Board Members present: Susie Smith, Dorothy Anderson, Peter Bartel, and Mike Dyer. Commissioner Bishop was absent and excused.
Others present: Garry Kunkel, Electric Division Director; Gale Banry, Terry Bequette, Cathy Bloom, Bert Dunn, Cathy Hamilton, Dick Helgeson, Eric Hiaasen, Everett Jordan, Roseanna McArthur, Laurie Power, Chris Middlewood, Jim Origliosso, Scott Spettel, Dick Varner, Debra Wright, and Krista Hince of the EWEB staff; Gail Greely, Don Haagesen, Guests; and Daniel Lindstrom, Minutes Recorder.
President Smith called the Special Meeting of the Eugene Water & Electric Board (EWEB) to order at 7:15 p.m. She noted that the meeting was starting before its scheduled time and determined there was consensus to consider the agenda item related to the 9th Circuit Court of Appeals Decision on the Leaburg and Walterville Hydroelectric Licenses following all other business.
CONSENT CALENDAR
President Smith noted that items presented for approval on the Consent Calendar included the following:
Commissioner Anderson requested that the Minutes of the August 3 Work Session be removed from the Consent Calendar.
Commissioner Dyer moved, seconded by Commissioner Anderson, that the August 17, 1999, Consent Calendar be approved, not including the August 3 Work Session minutes. The motion was approved unanimously, 4:0.
President Smith determined there was consensus to immediately consider the item removed from the Consent Calendar.
Commissioner Anderson requested that sentence 2 of paragraph 3 on page 3 of the minutes of the August 3 Work Session be changed, as follows:
Anderson said she believed the suggestion was attempting to
achieve a social goal, which was might
not be appropriate in rate
setting and would require policy discussion by the
Board.
President Smith determined there was no objection to the request of Commissioner Anderson and stated that the minutes were amended.
Commissioner Dyer requested that paragraph 3 on page 1 of the minutes be changed, as follows:
Vice President Dyer called the Regular August
meeting Work Session of the Eugene
Water & Electric Board (EWEB) to order at 5:45 p.m.
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 7 on page 4 of the minutes be changed, as follows:
Vice President Dyer suggested that the Dark Fiber Offering be
phrased in a way as to state that EWEB "believed such and
such a rate was appropriate." not set a minimum
rate, but a range of rates between which its price should be
set.
President Smith determined there was no objection to the request of Commissioner Dyer and stated that the minutes were amended.
Commissioner Dyer moved, seconded by Commissioner Anderson, that the minutes of the August 3, 1999, Work Session be approved, as amended. The motion was adopted unanimously, 4:0.
ITEMS FROM BOARD MEMBERS
Commissioner Anderson reported that she had received an e-mail message from a representative of the Northwest Energy Coalition, reporting that Eugene People's Utility District (EPUD) General Manager Jeff Shields was planning to hold a workshop on the removal of dams from the Snake River. She said the message had asked for the response of the Board about the possibility of EWEB co-sponsoring the event. She said her initial reaction was to question the reason for the workshop.
Commissioner Dyer pointed out that EWEB had taken no position on removal of Snake River dams, but that EPUD had. Commissioner Anderson said it would important to differentiate between the two positions in any involvement with a workshop on the subject.
President Smith said she believed the context and goal of the workshop should be considered in developing a response. She suggested that EWEB involvement could ensure that a balanced presentation was made.
Commissioner Bartel asked what would be involved in sponsorship of such a workshop. He also cautioned that it would be difficult to distinguish between providing information and taking an advocacy position in presentations.
Commissioner Anderson said she believed involving EWEB as a co-sponsor would enable a workshop to be held in the EWEB facilities.
Electric Division Director Garry Kunkel stated that he had not discussed the issue with Mr. Shields. He said it was true that EPUD had taken a strong position regarding removal of dams on the Snake River and that co-sponsorship of an event related to the issue could be misconstrued.
Commissioner Anderson said she would report that the Board needed additional information about the workshop before it would consider co-sponsorship and that it would not consider co-sponsorship if advocacy for a position on removal of Snake River dams was involved. President Smith suggested that it be also reported that the Board would want to be involved in the planning of such a workshop.
President Smith said she believed EWEB participation in a recent press conference regarding Year 2000 concerns was positive. She complimented staff for their presentation.
CORRESPONDENCE
Mr. Kunkel reported that EWEB would sponsor a booth at the Lane County Fair and that Commissioners were invited to spend time in it.
Mr. Kunkel stated that a meeting of Lane County Utility Directors would be held on August 19, that it would consider changes taking place in utility business operations, and that Commissioner were invited to attend. Commissioner Bartel said that he would join Mr. Kunkel at the meeting.
Mr. Kunkel reported that installation of fiber optic cable had begun.
Mr. Kunkel reported that a meeting of the Oregon Caucus of the Northwest Energy Coalition would be held on September 8 at 3:00 p.m. Commissioner Anderson reported that she would be unable to attend the meeting. Commissioner Bartel volunteered to attend in her place.
Mr. Kunkel reviewed the agenda of the September 7 Work Session and Regular Board Meeting.
PUBLIC INPUT
President Smith determined that there was no one present wishing to address the Board.
POWER RISK MANAGEMENT IMPLEMENTATION
EWEB Risk Manager Debra Wright referred to her memorandum dated August 12, regarding implementation of wholesale power risk management policies, distributed with the agenda of the meeting. She stated that information and the recommendation in the memorandum to change the Trading Exposure Limitation policy had been reviewed during the Work Session. She reviewed proposed changes to the policy, as follows:
The maximum exposure limit for EWEB's net position
value variance of net power cost from approved
budget will not exceed sixty-five percent of the
forecasted budgeted
year-end cash operating reserves.
Mr. Bartel moved, seconded by Ms. Anderson, that the recommended changes to the Trading Exposure Limitation policy of the Wholesale Power Risk Management Guidelines be approved. The motion was adopted unanimously, 4:0.
BONNEVILLE POWER ADMINISTRATION SUBSCRIPTION PROCESS
Power Management and Planning Manager Scott Spettel referred to his memorandum dated August 12, regarding issues related to EWEB decisions about power purchase products from the Bonneville Power Administration (BPA), distributed with the agenda of the meeting. He reviewed the products as described in a document entitled "Alternatives for BPA Power Product Contracts" attached to the memorandum, as follows:
Mr. Spettel reported that the first current BPA contracts to expire would only affect "light load" hour requirements. He said most analysis was focusing on requirements beyond the year 2001. He explained that he was providing BPA option analyses to participants in the Oregon Utility Resource Coordination Association (OURCA) because it would affect their decisions about pooling and transmission.
Mr. Spettel said that no decisions would need to be made about replacing BPA contracts until the second quarter of the Year 2000 and that the "subscription window" would be open for 120 days following related rate setting decisions.
Financial Services Manager Dick Varner reviewed elements of the BPA products being offered. He said the Partial Services Contract would likely result in higher costs, the Block Products would place responsibility for flexibility needs on the customer, and the SLICE Contracts would be most flexible.
President Smith asked if SLICE Contracts would enable the BPA to make management decisions affecting power delivery independently. Mr. Varner replied that it was most likely the BPA would align customer and BPA interests in such decisions.
Power Analyst Bert Dunn said SLICE Contracts would likely be the least expensive to purchase, but would involve risks to customers and would require a minimum a ten year contract. He suggested that combining SLICE Contracts with Standard Block Products could enable continuation of the flexibility available in current contracts. He said an elaborate analysis process was needed regarding the options.
President Smith said she was concerned that the new pricing contracts would increase the alignment of customers with the BPA only around cost concerns, versus previous diversity regarding operations and other issues.
President Smith suggested that the following considerations be included in decisions made about BPA Power Contracts.
Commissioner Dyer said he had begun to wonder if it would be possible to do better than BPA products during the length of the contracts. He also said he was concerned about the "take or pay" element of the SLICE contracts and that such contracts were buying an ownership percentage of the system without having input into how it was managed. He said he preferred the Partial Requirement Contract product.
Commissioner Anderson asked if it would be possible for EWEB to re-market power received on Partial Requirement Contracts. Mr. Spettel replied that it would not be possible to do so on a long-term basis.
Commissioner Bartel asked why only 10 and 20 year contracts were available for SLICE contracts. Mr. Varner said he suspected they were offered in that way to require customers to share risks related Snake River dams. He said he was most concerned about how ESA issues would affect SLICE contracts.
Commissioner Anderson said she believed that the Board should be kept informed of the responses of OURCA members to BPA Product Contract issues.
Commissioner Dyer asked if the price of various products had been determined. Mr. Spettel replied that the cost of one megawatt would likely be 19 mills, but that the current rate case could bring an increase.
CIRCUIT COURT OF APPEALS DECISION
Electric Division Generation Manager Everett Jordan referred to the memorandum of Mr. Kunkel dated August 12 regarding the 9th Circuit Court of Appeals decision on EWEB's Leaburg and Walterville Hydroelectric Licenses distributed with the agenda of the meeting. He reviewed the order of presentation about the decision to be made.
Hydroelectric Re-licensing Project Manager Gale Banry reviewed legal arguments raised in the lawsuit objecting to the licenses issued by the Federal Energy Regulatory Commission (FERC). He pointed out that the Court had agreed with only one of the six arguments and that the other issues important to EWEB were decided in the favor of FERC. He explained that the established practice was for the terms of previously in force licenses to be operative during ensuing legal processes.
Special Counsel Donald Haagensen distributed documents entitled "Potential Appeals of Ninth Circuit Decision (Further Actions at Ninth Circuit)" and "Potential Appeals of Ninth Circuit Decision (U.S. Supreme Court)." He reviewed possible appeals processes related to the Court of Appeals decision identified in the documents.
Legal Counsel Gail Greely reviewed the likely scenario of events and consequences of referring EWEB's license to operate the dams back to FERC. She said that the process could be extended over a number of years, the longest ever re-licensing process having lasted 27 years. She said the fastest way for a resolution of the process was for no request to reconsider the Circuit Court's action.
Ms. Greely explained that no operating changes were required at the present time, but that EWEB had permission to voluntarily make changes to improve operation of the facilities. She said addition features such as fish screens could not be added to the dam during appeal processes. She suggested that the issues involved in the challenge of the licenses had become less about fish than about the authority of the agencies involved - which would approve criteria and final design of fishway measures. She said the issues would not impact EWEB operations since the provisions themselves were already largely know, but that how they were to be implemented were in question.
Ms. Greely said that when FERC received the directive to re-issue the licenses, it would likely require a minimum of tie, since the court had only directed that fishway provisions not previously included be incorporated. She pointed out that measures in question were identified in footnote 11 of the decision of the Circuit Court attached to the memorandum of Mr. Kunkel. She said the biggest uncertainty involved was how ESA listings would affect decisions to be made.
Environmental Manager Laurie Power stated that, in the midst of the uncertainty about what the Circuit Court would decide, EWEB had been approved as the non-federal representative of FERC in consultations related to the effects of its hydroelectric projects on ESA listings. She said verbal agreement had been reached with the Oregon Department of Fish and Wildlife and the National Marine Fisheries Services (NMFS) to engage in joint consultations, which would provide increased efficiencies in processes to be followed. She said a tour of Carmen and Leaburg-Walterville facilities had been provided for Fish and Wildlife and NMFS staff in late June.
Ms. Power reported that a Request for Proposals had been issued to secure a consultant to assist with preparation of a Biological Assessment required by the ESA. She said the consultant would likely begin work in October, that the Board would review objectives for the project in September, and that Fish and Wildlife and NMFS staff would join EWEB in development of a work plan.
President Smith asked who would be responsible for the death of an ESA listed fish during the process of developing remediation actions. Ms. Power replied that she believed beginning a formal consultation process and making progress in the Biological Assessment could limit concerns about such issues. Mr. Haagensen added that proceeding in good faith through the process in a timely way prevented imposing of punitive provisions of the ESA.
Ms. Greely reviewed national implications of the Circuit Court decision and how they impacted re-licensing of Carmen and Leaburg-Walterville operations.
Mr. Jordan said many issues related to re-licensing continued to be in questions and that EWEB had somewhat limited ability to affect the results. He said the Board would continue to be kept informed of progress made.
Commissioner Anderson asked if balancing recreation, fishing, and power concerns of various federal agencies would be involved in resolution of issues raised by the court decision. Ms. Greely replied that such balancing was not currently involved, but that hydroelectric interests supported resolution of such concerns. She discussed complications involved in the process of creating such balancing.
Commissioner Bartel asked at what point the cost of pursuing legal recourse to the decision of the Court of Appeals decision became higher than acceptable. Ms. Greely replied that EWEB was unable to shorten or stop the process. Mr. Jordan added that legal costs were small, in comparison to the cost of implementation of plans involved. President Smith said that EWEB was not involved in the disagreements, that the various agencies were contending against each other, and that EWEB's choice was when to intervene and provide supporting testimony.
Commissioner Anderson asked what the position of the Hydropower Association was on the issues involved in the court decision. Mr. Haagensen replied that the association had not participated in the litigation, but had served as a "friend of the court."
The meeting adjourned at 9:10 p.m.
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Assistant Secretary President