Board Members present: Dorothy Anderson, Peter Bartel, Susie Smith, Patrick Lanning, and Sandra Bishop.
Others present: Randy Berggren, JoAnn Andersen, Dean Ahlsten, Ken Beeson, Terry Bequette, Tom Buckhouse, Gale Banry, Marty Douglass, Mel Damewood, Bill Fletcher, Dick Helgeson, Bob Lorenzen, Jim Maloney, Roseanna McArthur, Mat Northway, Jim Origliosso, Laurie Power, Scott Spettel, Dick Varner, Pat Ventura, Ron Wilson, Jim Wiley, John Yanov, and Krista Hince of the EWEB staff; Jim Brown, members of the public; Lance Robertson, representing the Register Guard; KVAL-TV, KEZI-TV; and Joe Sams, City of Eugene Minutes Recorder.
President Anderson called the Regular Session Meeting of the Eugene Water & Electric Board (EWEB) to order.
AGENDA CHECK
Item 9 on the agenda was moved to item 6.
CONSENT CALENDAR
1. Minutes of April 17, 2001 Work Session and Special Board Meeting, May 1, 2001 Work Session and Regular Board Meeting
Intergovernmental Agreement
2. Joint City of Eugene Public Works/EWEB project - Fairmount 850' Reservoir Drainage - Water Division - $32,400.
Business Service Agreements
3. Reach Program - Universal Service Plan - Customer Services - $71,000.
4. Westates Flagger Services - Water Distribution - Water Division - $125,000.
5. Cable Huston Benedict Haagensen & Lloyd - Smith Falls Hydroelectric Project Asset and FERC license transfer - Electric Division - $174,000
6. Cable Huston Benedict Haagensen & Lloyd - Hydro relicensing reform initiative - Electric Division - $7,000.
7. Kanner & Associates - relicensing reform initiative - Electric Division - $33,000.
8. Comfort STAT - energy management services - Customer Services - $200,000.
9. Proctor Engineering Group - energy management services - Customer Services - $60,000.
President Anderson pulled item 1. Commissioner Smith pulled items 6 and 7.
Vice President Bartel, seconded by Commissioner Lanning moved to approve the remaining items on the consent calendar. The motion passed unanimously.
ITEMS FROM BOARD MEMBERS
Commissioner Bishop reported that the League of Women Voters had there annual convention on May 18-20, and energy was prominently discussed. She said that there was a desire to do an in depth energy study for the purpose of supporting Peter DeFazio's statements on energy.
Commissioner Bishop said she was hesitant to talk with city councilors regarding aid to cover energy costs for low income people. She commented that it would be better to come up with a concrete plan to present to the council before asking for help.
Commissioner Smith agreed and said she had information, in terms of the situation that the utility was facing and its credit concerns, from staff that would be good to share with the City Council. She stressed the importance of sharing the information with the council before asking for any funding.
Commissioner Bishop said that she had an idea for a proposal and volunteered to write it.
President Anderson suggested sharing ideas by e-mail.
CORRESPONDENCE
General Manager Randy Berggren reported that there was confirmation for June 16, for the next Board governance conversation. He added that the July 28 date had not yet been confirmed and there was no other date before September. He suggested that an evening session be planned sometime before September.
Mr. Berggren reported that there was a retirement banquet on the upcoming Friday night at Valley River Inn at 6 p.m.
Mr. Berggren said that the raft trip down the McKenzie had been confirmed for July 20. He said specific details would be forthcoming.
Referring to the next Board meeting agenda, Mr. Berggren said the Work Session would address master plan implementation and Endangered Species Act relicensing. He said that the regular session would address the water supply contingency plan, water conservation plan policies, and borrowing authority for power supply.
PUBLIC INPUT
Tom Bowerman, 33707 McKenzie View, stressed his alarm that there were discussions about building a 500 megawatt gas fired power plant north of Coburg. He commented that if a different set of actions had been taken 10 years ago then the region would not be facing the problems that it was currently facing. He stressed that current actions would similarly affect the future. He read a 10 year old report from a committee he had been involved with regarding how to address the need for increased power loads.
Regarding billing structure, Mr. Bowerman recommended an inverted rate structure, (tiered rate), where heavy users would end up paying more. He opined that an inverted rate would promote conservation.
INTERGOVERNMENTAL AGREEMENT FOR PUBLIC AGENCY NETWORK
Terry Bequette, Information Services Manager, noted that the Board had been presented with the current status of the Public Agency Network and the Intergovernmental agreement that was needed to establish it. He said the staff recommendation to have the General Manager sign the agreement was now before the Board.
Vice President Bartel, seconded by Commissioner Smith, moved to approve the staff recommendation to have the General Manager sign the intergovernmental agreement and further agreements should they need to be signed.
Vice President Bartel commented on the excellent staff work done for the recommendation.
The motion passed unanimously.
PRELIMINARY DISCUSSION - NOVEMBER ELECTRIC RATES
John Yanov, Senior Financial/Rates Analyst, provided a presentation of the information provided in the meeting packet. He said that staff was looking for Board input before further analysis.
Mr. Yanov said there were two main cost drivers in the proposal:
1. Major projected increase in the power costs from the Bonneville Power Administration, (BPA).
Mr. Yanov said that this was the biggest cost driver since there would probably be no need for a rate change if there was no BPA cost increase.
2. Need for capital improvements related to relicensing at Leaburg and Walterville.
Mr. Yanov said the utility was looking at a projected total cost of $40 million with an annual debt service of $3-3.5 million.
Mr. Yanov suggested that the focus of the discussion be on secondary issues around the potential strategies and options for the rate design. The strategies for rate design were:
1. Maintain base rate structure
2. Tiered rates (inverted rates)
Mr. Yanov noted that there had been concerns from customers over equity in the use of this strategy. He added that from the utility's perspective, it would cause some billing complications.
3. Base rate plus surcharge or power cost adjustment
4. Low income or senior citizen rate
Mr. Yanov said that BPA had placed a ceiling on the projected rate increase of 250 percent. He stressed that staff still did not yet know what the increase would be. He expressed a hope that BPA would release some information by the end of June. He said that the retail increase would be roughly 50 percent of whatever the BPA increase turned out to be.
Commissioner Smith said that inverted block rates (tiered rates) had been discussed. She said that three blocks had been discussed; lifeline type consumption, middle of the road consumption, and the large residential consumers. She called for staff feedback on those block rates.
Commissioner Smith stressed that high use customers get the benefits of the lower and middle blocks before moving into the high use cost increases.
Mr. Varner mentioned that there were at least 20-25 residential customers that would see their bills triple if the inverted block rate was used.
Commissioner Smith suggested looking at what the characteristics of those customers were. She also raised concern over 20-25 households affecting the public policy for the overall rate base.
Commissioner Smith stressed that the rate increase would be a significant hardship for the majority of customers. She commented that it would be a good time to implement the inverted block rate, particularly with the cost benefit the that lower end users would see. She suggested being consistent and following the same practice with water rate increases as well.
Vice President Bartel noted that the majority of public comment had been favorable to the inverted block rate strategy. He said he had hoped for a better staff report on that particular strategy. He emphasized the need for a rate structure that addressed the difficulties low income customers faced as well as sending a message to customers about changing their rates of consumption.
Mr. Berggren said that a conceptual boundary had been prepared for Board input and a more in depth study would be made with Board direction.
President Anderson stressed the need to send a price message to customers regarding consumptive use.
Commissioner Bishop expressed a desire to look at rates that caused conservation in the customer base. She said she did not want a separate rate for low income/senior customers but wanted their needs addressed in whatever rate strategy was used.
There was general consensus to have staff review the inverted block rate structure and surcharge options.
President Anderson suggested looking at strategies before addressing questions about how low income customers would fit into the structure.
Commissioner Smith commented that there was a general trend toward inverted block rates in other areas. She stressed the importance of shedding more light on that type of rate structure. She reiterated that it was a good time to be looking at implementing such a structure.
Speaking to the issue of equity, Commissioner Smith reiterated that heavy use residential customers would have the advantage of the lower and middle rates before going to the high cost tier.
Mr. Varner commented that most facilities that had inverted block rates had a low income rate built into their rate structure.
In response to a question from Commissioner Bishop regarding how business rates would be handled, Mr. Berggren said that inverted rates had only been thought to apply to residential customers.
Mr. Yanov noted that some utilities were charging seasonal rates and time of use rates as well. He said that it would require additional capital costs for metering but it could be done.
Mr. Yanov reiterated that utilities with steep inverted rates almost always had a strong low income program to go along with it. He recommended taking a serious look at a low income program for EWEB if the Board chose to go with a tiered rate structure.
PRELIMINARY DISCUSSION - NOVEMBER WATER RATES
Pat Ventura, Senior Financial Analyst, provided a presentation on the options for a water rate structure as presented in the Board meeting packet.
Mr. Ventura noted that there had not been a rate change in some time. He said that the normal biannual period had been accelerated to rate case on the same schedule as electric. He said that the driving factors were increases in power for pumping costs, general cost increases in labor and benefits, and a voluntary conservation program that would cut sales by as much as $750,000. He also mentioned other issues such as water districts, possible surcharges for elevation zones, and seasonal rates.
Mr. Ventura asked for feedback from the Board on two alternatives;
1. Straight seasonal rates
2. Inverted Block Rates
Commissioner Bishop commented that if it was costing more money to supply water to the water districts then the water districts should pay the costs. She added that there should be elevation charges for customers in the hills.
In response to a question from Commissioner Smith regarding whether there were other communities doing elevation charges for water, Mr. Ventura acknowledged that there were.
In response to a question from Commissioner Smith regarding whether commercial customers still had a declining block rate, Mr. Varner said that there was a two step system, currently, and said that staff would look at eliminating the step.
Commissioner Smith called for staff review of an inverted block rate for water as well as electricity.
Vice President Bartel said that water districts needed to pay the higher costs of distribution. He went on to say that an elevation charge was consistent with the cost of service and reflected the City's desire to limit development in the south hills.
Regarding seasonal rates, Vice President Bartel stressed the need to send price signals on conservation to everyone.
Vice President Bartel acknowledged that an inverted block rate for water would be consistent with the plans for electricity.
Commissioner Bishop raised concern over an inverted block rate for low income and senior customers who used higher levels of water for their gardens.
Commissioner Lanning stressed the balance of conservation with consideration of low income and senior customers. He was in favor of investigating elevation charges for customers in higher areas of the City.
Commissioner Lanning left the meeting at 9:30 p.m.
HAYDEN BRIDGE CONSTRUCTION CONTRACT
Ron Wilson, Senior Civil Engineer, provided a presentation on the Hayden Bridge Construction contract. He said that two projects were identified in the water supply plan to bring larger quantities of water to the service area. The first was a 42 inch water transmission main, which had been completed, and the second was a 15 million gallon reservoir at Hayden Bridge.
Mr. Wilson said that the project had been moving forward aggressively. He said that discretionary use site plan approval had been obtained from the City of Springfield Planning Division. He added that the tree felling permit had been approved.
Mr. Wilson said that the design for the reservoir had been completed. He added that the entry permit for the separate access road had been approved by Lane County.
Mr. Wilson said that he planned one more open house, before actual construction began, to address any public concerns.
In response to a question from Commissioner Smith regarding storm water drainage, Mr. Wilson said the project includes facilities to manage storm water. The storm water will be returned to the river and is covered by tour NPDES permit.
In response to a question from Commissioner Bishop regarding where the company that had won the construction bid was based, Mr. Wilson said that it was based in Stayton and added that it was the premier organization in the State for reservoir construction work.
Commissioner Smith complimented the staff work on the project.
STEAM PLANT RE-POWERING PROJECT STATUS
Scott Spettel, Power Management and Planning Manager, provided an update presentation on the steam plant re-powering project. He said that, due to the downward trend of power prices, staff were recommending that the project not proceed. He said that there was no longer any economic incentive to proceed with the project. He cited the projected profit of $14 million over two years when the project was started and noted that due to the downturn in power prices the expected profit over two years would be around a $1 million.
In response to a question from President Anderson regarding how much money would be lost on the re-powering project, Mr. Spettel cited figures of $3 million plus the cost of demobilizing staff.
Commissioner Bishop raised concern over possible blackouts during the summer and said that she had looked at the steam plant as a possible back up power system.
In response to a question from President Anderson regarding whether it would have been better to lease the needed equipment or purchase it outright, Mr. Berggren said there was only a $100,000 price difference and noted that with leasing came significant issues over control, maintenance and reliability.
Commissioner Bishop raised concern over relying on power price projections. She noted that projections could change and stressed that the risk of continuing the project was worth taking for the reliability factor that it would provide. She said that she would vote against stopping the project.
Commissioner Smith stressed the importance of exhausting all creative opportunities to use the purchased equipment before sending it back.
Vice President Bartel, seconded by Commissioner Smith, moved to terminate the steam plant re-powering project. The motion passed 3:1 with Commissioner Bishop voting in opposition.
ITEMS REMOVED FROM THE CONSENT CALENDAR
Commissioner Bishop, President Anderson, and Commissioner Smith offered corrections to the April 17, 2001 Work Session and Regular Session minutes.
Regarding items 6 & 7 on the consent calendar dealing with hydro relicensing reform initiatives, Commissioner Smith asked what the policy position was for the utility.
Gale Banry, Project Coordinator, said that staff had discussed the critical issues. He said that the most critical issue was to have a dispute resolution process. He said that, currently, there was nothing that required that except going to court.
Mr. Banry said that another issue was a definition of fish ways. He noted that the Clinton administration had come out with a broad definition that would allow miles long fish ladders. He stressed that the intent of the definition was not for that.
Commissioner Smith called for regular updates from staff.
Vice President Bartel, seconded by Commissioner Bishop, moved to approve the remaining items on the consent calendar. The motion passed unanimously.
The meeting adjourned at 10: 35 p.m.
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Assistant Secretary President