Board Members present: Patrick Lanning, Sandra Bishop, Dorothy Anderson, and Henry Masterson. Vice President Ron Farmer was excused.

Others present: Randy Berggren, Ken Beeson, Tom Buckhouse, Terry Bequette, Marc Anderson, JoAnn Andersen, Gale Banry, Marty Douglass, Jay L'Estrange, Jennifer Joule, Mark Oberle, Mat Northway, Roseanna McArthur, Kris Kendall, Laurie Power, Lance Robertson, Debra Smith, Dick Varner, and Krista Hince of the EWEB staff; Joe Sams, City of Eugene Minutes Recorder; and members of the public.

President Lanning called the Special Board meeting to order at 7:35 p.m.

AGENDA CHECK

It was noted that Item No. 6 on the agenda (Long-Term Power Supply Hedge) did not require any Board action and was covered during the earlier Board Work Session.

APPROVAL OF CONSENT CALENDAR

Minutes

1. October 15, 2002 Regular Board Meeting and February 18, 2003 Work Session

Property Sale

2. Garden Way Road Widening- property sale to the City of Eugene - Property Management - Facilities Services

Business Service Agreements

3. Contract with SSR Engineering for the design and construction management of a transmission line relocation project at EWEB's Smith Falls Hydroelectric Facility

4. Telephone Services - Annual Renewal

Commissioner Bishop, seconded by Commissioner Anderson, moved to approve the items on the consent calendar. The motion passed unanimously.

ITEMS FROM BOARD MEMBERS

Commissioner Bishop thanked staff for its efforts in the HUES music event to support low income people in paying utility costs. She suggested writing a thank you letter to Linda Duffy and Paul Biondi who put on the event.

Commissioner Bishop raised concern over private information that had been given to Board members at a meeting so the information had become public record. She suggested a future Board discussion at a Board Governance meeting.

General Manager Randy Berggren suggested an Executive Session on the matter.

President Lanning said he would be serving on LCOG's budget committee as part of his membership on that Board. He also said that EWEB would be hosting the April meeting if anyone wanted to attend. It was scheduled for April 24 at 7:00.

President Lanning suggested that a Board meeting be held up the McKenzie when McKenzie River issues were being discussed so that people from the area could attend the meeting more easily.

CORRESPONDENCE

Mr. Berggren noted that there had been memos sent out to update the Board on FERC issues related to the refund litigation taking place in California. He said it was not clear whether the findings would name some one or a particular utility related to market manipulation. He noted that FERC had released a 700 page report on their website that documented their findings during the 2001 energy crisis. He said EWEB had not been identified as a participant in any market manipulation during the 2001 energy crisis but added that a number of municipalities in California had been named in potential market manipulation.

In response to a question from Commissioner Anderson regarding whether the ruling would enable EWEB to collect any refunds that might be forthcoming, Mr. Berggren noted that many of the companies that EWEB had done business with during the energy crisis were bankrupt and no longer existed. He stressed that the utility would pursue any refunds it was possible to collect on.

Mr. Berggren said the April 15, meeting would have an item on Board Governance, infrastructure issues, electric rate proposals and action, and general service deposit policies.

PUBLIC INPUT

Bob Cassidy spoke regarding tiered rates. He noted that he had submitted written material at a previous time. He said the points of his argument was that who should be paying for power was a social question. He opined that the Board should be more aware of conservation and stressed that tiered rates encouraged more conservation.

Judy Olsen spoke on Leaburg Lake issues. She thanked the Board for courtesies it had extended in the past. She raised concern that EWEB was not doing a good job of communicating with local residents. She raised concern that the Board did not understand the full impacts of EWEB projects on the McKenzie River. She urged the Board to rectify communication issues with local residents of the river and make modifications after hearing community input.

Ms. Olsen raised traffic concerns about the area accessing Leaburg Lake. She commented that another boat ramp would just exacerbate the traffic problem.

Margaret Haas stressed her agreement with the comments of Ms. Olsen.

Mark Herbert said he had attended a meeting at the Leaburg Community Center where there were many angry residents. He said that there was no formal means of representation for EWEB customers outside the City of Eugene. He said the Board had the authority to appoint an ombudsman to make sure that issues were heard on a consistent basis.

Patrick Donolly raised concern over the lack of communication between EWEB and the residents who lived along the McKenzie River. He also raised concern over lack of representation on the Board for people in that area. He commented that staff who dealt with the local residents were arrogant and did not listen to community concerns. He urged the Board to listen to the concerns of the local community. He said he would work against anyone who worked against he and his neighbors.

Richard Metzler reiterated previous speaker's concern over lack of representation on the Board for the people along the McKenzie. He stressed the importance of having a dialog rather than being dictated to by EWEB staff.

Cynthia Beal, aka Eugene Slug Queen, raised concern over summer water levels in the McKenzie. She noted that she was now a citizen of Leaburg and was very interested in more effective communication between EWEB and the residents of that area.

Andrew Black raised concern over the lack of communication between EWEB and residents above Leaburg. He remarked that trust of residents had deteriorated significantly in the last year.

LONG-TERM POWER SUPPLY HEDGE

It was noted that, as no action was required, this item was addressed during the Work Session previous to this meeting.

FINANCIAL POLICY

Treasurer Jim Origliosso provided a presentation on EWEB's financial policy. The presentation included information on financial issues such as:

• Cash Reserves
• Power Cost Recovery
• Capital Improvement Plan Funding
• Unfunded Actuarial Liabilities
• Retail Rate Comparisons

Mr. Origliosso said many changes had been made to the financial policy and said it was a good time to review those policies to make sure of Board direction. He reviewed the history of EWEB's financial policy to date.

Mr. Origliosso suggested a benchmark for retail rate comparisons. He said this would be more important as power cost recovery became more of an issue.

In response to a question from President Lanning regarding how EWEB would compare to other utilities' rates if a rate increase were enacted, Mr. Origliosso said EWEB would still be in the mid range of rates with comparable utilities in the region even with a rate increase of six percent in the Spring.

Mr. Origliosso noted that having nothing in capital reserves caused many funding issues and reduced the flexibility of the utility. He added that a high debt ratio further decreased flexibility. He said the utility would have to address a $35 million dollar capital funding gap in the near future.

In response to a question from President Lanning regarding how a rate increase would help the situation, Mr. Origliosso said different areas would be affected in different ways but said the immediate effect would be an increase in liquidity.

Commissioner Anderson stressed the importance of giving customers value for the rates paid. She commented that EWEB did not have the lowest rates in the region but stressed that she did not want to see the utility have the highest rates either.

Commissioner Bishop questioned the validity of comparing EWEB with other utilities in the region. She said such comparisons did not provide any useful data. She said rate competitiveness needed to be measured with quality of service provided.

President said EWEB seemed to be held to a higher standard than other utilities in the region. He said being in the mid range of rates was reasonable for EWEB given the value of its service to rate payers.

Commissioner Anderson stressed the importance of operating without any funding reserves. She said that if some projects needed to be put on hold to keep the utility's bond rating above average then that was what needed to be done.

Commissioner Bishop stressed the importance of EWEB keeping its good bond rating. She said the above average rating helped the utility in its options in financing. She said it would be irresponsible of the Board to knowingly do anything to put that rating at risk.

Mr. Origliosso commented that EWEB's bond rating was still above average compared to other utilities.

Commissioner Bishop suggested looking at the possibility of including capital funding in rate proposals.

President Lanning said having a below average bond rating would be unacceptable.

ITEMS REMOVED FROM THE CONSENT CALENDAR

There were no items removed from the consent calendar.

The meeting adjourned at 9:30 p.m.

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Assistant Secretary President