWEB Grant Program funds to this account to be managed by EWEB staff. To be considered for funding, the projects must meet at least one of the following criteria:
Other EWEB Education Grant Program criteria will be used to help differentiate between competing projects.
Issue #4: How should the EWEB Education Grant Program funds be distributed among the four area school districts?
Recommendation: Distribute the funds available to districts based on both electric and water customer revenues located within each district. Overall EWEB Education Program funding would be as follows:
|
Eugene 4J School District |
$386,000 |
|
Springfield School District |
$68,000 |
|
Bethel School District |
$82,000 |
|
McKenzie School District |
$4,000 |
|
Multi-District Fund |
$40,000 |
|
Flexible Partners in Education Grant Account |
$100,000 |
|
|
$680,000 |
Issue #5: What grant proposal guideline changes could improve the management of the EWEB Education Grant Program?
Recommendation: 1. Directly address more of the evaluation criteria in the proposed format. Restructure proposals to directly address a number of evaluation criteria, including:
President Smith asked if the McKenzie and Springfield school districts had grounds, other than the proposed grant reductions, to object to the recommended changes. Mr. Femal replied that he had learned the Springfield School District had mistakenly believed the Education Grant Program had been instituted in 1995 to replace mandatory CILT payments from EWEB, but that they were actually voluntary payments.
Commissioner Dyer noted that allocations to school districts had previously been calculated on the basis of revenue generated and the location of EWEB assets, but that the new proposal considered only revenue. He said to sever the tie between allocations and the location of assets removed any relationship to unpaid property tax. He suggested that doing so could be a legitimate objection to the proposed changes.
Mr. Berggren said the observation of Commissioner Dyer was accurate, but that the proposed changes were an attempt to eliminate any tie to proportionate values because the original voluntary CILT were established out of EWEB's desire to support school districts in which it had a presence. He said the allocations had little relationship to payments made to the Eugene 4J and Bethel school districts.
Mr. Femal said the proposed changes emphasized that the program was grant-based, not CILT allocations.
Commissioner Bartel said he had assumed that the proposed allocation reduction would lead to the loss of personnel. Mr. Femal replied that personnel changes in the Springfield District had led to the loss of its program coordinator, but that a replacement would likely continue its excellent program. He said previous allocations to the Springfield District had been proportionately larger than those made to the Bethel District.
Commissioner Bartel asked at what point the Board would be involved in decisions regarding allocations in the program. Mr. Berggren said he considered the proposed Partners in Education program to be "the Board's money." He suggested that there could be adequate flexibility in its grant approval criteria to allow it to be entirely allocated to the Springfield District. Mr. Femal added that approval of grant applications in the annual allocations was given through a committee decision-making process. He also said there were carry-over provisions in the allocation processes and that districts often did not utilize full allocations in the year they were provided.
Commissioner Anderson reported that she had discussed the proposed changes in allocations with representatives of the McKenzie Watershed Council and was pleased to discover that the proposed Partners in Education grant program was viewed as an opportunity to overcome losses in the annual allocation to the district.
Commissioner Bishop suggested that the timing of the proposed program changes did not fit well into school district budget planning processes. She recommended that consideration be given to maintaining current allocation levels through another school year.
Commissioner Anderson asked if it would be possible for the Mohawk School District to apply for a grant from the Partners in Education program. Mr. Douglass replied that such an application would be considered.
President Smith said that she believed it would be positive to expand the grant program proposed for the McKenzie School District because its residents had a major role to play in maintaining the quality of water used by EWEB.
Commissioner Anderson asked if there were residents in the McKenzie River watershed who were part of other school districts. Mr. Femal replied that some residents were considered to be in the Sweethome School District, but that their children were served by the McKenzie School District by mutual agreement.
President Smith asked if other utilities had programs similar to the Education Grant Program of EWEB. Mr. Femal replied that many utilities were privately owned companies and paid property taxes, that others were too small to establish an effective program, and that the Springfield Utility Board replicated the EWEB program.
Mr. Femal explained that the proposed change in funding the Education Program to use the current administrative cost split of 86 percent electric and 14 percent water was being recommended because the benefits of the program were utility wide. Mr. Douglass said the issue was of concern to the Water Division. Mr. Berggren added that the required funding would need to come from cost reductions or rate adjustments. He said it would be possible to implement the recommendation incrementally.
Commissioner Anderson said she supported the proposed funding change because she did not believe support for the program should be charged solely to the Electric Division.
Commissioner Bishop said she did not believe water rates should be raised to allow funding of the grant program. She suggested that additional discussion of its financial elements take place at the meeting at which it would be on the agenda. She said she would like to consider the possibilities of allowing the current allocation formula to continue for another year, when districts would be informed of changes to be made in time for budget planning.
Commissioner Dyer said he agreed with the suggestions of Commissioner Bishop.
Commissioner Bartel said he also agreed with Commissioner Bishop. He added that he believed it would be important to develop criteria for grant approval in the Partners in Education program.
Mr. Berggren said that information about criteria currently used to approve allocation grant applications would be provided to the Board. He added that he believed it would be helpful to school districts to hear that the Board was not considering changing allocation procedures the middle of budget cycles. He said reconsideration of the proposed changes to the Education Grant Program did not have a high priority, but that it would be added to the agenda of a meeting as soon as possible.
President Smith said she would support the proposed changes in the program, as long as it would be possible for all school districts serving residents along the McKenzie River to use its benefits for watershed education programs.
Commissioner Bishop said she would like to discuss the possibilities of expanding the grant program beyond school districts. Mr. Berggren replied that he had considered relating the proposed apprenticeship program to the Education Grant Program.
President Smith asked if the Education Grant Program was related to the EWEB Lane Community College energy management grant program. Mr. Femal replied that the two programs were established through separate agreements, although the college program had initially been built on CILT payments.
Mr. Femal expressed appreciation for discussion of the program by the Board.
President Smith left the meeting at 6:50 p.m. and Commissioner Dyer assumed the chair.
EWEB Legislative Session Representative Libby Henry reported that the Oregon House of Representatives had unanimously passed HB3218 which allows purchase of priced insurance from the market by a utility involved in wholesale power sales.
Ms. Henry also reported that Senate Bill 1149 providing for restructuring of the electric power industry had been passed by the Committee on Public Affairs with bipartisan support. She described political activity involved in its passage. She reviewed elements of the bill contained in Sections 22 through 27. She said EWEB policy was closely followed in consumer-owned utility provisions of the bill. She said the most active opposition to the bill came from PacificCorp, because it believed industrial rates would be required to subsidize residential rates.
Commissioner Anderson asked if it would be possible for SB1149 to be "watered down" when it was considered by the House of Representatives. Ms. Henry said significant changes were not likely because of the threat of a veto by Governor Kitzhaber.
EWEB's State Lobbyist Jim Whitty reported that Treasurer Jim Origliosso had provided testimony on proposed legislation related to issues raised by changes in Public Employees Retirement System (PERS) rates. He said committee members holding the hearing were engaged, but confused about how the State pension system had arrived at the position it had. He said he did not believe significant concern about the issues involved had yet developed.
Mr. Origliosso said his testimony before the Senate Judiciary Committee had attempted to convey that PERS needed to be fixed and that all proposed changes dealt only with the future, not the past. He said negotiated contracts were regularly identified as preventing changes to previously made PERS decisions. He said testimony was given in support of reallocating $3.5 billion in PERS Reserves to reimburse employer reserve accounts.
Mr. Origliosso said legal opinions regarding the possibility of legislative solutions to PERS problems had been submitted based on an argument that it could not have been the Legislature's intent to create the problem which had developed. He said others argued that the Legislature did not have the authority to act because matters of contract law were involved, since contract authority superceded legislative authority.
Mr. Whitty reported that a PERS Legislative Work Session was scheduled by the Senate Judiciary Committee on April 22. He said a Third Tier retirement category eliminating money match provisions would be considered as a resolution to the problem currently causing difficulty. He said consideration would also be given to allowing public agencies to "opt out" of PERS.
Commissioners discussed various elements of how to resolve PERS problems.
Mr. Whitty reviewed the status of other bills being considered by the Legislative Session of concern to EWEB &endash; Telecommunications, Net Metering, Business Energy Tax Credit Repeat, Salmon Recovery and Stream Restoration.
The work session adjourned at 7:40 p.m.