October 20, 2008

MINUTES of the 4,479th being a Regular Meeting of the Commission of Public Utility District No. 1 of Grays Harbor County.

Office located at 220 Myrtle Street, Hoquiam, Washington.  Monday, October 20, 2008, 3:00 p.m., Pacific Daylight Time.
 
WORKSHOP

The Workshop portion of the meeting was called to order at 3:00 p.m., by President Jim Eddy. Those in attendance were Commissioners Jim Eddy, Tom Casey and Truman Seely.  General Manager Rick Lovely, General Counsel Rick Pitt, Chief Financial Officer Doug Streeter, Human Resources Director Linda Trygstad, Human Resources Generalist Sarah Ainsworth, Community & Government Relations Director Liz Anderson, Engineering Manager Wes Gray, Fleet Maintenance Supervisor Denny Dierick, Operations Manager Ed Pauley, IT Construction Coordinator Gary Malone, IT Administrative Secretary Linda McNulty, Operations Administrative Secretary Mary Fry, Safety & Environmental Coordinator Lyle Powell, Purchasing Manager Carl Jonsson, Daily World report Leif Nesheim and 4 members of the public were also present.

The workshop consisted of discussions regarding the District’s proposed 2009 budget.

BUSINESS MEETING

MEETING CALLED TO ORDER:

The meeting was called to order at 4:36 p.m. by President Jim Eddy.  Those in attendance were Commissioners Jim Eddy, Tom Casey and Truman Seely.  General Manager Rick Lovely, General Counsel Rick Pitt, Chief Financial Officer Doug Streeter, Community & Government Relations Director Liz Anderson, Engineering Manager Wes Gray, Operations Manager Ed Pauley, Daily World report Leif Nesheim and 6 members of the public were also present as the meeting was brought to order.  Substation Planning Automation Supervisor Joe Orth, Contract Construction Supervisor Marty Sitton, Bob Mitchell of Burns & McDonnell and Joel Brown of Energy Risk LLC arrived towards the end of the meeting.

MINUTES:

Commissioner Truman Seely moved that the Minutes from the 4,478th meeting on October 13, 2008, as amended, be approved.  Commissioner Tom Casey seconded the motion.  Motion carried by unanimous vote.

PUBLIC COMMENT:
 
Randy Bachtell stated he was an instructor of the Energy Technology Program at New Market Skills Center in Tumwater.  He approached Contract Construction Supervisor Marty Sitton about arranging a tour for his students.  He has been a lifelong resident of Grays Harbor, so he thought it would be good for his students to do a tour in this community.  His students toured five different locations and they chose the Grays Harbor PUD tour as being the best.  They were able to tour the District’s Satsop substation, the transformer shop and the new system control center, which gave them a good view of the job opportunities available in the power industry.  He expressed his thanks and provided the District with Certificates of Appreciation for the employees involved in the tour.  They did a great job explaining everything to the students and showing them around.  Those employees were Lead Utility Wireman Jim Reeson, System Dispatcher Steve Hyde, Wireman Relay Technician Sue Cobb, Contract Construction Supervisor Marty Sitton and Lead System Dispatcher Doug Perry.  He will probably contact Mr. Sitton again in the future to arrange another tour.

Commissioner Eddy stated that he was pleased to hear Mr. Bachtell’s comments about the tour and that the employees involved in the tour did such a good job.  He presented Contract Construction Supervisor Marty Sitton and Wireman Relay Technician Sue Cobb with their Certificates of Appreciation, since they were present at the meeting.  He asked Engineering Manager Wes Gray and Operations Manager Ed Pauley to distribute the rest of the certificates.

Jim Mason stated he has a home in Lewis County and a home in Grays Harbor County, and the District’s rate for power per KWH is much more here.  He was provided with a copy of the District’s balance sheet and believes the high rates are due to outrageous debts.  He asked the Board if they had a plan to deal with this debt.  He stated that the District should not make any more investments in buildings until its debt is under control. 

Commissioner Eddy asked Mr. Mason what it was about the balance sheet and the debt itself that he felt was contributing to high rates.

Mr. Mason replied that the substantial amount of interest the District was paying has become very concerning.

Commissioner Eddy asked Chief Financial Officer Doug Streeter what the District’s debt service was this year.

Mr. Streeter stated that the District’s total debt service is $8.5 million so far this year.  The District’s overhead costs were a lot higher previously.

Mr. Mason stated that the District’s debt is troublesome.  He stated that his rates were cheaper at his Lewis County home. 

General Manager Rick Lovely stated that Lewis County PUD is a full requirements customer of BPA and does not have to have other resources, so Lewis County’s power costs are substantially cheaper.  The District is not a full requirements customer of BPA.  It only gets 60% of its electricity at the cheaper rate.  The District goes to the market or other resources to get the rest of its electricity.  The District has no means to become a full requirements customer of BPA.  BPA may give the District less power in the future.

Mr. Streeter stated that post-2011, Lewis County PUD’s rates would probably increase because it will need to get its electricity from BPA, as well as resources other than BPA.

Mr. Mason stated that he was also concerned about the sale of the District’s diesel generators in 2006.  The way the District handled the sale was very troublesome.  He read the following letter dated October 20, 2008 into the record:

“The decision for the acquisition of the subject generators was very troubling to many in our community, but the outrageous loss the District incurred on the sale in 2006 is almost beyond comprehension. 

To advertise the intended sale in some obscure trade publication is not acceptable advertising in a situation when such a large loss was anticipated. 

Masco Petroleum, which I want to make very clear is owned and operated by our son, discovered from an article in The Daily World on or about February 1, 2006, that the PUD was considering disposing of the generators for a sales price of $700,000.00.  Bill Tometich of Masco contacted the PUD officials on February 3, 2006, expressing interest in bidding on the generators.  During the February 3, 2006 meeting, Tometich explained that the value of the generators far exceeded the $700,000.00 that had been offered, and that he was authorized to make an offer of $1,200,000.00 after a due diligence inspection by the Masco personnel.

Apparently, the $700,000.00 offer was rejected, and a revised offer increased to $800,000.00 was received. 

Late in the afternoon of February 3rd, a PUD official contacted Mr. Tometich and stated that the PUD had a firm offer of $800,000.00, which they were prepared to accept. 

Masco then wrote a letter on February 3, 2006 via e-mail, to the PUD and all three Commissioners requesting 7 days to inspect the generators and prepare a formal bid. 

February 6, 2006, Mr. Lovely from the PUD responded to Masco’s 7-day request, stating very clearly that he would NOT grant the 7-day inspection period. 

February 6, 2006, the PUD Commissioners found the generators to be surplus, and authorized the sale. 

Masco requested the maintenance records of the generators, and subsequently received a letter from the PUD dated February 7, 2007, informing Masco they would be charged $0.15 per copy plus applicable taxes and postage.  PUD officials copied the generator manuals, which is not what was requested, and absolutely useless to Masco.  I am returning them today. 

February 8, 2006, Mr. Lovely signed and authorized the sale for $800,000.00, which was one week after the article appeared in The Daily World.  No one in their right mind would consider one week to be sufficient public notice.

As we all know, the primary purpose of competitive bidding on the sale of government assets is to insure prudent use of public funds, and the PUD must conduct business in a fair and forthright manner.

The generators were sold improperly without any apparent attempt to solicit additional bids.

Summary: 

1. A purchase order dated January 13, 2006, from Critical Power Exchange, 23602 Knox, Liberty Lake, WA, for the purchase of the generators in the amount of $800,000.00.  Question – Why were additional bids not solicited?

2. The PUD Public Notice in the Daily World dated February 1, 2006 did not mention the $800,000.00 offer by Critical Power.  Why not?

3. 3.  Mr. Lovely signed and authorized the sale only five days after the Public Notice.  Do the Commissioners really believe this notice was sufficient? 

4. Please explain the reason for not allowing Masco 7 days for a due diligent inspection.

5. Please explain the reason for providing Masco the voluminous generator manuals instead of the maintenance records.  This appears to be arrogance in its finest hour.  Our public officials are hired and elected to act in a fiduciary capacity, and the public expects and demands that they conduct OUR business in a prudent and business like manner.  I will be looking forward to your complete explanation within the next five days.

Sincerely, Jim Mason”

Commissioner Eddy asked if any of Mr. Mason’s questions could be answered right now during the meeting.

Operations Manager Ed Pauley stated that the District received two or three bids for the generators Mr. Mason is referring to.  The Board turned down one of the bids.  The Call for Bids notice was published in a trade magazine.  He does not recall any more specific details.  The generators were sold a couple of years ago, so he would need to double-check his records so he is not misquoted as saying something inaccurate.

Mr. Mason wanted to know why the District did not give Masco the opportunity for a 7-day inspection.

Commissioner Eddy stated that Mr. Mason is entitled to answers to his questions.  He wanted to be assured that someone from the District would respond to Mr. Mason.

Mr. Lovely stated that the District would prepare a response.

Commissioner Eddy stated that Mr. Mason could leave the box of documents he brought with him to the meeting with Mr. Streeter.

Customer Service Manager Randy Schmidt stated that he would like to discuss the District’s Senior Citizen/Disabled Discount Program.  It has been awhile since the District updated its program, which was established several years ago.  The minimum income per year in order to receive the discount has always been set at $8,000.00.  He contacted other utilities to ask about their discount programs.  Chelan County PUD provided its customers under this program total discounts of about $105,000.00 per year; Grant County PUD provided total discounts of about $92,000.00 per year; and Franklin County PUD provided total discounts of about $141,000.00 per year.  He also contacted Clark County PUD.  He thinks the District is a pretty generous utility since it discounted about $530,607.00 in 2007 for its customers under this program.  He provided a spreadsheet in tonight’s meeting materials that has two proposals listed out.  The Board needs to determine which scenario it wants to approve as far as the minimum and maximum income amounts required in order for customers to receive the discount under this program.  Discussion ensued. 

Commissioner Casey stated that he would like to index the income amounts, so it maintains itself.

Commissioner Eddy stated that if the Board ever chose to raise the income amounts, then the District would have to find extra money to pay for it.  He stated that the Board needed to make sure it gets put on a system.  He understands that Commissioner Casey has suggested that it be indexed.  He wants to make sure it gets indexed from the right spot so it automatically maintains itself.  He asked if someone could find out where the $8,000.00 figure came from.

Mr. Streeter stated that he would provide the Board with an equivalent number of where the $8,000.00 figure came from originally with an index built into the federal poverty guidelines.

Mr. Schmidt stated that the figure is set at the federal poverty level.

The Board decided to table this discussion until the next regular board meeting.

STAFF AND ATTORNEY REPORTS:

Chief Financial Officer Doug Streeter reported:

1) He will be attending the Organizational Excellence Workshop on October 22nd.
2) He will be attending a GHFB meeting on October 24th.
3) He had been busy working on his presentation for the budget workshop earlier this afternoon.

General Manager Rick Lovely stated that the GHFB meeting on October 24th is going to be held at either 7:00 a.m. or noon.  He would prefer to meet at 7:00 a.m.

Engineering Manager Wes Gray reported:

1) He will be attending Labor/Management meetings on October 21st.
2) He will be attending the Organizational Excellence Workshop on October 22nd.
3) He will be attending a JATC meeting on October 23rd.
4) He will be attending Leadership Grays Harbor on October 24th.

Operations Manager Ed Pauley reported:

1) He attended a Traffic Control Oversight Committee meeting in Kent on October 14th.
2) Crews made some repairs in the alley behind the Salvation Army and Hometown Feed on October 16th from about 6:00 p.m. until 3:00 a.m.  Things went well.
3) He received a pie in the face for the Kilowatt Kids fundraiser on October 17th.
4) DOT came onsite recently and inspected all of the District’s vehicles for safety.  The inspections went well.  There were only a couple of very minor issues that needed to be corrected.
5) He attended the Central Safety meeting on October 15th.
6) He will be attending Labor/Management meetings on October 21st.
7) He will be attending the Emergency Disaster Preparedness meeting on October 21st in Montesano.

Community & Government Relations Director Liz Anderson reported:

1) She attended WPUDA meetings in Olympia on October 16th and 17th.
2) There were two power outages today, the first due to a downed line in Ocean Shores and the other due to a bird in Hoquiam.  She distributed information to the media and to Customer Service.
3) She will be out of the office next week attending the APPA Customer Connections Conference.

Commissioner Casey stated that he continued to hear she did a good job on her presentation at the APPA Marketing and Communications Conference a month or so ago.

General Counsel Rick Pitt reported:

1) He attended a Department Head meeting on October 14th.
2) He received a pie in the face for the Kilowatt Kids fundraiser on October 17th.
3) He will be attending the Organizational Excellence Workshop on October 22nd.
4) He will be attending the APPA Legal Seminar October 26th – 29th.
5) He will be requesting an Executive Session following tonight’s meeting pursuant to RCW 42.30.110(1)(b) regarding the acquisition of real estate.  The Executive Session is anticipated to last approximately an hour and a half, and action may or may not be taken.

General Manager Rick Lovely reported:

1) He participated in a New Employee Orientation with the District’s new garage helper, Brad Shumate, on October 13th.
2) He participated in a conference call with RMC regarding 2010 market issues.  The news received out of this phone call was very good and he thinks it was very successful.
3) He participated in a conference call with the Governor’s office and Norm Dicks’s office on October 13th regarding the Cosmopolis mill. 
4) He attended an EDC Executive Committee breakfast meeting on October 14th.
5) He attended a Department Head meeting on October 14th.
6) He attended a WPUDA budget committee meeting in Olympia on October 15th.
7) He attended the Skagit County/Puget Sound Energy forum regarding Skagit County’s request to form a new PUD.  He wrote a letter to the editor and to the reporter of the newspaper at the forum about issues he felt were not addressed.
8) He took a ½ day of PTO on October 16th.
9) He will be taking PTO on October 21st.
10) He will be taking a ½ day of PTO on October 22nd.
11) He will be attending the Organizational Excellence Workshop on October 22nd.
12) He will be traveling to Richland to attend the Energy NW Member’s Forum meetings on October 23rd.
13) He will be attending the Energy NW Member Forum meetings and returning back home on October 24th.
14) He will be attending a GHFB meeting on October 24th.  The meeting will be held at either 7:00 a.m. or noon.

COMMUNICATIONS:

The District received a letter from Jim Womble, the Electrical Panel Committee Chair of the Governor’s Safety & Health Conference, thanking the District for its generous sponsorship contribution.  The Pole Top Rescue Committee felt this year’s competition was very successful and pleasurable for all due in part to the generous sponsorship provided by the District.  Mr. Womble appreciated the District’s commitment to the safety program of the Electrical Panel.  This is one venue where employers and employees come together in a united front to create a safe work environment.  He hopes he can count on the District’s support again in 2009.

The District received a thank you card from Linda and Brian Boomer thanking the District for its thoughtfulness in sending the flowers in Linda’s husband’s honor.  It was a stunning, all white arrangement in a beautiful vase.  The District’s kind thoughts are greatly appreciated.  Linda is the Power Manager at Franklin County PUD and her husband, Ed, recently passed away.

Commissioner Eddy told Contract Construction Supervisor Marty Sitton that Chuck Yucha, a customer in Cosmopolis, contacted him about some big trees around his home that he is concerned about.  He has Mr. Yucha’s address and phone number, and told him that the District would take care of the trees if they were deemed as being danger trees.  Mr. Sitton stated that he had already discussed Mr. Yucha’s concerns with him and someone is going out to look at the trees.

CONSENT CALENDAR:

Consent Calendar:

a) 126 Claim Vouchers for the week of October 20, 2008 (No. 0055004 through No. 0055129) in the total amount of $494,245.19

b) 10 Wire Transfers for the week of October 20, 2008 in the total amount of $4,684,014.59

c) Payroll for the pay period ending October 10, 2008 in the total amount of $549,695.69

d) Applications for 2008 Small Works Roster:

D & H Enterprises

e) Improvement Authorizations:

No. 08-7086 to reconductor and three-phase Canal Street in Ocean Shores at an estimated cost of $123,659.00

No. 08-7113 for underground distribution improvement to maintain service to Bowerman Airfield for the Port of Grays Harbor near Hoquiam, Washington at an estimated cost of $194,506.00

Commissioner Tom Casey moved that the Consent Calendar be approved.  Commissioner Truman Seely seconded the motion.  Motion carried by unanimous vote.

RESOLUTIONS:

RESOLUTION NO. 4365

A RESOLUTION APPROVING THE WESTERN RENEWABLE ENERGY GENERATION INFORMATION SYSTEM (WREGIS) AGREEMENT

General Manager Rick Lovely stated that the WREGIS Agreement would apply to the District’s RECs from the Nine Canyon Wind project.  The value would go up, because the RECs would be sellable.  There is a cost associated with the District’s participation in the WREGIS program.  Discussion ensued.

Commissioner Truman Seely moved that Resolution No. 4365 be adopted as proposed.  Commissioner Tom Casey seconded the motion.  Motion carried by unanimous vote.  The complete text of Resolution No. 4365 is available at District offices during normal business hours.

Resolution #4366 was pulled from the agenda for discussion at next week’s regular board meeting.

FORWARD PLANNING:

Another workshop on the proposed 2009 budget was scheduled for November 17, 2008.  A workshop on system operations was scheduled for November 24, 2008.

COMMISSIONER REPORTS:

Commissioner Tom Casey reported:

1) He attended the WPUDA meetings in Olympia last week.  He appreciated Commissioners Bruce Jorgenson of Mason PUD #3 and Buzz Ketchum of Cowlitz County PUD confronting BPA over the subsidies.
2) There has been some recent discussion of the prohibition of grassroots campaigning.  For example, the PUD cannot encourage the public to contact their local legislators about an issue such as the residential exchange payments.
3) He will be attending the Energy NW Member’s Forum meetings and touring the Columbia plant in Richland this week.

Commissioner Truman Seely reported:

1) He will be attending the Energy NW Member’s Forum meetings and touring the Columbia plant in Richland this week.

Commissioner Jim Eddy reported:

1) He attended the Hoquiam City Council’s meeting last week.  The Council adopted a Proclamation recognizing Public Power Week.  The District should be receiving it soon, if it has not already.
2) He will be attending the Satsop PDA meeting on October 21st.
3) He will be getting a flu shot at the District on October 21st.
4) He will be attending the Chamber’s Annual Banquet on October 24th.

PUBLIC COMMENT:
 
REGULAR MEETING RECESSED:
 
At 5:56 p.m., President Jim Eddy recessed the regular meeting, thereafter to convene in Executive Session to discuss the acquisition of real estate pursuant to RCW 42.30.110(1)(b).  The Executive Session should last approximately an hour and a half, and action may or may not be taken.

EXECUTIVE SESSION:

At 6:00 p.m., President Jim Eddy convened the meeting in Executive Session to discuss the acquisition of real estate pursuant to RCW 42.30.110(1)(b).  Those in attendance were Commissioners Jim Eddy, Truman Seely and Tom Casey.  General Manager Rick Lovely, General Counsel Rick Pitt, Chief Financial Officer Doug Streeter, Community & Government Relations Director Liz Anderson, Engineering Manager Wes Gray, Substation Planning Automation Supervisor Joe Orth, Joel Brown of Energy Risk, LLC and Bob Mitchell of Burns & McDonnell were also present.

RETURN TO REGULAR SESSION:

At 7:20 p.m., President Jim Eddy reconvened the meeting in regular session.

ADJOURNMENT:

There being no further business to bring before the Board, President Jim Eddy declared the meeting adjourned at 7:20 p.m.

 
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