Board Members present: Mike Dyer, Sandra Bishop, Dorothy Anderson, and Peter Bartel. President Susie Smith was absent and excused.
Others present: Randy Berggren, Gale Banry, Ken Beeson, Cathy Bloom, Will Bondioli, Tom Buckhouse, Mel Damewood, Marty Douglass, Cathy Hamilton, Dick Helgeson, Everett Jordan, Garry Kunkel, Roseanna McArthur, Jim Origliosso, Dick Varner, Shirley West, Ron Wilson, Debra Wright, and Krista Hince of the EWEB staff; Don Haagensen, Special Counsel; Gary Rayor, Wayne Walsh, Consultants; and Daniel Lindstrom, Minutes Recorder.
Vice President Mike Dyer called the Special Meeting of the Eugene Water & Electric Board (EWEB) to order at 7:30 p.m.
AGENDA CHECK
Vice President Dyer determined that there were no requests to alter the published agenda of the meeting.
CONSENT CALENDAR
Vice President Dyer noted that items presented for approval on the Consent Calendar included the following:
Commissioner Bartel moved, seconded by Commissioner Bishop that the Consent Calendar for October 19, 1999, be approved. The motion was adopted unanimously, 4:0.
ITEMS FROM BOARD MEMBERS
Vice President Dyer determined that Board members had no items to share.
CORRESPONDENCE
General Manager Randy Berggren reminded Commissioners that a Special Work Session of the Board was scheduled for October 22 at 5:30 p.m. He said it would concern the 2000 Budget. He distributed copies of a document which he said was a preliminary Budget draft and encouraged it to be studied in preparation for the Work Session.
Mr. Berggren expressed appreciation to Commissioners who had attended the reception for major EWEB customers held on October 13. He said the attendance was the largest to date. He also expressed appreciation to staff who participated in the gathering.
Mr. Berggren noted that copies of a year-end report of the 1999 Oregon Legislative Session had been distributed to Commissioners. He expressed appreciation to Legislative Representative Libby Henry and State Lobbyist Jim Whitty.
Mr. Berggren noted that information regarding the Master Plan Site Review had been distributed to Commissioners. He said consideration of the material had been re-scheduled for the November 16 Special Meeting.
Mr. Berggren noted that third quarter financial statements had been distributed to Commissioners. He invited those with questions to contact him or financial officers.
Mr. Berggren reported that a Public Forum regarding financing of the Water Supply Plan was scheduled for October 20 and encouraged Commissioners to attend.
Mr. Berggren reviewed the tentative agenda of the November 2 and 15 meetings of the Board.
PUBLIC INPUT
Vice President Dyer determined that there was no one present wishing to address the Board.
APPEALS PROCESS FOR WALTERVILLE/LEABURG RE-LICENSING PROJECT
Hydroelectric Relicensing Manager Gale Banry reported that the Board had consulted with counsel concerning its legal rights and duties with regard to litigation related to re-licensing of the Walterville/Leaburg hydroelectric project during an Executive Session held preceding the Special Meeting.
Commissioner Bartel moved, seconded by Commissioner Anderson, that the Board authorize staff to file a Petition for Re-hearing of the August 11, 1999, opinion by the Ninth Circuit Court of Appeals in American Rivers vs. FERC, regarding issues important to EWEB on the correct interpretation of Section 18 of the Federal Power Act providing for fishway; and that the Board further authorize staff to respond to any petition for hearing filed by others if the Court provides such an opportunity.
Commissioner Bishop said she hoped the Board would be informed of any unanticipated issues in the appeals process.
The motion to approve filing a Petition for a Re-hearing was approved unanimously, 4:0.
WATER SUPPLY PLAN PROJECTS
Senior Water Engineer Ron Wilson stated that he would present an update on optimization and expansion projects included in the Water Supply Plan. He referred to his memorandum dated October 12 regarding the projects distributed with the agenda of the meeting.
Water Transmission Line Project
Mr. Wilson reported that the Headquarters to Seneca Transmission Line Project was in its final stages of design and that contract documents would be completed and ready for bidding in November. He said a recommendation for a contractor would be made at the January 18, 2000, Board meeting.
Mr. Wilson described changes to the route of the transmission line. He said the changes would reduce costs, cross commercial property, eliminate two railroad crossings, and avoid hazardous spill areas. He reviewed issues related to the routes related to existing utilities, railroad crossings, Historic District, trees, hazardous material sites, State Highway crossings, traffic plans, abandoning of radial feeds, and communication plans.
Mr. Wilson discussed design issues, seismic concerns, and street construction issues related to the new transmission main. He said construction would take place between February and December 2000 and that the main would begin operation by June 2000, allowing time for it to "season" to provide delivery of good quality water. He said it was anticipated that the $6.5 million budgeted for the project would be adequate.
Vice President Dyer said that EWEB had had less than satisfactory results from out of state construction contractors in the past and asked if it would be possible to restrict bidding on the transmission line project to local firms. He noted that other locations required out-of-area bidders to submit offers five percent lower than local contractors to be considered.
Commissioner Bishop asked if it was legal to follow the suggestion of Vice President Dyer. Mr. Berggren replied that the restrictions suggested were legal, if there were a reason to do so.
Commissioner Bartel said he believed that, if all things were equal, preference should be given to local contractors.
Mr. Berggren said including price differentials for out-of-area contractors would require additional work on bidding documents. He added that potential liability could result if restrictions on the use of out-of-area contractors were created.
Commissioner Bishop suggested that the proposal to give preferential treatment in bidding to local contractors was establishing a policy which should be given additional consideration.
Water Division Director Dick Helgeson stated that EWEB had generally worked with local contractors because they were able to mobilize resources most effectively.
Commissioner Bishop suggested that it would be important to meet with Neighborhood Associations and hold other public meetings in areas through which the transmission line would be established. She asked what impacts the project could have on property owners. Mr. Wilson replied that construction would proceed at a rate of 50 to 100 feet a day and that a city block would likely be completed in one week.
Hayden Bridge Filtration Plant Expansion Project
Mr. Wilson referred to an executive summary of the Hayden Bridget Expansion Plan Report distributed to Commissioners with the agenda of the meeting. Commissioner Bishop requested a copy of the complete plan.
Mr. Wilson reviewed findings of the report, as follows:
Mr. Wilson reviewed action plans prepared to coordinate design and construction of improvement projects, as follows:
Action Item #2: Construction of a third contact basin, filters, and basin feedline. Benefit: Increases plant capacity by 14 million gallons per day, allows operational flexibility for repair and remainder of upgrades.
Action Item #3: Repair and optimizing of plant performance. Benefit: Increases capacity by an additional 14 million gallons per day and extends plant's useful life.
Action Item #4: Install disinfection system for Cryptosporidium oocyst inactivation. Benefit: Regulation compliance and added protection for EWEB customers.
Mr. Wilson said the cost of the Hayden Bridge Expansion Project had not changed from the previously developed Water Development Plan. He said a contractor would be chosen for Action Item #1 in January 2000 and design of the project completed in August 2000.
WESTER GENERATION AGENCY FUND DISTRIBUTION
Energy Resources Project Manager Ken Beeson referred to his memorandum dated October 13 regarding distribution of funds from the Wauna Cogeneration Project distributed with the agenda of the meeting. He reviewed the memorandum, explaining that independent auditors for the Project had requested that its documents more clearly state that distribution of proceeds be made on an equal basis to sponsors.
Commissioner Anderson moved, seconded by Commissioner Bartel, that authorization be given to EWEB representatives on the Western Generation Agency Board to support an agency resolution which clarifies that the distribution of proceeds from the Wauna Project General Fund be done on an equal basis between EWEB and Clatskanie Public Utility District. The motion was adopted unanimously, 4:0.
EARLY DEPARTURE INCENTIVE POLICY
Mr. Berggren referred to his memorandum to all employees dated October 12 regarding an Early Departure Plan distributed with the agenda of the meeting. He said discussion of the plan was on the agenda of the meeting at the request of Commissioner Bishop.
Commissioner Bishop distributed copies of a memorandum dated October 19 to the Board regarding her concerns about the Early Departure Incentive Plan. She said her major concern was whether staff reductions were necessary and that the Board had not been consulted before development of the plan. She said she did not support departure incentives and was inclined to seek reductions in the rate of funding capital reserves as an alternative to layoffs of staff.
Commissioner Bishop said she believed the plan was an indication of a "subtle shift" at EWEB resulting in instilling a sense of employee uncertainty that could have been avoided. She said she believed financial risks with reserve levels were preferable to reducing staff. She said that she did not support layoffs at this time. She believed issues such as these should be brought before the Board and more formal action be taken before staff takes action.
Commissioner Anderson said her recollection of Board discussion of the potential of staff reductions included recognition that if reserve levels were not to be lowered, staff was constrained by the budget to eliminate employee positions. She said she believed reductions should be made first in administrative staff positions. She said she believed the Early Departure Incentive Plan was a good attempt to deal with the situation.
Commissioner Bishop said she recognized that it was difficult for management to know how to react to informal Board discussions.
Commissioner Bartel said he believed staff reduction was a natural result of budget cutting. He said he supported the judgments of management regarding the Early Departure Incentive Plan, but that he recognized reductions were difficult. He said he did not believe statements regarding excessive EWEB administrative personnel were accurate.
Commissioner Bishop said she was not asking for Board action regarding her concerns, but had prepared her memorandum as a statement of her disagreement with staff reductions at this time.
Vice President Dyer said that it was too late to change the Early Departure Incentive Plan, that it may have been based on a misunderstanding of Board desires, and that developing the plan had been within the jurisdiction of the General Manager. He pointed out that no employee was being forced to participate in the plan. He suggested that if an employee made a case for his or her position to be eliminated, it would either be true and the reduction would be valuable or the employee wanted to leave EWEB. He said he believed the plan was a good alternative to laying off employees not wanting to leave their jobs.
Mr. Berggren said he had heard Commissioners express a concern regarding the implications of staff reductions. He said he was looking forward to responses to the Early Departure Incentive Plan. He said he and the Executive Management Team would develop cash position"bridging strategies" as alternatives to the elimination of employee positions in its five-year planning.
Commissioner Bishop said she did not believe the General Manager had over-stepped his authority in development of the Early Departure incentive Plan.
STEAM FUELS CHARGE REVISION
Fiscal Services Supervisor Dick Varner referred to his memorandum dated October 13 regarding steam fuels charge distributed with the agenda of the meeting. He reviewed factors impacting the charge - Organization of Pretorium Exporting Countries (OPEC) supply curtailments, low drilling activity due to low prices, pipeline from Canada to Midwest, and natural gas generation. He said the factors had led to prices 15 percent higher than expected when the Steam fuels charge had been set in April.
Mr. Varner reviewed options regarding the Steam fuels charge available to the Board:
Option #2: Two Equal Steps. Increasing rate to $5.15 now and a similar amount in April 2000, would keep impact on customer bills to under ten percent, maintain linkage to 1999 price increases, raise prices immediately before heating season, and not fully recover 1999 costs.
Option #3: Balanced by Year End. Increasing rate to $5.40 now, would leave a zero fuels balance by March 31, 2000, allow a more modest increase in April, pass on the full impact of price increases, risk perception of over-collection if natural gas prices fall, and raise prices immediately before heating season.
Option #4: Spread the Pain. Increasing the rate to $4.90 now and spreading the recovery of the resulting fuels balance deficit in equal amounts over the next three years, would have low impact on customer bills in current heating season, disconnect price increase from its cause, and risk major price increases in 2000 and subsequent years if natural gas prices remain at current or higher levels.
Mr. Varner said staff recommended Board approval of Option #2.
Vice President Dyer asked if customers had been informed of the potential of a rate increase. Mr. Helgeson replied that general discussion had taken place with the largest customers and that they realized such an increase was likely whether they continued to purchase steam from EWEB or purchased natural gas and generated their own steam. He said that rate increases not fully utilized in the past had been refunded to customers and had created a high level of trust. He said he believed customers would most appreciate smoothly reflecting gas price changes in rates.
Commissioner Anderson said she agreed with the staff recommendation. She asked how customers would be notified of a rate change. Mr. Varner replied that letters of explanation would be included with bills.
Commissioner Bartel asked why customers did not pay actual costs of natural gas at all times. Mr. Varner replied that the current system had been developed to avoid "whipsawing" of customer rates. Mr. Helgeson explained that EWEB had previously adjusted Steam rates each month, but the cyclical nature of the adjustments led to creation of the currently used mechanism to smooth out the fluctuations for customers.
Commissioner Bartel asked if there was a rate at which customers would consider dropping steam purchases from EWEB. Mr. Berggren explained that the alternative to such purchases for customers was purchasing natural gas and generating steam on their own. He suggested that such purchases would involve the same volatility faced in Steam rate changes.
Commissioner Anderson moved, seconded by Commissioner Bartel, to approve Steam Rate Change Option #2 and increase the fuels charge by approximately 16 percent, effective for October 1999 bills issued in November. The motion was adopted unanimously, 4:0.
The meeting adjourned at 9:15 p.m.
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Assistant Secretary President