Board Members Present: Dorothy Anderson, Peter Bartel, and Patrick Lanning. Commissioner Sandra Bishop was excused.
Others present: Randy Berggren, Cathy Bloom, Tom Buckhouse, Marty Douglass, Dick Helgeson, Mat Northway, Kathy Grey, Dick Varner, Jim Wiley, and Krista Hince of the EWEB files; Don Irving, and Shawn Holm, PricewaterhouseCoopers, LLP; Ruth Atcherson, City of Eugene Minutes Recorder; and members of the public.
President Anderson called the Work Session to order at 5:30 pm.
2001 FINANCIAL AUDIT AND MANAGEMENT LETTER
Assistant Treasurer Cathy Bloom introduced Don Irving and Shawn Holm, auditors from the accounting firm of PricewaterhouseCoopers. Mr. Irving and Mr. Holm provided a brief overview of the report on the financial statements that had been previously distributed to the Board. Mr. Irving noted that they had issued an unqualified opinion on the financial statements, meaning that there were no limitations on the scope of the work and that the audit had been conducted in accordance with the professional standards of PricewaterhouseCoopers. As such, he said, that in the opinion of the auditors, the financial statements present fairly the financial results and the financial position of the utility. He declared that there were no conflicts of interest that precluded PricewaterhouseCoopers from being the accountants to EWEB.
Mr. Holm discussed the list of recommendations contained in the letter entitled Report to Management.
Vice President Bartel asked what had been learned when the system "went down" during the windstorm.
Terry Bequette, Information Services Manager, responded that on the day of the storm there had been no power to the building. He said that a battery-operated system was initiated immediately until the back-up diesel generator had kicked in to run the 4th floor. He noted that this had been tested in preparation for the possible ramifications of the Y2K event. General Manager Randy Berggren noted that this was an un-interruptible power supply, adding that there was 5,000 gallons of diesel fuel on-site and more could be brought in if necessary.
Mr. Bequette, responding to a question from Vice President Bartel, clarified that the recommendations for disaster-preparedness that had resulted from the audit had to do with forming more of a process for thinking about what might happen, e.g. what would be needed if the power would be down for a week and whether the computer system is completely backed up with respect to data that could be lost from an interruption of the power.
Commissioner Lanning asked if there would be a follow-up on the list of recommendations and if the items would be pursued on a particular time line. Ms. Bloom responded that the problems should be solved by the time they are brought to the attention to the Board. She said that this is true with this particular report with the exception of the reconciliation of the EMS loans and the goal is to have that reconciled by the end of the year.
Mr. Irving, responding to a question from Commissioner Lanning, highlighted the things that PricewaterhouseCoopers will be doing to avoid a debacle such as the recent one brought to light in the Enron scandal. He stated that his company seeks to outline the general concept of oversight that an accounting firm should take. He related that one conclusion that has been reached is that the consulting business should be separate from the accounting business. Another conclusion reached is that the firm will issue an annual report to all of its clients. Thirdly, he said that the firm will share its partner evaluations and compensation policies with the audit committees of our client, due to discussion related to Enron or others that the compensation for individuals such as himself might be related to his ability to sell other services to clients. He related that the fourth point of action would be to develop an engagement contract that lays out what the role of the firm is and what the responsibilities of the firm are in relation to the client in the hope to be more pro-active. He felt that the expectation in the industry was that there will be a stricter policy with regard to the consulting work that is done. He stressed that the business of accounting will be working to regain the public trust.
In response to a question from Commissioner Lanning, Mr. Irving said that he expected the consulting arm of the business to have been separated from the accounting firm at the end of August, 2002.
SCHEDULE FOR FILLING "AT LARGE" POSITION
Marty Douglass, Public Affairs Manager, provided the brief overview of the procedure involved in filling the "at large" position as outlined in the memorandum entitled Procedure for Filling Vacant Board Positions and the options for action the situation presents to current Board members. He noted that the 90-day period will expire in the third week of June, 2002.
Mr. Douglass discussed the potential scenarios that could occur based on the outcome of the primary election in May, as follows:
Should Vice President Bartel win, he could choose to be appointed to the position immediately or he could choose to wait until his term representing Wards 4 and 5 is finished in December. If Vice President Bartel vacates the Ward 4 and 5 position, Ronald Farmer or a successful write-in candidate could be appointed to fill his vacancy.
Should Commissioner Bishop win, she will create a vacancy in her Ward 6 and 7 position as soon as she is appointed or assumes the "At Large" position. At that point the 90-day period in which to appoint a replacement begins. Her replacement would serve the remainder of her term, which will not be finished for two years.
Mr. Douglass recommended that the winner of the primary be appointed to Susie Smith's "At Large" position she vacated March 19, 2002..
President Anderson suggested that Mr. Farmer be invited to the EWEB retreat. Mr. Berggren related that Commissioner Bishop felt that Mr. Farmer could come as it is a public meeting, but that she did not think that he should be allowed to participate. Commissioner Lanning noted that he had attended a Board retreat prior to being sworn in as a Board member, but not as an active participant. He added that it had been an informative experience for him.
Commissioner Lanning suggested that a former Board member could be tapped as a possible appointed Board member replacement, should the second scenario occur.
FUEL CELLS DEMONSTRATION
Kathy Grey discussed the fuel cell project. She stated that the BPA had put out a request for utility partners to participate in a test of this particular fuel cell technology, called the proton exchange membrane fuel cell. She noted that EWEB was one of ten utilities selected to be in partnership with the BPA. She said that the actual project began in 1999 with the selection of a team and the site that the fuel cell would be located in. She commended Rod Wade and Charlie Morris, who had done most of the design work and had worked with the code officials. She noted that many other people contributed to the project as well.
Continuing, Ms. Grey said that the original units were called the Alpha units. She related that EWEB had made a conscious decision to wait to receive the units in the hope that most of the kinks would have been worked out. The utility received six fuel cell units and in July of 2000 all six units had to return to the laboratory. She reported that the fuel cell units had been contaminated with water and fuel. This necessitated modifications to the system. She stated that the unit that will be employed in the demonstration is a Beta unit, i.e. a second generation fuel cell unit. She noted that the Alpha unit had been difficult to access and, in this respect, the Beta unit is a great improvement as it is fully accessible for servicing and repairs.
Ms. Grey commented that a fuel service contract is under negotiation.
Ms. Grey noted that Gary Trujillo is the fuel cell operator that will be demonstrating the fuel cells for the Board and staff members that are present.
All those present proceeded to the anteroom of the EWEB meeting area for a demonstration of the proton exchange membrane fuel cell.
The meeting adjourned at 7:15 p.m.
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Assistant Secretary President