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

Others Present: Randy Berggren, Jim Wiley, Debra Smith, Jim Origliosso, Roseanna McArthur, Marty Douglass, Tom Buckhouse, Dick Helgeson, Gale Banry, Mike McCann, Catrin van Donkelaar, Allen Dannen, Marc Anderson, Judy Chase, and Krista Hince of the EWEB staff; John Simpson, Commissioner-elect; various members of the public; and Ruth Atcherson, City of Eugene Minutes Recorder.

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

AGENDA CHECK

Vice President Bishop related that she had been called by Tom Snyder of Eugene who wished to speak during the public input portion of the meeting but was uncertain if he would arrive at the appropriate time. She asked if it would be possible to allow him three minutes during the regular agenda.

Commissioner Anderson expressed reservations about making a special allowance for this item at a meeting that was supposed to be largely devoted to issues involving the McKenzie Valley.

President Lanning determined that the Board was amenable to allowing the gentleman to speak.

APPROVAL OF CONSENT CALENDAR

Minutes

1. Minutes of the May 25, 2004, Special Board Meeting, the June 15, 2004, Special Board Meeting, and the July 6, 2004, Executive Session.

Business Service Agreements

2. J.H. Baxter - Douglas Fir Wood Poles - Electric Division - $477,255

3. Wesco Distribution, Inc. - 3-Phase Padmounted Distribution Transformers - Electric Division - $1,290,810

4. USDA Forest Service - Habitat Improvement Upstream of Trail Bridge Reservoir - Envirnomental Management - Corporate Services - $50,000

5. USDA Forest Service - Habitat Improvement Downstream of Trail Bridge Reservoir - Environmental Management - Corporate Services - $50,000

6. Lane County Human Services Commission - Low-Income Energy Assistance - General Manager's Division - $1,635,000

• Barrett Business Services - Temporary Services - Electric Operations - Electric Division - $97,215

Property Sale

8. Adjacent to North Game Farm Road - Acquisition Area for Lane County - Property Manager - $900

Grant

9. Lane Community College - Grant for Energy Management Program - General Manager's Division - $600,000 for a five-year period

Commissioner Menegat pulled the minutes from the Special Board Meeting held on June 15.

Vice President Bishop pulled the minutes from the Special Board Meeting held on May 25 and Items 3, 6, and 7.

Commissioner Menegat, seconded by Vice President Bishop, moved approval of the Consent Calendar, with the exception of the minutes from the Special Board Meetings held on May 25 and June 15 and Items 3, 6, and 7 from the Consent Calendar. The motion passed unanimously, 5:0.

ITEMS FROM BOARD MEMBERS

Commissioner Menegat reported that he, John Simpson (Commissioner-elect), and the new EWEB Environmental Manager Steve Newcomb had attended a presentation on hydroelectric power licensing on the McKenzie River, given by the Hydro Power Reform Coalition. He felt the presentation had been objective and full of information.

Vice President Bishop recalled that the Board had agreed to a litigation reporting policy and asked when the first report would be presented to the Board. Assistant to the General Manager Debra Smith responded that she would talk to EWEB attorney, Win Calkins.

President Lanning thanked the citizens of the McKenzie River Valley for attending the meeting.

CORRESPONDENCE

General Manager Randy Berggren had no correspondence to share. He said it was a pleasure to be in Vida.

BOARD AGENDAS

Mr. Berggren highlighted the EWEB Board Agenda Report dated July 20, 2004. He noted a typographical error under the Work Session scheduled for August 3. GM Goal Status 'Q3 2004' should read 'Q2 2004.'

PUBLIC INPUT

Per Vice President Bishop's request, Tom Snyder was provided time on the agenda. He shared his vision of converting the steam power generation plant into a museum. He provided information to the Board in writing.

LEABURG CONSTRUCTION STATUS AND FUTURE WORK

Public Affairs Manager Marty Douglass explained that this was part of the discussion focusing on work that was being done on the Leaburg/Walterville hydroelectric facilities. He recapped for the Board that this was part of an extensive public process which included monthly meetings with concerned area residents and input from the canal bank vegetation committee and the recreational planning committee. He reported that staff had met with residents who live on the east side of the dam, and agencies and interest groups, including the McKenzie Watershed Council (MWC).

Hydroelectric Relicensing Project Manager Gale Banry recapped the construction projects that had been undertaken. He said rollgates one and three on the Leaburg dam would be modified and/or strengthened in the coming year. He stated that Marc Anderson, EWEB's Senior Civil/Mechanical Engineer, would begin installing the hydraulics, with unit number one to be installed in September. He noted that the Commissioners had just seen the improvements, still under construction, to the fish ladder on the far side of the river. He explained that, once done, staff would test the flow and this would determine how much the lake should be raised and subsequently what mitigation would be required. He said the lake was scheduled to be raised in 2006.

Mr. Anderson elaborated on the work being done on the Leaburg dam. He expected rollgate number one to be operational by August 1 and rollgate number three to be completed by November. He said the reconstruction of the left bank fish ladder would be done by the middle of September. He reported that the second rollgate and turbine would stay on line through the night for the very first time. He stated that all of the alarms were in place and the automatic dialing system would call the appropriate personnel should the alarm sound. He noted that it had been running without any problems for most of the day. He anticipated that it would not have any problems during the night. He added that the automation system included management of the flow down river and into the canal.

Mr. Douglass said a key project was maintaining the vegetation on the canal bank. He observed that much of the public input process had been initiated by the canal bank vegetation removal project required by the Federal Energy Regulatory Commission (FERC).

Mr. Dannen explained that the utility had been required to remove trees from the canal because the roots of the trees threatened the integrity of the canal. He stated that the utility was now charged with maintaining the vegetation and preventing it from becoming out of control. He said both goats and mechanical mowing were being used for vegetation control and the landscaper was working to ensure that the plants that were installed there survived.

An audience member asked where the planned boat ramp was proposed to be built. Mr. Douglass responded that this was not yet known, but the selection process would begin in a year and would include public input.

PUBLIC INPUT - WALTERVILLE/LEABURG PROJECTS

President Lanning opened the floor for public input.

John Bennett, Leashore Drive, thanked the Board and staff for holding a meeting in the Vida/McKenzie Community Center. He said the willingness of staff to meet with area residents had been very helpful and communication had improved. He noted that he was the President of the Friends of Leaburg Lake. He felt the "next big problem" the group faced would be the raising of the lake. He said staff had assured area residents that they would be kept informed of any changes. He affirmed that it was helpful to have refrigerator magnets with emergency phone numbers on them.

Robert Grafton, member of the Board of the Friends of Leaburg Lake and a member of the Recreation Committee, discussed the recreation planning. He felt the meetings had been productive. He opined that many recommendations were not fleshed out enough. He acknowledged that the FERC hearing would take place and expressed the group's preference to be in agreement with the utility prior to then. He urged the EWEB Board to instruct staff to set up a process by which a "meeting of the minds" could occur. He said the committee was not familiar with the budget and did not know what the financial parameters were. The work of the committee would be better informed by knowing the numbers. He noted that he lived by the lake and would be affected by a high water event. He suggested that people who live in close proximity of the lake have a phone number that would put them in contact with a real person should such an event occur.

Commissioner Farmer asked Mr. Grafton to elaborate on the committee's chief concerns regarding the recreation plan. Mr. Grafton responded that neighbors were concerned that the Leaburg Canal walking path cut through private property without adequate fencing and with loose livestock. He said the designation of westside parking along Highway 126 at the Leaburg Fish Screen as a focal point for recreational use was another key element of the committee's position. He conveyed the committee's desire to have the parking at that point emphasized more which would result in less traffic over the dam.

Mr. Douglass noted that the staff and the committee had also not come to agreement on the Walterville Pond access, but had agreed on the other elements of the recreation plan.

Jim Hayden said his family's relationship with EWEB went back to the 1920s. He alleged that the velocity barrier at the Walterville tailrace did not work. He related that the salmon "lined up" and beat themselves against the barrier. He asserted that the barrier had been built at the pre-flood elevation in 1996. He called the additional work done to the barrier "Rube Goldberg plumbing." He opined that had the utility built the tailrace a few feet lower it would not have impacted his property. He related that planning papers indicated that it would not impact the property, but a large portion of it had flooded. He closed by declaring it was past time that the McKenzie Valley should have a seat on the Board.

Vice President Bishop asked how the tailrace had impacted his property. Mr. Hayden replied that the water rose and fell. He said 309 trees died as a result of the "dewatering" of the canal. At present, his wooded area was under water. He related that his chicken coop was under water. He said planning papers had not projected that the water would cover so much of his land. He felt the engineering involved in the planning of the tailrace was faulty. He asserted his land was a flood basin and commented that most people would know better than to place a dam near such a geologic feature.

President Lanning noted that Mr. Hayden had submitted photographs of the flooding and subsequent damage. Commissioner Menegat said the photos showed the dead trees and the abandoned river channel.

CARMEN-SMITH RELICENSING STATUS REPORT

Mr. Douglass stated that the utility was "well into" the Carmen-Smith relicensing process. He said the public process had, thus far, consisted of extensive information posted on the EWEB Web site, public meetings, and facility tours. He noted that the public meetings had been held in Eugene, in the upper McKenzie Community Center in McKenzie Bridge. He stated that presentations had been made to the McKenzie Watershed Council (MWC) and the Santiam Fish and Game Association (SFGA). He discussed the geographic area that was affected by work at the Carmen-Smith facility. He stressed that noticing had been provided to a large area because of its location. He said the utility had conducted 43 meetings with agency personnel and interested parties in which scopes of the planned environmental studies were discussed.

Mr. Banry commented that, though staff was trying to conduct as much outreach as possible, the response had not been as great as had been hoped for. He described the three FERC relicensing processes and explained that EWEB had chosen to undertake the traditional process as EWEB did not have the staff capacity to undertake the compressed alternative process or the new integrated process. He said the traditional process was conducted in three phases, the first of which was the study work that was underway. The next phase would be license preparation. He stressed that the license must be prepared by November, 2006, adding that its relicense application would be filed regardless of whether it was finished or not. While he did not think EWEB would be denied, he said it was not a "slam dunk" either.

Catrin van Donkelaar, Relicensing Coordinator, explained that the studies that were underway had to do with informing the decision when staff put together the relicensing package so that it indicated that potential impacts would be mitigated. She stated that EWEB had worked with specialists and agency people, divided into three technical subgroups: aquatic, terrestrial, and social (recreation, aesthetics, land use, archaeological, etc.). She related that staff had met with government regulatory agencies, American Indian tribes, and recreational groups 42 times and had 27 study plans proposed with 18 approved. She added that the relicensing team mostly used email for communication between staff and the subgroups and over 1,000 e-mails had been exchanged. Nine studies had been implemented to date.

In response to a question from the audience, Ms. van Donkelaar said Tameolich Falls was part of the in stream flows, recreation, wildlife and habitat studies.

PUBLIC INPUT - CARMEN-SMITH PROJECT

There were no members of the public who wished to speak on the project.

PUBLIC INPUT - OPEN FORUM

Rick Ralston, Vida, expressed concern regarding the fencing and security lights used by EWEB. He stated that he had two acres and the lighting that EWEB used on its poles impacted the property. He asked that shields be placed on the lights to block light from spilling in his direction. He suggested that EWEB needed a policy on lighting in a rural area that would allow adjacent property owners to ask people who utilize such lighting to shield them.

Mr. Berggren noted that this item continued to be placed in the queue for a future Board agenda.

Commissioner Farmer asked if EWEB had jurisdiction over lighting on poles that were on private property. Mr. Ralston responded that it was an EWEB-owned light on an EWEB-owned pole.

Kerry Roberts thanked the Board for meeting in Vida. He echoed the comments of the two Friends of Leaburg Lake Board Members. He asked if it would be possible to give the Board a tour through properties affected by the activities of EWEB.

ITEMS REMOVED FROM THE CONSENT CALENDAR

Vice President Bishop offered the following correction to the minutes from the Special Board Meeting held on May 25, 2004:

• Page 3, paragraph 3: "He indicated that the proposal to have a joint meeting with the Emerald Public Utility District (EPUD) was for the purpose of hearing a presentation from the Northwest Energy Coalition. He related that the two utilities were conferring,..."

Commissioner Menegat offered the following corrections to the minutes from the Special Board Meeting held on June 15, 2004:

• •Page 6, paragraph 4: "Commissioner Menegat noted that Mr. Simpson had attended the recent APPA NWEC conference."
• •Page 8, paragraph 4: "He noted that refunding was not traditionally available with non-voluble non-callable bonds."

Commissioner Anderson offered the following corrections to the minutes of June 15, 2004:

• •Page 3, paragraph 1: "She said in all her decades of Bboard and commission experience she had never had to address such a thing."
• •Page 3, paragraph 6: "Commissioner Anderson said the information on the front of the bill was helpful because it indicated the cost of the bill, but the name was unimportant."

Regarding Item 3, Vice President Bishop said her intention was not to belabor the point, however she could not agree to placing an item that cost more than $1 million in the Consent Calendar. She asked for further explanation of the item. She stated that she had pulled Item 6 for the same reason, though she did know what it was and she supported it.

Mr. Berggren asked if the Board wanted to have a Governance conversation on Consent Calendar contents.

Commissioner Farmer stated that the three pulled items totaled nearly $4 million. He suggested that staff should at least determine whether the Board was comfortable with the items. He noted that he had only just received the backgrounder and had not had the time to read it.

In response to a question from Vice President Bishop, Mr. Berggren explained that Item 3, though costing more than $1 million, would be phased over five years. He said the item included all of the new transformers the utility was required to purchase. He explained that it had been bid out, though staff had not opted to take the lowest bid as it did not include adequate warranty service.

Commissioner Farmer asked for an explanation of Item 6. Mr. Berggren responded that a specific monetary amount had been used to insure that the utility had the order of magnitude well-considered. He added that the item did not constrict the Board's ability to arrive at a different amount.

Vice President Bishop said she pulled Item 7 because she was genuinely concerned about it. She was puzzled that two former employees were being hired through a temporary agency. Mr. Berggren explained that the Public Employees Retirement System (PERS) had imposed new limitations on retirees. He said some retired PERS employees had been required to pay back their full retirement when returning to work. Use of a temporary agency protected a retiree and EWEB as the temporary agency was not a PERS employer. Treasurer Jim Origliosso added that PERS had made a recent retroactive ruling that had adversely affected some retired employees, who previously had been able to take their benefits in a lump sum and continue to work up to 1039 hours per year.

Mr. Berggren said EWEB normally had a one-half percent turnover rate. Due to changes in the PERS benefits, he explained that the turnover rate had jumped to nine percent. He stated that large numbers of retirees were being brought back to help the utility to get through the contract negotiation.

Vice President Bishop questioned the wisdom of having Union employees work side by side with temporary employees. Nonetheless, she said she would support it. She asked for a backgrounder on the item.

Mr. Berggren stated that the need for this would be eliminated once the contract was ratified.

Vice President Bishop, seconded by Commissioner Farmer, moved to approve the minutes from the Special Board Meetings held on May 25 and June 15 of this year, as amended, and to approve Items 3, 6, and 7. The motion passed unanimously, 5:0.

In response to a question from the audience, Mr. Berggren explained that the amount of money for the Low Income Energy Assistance Program (LIEAP) was put into place as part of a rate action taken in 2001. He said there had been a substantial need that was being unmet and LIEAP had served to reduce the need. He added that the Board was discussing whether the amount should be lowered slightly and had undertaken a redesign of the system to improve efficiency.

Mr. Simpson, commenting from the audience, said he was surprised by the lack of backgrounders for the Consent Calendar. Mr. Berggren said there was no standing rule on this and it had traditionally been a staff decision on whether or not to issue such a memorandum to the Board.

Commissioner Farmer asked when the Board would be discussing the proposal for McKenzie-Triad Hospital to move onto the EWEB site. Mr. Berggren replied that it would be as soon as a meeting could be scheduled.

In response to a question from Vice President Bishop, Mr. Berggren said the decision on whether to make information public had yet to be made. He noted that public information requests were already being submitted for the appraisal information.

President Lanning thanked the Vida/McKenzie Community Center for hosting the meeting.

President Lanning adjourned the meeting at 8:50 p.m.

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Assistant Secretary President