Board Members Present: Patrick Lanning, President; Ron Farmer, Vice President; Dorothy Anderson, Sandra Bishop, Mel Menegat, Commissioners.

Others Present: Randy Berggren, Dick Varner, Dick Helgeson, Debra Smith, Tom Buckhouse, Marty Douglass, Joanne Andersen, Jim Origliosso, Terry Bequette, Jim Wiley, Lance Roberts, Roseanna McArthur, Mark Freeman, Jim Maloney, Eric DeFreest, and Krista Hince of the EWEB staff; and Ruth Atcherson, Minutes Recorder for the City of Eugene.

Vice President Farmer called the special board meeting of the Eugene Water & Electric Board (EWEB) to order at 7:30 p.m.

AGENDA CHECK

There were no changes to the agenda.

APPROVAL OF CONSENT CALENDAR

Minutes

1. Minutes of the September 16, 2003, Special Board Meeting.

Business SERVICE AGREEMENTS

2. McKenzie Willamette Hospital - HR, Wellness and Safety - Human Resources - Corporate Division - not to exceed $150,000 per year

3. Neighborhood Economic Development Corporation (NEDCO) - Water System Development Charge Grant Request - Santa Clara Glen Project (NEDCO) - Interagency Housing Policy Board - Water Division - $24,180 grant

4. Group 1 Software - Develop Web-Based Electronic Bill Presentment and Payment (EBPP) - Information Services - Customer Services Division - $49,500 per year for up to five years plus $19,000 one time purchase fee

Resolutions

5. Resolution #3006 - Authorizing Issuance of a Standby Line of Credit for Power Supply Contingencies - Finance Division

6. Resolution #3005 - Fiscal Services - Finance Division - limited hedging transactions

Bonneville Power Administration (BPA) Slice True-up Costs

7. Pacific Northwest Generating Cooperative (PNGC) - Arbitration Costs for BPA's FY 2001-2002 BPA Slice True-Up Charge - Electric Division - $65,000

Trojan Budget

8. Trojan Budget Approval - 2004 - Electric Division

Vice President Farmer, seconded by Commissioner Menegat, moved approval of the Consent Calendar as presented. The motion passed unanimously, 5:0.

ITEMS FROM BOARD MEMBERS

Commissioner Anderson reported that Public Affairs Manager Marty Douglass and Relicensing Coordinator Catrin VanDonkelaar made a presentation before the McKenzie Watershed Council (MWC) on the relicensing of the Carmen-Smith facility. She noted there had not been "a lot of enthusiasm" expressed by the group to review and comment on the different studies that had been done. More importantly, she noted that EWEB would be providing a presentation at the December meeting of the MWC on the technical points of the raising of the Leaburg Lake. She said the MWC was waiting to hear more from the EWEB Board on policy questions. She strongly recommended placing a discussion of the questions in the EWEB meeting agenda queue soon.

Commissioner Anderson reported that she, Commissioner Bishop, Electric Division Director Jim Wiley, Senior Financial/Rate Analyst John Yanov, and Treasurer Jim Origliosso had attended the Public Power Council's (PPC) "road show" the previous week. She agreed with General Manager Randy Berggren's assessment that the chance of a settlement was not good. She related that the PPC opposed signing off on the settlement, while the Bonneville Power Administration (BPA) had essentially said to sign it "or it would be off." Mr. Berggren added that it would be appropriate to bring this to a meeting for discussion purposes and to determine the Board's direction in that matter.

President Lanning asked if the two items of concern for the MWC would be placed on the agenda. Mr. Berggren replied that they had been scheduled for an upcoming agenda.

Vice President Farmer questioned the need to have the two items on the agenda. He stated that having an ombudsman from the McKenzie River Valley area had been discussed and decided upon. Commissioner Anderson responded that the question of having an advisory committee from the area had not been discussed and the MWC wanted more information regarding the other question, that of whether the MWC should weigh in on the Leaburg boat landing.

Vice President Farmer asked if EWEB would then have ombudsmen from other unincorporated areas. He cited the River Road area, with twice the population of the McKenzie Valley, as an example of an area that was not represented.

President Lanning advocated for bringing this up to the Board as an issue as it obviously merited discussion.

Commissioner Bishop said she would like to propose the formation of an advisory group that included customers in unincorporated areas, not specifically restricted to the McKenzie Valley area.

Commissioner Menegat commented that it would be beneficial to help the people who think they are unrepresented feel that they were being listened to.

Mr. Douglass conveyed MWC's lack of interest in acting in the role of a mediator for the boat landing issue. He related that they had said they would consider what level of involvement they wanted to engage in when EWEB made its decision on the boat landing.

Commissioner Menegat reported that he had attended the Jefferson-Westside Neighborhood Association meeting and the Whiteaker Neighbors meeting. He thanked staff for their support.

Commissioner Bishop discussed the Northwest Energy Alliance's Conference, calling it a "very interesting group." She called the sessions held there "cutting edge," noting that the future of the BPA was a major topic of discussion. She related that she had tentatively committed, pending Board agreement, to help coordinate and host a Northwest Energy Coalition presentation in January or February to get the word out to people on how people could be involved in the process. She stated that there was much talk of the challenges of transmission, whether regional transmission would work and whether it needed to be run by a third party or not. She noted that the hydro plants that were being built were "dropping out of the line up."

President Lanning thanked staff for planning the tour of the Lillis Business Building on the campus of the University of Oregon. He commended the building as an example for the rest of the nation as it was being built for sustainability.

President Lanning also thanked Mr. Douglass and External Communications Coordinator Lance Robertson for putting together the speaker bureau follow-up so that the Board could see the comments and themes that were emerging from the neighborhood discussions they were participating in as Commissioners.

Continuing, President Lanning announced that Mr. Douglass had worked to plan a tour of the Leaburg facility for newly sworn in County Commissioner Hampton. He invited the Commissioners to attend if possible.

CORRESPONDENCE

Mr. Berggren reported the following:

• A backgrounder from Human Resource Specialist II Laurie Muggy had been provided to Board members providing some preliminary information regarding the retiree lawsuit, and there more information will follow in 30 to 60 days.
• Mr. Douglass had provided Board members with a follow-up on the speaker's bureau that included a tentative listing of where Commissioners were next scheduled to speak.
• A memorandum from EWEB's Legislative Lobbyist Libby Henry that provided an overview of the 2003 legislative session had been included in the Board agenda packets.

BOARD AGENDAS

Mr. Berggren reiterated that an additional issue had been identified, in terms of the proposition for the formation of an advisory committee made up of customers in unincorporated areas. Regarding future board agendas, he stated that it had been decided to move ahead with the budget decision, though Commissioner Bishop and Vice President Farmer would be absent. He expressed concern regarding the growing list of governance issues. He advocated for prioritizing them, adding that staff was arranging a year-long overview of Board agendas for the Board to review.

President Lanning added that the tentative 12-month schedule would also aid the Board in making Special Board Meetings truly special by eliminating the monthly need for them.

PUBLIC INPUT

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

2004 BUDGET

Mr. Varner provided a brief synopsis, with power points, of the proposed budget. He noted there would be a public hearing both at the present meeting and at the meeting scheduled for December 2. Mr. Berggren stressed the importance of maintaining the quorum.

In response to a question from Commissioner Bishop, Mr. Varner explained that the steam plant had a perpetual net deficit. Mr. Berggren added that it had been the standard budgetary practice since the major equipment replacement had been implemented.

Mr. Varner noted that Vice President Farmer had called attention to a budgeted deficit in the electric utility in 2003 due to borrowing for a substantial portion of the capital expenditures and also borrowing for conservation measures.

Commissioner Anderson asked if there was any possibility the reserve could be replenished sooner, should weather conditions be optimal. Mr. Varner replied that it would not likely affect the rate action, to be requested in the spring, but the expiration of the surcharge could be moved up pending the size and lateness of the snow-pack.

PUBLIC HEARING ON 2004 BUDGET

President Lanning opened the public hearing.

Seeing no one who wished to testify, President Lanning closed the public hearing.

BILL REMITTANCE PROCESSING

Mr. Berggren explained the discussion had been scheduled at the request of the Board in response to public feedback due to the shift of the bill remittance processing to Vancouver, Washington.

Commissioner Anderson said her chief concern was how to respond to constituents who had concerns regarding the outsourcing of the processing to another state. Mark Freeman, Credit/Field Services Supervisor, responded that everyone who requested a response received one. He explained that, of all the people that had complained, only two or three did not understand the reasons for the action after sufficient explanation. He stated that, initially, the utility was receiving five to eight comments and complaints per week, but after utilizing the bill remittance service for a year, the complaints had dwindled to two to three per month.

Commissioner Anderson asked if it would be prudent to include a bill stuffer to explain the utility's reasoning for utilizing the Vancouver service. Mr. Freeman felt this would "ramp up" complaints, by bringing it to the surface again.

President Lanning understood why the shift in bill remittance processing had occurred, but he also understood why people opposed the move. He commented that he opposed the Vancouver, Washington address as it did not make sense for a locally owned utility to seem as though it was billing from there. He felt the reason for handling the billing in that way made sense, but the larger issue was the perception of public ownership. From the organizational perspective and as a Board member, he stated that it did not make sense to do this. He asserted it was the worst message to send to customers.

Commissioner Bishop suggested the Board brainstorm and look for a solution. She noted the utility was saving $45,000 by using the Vancouver facility. She recommended maintaining a Eugene address and "batching" the mail.

Mr. Freeman stressed that staff had made a conscious decision not to obfuscate the issue. He added that the mail had proven to arrive in Vancouver more expeditiously than it did across town, noting that when they had a sample letter sent across town versus to Vancouver, it took two to three days longer in town. He said he wasn't sure why that was.

Vice President Farmer opined that the savings did not seem like much. He felt that the comments made on the back of the bills were not a good measure for the public sentiment regarding this. He said it was disconcerting to him that the message had not been managed well. He suggested that the customers should have been made aware that keeping the bill remittance processing locally would mean a greater cost to them.

Commissioner Menegat remarked that he had been prepared to answer questions regarding the bill remittance processing at the neighborhood meetings he had spoken at and no one had asked him such a question.

BOARD GOVERNANCE

Mr. Berggren directed Commissioners to look over the Draft General Managers' Goals for 2004 and Attachments 1 through 3. He stated that, compared to prior years, the Board was substantially ahead, in terms of the timing of the discussion of goals. He felt this was predicated on the work accomplished by the Board's subcommittee, which had formulated a draft schedule for the goal setting process and the evaluation process. He advocated for getting the draft "out in front of the budget." He noted the goals were relatively similar to the goals for 2003.

Commissioner Anderson asked Mr. Berggren to define what he meant by a "streamlined budget process." Mr. Berggren responded that this was an idea that was due, in part, to the Board's wish to reduce the number of Special Board Meetings, i.e. the second meeting held in a month.

Commissioner Anderson averred that the Board had wished to get more involved in the budget process so that it had a greater understanding of the budget. Debra. Smith, Telecommunications Project Manager, commented, in response, that the budget process the Board was nearly finished with had been streamlined.

In response to a question from Commissioner Anderson, Mr. Berggren said the 'cost of labor' referred to in the goal related to wages and benefits referred to the cost of labor index.

Commissioner Anderson asked if Strategy 3.1 regarding technological improvement opportunities was in alignment with the Integrated Energy Resource Plan (IERP). Mr. Berggren responded that it was not, that the strategy focused on keeping up with technologies having to do with fuel cells, photovoltaics, automatic meter reading capabilities, and broadband power lines. He noted that the strategy was a placeholder at this point and not funded to much extent.

In response to a question from Commissioner Bishop, Mr. Berggren reiterated that the operation performance measures (OPMs) provided a way of calibrating the 88 percent of the resources spent for design, construction and technical attributes of the utility.

Vice President Farmer averred that the fact the goals were being streamlined this year did not imply that hundreds of management initiatives were not being put into action within the organization. He recommended the subcommittee on General Manager Goals present a report, perhaps at the meeting scheduled for December 16.

Vice President Farmer felt goals were a way to identify things that the utility needed to improve on. He recommended eliminating goals that were being met or exceeded, as they were not in need of being measured.

Continuing, Vice President Farmer remarked that, under organizational goals, it was stated as a goal that EWEB should develop a highly productive workforce that was adaptive and committed to EWEB's values and visions. He felt that, should a third party read this goal, a person could be lead to believe that EWEB did not already have this.

Vice President Farmer suggested that each Commissioner list the three or four goals that held the highest amount of interest for them and that this would provide insight into what was most important to focus on.

Mr. Berggren recommended that the subcommittee review and enhance the goals and then have another session soon to "check out contextual priorities."

Ms. Smith said she had been working on the annual calendars. She commented that the OPMs would not be completed until January 15, as they were based on three to five-year averages. She suggested the Board bring their top three or four issues to the meeting on the first Tuesday in January for refinement and then discuss it further at the second meeting in January.

President Lanning stressed the importance of aligning the work of the goals with the process the Board was trying to implement.

GENERAL MANAGER'S PERFORMANCE AGREEMENT

President Lanning explained that the Board had met with Mr. Berggren and legal counsel in an Executive Session on Monday, November 3, 2003, to discuss Mr. Berggren's failed driver's breath test of September 21, 2003. Pursuant to this discussion, President Lanning reviewed Mr. Berggren's Department of Motor Vehicles (DMV) records. He stated that he felt satisfied Mr. Berggren's citation did not reflect a pattern of behavior and, therefore, should be treated as an isolated incident. He recommended the Board direct the Board president to write a memorandum of understanding to be jointly signed by President Lanning and Mr. Berggren and to be placed in Mr. Berggren's personnel file that would clearly state that this type of conduct was improper, reflected poorly on the utility and its employees, and would not be tolerated in the future.

President Lanning moved that the Board give direction that a memorandum of understanding be written, to be signed by General Manager Berggren and President Lanning and to be placed in General Manager Berggren's personnel file, clearly stating that the aforementioned conduct was improper, that the conduct reflected poorly on the utility and its employees, and such conduct will not be tolerated in the future. Vice President Farmer provided the second. The motion passed unanimously, 5:0.

Mr. Berggren apologized and acknowledged the principles and the intent of the motion and extended his commitment to the Board to honor those principles.

President Lanning thanked Mr. Berggren for coming forward and taking responsibility for the incident and doing all he could do to minimize the negative impact to the utility.

ITEMS REMOVED FROM THE CONSENT CALENDAR

There were none.

The meeting adjourned at 9:20 p.m.

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Assistant Secretary President