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

Others present: Randy Berggren, Jim Wiley, Debra Smith, Jim Origliosso, Marty Douglass, Tom Buckhouse, Dick Helgeson, Terry Bequette, Jean Meyers, Laurie Muggy, Jennifer Joule, Janet McClennen, and Krista Hince of the EWEB staff; and John Simpson, Commissioner-elect.

President Lanning called the Special Board Meeting of the Eugene Water & Electric Board (EWEB) to order at 6:30 p.m.

AGENDA CHECK

There were no changes to the agenda.

PUBLIC INPUT

It was noted that one person had indicated interest in providing public input and had been instructed to arrive at 7:00 p.m. Board members agreed that, should the person arrive, time would be allotted for public input later in the agenda.

CONSENT CALENDAR

Minutes

• Minutes of the June 14, 2004, Regular Board Meeting.

Business Service Agreements

• ABSG Consulting - Hawkins 607 Seismic Retrofit and Roof Repairs - Water and Steam Division - $61,703
• Egge Sand and Gravel - 3/4"-0" Aggregate - Water Construction - $260,000 for up to five years
• Delta Sand and Gravel - 1/4"-0" Aggregate - Water Construction - $950,000 for up to five years
• Second Growth - Revegetation and Restoration of Wetlands - Environmental Management - Corporate Services - $212,858.05

• Indus International - License Renewal for Annual Maintenance and Support Fees for the Advantage CIS System for up to Five Years - $412,239.86

Public Agency Network Budget

• Public Agency Network Operations and Management - Electric Division - $118,635

Resolution

• Authorizing reimbursement to the Eugene Water & Electric Board from Bond proceeds for expenditures paid in connection with the FERC relicensing of the Carmen-Smith Hydroelectric Project (FERC No. 2242) prior to the issuance of the bonds.

Commissioner Anderson pointed out that the minutes from June 15 had already been approved as corrected.

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

ITEMS FROM BOARD MEMBERS

Vice President Bishop noted that the Public Utility Commission had recommended against Portland Gas and Electric's sale to a private interest. She thought it would merit watching as the City of Portland could become owner of a major utility.

Vice President Bishop asked if there had been agreement to begin meeting earlier. General Manager Randy Berggren responded that it was solely due to the need for more time at the current meeting and subsequent meetings would convene at 7:30 p.m.

CORRESPONDENCE

Mr. Berggren reported the following:

• The EWEB annual picnic was scheduled for August 28 from 11 a.m. to 4 p.m. at the Lloyd Knox Water Board Park
• The second quarter litigation summary had been provided to the Board. He welcomed questions from Commissioners
• The Oregon Waters Resources Commission field tour would begin August 5 and EWEB was scheduled to host a lunch, which would include a welcoming speech provided by President Lanning
• New Resource Project Manager Ken Beeson provided a memorandum on a series of matters associated with Trojan Nuclear Plant
• The Integrated Electric Resource Plan (IERP) project team included some general information on the status of work on the IERP in the Board packets
• Copies of the report on the Five-Year Electric Utility Operations, which looked at the quality of management in the system and the infra-structure, were provided to Commissioners. The government required this annual report.
• On August 23 the Standard & Poor Rating Agency would be in town. The agency was particularly interested in how the issues involving the Trojan Nuclear Plant would affect EWEB

BOARD AGENDAS

Mr. Berggren highlighted the Eugene Water & Electric Board's Agenda Report dated August 3, 2004. He said a backgrounder had been provided for the Energy Matters Resolution. He discussed the three outstanding agenda items, including the possibility of allowing Tom Snyder to make a presentation at a future Board meeting on his vision for the Steam Power Generation Plant.

Mr. Berggren gave a brief overview of the agendas for the meetings to be held on August 17 and on September 7.

President Lanning ascertained that there would be a quorum for the September 7 meeting.

UNION CONTRACT RATIFICATION

Mr. Berggren stated that an agreement had been reached with the International Brotherhood of Electrical Workers (IBEW) and the IBEW had voted to approve it, 81:60. He said the agreement was now before the Board for consideration. He conveyed staff's recommendation for approval of the agreement.

Water & Steam Division Director Tom Buckhouse conveyed staff's request for the Board to ratify the first collective bargaining agreement with the IBEW. He noted that work on the document had been carried out over the course of the previous year. He said the agreement, reached through the mediation process, was essentially the same document approved by the Board in June with only a few minor changes. He stated that all wages were now in the 55^th percentile of the market comparisons. Benefits, he explained, were now the same for all employees, salaried and otherwise. He cited some changes including a tightening of controls on overtime, training and travel requirements, the cost of meals, the replacement of personal protective equipment and tools, and a requirement that employees maintain excellent driving records. He added that employees' availability in the event of an emergency had been heightened as well. He felt equity for all employees had been maintained and the budget had not been exceeded, largely due to open positions particularly in the electric crafts.

Human Resource Manager and Project Manager Jean Meyers said the Collective Bargaining Agreement (CBA) was needed after the July 8, 2004 EWEB offer to the IBEW was ratified by the Board. She stated that the agreement would be signed by EWEB's Board President or General Manager and IBEW's local 659 Business Representative. Local 659 then will forward the CBA to IBEW National in Chicago, Illinois for review. She listed the four major elements of the offer, three of which were Board-driven and within the Board policy directives to staff. Those items were: the term of the collective bargaining agreement (CBA), the medical plan coverage and premium costs would remain the same in 2004 and 2005 for all EWEB employees including bargaining unit personnel, the pay schedules and wage adjustments bargained during negotiations also met the Board's direction for market position as mentioned by Mr. Buckhouse. She said the fourth element of the offer included all of the tentative agreements on the work rules of the bargaining unit employees.

In response to a question from Commissioner Menegat, Ms. Meyers affirmed the July 8, 2004 final offer was subsequent to the last mediated session by the Employment Relations Board (ERB).

Commissioner Menegat conveyed his excitement at how well the bargaining teams had worked together to arrive at an agreement. He felt the language was standard and said he would not be inclined to alter it.

Commissioner Menegat moved to ratify the offer and place it into bargain contract form and give the General Manager authorization to execute the document when the document was presented. Commissioner Anderson provided the second.

Commissioner Farmer asked Mr. Buckhouse if there were plans to fill the open positions and, if filled, would they present a financial impact EWEB was unprepared to absorb. Mr. Buckhouse submitted a financial breakdown of the costs for the Bargaining Unit (BU) over the term of the CBA. He went on to explain that EWEB's bargaining team had utilized the assumptions in the pro forma from the previous year and the number of budgeted FTE positions from that year. He said, in reconciling the numbers, the assumptions were that every position was at the "journey" level, though some were at a training salary, and there were approximately 8 fewer FTE employees over the previous year. He stated the combination of the two amounted for a total of $300,000 in savings. He noted that the 2005 projection indicated EWEB was only approximately two percent above the current levels in wage expense, which was close to the original projection.

Regarding the contract renewal, Commissioner Farmer wished to clarify that the contract language indicated that either party could opt to reopen the contract prior to December 31, 2005. Ms. Meyers confirmed this was correct, and also stated that the term of the contract coincides with the PERS 6% employee contribution EWEB presently makes and the Board's review and decision on that matter. Ms. Meyers also stated that the preparatory work for the next bargaining process would begin in June of 2005. She also shared that the EWEB Bargaining Team was preparing a series of trainings to BU managers and supervisors on the CBA.

Commissioner Farmer noted that State law required EWEB to charge for housing, but that there were some exceptions to this. He cited the litigation report that indicated there was legal action taken by employees at the Carmen-Smith facility related to this. He questioned if the charge for housing may complicate the pending law suit. Ms. Meyers stated she didn't think so and that EWEB developed and will implement rental agreements as part of the CBA.

In response to a question from Commissioner Farmer, Ms. Meyers affirmed that EWEB no longer transported children of its employees to schools. She added that the Leaburg/Walterville site was close enough to the Springfield/Eugene area that it was not considered necessary for employees to reside there.

In response to another question from Commissioner Farmer, Ms. Meyers stated that it was usual and reasonable for dues deductions to be included in most CBA's and while not preferred, this concession didn't adversely increase EWEB accounting costs.

President Lanning asked for clarification on the process by which the contract would be submitted to the IBEW office in Chicago. Ms. Meyers replied that the document was in review for editing at this time. She stated she had conferred with Rose Smith of the Springfield Utility Board (SUB) regarding their contract and Ms. Smith had shared that SUB had submitted their contract to local 659 who, in turn, submitted it to the international office of the IBEW in June of 2003. SUB had only just received their final printed contract recently. She stated staff's intent to clarify with local 659 why this process was necessary. She underscored that the step for National IBEW review will not undermine the authority or ability of EWEB's Board and IBEW local 659 to execute the final contract.

Vice President Bishop asked what contract the utility would operate under. Mr. Buckhouse reiterated that the document before the Board (July 8, 2004) was complete. He stressed that he had never encountered a situation wherein a contract was rejected by the international IBEW.

President Lanning said he had only just received the contract and felt unprepared to sign it. He did not feel any discussion on the housing rates, as an example, had occurred among Board members. He thought the team had done an excellent job, but wished to further review the final product.

Commissioner Farmer also thought more time should be allowed for the Board members to thoroughly read the draft contract.

Vice President Bishop concurred. She expressed surprise that the Board President was not the signatory on the document. General Manager Randy Berggren replied that President Lanning was welcome to sign it, should the Board so desire.

Commissioner Anderson was concerned that a choice not to ratify the contract at the present meeting would cause a substantial delay in its ratification. She commented that the Board did not oversee the employees. She said the Board entered into the contract process in order to identify and work through the policy issues and averred it had done so. She had looked over the draft and felt it reflected Board policies.

Commissioner Farmer pointed out that there would be a quorum at the next meeting. He took no issue with delaying the vote in order to provide Board members an adequate amount of time to study the contract. He said he had canceled a meeting that afternoon in order to read the contract received that day, and if he hadn't, he, too, would be asking for more time to read the contract in its entirety. He said it was a monumental decision to approve the utility's first union contract in EWEB's history.

Mr. Berggren supported allowing more time for the Board to study the contract. Ms. Meyers agreed, adding that it was in the best interests of the utility to assure that the Board was as familiar with the language as the employees were.

Commissioner Menegat advocated for moving forward with due diligence to ratify the contract. He suggested the Board gather prior to the luncheon meeting with the Water Resources Board and vote on it. The Board was amenable to this and it was decided to meet on August 5 at 11:00 a.m.

Commissioner Menegat withdrew his motion based on the discussion and that the Board planned to meet to vote on August 5, 2004. The second on the motion concurred.

ENERGY MATTERS RESOLUTION

Power Resources Director Dick Helgeson said this agenda item was a follow up to the presentation made by Steve Weiss from the Northwest Energy Coalition (NWEC) in which he asked for the Board's endorsement of a Resolution to support meeting all future load growth in Northwest electricity needs through renewable energy resources and efficiency. He thought there to be significant affinity between positions of the NWEC and the Board, particularly in the area of conservation.

Commissioner Anderson agreed that the resolution was in line with policies EWEB already had. She felt the Citizen's Energy Plan was somewhat worrisome, though she supported the idea. She averred the Board should not presume the outcome of the Integrated Electric Resource Plan (IERP) work group process.

Mr. Berggren suggested the Board clarify that it supported the spirit of the campaign, but reserved the right to represent EWEB on specific issues of energy or policy with the planning council of the Bonneville Power Administration (BPA).

Commissioner Anderson related that she had been able, when sitting on the coalition, to withdraw on certain issues.

Mr. Helgeson said he would draft a letter to the NWEC should the Board take action. Should the Board choose to defer action, staff would be directed to consider the principles in the context of moving through the IERP process. He felt this would not be a failure to act, but rather would indicate a deference to the public process EWEB was already engaged in.

Vice President Bishop did not see a problem in supporting the resolution. She likened it to "making a mountain out of a mole hill." She said there was nothing in the Resolution that bound EWEB to a particular policy or action.

Commissioner Farmer commented that no one had the record on conservation that EWEB had and, because of this, no one could infer from a decision not to act on the Resolution that EWEB was opposed to the ideals behind it. He underscored that the Resolution indicated that all future growth should come from renewable energy resources. He did not think EWEB should bind itself to this as there was a possibility that the utility may invest in a gas-fired plant at some point in the near future.

Commissioner Menegat agreed with Commissioner Farmer. He also felt the item should be deferred until the IERP process was completed.

President Lanning asked if there was a risk in deferring action.

Vice President Bishop pointed out that it had been deferred for several months already. She advocated for signing the Resolution. She questioned the value of being a member of a coalition if the utility was not willing to back up the actions of the coalition. She expressed surprise that Board members would be reticent to support the Resolution.

President Lanning supported deferring it until the IERP process was completed. Commissioner Anderson agreed. She felt there to be no need to take action immediately.

Mr. Helgeson stated that he would communicate to the NWEC that the Board had considered the Resolution and decided to defer action until the IERP process was completed.

BENEFITS - REQUEST FOR PROPOSAL INITIATIVE

Laurie Muggy, Senior Human Resource Generalist, introduced project team members Jennifer Joule and Janet McClennen. She explained that the purpose of the agenda item was to provide an overview of the request for proposal (RFP) process, to share the recommended changes for 2005, and to give a sense of the feedback that came from the employee feedback group. She provided a power point presentation on the 2004 Benefits Change Project.

In response to a question from Commissioner Farmer, Ms. Muggy said the contract for insurance benefits would be for one year.

Ms. Muggy provided a power point presentation on the 2004 Benefits Change Project. She discussed the four responses that had been received and weighed the pros and cons of each.

In response to a question from Commissioner Farmer, Ms. Muggy said administrative costs were the smaller portion of the cost of benefits.

In response to another question from Commissioner Farmer, Ms. Muggy stated that while the assumption was that the utility would remain with the new insurance carrier through the end of 2006, a contract would be signed only through the end of 2005 as the insurance companies would not commit themselves to a set rate in the face of fiscally uncertain times. She also explained that the RFP process was time-consuming and expensive and, should EWEB solicit them on a yearly basis, insurance carriers would come to perceive EWEB as not being serious about changing who the utility did business with and would not respond to RFPs. Ms. McClennen added that none of the carriers were willing to put guarantees on the current plan design.

Vice President Bishop wished for clarification on the health risk appraisals. She asked what the significance of it was in leveraging long-term cost controls. Ms. Muggy replied that employers had made changes in co-payments and cost sharing and had gone as far in this direction as they could go. She said employers were now trying to influence changes in peoples' lifestyles that would promote lower health care costs. She cited, as an example, that a health risk assessment may ask if an employee smoked. Information submitted would then be provided directly to the health plan and a disease management specialist. She explained that employees would then be provided an opportunity to contact the specialist. She added that such an appraisal could also aid in early identification of other disorders such as diabetes.

In response to a question from President Lanning, Ms. McClennen stated that approximately 20 percent of EWEB employees incurred 80 percent of the health care costs. She said it was rare for employees to hit the out of pocket maximum as catastrophic medical events did not often occur.

Commissioner Menegat expressed concern that the worst-case scenarios were being underestimated, but had no questions regarding the proposed change in plans. He felt the utility, as the employer, needed to be involved in partnerships with the insurance provider to help disseminate information on how to lower health care costs and premiums. He cited a company that recently began an in-house wellness program.

Commissioner Farmer commended the staff presentation, calling it "well laid-out." He asked for information regarding the recent litigation over health care benefits filed by retirees. Ms. Muggy said depositions had been completed several weeks earlier and the trial date was scheduled for early December of this year.

Commissioner Farmer asked how the weighting of the different elements of the insurance costs had been determined. Ms. Muggy responded that the project team had done their own assessment and weighting and then the Executive Management Team had been asked individually to score and the results had been combined. She noted there had been little variance in the resulting scores.

Commissioner Farmer was concerned that, while Regence/Blue Cross had indicated they would guarantee the medical cost in 2006 and ODS had not, staff had recommended selection of ODS ostensibly for two years. He said he would not quibble with the staff's choice, however. He noted that EWEB provided better benefits than 90 percent of the City of Eugene after the new contract and called it a "very good deal." He opined it would be näive to believe that the rate payers of Eugene would be willing to continue shouldering the entire burden for employee benefits.

Vice President Bishop expressed her displeasure with the past decisions on benefits. She asserted that the redesign of the plan shifted a significant financial burden to employees and retirees with potentially destabilizing consequences in the work place.

Mr. Berggren related that he had invited both sides of the employee input group to the Executive Management Team meeting at which the change in plans was discussed. He said he listened to both perspectives and gave his point of view regarding the difficulty in finding the best decision in the situation. He felt the side that opposed the change had come to a level of understanding through that process and would come to support it. He called it an important change to make if the utility wanted to put stability and cost controls on the medical costs.

Commissioner Anderson noted that the rates at the University of Oregon had soared. She said her only concern lay with the lower income employees and expressed hope that the money set aside in the budget for wage increases would help to balance the increased cost of benefits.

President Lanning echoed Commissioner Farmer's point that the end recommendation had met the expectations of the Board. He complimented the backgrounder staff had provided, calling it thorough and informative. He supported staff's interest in moving forward with the plans.

Commissioner Farmer, seconded by Commissioner Menegat, moved to accept the benefits proposal as presented. The motion carried, 4:1; Vice President Bishop voting no.

ITEMS REMOVED FROM THE CONSENT CALENDAR

There were no items removed from the Consent Calendar.

President Lanning adjourned the meeting at 8:57 p.m.

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Assistant Secretary President