Board Members present: Dorothy Anderson, president; Peter Bartel, Patrick Lanning, Sandra Bishop, Susie Smith.
Others present: Randy Berggren, Dick Varner, Mel Damewood, Roseanna McArthur, John Yanov, Pat Ventura, Cathy Bloom, Marty Douglass, Joanne Andersen, Deborrah Brewer, and Krista Hince of the EWEB staff; members of the public; and Ruth Atcherson, City of Eugene Minutes Recorder.
President Anderson called the Regular Session Meeting of the Eugene Water & Electric Board (EWEB) to order.
AGENDA CHECK
President Anderson noted that, as the meeting included two public hearings, the second quarter financial statements (agenda item 11) would perhaps need to be postponed.
CONSENT CALENDAR
1. Minutes: May 11-12 Board Planning Session, the May 23 Special Board Meeting, the June 5 Regular Board Meeting, and the June 16, 2001, Work Session.
Business Service Contracts
Commissioner Smith pulled the minutes from the Work Session of May 11 and 12, 2001.
Commissioner Lanning pulled the minutes from the Regular Board Meeting of June 5, 2001.
Vice President Bartel moved, with a second from Commissioner Lanning, to approve the consent calendar as amended. The motion carried unanimously.
ITEMS FROM BOARD MEMBERS
Vice President Bartel stated that he had attended a conference for regional governance in California and had brought back informational materials pertaining to the handling of the energy crisis there. He noted that a portion of the discussion there had centered on the Department of Energy in California.
CORRESPONDENCE
General Manager Randy Berggren said that EWEB had intervened in the first evidentiary hearing on the California energy problems. He suggested that an executive session may be necessary to facilitate the pursuance of litigation. He noted that the attorney fees may run as high as $50,000.
Mr. Berggren stated that Marty Douglass, Public Affairs Manager, had sent a memorandum to the Board of Commissioners regarding the increase in cost for metro-cable coverage and that it was going to cost $24,000 instead of $9,000.
Mr. Berggren briefly discussed the work of the Charter Amendment Committee and added that EWEB had been asked to submit a letter on its perspective regarding the work. He suggested that a discussion on this topic be tagged on to the upcoming Executive Session in a Work Session.
Mr. Berggren noted that Chuck Dalton, Customer Relations Manager, had sent the Board of Commissioners a memorandum regarding the Human Resources Commission plan for handling low income energy assistance programs for EWEB.
Continuing, Mr. Berggren stated that the public meeting on the new rate proposal would be held the following Thursday, August 23, 2001, and would incorporate a question and answer format.
Mr. Berggren noted that EWEB has a booth at the Lane County Fair to provide water for fair attendees. He added that information about the rate increases will also be available at the booth.
Mr. Berggren stated that the Board Governance meeting will happen on August 20, with the next Board meeting to follow on August 21. He highlighted some of the agenda items, including a review of employee benefits and a review of the public input from the hearing to be held in the current meeting among others.
PUBLIC INPUT
Paul Prensky, 933 East 20th Avenue, requested a change in the required qualifications for a medical waiver that would prevent disconnection as a result of nonpayment of bills. He noted that the current qualifications require that the medical condition be dependent upon an electrical device. He stated that, due to a dependency on 15 medications to regulate a heart condition and manic depression, his body temperature does not regulate properly and he is dependent upon electric control of his physical environment. He felt that the policy that defines a qualification for a medical waiver was too narrow.
President Anderson requested that staff provide the Board with information on the policy on medical waivers.
PROPOSED ELECTRIC RATES
John Yanov, Senior Financial/Rate Analyst, gave an overview of the proposed electrical rate changes as delineated in the November 2001 Electric Rate Proposal with the aid of overhead projections. He noted that the primary impetus for the increase was the increase in the cost of power from the Bonneville Power Administration (BPA). He added that part of the cost increase was due to the relicensing fees for the Leaburg and Walterville stations in the amount of approximately $35 to $40 million. He said that the low income mitigation program would also cost $2.9 million.
Mr. Yanov stated that every six months the BPA would "true up" its rates and that this would give EWEB an opportunity to do the same. He noted that this could translate into an increase or a rebate for utility users.
Mr. Yanov described and compared the three options for a rate proposal which included a flat rate and two tiered rate proposals. He noted that there is also a large general service rate proposal to reduce the number of megawatts used to qualify a large user for load curtailment contracts from ten megawatts to five megawatts.
Dick Varner, Fiscal Services Supervisor, presented an overview of the Memorandum on Potential Financial Based Cost Recovery Adjustment. He stated that, based on the present analysis, the dollar difference between the two tiered rates was small.
Commissioner Smith commented that EWEB had done a good job of explaining to the public why the rates are going up, but had not adequately explained the inverted block rate structure. She supported the tiered rate structure, explaining that it more closely aligns with reality. She stated that the flat rate proposal assumes that the next increment of power consumed cost the same as the previous one did. She requested that the staff prepare and provide information to the public on the tiered rate for the next public meeting. Mr. Varner responded that a sheet of information was being prepared.
Commissioner Lanning agreed with Commissioner Smith's need for education of the tiered rate structure. He asked how many of EWEB customers have electric heat. Mr. Yanov responded that 70 percent used electricity to heat their homes.
PUBLIC HEARING ON THE PROPOSED ELECTRIC RATES
President Anderson opened the public hearing. She read a letter submitted by V. Johnson, 3065 University, endorsing the adoption of a tiered rate system.
Ken Rivernider, 140 Hamilton Avenue, supported the adoption of the tiered rate system. He stressed that it would encourage energy users to consider conservation measures.
Carl Sundberg, 3318 Coraly Avenue, stated that he would like to see the portions of the increase that are related to the increase in power costs and the increased cost of distribution delineated on the utility bill. He encouraged EWEB to pursue alternative sources of energy. He felt that if Oregon had the sun that California has, EWEB would not need to purchase power from the BPA. He noted that he had worked on low temperature differential devices. He suggested that EWEB invite University of Oregon students to submit designs for creative ways to generate electricity and that money be set aside for scholarships for students.
Ralph Harrington, 3931 Royal Avenue, spoke against the rate increase. He stated that middle income people were being hit with cost increases and that the financial status of middle income people was dropping as a result. President Anderson clarified, at his request, that the residential rate increase was higher due to the cost of distribution. He expressed a preference for the tiered rate structure described in Option 2.
Steven Ross, 3660 Bardell Avenue, opposed the rate increase. He encouraged the utility to improve methods of providing energy.
Sam Parker, 2680 Baker Boulevard, speaking as a representative of the First Congregational Church, supported the adoption of Option 3, the second tiered rate structure. He stated that the energy consumption habits of our society were being called into question. He expressed concern for the impact of the rate increase on children and the elderly and people on a low or fixed income. He also expressed concern for the impact of energy production on salmon habitat.
Peter Keyes, 1685 Skyline Drive, stated that the rate increases in the utility bill for his residence would increase by 44 percent with the first option, 86 percent with the second option and 79 percent with the third option. He said that the December bill for his residence would more than double according to his calculation in spite of having been weatherized. He noted that he and his wife had bought an older house near the center of the City of Eugene and added that the rate increase would encourage sprawl as people would not be willing to pay to upgrade older homes to conserve energy and that this would discourage people from living in areas within walking distance of the center of activity.
Jim Brown, 3410 Grant Street, spoke as a representative of the First Congregational Church, endorsed the adoption of the tiered rate structure as outlined in Option 3. He felt that it would encourage people to learn methods of energy conservation.
Andrea Lewis, 2925 Lincoln Street, encouraged innovation in architecture to facilitate prudent use of energy.
President Anderson closed the public hearing.
ELECTRIC RATES
Mr. Yanov requested direction for staff as to how to proceed.
Commissioner Smith stated, for the record, that there is no cross-subsidization between classes, i.e. residential customers do not subsidize large energy consumers. She clarified that the rate increase is also not due to the increase in administrative costs.
Mr. Varner noted that Northwest Natural Gas had raised its rates as well. Vice President Bartel stated that the increase in natural gas rates had caused his heating bill to double. Commissioner Smith added that one perspective would be that it would be preferable for all people to heat with natural gas as that would greatly reduce the load on the electric utility and, thus, the need to purchase electricity on the margin might not occur.
In response to a question from Commissioner Lanning, Mr. Berggren stated that staff is anticipating an increase in energy conservation as a result of the tiered rate. He said that it was in the budget.
Commissioner Bishop supported adoption of the tiered rate structure. She suggested that having more tiers might be a better incentive to customers to conserve energy. Mr. Yanov stated that some utilities have tried as many as five tiers and that two and three tiers were the most common splits in the tiered rate structures of other power companies.
Commissioner Smith endorsed the inverted block rate and stated that Option 3 might be the most preferable of the options as it impacts the community the least.
Vice President Bartel noted that during the public hearing Mr. Keyes had stated that his utility bill could increase by more than 80 percent. He asked for verification of that possibility. Mr. Varner said that this could be true for a small percentage of people. Vice President Bartel added that he is inclined to support Option 2.
Jim Origliosso, Treasurer, stated that currently 70 to 75 percent of rented dwellings have not been weatherized. He expressed hope that the tiered rate structure would motivate landlords or would encourage tenants to motivate landlords to weatherize rental units.
President Anderson expressed a preference for the tiered rate structure as described in Option 2.
Commissioner Lanning said that he was inclined to support the tiered rate structure as described in Option 3.
PROPOSED WATER RATES
Pat Ventura, Financial Analyst, provided a presentation of the information outlined in the November 2001 Water Rate Proposal with the aid of overhead projections delineating tiered rate options with and without elevation charges. He stated that the 11.4 percent increase was intended to meet a net revenue deficiency, and noted that the basic charge is not proposed to increase. He said that the tiered rate proposal was structured so as to encourage water conservation.
Mr. Varner noted that staff had looked at seasonal water use and had tried to coordinate seasonal water rate distribution with the seasonal electric rate increases. He stated that the water staff had felt that the adoption of a year-round tiered rate would entail the least financial impact on customers. He gave a brief overview of the different tiered rate options for an increase in the rates charged for water service. He explained that the elevation charges were due to the increase in cost for delivery of services to customers at higher elevations.
President Anderson asked if there was any low income housing in the south hills of the City of Eugene. Mel Damewood, Water Engineering Manager, responded that there was a low income housing complex on Fox Hollow Road. Mr. Varner felt that the low income residents would fall under the qualifications for the first tier.
Commissioner Smith encouraged staff to educate the public as to why EWEB is proposing an increase in water rates.
PUBLIC HEARING ON THE PROPOSED WATER RATES
President Anderson opened the public hearing on the proposed water rate increases.
President Anderson noted that Ralph Harrington had registered his opposition to the proposed water rate increase.
Patrick Costello, 474 Brookside Drive, stated that he did not understand the impetus for adding an elevation charge. He said that it would complicate the rate structure, while not adding much revenue.
President Anderson closed the public hearing.
WATER RATES
President Anderson commented that the rates are based on the cost of service and, as such, customers who live at higher elevations incur a higher cost for service delivery.
Vice President Bartel endorsed the tiered inverted block structure.
Commissioner Smith said that she supported the tiered rate structure, but wanted more input from the next public hearing prior to weighing in on the issue of an elevation charge.
Commissioner Bishop felt that the elevation charge was fair as the consumer should be responsible for the cost the consumer incurs.
Commissioner Lanning questioned whether there were more relevant costs such as soils with higher acidity that cause more damage to lines or soils that were particularly difficult to lay lines in.
Mr. Varner stated that the conversion would take time to implement, approximately several hours a day for a period of a month.
CONTRIBUTIONS-IN-LIEU-OF-TAX (CILT) PROPOSAL TO THE EUGENE CITY COUNCIL
Marty Douglass went over the revised letter on CILT to the City Council of Eugene included in the Board members' packets. He stated that the italicized paragraphs, the second one and the fourth one, are new and seek to further explain how the money will be allocated.
Vice President Bartel said that he would prefer the City Council to allocate the $2.5 million to EWEB and let EWEB distribute it to low income energy assistance programs.
Commissioner Smith remarked that this was outreach to the City Council and that one possible result would be that the City Council could begin to take a vested interest in EWEB.
Commissioner Bishop suggested that tying the proposal to one of the programs that the City Council supported, would increase the likelihood for Council support for the CILT proposal.
Commissioner Smith noted that Councilor Gary Rayor had expressed support.
Commissioner Lanning stressed that it was important to not only offer energy assistance to low income people, but to also offer assistance for improved insulation, et cetera.
Vice President Bartel commented that there would be a benefit to having a relationship with the City Council.
ITEMS REMOVED FROM THE CONSENT CALENDAR
Commissioner. Smith recommended the following correction to paragraph four of page 11 of the Minutes from the work session of May 11 and 12:
"...Commissioner Smith suggested communicating with the City Council and examining the possibilities of using Systems Development Charge money..." should read "...Commissioner Smith suggested communicating with the City Council and re-examining the use of the funding EWEB currently uses to waive System Development Charges to help low income families with power costs.
President Anderson recommended the following change to paragraph four of page 10 of the minutes from the Work Session of May 11 and 12:
"...President Andersen commented that people who had paid a billing deposit were less likely to continue paying their bills..." should read "President Andersen commented that people who hadn't paid a billing deposit were less likely to continue paying their bills..."
Commissioner Lanning recommended the following change to paragraph four of page 7 of the minutes from the regular board meeting held on June 5:
"...He was in favor of elevation charges for customers..." should read "He was in favor of investigating elevation charges for customers..."
Vice President Bartel moved, with a second from Commissioner Lanning to approve the items removed from the consent calendar as amended. The motion carried unanimously.
The meeting adjourned at 10:30 p.m.
_____________ ______________________________________
Assistant Secretary President