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

Others present: Randy Berggren, Jim Origliosso, Tom Buckhouse, Dick Helgeson, Debra Smith, Terry Bequette, Jim Wiley, Marty Douglass, and Krista Hince of the EWEB staff; John Simpson, Commissioner-elect; and Ruth Atcherson, City of Eugene Minutes Recorder..

President Lanning called the Work Session of the Eugene Water & Electric Board (EWEB) to order.

2004 SECOND QUARTER BUDGET AND FINANCIAL PERFORMANCE

Treasurer Jim Origliosso provided a power point presentation on the Second Quarter Financial Statements, August 3, 2004. All those present were provided with a hard copy.

Commissioner Anderson asked if there was any increase in the electric department due to commercial/industrial activity. Mr. Origliosso said there it had experienced a small increase. Mr. Origliosso noted that several things had been added to the financial statement, including details on the units sold and a break-out on the contribution margin so that all of the revenue from retail and wholesale added up to 100 percent.

Mr. Origliosso said the report on the water utility included an extra page on performance indicators. He recalled that there had not previously been benchmarks for the water utility and so staff had done some research and identified the benchmarks most appropriate for EWEB financial statements.

Commissioner Farmer asked about the benchmark used for the current ratios, noting it would take $52 million to reach it. Mr. Origliosso responded that it was the norm for what utilities were holding in current assets and liabilities. He acknowledged that EWEB was deficient in its cash reserves. Commissioner Farmer expressed concern that this would affect the bond rating. Mr. Origliosso reassured him that it was not likely to have an effect as the debt service coverage showed well. He said the debt service was mostly made up of the Contributions In Lieu of Taxes (CILT) payments and capital improvements. He stated that, currently, it showed higher than the benchmark. Commissioner Farmer suggested it be asterisked and the level without consideration for the CILT payments be indicated at the bottom of the page.

President Lanning thanked Mr. Origliosso for the report.

GENERAL MANAGER'S GOAL STATUS - SECOND QUARTER

General Manager Berggren highlighted the report provided to the Board entitled 2004 General Manager Goals Status as of June 30, 2004. He directed the Board's attention to the tabular summary of the Operational Performance Measures.

Commissioner Anderson asked if anyone knew why the amount of vouchers provided to low income customers had been lower. Assistant to the General Manager Debra Smith thought one factor was that the utility was no longer requiring people to be delinquent prior to qualifying for help. She said one problem, to be corrected with the new relationship with Lane County, was that staff did not know how many customers had been provided with vouchers.

Commissioner Farmer shared his perception that the intent was to keep the utility financially sound, but then the weather patterns would shift one way or the other. He felt that it was not possible to praise or blame the General Manager for the weather. He thought that using a conservative assumption would aid in maintaining the benchmarks for financial performance.

Vice President Bishop asked what the regulatory delays for the well fields were comprised of. Mr. Berggren explained that the fields were affected by regulatory issues, primarily the impact of the wells on the aquifer that supplied the Springfield Utility Board (SUB) and the Rainbow Water District. He related that he had met with the General Manager of SUB, Steve Loveland, to discuss that issue, among others, and they had agreed that the two staffs would look at potential solutions that might satisfy the regional water board. He said they wanted to convey that the wells were more for emergency supplies. He stated that there was an emphasis at the water board on regional water planning. He hoped to reach an agreement with SUB and, ultimately, the Rainbow Water District on ways to mitigate the impact to their aquifer that drawing on EWEB's wells would cause.

Commissioner Farmer asked if the potential impact to the aquifer had been ascertained. Tom Buckhouse, Director of Water & Steam Divisions, replied that the consultant had developed a model that staff surmised to be accurate regarding the implications of EWEB drawing water from its well fields on the aquifer. He reiterated that EWEB needed to sit down with SUB and the Rainbow Water District and work with them to resolve the issues.

In response to Commissioner Farmer, Mr. Buckhouse affirmed that the well fields were only intended for emergency use at this point in time.

President Lanning closed the Work Session at 6:15 p.m.

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Assistant Secretary President