EWEB Board of Commissioners — June 2, 2020

0:01 five thirty times if you want to hit the Go button we might as well get started event is are we live we are alive well all right welcome everybody those of you who are out there in video land to the June 2nd 2020 a web board meeting we have a relatively light packet and scheduled to work through but some meaty topics nonetheless it's 5:30 my name is Steve Mattel I'm this year's board president and we thank you those of you who are out there participating remotely to to this meeting we'll jump right into the first item and that's the agenda

0:47 check all the commissioners have been sent the agenda beforehand is posted on our website as well so anybody who wants to see it who doesn't have it can go to the e web website and download a copy I will ask for any changes or concerns or alterations to the agenda of any of the commissioners I can see all actually I can't see John Brown I can see the others do any of you have any changes to recommend John I can't see you would you just say yes or no no well alright then we will move into items from board members and our general manager I suppose we will start if you think of your nor our normal seating arrangement there in the

1:33 e web board room we will start with the person who is furthest away from the river what would that be I think that's commissioner Carlsen actually I think that's I think I made a mistake I think that's Commissioner starts Berg sorry I just this is what happens when you step away from the board meeting room for three months you can't remember who sits where commissioner Salzburg you are up first um it's like that game where you look at the things on the plate and then you put a take one away and you have to guess what you can play anyway I don't have much I just want to thank that that you have staff for keeping things going during these very turbulent and uncertain times and also I attended the

2:19 laying resiliency collaboration meeting that happened last Friday I don't know if there was anyone else from you up there but um it was good to attend that especially because they called us out for an example of the types of collaboration that they're looking for with our Forge a collaboration and water distribution sites and then just last thing really quick I want to congratulate Matt McRae and John Brasky on winning their seats for the upcoming term as commissioners that's it thank you next up I think now would be Commissioner Carlson I I don't have anything to add well I guess I will say thank you to staff to I really

3:04 appreciated the information that was sent out about kind of our response during the incredibly challenging times as well so thank you everyone for just hanging in there and batten down the hatches and making sure that we can just keep running and doing the business that we do so thank you dick I think you're next okay thank you I I don't have any relatively current events but I just did want to touch on one thing that came up at the last meeting and that was that we had requested some background information on the various components of the web console and paid compensation plan particularly as it related to our

3:49 discussion last time of the general managers compensation and there were no issues there it was just a request to receive from staffs and documentation of the various components that we administer through the course of time so that we and future boards would have access to that and I just wanted to let you know as is referenced in general manager Lawson's report that there has been a draft prepared by Lina our chief human resources officer that speaks to that and I find it in good shape I did have a few clarification questions but I believe that's something that should be ready for distribution quite soon if not in the next couple of days I think president was tall has seen that as well

4:34 so that was really the only thing I had and it was a follow-up item thank you all right I think I'm next I'll just I just want to echo some of the sentiments echoed by others or stated by others the congratulations to the couple of folks who won at least the primary I suppose a vigorous writing could upset their chances in November however it's extremely unlikely so yeah we are really looking forward to the replacements to dick and myself on the board I think they're gonna be great so I'm looking forward to seeing them I hope they broke out there perhaps now listening to the meeting and also to echo sentiments about thanks aunty web staff those who are in the field and at home and perhaps

5:20 back at the office now to some extent we just want to appreciate the you know all the good work that you do my lights and the water I've been running just fine the entire time and I do think about you all and the work that you have to do to make that happen during strange time so much appreciated other quick things I did not have very much a web business per se this past month since we last met but I do have a little coming up I have a phone call scheduled with my counterpart John de Winter over at sub it was actually supposed to be today we had to push it to Thursday that's something we do just as president to president others have done it as well and we delayed it a little bit just as we are we kind of getting accustomed to the kind of Kovan

6:05 culture but anyways now we have a phone call we will do that this Thursday and hopefully we will also get back on the schedule with mayor city manager and one or two of the councillors that's a meeting that was scheduled quarterly that Mindy was responsible for getting up and running last fall we had one meeting in the winter and then things have been delayed for understandable reasons but it's important to get those back up and running so there is one scheduled fairly soon and then I suggest I have to report that I just had an invitation that is gonna be very difficult actually impossible for me to pass up that's a trip with some family and friends down the Middle Fork of the Salmon River which I believe is going to prevent me from attending next the July

6:51 board meeting so I will make sure to be fully prepared with the materials and so that anything I can vote by proxy ahead of time if there's that's necessary I will and and commissioner / borough of course asking you to run the meeting in my absence that's it from me I believe at this point John Brown you're next thank you I share the congratulations to to John and Matt for being able to join us and hopefully they'll be good brought into the queue with the information in the background there's things soon because Matt's and he was unopposed and I think John got the majority so like Steve said I think that it's pretty

7:36 they're going to be our next two commissioners and thank you Frank for reminding us of what our people in the field go through every day that incident with the two meter readers I as you know I said I have a little bit of about that but it just goes to show you that even locally that we have people that are subject to hatred and things and it's just it's sad to know that that happens here even in our community but I'm glad that it turned out the way it did and nobody was hurt the other thing is Frank and I are continuing our dialogues with sprinkle Utility Board and I think the documents I don't know Frank if you want to elaborate on that if the documents on the easements and transactions didn't Glenwood have got

8:22 any food last time I saw and lastly I just like to mention that hopefully sometime the future I didn't see it on our agendas we're gonna talk about the headquarters building now that it's we know that Phillips isn't gonna be there and that's going to be a big difference in the financial impact with the rent going away in a while so hopefully we can think about that and about what we're gonna do because if we're not going to be in there that building will be totally empty or almost empty within a year so that's all I have Frank you're up if you'd like to speak you have a couple things president Mattel commissioners good evening good evening to staff that are

9:07 listening in and also those down in the general public who are listening and I wanted to extend my congratulations to Commissioner Carlson as well who well run running unopposed in the primary along with John borovsky and Matt McRae they will both that all three of those will be solely listed on the ballot in November we actually refer to mr. Barofsky and mr. McCray as presumptive Commissioner elects at this point and so we will start working with them this summer and this fall to orient them to a lot of the issues that we face and offer them to our facilities and to meet with staff as appropriately so we're looking

9:53 forward to that I think the last Commissioner to go through that was Commissioner slash burg of just a couple years ago so we are looking forward to working with John and Matt in the future as well as congratulations to Commissioner Carlson I also wanted to just thank the finance staff for a lot of the work they've been doing the last few months around our bond issuances we did receive our pricing and have was a favorable benefit for refinancing some of our bonds roughly about 30 million dollars in total for the refinancing piece of it with a present value savings of over

10:42 roughly about four and a half million dollars so really like to thank all the work that goes into the bonding efforts that they put forth and and thank them and also congratulate the water utility they receive notice of a national award a National Safety Award from the American Water Works Association for utilities of 500 employees or less and so while we there is no national conference this year to receive the award we will receive the award on their behalf and so thanks to those in the water utility who put forth and and reinforced our values toward safety every day other than that Commissioner

11:29 metallo that was it I did provide most other comments to the commissioners in my general manager's report so I'll turn it back to you all right well thank you and I I can't believe I forgot to wish congratulations to commissioner cross and Sonja congratulations I think given the fact that you were running unopposed it was sort of a foregone conclusion I think I almost forgot that you were involved in the race as well but of course there you are and you ran and I'm really happy that you're running or that you're gonna be there for an additional four years because you've been a really great presence these last four so that continuity is really important so thank you for the service to date and for the plans to continue on all right well with that and somebody's got to say something about Frank's haircut Frank that I am

12:14 that's that's that's quite a shame but did you do that yourself or what happened there yeah that's that's actually you know my hair was getting so long and I was sequestered for a while and it's the the sign of impatience I I don't know maybe overreaction but it it actually feels great it's just a little bit white I need to get out and get a little bit of Sun other than that it feels great there's there's my beard is growing faster than my hair which is probably a bad sign so yeah I'm ready for summer all right then let's jump into the next item that's number three and that's public input so Ann kah our board secretary informed me just a little bit ago that

13:01 nobody had submitted public testimony ahead of time and that really is the only way that it can be read into the record at this point in time we don't have any live options the way we would at a normal board meeting the folks are out there watching and participating and want to submit testimony of course you always can via the Commissioner web page that will be dispersed to the five of us as well as to Frank and and and so we of course read our email just as very frequently and so that's a way to reach out to commissioners as well but as far as I understand there is no public input this evening so we will move straight into item number four that's the first of our action items and that's the

13:47 approval of the consent calendar a and in this case that's let's see Frank what this is the first time we're using consent calendars a and B so maybe for the benefit of us all we could just get clear about which items are on consent calendar a today and which ones are on B I'm going to pull that up right now all right well I'm looking at it right now the consent calendar a is the minutes from last month's meeting that's two executive sessions in the regular section and the first two contracts the eugen stand construction contract for a hundred in there it's a hundred thirty-five thousand dollars up for ABB's in a quick Creek QPS which is 250 mm all of those or anybody wants to pull

14:34 any of those items all right hearing none seeing none I will ask for a vote all of those in favor of passing consent calendar item consent calendar a please raise your hand and say aye aye all right hi we got to work on that a little bit but that sounded like you know unanimity all right we will now move on to consent calendar B that's the balance of the contracts for five six seven and a resolution number 2020 so anybody wish to pull any of those items for consideration or discussion and I thought for sure one of them was getting pulled but it looks like that's not

15:19 gonna happen all right in that case we will I will I just realized I've missed a little process do I have a motion to approve consent calendar B so move and do I have a second second all right well we now I will move to approve the well that is I guess we've had we we've had it we had a motion and a second all those in favor of passing consent calendar B please raise your hand and say aye let's try and get this in unison this time hands up on three one two three aye that was not so much good all right

16:04 that also passes unanimously Frank R and for purposes of process do I need to go back and redo consent calendar a I sitting here at my desk in the comfort of my own home I forgot some important process or potentially important process commissioner president Mattel I would recommend that that you just go ahead and call for a motion in a second and do that officially just so that's part of the record I would also just want to point out to some of those who are listening and especially the general public to that commissioners often times submit questions to staff prior to the meeting and so I just want people to understand that we we go

16:51 through a little bit of back-and-forth answering questions prior to getting to the public session and so the approval is based not only on on the agenda and the consent calendar as presented we also link the question-and-answer interactions from the commissioners on our website as well so it if they're our questions then those get posted as well but I would would recommend that you just go back through the process on agenda on consent calendar 8 all right well let's do that my apologies everybody that I don't know what threw me off something did tonight all right let's go back and do consent calendar any is there a motion to approve consent calendar a we have a motion from Commissioner Krauss gonna need a second as well sorry I have one from dick

17:36 helgesen okay now is there we have a motion and a second all those in favor of passing consent calendar a please raise your hand and say aye I don't think giving up on that when we're moving on all right now I believe we have passed that one officially let me just go back to the president at all yes I just for purposes of the any audience and also for all of us who may have forgotten going forward what is the distinction now between consent calendars a and B and from a process standpoint are those just separated by criteria or do they have different

18:22 background information or what's it's the value of the contract at stake but Frank will you elaborate and give us the precise information yeah typically consent calendar a is going to be routine items that have gone through a routine process so either an invitation to bid where we had multiple bidders meeting minutes or if we had requests for proposals where we achieved at least our minimum of three bidders for example or used a state contract a consent calendar be is typically items that either don't meet that criteria are directly negotiated for example and you should expect to see a little bit more background information on consent

19:08 calendar B but one is typically routine items that's a and then really non routine contracts would be consent calendar B thank you alrighty we will move on to general business items the first up is the köppen 19 financial position and customer lifelines there this items got 45 minutes and it's being headed up by Frank Deborah and Julie I believe yes president Mattel commissioners good evening if Travis you could pull up the presentation that would be helpful at this time thank you so commissioners I'd

19:54 like to offer that you really think of this presentation and discussion as a precursor to our July meeting where we will get into a lot more detail around assumptions for the long term financial plan and our budget assumptions and we'll go through more details on the capital improvement plan at that point but in that context we'd like to talk about some of the impacts that that were predicting for the economy relative to the pandemic as well as some other items that have impacted our finances over the last few months next slide Travis please this is really the essence of what you'll hear this evening this is the bottom line up front as a former

20:41 commissioner used to refer to it as the bluff I do want to emphasize that we are taking a very deliberate and intentional approach to how we're looking at the economic impacts going forward we do think that there's going to be some severe impacts that we need to plan for we are and it does look like we are going to be capable of remaining on our rate trajectory that we had to the board last year through 2023 in particular and then the outer years there are some decisions that we'd like to work with the board on as to potential long-term impacts relative to long-term investments there is a gap that depending on the scenario that we use and then the modelling that we use

21:28 we will have a financial gap mostly between now and the end of 2023 so to put a three-and-a-half year gap ranging anywhere from about 16 million dollars to 31 million dollars over that timeframe and and so we we do see some financial challenges ahead but we are planning for that and we are looking at both financial tools direct cost savings and some other decisions that can help us get there in the midst of recovery it's not just about e Webb it is about customers and so we'll discuss a little bit later in the presentation some of the enhanced programs that we're planning to offer customers it's mostly

22:13 around terms and conditions that we can offer them so that they can recover as well and we can participate proactively and and appropriately in the community we do see that reserves will remain within board policy throughout the ten year view we do look at we look at our long term financial plan beyond 10 years but typically work with the board and publish it looking out 10 years we do see reserves remaining within board policy there's one caveat to that and that that cash flows from year to year can have some impact on those metrics and so depending on issues around customer payments and other things we'll keep a very close eye on cash flow in

22:58 particular we're in a good cash position now but we also know that any actions that we take relative to cash today will have board policy and reserves and other types of impacts later on and then we'll talk a little bit about our capital strategies relative to investments we recognize that we use assets to deliver electricity and water and in some cases telecom to our customers and so we need to continue to make those long-term investments for the overall and long-term good of the community next slide please Travis just as a reminder I don't expect you to read the fine print here but just as a reminder that this is part of our overall

23:43 approach to the köppen 19 pandemic recovery includes both Annie Webb assessment as well as helping the community initially we were in response mode we're now internal to the organization working on reintegrating our workforce to our facilities that's a lot like the state that's in phases and so we're in the initial phase of that tonight we'll talk more about the economic recovery and then also a little bit around replenishment depending on how long and how deep the economic conditions persist we'll have to look at what it takes to make sure we're replenishing our financial resources appropriately next slide the principles were applying as we

24:31 go through this is that we do need to we are making the assumption that there will be economic fallout from the pandemic we see it in an unemployment numbers we see it in certain business segments not being able to operate even partially at this point and so we we do need to plan around that and we want to be active and intentional with that we also recognize that we have essential services 24/7 365 and we need to consistently deliver those in accordance with the values that this board has already reinforced around safety and reliability and affordability and being part of the community we also are

25:19 approaching this with the mindset that this is not going to affect our strategic goals those remain intact as well as our 2020 goals and we want to continue to pursue those for the act for the long term fit of our community but finally we do realize that we're gonna have to take some cost actions in particular around expenses and potentially some impact on capital going forward and we want to be strategic with that we want to be proportional and equitable as we move forward there next slide please when we model this this is really our way of taking a look at how wide and how deep the economic fallout can be we're

26:04 looking at three scenarios the first one is what we think the forecasted economy will be for a web this isn't necessarily you web is kind of a secondary market in reactor to this but we're looking at representing this as revenue decline this is consumption related decline that will capture as retail revenue so there's a year and a half of moderate decline five percent or so in the forecast and you can read the others here on the screen further depression is a little deeper and longer and then an early recovery would be maybe a year or year and a half followed by a pretty quick recovery and

26:49 and these are pretty consistent with what we're hearing from other utilities and also what we're hearing from some economists that we're working with we did a lot of interaction with with bond counsel and others when we were going through the recent bonding exercises so we're we're gonna start with the forecasted economy and look a little bit further at what it would look like if the depression went a little longer or deeper and makes sure that we're able to handle those two conditions most of all next slide please as we go through this there's a few things that we're targeting as far as our goals as and recovery goals one is we do want to make sure that we're in a

27:35 position that we can help customers through this we'll talk about what that looks like in a few more slides that is mostly around extended payment terms and conditions as opposed to putting a lot of money into direct aid we think there's actually other opportunities through enhance LIHEAP and others where there's an opportunity to for the state or the federal government to step up a little further there we are looking to maintain our present rate trajectory in the midst of a an economic challenge rates become important to customers they're always important to customers but in particular when they're already economically challenged and the utility burden or

28:20 energy burden however you want to look at that on the electric side it becomes important to them we are going to use all of our financial tools that we can prudently looking at potentially using reserves but as I mentioned earlier we want to make sure that we're in a good cash position as we go through this and and then we'll look at some some capital decisions around potential goals and limits going forward maintaining rates in the near term there can be some pressure in the outer five or six years and we want to get a little feel from the board as to whether you want to maintain the same rate structure that we did last year or whether there's some opportunity to push that in the outer

29:06 years if necessary not that we are all intending to push any problems down the road we want to continue to invest next slide this is a representation of what we presented last October as far as a rate trajectory I'll call it or revenue requirement to trajectory to be specific if you look at what that represents on the electric side the compounded value for that whole ten years is about eighteen point five percent and on the water utility it's about twenty three point four percent and so when we talk about the long term you know maintaining in the green there you'll see we really

29:52 want to maintain that rate trajectory which is what we projected last fall before we entered the particular pandemic crisis an economic challenge and then the blue is where we might have some flexibility and we want to gauge the board's willingness to to maybe add a few percentage points here and there if we need to for for other investments next slide there's lots of ways that we look at cost opportunities this is probably pretty small on on most people screen and so I won't go go through all the details we are looking at lots of different opportunities some of them are very easy and natural such

30:37 as travel travel that has been basically curtailed in most cases we have training reductions a lot of that is going online there's other programs such as what we invest in different trade organizations or memberships there's a lot of things that we're looking at from a direct expense perspective we are also looking at how we approach non labor escalation now again talking to and looking at a lot of economic reports it's very segment specific so for example meat prices have have skyrocketed as have home prices are still going up and yet you're getting a

31:22 pretty sharp decline in oil prices and so what we've been able to to gauge out of that is the general goods and services that we procure is probably more along the lines of a half a percent to 1 percent historically we've used 2 percent and so we we think that in an economic downturn it's probably a fair assumption to make that you won't see the escalation that you would under a normal economy and then we're also looking at a number of different options relative to the workforce the challenges that we face here is that we have two different we have the ma p t-- employee set and then we have a pretty large percentage of our employees who are

32:09 represented represented by the IBEW and operate under a collective bargaining agreement and so any changes relative to things like benefits or pay in the case of the Union has to be gone through a very specific process and so and we want to be equitable within our entire employee base and so we are looking at a number of different options relative to direct labor savings that can be anything and we are looking at anything from furloughs to potential layoffs to cutting back of benefits we are also in because a lot of our salary escalation and we're dealing with this

32:54 over three and a half years as I mentioned earlier salary escalation tends to be driven by CPI so it's probably our being competitive within our ranges looking at CPI that's going to historically we've looked at a three point one percent escalation and it's probably not appropriate to use that number we would like to actually control that number going forward over the next few years next slide please the the actual result when you look at these so far is under the forecasted economy were we're about 14 and a half million dollars worth of savings identified over the next three and a half years and about double that

33:39 twenty-seven and a half or so if the cont economy gets further depressed these are measures that we've identified that we can take when you look just roughly at how that breaks down about a quarter of it the blue segment is direct benefits and labor labor savings as of today those would be things like furloughs or cost controls relative to today's labor force benefits and other things about the orange segment there is future wages and benefits this is also part of this is leaving positions open so not filling open FTE and using a certain degree of attrition during that

34:24 time so that's included in the orange as well so it's just wages but it's also actual number of people and projected FTE and finally just direct cost savings which is the gray portion of the pie chart there and when you think about our actual budget and and the fact that about a quarter is labor this is probably appropriate given about quarter of that savings comes directly from a labor which would be pretty well represented in the grand scheme of our total budget next slide please when it comes to capital we we also have to look at this slightly differently

35:09 what we did was we went in and looked at the expense direct cost control measures and then we said okay well what does that do to capital the capital numbers that you see there for electric and water kind of wanted to give a little bit of flexibility to the planners broad price and the capital planners to be able to work within some ranges I would call these kind of the outer limits of the ranges and we wanted to test to see what it did to our future rate trajectory as you can see given the numbers there the the near-term compounded rate stays the same that was one of our goals so 2020 now through 2023 the rates stay on the same

35:56 trajectory as we had before which was actually a very good rate trajectory and then the long-term compounded rate is higher in both cases and so in the case of the electric it's about 5% increase over the outer six years actually and and then water it's goes from 23 to roughly 25 to 29 percent and so now this is it does give us opportunity and rod price we'll talk a little bit later about attorney in the dials up and down in the capital plan and so if all all we did right now was take the measures that we've identified those tend to be expense related savings and then use this

36:45 capital plan and you would get results that drive your rates up a little further than then we would have today so it is something that we feel like we can manage it's something that we want to talk further about with the board as we go forward as to the appetite to look at rates in the outer years versus the near-term years next slide please our life lines that we're looking to offer customers many of these you know already we've extended and and our customer care amounts actually the the June since this is June 2nd the June opening was yesterday out of we had 770

37:34 allocated spots for this month as of today those are partly unfilled so only roughly 570 or so last number 541 I think was the last number that I heard have actually applied for you have customer care this month so there's actually some openings this month we did suspend our shutoff program that is something that does need to return at some point we are looking as a backstop we obviously do not like to shut customers off it's the absolute last resort we do expect to resurrect that

38:19 part of our program in the early part of July would be the plan at this point we want to do that with the caveat that we can communicate with customers early and often which you've we've actually already started around the programs available and partial payments and we want to offer them extended payment plans and other things which are highlighted here on the right side of the screen offerings for both all customer classes and then also some small business opportunity terms and conditions for payment plans or deferred payments to reduce consumption payments there's a number of different options that we're looking at there this is mostly around offering customers the ability to over a number

39:06 of months pay off their existing balances as well as develop payment plans that they can live with and because really aren't and here is to keep our customers our customers and being able to continue our products and services unfortunately with a small number of customers the backstop of having shut offs and disconnects for non-payment is is the backstop that's needed to create the action that we need so that is going to kind of go hand in hand here next slide please so yeah just concluding the the presentation this is really a

39:51 reiteration of what we started with we do think that there's economic fallout that is coming there the signs are obvious as a utility and part of the community we want to facilitate our customers to have an opportunity to continue to provide them products and services we also know that there's a pretty large gap that we need to fill if indeed revenue decreases to the extent we think it could we also have some other things this isn't just kovat related Willamette industries closing for example Commissioner Brown earlier mentioned the loss of revenue at the headquarters building so we have some

40:36 decisions to make around that as well as some other decisions so we do think it's manageable we are really trying to prioritize our rate trajectory and understand there's a sensitivity to that especially over the next few years as our economy recovers so there's a special sensitivity to that but we also know that there's going to be some decisions around the long term because we think it's important to continue to invest in the and the people necessary to continue our operations so with that I think I will open it up for next next slide please which I think just says we would welcome your comments remember this is this is

41:21 really context for when we bring you things over the next month or two relative to financial plans the other thing I didn't mention was one of the options for financing some of our customer programs is we have a small business growth and retention fund that this board created that has a couple million dollars in it roughly that is basically gone unused and there is an opportunity to redirect that through board action to something that would be more along the lines of providing extended terms and conditions or other direct assistance to customers and so I'd be curious to get we can talk more

42:07 that we'll take a board action so we can talk about that more in the future but the intent here was to give you a little background so when we start talking about budget and long term planning assumptions you'll have some indication as to what our thinking around the economy is and what we're planning for president I'll turn it back to you alrighty well thank you Frank I'm just looking at the clock that I started at the beginning of this piece we have about 22 minutes remaining I'll open up a queue it looks like Sonya wants to jump in first so just yeah raise your hand I can't see John Brown unfortunately but so he relapsed and Commissioner I've got Sonya dick and then Jon anyway so far in the queue go ahead Sonya on the slide word has the

42:55 it's just capital investment financial capacity I'm curious the rates that the compounded rate impact that's listed on there in the long term compounded rate impact that means that what was what was in the upper box was what was forecasted in October and without any other changes to reduction in spending will be in order to keep that same level essentially we would be at 23.5 percent on the electric side and 25 to 29 percent on the water side is that what that means I just want to convert just slightly

43:40 different the that you are correct in in the sense that the plan last October are the numbers on the top the result on the bottom the part in in and pink there red there that represents what the capital investments in the upper left-hand corner would do to that rate trajectory if we wanted to get back to the original rate trajectory we would have to cut money out of the capital plan that's listed above so it's it's possible the capital plan listed above is is roughly on par to a little higher than what was presented in October and so that is something that we kind of want to

44:26 understand from the board's perspective as - yeah if we did these numbers we absorbed the the issue with the economy is it okay to be in the case of electric here 5% in aggregate so this is compounded higher in the outer six years is that is that something okay given them right investments or is is the board's appetite really to stick with the with the same trajectory that we proposed in October okay so another follow-up to that then the the assumptions then for the revenue requirement on it on the other slide

45:11 where it has the labor savings and such so the assumptions for that longer term financial plan are based off of the assumption the labor assumptions that are on the long term financing plan i dint potential savings are those the assumptions that are used are those part of the those are part of the mitigation so that we wouldn't hit that 23.5% no those those assumptions are already in there Commissioner Carlson when because right now we're looking at we are going to have to absorb a gap of anywhere from 16 to 31 million dollars depending on

45:57 whether it's forecasts that are further depressed that we are doing that by making the changes listed here on this page and a few others this is not the total list the capital is part of this discussion in the sense that these these are already baked in to the numbers that we're projecting at least at this point and so and that these do not fully absorb they are fully filled a gap of 16 to 31 million they get us part of the way there they get us probably 80% to 90% of the way there Sonja in the time I'm going to move it around to the other folks and I'll do my best to keep track of time

46:44 and remind folks that we're trying to keep it to three minutes each and should be enough time to get to full rounds in if we are efficient dick you're next okay thank you I too just want to ask some clarifying questions to make sure I'm understanding what you're showing us in these slides so so basically the savings that you're projecting is being needed to maintain our Rea trajectory are driven by the reductions in revenue associated with your economic assumptions is that correct that's correct commissioner they don't quite get us to the level the full gap that is developed in the loss of revenue they

47:30 get as part of the way they're they get us a substantial substantially there but not all the way and then again on the capital side of the capital side that we were looking at the escalation in contribution to future trait rate trajectory that that's a function of a reduction in revenues available to fund principally rate funded capital am i understanding that correctly yeah now what we've modeled so far is a combination of planned financing so things like bonding we had already and some plans out in the future for that and in some cases depending on

48:16 the economic conditions we may go a little tap into that a little bit heavier but then the rate funded portion of that the remaining rate funded portion is what's used to drive those compounded revenue requirements going forward which is what Commissioner Carlson those asking about earlier okay so lastly your your your pointing to the lovers that you see yourself as having available to treat any gaps as you call them it would be helpful to me in future poor trails maybe as an initial point to just see a picture of the financial forecast with the changes in economic

49:03 assumptions which would expose the extent to which both on the operating and capital side we're showing revenue requirements in excess of what the former Rea trajectory would have required so you know you're kind of skipping beyond that and saying we have the ability to treat it and here are the rough amounts that need to be treated over the various time spans for me it would be helpful to just see the the raw numbers without you know in terms of just rate percentage adjustments as compared to our original baseline and

49:48 I'll just leave that as a comment because I'm trying to interpolate a little bit in what you're showing us here although I I think I appreciate you know the points you're making thank you sorry go ahead president L good good I would just want to add that our intent when we come back and work through our normal financial processes this summer is we will present both the assumptions as well as the the ten year view of the long term financial plans more like you're used to seeing those we will have to establish okay here's here's the baseline that we started from and then here's the the projection now that we are incorporating and seeing both

50:35 revenue reductions as well as realizing cost reductions as well so I think there's the intent is that we will bring back something that's that's a little bit more of a trend and not just a bit of a broad brush which is what I've painted this evening I think the comment I was making and I appreciate your points and look forward to future discussions the point I was making is I'd like to see a view of the untreated version as compared to our baseline and then the treated version because that's all sort of things we see where the optional I can certainly follow up with the board on that understanding that it's it's a pretty interesting process when you look at all of a sudden and these are these are slightly different for the different utilities I will point out that there's maybe a little bit more

51:23 immunity on the water side than the electric side to economic conditions but of that 16 million 13 of it is electric and 3 million is water and so if you if you take out 13 just the total of 16 million dollars in the next few years of revenue then you have to make make up for that somewhere and and so we can present we can bring back or follow up with the board what that looks like I'm Travis oh hey all in the interest of just managing time which I'm trying to get accustomed to I'll hold this up when you have a minute left and then again when you have 30 seconds left just to try manage the time John Brown you're in the queue next thank you I'm gonna try and

52:10 get all three of my questions in a quick time I'm Frank did in your assumptions did you rule that construction costs number one number two is the rate increase that we have on that chart for water AWS when we go five and six percent over those years and number three how does Leaburg factor into this knowing that we're gonna have costs that aren't in the budget we're gonna have lost revenue and we're gonna have costs eager to fix it or to decommission it and so those are my three questions Thanks yeah Commissioner Brown so first of all we've used a lower escalator for construction that is something that managing project-by-project will see a pretty

52:55 wide range on that sometimes you see in tight economic conditions you can see certain segments increase but we across the board some of that would roll into capital as well most of the savings that were identified so far and the escalators are reduced under under a slowed down economy which includes construction the the second part of your question I remember it with your second question what was your second question I remember the third one some AWS thing Oh oh yes it did include AWS in the the middle 2020s that's part of the reason

53:40 you saw the six and a half and five and a half percent rate increases in that time frame and that would be a project that could be pulled in or pushed out depending on the economic conditions so yes that was included in there and then Leaburg we have modeled extended outages presently for Leaburg out through 2021 we have not modeled the costs associated yet with what a repair would look like to the canal that is something that we will have to roll into the capital plan if needed and that's part of what will have the work session on in a couple of weeks to talk about what some of those costs look like but we have modeled the loss in revenue at least for the the

54:26 near few years thank you John you done yeah I said thank you all right Mindy Europe and so I just have a couple questions about the customer impacts for people who are having more difficulty paying their bills right now so I think um when I'm looking at on their revenue requirement plans those are things that we've already decided right through 2023 and and looking at the economic forecast but I think I see is that we're

55:11 projecting that it's gonna still be pretty iffy either ending 2022 or 2024 and just when we look at our rate trajectory it just looks like between 2022 and 2024 or the years where we have the biggest rate increases so I guess I'm just wondering out loud about that and also like what does a 4.2 percent increase on the electric side like what does that equate to in dollars for the average family yet commissioner we can certainly give you dollars and what this means is I think the the average annual

55:57 electric bill for example was right around 750 dollars a year and so if you were to add 4% you could you could boil that down per month obviously as we go through the year the electric utility and the water utility are on different cycles the electric utility peaking in the winter the water utility peaking in the summer and so there's there's actually different rate impacts there when you look at the trajectory of some of those rate increases there's a couple every other year on the electric side is Bonneville Power Administration and so we've modeled those in and and one of those four and a half's included that as well as some financing for Carmen Smith some

56:42 additional financing for Carmen Smith and so some of those way into the two that the when you start to get into the middle 20 20s on the water side you start to get into and these are MOT that they the two utilities use cap use financing differently the water utility does a lot more bonding and financing that way when you start to get into the middle 2020s you get into the alternative water source and and then throughout the 2020s in our in our base level reservoir projects for example so rod will talk a little bit more about moving things around from a capital perspective the

57:29 other thing that we continue to look at and and because rates are important when you look back through history we have had rate forecasts things that look kind of like this and yet we've been able to mitigate as we've gone along this does also not include both certain things like Commissioner Brown mentioned Leaburg but also the selling of real estate assets for example are not included in here there's some other things that we have not included in the potential upside and so I think that when you look at this the message that you should get is that a lot of this is manageable the water utility for example

58:15 the the lowest price other than Medford which is more of a wholesaler the lowest priced water utility in the northwest which is probably one of the lowest in the country so I think managing rates is a is an important part of this will get you more specifics in the financial planning that we bring back next month as far as specific dollars and cents impacts on rates okay great thank you well I'll jump into the queue as well and we will not have time for a second round unless folks are interested in extending the session which I'll be happy to take a quick poll about in a few minutes and I'll measure myself for time just like I did you all so yeah I have a few things to ask and suggest Frank so last time we were in a budget

59:01 crunch I think was actually my first year perhaps the second and there was a big effort to basically defer a bunch of capital work the number I have in my head was some eighty five million dollars worth of capital work got deferred just to relieve some pressure on the immediate term so I'm just wondering to the extent to which you all either have or plan to evaluate those options and still you know maintain safety reliability those but those basic parameters yeah I think it's a good question commissioner metallically Rob price I'll talk about that more in detail in the next presentation as well as in July although you'll be on the Salmon River so I'm not sure that that you'll be in the right mindset I think

59:47 it is important you know one of the things that we recognize is that we use capital assets to deliver our products and services and we don't want to push problems down the road at the same time we do understand the ebbs and flows and the sensitivity that there is to rates and the ability to finance for example those are all things that we want to weigh in weigh into it some in some parts of our future we've had maybe inflated capital plans I think the ones that were we have now definitely are trying to look specifically at the trade-offs between running to fail for example the operational trade-offs onm

1:00:32 and maintenance versus capital I think those are all really important things we will look at all of that as part of our financial planning over the next couple of months and actually well into the fall as we get into the specifics for the 2021 budget it's a great point when you think about 250 million dollars over ten years on the water side and 350 million dollars on the electric side there's a lot of opportunity to maybe shift things around a little bit at the same time we know that there's parts of our system that are aging and so we want to do it intentionally and intelligently and not just say oh here's a number but we do know that rates and finances matter especially

1:01:18 when we're looking at tough economic conditions but we also don't want to leverage the future of our products and services in our community by doing taking a too drastic slice at that understood I think the board should probably have some you know some say in that so I'm hoping that we see options and you know for delaying some capital but and also to understand what the potential risks are and impacts to our reliability and safety programs and I think in the end it's probably - should be we should certainly weigh in on that because there is a lot of opportunity there but I also agree with you that we have made our capital plans much more realistic much less inflated or robust as the term used used to be so there's probably a far less opportunity there

1:02:03 but nonetheless whatever there is I hope we turn it over you kind of mentioned my second point and that was you know the extent to which we can move you know things from this bucket number two in the bucket number three and basically fund them with bonds with bond money and spread that cost out over a 30-year period take advantage of low-cost bonds right now the other thing I wanted to say and these are just comments now is it would be helpful to get some information about impacts in the local economy most of the information you shared and I understand what you know it's pretty broad swath kinds of things things that are happening nationally and statewide but at the end of the day what we're most concerned about and the information that's hardest to get I understand that is the local situation so you know what is the unemployment

1:02:48 rate locally and and how does that how's that looking now and what do we expect that to be that's gonna have a an impact on on my willingness to support rate increases for example so I to the extent that you can gather that information that would be useful to help make these decisions and then as far as that just to make some smaller points but on the expense saving time I mean I think a lot of us myself included have been zooming like crazy these past couple of months and have learned how effective it really can be even with folks when you're meeting with folks who don't regularly meet with not just folks in your own office and so it has really I think and changed the the need for travel related meetings right

1:03:35 there's this we're not doing it right now and I think most people are realizing it in terms of the information exchange it works reasonably well if not the same and in some cases better than it does be in person and so I just want to emphasize that and we really ought to be taking serious hard looks at our travel budget because that's a place where we can save a lot of money without impacting the quality of service that we provide the community so and that small business fund I'm all for looking but I wasn't really all that supportive of making it available in the first place I'd rather deploy that to folks in need right now so if other commissioners are interested in hearing that or exploring that I'm certainly in support of it there those are the end of my comments that made it as fast as I could we have just 25 seconds everybody have maybe

1:04:22 just a show of hands burning questions that they want therefore want to open up more time for second round I am not seeing any interest in that I'll just used a little bit of remaining time we have to check in with Frank this session was about giving direction to you all do you feel like you got the direction or did you want to you know pose a question or two and that folks can answer quickly to make sure that you do get that direction Thank You president Mattel this gives me enough to go on and I think staff enough to go on to bring back the various formats and options as we go and enter into our financial planning part of the year I

1:05:07 would definitely agree with you that we're looking at a lot of different ways of how we operate we're even looking at you know what's the role of an in-person Lobby going forward when you start to think about the fact that spaces money how do we tell a commute how do we do with some of these other things so no rock unturned we also when we talk about financing we're looking at lots of financing options but the more you finance the more you run into issues such as debt service coverage and some of these other things that then challenge your rates versus something like cash flows and so I'm I'm really pleased with how the and I'll tell you

1:05:52 one thing we've already seen a five-person roughly a five percent revenue decline that we can attribute to koban related changes we've seen some other revenue challenges recently because we had a very warm January our second-largest customer Willamette Industries announced that they were going out of business so they're going out of business effective June I think if I remember right so we're and seen a lot of challenges already some of those associated with kovetz so we'll work on getting more data and won't be work on definitely bringing forth options for the board to consider but thanks for asking I got enough direction that I can go with from here okay I know what where

1:06:40 I'm at is no rock unturned and anything we can do to relieve pressure I'm all for I mean that well you already knew that before asking the question but that's that's where you're gonna find me on those kinds of questions all right officially we have scheduled a break right now it's supposed to be 7:10 but it's not it's only 6:30 7:00 I'll just take a quick poll of folks we only understood God before I do we have one major item remaining the capital improvement plan it's got a 30 minute clock on it and then just correspondence and board wrap-up so you know we have some 40 minutes 40 to 50 minutes remaining in the meeting this evening if folks would like a break probably now is the better time to take it if you want to push on through that is an option as well so maybe just quick poll those in

1:07:25 favor of pushing on through I can't see John Brown but I could see everybody else those in favor pushing on through those in favor taking a quick break I can't see John Brown it doesn't matter because I got three votes in support of taking a quick break so we will do that given the the way things are no cheesecake once again unless you got some in your fridge why don't we just do a 5 minute break so according to my clock at 6:38 I will resume at at 6:40 I can't add 643 and you might want to turn off those turn on those mute buttons

1:13:00 all right we will start up again I can't see if Commissioner Carlson I can't see commissioner Acosta now she's here look there she is right yeah I could I can see four at a time not all five Frank are you here I mean I'm here president Mattel all right well at 6:43 we will get started again those breaks just aren't as fun if you don't have anybody to go talk to they just sit here and twiddle your thumbs until it's time to get back to work I guess all right well we have one major item remaining and that's the capital improvement plan assumptions and priorities with what says here Frank Lawson and rod price but I think rods gonna drive yes sir so a

1:13:47 couple things before I start the majority of it one is kind of like Frank I just wanted to let you know this is a informational at a very high level so dick if you are looking for a lot of numbers you're only gonna see a couple numbers this whole time so I really apologize the second part of this though is what I'm hoping to get out of it is you know kind of Frank's point what what kind of numbers what do you want to see in in July when we bring you them the final four the proposed plans and so I think I've heard a lot of good direction tonight as well so anyway that's kind of you'll just see a very high-level overview in this this presentation the

1:14:35 other thing I wanted to do real quick is give you a quick status of where we're at with the 2020 work I think Steve you mentioned that we were getting back to work and so in electric we anticipate spending about 70 to 75 percent of our capital plan budgeted this year and in water were anticipating about 80 percent the other thing I wanted to mention real quick is we are starting back ramping up customer work during the executive order in some of the early stages of the lock down we had really decreased our our outages to customers trying to avoid

1:15:21 lengthy or with many people but we're gonna be hopefully by mid-june ramped back up to argh our normal pace - to continue our work so Travis can you advance the next slide please so this slides just going to I want to talk a little bit about the the planning that's going on with the capital plans one of the things that several of you alluded to I believe we are getting better at creating our capital plans there's a number of things that go into that that's understanding how projects

1:16:07 work better we're taking more time upfront with our plans you know that that's saying garbage in garbage out kind of thing and it's resulting in improved actual - budgets if you look the chart there and basically the graph is showing us we're hitting just about a hundred percent of our our budget in the last two years and and I have to admit and do large part to to our friends in finance but it's also you know combined effort with engineers and and a lot of people involved in in spending this kind of money as you can imagine but anyway I think we're getting better at that kind of thing the other part I wanted to point out is again going back to Commissioner Mattel's request three years ago sort of

1:16:54 triggered something in me and Mel about hey let's let's work on this idea of a tie between how does capital and om and reliability how do those things all work together wasn't exactly how his commitment his question came out but that's the end result that's happened we've been able to do a couple projects now that are starting to take advantage of that thought process in roughly we're calling it roughly Asset Management it takes a lot of work to get to but we were just starting to ramp up some serious efforts in both the water and electric and standardizing around that and then

1:17:39 the decoded response hit and so will still continue on that but by and large that's going to improve our capital planning in the future so I just want to mention those two things next slide please so I'm going to talk about the water capital plan a little bit I'm gonna start with its ten-year number is around 250 million it's comprised of again trying to go back to our compulsory risk and strategy based conversations but some of the compulsory work that's in the plan that's proposed right now is College Hill we don't have a choice we need to redo that due to state and then

1:18:24 of course customer related work connections and response and that kind of thing our strategic work is the the second source that's still on track we hope somewhere our emergency water stations those are still in the plan and of course a mi risk-based those are ones that we have some discretion over we don't have to do them tomorrow we can do them in the future but these are all projects that pay off in the long run projects like working in our guard are modernizing our controls strengthening of our resilience spine there's that some transmission kind of related work and then updating our reservoirs the two other reservoirs

1:19:11 beyond College Hill one of the good things or whatever you want to call it one of the exciting things that while he pointed out to me yesterday or a couple days ago is that hayden bridge is no longer in the capital plan we have by and large completed our work at hayden bridge over the last 10 years to fantastic facility hope you guys get a chance to get up there and see it it's just it's running like a champ so next slide please so I wanted to touch on something real quick the 10-year total I mentioned was 250 million so if you if you baseline to the one we proposed last year that's up about six million dollars

1:19:56 that most of that six million dollars of course is over the 10-year period but it's based on improving our estimates of our projects and around the reservoir and related transmission projects so the other thing you'd probably noticed if you looked at it is the five year the first five year window jumped dramatically that's because the the placeholders we put in for the second source alternate air source have started creeping into the five year window next slide please what I would say is the major risk to our water capital plan we have some

1:20:41 uncertainty around what kind of customer work will be coming down the pike again Commissioner Mattel you sort of hit it what does the local economy gonna do we're from the word on the streets is work is really picking up but you know I don't know we don't know that's not known the second source you know exactly where is that gonna go in and when is it gonna go in we've got some ideas how much is it gonna cost again we got some ideas but there's some uncertainty around that I had its source protection and climate here and not just because of John Brown but I do think that right now we don't spend a lot of money in the capital plan on that but potentially you know depending on wildfires and how things unfold there may be some impacts to our source protection programs and

1:21:28 the things we do to deal with it represents a layers of course are always something that you can't predict if we get a stream of those you know that's it's just something that's always in there the other thing I'll note too and I'm going to note this in the electric as well but I'm talking about staffing to complete the work and and I don't necessarily mean by numbers but it could be do we have the right people doing the right things and in the water department for instance I did a big review and one of the things that we we pointed to as being a risk to further capital plans we don't have enough graphics in-house and we've tried doing external contracting and it hasn't work so we're we're gonna

1:22:14 boost up the staffing therefore for instance in our cab apartments so it's more than just a total number it well though it's about what people do we have and do we have the right skill sets as much as anything also next slide please thank you so turning attention to the the electric plan the the total tenure is three hundred and fifty six million for the proposed plan one of the things I'll note about the proposed plan is that as I asked our team to take what they were planning pre COBIT and work it through and then produce it so this is sort of the result of that just to let you know where it came from

1:23:00 but our compulsory work is basically the repair you know the customer kind of work one of the things we're doing because you know there's simply not enough money to to program and plan and fix and replace everything it's in we're in sort of a run to failure mode in the electric so we're trying to look at ideas about how to pre stock more supplies and different things but compliance and PC is a much bigger component of electric than it is in water strategic projects am i again the resiliency and reconfiguration especially on the up river system modernization and automation there's a

1:23:45 good way to offset some of the failures and cables for instance by being able to do some automatic transferring and get some of our numbers down risk based work that's working more on substations the underground cable replacement plan we have there'll be a good chunk of money we have put in there that will extend our cable life or at the end of most of our cable lines now but it would extend the cable life out to 50 years transmission sub-station rebuilds those kind of things substations are in tough shape about 15% of our outage numbers from the last year and a half we've come from substations when you consider how few substations we

1:24:31 have and how much wire and all the other things we get exposed to 15% a huge chunk of that so next slide please again comparing this year's proposal to to last year's it's up 31 million dollars improving the accuracy of our estimates we revised number of ways we've done things basically it's a lot of the same stuff but only I think more accurately projected we are increasing focus on I mentioned the cable the asset management component one of the things I would say about two thirds of that

1:25:16 increased falls in the outer years not in the first five years but basically you know modernization and pre spending for for emergent failures some of those things are all tied into our totals here next slide please so major risks to our plan again unknown customer work electrification I think is a big one you know I I see there's a there's probably a secret storm brewing out there between legislation need economy pricing there's all these kind of things that could tumble together fairly quick to to perhaps impact some

1:26:03 some upgrades in some areas so we'll see somebody mentioned the Liebherr canal you know there's a big question mark we're gonna talk more about that in two weeks you know it's there's no getting around it whatever we do it's it's going to be expensive Springfield area system if you see that that transformer being lifted to the on that picture there that's the the replacement unit that failed cash a couple weeks ago for out at IP and so there's some thoughts and and work and planning we need to do with that area too - reliably serve the customers out in

1:26:49 that area so increasing system age Tyler he likes to he calls it - sleeping dragon Tyler nice these are electric manager our system age keeps increasing and but we're keeping an eye on it and again that could lead to more emergent failures and again that's unpredictable depending where you out on that that reliability curve and I mentions the staffing it's also an issue and an electric do we have the right people can we get the right people the technical people we've struggled in some ways to to get technical people in the in the door here next slide please

1:27:38 so I'm going to end this discussion with the how do we turn the dials down in general principles what we mean by that in what are some impacts in both both utilities it's the same answer roughly and in Commissioner Mattel alluded to it it's we would defer projects so you would likely what we would do is defer some of the resiliency projects like one of the reservoirs or a transmission main in water or a substation and reconfiguration or something like that and push that out of the plan that that pushes a fairly large chunk of money out that has its drawbacks as well in the long run but that's one of the tools another one is we we reduce our our

1:28:31 projects around the modernization in automation pieces and it's not like it's necessary per se it contributes in the long run to - reliability but that's a lesser tool lesser impacts lesser costs so those are like within the year throttle kind of things and then finally type 1 reductions we have you know a number of of programs and projects in our type 1 categories that we continue to try and really chase hard you know cross arms for instance or whatever it is pipe replacements you know you want to try and keep ahead of those as much as possible to keep ahead of the

1:29:16 depreciation rate and the failure rates and all that nonetheless you can manipulate those four over you know short periods of time so they do come with more direct ties to to staffing and reliability though that's the overview if we go to the next slide I believe that's the question slide and with that I would take questions all right you hate but thanks for the presentation just a minute or so you mean if the session that's tougher as a reminder if you have a minute remaining and again at 13 seconds a bit a my one

1:30:19 rod I was wondering if you could talk a little bit more about the substation kind of degradation and cables you said that there was a lot of work to be done then have we been not funding that I mean generally when when I think about our repair work and the depreciation and such we have target levels and in ages that we look at in our fine and on the you know on on our overall financial plan and generally speaking it seems like the age of the facilities and equipment has been kept in that target range but if that's an average you know obviously some really big projects that

1:31:05 are newer could be weighing that in a different and our substations may be getting more neglected if you couldn't kind of talk to that a little bit more and then my other question was you said resiliency projects and you didn't list AMI and I I know that we had some projects that were kind of put off during kovat I think ami was one of them that was sort of put on hold because it was difficult for people to you know go and visit homes and have more contact so I'm wondering if that one is still on hold or if that's just not a big enough impact that it wasn't listed on this kind of conversation so

1:31:50 that's the great question so the aegis system we use right now from a metric standpoint that we report on an average if we we do have some breakdowns and Finance has been working with us to to break those down and do some predictions so we were just starting that work within then when the when the kovat sort of hit so we'll get back to that long story short though if you have something basically like Carmen while a lot of it's not on the books for instance it it does tend the fresh in the aged the thing is we have roughly 3/4 of a billion dollars in electric assets and so it takes a lot to move the needle and so if you have a substation

1:32:37 with cables the relative costs and so forth it you could spend a lot there but really we haven't spent if you look at our the controls in the substation they're all old and on their last legs a lot of the breakers have been updated but basically substations say about two-thirds of them are beyond the what I would consider normal life from from an engineering standpoint that doesn't mean they're they're ready to blow up or anything but the other question so we have a way to break that down I can send you some of that

1:33:22 I'm broken down from the age of system so you can see the different categories the other ones am i we're back on track we're starting deployment again we're starting a number of upgrades to the computers background we've installed two polls or actually the second ones going to go in next week so it's back on track somebody else want to jump with the q2id John you can see me now yeah it's Frank that I don't see anymore fair trade hey um thank you rod great presentation generally speaking I don't want to run in defer maintenance items

1:34:08 into the future I think the people that are consuming the product today needs to pay for the wear and tear on the system and I think it's Pennywise and pound-foolish to kick a can down the road and let future generations have to pay for what what we used and ran into the ground side I'm not for really deferring the the things that keep us running but I do have a question on the wisdom of keeping AWS in in the budget in the capital budget I noticed the rates and things when we don't even know if we can build that in Glenwood we have such a major land use decisions that we have no idea of maybe we should consider maybe moving that back down a little bit because it does have rate implications on the water side coming up in a few

1:34:54 years pretty significant ones and so I guess just to voice my sentiment on that a little bit that if we were looking for places to maybe push back a little that would be the first place I would push back that's all I ask yeah my quick comment on that is that if we if we do if we do move ahead with it I think we want to have a placeholder for it and right now I think they understand the the land use and all the things you're talking about but it's we Wally and I just talked about this the other day we're still in a really good position that make it happen it's good to hear we will Mindy you're next and then we'll

1:35:40 pick up dick afterwards okay I just have a quick question about turning down the dial or maybe a question comment in a question so I generally don't support deferring the resiliency projects given that that's one of our strategic priorities and also part of what will hopefully keep our cost down in the future because we won't have any kind of emergency costs come up but I'm curious when we do have to look at some of these choices like when we get more specifics if you could give us um just some like basic if we decided to defer certain projects what would the the risk in cost be in deferring those I don't know if

1:36:27 that makes sense what I'm saying I think it's I think what we could do is and that's why we're working to tie that reliability to the spending a little bit better and we're working on that but we we I can definitely in sort of big terms we can do that it's basically so if basically if we defer this project X for a million dollars what projected reliability impact might that have over ten years or whatever it is okay that we can use okay thank you go ahead dick okay I'd like to follow up on a comment that was made earlier about AWS so my

1:37:13 recollection is that we as a board in consultation with staff deferred tws because we had questions at least at that time about the efficacy of the project not overall but just in relation to our sense of what would be most useful in an emergency and that's why we kind of deferred to the the wells and water stations and the emergency supply we had we had questions about what we were going to build and where we were going to build it and we had questions about the cost and the impact that would have on race you know we really haven't happened discussion other than just sort of observing the progress that we've made on the emergency water stations around the community we've not really revisited

1:38:00 those strategic conversations or gotten clarity about what and where or cost and impact on rates so I don't feel as although I agree that the project as intended is beginning to move within the windows that begin to need to be addressed and and handled financially we haven't done the work as far as I can tell as a board and you know in consultation with staff to resolve some of the issues and questions that we had around all that maybe that's just a way of restating what Commissioner Brown said but I think we have some work to do before that starts to really take traction the other quick comment I

1:38:45 wanted to make is that you know from my perspective as a board we don't really involve ourselves much in the specifics of what goes into the capital plan that's staffs purview we have to rely on your expert judgment the engineering staff and the technical staff we're not going to second-guess that we get involved in discussions around some of the larger strategic projects like Carmen Smith and AWI and you know am i and AWS but generally you're the ones who drop the financial plan if you need more or less money then I I think we do have a major role in setting that the budget or the amount of money that you have to work with that comes from rates and from bonds we do that through the budget in the financial planning process you know if we need to if we need to

1:39:33 change the level of funding either up or down we probably need to do that on your recommendation or with your advocacy as opposed to just well you know on the one hand this and on the other hand this and there's some risk and you know we're not really in a position to process that unless it's queued up as specific questions around specific issues so the other quick comment was just that um I have as much interest it's not just a matter of did we spend the money every year that we intended you know I'm also interested in looking back and saying did we get the work done that we had put in play and and did we get the results out of that work that we intended and I'm still not seeing from a process standpoint we're in our elements

1:40:20 of managing all of this that we really address those last two questions but I appreciate the process and the point in the year that we're in and and I'm ready to engage you in any of the particulars around that yeah I think um a couple things I'll just say real quick we can I think it's probably time we can either do a background or or something I'll talk to Frank what he thinks is the best plan to do an AWS update john adler to the land piece but there's a little more to it than that the rates piece i mean i can't remember what the comment but i guess the last thing I would say though

1:41:05 is we all think about how the reporting piece on the did we do what we said we're gonna do not just did we get the total I think we're getting better at that in fact I know we are but I'll we'll get a way to talk about that and maybe you can put it in the quarterly report so it becomes a little more obvious thank you good comment all right we have two and a half minutes or so remaining on the clock so think about if you have around two questions I'll jump in while you're all doing that so I'll also jump on the AWS bandwagon I'm basically right where dick helgesen is and that I you know I

1:41:50 recall all of the conversations I was there when we halted the the first effort to put something out there on the Willamette and substituted some of the smaller projects and some of that thinking and then and well it was he articulated really well I feel like there are still ongoing conversations with sub and we're trying to determine the level of cooperation we might get to do something jointly that would save us and them some money so while I understand that we want to have a placeholder in the capital budget for this project should we decide to proceed as far as I recall we have not yet actually decided to proceed and and delaying that a year or two if that's what it comes to it or Munoz we might

1:42:35 decide we might have to just delay longer because of technical legal or land issues that kind of thing so I I just want to bookmark that as well the AWS in my mind is uh is very much an open question I you know a I think dick also made a really good point about us not second-guessing too much you know what goes into the capital plan although I probably push back on that a little bit I think there is a role for the board to play in that there you know there could be scenarios and should be in my mind scenarios brought to the board that say well there's a you know capital plan that looks like this and cost this much and you know you can you'll get this kind of resiliency or out of it or safety and reliability or this one really pushes the needle in this kind of way and here's one at the other end of the spectrum and somewhere in between and we ought to have a chance

1:43:20 to weigh in in in those kinds of ways it seems to me so but I agree that it's a team effort and we need to rely on your expertise and trust that judgment so but I think it like I said there's wool for the Suharto playing and you know when I think about all of these things as my final comment really is uh you know wow I want that resiliency I want that safety I want that reliability and I want those low rates and so I guess you get to pick two or three and not all four at the same time where I guess I would want to you know you know look for some relief I suppose is potentially in moving things that might be movable out into a financing position so that we can spread that cost and I know there may be

1:44:06 some projects that don't quite fit that today but could fit that with some modification and could then be financed over a longer period of time or at least I'm hopeful of that so those are my comments I can see if my time has just run out I'll just ask real quickly if there are any second round questions out there just show of hands hi Sonia showed me by the way how to scroll this thing so now I know how to look up and down and see nobody's raising their hand alright well in that case we will close out that eye well actually once again I think it's useful to give broad and/or Frank an opportunity to weigh in at the end and make sure that they got the direction and feedback that they need and if not please ask a pointed question

1:44:51 so you can get it hi yeah I found out a lot of things that I think we can follow up on and so I'm good thank you oh I'm just gonna say thanks for the feedback I think I think there's always an opportunity to look at the combination of sort of the large lumps in the oatmeal as I would describe them there's there's some projects like an ami an AWS a Carmon Smith where you can kind of encapsulate and segregate the project and look at its reliability and then there's other parts of the system that we have to take more of a

1:45:36 statistical look at you know how many feet of cable or length of pipe of certain ages and so it's a combination of macro and micro that we deal with and and we appreciate your feedback and guidance and and the level of detail that we bring to you for help with will be both really based on sort of the size and the impact and the the strategic relevance of those decisions and so expect to see more of that knowing that there are always trade-offs between spending rates as you point out president matau between rates and risk and investment and so we look forward to navigating through that with the board

1:46:24 alrighty I see that there are still 38 attendees I'm impressed Chris Jones were almost done Deborah don't fall asleep on us we're almost finished here and let's bring it home all right item number 10 correspondence and board agendas Frank that's you Thank You president Matteo commissioners appreciate all your feedback this evening there was only one item of Correspondence this was a state mandated report to you the board we also filed this report with the Department of Energy and that has to do with our 2019 renewable portfolio standard report and compliance and so if there were any we answered a few questions prior to the meeting about this I didn't know if

1:47:10 there were any additional ones this we we were compliant in 2019 although we did have a small compliance obligation because of some lower levels of um hydro output but any questions for me or for staff on the RPS report we have one from dick go ahead you can hit this inner one-on-one Frank but I just I noticed that there was a step up in that obligation some 10 years out or there abouts I think going from 15 to 20% for utilities in our category and I just I know that in the near to intermediate

1:47:55 term we weren't having any issues with our obligation because we had enough renewable energy credits to retire in order to meet that obligation and some exemptions for our hydro but I just wondered in the longer run you know did we see any problems with meeting that obligation when that steps up and again you don't have to try to answer that here but I'd kind of be interested in knowing whether that's a future issue for us yeah I can shed a little bit on a light on that Commissioner Howe this and there is a step up in 2020 I believe there's also one in 2025 and so it goes to if I recall 25 percent in 2025 20 percent in 2020 those those numbers are off the top of my head but I somehow

1:48:42 remember the 25 and 25 number and knowing that there is a step-up in 2020 under normal modeling we do model that we see under present load conditions with legacy hydro we're still in pretty good shape at least over the next five years through that 2025 but like happened this year we had some lower production with a legacy hydro which put a slight obligation on to the utility we still have quite a bank of recs for example so we we don't foresee an issue but I can elaborate further with some more details with our in our individual discussion to you the other sorry other

1:49:28 questions about RPS well alright then we will move on to oh why go ahead I just gonna say that the next the part of this was upcoming agendas we in two weeks from today we do have a work session there's no action planned but our topics of discussion center around the McKenzie specifically status update on the Leaburg Canal and potentially setting up some future decisions on that and so Lee Berg and Walter go and then also a presentation to the board on a cost analysis to serve our upriver customers cost of service

1:50:13 analysis which was requested by the board again no action just a discussion and so that's in two weeks and then really the July seventh meeting is to kick off our financial planning you've got a little bit of background tonight as to some of the differences this year versus past years and in particular some of those driven by economic conditions some of them driven by our own decisions and so that really kicks off in July and then August the kind of highlight of that will be the first release to the board of our electrification study results and so I know people are anticipating that and as we are having that discussion with the board to discuss those preliminary results so those are kind of highlights coming up

1:50:59 over the next two months or so alrighty well thank you Frank one last item remaining and that's the board wrap-up we will take it right down the line the same way we did at the beginning of the meeting so Commissioner Josh Berg you are first just when I give another thank you to Travis for a smooth virtual meeting all right Travis your smooth operator Commissioner Carlson I don't have anything thanks everyone good to see you all dick first of all you're all too young to remember this unless you watch a lot of late-night TV but there's this episode

1:51:44 of The Lucy Show that I was reminded of in the always reminded of in the Capitol discussion that one in the cookie factory where she and Ethel are trying to keep the cookies on the conveyor belt if any of you remember that I've kind of reminded that we when we engage our discussion about capital I also wanted to say just generally in terms of managing our way forward particularly in light of the risks and perils of the Cova Depa demmick and impacts on our financial trajectory we've really worked long and hard during my tenure on this board to write the ship and staff has done yeoman's work in terms of bringing financial stability and flexibility back to the utility that

1:52:29 affords the board options and an ability to commit to our customers what our rates are going to look like over time and to manage within that and I just would hope that we don't do things in the next while and the near term in response to that that undermine some of what we've accomplished there because I think that all stands us in good stead going forward and as much as anything that's been done during my tenure on the board will serve as legacy in terms of contribution over the past while so I just hope is that as we need to make trade-off decisions there that we we try to maintain the integrity of what we've accomplished for the last while because that was done with some sacrifice and

1:53:14 some difficulty but I think we're a good shape to do that so it's just my concern that we not trade that off thank you good meeting tonight thanks dick John Brown you're next and I'll go out last okay thank you um just a couple things that just a question Frank that I want to make sure that we were doing the public outreach for College Hill and and and neighbors and things and with the Cova thing and the inability to communicate I want to make sure that we're doing everything we can to make sure at that group of people that are gonna be affected by that project or still in the queue because I think the project can't be delayed and so I'm assuming that somehow we're gonna be able to communicate with them and then the other

1:53:59 thing just for others I shared this with with Steve but others I've been up on the McKenzie a bit lately and the water content snowpack is 35 percent of normal it's absolutely abysmal what we've got coming up for us with the drought and so I just hope the health of that River state that we're on that because if that snowpack and the water flows declined temperatures warm up algae and moss and just not good for the health of the river so I just hope that in our stewardship that we we do everything we can to make sure that River stays healthy sit Frank you care that you need to responder for this I will take

1:54:46 Commissioner Browns comments regarding communications and make sure we are addressing that I know we're reaching out continually to that group they've definitely not off the radar as well as the 40th Avenue site as well so both of those kind of work in tandem but your point is absolutely understood and I'll make sure that that message gets passed on all righty well I guess it's I get the final word I do believe I don't have any substantive things to say but I'm just looking down the list of participants the 34 who are remaining and Travis and Renee and Julie I'm just looking down the list here Adam ruzhin

1:55:32 acraman Lena Coast Occulus I'm not gonna go all the way down the list there's a whole bunch of folks down here thank you so much for participating it is hard to sit through two or three hours do meeting even when you do get to talk and that much harder when you don't so appreciate the efforts you all made to stay up to date and you know participate virtually from afar and with that I will close out the meeting I phone I guess 101 uses this meeting is adjourned Thank You commissioners