Board Members present: Susie Smith, Mike Dyer, Sandra Bishop, Dorothy Anderson, and Peter Bartel.
Others present: Randy Berggren, General Manager; Tom Buckhouse, Mel Damewood, Kris Evonuk, Cathy Hamilton, Dick Helgeson, Dale Kessinger, Garry Kunkel, Roseanna McArthur, John Mitchell, Jim Origliosso, Brenda Sirois, Dick Varner, Ron Wilson, John Yanov, and Lamonte Smith of the EWEB staff; a member of the public; and Daniel Lindstrom, Minutes Recorder.
President Smith called the Regular Meeting of the Eugene Water & Electric Board (EWEB) to order at 7:40 p.m.
President Smith noted that the agenda had inadvertently omitted the normal Public Input item. She said it would be added after consideration of Correspondence.
Commissioner Bartel reported that he had represented EWEB at an occasion in honor of the opening of the Housing Authority and Community Services Agency (HACSA) Jacobs Lane project.
Commissioner Bartel said he had appreciated the EWEB Retirement Banquet, which he attended.
Commissioner Anderson reported that she had received a phone call from EWEB customer Susan Klein, who continued to be upset regarding the high cost of her electric service.
President Smith asked for an explanation of the term "contribution margin" used in a memorandum from Assistant Treasurer Cathy Bloom regarding first quarter financial results. Financial Services Supervisor Dick Varner replied that the term referred to revenue minus variable costs &endash; how much was left over to fund the rest of the operation.
Commissioner Bishop stated that she had also appreciated the Retirement Banquet and described the experience. She reported that Ms. Klein and another customer had also called her, but that she had been unable to return the calls. She requested staff help in doing so.
Commissioner Anderson requested that sentence 2 in paragraph 7 on page 2 of the minutes of the April 6 Regular Board Meeting be changed, as follows:
Commissioner Anderson replied by explaining that a study of the
implications would need to be made, proposals developed, public
hearings held, and a vote Board action be
taken to change rates.
President Smith determined there was no objection to the request of Commissioner Anderson and stated that the minutes were amended.
President Smith requested that the spelling of the name of Susan Klein be corrected in paragraph 7 on page 2 and paragraph 2 on page 2 of the minutes of the April 6 Regular Board Meeting. She determined there was no objection to her request and stated that the minutes were amended.
Commissioner Bartel requested that sentence 1 in paragraph 10 on page 11 of the minutes of the April 6 Regular Board Meeting be changed as follows:
President Smith asked if there would be a cost savings or other benefit to postponing getting an appraisal of the Midgley Building until the development of the EWEB Building Master Plan.
President Smith determined there was no objection to the request of Commissioner Bartel and stated that the minutes were amended.
Vice President Dyer requested that paragraph 14 on page 11 of the minutes of the April 6 Regular Board Meeting be changed, as follows:
Vice President Dyer Dyer said that he agreed with
Commissioner Bartel because the $2 million EWEB investment needed to
be either "unloaded" or redesigned to maximize its return.
President Smith determined there was no objection to the request of Vice President Dyer and stated that the minutes were amended.
Commissioner Anderson requested that paragraph 3 on page 8 of the minutes of the April 20 Work Session be changed, as follows:
Commissioner Anderson reported that she had discussed the proposed
changes in allocations with representatives of the McKenzie
School District 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.
President Smith determined there was no objection to the request of Commissioner Anderson and stated that the minutes were amended.
Vice President Dyer moved, seconded by Commissioner Bartel that the minutes of the April 6, 1999, Regular Board Meeting and of the April 20, 1999, Work Session be accepted, as amended.
Mr. Berggren reported that approximately 250 persons attended the EWEB Retirement Banquet, a combination of employees and previously retired employees. He expressed appreciation to Commissioners who had attended.
Mr. Berggren announced that a Board Planning Session was planned for June 18-19 at the Eugene Hilton Hotel.
Mr. Berggren referred to First Quarter Financial Results reported in a memorandum from Assistant Treasurer Cathy Bloom. He said impacts of the predicted negative $1 million budget variance by year-end for the Electric Utility would be given further analysis and actions taken to lessen its effects.
Mr. Berggren referred to the memorandum from Environmental Manager Laurie Power regarding Environmental Compliance Assessments of the Carmen-Smith Hydroelectric Project and the EWEB Steam Plant. He noted that the assessments had been successfully completed and positively evaluated by EWEB's environmental attorney, Don Haagensen.
Mr. Berggren referred to memoranda from External Communications Coordinator John Mitchell regarding an EWEB information/advertising campaign and biennial Electric Division customer satisfaction and opinion survey.
President Smith proposed that the survey be used to receive feedback about the potency of the campaign. She said she believed it would be important to determine its effectiveness. She suggested that inquiries specifically referring to the campaign.
Commissioner Bartel said he believed viewers would be confused by the campaign &endash; whether it was news or advertizing.
Mr. Berggren reported that, with less than 20 percent of EWEB customers having received invitations to subscribe to the Windpower Project, over 200 application cards had been received. He said there was a higher than anticipated level of requests to use more than 10 percent of wind power. He said projections indicated that more customers would seek to use Windpower than was available.
Commissioner Anderson requested that final reports about subscriptions to Windpower include identification of the ratio of General Service Rate and Residential Rate customers.
President Smith said she was certain it would be necessary to identify Windpower participation options for customers unable to avail themselves of the EWEB project.
Mr. Berggren reminded Commissioners that a dedication ceremony for the Foote Creek Rim Wind Project facility would be on July 16 in Wyoming.
Mr. Berggren distributed copies of what he described as an updated version of 1999 Board Goal Themes and Proposed 1999 Goals for the General Manager discussed at previous meetings.
Mr. Berggren reviewed a listing of agenda items to be considered in May meetings of the Board distributed at the beginning of the meeting. He noted changes to previously presented agenda and said that a Master Plan development process, General Service Rates approval process, and 1999 Budget revisions had been removed and would be rescheduled.
President Smith noted that a memorandum from Customer Relations Manager Charles Dalton regarding the status of the Universal Service Plan Financial Analysis had been distributed with the agenda of the meeting. She said she was concerned that the sudden change in the financial situation of EWEB had forced the Board to leave consideration of the plan in limbo. She suggested that the Board consider taking some sort of action on the plan to establish its intended support.
Commissioner Bishop said that she interpreted the memorandum of Mr. Dalton's to be asking for action regarding support for the Area Services Low-Income Resource Group. Mr. Berggren replied that he had been unable to contact Mr. Dalton regarding that action, but that he would have full information regarding the request by the next meeting.
President Smith determined there was no one present wishing to address the Board of Commissioners.
Mr. Berggren reminded Commissioners of recent considerations of General Service Rates. He said no "silver bullet" solution had yet been found. He pointed out that any action taken would have system-wide effects.
Mr. Varner reviewed statistics regarding the number of General Service Rate accounts by size category, kilowatt hours of usage, and revenue produced. He described issues related to small General Service customers, as follows:
Mr. Varner described an EWEB rate study conducted in 1992. At that time, he said, the Board had decided to eliminate Demand Charges on the first 10 kilowatt of power in three steps. He said the first step took place in conjunction with October 1993 rate changes, but that no General Service Rate changes had occurred since. He said further implementation of the decision would increase bills to other customers.
Mr. Varner reviewed what he called the "Current Plan" to deal with General Service Rate issues by analyzing Load Data of a statistically valid sample of EWEB customers, splitting the General Service Class into three groups based on Load Data, and combining Large General Service and High Voltage customers in the third quarter; preparing a Cost of Services Analysis of the new class structure in the fourth quarter; presenting a new rate proposal in January 2000; holding public hearings regarding the proposal in February and March 2000; and implementing new rates in April 2000.
Mr. Varner explained options available to deal with General Service Rate issues, as follows:
Vice President Dyer asked that an explanation be given for Option 2. Mr. Varner replied that it would involve performing a "quick and dirty" cost of services study, creating a new class of customers which use less than 30 kilowatt hours of power, and giving the new class rates comparable to residential customers with the same power usage. He said he was unable to estimate potential rate increases required to make up revenue lost through the opinion.
Commissioner Bishop said she had always assumed it was an EWEB principle that there was to be no subsidization of one class by another. Mr. Varner replied that Option 2 could be considered to propose that such a principle remain valid because it could be interpreted to provide subsidization between members of the same class.
Commissioner Dyer asked if Option 2 would encourage conservation. Mr. Varner replied that it would encourage conservation of energy, as opposed to the current emphasis on conservation of demand.
Commissioner Anderson said her recent conversation with Ms. Klein had led her to rethink her position on the decision to eliminate Demand Charges on the first 10 kilowatt of power usage. She said she had concluded it was best if final implementation of it waited until next year. She said she shared the concern of other Commissioners that the decision had not been implemented as had been planned, but that a commitment to implementing it in 2000 was most logical. She said a temporary fix of the problems involved would not be appropriate.
President Smith said she wanted to agree with Commissioner Anderson, but that she felt the Board had been remiss in following up on the decision to eliminate the Demand charges. She said she understood why the second and third implementation steps had not been taken, but was upset that the issue had "fallen off the radar screen."
Commissioner Dyer said he was concerned that the Current Plan would move the cost of providing demand capacity from small to large General Service customers.
Commissioner Bishop said she did not believe a reduction in revenue such as would be created by elimination of Demand Charges on the first 10 kilowatts of power usage could be absorbed by EWEB.
Commissioner Bartel said he was attempting to understand the magnitude of the issue under consideration. He said it was difficult to understand why there were not thousands of customers complaining of high rates. Mr. Varner said such complaints seemed to arrive in groups. Commissioner Bishop said she believed there was a general perception that the EWEB rate structure was unfair.
Commissioner Bartel said he understood the necessity to raise rates and that it was good to make class and rate structure changes in connection with rate changes.
Mr. Varner explained that eliminating the Demand Charge on the first 10 kilowatts of power usage would result in an annual revenue decrease of approximately $2 million.
Commissioner Bishop asked why there was a need to eliminate the Demand Charge on the first 10 kilowatts of power usage for all General Service customers. Mr. Varner replied that to not do so would create a special rate class and involve subsidization of one class by another.
Commissioner Anderson said that to prepare a temporary fix of the problem under consideration could result in wide-spread customer dissatisfaction.
Senior Financial/Rates Analyst Dale Kessinger explained a cost of services study of the rates of Ms. Klein and stated that the expense of her power usage was approximately equal to her monthly bill. Mr. Berggren reported on various suggestions EWEB staff had made to assist Ms. Klein in reducing her electric usage, such as changing heat and using dual thermostats.
Commissioner Dyer said he believed that if EWEB was to have cost-based rates, customers should be charged the expense of providing service. He said he supported following the Current Plan to deal with General Service Rate issues outlined by Mr. Varner.
Commissioner Bishop said she believed being a responsible Commissioner made her unwilling to maintain the status quo in dealing with rate structures. She said she favored considering Option 5 proposed by Mr. Varner, developing rate classes based on load characteristics.
Mr. Berggren said he believed the Current Plan option to deal with General Service Rate issues was well formulated. He said EWEB would be faced with the necessity of increasing electric rates in 2000. He suggested that the Board might consider implementing the elimination of the Demand Charge on the first 10 kilowatts of power usage for General Service customers in a single stage, rather than in increments as previously planned.
Mr. Varner stated that if research regarding the change in General Service Rate structure began in July, a rate change proposal could be placed before the Board in January.
Commissioner Bishop said it would be important for a rate change proposal to consider all of its implications and to include supporting evidence for its implementation.
President Smith said she believed there was general agreement among Commissioners for staff to continue with Option 1, the Current Plan to deal with General Service Rate issues, and for staff also to continue to work with Ms. Klein regarding her concerns. She suggested it would be important to be prepared to deal with negative media reporting if threats made by Ms. Klein were carried out.
Mr. Berggren stated that the purpose of the agenda item was to clarify the involvement of the Board and public in development of an EWEB Headquarters Site Master Plan.
Facilities Services Division Director Tom Buckhouse referred to his memorandum dated April 29 distributed with the agenda of the meeting. He invited Commissioners to discuss questions raised about scope and process for the Master Plan contained in a document attached to his memorandum.
Mr. Buckhouse stated that he had discussed issues related to the Master Plan with staff of the City of Eugene's Economic Development Department. He reported that he had learned the City had a long-term interest in gaining control over AgriPac property and a portion of the EWEB Headquarters site for re-development. He said the interest was not related to a Riverfront Research Park expansion strategy.
Mr. Buckhouse reviewed consideration already given to the Headquarters Site Master Plan development -- operating issues and development needs for the site had been identified in staff assessments presented to the Board, and the Board had made a tour of the site.
President Smith said that, in addition to concerns she had previously raised which were included in the attachment to the memorandum of Mr. Buckhouse, she had identified other issues related to development of a Master Plan, as follows:
Commissioner Anderson said that she had also identified additional concerns, as follows:
Commissioner Bartel said the study should include consideration of the "Back to the River" movement evidenced by the City's interest in the AgriPac site.
Commissioner Anderson said she believed the scope of the Master Plan project should include consideration of the potential uses and/or limitations to use of the former coal gasification plant area on the Headquarters site.
Vice President Dyer said he did not fully understand why discussion of a Headquarters Site Master Plan had begun. He suggested that if the site was serving the needs of EWEB, the plan was superfluous; if it did not, a decision should be made to move; and if the City wanted a portion or all of the site, it should make an offer that would make giving up the desired area acceptable to EWEB.
Mr. Berggren said that difficulties in operating from the current Headquarters site had not led staff to consider recommending it should be abandoned. He said issues being discussed were more related to policy questions in which the Board had previously expressed interest in being involved.
President Smith said she believed EWEB should be considering future requirements for growth. She said sensitivity to the needs of neighbors and the potential of making a contribution to the City of Eugene also needed to be considered. She said it was exciting to consider the Headquarters site as part of a strategic planning process.
Mr. Buckhouse stated that a concern raised by the Master Plan was a need for major seismic upgrading in several buildings. He said decisions to proceed with the upgrades would be made after site plan policies had been set by the Board.
Commissioner Bishop said that she did not want to spend time on hypothetical issues related to moving EWEB Headquarters to another location. She said there were many crucial, practical issues related to the site which needed attention.
Mr. Berggren asked Commissioners to discuss processes for the involvement of the Board and public in development of a Headquarters Site Master Plan.
Commissioner Bartel suggested that EWEB should engage the services of professional planners to assist in the development of a Master Plan. He said the issues to be faced in its development involved more than the unusual shape and location of the site. He said he did not believe it would be useful to engage the public at the current stage of plan development. He said there was a need to be deliberate and thoughtful about the issues and that closure on the plan should be reached by the end of the year.
President Smith said that she did not believe a time line should be created for development of the Master Plan. She said it would be important to seek professional assistance in development of the plan. She suggested creation of a Board/staff task group to prepare recommendations regarding it.
Commissioner Anderson asked if funds were available to support the work of a task group or engaging a consultant. Mr. Varner replied that there was nothing in the budget designated for such support.
Commissioner Bishop said that she believed the task was being made too complicated. She said there was no need to hire consultants because EWEB had excellent staff. She said she objected to turning development of a Headquarters Site Master Plan into the basis for a strategic plan for the entire utility.
President Smith said that she disagreed with Commissioner Bishop because long-range site planning development required specialized training not possessed by EWEB staff.
Commissioner Anderson asked if staff was available to work with a Site Master Plan Task Group. She suggested that the purpose of such a group would be to determine a process for preparing recommendations regarding the site to the Board.
Mr. Berggren stated that staff representatives would meet with Board representatives before the next meeting of the Board, develop a proposal for goals and purposes of the Master Plan, prepare a description of requirements for a planning consultant, and do a "context check" for consideration.
Vice President Dyer said he agreed there was a need to have an intermediate step before a decision was made about engaging a planning consultant. He suggested that the decision to be made about the Master Plan was whether EWEB should move its Headquarters.
President Smith said that she disagreed with Vice President Dyer because decisions to be made included definitions of what the Headquarters site could and needed to have.
Commissioner Bartel said he believed there was growing sentiment that EWEB's Headquarters blocked access to the Willamette River. He said the problem was exacerbated by population growth and that he was interested in full discussion of what products should be delivered by the utility as part of the Master Plan.
Commissioner Bishop said that she did not believe the concerns of Commissioner Bartel belonged in a study of the Headquarters Site Master Plan.
President Smith reviewed planning assistance which could be provided by a trained consultant.
President Smith said her interest in developing a Master Plan was also practical &endash; the site looked "messy" and was a difficult location from which to access the Ferry Street Bridge.
Commissioner Bishop said she hoped the Master Plan project could be limited to Headquarters site issues.
Commissioner Bartel said that if broader issues were not considered in 1999, an important opportunity would be missed.
Commissioner Bishop said she was concerned about establishing a Board subcommittee because its work would not be carried out in a public fashion and that it had been agreed in an earlier meeting to not form such groups. She said that if such a Board/staff task group was formed, its membership should be limited to one or two Commissioners.
Commissioner Bishop said she believed there were issues of more importance to the Board than developing a site plan.
President Smith said that the current discussion of developing a Master Plan was an example of how the topic could "take over" a meeting. She said it supported the proposal to establish a task group to prepare recommendations.
President Smith and Commissioner Bartel volunteered to serve on a Board/Staff task group to develop recommendations regarding a Headquarters Site Master Plan.
Mr. Berggren agreed to have staff assist in formation of the group and include reports and recommendations from it on an agenda of future meetings of the Board.
Commissioner Bishop suggested that it would be helpful to have minutes and a clear record kept of meetings of the task group. She said doing so would avoid issues related to a third Board member joining the group and creating public meeting requirements.
Vice President Dyer moved, seconded by Commissioner Bartel, that the Board of Commissioners approve revising the steam fuels charge rates from $4.22 per 1000 pounds to $4.73 per 1000 pounds for 1999. The motion was approved unanimously, 5:0.
The Regular Meeting adjourned at 9:40 p.m.