Present: Patrick Lanning, Sandra Bishop, Dorothy Anderson, and Henry Masterson. Vice President Ron Farmer was excused.

Others present: Randy Berggren, Ken Beeson, Gale Banry, Tom Buckhouse, Marc Anderson, JoAnn Andersen, Jennifer Joule, Marty Douglass, Mike Logan, Kris Kendall, Dick Helgeson, Mat Northway, Mark Oberle, Scott Spettel, Debra Smith, Lance Robertson, Jim Origliosso, Roseanna McArthur, Dick Varner, and Krista Hince of the EWEB staff; Joe Sams, City of Eugene Minutes Recorder; Scott Maben, representing the; Register-Guard and members of the public.

2003 FINANCIAL TOOL KIT

President Lanning called the Work Session to order at 5:30 p.m.

Dick Varner, Fiscal Services Supervisor, provided a presentation on the 2003 Tool Kit. He said staff had provided a revised recommendation of what it thought fit the majority Board recommendation. He said the evening's meeting was to clarify any questions the Commissioners might have and finalize Board direction for final action in two weeks.

Mr. Varner said staff were recommending approval of the various revisions totaling approximately $9 million. In addition he said staff were recommending that the Board lower its target for short-term debt repayment for 2003 by $1 million. He noted that this would cause the surcharge to continue 2-3 months longer than the current forecast of 36 months.

Referring to an overhead spreadsheet projection, Mr. Varner outlined figures for financing, program reductions, and additional revenue sources. He said staff were concerned over making capital cuts because it would cause additional financing problems in future years.

Commissioner Anderson said she was happy with the staff recommendation. She said she would rather have a rate increase in the Spring than in the Fall. She acknowledged that other Board members disagreed with her position but reiterated her preference for a rate increase in the Spring.

Commissioner Lanning said if there was a reliable prediction for what Bonneville Power would do then he would also be in favor of a Spring rate increase.

General Manager Randy Berggren said that the Bonneville Power Administration (BPA) had been having a difficult time in predicting its numbers. He said there was major political opposition to BPA raising rates. He also said that this opposition would mitigate the risk of BPA outpacing any rate increase made by EWEB in the Spring.

In response to a question from Commissioner Masterson regarding the reason why Commissioner Anderson preferred a Spring increase, she said she did not want to increase rates at a time when people would have to be spending more on power in any event. She added that a Spring rate increase would also bring in extra revenue in less time.

In response to a question from Commissioner Bishop regarding the impacts of reduced office hours, Mr. Berggren said staff were waiting to get direction from the Board before gathering data on that issue. He noted that five percent of customer contacts happened from 8-9 a.m.

Commissioner Bishop raised concern with lessening open business hours of the facility for customer service. She noted she was receiving many complaints about customer service already.

President Lanning said he trusted staff to make the right decision. He remarked that staff was well aware of the emphasis the Board placed on customer service.

Commissioner Anderson noted that public business hours could be returned to their current level at a future time.

Mr. Varner called for specific input on the staff recommendation. He questioned whether the Board was willing to do something in June to compensate for the higher power costs that would begin in April.

Commissioner Masterson said he could not argue with the staff recommendation. He expressed his preference for one rate increase rather than two.

President Lanning agreed with the preference of only one increase. He raised concern that BPA would start raising its rates every six months.

Mr. Varner said that until the utility built up its financial reserves the choices are budget reductions and raising rates.

President Lanning raised concern over losing flexibility by cutting back on utility costs rather than a rate increase. He said the only reason he has supported reductions in conservation programs was because the reduction would only last for six months.

Commissioner Bishop stressed the importance that the utility was deferring merit wage increases and thanked employees for acknowledging and working with that need. She said she did not expect to ask for that kind of flexibility from employees in the future.

Mr. Varner said he would bring the current staff recommendation back for action at the next meeting.

LONG TERM POWER SUPPLY HEDGE

This item was removed from the following Regular Session as no action was requested from the Board.

Scott Spettel, Power Management and Planning Manager, provided an update on firm load resource balances. He said the utility only relied on firm power when it came to meeting actual load obligations but noted that secondary power was relied on when figuring rates.

Referring to an overhead graph, Mr. Spettel outlined firm monthly power reserves for the utility. He said the firm perspective was what was used to predict what amount of power was needed and what could be sold. He noted that there was most likely secondary power available but noted that it could or could not be there in reality. He noted that secondary power was at 82 percent of expected for the year.

Mr. Spettel said that if secondary power was going to be sold ahead of time then options needed to be set up for supplying that power if it did not materialize as expected. He said staff were looking at buying options that would enable EWEB to sell the desired amount. He said the utility had issued requests for offers for multi-year power purchases with the hope that there would be a discount on the price of the power as well as spreading out the option premium payment. He said staff was looking at two ways to do that:

1. Buy a "put"option that would allow the utility to sell power at a fixed price at EWEB's option;

2. Buy a "call" option that would allow the utility to buy power at a fixed price at EWEB's option

Mr. Spettel said by asking for multi-year power options it would allow staff to find a recently completed plant that the owner would be willing to sell at a discount. He said staff had received 12 responses of which two were less than a year, and two further responses that staff were interested in developing but needed more data. He said staff would gather more data and ask for Board action in early May.

Regarding the two response options for periods of less than a year, Mr. Spettel said staff were recommending acting on those through the Risk Management Committee since that committee already had authority to act on transactions of a year or less.

MCKENZIE RIVER PROJECT ISSUES

Gale Banry, Hydroelectric Relicensing Project Manager, Marty Douglass, Public Affairs Manager, and Jay L'Estrange, Generation Superintendent, provided a presentation on EWEB issues in the McKenzie River Valley. The presentation included information on the following topics:

• Walterville Specific Projects
• Walterville Power Canal Seepage
• Leaburg Specific Projects
• Canal Vegetation Removal Projects
• Community Communications

Mr. Douglass said the topics of the presentation were outlined in the staff report he had submitted to the Board the previous day. He apologized for the lateness of the staff report and said he would cover much of that material during the presentation as well as reviewing an Op-Ed piece staff had written in response to an editorial in the Register-Guard. He said he wanted to get concurrence from the Board on the response before sending it in.

Mr. Douglass said there was also an issue of Board representation for customers living in McKenzie communities. He said that topic was more appropriate as a strictly Board discussion and would not be outlined by staff in its presentation.

In response to a question from President Lanning regarding who was working with people living along the river who used river water for irrigation, Mr. Banry said there had been individual contacts with Mr. Douglass or Mark Oberle. Mr. Douglas said people could be referred to him and he could direct them to someone else if he was unable to help them. He went on to say that there would be a public meeting with McKenzie residents the following Thursday night where he would also make that information known.

President Lanning stressed the importance of being able to refer those people to a specific person if they had questions about EWEB policies regarding supplying irrigation water.

Mr. L'Estrange noted that because of the dry up of the Walterville Canal there were some areas of seepage. He said a consulting engineer was preparing a repair plan to submit to the Federal Energy Regulatory Commission, (FERC). He stressed that the seepage was not an indicator of the failure of the canal structure.

Regarding canal vegetation removal projects, Mr. L'Estrange said the project was still on schedule to have all of the slash and debris removed from the canal and its banks by the end of June. He noted that the debris would be chipped and spread over the walking paths on the Leaburg Canal Service Road. He added that a landscaping plan was being developed for the area just east of the fore bay and along the canal before entering the town of Leaburg. He said the plan would be completed by the end of April. He noted that FERC was receiving some correspondence and inquiries regarding the vegetation removal project. He said the project remained a hot issue which some people were not happy with but noted that there were engineering issues that required the project to clear vegetation.

In response to a question from Commissioner Bishop regarding the Walterville project and whether boaters should portage around the area, Mr. Banry noted that water levels would be so low, at certain times of the year, that the area was not passable to boats.

In response to a question from Commissioner Bishop regarding whether there had been discussions with people who floated the river, Mr. Banry said there had been many discussions with the public to show what needed to be done and when.

In response to a question from Commissioner Bishop regarding the irrigation issues from the power canal, Mr. Banry said the residents had water rights to the river but drew the water from EWEB canals. He stressed that there were agreements in place that stated EWEB was not responsible for supplying water to those properties during low water levels through the canals. Mr. L'Estrange added that the water taken did not affect the generation capability of the utility.

Regarding community communication, Mr. Douglass said it was obvious that people along the river did not feel that EWEB was communicating with them effectively. He said staff were going to hold monthly meetings, beginning May 1, along the river to provide updates to local residents on McKenzie River issues. He said the meetings would be publicized and he would also notify the Board before each meeting was held so that members could attend some of the meetings. He added that there were going to be progress reports on EWEB projects published in the McKenzie River Reflections, a local newspaper.

The meeting adjourned at 7:20 p.m.

_____________ ______________________________________

Assistant Secretary President