Board Members present: Patrick Lanning, Ron Farmer, Dorothy Anderson, and Henry Masterson. Commissioner Bishop arrived at 6:00 p.m.

Others present: Randy Berggren, Marty Douglass, Tom Buckhouse, Marc Anderson, Dick Helgeson, Mark Freeman, Terry Bequette, Dick Varner, Roseanna McArthur, Kris Kendall, Gale Banry, Ken Beeson, Jim Wiley, Jim Origliosso, and Krista Hince of the EWEB staff; Vicki Maxon, and members of the public.

MCKENZIE RIVER ISSUES

President Lanning called the Work Session of the Eugene Water & Electric Board (EWEB) to order at 5:30 p.m.

Jim Wiley, Electric Division Director, and Marty Douglass, Public Affairs Manager, were present for the item. Mr. Wiley reported on a community meeting held by the Federal Energy Regulatory Commissioner (FERC) with McKenzie River residents and representatives April 24. He noted that Vice President Farmer and several EWEB staff members had also been at the meeting. The FERC sponsored the meeting because of many communications it received from citizens. FERC wished to explain its role in the Leaburg and Walterville projects to the residents. Mr. Wiley said that FERC first addressed its role in the canal bank tree and vegetation cutting that occurred the previous summer and had explained why the cutting had to occur. He thought that the information had created a greater citizen understanding of the need for vegetation removal.

Mr. Wiley said that FERC also explained its role in the recreation plan, indicating that EWEB was the applicant to submit the plan subject to the agency's approval. EWEB had already submitted the recreation plan, and earlier that day submitted a request to withdraw the plan. That would give EWEB time to fill out the details of the plan and work with the stakeholders' group in the valley regarding its concerns about the plan. He anticipated that plan construction would occur in 2005 rather than in 2003-2004.

Mr. Wiley said the FERC also addressed residents' concerns about the raising of Leaburg Lake. He said the purpose of raising the lake was to provide a design flow of 2500 CFS through the turbines and generators as allowed by the water rights granted to EWEB. At this point, it appeared that the lake needed to be raised by 18 inches. EWEB would do construction in 2003 and then test in 2004 to determine the actual elevation needed for the proper design flow. Once the elevation was established, EWEB would determine with affected property owners the needed mitigation and perform the needed mitigation and raise the lake in 2005 or early 2006.

Mr. Wiley said that the issue of the "chevrons" at the Walterville power canal intake was the next subject discussed. EWEB was aware of the need for repairs and maintenance. He said that EWEB would involve the McKenzie River Guides in the effort. He estimated that about 3500 CFS flow was needed to complete the work. Contracts had been let for the equipment needed for the work. EWEB would attempt to complete the work as soon as possible.

Mr. Wiley said that EWEB had also previewed the construction work that would occur during the upcoming summer construction season. He briefly reviewed the scope of that effort.

Mr. Wiley characterized the meeting as a good one, saying that FERC had been able to address many of the issues of concern to valley residents, and he thought that EWEB had been able to allay many concerns about the lake raising. He suggested that small working groups could be a way to involve citizens as EWEB worked to mitigate the impact of the construction work.

Vice President Farmer thought that the FERC meeting had been useful and that staff had done a good job of listening to residents' concerns. He said that FERC indicated it had done hundreds of projects that involved the removal of vegetation and had received only two complaints about them. Both were in Oregon, and one involved the Leaburg canal clearing. He noted that FERC sought an independent third party assessment of its decision, which had occurred in May 2002.

Vice President Farmer noted that canals were only rated for hazards recently, and the potential of loss of life increased the rating. EWEB was not notified about the high rating that the Leaburg canal received until August 2001, and that was why the vegetation was not previously removed. FERC notified EWEB of the need to remove the vegetation before September 2001. The removal of the vegetation was total, and it was not negotiable. He further noted that there was more water in the canal than in the lake.

Vice President Farmer noted that, contrary to assurances, the slash in the area would not be removed before the end of May. The contractor could not meet the deadline, and could not remove the slash until the end of June.

Vice President Farmer noted FERC's suggestion that EWEB could better communicate with residents through the River Reflections than through The Register Guard

Vice President Farmer expressed concern about the increase in the costs of mitigation and requested more information about that topic.

Vice President Farmer commended staff for its work at the meeting. He believed that the biggest potential area for conflict was the raising of the lake, and hoped that EWEB had learned something from this process it could apply to that process. He asked staff to think strategically about how it would work with residents.

Commissioner Anderson determined from Mr. Wiley that EWEB was working with the resource agencies on the fish passage issues related to the tailrace barrier at Leaburg.

Commissioner Masterson asked if the raising of the lake would affect private property owners, and what happened when the lake went below the needed flow levels as could happen in a dry year. Mr. Wiley indicated that EWEB could stabilize the elevation of the lake if needed to maintain the needed flow. He indicated that some private property would be encroached upon and staff was working on how to mitigate that impact.

Mr. Douglass discussed EWEB's communications with residents, acknowledging more could have been done prior to the clearing of vegetation. He said that staff would work in the future to maintain communication, even during times of little or no activity, and had established a schedule of community meetings that would initially occur monthly and then occur on a quarterly basis. At a minimum, that would give residents an opportunity to ask questions. He noted that recent meetings had been much less acrimonious, and he credited residents for that. A good working relationship had been developed, and some trust, which Mr. Douglass wanted to ensure was guarded and built upon.

Mr. Douglass reported on the most recent meeting held on May 1, saying it went well. Many of the same agenda items that had been covered at the meeting with the FERC representatives were addressed, in addition to discussion of forming a citizen group to consider alternatives to the construction access road at the Leaburg Tailrace, which could save additional trees now intended for removal. Mr. Douglass reviewed the complete agenda of the meeting, noting that the bulk of the meeting was spent on small working groups that examined various aspects of the construction process. He anticipated that members of the small working groups would continue to meet on some aspects of the construction details and report on their activities at the next full residents meeting.

Mr. Douglass anticipated that EWEB would take greater advantage of advertising and reporting opportunities in River Reflections in the future.

Commissioner Bishop called for an internal accounting of "what got us into the mess in the first place." She wanted the Board and staff to reflect on what went wrong, and thought the Board deserved an explanation of what went wrong. She thought recent communication efforts had gone well but wanted to ensure that something was in place to avoid such mis-communication in the future. She believed that what most residents were interested in was the relicensing process piece that could actually impact them. She thought that would be worked out in subsequent meetings.

Mr. Douglass discussed the issue of McKenzie Valley residents' representation on the Board, noting it was an issue that had been raised from time to time over the years. Staff had attempted to stay away from the issue because it was one more properly addressed by the Board. He thought the residents understood that.

Mr. Douglass discussed potential alternatives to representation, which he had listed for the purposes of discussion:

• Change the Eugene Charter to allow a resident to serve as a voting member on the Board
• Establish a community-selected liaison to serve as an unofficial, nonvoting representative to the Board
• Form a standing advisory committee of valley residents to provide input to the Board on issues of concern to them
• Use the East Lane County Commissioner as a liaison to residents
• Select a Board member to serve as liaison to the valley residents and get involved in community issues
• Occasionally hold Board meetings in the McKenzie Valley
• Maintain the status quo

Mr. Douglass assured the Board that staff would continue to work with the valley residents.

Mr. Douglass noted that the valley residents were not the only EWEB customers that lacked representation, citing residents of River Road/Santa Clara as an example.

President Lanning invited questions.

In response to a question from Commissioner Bishop about the number of customers in the valley and in the River Road/Santa Clara area, Mr. Douglass estimated there was approximately 3,500 combined residential and general services in the valley and about 4,500 services in the River Road/Santa Clara area.

Vice President Farmer determined from Mr. Douglass that EWEB had services in the urbanizing area of Eugene as well as some in the Thurston and East Springfield area that had not yet been transferred to SUB. He confirmed, in response to a question from Commissioner Bishop, that the customers in East Springfield were included in his estimate of valley services.

Commissioner Anderson did not think it was practical to expect to find a valley resident who could represent the entire geographic area being served. It was her experience serving on the McKenzie Watershed Council that it was difficult to keep valley residents involved. She thought Commissioners represented the customers rather than districts, given how diverse each district was. She thought a standing advisory committee would be a possibility but noted her earlier concern about keeping residents involved. She suggested EWEB consider taking advantage of the Watershed Council as a liaison. She wanted to keep the East Lane County Commissioner involved to the degree possible but thought that depended on the individual in office. She also thought the success of a Board liaison depended on the individual in the position.

Vice President Farmer suggested the Board was the wrong body to discuss a charter change. Only the City Council and Eugene citizens could change the charter. He suggested that when considering each option, the Board consider whether it was creating a separate class of customers. For example, he did not think the Board should create an Advisory Board for valley residents without offering the same option to River Road/Santa Clara residents and other non-Eugene customers. He suggested that instead, EWEB establish working groups when it knew it was embarking on specific projects.

Commissioner Masterson thought the Board could possibly use the East Lane County Commissioner as a liaison given that the individual already represented the area and had accountability in the need to be elected. However, he questioned whether that created an inequity with other areas. He endorsed Vice President Farmer's suggestion for working groups.

Speaking to the concern voiced by Vice President Farmer regarding the potential of creating different classes of customers, Commissioner Bishop thought that valley situation was unique. Residents in the valley felt as though EWEB was "extracting a resource from their backyard." EWEB was a major presence in the valley. That situation did not exist in River Road/Santa Clara. She agreed that if EWEB provided representation on the Board to valley residents, it would be creating a different class of customers.

Commissioner Bishop agreed with Vice President Farmer regarding the Board's role as it related to the Eugene Charter. She said that if valley residents persuaded Eugene voters to change the Charter, that would be fine.

Commissioner Bishop thought a nonvoting liaison was problematic for the reasons cited earlier. Regarding the use of a County Commissioner as liaison, she suggested that approach was too personality-driven. The current incumbent, who was resigning, had been very active. There was no guarantee the next Commissioner would be equally active.

Commissioner Bishop thought EWEB needed someway to foster communication with valley residents, and thought establishing a standing committee of residents would not demonstrate favoritism given the many projects EWEB had in the valley. She thought the information sessions had been a good start, and suggested that the staff identify recurring or unresolved issues that could be assigned to a standing committee. Mr. Wiley indicated that staff intended to hold additional information sessions.

Responding to a question from Commissioner Masterson, Mr. Douglass indicated the participants at the information sessions were self-selected. Commissioner Masterson suggested the number could be winnowed down. He said that the residents could form their own working group, and EWEB could work with the group. If the residents themselves put the group together, they would have more interest in its continuance and would be more accountable. Staff indicated that had occurred already with a group of residents living near the lake with concerns about the lake raising.

Vice President Farmer clarified that he was not opposed to a Eugene Charter change and if he could establish a voting district that consisted of EWEB ratepayers he would do so. He did not see a way to create a voting district of that type under current State statutes, and acknowledged the political hurdles that would need to be overcome. He did not think the City Council would support the change because the City would then have to share revenues with other taxing jurisdictions. In addition, EWEB's need for bonding created legal obligations on the part of ratepayers, and he did not think valley residents would be willing to assume that obligation.

Mr. Douglass said that some valley residents had complained that the Contribution-in-Lieu-of-Taxes (CILT) paid to Eugene represented taxation without representation, and wanted a proportional amount shifted to Lane County for distribution to the valley. Commissioner Anderson pointed to EWEB's contribution to the McKenzie School District as a form of return to residents.

Commissioner Anderson asked if residents had been solicited for ideas about how to communicate with them. She suggested that they be asked to help design something for use over the long term. Mr. Douglass said that some residents would be more than willing to work with EWEB on such a project.

Speaking to the issue of communication, Vice President Farmer observed that some residents wanted information provided through River Reflections but not through The Register-Guard, while others had indicated the precise opposite thing.

Commissioner Bishop suggested that EWEB give the residents something to respond to rather than ask them to develop something on their own. Regarding Commissioner Anderson's suggestion to use the McKenzie Watershed Council, Commissioner Bishop believed it had a very specific mission and questioned whether valley residents would employ it as a forum for EWEB issues. Commissioner Anderson clarified that she was suggesting that EWEB could take advantage of the Council's communication efforts, such as its newsletter. She said that residents had been in contact with the Council regarding their concerns about EWEB.

Commissioner Bishop requested information on the education grant to the McKenzie School District as a percentage of the CILT paid to Eugene. Mr. Douglass indicated the grant was proportional to the customer base. General Manager Randy Berggren estimated that the residents paid about $12,000 to $15,000 in the CILT while the McKenzie School District received about $20,000 from EWEB.

President Lanning shared the same concerns Vice President Farmer had expressed in regard to the Eugene Charter. He thought there were two issues: 1) the need for EWEB to engage valley residents regarding the projects currently underway, which he thought was occurring; and 2) concern about ongoing issues such as the CILT and the charter over which EWEB did not have total control over, but about which more communication was needed. Speaking to the latter issue, President Lanning acknowledged he did not know the answer. He suggested meetings in the valley when the Board was scheduled to discuss valley-related issues might be one way to facilitate communication.

Mr. Berggren thought the project communication work done by Mr. Douglass and Mr. Wiley had been very useful and would be helpful over the next two years remaining in the project. From the point of view that EWEB had a major facility setting in the valley, Mr. Berggren thought it would not represent a major effort to establish an ongoing committee that addressed issues related to the operation of the project. EWEB could build institutional agreements with residents regarding the membership and meetings. He said that, given the long-term nature of the project, residents would need to make some commitments to creating continuity of membership. The Board could receive quarterly status reports from the committee. While that did not address some of the issue that had been raised regarding representation, Mr. Berggren thought it did address some of the issues related to communications and the ongoing presence of EWEB in the valley.

Commissioner Anderson thought Mr. Berggren's suggestion worth a try.

President Lanning thought it would be useful to know what residents thought the Board could be doing differently to serve their needs outside of providing representation. He also liked Mr. Berggren's idea. He thought it would be helpful to have a long-term committee in place and believed that there were several residents who were ready to serve on something meaningful.

Commissioner Bishop distinguished project-related issues from ongoing operational issues and suggested that EWEB had a model in the former Water Resource Working Group as a model, which included Board members. She thought the proposed committee should also have Board representation and said the nature of the committee needed to be carefully defined.

Commissioner Masterson also thought Mr. Berggren's suggestion worth exploring.

President Lanning was unsure the Board needed to be involved in a committee given the work that EWEB staff had done with residents. If problems proved unresolvable at that level, the Board could be consulted. He requested more Board discussion about governance issues, and recommended against making a decision at this point.

Commissioner Bishop said that the Board could monitor the progress of the working groups and discuss the issue again in the fall. She commended River Reflections for the number of stories it carried on EWEB-related topics and suggested that EWEB staff purchase advertisements in the paper to publicize its meetings with residents.

President Lanning closed the Work Session at 7:10 p.m.

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Assistant Secretary President