Board Members Present: Patrick Lanning, Ron Farmer, Dorothy Anderson, Sandra Bishop, and Mel Menegat.

Others present: Randy Berggren, Dick Varner, Dick Helgeson, Debra Smith, Jim Wiley, Tom Buckhouse, Lance Robertson, Marty Douglass, JoAnn Andersen, Ken Beeson, Dean Ahlsten, Cathy Bloom, Roseanna McArthur, Jim Origliosso, and Krista Hince of the EWEB staff; and Ruth Atcherson, City of Eugene Minutes Recorder.

President Lanning called the Regular Board Meeting of the Eugene Water & Electric Board (EWEB) to order at 9 p.m.

AGENDA CHECK

President Lanning moved to postpone Agenda Item 7(a) Board Governance; Board Staff Interaction and Agenda Item 9 Bill Remittance Processing to another meeting due to the lateness of getting started with the Regular Board Meeting. Commissioner Bishop provided the second. The motion passed unanimously, 5:0.

APPROVAL OF CONSENT CALENDAR

Minutes

1. Minutes of the September 2, 2003, Regular Board Meeting, and the October 7, 2003, Special Board Meeting.

Contract Award

2. Indus Utility Systems (aka SCT) - Customer Information Systems Maintenance Information Services - Corporate Services Division - $65,000

3. Brothers Concrete Cutting, Inc. - Asphalt/Concrete Cutting and Core Drilling - Construction - Water Division - $50,000 or service each year of the contract, for a possible total amount of $250,000 over the five-year period

Business Service Agreements

4. St. Vincent DePaul's - Energy Share - Customer Relations - Customer Services Division - not too exceed $200,000

Vice President Farmer moved to approve the Consent Calendar. Commissioner Menegat provided the second. The motion passed unanimously, 5:0.

ITEMS FROM BOARD MEMBERS

Commissioner Bishop requested that staff let her know if it was possible to test for radioactivity in the water.

Commissioner Bishop asked that the coat rack be returned to the meeting so that she had some place to hang her coat.

Commissioner Bishop reported she had seen an EWEB employee talking on a cell phone while driving. She asked if there was a policy regarding this.

Commissioner Bishop commented on the article on deposits that Mr. Douglass and Mr. Robertson had contributed to, stating that it had made the deposit policy appealing because of the interest rate.

President Lanning reported that he had attended the Churchill Neighborhood Meeting. He complimented Mr. Robertson on his help in answering questions. He recommended staff provide Commissioners a brief update on recent developments in the utility when attending these events so that Commissioners could provide current information when answering questions from the public. He related that a number of questions had been in regard to the low-income energy assistance program and the utility's adoption of a policy allowing people access prior to reaching the level at which they have received a cut-off notice. He said there were questions borne from a rumor that the utility was cutting back on its environmental programs as well.

CORRESPONDENCE

General Manager Randy Berggren reported the following:

• A letter had been signed by President Lanning and sent to the new member of the Lane County Board of Commissioners, Don Hampton, welcoming him and offering him a tour of one of the utility's facilities.
• The Commissioners' packet included results from the Power Quality and Liability survey.
• Board packets included a letter from the McKenzie Watershed Council written to the EWEB Board, along with the preliminary response written by Mr. Douglass. He thought the Board would likely want to put this item in the queue for future discussions at a Board meeting.
• Regarding the settlement agreement, the Public Power Council was touring cities to provide an informational talk on it and would be in Springfield at the Emerald Peoples Utility District (EPUD) on November 13 from 1 p.m. to 4 p.m. He said it was comprised of a presentation on the settlement agreement, followed by questions and answers.

In response to a question from Commissioner Anderson, Mr. Berggren conveyed his recommendation that the utility accept the settlement.

BOARD AGENDAS

Mr. Berggren highlighted the scheduled agendas for the Board, as listed on the attachment entitled Eugene Water & Electric Board; Board Agenda Report, November 3, 2003. He noted that the future Board agendas had been updated.

Vice President Farmer commented that he had requested a copy of the motion for the surcharge approved at a meeting in 2002 and it had come to light that there was no written copy of the motion on file. He requested that there be a discussion on this.

PUBLIC INPUT

There were no members of the public who wished to speak at this time.

BOARD GOVERNANCE

• 2003 GM Goals - 3^rd Quarter Status

Mr. Berggren said he had provided an extensive summary in the 3^rd Quarter Status Report.

Vice President Farmer expressed disappointment that the utility was not closer to meeting some of the performance metrics set forth by the subcommittee and GM.

Customer Services Director JoAnn Andersen stated, in response to a question from Commissioner Anderson, that low-income assistance was currently credited on the same day it was granted.

Vice President Farmer encouraged the formulation of a process whereby the ultimate decision-makers of EWEB and the Eugene City Council were brought together to foster a better relationship between the two. Mr. Berggren responded that this was being added to the Governance work.

In response to a question from Vice President Farmer, Ms. Andersen said that approximately 2/3 of the money allocated for low-income energy assistance had been spent in 2003. She thought that this was appropriate for this time of year as the heating season was beginning. She added that this included the projected variance of $700,000. Mr. Berggren clarified that $2.5 million was budgeted for the assistance program, but $1.7 million was the amount projected to be spent.

Regarding the goal to improve efficiency by lowering costs, increasing speed, and redirecting employee talent, Vice President Farmer said it seemed that management was still trying to put a plan together to accomplish this. Mr. Berggren responded that a part of the Tool Kit was to suspend activity in that area, but staff continued its work on the performance management model.

Debra Smith, Telecommunications Project Manager, said that this year the plan had been to focus on process improvement but because of funding limitations, staff had not done so. She explained that it was now "geared up" for 2004. She added that the $80,000 allocated for it had largely remained unspent.

In response to another question from Vice President Farmer, Mr. Berggren explained that the software vendor made some substantial code changes and system support changes that the utility had not been aware of. When implementing the system, it had been found not to function. He predicted that by the end of the year implementation of the software would begin. Mr. Varner noted the company was apologetic and had indicated its commitment to providing support in the future. He added that the software company was working on the system "on their nickel" and was only billing EWEB its usual monthly maintenance bill.

President Lanning asked the Board for its consent to continue beyond 9:30 p.m. The Commissioners agreed to extend the meeting.

THIRD QUARTER FINANCIALS

Cathy Bloom, Assistant Treasurer, provided a power point presentation, accompanied by a memorandum outlining the information entitled Third Quarter Financial Results and Impacts. She noted that the net income had dropped slightly from the previous year and attributed this change to the Federal Emergency Management Agency (FEMA) money that had come in one year previously and a reduction of revenue from the Western Generation Agency (WGA).

Ms. Bloom said the utility was at 46 percent of costs for capital and expected to be at budget by the year's end. She stated that the operating budget, all non-contribution margin items, was at 75 percent of costs. She explained that miscellaneous operating revenues were showing above 100 percent of budget due to transmission revenues that had been unanticipated.

Ms. Bloom said, in response to Vice President Farmer, that staff would include a sense of system load and customer consumption in the next financial report.

Regarding the comparison of the 2003 Annual Working Budget and the percentage, Vice President Farmer asked for clarification on what appeared to be a budgeted $8 million loss. Ms. Bloom explained that staff had taken a cash budget and inserted it into an accrual financial statement. She affirmed that the utility had not experienced an $8 million loss, but had a small difference in balance sheet adjustments. She said when Mr. Varner put the budget together, he put it together on a modified accrual basis and that, in attempting to make the statement on a full accrual basis, there were items that would offset the net of $5.5 million.

Vice President Farmer asked when the current ratio would be brought back to the benchmark. Ms. Bloom replied that the benchmark would be reached when the utility's assets had substantially increased.

Ms. Bloom moved on to the water utility financials. She explained that the negative cash position was because money in the construction fund had yet to be transferred. She said that after the transfer was complete, the balance in the water cash account would be approximately $1.5 million. She commented that this amount was still low, as the water utility should have an operating balance of $3 million. She noted that the capital fund was made up of mostly systems development charge (SDC) monies.

Ms. Bloom stated that the capital budget was 58 percent of the cost and the operating budget was 63 percent of the cost.

Ms. Bloom highlighted the steam power branch of the utility's third quarter financials, noting the rate increase the Board approved in the previous month.

Regarding the Payroll and Employee Benefit Budget Comparison, Vice President Farmer asked why there was such an abundance of overtime hours. Ms. Bloom replied that the work upriver had incurred in overtime hours for the electric generation branch of the utility and that the customer service area had experienced high turnover resulting in overtime there.

Mr. Berggren noted that there had been an oversight in the previous year's budget and trying to make up for it was affecting overtime costs.

ITEMS REMOVED FROM THE CONSENT CALENDAR

As there were no items removed from the Consent Calendar, President Lanning adjourned the meeting at 9:45 p.m.

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Assistant Secretary President