Board Members present: Susie Smith, Mike Dyer, Dorothy Anderson, and Peter Bartel. Commissioner Bishop was excused.
Others present: Randy Berggren, Cathy Bloom, Tom Buckhouse, Ed Case, Marty Douglass, Dick Helgeson, Garry Kunkel, Roseanna McArthur, Jim Origliosso, Scott Spettel, Dick Varner, Debra Wright, and Krista Hince of the EWEB staff; Kevin Jones, Robert Webster, members of the public; and Daniel Lindstrom, Minutes Recorder.
President Smith called the Special Meeting of the Eugene Water and Electric Board (EWEB) to order at 7:35 p.m. She determined there were no requests to alter the agenda.
ITEMS FROM BOARD MEMBERS
President Smith referred to a memorandum from Public Affairs Marty Douglass announcing that a joint meeting of the EWEB Board of Commissioners and Eugene City Council had been scheduled for June 9. She reported that she had discussed the meeting with Eugene Mayor Jim Torrey and that they had agreed to request that the meeting be postponed. She determined that there was consensus to request staff to reschedule the meeting, as late as September.
Commissioner Anderson stated that she would submit information regarding the breaching of dams received from the Northwest Energy Coalition's Columbia & Snake Rivers Campaign to be copied and distributed to Commissioners.
APPROVAL OF MINUTES
President Smith requested that Sentence 1 of Paragraph 2 on Page 4 of the minutes of the April 6 Work Session be changed, as follows:
President Smith said she was pleased with the way the analysis had
brought the Board
perspectives together.
President Smith determined there was no objection to her request and stated that the minutes were amended.
Commissioner Dyer requested that the name of Don Doerr be correctly spelled in Paragraphs 4 and 6 on Page 4 of the minutes of the April 20 Special Meeting.
President Smith determined there was no objection to the request of Commissioner Dyer and stated that the minutes were amended.
Commissioner Dyer requested that Sentence 1 of Paragraph 6 on Page 4 of the minutes of the April 20 Special Meeting be changed, as follows:
Vice President Dyer asked if PriceWaterhouseCoopers had included
bond covenant compliance testing of
EWEB bonds in the EWEB audit.
President Smith determined there was no objection to the request of Commissioner Dyer and stated that the minutes were amended.
President Smith requested that Paragraph 3 on Page 7 of the minutes of the April 20 Special Meeting be changed to more accurately reflect discussion by the Board of the use of URBA procedures, as follows:
Commissioners discussed the relative merits of methods for
authorizing the issuing of bonds and appeared to favor use of
procedures authorized by URBA.
President Smith suggested using the URBA process for the total amount minus the deep well aquifers. She said postponing bond authorization for development of deep wells would not affect to implement the remainder of the plan.
President Smith determined there was no objection to her request and stated that the minutes were amended.
President Smith requested that Paragraph 5 on Page 10 of the minutes of the May 4 Regular Meeting be changed, as follows:
President Smith said that she disagreed with Commissioner Bishop because long-range planning required specialized training not possessed by EWEB staff.
President Smith said that she disagreed with Commissioner Bishop because long-range site planning development required specialized training not possessed by EWEB staff.
President Smith determined there was no objection to her request and stated that the minutes were amended.
Commissioner Dyer moved, seconded by Commissioner Bartel, that the minutes of the May 4, 1999, Work Session be approved, as submitted; and that the minutes of the April 6, 1999, Work Session, April 20, 1999, Special Board Meeting, and May 4, 1999, Regular Board Meeting, be approved, as amended. The motion was adopted unanimously, 4:0.
CORRESPONDENCE
General Manager Randy Berggren stated that he would seek to re-schedule a joint meeting of the EWEB Board of Commissioners and Eugene City Council at a mutually agreeable time in September.
Mr. Berggren reminded Commissioners of the Planning Session scheduled for June 18-19 to be held at the Eugene Hilton Hotel. He said a location for the July 23-24 Planning Session had not yet been confirmed.
Mr. Berggren stated that the requested appraisal of the Midgley's Building would not be available until mid-June.
Mr. Berggren referred to a memorandum from Environmental Specialist Mark Wall regarding reporting of hazardous substances. He noted that it stated EWEB was in compliance with all regulatory requirements for both storage and use of all chemicals and that reporting of compliance details was published by the Oregon Office of the State Fire Marshal.
Mr. Berggren reported that subscriptions to the Windpower Project continued at a high level -- over 600 application cards had been received, including two commercial customers. He said the total kilowatt hours purchased was not yet available, but would be reported when analysis was performed after the first billing cycle solicitation was complete.
Mr. Berggren announced that the June 1 Work Session of the Board would include consideration of the Integrated Electric Resource Plan; and that the agenda of the Regular Meeting would include the second reading of the Oregon Utility Resource Coordination Association (OURCA) ordinance proposal, an update on goals, discussion of contract review Board policy, a report on progress made on dealing with Public Employee Retirement System (PERS) issues, and approval of the Willamette Water District contract.
PUBLIC INPUT
Robert Webster, 1261 Tyler Street, Eugene, stated that he was concerned about a potential meltdown of nuclear reactors used for the generation of electricity caused by malfunction of computer controlled operations because of Year 2000 non-compliance. He explained that such a meltdown could result from lack of adequate supplies of water for cooling reactors. He said it had been calculated that if utilities throughout the nation would reduce power requirements by 19 percent, all nuclear generators could be shut down in June 1999, allowing ample time for complete cooling and avoiding a disaster on January 1.
Kevin Jones, 4740 Wendover Street, Eugene, stated that a public information effort would be launched regarding the proposed power reduction plan described by Mr. Webster. He said the purpose of the effort would be to encourage action regarding the concern. He asked that EWEB pledge to reduce its power requirements by 19 percent. He said the Nuclear Regulatory Commission was considering a shutdown of nuclear power generating plants. He suggested that it would be wise for EWEB to encourage customers to reduce their power needs and that everyone should join the effort to shutdown nuclear power generation plants.
OREGON UTILITY RESOURCE COORDINATION ASSOCIATION (OURCA)
INTERGOVERNMENTAL AGREEMENT
Mr. Berggren said the Board was invited to engage in the first of two discussions of a proposed OURCA Intergovernmental Agency (IGA). He said staff would make presentations to help Commissioners understand the benefits of the proposal and that it was likely the first of several possible alliances.
Power Management and Planning Manager Scott Spettel explained that Oregon Revised Statutes provided for creation of a legal entity consisting of two or more government bodies through what was known as a "190 agreement." He said the OURCA IGA was proposed to be such an agency formed to facilitate coordinated activities in managing power supplies. He said the entity would be created through the adoption of an "ordinance" by the boards of participating utilities. He said approval of such an ordinance required two readings to comply with state regulations. He suggested that the Board initially adopt a motion to "read by title only" the ordinance to be considered.
Commissioner Bartel asked if proper public notice had been given of the action under consideration. Mr. Spettel replied that EWEB legal counsel had provided the opinion that the regular notice of pending actions at Board meetings met all such requirements.
Mr. Spettel referred to his memorandum dated May 11 distributed with the agenda of the meeting. He reviewed a chart attached to the memorandum entitled "OURCA Trading Floor Services." He said establishing the OURCA IGA would authorize trading, scheduling, accounting, contract management, settlements, and risk management services for participants. He showed how EWEB would be both a member of the agency and its service provider. He said preliminary estimates were that the arrangement could reduce EWEB costs by $500,000 a year.
Commissioner Bartel asked what services would be provided to EWEB by the agency. Mr. Spettel replied that the agency would provide all of the power trading services EWEB currently provided through its own Power Management and Planning services. He explained that since EWEB would be providing the services for the OURCA IGA, EWEB would experience no changes in its current operations, but that the other members would benefit from them. He pointed out that member utilities would reimburse EWEB for the management services, reducing its total cost.
Commissioner Bartel asked how bonding would be accomplished through the OURCA IGA. Mr. Spettel replied that authority for such functions would be given to the newly formed agency and that member utilities would be liable for payment of pre-determined shares.
Commissioner Bartel asked if the OURCA IGA could be considered a "clandestine" operation. Mr. Spettel replied that he believed such a characterization was an overstatement. He pointed out that the proposed agreement established a government agency responsible to the public. He said OURCA IGA was similar to the Western Generation Agency (WGA) formed by EWEB and the Clatskanie Public Utility District to develop the Wauna Co-Generation Project.
Commissioner Dyer asked how property tax requirements were handled by an IGA. Mr. Spettel replied that it was hoped the proposed agency would receive the favorable tax exemption ruling provided the WGA. Treasurer Jim Origliosso added that taxes and other obligations owed by an IGA were paid by members on a pro rata basis.
Commissioner Anderson asked why it was suggested that the principal offices of the OURCA IGA be located in Multnomah County and how the expenses of such an office would be paid. Mr. Spettel replied that the final decision about location of the office had not been made, but that Multnomah County had been suggested because no participating utility was located there, which would be an advantage in the resolution of disputes. He said the current mailing address of the agency was the Cable Huston Benedict & Haagensen law firm in Portland.
Commissioner Dyer asked how OURCA IGA would differ from a trade association. Mr. Spettel replied that the agency would operate more closely and involve a more significant sharing of resources.
Commissioner Dyer moved, seconded by Commissioner Bartel, that the first reading of Ordinance would be completed by title only. The motion was adopted unanimously, 4:0.
Commissioner Dyer read the Ordinance by title, "Authorizing An Intergovernmental Agreement Creating The Oregon Utility Resource Coordination Association Intergovernmental Agency."
CONTRACT REVIEW POLICY
Mr. Berggren stated that staff would summarize current procurement and contract review practices and requirements and would make recommendations for changes. He said the purpose of the presentation was to test whether Board concerns raised regarding the remodeling of the Midgley's Building were being met.
President Smith stated that she wanted consideration of procurement and contract issues to continue at future meetings and requested that Commissioners receive copies of EWEB procurement policies.
Facilities Services Director Tom Buckhouse introduced Purchasing Agent Ed Case, a recently hired EWEB employee with extensive experience in public contracting requirements.
Mr. Buckhouse made a presentation entitled "Public Procurement Laws, Rules and Policies," including the following:
Mr. Buckhouse said the EWEB procurement policy was described in Section 020 of the Policy Manual. He said the General Manager was designated general control and supervision over all purchasing and contracting. He explained that the role of the Board was to adopt the Purchasing Policy, grant exemptions for alternative bidding methods, and hear appeals.
Mr. Buckhouse stated that management staff recommended that an update and revision of purchasing policies and procedures be undertaken following completion of the 1999 Oregon Legislative Session, provide training in the policies and procedures for all managers and supervisors, and budget for the activities in 2000. He explained that approximately 30 bills related to purchasing practices of public agencies were under consideration in the current Legislative Session.
President Smith proposed that, based on experience gained in remodeling the Midgley's Building, changes to EWEB procurement policies and procedures be brought to the Board for discussion. She said she wanted the Board to assume appropriate fiduciary responsibility and would support adding components to the policies, as follows:
President Smith said that her experience in municipal government was that bids on any project over $15,000 were approved by the City Council, including all personal services contracts. She said she believed involvement at such a level, even when accomplished through a Consent Calendar process, provided an appropriate accountability mechanism.
Commissioner Dyer said that he agreed with President Smith, but that he believed it was necessary to know the number of contracts involved at the level she had suggested for Board involvement. He said that a different threshold for Board involvement might need to be determined.
Mr. Case reported that it was current EWEB policy to involve the Board with contracts over $50,000 and that the threshold set by the State for such involvement in public utilities was $75,000. He explained that current State regulations required no solicitation of bids for contracts below $5,000; three competitive bids for contracts between $5,000 and $50,000; and a sealed bid or request for proposals process for contracts above $50,000. He said the EWEB General Manager was currently authorized to increase contracts by 20 percent, 33 percent on public improvement projects.
Commissioner Bartel asked how purchases of computer software related to procurement practice limitations described by Mr. Case. President Smith replied that there were a number of rule exemptions provided for such purchases. Mr. Case added that exemptions from requirements for competitive bidding if there was only a single contractor capable of filling a need was an example of the exemptions reported by President Smith.
Commissioner Bartel said he was aware that computer-related contracts often resulted in difficulties and that he wanted to avoid them whenever possible. He also said he felt having the Board being required to give consent to contracts above $20,000 would provide the public with a needed assurance that the Board was doing what it should.
President Smith said her interest in pursuing budget controls had not developed only because of issues raised by cost over-runs in the remodeling of the Midgley's Building. She said she believed a higher level of Board involvement was required because of its responsibility for EWEB fiscal affairs.
Commissioner Anderson said she could support identifying thresholds for Board involvement in EWEB contracts.
President Smith requested that staff help the Board determine appropriate thresholds for its involvement in approving personal services contracts, capital improvement projects, and major purchases.
Mr. Buckhouse said he would provide to Commissioners within one week copies of Section 020.2 of the EWEB Purchasing Policy and a summary of the cost levels of EWEB contracts within the last year. He said staff proposals for changes in the policy would be provided within two weeks.
BUDGET TRANSFER CONTROLS
Fiscal Services Manager Dick Varner stated that current EWEB fiscal policies did not require expenditures to stay within established budgets because municipal utility budgets were a tool for assuring the adequacy of rates rather than for control, a plan not a contract. At the same time, he said, managers and supervisors were encouraged to keep expenditures at or below budgeted levels and occasionally adjusted budgets to better manage specific expenditure categories within the overall budget. He said current budget transfer procedures included the following:
Mr. Varner described the experience of circumstances where there was reduction of authorized expenditures below budgeted levels was required by the General Manager. He described the experience of previously required Board authorization of capital projects exceeding $50,000. He compared requirements made by the Oregon Local Budget Law of municipalities and described budgetary practices of the City of Eugene.
Mr. Varner reviewed potential types of budget control available to the Board - prevention and detective/corrective. He described levels at which budgetary controls could be enforced - Utility; Capital/Operations and Management; Federal Energy Regulatory Commission categories; Capital Budget by project or category; Divisions, Departments or Sections; Program or Project; Major or Minor Resource; and Full-time Equivalent Positions.
Mr. Varner said that staff recommended incremental changes be made to current budget controls by
Mr. Varner said that staff also intended to implement additional internal budget controls, as follows:
President Smith said that she appreciated the recommendations of staff, but that she preferred that the Board be required to authorize expenditures exceeding budgets. Commissioner Dyer said an inflexible policy could ignore that some budget over-expenditures were uncontrollable. President Smith replied that she believed capital, labor, and materials budgets were controllable and that the Board should be required to authorize over-budget expenditures in them. Mr. Dyer said power purchase budgets were an example of uncontrollable expenditures.
President Smith said that she did not believe the Board should simply get reports that expenditures were anticipated to exceed budgets, but that such reports should be a "trigger" for staff to prepare recommendations of how the Board should deal with the overage. She said budgets and reserves should have an accountability.
Mr. Origliosso described how "unfavorable variances" projected in the First Quarter of a fiscal year could be dealt with by cutting costs, but that such projections in the Fourth Quarter could require use of budgeted reserves.
President Smith said that she did not believe funds should be moved between utilities; between Operation and Maintenance and Capital budgets; or between Labor and Managers and Supervisors budgets. She said she believed balancing the budget by transferring funds did not keep the Board accountable. She said the Board should be involved in decisions about moving funds.
Commissioner Bartel said he was concerned that there was no requirement for expenditures to stay within budgets. He said he believed it was the responsibility of managers and supervisors to keep expenditures within established budgets.
Mr. Varner said he had heard Commissioners make requests, as follows:
President Smith said the review of Mr. Varner was exactly what she wanted.
Commissioner Dyer said he believed budget control by the Board needed to be "done within bounds" to avoid shutting down the utility. He said he agreed that the Board should be accountable for budgets, but that he believed the staff should be allowed freedom to operate and manage the utility.
The meeting adjourned at 9:25 p.m.