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M:\BOARD & POLICIES\Agendas\2015\2015 - 2-10 Business Meeting Agenda.doc

EMERALD PEOPLE’S UTILITY DISTRICT BOARD OF DIRECTORS

MEETING AGENDA - DRAFT

33733 Seavey Loop Meeting Time – 5:00 p.m. Tuesday, February 10, 2015 Eugene OR 97405

1. CONVENE BUSINESS MEETING - CALL TO ORDER – ROLL CALL – INTRODUCTIONS Executive Sessions may be convened as necessary, in accordance with: ORS 192.660 (2) (e) Property ORS 192.660 (2) (b) Public officer conduct ORS 192.660 (2) (f) Information or records exempt from public inspection ORS 192.660 (2) (h) Legal Rights ORS 192.660 (2) (i) Personnel

2. AGENDA TIMELINE – Requests for Additions or Deletions

3. DEFERRED ITEMS 4. PUBLIC COMMENT

PLEASE NOTE: Statements from the public are limited to 5 minutes per speaker and are a comment period ONLY on Agenda items. The Board will not engage or respond to comments unless it is to correct inaccurate information or statements from the public. Interaction with the Board will be allowed if a member of the public has previously submitted a request to be added to the Agenda.

PRESENTATIONS AND REPORTS 5. RATE COMMITTEE PRESENTATION

6. FINANCE/TREASURER REPORT

7. GENERAL MANAGER’S REPORT

8. SDAO FUNDING REQUEST FOR SUPREME COURT APPEAL

9. BOARD POLICY UPDATES

6:00 PM – PUBLIC HEARING ON RATE INCREASE

ITEMS FOR ACTION Items placed on Consent Agenda are of a routine nature. Board will vote on the Consent Agenda without discussion. Items requested by any Board Member for discussion will be acted on separately. 10. CONSENT AGENDA Minutes of Board Work Session – December 3, 2014 (Revised) Minutes of Board Meeting – January 14, 2015 Minutes of Executive Session – January 14, 2015 Minutes of Special Board Meeting – January 20, 2015 Minutes of Executive Session – January 20, 2015 Minutes of Special Board Meeting – January 22, 2015 Approval of Claims

M:\BOARD & POLICIES\Agendas\2015\2015 - 2-10 Business Meeting Agenda.doc

11. MOTIONS AND RESOLUTIONS

Action Item 15-04, Resolution 2015-02 – Person of Authority Update Action Item 15-05, Resolution 2015-03 – 2015 Rate Increase Action Item 15-06 – Business Expansion Rate Incentive Program

INFORMATION AND PLANNING ITEMS

12. REVIEW OF MOTIONS

13. PUBLIC COMMENT – Open Comment Period (if time permits)

14. SUGGESTED ITEMS FOR FUTURE MEETINGS

15. UPCOMING MEETINGS/EVENTS Wednesday, February 18 Coburg Chamber ............................................. Countryside Fellowship ...................... Noon Thursday, February 19 Tri-County Chamber Luncheon ....................... varies ................................................... Noon Thursday, February 19 Cottage Grove Business After Hours ............... varies ................................................... 5:30 pm Friday, February 20 OPUDA Board Meeting.................................... SDAO - Salem ...................................... 9:30 am-1 pm Tuesday, February 24 EPUD Board Work Session ........................... EPUD ............................................... 5:00 pm Tuesday, March 3 Creswell Chamber ........................................... varies ................................................... Noon Wednesday, March 4 PPC Members Forum ...................................... Sheraton – Portland Airport ............... 3-5:00 pm Thursday, March 5 PPC Executive Committee ............................... Sheraton – Portland Airport ............... 8:00 am-noon Friday, March 6 PNUCC ............................................................. Sheraton – Portland Airport ............... 8:30 am Tuesday, March 10 EPUD Board Business Meeting ..................... EPUD ............................................... 5:00 pm 16. DIRECTORS’ CONCLUDING COMMENTS 17. ADJOURN MEETING 18. CONVENE EXECUTIVE SESSION in accordance with ORS 192.660(2)(h) Legal Rights

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MËMÕDate:

To:

Subject:

January 22,2015

Board of Directors

SDAO Funding Request for Supreme Court Appeal

As wos indicoted in the December 9,2014 Generol Monoger's Report, Speciol

Districts Associotion of Oregon (SDAO) is requesting ossistonce in funding on

oppeol to the Oregon Supreme Court.

At the Jonuory 14,2015 meeting, Executive Director of SDAO, Fronk Strotton,

visited with the Boord ond gove them o brief overview of the Supreme Court

chollenge ond how it relotes to speciol districts. Following Director Strotton's

presentotion, the Emerold Boord of Directors suggested further discussion on this

ond to consider o donotion.

Attoched you will find Director Strotton's originol communicotion regording

potentiol funding for this request os well os o memo from Coble Huston which

Director Strotton shored with the Boord oi the Jonuory 14 meeting.

++CNNLE HUSTON

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FROM:

DATE:

RE:

MEMO RANDUM

Frank StrattonExecutive DirectorSDAO

Clark L Balfour

January 12,2015

Rogue Valley Sanitary Services vs. City of Phoenix

As you know, we represent Rogue Valley Sanitary Services (RVSS) against the City of Phoenixover franchise and right of way usage fees imposed by the City. RVSS challenged the City's impositionof a franchise fee for use of the City right of way. The Jackson County Circuit Court ruled for the City.RVSS appealed, asserting that imposition of what amounts to a tax requires a specific grant of authorityfrom the Legislature, which the Legislature has never granted. In fact, the reverse is true in that the

Legislature has specifically allowed cities to impose franchise fees or privilege taxes only on InvestorOwned Utilities, Peoples' Utility District and Cooperatives. Silence with respect to other units ofgovernment was not a gfant of power to Cities. The Court of Appeals rejected that, holding that citieshave the power to impose fees on other units of government under City Home Rule Authority. Thatdecision is currently on appeal to the Supreme Court and argument is set for February 4,2015.

We also are representing Rockwood Water PUD against the City of Gresham. That case is set forargument before the Oregon Supreme Court in May,2OI5. Under statutes that have been in place since

the 1980's, the City of Gresham has charged PGE, Northwest Natural Gas and Rockwood a privilege taxof 5Vo for use of the City right of way. The City unilaterally changed the fee from 5Vo to 77o based on itsHome Rule Authority. The IOUs and Rockwood challenged this in Multnomah County Circuit Court and

prevailed. The trial court held that there were two choices available to a City: a mutually negotiated a

franchise agreement or, if there was not agreement, to impose a privilege tax. The Legislature had set the

limit at 5Vo by statute and therefore Gresham could not unilaterally charge the additional2Ta. The same

Court of Appeals panel in RVSS reversed the trial court. Essentially, the Court of Appeals held that a citywas free to charge what it wanted for use of the right of way and could unilaterally impose theTVa. Thisis now on appeal to the Supreme Court.

Certainly, the Rockwood case is of great import to all PUDs who operate within cities. It allowsCities virtually unchecked authority to charge what and when it wants. But Rogue Valley should also be

of concern. The reason is that the Rogue Valley Supreme Court appeal raises some of the same statutoryand Home Rule issues and questions as Rockwood. In fact, in the notice from the Supreme Courtaccepting the Rockwood case for review, the Supreme Court pointed out that some of the same issues are

raised in Rogue Valley and that a decision by the Supreme Court in that case could dispose of the issue inRockwood before Rockwood can independently present and argue it from the PUD perspective.

For that reason, all PUDs should pay close attention to Rogue Valley and provide support to be

sure that the Supreme Court does not render a decision in that case that harms Rockwood and other PUDsbefore they have a chance to formally argue the PUD perspective.

Page 1

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November t9,2Ot4

Sara ClineEmerald P.U.D,

33733 Seavey Loop Rd

Eugene, OR 97405

Dear Saral

SDAO is funding an Oregon Supreme Court appeal of a recent Court of Appeals decision thathas introduced a new and worrisome uncertainty regardingthe protections from¡ntergovernmentaltaxation special districts typically enjoy, ln Rogue Valley Sewer Services("Rogue Valley") v, City of Phoenix, Rogue Valley objected to a 5% 'lanchlse fee" imposed by

the City of Phoenix on the grounds that the city had no authorlty to impose such a fee on a

sister governmental entity. ln upholding the fee, the Court of Appeals expressly concluded thatRogue Valley's status as a public entity had no bearing on the limit of the city's author¡ty.

Although the case addressed only the City of Phoenix's franchise fee as applied to a sanitary

authority, the Court's reasoning could apply to a multitude of charges against any localgovernmental entity and ís a departure from nearly a century of other cases that have limitedcítíes' ability to tax other governments.

When considering the City of Phoenix's franchise fee, the Court of Appeals relied on the city'shome rule authority to consider the validity of a charge on another government. The CourtreJected Rogue Valley's argument that the Home Rule Doctrine does not apply in agovernment-to-government scenario stating that 'the mere fact that RVS is organized as a

sanltary authority under ORS chapter 450 does not serve to circumscribe the city's authority as

a home rule municípal¡ty." This is a major new application of the Home Rule Doctr¡ne. lt is thatnovel conclusion that serves the Rogue Valley's primary basis for seeking review by the Oregon

Supreme Court.

Although many special districts have willingly partnered with cities to negotiate fees for use ofthe public rights of way, others have operated under the assumpt¡on thet, unless there ls a

statute clearly stat¡ng otherwise, they are immune from taxation by clties. That assumption was

reasonable in light of the long history of court cases limiting intergovernmental taxation, but itcan no longer be safely relied on.

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Any special district that occupies a city right of way, especially those with linear facilities like

water, sewer, or even transit, will likely fínd themselves subject to more and more fees,

lncredlbly, under the Court of Appeals' reasoning, there is potentially no limit on the amount of

those fees, Other "non-utllity" special districts could also suffer, as the Court of Appeals'

reasoning is not limited to just franchise fees and privilege taxes for occupying rights of way.

lnstead, it opens the door for citíes to ¡mpose any charge on another governmental entity

unless and until the legislature expressly prohibits that charge.

SDAO is requesting that your district conslder voluntarily contr¡but¡ng flnancially to theSupreme Court appeal. We have already spent over S100,000 at the Court of Appeals level and

are exped¡ng to spend approximately that much more to take the case all the way through the

Supreme Court appeal. This is a great deal of money but we believe it ls an extremely lmportant

case with broad legal ramifications. lf you are willing and able to financíally contribute to this

important effort, please complete the attached form and return it to SDAO. At the conclusion of

the Supreme Court appeal, we will send you an invoice for the pledged amount.

Thank you for your conslderation.

Sincerely,

wffiFrank StrattonExecutive Director

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Date:

Emerald P.U.D. would like to contribute $- to assist SDAO with the

funding to appeal the Court of Appeals' decision to allow the City of Phoenix to impose a

5% franchise fee on Rogue Valley Sewer Services in the case of Rogue Vølley Sewer

Services v. CitY of Phoenix.

We understand this contribution is voluntary and will be used solely for expenses

related to the appeal of the above ment¡oned case to the Oregon Supreme Court,

We also understand that we will be invoiced for thls amount at the conclusion of the

Supreme Court appeal and the pledged amount is not due at this time.

Board President/Ch ai r Name

Signature

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Date: February 10, 2015

To: Board of Directors

Subject: Board Policy Updates

Although suggested Board Policy updates were presented to the Board at the

December 9, 2014 Board meeting, the consensus by the Board at that time was

to bring the discussion back in during a future meeting.

Attached are suggestions for policies which might benefit from some updates to

align with current practices.

1105 Subdivisions

The District shall be divided into five subdivisions, as follows: Subdivision 1, including precincts of Camas, Latham, London, Mosby Creek, Saginaw, Cottage

Grove, Lorane, Silk Creek including the Cottage Grove area, including Saginaw, London Road, Row River Road, Latham, Mosby Creek, Cottage Grove-Lorane Highway, and Lorane.

Subdivision 2, including precincts of Alvadore, Crow, Demming, Elmira, Fern Ridge, Noti,

Veneta. including the City of Veneta and surrounding communities of Alvadore, Elmira, Fern Ridge, Noti, and Vaughn.

Subdivision 3, including precincts of Coast Fork, Fall Creek, Lost Creek, Pleasant Hill including

the communities of Pleasant Hill, Jasper, and Dexter in addition to the Jasper Meadows sub-division in Springfield and the area south and east of Creswell.

Subdivision 4, including precincts of Alvadore, Irving, Lancaster, Richardson, Santa Clara,

Prairie, Wilkins. including portions of both Lane and Linn County, including Halsey, in the northern Santa Clara area beginning at Beacon Drive and moving north into areas surrounding the communities of Cheshire, Junction City, and Coburg.

Subdivision 5, including precincts of Coast Fork, Camas, Creswell, Goshen, Marcola, Mohawk.

including Goshen, Seavey Loop, and Mathews Road, Highway 58 west of the Willamette River, the majority of Creswell, and the Mohawk Valley from Hayden Bridge to the Linn County line including McKenzie View Drive.

The boundaries of the subdivisions shall be adjusted periodically to maintain the population of each subdivision to be as equal as possible, in accordance with ORS 261.405(2).

1115 Directors Take Office

The term of office of all Directors shall commence on the first Monday meeting in January (ORS 261.420) next following their election. The Oath of Office will be administered during the first Board meeting in January. Directors shall serve until their successors are elected or appointed and qualified, unless the term of office is terminated earlier due to circumstances described in Policy 1120. Board Directors must qualify by taking the following oath of office: I, __________________, do solemnly swear that I will support the Constitution of the United States, and the Constitution of the State of Oregon, particularly the letter and intent of Article XI, Section 12, People’s Utility Districts, and the laws of the State of Oregon, particularly the letter and intent of Chapter 261, People’s Utility Districts, and that I will faithfully discharge the duties of the Emerald People’s Utility District Board Member to the best of my ability to accomplish

the goals and objectives for which the People’s Utility District laws and Constitutional Amendment were adopted.

1150 Time and Place of Meetings

Regular business meetings of the Board shall generally be held on the second Tuesday of each month and a Board work session on the fourth Tuesday of each month in the officially designated Board facility and are open to the public. At the option of the Board, meetings may be held at other locations and/or at a different time within the District. Notice of Board meetings shall comply with the notice provisions of ORS 192.630.

1155 Meetings and Executive Sessions

The Board will liberally construe the section in ORS 192.610-690 that declares all meetings are to be held in public; the exceptions are those defined in the statute that may infringe on personal or public rights. Where authorized by statute, an employee may request consideration of those matters set forth in ORS 192.660(2)(b) in executive session. The Board may hold an executive session during a regular, special or emergency meeting after the presiding officer has identified the specific authorization under ORS 192.610 to ORS 192.690 for holding the executive session.

1165 Officers of the Board

The Board shall choose from among its Directors (ORS 261.425) a President, Vice President and Treasurer at its first Monday meeting in January each year, to serve until their successor is chosen by subsequent Board action. The Board shall choose a Secretary of the District in accordance with Policy 1185.

1200 Order of Agenda (See attached for suggestions on options for wording the Public Comment portion of the Agenda)

Generally, the order of business at all regular meetings of the Board shall be: ● Call to Order - Roll Call - Introductions ● Public Comment** (Up to 5 minutes per speaker. The Board will not respond unless to correct inaccurate information. Interaction with the Board will be allowed if the public previously submitted a request to be added to the Agenda.) ● Agenda Timeline -- Requests for additions or deletions ● Deferred Items Presentations and Reports ● Finance/Treasurer Report ● General Manager Report Items for Action ● Consent Agenda – approval of minutes/claims ● Motions and Resolutions

Information and Planning Items ● Review of Motions ● Public Comment ● Suggested Items for Future Meetings ● Upcoming Meetings/Events ● Directors’ Concluding Comments (limit 1 minute/comment) ● Adjourn ** Public comment at Board work sessions will be allowed as outlined in Board Policy 1201 – Public Input and Comment. At the discretion of the President, a recess may be called at any time in the course of the meeting (ORS 261.430(2)).

1245 Whistle-Blower Policy

The District requires that our Directors, managers and employees hold themselves to the highest standards of honest and ethical conduct when conducting the District’s business. Should any Director, manager or employee observe an unethical business practice, he/she must report the violation to the appropriate person or persons. If you observe any improper action or unethical business practice and, in good faith, report such action, you will not suffer any harassment, retaliation, discrimination or adverse employment consequences as a result of this good faith reporting. “Good faith” in this case means that you have reasonable grounds for believing that a violation has occurred. Any allegation not made in good faith, which appears to have been made maliciously or knowingly to be false, will result in disciplinary action up to and including termination. If an employee or Director observes unethical business practices or improper governmental action and fails to report the violation, that person, too, could be subject to disciplinary action or censure. Any Director, manager or employee who harasses, retaliates or discriminates against someone who has made a complaint of this nature will be subject to disciplinary action up to and including termination of employment or censure and request for resignation from the Board. Reports of improper governmental action or unethical business practices should be directed to Human Resources, a Senior Manager, the General Manager or the Chair of the Board of Directors. If the complaint involves a person holding any of these positions, it may be made directly to the District’s legal counsel. Currently this person is Richard Larson, Attorney at Law, of the firm of Johnson, Johnson, Larson and Schaller, P.C., Eugene, Oregon (ORS659A) (ORS244.320).

Current Policy:

Public Comment** (Up to 5 minutes per speaker. Board will not respond unless to correct inaccurate information. Interaction with the Board will be allowed if the public previously submitted a request to be added to the Agenda.)

Option 1: (Current Agenda language with suggested change underlined in red):

Public Comment** Statements from the public are limited to 5 minutes per speaker and are

comment period only on agenda items. Details of agenda items are available on the District’s web site, EPUD.ORG or at the District’s office. The Board will not respond unless to correct inaccurate information. Interaction with the Board will be allowed if the public previously submitted a request to be added to the Agenda.) Option 2:

Public Comment** (Up to 5 minutes per speaker. This is a comment period regarding today’s

agenda items. Board will not respond unless to correct inaccurate information. Interaction with the Board will be allowed if the public previously submitted a request to be added to the Agenda.) Option 3:

Public Comment** (Up to 5 minutes per speaker. Board will not respond unless to correct

inaccurate information. Interaction with the Board will be allowed if the public previously submitted a request to be added to the Agenda.)

Option 4:

Public Comment** (Up to 5 minutes per speaker. Speakers must sign the request to speak

document with the subject and time requested. Speakers will be allowed to speak based on the time available at today’s meeting. Speakers will be in order of sign in. Due to time constraints, not all speakers may be allowed to speak at today’s meeting. The Board will not respond unless to correct inaccurate information. Interaction with the Board will be allowed if the public previously submitted a request to be added to the Agenda.)

EMERALD PEOPLE'S UTILITY DISTRICT Board of Directors' Work Session

December 3, 2014 – PROPOSED REVISION Minutes Convene Vice President Davis convened the meeting at 3:13 pm at the Emerald offices,

33733 Seavey Loop Road in Eugene. Attendance and Introductions

Directors: Ron Davis, Penny Jordan (participated by telephone), and Katherine Schacht. Patti Chappel arrived at 3:15 pm. Kevin Parrish was absent. Staff: Doug Barab, Sara Cline, Rob Currier, Ron Dubbs, Brian Johnson, Kyle Roadman, Alice Schroeder, Jim Theabolt, and Beth Matthews. Guests: Don Beck, Emma Higley, and Bob McKuhn – ratepayers; Sandra Bishop and Tina Batori – interested parties.

Agenda Timeline There were no additions to or deletions from the agenda. Public Comment Bob McKuhn welcomed Jim Theabolt back and extended a thank you to him for

coming back from retirement. McKuhn commented on potential costs for recruiting a new General Manager. Emma Higley commented on the proposed policy updates due to be presented on today's agenda. She stated there are policies referred to that don’t exist and ones that do exist but are not followed. Don Beck spoke briefly about voting and how past practice has allowed discussion of items not on the agenda. He also read from a prepared statement which covered a variety of information related to Board meeting behavior. Before Beck was able to complete his statements, Director Davis became aggressive toward Beck and demanded he stop as his allotted time for comment had expired. He rapped the gavel loudly three times and physically got up from his chair and forcibly removed Beck’s papers from his hands. Beck indicated that Director Davis had no right to assault him and that he would “smack him upside the head” if he were to ever do this again. Sandra Bishop stated that the utility needs to have a competent General Manager.

Update on Citizen’s Advisory Resource Planning Committee Meetings

Roadman gave a recap of the recent Resource Planning Committee meetings, during which time staff gave the Committee an update on current load/resource forecasts and on emerging issues and opportunities. The Committee was not asked for any formal recommendations, and there were no pressing decisions which needed to be made, although they were asked for a “head nod” related to future conservation investments. Roadman presented information on EPUD’s annual historical energy load, saying we may have hit a bottom as far as our load is concerned. Roadman said this is fairly typical of the region, which is experiencing flat growth. Our conservation

Emerald PUD Board Minutes – December 3, 2014 Page 2

investment was reviewed, and he indicated that load forecasting is almost impossible to get right. Three different scenarios for load forecasting were presented. All three are down from what we thought might happen back in 2012.For our Peak Demand Forecast, we'll look at our energy profile and this shows our demand is outstripping our supply at certain times. The Resource Portfolio pie charts were displayed and reviewed, looking at how our profile has changed since 1988. Existing Resource Forecast Assumptions were reviewed and explained as were Long Term Resources (Annual Energy) or "resource stack". Roadman explained we have more energy than we need on a monthly basis; on an hourly basis, we have a peak demand forecast and during certain hours, we have to go out and make up the difference. We need to be smart and prudent about how we make up that gap. Roadman reviewed updated types and costs of resource profiles and what has changed since 2012 (price for solar, for instance, has dropped dramatically). He also discussed the fact that the Production Tax Credit has been eliminated, which has a big impact on the cost of wind. Roadman said that conservation remains our least cost resource. Sample Portfolios for Analysis were reviewed, and Roadman indicated most of these include some measure of conservation. The basic process of doing this analysis is to define load and pricing as well as the software changes and variables and then to run dozens of different scenarios. Roadman reviewed the Model Portfolio Results chart, saying that P2-P5 is the group we would be looking at. The Resource Committee wants us to look at reliable renewables Roadman continued his presentation by reviewing Model Portfolio Lessons: --Portfolio 1 (Status Quo Conservation & Market) is a clear leader; however, the model uses monthly pricing as opposed to hourly and this tends to miss “price excursion events. --A cluster of similar portfolios stand out (P2-P5). --These portfolios align closely with 2012 results with an increased conversation investment starting in 2017 and a base load renewable resource acquired in the distant future (beyond 2020). Conservation Planning shows that all of these portfolios require an increase in conservation. The plan calls for starting in 2017 in order to meet goals over a 20-year time horizon. The annual increase would be approximately 0.07 aMW. The Resource Committee was asked for a "head nod" on this point and staff would plan to bring this back to them again in 2016 to offer a formal recommendation. Roadman discussed “what's next” for demand side management. He said that distributed generation is another topic that staff went through with the group and he talked about the challenges with net metering, which was more to get this on the Committee's radar. He said the Committee was also given an overview of


distributed generation and the group focused on the scale of the problem. Staff will revisit the community solar model at a later date and will also speak with the Rate Committee regarding fixed cost recovery.

Review of Rate Committee Membership

A list of the current Rate Committee was presented to the Board and Roadman asked the Board to review their appointees to the Committee so if there are any changes required, we can get those made. He asked they let staff know about changes or suggestions for replacements.

Budget Discussion Cline distributed information on the 2015 revised budget proposal. She gave a

listing of highlights one more time, including changes which have happened and which gave one more look at the forecast. Cline spoke about the one change, including the 10-year forecast scenario and Management Report summary and detail. She indicated the Finance Committee voted for a 1.5% rate increase to occur in April 2015 while 2 out of 7 of the Committee members voted for a 3% rate increase in April 2015, which was also the staff-recommended rate increase. Pages 1-5 of the document distributed show the update from 1.5 to 3%. Cline also talked about the property tax increase which was not expected in the budgeting process. Theabolt talked about the contributions in aid adjustment by Lane County. He said he believes this was moved and increased the value of plant assets by $9 million (and this took it back to 2001). He thinks that is what caused the increase. This is something which came about with the 2013 audit. Tillamook had the same auditor and they came to a different agreement as their situation is a little different. Theabolt said staff will have a conversation with the auditors on this as it has to do with a GASB rules and that it’s worth a discussion. He's not sure what the appeals process with the County is yet. Cline said there was discussion at the Finance Committee that other entities have appealed property taxes and have been successful. Theabolt referenced an OPUDA letter he would provide to the Board for next week related to franchise fees. It was noted $150,000 was added to the labor portion of the budget for 2015 due to the General Manager’s separation. Cline said the 2015 budget is very similar to the 2014 budget - within about $10,000. There is not a lot as far as projects in this budget - nothing major - just capital maintenance but no capital improvements. Cline referred to several of the highlights: --the proposed budget includes a 2.5% COLA. We went out to our external party consultant as we do every year. That consultant had recommended 2.7%. We are comfortable with the 2.5% increase. --We do our occasional compensation and salary survey (once every 5 years – the next is due in 2015) and we could adjust at that time based on this survey. --The overall head count change is half a person. We added half an Apprentice Lineman for the future as we have some pending retirements with the line staff. Dubbs indicated that it takes six months as a groundsman and three years as an apprentice to become a lineman. Cline said there are two positions that were


budgeted in 2014 which are currently vacant and being evaluated. There currently are 69 employees at EPUD. Regarding capital and the operating and expense side: --Fleet Replacement Plan - for 2015, we have included $250,000 allocated toward fleet replacement. This is about half of what we originally intended to put into the budget. We scaled back to try to present a more balanced budget. We'll see how we can move forward with the revised plan. --There are no Short Mountain rebuilds scheduled for 2015. --There are some decreases on the purchasing front. We feel we will be well-stocked by the end of the year. Some projects, such as lighting, were completed here at headquarters in 2014. --On the purchased power front, there will be a 2015 BPA increase in October. --We have budgeted for some risk management budget premiums. --We are anticipating an increase in medical coverage. --We budgeted for a web page rebuild as the current provider will no longer be supporting the existing site.

Page 6 of the revised 2015 budget proposal shows revised Scenario #1 - 1.5% rate

increase in 2015 (around $400,000 in revenue is projected for 2015) for three-quarters of the year. Page 8 of the revised budget proposal shows Scenario #2 which includes a 3% rate increase in 2015. Using this scenario the deficit is taken down from a little over $1 million to around $600,000. We've talked a lot about the effect a compounding increase has over the years and how it affects our bottom line cash reserves. If you look at the two scenarios and look out over the future, you can see what an impact this would make. Director Schacht commented that we have to raise rates due to expenses that aren't normal. She asked how many dollars would equate to a 1% increase. Cline responded, saying it's a little less than $300,000. Director Schacht then confirmed with Cline that if we're at a $900,000 deficit, that means a 3% increase. Board policy requires cash for bonds but also a bond covenant DSC of no less than 125%. Theabolt said that if we had another big storm or have a substation transformer go out, the Board could choose to implement a CRAC as Bonneville has done previously, although this would not give you the compounding effect. We don't know what Bonneville is going to do. Theabolt said it's a balancing game. Director Davis expressed his concern that people are barely making it and maybe there's a way to generate jobs and have more income coming in. Director Schacht asked about total revenue for 2014 and referred to Coburg North. Roadman said residential revenue is actually going down. There is some growth but not that much in commercial. Theabolt reminded the Board that 50% of our cost is for purchased power. Director Davis commented on the General Manager situation and how we could bring back the previous General Manager back and save money. Director Jordan commented briefly, saying those decisions need to be made outside of finances. She also reminded the Board that $154,000 was already paid out with the first


whistleblower issue and that's not on the backs of the Board members who are not supportive of bringing the previous General Manager back. Chappel confirmed that at the next meeting of December 9, the Board will be choosing from either a 1 ½% or a 3% rate increase. Cline confirmed this was accurate unless there was something else the Board wished to look at. Theabolt asked whether the Board would be willing to consider a surcharge if there is a catastrophic expense with just a 1 ½% rate increase. If not, and they would want more certainty, they would want to go with the 3%. Johnson confirmed that each percentage point is about $1.03 for each one percent increase or about $3.10 per residential customer with a 3% increase. He said the Board is already planning to be in violation in 2019 if they choose just a 1.5% increase. The 3% increase which staff recommended is in step with Bonneville's rate increases. The 1.5% increase offers less flexibility and in future years, you might suffer an 8 or 9% increase if you fall too far behind. Director Davis again commented on how to keep the community sustainable and how we need to be careful. Theabolt said we've done that pretty well compared to what Pacificorp is charging. We need to continue to look at that direction.

Director Schacht asked why the Finance Committee recommended a 1 1/2%

increase. Cline said the Committee had good conversations and their goal has recently been to look at smaller, regular rate increases. For 2014, staff had initially recommended a 2% increase and the Finance Committee actually recommended a 3% increase with the additional 1% to go toward capital improvements. This year, the Committee and staff flipped on their recommendations. For 2015, the Committee felt the cash position is comfortable. For Cline, she said staff feels we’re uncomfortably close to the minimum cash requirement of 14% in 2018 with a 1 ½% increase. Roadman also reminded the Board that we haven't had a bad water year yet with Slice and that could also affect the budget in a big way if we do experience one. Cline also mentioned that a potential weakness pointed out by Moody's was a declining cash balance. That is also a consideration--that they like to see a more stable cash balance. Moody’s said in their report that they liked our history of smaller, more frequent rate increases when they are necessary.

Proposed Policy Updates

Schroeder briefly explained the current Short Term Disability Policy. She said the EPUD Benefits Committee has recommended a change because those employees with large sick leave balances may have managed their sick leave rather than someone who abuses their privilege and there is a feeling in inequity among employees. The current policy states that the benefit of 80% pay begins after the 14-day waiting period and after any additional time required to use up an employee’s accrued sick leave. Employees have expressed they consider the current policy a disincentive to keep a large balance of sick leave. This proposal would allow for benefits to be paid after completion of the waiting period of 10 calendar days, plus any additional time required to use 50% of an accrued sick leave balance.


There was concern expressed that this would promote abuse. Schroeder explained that as with any illness or injury, there is a requirement for a doctor to fill out appropriate forms to support the employee’s time away from work. She also discussed page 2 of the policy support document which compares EPUD to other utilities. She said we have a very generous plan and some agencies do not even offer short term disability. Schroeder said she put a January date on this in case the Board chooses to approve it next week at the December 9 Board meeting. The next policy update for the Board’s review was the Storm Pay/Rest Pay Policy. This came out of February's ice storm when we had outside crews assisting us and as with the Short Term Disability Policy, was also a policy which Scott Coe had tasked the Benefits Committee with reviewing. Although we currently have a policy in the case of emergency, we don't have a policy as to who declares a storm and/or when it gets declared. Once a storm has been declared, the rest pay policy would be in force. Considerations for determining a storm would include the duration and number of crews working. This proposed change in policy mirrors the approach which was used during the February 2014 ice storm. The next policy for review was the Contract Minimum Purchase Threshold. This proposed update is due to a change in requirements under ORS 279B.065 for the minimum amount we need to evaluate in a contract situation. The law has changed to allow us to award contracts up to $10,000--up from $5,000. The current Mandatory Review of Rules policy states that the General Manager will be responsible for reviewing contracting rules. Staff is proposing changing this review to the Purchasing Agent. Typically, in practice, it actually is the Purchasing Agent who reviews the contracting rules but the Board indicated they would like both the General Manager and the Purchasing Agent to do the review. Cline explained that staff just wants to designate someone to stay current on rules. Again, the Board stated they would like to have both the General Manager and the Purchasing Agent responsible for staying current on purchasing rules. Theabolt reviewed the suggested changes/clean up to Board Policies. He also asked if the Board wished to continue with Wednesday meetings or if they would prefer to go back to Tuesday meetings. The discussion will be continued on this item. Staff will prepare formal documents/Action Items and will bring back the proposed policy change items to the Board for a vote at the Tuesday, December 9 Board meeting. The Board took a quick break beginning at 5:24 pm prior to continuing on to Board Reports.

Board Reports Director Chappel spoke briefly about the recent OPUDA meeting. She said there

is concern about 111D and franchise fees.


Director Schacht discussed EIM and SCED (Security Constraint Economic Dispatch), which would require more involvement with rates. There is concern about seeing more FERC scrutiny. She said the largest reason the region is looking at EIM (which is a balancing of resource and loads) is due to the large amount of variable generation in the region. PPC developed some criteria in BPA’s involvement in such a market last spring, including: --there must be some durable economic benefit for BPA to belong; --must provide preference customers full value and scope of their rights and contracts; --BPA must retain its practical and legal autonomy. Director Schacht indicated the Bi-Op is still ongoing. She discussed the increase in the sea lion population and how it’s impacting the number of fish surviving. Director Schacht briefly mentioned energy efficiency and the 7th Power Plan. She said BPA has offered a billing credit to utilities which want to self-manage their conservation programs. Roadman is evaluating this to see if it makes sense for EPUD. Director Schacht said she had attended the Tri-County Chamber of Commerce awards banquet. She said EPUD is in the silver support group for this organization.

Public Comment Emma Higley spoke briefly about potential ways she felt the utility could save

money and about spending which she feels could be reduced. She also expressed her concern again about the General Manager leaving EPUD and how she feels the public should be provided an explanation. Bob McKuhn spoke about fuel and copper costs going down but that all budget projections for the future are based on increased costs. He said it appears no one is considering reductions in costs. Director Chappel responded to Higley’s comments, and stated she agreed the public needs to know about why the General Manager left the organization and that even though the Board cannot speak to those issues, the recordings do get to Director Schacht’s character. Don Beck said he had made a request for the recordings. He said he is talking with the District Attorney's office in Eugene as well as the State Ethics Commission. He said he wants to get the bottom of this and the legality of the recordings. Beck also shared his comments about Director Schacht’s behavior toward other Directors. Sandra Bishop indicated that Tina Batori had to leave, but before she left, she asked Bishop to put on the record that she (Tina) was impressed with the professionalism of the staff in this type of environment.

Emerald PUD Board Minutes – December 3, 2014 Page 8 Adjournment

Vice President Davis adjourned the Board meeting at 5:52 pm. Minutes prepared by Beth Matthews, Executive Assistant.

EMERALD PEOPLE'S UTILITY DISTRICT Board of Directors' Meeting January 14, 2015 Minutes Convene President Parrish convened the meeting at 5:33 pm at the Emerald offices, 33733

Seavey Loop Road in Eugene. Attendance and Introductions

Directors: Ron Davis, Penny Jordan, Lee Kelley, Kevin Parrish, and Katherine Schacht. Staff: Doug Barab, Sara Cline, Brian Johnson, Matt Mills, Dale Olson, Kyle Roadman, Alice Schroeder, Brian Sharr, Mike Terry, Jim Theabolt, Neil Williamson, and Beth Matthews. Guests: Rick Larson – attorney with Harrang Long Gary Rudnick; Julie Desimone and Keith Simovic – auditors with Moss Adams; Frank Stratton – Special Districts Association of Oregon; Patti Chappel, Emma Higley, Laurie Smart, Douglas Card, and Bob McKuhn – ratepayers.

Oath of Office Attorney Rick Larson administered the Oath of Office to incoming Board Director

Lee Kelley and to Director Kevin Parrish.

Election of Officers

Nomination

Vote

Nomination

Vote

Nomination

Vote

Director Schacht nominated Director Davis for Board President.

Yes: Directors Davis, Kelley, Parrish, Schacht.

No: Director Jordan.

Director Davis nominated Director Schacht for Board Vice President.

Yes: Directors Davis, Kelley, Schacht.

No: Directors Jordan and Parrish.

Director Schacht nominated Director Kelley for Board Treasurer.

Unanimously approved.

Agenda Timeline

Motion

Vote

There were no deletions from the agenda. Director Schacht indicated she wished

to address hiring back former General Manager Scott Coe, censures if they need to

be addressed, and a potential investigation.

Director Davis/Director Schacht moved to hire former General Manager Scott

Coe back, conditionally upon whether a mutually-acceptable contract could be put

together.

Yes: Directors Davis, Kelley, Schacht.

No: Directors Jordan and Parrish.

Emerald PUD Minutes – January 14, 2015

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Director Davis indicated he wished to discuss holding a special Board meeting as

soon as possible to discuss the details of re-hiring Coe. Director Parrish suggested

speaking with Coe first to determine his interest. A contract would need to be put

together, a legal review would need to be completed, and a special meeting would

require at least 24 hours’ notice. Director Davis indicated he would speak with

Coe and Schroeder will prepare a contract and then receive feedback from the

Board over the weekend in preparation for a special Board meeting early next

week. It was agreed there would be a Special Board Meeting scheduled to begin

at 5:00 pm on Tuesday, January 20, 2015.

Public Comment Patti Chappel commented on the election of officers—specifically, that Director

Schacht has been sanctioned from holding any officer position on the Board. She

said Scott Coe should be protected from Director Schacht. She said Director

Davis assaulted a member of the public in a previous meeting and that this should

be included in the meeting minutes. Chappel said she would encourage Director

Kelley to give this position a sincere effort and guard the interests of the district.

He will need to do a great deal of listening and reading, she said, and to not be

afraid to ask questions and to “keep your eye on the big prize.” Chappel wished

him good luck.

Director Schacht responded by saying her 25-year record speaks for itself.

Mike Terry talked about the letter writing campaign which had gone on. He

brought copies for the Board to show support for Scott Coe.

Emma Higley said that on behalf of 66% of people in Veneta and the majority of

people in this room, she welcomes Director Kelley.

Laurie Smart echoed what Higley said. She, too, welcomed Director Kelley to the

Board, beginning a new term with a new tone.

Deferred Items None.

SDAO – Information Regarding Request for Funding Supreme Court Appeal

Frank Stratton, Executive Director of Specialist Districts Association of Oregon, was on hand to give the Board a brief overview of a Supreme Court challenge and how it relates to special districts. He brought copies of this and a related case on Rockwood Water People’s Utility District v. the City of Gresham. Rogue Valley Sanitary Services in the Medford area provides service to the City of Phoenix. The City was annexed into Rogue Valley Sanitary Services and then they imposed a franchise fee of 5%. The City took it to court and lost at Circuit Court. Stratton said SDAO financed this at the court of appeals. They are now taking the issue on to the Supreme Court. On the legislative authority for franchise fees or privilege tax, home rule authority allows them to do whatever they want. This is being considered a privilege tax rather than a franchise fee. The appeals court came back with the same rationale they did on the Rogue Valley case. Stratton said we're wide open right now for


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paying in the future as well. The City of Coburg is the only city above a 5% franchise fee in our district--they're at either 7% or 7.5%. Stratton said SDAO has invested money in this now, and still have another $80,000 budgeted. SDAO has a lot of assets and could fund this, but recently sent out a letter to members for a strictly voluntary assessment. He said $100-$10,000 is currently the range of donations. Win or lose, he said, this will end up at the legislature. Stratton said he has met with the LOC, who would like to put a real cap in place so that budgeting can take place. He expects this to eventually move to counties, although there are none currently imposing fees as it is not legal--although Stratton said SDAO also thought that the cities didn't have the ability to do so either. Director Schacht asked how this was initially generated. Cities are really struggling, said Stratton. This is a way for cities to get more revenue when they can't do so from property taxes. Director Parrish suggested adding an item to our next agenda for discussion about a donation. Otherwise, he said, “we're just fruit to be plucked.” Rockwood Water is separate from the Rogue Valley case since they're using the same arguments on both. Director Parrish also asked if there is special language we can put on our customers' bills. Theabolt indicated that we already do so. Three percent is rate-based and the difference is put on as a line item. Director Parrish said it seems like it would be more palatable if we can explain on the bill. Theabolt said if the county comes in with a tax, that's a different discussion.

2014 Audit – Moss Adams

Julie Desimone and Keith Simovic, auditors with Moss Adams, spoke to the Board and gave an update on the audit process. Julie explained Keith is a new face to the audit team this year and is here this week with two other auditors. In addition to this preliminary presentation, Desmone said a formal meeting and presentation to the Board will also be held at the end of the audit. Desimone said the risk assessment and internal control testing is being wrapped up this week, with final audit work being completed during the week of March 2. The final reporting is due in April 2015. Desimone said the audit team knew the process wouldn't be 100 perfect this year but they were looking for significant progress. The internal EPUD PIT crew (Process Improvement Team) is currently talking about internal controls. She said Keith and the team have seen a lot of areas with significant improvement in them. They are very impressed with the amount of work which has been done. They will report on improvements that have been made and what still needs to happen. Desimone said kudos to staff as they have been taking this seriously. The areas of emphasis for the audit include: --billings and revenue structure --plant assets (job approval, costing, and monitoring) --payroll --disbursements --inventory


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Desimone said that the audits they perform don't get stagnant as they treat every year as new. She discussed how the contributions in aid of construction hadn't been recorded appropriately previously, so that was caught up to Moss Adams’ satisfaction. They are currently looking to see if any exemptions apply within the state. This relates to in part to county property taxes. Desimone said EPUD had received a FEMA grant for the February 2014 storm, which exceeded the threshold. She said there will be an additional audit on just this grant. In terms of new Accounting Standards for reporting, Desimone said there is nothing significant impacting EPUD for the year ending December 31, 2014. Next year, there will be some new standards, although the State of Oregon is trying to make it as easy for us as possible. Director Schacht asked what the auditors may find at a utility that they wouldn't find at other businesses. Desimone responded the fact that you have two businesses in one. The rates are regulated by the Board but we also have a construction company which has regulations set by state, county and local rules and regulations. Our audit is set based on operating revenue, said Desimone, looking at operations and expenses.

Finance/ Treasurer’s Report

The Accounts Payable Check Register for the period from December 1-31, 2014 was reviewed and discussed. Staff clarified several expenditures for the Board.

General Manager’s Report

Theabolt said he had received an email today regarding River Partners' previous request for a contribution from EPUD for television advertising. He reminded the Board we budgeted $15,000 for this after the Board approved the $15,000 requested at the September 10, 2014 meeting—contingent upon River Partners raising the funds to fully fund this campaign. A copy of the email information was distributed to the Board. It outlined that the ads will be starting to run in February through mid-June. River Partners will also have a press release, print ad, GM news article and other materials available for our use. Theabolt distributed his General Manager’s report, including the board calendars for Tuesday or Wednesday meeting options. He also included information on outages that we've had for the last 4 weeks - from December 8, 2014-January 11, 2015. During that time, there were 6 car-hit poles and 1 guy wire hit. He said these accidents caused outages to 1,691 customers for an estimated total of 47,000 minutes. Theabolt indicated to the Board that two calendars have been prepared for consideration - one for meetings to be held on Wednesdays and the second for Tuesday meetings. Director Davis said he would prefer going back to Tuesday meetings and there was general consensus from the Board on this. Typically, it's just senior staff that comes to the evening meetings. There was discussion about the time for the work session, and whether we should stay at 1:00 pm or move to another time. If it's a meeting more for education, Director Jordan said she would prefer holding it during daytime hours if that makes it more convenient for the staff would who be presenting.


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Motion Vote

Director Parrish/Director Schacht moved to hold the Board business meetings at 5:00 pm on the second Tuesday of the month and to hold the Board Work Session on the fourth Tuesday of the month, also at 5:00 pm for consistency. Unanimously approved. Theabolt mentioned the process for the upcoming Rate Committee meeting, which is scheduled for later in January. The Committee will be reviewing the implementation strategy for the 3% rate increase adopted by the Board as part of the 2015 budget. As in years past, staff will prepare several rate structure scenarios and present them to the Committee. They will then make their formal rate structure recommendation to the Board at the Tuesday, February 10 Board meeting. The next item in the General Manager’s Report was information on a process similar to the Energy Imbalance Market. This is the proposed Security Constrained Economic Dispatch (SCED) process. Roadman said that Bonneville is right in the thick of the decision making and about how to implement this. He said there is an official track of our comments. Roadman said he is working with The Energy Authority (TEA) on a committee. It's unknown how this will change the whole scheduling picture. There will be a lot more to come on this. The initial proposal is due by the end of March. Based on what he's been hearing, Roadman said that's where it's headed. He said he would be happy to come back to a future workshop to talk more about this sometime after March. Roadman said our scheduling agent, TEA, has a lot of experience. They are being looked to for advice on what has worked before with other agencies. Theabolt distributed information on the APPA 2015 Public Utility Governance webinar series. Several of the directors commented that they thought this would be a good training opportunity for Director Kelley. Director Parrish also talked about an NWPPA training he had gone to early on when he became a director, and how beneficial that had been.

Consent Agenda Motion Vote

Director Jordan asked about the December 3 Work Session minutes. She said there should be some reference to the physical action which occurred between Director Davis and a ratepayer who was speaking during the public comment period. Director Jordan felt there should be a written version for clarification as she had been participating by telephone and was unable to discern the interaction. She said it should be clear that the ratepayer didn't approach the Board Vice President, but rather, that the Vice President approached the ratepayer. Director Schacht/Director Parrish moved approval of the Consent Agenda with the suggested change to the meeting minutes of December 3. Unanimously approved.

Addition to Agenda

Director Schacht asked to speak about the censure which had previously been placed on her. Director Davis said he has had concern about that not following Board Policy. Director Schacht felt it wasn't legitimate in the first place. There


Page 6

Motion Motion Amended Motion Vote on Amended Motion Vote on Original Motion Motion

was no reason given, no date(s), no time(s)/or place(s) given which, as stated in Board policy, is to be identified when imposing a sanction. Director Davis/Director Kelley moved to remove the sanction imposed on Director Schacht. Directors Parrish and Jordan reminded Directors Davis, Schacht, and Kelley that they did indeed provide Director Schacht with the reason for the sanction while in an Executive Session. Director Jordan said the reason it was not done in open session was to protect staff. She reminded Director Schacht that she could not vote on this due to pecuniary gain. After discussion, Director Davis realized he could not make the motion and Director Kelley said he would like to wait. As a result, there was no vote taken. Director Schacht/Director Davis moved to censure Director Jordan for the duration of her term of office. Director Schacht indicated that on October 7, 2014 Director Jordan provided information to at least one private citizen in regard to the recordings. The proposed censure would include the same language as what Director Schacht received (to include riding in parades). The sanction imposed on Director Schacht at the September 10, 2014 meeting read: As a censure, Director Schacht is not authorized to attend NWPPA, APPA, PPC, PNUCC, NWEC or OPUDA meetings or other organizations as a representative of the District, in which no per diem or expenses would be payable for the remainder of her term. Director Schacht may attend District board meetings to represent her constituents. Director Schacht shall have absolutely no contact with the General Manager outside the Boardroom.

Director Davis felt the motion to censure Director Jordan should be amended to just four months and made a motion to that effect. He felt the censure for Director Schacht’s remainder of her term of office was ridiculous. Director Schacht seconded the motion to the amendment. Director Jordan said the punishment should fit the crime. If she would be restricted from speaking with ratepayers, she would understand and accept that punishment as it fits the crime. Director Parrish reminded the Board that the reason Director Schacht was originally sanctioned was for sharing information from Executive Sessions and breaching confidentiality. He again urged Director Kelley to listen to the recordings so that he could form his own opinion. Yes: Directors Davis, Kelley, Schacht. No: Directors Jordan and Parrish. Yes: Directors Davis, Kelley, Schacht. No: Directors Jordan and Parrish. Theabolt shared with the Board that we have received a subpoena to release the recordings. If the District Attorney rules that we need to do this, we will need to work with Attorney Kathy Peck's office. Director Schacht/Director Kelley moved to lift the censure off both Director Jordan and Schacht in accordance with Article 8 of Robert’s Rules of Order. In reviewng Robert’s Rules of Order after the meeting, the section quoted was


Page 7

Vote

Article 8(46) which reads: “It is a general rule that no one can vote on a question in which he has a direct personal or pecuniary interest. Yet this does not prevent a member from voting for himself for any office or other position, as voting for a delegate or for a member of a committee; nor from voting when other members are included with him in the motion, even though he has a personal or pecuniary interest in the result, as voting on charges preferred against more than one person at a time, or on a resolution to increase the salaries of all the members.” Yes: Directors Davis, Kelley, Parrish, Schacht. No: Director Jordan. Director Jordan made the comment that she should not have voted on the motion for her sanction as she had a conflict of interest.

Action Item 15-01 – NWPPA Items for Consideration Motion Vote

There was a brief discussion around the items for consideration. Director Schacht suggested that Director Kelley look into this and consider getting more involved as it's such a great organization. Director Kelley could certainly attend the meetings before submitting and application to serve on the NWPPA Board. Director Parrish/Director Davis moved to take no action. Unanimously approved.

Action Item 15-02 – White Creek Wind Re-sale Agreement Motion Vote

Director Parrish/Director Schacht moved to approve Action Item 15-02 – White Creek Wind Re-sale Agreement. Unanimously approved.

Review of Motions The motions made during the meeting were reviewed for accuracy.

Public Comment Douglas Card from Veneta spoke about Director Kelley and his qualifications. He commented that it is time to move forward. Card said he was glad the sanctions have been removed and that he hopes the Board can work together successfully in the future. Patti Chappel said “it has been a travesty tonight.” She said she would encourage Director Kelley to listen to the recorded conversations. “Do not be led hook line and sinker down the path” she said. Chappel wishes Director Kelley luck and wishes the rest of the Board luck. She suggested that Director Schacht resign from the Board. Bob McKuhn suggested that the Board get on with their business and quit their bickering.


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Suggested Items for Future Meetings

In addition to those items discussed during the meeting, Board Policy updates need to be finalized based on the change in meeting days/times of day and several other policy changes which is out of date and were originally discussed in December.

Upcoming Meetings/Events

The list of upcoming meetings and events were included on the Agenda. The Board will hold a Special Board Meeting on Tuesday, January 20 beginning at 5:00 pm, as previously stated. The two additional Board meetings on the agenda—Wednesday, January 28 and Wednesday February 11—will be moved to Tuesday, January 27 and Tuesday, February 10 as per discussion at tonight’s meeting. Each will begin at 5:00 pm.

Directors’ Concluding Comments

Director Schacht thanked Douglas Card for his kind words. She said it is time that we move forward and think about the utility rather than ourselves and that she would challenge all of us to keep working together. She said she was hoping to be able to talk with Director Jordan in order to work together in the future. Director Schacht said the presentations were quite good and that she impressed with both Roadman’s presentation and the audit firm of Moss Adams and was quite pleased with the accomplishments. She commented that she hopes to bury the hatchet and move on. Director Jordan stated that she has learned from 10 years of history with Director Schacht that she doesn't forgive and forget. Director Jordan said from experience that Director Schacht is not to be trusted.

Adjournment

President Davis adjourned the Board meeting at 7:42 pm. Minutes prepared by Beth Matthews, Executive Assistant.

EMERALD PEOPLE'S UTILITY DISTRICT Board of Directors' Executive Session January 14, 2015 Minutes Convene At 3:03 pm, President Parrish convened the Executive Session pursuant to ORS

192.660 (2)(i) and (2)(f)at the Emerald office, 33733 Seavey Loop Road in Eugene.

Attendance Directors: Ron Davis, Penny Jordan, Lee Kelley, Kevin Parrish, and Katherine

Schacht. Staff: Alice Schroder, Jim Theabolt, and Beth Matthews. Guest: Heather Gantz, Waldron recruitment firm

The Executive Session was convened pursuant to ORS 192.660(2)(i).

The Board met to discuss the General Manager recruitment process. At 3:41 pm, the Executive Session was adjourned in order to transition to the next segment of the meeting. Heather Gantz left the meeting. At 3:45 pm the Executive Session was reconvened pursuant to ORS 192.660(2)(f) and Power Manager Kyle Roadman joined the meeting to discuss the White Creek Wind Resale Agreement.

Adjournment At 4:14 pm, President Parrish adjourned the Executive Session.

Minutes prepared by Beth Matthews, Executive Assistant to the GM/Board

EMERALD PEOPLE'S UTILITY DISTRICT Board of Directors' Special Board Meeting

January 20, 2015 Minutes Convene President Davis convened the meeting at 5:02 pm at the Emerald offices, 33733


Directors: Ron Davis, Penny Jordan, Lee Kelley, Kevin Parrish, and Katherine Schacht. Staff: Doug Barab, Sara Cline, Ron Dubbs, Jerry Lay, Dale Olson, Kyle Roadman, Alice Schroeder, Brian Sharr, Jim Theabolt, Joel Timpe, Neil Williams, and Beth Matthews. Guest: Dash Paulson – Register Guard reporter.

Adjournment and Reconvene

Director Davis adjourned the Special Board meeting to convene an Executive Session at 5:04 pm pursuant to ORS 192.660 (2)(h) – Legal Rights. Attorney Dee Rubanoff joined the meeting by conference call. All staff except Alice Schroeder, Jim Theabolt, and Beth Matthews left the room. Dash Paulson remained in the room as well. The Executive Session was adjourned at 6:18 pm and the Board took a brief break prior to reconvening the Special Board meeting at 6:19 pm. Rejoining the meeting were Doug Barab, Sara Cline, Ron Dubbs, Dale Olson, and Kyle Roadman.

Motion

Director Davis indicated the Board had a discussion during the Executive Session about an appeal regarding disclosure of requested phone recordings. There was discussion about possible illegal activity regarding the tapes being released as well as discussion about seeking a criminal attorney. Director Davis/Director Schacht moved to investigate the potential of illegal activity. Director Davis will contact a criminal attorney tomorrow to explore an appeal on the condition that we find an attorney to concur that we have a valid case. Theabolt asked if the Board could just drop the appeal if they are unable to find a criminal attorney who feels this is valid. Director Parrish indicated he was opposed to an appeal. He said Dee Rubanoff indicated we don't have much of a case. He said he does not want to appeal the District Attorney’s order. Director Schacht said Director Parrish already spent money on attorney fees last year when it wasn't appropriate. Director Parrish rebutted Director Schacht’s accusation that he spent money because we were required by law to conduct an investigation into whistleblower allegations. Director Schacht said she felt Director Parrish acted unilaterally on the whistleblower issues.

Emerald PUD Special Board Meeting Minutes – January 20, 2015

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Vote

Director Davis expressed concern that the public could come in and request additional recordings. Director Jordan said she was against an appeal and feels that would not be done to protect the utility, but rather, only Director Schacht. The utility has until Friday, January 23 to give notice of intent to appeal the order of the District Attorney’s ruling. Rubanoff said if the Board decides not to move forward, they would need to reconvene to hold another vote. Yes: Director Davis, Director Schacht. No: Director Jordan, Director Parrish. Abstain: Director Kelley. The motion failed by lack of majority vote, which means the recordings will be a matter of public record and releasable according to the public requests request process upon request.

Obtaining an Attorney for an Appeal Motion Vote

Director Davis/Director Schacht moved to authorize Director Davis to seek an attorney for legal advice who could assist us with determining if we have a viable case for an appeal. Yes: Directors Davis, Kelley and Schacht. No: Director Jordan and Director Parrish.

Action Item 2015-03/ Resolution 2015-01 - General Manager Employment Agreement Motion

Rubanoff explained the original contract which Scott Coe had signed in 2012 which contained an arbitration provision. She spoke about Oregon law surrounding an arbitration provision in contracts. Rubanoff indicated Coe would like to start right away and would like the Board to waive the arbitration provision requirement. She explained how an arbitration provision is a wise move on the part of an employer. She said it is a question of whether the Board wants to do what Coe is requesting, so that he can start as early as tomorrow rather than waiting until next Monday. If the Board agreed to that, they would be taking a chance on whether the arbitration provision in Coe’s original 2012 contract would be in effect. Director Schacht/Director Davis moved to accept the agreement to allow Coe to begin tomorrow –January 21–which was outlined in the contract dated January 1. Director Kelley asked about the arbitration clause and who benefits most by this. Rubanoff said it makes for a fair process, but provides a fair process for the employer. Director Schacht asked whether it's possible to override the 72-hour rule. Her argument was that Coe could challenge it down the road with any legal action—that he could say this wasn’t a legal arbitration rule for the provision to be effective. Director Jordan said she would prefer waiting the six days if Coe really wants to protect EPUD and has their best interests in mind.


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Vote

Yes: Director Schacht. No: Directors Davis, Jordan, Kelley, and Parrish. Rubanoff said Coe is asking the Board to waive the arbitration clause since he's giving up the severance pay. Director Jordan discussed what other PUDs are paying their General Managers. She said she doesn't understand why we're jumping so high on the salary since the average salary range for General Managers--as noted in the 2014 NWPPA survey--was $184,000. Director Schacht rebutted the salaries for EWEB and Central Lincoln and defended Coe’s salary request since we are Slice customers. She said we can attempt to find someone else, but would continue to pay out money in the interim for salary to Theabolt and on recruitment costs. Director Parrish stated that he thought this was wrong and believed the ratepayers would also think this was wrong. Director Davis asked Director Parrish what he would recommend if we don't do this. Director Parrish would recommend we talk with Waldron and get the search for a new General Manager started again. Director Kelley asked if line item changes could be done. Schroeder said the Board could do a counter-offer. Director Parrish stated $190,000 would be appropriate and then move Coe to the right levels of vacation and sick leave accrual. His vacation accrual would be 48 hours more per year if he were to bump up to the 25-year employee level (he left with a 6.46 hour per pay period accrual, equivalent to a 15-year employee). Director Schacht thought Coe has earned the $208,000 by coming back after being “drug through the mud.” Director Schacht stated, “We need to start considering the human being.” Director Davis said he was having trouble with the $208,000 annual salary. Director Kelley said he would like to propose $198,000 instead. Director Jordan said Coe has been threatening for quite a while that he’ll leave and go somewhere else if we don't give him what he wants. There was interest by the Board in counter-offering Coe a salary of $198,000; a vacation accrual equivalent to a 15-year employee; and severance at a rate of 12 months, although the Board would prefer less (Director Jordan and Director Parrish supported six months, while the other three Directors supported nine months). In Coe’s Modification of Separation Agreement, an amendment would need to be made if the salary is countered with a lower amount, said Schroeder. It was also noted that in 2014, Coe had already received a cost of living adjustment—the same as other employees received. If Coe had received the 2.5% cost of living adjustment on January 1, 2015, it would have taken his salary to $189,375—a 7.2% difference between that and $198,000, as Director Parrish pointed out. Theabolt also spoke to Coe’s request for retiree health care. He said this amounts to approximately $1,100/month rather than $2,200 for only 18 months of


Page 4

continued coverage under COBRA. The biggest issue is waiving the 10 years of service for Coe to qualify for the retiree health plan, which would cover Coe up to age 65 and his eligible dependents up to age 26. Schroeder confirmed that if Coe were to obtain employment elsewhere, he would no longer qualify for this. If there is an amendment to the proposed contract and modification of separation agreement, that would need to be done at another meeting. The Board countered Coe’s proposal with the following: --Coe would begin tomorrow at an annual salary of $198,000. --He would remain status quo on vacation accrual at the level of a15-year employee. --A 9 month severance payout if terminated not for cause. --Regarding a sick leave payout, Coe is currently at 10% of the value on the books. Employees receive 50% of the value when here at 5 years and this goes up to a maximum of 50% and then stays there. The Board would settle on 20% for Coe, or as someone at the 4-year employee level. --The 2014 retroactive pay drops down to $14,127 in the modification of separation agreement. The Board had some discussion about what to do if Coe doesn't accept the counter-offer. Director Parrish expressed his feeling that Coe caused the turmoil to begin with. The meeting was recessed at 7:26 pm for Schroeder to place a call to Coe. The meeting was reconvened at 7:34 pm. Schroeder indicated Coe did not want to change any of the terms in the original contract as he had no guarantee of employment since, by law, we don't have the ability to have an end date in the contract. Schroeder said Coe does want to come back to work but he wants the original terms as spelled out. There was no counter offer. Director Schacht suggested the Board accept the contract as written and move forward with it. Director Davis said it disturbs him that Coe doesn't want to adjust his position at all. Schroeder said it comes down to the fact that there is no guarantee of his length of employment as we can’t offer that by law. Coe wants to have a show of support for the contract as it stands. Schroeder said those were his instructions to her. Theabolt said another option would be to increase the severance agreement if security is what Coe is looking for—perhaps changing to a 2-year severance with other conditions suggested still the same. There was also a suggestion about a counter-offer of $202,000, with other terms remaining as what the Board had discussed. The Board adjourned while Director Davis went to negotiate another counter-offer with Coe. At 8:00 pm the Board meeting was reconvened. Director Davis asked about extending the meeting, since Board Policy 1205 requires a unanimous approval by all Directors present to meet past the three-hour time period. As a result, the Directors agreed to extend the meeting for five minutes. Director Davis informed the Board that Coe is not wavering on the terms of his contract.


Page 5

Next Meeting A Special Board Meeting is scheduled for 6:00 pm on Thursday, January 22, 2015 in the District Offices, 33733 Seavey Loop Road, Eugene. This will be to discuss what the path forward will be from this point.

Adjournment


EMERALD PEOPLE'S UTILITY DISTRICT Board of Directors' Executive Session January 20, 2015 Minutes Convene At 5:04 pm pm, President Davis convened the Executive Session pursuant to ORS

192.660 (2)(h) at the Emerald office, 33733 Seavey Loop Road in Eugene. Attendance Directors: Ron Davis, Penny Jordan, Lee Kelley, Kevin Parrish, and Katherine

Schacht. Staff: Alice Schroeder, Jim Theabolt, and Beth Matthews. Guest: Dash Paulson – Register Guard reporter.

The Executive Session was convened pursuant to ORS 192.660(2)(h) – Legal

Rights. The Board met to discuss a potential appeal regarding disclosure of telephone recordings.

Adjournment At 6:18 pm, President Davis adjourned the Executive Session.

Minutes prepared by Beth Matthews, Executive Assistant to the GM/Board

EMERALD PEOPLE'S UTILITY DISTRICT Board of Directors' Special Board Meeting

January 22, 2015 Minutes Convene President Davis convened the meeting at 5:58 pm at the Emerald offices, 33733


Directors: Ron Davis, Penny Jordan, Lee Kelley, Kevin Parrish, and Katherine Schacht. Staff: Doug Barab, Dale Olson, Kyle Roadman, Alice Schroeder, Mike Terry, Jim Theabolt, and Beth Matthews. Guest: Dash Paulson – Register Guard reporter.

Action Item 2015-03/ Resolution 2015-01 - General Manager Employment Agreement Motion

Director Schacht/Director Davis moved to accept the terms of the General Manager's employment contract. By approving this, Scott Coe’s salary would move from his originally-proposed amount of $208,000 to $202,000 annually, with a slight change to the dollar amount in the modification of separation agreement to $17,234. Coe is aware of this change as well. There was a discussion about the arbitration clause and putting that back into the contract. Director Parrish said he is obviously opposed to this. It's a 9.3% raise and a lot of add-ons. Director Jordan said she still has issues about all of the fringe benefits Coe has requested. She asked about Central Lincoln PUD’s General Manager Debra Smith's salary. Director Jordan commented that it is $206,000 and placement at that amount had to with geography and Smith’s years of service as an assistant General Manager while at EWEB. Another public utility’s General Manager is at an annual salary of $178,000 while another is at $185,000 annually. The difference is in the years of service. Director Jordan said the average years of service was 20

+ and salaries were less than what Coe is asking for. She said she

feels the 12-month severance package is not acceptable. She said she also feels she would like to negotiate on some of the other fringe benefits. Director Schacht said she felt we were negotiating the other night and we had already had that discussion. Director Davis again brought up the fact it would cost the utility a lot of money to go out and get another General Manager who is up to speed on Slice. He said he feels it will be demoralizing for employees. Director Parrish asked Director Davis how he got to $100,000-$500,000 as the estimated cost for attaining a new General Manager. Director Davis said there would be the initial cost of $10,000


Page 2

Vote

for the Waldron search, plus expenses and that he believes employees will leave the utility and it will cost money to replace them. Yes: Directors Davis, Kelley, and Schacht. No: Director Jordan and Director Parrish.

Public Records Appeal

Director Davis discussed the appeal process. Since the January 20 Special Board Meeting, he has done research on this situation. He feels it's a concern that if we don't appeal, those recordings will be released. He discussed the current, similar situations at Eugene 4-J and the University of Oregon. Director Davis indicated he had spoken with the District Attorney’s office, attorney Rick Larson, and attorney Kathy Peck. He said that as a utility, we still don't have a clear understanding of how these recordings came about but that to appeal, it would cost our customers a substantial amount of money. Director Davis said he believes we should release the recordings as ordered by the District Attorney. The legal firm of Harrang Long Gary Rudnick has reviewed the recordings and there is nothing confidential related to red flag rules. The parties involved on the calls admit to using bad judgment. Director Schacht asked that additional time be requested from the District Attorney’s office to investigate this further. Director Parrish reminded her that we don't have the right to do that. If we don't file an appeal by tomorrow, we need to release the recordings. Director Davis said there is a problem with getting attorneys to talk with us, outside of our staff attorney. However, to contact a criminal attorney, it takes a while to do so. Director Parrish noted there is no criminal element in the District Attorney’s order. Theabolt reminded the Board that we face additional costs to file an appeal and then not carry through. He said that we would need to start working with our attorney tomorrow (January 23) in order to file an appeal by next Friday, January 30. We were originally given seven days from the date of the letter to respond. Director Parrish reminded the Board there is a process involved with a District Attorney’s ruling. Theabolt asked Director Davis what he found out from speaking with two separate attorneys. Director Davis said that eventually the recordings will become public record. The question is whether you release the recordings now or after you spend additional money and end up having to do it later anyway. Director Davis said it’s a problem either way. Director Schacht said this is not looking good for other utilities—that it’s harmful to our neighbors and other utilities. Director Schacht said she feels it’s huge. Director Davis said he is having trouble with a solution. Director Parrish stated that he does not feel this is a problem for other utilities. The longer we drag this out, it makes it worse. Since an appeal to the District Attorney will not be made, the call recordings will be available to be released through the public records request process once we receive them from the legal firm.


Page 3

Director Schacht stated that her personal privacy has been invaded. She said there is nothing illegal said on those tapes. She stated, “You do not have my consent to listen to those private conversations.”

Interim General Manager Contract Motion Vote

Theabolt said he has a contract with the Board, which they will need to cancel today. Director Schacht/Director Davis moved to cancel Jim Theabolt’s contract as Interim General Manager effective this evening. Unanimously approved.

Adjournment


Action Item 15‐04

To: Board of Directors Date: February 10, 2015 Re: Resolution 2015‐02, Authorization for Updating Bank Persons of Authority

Attached is Resolution 2015‐02 to add General Manager Scott A. Coe to the list of

current authorized Persons of Authority.

Emerald People’s Utility District Resolution 2015-02

Authorization for Updating Bank Persons of Authority

WHEREAS, Emerald People’s Utility District, of Eugene, Oregon, has a request for updating our records to reflect new Persons of Authority; NOW THEREFORE BE IT RESOLVED by the Emerald People’s Utility District Board of Directors that the following employees will be Persons of Authority: Scott A. Coe, General Manager and Sara J. Cline, Chief Financial Officer. This level of authority gives them authorization to initiate bank account information changes, including adding and deleting signers, and opening or closing accounts for Siuslaw Bank, Umpqua Bank, US Bank, and the Oregon State Pool. This resolution authorizing Persons of Authority supersedes previous resolutions authorizing Persons of Authority and shall remain in force until a new resolution is adopted; ADOPTED by the Board of Directors this 10th Day of February, 2015. By: _____________________________ Ron Davis President, Board of Directors ATTEST: ______________________________ Beth Matthews Secretary to the Board Votes of the Directors: Yes No AbstainDavis Schacht Kelley Jordan Parrish

Action Item 15‐05

To: Board of Directors From: Kyle Roadman, Brian Johnson Date: February 10, 2015 Re: 2015 Rate Increase

Discussion The 2015 budget was approved by the Board in December 2014, and includes a 3% overall

rate increase beginning in April 2015. Staff recently met with EPUD’s Citizen Advisory

Committee on Rates to discuss the implementation of this increase and solicit feedback. The

Committee was split in its recommendation between two options: (1) a small basic charge

increase ($3 for Residential customers); and (2) a moderate basic charge increase ($5 for

Residential customers). In either case, the basic charge in other customer classes would be

adjusted in the same proportion. Other charges (Energy, Demand, Distribution) would be

adjusted evenly to bring the total average increase for each class to approximately 3%.

The proposed rates under these two options are attached under the headings “Option 1:

Small Basic Charge Adjustment” and “Option 2: Moderate Basic Charge Adjustment”. For

reference, Option 1 would increase the basic charge from $15.00 to $18.00 and increase the

energy charge from $0.0795/kWh to $0.0799/kWh. Option 2 would increase the basic charge

from $15.00 to $20.00 and decrease the energy charge from $0.0795/kWh to $0.0783/kWh.

Staff supports either of these options as a means of bringing Emerald’s basic charge in closer

alignment with actual cost of service. Emerald’s previous Cost of Service Analysis (completed

in 2011) indicated the residential basic charge should be approximately $31.00. A higher

basic charge allows us to better recover the fixed costs of operating the utility.

Action Request Staff is requesting that the Board adopt one of the two attached resolutions (“Option 1: Small

Basic Charge Adjustment” or “Option 2: Moderate Basic Charge Adjustment”) in order to

implement a 3% overall rate increase. This increase will be approximately equal for each

customer class and will be effective on April 1, 2015.

Option 1: Small Basic Charge Adjustment

Option 2: Moderate Basic Charge Adjustment

Basic Energy Demand Dist. Basic Energy Demand Dist. Increase

Residential

4 & 4a $15.00 $0.0795 ‐ ‐ $20.00 $0.0783 ‐ ‐ 3.1%

Total Residential 3.1%

Irrigation

41 (1ph) $15.00 $0.0863 ‐ ‐ $20.00 $0.0860 ‐ ‐ 10.1%

41T (3ph , < 30 HP) $18.75 $0.0679 ‐ ‐ $25.00 $0.0649 ‐ ‐ 2.5%

41U (3ph, > 30 HP, < 60 HP) $48.75 $0.0679 ‐ ‐ $65.00 $0.0649 ‐ ‐ 2.9%

41V (3ph, > 60 HP, < 120 HP) $63.75 $0.0679 ‐ ‐ $85.00 $0.0649 ‐ ‐ 0.9%

Total Irrigation 3.4%

General Service

25 (1ph, < 50 kW) $15.00 $0.0863 ‐ ‐ $20.00 $0.0860 ‐ ‐ 3.5%

25E (Education) $15.00 $0.0795 ‐ ‐ $20.00 $0.0783 ‐ ‐ ‐0.9%

25S (1ph, > 50 kW) $45.75 $0.0679 $4.75 ‐ $61.00 $0.0697 $4.88 ‐ 4.5%

25T (3ph, > 50 kW) $45.75 $0.0679 $4.75 ‐ $61.00 $0.0697 $4.88 ‐ 3.1%

25U (3ph, < 50 kW) $15.00 $0.0863 ‐ ‐ $20.00 $0.0860 ‐ ‐ 1.7%

Total General Service 2.7%

Industrial

Nov‐Jan $135.00 $0.0327 $4.69 $0.0339 $180.00 $0.0337 $4.83 $0.0339

Feb‐Jun $135.00 $0.0245 $3.66 $0.0339 $180.00 $0.0252 $3.77 $0.0339

Jul‐Sep $135.00 $0.0265 $4.31 $0.0339 $180.00 $0.0252 $3.77 $0.0339

Oct $135.00 $0.0315 $4.36 $0.0339 $180.00 $0.0324 $4.49 $0.0339

Total Industrial 3.1%

Lighting

51 $0.00 $0.1968 $0.00 ‐$ $0.00 $0.2027 $0.00 ‐$ 3.0%

54 $15.00 $0.0795 $0.00 ‐$ $20.00 $0.0783 $0.00 ‐$ 2.8%

Total Lighting 3.0%

Grand Total 3.0%

Current Rates Proposed Rates (effective 4‐1‐15)


Emerald People’s Utility District

Resolution 2015-03 A Resolution Adopting Price Changes to be Effective April 1, 2015

WHEREAS, Emerald People’s Utility District is required to adopt price schedules for billing purposes; and WHEREAS, after a public hearing on February 10, 2015, the Board of Directors finds it necessary to adopt new price schedules; and

WHEREAS, ORS 261.465 vests in the Board of Directors the right and duty to fix and adjust prices; and

WHEREAS, the assumptions used in the 2015 budget predict total annual rate revenue will need to be increased by an additional 3% in April 2015. WHEREAS, the Rate Advisory Committee has reviewed the current rate structure of Emerald People’s Utility District and made recommendations to obtain this additional revenue by increasing all billing determinants within each customer class, including the basic charge. NOW, THERFORE, BE IT RESOLVED that the Emerald People’s Utility District adopts increases from the April 1, 2014 price schedules of approximately 3% in revenue requirements. The price adjustments are effective April 1, 2015, and electric usage will be prorated based on the number of meter reading days in the billing period. The monthly use will be divided by the number of days in the billing period, and allocated from the March meter reading date to April 1, billed at the previous rate. Use from April 1 to the meter reading date in April will be billed at the new rate. Approximate average class changes are: Residential +3.1%, General Service +3.0%, Industrial +3.0%, Irrigation +3.0%, and Lighting +3.0%. Prices are distributed in accordance with the attached Price Schedules. The increase will be applied as a $3 increase in the basic charge for Residential customers, with other customer classes adjusted in the same proportion. The remaining increase will be evenly distributed to the other charges (Energy, Demand, Distribution) to bring the total average increase for each class as close as possible to 3.0%. ADOPTED by the Board of Directors of Emerald People’s Utility District at its meeting on February 10, 2015.

By: __________________________________ Ron Davis, Board President

ATTEST: ___________________________ Beth Matthews, Board Secretary

Votes of the Directors: Yes No Abstain

Davis

Schacht

Kelley

Parrish

Jordan


Emerald People’s Utility District

Resolution 2015-03 A Resolution Adopting Price Changes to be Effective April 1, 2015

WHEREAS, Emerald People’s Utility District is required to adopt price schedules for billing purposes; and WHEREAS, after a public hearing on February 10, 2015, the Board of Directors finds it necessary to adopt new price schedules; and

WHEREAS, ORS 261.465 vests in the Board of Directors the right and duty to fix and adjust prices; and

WHEREAS, the assumptions used in the 2015 budget predict total annual rate revenue will need to be increased by an additional 3% in April 2015. WHEREAS, the Rate Advisory Committee has reviewed the current rate structure of Emerald People’s Utility District and made recommendations to obtain this additional revenue by increasing all billing determinants within each customer class, including the basic charge. NOW, THERFORE, BE IT RESOLVED that the Emerald People’s Utility District adopts increases from the April 1, 2014 price schedules of approximately 3% in revenue requirements. The price adjustments are effective April 1, 2015, and electric usage will be prorated based on the number of meter reading days in the billing period. The monthly use will be divided by the number of days in the billing period, and allocated from the March meter reading date to April 1, billed at the previous rate. Use from April 1 to the meter reading date in April will be billed at the new rate. Approximate average class changes are: Residential +3.1%, General Service +2.7%, Industrial +3.1%, Irrigation +3.4%, and Lighting +3.0%. Prices are distributed in accordance with the attached Price Schedules. The increase will be applied as a $5 increase in the basic charge for Residential customers, with other customer classes adjusted in the same proportion. The remaining increase will be evenly distributed to the other charges (Energy, Demand, Distribution) to bring the total average increase for each class as close as possible to 3.0%. ADOPTED by the Board of Directors of Emerald People’s Utility District at its meeting on February 10, 2015.

By: __________________________________ Ron Davis, Board President

ATTEST: ___________________________ Beth Matthews, Board Secretary

Votes of the Directors: Yes No Abstain

Davis

Schacht

Kelley

Parrish

Jordan



Residential

4 & 4a $15.00 $0.0795 ‐ ‐ $20.00 $0.0783 ‐ ‐ 3.1%


Irrigation

41 (1ph) $15.00 $0.0863 ‐ ‐ $20.00 $0.0860 ‐ ‐ 10.1%

41T (3ph , < 30 HP) $18.75 $0.0679 ‐ ‐ $25.00 $0.0649 ‐ ‐ 2.5%

41U (3ph, > 30 HP, < 60 HP) $48.75 $0.0679 ‐ ‐ $65.00 $0.0649 ‐ ‐ 2.9%

41V (3ph, > 60 HP, < 120 HP) $63.75 $0.0679 ‐ ‐ $85.00 $0.0649 ‐ ‐ 0.9%


General Service

25 (1ph, < 50 kW) $15.00 $0.0863 ‐ ‐ $20.00 $0.0860 ‐ ‐ 3.5%

25E (Education) $15.00 $0.0795 ‐ ‐ $20.00 $0.0783 ‐ ‐ ‐0.9%

25S (1ph, > 50 kW) $45.75 $0.0679 $4.75 ‐ $61.00 $0.0697 $4.88 ‐ 4.5%

25T (3ph, > 50 kW) $45.75 $0.0679 $4.75 ‐ $61.00 $0.0697 $4.88 ‐ 3.1%

25U (3ph, < 50 kW) $15.00 $0.0863 ‐ ‐ $20.00 $0.0860 ‐ ‐ 1.7%


Industrial

Nov‐Jan $135.00 $0.0327 $4.69 $0.0339 $180.00 $0.0337 $4.83 $0.0339

Feb‐Jun $135.00 $0.0245 $3.66 $0.0339 $180.00 $0.0252 $3.77 $0.0339

Jul‐Sep $135.00 $0.0265 $4.31 $0.0339 $180.00 $0.0252 $3.77 $0.0339

Oct $135.00 $0.0315 $4.36 $0.0339 $180.00 $0.0324 $4.49 $0.0339


Lighting

51 $0.00 $0.1968 $0.00 ‐$ $0.00 $0.2027 $0.00 ‐$ 3.0%

54 $15.00 $0.0795 $0.00 ‐$ $20.00 $0.0783 $0.00 ‐$ 2.8%

Total Lighting 3.0%

Grand Total 3.0%

Current Rates Proposed Rates (effective 4‐1‐15)

2015 Rate Adjustments

Presented February 10, 2015

1

• Meeting took place on January 29th, 2015

• 10 of 12 members of the Committee attended

• Attendees:

• Mary McNamara (spokesperson; Sub-district 1)

• Jerry Crabtree (Sub-district 1)

• Alan Cook (Sub-district 2)

• Irene Jasper (Sub-district 2)

• Corrin Schrenk (Sub-district 3)

• Ron Case (Sub-district 3)

• Terri Nielsen (Sub-district 4)

• Laurie Smart (Sub-district 5)

• Brent Czaban (Weyerhaeuser, Industrial Sector)

• Bob Russell (Agriculture/Irrigation Sector)

• Absent:

• Marc Bass (Residential, At-Large)

• John Perdue (Traveling, Sub-district 4)

• Tyler Schmunk (Sub-district 5)

• Tony Scurto (Pleasant Hill School District, Institutional Sector)

• Alan Johnson (Veneta Dairy Queen, Commercial Sector)

2015 Rate Committee

2

• Board approved the 2015 budget on 12/09/14

• Included a 3.0% rate increase beginning April 1st, 2015

• Rate Committee is concerned with Rate Structure and Design

• Given a revenue requirement, how should it be collected?

• Examples: fixed vs. variable charges, progressive vs. regressive usage rates

• Focus of the Committee was implementing 2015 rate increase

• How much in the basic charge vs. the usage charge?

Background

3

• 2012-2014: Small but steady increases

• Board adjusted based on Rate Committee recommendations:

• 2012: $2.00 residential basic charge increase



• Basic charge currently stands at $15.00 for Residential

• Remains well below actual cost of service (approximately $31.00)

Recent Basic Charge Adjustments

4

Basic Charge Analysis (2011 COSA)

5

Class Rate Schedule Present

Minimum

System

100%

Demand

COSA

Average

Variance to

Present

4 & 4a $15.00 $41.60 $21.22 $31.41 $16.41

4s $9.90 $41.60 $21.22 $31.41 $21.51

Single Phase, < 50 kW $15.00 $41.60 $21.22 $31.41 $16.41

Single Phase, > 50 kW $45.75 $41.60 $21.22 $31.41 -$14.34

Three Phase, < 50 kW $15.00 $53.48 $33.13 $43.31 $28.31

Three Phase, > 50 kW $45.75 $63.39 $43.05 $53.22 $7.47

School Service 25E $15.00 $53.48 $33.13 $43.31 $28.31

Single Phase $15.00 $41.60 $21.22 $31.41 $16.41

Three Phase $19.76 $53.20 $32.85 $43.03 $23.27

Recreational Lighting 54 $15.00 $34.23 $13.85 $24.04 $9.04

Industrial 48 $135.00 $219.87 $199.80 $209.84 $74.84

* Three phase basic charge was analyzed in total rather than by rate class. These blended totals are included for reference.

Residential

General Service

Agricultural / Irrigation *

Residential Basic Charge Comparison

6

Current EPUD Rates

7

Basic Energy Demand Dist.

Residential

4 & 4a $15.00 $0.0795 - -

Irrigation

41 (1ph) $15.00 $0.0863 - -

41T (3ph , < 30 HP) $18.75 $0.0679 - -

41U (3ph, > 30 HP, < 60 HP) $48.75 $0.0679 - -

41V (3ph, > 60 HP, < 120 HP) $63.75 $0.0679 - -

General Service

25 (1ph, < 50 kW) $15.00 $0.0863 - -

25E (Education) $15.00 $0.0795 - -

25S (1ph, > 50 kW) $45.75 $0.0679 $4.75 -

25T (3ph, > 50 kW) $45.75 $0.0679 $4.75 -

25U (3ph, < 50 kW) $15.00 $0.0863 - -

Industrial

Nov-Jan $135.00 $0.0327 $4.69 $0.0339

Feb-Jun $135.00 $0.0245 $3.66 $0.0339

Jul-Sep $135.00 $0.0265 $4.31 $0.0339

Oct $135.00 $0.0315 $4.36 $0.0339


8


9

• Pros

• Small step toward more stable revenue base and help recover fixed costs

• Helps insulate customers from higher bills in extreme weather

• Could be viewed as a more balanced approach than other two scenarios

• Cons

• Would result in higher effective increase to lower usage customers

• Could slightly reduce conservation incentive (more fixed cost on bill)

• Relatively small step that may not have much impact either way

Option 2: Moderate Basic Charge Adj.

10


Residential

4 & 4a $15.00 $0.0795 - - $20.00 $0.0783 - - 3.1%


Irrigation

41 (1ph) $15.00 $0.0863 - - $20.00 $0.0860 - - 10.1%

41T (3ph , < 30 HP) $18.75 $0.0679 - - $25.00 $0.0649 - - 2.5%

41U (3ph, > 30 HP, < 60 HP) $48.75 $0.0679 - - $65.00 $0.0649 - - 2.9%

41V (3ph, > 60 HP, < 120 HP) $63.75 $0.0679 - - $85.00 $0.0649 - - 0.9%


General Service

25 (1ph, < 50 kW) $15.00 $0.0863 - - $20.00 $0.0860 - - 3.5%

25E (Education) $15.00 $0.0795 - - $20.00 $0.0783 - - -0.9%

25S (1ph, > 50 kW) $45.75 $0.0679 $4.75 - $61.00 $0.0697 $4.88 - 4.5%

25T (3ph, > 50 kW) $45.75 $0.0679 $4.75 - $61.00 $0.0697 $4.88 - 3.1%

25U (3ph, < 50 kW) $15.00 $0.0863 - - $20.00 $0.0860 - - 1.7%


Industrial

Nov-Jan $135.00 $0.0327 $4.69 $0.0339 $180.00 $0.0337 $4.83 $0.0339

Feb-Jun $135.00 $0.0245 $3.66 $0.0339 $180.00 $0.0252 $3.77 $0.0339

Jul-Sep $135.00 $0.0265 $4.31 $0.0339 $180.00 $0.0252 $3.77 $0.0339

Oct $135.00 $0.0315 $4.36 $0.0339 $180.00 $0.0324 $4.49 $0.0339


Lighting

51 $0.00 $0.1968 $0.00 -$ $0.00 $0.2027 $0.00 -$ 3.0%

54 $15.00 $0.0795 $0.00 -$ $20.00 $0.0783 $0.00 -$ 2.8%

Total Lighting 3.0%

Grand Total 3.0%

Current Rates Proposed Rates (effective 4-1-15)

Option 2: Moderate Basic Charge Adj.

11

• Pros

• Significant move toward more stable revenue base and EWEB alignment

• Helps insulate higher use customers in peak months

• Some rate classes could see a usage charge decrease (Residential to 2013 levels)

• Cons

• Would result in higher effective increase to lower usage customers

• Could reduce conservation incentive (more fixed cost on bill)

• Could create customer service issues (Opportunity to rename Basic Charge)

12

Monthly Bill Comparison - Residential

• Higher use customers see slightly lower bills as basic charge increases

• Provides a lower bill for high-use low income customers.

• Helps EPUD forecast revenue and support financial stability

EPUD vs. Pacific Power (Residential Rates)

13

EPUD proposed rates are 18.13%

lower than Pacific Power

EPUD vs. Pacific Power (Residential Rates)

14

Action Item 15‐06 To: Board of Directors From: Kyle Roadman, Rob Currier Date: February 10, 2015 Re: Business Expansion Rate Incentive Program

Discussion Staff previously implemented a Business Expansion Rate Incentive (“BERI”) program during

the second half of 2013. This program was intended to provide an incentive for our industrial

customers to increase energy usage during our provisional high water mark measurement

period with BPA. Staff is proposing to offer this program again for the duration of 2015 in

order to increase Emerald’s retail revenues and offset low wholesale market pricing. As

described in the attached document, the program would provide a discounted retail rate on

incremental customer usage above a baseline level. This baseline will be set at or above last

year’s usage levels in order to reflect a reasonable estimate of current year usage levels.

This program will be available to all Industrial and large General Service customers with a

demand greater than 500 kW. Offering the program to this limited group of customers allows

for the greatest potential impact and the least amount of administrative work.

Action Request Requesting Board approval of the temporary Business Expansion Rate Incentive (“BERI”)

program, as described in the attached document.

Emerald People’s Utility District Temporary Business Expansion Rate Incentive (“BERI”)

Background Emerald previously offered a Business Expansion Rate Incentive (“BERI”) program during the second half of 2013. At the time, the focus was on achieving higher load growth in order to increase Emerald’s share of low‐cost Federal “Tier 1” power. Although our allocation of Tier 1 power is now fixed, a second BERI program is being proposed in an effort to increase Emerald’s retail revenue.

Purpose The purpose of the BERI program is to incentivize industrial customers to accelerate expansion plans, thus increasing Emerald’s retail revenue over a defined time horizon. As a result of unseasonably warm weather, our loads during the first part of 2015 have been much lower than forecast, resulting in lower sales to date. At the same time, wholesale market prices have been extremely low, making it difficult to secure higher surplus revenues. A new BERI program would allow us to sell our surplus at a rate above current market prices, while also partnering with our own customers. This demonstrates a willingness to help local businesses and is a chance to leverage the flexibility we have with our BPA Slice contract.

Methodology The BERI rate will be offered to customers served under an Industrial rate schedule (48) and to large General Service customers with a demand greater than 500 kW. After Board approval of the program, eligible customers will have a 30‐day window in which to decide to participate. The program will be designed to run through the end of 2015. EPUD will measure loads for BERI eligible customers beginning on the billing period immediately following notification of a customer’s intent to participate. Staff will track this load against a baseline, which will be set at or above last year’s usage levels in order to reflect a reasonable estimate of current year usage levels.

The BERI rate will be equal to the weighted average of the Forward Mid‐C pricing curve for the six‐month time period in question. A $10.00 risk premium will also be included to account for potential changes in market pricing. An example calculation is shown below for March‐2015 through Dec‐2015. This forward pricing is approximately equal to the rate at which EPUD would sell surplus energy in the open market. This rate will be applied to all energy consumed above the baseline during this period.

At the end of the measurement period, EPUD will look at the incremental consumption for each participating customer and apply the pre‐determined discounted rate on that energy. This look‐back approach simplifies the billing process and provides time to compile valid data.

Rate Discount Calculation Example (Applies to Incremental Load Only)

Current Annualized “All‐In” Rate for Mar‐15 to Dec‐15 $52.69/MWh

Weighted Average Forward Mid‐C Pricing for Mar‐15 to Dec‐15 $21.13/MWh

Risk Premium added to Mid‐C Price $10.00/Mwh

Mid‐C Indexed BERI Rate $31.13/Mwh

Discount, $ (Current Rate minus Mid‐C Rate) $21.56/MWh

Discount % 41%

emerald people’s utility district board of directors ... · 2/10/2015 · po¿r-te¡ mËmÕ...

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