Board Members present: Sandra Bishop, Dorothy Anderson, Peter Bartel, Susie Smith, and Patrick Lanning.

Others present: Randy Berggren, Dick Helgeson, Dick Varner, Jim Wiley, Dave Koski, Mel Damewood, Tom Buckhouse, JoAnn Andersen, Burt Dunn, Roseanna McArthur, Jim Maloney, Eric Hiaasen, Cathy Grey, Mat Northway, Scott Spettel, and Krista Hince of the EWEB staff; and Joe Sams, City of Eugene Minutes Recorder.

President Bishop called the Work Session of the Eugene Water & Electric Board (EWEB) to order.

1. 2001 BUDGET AND WORK PLAN

General Manager Randy Berggren commented that there were increases in the budget and that labor was driving the increased costs. He noted the 88 percent of the budget was business as usual. He introduced Dick Varner to speak about the overall budget for 2001.

Dick Varner, Fiscal Services Supervisor, said that there was a $20 million increased revenue requirement for the Electric Utility. He said that $13.8 million of that money was for power, $1 million was for increases in conservation costs, $1.8 million in O and M labor, slightly over $1 million in non-labor, slightly over $1 million increase in payments to Lane Electric, and a $970,000 increase in capital rates.

In response to a question from President Bishop regarding the percentage of the budget dedicated to conservation, Mr. Varner said all capital expenditures were loaded with a seven percent administrative overhead. President Bishop noted that there had been a previous request for information on the conservation topic to assess whether the seven percent was appropriate. Mr. Varner said the analysis had not been done due to lack of resources.

In response to a question from Commissioner Lanning regarding the definition of wheeling, Mr. Varner explained that when power was purchased there was a charge to transmit that power over other power lines to the EWEB facility.

In response to a question from President Bishop regarding what the total cost of conservation was after the projected increase, Mr. Varner said the total amount was $6.5 million.

Jim Wiley, Director of the Electric Division, provided an organization chart explaining the Electric Division's 2001 budget. He said that the total division budget was $112.6 million. He said that the main budget drivers for the division were cost of power, labor, tree trimming, fuel, and an outage plan by Western Generation.

Mr. Wiley provided a project summary for 2001 including electric generation, electric distribution, operations, wholesale power management, utility administration, and telecommunications.

Roseanna McArthur, Director of Corporate Services, provided information on the 2001 telecommunications budget. She said that the total budget for 2001 was $21.6 million with the majority going for equipment purchase. She stressed the importance of preparing for the eventuality of having to go beyond what had already been predicted as EWEB's role in telecommunications.

In response to a question from President Bishop regarding phase two construction, Ms. McArthur said that phase two construction was part of the major portion of the budget that was going toward purchases. She noted that the plan was to depend on bond revenue for that money.

Tom Buckhouse, Director of Facilities Services, provided information on the Facilities Services Budget. He said that the division would be made up of 46 regular employees with management consisting of three people, (including himself). He said that the main cost drivers for the department would be materials management, building and land management, fleet management (he noted that there were increases in vehicle acquisition), and facilities and research management.

Jim Origliosso, Treasurer, provided information on the Financial Services Division. He commented that half of the projected budget was going to Lane Electric Co-op payments. He said that other strategic priorities were the telecommunications project and a voluntary consultation with OSHA.

In response to a question from Vice President Anderson regarding the consultation with OSHA and the possibility of workman's compensation credits, Mr. Origliosso commented that fewer accidents led to fewer workman's compensation claims and greater safety for the employee.

Ms. McArthur also provided information on the Corporate Services Division. She said there were four basic areas in which there were changes to the FTEs. She said that a telecommunications specialist had been added to the administration area. She noted that they were in the process of recruiting for that position right at the current time. Regarding the environmental management section--there was a single FTE increase for the drinking water protection coordinator position. In Human Resources, she noted that the payroll function had been transferred from Human Resources to General Accounting. Regarding Information Services, she said there would be an increase of two programer analysts for purposes of succession planning.

Ms. McArthur said that the major cost drivers for the budget were labor costs, benefit measures including PERS and medical benefits, additional FTEs and postage.

In response to a question from Commissioner Smith regarding the reason why new computers were not listed as a major cost driver, Ms. McArthur said that the budget assumed a turnover of about 1/3 of computer equipment every year. She said that the turnover was part of the capital plan and that EWEB received bargain rates in computer acquisition.

Mat Northway, Energy Management Services Manager, substituting for JoAnn Andersen, Director of Customer Services, provided information on the Customer Services Division. He said that the major budget drivers for the department were added funds for customer conservation, implementation of a universal service plan, a strategic metering project, reorganized and focused cash accounting, reorganized and supported meter reading, and expanded customer account services.

Mr. Berggren reported on the General Manager's Division. He said there was a total budget of $385,000 which was a $50,000 increase over the past year. He said that 17 percent of the increase was for labor, increased PERS benefits, and the balance went to additional training. He noted that the organizational management category was approximately 86 percent of the budget.

Mr. Berggren opined that it was time to move to take closing steps on the FY01 budget.

The work session adjourned at 7:30 p.m.

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Assistant Secretary President