Board Members present: Patrick Lanning, Mel Menegat, and Dorothy Anderson. Vice President Ron Farmer and Commissioner Sandra Bishop was excused.

Others present: Randy Berggren, Dick Varner, Dick Helgeson, Debra Smith, Jim Wiley, Lance Roberts, JoAnn Andersen, Roseanna McArthur, Jim Origliosso, and Krista Hince of the EWEB staff; Ruth Atcherson, Minutes Recorder for the City of Eugene.

President Lanning called the Special Board Meeting of the Eugene Water & Electric Board (EWEB) order at 7:50 p.m.

AGENDA CHECK

There were no changes to the agenda.

APPROVAL OF CONSENT CALENDAR

Business Service Agreements

1. Safety/Material Safety Data Sheet (MSDS) and Chemical Management - Safety Department - Financial Services Division- $85,600

Commissioner Menegat moved approval of the Consent Calendar. Commissioner Anderson provided the second. The motion passed unanimously, 3:0.

ITEMS FROM BOARD MEMBERS

President Lanning announced that the tour of the Leaburg facility, scheduled for newly appointed County Commissioner Hampton, had been postponed. The tour was now scheduled for December 8. He encouraged those present to join the tour, if possible.

CORRESPONDENCE

General Manager Randy Berggren reported the following:

• The Commissioners' packet included a memorandum from Purchasing/Risk Manager Ed Case updating the new purchasing rules that were pursuant to changes in the Oregon Revised Statutes (ORS).

• Another meeting regarding the relicensing of the Carmen Smith facility had been held with the McKenzie Valley residents upriver on November 20. It was similar to the two previously held public meetings and only six people attended. People with interests in the area's recreation have been the dominant voice in the discussion to date, though Mr. Berggren felt the environmental community would be contributing to the dialogue before too long.

Commissioner Anderson asked for more definition of recreational interests. Lance Robertson, External Communications Coordinator, clarified that the people who spoke tended to be opposed to more development and were avid hikers, river rafters, and wilderness advocates.

• A meeting had been scheduled with the McKenzie Watershed Council (MWC) on December 11 to discuss the raising of the Leaburg Lake, per the agreement EWEB had made with the MWC to bring this information to them.
• Another McKenzie Public meeting had been scheduled for December 11 as well to discuss the recreation plan. The meeting was planned to be held at 7 p.m. at the Leaburg Community Center. Mr. Berggren recommended there be a Commissioner in attendance.

President Lanning suggested that Vice President Farmer attend the meeting or stand in as alternate for President Lanning at the Lane Council of Governments (LCOG) so that he could attend.

BOARD AGENDAS

Mr. Berggren stated that there had been no changes to the scheduled agendas for the Board at this time. He noted that union negotiations would be discussed in an Executive Session and, during the Regular Board Meeting, the agenda included Governance and a Subcommittee report on the General Manager's goals.

Mr. Berggren noted that the 2004 Annual Calendar of Board agendas had been formulated, and for the first time there had been a 12-month view of the work to come.

Mr. Berggren said the planning for the 2003 audit would begin in January.

Additionally, "pooling" would be considered, more likely as a Consent Calendar item. Mr. Berggren related that staff was recommending "pooling" as the utility currently did not "pool."

PUBLIC INPUT

Charles Biggs, 540 Antelope Way, asked if there was a moral and/or conduct clause in the employee contracts. He requested a copy of it, if such a clause existed.

Roseanna McArthur, Director of Corporate Services, spoke with Mr. Biggs and will provide the information he requested.

2004 BUDGET

Dick Varner, Fiscal Services Supervisor, introduced the 2004 budget. He stated that it had been in progress since July of this year. He noted that there were no specific comments on the budget made at the previous meeting.

Mr. Varner provided a brief overview of the budget, accompanied by a power point presentation. He commented that staff did not anticipate that the economy would rebound. He explained that the budget was based in part on the assumption that there would be rate increases in May in both the electric utility, at 6.5 percent, and the water utility, at 6 percent. These represent the first increases in two and a half years.

Regarding the rate funding for capital spending, Mr. Varner stated that it would increase from $7 million to $15 million. He noted that the utility had been getting by with $7 million per year for 12 years. He added that staff would likely present a proposal to remove the surcharge in the summer of 2004.

Mr. Varner commented that the water budget was down from the previous year because there was a smaller capital program now that the work at the Hayden Bridge Reservoir was substantially completed.

Mr. Varner stated that the utility had reduced labor costs by four Full-Time Equivalent (FTE) positions, but was looking to return pay increases as written in the utility's policy. He pointed out the reduction in the Public Employees' Retirement System (PERS), calling it significant, and added that, by contrast, medical expenses had increased by $1 million. Regarding the latter, he said employees were paying 25 percent of the increase.

Mr. Varner highlighted the table delineating the Eugene Water & Electric Board Budgeted Financial Ratios and Statistics. He explained that Vice President Farmer had been asking to look at the budgeted financial ratios as the current ratio was the measure of the utility's liquidity. He said the electric utility was working its way toward 60 percent, but the target was to get closer to 50 percent so as to have more "room" to issue substantial debt. He called attention to the financial ratio of the water utility which, at 40 percent, was healthy.

Mr. Varner said the operating ratio was the measure of how much of the current revenue was spent on operating costs. He stressed that a lower number was better than a higher number in the eyes of the rating agencies, as a high number indicated that all of the revenue was going into running the day-to-day operations of the utility.

Mr. Varner stated that there were three major sources for net income. He noted that, in order to add to the reserves, the utility needed to generate at least $7.5 million in net income. In order to pay for the capitalized conservation program, the utility needed to generate $6.5 to $7 million. He said looking at the amount of capital and principle payments on existing debt that was in excess of depreciation comprised the other $6 million in needed net income. He stressed that without the net income, the utility could not continue to support the capitalized conservation program.

PUBLIC HEARING ON 2004 BUDGET

President Lanning opened the public hearing.

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

2004 BUDGET

Mr. Varner conveyed the staff request to approve the 2004 budget as presented.

Commissioner Menegat moved approval of the proposed budget with the figures set forth by staff, $224,387,000 for the electric utility, $3,172,000 for the steam utility, and $21,205,000 for the water utility. Commissioner Anderson provided the second.

President Lanning asked if there had been any forecasts on the snow pack at this point. Mr. Varner replied that the early indications were that the snow-pack was relatively normal. He noted the first official stream-flow forecast would arrive around the first of 2004.

The motion passed unanimously, 3:0.

President Lanning thanked staff for the work done on the budget of 2004.

ITEMS REMOVED FROM THE CONSENT CALENDAR

As there were no items removed from the Consent Calendar, President Lanning adjourned the meeting at 8:20 p.m.

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Assistant Secretary President