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

Others present: Randy Berggren, JoAnn Andersen, Tom Buckhouse, Dick Helgeson, Jim Origliosso, Roseanna McArthur, Debra Smith, Jim Wiley, and Krista Hince of the EWEB staff; and John O'Connor, Consultant. Minutes were prepared by the City of Eugene Minutes Recorder Kimberly Young.

INTRODUCTION

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

General Manager Randy Berggren said the Board was at the beginning of a "grounds-up" review of its goals and strategies. Staff was in the process of doing the same task internally with a group known as the Strategic Thinking Group, which was a collection of various managers. As part of that work, staff had engaged the Board in a conversation about Governance. He said that the session was designed to close the gap between what EWEB had done with its strategies and goals in the past, and some of the conversations the Board had about its view of its role and how staff should work with the Board.

Mr. Berggren previewed the agenda and briefly noted the materials distributed to the Commissioners, which included summaries of the various retreats held by the Strategic Thinking Group and a prioritization outcome listing the major issues identified by the group and the group's prioritization of those issues. He requested feedback on the issues, and said that after staff had clarity about the Board's issues it would develop strategies and responses to the issues and return with that information in July 2003 prior to the start of budget preparation.

SCENARIO PRESENTATION

Electric Division Director Jim Wiley observed that the Board had spent considerable time over the past year on various technical issues and the session was an opportunity to think about long-term planning. To create context for the discussion, he provided a PowerPoint presentation on three scenarios, drawn from the book Which World? Scenarios for the 21^st Century by Al Hammond of the World Resources Institute, which discussed three potential scenarios for 2050. Mr. Wiley briefly described demographic, economic, environmental, social, and political trends, and related the trends to each of the three scenarios, which were as follows:

Market World-a belief in the efficiency and overriding power of the market

Fortress World-a darker vision of the future in which uneven economic growth creates islands of prosperity surrounded by oceans of poverty

Transformed World-a future in which fundamental social and political changes offer hope of fulfilling human aspirations

Mr. Wiley said that to respond successfully to uncertain outcomes one needed to be aware of these interconnected issues and how they may play out. He said that was the intent of the presentation. He urged the Board to look beyond the immediate future and to better position EWEB for the future outcomes of the utility industry.

EXTERNAL ISSUES DISCUSSION

Debra Smith, Telecommunications Project Manager, called the Board's attention to copies of an organizational fitness model developed by Ken O'Brien, which EWEB had been using for about four years. She said that the point of the fitness model was not to be the fittest, but to be "fit enough." Ms. Smith reviewed the model and described how it was used. She anticipated that the Board would discuss mission and purpose on the following day as well as debrief the homework assignment. Tonight the Board would discuss the external issues facing EWEB through a series of dialogues that allowed the Board to challenge staff's sense of where things were at.

Mr. Berggren noted that an external issues summary and preliminary prioritization sheet had been provided to the Board for additional context.

Mr. Berggren reviewed the issues identified by staff in priority order:

Cost of Power/Bonneville Issues

Mr. Berggren discussed increased power costs, noting that power rates were increasing faster than inflation. That raised the ability to pay issue, which the Board recognized when it committed substantial money to low-income energy assistance. EWEB was also hearing from its larger commercial and industrial customers about the impact of increased power rates, which had a regional economic impact. He noted the relationship of the issue to the Bonneville Power Administration (BPA) as a wholesale provider of electricity and to the Federal Energy Regulatory Commission (FERC) as a regulator of the industry. He said that BPA's relative distance from the retail market was a concern for EWEB. He noted that EWEB was more integrated with BPA than many utilities were and had several complex relationships with the agency. That had implications for EWEB and complicated the future.

Commissioner Masterson suggested that deregulation had not benefitted the end user to this point, and asked if staff anticipated that would turn around. Mr. Berggren said that he believed that deregulation at the federal level under the current administration did not provide any actual relief for the consumer. He characterized the current leadership of FERC as being on a "vision quest" about the power and competitive opportunity of a deregulated energy market. That vision was being implemented through market design and the mandate for a regional transmission organization (RTO). When brought down to the state level, he thought there had been a step away from deregulation as a result of what states had experienced; at one point in time, 31 states had been moving forward with deregulation, among them Oregon. With the unsurprising exception of Texas, all had slowed or stopped deregulation efforts.

Continuing, Mr. Berggren noted that other countries had similar experiences. Deregulation in those countries had not decreased consumer costs, and in fact had resulted in what he characterized as a redistribution of wealth that, in general, largely benefitted the energy companies. He observed that at the federal level, the vision had not been abandoned, and in the current political climate there was a developing argument related to states' rights and federal rights as they related to the formation of RTOs and the standard market design (SMD) proposal. The Northwest had been successful in creating flexibility and "pushing back" on FERC, giving the area the opportunity to consider the implications of the region's unique hydro-based capacity and the damage done to the Northwest by the west coast energy crisis. He thought that BPA's advocacy for the region was in question by many; was BPA supportive of the states' position, which was in opposition to the SMD, RTO, and deregulation, or was it supportive of the Department of Energy's position and merely pushing forward with its support for an RTO and, at some point, an SMD.

Mr. Berggren said that recently, BPA appeared to be more receptive to regional issues, and he suspected that it was due to the loss of relationships and customer trust. BPA's leadership appeared to be moving away from its "just say no" relationship with regional customers to a more constructive relationship. Mr. Berggren said that it was "late in the game," and considerable damage had already been done to customer relationships.

Mr. Berggren concurred with an observation from Commissioner Anderson that BPA's behavior was somewhat cyclical.

Mr. Wiley said that BPA had only so much generation capability, but he believed that what BPA sold should be inexpensive given that the facilities producing the power had been constructed many years ago and should be paid for. He thought that BPA would always be at or just below the market price. There was pressure on BPA from the investor-owned utilities (IOUs) for more power and, due to a recent court decision related to the condition of the riverine fisheries, renewed talk of removing dams on the Snake River, potentially impacting the supply of electricity. Given that BPA's power supplies were limited, Mr. Wiley anticipated that the region would be looking for other sources of power with the ten years. It is most likely that the new generation sources will be higher in costs than BPA power.

Mr. Wiley believed that the country was seeing more re-regulation.

Mr. Wiley characterized the entire energy situation as a mess because there was no investment occurring in the energy infrastructure because Wall Street resisted risk. He suggested that perhaps transmission lines, rather than power plants, were what was needed, because they took longer to construct than power plants and there were many obstacles blocking their location. Mr. Wiley anticipated that the amount of power that EWEB would receive from BPA in terms of supporting its customer load in the future would fall.

Commissioner Anderson said that cost-based rather than market-based and preference power for the public were important priorities that would be lost if there was not a BPA. If the region lost preference power and the cost-based power, she did not know what purpose BPA had. She suggested that EWEB needed to consider what it invested in "fighting that fight." Mr. Wiley noted BPA's many energy non-related program investments, such as support for watershed councils, that tended to raise the price of BPA power.

Commissioner Bishop questioned whether BPA's prices were raised by its support for such programs, or by the fact that at some point in the past it decided to provide more power than it could generate. She said that EWEB should be pushing on BPA to eliminate its corporate customers and stick to its public purposes. Because of those customers, the public's rates were raised so BPA could buy energy on the market to satisfy those customers' needs. Mr. Berggren concurred.

Speaking to Commissioner Bishop's remarks, Mr. Berggren said that there were two primary issues driving cost. One was that BPA had to go to the market to buy augmentation, that is, extra power above the federally based system, to serve its customers in 2000, including the IOUs. The second issue was the benefits being transferred from the federally based system to the IOUs. When the Regional Act was put in place, the residential and farm customers of the IOUs were to receive the same benefits as customers of public preference customers, or the 7b2 rate test.

Continuing, Mr. Berggren said that the Regional Act also stipulated that whatever benefit was transferred to the IOUs, the public preference customers were to be no worse off in their rates as a result of those transfers. Mr. Berggren said that the benefits transferred to the IOUs as a result of various administrative actions over the past 10-20 years had resulted in the IOUs receiving close to four times the benefits they had received in the 1980s. Today the IOUs receive 75 percent of the benefit from the federally based system. There was a direct correlation between the benefits received by those customers and the rate increases experienced by the customers of the public preference customers.

Commissioner Anderson suggested the potential of litigation. Mr. Berggren responded that BPA had a good track record with the Ninth Circuit Court and had been given extraordinary flexibility by the courts in making decisions.

Commissioner Bishop said that it was frequently contended that BPA had not dedicated enough money toward, for example, fish recovery, and asked where that funding was anticipated to come. Mr. Berggren anticipated that it would come from the public power customers. He agreed with Commissioner Bishop that the situation was not fair. Commissioner Bishop suggested that it would be cheaper to remove the dams on the rivers than it would be for the public to pay the costs of fish recovery. Mr. Berggren said that Commissioner Bishop could be right, given the substantial commitments the agency faced in terms of fish protection in 2007-2011.

Mr. Berggren said that over the past few years, so much money had been transferred to the IOUs that the competitive position of private to public utilities had been reversed, and there were several public utilities that were more expensive than the adjacent IOU, which had received benefits from BPA while the public utilities' rate went up to support those benefits. He indicated that a major goal for public utilities in 2006 was to get BPA out of the augmentation business and back to selling what power it had. It would get BPA out of the markets and remove its obligations to serve loads that it did not have the resources to serve. It would probably also force a redistribution of the benefits to the public utilities. He noted that a lawsuit was recently filed against the BPA by a utility related to its refusal to implement the 7b2 rate test.

Mr. Wiley said that midwest and northeast interests have been a threat to low energy prices in the Northwest for several years and think tanks representing those interests have persuaded the General Accounting Office to audit the BPA.

Water & Steam Division Director Dick Helgeson observed that in the past, BPA had perceived itself as a wholesale supplier to the public utility community. The public utilities were retail outlets for federal power. He thought that at this time, the BPA considered itself a federal competitor in the new market world, where it served everybody. He did not know how high a priority public preference was for BPA.

Mr. Berggren said that there had been pressure at the federal level to either dissolve federal marketing agencies or move them away to cost-based rates to a marginal pricing view of the market.

Commissioner Bishop asked if there were other regions facing the same sorts of problems with a BPA-like entity. Mr. Berggren cited the Tennessee Valley Authority as an example, although the issues were somewhat different. Commissioner Masterson cited several examples, including the Western Area Power Administration in California and the Alaska Power Authority.

Commissioner Bishop asked if there was a way to ally with other regions to put more pressure on the federal government. Mr. Berggren said he did not know the answer to the question. Commissioner Bishop believed that regions working together in a coalition would be more effective than regions attempting to influence the federal government alone. Mr. Berggren noted that recently, the regions had been cooperating as a result of the push for SMDs and RTOs, but the area was still at unique risk because of its dependence on hydro power.

Responding to a question from President Lanning, Mr. Berggren said that there was a wide range of public customers with different needs, character, and politics. He said that one of the greatest difficulties in securing a joint customer agreement that required BPA to satisfy its full requirements customers was that many of the utilities had been "taken care of" by BPA in the past and they were apprehensive about the need to take care of themselves. The diversity of need among utilities was a great risk, because they could not find any consensus on the topic, leaving opportunities for the IOUs to divide them. Commissioner Bishop suggested that without augmentation, BPA would have no problem supplying the public utilities. Mr. Berggren said that left the IOUs with a regional opportunity to secure preference power for their residential and farm customers, which, when added to the public load, left BPA without enough energy to serve all demand. That would likely lead to an allocation war between existing customers.

Commissioner Anderson questioned the impact on BPA that would occur if PGE went public. Mr. Berggren acknowledged that PGE would then be eligible for preference power and, while he did not think that would happen, agreed it was a risk.

Mr. Berggren believed the IOUs had done a good job in positioning themselves; their rates, for the first time since the passage of the regional act, were lower than their competing public utilities, drawing industry away from the public utilities. Because of the benefits received by the IOUs, the public utilities were very frustrated and had lost trust in BPA and were looking to other options for the future, which the IOUs encouraged, knowing they would benefit from the shift. In the meantime, the public utilities would be on the margin, forced to the market. He thought that created a strategic dilemma, and there was no governance body, outside BPA's willingness to partner with its customers, to ensure that BPA was managed according to its mandate.

Responding to a question from Commissioner Bishop regarding what percentage of EWEB power historically had come from BPA, and if the percentage was increasing, Mr. Berggren said that EWEB had been heavily dependent on BPA in the early 1990s. About 70-75 percent of its energy came from BPA. In 1995, BPA's prices began to go up and the market began to go down, and EWEB reduced its dependency on BPA to about 40 percent of its energy. He estimated that EWEB saved $25 million in power costs over the next four years as a result of that shift. When BPA had begun to project decreased prices, the energy crisis occurred.

Responding to a question from Commissioner Masterson, Mr. Berggren said that EWEB could not replace the generation it received from BPA in its own hydro. He said that EWEB could look to other sources, but each had risks. He thought BPA continued to have a role to play in EWEB's future. He also believed that at some time in the future BPA would allocate what it had and eliminated its product differential, uniting the region in retaining the value of BPA for the region. The question then becomes, "How much BPA does EWEB want in its portfolio?"

Commissioner Bishop questioned whether Mr. Berggren's version would be realized before hydro was no longer viable. She cited the increased costs of fish recovery and global warming as factors to consider.

Commissioner Masterson questioned whether it was healthy to depend as much on one source of energy. Mr. Helgeson said that seeking alternatives to BPA power such as a new resource would require EWEB to bear the full costs of any project, such as a wind project. BPA would not be available to offset the costs of financing.

Commissioner Masterson asked if the wheeling costs of moving to another source of cheaper power would "eat us up." Mr. Berggren said that he was unsure that those costs would have that effect. There was uncertainty about what wheeling costs would be in the region over the next several years because no one knew if the region would have an RTO (Regional Transmission Operation).

Commissioner Masterson requested more information about the impact of an RTO. Mr. Berggren said that a cost-benefit analysis of an RTO suggested it would be more expensive. An RTO provided access to a provider's system without requiring investment in the system. Both BPA and Pacific Corp were pro-RTO, while the public utilities were looking for alternatives to an RTO that used the existing system more efficiently and met some of the requirements FERC had regarding transmission systems.

Climate Change/Environmental Degradation

Mr. Berggren identified climate change as the next highest priority and related it to the previous priority and EWEB's reliance on BPA power and lack of resource diversity. He said that some were convinced that climate change was occurring; he agreed with that conclusion. There appeared to be consensus growing among scientists that something was happening. The precise implications of climate change were not known, but earlier snow melt and higher temperatures would make a difference in how hydro power supported EWEB's load resource balance.

Commissioner Bishop suggested that EWEB's decisions about its power supply could exacerbate the problem of global warming. She believed that the Board should consider some strategies as bridges to the future. For example, EWEB might have to acquire less desirable, nonrenewable energy resources as a bridge. Mr. Berggren agreed, saying that there were short- and intermediate-term strategies that the Board might consider with an eye to the long-term.

The Board took a brief recess.

Mr. Berggren said that EWEB needed to respond to climate change and how EWEB could diversify to respond to its impact. He said that EWEB needed to consider the impact there would be on the utility's revenue stream from less-than-normal hydro conditions, and incorporate assumptions about how to address those conditions in its planning. That could lead to increased pressure to raise rates.

Mr. Wiley discussed staff's assumption that climate change would bring more lightening storms to the Willamette Valley. The distribution system was not designed for lightening storms, and lightening storms frequently led to blown transmitters and customer dissatisfaction. He said that EWEB would need to make a significant investment in the system to increase its resistance to lightening, further increasing pressure on rates.

Commissioner Anderson questioned whether climate change would have a significant impact in the next 25-30 years and how much EWEB needed to be concerned about it now. Mr. Berggren said that was part of the dilemma EWEB faced. However, at some point, EWEB needed to determine at what point planning commenced.

Commissioner Anderson questioned how the situation was facing gas. Mr. Berggren said that some took the view that gas supplies were limited to ten years; others argued that gas supplies were in place for fifty to one hundred years. Ms. Smith said that gas could be a bridging strategy for EWEB given that fact. She noted that she had recently visited England, and learned that country was establishing targets for alternative energy sources to diminish its dependence on fossil fuels and the environmental degradation that resulted from its heavy use of coal. England had set no targets for the use of gas because it was looking to aggressively introduce new, long-term resources. Commissioner Anderson liked the approach England was taking.

Mr. Berggren said that the decision to move to fossil fuels as a bridging strategy brought up several related issues, such as the utility's conservation ethic, and what end uses EWEB served; for example, natural gas was more efficient when, for example, used in the home to heat water than it was being burned in a thermal plant.

Commissioner Masterson asked if staff had considered that technological change could result in other resources. Mr. Berggren said yes, and referred the Board to the next priority topic and linked it to the current priority topic.

Commissioner Bishop said that she considered it absurd that people questioned the fact of global warming and climate change. The issue was how long it would take for climate change to have an effect. She did not want EWEB to avoid the issue. Mr. Berggren said that there was no universal agreement on the topic, and EWEB was directly affected by federal policies set by those who denied global warming.

Commissioner Masterson said that he had read conflicting views on the topic and was not convinced of the fact of global warming.

President Lanning asked what dialogue was occurring with other public utilities about backing away from BPA as a resource. He suggested that EWEB could use its trading resources to benefit other providers. Mr. Berggren said that such discussions had occurred and EWEB was providing actual resource management and monitoring services to other utilities, such as the City of McMinnville. President Lanning asked the purpose behind EWEB's actions; were they intended to move providers away from BPA. Mr. Berggren said that EWEB saw an opportunity to partner with other public utilities to provide services they did not have. He said that EWEB had reached out to other utilities several years earlier to encourage them to move away from BPA and form a coalition with its own resource development and trading capability. At that time, EWEB had begun providing services. The utilities had been very receptive but several had acted precipitously and took positions in the market beyond what EWEB recommended, suffered by it, and subsequently retrenched. Those that remained with EWEB were doing well.

In response to a question from Mr. Berggren, the Board discussed how well its information needs were being met. There was general agreement that the Board received a great deal of information and members often did not have time to review it all. Commissioner Bishop suggested that staff consider dedicating 15 minutes of each two-hour work session for a general overview of the latest regional and industrial news.

Changing Technologies

Mr. Berggren said the topic was primarily in regard to Distributed Generation (DG). Technology at the customer location in the form of on-site generation that took away from the overall load and diminished the efficiencies designed into the distribution system. He said the question was what was DG, what fuels were involved, and how did hydrogen relate to the concept. He said that EWEB needed to determine the effect of DG on its customer base, and how it could position itself so it did not over-invest in the distribution system and under-invest in its relationships with customers. Mr. Berggren suggested that EWEB needed to develop strategies to use DG for retail load growth. He said that EWEB also needed to be careful about the technologies it invested in, giving the rapid changes occurring in generation.

Commissioner Masterson supported the use of new DG technologies to support EWEB's customer load.

Commissioner Bishop suggested that technologies for new alternative energy systems were being suppressed by corporations that had the purpose of generating revenue rather than getting energy to people. She said that no matter what technology was available, it would not be allowed to be used because it would adversely affect the corporate "bottom line" for the big corporations that control the market. Mr. Berggren cited industry resistance to EWEB's fiber venture as an example.

Commissioner Bishop suggested that new technologies would not be widely used until they were economically feasible for large companies. She did not know if EWEB could afford them. She said that many people were seeking to "get off the grid" and she anticipated that EWEB would lose some small residential customers in the future. Mr. Berggren said while EWEB had a franchise of sorts on electricity, its monopoly only reached to the customers' meters. The customer had the ability to find other DG sources, install it on his or her property, and connect to the system, leaving EWEB with the option of buying any excess power generated by the customer. He said the market could result in EWEB losing its relationships with customers. He related that to Commissioner Bishop's comments about people wishing to get off the grid, and said that would feed the impetus toward new technologies over which individuals had greater control. If that trend was realized, the system did not serve the same purpose as it had before and EWEB would be overinvested in its system. If EWEB was able to anticipate the trend and develop a system that addressed the trend, the craft and vocational skills needed to manage such a system would be very different from those needed today. Mr. Berggren said that planning for that and the timing of that planning were major issues.

Ms. Smith observed that staff had discussed what a vision statement would be for a utility that was not the provider of energy but rather more of a facilitator of energy.

Mr. Varner suggested that EWEB was uniquely positioned to exploit the power line carriers and noted that the technology was improving at a high rate. EWEB could manage the various loads of various entities by leveraging its power lines. He noted the use of those lines for both electricity and data now. Mr. Berggren agreed. He said that while the electricity might be generated by the customer in the future, there would still be the need for an entity to manage generation on a moment-to-moment basis. The distribution system would be what he characterized as "distribution system light," which had a primary purpose of back-up and to serve as the broadband system.

Aging Infrastructure

Mr. Berggren referred to EWEB's aging infrastructure and recalled past board discussions about the appropriate level of investment and the appropriate mix of investment. He said that there was a relationship between the issue of aging infrastructure and the technological advances in DG. Perhaps the utility does not want to replace an aging infrastructure, or replace it with a new design and purpose.

Mr. Berggren said that another aspect of the topic was the state of public infrastructure in general. He cited the road system as an example. He said that in general, the public has not invested in its infrastructure. He said that there would be an impact if the City generated new revenues and began to build new roads and rebuild old roads. EWEB would have to accompany that with its own replacement and relocation of facilities on a schedule it did not have control over. Those issues had strategic implications for EWEB. Mr. Berggren said that in addition, customers were getting more sophisticated equipment at home, which "raised the ante" on the issue of liability and power quality.

Mr. Wiley emphasized the importance of power quality to today's customer.

Commissioner Masterson asked the least expensive source of power. Mr. Berggren said that conservation was the least expensive. It reduced the need for new marginal cost generation. Commissioner Masterson suggested that investing in new generation and transmission lines might not be the most viable investment for EWEB. He asked about the cost of wind. Mr. Berggren said that while wind was a renewable resource, it cost more than hydro.

President Lanning determined from Mr. Wiley that power quality was measurable, and customers often measured the quality of electricity, depending on their needs. Ms. Smith said that additionally, EWEB had power quality engineers that worked with customers.

Commissioner Bishop asked whose responsibility it was to guarantee customers received a high quality, continuous supply of power. She suggested that it was the customers' responsibility given the potential high cost of a power failure. She did not think it should be EWEB's responsibility and suggested the Board discuss the issue. Mr. Berggren said that in practice, it was the customers' responsibility. EWEB heard frequently from its large commercial and industrial customers about the issue and had built up its power quality division over the past eight years.

Responding to a question from Commissioner Bishop, Mr. Berggren distinguished between interrupted service and a brownout.

Ms. Smith suggested the potential of selling electricity of varying degrees of quality and of selling higher quality power to customers willing to pay a premium. Mr. Berggren questioned whether EWEB could offer increased reliability to some customers because of the implication that the reliability of other customers was lowered.

The Board took another brief recess.

Political Instability/City Relationship

Mr. Berggren noted the recent hiring of a new Eugene City Manager Dennis Taylor. He said that there was some mutual frustration between EWEB and the City that he believed dated back to EWEB's telecommunications initiative and what EWEB perceived as a lack of support from the City. The City felt a lack of support from EWEB about many of its initiatives. He believed there was instability in the relationship. Internally, the Board had its own discussions on governance for clarity about how decisions were made as Board members came and went. There were also global issues, State issues, and economic conditions creating political instability that affected EWEB.

Commissioner Bishop asked what EWEB was doing about establishing a relationship with the new city manager. Roseanna McArthur, Corporate Services Director, said that staff was talking about how to establish a relationship and was working on setting up monthly breakfast meetings between Mr. Berggren and Dennis Taylor. Commissioner Bishop suggested that the Board and staff make overtures to Mr. Taylor and invite him to visit EWEB and view its operations to educate him about EWEB and its issues. Ms. McArthur indicated that was intended. Mr. Berggren said that a meeting of all the local governmental CEOs will occur in the next few months to acquaint Mr. Taylor with those individuals. Ms. McArthur assured the Board that staff was cognizant of the need for communication between the city manager and Mr. Berggren.

Mr. Helgeson said that the hiring of the new manager and turnover among City staff presented an opportunity for EWEB and the City to develop a different relationship.

President Lanning did not believe the Board's attempts at formal communication with the City Council had worked, but suggested that if something could happen informally at a lower level to increase shared understanding, that would have benefit.

Commissioner Bishop suggested the Board take advantage of low-key communication opportunities such as floating the river or touring the water plant. Mr. Berggren said that he would work with the new manager to create such informal opportunities for the Board and council.

Commissioner Bishop emphasized the importance of educating the council and the new manager about the relationship between EWEB and the City. She said that the questions asked of staff by the council when it considered EWEB bond issues demonstrated the lack of knowledge on the part of councilors about such fundamental issues.

The Board briefly discussed its relationship with the City Council and past attempts to improve communication. President Lanning related his experience in attempting to make contact with members of the council, who had failed to even return his calls. He had not felt any respect from the council. He acknowledged that some commissioners, such as Commissioners Anderson and Bishop, had developed relationships with some members of the council.

Mr. Berggren said that he would work with the manager to provide him with an education about EWEB issues that he could use to educate the council and manage the organization.

Ms. McArthur said that the Board would have multiple opportunities to interact with the council given some the issues that faced the community, such as the federal courthouse and aging infrastructure.

Mr. Berggren gave the Board a homework assignment to provoke creative thinking. He asked the Board to consider what their vision would look like if it had the vision that EWEB was to be the best managed public utility in the nation; what kinds of things would begin to distinguish EWEB as a publicly owned utility from other publicly owned utilities in the country, and how would the Board want to see EWEB function if it was the best managed utility in the country. In whose eyes would EWEB be the best publicly managed utility?

Ms. Smith suggested that the Board consider having a visioning session at some time in the future.

Ms. Smith provided the Board with evaluation forms to complete for the special session.

President Lanning adjourned the meeting at 9:25 p.m.

_____________ ______________________________________

Assistant Secretary President