EUGENE WATER & ELECTRIC BOARD
SPECIAL BOARD MEETING
EWEB BOARD ROOM
AUGUST 17, 2004
7:30 P.M.
Board Members present: Patrick Lanning, Dorothy Anderson, Mel Menegat, and Ron Farmer. Vice President Sandra Bishop was excused.
Others present: Randy Berggren, Debra Smith, Jim Origliosso, Tom Buckhouse, Mike Logan, Charles Dalton, Dick Varner, Dick Helgeson, Terry Bequette, Ken Beeson, Lance Robertson, Jean Meyers, Ron Wilson, Steve Mangan, Scott Spettel, Brenda Sirois, and Judy Chase of the EWEB staff; John Simpson, Commissioner-elect, 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 7:48 p.m.
AGENDA CHECK
Commissioner Menegat registered his intention to pull the first item of the Consent Calendar. He requested that the Board consider it immediately after approval of the Consent Calendar, rather than at the end of the meeting. The Board agreed to do so.
PUBLIC INPUT
There were no members of the public who wished to speak at this time.
CONSENT CALENDAR
Business Service Agreements
1. Stillwater Sciences, CH2M Hill and MHW Americas - Hydroelectric Environmental Studies and Quality Assurance Review of Studies (Carmen Smith Relicensing) - $3,000,000
3. US Filter C/O Wm. H. Reilly Co. - Hayden Bridge - Water Division - $339,700
Commissioner Menegat pulled Item 1.
Commissioner Menegat, seconded by Commissioner Farmer, moved approval of the Consent Calendar, with the exception of the first item. The motion passed unanimously, 4:0.
ITEMS REMOVED FROM CONSENT CALENDAR
General Manager Randy Berggren indicated that information on the item was contained in the memorandum to the Board entitled Consent Calendar Item - Hydroelectric Environmental Studies and Quality Assurance Review of Studies - Carmen Smith Relicensing - Project #21753. He noted the list of reasons staff felt the item was an appropriate expenditure at the bottom of the first page.
Commissioner Menegat explained that he pulled the item because it had a large price tag. He said he reviewed the letter from Mr. Berggren and the backgrounder and wanted to commend staff on the good work they had done to inform the Board on the item.
Commissioner Menegat moved approval of Item 1 on the Consent Calendar. Commissioner Anderson provided the second. The motion passed unanimously, 4:0.
ITEMS FROM BOARD MEMBERS
Commissioner Anderson noted that she would be present for the meeting scheduled for September 7, a meeting she previously thought she would need to be excused from.
Commissioner Farmer said he would be speaking on August 18 before a neighborhood group. He related that Lance Robertson, EWEB's External Communication Coordinator, had put together some talking points for him.
CORRESPONDENCE
Mr. Berggren reported the following:
BOARD AGENDAS
Mr. Berggren reviewed the Eugene Water & Electric Board Agenda Report dated August 17, 2004. He noted that staff was beginning to gather the background information regarding the power generation plant proposed to be developed in Coburg. He reviewed the agenda for the meeting to be held on September 7.
LOW INCOME FUNDING
Debra Smith, Assistant to the General Manager, said the backgrounder entitled Re-allocation of Low Income Funding described what was proposed. She explained that Senior Financial/Rate Analyst John Yanov had a week to take the Board's discussion and draft the rate work. She noted that EWEB's Customer Relations Manager Chuck Dalton was present to represent the residential customers and Steve Mangan, EWEB's Key Account Manager, was present to represent the business accounts.
Commissioner Menegat commented that concerns had been expressed in earlier discussions regarding business accounts paying a portion of the low income energy assistance funding. Noting the concern expressed by commercial customers that they did not use the program, he pointed out that 80 percent of the residential ratepayers did not utilize it either. He suggested the money for the fund come from a 70/30 split between commercial and residential ratepayers. He underscored that EWEB was a community utility and both ratepayers and commercial accounts reap benefits from the assistance provided to low-income customers.
Ms. Smith agreed that residential customers benefitted from the program but averred that business customers did not.
Fiscal Services Supervisor Dick Varner explained that some customers would pay significantly more under the Senate Bill (SB) 1149 methodology that was recently passed.
Commissioner Anderson asked how much an average residential customer paid for the low income assistance program. Mr. Varner replied that resident customers contributed $818,000 annually, or approximately $12 apiece.
Commissioner Anderson suggested an 80/20 split between commercial and residential customers. She opined that commercial customers do bear some responsibility as they hire and fire people and place them in the position which necessitates assistance on their utility bills.
Commissioner Farmer did not think the percentages needed to be changed. He expressed concern regarding a perceived inequity between the two. He recommended placing a cap on the amount paid into the program. He remarked that a residential customer paid $1 a month, while the commercial customers paid a quarter of a million. Mr. Mangan noted that this was the perception of the commercial customers.
President Lanning was not convinced that SB 1149 should be the anchor. He thought the ratio should be set on a percentage basis and that it should be subject to change. He thought any relief at all would be important to large commercial customers. He noted Commissioner Farmer's proposal for capping the amounts, but was uncertain that was the appropriate direction to take. He was inclined to support an 80/20 split.
Commissioner Farmer did not understand the justification for the 80/20 split. He reiterated his support for creation of a cap. Mr. Berggren commented that a cap would create a level of administrative complexity for staff.
Mr. Varner explained that a cap created tricky rate and implementation issues. He thought it would be simpler to say that no customer class should pay more than "X" amount.
Mr. Mangan said commercial contracts 'A' and 'B' were currently renegotiating with EWEB and pressuring EWEB to change the formula for low income assistance funding. He related that they were anticipating "good news" from the present discussion.
Mr. Varner said Weyerhaeuser would pay, using the SB 1149 cap, $6,000 per meter and had five meters. He stated that EWEB had been using a program that was approximately twice that amount.
Mr. Dalton related that he had witnessed the entire political process that went into the writing of SB 1149. He felt the numbers were arrived at in an arbitrary manner. He said the debate centered on how to have a safety net without raising taxes and the bill was the "sausage" that came out of the multi-faceted debate. Ms. Smith added that commercial and industrial customers "drove" the legislation.
Mr. Dalton commented that the $10 million they ended up with was a stagnant number and did not take into account the variables such as shifts in the population, etc. He felt the number EWEB was currently working with was reasonable.
Mr. Mangan stated that commercial customers were looking for an even fixed number. He said an 80/20 split would increase the amount those customers paid.
In response to a question from Commissioner Farmer, Mr. Varner explained that the only way there would be more money would be if there were significantly more retail sales. Commissioner Farmer asked if excess money could be placed into the General Fund. Mr. Varner replied that this could only happen with dramatically increased commercial use.
Ms. Smith felt staff was reacting from concern for the industrial customers. She noted that there would be plenty of opportunity to make changes in the formula, adding that the current method was not the preferred method of the general counsel. She suggested that low income assistance funding should be considered a part of the regular budget.
Commissioner Menegat said he would be comfortable with the 80/20 split. Mr. Varner responded that he would prepare the rate proposal with an 80/20 split built into it.
INTEGRATED ELECTRIC RESOURCE PLAN WORK GROUP REPORT
Brenda Sirois, Resource Planning Analyst, provided a power point presentation on the findings and recommendations of the IERP working group.
President Lanning stated that, while he understood how the data set was arrived at, he did not understand how important this information was to the Board. Mr. Berggren averred it would present the diversity of views held by the citizen group to the Board. Ms. Sirois said the main points were that there were a lot of areas where the group agreed and there were areas about which the group had divergent views. She related that staff hoped to glean several options for resource portfolios for the Board to consider. President Lanning responded that he thought it had been helpful to go through the process within the context of the working group, but he was uncertain how the detailed background information would aid the present discussion.
Energy Resource Project Manager Jim Maloney commented that he saw in the last statements made by the group that people's support for some things was contingent upon others. He said it was staff's job to get a general sense of the group's results and the Board's response to it and then to craft proposals for portfolio options.
Commissioner Anderson asked what made the costs go down in the 23rd year, as projected by staff. Mr. Maloney replied that there was nothing systematic to that number. He said there was likelihood that for some resources there was a debt issue and at some point the debt would retire.
Commissioner Farmer asked if, when assuming costs, whether the group took into consideration the potential building or buying of facilities. Mr. Maloney replied that one fundamental assumption was that EWEB was not building.
Commissioner Farmer asked, regarding the findings and recommendations on page 13 of the power point presentation, if there was adequate capacity in the wind resources to cover load growth not met by DSM. Mr. Maloney affirmed that, according to the Northwest Power Planning Council (NWPPC) there was capacity. He added that there was some question on how the variability of wind could be integrated.
Mr. Maloney noted that the working group only had six weeks and staff had spent a great deal of time teaching them about power resources. As such, he said the group had primarily focused on the question of how the resource gap would be filled. He iterated that the utility had ongoing issues with firming up secondary power resources and crafting strategies to address BPA inconsistencies. He discussed the phased approach staff wished the Board to consider, from page 16 of the power point presentation.
Regarding the alternative strategies, Mr. Maloney underscored the possibility that EWEB might not get the same power allocation from the BPA in 2011 that it currently received.
President Lanning requested that staff provide a "sense of scale" of the uncertainties that EWEB was facing in the future.
Commissioner Anderson asked if all of the alternatives presented to the Board met the one percent per year increase in renewable energy resources overall. Mr. Maloney replied that it depended on how it was interpreted. He averred that, on average, the utility did fulfill its goal for the increases.
Scott Spettel, Power Management and Planning Manager, noted that the one percent goal was a mandate that came from the old IERP process. He recommended, should the Board want to continue this rate of growth, it should direct staff to continue this. He pointed out that EWEB had substantial load loss when the Weyerhaeuser number one machine had been turned off as it provided 15 megawatts, or the power to meet a one percent annual load growth for five years.
Commissioner Anderson did not feel the one percent number to be "sacred." She underscored the importance of ensuring that the utility decreased its dependence on non-renewable energy resources.
President Lanning thought it good to call that specific issue out. He felt that though it was well-articulated to the IERP working group that they were purely advisory, and though they were not asked that specific question their input would not be disregarded. He said he was operating on the assumption that staff would take the "richness of the feedback" and be able to extrapolate from it the position of the working group.
Mr. Spettel said the intent was to formulate a schedule of how much energy and from what resource and for how long.
Commissioner Farmer commented that if the utility was out buying fuel to generate power, the utility could buy less fuel and more renewables to "go long."
Commissioner Anderson indicated that she did not like the Alternative A Portfolio.
Commissioner Farmer commented that the concerns with BPA lay with supply and volatility and questioned whether volatility had been considered when looking at wind, solar, and natural gas power generation. Mr. Maloney responded that there was some data for wind in the northwest. He explained that an assumed capacity factor was used and then randomness applied on top of this, similar to how the non-firm hydroelectric power was modeled. He said even EWEB's hydroelectric projects were modeled as if they had the same uncertainties as the "Slice" product from the BPA. Commissioner Farmer expressed concern that the utility could end up trading one volatility for another.
Commissioner Farmer said the Oregon Water Commission had indicated that snow on top of the Cascades took 15 years to get to Eugene. He asked if similar work had been done for the Columbia Basin system. Mr. Maloney replied that the McKenzie area and the lava aquifer underneath it was one of only two aquifers like it west of the Rockies. He stated that the Columbia and Snake River systems were driven by the snowpacks of this year and the previous year.
President Lanning adjourned the meeting at 9:29 p.m.
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Assistant Secretary President