Board Members Present: Dorothy Anderson, Peter Bartel, Susie Smith, Patrick Lanning, and Sandra Bishop.
Others present: Randy Berggren, JoAnn Andersen, Deborrah Brewer, Tom Buckhouse, Mel Damewood, Marty Douglass, Dick Helgeson, Jim Maloney, Mark Oberle, Jim Origliosso, Scott Spettel, Dick Varner, Jim Wiley, and Krista Hince of the EWEB staff; members of the public, and Kim Young, City of Eugene Minutes Recorder.
President Anderson called the Special Board Meeting to order at 7:30 pm.
AGENDA CHECK
President Anderson determined that there were no changes to the agenda.
Consent Calendar
The following items were presented for approval to the Consent Calendar:
MINUTES
Commissioner Smith removed the minutes of the October 20 Planning Session from the minutes.
Responding to a question from Commissioner Bishop regarding where the utility was in the process of the Schwabe, Williamson, & Wyatt contract (item 5), Dick Helgeson, Water & Steam Division Director, indicated that there was a draft agreement, but it was not executable until approved on the board’s Consent Calendar. Commissioner Bishop asked that the item be removed from the Consent Calendar.
Regarding item 3, Commissioner Lanning stated for the record he was an employee of Lane Community College but had no direct relationship to or interest in the item.
Vice President Bartel, seconded by Commissioner Lanning, moved to adopt the Consent Calendar with the exceptions of item 5 and the minutes of October 20. The motion passed unanimously.
ITEMS FROM BOARD MEMBERS
Vice President Bartel said that in his role as the Lane Council of Governments Board president, he had met with other local officials and State legislators earlier that day to discuss anticipated State budget cuts. He said that it appeared there would be a revenue solution proposed. He noted he had been elected for a second term as president of the LCOG Board.
President Anderson said that the McKenzie Watershed Council would receive $325,000 next year from the Bonneville Power Administration (BPA) because of its designation as a focus watershed; the council had been receiving about $110,000 from the BPA. That amount would be increased annually the following two years. She said the council would use the money for implementation projects.
President Anderson discussed the status of Cedar Creek water quality monitoring, saying that EWEB had taken action to ensure that monitoring continued to occur following the reassignment of students who had been monitoring the creek.
Commissioner. Bishop said the Confederated Tribes of the Umatilla had an election for the board of trustees and general council, so the people the Board had been working with about a possible power plant would be changing somewhat. She reviewed the changes that had occurred on the board and council. She added that she did not expect the direction the process was taking to change.
CORRESPONDENCE
General Manager Randy Berggren said that staff, as soon as the weather improved, would ensure the Board had the opportunity to tour the filtration plant. Commissioner Lanning and Commissioner Smith indicated the weather was no concern to them.
Mr. Berggren said that the United Way Campaign had been wrapped up. He said that 256 employees and retirees contributed; 36 employees were leadership givers of $1,000 or more, the second highest for the County after the University of Oregon, with far more employees. Contributions totaled $83,600, a 7.5 percent increase over the previous year. He commended EWEB employees for a successful campaign.
Mr. Berggren said the Employee Activities Committee holiday party occurred on December 14, and there was a great turnout and a great party.
Mr. Berggren previewed the agenda of January 2, 2002.
PUBLIC INPUT
There was no present wishing to offer input.
2002 BUDGET AND WORK PLAN
Treasurer Jim Origliosso provided the presentation on the 2002 budget proposal, noting that the budgets for all utilities meet the balanced budget criteria; there were no rate increase assumptions in any utility; the electric utility had a $6 million budgeted surplus, the water utility had a $330,000 budgeted surplus, the telecom utility had a $130,000 budget surplus, and the steam utility had a $7,000 budgeted surplus. He reviewed next steps in the budget process. Mr. Origliosso recommended approval of the budget proposal.
Commissioner Smith, seconded by Commissioner Lanning, moved to approve the 2002 budget proposal.
Commissioner Bishop thanked staff for the work it had done to accommodate the Board’s interest in assuring there was no rate increase in the budget at this time. Mr. Berggren attributed that fact to the existing budget surpluses.
The motion passed unanimously.
PRIEST RAPIDS CONTRACT
Scott Spettel, Power Management & Planning Manager, reviewed the decision before the Board, which was to decide whether to sign the Grant contracts by December 31, 2002. He said the contracts have been reviewed by EWEB’s counsel, which informed EWEB they were within the Board’s authority to sign. He recommended that the Board’s motion ask that Grant give consideration to EWEB’s continuing need for the flexibility of automatic generation control in terms of the fourth contract, and that there be no adverse court ruling that diminishes the value of the contracts for EWEB.
Vice President Bartel, seconded by Commissioner Lanning, moved to direct Mr. Berggren to sign the Grant contracts with the stipulations offered by Mr. Spettel.
President Anderson said the decision was a difficult one for her because of the concern about the tribes and because of the other proposal, but she believed now was not the time to take the additional risks involved. She was pleased by the fact EWEB would have a say in the river stewardship issues.
Vice President Bartel acknowledged the merits of the other proposal but did not think that EWEB had any choice, given that the other major utilities were lined up behind the current license holder.
Commissioner Smith thanked staff for getting the utility a better deal that the Board could support.
Commissioner Bishop did not think that PacifiCorp and the tribe put together a strong enough legal case for the contracts, and there was too much risk for EWEB. She was concerned about the diminishing amounts of power over the years. The other proposal had more power, and more predictable power over a substantial number of years.
The motion passed unanimously.
EWEB MASTER PLAN STATUS
Deborrah Brewer, Intergovernmental Affairs Coordinator, provided an update on the Master Plan, Phase II, the economic analysis requested by the Board. She called the Board’s attention to three options developed by the consultant, E.D. Hovee & Company:
Option A: All EWEB functions remain at the current sit
Option B: All EWEB functions move to another site
Option C: EWEB Administration remains at the current site and Operations move to another location.
Ms. Brewer noted that the Board members had been interviewed by Eric Hovee of the consulting firm the previous week about the options. She said that the consultant was ready to move forward using the assumptions reflected in Attachment B to a memorandum from Ms. Brewer entitled Update on EWEB Master Plan Economic Analysis, which was in the meeting packet. She called attention to the schedule for the analysis, Attachment A. Ms. Brewer clarified that the major change in the assumptions from the previous draft was how the riparian edge was treated.
Ms. Brewer reviewed an outline of the three options, which was reflected in Attachment C to the memorandum.
Commissioner Smith said that when she and President Anderson spoke with Mr. Hovee, they discussed the steam plant at some length. She believed that there was more pressure to do different things with the plant if EWEB was not in its current location. Ms. Brewer said that staff could make that assumption; the question was how that affected the economic bottom line. Commissioner Smith believed it would. Ms. Brewer said that staff was unsure how to treat the issue. Commissioner Smith did not want an unknown factor equated to zero. She said that if the area around the steam plant developed as envisioned, EWEB would be under pressure to at least make it look visually better, or take it down. Ms. Brewer indicated that staff would investigate the dollar impact using that as a threshold.
Vice President Bartel believed that EWEB would sell the building as it is if it left the site and let the buyer determine the building’s fate. Commissioner Smith said that she was operating under the assumption that the steam plant was staying. Ms. Brewer said that the Board did not need to decide now. She said she would look at keeping the building in EWEB’s use, selling the building, or retaining the building and improving it. She said that staff would ensure those questions were asked to get the costs involved. Vice President Bartel wanted to ensure that the Board was able to compare “apples to apples,” which meant using consistent numbers for all the options. Commissioner Bishop said that knowing the cost of the environmental clean-up needed for the building would be useful.
Commissioner Smith emphasized the need to consider public meeting spaces in Option B. She said that there was community value to the existing meeting spaces, and she questioned if EWEB had responsibility to replace what would be lost. President Anderson agreed. Ms. Brewer said she would secure information about the cost of different square footage meeting rooms.
Ms. Brewer distributed a revised methodology outline and pointed out changes.
Ms. Brewer indicated she would be back again in February 2002.
Commissioner Bishop expressed appreciation for having the item on a meeting agenda where all commissioners could be present. She thought it better public policy to discuss the issues in a public setting, rather than in private with the consultants.
Commissioner Bishop said she was becoming increasingly sensitive to the public perception of the topic and how it played out economically in difficult times, and stressed the need for the Board to get as much information as possible.
WIND POWER CONTRACTS
Jim Maloney, Energy Resource Project Manager, reminded the Board that it previously heard a presentation on wind projects the utility might be able to put into the fiscal year 2002-2003 budget. He was directed to return with the best project.
Mr. Maloney reviewed the reasons for the staff recommendation for the Stateline project, citing near-term pricing; deadline certainty, as the project was to be ready by December 31; and the wind resource itself, which was well-documented. In reference to the other site, the Klondike site, Mr. Maloney noted that the construction and operations manager was Enron-Wick, whose status in terms of the parent company’s bankruptcy was unknown; the turbines at the site were Enron turbines. The Stateline site had Vestus 660 turbines. The owner of the Klondike site was also in the midst of a legal dispute.
Mr. Maloney provided information about the project, noting it was constructed, owned, and operated by FPL Energy; had 300 MW’s total capacity when Phase II was done; had been through the regulatory processes in the two states; the land was in farm and ranch use, and that use would continue; and EWEB had worked out an agreement with Pacific Corps to have a single “virtual wheel” to the Mid-C trading hub.
Mr. Maloney pointed out the project location on a map. Responding to a question from Commissioner Bishop, he clarified that it was in Walla Walla County on the Washington side and Umatilla County on the Oregon side.
Mr. Maloney called attention to an article from the Puget Sound Business Journal regarding Seattle City Light’s 20-year commitment to wind power using capacity from the Stateline project.
Mr. Maloney provided an outline of the basis proposal:
Referring to the 25-year term, Commissioner Smith asked if EWEB would have a first option for renewal. Mr. Maloney indicated that would be discussed during contract negotiations; at this time staff was working from a proposal term sheet and a six-page technical appendix. He said that at this time, staff would like the Board to direct it to finish this phase of the work, and carry Commissioner Smith’s interest forward into the contract phase.
Mr. Maloney provided information about the pricing for the basic proposal:
Mr. Maloney said that in terms of meeting the Board’s renewables agenda, the project met EWEB’s goals for 2002-2003, and give the utility revenue for some of the potential development the Board had discussed for the long-term.
Mr. Maloney noted uncertainty about the fate of the energy legislation pending in Congress.
Mr. Maloney invited questions. He recommended that the Board move ahead with the project. He referred the Board to the staff-recommended motion.
Commissioner Smith reiterated her interest in including a first option for renewal in the contract. Mr. Maloney said that PacifiCorps was aware that EWEB was talking to other providers for the 2004 time frame, and the company was quite interested in competing with them.
Vice President Bartel, seconded by Commissioner Bishop, moved to direct staff to finalize negotiation and contract language for generation output from the Stateline Wind Project and gives the General Manager authority, after appropriate legal review, to sign the resulting contract so long as it comports with and is representative of the capacity, pricing, and other project characteristics as outlined tonight.
Commissioner Bishop indicated comfort with the motion.
Mr. Maloney assured the Board that he would keep it apprized of progress.
President Anderson said that she was happy to see the project work out.
The motion passed unanimously.
Responding to a question from Vice President Bartel regarding green tax credits, Mr. Maloney said that EWEB would receive the environmental and other attributes associated with the power that it bought from the project; at a later point EWEB would get to determine what and how it wanted to participate in a wind tax or green credits market.
WATER EXTENSION POLICY CHANGE
Dick Helgeson, Water & Steam Director, was present to discus proposed water main extension policy changes. He said staff was requesting a policy change to allow water substructure work to be billed based on estimated costs. That will allow EWEB to provide the developer with one bill and contract for substructure work.
Mr. Helgeson reviewed the utility’s current practices related to joint trench work and provided background on the existing billing system. He reviewed the elements of the proposed process improvements, and emphasized the fact that estimates were consistent with construction industry practices, put the utility and third-party contractors on an equal footing for bidding on construction by developer projects, made the allocation of costs easier, allowed for change orders prior to the completion of work, and the final reconciliation would not involve a third party.
Mr. Helgeson reviewed proposed changes and clarifications to the water main extension policy. He recommended Board adoption of the proposed policy changes.
Responding to a question from Vice President Bartel, Mr. Helgeson said that the impetus for the recommendation was the construction-by-developer process that Tom Buckhouse put together. Staff agreed that there needed to be consistent billing between water and electric. Another staff team had worked on the billing process, and it had also recommended consistent billing efforts. He confirmed, in response to a follow-up question from Vice President Bartel, that EWEB was proposing to create rules and standards that make the playing field level for all to protect itself and ensure the quality of workmanship and materials. Mr. Berggren noted that in the majority of cases, the private developer still did not choose to do the work privately but had EWEB crews do the work.
Vice President Bartel endorsed the staff recommendation and said he was glad EWEB was moving in that direction. He thought it meant EWEB would operate on a more level playing field with a defensible position.
Vice President Bartel, seconded by Commissioner Smith, moved to approve the staff recommendation. The motion passed unanimously.
ITEMS REMOVED FROM THE CONSENT CALENDAR
Referring to page 5 of the October 20 minutes, Commissioner Smith corrected paragraph 4 to read: “Commissioner Smith suggested that staff review the cable replacement strategy carefully, because it seemed to her that the expense of replacing cable in a total run instead of a single section might make better business sense.”
Vice President Bartel, seconded by Commissioner Smith, moved approval of the October 20, 2002, Planning Session minutes. The motion passed unanimously.
Referring to Item 5, the Schwabe contract, Commissioner Bishop clarified with Mr. Helgeson the costs per hour being charged by the consultants. He said that he had previously had some modest funding budgeted for the legal expenses associated with the rule-making work, but had not spent the full amounts budgeted. The amount authorized in 2002 was consistent with that budgeted in the past. He noted that water rights were last extended ten years ago under a set of rules that were fairly perfunctory, the regulatory environment had changed substantially since then, requiring more legal support. Commissioner Bishop said that she had been shocked, thinking that the expertise being purchased was already available through the Cable Law firm. She would vote to approve the contract, trusting that staff knew what it was doing. She indicated that she was not sure how long EWEB could afford to have the best of everything.
Commissioner Smith said she sat on the Oregon Water Resources Commission, and it was her observation that there were just a few attorneys in the state that practiced the type of law involved. Mr. Helgeson concurred. He noted that the Cable Law firm represented eleven municipalities that might find themselves in competition with EWEB for the remaining water in the river, and he had some concern that the firm might be somewhat compromised when it came to advocating for EWEB.
Vice President Bartel noted previous discussion of the topic and said the information was not new.
Vice President Bartel, seconded by Commissioner Smith, moved approval of Item 5. The motion passed unanimously.
The meeting adjourned at 9:25 p.m.
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Assistant Secretary President