Board Members present: Dorothy Anderson, Peter Bartel, Susie Smith, Patrick Lanning, and Sandra Bishop.
Others present: Randy Berggren, Larry Billhartz, JoAnn Andersen, Tom Buckhouse, Will Bondioli, Dean Ahlsten, Ed Case, Marty Douglass, Jim Bemis, Ken Beeson, Kris Kendall, Dick Helgeson, Eric Hiaasen, Jim Maloney, Roseanna McArthur, Mat Northway, Jim Origliosso, Mike Logan, Scott Spettel, Dick Varner, Jim Wiley, and Krista Hince, members of the EWEB staff, members of the public; and Ruth Atcherson, City of Eugene Minutes Recorder.
President Anderson called the Regular Board Meeting of the Eugene Water & Electric Board (EWEB) to order.
AGENDA CHECK
There were no additions or changes to the agenda.
APPROVAL OF CONSENT CALENDAR
The following items were listed as follows:
Vice President Bartel requested that item number 6 be moved to the end of the meeting.
Vice President Bartel moved, with a second from Commissioner Lanning, to approve the consent calender as amended. Motion carried unanimously.
ITEMS FROM BOARD MEMBERS
President Anderson announced that the Northwest Energy Coalition is having its spring meeting in Boise, Idaho during the first weekend in May, 2001. She encouraged all members to consider attending.
CORRESPONDENCE
General Manager Randy Berggren thanked Board members for helping to make the EWEB 90th anniversary birthday photograph a success. He also thanked all employees who represented EWEB at the Eugene Home Show at the Lane County Fairgrounds.
Mr. Berggren encouraged members to look over the conservation communication plan that Mr. Douglas had distributed to the Board Members. He requested feedback.
Mr. Berggren directed members to look over the copy of the document from the EWEB consultant, Black and Veatch, with an attachment from Powers/Perrin, the business that conducted the annual insurance review. He explained that this is a requirement of the EWEB bond covenant.
He called the Commissioners' attention to the memorandum from Mr. Beeson on the VECTRON Communications Services Contract, which is part of the telecommunications project.
Continuing, Mr. Berggren stated that EWEB had a response to the letter from the 1st Baptist Church for members to look over and sign.
Mr. Berggren noted that there was a memorandum on tree trimming and that the Commissioners would have it in their next Board packet.
Mr. Berggren highlighted some of the agenda items for the next meeting. He stated that the March 27, 2001 Work Session would include discussion of the Telecommunications Public Agency Network and interim funding for the Bethel School District Laterals, but that the discussion on the Hayden Bridge Project would have to be postponed because Ron Wilson will be away during spring break. He said that the update on the Universal Service Plan will be moved up to the March 27 meeting from the meeting scheduled for April 3, 2001. He added that, depending on how the Board acted on the Load Curtailment issue at the present meeting, staff may have to bring back some individual contracts from customers for the consideration of the Board.
PUBLIC INPUT
Bob Cassidy commented on Agenda Item 6, Large Customer Curtailment/Generation. He advocated motivating large companies to conserve energy. He suggested that the 5 percent conservation threshold was low and that EWEB should consider raising the required threshold before companies received monetary abatement. He cited the example of a 20 percent threshold used by some power companies in California.
Tim O'Shea spoke on behalf of an unnamed group of citizens who are for sustainable energy and the American Hydrogen Association. He urged EWEB to look into wind power as a source of energy.
Responding, Commissioner Smith suggested Mr. O'Shea discuss the issue further with Mr. Maloney, who is an EWEB energy resource staff person.
LARGE CUSTOMER CURTAILMENT/GENERATION
Fiscal Services Supervisor Dick Varner explained that staff is seeking Board approval for the General Manager to enter into the load curtailment agreements with some of the larger customers, a conservation measure that many of the utilities up and down the west coast are currently employing. He said it is a pilot program and after the new contract with the Bonneville Power Association is negotiated in September of 2001 it will need to be reevaluated. He stated that it is likely that companies will voluntarily curtail power usage at a level that is significantly higher than the 5 percent minimum threshold. He added that the program will be restricted to large companies as they have the kinds of metering needed to run this kind of program and there is a small enough number of them that the calculations can be conducted manually and the program run effectively. He noted that, because of the size of the companies, a lot of megawatts will be saved. He emphasized that the plan is structured so that employees are minimally impacted. He explained that the benefits of the program begin the month after a company joins the program, then the calculation for the monetary abatement is based on the energy savings from the previous month's bill.
Jim Bemis, Key Account Manager, stated that, with three large customers on board, the savings to EWEB may reach $500,000. Steve Hill, also a Key Account Manager, added that there may be up to twelve or more companies that are interested in participating in the program, with potential participants including Lane Community College, Lane County, and the City of Eugene.
Commissioner Smith asked if it was possible to make major long term energy conservation capital improvements with the net savings. Mr. Varner responded that it was not being pursued at this time. Mat Northway, Manager of the Energy Management Services, added that staff was looking at improving energy efficiency at the University of Oregon.
Commissioner Smith reiterated her question, that the permanent energy conservation solutions have not been properly looked into. Mr. Berggren commented that, in the long view, this was probably true, but that the value of the load curtailment will be different in this power market than the long-term present worth value of a standard conservation measure. He said that, while it is prudent to look for synergies, the two ideas are different concepts.
Mr. Varner stated that some of the money will be spent on "ramp ups."
Commissioner Smith suggested that, with the money saved, EWEB could potentially help a large company purchase a more energy efficient means of production and achieve a long term energy savings. Mr. Northway stated that this is being looked into.
In response to a question from Vice President Bartel, Mr. Varner said that the first place the money will be applied to will be the power operation reserves, which allows EWEB to avoid buying power on the market.
Vice President Bartel expressed concern about the potential negative impact of the program on employees of these companies and stated that he didn't want to benefit the stockholders at the expense of the employees. Jake Elston, a local business owner, assured Vice President Bartel that his employees are very supportive of the energy conservation program. He added that the generation of profit for stockholders, in his opinion, created jobs.
Commissioner Bishop commented that she perceives this as avoided cost. She advocated tying the money that is potentially saved to reserves.
Commissioner Lanning reiterated Vice President Bartel's concern about the impact on employees, but noted that EWEB is working to counteract this possibility by closely monitoring the situation. Mr. Varner stated that EWEB is working with the companies to determine a working plan that doesn't impact employees.
Vice President Bartel affirmed his support for the program, but stated that he would like the Board to look over and give approval to the individual contracts. Mr. Berggren responded that there may be a logistics issue should the Board decide to look over each contract as it may be difficult to work around meeting times. Mr. Varner added that there are more than a few companies, perhaps as many as 15 or 20, queued up to take advantage of the program.
Commissioner Smith agreed with Vice President Bartel, citing that there are two Board meetings in the next two weeks which would eliminate the concern about companies in the queue having to wait very long for approval.
Commissioner Lanning felt that the staff has done a thorough job of looking into the companies and educating the Board about the program. He suggested that the Board consider having an evaluation period of six months at the end of which staff would present an interim report.
President Anderson expressed concern about the length of time it would take the Board to address each company individually.
Mr. Varner explained that there is a termination clause in the contracts and that a company can be terminated from the program with a 30 day notice, should the Board be feel it is not meeting the agreed upon requirements.
Vice President Bartel stressed that he was not implying that he did not trust staff. He emphasized that he was motivated by responsibility to the community at large, that the Board needed to put a lot of thought into approving the companies.
Commissioner Smith stated that she was comfortable looking at the companies in the context of the consent calender. She asked that there be documentation for the Board members' perusal that summarized the company savings.
Commissioner Lanning wondered if there would be a lost opportunity in waiting a week. Mr. Varner stated that it was important to have everybody signed up by April 1, 2001, adding that beyond that a substantial portion of a month would be lost.
Vice President Bartel moved, with a second from Commissioner Smith, approval of the Large Customer Load Curtailment Agreements with the clarification that the contracts would be approved within the context of the Consent Calender. Motion carried unanimously.
DISCUSSION ON BPA SUBSCRIPTION ALTERNATIVES
Power Market Analyst Eric Hiaasen outlined the BPA Subscription Analysis for the Board decision on whether to purchase a Slice, a Block, or a Partial Requirement from the BPA. He provided the Board with graphs demonstrating the benefits and drawbacks of different power purchasing strategies.
Vice President Bartel asked for clarification on what it meant for EWEB to manages its share of Slice. Mr. Hiaason gave an example on how last year staff assumed average hydro-electric output this year. As the year has become drier, the hydro-electric power forecast, of necessity, has gone down, so EWEB has to buy power to make up the deficit. Commissioner Bishop summarized it by stating that EWEB is managing the risk.
In response to a question from President Anderson, Mr. Hiaason stated that at this point it is difficult to analyze if there will be savings in a long-term Slice purchase.
Scott Spettel, Power Management and Planning Manager, expressed preference for the Slice approach as it includes risk management and revenue control by EWEB. Mr. Varner added that the biggest issues with the Slice are the issues involving the deficiencies in the EWEB hydro-electric generation and funding reserves. Mr. Berggren stated that it was a potential $30 to $40 million cash position for power operating reserves to handle the risk that comes with Slice, which involves a significant rate impact. He recommended taking sufficient action early on to achieve the cash position to offset the risk.
Vice President Bartel asked if there would be any additional staff requirements. Mr. Spettel responded that it would possibly increase staff by one. Mr. Berggren stated that one staff person would be necessitated by the Slice approach for risk management.
ELECTRIC SUPPLY ISSUES (TIETON, STATELINE AND EWEB STEAM PLANT)
Mr. Spettel gave an overview of the Tieton Hydroelectric Project price increase. Jim Maloney, Energy Resources Project Manager, delineated the costs and benefits with the aid of a graph. Mr. Spettel asked for Board guidance on whether to pursue the project. He added that the Board would have final approval of the contract.
Commissioner Bishop moved, with a second from Vice President Bartel, to approve the Tieton Project and to direct staff to pursue negotiations thereof. Motion carried unanimously.
Mr. Spettel discussed the Stateline Windpower Purchase. He added that the cost is above the three cent level mentioned at prior Board meetings.
Commissioner Smith moved, with a second from Vice President Bartel, to authorize the staff to move forward with negotiations relating to the Stateline Windpower Project.
Mr. Spettel stated, in response to a question from Commissioner Lanning, that participation in this project does not preclude participating in other projects.
Mr. Spettel explained, at the request of Commissioner Bishop, that the project is selling the power for $30 to $40 and expecting EWEB to add value to it. He added that the chief motivating factor in this power avenue is the potential for a long-term renewable power resource.
President Anderson called the question. Motion carried unanimously.
Mr. Spettel described the Steam Plant Refurbishment. He stated that this is a short-term solution to potential drought-related power deficits. In response to a question from President Anderson, he said that one turbine provides 15 MW and one provides 10 MW.
Vice President Bartel wondered how much water this process used. Mr. Maloney answered that it would use about 460,000 gallons per day. Larry Billhartz, Senior Engineer, explained that there are 14 cells to the cooling tower. Mr. Maloney said that the cooling tower cells arrive by truck. Mr. Spettel stated that when EWEB no longer needed them, the cooling towers would be shipped back as they are being leased and not purchased.
Mr. Spettel clarified that the economic analysis assumes the plant running 90 percent of the time. He added that turbines would be powered by diesel fuel only in a declared system emergency. He stated that there is a projected net benefit to EWEB of $1 million a week.
Commissioner Bishop moved, with a second from Commissioner Smith, to instruct staff to proceed with the Steam Plant Refurbishment.
Vice President Bartel opposed refurbishing the steam plant. He felt that the only way he could support this project would be if the profits were allocated to redevelopment of the EWEB site.
Commissioner Smith asked what marginal resource EWEB would end up paying for in this market and what would the impact be on the air shed. She expressed concern that purchasing power from other power generation entities might mean purchasing power produced by burning oil or coal and that the environmental implications, though not experienced in the immediate air shed, were greater in the larger sense. Mr. Maloney agreed that it would be likely that EWEB would be purchasing power from the "dogs of the system."
Mr. Berggren stated that the steam turbines would offset the decline in power production from the Walterville and Leaburg stations.
Commissioner Bishop remarked that she does not perceive this as a normal project, but rather an emergency measure. As such, she said $3 million is a good risk to take given the volatility of the power market.
Commissioner Lanning agreed that it would be preferable to run EWEB turbines with a cleaner fuel source than to purchase power from another entity that burns coal or oil. Commissioner Smith reiterated that EWEB would be equal to or better than the alternative.
President Anderson called for the question. The motion carried, 4:1 with Vice President Bartel opposed.
PUBLIC BIDDING EXEMPTION - STEAM PLANT REPOWERING PROJECT
Commissioner Bishop made a motion, per ORS 279.0150 (4) and (5), to approve the resolution to declare an emergency and to authorize EWEB to enter into an emergency contract for this project. Commissioner Smith provided the second.
Mr. Spettel clarified that the emergency is being requested under a purchasing statute and that this allows EWEB to bypass the normal eight to twelve week public process which would help expedite getting the turbines up and running. He clarified that this was not intended to imply that EWEB was declaring a regional energy emergency, since it has no authority to do so. The nature of the emergency is specific to EWEB resource under performance due to poor hydro conditions and is meant to expedite a prudent response to the situation.
Vice President Bartel stated that he is voting against the motion to be consistent with his first vote.
President Anderson called the question. The motion carried, 4:1 with Vice President Bartel opposed.
BONNEVILLE ENVIRONMENTAL FOUNDATION - GREEN CREDIT REQUEST
Mr. Maloney gave an overview of the memorandum outlining the request made by Mr. Angus Duncan, Director of the Bonneville Environmental Foundation, to purchase some of the "Green Credits" that belong to EWEB. He explained that Mr. Duncan would sell the "Green Credits" to industries that would use them to offset their "carbon debt."
President Anderson stated that she would be more comfortable with a six month time line, and that the proposed twelve month time line seemed long.
Vice President Bartel objected to the idea as it makes "murky sense." He felt that it promotes the "dirty utilities" as they can buy into the idea of being "green." He expressed a preference to wait and see what transpired in the utility market.
Commissioner Smith said that she felt very ambivalent about selling "green credits." Commissioner Bishop added that she had no interest in selling the "green attributes." Commissioner Lanning added that the timing of the request is also not good.
Vice President Bartel made a motion not to sell "green credits." Motion died for lack of a second.
The Board simply expressed its belief that taking action on this proposal was not appropriate at this time.
ITEMS REMOVED FROM THE CONSENT CALENDER
Vice President Bartel requested clarification on the Network Protector Upgrading Program.
Mr. Berggren explained that it is a project to upgrade the downtown electrical network and, as such, is much needed. The alternative to upgrading is the eventual replacement of the system at a much higher cost.
Vice President Bartel made a motion, with a second from Commissioner Lanning, to approve item 6 from the consent calender. Motion carried unanimously.
The meeting adjourned at 10:01 p.m.
_____________ ______________________________________
Assistant Secretary President