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

Others present: Randy Berggren, JoAnn Andersen, Tom Buckhouse, Jay Bozievich, Marty Douglass, Tom Meyers, Tom Martin, Kris Kendall, Roseanna McArthur, Jim Maloney, Laurie Muggy, Scott Spettel, Dick Varner, Stephen West, and Krista Hince of the EWEB staff; and Joe Sams, City of Eugene Minutes Recorder.

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

President Anderson indicated that the Electric/Water Rates, originally scheduled for tonight would be pulled and the Wanapum/Priest Rapids Contract status would take its place in the Work Session.

EMPLOYEE BENEFITS REQUEST FOR PROPOSAL (RFP)

Laurie Muggy, Human Resource Specialist, provided power point presentation on the Benefits RFP Update. The presentation included a review of the Board Briefing Paper for the RFP Committee, RFP responses received, selection criteria used, quoted costs of each finalist, a comparison of the financial projections to the actual costs, final recommendations, enhancements and trade offs, a timeline, and ideas for other benefits work.

The final recommendations were as follows;

Life Insurance: Prudential

Disability: Prudential

Vision: Vision Service Plan

Dental: Oregon Dental Services (ODS)

Medical: Regence Blue Cross Blue Shield

In response to a question from President Anderson regarding whether spouses would be included in the proposed employee dental plan, Ms. Muggy confirmed that they were included.

In response to a question from Commissioner Bishop regarding the duration of contract rate guarantees, Ms. Muggy said that there would be annual contracts with two year rate guarantees.

In response to a comment from President Anderson about the cost of including families in the employee dental plan, Ms. Muggy said when a spouse was added to the plan the employee would pay 25 percent of whatever the additional cost to add that person would be. She noted that this was a competitive rate.

Tom Martin, RFP Committee member, noted that if EWEB had done nothing and gone with existing providers the cost would have been $6.3 million as opposed to the proposed $5.8 million.

Ms. Muggy noted that if employees wanted to opt out of EWEB's plan, and could prove that they had insurance through another source, they would be offered cash back in the amount of 50 percent of whatever the employee cost would be.

In response to a question from Commissioner Bishop regarding how many employees were not enrolled in the current Option 1 of EWEB's health plan, Ms. Muggy said that 25 percent of the utilities' employees were not in the Option 1 plan.

Mr. Martin said that the secondary thing that needed to be examined was the retiree benefits issue.

Vice President Bartel expressed his amazement at the rising costs of coverage. He commented that, at some point, cost caps needed to be put in place and employees would have to make up the remainder. He stressed that the utility could not continue to cover the increasing costs without some containment efforts. He called for a Board discussion on the topic.

Commissioner Smith acknowledged that trends would eventually call for increased employee participation in covering the costs of benefits.

In response to a question from Commissioner Lanning regarding the percentage of cost increases, Ms. Muggy said that it was 17 percent overall. Mr. Martin noted that this figure was below the industry standard.

In response to a call for a study of increasing employee participation in covering rising costs, Mr. Berggren noted that employee contributions had increased substantially in the past 10 years. He stressed the importance of not assuming that employees had been riding at no cost.

Vice President Bartel reiterated his desire for a future discussion.

Ms. Muggy noted that staff was moving forward with a retirement benefits study and would solicit retiree and employee participation in that process.

In response to a question from President Anderson regarding pooling insurance with other organizations, Ms. Muggy said that staff was examining options.

In response to a question from Commissioner Lanning regarding the retirement study using external comparisons, Mr. Martin said that he would request that it did.

WANAPUM/PRIEST RAPIDS CONTRACT STATUS (Item VIII from the Special Board Meeting Agenda)

Scott Spettel, Power Management & Planning Manager, provided a report for discussion regarding whether to sign the contract with Wanapum/Priest Rapids. He noted that the regional response to PacifiCorp and Yakima Nation's announcement that they would compete for the license depended on how many public entities aligned publically with PacifiCorp prior to signing the grant contract.

Mr. Spettel said that there was a September 7, deadline to sign the contract. He said that Grant was unwilling to delay the deadline and was pressuring facilities to use, or lose, their right of first refusal. He noted that Seattle City Light and Puget had asked the circuit court to rule on the right of first refusal and said that EWEB's lawyers were urging caution.

In response to a question from President Anderson regarding a time line on the court ruling, Mr. Spettel said they had asked for an expedited ruling.

Regarding the Board's request for staff input on the likelihood of success for PacifiCorp on the competing licence application, Mr. Spettel noted that competition for such licences had been limited and staff were not aware of any in which the competitor had been successful in taking the licence away from the incumbent. He stressed that Grant was putting together a very thorough licence application. He noted however, that Seattle City Light was not inclined to sign with Grant and Tacoma was wavering as well. He estimated PacifiCorp's chance of success at approximately 30 percent but noted that other staff had not rated their chances so high.

In response to a question from Commissioner Smith regarding whether there had been any contact with Seattle or Tacoma regarding their decisions, Mr. Berggren said that he had communicated with them and they felt that Grant was being heavy handed and greedy. He added that there was more economic benefit in PacifiCorp's proposal, as it was presented, than there was in the Grant proposal. He added his opinion that if there was no court ordered stay, then Seattle would not sign with Grant.

In response to a question from Commissioner Smith regarding whether there would be any benefit in adding EWEB's bargaining strength with Seattle and Tacoma to influence Grant, Mr. Spettel opined that there would be no benefit in such a situation. He said that it would not add to PacifiCorp's chances of succeeding.

In response to a question from Commissioner Bishop regarding what would happen to the existing contracts with Grant if EWEB choose to sign with PacifiCorp, Mr. Spettel said that the existing Grant contracts would remain in place for Priest Rapids until 2005 and Wanapum until 2009.

In response to a question from President Anderson regarding whether the licence would be split between the two competitors, Mr. Spettel said that Grant was trying to combine both projects into one licence.

In response to a question from Commissioner Lanning regarding whether EWEB could sign with both competitors, Mr. Spettel said that signing with both would violate existing contracts.

Mr. Spettel said that Grant prices could double and still be a benefit to EWEB.

President Anderson reiterated Mr. Berggren's comment that the PacifiCorp proposal would be more of a benefit to the region.

In response to a question from Vice President Bartel regarding the value of the contracts, Mr. Spettel stressed that there was a large benefit in the contracts, (seven figures).

The meeting adjourned at 7:30 p.m.

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Assistant Secretary President