Vice President Bishop expressed appreciation for the memorandum on the use of temporary services at EWEB. She said it did not allay her concerns, though she found it informative. She still had questions in her mind regarding the necessity and the value of hiring such workers. She thought the Commissioners might want to consider whether or not it wanted to put a policy in place governing contracts with temporary services.           

Vice President Bishop reported that she and Governmental Affairs Coordinator Deborrah Brewer had attended Eugene City Mayor Kitty Piercy’s initial meeting on sustainability. She estimated that 60 to 70 people were in attendance and said they had split into smaller groups for a brainstorming session. She related that the groups had been asked who should be appointed to a 15-person task force. She had recommended that someone from EWEB be appointed and nominated Jim Maloney. She noted that Deborah Brewer had nominated her (Vice President Bishop).

Vice President Bishop voiced her support for a discussion of a possible contribution to BRING Recycling. She pointed out that she returned her manila envelopes and asked other Commissioners to do so as well.

Commissioner Simpson echoed support for visiting the BRING request at the Board level.

Commissioner Simpson reported that the last meeting of the McKenzie Watershed Council (MWC) featured a presentation regarding riparian management in the McKenzie Watershed by representatives of the United States Forest Service (USFS), Oregon Department of Forestry, and the East Lane Soil and Water Conservation District. Additionally, he said, there had been a report on the Willamette River restoration priorities from the Confluence Steering Committee as well as a presentation from Leaburg Hatchery staff. The latter was in regard to its “Down by the Riverside Project” which allowed people to go down by the McKenzie River and observe a salmon spawning channel.

President Farmer related that he had called BRING Recycling in regard to the request for money. He said he had asked for a list of the donors and how much they had paid.

Mr. Berggren provided an overview of the Eugene Water & Electric Board: Board Agenda Report; April19, 2005.  He asked the Board for input on the level of priority to place on the discussion of the use of temporary employment agencies as the mechanism to hire retired employees.

President Farmer indicated that he had no objection to placing this item on the agenda.

Commissioner Simpson indicated he was ambivalent about the issue.

Commissioner Menegat said he did not hold a position on it.

President Farmer recommended that staff go ahead and put the item in the queue. He did not feel it was urgent, however.

Vice President Bishop suggested the Board discuss it before it got “too far into the next budget cycle.”

Mr. Berggren reviewed the future agendas.

Mid-term Trader Bert Dunn introduced himself and provided a power point presentation entitled EWEB Generation Forecasting Status and Methods, copies of which were provided to everyone present.

Mr. Dunn declared the largest challenge in his job to be the conversion of snow and stream flow information into monthly generation forecasts for EWEB, particularly since the resource mix had become more sophisticated when the utility became a Slice customer of the BPA. He outlined the hydroelectric resources with the aid of a map. He stated that local basins were down near the 60 percent level in snow, whereas the Canadian basins were near normal. He called this the utility’s “saving grace.” He said the stream flows were forecasted to be 60 to 80 percent of normal for the spring and summer.

In response to a question from Commissioner Simpson, Mr. Dunn clarified that the uncertainty of the summer forecast was characteristic of every year. 

Mr. Dunn reviewed the third party materials on precipitation and stream flows that he used in his forecasting from entities such as the National Weather Service and the Natural Resources Conservation Service. He said the area most focused on was near The Dalles, Oregon. He briefly highlighted the elements taken into consideration in the generation calculations: storage flows minus bypass flows, resulting in the net monthly flow, multiplied by the conversion factor and the availability factor, resulting in the determination of the monthly generation.

Mr. Dunn then reviewed the expected market positions for 2005. He said EWEB tended to be “structurally long” in sellers in the market place. He stated that July, predicted to be long, would predicate either selling or buying a “put” option, which would provide the right to sell at a fixed price. He explained that the utility needed to hedge this in order to protect itself from falling prices. Conversely, he added, August looked to be a “short” position in which the utility should buy power or buys a “call” option for power in order to close the utility’s position to protect against rising prices. He stressed that these were the best guesses at market positions and, because they could always be higher or lower, he was frequently refining the numbers.

President Farmer asked how far this number was off budget. Mr. Dunn responded that the positions reflected the $82 million contribution margin and what had happened through the year thus far. He said if any of the numbers changed or there was a change in the market prices applied to the numbers, the $82 million figure would change. He added that hedging sought to stabilize that number.

President Farmer asked, given that the snow on top of the Cascades would not likely reach this area for fifteen years, why the current year’s snow data was so important. Mr. Dunn replied that while this was accurate for the higher elevations, for the lower elevations precipitation had a more instantaneous impact on the river.

In response to a question from Commission Simpson, Mr. Dunn stated that he received regional forecast updates weekly and tried to respond to any significant changes immediately.

Vice President Bishop asked if it was possible to make those same sorts of calculations for wind power. Mr. Dunn explained that it was not possible to forecast wind power because it appeared to be random. He said EWEB had integration contracts with its suppliers that provided some certainty and there was never more than five megawatts of “surprise.”

Megan Capper explained that she worked as a power risk analyst in the fiscal services department. She outlined the typical trading operations construct, focusing in particular on the fiscal services, called the “middle office.” She underscored that her role primarily involved providing checks and balances for power trading by ensuring that the assumptions were prudent and consistent. She said her office attempted to identify risks as well.

In response to a question from Vice President Bishop, Ms. Capper stated that no temporary service employees worked in that office.

President Farmer asked how the power generation models were generated and how their validity was tested. Ms. Capper replied that staff was constantly testing them and were constantly looking at the outcomes and attempting to refine them as it attained more information through external sources.

Mr. Berggren commented that the monthly results from a budget perspective provided a good sense on how well the model was a predictor. He observed that over the course of the last four or five years, staff had come to feel pretty confident in its predictions.

Mr. Dunn pointed out that the BPA had to provide three-month generation forecasts for its Slice product. This served as a valuable calibration tool for EWEB’s models that went out for a couple of years.

President Farmer noted that the recent audit report the Board had received had raised the question of whether the utility had enough oversight assigned to the trading work. Mr. Dunn responded that Fiscal Services Supervisor Dick Varner and Ms. Capper were very effective in their oversight of his work. He averred they were more than checks and balances because they were “partners.”

Mr. Varner related that one person had been “added to the mix” in 2004 whose job it was to take care of all of the confirmation of transactions and evaluations of credit. This freed Ms. Capper up to spend more time in management of the portfolio

In response to a question from President Farmer, Ms. Capper said with more resources she would continue to refine the model and work more to understand the resources.

Vice President Bishop asked how many traders EWEB employed.  Mr. Dunn replied that five or six worked at it in real time and two or three were short-term.

Mr. Berggren remarked that the projection of $82 million for a contribution margin represented a substantial improvement from six weeks earlier.

Vice President Bishop conveyed her appreciation for the work that the traders did. 

EWEB legal counsel Win Calkins reviewed the refinements proposed for the Bylaws.

Mr. Berggren asked how the notation of a special meeting as opposed to a regular meeting had been handled. Ms. Smith replied that the bylaws defined the regular meetings as those being held on the first and third Tuesdays of the month and a special meeting as being called separately from those.

Regarding Article VI Section 1, Commissioner Simpson suggested that the words ‘regular and special’ be omitted from the first sentence.

Vice President Bishop said she was unclear as what the Board would use to resolve issues, whether it would be Robert’s Rules of Order or not. Mr. Calkins responded that the Board utilized EWEB Rules of Conduct and the Robert’s Rules of Conduct would be used to resolve procedural issues.

Vice President Bishop asserted that the Board should review EWEB’s rules. Commissioner Simpson responded that he was under the assumption that the Board would do so.

Ms. Smith observed that the EWEB Rules of Conduct had been fashioned after Robert’s Rules of Order. She pointed out that the president’s role was largely procedural and suggested that it would be the president’s responsibility to call in the reference needed should a procedural issue arise.

Mr. Berggren commented that the Board did not often use Robert’s Rules of Order. 

Vice President Bishop thought it odd to include in the bylaws language regarding the Board’s oversight over contracting given that the EWEB purchasing policies could be changed “so easily.”  Mr. Berggren pointed out that it was a policy that indicated limits on his authority and not the specifics of purchasing.

Regarding Article VI, Section 3, President Farmer asked if the words ‘appoint and remove employees’ were the same as hiring and firing said employees. Mr. Berggren replied that he did appoint some employees to positions. Vice President Bishop suggested that the word ‘hire’ be added to the section.

President Farmer questioned the need for such specificity given that Mr. Berggren was hired to run the utility.

Mr. Calkins suggested he add ‘hire and fire’ in front of ‘appoint and remove.’

Commissioner Menegat observed that hiring and firing versus appointment and removal did not represent a great difference in intent.

Regarding Mr. Berggren’s ability to delegate hiring and firing, President Farmer noted that the language indicated that hiring and firing were the General Manager’s exclusive right. Mr. Berggren explained that the intent at the time of the rewrite was to clarify in the bylaws because of difficulties with a prior board. He underscored that exclusivity in the context of the original revision from 1990 was to make clear that the Board did not have this right.

President Farmer did not believe that the Bylaws were clear in this regard. Commissioner Simpson concurred and recommended it be clarified.

Mr. Calkins offered to take a look at it and bring back draft language that would suit the intent of the bylaw.

Continuing, Mr. Calkins reviewed the proposed changes to Sections 2 and 3 of Article VII.

In response to concerns expressed by Commissioner Simpson, Mr. Calkins stated that the Oregon Revised Statute (ORS) referenced at the end of Section 2 had been in effect as written for approximately 25 years and that he did not anticipate that it would change soon. He added that should it change it would be a matter of a simple Bylaw amendment to reflect that change.

Vice President Bishop asked how a member of the public who was worried about the legality of an Executive Session could reference the appropriate statute. Ms. Smith responded that the policy manual would be publicly accessible.

President Farmer remarked that the Board needed to take care not to interpret the law.

Commissioner Simpson noted the omission of the word ‘their’ in the first sentence of the draft language for Section 3.

Commissioner Simpson suggested the words ‘to apply’ be omitted from Section 4 of Article VII. Mr. Berggren did not think this would change the intent of the section.

Moving on, President Farmer recalled that it had been determined that a quorum vote would have to be unanimous as the Board could not vote for something 2:1. Mr. Calkins recommended that language in this regard be added as a subsection to Article VIII.

Vice President Bishop asked if this was from the Charter. Ms. Smith responded that it had to do with the Charter and how the City Council voted. She related that the council would not pass something by a 3:2 vote at its quorum because it did not represent a majority decision.

Mr. Calkins said he would include language that indicated that a majority of the seats on the Board were required to pass a motion.

Mr. Calkins asked the Commissioners to look at the three alternatives proposed for Section 2 of Article X.

Commissioner Menegat said the Board had established that there would be two meetings per month. He questioned the necessity of going into great detail as far as how another meeting could be called. He indicated his preference for the second alternative, in which meetings other than the regular two would be at the call of the General Manager-Secretary or the President of the Board.

Mr. Berggren commented that the Board was in charge and he would not refuse to hold a meeting that the Board called.

Commissioner Lanning agreed with Commissioner Menegat and Mr. Berggren. He underscored that the Board President worked with the General Manager on scheduling and the agendas.

Commissioner Simpson supported adoption of the second alternative.

Vice President Bishop thought that only emergency circumstances would warrant a meeting to be called by two members of the Board.

Mr. Calkins highlighted the change to Section 2 of Article XII.

Commissioner Menegat thought this was a prudent change, as it would cause the Bylaws to be reviewed every two years.

Commissioner Menegat asked that the word “regular” not be stricken from Section 1 of Article VII. There were no objections.

Ms. Smith stated that the process to formalize the Bylaws would begin. She indicated that any discomfort on the part of the Board members with the revised Bylaws would defer action on them at the next meeting.

Commissioner Lanning commented that the presentation on Bylaws could have been presented as information in a backgrounder. He averred that to use the Board’s time more effectively, the focus should be more on discussion and less on review.

• Board Policies

Ms. Smith explained that the first group of Board policies was comprised of those that were already on the books and that had not been deemed to need much in the way of modification. She said the next grouping included policies that needed minor modifications and the last group would require more extensive discussion and review.

Vice President Bishop conveyed her concern that policy number BL6, Board-Staff Working Relationship, might allow staff people to determine the weight of a Board member’s request. Mr. Berggren assured her that no staff person would proceed to do so without explicit approval from the General Manager. President Farmer recommended that it be reworded to address Vice President Bishop’s concern.

Vice President Bishop was also concerned that Item 4 of BL6 lacked a mechanism that brought the information before the Board. She underscored that this was not for the purpose of action.

Commissioner Lanning suggested the policy be pulled for future discussion.

Vice President Bishop pulled policy number SD8, Power Risk Management Policies. At Commissioner Lanning’s request, she clarified that she wanted an explanation as to why the terms ‘expected sales’ were used instead of ‘expected use or need’ and how the safety margin related to the expected need. 

Mr. Berggren suggested that staff discuss the policy individually with Vice President Bishop and see if that would not allay her concerns.

Vice President Bishop recommended addressing her concerns at the present meeting. Ms. Smith responded that this was crossing the line from governance into content. She noted that Mr. Varner was present, but questioned whether the discussion should occur within this context.

Commissioner Menegat underscored that Commissioners were provided the policies for review two weeks earlier with the understanding that staff could address any questions a Commissioner might have. He recalled that the Board was going to come back at this meeting and go through the policies and ratify them unless there were specific content issues.

President Farmer agreed to pull the policy in question.

Commissioner Simpson pointed out that ratification of policies at this meeting did not mean that the policies could not be pulled for future review.

Vice President Bishop retracted her request to pull policy SD8. She said she would “get clarification later.”

Ms. Smith noted that this Power Risk Policy would be brought back before the Board by Mr. Origliosso as part of the Financial Policy discussion.

President Farmer asked to pull policy number SD11, General Compensation Policy. He felt the language was inaccurate because the dollar amounts had not been revised.

Additionally, President Farmer asked that the Board have a discussion in regard to EL1, Financial Controls, as he wanted to manage EWEB by a dollar amount and not by full time equivalent (FTE) employees. He underscored that he did not wish to pull the Policy at this time.

Vice President Bishop indicated she also took issue with the policy, though her concerns lay in the hiring of temporary employees.

Vice President Bishop felt policy number EL2, Purchasing Controls, needed more detail, but that this could be fleshed out at a later date. She also was concerned that it was unclear as to what was meant by managing “excess funds” in policy number EL4, Investment Policy.

Ms. Smith thought some definitional work was perhaps needed. She noted that Assistant Treasurer Cathy Bloom was working to rewrite some of the policies.

Commissioner Menegat moved to ratify the Governance Process Policies including numbers GP2, GP4, GP6, GP9, GP11, GP14, GP15, and GP16; the Strategic Direction Policies including numbers SD1, SD2, SD4, SD5, SD6, SD8, SD9, and SD12; and the Executive Limitations Policies including EL1, EL2, and EL4 and to exclude Board-Staff Linkage Policy number BL6 and Strategic Direction Policy number SD11 from current ratification. Vice President Bishop provided the second. The motion passed unanimously, 5:0.

ITEMS REMOVED FROM CONSENT CALENDAR

There were no items removed from the Consent Calendar.

President Farmer adjourned the meeting at 9:40 p.m.