Board Members present: Sandra Bishop, Susie Smith, Dorothy Anderson, and Peter Bartel. Mike Dyer was excused.
Others Present: Randy Berggren, JoAnn Andersen, Cathy Bloom, Terry Bequette, Tom Buckhouse, Dick Helgeson, Cathy Hamilton, Everett Jordan, Garry Kunkel, Roseanna McArthur, Jim Origliosso, Dick Varner, Debra Wright, and Krista Hince of the EWEB staff; and Kim Kunkel, Minutes Recorder.
Noting the absence of President Dyer, Vice President Bishop called the Special Board Meeting of the Eugene Water & Electric Board (EWEB) to order.
AGENDA CHECK
Vice President Bishop determined that there was consensus to approve the agenda, as written.
APPROVAL OF CONSENT CALENDAR
Vice President Bishop noted that the items presented for approval on the Consent Calendar included the following:
Vice President Bishop requested that Item 3 be removed from the Consent Calendar.
Commissioner Bartel moved, seconded by Commissioner Anderson, to approve the Consent Calendar, with the exception of Item 3. The motion passed unanimously.
ITEMS FROM BOARD MEMBERS
Commissioner Anderson reported that EWEB was awarded the "Eagle" award in recognition of its work on renewables during a recent NWEC conference. Commissioner Bartel suggested that the Board schedule a discussion regarding its stance on the RTO issue.
CORRESPONDENCE
General Manager Randy Berggren reminded Board members of additional Work Sessions that had been scheduled.
Mr. Berggren reviewed draft agendas for the June 6, 2000, Work Session and Board Meeting.
PUBLIC INPUT
There was no public input.
FOOTE CREEK RIM PROJECT
Referring to a memorandum, copies of which were included in the meeting agenda packet, Generation Manager Everett Jordan and Resource Planning Analyst Jim Maloney updated the Board as to the status of the Foote Creek Wind project in terms of 1) generation; 2) gear box problems; 3) project costs; 4) environmental issues; and 5) windpower marketing program.
WATER BOND RESOLUTIONS
Referring to a memorandum and attachments, copies of which were included in the meeting agenda packet, Treasurer Jim Origliosso presented a brief overview of the most recent draft of the supplemental resolution EWEB will use to issue its first series of Water Supply Plan bonds. He noted that the financing plan also includes an amount sufficient to refund the 1995 Water mini-bonds.
Mr. Origliosso noted that while the draft represented the most current input of bond counsel, underwriters, and financial advisors, one issue would remain unresolved for a couple more weeks, and may necessitate an amended resolution after the rating agencies have reviewed EWEB's plan. He said that issue was the potential impact of Bill Seizemore's recent voter initiative which may appear on the November ballot.
Mr. Origliosso requested Board approval of the draft Supplemental Resolution for Water Supply Plan Bonds.
Commissioner Bartel moved, seconded by Commissioner Anderson, to approve the draft Supplemental Resolution for Water Supply Plan Bonds. The motion passed unanimously.
FINANCIAL PLAN REVIEW
Referring to a memorandum, copies of which were included in the meeting agenda packet, and a series of overhead displays, copies of which were distributed to the Board, Treasurer Jim Origliosso and Fiscal Services Supervisor Dick Varner reported that the most recent projection of Electric System revenues and expenditures shows a significant projected gap between projected revenues and expenditures over the next four years. Noting that the issue at hand was how EWEB would go about closing that gap while maintaining financial stability, Mr. Varner and Mr. Origliosso presented an overview of EWEB's Revenue Requirements Strategy.
With regard to what has changed since the last update during the April Board Retreat, Mr. Varner noted the following: 1) change in BPA contract status; 2) increased forward prices for wholesale power; and 3) increased cost of medical benefits for employees and retirees. He said these changes resulted in an increase in the gap between projected Electric System revenues and expenditures.
Mr. Varner said uncertainties related to Electric System revenues and expenditures include: 1) power supply choices and prices; 2) retirement benefit obligations; 3) relicensing cost/timing; 4) Weyco/Hyundai as EWEB customers; 5) telecommunications; and 6) medical benefits costs.
Mr. Varner said the "tools" by which EWEB might address the revenue/expenditure gap include: 1) reserves; 2) debt; 3) revenue increases; 4) cost reductions; and 5) revenue/cost allocations. He said staff has identified the following as possible actions:
Cost Reductions $ 400,000
Surplus Operating Reserve 1,500,000
Lean on Capital Reserve 600,000
Total $2,500,000
Assumes 8 percent in 2002 and 5 percent in 2004
Cost Reductions $ 400,000
Surplus Operating Reserves 1,500,000
Power Rate Increase (2%) 600,000
Total $2,500,000
Assumes 6 percent in 2002 and 5 percent in 2004
C. Cost Reductions, Reserves, and 2001 General Rate Increase
Cost Reductions $ 400,000
Surplus Operating Reserves 1,500,000
General Rate Increase 2,600,000
Total $4,500,000
Assumes 6 percent in 2003
Commissioner Smith expressed support for the "power cost pass through" approach. She said further reducing internal costs could result in significant consequences for the organization.
Vice President Bishop said she was conflicted regarding the "power pass through" approach. She said EWEB has some flexibility to defer a 2001 rate increase, given the availability of reserve funds. Vice President Bishop expressed support for staff exploring alternatives to a 2001 rate increase.
The Board expressed support for exploring the option of "leaning on" reserves to avoid a rate increase in 2001, with a replenishment strategy in 2002. Staff agreed to return to the Board with strategies related to Options A and B.
PUBLIC AGENCY TELECOMMUNICATIONS STATUS
Referring to a memorandum, copies of which were included in the meeting agenda packet, EWEB Risk/Purchasing Manager Debra Wright and Terry Bequette presented an update on Public Agency Telecommunication applications. The update included information regarding 1) the newly-formed Public Agency Telecom Group; and 2) a proposal by School District 4J related to the use of EWEB dark fiber for a public school network.
With regard to the proposal by School District 4J, Ms. Wright explained that a scenario was developed which has subsequently been tested with all parties. The proposal includes EWEB licensing four strands of dark fiber to School District 4J at a minimal cost. Chambers Communications will work with 4J on fund-raising activities with the goal of raising sufficient funds to install the remaining electronics and lateral extensions (approximately $250,000 to $400,000.) Ms. Wright said the goal would be to begin construction before school reconvenes in the fall.
Ms. Wright said staff was supportive of the above scenario. She stated that there were many details to be resolved, including issues of service, operation and maintenance; however, it would seem that assisting schools is "public purpose" at its most basic level.
Commissioner Bartel said Chambers Communications involvement raises the question of whether a private corporation would benefit from the proposal.
Ms. Wright said staff would work to resolve the issues related to service, operation, and maintenance and return to the Board with a request for action.
ITEMS REMOVED FROM CONSENT CALENDAR
Vice President Bishop moved, seconded by Commissioner Bartel, to approve Item 3 of the Consent Calendar. The motion passed unanimously.
The meeting adjourned at 10:15 p.m.
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Assistant Secretary President