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

Others present: Randy Berggren, Roseanna McArthur, Debra Smith, Tom Buckhouse, Jim Origliosso, JoAnn Andersen, and Krista Hince of the EWEB staff, John O' Connor, Consultant and Facilitator; and Ruth Atcherson, City of Eugene Minutes Recorder.

RULES OF CONDUCT

The Commissioners and members of staff who were present looked over the Board of Commissioners Rules of Conduct; draft - 07/28/2003, as follows:

• Commissioners will treat each other with courtesy, civility and respect despite differences of opinion; commissioners will treat staff with the same level of respect.
• In public, Commissioners will talk constructively about the organization, fellow Commissioners, staff and employees.
• Commissioners and the General Manger will keep each other informed about all situations; which may directly affect them, or the status of the utility.
• Commissioners will not monopolize meeting time and will not use Board time to further their personal agendas.
• Commissioners will be active team members, be prepared for the various decision issues and fulfill their responsibilities to participate in decisions.
• Commissioners will listen, discuss and try to understand one another's views.
• Once a decision is reached, Commissioners will support the Board decision, even though they might hold a minority viewpoint.
• Commissioners will speak only for themselves unless authorized to speak for the Board.
• Commissioners may authorize the President to represent their point of view if absent from a Board meeting.
• Commissioners will attempt to understand their legal obligations and if unclear, will seek the advice of legal counsel.
• Commissioners will deal with individual issues individually and privately, and if needed, use a third party to help with the issue.

Commissioner Bishop objected to the use of the phrase "personal agendas" in the fourth bullet point. Debra Smith, Telecommunications Project Manager, clarified that the intent of the language was to specify that Board issues should rise above individual Commissioners' issues.

E-MAIL POLICY

Ms. Smith directed those present to read the E-Mail Retention Policy; draft 07/28/2003, as follows:

"It is the policy of the Eugene Water & Electric Board (EWEB) to retain copies of all relevant e-mail messages transmitted between one Board member and another, in accordance with record-retention requirements defined in Oregon Revised Statutes. The General Manager, or his or her designee, will be responsible for maintaining the Board's electronic communications records and for making such records available to the public in accordance with state law."

Commissioner Bishop said that she did not perceive the policy to be legal. Vice President Farmer noted that policy and legality were two different things and that the draft before the Board was an attempt to write policy and not law.

Ms. McArthur commented that the information disclosure laws state that a person can request the information, but if the communication was not retained, it would not be available to the public.

Commissioner Bishop expressed concern that serial e-mail communications between Commissioners could be considered to be in violation of meeting laws. Vice President Farmer felt that it would be a jump to call a communication between two Commissioners a violation of the Public Meeting Laws.

Ms. McArthur said that there was potential that one Commissioner could contact another and the next could contact a third regarding a decision that was to be made and that this "daisy chain effect" could be perceived to be a meeting of sorts.

Ms. Smith suggested that the situation was too complex to encompass in policy.

Commissioner Bishop opined that it looked as though the Board was trying to hide what it does.

Vice President Farmer stated that the law specified that a quorum was three people.

Mr. O' Connor asked the Board to determine if the Board wanted such a policy. Commissioner Anderson thought it to be prudent.

Ms. McArthur stressed that a public meeting was preceded by public noticing and that minutes were required to be taken, but the policy was strictly governing other communications. She added that any communication that came into EWEB would be subject to disclosure.

Vice President Farmer asked if talking to General Manager Randy Berggren over the phone would be the same as e-mailing him. Ms. McArthur explained that the difference was that the written communication could technically become part of the public record.

Mr. Berggren commented that the original issue had been whether the e-mail communication could be considered a public meeting. Ms. Smith agreed, noting that the issue had been brought forth by former Commissioner Paul Conte. She reiterated that the policy before the Board addressed record retention and not public meeting laws.

Commissioner Bishop said that the issue to consider was how public should the business be. She asserted that the decision-making aspect of EWEB should be "transparent."

Mr. Origliosso commented that this was a value not necessarily shared by others.

In response to further comments from Commissioner Bishop, Mr. Berggren stated that it would not be possible to retain all e-mails.

Vice President Farmer remarked that the communications between Board and staff at EWEB were truly not open as conversations by telephone and face-to-face were not retained in any fashion. He asserted that only one-third of the communications happen via e-mail.

President Lanning recommended a simpler approach, that of clarifying what e-mails must be retained.

Vice President Farmer noted that such a policy was ground-breaking as neither the Cities of Springfield, Eugene, nor Lane County had such a policy regarding their e-mail communications. He suggested that e-mails that represent a quorum among Board members be retained.

Mr. Berggren reminded the Board that meeting laws would only be broken should the Board be deliberating upon a decision affecting EWEB in e-mails.

Ms. Smith suggested that legal counsel review the policy. Mr. O' Connor agreed that the policy should be set aside pending legal clarity.

AGENDA MANAGEMENT

Ms. Smith circulated a copy of the Notes on Meeting/Agenda Management; draft 07/28/2003, as follows:

Assumptions:

• The Board owns their agendas.
• The Board President sets the agendas with the General Manager.
• Board priorities take precedence over individual priorities.

Proposed Process for Adding Items to Board Agendas:

• Agenda management will be broken out as a regularly occurring agenda item.
• The time will be used to gauge the Board's interest in topics raised by Commissioners or staff and to discuss the trade-offs involved in using Board time for that issue.
• A list will be maintained of items that have been raised for possible discussion by the Board. The list will be in the form of a "quarterly report" which lists open issues, issues addressed, and issues to be taken off the list.
• In general, new items, which have some level of Board support, will result in preparation of a staff background paper.
• Once the background paper has been prepared, the Board can request the item be brought forward for additional discussion.
• The President and the General Manager meet once a month to discuss future Board agendas utilizing information gathered during Board meetings.
• Staff will check in regularly with the Board to discuss how the change in process is working for both staff and Commissioners.
• Staff will continue to bring action items of an administrative nature to the Board via consent calendar.
• In December the Board will again discuss the issue of changing the form and frequency of monthly Board meetings.

President Lanning suggested the following change to the fourth bullet:

"...new items, which have some level of majority Board support, will result..."

Vice President Farmer commented that when talking about majority Board interest in an issue, what was really being addressed was future goals and how they should be achieved.

Ms. Smith commented that a new Commissioner may have a greater need for staff backgrounders on new topics. Krista Hince, Assistant Secretary to the Board, suggested that staff members could meet with the new Commissioner, one-on-one, for educational purposes. President Lanning reiterated that the majority should request the backgrounder prior to staff allotting the time to prepare it.

Vice President Farmer felt that the larger issue was not the procedure, it was what was put on the agenda in the first place. He asserted that two-thirds of the agenda was administrative in nature and should not subject to the Board decision-making process.

President Lanning commented that having the agenda set by the Board would reduce use of Board time for items that did not necessarily require the guidance of the Board.

Vice President Farmer suggested that Board members be provided a backgrounder, should staff feel that this was necessary, and that Board members could then ask questions during a meeting. Commissioner Anderson asked why time should be provided on the agenda for such questions. Vice President Farmer said that it would depend on whether it was an item that all Board members would need to discuss.

Commissioner Bishop disagreed. She asserted that there should be specific time set aside as the way the Commissioners learned about a topic was through discussion.

In response to a question from Vice President Farmer, Ms. Hince stated that there was a Board book that was classified by topic and that Board members were given a book when they were sworn in.

The Commissioners took a short break.

Vice President Farmer said that, in general, items from the Board should be policy-related. He recommended setting goals for the year and the outcomes that were to be achieved and then allowing the staff to determine how the goals could be met. He felt that meeting time should not be devoted to instructing staff-members on how to do their jobs.

President Lanning agreed with this, adding that he thought the goal-setting should extend beyond one year. He commented that he wanted to move the Board into the future.

Vice President Farmer stated, in response to a question from Commissioner Anderson, that half of the time spent in meetings was devoted to administrative issues. Commissioner Bishop asked him to explain what he meant by administrative issues. Vice President Farmer replied that the Commissioners were often provided with backgrounders which then were explained in detail to them by staff-members as informational pieces and that the Board did not provide input or make decisions on these items. He averred that the Commissioners should have a vision of what the Board wanted for the utility and that the Board should hold staff accountable for bringing the vision to fruition.

Mr. O' Connor remarked that he heard conceptual agreement on this among Board members.

Ms. Smith summarized the discussion with a bullet point that read, as follows:

• Board agendas will emphasize policy setting, goal status, and the future of the utility.

Mr. Berggren requested clarification in regard to the third bullet point. Commissioner Anderson explained that the Board had been tracking different agenda items and, from that, a list of items had evolved that the Board wished to consider in a meeting. Ms. Smith added that Mr. Berggren and President Lanning would use this list to develop agendas. She reiterated that items would not make it to the list unless they had majority support from the Board.

Ms. Smith circulated evaluation forms to the Commissioners and instructed them to complete them and return them to her as soon as possible after the Governance retreat.

COMMUNICATION STANDARDS

Ms. McArthur provided an overview of the draft; EWEB Board Communication Policy, as follows:

The Board has agreed on a "code of conduct" that applies to all interactions they have among themselves and with others. Additionally, it is the policy of the Board to use the following guidelines in communicating specifically with members of the public, other government agencies and the media:

• Communications about Board decisions or positions on issues are generally prepared and coordinated by staff, reviewed by the full Board, and, if written, distributed under the signature of the President or designee. A Commissioner with a particular area of interest or expertise may be designated as the Board's spokesperson. Speeches may be delivered by any Commissioner following the same protocol.
• A Board Member may make a request to the full Board for limited staff assistance in preparing communications which state an opposing view. That communication will be attributed only to that Board Member and not be represented as belonging to the full Board.
• A Board Member may, without Board review or staff support, issue communications representing an individual viewpoint and represent it as such.
• Communications between a Board Member and an individual member of the public are left to the discretion of that Commissioner. E-mail communications are covered in a separate policy.

Ms. McArthur reiterated that the overriding set of assumptions came from the code of conduct.

Vice President Farmer noted that Public Affairs Manager Marty Douglass had asked him to give speeches on several occasions and had prepared information and tweaked it to make it current. He said that these speeches had not been approved by the Board. Ms. McArthur assured him that as long as the subject matter was generally presumed to be the position on a matter that the Board was taking, this was within the parameters of the policy.

President Lanning pointed out that the full Board should be aware of who was speaking to a group and what they were speaking on. Commissioner Bishop agreed, and stressed the importance of communication between Board and staff.

Commissioner Bishop felt that the draft policy under the second bullet point did not reflect the conversation that was had on it the previous day. She had interpreted the end result of the conversation to be that staff would check facts for Board members when the Commissioners write a piece that goes against the sentiments of the majority.

Commissioner Bishop requested that the word Commissioner be used in lieu of "Board member." The Commissioners agreed to this.

Vice President Farmer said that the individual Board member, when speaking with or writing for the public, should support the position of the majority, but could state that the Commissioner did not vote for the item.

Mr. Berggren supported the policy. He noted that there had been a former Commissioner for whom staff sent a great deal of time crafting responses for him. Commissioner Bishop responded that the original intent in staff crafting responses was to assure that there would be follow-through.

President Lanning thought the last bullet to be unnecessary.

Commissioner Bishop commented that Board decisions on an issue and how to represent the decisions to the public had not been adequately addressed in the policy. Ms. McArthur responded that the portion of the policy that discussed holding a position on an issue would cover this.

Vice President Farmer remarked that the "McKenzie episode" was an example of an issue that was better served within the realm of staff. He asserted that administration was clearly not a Board issue.

Commissioner Anderson pointed out that there were times when the information that was being sought was so technical that a staff response was warranted.

Mr. Berggren thought that the concerns that had been raised could be addressed by placing the word 'generally' in the preamble.

Vice President Farmer said that this was the issue that went to the heart of Governance as the Board should be signing off on policy issues.

President Lanning disagreed, stating that, for him, the heart of Board Governance lay in the interaction between Board and staff.

Ms. Smith commented that this discussion harkened back to the rules of conduct. She related that she heard two variations here, that the Commissioners would be more respectful of limited meeting times and that the Board priority would take precedence over the priorities of the individual.

The Commissioners and staff took a break for lunch.

LEGACY

Mr. O' Connor asked the Commissioners to speak to the idea of the legacy of the utility.

Commissioner Anderson said that the legacy she wanted to carry forward was that the Board and staff would respond very well to the changing times in the energy industry. She stated that the utility was faced with declining resources and should pursue alternative sources of energy as much as possible. Regarding water, she commented that EWEB worked to maintain the facilities on the main source, the McKenzie River, and had worked to develop back-up wells as well. She felt that these activities would maintain the integrity of the water into the future.

President Lanning felt that the Board should be remembered for understanding and acting upon decisions and then understanding the implications of enacting the decisions. He envisioned the Board learning to accept its mistakes and learning from its mistakes. He hoped that the Board would continue to deal effectively and efficiently with the ecological implications of power generation, while actively searching for sources of alternative resources.

Vice President Farmer shared his vision of a Board that was remembered for policies that assured reliable and reasonably priced electricity.

Commissioner Bishop had written out a report of how the utility had come to be known in the future which included that EWEB was a specific example of a success in local government, that it played a leading role in the wind projects in Wyoming and in the development of other alternative sources of energy, and that it would be known for its joint power project with the Umatilla tribes. She said that EWEB would be known for its flexibility and its top-notch management, that it was so flexible that the utility could "move with the times." She projected that EWEB would make a lot of money and would never lose its bond rating, while never losing sight of resource management. She commented that the future could hold stories of how EWEB took the lead in pushing back against the BPA to get it to back off from its exorbitant rate increases. She concluded by saying that the utility would retain its water rights and would retain ownership of its riverfront land.

Mr. O' Connor asked the Commissioners to consider what sorts of commonalities existed in the visions.

Commissioner Anderson commented that more than one person had brought up that EWEB should be at the forefront of technical innovations and alternative energy generation sources. Vice President Farmer added that he had implied that these were present in his vision.

President Lanning related that he had heard reliability as a theme in the Commissioners' legacies. He said that reliability related to both the economic and the socio-political environment.

Vice President Farmer said that, if through pursuing alternative methods of generation, it made things less reliable and less reasonably priced, he would be opposed.

Mr. O' Connor asked if cost and reliability could be measures of strategy or strategies in and of themselves?

Vice President Farmer said that a financial plan was a strategy to achieve a goal, and action steps to achieve a legacy. He stressed that it was important to the community to have energy be competitively priced.

President Lanning stressed that inter-connectedness was not just local, as the utility was inter-connected beyond local resources. He said that if the utility was not aware of that, the utility would not make decisions that were best for the community. Commissioners Bishop and Anderson concurred. President Lanning reiterated that conservation was proven to be cost effective.

Commissioner Bishop cited the provision of some money to schools as an example of an unquantifiable long-term effect.

President Lanning called our community the competitive edge for the utility.

Vice President Farmer responded that his perspective was that it was not whether the utility did or did not have a programs available, but he wanted to assure that EWEB had the right resources to further its legacy.

Commissioner Anderson noted that in this community, few people are unconcerned with the long-term implications of human behavior on the environment. Mr. O' Connor noted that the word 'sustainability' had been used by President Lanning as a goal.

Vice President Farmer responded that sustainability meant that a source was always available.

Commissioner Bishop said that at a fundamental level the purpose of EWEB was to provide services.

Ms. Smith formulated a list from the Commissioners' discussion, as follows:

LEGACY STRAW HORSE

• Strong board - clear policy leadership
• Direction and decisions anchored in sound assessment of risks and strategic environment
• Strong connection to customers and community
• High capacity organization - staff/organization
• Learning and adaptive
• Take advantages of changes in supporting environment
• Financially stable

CUSTOMER OUTPUTS

• Reliability, delivery of utility products and services
• Reasonable and stable price structure compared to industry

COMMUNITY OUTPUTS

• Has effectively dealt with tensions among social, economic, and environmental needs both short-term and long
• Viewed as stewards of the environment

President Lanning felt that part of EWEB's role in the community was to teach.

Continuing, President Lanning suggested that having a Board manual could foster a strong Board. Vice President Farmer asked what he meant by a strong Board. Commissioner Bishop asserted that a strong Board was only as good as its relationship with the organization and with staff. Mr. O' Connor suggested that 'effective' might be a better word. He noted that a Board comprised of five strong individuals who chronically disagreed would make for a weak Board.

Mr. Berggren stated, in response to a short discussion on "high capacity staff," that for him, a "high capacity" meant that the staff would be able to take on the complexity and challenges on a fairly routine basis as required, as opposed to being routinely overwhelmed.

Mr. O' Connor added the following to the list:

• Able to take on newness and highly challenging work
• Able to deal with challenges

Mr. O' Connor asked the Board to consider what the staff had learned over the years and whether there were useful tools that the Board could utilize and whether, too, there were some things that needed to be "shucked."

Ms. McArthur sensed discomfort with some of the wording. Commissioner Bishop commented that Mr. O' Connor was forcing the Board to be "more definite."

Vice President Farmer questioned how the present could be separated from the future, and whether the discussion was in regard to structure or in regard to outcomes. He felt that EWEB should look like the list suggested right now.

Ms. McArthur suggested that the Board look ahead 15 years and ask themselves if everything in the list would still be appropriate. She then recommended that the Board work backward from there and determine where the gaps lay.

Mr. Origliosso added that the work at the present meeting was to attain agreement on where the Board wanted the utility to be and that once the goals were identified, they would be attained quickly.

Ms. McArthur noted that if one went back 15 years one could not have envisioned the technology of today.

Vice President Farmer reiterated the "Carver model," i.e. the Board formulates policy and staff brings it to fruition.

President Lanning noted that there was a weakness in Carver's model in that the Board members might not know enough of the industry to formulate goals.

Vice President Farmer stressed that the Board had a fiduciary responsibility to approve of staff's methodology.

Commissioner Bishop remarked that it seemed that there was a Board sentiment to move away from a power portfolio that was so highly dependent on hydro-electric energy. Vice President Farmer responded that, according to Carver's model, the Board would direct staff to address the situation and then staff would develop a plan as to how to carry it out. He added that, at a very fundamental level, it was important to assure a reliable source of energy.

Commissioner Anderson had a slightly different vision of how it should work. She felt that the Board should provide direction to staff, staff should go away and conduct the necessary research, bring it back before the Board, and then the Board, with the help of staff, figures out how to proceed.

Mr. Berggren said that, just looking at the conditions in the present, the Board and staff would choose to diversify the power portfolio. But he felt that in the long run, it was more difficult to predict how things would proceed, that perhaps the utility would be able to completely hedge the risk of hydro-electric power.

Ms. Smith noted that the staff process for strategic planning was three-phase: mission, vision, and values.

Ms. Smith added to the list:

• Organizational competency

Ms. Smith said that the Board could create fitness themes that would help the staff get to where the Board wanted them to go, but that this would require some process of looking at the market and the environment.

Mr. O' Connor noted that the previous strategic work that had been done was short-term work. He stated that the work to come would be a longer range look at the utility.

Commissioner Anderson likened the process to a law. She said that a law could be looked at either as a constraint or as something made to do what one wants it to do. She asked how the Board could guide things in a way that they performed as the board desired them to in the future.

Mr. O' Connor responded that audacious goals were not necessarily what such planning would produce every time.

Ms. Smith noted that distributed generation could be a highly held goal of the Board. Mr. Berggren felt that this was a case of determining when to act and when to react. He asked if the Board should set a goal that 30 percent of the power would come from distributed generation in 15 years. He called this a "stretch goal," adding that it would play into every facet of the utility. He noted that he would propose that the utility achieve financial stability before proceeding. Ms. Smith suggested that it could be crafted into the vision statement.

Vice President Farmer stated that the operational model for the organization would likely change.

President Lanning asked how the list aligned with internal organizational values. Mr. Berggren shared his thoughts on the list. Regarding the high capacity, he said that the utility was already functioning at a high capacity. He stated that, in every area of the organization, the work had almost doubled.

Ms. Smith, returning to the idea of distributed generation, said that barely enough money was being invested in it at the present and that the utility did not have enough resources to meet other priorities. She commented that the utility would not be able to pursue an increase in distributed generation without making the investment in it.

Continuing, Mr. Berggren stated that he felt a value and pride in EWEB. He related that other staff felt this way, as well.

Vice President Farmer commented that there was room for improvement in forming the "strong connection to community."

Vice President Farmer advocated for having a section allotted on every agenda for Board planning.

Jean Meyers arrived with bargaining consultant, Dean Nordstrom, to formally introduce him to the Commissioners. They then went through the process of what a union bargaining situation would be in case the vote on August 22 voted in the union.

The meeting adjourned at 2:30 p.m.

_____________ ______________________________________

Assistant Secretary President