Board Members present: Dorothy Anderson, Patrick Lanning, and Sandra Bishop. Vice President Bartel was excused.

Staff Members present: Randy Berggren, JoAnn Andersen, Ken Beeson, Tom Buckhouse, Marty Douglass, Dick Helgeson, Libby Henry, Jim Origliosso, Ken Beeson, Scott Spettel, Dick Varner, Jim Wiley, and Krista Hince of the EWEB staff; Ruth Atcherson, City of Eugene Minutes Recorder; and members of the public.

President Anderson called the Eugene Water & Electric Board's Work Session to order at 5:30 p.m.

WANAPA DEVELOPMENT

Energy Resource Project Manager Ken Beeson provided the staff presentation on the Wanapa Energy Center project, as outlined in the memorandum entitled Wanapa Energy Center Project, with the aid of overhead projections. He noted that this was an informational presentation and did not require action at this point. He briefly discussed the draft Articles of Incorporation for a tax-exempt non-profit foundation being proposed by the Wanapa project participants that would identify and develop certain environmental initiatives directed at mitigation of environmental impacts related to the proposed Wanapa project. He said that this Work Session would focus on the environmental mitigation proposal.

President Anderson asked if weatherization would be considered as part of the environmental mitigation plan. Mr. Beeson said that it would.

Mr. Beeson stated that the board for the proposed foundation would likely come up with a slate of specific initiatives and then would formulate a five year rolling set of projects.

In response to a question from General Manager Randy Berggren, Mr. Beeson said that a lot of the technical work of figuring out what the projects are and the evaluation of the merit of the projects would be done by the natural resources department of Umatilla tribe.

Continuing, Mr. Beeson said that the process and schedule for forming the foundation has been designed to give all of the five Wanapa project participants the opportunity to review the proposal and provide feedback. He added that the review is projected to be completed by the end of June, 2002. He stated that, within the May/June time-frame the Umatilla tribal authority would take the necessary action to become the "enabling authority" for the proposed foundation. He felt that, given the time-frame for the work, he would not likely be able to bring back a formal resolution authorizing EWEB's participation in the foundation until later in the summer. He projected that, once approved by the participants, the foundation would be making its application to the IRS for 501(c)(3) status in October/November, 2002, and would move forward from there.

President Anderson requested clarification as to whether the current project activity related to transmission access for the proposed project was a preparatory measure in advance of building the access or an actual plan to build the access. Mr. Beeson responded that, at this point, it paved the way for a plan and was not a plan unto itself.

Mr. Beeson summarized the presentation by stating that as the utility initially entered into the project the environmental dimension to this project had become of primary importance. He likened the environmental mitigation proposal it to "raising the bar" for environmental mitigation for new thermal projects in the region. He felt that this program is "clearly above and beyond" any other environmental mitigation planned for proposed or existing generation in this region. He stressed that the $16 million to be put in the fund for the foundation is projected to generate circa between $16 to $25 million over the course of the next 25 years. He emphasized that the principles proposed for the foundation have been put together to provide clear direction to the foundation in which to mitigate the excess CO² consistent with state requirements.

Commissioner Lanning asked if wind power would play a role in the project. Mr. Beeson responded that EWEB staff had been working with the project developer to develop a proposal for a wind component to the project, but wind it was not currently a part of the plan. He indicated that he expected once more was known about the project business structure, the participants would be able to determine the feasibility of adding a wind component to the project. He estimated that should the project add 100 megawatts of wind it would add $100 million to the project cost. He noted that among the participants EWEB is the primary proponent of wind power. He thought that the development of wind power could provide CO2 mitigation for the project.

Commissioner. Bishop asked how compliance with Oregon regulations could constitute "raising the bar." Mr. Beeson responded that the projects of comparable size and revenue that have preceded this project have not dedicated as much funding toward environmental mitigation, and that this project would spend over twice as much money on CO2 mitigation and other environmental work as other comparable projects. Commissioner Bishop encouraged the project leaders to focus as much as possible on prevention rather than mitigation.

Commissioner Lanning asked who the governing parties would be. Mr. Beeson responded that there would be a five-member board with each participant having a representative that would meet four to five times in the first year.

Commissioner Lanning accentuated the importance of stressing the usage of renewable resources from the outset of the project. Mr. Beeson suggested that the potential wind component of the project be addressed separately in the project development work given that purpose of the foundation is environmental mitigation and not energy production.

In response to a question from Mr. Berggren, Mr. Beeson said that the promotion of wind as a power source is, in part, to mitigate CO production. In response to Commissioner Lanning, Mr. Beeson suggested that staff had previously put together a pro forma proposal regarding potential development of wind power and submitted it to the project developer.

Commissioner Lanning asked how long the period for comments from the Board of Commissioners would be. Mr. Beeson responded that he would be gathering and soliciting feedback for another month.

Commissioner Bishop asked if the foundation was under the enabling ability of the tribe. Mr. Beeson stated that the organization would be under the tribal laws as opposed to the State of Oregon law.

BONNEVILLE POWER ADMINISTRATION'S ENERGY ALLOCATION

Libby Henry, Legislative Representative and Jim Wiley, Director of Electric Division, provided the background information regarding the Bonneville Power Administration's (BPA) energy allocation, as outlined in the memorandum entitled Update - The Future Role of BPA Regarding Power Supply.

Ms. Henry discussed the trip to Washington, D.C. to meet with 60 representatives of regional utilities. She noted the eight committees that the group has formed, one of which is comprised of nine lawyers that are making sure that no laws will need to be amended for the group goals to be forwarded.

Ms. Henry discussed the components of the language that the utilities would like to see regarding Direct Service Industries (DSI) that would require that the DSIs would have to bring value to the region i.e. they would have to generate some power, that they would not get all of the energy that they want from the BPA, and that they need to remain in operation. She said that the DSIs had circumvented the process to a certain extent by coming in and influencing it so that language had been incorporated giving them any power that they needed and when they needed it.

Ms. Henry related that the goal of the legal team was to have no need for legislation, but to have it all done by contract. She said that the BPA had reservations as to whether this was really feasible.

Continuing, Ms. Henry reported that there is an issue forming regarding the formation of new publicly-owned utilities. She related that the proposal states that a new public priority would get 75 megawatts and would not come in with full preference status customers such as EWEB. She noted that there were two issues raised, one, that there have only been three public utilities formed over the last 20 years and, two, that a lot of the public utilities have higher rates.

Ms. Henry reported that there has been concern raised about river operations and the affect they have on fish. She felt that the fish problem had not been solved over the previous 20 years and would not likely be solved by the Joint Proposal of the Northwest Utilities that had been forged by the coalition of Pacific Northwest utilities.

Ms. Henry discussed a two-page memorandum regarding renewable resources that had come from the committee she was a member of. In response to President Anderson, Ms. Henry stated that public interest groups had been contacted for input prior to writing the memorandum. She said that, for years, the lobbying group had sought to get higher funding levels for conservation and renewable resources. She noted that the support needs enhancement as it is currently funded at $½ million. She reported that this does not come close to three percent of retail revenues that are now being invested by the investor-owned facilities. She stressed the importance of increasing support for all existing programs, adding that this is a mandatory funding that is paid whether the utility participates in the program or not.

Ms. Henry reported that the BPA has asked for and been granted four to six weeks to review the proposal.

In response to President Anderson, Ms. Henry stated that there have been meetings with the northwest governors and a delegation of northwest utility representatives and both times the State of Washington has refused to put the issue on its agenda.

President Anderson asked if there was concern that the region would become overbuilt in the future. Ms. Henry responded that it is up to the individual utilities to formulate and follow through with resource plans. She stressed the importance of forming resource plans in the present because of the current work that is being done on this joint proposal.

Commissioner Lanning noted that the BPA and Steve Wright would be meeting with Ms. Henry in a month. He wondered what the next step would be. Ms. Henry suggested that she return and brief the EWEB Board at that time. Commissioner Lanning agreed that this would be a good idea.

The meeting adjourned at 7:27 p.m.

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Assistant Secretary President