Board Members Present: Paul Conte, Ron Farmer, Patrick Lanning

Others present: Randy Berggren, Jim Origliosso, Dick Helgeson, Tom Buckhouse, Roseanna McArthur, Jim Wiley, Mat Northway, Marty Douglass, John Mitchell, Lance Robertson, Eric DeFrees, Mike Logan, Debra Smith, Bob Lorenzen, Lamonte Smith and Kris Aanderud, City of Eugene Minutes Recorder.

Vice President Lanning called the Special Board Meeting to order at 12:15 p.m.

AGENDA CHECK

There were no revisions.

ITEMS FROM BOARD MEMBERS

Members were provided with a memorandum from Tom Buckhouse, outlining EWEB's alternative fueled vehicle history, dated July 19, 2002, provided at the request from Commission Farmer as a result of a constituent inquiry.

CORRESPONDENCE

There was no correspondence.

PUBLIC INPUT

There was no public input.

CONSERVATION AUGMENTATION CONTRACT WITH THE BONNEVILLE POWER ADMINISTRATION

Mr. Northway reviewed the memorandum dated July 19, 2002, regarding the request to grant approval to enter into a conservation augmentation agreement with Bonneville Power Administration (BPA) distributed to members. Under the agreement BPA will provide up to $16,000,000 over the next four years to help fund customer conservation projects in Eugene. In return, EWEB will return up to 13 average MegaWatts of our right to purchase BPA block power, an amount equal to the power saved from the $16,000,000 of conservation. Commissioner Farmer had asked for more detailed fiscal information, which had been provided to by Dick Varner under separate memorandum.

Mr. Northway spoke specifically to fiscal considerations and payout rates. He said that the issue at this point was the length of funding. BPA is concerned with their long-term budget and is only able to guarantee funding for six months, through February 2003. He said that EWEB could count on and bill out on two MegaWatts equating to $2.5 million. This would allow EWEB to balance the conservation budget for 2000-2002 fiscal period, allowing EWEB to begin FY03 on track. During the fall budget process, EWEB will need to plan for budget expenditures that will be lower than this year and back within the five percent allowance. The last details of the contract are being worked out this week and the contract should be available for signature next week.

Mr. Berggren spoke about his conservation with Paul Norman, who works with the conservation augmentation contracts. He said that Mr. Norman said that BPA believes that this is a good contract and sounded confident that BPA would make a good faith effort to make reductions and meet the terms of the contract, although there is no guarantee that BPA will go forward after the first six months. BPA is anticipating a 2 MegaWatts conservation acquisition from EWEB, which will come close to meeting the current revenue gap. The good news is that there has been no shift in the contract negotiations that have been ongoing for the past six months.

Mr. Northway explained the conservation augmentation contract components, which provides for incentives for conservation efforts while reducing power needs.

Commissioner Farmer asked if the valuation of $2.5 million was different than the methodology used by Mr. Varner. Mr. Northway said that it was the same valuation.

Commissioner Farmer asked if the conservation had to be used during the initial six month period. Could the funds be used next year? Mr. Northway said that the contract was designed to allow the flexibility to move funds back and forth. However, BPA is uncomfortable with that large of a budget commitment and will only commit for the shorter period of time. There will not be much additional effort to bill out the first two MegaWatts. This can be accomplished without ramping up or ramping down due to current program activity, specifically on the commercial side. At the current rate, EWEB will end $2.7 million over its allocation and the $2.5 million would bring EWEB back on track. He said that one question remains - will customer interest follow the funding reduction and also reduce? Currently, EWEB staff could continue implementing conservation at the current rate of customer interest but would need the additional funding of the whole four year contract.

Commissioner Farmer asked if EWEB was overspending the current budget. Mr. Northway said that there is projection that before the end of the year there will be a need for a supplemental budget request to address the projected over-expenditure.

Commissioner Farmer said that he had some aversion to giving up permanent allotment for a six month fix. He said that he was more comfortable with the four year contract proposal and tradeoff. Mr. Berggren said that the entitlement would be for ten years, although after ten years who knows what would happen.

Commissioner Lanning asked what authorization was requested. Mr. Berggren said that he was seeking authorization to sign the contract, substantially in the same form as has been described to the board, subject to legal review of the contract.

Commissioner Farmer, seconded by Commissioner Conte, moved to authorize Mr. Berggren to approve the conservation augmentation contract with Bonneville Power Administration, in substantially the same form as described to the board, subject to legal review. The motion passed unanimously.

A copy of the final contract will be made available to the Board.

OTHER ITEMS

Commissioner Farmer asked if staff needed more direction with the comments from e-mail's from himself and Commissioner Conte relating to post-retirement medical benefits. Mr. Berggren said that he felt that staff would like more direction. On August 6, staff will present additional information and seek further direction.

The meeting adjourned at 12:30 p.m.

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Assistant Secretary President