Board Members present: Dorothy Anderson, Patrick Lanning, Sandra Bishop, and Ron Farmer.

Others Present: Randy Berggren, Jim Wiley, Marty Douglass, Cathy Bloom, Dick Helgeson, Ken Beeson, Roseanna McArthur, Jim Origliosso, JoAnn Andersen, Tom Buckhouse, Dick Varner, Jennifer Joule, Libby Henry, Leslie Monk, Dean Ahlsten, Debra Smith, Dave Koski, and Krista Hince of the EWEB staff; and Ruth Atcherson, City of Eugene Minutes Recorder.

President Anderson called the Regular Board meeting of the Eugene Water & Electric Board (EWEB) order at 7:34 p.m.

AGENDA CHECK

There were no changes or additions to the agenda.

APPROVAL OF THE CONSENT CALENDAR

Ratification of Board Consultants

1. Ratification of Board Consultants for 2003

a. General Counsel - Calkins and Calkins

b. Independent Auditor - Pricewaterhouse Coopers LLP

c. Independent Engineer - Black and Veatch

d. Consulting Engineer - Black and Veatch

e. Certified Public Account - Pricewaterhouse Coopers LLP

f. Special Counsel - Cable Huston Benedict Haagensen and Lloyd LLP

g. Bond Counsel - Foley and Lardner

h. Financial Consultant - Seattle Northwest

i. Consulting Actuaries - Coates Kenny, Inc.

Minutes

• Minutes of the June 4, 2002, Work Session and Regular Board meeting, the September 17, 2002, Special Board Meeting, and the October 17, 2002, Special Board Meeting

Business Service Agreements

• Cascade Automation - Steam Control Systems - Steam Divisions - $10,000
• Flagging Services - Distribution O&M - Electric and Water Divisions - $150,000 per year for up to five years ($100,000 for electric and $50,000 for water annually)
• Spencer Environmental Services - Compliance Assurance - Environmental Department - Corporate Services Division - $50,000 for five years
• Knowledge Point - Performance Management - Human Resources - Corporate Services - $35,200 for three year extension
• Harrang, Long, Gary and Rudnick, P.C. - Legal Services - Human Resources - Corporate Services - $50,000
• Aon Consulting - General Benefits Consulting - Human Resources - Corporate Services Division - $51,000
• Cardwell Consulting - 2003 Base Pay Market Pricing Cycle - Human Resources - Corporate Services Division - $65,000
• Rancho Las Chivas/Frank Rodriguez - Leaburg & Walterville Power Canals - Electric Division - $27,000

Vice President Lanning moved, with a second from Commissioner Bishop, to approve the Consent Calendar. The motion carried unanimously.

CORRESPONDENCE

Mr. Berggren noted the following items:

• He thanked the commissioners for attending the legislative luncheon on solutions to the PERS debacle and he thanked Libby Henry for the work that she had done for the hearing.
• Ms. Hince would be calling commissioners to arrange individual meetings with the General Manager in order to brief commissioners on potential issues.
• Chris Atneave's memorial service was scheduled for January 12, 2003, at 2 p.m. in the University of Oregon Browsing Library.
• The Umatilla Tribes and Diamond Generating have invited two commissioners to attend the Governor's Inaugural Ball at the Portland Hilton Hotel. Commissioner Bishop expressed an interest in attending.
• Lance Roberts sent a memorandum noting that the annual benchmark surveys were going out to EWEB customers.
• Scott Spettel sent a draft of the proposed comments on SMD (????) which were scheduled to be conveyed on January 10, 2003.
• The Walterville Canal was "re-watered" but may still have a few leaks. It had been difficult to tell if and where the leaks were occurring as it had been raining.
• Board agendas for the January 21 meeting included a "kick-off" for the Scope Document for the integrated electric resource plan update in the work session and, at the Regular Board meeting, the status of CILT negotiations was scheduled to be discussed, as well as an update of the financial policy, and the feasibility of handling the billing for the transportation fee that the City of Eugene had requested.

ITEMS FROM BOARD MEMBERS

President Anderson thanked the General Manager Randy Berggren for the fine job that he had done for the legislative luncheon held the previous Saturday. She also thanked Cathy Bloom, Assistant Treasurer, for helping her to hear the discussion when the microphone system had malfunctioned. She noted that she would miss the February 4^th meeting as she would be in Portland for medical reasons.

Vice President Lanning echoed the appreciation for the work that staff had done on the legislative luncheon. He announced that the annual Lane Council of Governments appreciation dinner was scheduled for January 15, noting that former Vice President Bartel would be honored there. He asked any interested Commissioners to let Krista Hince, Assistant Secretary, know if they intended to be in attendance.

Commissioner Bishop commented that she had included a resignation from her former position to assume the at large position. She expressed concern regarding a potential gap between the end of a Commissioner's term at the end of a year and the point at which a new Commissioner was sworn in as much as a week later. Mr. Berggren agreed that more specificity was needed in this.

Continuing, Ms. Bishop said that she had toured the water filtration plant. She related that she had been impressed with the design. She encouraged her fellow Board members to tour the facility.

PUBLIC INPUT

Paul Conte, 1461 West 10^th Avenue, read a statement, copies of which were circulated to the members of the Board. He encouraged the Board to do what it could to promote prompt reform of the PERS system. He asserted that EWEB customers would face substantial rate increases if this problem was not addressed. He stressed the importance of considering the implications of passing along the PERS deficits to customers that had resulted from crediting excess earnings to Tier 1 PERS members' fixed accounts. He reiterated that the PERS Board had acted improperly in this. He also reiterated that the mortality tables had not been updated since 1978 and, as such, were not an appropriate resource by which to calculate PERS benefits.

Moshe Immerman, thanked Mr. Conte for his "lucid and right on comments." He thanked EWEB for utilizing goats for brush control along the Leaburg and Walterville Power Canals. He expressed concern regarding the use of the word 'Corporate' and 'Business Service Agreements' in the agenda. He felt that, as a government service agency, EWEB should refer to itself as such. He asserted that the law firm of Harrang, Long, Gary, and Rudnick, P.C. was also the attorney for Hynix and for the Register-Guard. He strongly encouraged Mr. Berggren to attain a legal opinion as to whether contracting with the firm represented a conflict of interest. He opined that the Oregon Bar Association should be contacted to ascertain whether the law firm had participated in any impropriety. He also suggested that a staff attorney should attend all EWEB meetings.

ELECTION OF OFFICERS

President Anderson thanked the Board for the opportunity to serve as president.

President Anderson nominated Vice President Lanning to serve as Board President and Commissioner Farmer to serve as Board Vice President. Commissioner Bishop provided the second.

Commissioner Bishop expressed hope that the Board would "come together and really act more as a cohesive Board." She felt that this would ease the staff workload. She requested a "campaign speech" from the two candidates.

Vice President Lanning jokingly commented that he had presided over the shortest Board meeting to date. He also said, seriously, that Board Governance was an area of focus in his graduate work and it was something he wanted to focus on this year.

Commissioner Farmer said that he would be happy to serve as Vice President. He stated that he would like to see the Executive Management Staff perform more decision-making on a day to day basis, so that the Board could go back to acting as a Policy Board.

President Anderson asked for the vote. Patrick Lanning and Ron Farmer were elected by a unanimous vote to the offices of President and Vice President, respectively.

Newly-elected President Lanning thanked Commissioner Anderson for the work that she had done during her tenure as President.

APPOINTMENT OF COMMISSIONERS TO BOARD LIAISON ASSIGNMENTS AND COMMITTEES

President Lanning expressed a desire to continue serving on the Lane Council Of Governments Board. He requested someone to be an alternate. Vice President Farmer agreed to do so.

Commissioner Bishop agreed to continue to act as the EWEB representative to the Western Generation Agency.

Commissioner Anderson agreed to continue representing EWEB at the Northwest Energy Coalition and to the McKenzie Watershed Council. President Lanning said that he would be the alternate for the liaison to the McKenzie Watershed Council.

President Lanning noted that he had been the liaison to the Special Districts for the Water District during the previous year and the group had not met. He offered to continue being the liaison for 2003. Water & Steam Division Director Dick Helgeson noted that a road widening project would likely require a meeting in the coming year.

Commissioner Bishop requested that there be a discussion of the liaison positions at the next meeting convened to discuss Board Governance.

Commissioner Bishop moved, with a second from Vice President Farmer, to adopt the liaison appointments for 2003. The motion carried unanimously.

PUBLIC EMPLOYEES RETIREMENT SYSTEM (PERS) LEGISLATIVE UPDATE

Legislative Lobbying Libby Henry stated that the goal of the discussion was to attain a policy directive from the Board of Commissioners in order to understand what the board would want from her lobbying in the State Legislature. She suggested that the Board consider how the retirees' interests would be addressed, what sort of rate action was a desired result of any PERS legislation, and what, in terms, of governance, was the Board seeking. She said that a package bill would come out of the legislature.

President Lanning stated that self-governance was a central issue. Ms. Henry said that, in order for EWEB to choose not to agree with legislation, it would need to offer its own solutions to the PERS problem. She felt that the "opt out" was not a positive choice for EWEB.

Ms. Bloom stated, in response to a comment from President Lanning, that some employers around the state had their own retirement systems outside of PERS. She suggested that EWEB could tap them for information on the development of such a system.

Commissioner Anderson felt that fairness to employees was paramount in terms of providing the employees time enough to adjust to any changes.

Vice President Farmer opposed exercising the "opt out" option in the legislation unless it was needed as a defense mechanism.

Commissioner Bishop stressed that if certain actions of the PERS Board were deemed illegal, the rate payers should not be held accountable for illegal acts, such as contributing excess returns to employees' accounts they had not participated in.

Vice President Farmer commented that it was challenging to formulate a specific action to take without fully understanding the cost of the action. He felt that he was unable to make an informed decision at this point. Ms. Bloom responded that some numbers were known, such as the three percent reduction in the EWEB rates that would result from the adjustment of the mortality table.

Vice President Farmer stressed that the recipients of PERS did not create the situation, nor did the ratepayers and taxpayers. He said that he did not want to place the solution on the shoulders of one group over another, but rather everyone would need to "pull together and give a little bit." He emphasized that the legislature should be made to understand that the PERS reform should focus on all employees and not just one or two groups or tiers. He stated that the most important outcome of the process was the creation of a sustainable and accountable system that would thrive into the future. He commented that he "wanted the foxes out of the henhouse," i.e. that he felt that the PERS Board should be independent. He reiterated that there were no short-term solutions.

Ms. Henry said, in response to a further comment from Vice President Farmer, that EWEB would be suggesting solutions for the legislation in coalition with other affected entities and that EWEB would not be able to affect the legislation by itself. Ms. Bloom added that the PERS Employers Task Force was meeting regularly and discussing potential legislation and the redesign of the system. She related that there was contention among the members of the task force and that the members were not consistent in attending. Ms. Henry commented that the utility needed to find entities that it agreed with and move forward as a coalition.

Commissioner Bishop felt that the EWEB Board could provide specific suggestions for the restructuring of the PERS system. Mr. Berggren suggested that the Board could put pressure on to eliminate the phase-in of the revised mortality tables and to institute the revised table immediately.

In response to a question from Vice President Farmer, Ms. Henry stated that it was an extremely partisan process and that this increased the difficulty. She noted that it does not take much to kill legislation brought forward. She added that, with an expedited review, the process was still likely to take two to three years.

Commissioner Bishop supported the inclusion of a full funding contingency and also that the solution to the PERS debacle did not selectively impact employees.

Ms. Henry said that staff would maintain communication with affected employees and retirees regarding any developments. She encouraged the Commissioners to spend a day at the Capitol.

BOARD VACANCY PROCESS

Public Affairs Manager Marty Douglass outlined the process by which EWEB was soliciting applications for the Board vacancy in Wards 6 and 7, which includes Central Eugene, the Whiteaker Neighborhood, Highway 99, the incorporated portions of River Road and Santa Clara, and the Bethel-Danebo area. He said that there would be advertisements printed in The Register-Guard and The Eugene Weekly. He noted that there was a sample application in the memorandum to the Board entitled Board Vacancy. He stated that Board agreement on the interview process was needed and asked if the Board would like him to return with some suggested interview questions.

Commissioner Anderson asked if the application deadline could be extended. Mr. Douglass replied that it could, if necessary, noting that it had been approximately a month long process during the previous summer.

In response to a process question from Vice President Farmer, Ms. Hince said that, previously, each Commissioner had taken one or two applications and called references and reported their findings back to the other Board members.

President Lanning suggested that the references be raised to a bullet level and that there be at least one professional and one personal reference required. Discussion ensured regarding what kind of references (i.e. personnel or profession/both) should be listed and agreed to leave it as is.

In response to a question from Vice President Farmer, Mr. Douglass provided the following timeline:

• Application deadline: February 14 (extended from February 7)
• Selection of finalists: March 4
• Interviews: The week of March 11
• Discussion of appointment: March 11
• Appointment to the Board: March 18

President Lanning adjourned the meeting at 9:24 p.m.

_____________ ______________________________________

Assistant Secretary President