Board Members Present: Dorothy Anderson, Patrick Lanning, Sandra Bishop, Paul Conte, and Ron Farmer.
Others present: Randy Berggren, JoAnn Anderson, Dawne Howard, Mark Freeman, Marty Douglass, Jim Origliosso, Debra Smith, Jean Meyers, Laurie Muggy, Dick Helgeson, Dick Varner, and Krista Hince; Ruth Atcherson, City of Eugene Minutes Recorder; and members of the public.
President Anderson called the Regular Board Meeting to order at 8:10 p.m.
AGENDA CHECK
President Anderson suggested that agenda item 8 (Implementation of Deposit Policy) be postponed due to the late hour. Board members and staff agreed to postpone the item.
Approval of Consent Calendar
1. Minutes of the January 15, 2002, Work Session and Regular Meeting, the February 5, 2002, Work Session and Regular Board Meeting Minutes, the March 5, 2002, Work Session, and the April 16, 2002, Work Session and Special Board Meeting.
Business Service Agreements
Commissioner Bishop pulled the minutes from the Work Session of January 15, 2002.
Commissioner Bishop moved, with a second from Commissioner Lanning, to approve the consent calendar with the aforementioned exception. The motion carried unanimously.
ITEMS FROM BOARD MEMBERS
Commissioner Lanning reported that he had met with Commissioner Conte and Jean Meyers, Human Resource Manager, to discuss the compensation package for the General Manager.
Commissioner Bishop said that she had gone on a river trip sponsored by the McKenzie Watershed Council (MWC). She related that it had been very educational and that it had "brought home" for her that all of the area is interrelated.
President Anderson stated that the confluence of the McKenzie and Willamette Rivers is a very special area and that the MWC is trying to get the sand and gravel operators to work together with environmental concerns.
CORRESPONDENCE
General Manager Randy Berggren noted that the annual Good Cents tour of homes had occurred.
Mr. Berggren announced that the annual employee picnic would be held on July 27, 2002, from 11 a.m. to 4 p.m.
Mr. Berggren also announced that the new Board Member manual was distributed to them and that they invited feedback if the information was helpful or if there was any information that could enhance the manual for future Board members.
Mr. Berggren reported that EWEB had a $10 million bond sale at 4.32 percent. He said that there had been 11 bidders and that it had been sold uninsured.
Continuing, Mr. Berggren noted the following items that will be coming up on the calendar for the Board:
PUBLIC INPUT
There were no members of the public who wished to speak at this time.
ELECTION OF OFFICERS
President Anderson explained why there was an election scheduled for this meeting, noting that it was unusual to have an election at this time, but that with the resignation of Vice President Peter Bartel, it was necessary to elect a new Vice President.
Commissioner Bishop moved, with a second from Commissioner Farmer to elect Commissioner Lanning as Vice President of the Board of Commissioners of the Eugene Water & Electric Board. The motion carried unanimously.
There was a discussion of the liaison work that Commissioners do. Commissioner Conte agreed to be a substitute liaison to the Lane Council of Governments (LCOG).
2003 BUDGET ASSUMPTION/TARGETS
Dick Varner, Fiscal Services Supervisor, presented the 2003 Budget Assumptions and Target, July 19, 2002, with the aid of overhead projections.
In response to a question from Vice President Lanning, Mr. Varner said that the contract with Regency/Blue Cross medical benefits will likely end in the year following this year. Vice President Lanning asked if a 24 percent increase in premiums was comparable to the industry-wide experience. Mr. Varner replied that it was. In response to a question from Commissioner Farmer, Mr. Varner said that the future benefits package has yet to be decided and another quote will be sought.
Commissioner Farmer asked what retail load was. Mr. Varner stated that it includes all sales in the general service area.
Commissioner Conte asked what the standard deviation of the median was. Mr. Varner responded that it was approximately 10 percent and creates a $6 to $8 million difference to the bottom line.
Mr. Varner said that one element that had not been included in the presentation handout was that the Bonneville Power Administration (BPA) was starting a transmission rate case. He related that he had heard that there could be a 5 to 10 percent increase in transmission costs as a result.
In response to a question from Commissioner Farmer, Mr. Varner stated that the remaining bond capacity was already factored into the capital funding.
Mr. Berggren clarified for Commissioner Farmer that the Board had decided that the conservation funding was non-discretionary.
Vice President Lanning asked what the annual personnel expenditure was for EWEB. Mr. Varner stated that it makes up approximately 45 to 50 percent of the budget.
Commissioner Bishop asked what was driving the workers' compensation increases. Mr. Varner stated that there have been some accidents that have cost the insurance carrier money and that it also was due to the industry-wide increases in insurance costs. He noted that this was largely due to investment earnings that were not coming in for these companies because of market conditions.
In response to a question from Commissioner Bishop, Mr. Varner explained that typically transmission rate cases come in the fall.
Mr. Varner explained the budget assumptions for the water division of EWEB.
In response to a question from Commissioner Farmer, Mr. Varner stated that the $2.5 million in capital funding from rates is already programmed. Commissioner Farmer asked what the effect on the average revenues was. Mr. Varner replied that every one percent equals approximately $125,000 to $150,000 in revenues.
Mr. Varner requested feedback from the Board as staff goes to prepare this budget regarding what seems realistic, where staff may be too conservative or too optimistic in their assumptions and what the Board would like staff to bring forward in the next year.
President Anderson asked, regarding wholesale electric prices, if staff thought that FERC may try to put a cap on prices. Mr. Varner responded that the price-cap formulas that FERC put into place during last year were triggered as California went into Stage 1 and Stage 2 in the previous week. He said that some utilities had generation costs that were greater than the cap and, as a result, chose not to generate power during that time.
Commissioner Bishop asked what the formula was. Mr. Varner responded that the cost of gas is multiplied with a theoretical heat rate for a generator with some operation and management costs added in. He added that FERC had realized that it was generating nonsensical costs and reinstated the original cap.
President Anderson remarked that she agreed with staff's presentation of the budget assumptions and targets in the coming budget year. She felt that the level of conservatism expressed was appropriate. Mr. Varner responded that staff will continue to monitor the monetary factors and will continue to keep the Board updated.
Commissioner Bishop commended staff for the work that had aided the utility in its financial recovery, noting that the utility was 50 percent recovered.
In closing, Mr. Varner stated that based on everything that has been heard from the BPA, the utility will have the BPA's "numbers covered" until October of 2003.
ITEMS REMOVED FROM THE CONSENT CALENDER
Without making any changes, Commissioner Bishop moved, with a second from Vice President Lanning, to approve the minutes from the Work Session held on January 15, 2002. The motion carried unanimously.
The meeting adjourned at 10:10 p.m.
_____________ ______________________________________
Assistant Secretary President