EUGENE WATER & ELECTRIC BOARD

REGULAR BOARD MEETING

EWEB BOARD ROOM

JULY 5, 2005

7:30 P.M.

                                                                                                                                                           

 

Board Members Present: Ron Farmer, President; Sandra Bishop, Vice President; John Simpson, Commissioners.  Commissioners Mel Menegat and Patrick Lanning were excused. 

 

Others Present: Randy Berggren, Debra Smith, Dick Varner, Jim Wiley, Tom Buckhouse, Roseanna McArthur, Jim Origliosso, Lance Robertson, Matt Northway, Ed Case, Bill Fletcher, Mark Oberle, Laurie Muggy, Jennifer Joule, Jay Bozievich, and Krista Hince of the EWEB staff; Rich Dickman, consultant for Voluntary Employees’ Beneficiary Association (VEBA); members of the public and Ruth Atcherson, minutes recorder for the City of Eugene.

 

President Farmer convened the Regular Board Meeting of the Eugene Water & Electric Board (EWEB). 

 

AGENDA CHECK

 

President Farmer, with agreement from those Commissioners present, changed Agenda Item 10 to Agenda Item 4. He noted for the record that Commissioner Menegat was on vacation and Commissioner Lanning had undergone unplanned surgery.

 

PUBLIC INPUT

 

Neil Mann, 2470 Lawrence Street, spoke about the College Hill Reservoir.  He said the first time he had heard of the proposed fence around the reservoir had been in a very recent EWEB newsletter. He felt such a decision required a slow deliberate process. He averred the property was used daily by people in the neighborhood and that it had been meeting its design objectives since its inception by providing a reservoir for clean water and a recreation site for area neighbors. He listed the wide variety of ways the property was used. He predicted that closing the site would create a dead space in the neighborhood and promote vandalism. He was not convinced that a fence would secure the site, but thought active use of the property served to do so. He accused the Commissioners of “quietly closing” the site without public input.

 

Zack Vishanoff, Patterson Street, thanked the Commissioners for having its public forum on the possibility of building a hospital on the EWEB site. He said the Commissioners were leading by example. He invited the Commissioners to attend an alleged forum on the proposed basketball arena. He alleged that Mayor Kitty Piercy had agreed to hold a public forum on the topic.

 

Mr. Vishanoff provided the Commissioners with information on nanotechnology and copies of his newsletter. 

 

In addition, Mr. Vishanoff asked the Commissioners to explore the possibility of a greenway committee. He encouraged the Commissioners to remain active.

 

APPROVAL OF CONSENT CALENDAR

Minutes

1.      Minutes of the May 17, 2005, Regular Board Meeting and the June 7, 2005, Work Session and Regular Board Meeting.

Business Service Agreements

2.      OBEC Consulting Engineers – Engineering Services for Rehabilitation of Smith Reservoir Intake Cable Car – Electric Division - $8.600

3.      OBEC Consulting Engineers – Walterville Fish Return Channel Review – Electric Division - $22,100

4.      Morris P. Kielty, General Contractor, Inc. – Leaburg Site – Maintenance Shop and Office Building – Electric Division - $471,058

5.      Morse Brothers, Inc. – Walterville Chevrons Project – Electric Division - $112,000

6.      R.W. Beck, Inc. – Economic Consulting – Fiscal Services - $60,000

7.      Johnson HR Consulting Incorporated – 2005 Market Pricing Cycle – Human Resources – Corporate Services Division - $24,400

8.      USDA Forest Service – Implications of Water Management on the McKenzie River Basin – Environmental Management – Corporate Services - $30,000

Land Management

9.      ODOT Beltline and Interstate 5 Interchange – ODOT requests the purchase of EWEB utility corridor property located north of Beltline Road and west of Interstate 5 to facilitate the Interstate 5-Beltline Road Interchange Improvement Project.

10.  Bertelsen Road South of West 11th Avenue – Due to new information from a Wetland Report and time on the market, EWEB property previously declared surplus by the Board at $126,500 has not sold.

Supplemental Resolution – Series 2005 Water Bonds

11.  Resolution No. 0509 - Supplemental Resolution Series 2005 Water Bonds – to obtain interest cost savings.  This Resolution sets out the terms and conditions of the bond’s sale and is the final delegation of authority needed to carry out the transaction.

Public Agency Network (Pan)

12.  As the Executive Operating Authority for PAN, EWEB is responsible for the adoption of an annual operating budget.  Staff is requesting the Board authorize the General Manger to approve the annual budget for the 2005-2006 budget year.

BOARD POLICIES (Ongoing)

13.  Continued Policy approval for your Board Governance Policy Review

·        GP10 Public Input

·        SD11 General Compensation Policy

·        SD13 Real Property Policies

 

Commissioner Simpson pulled Item 1, the minutes from both meetings.

 

Vice President Bishop pulled the Items 3, 4, 5, 11, 12, and 13.

 

President Farmer noted that Item 9 (ODOT Land Management) had been pulled by staff for further research.

 

Vice President Bishop moved approval of Items 2, 6, 7, 8, and 10 in the Consent Calendar.  Commissioner Simpson provided the second.  The motion passed unanimously, 3:0.

 

Vice President Bishop asked that Agenda Item 11 - Items Removed from the Consent Calendar - be presented next on the agenda.  The Board was amenable to this.

 

ITEMS REMOVED FROM THE CONSENT CALENDAR

 

Vice President Bishop indicated that she had pulled Items 4 and 5 (Morris P. Kielty and Morse Bros. Inc., respectively) because they were related to the budget amendment. 

 

            Though she had not pulled Consent Calendar Item 10 (Bertelsen Road South of west 11th Avenue Land Management), Vice President Bishop wished to convey her desire for more information to be printed under the item as it appeared on the agenda. 

 

            Vice President Bishop said she was uncomfortable with the placement of a bond item on the Consent Calendar, as it was under Item 11 (Supplemental Resolution – Series 2005 Water Bonds). She did not have an objection to the bond item; she merely did not want it voted through in this manner.

 

            Vice President Bishop explained that her concerns with Item 12 (Public Agency Network) were the same as concerns with Item 10. She wished to see an explanation that included the cost of the Public Agency Network (PAN) budget that the General Manager would approve.

 

            Vice President Bishop said she pulled Item 13  (Board Policies) because she wished to offer a change in wording for Policy Number GP10, which governed public input at EWEB Board meetings. She offered the following change to paragraph one, third sentence, of the policy:

 

·        Members of the audience wishing to speak fill out a sign-up sheet at the meeting beforehand and are called by the presiding officer to address the Board when this agenda item appears. 

 

            In response to a question from Vice President Bishop regarding Item 3 (OBEC), staff explained that ‘geo-morphogy’ had been a typographical error. The intended word was geo-morphology.

 

            Vice President Bishop asked that the vote on items removed from the Consent Calendar be deferred until after Budget Amendment Nos. 3, 4, 5, and 6 on the Agenda. Commissioner Simpson and President Farmer were amenable to this.

 

            Commissioner Simpson offered the following correction to the minutes from the May 17, 2005, Regular Board Meeting:

 

·        Page 5, the third bullet point under Mr. Damewood’s presentation:  “…require moving the fiber control center and all of the computer systems would be very expensive to move.”

 

Commissioner Simpson offered the following correction to the minutes from the Work Session held on June 7:

 

·        Page 8:  “… He agreed that a temporary employee aside a versus a permanent employee…”

 

Commissioner Simpson noted that Carrie Shaw had been incorrectly referred to as Carry  Shy throughout the Public Input section of the minutes from the Regular Session held on June 7.

 

BUDGET AMENDMENT NOS. 3, 4, 5, AND 6

 

Treasurer Jim Origliosso explained that should a projected expenditure increase by 20 percent it was required to come before the Board as an action item pursuant to Board policy. He outlined the four items that had exceeded their respective budgets, as follows:

 

Budget Amendment No. 3: For the Leaburg maintenance shop and office facility; originally budgeted for $435,000. The scope had changed because a decision had been made to co-locate a telecommunications facility with the shop facility, adding $70,000 to the cost. Bids received indicated a substantial increase in building materials and subsequently the total of the budget amendment was $170,000. Funds were being allocated from unspent telecommunications bond proceeds previously unbudgeted for this year, as well as the UHF microwave job and the Trailbridge capital improvement which were both running under budget.

Commissioner Simpson asked if the telecommunication room had not been part of the original plan. Mr. Origliosso explained that the 1998 bonds had included $15 million to construct a fiber network and the network had cost substantially less than that and some of the bonds had been paid off early. He said money had been held out for several related projects, one of which was the work to be done for utility purposes only to extend the fiber network into the McKenzie River Valley. However, he stated that the County had engaged EWEB in a joint venture for fiber facilities and the remaining bond proceeds were being used to fund various small fiber projects within the definition of the EWEB fiber network. 

 

President Farmer asked Mr. Origliosso to clarify whether the room project had been part of the original plans. Mr. Origliosso replied that it was a new project altogether. 

 

Vice President Bishop asked if having two years elapse between a project’s plan and its execution was normal. Mr. Origliosso responded that it was consistent, though it might not be normal. 

 

            President Farmer asked if it was really the increase in costs that drove the budget amendment or was it due to the telecommunications room. Mr. Origliosso reiterated that the budget amendment included $70,000 due to the change in scope of the project and $100,000 due to the increase in material costs. 

 

Senor Water Engineer Jay Bozievich said the original intent was to build a separate building for the telecommunications facility, but the building had a covered area that was outside the footprint of the shop that was easily utilizable. He underscored that this was less expensive than the building that was part of the original master plan for the site. He attributed some of the material costs to requirements set forth by the State Historical Preservation Office (SHPO) as the original building had some historical significance. 

 

In response to a question from Vice President Bishop, Mr. Bozievich stated that staff likely did not adequately adjust material costs for inflation in the year the project was delayed. He thought some of the materials had increased in cost by 20 percent. 

 

In response to a question from President Farmer, Electric Division Director Jim Wiley indicated that the Trailbridge project was not done, but it was ahead of schedule. He noted that some bids had come in much lower than had been anticipated. 

 

Commissioner Simpson asked if the funding for the telecommunications room only built the room or would it also fill the room with the necessary equipment. Mr. Bozievich responded that it built the room and provided the mechanical and electrical infrastructure necessary to support the room. He said the racks and equipment would not be purchased at this time. He underscored that because it was a critical piece of infrastructure built in partnership with the Lane County Sheriff’s Office (LCSO) it took the building from being a standard wood-frame building to a building that had to meet seismic standards. He added that one major cost was the installation of a separate HVAC system for that room.

 

Mr. Origliosso outlined the next budget amendment, as follows:

 

Budget Amendment No. 4:  Called the 5th Street job; this job was intended to be completed in 2004. At the request of the High Street commercial community the job had been postponed to avoid the holiday season and moved to 2005. However, the budget for 2005 had already been passed. Because of this the entire amount, $112,583, was spent this year. In order to accommodate this work, some lower priority main replacement projects had been deferred.

 

In response to Commissioner Simpson, Mr. Origliosso affirmed that this was the project that was planned to traverse below the railroad tracks and that it had been started and stopped. 

 

Mr. Origliosso proceeded to the next budget amendment, as follows:

 

Budget Amendment No. 5:  A water main replacement project; in this project the scope had increased substantially as excavation had exposed more of the main, which was in a more deteriorated condition than had been expected. The project expenditure was $217,000 but had been budgeted at $111,500. The remaining $105,000 was reallocated from a water reservoir project, which was not going forward in the current budgetary year. 

 

In response to a question from Commissioner Simpson, Water & Steam Division Director Tom Buckhouse explained that the water reservoir project was a “filter rebuild” project and extra funds were left over when it had been completed.

 

Mr. Origliosso reprised the last of the four budget amendments, as follows:

 

Budget Amendment No. 6:  The chevron work at the Walterville/Leaburg site and the Carter/Shaw claim made for damages; it had been budgeted at $532,000. The additional chevron work together with the claim brings the projected expenditures to $1,377,000. The $847,000 in additional funding was from the Walterville fish return channel work that had been in the budget and the self-insurance reserves. 

 

Commissioner Simpson asked if the fish return channel project had cost less or if it had not been undertaken. Electric Division Director Jim Wiley clarified that it was a project ordered by the Army Corps of Engineers (ACOE) and EWEB had permission to stop that activity until 2006. He added that the fluid geo-morphology required more study before a permanent solution could be proposed to the ACOE. He predicted that the scope of work would be reduced upon completion of those studies.

 

President Farmer asked what the total of the settlement had come to be. Mr. Origliosso replied that it had not been settled at this point. He clarified that the family had filed a claim because their property had been inundated with water over the course of changes resulting from fish return channel work.

 

In response to a follow-up question, Mr. Origliosso explained that the self-insurance fund would be used and then replenished in the coming budget year.

 

Vice President Bishop asked if the work was comprised of modifications to the chevrons. She wondered if there was a projected date by which the chevrons would be redesigned and stable. Mr. Wiley replied that the chevrons had been designed but the ACOE had not issued a permit for the work. He said the window for work in the water was July and August and it did not look like the permit would be issued in time for the present year. 

 

President Farmer asked if the chevrons would have an effect on boaters. Mr. Wiley replied that it could have an impact on drift boaters. 

 

President Farmer asked if funding remained intact for a project if it was not completed in the current budget year. Mr. Origliosso responded that this budgeting was determined on a case-by-case basis because every year the projects were reprioritized.

 

Vice President Bishop moved approval of Budget Amendment Nos. 3, 4, 5, and 6.  Commissioner Simpson provided the second. The motion passed unanimously, 3:0.

 

Commissioner Simpson moved to approve the minutes from the May 17, 2005, Regular Board Meeting, and the minutes from the June 7, 2005, Work Session and Regular Board Meeting, as amended. Vice President Bishop provided the second. The motion passed unanimously, 3:0.

 

Vice President Bishop moved approval of Consent Calendar items 3, 4, 5, 10, 11, 12, and 13. Commissioner Simpson provided the second.  The motion passed unanimously, 3:0.

 

(Note:  Item 10 was passed both under the Consent Calendar and here.)

 

ITEMS FROM BOARD MEMBERS

 

Vice President Bishop expressed concern about the article in the Register-Guard regarding preferential rates the Bonneville Power Administration was allegedly granting some larger industrial customers. She asked staff to provide more information.

 

President Farmer asked if this referred to aluminum companies. General Manager Randy Berggren indicated that it did. 

 

Vice President Bishop opined that it was unfair for the BPA to raise rates for utilities such as EWEB while providing a break to industry. Mr. Berggren said he would provide the Commissioners information on the issue.

 

Vice President Bishop reported that Sean Murphy, a diving representative, had approached her and he indicated he would attend a future EWEB meeting to ask the Board to consider adoption of national dive standards for those workers who do this sort of work.

 

Vice President Bishop wished to know more information on how the property owners referred to in the memorandum regarding the claim that had resulted from damage caused by flooding felt at this point.

 

Mr. Wiley stated that the day after the last board meeting an EWEB civil engineer looked at the property and talked with Norm Carter, property owner. He said Mr. Carter’s fields would dry out and Mr. Carter seemed to be satisfied. Regarding the hatchery, he stated that the hatchery would fix the leak located near the point where the water was taken from the Leaburg canal to return to the river. 

 

Vice President Bishop cited the memorandum from Electric Operations Manager Dave Koski regarding the damage claim from Carrie Shaw and wondered if the resolution was adequate. Mr. Berggren responded that the physical aspects of the problem had been fixed, the pole and wiring had been replaced, but the damaged appliances had presented more of a problem because the person in question had not provided complete information on the damages. 

 

President Farmer commented that Ms. Shaw was asking for a replacement value as if the lost appliances had been new. 

 

Vice President Bishop said she would discuss the matter with Mr. Koski to learn more about the situation. 

 

Commissioner Simpson related that he had lunched with staff in order to ask the questions he needed to ask regarding this situation. He felt his questions had been answered to his satisfaction. 

 

Vice President Bishop asked if this situation had fallen through the cracks. Mr. Berggren replied that it had been overlooked for approximately three weeks and staff had made adjustments to their procedures to ensure this did not happen again. Mr. Wiley added that upon having it brought to the Board’s attention, crews responded on May 28 and conducted the restoration work so that the electrical facility was made safe.

 

Commissioner Simpson reported on his recent attendance to the American Public Power Association (APPA). He said the APPA had re-elected Alan Richardson as its president and had launched a new marketing campaign called “Public Power is Good for Business.” He shared that he had attended public seminars on electric utility basics, broadband, improvement of customer service through benchmarking, development of strong relationships with news media, understanding the value of public power, and the evaluation of the chief executive officer’s (CEO’s) performance. In conclusion, he read an introduction to the marketing campaign aloud that highlighted how service-oriented a publicly owned utility tended to be.

 

Commissioner Simpson thanked the general manager and other staff for meeting with him to discuss the Holden Creek Road issue.  He reiterated that all of his questions had been answered regarding a topic he found to be particularly disturbing. He looked forward to a prompt resolution to the problem.

 

Commissioner Simpson related that the General Manager Compensation Subcommittee had met with Mr. Berggren on June 27 to hear his point of view about a new employment contract. He said the subcommittee had learned about the history and motivation behind the deferred compensation contract. He stated that the next steps involved recalculating a new total compensation figure that took into account current comparable salaries in the public utility marketplace and the expiration of the general manager’s deferred compensation contract. When completed, the subcommittee would frame a proposed contract for Board review. He stressed that the goal was to create an employment contract that would be attractive and functional for the current and future general managers. 

 

Continuing, Commissioner Simpson stated that he had not received any customer feedback regarding the survey on customer service. 

 

Regarding a 12-hour power outage in the vicinity of Seneca Street and West 11th Avenue, Commissioner Simpson reported that he had made courtesy follow-up calls to managers of the affected companies. One such company, Izzy’s Pizza, had indicated an interest in filing a claim for money lost when frozen food thawed. He said he had referred the business to the general manager’s office and an investigation indicated no negligence on the part of EWEB. 

 

Commissioner Simpson added that a customer had reported to him that the EWEB Web site was difficult to navigate. He said he forwarded his response letter to the public relations staff.

 

President Farmer also had attended the APPA conference. He commented that the classes were a mixed bag, some very beneficial and others less so. He indicated he would share some of the more beneficial information at a future meeting.

 

CORRESPONDENCE

 

Mr. Berggren averred that the memoranda regarding the two claims had been sufficiently discussed. He thanked the volunteer staff that had hosted the water booth for the Butte-to-Butte Run. 

 

BOARD AGENDAS

 

Mr. Berggren reviewed the Eugene Water & Electric Board: Board Agenda Report; July 5, 2005. He said staff tentatively targeted July 19 for a backgrounder on the status of the meter exchange. He stated that no additional items had been added to future board agendas.  He noted that the meeting on July 19 was slated to include a short meeting that would then segue into a budget workshop in lieu of the all-day retreat. He added that a formal budget amendment for the short-term contingency plan would be presented for Board approval that sought to set aside funds for one of the Board-assigned goals to establish a short-term contingency plan against water conditions for the present year.

 

Commissioner Simpson asked when the postponed Executive Session would be rescheduled. Mr. Berggren replied that it would most likely be rescheduled for August 16. 

 

In response to a question from President Farmer, Assistant Secretary Krista Hince assured him that a filing system was in place that organized backgrounders by subject matter.

 

VOLUNTARY EMPLOYEES’ BENEFICIARY ASSOCIATION (VEBA) – FINANCIAL TRUST, FUNDING OPTIONS, & RESOLUTION

 

            Senior Human Resource Generalist Laurie Muggy reviewed the memorandum entitled Medical Savings Plan Project. She underscored that the goal for the present meeting was to have a dialogue between the Board and staff and to gain Board support for becoming a member of the Voluntary Employees’ Beneficiary Association (VEBA) trust. She explained that VEBA was similar to a flexible spending account but also reimbursed for retiree premiums. She thought employees could potentially pay for retiree premiums pre-tax. She said the money rolls over from one year to the next and was portable as it was 100 percent vested. She stated that the VEBA trust was created in 1990 had approximately 8,700 participants with over $30 million in assets. She said over 160 public employers participated in the VEBA trust. 

 

Ms. Muggy reviewed the Project Team’s Process for Determining VEBA Contribution Choices, and the VEBA Funding Methods, outlined in attachments.

 

Ms. Muggy said EWEB had two groups, union and non-union employees. She explained that the union employees would bargain on the VEBA process and vote on it as a part of its contract and the non-union employees would have a voting process as well as being preceded by an education process. She said the third step in the process would be a decision on voting protocols. She noted this was an administrative policy decision whether the vote should be a simple majority or some other ratio. 

 

Ms. Muggy reported that she and Human Resource Generalist Jennifer Joules had spent May meeting with over 300 employees in 20 different work group meetings. They had given a straw poll to each employee after the sessions and found that 79 percent of employees generally supported the VEBA trust, with the preferred funding method the ½ percent or 1 percent of base pay. She noted that employees did have concerns about implications regarding the Public Employees Retirement System (PERS) and also had concerns about the lack of individual choice. She also noted some suspicion on the part of employees that the VEBA trust could be an indication of future changes in the health care plan. 

 

Ms. Muggy affirmed, in response to Commissioner Simpson, that a majority vote would make employee participation in the VEBA trust mandatory.

 

Commissioner Simpson asked how disbursements were restricted. Rich Dickman, consultant for the VEBA trust, responded that the Internal Revenue Service (IRS) provided specific guidance on what was allowable through the VEBA trust or flexible spending accounts, explained in IRS publication 213D. He said it covered medical, dental, and vision expenses as well as over the counter medicine. Because this was a savings vehicle, it was possible to set the funds aside and use them in retirement. 

 

In response to a question from Commissioner Simpson, Mr. Dickman stated that the VEBA contribution would be part of the benefits package for a new hire. 

 

Commissioner Simpson asked what rationale lay behind the difference between the EWEB contribution to salary and the contribution to sick leave. Mr. Berggren replied that approximately 50 percent of the current sick leave was not utilized in its entirety largely due to incentives for retirement.  He said what EWEB tried to do was to create incentives for all of the options and so each option had been given different incentive levels. He stated that the payroll money would be paid regardless, a decision made by the EMT. 

 

President Farmer acknowledged that it was not unusual to experience an increase in employee suspicions when a change such as the one the VEBA trust presented was brought forth. He wanted to underscore that the Board did not want to push the trust on anyone and that it was ultimately subject to a vote. He also wished to clarify that the impact to the Union employees was different from non-Union employees because the Union would negotiate this as a benefit. 

 

President Farmer stressed that the 100 percent salary contribution and the 50 percent sick leave contribution were not choices that the Board made as it had come from the Executive Management Team (EMT).  He said the decision to have the VEBA trust approved by a 75 percent vote had also been an EMT recommendation. While he understood the value of having 75 percent approval, he thought it could allow 26 percent of the people to throw the VEBA trust “out the window.” He was concerned that a small minority could vote to end a program that could potentially be working very well. 

 

Continuing, President Farmer noted his concern that membership to the trust could reduce pension benefits. He related that Ms. Muggy had provided him the example of an employee that would retire in 10 years. He asked how it would affect an employee that would retire within the next few years. Ms. Muggy explained that an employee who had the opportunity to contribute one percent into a VEBA account for 10 years would earn a three percent rate of return and would receive a 100 percent tax saving contribution from the employer and the retiree would have $8,600 and would have a difference in pension of $25 per month. She further explained that an employee who only paid into his or her VEBA account for four years would still have a $25 reduction in pension, but it would take 11 years to reach the break-even point. 

 

President Farmer observed that joining the VEBA trust would mean joining an entity made up of many companies. He asked if it would be adversely affected should a large company file bankruptcy. Mr. Dickman responded that the VEBA accounts were not liable for someone else’s default.  He said the six trustees that sat on the VEBA board were elected by participants and were insured for liability in the amount of $1 million per term. He stressed that EWEB would not have a fiduciary responsibility for the investments of another participant.

 

Vice President Bishop asked how long the trust had been in existence. Mr. Dickman replied that the trust had been in existence since 1990 and that in 1999 the International Brotherhood of Electrical Workers (IBEW) asked that the VEBA trust be expanded from Washington to Oregon. 

 

Vice President Bishop wondered whether it was common to have a choice of three options for contributions. Mr. Dickman explained that it was very usual for an employer of EWEB’s magnitude to provide options. 

 

In response to another question from Vice President Bishop, Mr. Dickman said he did not know how long the Clark Public Utility District had been a member of the trust. Ms. Muggy pointed out that the Springfield Utility Board (SUB) had participated in the trust for the past two or three years. Mr. Dickman reiterated that membership was not possible in Oregon prior to 1999.

 

President Farmer noted that many similar plans in the private arena had only recently come into being, largely as a result of soaring medical costs. 

 

Mr. Dickman said the first VEBA trust had been a railroad retirement fund. He stated that 90 percent of the public school districts in the State of Washington participated in the trust.

 

President Farmer commented that, like a 401(k), the employees decided how to invest money and also took a certain risk. Mr. Dickman agreed that there were market risks, but pointed out that the trustees chose a range of investment options for employees to choose from. 

 

In response to a question from Vice President Bishop, Ms. Muggy said 312 employees filled out the survey and, of them, 79 percent were in favor of joining the VEBA trust.

 

In response to a question from Commissioner Simpson, Mr. Dickman affirmed that every employee would have access to his or her VEBA account on line, secured by a password. Commissioner Simpson also wondered if the investments were portable. Mr. Dickman assured him that if the employee moved to a private employer the VEBA account, when used, would pay for medical expenses until it was gone and if the employee moved to a public employer that was a member of the VEBA trust, the investment account would move with him or her. 

 

President Farmer asked how the money was disbursed.  Mr. Dickman replied that the “slickest way” was to pay the retirees’ insurance premiums or, like a flexible spending account, the employee would fax in proof of medical expenditures and would be reimbursed.  In the case of someone who was terminally ill, Mr. Dickman stated that there was a way to retroactively reimburse him or her that would allow him or her to clean out the account. 

 

President Farmer then asked how the sudden deaths of a VEBA trust member would be treated. Mr. Dickman explained that like other assets the nearest relatives would inherit the trust account, but it would then be treated as taxable income for them.

 

Commissioner Simpson reviewed the VEBA funding methods and questioned how the third option, that of a one-time investment of two or three days of sick leave with 50 percent of the tax savings donated by EWEB, would be beneficial. He thought one could be stuck with a $300 account. Ms. Muggy said staff looked at it as a one-year plan because the employees would vote on it every year. In other words, she explained, the employee would be voting once a year to transfer sick leave equivalent pay into his or her VEBA account. 

 

Commissioner Simpson asked what would happen in the event that the VEBA trust was opposed by a majority vote after being in place for a few years. Mr. Dickman replied that employees would vote again in the next year and could vote to renew their contributions or not.

 

President Farmer commented that employees were not allowed to vote on a 401(k) account. He questioned the wisdom of putting something in place that was subject to the vagaries of voting. He asked if there was a rule that required an annual vote. Mr. Dickman responded that there was not. Ms. Muggy clarified that this was the project team’s recommendation.

 

President Farmer opined that it would be illogical to vote every year on this. Mr. Berggren remarked that some people were more comfortable knowing they had the option to change. President Farmer responded that the Union was not likely to be comfortable negotiating on this bargaining point every year.

 

President Farmer polled the two commissioners present to determine whether they were prepared to support the VEBA trust. Commissioner Simpson said he was willing to pass a resolution that would state EWEB’s intention to become a member of the VEBA trust. Vice President Bishop was not comfortable with this, however, without the input of the other Commissioners.

 

Vice President Bishop opined that an affirmative vote on the part of the Board would be a message to the employees that they “absolutely had” to join the VEBA trust. Mr. Berggren disagreed. He pointed out that 20 employee meetings had been held along with many “face to face discussions” and he thought it was clear that the employees understood the Board’s role in the decision process. 

 

Ms. Muggy underscored that 79 percent of the employees, a total of 247, supported offering the VEBA plan to employees as a benefit. 

 

Vice President Bishop said EWEB had been at this decision point in the past and had made “bad decisions.” This was why she was not willing to support it with only three Commissioners present. 

 

President Farmer favored the VEBA plan. He recommended the item be tabled until it could be brought before the larger Board. He then asked Ms. Muggy and staff to spend the necessary time with Commissioners Menegat and Lanning outside of the Board meeting to educate them on the process. He indicated his willingness to spend time with them as well in order to share his perspective on the issue. 

 

In response to a question from Commissioner Simpson, Ms. Muggy clarified that employees could vote on more than one funding option. 

 

Commissioner Simpson indicated his support for the VEBA plan and his consent to table it for the present.

 

LONG-TERM CONTINGENCY PLAN CHECK-IN

 

This item was deferred for lack of time.

 

CONTRACT AMENDMENT

 

Electric Division Director Jim Wiley explained that part of the budget amendments had been for the Carmen-Smith relicensing effort. He said environmental consultants for Stillwater were performing part of the work. He stated that the budget approval allowed for expansion of the scope of services being provided by Stillwater. He requested the Board’s approval for an increase on the Agreement to Agree (ATA) by $4.5 million for a total of $10.5 million. He averred that this level of contract funds was estimated to be adequate through project completion, which was the award of the Federal Energy Regulatory Commission (FERC) license for the facility, targeted for November 2008. He indicated that the contract scope of work and funds were usually issued on a work order basis and it was estimated to cost $500,000 in 2006 to finalize Exhibit ‘E,’ the environmental exhibit, to assist in the development of the post-licensing modifications, and to assist with public meetings. He anticipated the work in 2007 to be comprised of the provision of the Endangered Species Act (ESA) and National Environmental Policy Act (NEPA) inputs and reviews, the responses to license comments, and some negotiations. He thought this work could carry over into 2008.

 

Vice President Bishop moved approval of the amendment for the Agreement to Agree contract with consultants, primarily working for Stillwater Sciences, which would increase the contract amount from $6 million to $10.5 million. Commissioner Simpson provided the second. The motion passed unanimously, 3:0.

 

Regarding the deferred agenda item, President Farmer said he hoped staff could review and amend the contingency scenarios so that the “down side” was not a worst-case scenario.

 

Fiscal Services Supervisor Dick Varner explained that staff was attempting to “bracket” a wide range of possibilities and then develop a process to narrow the range. He said the numbers used were relatively realistic for each of the scenarios, though there was a low probability that EWEB would be faced with the worst case scenarios set forth by staff.

 

President Farmer liked the idea of a “bigger picture” perspective that did not only focus on the Carmen-Smith relicensing project. He thought going through the process could force the Board to make decisions they might not be faced with otherwise and this would be beneficial.

 

President Farmer adjourned the meeting at 10 p.m. 

 

 

 

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                    Assistant Secretary                                                           President