Pre-Meeting Q & A from the Board - September 4, 2018

The following questions have been posed by Commissioners prior to the scheduled Board Meeting on September 4, 2018.  Staff responses are included below, and are sorted by Agenda topic.

Property Management Program (ACKERMAN)

It is stated that after the initial declaration of surplus, properties that the City passed and did not exercise their rights to purchase any of the properties but that "they are now expressing an interest in the River Loop site". I believe this property is in front of the new Madison Middle School and it is in such configuration that it appears several lots could be created. If the city is anticipating a housing project at that location that we also consider 4J's possible interest as this is in their front door so to speak. By way of disclosure, President Brown works for 4J on a contract basis on real estate matters.  Because the City did not exercise their right to purchase the River Loop site within the designated 30 days, we have options to engage other parties, including 4J. Our current thinking is to first determine the value of the property and then approach both the City and 4J to see if they have an interest in purchasing

With regard to the Weyerhaeuser property; can EWEB condemn the 8 acres we need for a sub-station?  Yes, we could, but condemnation carries some risk of success, and the time and cost for acquiring the eight acres through condemnation may exceed the effort for direct purchase. Since Weyerhaeuser is a willing participant in the direct sale and the additional acreage will benefit the utility's drinking watershed protection efforts, staff recommends proceeding with direct negotiation on the larger parcel.

Consent Calendar

CONTRACTS

Altec Inc. (LEIPOLD AIC for DAMEWOOD) - What is the knuckle boom at ROC used for? How often has it needed to be transported to Carmen-Smith for emergencies in the last 15 years?  The knuckle boom at the ROC is assigned to the electric construction department and is rated as a 14-ton crane. It is used for moving vaults, transformers and other material for both the Electric and Water Utility. Utilization for this crane is relatively high as it is currently the only knuckle boom crane at ROC. The crane selected for Carmen Smith is a 23-ton crane.

The Generation Department is replacing a "boom truck" with a "knuckle boom crane." The boom truck has been an ineffective piece of equipment for Generation because we cannot use it in tight locations or for several critical lifts. As a result, we've had to borrow the electric ops knuckle boom or rent from a private provider. Generation has already turned in the boom truck to Fleet Services for disposal. We estimate that we have used the Electric Operations knuckle boom between 15 and 20 times over the past two years and have contracted for outside crane services about a dozen times in the same period.

Basically, for many years Generation has had no crane or other equipment able to lift various pieces of equipment that have been added to the generation system over the past 15 years. This includes manipulating stop logs at the Walterville, Leaburg or Trail Bridge powerhouses or at the Carmen Diversion tunnel entrance. This condition will only get worse as we build out the Carmen-Smith fish passage components of the Settlement Agreement. In addition, the powerhouse crane at Trail Bridge is inoperable and a decision was made,based on condition, to not repair or replace it. As a result we have no working crane at the Trail Bridge powerhouse. The knuckle boom can be used there rather than investing in a replacement or repair of the powerhouse crane. In addition, we list the boom truck in our dam safety program. We will notify the FERC that we are adding the knuckle boom to provide additional capacity onsite, and bolster our dam safety program response capabilities.

Beecher Carlson (FAHEY) - Please explain the commercial insurance portfolio a bit more.  Our commercial insurance portfolio includes liability insurance for events in excess of our self-insured reserves, property insurance, and cyber liability insurance. Some insurance carriers that provide coverage for public utilities can only be accessed through a broker so utilizing the services of a broker provides EWEB access to more comprehensive coverages and better pricing. The broker assists in determining coverage, limits, and deductibles based on their knowledge of utility risks and other utilities' coverage amounts. For example, in light of the 2017 northern California wildfires that were determined by Cal Fire investigators to be partly the responsibility of PG&E, many liability insurance carriers were reluctant to provide coverage to EWEB for wildfires. Our broker at the time worked with liability insurance carriers to enable EWEB to have coverage in the event of a wildfire based on EWEB's specific needs and offered suggestions on actions to reduce insurance costs in the future. The insurance portfolio is reviewed at least annually to ensure it still meets our needs.

HD Fowler (LEIPOLD AIC for DAMEWOOD) - Was the expense for polymer concrete meter boxes factored in to the total project cost from the beginning or are we just now realizing this is needed as part of the AMI water meter transition?  The expense of water meter boxes and lids are covered in the Smart Meter Rollout project estimates and capital budget. The reason for this contract: we were using the City of Salem's purchasing contract for all concrete water meter boxes and lids. All of the EWEB standard items were included within that contract. The City of Salem just completed a new contract and most of our items weren't going to be covered moving forward. This is why we moved to our own solicitation as there was no existing contract that covered our needs.

Owen Equipment Company, an Authorized Dealer of the Federal Signal Corp (LEIPOLD AIC for DAMEWOOD) - Did the Work Asset Management (WAM) system identify the truck mounted hydro excavator was in need of replacement? If not, why not?  No, EWEB's fleet vehicles are not part of WAM. When WAM was implemented for the Utility, it did not have the ability to track miles, hours, time, and/or fuel use as maintenance triggers to support its maintenance program. EWEB's Fleet Services has used a fleet management system by Asset Works, FleetFocus^TM to manage its fleet since 1995. This hydro-excavator that we're replacing was identified by our fleet management system for replacement in 2015. At that time, the maintenance cost had exceeded the initial capital cost of the unit. When this was evaluated by EWEB staff (as we were finishing up the EMX project), we wanted to verify that our projected utilization for this unit was in line with replacing the unit. Today, this hydro-excavator, along with the other hydro-excavators in the utility are some of our highest-used assets in the fleet as they support both the Electric and Water Utility.

Pacific Excavation - for North Bertelsen Road Water Main Replacement (LEIPOLD AIC for DAMEWOOD) - Is this and all new water distribution pipe designed to withstand Cascadia earthquake?  All new water distribution pipe is provided with restrained joints to prevent separation in the event of any ground movement caused by an earthquake. In accordance with the recommendations of our resiliency plan, we currently use two styles of restrained joints, standard ductile iron with restrained joints in areas with low probability of ground deformations and telescoping seismic joints where ground deformations from liquefaction or landslides is expected to be moderate or high. This project is in an area of low probability of ground deformation and thus standard restrained ductile iron pipe will be used.

Sanipac (PRICE) - Why didn't EWEB bid this contract? Sanipac is no longer a local company as they were acquired by a large multi-state company, Waste Management, headquartered in Texas. I know there are locally owned and operated companies who would possibly like to bid for the business as I believe the rates are set by the City.  We did not bid the garbage collection contract because prices are regulated by the City of Eugene, so pricing would not be a factor. Also, Sanipac is the only contractor that can collect in Springfield and Eugene, which would be our next qualifier, so they would likely win an open bid. We have used Sanipac for many years with good results. We could create two contracts to share between Springfield and Eugene, but for approximately $35,000/year, it would double our paperwork and logistics ultimately costing EWEB more money. Therefore, it is more efficient to forgo the bid and renew the contract previously awarded to Sanipac.

Wildish Building Company - for an increase to existing contract for Carmen-Smith turbine shutoff valve installation (ACKERMAN) - Was the Board told in March 2017 that there would be additional cost for this project? If not, why not?  The March 2017 consent item for TSV installation indicates that it is for the mechanical installation of the valves, and it includes the following language: "Electrical, instrumentation, and control improvements will be bid separately." EWEB subsequently decided to self-perform a substantial portion of this work using Generation Department employees (electricians) since they were available during the 6-month plant shutdown. EWEB contracted the portion of the work requiring careful coordination with the mechanical installation through a change order to the original CMGC contract. The other major contributor to the change order total sum currently before the Board is for power tunnel repairs, which is work that was not included in the original mechanical installation scope. To ensure proper coordination with the plant work (primarily related to air circulation and the need to coordinate welding fume management with crack repair fume management etc.) that additional scope of work was also added to the CMGC contract via change order.

INTERGOVERNMENTAL AGREEEMENTS

City of Eugene - for water pipeline crossings on pedestrian bridges over Amazon Creek (LEIPOLD AIC for DAMEWOOD) - Don't we need to remove that pipe and not just abandon in place? Also, the bridges are built to withstand "seismic forces". Does that make it Cascadia proof?  Pipe removal is not currently included in the scope of this project. The permitting for the City's project does not cover work within the water. At this time, the pipes will be abandoned in place but may be removed in the future under direction from the City of Eugene. The bridges are designed to current structural codes and are expected to withstand the Cascadia earthquake.

Lane Council of Governments - for Geographic Information Services (GIS) (BARTON) - I am curious, as I subscribe to RLID and I have access to what appears to be similar data and I pay $90 per month. The contract indicates a cost of $80,000 per year so I am wondering if this is a similar service why is there such a big price differential?  EWEB's agreement with LCOG includes access to Regional Land Information Database (RLID) as well as access to Regional GIS, aerial photography, and RLID Data which integrates with our GIS System. The $90 per month license only allows users to query the data from RLID's website.

Around 250 EWEB Staff leverage this data so we end up saving a fair amount ($190,000) with our agreement with RLID instead of using individual subscriptions.

Correspondence

2017 Audit Management Letter Update (BARTON) - Does our CIS, WAM, etc. track what each authorized staffer does when he/she is logged into the system? If someone did something malicious, would we be able to easily figure out who it was?  This response is in regard to our financial systems (CIS, WAM, General Ledger, and Human Capital Management Systems) that fall under the Moss Adams Audit.

Our Customer Information System (CIS), General Ledger (SmartStream), Human Capital Management System (Ultipro) and Work and Asset Management (WAM) System have similar logging methods. They track when a user logs in and makes a change to the application's database. For example; we would be able to determine if a specific user logged into the application and changed an account's mailing address.

The applications do not track when a user views a record. For example; we would not be able to tell if a user logged in and viewed an account's mailing address. Since no changes are made in the database the activity is not logged.

EWEB employs several methods to prevent and detect if a user is acting maliciously. One of the first, as mentioned in the Moss Adams Letter, is controlling what access and capabilities a user has in each system. By segregating this access we can prevent a fraudulent transaction going from 'concept to cash'. Other examples include; setting approval limits, controlling what changes can be made to production environments, and regular review of financial statements.

Pentachlorophenol Plume Associated with International Paper Mill Complex (LEIPOLD AIC for DAMEWOOD) - Explain in laymen terms if the plume is migrating towards the well fields and the McKenzie River.  The basics of the Weyco Penta plume area that the source of contamination was removed in the mid-1990s. The direction of the plume is toward the SUB/RWD wellfields and the McKenzie River. Since Penta is heavier than water the contamination migrated from shallower to deeper groundwater over time and with distance away from the original source. Both the intermediate (36 to 72' bgs) and deep (78-92 feet bgs) groundwater plumes have been decreasing in concentrations since 2010-2012. Overall the deep groundwater zone has the higher concentrations of Penta than the intermediate zone as contamination continues to migrate deeper. In general, the trends are decreasing Penta concentrations over time.

Urgent Investigations at Carmen Diversion Reservoir (ACKERMAN) - In regards to the tunnel that hasn't been inspected since 1982, don't we have protocols that require infrastructure be inspected periodically? If so, why hasn't this happened in the last almost 40 years?  The short answer is that yes, we do inspect our infrastructure on a regular basis. That requires some amount of professional judgment, however. In general, we inspect our infrastructure as frequently as appropriate and/or required or necessary. We have certain structures that we inspect daily, weekly and annually. FERC also requires certain structures- spillway gates, for instance- to be inspected with a full opening test every five years. However, because of the risk and difficulty involved in dewatering and inspecting the power tunnels, our power tunnels and penstocks aren't inspected all that often. This is consistent with other utilities. FERC does not require that tunnels and penstocks be inspected at any regular interval and it's left up to the utilities. Most utilities, including EWEB, inspect their tunnels and penstocks opportunistically. The ongoing work at Carmen-Smith has afforded us the opportunity to inspect both the diversion and power tunnels, and we are taking that opportunity.

The reasons that tunnel inspections occur so infrequently include:

•  The tunnels don't have any moving parts or pieces that can't be inspected while they are full of water. Dewatering allows for the inspection of the interior of the tunnels, but changes to condition inside the tunnels is expected to be minimal and slow to develop. There would also be other signs that there were problems in the tunnels without requiring a formal inspection.

• Dewatering of the tunnels is a risky activity, and repairs would be costly and time consuming. EWEB learned during the very first year of operation that dewatering too quickly can create damaging groundwater pressure on the exterior of a tunnel. One of the initial dewatering operations on the power tunnel was performed too quickly, causing the floor of the tunnel to buckle. The structural damage was severe enough that the tunnel floor had to be reconstructed. Groundwater pressure relief valves were installed as an additional protective feature. That experience has made staff wary of the potential for unintentional damage during tunnel dewatering. The diversion tunnel is believed to be even more vulnerable to groundwater pressure damage than the power tunnel. During its construction, tunneling crews faced a challenging battle with groundwater infiltration at the diversion tunnel relative to the power tunnel, indicating that there are much more significant sources of groundwater supplying pressure to the exterior of the tunnel. The diversion tunnel does not have groundwater pressure relief valves.

• Given the risks of unintended structural damage, the 1982 dewatering effort was conducted very carefully at an average rate of 1 foot per day. As such, the dewatering effort lasted two months, starting in early May and ending in early July. As such, a diversion tunnel inspection is disruptive to normal operations and the lower-than-normal operating pressures risk excessive wear and tear on sensitive components such as the aged turbine-runners at the Carmen Plant.

• Finally there are some personnel safety risks associated with the tunnel inspection. To mitigate some of those risks, Generation Engineering staff have initiated a design effort to improve the diversion tunnel intake structure so that it provides more robust isolation of the tunnel from Carmen Diversion Reservoir. These improvements will provide a well-designed structural barrier between the tunnel and reservoir as well as minimize reservoir leakage into the tunnel.

Management is happy to explain our plans in more detail and answer additional questions.