Board Members Present: Dorothy Anderson, President; Peter Bartel, Patrick Lanning, Susie Smith, Sandra Bishop.
President Anderson called the Work Session of the Eugene Water & Electric Board, (EWEB), to order at 5:30 p.m.
EUGENE CHARTER REVIEW
Deborrah Brewer, Project Manager, provided a presentation on Eugene Charter review. She reviewed that the City Council had formed the Eugene Charter Review Committee earlier in the year and noted that one of the things being examined by the committee was EWEB's role.
Ms. Brewer said that the committee was very busy and outlined three possibilities regarding its examination of EWEB's role:
1. The Committee could run out of time before getting to issues related to EWEB.
2. The Committee could decide not to examine EWEB's role
3. The Committee could examine EWEB's role and decide to make recommendations to the City Council who would decide what went to the voters for a charter amendment.
Ms. Brewer stressed the importance of using the opportunity to look at some concerns EWEB had regarding the charter and make language proposals for the committee to discuss.
Ms. Brewer outlined the general topics that staff had proposed for committee discussion:
1. EWEB's authority to bring measures to the voters.
2. EWEB's authority as it pertains to short term borrowing.
3. Confusion over contributions in lieu of taxes.
Ms. Brewer noted that the utility's legal council had been asked to attend the work session and provide some legal background.
Win Calkins, General Council, said no one was looking for a huge overhaul of the relationship between EWEB and its relationship to the City Council as it functioned within the City Charter. He did note that there were a few areas where clarification would be helpful.
Discussing the issue of EWEB's authority to bring measures before the voters, Mr. Calkins said there had been no clarification that virtually every time the utility had needed to place a measure before the voters that a measure had been placed. He said it was, more or less, assumed that EWEB was involved in the planning and financing and that EWEB had authority in that area. He recommended an amendment to Section 44, which would add a subsection 7, that the Board without necessity of review or action by the City Council may require measures, related to utilities, including financing thereof or issuance of indebtedness to be submitted to the electors of the City, subject only to form and procedure requirements in election law.
Mr. Calkins said that this would eliminate any potential liability on the part of the city regarding EWEB matters.
Mr. Calkins said that a subsection 7 (b) needed to be added that would adopt resolutions for the issuance of bonds under the Uniform Revenue Bond Act. He said the subsection was under study because it implicated State Law and the definitions under the State Statute. He recommended continuing study to see if it had the support of the State Statute.
In response to a comment from Vice President Bartel regarding the evolution of the utility from tax payer paying of bond measures to a rate payer backing of bond measures, Mr. Calkins said the evolution was clear and observed that in the last several decades there had been nothing but revenue bonds and special fund liability which was designed not to implicate the taxpayers and the general funds of the City.
In response to a concern from Vice President Bartel regarding in putting measures on the ballot, Mr. Calkins opined that the EWEB Board members had a responsibility to the utility and a fiduciary duty to carry out operations under the Charter. He noted that there were reporting requirements and practices with respect to the City Council, but stressed that the Board's top priority was to the utility.
In response to a question from Vice President Bartel regarding what kind of a language amendment to the charter it would take to eliminate the need to go before the council with bond issues, Ms. Brewer noted that the Springfield Charter had a different approach to its charter and stressed that unique language would have to be crafted specific to Eugene.
Vice President Bartel raised concern that the City Council did not have the time to thoroughly research EWEB issues and suggested a public partnership with the City Council rather than the relationship that had gone on in the past.
Discussing the utility's borrowing authority, Mr. Origliosso noted that EWEB had some borrowing authority that it had used to supply liquidity support for power trading and power supply. He noted that the City Council had made it clear that it would like to see future borrowing for the Telecommunications program voted on by the community. He said there were two housekeeping items for charter discussion:
1. The addition of Telecom to the list of utilities provided
2. An update of the charter language to broaden borrowing authority beyond just bank loans.
Discussing contributions in lieu of taxes, Mr. Origliosso outlined how they were characterized and payed by the utility to the City. He said that staff were asking for a charter language clarification that stated that CILT payments were surplus earnings payments made in the event that there were sufficient earnings from EWEB to make the payments.
In response to a question from Commissioner Bishop regarding the reason why Telecom was not included in the charter, Mr. Origliosso said the focus had been on getting authority to do Telecommunications and were not looking at how to finance the project.
In response to a question from Commissioner Bishop regarding whether the proposed language on telecom would eliminate the need to go before the voters for financing issues, Mr. Origliosso said they would be limited to five percent of the retained earnings of the utility and added that there would be other restrictions as well.
In response to a question from Commissioner Bishop regarding where the five percent figure came from, Mr Origliosso said the origin came from the Trojan Bond Resolution which referred to the requirements of the original bonds. He said the original bonds were the Carmen Smith bonds that limited subordinated debt of that kind to five percent of retained earnings.
In response to a question from Commissioner Bishop regarding what would happen to CILT payments if there were no surplus earnings, Mr. Calkins said the existing agreements would continue as far as the rates of payment. He said the existing language from the 1976 Charter had been continued.
In response to a question from Vice President Bartel regarding whether CILT payments had been discussed with the City Attorney, Mr. Calkins said it had not been discussed yet since all the proposals were still preliminary. Ms. Brewer added that the intent was to focus on house keeping issues and not make any major changes to current practice.
General Manager Randy Berggren stressed the importance of clarity in the Oregon Revised Statues regarding accounting for cash flow and the relative priorities of payment obligations.
Commissioner Bishop commented that there were some outdated things in the charter.
1. City oversight in the extension of water services.
2. Annual reports to the City Council
There was general discussion of city oversight of extension of water rights. President Anderson noted that the topic had been extensively discussed in the past and said that the issue related to EWEB extending services outside of the urban growth boundary. She commented that it would be a waste of staff time to bring the item up again.
Mr. Berggren noted that the utility provided an annual report to the city.
Vice President Bartel stressed the importance of maintaining communication with the City. He suggested that the communication process might be formalized in some way.
In response to a question from Commissioner Bishop regarding the charter and the election of Board members and their terms of office, Ms. Brewer said that the Charter Review Committee would address that issue.
STEAM STRATEGY UPDATE
Dick Varner, Financial Services Supervisor, provided a presentation on the EWEB steam strategy. The presentation included:
1. Historical Context
2. Emerging Steam Issues
3. Steam Customer Profile
4. Cost Structure & Budget Status
5. Current and Projected Fuel Costs
6. Rate Competitiveness
7. Future Operating Scenarios and Alternatives
8. Next Steps
In response to a question from Commissioner Lanning regarding whether the forward prices, as presented by staff, were locked in, Will Bondioli, Steam Division Supervisor, explained that the forward prices mentioned were 50 percent locked in.
In response to a question from Commissioner Lanning regarding the rate for EWEB's use of steam, Mr. Helgeson said EWEB's rate was between the medium to large customer range.
In response to a comment from Vice President Bartel regarding his desire to phase out the steam program completely, Mr. Helgeson noted that a phase out of the program was listed in the presentation under Future Operating Scenarios and Alternatives.
Vice President Bartel stressed the importance of communicating with steam customers regarding conversions of their facilities to steam alternatives.
Mr. Helgeson stressed that staff were not recommending any particular alternative to the Board, but added that staff were fully prepared to begin a phase out of the steam program if directed to do so.
Commissioner Smith commented that the steam program should be phased out when it began to lose money. She outlined some questions that could be used as criteria for the steam program:
Commissioner Smith suggested possibly merging EWEB's steam utility with the University of Oregon's steam plant.
Commissioner Bishop commended the steam plant staff work. She raised concern that there was no funding available to assist steam customers to convert to alternatives.
In response to a question from Commissioner Lanning regarding the percentage of EWEB that was heated by steam, Mr. Helgeson noted that the entire utility was heated by steam.
Commissioner Lanning requested an estimate of the cost for EWEB to convert to an alternative heat source.
The Work Session adjourned at 7:50 p.m.
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Assistant Secretary President