Board Members present: Susie Smith, Mike Dyer and Sandra Bishop. Commissioners Dorothy Anderson and Peter Bartel were absent and excused.
Others present: Randy Berggren, Ken Beeson, Terry Bequette, Cathy Bloom, Tom Buckhouse, Marty Douglass, Cathy Hamilton, Dick Helgeson, Garry Kunkel, Roseanna McArthur, Mat Northway, Jim Origliosso, Scott Spettel, Dick Varner, Debra Wright, and Krista Hince of the EWEB staff; Bill Kloos, member of the public; and Daniel Lindstrom, Minutes Recorder.
President Smith called the Special Meeting of the Eugene Water & Electric Board (EWEB) to order at 7:25 p.m.
AGENDA CHECK
President Smith noted that a revised agenda had been distributed which did not propose to award a contract to Arbor Tree Surgery as part of the Consent Calendar. General Manager Randy Berggren reported that the item had been removed because of pending completion of an appeal of the bidding process used to award the contract.
President Smith determined there was consensus to adopt the agenda as revised.
CONSENT CALENDAR
President Smith noted that items presented for approval on the Consent Calendar included the following:
Commissioner Dyer moved, seconded by Commissioner Bishop, that the September 21, 1999, Consent Calendar be approved. The motion was approved unanimously, 3:0.
ITEMS FROM BOARD MEMBERS
Commissioner Bishop reported that she had attended the EWEB System Development Charges (SDC) forum and meeting held with the Lane County Homebuilders Association. She noted that the topic would be on the agenda of a future meeting. She asked if it would be possible to consider changing the required date for paying the SDC.
President Smith replied that the provisions for payment of SDC were defined in the Oregon Revised Statutes. Water Division Director Dick Helgeson stated that the provisions which set SDC payment schedules were included in the Municipal Financing Code, which did not apply to EWEB.
Commissioner Bishop said she had learned of alternate methods of collecting SDC used elsewhere, such as on the sale of a property. She said she would raise concerns about the issue during discussion of the matter.
Vice President Dyer noted that a recent news article about the Foot Creek Rim WindPower project had not identified EWEB as a sponsor. He said he believed it was just as well because difficulties with blades of generators had been highlighted in the story.
Commissioner Bishop reported that Oregon Governor John Kitzhaber was proposing to organize a new river governance program because he was not pleased with current fish preservation practices. Electric Division Director Garry Kunkel reported that he had recently attended a briefing and presentation on the topic and reported that he would be able to make a full report to the Board.
CORRESPONDENCE
General Manager Randy Berggren expressed appreciation to employees who had volunteered at the EWEB booth during the Eugene Celebration.
Mr. Berggren reported that a Year 2000 computer compatibility test held on September 8 had gone well and that no unexpected issues were discovered during it.
Mr. Berggren reviewed information contained in memoranda distributed with the agenda of the meeting, as follows:
Mr. Kunkel explained that it was rumored that parties to the 9th Circuit Court of Appeals decision on EWEB's Leaburg and Walterville Hydroelectric Licenses were about to ask for a 30-day extension of the period in which an appeal of the decision could be made. He said EWEB had contacted the parties involved to suggest the advantages of allowing the required improvement to be made, rather than litigate authority issues involved in the decision. He reported that there seemed to be some interest in following EWEB's suggestion. Without an extension of the appeal period, he said, EWEB would need to file an action plan regarding the decision by September 27.
Mr. Berggren reviewed the agenda of the October 5 and 19 meetings, noted that an executive session was scheduled for the first meeting, and reported that a Board Planning Session was also under consideration for sometime during the month of October.
PUBLIC INPUT
President Smith determined there was no one present wishing to address the Board.
TELECOMMUNICATIONS PROJECT REVIEW
Telecommunications Manager Ken Beeson reported on Phase I of the EWEB Telecommunications Project. He described the project construction and cost status for the fiber installation, substation electronics installation, creation of a Network Operating Center, preparation work done by EWEB, and project costs. He said business development objections had been set, as follows:
Mr. Beeson reviewed goals for Phase II of the Telecommunications Project, as follows:
Mr. Beeson described how the feasibility of the telecommunications project was being tested and alternative business structures were being investigated. He said a legal review needed to be conducted, financing alternatives reviewed, and community support determined. He said that a business plan, marketing study, system plan, and cost estimate also needed to be developed.
Mr. Beeson reviewed a document entitled "EWEB Telecommunications Project Phase I - Project Cost Summary." He also referred to his memorandum dated September 15 regarding the project distributed with the agenda of the meeting.
Commissioner Bishop asked why it was proposed to distribute a Request for Proposals to public agencies at a later date than to potential private users. Mr. Beeson replied that staff believed testing of costs with potential commercial users was more possible without the involvement of public agencies. He said it was likely public agencies would be contacted about use of the system before the end of the year.
Vice President Dyer asked if it would be possible to claim late delivery penalties from the provider of fiber optic cable being used in the project. Mr. Beeson said such penalties were being investigated.
Fiscal Services Manager Dick Varner explained that 1.25 full time equivalence (FTE) employees were projected for the Telecommunication Project because it was unlikely that personnel would could be hired before the end of the first quarter.
Commissioner Bishop asked if "spinning off" the Telecommunication Project as an independent utility was being considered. Mr. Berggren replied that such a consideration had been discussed as a possibility when financing for Phase II could create requirements beyond what was proposed to be available in the bond issue. He said it was possible for an independent, intergovernmental telecommunications agency to be considered.
Commissioner Bishop asked if it would be possible to "take the risk out of" financing Phase II of the Telecommunications Project. Mr. Beeson replied that it could be possible to make development of the phase dependent on revenue produced by it. Mr. Berggren added that it might also be possible for private sector entities to participate in the project, reducing EWEB's risks.
FINANCIAL POLICY REVISION
Treasurer Jim Origliosso referred to his memorandum dated September 15 and attached drafts of EWEB Financial Policy Statements. He reviewed the statements, highlighting changes to previous draft versions, and noted corrections required in supporting statements, as follows:
Financial Entity Policy
EWEB will account for separate financial entities and will clearly define relationships among those entities to facilitate management decision-making.
Rate Sufficiency Policy
Rates and charges will be adequate to provide revenues sufficient to maintain a high degree of financial soundness over and above requirements for compliance with existing bond covenants.
Rate Stability Policy
Certain funds will be held in reserve for the purpose of mitigating the customer rate impact of unanticipated events.
Budget Policy
The authorized annual spending plan will be balanced such that resources meet or exceed requirements in each fiscal year.
Cost Management Policy
EWEB will take cost management actions that provide for authorized budgets that appropriately consider comparable costs of other publicly-owned electric and water utilities, including actions to maintain expenditures within authorized budget levels.
Capital Investment Policy
Net investment in utility plant assets will be maintained, including such capital additions and reserves as may be necessary to support growth in loads and customer base.
Major Capital Improvements Policy
Funds to acquire major capital improvements will be provided in accordance with the estimated useful lives of such assets.
Risk Management Policy
Risk attendant to EWEB's operations will be proactively managed in a cost-effective and efficient manner consistent with prudent utility practice.
Investment Policy
EWEB's investment portfolio will be managed to achieve safety of capital, achieve market rates of return, and provide sufficient liquidity to meet disbursement schedules.
Capitalization Policy
Major utility expenditures for labor, materials and/or services that result in revenue or benefits in future reporting periods will be capitalized and allocated to match such future revenue or benefits through periodic amortization or depreciation.
Billing and Collections Policy
Services will be billed in an accurate and timely manner and collected with fair and equitable consideration of all customers.
Mr. Origliosso recommended approval of the draft Financial Policies.
Commissioner Bishop said that she preferred that the policies be adopted at a future meeting when all Commissioners were present.
Mr. Origliosso stated that he would present the policies for approval at a later date.
INDUSTRIAL AND LARGE COMMERCIAL WINDPOWER RATES
Energy Management Services Manager Mat Northway reported on subscriptions for the power output of the Foote Creek Rim Wind Project, as follows:
Mr. Northway explained that a WindPower product had not been provided for large commercial and industrial customers to enable smaller residential and commercial customers the first option to purchase and because billing practices did not make such a product feasible.
Mr. Northway further explained that unbundling of power generating and transmission costs enabled calculation of a WindPower rate for units of 1,000 kilowatts at $31 per month. He said the unit price was equivalent to prices charged to residential and commercial customers. He said purchase of units equivalent to ten percent of a company's bill would allow it to use its support for WindPower in advertizing.
President Smith asked if there would be any discounts allowed on the 1,000 kilowatt rate. Mr. Northway replied that all units would sell for $31, regardless of the number purchased.
Commissioner Bishop said the advertizing opportunity appeared to provide a lower-cost benefit to large industrial and commercial customers. Vice President Dyer replied that cost-benefits would likely be the only reason a large company would consider purchase of WindPower.
Vice President Dyer asked if purchase of WindPower units would require adjustment of contracts with large industrial customers. Mr. Varner replied that no adjustments would be necessary since the change would be mutually agreed upon.
Mr. Northway stated that he would be seeking Board approval of the new unit rate of WindPower purchase at its next meeting.
The meeting adjourned at 9:00 p.m.
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Assistant Secretary President