EUGENE WATER & ELECTRIC BOARD
SPECIAL BOARD MEETING
EWEB BOARD ROOM
JANUARY 6, 2005
6:30 P.M.
Board Members present: Ron Farmer, Sandra Bishop, Mel Menegat, John Simpson, and Patrick Lanning
Others present: Randy Berggren, Tom Buckhouse, Jim Origliosso, Dick Varner, Debra Smith, Marty Douglass and Krista Hince of the EWEB staff.
President Farmer convened the Special Board Meeting of the Eugene Water & Electric Board (EWEB).
AGENDA CHECK
There were no changes to the agenda.
PUBLIC INPUT
There was no one present wishing to speak
APPROVAL OF CONSENT CALENDAR
There were no items on the Consent Calendar for January 6, 2005.
ITEMS FROM BOARD MEMBERS
There were no items from Board members.
CORRESPONDENCE
There was no correspondence.
BOARD AGENDAS
There was no discussion.
REQUEST FOR LEAVE OF ABSENCE FROM COMMISSIONER LANNING
Commissioner Lanning related that Lane Community College (LCC) was facing a large budget cut. He the need to address a third consecutive biennium of budget cuts in his role as Interim Associate Vice President for Instruction at LCC would not leave him adequate time to prepare for and participate in Board activities. He distributed a letter requesting a leave of absence from Board duties until April 2005. He realized that resignation from the Board was an option but preferred, because of the short-term nature of the situation, to remain if the rest of the Board was agreeable. He invited questions and comments from other Board members.
In response to a question from President Farmer, Mr. Berggren said there were no specific provisions for a leave of absence but there was some precedence for a Commissioner to request excused absences. He said an excused absence would provide the opportunity for Commissioner Lanning to return to his position on the Board without conflict with the provision in the Bylaws relating to unexcused absences. He felt it was appropriate for the Board to grant Commissioner Lanning an excused absence predicted to continue into April 2005.
Commissioner Menegat commented that Commissioner Lanning was a valuable asset to EWEB and it was appropriate to grant him an excused absence in order to retain his background historical knowledge, and sound judgment on the Board.
Vice President Bishop said the Board was developing a good working relationship among members and she was in favor of granting Commissioner Lanning’s request for a leave of absence. She said that it took a long time for a new Commissioner to understand the many issues with which the Board dealt and it was worth it to support Commissioner Lanning’s need for leave. She asked that Commissioner Lanning make an effort to attend any Board retreats that might occur during his leave. She said the need for Board members to balance the demands of their jobs with those of Board activities could raise the question of a stipend for utility Commissioners.
Commissioner Simpson said he preferred a leave of absence to resignation from the Board. He was concerned that the leave request might be for six months and was relieved to see it was for a shorter period of time, although four months was at the outer limits of what he considered comfortable. He was willing to support the request and agreed with previous comments regarding participation in Board retreats when possible and Commissioner Lanning’s value to the Board.
President Farmer concurred that a four-month absence was the maximum time he felt comfortable approving and expressed concern that the leave could establish a dangerous precedent for representation in the community. His decision was based on Commissioner Lanning’s level of experience and he would be unlikely to support such a request from a new Commissioner. He raised the issue of tie votes and said a plan was necessary to avoid holding the community hostage to inaction as a result of a tie vote. He questioned whether a member could return on a selective basis to deal with a tie vote.
Commissioner Lanning said that if he had an excused leave he would be willing to participate in issues where there had been or was likely to be a tie vote.
General Manager Randy Berggren remarked that an excused absence, rather than a leave of absence, would allow Commissioner Lanning to participate in Board activities when critical issues arose.
Vice President Bishop pointed out that typically a tie vote resulted in failure of the action. She suggested that if it was the intent of the Board to request Commissioner Lanning’s participation in the event of a tie there should be clear agreement among Board members that the action is not considered final until all five commissioners had participated. She asked staff to research how that could be accomplished under the Board’s operating procedures
Assistant to the General Manager Debra Smith pointed out that the Board’s bylaws spoke to EWEB Rules of Order, not Roberts Rules of Order, and the Board could modify the EWEB Rules of Order to include provisions to address a tie vote consistent with the earlier discussion. Mr. Berggren said he would provide the Board with information on proposed modifications.
Vice President Bishop said that an alternative approach was to request Commissioner Lanning’s participation in a meeting when there was a possibility of a tie vote on an action item or when the purchase or sale of property by EWEB or changes to rates or system development charges was to be acted upon.
President Farmer asked Mr. Berggren to determine the validity of a commissioner’s selective participation in Board activities while on an excused leave of absence
Commissioner Lanning said that he had initially framed his request as a leave of absence but after listening to the discussion he felt an excused absence was more appropriate to the situation.
Vice President Bishop moved to allow Commissioner Lanning to enter into a four month period from January 6 to April 30, 2005, in which he is allowed to be excused from attending EWEB Board meetings as needed to satisfy his job requirements during the next four months.
Commissioner Menegat asked if the motion as stated would grant the excuse for the entire period or allow Commissioner Lanning at some future time to be excused from a meeting if he requested.
Vice President Bishop said her intent was to allow Commissioner Lanning to request the specific meetings that he would need to be excused from.
President Farmer said that the options included granting a blanket excusal through the end of April 2005 or providing the opportunity to ask for an excused absence for each and every meeting as specified in the motion. He preferred to grant the leave request for the entire period.
Vice President Bishop said that she would restate her earlier motion
Vice President Bishop, seconded by Commissioner Menegat, moved that Commissioner Lanning be excused from attending EWEB Board meeting from the present until April 30, 2005, with the understanding that he would take that period of time to attend to professional business.
Commissioner Simpson asked for clarification that the motion would allow Commissioner Lanning to participate in any Board meeting of his choice during that period. Mr. Berggren replied that if a Commissioner was excused he or she could still attend a meeting.
The motion passed unanimously, 4:0; Commissioner Lanning abstaining
BOARD GOVERNANCE – GENERAL MANAGER 2005 GOALS – COMMISSIONER PRIORITY ISSUES
President Farmer listed the general issue areas identified by the Board in previous discussions:
Financial stability (including Carmen Smith)
President Farmer asked the Board to discuss, arrive at consensus and provide direction to the General Manager on the following items related to financial stability:
Mr. Berggren observed that while he understood the intent, Item 3 (Maintain existing bond ratings) was not within his control. He felt that Item 8 (Develop defined plan for the utility’s long-term energy future, including a comparison of long-term energy costs) was under the wrong goal as the Board had already identified the IERP as a separate and independent issue. He felt he had a good sense of what the Board was suggesting with the list and could develop some proposals and milestone of a more formal, scenario-based financial plan for the progression over the next five years. He provided examples of “good” and “bad” General Manager goals and emphasized the characteristics of a “good” goal:
Mr. Berggren said the Board’s financial goal had become clearer and he was prepared to provide more tangible information to help codify expectations at the February 2005 meeting.
Commissioner Lanning agreed that it was important for the Board to provide clarity and for Mr. Berggren to provide feedback that would assure the Board that he understood its intent and direction.
President Farmer said that once there was agreement on the goals Mr. Berggren would develop action steps for the Board to confirm. He said that Item 3 was more of a measurement of whether the General Manager maintained financial stability than a goal itself, but he thought it was the General Manager’s responsibility to do everything in his power to maintain the bond ratings.
Mr. Berggren said the context within which the bonding community evaluated utilities had become much more “risk adverse” and one of the primary indications of whether a utility was given the benefit of the doubt on bond rating was its willingness to raise rates to create financial solvency. He said that he could recommend a raise in rates but if the Board did not approve it he could lose a bond rating; that was why it was important that goals acknowledge the roles of the Board and the General Manager in achieving mutual success.
Commissioner Simpson said he had proposed to maintain existing bond ratings because it seemed measurable and less specific wording, such as maintaining an environment that allowed for the highest possible ratings, would be less easy to measure.
President Farmer said his intent in suggesting Item 6 (Measure progress in meeting income statement and balance sheet benchmark financial targets) was to make sure that targets were met and he hoped the General Manager’s action plan would set forth steps that would assure the bond ratings were maintained by meeting financial standards.
Commissioner Lanning asked the Board to consider removing Item 3 from the list if Item 6 was included.
Commissioner Simpson said he was agreeable to that suggestion.
Vice President Bishop agreed that item 8 did not belong under the category of financial stability.
Commissioner Lanning commented that the Board had agreed to identify the top three goals and removing Item 8 (Develop defined plan for the utility’s long-term energy future, including a comparison of long-term energy costs) would mean the IERP was not among them.
Ms. Smith pointed out the statement under accountability of the General Manager that the Board would view the General Manager’s performance as identical to organizational performance so that organizational accomplishment of Board-stated results would be viewed as successful General Manager performance. She said that Mr. Berggren was accountable for the organization, including the core utility business, and the issue was where he was best leveraged. She said that IERP implementation was more the direct responsibility of staff under the manager’s direction.
President Farmer remarked that the goals under discussion were not EWEB’s goals, but goals for the General Manager to provide focus in two or three areas for his efforts during the next year to improve the organization.
McKenzie-Willamette Medical Center/Triad property transaction
In response to a request from President Farmer, Mr. Berggren identified two distinct areas of work related to the McKenzie-Willamette/Triad property transaction. He said that acquisition of an alternate site and beginning to identify the costs of relocation of a combined facility, based on previous Board discussion and direction, was one area of activity in 2005 and the second was to proceed with the Board direction to negotiate an agreement in principle relating to whether McKenzie-Willamette was willing to pay the price necessary to affect that relocation. His understanding was to negotiate with McKenzie-Willamette as the primary potential funding source for a relocation, execute the terms and conditions of an initial agreement that would provide firm estimates, determine whether a sale was feasible, if so to affect a sale and if not to exit negotiations and determine an alternative for funding relocation of EWEB’s facilities.
Commissioner Menegat said the issue of McKenzie-Willamette was not one of his primary concerns. His understanding and expectations were as described by Mr. Berggren to pursue a conceptual agreement.
Vice President Bishop said she hoped to see action steps identified instead of goals and was having a difficult time connect with the process. She said that McKenzie-Willamette was “business as usual” and not a goal for her.
Commissioner Lanning concurred with Vice President Bishop’s remarks and agreed with the steps Mr. Berggren had articulated.
Commissioner Simpson also agreed with Vice President Bishop’s characterization of McKenzie-Willamette property acquisition as “business as usual” and felt some confusion about how to proceed if the Board had not firmly decided whether to maintain operations and headquarters together or split functions between the existing and a new site. He hoped that the 30 percent design work would provide cost estimates of both options.
President Farmer stated that he saw the McKenzie-Willamette transaction as a major issue, not “business as usual” and felt that were also the public’s perception. He said from his perspective it was one of EWEB’s top two issues, along with rates. He concurred with the action steps described by Mr. Berggren as consistent with prior Board direction.
Vice President Bishop said that if the McKenzie-Willamette transaction was a goal it needed to be in a larger context related to long-term planning and inclusion in the master plan. She could support a General Manager goal that addressed planning instead of a specific transaction.
President Farmer said the purpose was to move from vague goals to ones that were focused on specific accomplishments related to the general manager instead of the utility. He felt it was important to include the McKenzie-Willamette transaction as a goal.
Commissioner Simpson said he would like to see the master plan development process re-engaged. He said it was difficult to determine how individual decisions related to a property transaction fitted into the larger picture and benefited EWEB’s long-term interest.
Commissioner Menegat commented that some Board actions had made decisions for commissioners, such as indicating to Triad that the entire property was for sale and directing the general manager to negotiate a conceptual agreement and the Board at this point was primarily looking at a price instead of exploring other planning options. He saw the property transaction as one of the major issues confronting EWEB and agreed with President Farmer that the public’s perception was the same. He was not certain that it was necessary to specify negotiation or due diligence as goals.
Commissioner Simpson asked what actions were not already in progress and would require Mr. Berggren to spend significant time to initiate. Mr. Berggren said that due diligence and the 30 percent design process were moving forward and his main focus was development of a conceptual contract between McKenzie-Willamette and EWEB using the authority he had been granted by the Board.
Vice President Bishop remarked that a special goal related to negotiation with Triad might not be relevant at some point and the goal could be framed around operational needs and future site requirements for EWEB and included, but was not limited to, current negotiations. She was not comfortable with a goal that was driven by an outside interest that could change.
President Farmer said his expectation was that Mr. Berggren would come to the board with an agreement in principle, not a sales agreement, because the transaction would not proceed if due diligence determined it was not in EWEB’s best interest. He was comfortable with Mr. Berggren’s articulation of his work areas.
Commissioner Simpson agreed that the transaction should be focused on meeting EWEB’s needs and not as a result of external interests. He was not certain that the current Board had fully examined all aspects of the issue.
President Farmer suggested establishing a goal on the issue with language Mr. Berggren had used to describe his work areas and asking him to return to the Board with action steps that would be taken to achieve the Board’s direction.
Mr. Berggren recommended that the goal could be to identify and make all reasonable efforts to acquire an alternate site. He said he would provide the Board with a written proposal identifying the goal and action steps.
Commissioner Menegat said that currently EWEB was negotiating with McKenzie-Willamette on the sale of 22 acres that included headquarters and operations sites and if that potential buyer were no longer interested other questions would be raised. He said part of the goal should be to evaluate some of the issues that had been raised regarding the sale, such as collocation, and explore options for funding relocation.
Communication with the public (including customer service)
Commissioner Simpson said this area was his first priority and included improving and encouraging clearer communication with the public, not only at Board meetings. He felt the Board needed to maintain a higher degree of awareness and enhance public communication through EWEB’s website by providing better information about the Board’s current issues and strategies. He said a personal goal was public education through creation of a “citizen’s utility academy” where members of the public could learn about utility operations. He said that academy might be a longer range goal than 2005 and could draw on the City’s experience with a similar effort related to the Police Department.
Commissioner Simpson identified promoting and encouraging two-way communication with the public as a way to foster better community relations and defusing some of the negative reactions by communicating things like rate increases at a much earlier point in the process.
Commissioner Lanning commended Commissioner Simpson for articulating his issue and asked how the Board could measure whether the general manager had been successful.
Commissioner Simpson replied that success could include motivating the public affairs staff to enhance dissemination of information in a form that was publicly suitable.
Vice President Bishop commented that enhanced communications should result in fewer customer complaints.
Mr. Berggren suggested that a determination of success in 2005 could be whether he was more proactive and aggressive in identifying means, tools, opportunities, strategies and mechanisms for sharing information and educating the community. He said that enhancing two-way communication could include thinking differently about how EWEB encouraged and received public input.
Public Affairs Manager Marty Douglass added that there could be other ways to design the forums for public input.
Commissioner Simpson used EWEB’s response to comments written on the backs of utility bills by customers as an example of enhancing two-way communication by letting the Board know how and when responses were provided and perhaps sharing those responses with the Board. He was interested in obtaining public input in a manner more conversational that the limited public testimony portion that Board meetings allowed.
President Farmer said that communication was an important issue and he did not rate it higher because of the difficulty in quantifying success in improving communications. He preferred to focus improvement efforts on identifying the core substantive issues and making sure that the public understood those issues. He gave the reason for rate increases and the site issue as examples.
Commissioner Lanning said communication was one of his top three issues because of the need for strategic communication plans for substantive issues such as relocation and rates. He commented that an action step could be for the Board to be more actively engaged in the communication plan on some key issues. He remarked that the more web-based EWEB’s communications with its customer’s base, the more web-based customers’ communications would become.
Commissioner Menegat commented that extensive work had occurred and often decisions had been made at the point of public testimony on an issue, which was frustrating to those testifying. He pointed to the Leaburg Dam construction project, where staff interaction with residents had defused the initial negative reactions, as a communications success story. He said it would be difficult to address all of the complaints regarding communications, some of which were minor.
Commissioner Lanning stated that developing specific communication tools was the responsibility of staff and they did an excellent job. He asked that issues likely to be highly politically charged be proactively identified and information to the community driven by EWEB. He said the Board could direct staff to develop strategic communication plans around specific key issues.
President Farmer suggested the goal could be that the general manager identifies key issues the utility would face in 2005 and assures that an effective communication plan was in place to educate the public about those issues. He saw communications as having two main branches: one branch would be a communication message that continuously reinforces the utility’s core values; the other branch was a communications plan to educate the public about specific key or controversial issues. He felt the latter branch was more appropriately a General Manager goal.
Mr. Berggren said that educating and communicating with the public had been a prevailing theme for many years and the difficulty was not in identifying the issues but in finding the tools and means to attract the interests of 77,000 ratepayers when the mass communication media was focused on “sound bites” instead of fully and accurately conveying information. He urged the Board to be realistic in selecting goals and measurements related to communications.
Commissioner Lanning offered direction from a federal agency to clear-cut an area as an example of an issue that required a proactive plan to communicate that information prior to taking action.
President Farmer said he did not see Mr. Berggren competing with the mass communication media but rather utilizing them as tools to get the message out. Mr. Berggren replied that he was willing to accept any goals and measurements the Board chose to impose but it would be challenging to measure the success of communication goals.
Commissioner Lanning said that timely, regular updates on power outage restoration estimates were another example of communications.
At President Farmer’s request Ms. Smith summarized the discussion on communication goals:
Vice President Bishop said the key was identifying critical issues in advance and proactively informing the public. She expressed appreciation for Commissioner Simpson’s emphasis on and knowledge of web-based communication, which was an area where she felt EWEB could greatly improve customer communication tools.
Ms. Smith said that staff had developed internally a process to collect and analyze information to better understand customer expectations.
President Farmer asked Ms. Smith to compile the results of the goal development discussion for distribution to Board members as soon as possible. He asked Mr. Berggren to begin developing action steps to address the goals. He said that the Board would consider how to weight the goals using a matrix process in order to calculate the overall rating.
Commissioner Simpson asked if the goals were limited to the three issue areas already discussed or would the three remaining issues of IERP implementation, employee trust/relations, and core utility business be discussed at a future meeting. President Farmer said he understood that goals would be established under the top three issue areas and while the General Manager would be expected to make progress on the other issues he would not be rated on them.
Vice President Bishop pointed out that the General Manager had four goals in 2003 and five goals in 2004. She was concerned if only three goals were established in 2005 and felt that it was vital to establish goals related to employee relations and internal operations of the utility.
President Farmer said he was not opposed to including a fourth goal if there was Board consensus on what that should be.
Commissioner Simpson said it would be difficult to establish and quantify a goal around the issue of employee relations. He suggested the Board could encourage Mr. Berggren to address employee relations rather than establishing it as a formal goal.
Ms. Smith pointed out that employee relations were still one of the four strategic goals for the utility and the Board would receive regular reports on progress.
Vice President Bishop said that her concept was that a goal was an opportunity to overtly express that the management and Board continued to value employees.
Commissioner Menegat agreed that employee relations were important but felt that Mr. Berggren was already addressing the issue and a formal goal was not necessary. He was comfortable with the goals already established.
President Farmer adjourned the meeting at 9 p.m.
_____________ ______________________________________
Assistant Secretary President