EWEB Board of Commissioners — November 2, 2021

0:01 and we have a jam-packed agenda so i think we should go ahead and get started and call to order the eugene water and electric board november 2nd 2021 board meeting we'll start with an agenda check anyone have anything about the agenda no great next we'll go on to items from board members and general manager anyone want to jump in and go first great thank you so much i wanted to just give a big thanks to staff for the thin

0:46 rock tour uh really fantastic experience to be able to see the work that we voted on and see the progress that they've made excited to continue um to be able to go up there and see that work so thank you everybody who put that together it was really well done i also wanted to note that i saw jennifer connor's piece on resiliency planning in the river road newsletter i loved seeing that in one of the local um neighborhood association groups and so thanks for that work and then i wanted to update the board on uh one item so i have been the representative for elkhog and this last meeting they elected me for the next

1:32 two-year term for um vice president now what that what that means is if you know if i'm not elected uh to be the representative for elkhog in the coming years then whoever is appointed from the e-web board would then uh serve as vice president so i just wanted to let you all know about um about that and i'd be more than happy to continue serving on cog board but if we felt like we needed to change that would be what's coming up in january and then finally i wanted to make a note about i i thought it would be a good idea and i'd love to get other board members feedback if as a an attempt to be a little bit more inclusive

2:17 and respectful of others in our community i thought it might be good if we could actually have our names have our pronouns behind them i've noticed that many other government agencies and such are moving to do that to be more inclusive and i thought that would be a good thing for us to do too i don't think that we i've never typed my own name in so i don't know if i can change it or not i think that that's kind of up to our i.t staff but if other board members were supportive um i'd love to see that change made at least for our next board meeting that's what i have thanks thank you sonia anyone else have any items to check in about uh go ahead and matt mccray

3:05 yeah thank you um i would just second sonia's appreciation of the staff putting that tour together that was extensive well thought out and really well uh delivered so and um we had partner agencies there as well and i really appreciate their time and commitment to to being there to help us understand all the intricacies of the project um i also want to let my fellow board members and staff know that um i had an interview today with the eugene weekly they're doing a story on uh eugene's decarbonization efforts and i really just pointed towards this electrification study that we're speaking about tonight um and some of the results that are in that so um

3:50 i that yeah that was really just pointing towards the the findings which is super helpful and i just want to commend staff for putting together that report which we'll dive into later thank you great commissioner barofsky thank you yes um i had the opportunity also to go to finrock that was that was great very informative also a follow-up on our last uh month's work session on the multi-year financial plan i was able to meet with staff and dig in a little bit deeper into that which was very helpful help me when going over this year's proposed budget and also help me figure out the timelines to

4:36 raise some issues come next spring on on some other items as far as pricing and those types of things so i want to say thanks to the debra and staff for helping bring me along we're supposed to be doing one of those also on the second source water treatment coming up the first part of this next month so thank you commissioner brown anything from you i'm good thank you all right just a few things from me one is that commissioner mcrae and i had a um meeting about cosa just to get some more information last week and that was really helpful so thank you adam and debra for doing that with us

5:22 um matt frank and i also had our quarterly meeting with the city of eugene today um just to our leadership meeting and um some of the highlights that came from that is that um frank and sarah madari the city manager are going to put together a list or something for us that kind of shows really where we overlap specifically um related to climate but also things about infrastructure and resiliency too so just that we can have like more of we can hone in more on our work together um so that if we ever do have any more joint meetings we'll see if that happens

6:07 but anyway that we're really clear about where our overlap is so we can look forward to that coming soon and that is it from me and frank do you have anything that you'd like to add yes uh president schlossberg commissioners good evening um i wanted to just appreciate the fact that uh for those who don't follow this you enjoyed a 368 page uh a board packet this month with a lot in it so i appreciate um and i know staff appreciates whatever time and attention you could give to that and and also for for members of the public who may just tune into this at various times um you

6:52 do uh prior to the meeting submit uh questions to um to myself and management for follow-up so those are also posted and linked to the agenda prior to the meeting so um sometimes when we get to consent calendar items and it looks like the board approves these there's a whole back and forth that takes place prior to the meeting just to make sure people are aware are aware of that the other thing i did want to thank you for all the extra time this fall i know we had a lot of different extracurricular activities including i believe one next week which is to visit the potential future site for a second water treatment plant and an intake on the willamette

7:37 and so appreciate your time with that finally i would like to mention and i know i i briefed the board earlier today on this we did have a safety incident up at the east 40th site this afternoon we are investigating that and until we get further information won't have a lot to comment on but it did involve our subcontractor who was doing some blasting and some rocks and debris [Music] went flying during that process and so we do take safety very seriously as you know and even though they're a professional subcontractor we halted work on the site until we can get a formal investigation and understand what happened and and how to prevent any further incidences and so

8:23 i just wanted to make sure that that the public was aware of that and part of our approach will be to be will be to be very transparent with the communications with the neighbors and with others and with you as we learn more about that so i wanted to make sure that that was that was uh that nobody missed that and we'll follow up with information as it becomes available when we get we get more information so president schlossberg that was it from me appreciate the time i look forward to a long meeting thank you all right just to note that we do have so many things on our agenda tonight and we have one five minute break so if for some reason we need to take another little break or something

9:09 like that beforehand just let me know and we can figure that out okay we are now on to public input um when your name is called uh remember to unmute your call press star six if you're calling from a landline or simply use the unmute button if calling from your cell phone please state your name and optionally your address or ward and speak clearly into the telephone each speaker will be offered three minutes to present their testimony please keep track of time you'll hear an audio notification when the three minutes has elapsed after all testimony is heard each commissioner will have an opportunity to speak if they choose although by policy we do not engage in a back and forth

9:54 dialogue please note that failure of a commissioner to speak shall not be construed as support of or opposition to any speaker's testimony if a question is presented by a speaker and the board does not provide an answer an eweb staff member will contact the speaker so that the question can be addressed at a later time the public testimony period for this meeting is now open and we are starting with tana shepard followed by tim scott all right hello everyone it's me ecochick otherwise known as tana shepard i'm the eugene 4j teacher on special assignment as the eweb education partnership grant coordinator and educator this is my fifth year in the

10:40 position and i have multiple addresses because i'm also a you know a resident i'm in wards seven and eight so i'd just like to start by thanking the board for your continued support and funding this meaningful educational partnership um for so many years now this year is beginning similarly to last year for a program with limited classroom visits and no field trips for students and it quite frankly has been pretty tough spirits are down and our district is working with shortages of all kinds but that is not stopping me i'm utilizing all that i learned from last year with outreach strategies continued collaborations and refining resources that were created to offer meaningful educational opportunities to 4g teachers

11:25 and students and wow that water bottle refill station project we started two years ago sure was timely the educational signage is placed in every building and the eweb grant is well represented so back this year this fall is virtual salmon education unit have about 35 classrooms signed up so far and it will feature tank life videos lessons virtual field trips series and making some connections to the tribal history shared history curriculum that is mandated now and so it's a great connection with salmon especially at the fourth grade level and i'd like to note just overall in the willamette basin we have a salmon egg shortage with the hatcheries and so for the first time ever we had to get our eggs from the san

12:12 diego hatchery and it's really like a crazy teachable moment with climate connection so i'm sadly excited about that i'm continuing work with the 4j climate justice team with teachers and students and in particular bolstering the student group we're meeting every friday with students via zoom and we're trying to reach all five of the high schools and get it bolster that group and then the adult team meeting with students representatives meets on the second tuesday and then we're making some statewide connections with portland public and corvallis in particular continuing the eco experience newsletter it's really a great outreach for teachers and it's a way to get a lot of grant information out as well as other cool

12:57 ideas and connecting people to our community and what's happening and i was invited to be part of the social studies language arts adoption consulting with a lens on climate change across the subject areas as well as ensuring that the environmental and climate-related social justice topics and issues and solution strategies are incorporated in our district's guaranteed viable curriculum plan and it's part of our picture of a graduate skill set and i have a middle school science group that i'm working with to write some crime like a climate bridge unit to integrate into their curriculum because it's missing and then i can support more and then just the continued support in particular with elementary middle school science so all right yeah so again it's just a lot happening and i really just

13:42 appreciate the opportunity to represent eweb and 4j and the community that i love thanks so much thank you tana um next up we have tim scott followed by anthony ramos hello my name is tim scott i'm the executive director of the eugene science center located in ward 4. i'm calling today to highlight this amazing opportunity we have to transform the eweb administration buildings into a world-class science center and i'm not using the term world class lightly we truly do envision creating a world-class science center that will serve our community for many generations to come i do have experience transforming science centers and aquariums in order

14:27 to have a greater impact on their community i began my museum career in 1996 and i've worked on a few multi-million dollar renovations and expansions the largest of which was a 30 million renovation of the virginia aquarium a project similar to this one where we transformed the interior of an old building to create all new exhibit experiences i moved to eugene in 2016 not to maintain the status quo of what was then called the science factory i saw extreme potential in our community and have since worked to transform the science factory into the eugene science center you can experience today but i live in south eugene and every day i would drive by eweb imagining the possibilities and knowing that of all the places in eugene these two buildings connected by a really cool sky bridge

15:13 could become one of the best science centers in the world one that complements all other local world-class facilities such as the halt center the night science campus fifth street market the new hayward feared and the future of riverfront development and now this dream can finally become a reality we envision a community science center that is not just for families students or children but for everyone in our community this new centralized location would make us more accessible and the additional space would allow us to provide more services for our community members with increased field trips camps after school programs special events adult nights even things we haven't even thought of yet because we've been so spatially constrained we would become a destination for out-of-town visitors who would further

15:58 support other businesses such as hotels restaurants and stores transforming the e-web buildings into the new eugene science center would be transformative for our community it's an investment that would continue to benefit our community for decades upon decades omsi was given this opportunity in 1992 and just look at the impact they've had on portland and beyond this is our one chance to do something similar if not better in eugene and i'd love to just sit down and talk about possibilities with all of you at one point to see if we can work together to make this dream a reality eweb's core values of sustainability clean water and community align with our core values we both want to support and improve our community we know we have a lot of work to do to make this happen but if given the chance

16:44 and when we are successful our community will continue to reap the benefits from many generations thank you for your time thank you very much next up we have anthony ramos and then chris jones good evening commissioners and director lawson my name is tony ramos and i'm the community and government affairs manager for northwest natural serving benton lane and lynn counties i started serving in this role this past summer i'm a resident of the city of eugene and reside in ward 8. commissioner mcrae is my commissioner i've been making the rounds introducing myself to elected and appointed leaders and it's my pleasure to be able to join you this evening

17:30 earlier today i emailed you all some information about current efforts underway by northwest natural as it relates to our decarbonization efforts and how we're addressing climate change please don't hesitate to reach out to me i'm happy to answer any questions you may have i look forward to learning from and collaborating with each of you and the entire eweb team i appreciate your time this evening thank you thank you and last up we have chris jones good evening commissioners can you hear me yes we can hear you thank you my name is christopher jones i live on kincaid street in eugene in ward 3.

18:15 i come to you tonight to discuss the eweb staff's excellent work on the electrification study and to raise a few issues for you to think about as you discuss it tonight first the study makes very optimistic assumptions about the future supply of renewable natural gas for those assumptions to come true renewable natural gas will need to exceed even the gas industry's unrealistic dreams and gas prices will be so high that nobody will be using gas in homes or small businesses and yet eweb's study concludes that 50 electrification of space heating is as high as is as high as we can go so something doesn't quite add up there

19:00 second i was confused about the natural gas prices used in the study one section cites an outside study showing that future natural gas prices are predicted to be three to six times higher than today's prices with electric prices increasing only a small amount later in the study there's a graph that appears to assume that natural gas and electric price increases will be essentially equal i worry that the study may significantly underestimate energy bill savings for customers doing electrification projects third the social cost of carbon used in this study is 75 per ton but current calculations of that figure by government agencies do not include

19:45 some very real costs including the kind of human mortality that we saw in the heat dome event that we experienced this summer a recent peer-reviewed study that included mortality resulted in a social cost of carbon that was more than three times higher than the one used in this eweb study finally the excellent bar charts in the report show that eweb can save ratepayers money by providing additional heat pump incentives so i encourage the board to provide clear direction to staff to expand cost-effective heat pump incentive programs based on this analysis i also urge the board to communicate to local and state elected officials that electrification will be a clear net

20:31 benefit for society as a whole and that those officials should create incentives and regulations and programs now right away to accelerate this necessary transition thank you for your time thank you very much um the public testimony period for this meeting is now closed and at this time commissioners are given the opportunity to comment if they choose so you can just if you have anything to say raise your hand then i can call on you uh commissioner mcrae go ahead i'll just say thanks to everybody for taking the time to come and provide testimony

21:18 uh really it matters thank you very much commissioner carlson i saw your hand raised i was just gonna do the same if nobody else was going to thank so thanks everyone for coming appreciate your time um i just want to add one little thing um in regards to tana shepard with 4j i just really appreciate your enthusiasm that you're continuing to bring to the projects as somebody who works in education i know that morale is low and i'm sure that the teachers are really happy to have any kind of infusion of um materials and exciting things to work on so thank you for doing that um commissioner brown yeah i'd like to also thank everybody to

22:03 testify this evening i do i do have a question for tana that she doesn't have to answer now but i know in the past that when when we've given present a presentation to some of the schools um that didn't know if uh things you know the programs are available to um eweb ratepayers but we only give these programs to 4j springfield and mckenzie but we do have private schools like marist and o'hara and all those other things should have a significant population and i just wanted to maybe you could get back to me frank or somebody on whether or not we are including those schools in uh in benefiting from these programs because to me i think it would i know it's a hard thing to do but the private schools

22:49 they're rate payers too and want to make sure that we're including them thank you okay we're moving on to our board action items item number four is approval of consent calendar a i'll move to a doc instead calendar right second all right um all those in favor say all right bye hi hi great moving on to approval of consent calendar b i'd like to pull number 10 just for a

23:34 quick question if i could on consent calendar b uh move to approve all except for item number 10 the remaining oh second all right all those in favor say aye all right all right so item number 10. well i appreciate karen's uh response to my question about that amount of money for one individual for 12 months and i just want to make sure that i understood that response correctly that is for one person for 12 months for up to 2000 hours and i've done some math there and and

24:19 that's it and there's not a big truck that goes with it or a building or anything else it's just one individual is that correct i will let karen respond if she wants to add more detail commissioner brown but i believe that that 222 dollars an hour or whatever it comes out to be does include whatever equipment is necessary as well but karen can um also weigh in on that good evening commissioners uh yes i second what frank said and um it does include you know all of their background and training and all of that that we could not provide a brand new employee

25:04 okay well hopefully in our community with the community college and others will see an opportunity because to me that's a significant amount of money to pay one individual on an independent contractor for not saying that that's not uh you know adequate you know that's more than that's great compensation i mean that's more than we pay our general manager um and uh i just would think hope there would be an opportunity to have a training or something that to get more people trained in that skill set in that profession because it seems like it's a very lucrative profession so thank you very much i do appreciate your answer but i just wanted to make sure i wasn't missing something because i think there's an opportunity there for somebody to to get some career opportunities thank you we share your sense of urgency on

25:49 that commissioner brown um it's it's also a a union position that has a number of years of apprenticeship associated with it as well and it's one of the positions we've really had a difficult time filling the last several years actually so we we share your both your enthusiasm and your sense of urgency on that thank you well with that i'll move to adopt uh consent calendar be item number ten all those in favor say aye hi thank you okay

26:34 on to general business items agenda item number seven the 2022 proposed budgets and prices good evening commissioners my name is deborah hart i'm here with adam rood the fiscal services supervisor this evening i wanted to start by saying thank you i know i contributed more than 100 pages to that board run so thank you for waiting through that and for the questions that we got over the last couple of days holly could i get the next slide please uh so this evening we're here to review the 2022 proposed budgets

27:21 the overall revenue requirement as well as kosa results and proposed prices there is a public hearing scheduled this evening immediately following the presentation and then we'll be looking for board direction on these materials and we'll take that and return in december and with that i'm going to pass it over to adam rail thanks deborah next slide please uh so i walked through a few slides related to the 2022 budget and the pricing pro proposals for the water and electric utilities this slide here is a high level overview that we saw last month of the 2022

28:08 budget and we provided the more detailed budget document in the board backgrounder so we'll be happy to answer any questions related to the budget document or anything in there um but first we'll move through to some key items from the pricing proposal next lectures so after five years of no increase in prices for both utilities we are seeing a shortfall in the revenue requirement both utilities are entering a period of significant infrastructure investment in replacing assets and updating systems so next month we'll be request requesting approval of uh price increases for both utilities for 2022.

28:53 these recommendations are based on cost of service results which were informed by those three-year cost of service trajectories we've been talking about as well as rate making principles such as principles of gradualism additionally for the water utility we'll be requesting approval of the wholesale water contract rates which are established using the cost of service analysis as well and required board approval for the electric utility i will also be recommending approval of some market-based rates that are based on wholesale power market prices those relate to the distributed generation rate for customers that own generation that sell that power back to eweb as well as the business growth and retention rider which is based on the

29:38 differential between wholesale and retail market prices so the wholesale prices um increase significantly for 2022 so that's increasing the value for customer owned generators that we're purchasing that power for as it's a wholesale pass-through and reducing the differential between um retail and wholesale prices which are roughly in alignment now and eliminating the um benefit to be split for those customers so these are market based prices which are highly volatile and we update annually so next slide please so shown are the cost of service results for the electric utility we worked with a consultant to modify our existing cost

30:23 of service for the electric utility to accommodate a three-year cost of service analysis and uh and include that in the pricing proposal and we validated assumptions in the model and add data inputs the results of the cost of service have been prepared annually although we haven't always recommended an adjustment and these are generally consistent with what we've seen for the last few years specifically the large general service had been bordering that five percent threshold that we've used um as a benchmark for when we would adjust rates um and that's largely due to for several years we've had higher purchase purchase power costs um that make up a majority of their bills so those customers over 60 percent of

31:08 their bill is power related cost whereas for a residential or small commercial they have a higher proportion of distribution costs private lighting increased related to higher distribution costs for that customer and after implementing the gradualism and the recommendation uh their increase is um for a hundred watt bulb uh roughly six dollars or six increasing from six dollars and six cents to six dollars and eighty cents per month uh next slide please so here in the 2022 column is the percentage increases for the respective customer classes and those

31:53 multi-year trajectories showing 2023 and 2024. absent any significant changes or a different direction from the board we'll be recommending increases in 2023 and 2024 consistent with those shown on the slide the cost of service results did show a bit more variability than in the recommendation and we've looked towards the 2022 end state and tried to moderate those any annual uh changes uh to to employ the principles of gradualism and results of the multi-year study so let's slide please for why uh so attached are the water cost of service results based on the new model

32:39 our cost of service model that we worked with the consultant on for the water utility and similar to the to the electric utility the classes representing the majority of the sales are roughly in alignment with the overall increase and some of the smaller customer classes have different impacts for example the allocation of pumping costs increase the elevation and the charges of the elevation charges the impact of the fixed portion of the elevation charges at the second elevation level or an increase from five dollars a month to five dollars and forty five cents per month and at the highest level it's an increase from seven dollars a month to eight dollars and seventy five cents a month um next slide please

33:29 so the cost of service results for the water utility also showed um a bit more variability which we've smoothed using the principles of gradualism to get to the 2024 pricing results and we're not recommending any smoothing for the water contract customers as uh by contract those are updated annually and approved by the board and the electric utility those are also updated annually but don't specifically require board approval so this is a combined chart showing the bill comparator for both water and electric utility customers we use 1600 kilowatt hours and 9k gal

34:15 water consumption to represent a typical single single-family electric heated residents our position on this chart is consistent with where um it has been recently as the sixth lowest out of these 17 comparators this represents eweb's current and proposed price changes um but all of the comparator groups represent just their existing prices though some of those have um uh pending uh proposals that could be approved in the near future we wait until those are formally in place before we include them in the bill comparison uh so with that i'll turn it back to deborah thank you adam this evening management is recommending

35:01 that the board direct staff to prepare 2022 budgets as presented in the board materials as well as pricing proposals as presented slide please so we're at that uh highlighted bubble here in november now and uh our next step from here is a public hearing and then direction from you all which we'll incorporate and bring back in december great so we do questions and stuff after the public hearing section after the public hearing yes

35:46 okay so great we are now at public hearing on 2022 proposed budgets and prices i don't know if we have anybody signed up to speak though president schlossberg there were no members of the public who signed up to speak at the public hearing okay so the public hearing is closed we can for just for official purposes um president schlossberg i would suggest you both open and close the public hearing just for official purposes great the public hearing on 2022 proposed budgets and prices is now open and now the public hearing on 2022

36:33 proposed budgets and prices is now closed thank you who wants to jump in go ahead john brosky i see you first thank you thank you deborah for giving us beautiful reading material for the weekend i really appreciate it and i also appreciate like i said earlier the the meeting that i had with you and adam to go over some of the issues that i had with the multi-year plan and how it impacts the budgets um for me one of the main concerns that i saw was the dramatic increase in the water prices in

37:20 2023 and 2024. i know we're not speaking about that budget right now we're talking 2022 and i think i can i can buy into the the rate increases that we have here but something that was made clear to me was that next spring we may have an opportunity to look at uh maybe doing some smoothing of those rates over the the next few years there is the opportunity to you that we're planning on using rate stabilization to help uh defray some of the large increases in the out years of the multi-year financial plan and so at that point next spring i'd like to talk with the board about being able to maybe

38:05 bring that nine percent down to closer to four or five percent if that's possible um just so that our customers know you know again we we haven't raised rates in in five years um and we do have a rate stabilization fund in both the water and the electric side that we're going to be dipping into to help mitigate some of these rate increases but as everybody knows things do go up we've seen it with our materials with our labor and and other contracts that we've entered into so i'm comfortable moving this uh budget proposal forward and look forward

38:50 to the opportunity to discuss next spring the easing of the larger rate increases in the water side thank you go ahead frank yes i think that that's um commissioner barofsky i don't know where he disappeared on my screen but i think he's still probably um i think that's a relevant conversation for next spring i will also uh say that part of the reason that the rate stabilization funds were created was to address i guess i would what what i would describe as the lumps in the oatmeal kind of projects we specifically beefed up the electric rate stabilization fund to help with

39:36 the carmen smith bubble of investment and i could see where it would be an applicable use of of various kinds of looks at the rates relative to a large strategic decision like a second water treatment plant which is a really the biggest driver for the water increases being so significant in in the years that you're you're referring to um the other the other piece of information i think is relevant to customers on the water side is that even with the investment in the second water treatment plant we go from the second lowest to the fourth lowest of all of our comparators on an absolute basis and so from a percentage standpoint while it

40:21 can look pretty significant the absolute number is still very very favorable compared to utilities across the northwest and so i think that'll be a good discussion and we'll look forward to having that in the spring along with some rate design discussions i'm assuming as well well first i want to say thank you so much for the very detailed packet i know that took a lot of time uh i know that in years past there have not been as many footnotes for the various differences and i wanted to make sure that you knew that did not go unnoticed where there were major differences between previous years and

41:07 budget moving i looked at all those little footnotes so thank you so much for uh putting in that detail it really helped me understand where those differences were and what happened um outside of that i i wanted to ask again and i'm sure that somebody has answered this for me before but why do we pay twice as much as a percent on stilt than springfield does is that an agreement we've worked out is that something we've decided to do out of the kindness of our hearts what what why do we do that debra do you want to go through the the history i i it goes way back commissioner carlson i can't remember exactly how far but deborah might know off the top of her head um

41:52 there's a whole history lesson there it goes back decades literally decades it does and i don't know off the top my head but that question came from i want to say commissioner brown earlier today and uh frank and i had a little a little side conversation about maybe preparing a backgrounder uh that would detail the history on silt for you all something is a little cheat sheet about our history on that but it has been some time well before frank where i arrived that that six percent was negotiated if i could chime in uh commissioner carlson that uh i i've been barking

42:38 about that for many years because uh and nobody else pays three the the ordinance says three but it was a deal worked out in the 60s between eweb and the council and it takes a charter amendment to get it back to three percent and it's just a deal that we have to live with we did amend it a few years ago to where we didn't have to pay on the on the wholesale side and uh got it i think better attuned but it's just one of those deals that was worked out and uh we are the largest financial contributor to the city of eugene so the portion that we pay is it on all of our revenues or is it on the revenues that are only in eugene

43:23 it's on all of our revenues um the wholesale portion is sorry frank i was just going to say all electric revenue yes all electric revenues the wholesale revenue is carved out separately and we have a negotiated flat fee the city's interest in that was around controlling some volatility in their pricing so are in their budgets because they also depend on they they do depend on this for their budget so i i mean i guess i would like to look at that especially since others outside the eugene area i mean if it's the revenue within it

44:08 okay but especially the revenue that comes outside of the city it doesn't seem like we should be putting that towards them um you know as we're looking at raising rates it really should focus on what we do so um i'll put that piece aside and look out for a backgrounder of sorts but thank you all for the history there um and i think that i think that covered it i had other questions that um were answered before so thank you for answering all the questions i know some of those came late it was it was a pretty hefty packet it took me about seven hours to get through so um but thank you for again for all of your work to put that together i know

44:53 that was a huge time commitment as well go ahead john brown thank you um deborah and steph and others i want to thank you all for doing it i'm fully in support of what you have proposed here i am concerned between inflation and construction costs and environmental concerns with water supplies and salmon that we're going to be challenged even more with rates over the next three to five years that uh i hope we can keep rates within what are projected but um i don't want to be the dark cloud but uh we there's a lot of pressures on a lot of different from coming from a lot of different ways to uh that are could potentially affect

45:38 that to even a greater degree than what we're proposing so hopefully we'll be able to keep them there but i'm not going to be totally surprised if we have to go outside of the parameters of what's been proposed thank you go ahead matt thanks mindy um yeah likewise i want to just say thanks um for not only to putting this report together which was uh really helpful and and readable um which isn't the case with financial documents so um thank you for making it uh easy for this guy to figure out and like mindy appreciate deborah and adam taking time to help you better

46:23 understand the costa during a meeting last week um i guess you know just a couple of things that i take away from this i have a little bit of heartburn about raising rates much above the annual rate of inflation but it seems like you know that's kind of where we are um and when we look at bills and thank you so much for including the bill comparison because to me that's what really matters when we look at bills we can see that we're consistent or slightly more affordable than our neighboring utilities and i think that is really the measure we used to be um a key measure we should be continuing to pay attention to so thank you for incorporating that from the center and my other comment is that and i

47:08 mentioned this i think last time we talked about um about rates is that i appreciate that we held rates flat for several years and all things be equal i would rather see low increases year over year of perhaps uh one percent then rates have held flat followed by a jump of four percent and i know i know we do some smoothing um it feels like that could be applied um i mean obviously not retroactively but in the future i guess i would rather see um just really you know lower lower increases rather than um striving to keep things at zero percent rate increases um anyway thank you and and like john i'm i'm very supportive of what's proposed here i appreciate the effort that's all

47:53 i have thank you yes frank yeah president saltsburg yeah for both uh commissioner mcrae and commissioner brown i think when we look out we we see and try to gauge what we see as upward pressure on rates and and and you know there's there are inflationary pressures that that we're seeing um part of how we go into our planning processes is to look at you know if we end up having pressures that we didn't assume next year we want to be able to come back to the board with areas of relief for example which doesn't place everything on rates but also looks at turning the dials up and down relative to projects

48:39 um part of the reason that this is a little bit of a jump and we we did hold rates um steady for for really five of six years um uh actually five years in a row for both water and electric was that the rates are driven by the work that we're forecasting to do and we we have increased the level of investment we're making in some pretty key strategic projects and so that's we will we will smooth from there but some of those we have um looked at the timing of and some of those are emergent and so the the smoothing um is close to inflation if you take out on the water side for example the second treatment plant over the course of the

49:24 10 years so that's commissioner mcrae that is what we're shooting for to be pretty close to the rate of inflation over that decade but we we do anticipate um i i don't think there will be downward pressure in rates i i think most of the pressure will be upward and so it will be on all of us to manage the trade-offs between rates and projects and other forms of financing so i think that's fully anticipated that these conversations will continue sony did you have a oh sorry i don't mean to cut you off matt but i see your hand up sonia sorry if there's another round i had a quick item that i forgot to mention earlier but if others need to go first let them come

50:09 up okay matt did you have other questions i i do but uh go ahead and uh take sonia's if you like be great well i'm gonna jump in and do my turn um i think that it's i mean it's pretty remarkable that we have been able to not raise rates over these past however many years and continue all of our programs and even expand some of them so i i think that's pretty admirable and i also echo matt's sentiment that even maybe a little bit of increase um each year is better than such a big jump i know there's there's other other other budget principles that we're following i'm curious

50:55 i'm sure once people hear that we're raising our rates we're going to get a lot of requests or a lot of comments from the public and is there a place where people can go and see what the estimated cost increase will be on their bill because that you know some people might not know exactly like what is a three percent increase or um anyways is that information available and then also i know i've asked this question before but when we increase our rates do we also increase the amount of money that is available for low income customers i can i can answer that unless you i saw you come off mute frank

51:42 no go ahead deborah um our communications department uh does uh does work with adam's team to come up with some average bill impact so that they can so that customers can see what the dollar impact would be uh so that is a part of the communication strategy as for the limited income programs are reviewed periodically with the goal in mind to maintain a steady level of support but they are not automatically increased so the formula we used for that president schlossberg is we look at a certain

52:27 number of households and try to cover the basic charges for those water and electric for those households and i don't remember exactly how many households it is and so that's that's traditionally what we try to cover um now if if the basic charge is not affected then i i wouldn't expect that that we would necessarily increase the level of support but it's i don't remember exactly how many thousand homes and but but there's a formula there that we use so it's something that we would just keep our eye on and if say march we we've run out of money and we get like a unprecedented amount of people uh that need help we could we could

53:13 adjust yeah the the schedule for the um eweb customer care programs are they are not even every month so we allocate more money when there's typically higher bills in the winter the shoulder months are usually the lowest and so we we actually have a a planned forecast for distribution occasionally there is an opportunity because of extenuating circumstances to either pull in or push out some of those numbers and move those move those allocations around or like we did in 29th uh the years run together i'm sorry the covet year we actually worked with the board to increase the total pool for that

53:58 particular form of relief so there's we do keep an eye on it and um if it looks like there's some substantial issues there we'll we'll look at the board and work with the board on on what options we might have frank i could chime in with numbers um the target for the community care program is approximately ten percent of an annual water uh an electric bill and we provide that to a minimum of five percent of our customers on an annual basis great thank you okay so two people have requested another round so we will add some more time to our clock for that

54:45 and um sonia we will start with you okay uh thank you i really appreciate that um two quick items one uh mindy to your point about communication with customers there was a an item in the gm packet and i was curious when when that letter would go out and i noted that at the bottom of the letter it says you can learn more about the rate changes at eweb.org rate info so there is some information there i just pulled it up it does look like there's you know some good information there but staff when is that letter expected to go out julie do you know or adam i'm julie mcgahee chief customer officer

55:32 yeah i'm looking in my notes i actually think it was released to go out already this week but i can double check okay great thank you and then uh the other so one quick comment i do hope that we you know as you develop that website and uh make you know more information gets put up that some of those rate increases that we've absorbed through bpa from bpa get highlighted on there because that is a lot of what we were able to you know absorb and take in without raising rates over the last few years and it's pretty significant as i recall so i hope that we show that to the public too and then lastly i wanted to say thank you to the purchasing staff for their

56:17 work to find ways to get efficiencies of scale economies of scale through group purchasing with other governmental entities i did know about the fuel program and i was happy to see that highlighted in the packet and um in the follow-up question i know they noted a little bit more about all the other types of group purchasing that's done and i think that's that's another really great thing that they've done uh here locally to keep rates down so thank you for that work um every little bit helps all right matt you had a you had some more questions i do have a quick question may i dive

57:02 into the weeds um on page 30 uh appendix b the electric service charges and prices this is actually great news i think for folks that are interested in installing solar if i'm reading this right it looks like we're proposing to increase fairly significantly the compensation for um for generation uh like renewable net metered or rate schedule changes right and we're proposing to almost double the amount of compensation folks they're getting for excess generation am i am i reading that right first

57:48 correct and what what what's the driver behind that that things have changed is that because we see the landscape shifting dramatically in terms of electricity price or yeah can you help fill me in on that yeah uh sure that so we base those on um uh wholesale power forward power prices so the prices that we're seeing in the market for trading power next year uh yeah and that's how it's developed we years ago had a longer term rate that was updated and had a 15-year time frame associated with it but we moved that to just updating it annually

58:33 so recently the rates have been updated annually the last the prices for next year are significantly higher um than they've been the last several years so we've seen a lot of volatility and um and so i that's something that we would um put i guess it's kind of a caveat with that people making long-term investments uh might not want to assume that same rate for the entire payback period just because it it is something that will be adjusted annually and as um conditions in the market change there could be you know different values so this is just an annual rate for someone um in essence mr mccray we pass along what we can get for that power in the market right and that makes total sense um and

59:20 i know that our um our net medium policies have not been um have not been especially supportive of small scale renewable generation and it's upgraded folks who have wanted to install um you know solar especially and i can hear in the back of my head people celebrating and i don't want to be the the dark cloud i think that's a john brown terms himself so he's doing some of that so i don't have to be the only dark cloud but i do wonder well one how we plan to communicate that to people who are preparing to install systems um i get concerned that they would miss that and then find themselves in a spot where they spent twenty thousand dollars on a system

1:00:05 and then two years later the floor drops out and their you know their compensation drops and their long-term plan of paying off that system doesn't work in the way they had expected so i hope that if we're going to do that we have a really robust system to um help people understand the volatility in that market and that this will change from year to year or i would ask that perhaps we find some way to develop a policy where i suppose it would be really cumbersome if we guarantee some fixed rate of um of return or you know of uh sorry i'm not fluent enough in these terms but the um the the net metered rate would be

1:00:52 stable for the duration of somebody's um you know whatever a 10-year period or something like that i don't know that that's realistic but this does cause me concern i just want to flag that um i'm not sure we want to chase that around and deal with the political blowback that could come from people being frustrated and i'll end there i see him past times sorry yeah so if i i can just comment briefly i think the reason that it shifted to an annual um an annual adjustment instead of a longer payback um was i think really the recognition that who there's going to be some volatility in the prices and either the person making the investment is

1:01:38 responsible for that and and kind of taking the risk or that risk get shifted to the rest of ratepayers and if you know the value falls then other people are kind of bearing the burden of that decision that they made so it's kind of that trying to make other people not harmed by another customer's decision that makes sense thanks commissioner mcrae the other thing i would add was this this is not the net metered rate per se the where a lot of your return comes from is displacing the retail rate that you're paying this is if you generate in excess of that and so it sizing your system to meet your own needs is probably the most important thing if you oversize your system

1:02:24 thinking you're going to get a return that's where the volatility can can have some impact on customers and so and this is another area where as we go forward rate design to make some of those decisions more neutral to customers will be part of the discussion all right john brown or john borowski do you have any other questions none for john brown none for john brosky and none for me um so deborah and adam did you get what you needed from us i believe we did i just want to um thank adam's staff you all have very

1:03:10 kind words to say about this budget document and adam and i were just um two sets of eyes and hands on this so it was really adam's team that put this together all right um i'm just going to apologize in advance that i'm home there's nobody else around me right now but my dog is next to me and she's kind of going crazy whining so i'm just gonna try to mute and unmute so we don't all have to hear her um we are on agenda item number 10 which is enterprise resource planning update

1:03:56 high commissioners travis knabe for the record uh chief information officer again happy to be here to chat about this technology investment plan so really what we're at today is a continuation of the discussion we started in june and so holly let's go ahead and advance the slide so if anything came out of the conversation in june i'm hoping that the understanding that we have some legacy applications that are causing us some problems here and and stifling our ability to do some of the great work that we want to do and again and i know this slide is kind of small and so i'll read it i can um well i won't read it but anyway i'll try to speak to it for you all um our legacy applications again are averaging 20 years old um 10 20 and 30 years old

1:04:42 they're managing 250 million dollars in budgets uh tracking a billion dollars in assets uh doing 100 over a million bills uh per year producing over a million bills per year and and we've got over 150 000 customers in those systems and so there's still some costs that that are associated with those legacy systems that i wanted to call out and that's these little tiny graphs that are difficult to read and i apologize for that um but anyway what i wanted to just show is the escalation in price is anywhere between four and seven percent in those three systems and again that's our our asset management our financials and customer information system and so what we're getting for that percentage of increases the continued right to use the application and that technology but

1:05:28 no new features no new bells and whistles no new functionality um really just the the right to continue to use that investment we made and i promise the futures the next slides are going to be bigger for us so you don't have to squint again i apologize um and again what we what what i recommended at the at the end of the the meeting in june was that we do modernize these applications and and we do so with an erp which is that integrated uh tool that has a single database backend um etc and so the other action that i had from the board meeting in june was that i told you we were going to do an assessment um and and hire a third party to come in and really give us an idea and the goal of that assessment was to provide us with

1:06:14 uh an order of operations really a timeline and an order of magnitude budget and and so we've done that and hollywood you want to go ahead and advance yeah so we partnered with sure power consulting and they brought some industry experts in and and met with our staff and really did some some deep dive interviews they did uh 17 individual discovery sessions with with staff and they started with the executive team and then moved down into the the line of business leaders and and managers of those divisions and they had industry experts in each of the areas of focus which are our back office systems the financial systems workforce services meter to cash and so the chart you're seeing on the

1:06:59 right here is really the results of that um those assessments and if if you look at the top right hand corner which is high wait no surprise customer information system is up there but what what is what was interesting to us is that they included some additional scope um in their recommendation and included um some modules that were like our customer relationship management tools um the mdm data that we're pulling from ami and the reason that they did that is they felt that eweb was lacking the 360 degree view of our customers and that if we pulled those additional tools in that that we would then gain that and then as we look down this chart

1:07:45 asset management and finance i think you could see by the color and their location we could probably flip a coin really and do which whichever one of those next and then workforce and and again you can tell that this the scope has changed a little bit you know when we talked back in june we were focused on assets financials and um customer information so the next slide um go ahead and move forward holly so what we've what we've got now is the what and now the win of where where we want to go and so this slide really shows that timeline of when when and how fast this can happen at a reasonable rate and again customer

1:08:30 information is that full 360 degree view um asset management and financials again could be flip-flopped or we could pull one forward or or whatever based on where we are in the project and we need to look at a lot of variables there like fatigue from the utility or our employees is coming off of customer information and going into financial gonna really burn people out should we does it make sense to do asset is our asset management strategy in place or do we need to spend some time doing that and will we be ready for that in 2024 and um and then human capital uh towards the end i think that the the book ends we're pretty confident on uh it's the in between that we'll make some decisions as the progress as the project goes

1:09:16 so now we know have the recommendations on the what and we know the win and so i don't want to forget about the budget um i know that we just had a really great discussion on that and so as we talk about the budget i i wanted to i included some things beyond just this erp in this budget because i you know i think it's important because you know as as we read goal 4c here we're really implementing is's long-term budget and investment plan into the to the ewebs long-term financial plan and so i'll explain these graphs this top graph is our combined capital and non-labor o m budgets that are combined so that's that total and they include the numbers of the erp budget that are down below so those are

1:10:01 in addition i just wanted to call out the erp budget separately because that work is going to be happening over the next five years one of the exciting things for me um is that we got to spend a lot of time working on our capital planning capital replacement operational replacements for the next 10 years we worked with both electric and water and their capital budgets and we've got um all of that detail into that long-term financial plan and then i worked with debra and her team probably at their nauseam um with all my questions uh to make sure that we had our non-labor o m budget um included in the in the long-term financial plan i've been at eweb uh for about five years now and we've been fortunate to execute our capital budget in is for the last several years and and i love the

1:10:47 fact that i get to report we're on target this year to hit our o m budget our non-labor o m budget too and frank challenged me a little bit and so which i thought was great that you do it once you might be lucky you do it twice it might be a coincidence and you do it three times and then maybe there's something there so challenge accepted um we'll see how things go over the next couple years so go ahead and move to the next slide holly so this dives into and i know this is an eye chart and i can see uh commissioner carlson's eyes squinting again i'm sorry um this was kind of uh one of the most fun slides for me to create because i got to do a bunch of computer nerd stuff and so i'll really i'll describe it this is really this erp budget and so what we're seeing with the red bar chart is that's our legacy application costs

1:11:32 and and i started it back in 2015 because i wanted to show show that run rate then the green bars represent the replacement system so our modern system that gets put in place and you can see as it escalates the legacy system prices or costs go away now i'd love to be able to stop paying for one and start paying for the other not have an overlap but that's just not possible right we can't just abandon the one system while we migrate to the other one and so then what the blue lines are that represents the implementation cost so we're gonna have to hire consultants to help us do data translations architecture all of the implementation the program management all of those fees and so

1:12:17 what you will notice on this slide though that i think is kind of interesting in it and it's a little bit different way of doing is around here and we talked about this um back in june as well as there's no upfront cost to purchase the software so does that green line or those green bars start showing up it's us just adding services and and paying um a model essentially to rent that software which eliminates the need for a huge upfront cost which is which is nice and really wasn't possible even three years ago so um that's just how fast the it landscape is changing the the bar chart on the bottom here is really just that delta between what our current run rate is which is

1:13:02 running it somewhere around a million dollars for legacy applications and you can see it goes up to about a million five posts go live um and so this run rate or the the delta is really the difference in cost between what are what we would expect to spend versus what we're spending to do to do that extra work so if we look at like year 2022 that 4.1 million is the implementation fees plus that little bit of green and then as you look out into 2027 that's just the the remaining implementation fees and and a little bit of red the total delta is that 20 million and if you remember back to june we'd estimated um about 20 million i think we budgeted around 22 um to do the project but that was really

1:13:48 just those three applications and so it's it was a we're cautiously optimistic that we get to fold in this additional scope and get that full 360 degree view and pull workforce in and maintain the timeline and do it for the same price you know there's some things in there that aren't included i think as an example if karen wanted to hire some consulting to help develop an asset management strategy that isn't something that i budgeted for in the technology budget that would be something that um individual divisions would be looking at so now we know the what the how or the win and how much so i wanted to this next slide um commissioner carlson

1:14:33 you asked a question at the end of the last board meeting or at the last at the end of the presentation um in june what's different this time what makes us think we can be successful and and i've heard that believe it or not from other people at eweb as well and so i really dove into it and really tried to to educate myself and and really think about that to provide some good answers here and this is what i came up with is that this is a very strategic project it's something that's going to be meaningful across the entire utility it's it's going to take us from point a to point b right it's going to it's going to position us to be able to do the things um that we want to do and position this for future success we've got a the et ownership of the program if you'll notice if you remember back to the the timeline slide

1:15:18 my face wasn't on that slide at all right it's because this isn't a project that's being run out of any one division it's it's being run at the at the et level and we're doing a ton of change management and getting buy-in from the division for the utility as a whole we're doing these assessments um all of the things that we can to make sure people understand what's what's coming and why it's coming and what the what the potential benefit is but we're also being realistic about it you know as frank mentioned um last presentation too is that there's just a cost of doing business and so we're not gonna try to inflate some big roi here or that there's gonna be magic that comes at the end of this the other thing that i think is is significantly different than the past is

1:16:04 we've made some decisions about the tool already we know it has to be utility specific it has to be enterprise class like i said in some of those statistics when you're tracking a billion dollars of assets you can't do it with a mid-range piece of software you need something that's enterprise class we need to maintain this this idea of commercial off the shelf where we're not customizing source code that we're just configuring the the application to meet our needs and it has to be supportable and and by supportable we have to be able to afford to run it we have to have staff that we can attract to continue to manage it and we have to be able to lean into consultants where it's appropriate and if if if you remember back to june those are some of those guiding principles right and that that we talked

1:16:50 about and that i thought were important and then lastly from an execution phase we have to have dedicated e-web resources we we're building teams in is already and i know the other um executives are thinking about their departments and their divisions about how they can resource this so people can be dedicated to the effort and not have to do their day job and also work on this project we've got utility expert program management that we've partnered with with sure power who is not an implementation partner and they're not a product seller they are an advisor to help us navigate these waters because it's not something that we do every day and we're developing govern uh discipline governance framework and that's both during the project as well as post project go live

1:17:36 that we maintain this discipline governance framework and so now we know the how hopefully right and so holly let's go and move to the the next slide and so really what's next we're going to continue the change management process throughout um we've completed the assessment and this is where we're going to start looking at going out for doing the request for proposals and we're going to do this in a in a calculated order and that we're going to select the product and then we'll select the implementation partner because we want a a partner who's an expert in that product we're going to continue building and developing our governance framework and then for the board what will what we plan to do is as we get these contracts negotiated and as we work through these things that will

1:18:22 bring those back in on consent for your approval once we've gone through the rfp process and um and move that forward and so my hope is that i can provide you enough information in these meetings and then um we can have some obviously available for questions as those consents come in but i want you to be armed with as much data and knowledge about this as you can be as as we move forward and so that was it for me i tried to go fast i know you got an action-packed meeting um president schlossberg all right so you're probably looking for some questions at this point or comments is that right yeah whatever whatever i can

1:19:09 answer for you or um yeah i don't have to be put on posse that's fine too but happy to answer any questions or or or clarify anything that that i need to great well does anybody have any questions or comments for travis go ahead john just a quick question about uh outside resources i know that we're challenged in other areas of expertise in the utility industry and having been through wham and kubra and all these other things when we've gone to massive changes are you concerned at all about being able to retain uh the professional services that you need to implement this um i'm not and and the reason i'm not is

1:19:54 because the the list of applications out there that meet our guiding principles are have are going to put a limit to where the people that are going to respond are going to be able to respond and help us through end to end i'm confident in that sorry my my food is being delivered to me so i want to distract lucky um does anybody else have any other anything else that they would like to say uh yes matt

1:20:39 thanks for the presentation here travis this is really helpful and i appreciate the warm-up that you gave us in june uh the kind of building information and continuity for us in educating us is much appreciated um if you were to pull out your crystal ball do you think we'll have a cost for a transition like this again in the future do you expect i mean it's been many years since we've done a transition like this but would you anticipate that we'll probably bump into the same thing 20 years from now you know i that's a tough question and right and so what when we've talked to our consultants and and when i've done research and my team has done research we're really looking at this product as a 20-year product

1:21:25 and then and the and again the reason that we're doing this and the way we are is that as the system gets upgraded and maintained and um it happens across the board right so we don't have to worry about doing a customer information system and then an asset management system and so we're in this constant um influx of upgrades i kind of look at it like they they say about painting the golden gate bridge right you start at one end go to the other end and then you start right back over and that's kind of where we would be if we continue down this disparate path and so uh what i'm looking at is that this is a 20-year solution and it'll be kept and updated and maintained as we go yeah thanks uh and i feel like i should know this but i don't uh this includes

1:22:10 an update to our billing software is that true it would yes okay great um it feels like that has been a barrier to a number of uh changes in the organization in the past so it feels like that would be great yeah and actually that's that piece that's targeted as number one sorry didn't mean to cut you off no no no uh given the immense amount of resources that eweb manages and the essential nature of all these systems frankly the additional cost over a few years that you've outlined here seemed uh really worthwhile so i appreciate you

1:22:55 making it clear to us you know what this looks like over time the expense over time and and uh i'm i'm glad that we're moving this direction thanks thank you yeah frank um president sorry i got cut off from my might had some network trouble so i just rejoined um i i was going to say you know it's it's interesting this is a really significant project or or group of projects for the utility um during the sit for some context during the six years that or so that travis is referring to where we we might invest 20 million dollars or 25 million or 30 i don't know exactly the number

1:23:41 uh where all this will wash out during that same time our budgets will be over 2.3 billion dollars and so just to give it a little bit of context as to the amount of assets and the fact that if if we had a market cap we'd be a two billion dollar organization and we're spending you know one or two percent in total on our uh information systems is actually pretty sort of surprising if you think about the the level of investment there so these these are absolutely our cash registers and the things that are necessary to run run the organization

1:24:33 thank you thank you travis um so i guess one of my questions would be um into which bucket does the ami fall uh and and putting all of that information is this that income customer information asset management's where where does that fall in this timeline yeah so the ami project in and of itself is definitely going to stay separate from this and and and our data the way that lives from the ami perspective is separate where the data does come in is during the customer portion of it and this is based on this recommendation it would come in in that if you want to call it phase one or or year 2022 is where we would start to consume that meter data into this solution so then that gives

1:25:20 all of that information about the customer all in one central location okay yeah so that that's what i'm i'm interested in because you know when i was reading the electrification report that we had later a lot of the things that were key to the community being able to electrify depends on on using the data from the amis you know to help us decide when we want to charge our cars to decide which transformers are being used more and more by by doing all those types of things and so i want to make sure that that is rolled into this um and and on early

1:26:05 so that we have a lot of uh good working time on that when when we do need to implement those you know so we know which transformers are getting higher loads and and all of those types of things so that's early on in the process is that weird what you're telling me yes and then and then that data from what you were telling me earlier or what you said was that there'd be dedicated people in each department that will know how to use that data you're not just going to dump it and say okay we know what jon jones is using kincaid street but there will be people in the in the transformer department that'll decide oh well we need to work on these

1:26:51 or we need to you know let these customers know it's going to be cheaper to charge at this time in that time there's going to be dedicated staff in each department that will be able to use this data is that what i'm understanding so i am providing the data for sure thanks frank yeah i'll bail you out a little bit um there's there's a couple of ways that this feeds in commissioner barofsky so um they're the ami meters do have their own data management system and that's actually where a lot of the the data comes from from the meters that can go several different locations if if you're wanting to use that for customer purposes for example for billing purposes that links into the customer information

1:27:37 system where we do our pricing and time of use and and then those programs and that's one of the very those both are very early in the process if we want to actually use that for other kinds of infrastructure systems or infrastructure decisions then that can either be interact interfaced with the mdm itself the meter data management system itself or in an asset then feed into the the asset system which is which is also where you could make some of those decisions i don't think that we look at this as separate data managers within departments these are we we are going to have to be able to convert that data into useful information and that's going to have to become integral in what those

1:28:22 departments do anyway so we won't have some separate oh you're a you're a you know a data extractor or we're gonna have to be able to to do that within the scope of what the departments do so yes it'll be permeated throughout the organization to make it most useful um but it but it will appear in lots of different departments depending on the use of the data and and travis's group is help helping disperse and massage and communicate and acquire that data so that it can be used right and that's that's what i'm hoping for is you know i don't want us to just be able to collect a bunch of data and then not be able to utilize it to its fullest extent you know if we're spending this money to to

1:29:07 do all of these things that these great tools um you know i want to be i want the the people who can utilize those tools to one know how to utilize them and to be able to access them you know and that that's the important part that i hope will come out of this yeah that's that's a really important part and that's why for one that we would choose an integrated resource an erp kind of solution is that those are more integrated across all the different functions of the utility

1:29:53 well travis thank you for thinking about that question and delving into it a bit more i i certainly love hearing that that's you know something that you're thinking about it gives me um good it helps me sleep at night knowing that those kind of things and how we implement you know and had failures in the past you know we won't have that so thank you for that um i also wanted to say that i was um i was a little bit surprised about the billing portion so are customers going to have to redo the auto pay logging into the customer service portal and all that again we just went through that whole process and it was really ugly and

1:30:39 i got many calls about it so i i thought that i thought that that was like the first phase of this and then once we got through that piece we weren't going to have to do it again i'm surprised to hear this yeah so the portal is actually an interface into the billing system if you want to look at it that way so it's it's it's not the billing system in and of itself and so what we'll do is when we replace cis and and put a new billing system in we'll have milestone come back and help us reintegrate their portal with the new system and so short answer no the customers will not have to go back and go through a new portal the where the data comes from will just change it will go from the old 20 year old cis to the modern system that we can then use modern tools to communicate

1:31:25 okay good so they're not going to have to go through the whole onboarding process again and all that perfect okay that unless you would like to unless you would like them to and then we could we could create that notes the intent of going to a more modern platform which was part of this sort of rough you know you know difficult transition for some customers was um was so that it was a modern platform and we could make the next one um really transparent to customers that's what i thought so i was just i had to get some clarification there well little heartbeat here all right thank you

1:32:11 i just have one comment and i really appreciate your the way that you're framing this travis instead of um it seems like in the past we've thought a little bit differently about uh information systems but this is really um kind of on par with a lot of our like the electric and the water uh i guess what i'm trying to say is the way that you're presenting it how it's integrated um makes a lot more sense um i feel like in the past at least the way i've i've understood it is a little bit more of a standalone but you've kind of showed how um uh integral it is in in everything that we do so anyway just thank you for the way that you framed it

1:32:56 good yeah thanks for the feedback that's that's very helpful okay so um i think does anyone have anything else for travis no okay so thank you very much travis thank you um so we on our agenda we're at the break but we're running a little bit ahead of time and i'm just wondering if people want to go to the next agenda item which is about 20 minutes long and it's about the property and then take our break or if people are wanting a break now so if you want to break now maybe raise your hand

1:33:41 i don't see any hand oh i have one hand raised two hands raised okay well then we will go ahead and take our five minute break now and we will come back at 709

1:39:06 that was felt like the fastest break ever okay we are now on agenda item number 12 which is the eweb headquarter property solicitation process so president schlossberg i'm going to turn it over to ann caw and then we have really a very simple directional need some very simple direction from the board so ann you want to take this part away thank you general manager lawson good evening commissioners in your background materials we outlined the legal and e-web policy parameters for disposing of the headquarters property the memo described two potential paths forward for the board to discuss this evening the first option describes a process

1:39:52 with intent to focus on attracting beneficial public use such a process could be used if the board is open to considering the exploration of creative solutions and perhaps more accommodating terms to attract public and community organizations who might need some help overcoming financial hurdles by choosing this approach the process could be less formal and offer greater flexibility for qualitative assessment although this type of process may draw scrutiny because of its lack of structure the second option is intended to attract the broadest range of proposals from both public and private entities concurrently using an rfp process similar to the one used by 4j school

1:40:37 district for civic stadium in this scenario we would develop and strictly adhere to define criteria and scoring method in either case the board can evaluate proposals based on both their social and economic merits we're seeking commissioner's input tonight as it will be very helpful as we develop a step-by-step process for a draft solicitation understanding which of the two options the board prefers as well as any key factors that are important to you will help us bring back the best process to you in january for consideration and refinements lastly if the board wishes to appoint a board liaison to participate with the general manager and staff in the evaluation of proposals we can add this

1:41:23 to the roster for discussion during the board's annual business meeting which will also occur in january and that's all i have this agenda item is really more about listening so i'll turn it back over to the board for your comments great thank you ann um is there anybody that would like to go first with questions or comments i think john brown you're raising your hand but it's out of the screen [Music] thank you well i have a legal question before i uh chime in on this and frank can uh you tell me where i should go with this because i want to make sure there's no conflict of interest because if this if this determined that this property is

1:42:09 going to be sold in the open market there's a possibility i could bring a buyer i mean i brought phillips to e-web and had to step aside and is you know i don't know how you as an organization are going to structure that but we get paid very handsomely when we do transactions of this size and i want to make sure that if i were if my my participating in this process is that uh accused excuse me from participating if i bought a buyer and said they want to give you 15 or 20 million bucks for this property i can't be part of it or do you want to wait to weigh in on that later i can do a little bit uh further research but but in in general commissioner brown i i want to say that you you cannot play

1:42:56 both sides you cannot play both sides of the equation um you could um recluse yourself um from this process if you felt like there was opportunities um outside of of your work as a board member that would have to be done actually early in the process when i say early probably prior to the point where we're weighing in with the board on the criteria just to avoid the fact that you might know um some of the the buyers so we would want to do that sooner rather than than later um but i can get more specifics um for you um as far as what that what that would look like

1:43:42 um when when um and cod described the second approach to this uh where there's there's actually a criteria developed and she mentioned a board liaison there's we want to make sure that we're clear between what the role of a liaison would be versus the role of a board subcommittee which is much different a liaison or two could participate with staff to develop what that criteria is and what the process is and then be a representative back to the board you're a liaison back to the board that is different from an independent subcommittee even of two which would require the public process be adhered to so all of the if you even

1:44:29 with two if you had a subcommittee you'd have to have public meetings with public notice and that type of thing so to answer your question again commissioner brown i think we'd have to work through some of those details um but it would eventually you would you would have to decide whether you would represent the e-web board or whether you would represent a client okay well i'd just like to make that declaration right now i'd i would rather participate on the e-web board part yeah i'm kind of winding down my career and i i helped with civic stadium and i just helped springfield schools sell their headquarters and so i've got a lot of experience with doing that and uh you know i don't have to have my fingers and everything in the world and so i'm just gonna say that if if i'm involved it's

1:45:14 gonna be to help eweb maximize the value and still meet the meet the values of the consensus of the board and whatever so i'm not going to be participating on the private sector side or even on the public sector side because i do represent several governmental agencies that probably would have an interest but as long as there's no president or future contemplated financial interest in this i think i'm going to be okay i just wanted to make sure that it's out there in the open and on the record thank you um commissioners just just so you're clear what we're asking for direction on tonight is option a or option b option b being the development of a kind of an rfp process option a is a

1:46:00 little bit more nebulous and it's it's it would be with certain kinds of entities and it would be a lot more informal and we would like to get your direction on whether you you would rather go with option a or option b i'm curious about um kind of when you say strictly adhere to define criteria and scoring does that mean that we get to the end of that process whatever pops out on top and that's it and that's what we go with um it's well the the scoring include includes a number of criteria and it it includes the

1:46:46 you know price would be one of those you know how much is price worth versus how much is various purposes that might be involved there it is it is pretty common that if you s if you stray from whoever is ranked the highest which includes price that i mean you could start the process entirely over again but you'd have to have a pretty good reason why you would go with choice number two or choice number three it's it's not absolute if they're very close but um if if you do have a pr of a strict process you would you would have to stick to that i guess my challenge in picking from point a or from option a and option b uh when you say nebulous that

1:47:31 that already turns me off of it but i do want to make sure that the community organizations you know we've kind of we've had this underlying um want to work with public and community organizations and really use this space to for the community's benefit it's such a unique space um that i don't want that to be thrown aside but i do want to make sure that we give clear criteria and um and timelines and expectations sending these community organizations that might be interested in it around how you know how how they can be involved and how they might do that um because i think there's definitely from some of the community organizations i've talked to

1:48:16 there's they don't know what the the process looks like and i'm you know i think we're developing it together so it's going to be some time um yeah the hope would be that if if you if the board was leaning toward option the second option for example developing an rfp process we will come back to the board with a very specific time frame and process layout we so that all of the various entities and and the board work you know we would work together on what that process looks like um what you know how we would develop their criteria and you know potential criteria and things like that and and then there would be really well well laid out well advertised kinds of time

1:49:03 frames the the first option when i don't mean to say nebulous it's it's a little more unstructured in the sense that you're looking for propos you know you look at uh we solicit ideas the board can have a little more of a free flow as to what they want to do which which also opens up for criticism as well which is kind of the downside why did you pick that one over that one um and it's it i would describe it as a little bit more of a direct negotiations kind of kind of process um whereas the second one's an rfp and and laid out a little bit um more formally

1:49:48 one last question then on the rfp side because having strict you know timelines while helpful i also wonder how soon those are because if we go through that um that pathway i don't want it to exclude the community organizations that maybe don't do this all the time i mean if you're looking at the real estate market at large you know folks um folks in that in that space they may be able to really you know put together these proposals very quickly and jump on it where some of the community organizations uh and i know that we said during the last meeting that we didn't want it to wait forever and drag on and on but i also recognize you know we're going to be in that building for 18 months roughly so i i don't i just want to make sure

1:50:33 that it's not kind of a all right well if we do our rfp then it's going to exclude them because they're not as sophisticated and moved out quickly yeah i i think the intent commissioner carlson when we come back with whatever direction you give us tonight in january that that's part of the discussion is that you know what are and it's not necessarily something that is done uh in isolation that we can test them i'll say test the market so to say to see if some of those agencies can respond within the time frames that we're asking for and that's that's a piece that the board would would certainly want to weigh in on because it would it would either open up

1:51:18 or narrow down the potential market for the for the building okay then i guess the last thing then i'll just say is that you know i i support the i support more of the request proposal for proposal side as long as we can put certain parameters on there that can work for all the entities thank you all right i feel like john brown might jump out of his seat in a minute if we don't give him a turn and then after him we'll be john barofsky oh thank you and i apologize for i just didn't know when it was my time but anyhow i haven't been through this i just would want to give the board um some comment from history uh it just depends on how much

1:52:05 appetite you have for this because majority of your meetings are going to have to be an executive session and and you know it took us nine years to sell civic stadium and you know we still haven't completed the transaction on the ymca and we're working on seven years um these things take a long long time and it's subjective when you turn around and say is a science center more important than a history museum in an art museum or uh is 15 million dollars more important to the rate payers because when we declared everything surplus we kind of made a pledge that we were going to use this money to retire debt when we built the rock so there's a lot of things involved and how much appetite does this board have for how much time you want to put into it because when you

1:52:50 get somebody to get in there and they have a great proposal and everything but ah they don't have money they have to go to the legislature and get money they have to do fundraising you have to grant funding um it's very time consuming and how much lobbying do you want to be subject yourself to because you will get lobbied by special interest groups and but i too want to make sure that we maximize the value of this asset this is a nobody will ever be able to replicate this on the river again it's an incredible asset i think it ought to be a community asset but i think we ought to be very careful with how we do this time wise and uh and value-wise i mean look look at the stop and go we did on selling the 17 acres uh you know first it was university and then they backed out after a year and then we had three proposals and then

1:53:35 we we went uh with williams and dame on the second one but we had three very viable options and we have differences of opinion and value that vary by 15 million bucks so it it took i don't know how many million dollars to get through that process and how many years and so i just want to make sure you're all aware of what we're entering into um and so i think we have to have in my opinion have some pretty good sideboards on this and uh i'm gonna i'm gonna defer to others to let you guys figure out what what you want to do and once you decide that then i'll help you in any way i can because i want to make sure that we we do the best for the ratepayers in the community

1:54:23 all right john barofsky thank you uh and thank you for that commissioner brown um yeah i'm i'm leading towards option two uh the formal request for a proposal and i'm leaning that way for a number of reasons one uh just to the the transparency the defined criteria whatever we decide that criteria is um gives everybody a a fair shot at coming up with the best proposal um i think that if we if we design the rfp correctly we can we can build into it the values that we want to see this property morph into you know and we can put

1:55:08 community values in there we can we can morph it so that it's not just weighted on the dollar amount but i also agree that the dollar amount should be uh something that we we consider and the the ability to get funding and those types of things in a timely manner these are all things that can be put forward and into an rfp i've had the opportunity to uh help develop a few rfps for uh the city for some affordable housing projects and also been involved in scoring rfps uh and the same type of a thing for some community development dollars that went out there so

1:55:53 um if we do go that way i would be up to be one of the commissioners if if that's chosen to be on the evaluation team so that's where i'm leading is formal rfp make it clean make it make it very easy for the for the people to access it and then come up with our values as a commission as to what we would like to see done with that property thank you president schlossberg uh i have a couple of questions commissioner brown just mentioned that we at some point had obligated ourselves to selling this building to retire debt

1:56:39 i'm curious how firm that obligation was to ourselves i assume it's not legal or maybe it is um i guess that's the first question it is not a legal obligation uh commissioner mcrae when we built the roosevelt operations center the board at that time indicated that part of the financing for that would come from the sale of the headquarters building at this point in time we would do what we do with any influx of cash and that would be to use it for its highest and best uses um it could be to retire other debt it could be for rate stabilization it could be whatever the board decides but that

1:57:25 is not a legal obligation right okay have we made other obligations to ourselves or have passed boards made other suggestions about how this building could or should be used um otherwise the the only thing that i have heard um during you know listen in my prior to well i'll say since 2010 since i've been attending board meetings in various capacities is that the the board understands the value of this building and the potential it has for some kind of public purpose whether that public purpose is to get it back on the tax rolls as i think one commissioner mentioned last meeting or whether it's for some educational

1:58:11 purpose or some other kind of social purpose is yet to be determined but i think all of the boards have mentioned that this is a really unique site and that it would be it would be preferred to sell it into a capacity that benefited the community at large that's that's what i've heard great thanks and my last question um i believe we made this uh an offer to the city of eugene if they wanted to purchase it uh can you confirm that and then have we offered it to any other entities or is that the only entity so the we we actually did not offer it to the city of eugene the city of eugene under the city code has a first right to negotiate is is

1:58:58 what i would how i would classify they have not expressed um interest um there was some there was various back and forth with the city through a number of years actually um that um was um the city with the sale uh the entering of the purchase and sale agreement for the mgp site um has relinquished their first right of negotiation so we do have the right now to offer it to anybody but we haven't offered it to anybody because this this needs to be a formal process this this is what we're talking about now this is the next step okay great thanks for the clarification there um all right so my feedback then i

1:59:44 um appreciate commissioner brock he's offered to be on a valuation team i don't feel like i would have the time to commit to that so if we do put together a team i don't think i'm the right person and i do feel like um it sounds like the rest board's on the same page that going the route of an rfp would be i do have one thing that i need to check on legally because the board is actually the decision maker i don't know if the board can legally actually be board members can be on the evaluation team and the approving team at the same time so that's something i need to look into legally okay so so but you could have an elite a

2:00:30 liaison for example so commissioner barofsky could be a liaison to the process but since he would have a final approving vote um i don't believe he could be one of the evaluators per se but right sorry i mixed up the term the terms there yeah that's a clarification we'll have to make between now and january when we it when we define the process further okay great thank you my question is actually to john brown if that's okay if i ask you john i'm really curious because you've had a lot more experience with this than um i think any of us have and um

2:01:15 well my first question is like how do we um i would love for you to just share not right now maybe but just share more of your thoughts through the processes that you've been through and what some of the um pitfalls have been or how to avoid some of the um things that have like taken so much longer i guess what i'm wondering is how can we capitalize on your experience um and um because staff will be we'll be advising staff but staff will be driving this well but just be real brief mindy thank you um i i think the civic process ended up i mean it's wonderful look what we got we you know nothing against fred meyer but we got

2:02:01 a really cool community asset but it was controversial and and everything else and it took a long time but there's a very clear and i've provided it to staff criteria where where and eric defreest was counsel for 4j at the time so i think frankie has experience with who can participate who can't but long story short you know the criteria the price was won preservation of the stadium was one community benefit was one tax revenue to the district was a criteria and they each had certain points and but at the end of the day um you know i can't discuss why they made the decision and everything else because it was done in the executive session but um they they made what i believe was the right decision and and ended up with it but some you know i'll go into detail of

2:02:46 some of the pitfalls my experiences because i don't want this i do not want to have this be a three to five or even a one year process i want to get it in and get it done because it costs us 300 grand a year to motherball this thing and uh and um you know if people want it we need to get it back functioning like it should be it's a public building and so i can i i'd be volunteering to join the other john b on on a liaison if i if there's not a conflict and if i can do that i've got some experience so i'd be more invited to do that and i'll send an email out to the to uh to frank and ann and then they can distribute it their edit to say what my experiences have been and what's worked and what hasn't worked great that would be really helpful to me and um and i know in some of the pre-meeting

2:03:32 questions i think i had asked about this and you sent there's a link on the 4j website where we can look and see what their process was um i'm wondering are we going to get anything else from eweb or should we just look at the website to get that information president slashberg the link on the website for 4j does contain everything you would possibly want to know about their process but if you have any questions i'd be happy to look into that further for you and and also the the second option the the the um the request for proposal is similar to their process so

2:04:17 um i would hope that we could streamline it that we could create the appropriate criteria to be able to do that one of those obviously is timing and and the financial capacity but that can be defined in the process but it's very close to the rfp process that we're describing there's just a lot more stuff out there that you can peruse through if you want to they've been very generous with what they've shared on their website um right down to the scoring that they use so it'll be a wonderful model for us great thank you sonya i see you keep raising your hand

2:05:05 sorry i just i wanted to just check in on the kind of the liaison evaluation team would they be creating the criteria only and then would the board then have a chance to weigh in like they take the first stab at it or when what what gets developed with that get um gets adopted and and everything is kind of set from there and then we just get the projects that meet that criteria can you talk a little bit about that process um commissioner carlson the the board will be involved in in uh lots of these steps so the liaisons could be part of the development of the criteria but then we wouldn't formalize the criteria or the process before coming

2:05:51 back to the board for for feedback and either endorsement or approval depending on kind of what our formal process would look like um you yeah the liaisons um you'll be involved in a lot of the steps i guess i'll just say it that way um the liaisons will be part of the working meetings with eweb staff and part of those discussions but there will be regular and multiple check-ins with the board you won't just be brought up a bunch of projects and say here's our number one here's our number two here's our number three it it'll be a lot more transparent than that okay um i before the other two had jumped in i was willing to serve on it as well but i

2:06:36 know we only need two so i can defer and then just be actively uh participating in the uh you know the rest of the proposal process i think we should be tbd on who those liaisons are um and we don't have to decide right now i don't think right frank that's that's correct yeah i would suspect that by when we come back in january um president schlossberg that's when we would want to know who the liaisons are going to be and we will write the liaisons into the processes we'll just call them liaison 1 and liaison 2. and

2:07:25 great so maybe we'll we'll hold off on choosing those if that's okay with everybody um and so it sounds like there's uh what i'm hearing is um more leaning towards the rfp process um is that what so everybody else's understanding okay thank you commissioners that's that's what we needed great thank you very much it's kind of amazing to me the scope and breadth of our work on this board um which is a great segue into our next agenda item the electrification impact

2:08:11 analysis reports final results from phase two i'll kick us off thanks uh good evening commissioners uh i'm megan capper energy resources manager in august ben ulrich and i were in front of you to discuss the preliminary results of the second phase of our electrification impact study we're back in front of you to share the final results of this effort so next slide please i'm going to start off with some reminders we did two studies and looking at possible outcomes if there was future electrification of small passenger vehicles and building a space and water heating our original objective hasn't changed is to understand the likelihood degree and pace of electrification in

2:08:56 support of our planning efforts we're not endorsing any action this is just to help us understand the drivers around how our customers use electricity and its carbon impacts to prepare us to make future decisions and understand the opportunities around products and services and rate design as soon as we get the okay from you we will put the final touches on the draft report and start preparing for our 2022 integrated resource plan next slide please in both studies we looked specifically at electric conversion of existing residential and commercial buildings in the first study we assumed adoption or conversion rates were at a low medium and high level under those assumptions we learned over time there's an impact at high adoptions

2:09:41 on our peak load and we affirmed carbon savings with electrification what we didn't know is how these outcomes could change if we were to look at the benefit cost impact on adoption rates so this year we looked at cost how the economics drives adoption rates we added some sensitivities around the cost of electricity gasoline natural gas and equipment and we also looked at this from three perspectives that of the participant or consumer eweb at large and then a society of a society perspective in july we talk to you about just the base case results for residential buildings and electric vehicles the base case is defined at what's most likely to occur under status quo so it's current legislation today

2:10:26 and since we have studied the small office subset of commercial buildings and looked at all the results under an aggressive carbon scenario this scenario assumes more rapid decarbonization across all sectors as a result of regulations or mandates so i'm going to hand it off to ben now to share with you our final results great all right thanks megan so megan briefly touched on the methodology and we went into a lot more detail in the 60 plus page report that was provided as part of your background materials and so tonight i'm just going to cover the high level conclusions from our study and i'm going to cover them on this first slide before we move into some more detail on the following slides so one of the reasons we look at electrification is for the carbon

2:11:12 potential carbon reduction benefits and a key conclusion of our study is that all the electrification measures we studied reduce carbon emissions over their equipment lifetime whether it's electric vehicles water heating or space heating based on the economics we concluded that ev and water heating electrification were the most likely forms of electrification we would see in the next 20 years and in fact our economic analysis supported higher levels than even in phase one under the high scenario for space heating we found that consumer-driven space heating electrification was more conditional and less likely based on the economics under the base case assumptions without incentives or mandates we would anticipate very low levels of

2:11:57 electrification however in the aggressive carbon reduction scenario we did see higher levels of building electric or space heating electrification we also discovered that different space heating heat pump technologies have different trade-offs for the utility and for customers we also found based on the the impacts to e-web that managing ev charging behavior was eweb's largest peak mitigation opportunity and we found that the utility consistently benefits from electrification and that our ratepayers at large can see financial benefits if customers choose to electrify lastly we found that eweb's incentives and our rate design can influence customers electrification choices by

2:12:42 changing the financial benefits and costs of electrifying next slide please let's talk about carbon reduction today approximately ninety percent of eweb's power comes from carbon-free resources as a result electrification provides a way for eweb customers to switch from fossil-based fuels like gasoline and natural gas to electrify to reduce their carbon footprint for e-web this transition could have long-lasting impacts on the demand for electricity and the board wanted to explore the potential peak impacts are excuse me explore the potential impacts to the utility both understanding the carbon reduction potential as well as the average and peak energy impacts to the utility phase two of our study concluded that

2:13:28 all of the electrification measures do in fact reduce carbon in addition the study helps us understand the likelihood of these potential carbon reductions based on our economic analysis in the chart you can see the annual carbon emissions from eugene's climate action plan the historical trends are in black and the city of eugene's carbon reduction goals are illustrated with that solid green line which declines to the right the carbon reduction benefits of electrification in our expected or base case scenario are shown here in orange this represents a 45 reduction in our 2017 emissions and is primarily caused by significant ev adoption under the base case this shows that electrification by itself does provide

2:14:15 meaningful carbon reduction but it should also be noted that electrification is just part of a bigger decarbonization strategy and our study scope doesn't look at all possible electrification for example we didn't look at industrial process electrification this chart also does not include other pillars of economy-wide decarbonization work like increasing building energy efficiency or reductions in non-combustion greenhouse gases like methane leaks this chart is just intended to illustrate the role that electrification can play the green dotted line which is shown below the orange is our aggressive carbon reduction scenario this is where multiple sectors decarbonize including

2:15:00 the natural gas sector this scenario assumes that over 50 percent of the natural gas supply would come from renewable natural gas or rng by 2040. it should be noted that this scenario estimates higher levels of building electrification because decarbonization of the natural gas sector is anticipated to increase natural gas prices making electrification more financially beneficial this scenario would be a 60 reduction in total emissions next slide please so as i mentioned the study gives us a sense of how how likely electrification would be by analyzing the financial uh benefits and costs of electrifying

2:15:45 and this table shows the estimated amounts of electrification and the average and peak energy impacts to the utility and was included in the full report but this slides a little busy so can you hit next please the slide's a busy table so i'm going to try and break it up into sections to to illustrate some of our conclusions both scenarios we studied showed high levels of consumer driven transportation electrification and water heating electrification water heating is much less impactful to eweb due to the low energy use whereas the impacts of ev adoption are much larger due to very high levels of electrification of light duty vehicles by 2040 between 85 and 95 of the

2:16:31 vehicles on the road could be electric based on our economic analysis assuming unmanaged charging behavior this could add up to 30 percent to our one and ten peak loads although this ev transition is faster and more than we anticipated in phase one of the study this transition is anticipated to be slow in the next 10 years as the electric vehicle market matures next please for buildings um space heating electrification was much more conditional based on the assumptions that we used our economic analysis concluded that consumer-driven space heating electrification was less likely due to lack of financial benefits for the participating consumers under our base case scenarios however in

2:17:17 the aggressive carbon reduction scenario the benefits improved and adoption increased to 50 percent by 2040. we showed a range of potential peak impacts between 1 and 12 to illustrate that the type of heat pump our customers choose will play an important role for eweb the different heat pumps we studied have trade-offs between upfront costs carbon reduction and peak energy use standard performance heat pumps have the least cost and lowest efficiency of the models that we studied and that's especially true during peak periods when the standard performance heat pump switches over to backup electric resistance heating cold climate heat pumps have much higher

2:18:03 upfront costs to the customers but are very efficient and contribute less to eweb's peaks dual fuel heat pumps have a slightly higher cost to the customer compared to standard performance heat pumps but they have very little impact on our winter peak electricity use because the units will switch over to natural gas when the temperatures dip below freezing if mandates or other influences improve the likelihood of space heating electrification influencing our customers heat pump technology choices may be a peak mitigation opportunity for the utility next please because ev adoption is the most is the most likely based on economics and

2:18:48 impactful for the utility the study concluded that managing ev charging behavior will be eweb's largest peak mitigation opportunity in the years to come the peak impacts from managed charging behavior are nearly 40 percent less than unmanaged charging behavior the key to managing this charging behavior is to shift ev charging away from eweb's existing 8 am and 6 pm system peaks this can be done by increasing public and workplace charging access during the middle of the day increasing public or shared charging infrastructure can also be helpful for people without access to home charging like customers who live in apartments eweb can also mitigate peak impacts by

2:19:36 encouraging customers who do charge at home to shift their ev charging to after 10 pm at night they can do this by either using their electric vehicles built-in settings or a level 2 charger program to charge at night luckily eweb is already engaged in some of this peak mitigation work recently customer solutions staff presented plans for the upcoming year which include funding the expansion of workplace and public charging infrastructure including dc fast charging infrastructure these plans also include continuation of eweb's level 2 charger rebate which can help our customers shift their vehicle charging to after 10 pm at night next slide please

2:20:21 the next slide shows the electrification score card for the base case that was included in the full report we also provided this scorecard for the aggressive carbon reduction scenario but again the scorecard is fairly detailed so i want to highlight some key conclusions can you advance the slide please the participant perspective illustrates that some electrification opportunities studied have a financial benefit to customers choosing to electrify whereas others do not have a financial benefit for example under the base case scenario a cold climate heat pump has a net cost to the participant shown as a red circle here this represents a barrier to adoption of cold climate heat pumps and indicates that this particular measure is not very likely based on economics

2:21:06 under the aggressive carbon reduction scenario all space heating electrification for single family dwellings was considered beneficial and therefore more likely that's why we saw higher levels of adoption under the aggressive carbon reduction scenario this again illustrates that space heating which much more sensitive to our assumptions and conditional next please a consistent finding though under both scenarios was that the utility or eweb ratepayers at large consistently benefit from electrification meaning that the eweb ratepayer benefits even if they're not the person who chooses to electrify this indicates that there could be opportunities to share utility benefits

2:21:51 with the electrifying participant and perhaps even find a break-even point where all perspectives can be net beneficiaries however it should also be noted that in our sensitivity analysis we found that increased electricity supply costs do pose a risk duplos a risk to affordability and these utility benefits the study assumed that electrification would be supplied with marginal electricity supply costs like market rate energy and system-wide averages for transmission and distribution costs but if enough electrification was added to our system any headroom or available capacity that we have today could be used up creating a need for eweb to purchase additional resources or invest in peak mitigation programs or build additional

2:22:38 transmission and distribution infrastructure so maintaining affordability and mitigating the risks of increased electricity supply costs may require eweb to make adjustments to the electrification strategy over time if done effectively eweb can find opportunities to benefit customers from all three perspectives while mitigating these risks next slide please so our next conclusion is that eweb incentives can influence our customers choices this chart uh this this graphic and on the screen here is the benefit cost analysis for a single family dwelling looking to electrify with a heat pump water heater ewebs incentive programs can influence

2:23:24 customer choices by making electrification more appealing without incentives electrifying with a heat pump water heater would be a net cost of 317 dollars to the participant over the equipment lifetime you can see that number on the left side of the screen here you advance the slide please however eweb's existing energy and efficiency incentive tips the scale by transferring 800 of utility benefit to the participant through a rebate in this water heating example there could have been a break-even point at 317 dollars but i think this just illustrates the challenge of finding the right breakeven points where both pers where both perspectives can be beneficiaries and

2:24:09 still incentivize the participant to change their behavior in this example when the utility shares all of their net benefits with the participant the utility perspective can be harmed especially if electricity supply costs are higher than as anticipated but for single family dwellings both standard performance heat pumps and dual fuel heat pumps have a break even point where both the utility and participants could share benefits and both benefit from electrification this implies that there may be an incentive opportunity for those two technologies next slide please we also found that rate design influences our customer choices

2:24:54 this is a benefit cost analysis summary for a small office looking to electrify space heating with a standard performance heat pump this small office is assumed to be a commercial customer of e-web rate structures influence what our customers pay and can send our customers price signals eweb's commercial demand charge sends commercial customers a price signal based on their peak energy use during the month next slide or next please in this benefit cost analysis chart this bright blue area shows the demand charges that would be paid by a small office choosing to electrify with a standard performance heat pump for commercial customers choosing

2:25:40 electrification this demand charge is a peak pricing signal and they act as a deterrent to electrification this program or this demand charge also has program design implications as well because it can serve as a demand response program for our customers signaling to the commercial customer that the utility benefits when customers keep their peaks as low as possible next please as the board considers different rate design ideas in the coming years this may be something that we want to explore further next slide please but rate design won't be the only strategic element that the board will be considering in the years to come the strategic plan also highlights that

2:26:27 the integrated the integrated resource plan or irp which will inform eweb's electricity supply planning as we prepare for the irp next year this electrification study has helped us better understand the likelihood of electrification in e-web service territory as well as the potential impacts to the system for context this chart shows eweb's average system load since 2005 and the most recent load forecast both with and without conservation illustrated in the blue and red dotted lines eweb's average load has declined since 2005 and you can see that in the black line and electrification which is shown in green has the potential to reverse that trend

2:27:13 as we've said previously this electrification transition is expected to be slow at first and eweb's existing conservation programs can help offset some of the impacts of electrification in the next 10 years by 2030 if ev adoption continues to increase eweb could see electricity demand begin to outpace our current conservation assumptions going forward the irp can help inform the best way to meet this demand staff will continue to review our assumptions and use these electrification for forecasting tools as we begin to plan for the road ahead and with that i'm going to pass it back to megan thank you great thank you ben before we move to board i wanted to take a moment to highlight

2:27:59 that this electrification work was a team effort from uh for the power planning department they worked uh through covet technical challenges child care issues and two newborns and i've really never seen a stronger more dedicated team including the internal advisory team and communications team who provided their supportive feedback always um on short notice finally i wanted to specifically acknowledge uh will price's expertise he is was architect guiding uh the analytical work over the last two years and he's going to be retiring at the end of the month and uh his team just um wants uh to acknowledge him he will be sorely missed so with that let's move on to discussion and some questions that you may have

2:28:47 great well thank you for that um who would like to start us off with questions i'm sure this doesn't mean that there no one has any questions go ahead sonia i'll jump in okay can we go back to the slide i think it was the second or maybe the third slide in it has the um comparison of the different regulatory reductions back more there we go that one okay there we go thank you so i i see that the the city of eugene climate recovery ordinance has significantly you

2:29:32 know reduced the amount and i know that it's hard to compare these apples to apples and all that i really appreciate you putting this on this graph because reading through the backgrounder with such and such level 20 the you know below 1990 levels it you can't compare it at all so putting data and comparisons into a chart that has one set number was really helpful so thank you for putting that on there i am curious on that climate recovery ordinance i think they have some assumptions as to how much um is eweb's kind of responsibility to reduce is that the case and if so where does that fall on this chart because the the climate recovery

2:30:18 ordinance is for the entire city of eugene i think there's a portion of that that is you know expected out of you and maybe i'm wrong so if i'm wrong just say so well i i can't recite it off the top of my head but um their their inventory they do have a detailed greenhouse gas inventory that they that they did and in that they itemize things but they do the accounting kind of a different way so they do show like residential electricity use for example they assume that it emits a certain level of carbon emissions um so i didn't break out this chart into those different buckets like residential versus commercial um but i i would say this represents a significant like the

2:31:04 ev adoption represents like eliminating a lot of the transportation sector emissions because the light duty vehicles are such a significant portion of the carbon emissions so i we might be able to follow up and try and break it out yeah i don't expect you to you know answer it tonight just make sure that you know that is the kind of pathway we're on and it while it's helpful to see where eugene wants to be you know we have so much of our car you know so much of our electricity that is carbon free figuring out how we can impact and and what we're expected to do and where we want to go it's just helpful to see where those you know where those different systems all line up because ultimately

2:31:50 what i would like to see as a board member is that we you know we have some goals set um and i know we are getting kpis and there's some discussion there but to make sure that all of these different entities are working towards the same and they're not assuming that we're going to be you know taking x um you know number of tons of carbon more than we are just to make sure that we're all working together towards the same goal and it's hard to figure out what that is until we can actually put it in like terms so if you can bring some of that information back and kind of what the expectation is and where our current kpis and uh current goals are set that comparison will help me figure out what that that delta is maybe we're already going to

2:32:36 hit it maybe not maybe you know i i just don't know as a board member so um thank you for doing that commissioner carlson i would just weigh in that one of the things that um president schlossberg mentioned in the items from commissioners uh early on was that we did meet with the city one of the areas that sarah maderie and i are going to work on is where where are some of these areas of overlap eweb is is mentioned dozens of times in the the climate action plan um sometimes through through actual work and sometimes not i think what we were trying to really show here was that electrification is is very

2:33:21 impactful to whatever program you're on but it's obviously only just one part of it there for example this does not include energy efficiency for example it doesn't include industrial it doesn't include mass transit it doesn't include there's just so many sectors but but this is impactful but sarah and i will be doing some reconciliation around uh where our roles overlap between the city of eugene and eweb okay perfect um and then the other the other thing that i want to just mention briefly and i can't see the time anymore so i don't know where i'm at there sorry it's not one of the screens that popped up um i am supportive of incentives for some

2:34:07 of the other ductless heat pump the cold ductless heat pump where there's a disconnect there i do wonder when we think about that if it would be prudent to put maybe a cap on how much we do in any given year if we think that it's really going to have a significant impact on rate just given that we have so many different pieces that we're piling on to the rates right now um or if there are other incentives that we have that maybe don't target as as it has you know have as much of an impact as others that maybe those are toned down to focus on the ones that have the biggest impact anyway um but i am supportive of looking at that and it sounds like that's not going to come in this

2:34:52 budget cycle so much that it's in future budget cycles or is that the case yeah um commissioner carlson there's i i think um probably two or three outcomes of of the study one of them is definitely for our use with the integrated resource plan we we needed to understand one of the questions around consumption patterns which was electrification and how that both the not just how much but the pace of it was going to contribute to our resource planning the other one has to do with rate design and how we do rate design in a way that facilitates things like demand response peak mitigation and electrification um going forward for for that benefits both the utility

2:35:38 and the the participant and then the third one is the design of products and services of which you know incentives are part of that um i would suspect that we will get into more of that in uh both rate design and program design in 2022 um some of that because what what ben showed in in his charts were marginal energy benefits for the utility it it didn't include some of the other costs that we would want to make sure that we're covering so that we don't end up with some unintended consequences with basically a transfer of value we want to make sure that that what he called the break-even point between the participant and e-web is indeed based on some some good

2:36:24 numbers and some good assumptions once we find that i don't know that there's there's much of a limit to the amount of incentive pool that we would create because there is there there it is a break even so um it would it would eventually pay for itself through recovery of of rates and other things so um but that'll that'll have to be part of that discussion and i think that'll be a really good one a beneficial one just real quick you know on that break-even point i i don't want to don't get me wrong i want to get as much of these out there as possible because i i very much support carbon reduction i was just thinking about you know sometimes when you limit a resource it becomes even more valuable and people you know seek it too so it's that kind

2:37:10 of mental side of things of oh well there's only so many of these let's go get them and encourage it that way and then also give the utility some um you know assurance about how far we go i mean obviously in in every year obviously the breaking point is over a much longer term but yeah and there is even though there's payback that payback comes over the life of the appliance and so there's some cash flow implications um but one thing that it also pointed out and i think even uh christopher jones's comments during public testimony was one of the things that becomes important is the differential price between natural gas and electricity um the the

2:37:55 and if there's if there's a benefit if if there's a economic return to our competitiveness i'll call it that then it will tend to accelerate electrification if there is not then it'll tend to be a deterrent um and so we did sensitivity analysis around that and no surprise if if you see higher electricity prices then you're going to slow down electrification and so i think it is important to maintain our competitiveness overall to facilitate uh electrification um throughout you know it from a participant perspective but we really need the externality to be taxed at the rate but that's the economist in me talking okay we'll turn

2:38:40 it down thank you and and thank you for all the work on this this study i think it's gonna help drive a lot of conversations in the future uh and i'm ready for you to take the draft off the front cover and put it as as implemented that's what i'm hoping we can see by the first of next year um a couple of questions um for ben in the aggressive scenario did you there's there's there's talk of at at the city

2:39:26 um there's advocates out there that are saying uh no new natural gas on new construction would was that considered in in the aggressive model that future development would not have natural gas i'll let frank chime in on this one as well but you know we didn't our study was really focused on the retrofit of the existing building stock um because that was much larger and more impactful as opposed to a moratorium okay and and that's fine we don't need to to go go down there i just didn't know if that was was put in as one of the the variables of of aggressive um the other thing that um

2:40:12 that stuck out to me you know you were talking about the peak demand and the fact that commercial uh space heating you know commercial space heating doesn't have the opportunity to turn on and off like you would uh plugging in an electric vehicle you can't heat your commercial building at two in the morning till six in the morning and and turn it off during the day so that again that's something that the benefit is tough to see there and then the third question that i have goes to the irp what i took away from this electrification study was that eweb has the capacity even in peak times

2:40:59 to provide power to the to the community even under aggressive electrification scenarios the question that i have is how how and where in this analysis would you are we going to lose the surplus power that we're selling on the open market now because it's going to be eaten up by demand right right now we've got excess power that we sell back and and make pretty good uh return on investment to our ratepayers if that's all eaten up how is that going to be factored into this thank you

2:41:44 so commissioner barofsky i'll i'll answer that i know that um there's a number of pieces to it so the the whole point of the integrated resource plan is to look at what resources we need um for not just average consumption but for managing these peaks and growth and how much of a role does demand response how much of a role does does energy efficiency play in in the balancing of both supply and demand i i will say today and i want to be really careful that people understand this is that we are on an average annual basis we have excess surplus electricity during peak times we do go out to buy on the market now so uh during peaks we are not in a surplus position um so

2:42:30 it's we we will based on some of our resource decisions change that mix over the next five to eight years um and so the the the real i think the irp is probably one of the most important things strategically that we need to get done in the next um you know by the end of 2022 early 2023 because those types of decisions as well as how we design our demand response products our time of use products will impact our resource decisions and we have quite a few of them but we will you know on average be surplus and i think it's fully expected that as you see growth you know through electrification

2:43:15 that the surplus even on average will be consumed but then you're going to have to acquire the various resources to meet your average and your peak demand and your high weather events and your you know extremes and so and you can rely on partners in the market for some of that we we will um but i think we also need to understand that um there's a lot of work to balance those two things and this is one of the inputs to that that to me was an important input to that to that plan i'll go ahead and jump in i usually wait

2:44:00 till the end but if that's okay um okay so i have a couple questions um so i do not do modeling i'm not an economist so i apologize if these questions are like obvious or basic but i'm curious about the assumptions like some of the assumptions so like for instance one of the assumptions was um like a certain rate of natural gas decarbonization which i think here locally were not yet seeing right is that correct that's something that's in the future but we but we incorporated that but at the same time we didn't incorporate any of the like potential

2:44:45 local policies that might be enacted so like i think in the in the cap 2.0 there's like a a big goal of reducing car use so if we did reduce car use then maybe we wouldn't have as many evs because overall car use would be lowered um i know that we didn't look at any new construction but i'm curious about that little piece since that it was a proposal or is a proposal from the city of eugene so why didn't why don't we include those things but we include other things so some of that commissioner carlson and i'll let um megan and ben weigh in so

2:45:31 there's a couple different questions that that you asked there um we didn't do new construction um partly because it's it's incredibly difficult to forecast relative to an existing base but we did i think it was in one of the q and a's we did estimate the impact of space heating if there was a based on the number of projects that we've seen on average over the last 10 years i think it was 800 and something new new meters i guess i'll call it that from new construction of which it looked like if it were to electrify only it would be about a one percent impact on peak every year so for the next however number of years that was implemented and that was provided to

2:46:17 the board in a different in a different setting some of the other assumptions we did not make assumptions based on goals we did put in assumptions where there was actual legislation that was that was already enacted so for example the decarbonation of the electric grid for example those are based on laws that are already in place um but we didn't put in uh for example that you know a decreasing number of cars or things based on on just goals that were that were stated so some of that we incorporated and then we did quite a bit of just sensitivity analysis to see what ranges of variability we had um in prices and numbers and and things like that so there was there was some

2:47:04 logic behind it but we didn't want to make assumptions uh that were strictly sort of based on somebody's goals we wanted to look at a decarbonization now the the natural gas one has kind of pros and cons so some there you know i i think it's been mentioned that the assumptions around decarbonization of or or the i'll say that the higher um mix of renewable natural gas and renewable could include synthetic natural gas as well but that improves the carbon perspective but it also increases the price significantly so in in one way it's sort of counterproductive by over assuming a higher degree of renewable natural gas it actually facilitates more electrification so you know some of

2:47:49 those have a little bit of an inverse effect um and so i think it some of that washes out and it we were really trying to get some degree of scope around what the impacts of these were but that's a little bit of the logic behind some of the assumptions we made ben or megan you want to jump in the only thing i wanted to follow up with um is uh it's um it is it's a really good it's a really good question we um we we've done a lot of research we uh really tried to hone in on what are the key drivers we did the sensitivity around those key drivers uh and and the key is is that we have the analytical framework that as we move into the irp we can we

2:48:35 can you know once again look at um what are what are are there any new drivers are there any you know this is a one-time this is this is what we publish now but these things are changing and um i just think that the approach is going to be a lot like we are going to approach the irp in in looking at uh we have to make you know assumptions we look out into the industry and look at what other people have studied and uh like i said look at those drivers around the assumptions that those other studies look at and then we um do some sensitivity or analysis and then uh talk to you about it and and this is this framework is just something that's this these models we have are really going to be pre in the future provide us some flexibility to answer

2:49:21 more specific questions that you have in a few years so i just want to make sure we don't get in some kind of like vicious cycle where like we we model and we're going to plan for the thing that we've modeled but we haven't included maybe some of the policies that the city is hoping to adopt and then when the city says that they want to adopt them then we come back and say like well we don't actually have you know enough carbon free we haven't planned for enough carbon free electricity it's going to kind of bump us up and to have to go to the market so i guess i'm just wondering i i know that um i guess this is one of my things is that we're very we we stay in our lane and the city tries to have a wider lane like how do we make sure

2:50:06 that we're informing the city on the policies that they're trying to make and also that we're being responsible to what we're trying to do but also um do our part for the city does that make sense what i'm asking yeah i i think so president schlossberg you know one of the things that when i look at the outcome and the primary you know the primary outcome that we're looking at here is what's the impact on our consumption patterns for electrification and we i think did enough work around sensitivities to know even even if you look at the aggressive carbon reduction scenario on

2:50:51 space heating with a 50 conversion byte by 2040 it it was it has an energy impact that's pretty low and has up to a 12 peak impact that's that's probably manageable over you know i would hope we could manage that over a 20-year time frame right um the other ones i think we're seeing that um and i think ben really captured it in his very initial conclusions that most of these and i don't think this is a surprise to people most of these will transition over time um but because we're looking at 20-year planning horizons we want to make sure that we at least understand the sideboards and the boundaries to what those are it it doesn't

2:51:37 it's not significantly impacted even when i when i think about some of the the mandates that might come come about it seems like it from an energy and a planning perspective it's manageable now there's there's things that we want to make sure that opportunities that we want to make sure that we're aware of but i didn't read anything into this that was a concern to me from oh my gosh that is going to be something that is um is going to threaten our power supply or our ability to continue to supply our products and services um you know it are there challenges along the way absolutely there's always challenges and everything we do i i think but i didn't

2:52:24 i think we got out of this sort of the range of scope of different options for our planning process and that's really what we were looking for it wasn't necessarily to test policy which is a little bit different type of of modeling discussion um okay i don't want to beat a dead horse but i'll just make one more comment about that and and that is just that um i would really hope that like as as being a good partner we have the capability to kind of give the capacity to give the city some of the information that they were looking for about some of their potential policies specifically about the impacts of if they um

2:53:09 mandated all new construction residential construction needs to be electrified and um i would just love to be able to get them that information if possible but i don't know the channels to go through i don't know if someone's requested it but anyway it just seems like that that would be something that we should be able to provide to them and that's all i have so i think we still um have john brown and matt right neither of you have asked a question so i don't know if one of you wants to jump in go ahead man

2:53:56 all right i will then thank you mr brown um and thanks uh the questions and conversations so far so far is super helpful uh i have to start by saying holy cow will price is retiring congratulations to will price and thank you will for your service wherever you are tonight hopefully you're not listening to this but you're actually packing up with a cold one and enjoying yourself uh not that this isn't enjoyable i like long e-web board meetings and um this is a fascinating topic for me uh i'll also say this is a thorough study and a very helpful report so thank you to the whole team that worked on it it's solid work and while i'm going to ask a bunch of questions mostly about assumptions so that i can better understand the study and the study results i hope nobody will

2:54:42 take this as criticism of the work i also want to agree with megan that the tools here these models are incredibly valuable and will absolutely serve us going forward so thank you for doing the heavy lifting to get these tools in place uh and lastly in terms of comments i feel like this team's done a really remarkable job of reporting your assumptions which in a study this complex is so important and makes it really easy to understand where things are coming from so thank you for doing that um frank i'll second mindy's request that we provide the city of eugene a formal answer to their question about um or our question the collective question about

2:55:27 the impacts of electrifying all new construction i think that would be a solid thing for us to do and if there is other action we need to take in order to help make that happen please let me know into my question ben toward the end of your presentation you provided a chart that showed past load and future load um and it showed that our load in like i think what was in it like 20 or 2000 or so quite a bit higher than it is now and it's been it went down and it's relatively flat over the last 10 or 15 years um given that our load is lower than it has been in the past is it fair to say that future load growth will benefit

2:56:12 customers by spreading out fixed costs among a larger group of customers up until of course we bump into the limits on our system or you know that the previous load that we were managing in in the early 2000s um it feels like at least at the front end here load growth benefits both the customer in many cases but certainly the the customer base is that right yeah so so in the ratepayer perspective we talked about the consistent benefits for rate payers but we highlighted that that's based on average system cost and so um frank reminds us that it's like it's all great when you assume marginal it's all fun and games so you have to build a substation to serve a load and so uh you

2:56:59 know our community is going to experience electrification in a neighborhood by neighborhood level and some neighborhoods are at capacity some have some have headroom so we tried to use averages to give you a sense on average yes ratepayers benefit um but we really drive home the discussion on costs because those are assumptions directly commissioner mcrae we we deal with both a very small near-term marginal cost but potential large long-term costs and that's that's the tricky part that's that's actually how conservation originally got started in utilities it wasn't it was to offset the building of new

2:57:45 resources it was to prevent that but on a marginal basis for some period of time until we we change our our um resource mix which which isn't that long actually it could be five to eight years we do have marginal near-term marginal cost headroom so in that perspective you're correct it would benefit the utility okay thanks um and then on page 52 just a clarification and this is page 52 of the report that you provided us uh clarification the aggressive carbon carbon reduction scenario results in 50 of space heating units electrified by

2:58:31 2040. and my question is is this 50 percent of all units all space heating in the web territory or 50 of all the units in eweb territory that are currently heated by natural gas is this fuel clicking or is this the whole the ladder it's the so it's fuel switching only so we only zoomed in at those that subset of customers who use natural gas thank you for that clarification that's super helpful uh it might be useful in the final report just to make that super clear um but that's very helpful um and then do we feel like 50 uh switching 50 of those natural gas heated homes by 24 40 is the highest level of

2:59:18 electrification we feel is feasible i mean i'll answer that with the caveats of based on economics so based on the economics and the assumptions that we used we we assumed that if something was not in someone's financial self-interest that they would not choose to electrify um and so if the economics changed um and that's why we tried to do the aggressive carbon scenario we showed how the economics can change and therefore space heating electrification changed okay it's based on the the modeling results not what we are are assuming it's an output not an input

3:00:05 that's correct i think part of that um commissioner mccray is that when we looked at the the base case natural gas prices have been incredibly low for a long period of time and it's you know the economic incentive to switch from one fuel to another just hasn't been there in in a more aggressive scenario that changes and so it's an output uh as a result of that okay thanks um and i see i'm out of time i will just say that i yeah no i'll can i get another round if that's possible mindy i don't know what our time looks like um let's let john brown go and then

3:00:50 we will see we're very over time but this is important well i just had a real quick question about i think ben you mentioned that uh in peak you're going to have to go out and get additional resources to meet peak um to meet some of this electrification i i'm thinking about the bigger picture that we're talking about homes and things but i think recently we just put the entire downtown we took them off steam and most everybody down there converted to gas and isn't the university of oregon also um i mean it's a city in it in itself isn't it pretty much heated with natural gas and if those two geographic portions of our community do fuel switching or you know the price of that commodity becomes to where it

3:01:36 makes economic sense to do something else um how will that change your your prediction about having to go out and buy more for peak if just say downtown because all those facilities are new from steam to gas and the same thing with the ufo i think they have a relatively new system in their physical plant um how will that change this equation sorry muted i mean candidly the size of that the scale of commercial customers like that would certainly change the equation um we really zoomed in on the on the small commercial to show kind of the economic barriers to understand why it's

3:02:22 not happening today um but yeah that that level of electrification probably would change our our bindings okay i'm just i'm just thinking conceptually if if the goal is to get us off carbon and uh we have the big users and they're not exempt from this study but if they're going to go from gas to electric um or we're you know we're going to try and see if how that works because those systems will become obsolete they'll have to change sometime in the future how that will affect our ability to meet everybody else's demand at peak times yeah we really zoomed in on small office as an example because the technology is

3:03:09 similar to residential technology but it does get a lot more complex as you have larger natural gas use facilities so i'm curious how people feel about another round um i know that um this is a opportunity for us to comment on this i don't know when we're going to revisit it again but we are about 20 minutes behind schedule so um who who would like to have a second round or who has questions for a second round

3:03:58 i'm fine with the second round but i don't have any questions okay so let's do another second round and now i see the clock i didn't see it before so let's try to pay really close attention to the clock and so matt i know that you have some more questions i do thanks mindy and i have more questions i don't have time for tonight um so you know frank and megan and ben perhaps there's a way that uh we could circle back and i can ask you some more questions about um about the study please please okay thank you very much um the the renewable natural gas assumption that's in here that we're going to like that we would see 15 by 2030 and 30 by 2050 and under

3:04:46 an aggressive scenario 80 by 2050 of renewable gas in the gas pipeline all seems really optimistic to me unless we're both driving up renewable gas while simultaneously reducing gas use overall and i understand that those numbers come from senate bill 98 but that bill enables and doesn't require this level of new renewable gas right it allows utilities to invest and create that level of no renewable gas it doesn't require that so my question is what evidence do we have that natural gas utilities can meet those kinds of targets have we seen any gas utility decarbonization plans that meet targets like that

3:05:33 i can let frank jump in because i recall and talk about northwest natural has has come out and committed to meeting the goals set out in sb 98 um but commenting on the viability of plans and whatnot is outside of my personal area of expertise yeah that that does come matt from the combination of sb 98 plus the i want to say it was called the the carbon pathways study and commitment that um the northwest natural has made to be carbon neutral by 2050 in their goals and um have made presentation public presentations around that including the citizens utility board and some others

3:06:19 and they of course they are governed differently but it's it's based on those assumptions okay thanks um i'll leave the rest of my questions uh for another time i just do have one point uh that i'd like to end with if i may and that is that um electrification like this is a key pillar of getting fossil fuels and well some amount of natural gas use may have to continue it feels to me like it would be a wasted use to heat homes with fossil fuels when renewable electricity can do the job i recognize that the potential for electrification to impact peak load but the irp gives us chance to address some of those peak issues and i believe

3:07:05 that managing additional peak load would be way easier than managing the impacts of climate change and i'll stop there thanks so much for the extra time and i have one last question that i'm actually gonna i you can email me back the answer and it's just about assumptions about air conditioning and i know we're looking 20 years into the remodeling 20 years into the future and like right now maybe a lot of people don't have air conditioning but just what um that might look like in the future because i know it will also shift our peak and all that kind of stuff so i will um email that question and you can can i i know ben made lots of different calculations and

3:07:51 um did a lot of work around the the sort of side impact of air conditioning as a subsection of electrification so i i know he's got all kinds of things off the top of his mind on that great well thank you very much this was a good robust discussion and um we appreciate all of your all the work that has gone into this i know that it's been a big team effort and um thank you for all of that and we look forward to um the next the final iteration i guess this was the final iteration and working on the irp yeah the irp is really the next step and we will there's some finishing touches

3:08:37 we need to put on this um and and um and then this becomes input and potential perm permutations going into the irp and we will be back to the board um early next year to talk about the process for the irp and and what goes into that important piece of work great well thank you very much megan and ben and the rest of your team and congratulations will on your impending retirement okay um well along the same vein we are on agenda item number 14 which is board policy sd-15 climate change policy

3:09:22 review slash kickoff so president schlossberg commissioners good evening i'm just going to kick this off i have a little bit of background information this discussion was at the request of board members at the last meeting there was um at least two commissioners that that wanted to explore potential changes to what eweb calls sd15 which is our climate change policy um i did provide some background information that was just it was a slew of information around what we're doing on climate change and what other utilities are doing as well and i'll just start with some background information and then i'm really going to

3:10:07 turn it over to you president schlossberg to because i think this is a board discussion as to how you want to approach potential changes to it just a little bit of history on sd15 it was originally crafted in 2007 and the latest update was in july of 2018 there's a number of links into our strategic plan just a few of them are listed here everything from our environmental responsibility for uh from a customer confidence perspective to um the the phases of our strategy which includes the integration of clean energy resources uh and the importance that that that plays in

3:10:54 our integrated and resourced planning decisions um part of our resiliency includes being environmentally responsible as as well as the balance with our other values so we we do specifically call out in our environmental value that we um value our sustainable stewardship of the environment and natural resources and and also in including our role in reducing greenhouse gases that are contributing to climate change so there's some very direct links to the the strategic plan which you adopted um last month actually formally then in its latest revision the next slide

3:11:40 just at a very high level there are really five areas where sd 15 directs me as the general manager on on your behalf to pursue actions uh in the following areas one of them is related to power generation and maintaining a low carbon high renewable content in our generation portfolio we have not had to make very many uh decisions related to our portfolio in in the last five years or so um and right now we have about a 90 percent carbon free on average resource base with a very low carbon intensity from a carbon measures perspective this is really about taking positions based

3:12:26 on uh local state and and federal uh efforts of legislative efforts we we have taken a number of positions we were one of the few public utilities that came out in support of the cap and trade legislation we've supported a number of other measures at the state level that have to do with impacts on the climate as well as the climate's impact on us which includes wildfire mitigation and other things and so we do participate in in that and have have continued to lobby and work with members of the the state and federal delegation on those issues our own operations we also

3:13:12 on an annual basis uh we do report out our um reductions in our own operations and uh really between uh 2009 and 2019 we reduced about 4 500 metric tons or 39 in our own operations uh most of that due to our our fuel consumption and we'll see where we are at next month in december uh when we report out on our on our latest carbon accounting for our own operations from a customer decarbonization perspective we do offer over 40 different energy efficiency and conservation programs including limited income and rental qualifying programs we have electric vehicle charging and heat pump water

3:13:58 heater incentives along with commercial programs for lighting refrigeration compressors and other types of applications and since 2010 this is a rough estimate and we're actually analyzing the data um we believe our programs have saved somewhere in the area of 600 000 megawatt hours between 2010 which is the baseline by the way for the climate action plan for the city of eugene and today and if you uh use a uh the regional number for carbon intensity which is probably more appropriate than our own given that we're re that it's consumption that would otherwise be consumed in the region that's somewhere between 14 000 and 16

3:14:45 000 metric tons a year of carbon reduction through those programs which is very significant and then the final directive area is through impacts to eweb and we continue to look at how we analyze and improve our resiliency to disruptive events including climate change you know most recently the board got a view of our wildfire mitigation plan um the the 2020 eugene springfield area multi-jurisdictional natural hazard mitigation plan which is a mouthful and then we've also done a number of different studies around drinking water risk and resiliency assessment and which was part of the 2018 american water infrastructure act so we we continue to do a number of things

3:15:31 um relative to all of these measures but there's there's always room for improvement and i as part of the background information i did include a number of other different things that other utilities were doing to give you a little flavor for some of the other climate policies that utilities across the west have i also tried to provide our legislative obligations in the areas of resources and and other things as well as some of the program updates and also a copy of sd15 which was probably the shortest document you had to read during this whole board packet um and i

3:16:16 think it was a page and a half or so um but the board um at your request you wanted to have further discussions around the climate change policy and where you might like to see it go and so i tried to provide the background information to facilitate that conversation and i hope i've done that and with that president schlossberg i'll turn it back over to you frank i think i saw president schlossberg um lead the meeting i think probably by accident i would guess there she's back now i'm i'm back something just happened to my computer sorry about that

3:17:03 um i just said a bunch of really important things president schlossberg and i turned it right back to you to um to manage the discussion around potential um revisions or updates to sd15 so i'll just turn it back to you now that you're back great thank you i think i i was only off for a few seconds so sorry about that um so sonia if it's okay i was gonna kind of let you open it up because you this was you're the one who um made the request so go ahead okay well i appreciate it um i mean i think frank you really teed it up well and that i like the different buckets that are there can we go back to the previous slide that has the

3:17:52 there we go the primary directives not buckets because i think under each one of these separate areas there's potential uh ways that we could put kpis or you know goals around where we want to go now i know power generation the goals that we're going to get there are very costly so maybe that's you know one that we say okay that one's not going to be an area that we focus on except for where we optimize and and have um technology that helps our customers you know charge during off-peak hours because then we don't have to go out and get those market purchases so it's more of an avoidance strategy in that area so

3:18:37 maybe the goal in that area is you know we get certain number of customers to sign up to say we're going to charge at this time instead um but what i would really i so i think these are really good um directives and buckets to really look at and what i would like to see is just you know we we kind of have a discussion does that make sense can we go through and um you know then there might be some other data that i think we would need uh to kind of look at what where those goals could be you know where the where the targets need to be i really appreciated having the other information on other utilities and where they need to go but like that one uh chart that was brought up before it's really hard for me to compare apples to

3:19:22 apples because they're their times and the amount that they're reducing are kind of all over the map so it's really hard for me to say okay well if you're reducing 50 percent by you know the full below 2010 levels what is that compared to our 10 below 1990 levels i mean i just have no idea what kind of level that is or or how big of a commitment that really is and i don't know if that's something that staff can help us with if we're trying to see where we're at in comparison wise to other utilities but i think that would be helpful for me as we figure out kind of where those buckets are or not where the buckets are but you know where we where we set those targets are um at um and obviously we want to i think the electrification study will help us a lot

3:20:08 in terms of looking at setting those dials you know here are the things that really have the biggest bang for our buck well let's focus on those let's set a goal um we'll get x number of homeowners to fuel switch and we're going to try it at this incentive level and see if we can meet that target so those are the things that i would like to see out of here thank you other comments questions

3:20:54 thanks mindy um yeah i agree with sonia i think adding some some specific like measurable targets or kpis if that's how we want to refer to them would be really helpful in all these areas i i do want to acknowledge that um e-web has been no slacker when it comes to reducing carbon emissions i mean for decades right this utility has been supporting low-carbon electricity and taking measures to you know invest in energy efficiency and help people use less energy and reduce the emissions that way um so just want to acknowledge the hard work of uf staff and past the web boards who consistently pointed us in the right direction um i do think yeah adding targets as

3:21:40 estonia suggested would be useful um i think we could pretty easily set something for the co2 intensity of the electricity that's divided by eweb we measure that already and it's something that we can track and and address through our electricity planning um i think setting an electrification target for evs and buildings would be reasonable given that we have a study that gives us a sense of magnitude of what can be done without you know technically and and economically i think uh electrification target would be useful i we already have an energy efficiency target i would love to see that included here because it's such a key piece of uh addressing climate change

3:22:27 then perhaps that energy efficiency target revised to complement an electrification target on a somewhat separate note but not really if we think about climate impacts i feel like uh setting some goal for how much of our power we want to have local control over right eweb currently owns several generating facilities and um and has immediate control over some others and it feels like we it would be valuable for us to try and maintain that control so that as we run into disruptions in power supply we we aren't just beholden to other providers but we

3:23:12 have some local control and then to address some of the peak issues that you know frank has has been talking about and are included in the electrification study i think a distributed energy resources target that can help us um understand or help us set some goals about uh how how and when we want to address peak loads and then lastly and maybe this should be first an equity goal so that our emissions reduction reduction activities help and don't hinder underserved populations in our third area and i know that's a lot um but it feels like uh setting it

3:23:57 yeah it feels like we need kind of a full complement of goals that all point us in the right direction there are a lot of things that can have to mean simultaneously um or at least continue in the same direction simultaneously so uh those are my thoughts on in terms of goals thank you yeah john brofsky thanks um so i kind of look at policies a little bit different than i think maybe some of the other commissioners do so i i look at a policy as the direction and then action items are what get us to that direction and and some of the things that frank

3:24:43 you know pointed out to me are action items um and i think that if we want to add action items to bolster the the policy i think that's fine i don't know that we necessarily need to bake in all of the action items into the policy i you know as far as some of the things that matt just said i agree with with some of the the idea of local generation i think we can use you know the power generation and use sd15 when we make our decision on the lead what we want to do with liber you know use this policy as one of the the weight points that we're looking at

3:25:28 when we're when we're making that decision um the only one thing that that really rang out to me that could rise to the policy level rather than the action item level is what matt just said the equity i don't think we've i think that that would be appropriate to fit in somewhere in the policy that our climate action policy addresses the equity portion of our community but for me measurable action items are a great way to make sure that we are achieving the policy it doesn't in my opinion it doesn't have

3:26:14 to be baked into the written policy part i like a lot of what is written in the policy and then just clarifying these are the action items and these are the action items that we want metrics on would be a way that i could seek us getting to fulfilling this policy all right john brown anything that you would like to add well i just want to um i agree with the other john b about about that i don't want to get into a position where we haven't met a specific number of things one of the statistics in this background that really stood out to me

3:26:59 and said the rest of the region needs to reduce emissions by 94 to adjust their present carbon intensity to reach eweb's current generation mix that's pretty telling about where we are and when we discussed earlier you know decades ago about safety you know what reliability about what it costs to get no outages you know we we have a 95 reliability now to get that other five percent the cost metric was like tenfold over what was to get the first 95 and i want to make sure that we don't make a goal that's still um that is so embedded in there that it doesn't get into the equity thing that you know we've got all these wish lists and everything else but you know if we have to

3:27:45 get a certain percentage or a certain thing that uh if we don't make it we haven't met a goal and then all of a sudden we we look like we're not there i mean if we strive to attain uh maximization of these that's one thing but to put it hard and fast um i don't know if i agree with that i agree more with what uh john morosky has said and i do also agree with that local control because not only libra but uh we've got seneca coming up and that's that's going to be another one that we're going to whether i'm around or not it's going to be a fun discussion trust me i've been through it and so uh there's some some good things here but i think i think we can uh modify this a little bit to uh

3:28:30 to meet everybody's desire and not have to i just want to make sure that we we don't set the goal so high that it becomes so costly that it's not a table or it just drives people out that's all i am um when i think about this it kind of reminds me of the conversation we had i don't know how many months ago it was it was about eweb's carbon intensity and one thing frank that you brought up is that there's so much different language that we use um it's not always consistent like we talk about carbon free we talk about environmentally friendly like there's no there's there's not always consistent language because that would be really boring

3:29:15 so we try to liven it up a little bit but sometimes i wonder if because we use so many different terms that there's not like a standard definition for some things and and not that we need a glossary for all of our documents and stuff but i i'm just wondering if we tighten up some of our language a little bit that it might be a little clearer in what we mean um and i do like the idea of setting targets i don't know that it's the board's job necessarily for us to be the ones to get in the weeds and set the targets but i think what i'm hearing from at least some of the commissioners is that in principle we've got like this has some good bones and we're just curious like

3:30:01 how do we make sure that we continue to like move on the upward trajectory um that work that we're trying to advance these these policies like what what are the end goals kind of instead of just saying like we're committed to low carbon we want to um we're energy efficiency and things like that so for me that would be helpful and and maybe at a working level these goals already exist these targets exist i just don't know i don't know what they are necessarily other than just like the big things that we say um so that would be helpful to me i don't know if i've it's

3:30:46 nine o'clock and i don't know that i'm even making any sense anymore um but but i think that there there's got to be a way to maybe tighten this up a little bit and i know i one thing i do know about this board is that we don't seem to get into the weeds and micromanage and stuff and so i do think that we're trying to keep it at the policy level um to figure out how we can um just make sure that we're on the same page and sony i see you raising your hand which will rescue me from just talking in circles right now well i mean i i agree i don't want to to put all those different pieces in there but we i feel like we do need that

3:31:31 data or at least some direction from staff on what those components can be so we know what is relatively achievable you know and then we can hold ourselves accountable to those end goals i'm not talking about putting in you know for every single one of those and sorry that i said that um earlier because what i'd like to see is a goal but something that's based in reality and we have a thought process around you know these are the the actionable items that get reported to us and the kpis that we get in the the end of the year reporting but it feeds back into this policy and frank if i'm not mistaken we have targets in our financial uh like when we have financial uh documents we have reserve requirements and and

3:32:16 different targets that are actually a part of policy so i don't think having and correct me if i'm wrong but i think having specific targets in here is in line with our other policy writings so i'm fine putting in more generic things but it doesn't need to be specific i believe that the the some of the financial policies um at the board level don't necessarily say what debt service coverage should be for example um they they say maintain certain um sort of industry ratings or things like that that weigh into that um i i do appreciate there's a balance between things that sort are directional and

3:33:01 aspirational and inspire actions versus the actions themselves which i think is kind of where this conversation goes you know one of the things that could be an opportunity with this is is to identify within the five areas where some of these actually manifest themselves you don't necessarily have to actually specify the goal at the the metric itself but for example when i think about carbon intensity and i'll call it localness commissioner mccray if i if you don't mind the localness of the resources the the tool for that would be the inputs of criteria to the irp those those actually so for example that goal could be or

3:33:46 that particular part of the policy would be using the irp identify these things as part of your generation base and it doesn't necessarily have to specify what it is that could be you know worked out with the board so there might be ways to identify the the linkages maybe a little bit better is how i might describe that um and and then that the equity piece is a is an interesting one it it does not refer to climate equity in in the policy um nor does it actually talk about the impact of equity of affordability or reliability so there i you know there's there's something there that i'm not sure if it's this policy or another one

3:34:31 where we could incorporate uh incorporate that but i do think that um it sounds like at least sort of the basic components of it people kind of like the the different components it's to what degree to do we sort of specify or refine the direction within those components and then the the linkages to to actions and um and metrics and and ways to implement those um and so we you know it it sounds like there's opportunity there but there's some balance that i'm hearing from a few of you around how much detail around the actual target do we put in there versus

3:35:16 or i'll say the measurement in there versus the sort of the philosophical target yeah the the difference between i mean for me each of these different buckets has different deltas that are impactable right and some we have a lot of control over and others we have very little control over um but it what gets measured gets managed and if we put measurements in here climate change is such a critical challenge of our time it's gonna take everything we've got i mean i and i don't you can't make it so expensive that nobody can afford electricity anymore obviously that undermines it but we have to focus on this and do it

3:36:01 in a really clear way and so i think you know putting something into the policy that really defines each of those different goals so we can look at it and say oh yeah well we're here even if we look at it and we say we've done so much in this realm and we can even show you know across utilities we're top of the line that's okay too because it tells the story to our customer base in a way that i don't think that they really know or see and that's part of our problem too we're getting a lot of pressure from climate activates and such well eweb doesn't do anything anymore we do a lot we've done a lot for so long it's just i don't think that that we tell the story well and i think having measure metrics that we can show where we've been and where we're going to and the possibility

3:36:46 will tell them a better story i really appreciate putting it on here thank you um can i actually have a dialogue with you here on a couple of things but um do you think that the policy is where sort of the overarching objective sort of the the destination i'll call it is can reside in the policy but then the annual goal-setting process is where you review the sort of the status of where you are with the metrics the jump off point and then the sort of the the goal for the target for so that so there becomes a tie in with the annual work in pursuit of wherever that destination is is that a fair description

3:37:33 i would agree with that absolutely and i think that's that's i mean tell me if i'm wrong but it sounded more of like where the johns were at as well but i it you know i don't want to get into the weeds with you know how much you do of each of these different programs but it's really hard for me as a board member to say here's the goal until i know where we can impact it i don't want to set something that's so unreasonable that we could never achieve it so there has to be some underlying basis for what are those steps that we can take and where do we think we can reasonably get to because i think that will also inform the city when they're saying oh well you know we have this we assume that eweb will reduce x number of emissions where are we getting those

3:38:19 numbers from where where is that where is that reduction coming from we have to have a clear coordinated path and in order to do that we need to know where all those buckets are so you you handle the what but we need to know how we can set reasonable targets i just said a lot i hope that was worthwhile i wasn't babbling here at 908. thank you i wasn't babbling at all that was i think it was very clear um does anybody else have any other comments about this i just i want oh go ahead yeah i you know

3:39:05 dovetailing on what sony just said you know i i think that there are areas in this policy that we definitely can pull some leather levers um you know in the in the customer decarbonization bucket as as we're referring to it i think there's great opportunities for us there either with either with um you know efficiencies or fuel changing and stuff like that i think there's a a ton of things that we can do there that are very measurable you know you go up to the other ones you know uh the carbon measures you know yeah we can we can send our people to salem and help lobby for legislation but

3:39:53 you know the impacts that we have there may be less dramatic um and so you know i think that there's parts of these things that metrics really play into well and there's other ones that it's going to be you know the eweb operation one that's that's very straightforward you know how many gallons of diesel are we using this year right those types of things so i think that in the overall policy there's there's great opportunities for us to show our work right that's kind of what what sonia was looking for show our work show what we're doing year over year other ones policy is is a little bit mushy you know and and so uh that's why i i think we're i think

3:40:39 hopefully this gives frank's an opportunity to look at these and say yes and as far as the equity yeah i think that i think that that can can be in other policies uh and it should be in other policies it should be in reliability it should be in affordability it should be across more policies than just the climate action policy i think that that's something that we can we can bake into a lot of our policies going forward so thank you anybody else have any other comments go ahead matt yeah just a question for frank and i feel like i should know this so uh forgive me but in terms of like the goal

3:41:25 of the annual goal setting are those goals intended to be what we're accomplishing over the course of 12 months or are those goals longer term than that so that's a good question um commissioner mcrae i think they can be framed up to be both so and and what i mean by that is in pursuit of this we are going to achieve that in 2022 so it it can actually be you you can provide linkages um between what you're going to accomplish in the next 12 months which is really what you're trying to do you're trying to drive your your immediate actions but if a goal is written correctly it

3:42:11 can frame it up to to give it context in the larger pursuit so it and and i would say our our goal setting methodology has been not very robust when it comes to the to the board piece of it um and that's why we're going to try to change it this year to start working with the board in december to come up with annual goals um most of that has been quite honestly me and manning the management team bringing you what we think we should do and that um you know it's it's better than some organizations but it's not really where we would like to be because i don't think it provides continuity over the long period of time so if we do it right we can cover both

3:42:57 thanks yeah and i guess i for me that's one of the things that we could do here is provide the long-term goal you know where we want to be in 2050 or 2040 that we're then kind of taking bites at each year through our annual goal setting but the long-term goals could reside in this policy statement just to point the long-term direction um this isn't how i could imagine this working so that we're like you know i'm the same way i don't want to be in the weeds i don't want to tell to tell anybody how to get there but i do think it is the role of this board to say where we want to go um and provide those yeah that long-term

3:43:42 destination i i do feel measurable measurable targets or long-term goals would be valuable from my perspective go ahead frank i'm hoping that we can craft it in in such a way that allows for an understanding of the destination um without creating the the sort of a an unintended consequence from pursuit of one goal in in sacrifice of another you know that that's always an interesting one and we've talked about the trade-offs between the values just that that we have between affordability and environment and reliability uh

3:44:27 commissioner brown mentioned one earlier that how many 99.99 how many nines do you want to have in your reliability metric before you start to impact your affordability um you know one example of that that i put in the in the memo was how our carbon intensity is is really subject to uh the water year that we have and how much hydro generation that we have it it does fluctuate pretty significantly uh based on how much water is available and are our hydro projects operating at the at the way they should now that is all relative because you compare with the region and it's multiple times better to start with so

3:45:12 i think how we craft this will be would be important and there's some detail that i think just needs to be cleaned up because for example the customer piece talks about smart electrification and we really have never defined smart um and and so you know for some customers all electrification is smart that and that's that and and for others it might not be and so we we do need to clean up some of the some of the language in in the policy i have a few ideas i'll i'll give you one of my concerns and it's the wrong rock scenario

3:45:58 if you don't know what that analogy is it's it's that i i feel a bit tasked with going off and and looking at some potential changes of which i will bring it back to the board and you'll go well that's not what we wanted go bring us something else and i end up going back and forth bringing you the wrong rock um and and so what what i may do is is look i'll i'm up for the challenge i'm you know lifting rocks is is uh will keep me in shape um but i think it's going to be an iterative process i do want to get this right and so um i i will do my best to to bring you back at least a potential iteration that can facilitate

3:46:45 some more discussion and hopefully it's a really close to the right shaped rock just great well um i i also think just really quickly that um some of the goals there are already goals that we're working on it's not like we're going to have to come up with goals so this is already a lot of work that we're doing it just sounds like we want to firm it up a little bit and maybe set some some targets and part of the thing that makes it so difficult is that we're already doing a lot so we don't have like a whole like if if if we were kind of starting from scratch or weren't doing a good job in our carbon intensity it would be a lot easier

3:47:31 to to firm this up i think so it's kind of a good problem that we have yeah if we were really bad it would be easy to make progress yes exactly okay so do you have from us what you need frank i think so you know we have our check-ins next week i think that for appropriate timing so i can check in with individual commissioners and kind of see where you're at with some of the ideas and i'll plan to this will be one of the subject matters that we can discuss great shiny rock not too round pretty hard not too soft floats on water about that size of heart

3:48:17 shape maybe spray it with some flex steel okay we are hitting the home stretch here agenda item number 15 quarterly strategic and operational report for q3 2021. it's like rod over to you isn't the term you're looking for frank catch ball not uh bring me the rock i i am looking actually for catch ball uh which is which is a lean process by the way commissioners it's a it's doing exactly what we're doing which is over a period of time you bounce things back and forth so i'm hoping it's catch ball and not wrong

3:49:02 rock how's that thanks so uh yeah uh good evening commissioners and the the rest of the folks listening so my name is rod price for the record um in recognizing i am the person standing between a beer or your pillow uh i i will um go pretty quick on this i think um holly can you go to the next slide please one of the things that was really interesting about that last conversation is i think it directly applies to to this conversation which is essentially how do you uh you know measure and and [Music] quantify and do the things um to see that we're doing what we're supposed to be doing right and so the quarterly report is this awesome tool

3:49:48 that um that we've been using to to have those discussions so one of the things that i i think you can read the report and see some of the things that you know there's there are some downtrends in some of these things but uh what i wanted to do is kind of uh into more what frank is maybe talking about in matt a little bit is i wanted to talk about the the quarterly report and the results more in terms of the strategic plan and the the mission you know and how they interact with the values and i i think it kind of it pertains directly to that last conversation is there's long-term things that have tension in them and so how do we apply our goals and and and how do we measure things and how do they

3:50:33 line up with our values so i'll talk about a few things and highlight a few things and then frank will end up giving us the report card so anyway next slide please so let's start off with you know there's uh we deliver water and electricity per the for the mission um and i just wanted to start off saying though that there's more than just a water division and an electric division we've got a lot of people that that help support both and and i think deb and finance we've had some uh stellar examples tonight of those uh um kind of things that they do and and they have a goal it's on track they're close to goal but they also are on track with all their budgets and so the finance they've just done a ton of work less this last

3:51:19 quarter and you're seeing the results of it so i'd like to acknowledge that i think workforce services in case you didn't know that's what we are now calling uh human uh formerly the human resources and and they have ci and safety in them too so selena's kind of rebranded that that division a little bit to name it appropriately but there's some really cool things going on here and so here's the first value comes in which is safety uh our safety uh and injury record is really well and really good this year uh we're getting some awards nationally recognized for some of these things and again some really good work there recognizing our safety and our commitment to our health of our employees so one of the things that's not going so well supply chain but i'm not sure

3:52:04 um you know how much we have to do with that but we are working hard and again i think we've talked about this last time the main impact still remains the deployment for ami has slowed down and paused to this point in in the electric community community focuses value i'd like to bring in and talk a little bit about customer solutions so they talk to customers all the time obviously on the phone and again we've been challenged there a little bit with long lead times and and i think you've gotten some reports where we are working on hiring more people working on ci to to alleviate that in the long run but i also want to highlight that in that that group is the the communications team

3:52:49 uh for instance in the cei work all these things are reaching out and starting to touch customers in different ways and so i think that's one thing that's really important because there's so many things we do that people like and don't like and so we're finding better ways to communicate with people and so i think you see that sort of highlighted in there another thing i'll touch on real quick and uh i'll just mention as you web property we just went through all kinds of discussions on that already more goals being hit in that um i am going to highlight travis in the information service group a little bit he was kind enough to leave my picture off his slide so i'm going to give him a shout out back i think if you look at the strategic plan it's really predicated on building customer confidence and taking care of your operations first so travis took

3:53:35 over i don't know about two years ago that division and and rebuilt it almost from scratch and so one of the things he's done and again if you look at the stats in the quarterly report he's taking control of budget and operations him and his team you know danielle bruce uh all the folks supervisors and people in that division have committed to uh those kind of things and it set them on a good course to do their strategic goal and again you heard travis talk a lot about erp and all the the care and consideration and all the people that are pouring into that not just in his division but it's a good take care of your operations build on your operations to meet your strategic goals so um

3:54:20 i'm not going to say the last one because it'd be like sucking up to my boss but he did complete goal three he's the first person to complete their goal this year so next next slide please uh so we do two things we deliver electric and water so when we say electric we include the generation division um and so uh you know we do uh if you did note in there there's a uh blow target in our um our um how we're doing with our our revenue to to expense kind of thing i do want to point out that's 1.6 million out of 284 million so i'm not sure it's an emergency um dead will probably be kicking me under the door right now but um just a heads up there's probably a

3:55:06 budget amendment likely along with that but but it does go to show again the the effort we take in our affordability kind of component and the things we look at to to the detail we do in our values uh overall though bottom line what i want to say is electric reliability is up i mean it's doing really well we are accomplishing our mission uh we are doing it reliably and we're doing it safe and i think one of the things that we think about when we talk about safety a lot is you know we're taking care of the employees the employees are safe and all that well we put a whole bunch of effort into our customer our our community all these safety items that are not just for our employees and so

3:55:51 the the dam safety issues that we're experiencing may seem annoying on some levels and they're frustrating for a lot of people and and they cost a lot of money and all these things but at the bottom um of that whole discussion is that we we are very conservative and we take our time and we want to do things right with those facilities so um so when we talk about safety i think we do put it up there um another thing is the the wildfire mitigation planning we had some great discussions last time about that so that goal's on track um and again tonight we talked about electrification how that ties in all kinds of community affordability all the kind of things we were just talking about so next slide please

3:56:39 uh well here's where water's really shining there they're 10 million ahead on a on a budget of 30 or 40 million so they're looking pretty good right now um but um [Music] i also want to say first and foremost that the the delivery of water and and the water quality is extremely high and and we continue to do those things despite our ups and downs and again i think i want to talk about uh reliability is as it's not just now it is we are tasked to be reliable 20 40 uh years from now right matt so uh part of that is uh we've started our our water storage projects and and we had an incident today um and again safety came right up to the matter uh we shut the job down completely we will not restart that but it's a series part of this whole

3:57:25 series of making sure that that uh our our kids and our our future generations have uh reliable clean water and it's another it's a really key cornerstone to that and so these are projects we work on that that key into the community and quality and all that we're doing a lot of resiliency work if you recall we the the board had tasked us to work with sub a couple years ago to check out second source and cooperation so we did finish our first drills the other day with sub and rainbow uh some intertie work that hasn't been done in a very long time so very happy about all that and of course the community um and again the source protection and all the work going on in source protection and environments and in

3:58:10 how we're working through in the restoration from the fire there's a lot of good work in there i just threw the words kaiser slough in there for for john brown to to uh let him know that we're still working on that and actually making some progress in that that area so with that i'm going to turn it over to frank so he can give us our report card thank you mr price appreciate the update go with the next slide please so taking a a step back from another step back from the detail here's where we are with our our goals that were set for this year the first goal is really operate the utility the way that you have already told us to operate through the various resolutions

3:58:56 and metrics and all kinds of things that have been established through the years and i don't know if i've said this before but um the last time i checked there were over 40 active board resolutions still in effect so it's not just policies there's resolutions that you've you and other collective boards through the years have told us it on the operational piece that there are some mixed results um i would say that the organizational response though has been really good we are resilient as a workforce and rod's mentioned a number of things safety reliability water quality resilient all of those things emergency planning those things are going incredibly well but we've had some challenges in some labor tightness areas and some response

3:59:42 times and some projects that are in in mixed uh states of progression so um some mix there probably uh the one that would be would be red in in my category would be the advanced metering and it's it's not because of planning it's because of a supply chain delay our response has been pretty good though as far as setting aside enough meters to continue to do new development work and emergency replacements and some of those things that are are based on our responsiveness to new construction and renovation work and repair and replacement of existing meters the other goals and i will say goal

4:00:27 three was actually your goal not my goal so i appreciate the credit from mr price but that's really a i think an accomplishment of the board to go through a number of iterations and discussions around the strategy and refining of that and so thank you for that and then really all of the various sort of interim targets and and some of these are activity based and then some of them are sort of result based but watershed updates on the hydroelectric projects and and where we are on that information technology you know all of these are basically on target as well as a goal number five which was the electrification impact analysis and you just got an update on that one so

4:01:12 you take a step back i think there's some mixed in the operational day-to-day some of those things we we own and we we work to improve and and others we uh be are resilient and adapt to so um it's kind of the overall assessment from um rod price and myself and we'd be happy to answer any questions that the board has i think the next slide is just a question slide yep there we go back to you president schlossberg it's pretty amazing all the things that we're doing in the midst of an ongoing pandemic and still recovering from a wildfire so kudos to you frank and the rest of the organization for all

4:01:57 that hard work it's impressive um questions comments matt yeah i would echo your point mindy um you know these are all the goals that we had set for ourselves but there are uh additional activities we're taking on wildfire recovery being one of them that we didn't have a goal around but we're doing it because we need to do it to serve our community and our customers then um yeah it is kind of wild uh what this utility is able to do and also i appreciate the candor that is baked into this report um that we're not

4:02:43 you know glossing over things that that could use some improvement um i think that makes it easier to comprehend and um and easier to talk when you know when we're kind of playing about the things that aren't working as well as we'd like it to i think that's really helpful so um it it yeah i guess i just i'm with mindy it's amazing what this utility is capable of doing and thank you all for keeping an eye thanks i'm not going to reiterate everything they just said great you know great work kudos just one quick comment something to chew on as we look at next month and we're going to be voting on a rate increase

4:03:29 somebody's going to bring up that we're 10 million dollars over budget for the water and we're looking at raising rates i just want us to be prepared for how we talk about that and justify what we're doing so okay that's it thanks again for everything yeah i think that's a great point though it's not a it's not a year-end number and so i i think that um when you really have to look at the year-end accounting to um to really make some of those kind of discussions because we do have reserve targets to hit we've got all kinds of of things that that have to take place before that 10 million is realized and so um i think that's a really good point

4:04:15 though and and i would point out just for the preview commissioner carlson is some of this relates to the timing of expenses and investments and kind of where they fall and and the rate projections for 2022 are based on the sort of the expenses and investments of 2022 and the outcomes of that if if we go into that year with the ability of having 10 million dollars to potentially and in fact it goes back to commissioner barofsky's discussion around basically rate smoothing funds or rate mitigation funds then that can be a discussion that would come in in typically april or may

4:05:07 yeah john borowski yeah thank you um i think these these quarterly reports are amazing um to do them on a quarterly basis is i mean in my business if if we get around to this type of thing every couple of years i would be i would be pleased on it so to see them on a quarterly basis to this type of detail is is very encouraging um and and unfortunately the things that uh always seem to stand out are the ones that where we're not meeting our metrics right you know it's when we look into the when the dial points to red we have it always it always is a flag that we we tend to look at and we

4:05:52 gloss over all of the greens and whites and and and and that's shouldn't shouldn't be um and you know sonya yeah 10 million dollars but we have a lot of things coming up down the pipeline on water you know there's there's this little thing on the uh off of franklin boulevard that might have an impact on some of that money um so we need to be able to communicate that to our to our customers say you know just because we have money in the bank doesn't mean that we can spend it all to offset one year's rates um again i i've gotta i've gotta

4:06:37 pick out a red dial and that's you know the customer service because that's the thing that we're hearing and i still would like to have some sort of idea going forward maybe by the next core quarterly strategic if there's going to be a public-facing opportunity for our customers to interact with us not just through a telephone because i think that that's an important that's something that's important to me to be able to say to my cut to the constituents that are reaching out to me that you know i can't get through on the phone and there's no place for me to go talk to somebody so um i don't know where that lands but i just have to bring it up i do think we're doing

4:07:22 great work but there's always room for improvement thank you thanks commissioner one thing i didn't mention in my in my report card at the end was that um what's what i think becomes important in our in our new goal setting process is that the status of where you are the jump off point really sets the stage for the goals and activities for the next year and so i i do think these the quarterly reports and the the situational analysis of where we are can provide some input and and i would be very surprised if in our gold discussion whether it's brought up by the board or it's brought up by

4:08:08 management that the responsiveness on the customer service side needs to be raised to an organizational goal level in 2022 now there can be a number of discussions around how that takes place um the importance of in-person versus telephone because those actually in some ways conflict with each other because they take the same resource but if there's a need that needs to to come out of that goal-setting process then that's a really good opportunity to do it so i think this is a springboard for the conversation gosh actually next month um which is well i can't believe it's you know we'll be talking about 20 20

4:08:53 two goals next month but it's a really good opportunity to do that john brown anything from you nope ready for bed um nothing else for me other than that i'm really proud to be part of this organization i think that we're doing really great work and um thank you for your leadership frank um and with that that brings us to agenda item number 16 correspondence and board agendas well thank you commissioners i i appreciate the kind words it really is an organizational effort um that you

4:09:38 know that that we can accomplish as a team and i include the board in that from your leadership and guidance al that all of the things amongst all of the different distractions some of them created by us some of them created by other circumstances but but thank you but it really is the organization that that makes this work so um it's not it's not me i'll i'll celebrate this evening by saying there is no correspondence um in the board packet we we figured 368 pages was enough um and so the only thing left is the board agendas i'm i'm not seeing a need for either a november or a december work session at this point

4:10:23 we do have some uh it looks like the december meeting isn't as full as this one um but it does have some good media items in it as well and so look forward to that we do have a a trip next week out to the to the um glenwood site and so i think that's on the docket um from an agenda's perspective but um unless there's any questions about that i will pass it back to you president schlesberg not seeing any hands raised for questions great thank you that leads us to board wrap up anyone have any last words

4:11:12 go ahead matt i know that we wrap up yeah it's late all right well this has been a marathon meeting for sure unless anybody has anything last that they want to add nope all right 9 41 one minute late this meeting is adjourned good night everybody listeners a lot of good conversation thank you yeah good night good night