Board Members present: Sandra Bishop, Dorothy Anderson; Peter Bartel, Susie Smith, and Patrick Lanning.
Others present: Randy Berggren, Tom Buckhouse, Dick Helgeson, Marty Douglass, Jim Wiley, JoAnn Andersen, Jean Meyers, Dick Varner, Scott Spettel, Dick Varner, John Yanov, Debra Wright, Kathy Grey, Jim Maloney, Jay L'Estrange, Doug Caven, and Krista Hince of the EWEB staff; Jo Sams, City of Eugene Minutes Recorder, Frank Nearing, KLCC-Radio, Lance Robertson, Register-Guard, KVAL-TV; KMTR-TV; and members of the public.
President Bishop called the Regular Session Meeting of the Eugene Water & Electric Board (EWEB) to order.
SWEARING IN OF COMMISSIONERS SANDRA BISHOP, DOROTHY ANDERSON, AND PATRICK LANNING
Kate Fieland, City of Eugene Recorder, swore in Commissioners Bishop, Anderson and Lanning.
AGENDA CHECK
General Manager Randy Berggren noted that no action was needed on item 11, Bonneville Power Administration's Power Supply Contract, of the meeting's agenda.
APPROVAL OF CONSENT CALENDAR
President Bishop noted that items presented for approval on the Consent Calendar included the following:
1. Minutes of November 9, 2000 Work Session and Regular Board Meeting, and November 21, 2000 Work Session (changed to Meeting Notes)
Ratification of Board Consultants
2. Ratification of Board Consultants for 2001
Business Service Agreements
3. Oakway Wine & Deli - Board Dinners - General Manager's Division - $10,000.
4. R.W. Beck - Strategic Planning - Human Resources - Corporate Services - $20,000.
5. H. D. Fowler - Fire Hydrant Inventory - Water Division - $95,000/yr. for five years
6. Cardwell Consulting - Strategic Consulting - Corporate Services - $30,000.
7. Cardwell Consulting - Base Pay Maintenance and Updates - Human Resources - Corporate Services - $42,000.
8. Cardwell Consulting - Incentive Design, Development and Implementation - Human Resources - Corporate Services - $21,000.
9. AON Consulting - Compensation & Benefits Administration - Human Resources - Corporate Services - $51,000.
10. Leb Tannenbaum - EMT Development - Corporate Services - $20,000.
11. David Evans & Associates - School Laterals - Facilities Services - $20,900.
12. Alternative Work Concepts (AWC) - Office Systems - Corporate Services
13. Delta-T, Inc. - Comfort Seal Program - Energy Management Services - Customer Services - $30,000.
14. LH Morris Electric, Inc. - Comfort Stat - Energy Management Services - Customer Services - $100,000.
15. Housing Authority and Community Services Agency (HACSA) - Residential DSM Resource Programs/Low-Income Weatherization - Energy Management Services - Customer Services - $$3,000.
16. HACSA - Residential DSM Resource Program - Energy Management Services - Customer Services - $190,000.
17. McKenzie Willamette Hospital - HR, Wellness & Safety - Human Resource Department - Corporate Services - $125,000.
18. Mel Smith/AON Consulting - Wellness Program - Human Resources - Corporate Services - $25,000.
19. PeaceHealth Employee Assistance Program (EAP) - Human Resources - Corporate Services - $15,000 for two years, or $30,000.
20. Portland General Electric - Generation - Electric Division - $150,000.
21. Dominion Power Services - Generation - Electric Division - $629,000.
22. Arbor Tree Surgery - Electric Operation - Electric Division - $6,165,000 ($898,000 yearly).
23. Cable Huston Benedict & Haagensen - Leaburg-Walterville Relicensing - Electric Operations - $35,000.
24. Tomen Power Corporation - Renewable Resources Project Development - Electric Division - $ 60,000.
Annual Agreements
25. Lane Council of Governments (LCOG) - GIS Cooperative Project Agreement - Information Services - Corporate Services - $28,442.
26. Regional Information System (RIS) Partner Services Agreement - Information Services - Corporate Services - $63,624.
27. Cascade Claims Service - Liability/Recovery Claims Independent Adjuster - Financial Services - $75,000.
Vice President Anderson pulled the minutes of November 9, 2000.
President Bishop pulled the minutes of November 9, and November 21, 2000.
Vice President Anderson, seconded by Commissioner Bartel, moved to approve the items on the consent calendar that weren't pulled for further discussion. The motion passed unanimously.
CORRESPONDENCE
Mr. Berggren reported that the January 16, 2000 Work Session would deal with contract principles on large loads. He added that the Regular agenda would have an item on the resource plan and implementation work, a discussion on the investment allowance, the University of Oregon and Willamette Industries contracts and the General Manager's Goals.
ITEMS FROM BOARD MEMBERS
Commissioner Bartel reported that he had been elected president of the Lane Council of Governments Board for 2001.
President Bishop reported on her successful trip to Tulsa Oklahoma. She said that the trip was very rigorous and would not have happened except for the efforts of staff.
President Bishop reported that Councilors David Kelly and Betty Taylor had toured the steam plant in December.
President Bishop distributed photos from the celebration of the renaming of Water Board Park to Lloyd Knox Water Board Park. She expressed her appreciation for the work of EWEB staff in planning the celebration.
President Bishop said that a letter had been printed in the Register Guard on December 29, 2000. She said the letter contained misinformation regarding the electric facility and future telecommunications. She said that she would not reply to the letter but urged members to be aware of misinformation that was being put forward in the media.
As a future agenda item, Ms. Bishop wanted a discussion on the manufactured gas plant site. She challenged the other members to examine what would be appropriate for clean up efforts on the site.
PUBLIC INPUT
Sara Hamlin, City of Eugene's Legislative Representative, expressed her desire to cooperate with EWEB in lobbying the Oregon Legislature.
ELECTION OF OFFICERS
Commissioner Bartel, seconded by Commissioner Smith, nominated Dorothy Anderson for Board President. Vice President Anderson was elected by a unanimous vote.
Commissioner Smith, seconded by Commissioner Lanning, nominated Commissioner Bartel to serve as Board Vice President.
Commissioner Bishop raised concern that Commissioner Bartel's position on the Eugene Planning Commission might raise conflict of interest issues with the EWEB Board.
Commissioner Bartel commented that if there was an issue before the Planning Commission that had to do with the EWEB Board then he would recuse himself. He stressed that there was no conflict of interest and added that he would not have accepted the nomination if he thought he could not do the job.
Commissioner Bartel was elected by a vote of 4:0:1 with Commissioner Bishop abstaining.
APPOINTMENT OF COMMISSIONERS TO COMMITTEES
Mr. Berggren noted that Everett Jordan had been replaced by Jay L'Estrange as staff representative for WGA.
Commissioner Smith expressed her willingness to step aside as alternate for the Lane Council of Governments if Commissioner Lanning wished to participate.
Commissioner Bishop noted that the only subcommittee of the Board was the Master Plan Site Review Subcommittee and added that it was confusing to refer to the Telecommunications Project as a subcommittee. She suggested, to general consensus, that the position be referred to as the 'Board Liaison to the Telecommunications Project'.
Commissioner Bishop, seconded by Vice President Bartel, moved to approve the appointment of Commissioners to committees. The motion passed unanimously.
ANNUAL REVIEW OF THE GENERAL MANAGER'S PERFORMANCE AND COMPENSATION FOR 2001
Jean Meyers, Human Resource Manager, noted that the Board had already fulfilled its responsibility to evaluate the General Manager in Executive Session. She related that the Board had described its relationship with the General Manager to be very constructive, open, and engaged. She said that Mr. Berggren was given a very positive evaluation overall.
Ms. Meyers recognized specific accomplishments that Mr. Berggren had achieved such as successful management and execution of the Board's power management policies in a very volatile market, completion of Phases 1&2 of the telecom project, development of a five year financial pro forma, the master plan, and the replacement of the water transmission line. She added that this was only a partial list of his accomplishments as there was not time to mention them all.
Ms. Meyers also recognized Mr. Berggren's conscientious efforts to remain accessible to employees, work in the budget process, making critical decisions, and communication with the Board.
Regarding areas for improvement, Ms. Meyers cited continuing to build relationships with the City of Eugene, and making EWEB's efforts on the public behalf more visible to the community.
President Anderson moved the discussion on to the topic of compensation. She suggested a raise of 4-5 percent for Mr. Berggren.
Vice President Bartel commented that the General Manager's wage should be increased at the same rate as the rest of the employees of the facility. This amount turned out to be between 4-5 percent. He raised concern that Mr. Berggren's pay was less than some of his subordinates.
Ms. Meyers noted that, on the average, the difference between a supervisor of executive positions and his subordinates was 20-30 percent. She stressed that Mr. Berggren's pay rate was below the average compared to other utilities in the region.
Commissioner Smith noted that the Board was already aware of the disparity in Mr. Berggren's compensation compared to other utilities and added that the Board had attempted to make up for that difference by adding a supplemental retirement package. She stressed that this retirement package needed to be considered along with other factors in Mr. Berggren's compensation.
Commissioner Bishop stated that the reason EWEB was so successful was largely due to Mr. Berggren's efforts and said that his compensation should be raised to a more appropriate level.
Commissioner Smith raised concern that the General Manager's supplemental retirement package was not being mentioned in the compensation numbers.
President Anderson noted that salaries were continuing to rise and that Mr. Berggren's compensation needed to reflect that.
Vice President Bartel noted that others might have supplemental retirement packages as well and stressed the need to retain people of Mr. Berggren's quality. He noted that retention would not happen if the General Manager's compensation was consistently below average.
Commissioner Smith suggested deferring the decision on compensation until there was more information on the market average. Once this was done an appropriate compensation decision could be made.
Commissioner Bishop was uncomfortable with not taking action that evening. She suggested that any compensation decision made in the future be made retroactive to cover the delay in making a decision.
Vice President Bartel stressed that the Board was trying to get the best information available to make a good decision as to the compensation amount.
There was general consensus to defer the decision until a later date but to make any raise in compensation retroactive.
POWER RISK MANAGEMENT POLICY
Dick Varner, Fiscal Services Supervisor, provided a presentation on the Power Risk Management Policy. He noted that, two years previously, staff had come to the Board with a request to put in place policies and guidelines to govern the risks taken in power trading activity. He said that those policies had been successful in preventing the necessity of a 100 percent rate increase.
Mr. Varner said that one of those policies needed to be clarified and one needed to be changed. He said that Policy 3 needed to be changed to make explicit that a separate power operating reserve had been created as well as a line of credit and that those two things were what backed up the power trading operation. He asked the Board for permission to change that policy.
Regarding Policy 5, Mr. Varner said that it needed to be clarified to show the exact length of a transaction that could be made without Board approval. He noted that it was not clear if a one year transaction was authorized without Board approval. He said that the new language would specify transactions up to and including one year would be allowed with General Manager approval and transactions of over one year would be allowed only with Board approval.
In response to a question from Commissioner Smith regarding why the situation had arisen, Mr. Varner said that as the Forward Power Sale was being enacted there was confusion over the exact authority for making the deal.
In response to a question from Commissioner Bishop regarding the definition of contribution margin, Mr. Varner said that it was revenue, less the cost of goods sold. He said it was net profit before one got to all the normal operating costs.
In response to a question from Commissioner Bishop regarding Policy 3 and whether the new policy was more or less dollars at risk, Mr. Varner acknowledged that there were more dollars at risk with the new policy being asked for. He stressed that the current variability in retail loads and generation amounted to more money than the previous policy allowed.
Commissioner Smith, seconded by Vice President Bartel, moved to approve the changes recommended by staff. The motion passed unanimously.
BONNEVILLE POWER ADMINISTRATION'S POWER SUPPLY CONTRACT
Scott Spettel, Power Management and Planning Manager, said that the original purpose of the item was to determine whether there was a need for an emergency Board meeting to finalize EWEB's subscription decision. He noted that the date had been pushed back to March so that no action was needed that evening.
2001 REVENUE REQUIREMENTS/RATE ADJUSTMENTS
Dick Varner provided a presentation comprised of the latest market information, key variables, retail loads, generation, and wholesale prices.
Mr. Spettel complimented the EWEB power traders for their work in December when the market was so volatile.
Commissioner Smith stressed that even though EWEB's traders were doing such a exemplary job, people should know that EWEB was not increasing profits by any rate increase action and that there was still trouble ahead.
Mr. Varner recommended delaying any rate increase for 30 -60 days and further suggested a tiered or blocked increase when it became necessary.
Commissioner Smith stressed to the public present that the rate increases were a result of the cost of power in a volatile market. She urged the Board to consider people that had subscribed to wind power and noted that those subscribers have no increase to the wind power portion of their electric bill.
Mr. Varner stressed the importance of getting the message to the public about conserving power as much as possible to prevent more rate increases and possible brownouts during peak hours.
Mr. Berggren reiterated the importance of public awareness that conservation would not only keep their monthly bills lower but would help prevent more rate increases as well.
Mr. Varner noted that EWEB was currently at 120 percent of its goal for conservation which represented 12,800,000 kilowatts of energy savings. He added that a one percent reduction in use per customer would eliminate the need for another rate increase. He reiterated his recommendation to delay the increase until February or possibly even April.
President Anderson was in favor of delaying an increase until after the winter months.
Vice President Bartel raised concern over raising rates at tax time.
In response to a question from Vice President Bartel regarding the difference between a surcharge and a rate increase, Mr. Varner said that a surcharge was a response to a temporary short term problem that would eventually be eliminated while a rate increase would last for the foreseeable future.
Vice President Bartel was in favor of a surcharge since the volatility of the market would not be a permanent thing.
Mr. Berggren clarified that staff was recommending a rate increase as well as a temporary surcharge.
Mr. Varner added that a rate increase of 15 percent was needed over the next two years to meet basic needs.
Commissioner Smith suggested a nine percent rate increase immediately with a smaller increase in the future.
Commissioner Bishop raised concern over a rate increase around tax time.
Mr. Berggren reiterated the idea of a more immediate increase with another, smaller increase at a later date.
There was general consensus for a rate increase in February and another at a later date.
ITEMS REMOVED FROM THE CONSENT CALENDAR
Commissioner Bishop asked that titles in the minutes be more consistent and that the consent items be listed.
Regarding the minutes of November 9, 2000, page 6, President Anderson asked that the second paragraph say that EWEB would be allowed to submit comments when it considered the Downtown Visioning Document. In the sixth paragraph she wished to replace 'however' with 'to the extent possible'. On the last line she said that she had volunteered to help draft a letter to the City Council.
Commissioner Bishop noted that on the meeting of November 21, 2000 three of the Commissioners were excused rather than just absent.
Mr. Berggren noted that there was no quorum for that Work Session so the minutes should be approved as 'meeting notes' rather than minutes.
Commissioner Smith, seconded by Vice President Bartel, moved to approve the minutes of November 9, 2000 Work Session and Regular Session and November 21, meeting notes as amended. The motion passed unanimously.
The meeting adjourned at 9:45 p.m.
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Assistant Secretary President