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

Others Present: Randy Berggren, Dick Helgeson, Debra Smith, Tom Buckhouse, Marty Douglass, Jim Origliosso, Jim Wiley, Dave Koski, Roseanna McArthur, John Yanov, and Krista Hince of the EWEB staff; and Ruth Atcherson, Minutes Recorder for the City of Eugene.

President Lanning called the Special Board Meeting of the Eugene Water & Electric Board (EWEB) to order at 7:56 p.m.

AGENDA CHECK

There were no changes to the agenda.

PUBLIC INPUT

Kay Emmons, 450 East 36^th Avenue, speaking on behalf of her neighbors and herself, expressed frustration at the frequency and duration of power outages in her neighborhood. She stated that during the recent ice storm, the neighborhood had been without power for two days and that, following the major windstorm several years ago, the neighborhood had been without power for six days.

Ms. Emmons stated that she had spoken to a member of the engineering department and had been informed that power was provided to her neighborhood via a spur and not a loop and so that when the circuit was broken there was no alternate route for electricity to travel to supply the area. She said the engineer had drawn up the plans for a change to the loop model for routing of power but it had not been approved for funding. She explained that the homes had been built 40 years earlier and that loss of power to their small area was an ongoing problem. She opined that the problem should have already been fixed.

Ms. Emmons additionally requested that the policy be re-instituted wherein a priority for the restoration of power was given to homes with an identified medical necessity-life support. She explained that her daughter was disabled and breathed with the aid of a ventilator. When a power outage occurred, this necessitated a move to a hotel room, both expensive and inconvenient due to the medical equipment that had to be brought along. She declared this an "undue hardship."

Commissioner Anderson asked who was responsible for the poorly designed medium for electric service delivery in that neighborhood. General Manager Randy Berggren responded that there were a number of "radials" in the City. He explained that a "loop" allowed for the system to take power from one direction or another. He said that over time the utility had tried to close up the radials and replace them with loops, but that funding for this had been one portion of the capital spending that had been deferred due to the financial challenges the utility had been forced to address.

Continuing, Mr. Berggren stated that there had been a time when EWEB had tried to identify when there were people with critical medical needs on the grid and to give them priority, but this had proved to be daunting. He noted that there were some things that could be done on the customer's side to augment their electrical needs and that EWEB was willing to help a customer work on this.

In response to a request from Commissioner Anderson, Mr. Berggren thought it possible to provide a back grounder to the Board that could at lay out a time table for further exploration of the topic.

Electric Operations Manager Dave Koski said, in response to a question from Commissioner Farmer, that there were still hundreds of radials on the system.

President Lanning asked how many people had been out of power for six days during the wind event of 2002. Mr. Koski replied that there had been 28 feeders taken out in that windstorm, while the utility had only lost six in the recent ice storm. He stressed that the restoration hierarchy focused on larger groups and worked its way back to the smaller groups.

Ms. Emmons commented that the engineering department had informed her that there were only three radials in the City that were like the one that feeds into her neighborhood.

Mr. Berggren asserted that the utility had no interest in penalizing people on the smaller radials.

President Lanning, noting another comment Ms. Emmons had made, asked how the information that was given over the phone could have been lost. Mr. Berggren responded that the automated phone system badly needed replacement. Ms. Emmons added that the person who had arrived to fix the power problem in her neighborhood was not privy to all of the information that came from the customer service lines. She thought the communication breakdown was not necessarily at the "front end."

Vice President Bishop asked if there was a way to reinstate the policy of giving priority to people with medical needs. Mr. Berggren felt there was more work that needed to be looked into but felt that the utility could look at options available for people with life support issues.

Mr. Koski reiterated that it would also be advisable to look at what the customer could do to mitigate a power outage.

APPROVAL OF CONSENT CALENDAR

Minutes

1. Minutes of the December 16, 2003, Executive Session

BUSINESS SERVICE AGREEMENTS

• Enviro Spatial - Enhancements and Maintenance of McKenzie Watershed Emergency Response System (MWERS) - Environmental Management - Corporate Services - Cost is $80,000 over two years
• Transunion - Credit Reporting - Customer Service - Finance and Customer Service Division - $30,000 for 2004
• AON Consulting - Employee Health Benefits and Actuarial Consulting - Human Resources - Corporate Services $158,145 for 2004

Commissioner Anderson, seconded by Commissioner Farmer, moved approval of the Consent Calendar. The motion passed unanimously, 5:0.

ITEMS FROM BOARD MEMBERS

Commissioner Anderson asked if there would be a staff person present for the public hearing the Eugene City Council was holding on the Downtown Plan. Public Affairs Manager Marty Douglass assured her that Intergovernmental Affairs Coordinator Deborah Brewer would be in attendance.

Commissioner Farmer stated that the McKenzie Watershed Council (MWC) had asked to set up a briefing session for him. He said it had been scheduled for January 26 at noon and welcomed any interested Board members to join him. He noted that he had been asked to attend the annual meeting of the MWC on January 31, but had declined as he was only the alternate. He affirmed, however, for Commissioner Anderson, that he would attend the MWC meeting on February 12 in her place.

Vice President Bishop stated that she had received information from a customer upriver that was also an engineer who was interested in aiding the utility to come up with a policy to curtail light pollution.

Vice President Bishop remarked that she had received an email on light pollution, and had sent it to the rest of the Board, but it had not made it past her Spam filter.

President Lanning reported that he had been privileged to present the Lane Council of Governments (LCOG) award for the public agencies with the greatest contribution to the community which had gone to the Public Area Network (PAN). He noted that EWEB had not been represented at the ceremony, but that it had been nice to acknowledge the community members that had helped to "make that happen."

President Lanning added that he and Mr. Douglass had decided not to follow up on the letter to the editor of the Register-Guard.

CORRESPONDENCE

Mr. Berggren reported the following:

• Board packets included a copy of an email from Mr. Douglass that updated Board members on the meeting with the Leaburg Lake people. He stated that the utility was doing its best to work with the people who live there, but that the only answer they really wanted to hear was that the utility would agree not to raise the lake. He said further information would be provided in a back grounder, now that the project had begun.
• Commissioner Anderson was scheduled to have her cochlear implant surgery on February 12 and would not be available for the Board retreat on the 13th. He said the retreat would proceed as scheduled.
• External Communications Coordinator Lance Robertson provided the Board in their Board packets an update on the media contacts in 2003.
• Commissioner packets also included copies of the letter from Kay Emmons, who had spoken during the Public Forum portion of the meeting.

BOARD AGENDAS

Mr. Berggren said he had added back grounders regarding Vice President Bishop's concern on ordinances regarding light pollution, in support of Item (5) on future Board agendas.

Mr. Berggren stated that he and President Lanning would have a meeting to determine the course of Board agendas.

Mr. Berggren listed the following topics for the Board agenda of February 3, as follows:

• An Executive Session for further discussion of union negotiations;
• The General Manager 2004 Goal adoption was scheduled for the regular meeting;
• The State of the Utility address, provided by President Lanning;
• The Wanapa Project (still tentative at this time);
• A discussion of the annual customer survey.

Commissioner Farmer announced that he would be absent for the meeting of February 3 as he was scheduled to be out of town.

Commissioner Farmer asked if the State of the Utility address would be picked up by the media. Mr. Douglass replied that the address was mostly for an "internal audience" as there was not much "news value" to the media. He said that the utility had, in the past, tried to garner some media interest but not with much success. He commented it would be possible to provide the message to customers via a bill stuffer. He noted that the subject matter would not be of interest to customers if the address mostly focused on the internal workings of the utility. Commissioner Farmer suggested that it should be made more accessible to customers or else it might not make sense to even take the time to do it.

President Lanning felt the message could be shaped so that it had true meaning to the customers. He noted that Commissioner Farmer had raised this concern after the previous year's address. He agreed it was a valid concern.

BONNEVILLE POWER ADMINISTRATION'S (BPA) SETTLEMENT AND SLICE STIPULATION AGREEMENTS

Electric Division Director Jim Wiley provided a brief synopsis, using the overhead projector, of the proposal for a resolution on the litigation settlement. He reminded the Board that at the last meeting staff had been instructed to ensure that the waiver to sue did not include the 2002 Slice True-up case that EWEB was currently involved in. He reported that a letter had been received from the BPA assuring EWEB that it was not excluded, though it had not represented an absolute guarantee.

Mr. Wiley reported that the roll call vote of the Public Power Council's Executive Committee had resulted in 16 yes votes, three no votes, and two absentees. He noted that the three no votes were cast by Grace Harbor, Snohomish PUD, and Grant County. Mr. Berggren commented that the latter had been a surprise change in position.

Mr. Wiley stated that the meeting held earlier in the day had resulted in five no votes, Canby, Snohomish, Grace Harbor, Neskalum, and Cleullum. He said that the public utilities of Lane County had authorized their General Managers to pass Resolutions and would be issuing press releases to the Register-Guard explaining the action.

Mr. Wiley related that the attorneys had reviewed the documents and affirmed that it could be passed without losing any rights. He recommended that the Board approve the resolution.

Commissioner Anderson opined that the BPA was wrong in what they had done and had violated laws under the Northwest Power Planning Acts. She conveyed her intention to vote for the Resolution, but expressed her reluctance to do so.

Commissioner Farmer called the Resolution "window dressing."

Senior Rate/Financial Analyst John Yanov stated, in response to a question from Commissioner Farmer, that he wrote the Resolution and that, although all the resolutions that were being voted on seemed similar, they were all written by each utility. Commissioner Farmer expressed discomfort with the second statement of the Resolution. He remained unconvinced that it would be possible to provide economic relief to customers.

Mr. Yanov said that part of the idea behind the Resolution was that the utility would recognize some relief. Mr. Wiley added that, in the long-term, there would be more rate stability.

Commissioner Farmer stated that he had been a part of the EWEB Board "just long enough to see the BPA flop all over the map." Mr. Berggren concurred and offered to restate that portion of the Resolution so that it indicated that there would be "near-term rate relief."

Commissioner Bishop moved to adopt Resolution No. 0104 with the following amendment:

• "2. The settlement will provide economic near-term rate relief to the customers of EWEB and other electric utilities in the Northwest.

The Resolution, in corrected form is as follows:

EUGENE WATER & ELECTRIC BOARD

RESOLUTION No. 0104

SUPPORTING THE CURRENT

SETTLEMENT PROPOSAL OF THE

BONNEVILLE POWER ADMINISTRATION

"WHEREAS, the Eugene Water & Electric Board (EWEB) is a consumer-owned utility having a federal statutory preference and priority to electricity produced by the Federal Columbia River Power System and marketed by the Bonneville Power Administration (BPA); and

"WHEREAS, in order to meet the loads of its customers, EWEB purchases a substantial amount of wholesale power from BPA through a 10-year Block and Slice Power Sales Agreement effective as of October, 2001; and

"WHEREAS, BPA has entered into subscription power sales agreements with investor-owned utilities, consumer-owned utilities and other wholesale customers; and

"WHEREAS, many of BPA's wholesale customers have initiated litigation against BPA challenging the legality of certain wholesale power sales agreements; and

"WHEREAS, BPA, many of BPA's wholesale customers, and other affected parties have been engaged in global settlement discussions for nearly two years to attempt to resolve the litigation relating to the BPA's power subscription contracts, "augmentation" and "buy-down" contracts promulgated by BPA in response to the 2001 Energy Crisis, the Residential Exchange Program (REP) agreements and benefits, and BPA's wholesale power rates; and

"WHEREAS, on November 10, 2003, BPA sent to EWEB a global settlement proposal consisting of multiple settlement documents including a Stipulation and Agreement for Settlement, a Waiver and Covenant not to Sue, a Slice Settlement Agreement, a Motion to Dismiss Causes and Claims, and a Motion to Limit Issues on Certain Rate Claims; and

"WHEREAS, BPA has issued a letter to EWEB dated January 13, 2004, containing written assurance that the settlement documents are not intended, and will not operate, to preclude EWEB from challenging, by way of litigation or arbitration, any action taken (or not taken) by BPA in conjunction with the CY 2002 True-Up Adjustment for Actual Costs under the Block and Slice Power Sales Agreement; and

"WHEREAS, EWEB's staff has been monitoring, reviewing, analyzing and participating in regional discussions of the issues surrounding the lawsuits and the proposed global settlement and corresponding settlement documents offered by BPA; and

"WHEREAS, an examination of the many complex issues involved in the litigation to be resolved by the settlement indicates that there is substantial uncertainty regarding the probable outcome of such litigation if pursued to final judgment; and

"WHEREAS, if the proposed settlement is executed by all required parties, BPA has committed to reduce its wholesale power rates for FY2004, attempt to reduce currently forecasted rates for FY2005 and FY2006, reduce the level of financial payments made by BPA to investor-owned utilities through 2006 and limit the level of their potential benefits through 2011; and

"WHEREAS, the benefits of the settlement would provide economic relief to the customers of EWEB and electricity consumers throughout the region, and EWEB seeks to improve the local, state and regional economies; and

"WHEREAS, based on the foregoing findings, EWEB's staff supports the settlement and supports EWEB's participation in the settlement,

"NOW, THEREFORE BE IT RESOLVED THAT:

"1. The proposed settlement represents a reasonable compromise of regional interests.

• "The settlement will provide near-term rate relief to the customers of EWEB and other electric utilities in the Northwest.

"3. The General Manager and/or legal counsel, acting as the Board's agent and representative, is hereby authorized to execute and deliver to BPA the pertinent settlement documents.

"DATED this 20th day of January, 2004."

Commissioner Farmer provided the second. The motion passed unanimously, 5:0.

BOARD GOVERNANCE

• Board Representation for Out of District Customers

Mr. Berggren noted that the originally scheduled item had included a conversation on Board/Staff interaction, but that due to time he suggested, and the Board agreed to it, that it be deferred to a later meeting. Debra Smith, Assistant to the General Manager, provided a brief handout that outlined the previous discussions on this.

Commissioner Anderson thanked Commissioner Farmer for his suggestion that the Board refer back to its minutes. She noted that there had not been an agreement on an advisory committee nor on having Board representation for people who reside in the McKenzie River area. She said the McKenzie Watershed Council (MWC) had suggested the Board have an ombudsman from the area to act in an advisory role and as a liaison. She advocated for rendering some sort of firm decision on this matter.

Commissioner Farmer saw no reason to rehash previous discussions. He said there was no opposition to listening to customers, but the burden or initiative should be on the customer and not the Board. He felt that having an ombudsman implied there was a problem. He suggested that another issue to consider in thinking of appointing an ombudsman from the McKenzie River Valley was whether the Board, in the interest of fairness, should encourage the unannexed areas of River Road to seek representation as well.

Commissioner Anderson agreed. She opined that an advisory committee with representatives of all customers would be an awkward entity. She felt the ad hoc committees that had formed in the McKenzie Valley area had worked well.

Commissioner Farmer reiterated that an ongoing advisory group that was not project-related should be the responsibility of the committee and not the responsibility of our Public Affairs Manager Marty Douglass.

Mr. Berggren said the wish of the McKenzie Valley residents was not so much to have staff be an interpretive middle person for whatever issues arose as it was to voice some policy-level views to the Board that they did not feel they had the right to express through voting.

Commissioner Menegat related that he attended neighborhood meetings in the River Road area and this seemed to be an adequate vehicle for groups to raise their concerns. He said he was unaware of any residents in the unincorporated River Road area that felt a need for further representation.

Vice President Bishop stated that it had been made clear that it would not be possible to add another Commissioner to the Board that would represent the McKenzie area residents without a change in the City Charter. She said, however, that the issue before the Board represented an opportunity to develop better communication with customers. She felt that treating the issue with "odd down-played terminology" under the heading of Board Governance was a way of obfuscating it. She called this the "beginning of the first step to actually elevating this up to an agenda item" with proper notice. She suggested setting aside a Work Session and inviting people to come in and talk to the Board. She thought making it their responsibility was "harsh." She supported the formation of an advisory committee. She remarked that the Federal Energy Regulation Commission (FERC)-related projects were in the "backyards" of the people of the McKenzie Valley and they should be invited to bring their concerns to the Board.

Commissioner Anderson commented that the McKenzie Watershed Council (MWC) had put much effort into recruitment of members from up and down the McKenzie Valley and had experienced difficulty. She did not think that a committee would sustain itself for long, due to the commitment, but would lose momentum as the tempestuousness of the issue subsided. She suggested including a questionnaire in the bills of the McKenzie Valley perhaps twice a year in order to remain in touch with the customers who reside there.

Commissioner Farmer asked if the customer survey included a sampling of all customers. Mr. Douglass responded that the survey was directed toward a random sampling of all customers.

Mr. Berggren suggested holding one EWEB meeting in the McKenzie Valley area per year. President Lanning liked the idea. He felt that the Board needed to take some responsibility for hearing the voices of the customers. He commented that it made sense to engage customers in a meaningful way and the Board should take a more active role in engaging them. He thought there was a lot of passion around the FERC-related changes in the McKenzie Valley and that it would be enough motivation to form a committee, but not enough to sustain it.

Commissioner Farmer stated that the issue came to the surface because a politician was agitating people on it. He advocated for making it clear to the residents there that the Board did not have the jurisdiction to create another seat for a Commissioner. He said if this was their goal it was imperative that they be instructed to present it before the City Council so that the process for changing the City Charter could begin.

Vice President Bishop wished to clarify that the issue had surfaced prior to the politician becoming engaged in it.

Commissioner Farmer remarked that it was important to discern how much of the situation up the McKenzie River was issue-driven and how much of it was representation-driven. He noted that no one had come before the Board and spoken on it.

Mr. Berggren stated that there was an option that would allow the residents there to be represented, that of becoming members of the Lane Electric Cooperative. He said EWEB would still have its projects in their neighborhood, however, and this would not solve the residents' primary concerns. He questioned the fundamental issue before the Board. He felt that being unclear about the issue posed the risk of finding the wrong solution.

Commissioner Farmer opined that if representation was an issue that loomed large in customers' minds the Board would hear from the unincorporated areas of River Road. He reiterated that the need for representation had arisen from one issue, that of the changes that FERC had required for relicensing and how it affected their neighborhood.

Commissioner Anderson felt there was no one opinion up the McKenzie River. She opined that there was one small group who were angry and sought to "get rid of EWEB" but they did not represent the majority. She remarked that the tree-cutting had been "terrible" and had distanced some of the residents.

Commissioner Anderson supported the formation of ad hoc committees to address problems as they arose.

Commissioner Farmer asked how best to communicate that the Board did not have the power to grant the McKenzie area residents representation. Mr. Douglass responded that, should the Board choose to communicate through bill stuffers, it might actually rile the residents up. He felt a communication through the newspaper was a possibility, though that would have a similar risk. Another option he suggested was to have Commissioner Anderson communicate this through the MWC as one aspect of its existence was to serve as a mediator or a forum. He stated that there was a neighborhood association in the area and that EWEB could write a letter to it. He thought the best definitive statement that could be made would be a statement to the council and to the neighborhood association. Commissioner Anderson noted that two members of the neighborhood association also sat on the MWC.

Mr. Douglass agreed that there was value in making the definitive statement regarding representation of this unincorporated area.

Mr. Berggren said that, to the degree that the Board and staff chose to address the issue, it would be important to ask them to "step up to the choice." He noted that the viable choice would be to suggest that they transfer to Lane Electric Cooperative, as that could actually happen, but the likelihood that the City Council would grant them a change in the City Charter so that they could sit on the Board was slim.

Vice President Bishop thought this should be incorporated into a broader communication. She supported holding a Board meeting in the McKenzie Valley area. She recommended setting boundaries on the discussion.

Commissioner Anderson supported communicating to the McKenzie area customers through a letter to the MWC and the neighborhood association.

Mr. Berggren stated, in response to a question from Commissioner Anderson, that Lane Electric Cooperative would have to purchase the facilities from EWEB, should the residents choose to transfer to a different utility and EWEB would have to release them. He noted this would be expensive.

Commissioner Bishop reiterated her wish to place this item on the agenda once again and to invite McKenzie Valley residents to a meeting. She felt a broader communication should be provided to the area.

Mr. Berggren recommended letting staff brainstorm on communication strategies and come back to the Board with something more specific and definable.

ITEMS REMOVED FROM THE CONSENT CALENDAR

There were none.

The meeting adjourned at 9:43 p.m.

_____________ ______________________________________

Assistant Secretary President