EWEB Board of Commissioners — June 6, 2023

0:01 let's call the meeting to order good well then we will move on to items from board members and general manager [Music] somebody's chewing I can't call him oh okay Frank all right well I'll go back but we're gonna move back to Frank come on Brown I spoke at the Northeast neighbors meeting in the uh the mayor was there a couple City councilors and things like that he talked about natural gas ban and Court decisions and all of that stuff

0:46 but she actually did she did a good job of giving an overview of a lot of different programs going to Eugene and then my phone lit up Saturday because we deepwatered the Waterville Canal Walterville canal and it created quite a lot of turbidity in the river and that set well with people on the river and so I contacted Frank and Rod and they looked into it and we suspect it was a Gravel Bar below the tail race where the fish bashing fuels I don't know if you've ever seen it in there but it happened but I would hope in the future that we could ramp it slower or do something because I know if anybody else created that much turbidity I had pictures of it in the river they'd probably have a fine and I know we're doing it to the federal federal standards and everything but that to me doesn't make it right if

1:32 we're creating turbidity in the river um especially right above our water intake I hope we could at least be aware of that next time uh attended the Jefferson West Side neighborhood meeting with uh staff presenting on all things eweb um and I think huge a significant career report but uh good questions as always and then I attended the double ACP freedom of fund Gallant with commissioner schlossberg I also attended a building and trades groundbreaking ceremony at LCC which is great because I think some of the some of the work that they do might tie in nicely with what we do so hopeful for

2:18 that and then um just had a quick question about um next door and if we have a public agency account I noticed that some of the other uh government entities in the area have actual entity accounts and can post on there and share and so I just wanted to embrace that is something that I noticed and maybe if we have you need to get out there those are the things that I wanted to bring up this evening and Frank do you have anything thanks president costlin good evening Commissioners um just a couple of things we will follow up on the ramping I know we have pretty strict procedures on that and I'll just double check and and see what the flows and process looked like and so

3:03 I'll confirm that but before you commissioner Brown I did want to I think Rod price for filling in uh for me last board meeting while I was in Washington DC meeting with a lot of interesting people back there and witnessing some Senate oversight of ferc and some other things that were relevant to to our business and so I appreciate uh going in Rod thank you I think that's it okay and then we are doing correspondence then next so if he has anything the correspondence items and free pressure we had the legislative update and the water system development charges

3:54 system the svcs when they when they bring those back to us it would be nice to see how they correspond to what we have now um and you know they're saying that if you can build a smaller house it's going to be less if you build a bigger house it's going to be more what size house is where we're at now would be kind of good to know and then also our our flexibility on those to uh help us incentivize housing what kind of tools we have you know if we just put in a straight methodology does that give us any type of flexibility as far as incentivizing to help so when that when those come back those would be some of the questions that I

4:39 would have on that right yeah thanks commissioner barovsky um I know there's a few intents here one of them is that the overall Revenue requirement will remain the same um it won't be a direct apples to Apple's comparison because one is based on meter size one is based on the size of the house but we can do some relative comparisons to give you a feel for the difference in in different kinds of construction projects and so now sdcs themselves are mandated by the state and so we cannot his we cannot waive the fee but we we do in some cases for projects that have Community good we do provide grants that would typically cover a portion of the

5:25 sdcs and um I'll make sure that when we bring that back in the fall that we discuss the different opportunities that we can add thank you any other about some correspondence all right well then we were up to public inputs and we still have nobody that's signed over the link okay it's right along then um then we have the approval of consent calendar today

6:54 [Music] calendar B minus number eight and eleven okay you have a second okay all those in favor of consent calendar B minus eight and eleven please raise your hands say aye okay passed unanimously all right uh let's go with number eight yeah thank you so I know that this will come back at some point but I'm not sure when it is so under the uh schedule of cash Reserves um and I'm I'm on board with all of the raising all of these uh these limits toward that it makes sense the question that I have was the working cash um we've got a target of

7:40 um it was three point four in the Waterside it was 3.4 million we're moving it we're moving some cash out but we still have 5.1 million in there and then on the so you know a million and a million seven and then on the electricity side you know we're have a target of 36 million and our balance after is 47 million of working cash I'm just wondering where and at what time those funds get allocated to different different if it's not in reserves it's to just stay in work I mean if if we're above our Target of working cash what is the procedure for that money so I don't know when that comes back to

8:26 us or what can answer me yeah okay good evening uh so on the electric utility uh those would be funds above Target that we will be looking to spend on Capital later this year because the electric utility is going to postpone borrowing because of its um strong cash position above and beyond the 15 million that we're already moving to to capital reserve Okay so where does that what is that in the budget where do we see that that um so all of the capital spend s currently approved in the budget

9:12 but rather than borrow funds we have cash on hand to pay uh for most of those projects or rather than borrow additional funds this year so it's all spending that's already approved so okay so I guess my question is is what is the policy for funds that are above the Target in working cash is that internally directed or is that directed by the board and if it's directed by the board is it done during the regular budgetary process or when is it done because I mean that's 11. that's 11 million dollars

9:58 so so the board directs Reserve transfers and the board approves the budget uh so um but there's not a direct link to where that cache sits other than when we do move it into the capital Improvement Reserve that does need to be used for Capital unless the board makes a decision to move it out so we can look out and see this bench that we have planned this year in one of these sufficient cash balances uh to pay for that Okay so yeah I would just add working cash is is specifically has inflows and outflows and it has revenue and what we do each year is we go through and look for sort

10:44 of abnormalities um low or high and that's when we come back to the board and do the the transfer of of of cash um now the fact that it's 15 million High doesn't mean we're going to spend 15 million extra uh what we're spending is what the board approved in the budget and as things flow in and out of that throughout the year we could in the end the year above Target or below Target depending on the revenue stream as well a early cold winter would drive that number higher a more mild winter could drive that number lower and so it's really not like we're spending an extra 15 billion we're spending what the board approved but that's the present working cash balance and working cash gives us

11:29 the most flexibility as a so if we moved into Capital then it's only used for Capital and the only reason I asked is is with some other uh budgets that I've dealt with there was there were policies for the use of the the marginal beginning working capital is what I've always referred to it as and it was like this is what the policy is first for highest first use of it is this this this and it goes down I just didn't know if if we had a policy for that or that was just directed uh internally yeah correct me if I'm wrong Deborah um also what's working Cash's um impact on debt service coverage um our um well Debt Service is our Revenue

12:16 uh so that in as much as it came from abscess of Revenue it improves our debt service coverage we pay our bills through our working cash and so the so the um the procedural way in which um Capital gets paid for is the bills come out of working cash and then uh and then can be reimbursed through either bond funds or something like that or the capital reserve or if the board were to approve a rate stabilization fund so um to the general managers comment is it is our most flexible form and when we can see that we need to pay bills out of there uh later this year we would tend to leave it there

13:01 okay any other questions okay they're both together together okay I have okay I I wanted to potentially change on the Strategic plan which we're comfortable is that the movement of the next so on the Strategic plan um I asked about this in the pre-meaning questions I was just curious if anybody else felt like on number 4.1 the opening it says Foster customer confidence um the a through e is delivery Safety and Security cost efficiency service responsiveness and environmental responsibility it's so closely aligned

13:48 with the values that we have down below I just wondered why the Safety and Security was not number one um it's very minor I know it's very minor but if others felt that way I I wanted to recommend that we move the Safety and Security to a we basically just switch A and B so the delivery is second and otherwise they had no other suggested it looks great so thank you for the your teaching plan like emphasizing that we put safety above other aspects in general oh you're saying the staff object for some reason I don't have any objection

14:37 I don't have any objection we could we can make note that what you're proposing of President Carlson is that we basically switch item a and item b in section 4.1 it's then um the board through the process here would approve the revisions to the Strategic plan including Network okay and then I have a question also on that on a different on a different section of that and the result resiliency one which is the mid game number e or F excuse me it says there's a sentence that says resiliency spying it says and develop generating resources capable of maintaining an

15:23 emergency power to me that sounds like that's something we're going to do we are going to develop generating resources should that be written a little different that says look at the possibility of of developing generating resources I mean the way it's written is like we're going to we're going to develop new generation resources and I don't know if that's something that we have decided yet optimize yeah I think the the word in this case that you're is is developed I think some of these come through Partnerships so they could be uh

16:14 you know what what we're trying to do there is to work on the resilient spine and also be able to operate if we're going to go down and that could be a relationship with other partners in the area it doesn't necessarily um me that we go out and build a plant per se and that's why I have problems with the word and I would say maybe and look for possibilities to develop or look for opportunities to develop I just what is this and develop to me that means you're going to develop well we have those Partnerships in place by 2024. I suspect we'll have some potentially the other option that we've talked about is black the ability to Black start units

16:59 um which would include our our own generation as well as Partnerships um I just just the way about word spending here on off the on the fly yeah I mean quick suggestion and develop generating resources or capabilities for maintaining emergency power because they have developed for eign same generation it's not it's not that time sensitive I don't know I just the way it was written I just saw it as a it's a directive

17:47 I understand I I think a probably a more appropriate raise would be I mean we're really looking at evaluating and developing the generated grading capabilities doesn't necessarily mean developing the generating resources so and I'm fine with however you want to word it but just am develop doesn't work for me do we like what Frank just said we could just have an amendment to it and pass it as is how Frank just said it okay with that support that wasn't there two revisions yours and practice that would we need to have

18:32 a motion because you bundled them with a budget issue of the cash Reserve issue in one motion to get you in both motions yeah and you can procedurally but I historically we've done one at the time it's up to you and we can do one we can sell to one at a time minus uh number 11. did you play something okay all right do you have a second second okay all those in favor of consent calendar B number eight could you say hi hi

19:21 uh all right so next to the Strategic plan that I moved to to prove set calendar with the Strategic plan with the Amendments put forward at this table let you guys put that in there is that okay between A and B on Section 4.1 and I can't remember how I've raced it earlier you've got a recording of it thank you present girl says thank you just to Circle back with the board I'll include the revised strategic plan and correspondence next month and if there's an issue

20:06 please identify it and we make a correction thank you okay so as we read it not through that all right so we are up at the hydrogen technology interest now for quite a bit of how to schedule or is that okay I have a guest speaker okay yeah Michelle is online okay perfect good evening Commissioners uh my name is Kelly Hale I am eweb's climate policy

20:52 analyst and advisor I'm thrilled to be here tonight as part of a three-part presentation to talk about clean renewable hydrogen I am joined with Michelle Detweiler who is the executive director of the renewable hydrogen Alliance she is joining us virtually and also general manager Lawson here who will talk a little bit more about eweb's interests in hydrogen um my part will be up first and I'll talk briefly about chemistry and Equipment we'll talk about colors of hydrogen but really how that creates into carbon density to touch on equipment and storage um when uh Michelle talks she'll talk a little bit about industry Trends leaders opportunities and funding and then we'll title back together with a connection to

21:39 eweb's hydrogen principles that you saw in the kind of guidebook back in March and how that relates to eweb's interests uh in this nuclear fuel so uh to kick us off with some Basics I wanted to just start with uh channeling our high school chemistry classes you might remember the periodic table uh and uh the um upper left hand corner there the element of hydrogen it's the simplest lightest most common element in on Earth it's non-toxic and one of the coolest things about it is that when it reacts with oxygen it releases energy and creates pure water so that chemical formula there just shows the benefit of

22:24 how we can use this plentiful element in order to generate energy so this is a very busy graphic and I'm going to walk you through it it actually um if any of you have been following the news maybe you've noticed that yesterday just yesterday I think in preparation for tonight's meeting I think they had it all planned um the United States Department of energy just released the national clean hydrogen strategy and roadmap so this is a version of a graphic that they have included in that document you'll notice that up here there's this big hydrogen uh symbol and um that hydrogen has many applicable applications right this is a very

23:09 versatile potential Fuel and so you'll notice on this side here that there are a number of different applications hydrogen can be used in many different forms from transportation to Industry the fertilizer to Metals refining to heating to a number of different things so it's very versatile in its end uses and another way that it's versatile is that it's also very versatile in how it can be made right so we can use many different types of energy to create hydrogen you can use electricity from a variety of sources and that can be directly generated so it can be directly connected to wind or solar or a number of other Renewables or nuclear power or you can use fossil fuels to generate

23:55 that or you can actually connect it and just use grid powered electricity so you'll notice the direction of arrows on this left side um you know going into the generation of hydrogen and moving here uh and then you'll also notice that once it's in hydrogen it actually can go back and generate electricity again so you can use electricity to generate the hydrogen then you can use the hydrogen to generate electricity there are energy losses along that path but again it's very versatile um so one of the things that you know the that U.S clean um energy excuse me the U.S national clean hydrogen strategy and roadmap the very first takeaway uh there's three kind of strategies that are outlined for

24:41 for the U.S approach to hydrogen and the first one is to really Target strategic high impact uses of clean hydrogen and really that's talking about where electricity is not an option to decarbonize so um that report talks about industry uses heavy duty transportation and long duration storage um so moving right along you might have heard a lot about colors of hydrogen and so here I have a Graphic that shows there's a variety of different colors here that's the terminology section where that red circle is and really what that does is it connects how because it's such a versatile fuel you really have to know when you say hydrogen in one place you have to know what kind of hydrogen

25:26 you're talking about and so the colors were extended to help you differentiate between how one type of hydrogen could be produced compared to another so you'll notice that the terminology is tied to the feedstock that generates the hydrogen in the first place so green hydrogen comes from when solar hydrogeothermal entitled those renewable sources right black hydrogen typically comes from coal so they try to align those colors with the type of fuel that it comes from but that's really what that is referring to now you'll notice that the bottom of this chart shows that there's uh well the chart can be split into these two components right so you can produce hydrogen via fossil fuels and you can

26:12 also produce hydrogen via electricity that could come from fossil fuels or from renewable sources and so that's kind of the the differentiating component here and if you think about uh eweb's interests you know you'll hear a lot about the particular type of Technology uh a lot called electrolysis and we'll touch on that in a moment but the reason we are an electric and water utility and we'll show a graphic on how this works but electrolysis uh takes electricity splits a water molecule and produces pure hydrogen so as an electric and water utility that obviously makes a lot of sense and so you'll hear us talking a little bit more about electrolysis than

26:57 some of these other forms or Technologies of producing hydrogen and that's the reason another reason is that electrolysis you can pair with those zero carbon electricity generating sources to produce a carbon footprint from hydrogen that is very small to zero and if we are intending to use hydrogen as a solution to climate change especially for those hard to Electrify parts of the economy that have few other options this is especially important to make sure that the type of hydrogen that's being used as a slow carbon as possible all right so I mentioned electrolyzers or electrolysis as the technology and

27:42 electrolysis is using a piece of equipment called an electrolyzer and you might have also heard about different types of applications that use a piece of equipment called a fuel cell and I just wanted to put this up here so that you can see the differences and the similarities between the two because they're really kind of the inverse of one another so let's start with the process of electrolysis or the piece of equipment called an electrolyzer you use an electrolyzer to generate hydrogen you put electricity and water in and it's a process that produces pure hydrogen and oxygen as an output so you use electricity to make hydrogen and that's a process if you want to generate

28:27 some of that hydrogen a fuel cell on the other side is used in the end applications most commonly so you might see it in a backup energy generation site for stationary sources as an alternative to a diesel generator or you might see it in a vehicle a fuel cell vehicle and it's kind of like an electrolysis electrolyzer in Reverse it takes hydrogen and oxygen in and it produces it uses electricity uh it produces electricity and it as a byproduct has water as a byproduct right pure water so you use the elect it makes electricity using the hydrogen and no combustion is involved in this process

29:12 happy to take questions at the end if there's anything that comes up about that um so just quickly again back to those colors the industry is actually moving away from the colors so if those colors are confusing and you can't remember the difference between pink and turquoise and green and yellow and whatever that's okay don't spend any time focused on that because the industry is really moving towards what is the carbon intensity of each of these different types of hydrogen and so when you think about carbon intensity I wanted to just call your attention to two differences right when you think of carbon intensity you're trying to understand in all the stages of the production of hydrogen or the use of a hydrogen fuel where are the sources of emissions coming from and there's kind of two sets of boundaries

29:58 you can think about when people talk about uh the life cycle uh carbon intensity of a product right and um so in this particular example you might hear in the inflation reduction act there was a provision Michelle will talk about this briefly for a new tax incentive called the production tax credit the PT CC it's an incentive for producing hydrogen and uh that actually only takes into account the carbon intensity up to the point of hydrogen production so if you think about this diagram as being the entire life cycle of the production of carbon you've got the clean energy generation you've got the water they come together they you

30:43 know you use electricity to split that water molecule in the green hydrogen production then you might have some storage or you might have some Transportation then you have the ultimate use of that hydrogen so in the example of the production tax credit the carbon intensity of that is really only measured up to the point of production that's one example another example though takes into effect into account all steps in that uh production of hydrogen so the full life cycle and the example here is the Oregon clean fuels program has an opportunity where you could use hydrogen in the application of a transportation Fuel and in that case what they're measuring is the life cycle uh impact of the hydrogen through all

31:29 stages of the life cycle through the use in transportation storage uh Michelle we'll talk a little bit more about this but I just wanted to give a a quick visual sometimes it's hard to understand what equipment is involved in hydrogen production and so again this is focused on that electrolysis pathway that particular technology there are lots of other ways to produce hydrogen this is one example but in that method of using an electron electrolyzer you have some sort of electricity components maybe you're transforming high voltage uh Transformer to medium voltage and bringing that into your electrolyzer you've got some water treatment here and

32:14 then you bring that water in to the electrolyzer you split the water molecule apart you purify the gas with that gas purification equipment and then you either consume that gas uh or you have to compress the gas and then you either store that gas or you use it in in its end form okay so there could be a liquefaction equipment that's not shown here to turn it into a transportation application to get it even colder so that you can compress more of it and and get a higher quantity into a smaller space you might have fueling equipment to put it into a vehicle or to use it on site in different applications you might have long-term storage all of those are

33:01 different pieces of equipment but this kind of gives a snapshot of some of the types of equipment that might be involved and the last thing or second to the last slide I'll leave you with is just when it comes to storage there's kind of two main ways to think about storage of hydrogen and um when general manager Lawson will talk a little bit more about eweb's interest one of those things is really about how do we make use of uh um intermittent electricity sources and the storage component is one of the things that could make hydrogen very attractive to take intermittent electricity sources and firm that up into something that's more dispatchable that we can use at those peak times and so there's two kind of main ways

33:46 that you can think about hydrogen storage there's physical based hydrogen storage where you either compress or get it really cold and liquefy the hydrogen itself and that can be very energy intensive uh and it can be hard to keep it in that cold State and not lose it there can be higher losses in those um uh storage mechanisms so for long-term storage there are some challenges there the other opportunity is to turn hydrogen pure hydrogen into what they call a material based storage technology or sometimes you might hear the terms intermediate chemistries or hydrogen carriers those are all terms that really get at how do we take pure hydrogen

34:31 do a chemical reaction to turn it into a storage mechanism that you could use at room temperature that could be transported more easily as a liquid those kinds of applications and then you'd have to go through another process to again then remove the hydrogen atom from that molecule to get it out of that hydrogen carrier and then be able to use it but it allows for a longer term storage capability so then just um because you know as your climate policy analyst I've been talking a lot tonight about the climate implications of hydrogen there are other sustainability uh considerations to be brought into consideration here from the triple bottom line of economic

35:17 consideration social considerations environmental considerations um and oftentimes it's helpful to not think about hydrogen just by itself when you're comparing these things but to think about it in comparison to a alternative fuel that you might be deciding between so I just wanted to add that um I'd like to take a moment now to just introduce Michelle Detweiler um I'm going to turn it over to her um and and just before that I want to just review a couple of quick takeaways from my section of the presentation so number one hydrogen is versatile right it's versatile in how it's made and it's how it's how it's used and so if you think you know hydrogen because you've studied a particular pathway there's so much more to know uh and so if somebody comes at you and says I don't like hydrogen

36:02 because this there's lots of variation there's lots of ways to think about changing those characteristics and doing it in a different way so keep in mind of that versatility and most of the hydrogen today is high carbon so the second takeaway is that keeping emissions low during the development of this emerging industry is going to be really key low carbon options are emerging and they are very promising okay so now I'd like to turn it over to Michelle for the second part of the presentation Michelle has 30 years of experience in the energy sector her work has primarily focused on government Affairs and policy she's worked for law firms utilities including here in Oregon Pacific Court and energy efficient Building Products manufacturers she's been the executive

36:47 director at the renewable hydrogen Alliance for the last two years and rha's mission is to promote using renewable energy to produce hydrogen and other climate neutral fuels to replace fossil fuel consumption so without further Ado I'll turn it over to Michelle thank you so much Kelly everyone can hear me okay yeah thank you all right uh good evening everybody and thank you so much for having me I really appreciate this opportunity um so um let's uh next slide please so when we talk about why hydrogen and before I get into that I want to sort of expound on some of the things that Kelly

37:33 mentioned um the simplest way to think about hydrogen is hydrogen is a molecule that is always attached to something so the you know she was describing the electrolyzer in the electrolysis process um what what electrolysis does is really just separate that hydrogen molecule out of the water um and in the different colors of hydrogen so if you're using fossil fuels it um steam methane Reformation pulls the hydrogen molecule off of a hydrocarbon um so really no matter how you make it hydrogen is hydrogen is hydrogen the hydrogen in itself doesn't change the only thing we're thinking about changing is how we get that molecule and how we

38:21 use it so um with respect to the urgency and why so many people are talking about hydrogen these days why is it that this hot topic and it's because we have our climate emergency on our hands and we need to have as many tools to decarbonize economy-wide as we can possibly get our hands on and hydrogen is a very promising pathway for that so um speaking from a policy Viewpoint um there are policies up and down the West Coast but you know including in Oregon where we are trying to decarbonize the electricity sector we're trying to decarbonize the transportation sector we're trying to decarbonize the

39:07 industrial sector so again hydrogen as a fuel and hydrogen is an energy carrier is is proving to be a very feasible practical pathway for that um so there's all kinds of requirements in those climate policies we've got 100 clean electricity we've got uh Catherine trade well cap in Oregon um and lots of other things that are driving this decarbonization so we use about 11 million tons of hydrogen in this country every year and and what we want to do is we want to not just clean up the way we're making the hydrogen and the hydrogen that is used for all those applications like fertilizer

39:59 oil and gas refining Metals processing Etc but we want to again we want to use cleaner hydrogen for those things and then we want to use that clean hydrogen for other applications um as and Kelly also touched on on this a little bit so some of the energy applications for hydrogen are things like avoiding curtailing valuable renewable energy so if you have a renewable energy project particularly a utility scale energy project you want to be able to preserve the value not only of the asset but of the of the energy that you're producing from that asset

40:45 um and you know as many of you probably know you can blend that blend hydrogen into natural gas to reduce the carbon intensity of the natural gas system um Kelly also talked about storage this is where I think hydrogen really shines um unlike a battery and you and the pictures here uh really sort of stand out uh with regard to how much energy can you store in the hydrogen uh in hydrogen molecules uh so you get a battery the largest battery storage facility in the country this is in Northern California uh you're getting 129 megawatt hours and and frankly you know most stationary batteries for utility scale you get about four to six

41:32 hours um hydrogen you can store for months on end um and always you know and use it to either it's not temporarily uh constrained like you can use it anytime and it's not locationally constrained you could put it in a pipeline you could put it on a truck you can get it to somewhere else you could use it as a transportation fuel um and one of the key benefits is uh uh grid resiliency and flexibility as as I think Kelly mentioned also um electrolyzers Can ramp up and ramp down within seconds and and forgive me if many of you already know this um and that's where sort of the balancing benefit of hydrogen uh really

42:19 comes into producing hydrogen to the electrolysis really comes into play if you've got a lot of Internet intermittent resources on your system and you know very very variable if you need to absorb some of that electricity you can you can turn that electrolyzer on right away um and you know in the case of for instance um and I'll talk about this um in hydropower facilities what some utilities are looking at as far as putting electrolyzers on their system is when you avoid those uh those ramp those knee that need to ramp up and ramp down your your firm generation resources like a hydropower Dam you're actually

43:05 um preventing uh you're probably reducing the amount of Maintenance you need to do on turbines because you're smoothing out the way they operate you pause for a second yeah I think you're back am I coming through okay am I glitchy you can I can turn off my uh I can turn off my video if that's better okay it was fine there for a bit and then all of a sudden it it got okay

43:53 all right so I apologize I'll turn off my video to try to say bandwidth here um on the transportation side um these numbers up here are pretty much uh almost all California um that they are the most advanced hydrogen economy uh in the United States so far um but this is the the versatility as Kelly mentioned of hydrogen for specifically Transportation applications um these are really hard to decarbonize types of Transportation the heavy duty vehicles um the ships uh and and uh in aviation

44:42 and in fact um there is one hydrogen fueling station for uh public transits and I think it will also serve passenger vehicles uh in development right now uh on I-5 in Chehalis Washington so and But but so far that's the only hydrogen fueling station being contemplated uh up here in the Pacific Northwest um here are some of the regional industry leaders um I would frankly consider e-web because because you are you are looking at it you are focused on it um I would I would add you to this list um but these are all the some of the um the entities in the Northwest that are really moving forward with this

45:29 um Plug Power in particular what a lot of people don't know is um for warehouse distribution and for material handling most of the the forklifts in Walmart warehouses Costco Warehouses Amazon warehouses are all fuel cell electric forklifts because what they found is is that these these entities these warehousing these retail establishments can save millions of dollars a year by converting their forklifts to fuel cell because they're not they don't have a bunch of like half their Fleet down charging uh and and unavailable for use

46:15 next slide please and when it comes to um uh funding opportunities where is all the money going well most of the money is coming from the federal government at this point um there are probably um uh oh so wait on the slide ahead of myself so so here's where some of the future opportunities are happening as you may have heard there are two hydrogen Hub posts currently under consideration with doe in the Pacific Northwest um the the first one is a multi-stage uh the second one being done by obsidian Renewables out of play classical

47:03 um they are mostly Oregon and Washington and that is a a hub idea that's centered around fertilizer production um and uh sort of a pipeline system that would go through both Oregon and Washington um there is currently a joint uh three-state joint application for hydrogen fueling infrastructure funding under the federal uh if I get this note this right uh charging and fueling infrastructure um Grant there's another name for it but anyway it's it's one of the grant programs that came under the bipartisan infrastructure law the EPA power plant role that was just announced about a month ago uh that's a rule that's going to require the

47:48 decarbonization or the lowering ghgs and carbon dioxide emissions from natural gas plants and coal plants so there's going to be a particularly large demand for hydrogen as hydrogen is a compliance pathway in that power plant rule particularly for um mostly for natural gas plants PGE is looking at converting their Boardman coal plants uh to combust hydrogen so unlike a fuel cell this is where hydrogen would in fact be combusted in turbines uh much like a natural gas generation uh electricity power plant um the port of Portland is looking at uh decarbonizing its uh parking lot shuttle Fleet by converting to hydrogen fuel

48:34 cell buses and then there is a a project happening in Portland a partnership between OSU and Daimler uh to develop uh probably one of the furthest range heavy duty Class A trucks on the market next slide please here's where we're talking about money uh so um some of the momentum on the hydrogen uh all the hydrogen excitement and all the developments and all the activity happening now is because the federal government has really taken the lead in lots of initiatives that it has trying to get the cost of hydrogen down the hydrogen hubs program the production tax

49:19 credit as Kelly mentioned um there's just hundreds of millions of dollars being made available by the federal government to and d and project development the production tax credit is the thing that is really an historical everybody keeps referring to it as a revolutionary historical Game Changer in the market uh so it's a tiered production tax credit uh you may know energy production tax credits uh from wind and solar so wind and solar projects are still getting production tax credits from the federal government um and now it's kind of hydrogen's turn so weird level goes from the I think the

50:06 the lowest level is about um 20 cents or something and then it goes all the way up to three dollars so the cleaner your hydrogen the the lower your carbon intensity of your hydrogen the more uh valuable that production tax credit becomes um Washington and you know I know we're not in Washington but sort of comparatively speaking when it comes to kind of what the states are doing on funding opportunities um we RHA uh did propose two bills this during this Oregon session to develop pilot Grant programs for fuel cell backup systems backup generation systems so replacing diesel engines and also uh

50:52 in the transportation sector fueling infrastructure and vehicle deployment in the State uh I don't given what the Oregon legislature is doing these days those those bills are not going to advance um but Washington uh Washington is second to California as far as hydrogen tax incentives supportive hydrogen policy they're probably by December they will have I think what is the first official state level hydrogen strategy um so they're they're moving much more quickly but there are some things some funding opportunities in Oregon where hydrogen fuel cell Vehicles there's an option you can

51:38 um the battery electric vehicle um still is getting the The Lion's Share of that funding but we are constantly you know Circle ways raising our hand up and saying don't forget about fuel cell vehicles um so the clean fields for the charger head program rebates and advancing cars and advanced again do include zero in vehicles and um hydrogen fuel cell vehicles are considered zero Mission vehicles um so we certainly hope that there eventually there will be more of a balance uh and those kinds of programs to really um profile and support the hydrogen technology um next slide

52:23 oh that's or I think that that that's probably it so I'm happy to answer any questions thank you thank you Michelle so go ahead go ahead with the next slide I'm just going to close this out I know we're running a little bit over on time so I'll be pretty brief um this isn't a sales presentation although it sounds a little bit like a sales presentation because it's it's pretty exciting to think about the technology and all the different applications um really information I know the board has asked for information on hydrogen and we wanted to respond but I wanted to reiterate um what dweb's interests have been and in fact very consistent with other electric utilities as well and these really four areas have been what we've

53:10 kind of pulled people either inside or outside the industry for a number of years the first one is around the secondary Market application as we add more Renewables to the system getting value out of those instead of curtailment makes a lot of sense for the industry including potentially eweb's edition of resources or procurement of resources going forward it really makes a significant difference as you build out resources if you can use those assets the most effectively so the secondary Market is part of it I think both Kelly and Michelle talked about hard to decarbonize areas not that necessarily eweb would be a leader in that but it's a recognized it's

53:55 something that we recognize when we talk about helping customers decarbonize that this is an area where hydrogen has has some potential because of its flexibility the last two are really the ones that probably head closest to home local grid support you saw the diagram where you can actually use electricity to create hydrogen and also use hydrogen vacuum fuel cells to support the grid this can be potentially used for demand response load shifting dealing with Peaks also potentially offsetting investments in capital that you might have to do in your in your distribution system for example and so this is an opportunity I'll call it intermediate term storage I know Michelle talked about long-term storage

54:41 I think from our perspective we might evaluate opportunities from an intermediate type of storage perspective more than four hours but less than months so depending on how we want to integrate the two ends of the spectrum that are both becoming more Dynamic the generation side and also the consumption side and this is a clutch between between those two and then finally resiliency I think it was mentioned looking at this as uh distributed energy source it's carbon free it can be a backup fuel resiliency is an important part of our strategy and I'll mention that these have come up because we're keeping an eye on them we felt like this wasn't something we did an economic study I think it started back in 2017

55:28 when we we procured a study to look at some of the economics and some of the trends we have followed it since we have included in the climate guidebook certain principles around policy I think some of them were mentioned really to look at hydrogen across its Spectrum from a carbon perspective is one of the principles for example not eliminating it as a choice when it comes to technology choices and some of those things so you see some consistency with these these four items but these I think we've been pretty consistent with our interest in it um I think you maybe have a little feel for why we've we've had an interest in it when you see it evolving in California you see it involving in in Washington and you see it evolving in

56:15 probably even more in Europe where we see more advanced application of it and so I'll just finish with that and turn it back to you president Carlson I know we a little bit over so if you want to extend some time for Q a most of this is really for you to ask questions and make comments we have nine minutes on the clock but we are ahead by 40 minutes so that's how many questions we have we'll go through and and I'll ask if we want to do another round so who wants to start in the queue first John Brown I don't care who answers these um what's the oxygen out of the process the hydrogen goes one way and the oxygen goes the other does that come out industrial grade conversion grade can it

57:00 be used medically or is that just a byproduct that goes back into the atmosphere so I'll let you take that one and then I can add to it okay um say it can be it can be vented to the atmosphere or there's even some talk about using it uh injecting it into back into the water for like fish uh habitat benefits so it sounds like they haven't really thought it through yet um that's kind of what I'm hearing um how adaptable is the transportation sector to hydrogen conversion I don't converting the heavy trucks like propane and things like that it's pretty easy a combustion engine but how adaptable is

57:45 the transportation sector to hydrogen technology does it take a whole new Transportation Fleet or is there existing Transportation infrastructure adaptable to this technology It's a combination of both stupid Michelle oh I was just so um so you have brand new fuel cell trucks but you also can convert um heavy duty trucks to do actually a combination of hydrogen and Diesel or um there's some companies that will put in a hydrogen combustion vote uh powertrain in a truck

58:30 um so there's there's some options available and real quickly how does a PTC or PTL learn to the tax credit is that like Betsy where you know people like myself could buy the credits and then I mean I'd pay fifty thousand dollars to the school district they give me the Solar credit so I get a hundred thousand dollar tax break is that the same concept here about generating uh private sector investment it is but go ahead I was going to say production tax credits is probably more similar to what we saw in the Solar industry through the years of etsy program yeah I would say Moro it's probably more on a mass scale because of the large

59:16 Capital Investments I don't think it would be something that someone would typically put in their house for example so it's probably more on a on a utility scale but that would be available to the private sector if they wanted to invest because I'm all in on this technology thank you I think yeah um well thank you for the presentation I'm somebody that told you I was completely ignorant about this so I really appreciate you um doing a bit of a deep vibe um my first question is what is the scale that eweb is interested in getting like are we thinking that we would build a plant could we buy shares in a plant kind of like how we deal with the Wind Farm what is our involvement like

1:00:03 yeah that's a great question um I'll give you the depends answer I I think what we're trying to do with our kind of the alignment with the strategy and the involvement of the technology is to see where it's overlapping but we did participate with some others in the hydrogen Hub application from a research perspective it was a non-committal role that we had where we were going to look at um what how would production in in with our Fleet of generation uh were to improve our economics for example um I see direct ties with resiliency but I think the scale of that is going

1:00:49 to be determined by a few different things and and the economics is is a big piece of that as this evolves more Capital costs will come down they'll also be a little bit better understanding of of the carbon laws and the carbon accounting of it and some other things so it depends a little bit I think we're interested but it's not something that I plan to be coming to the board saying you know here's this 10 million dollar opportunity tomorrow I think we'll have to see how the economics develop and align with our strategy so I think we're interested but I I don't expect a big bang to it's a bad idea um this will be more of an opportunity I think an opportunistic evolution

1:01:36 great I have a question with something withdrew their proposal so was the idea behind that that they were going to develop their own hydrogen system and then ingwit would sell them water or what yes it's exactly that um eweb's role in that project was to provide electricity to provide water and to provide some space at all of those at retail rates we were not looking to subsidize their project from an economic perspective our interest in that was to understand the actual production and of hydrogen and the impacts it would have on both the electric and the water

1:02:21 system from an operational perspective but they were going to they were going to it would be involved with their own production in case they were looking to blend it into the natural gas system as as part of the end use I've done just one quick question uh when we were talking about doing the pilot project with Northwest Natural we had a group um in town who raised concerns about hydrogen being injected into the natural gas system and the potential for ill effects at the use phase where somebody's cooking or heating their home

1:03:06 or eating water with it do we have any um concerns or awareness of potential negative effects of adding a percentage of hydrogen to the Natural Gas system I'm not advocating to do that necessarily I'm just curious if there's a yes there's potential fill effects there jumping I can talk yeah and Michelle has some of the science the issue is really about the Knox levels uh that were a byproduct of the flame of a blended hydrocarbon hydrogen product that was the concern in the community and Michelle has some of the science on that and then Frank again I'll listen to her first Michelle do you

1:03:51 want to talk about the science sure um so there's lots of research being done at pnl and other Federal Labs about controlling the nox um and the Knox emissions for instance in a residential Blended um Natural Gas Service uh would largely be related to the um the flame speed so it gets a little technical but it's it's controllable also Northwest Natural was going to blend an amount that was just five percent and the testing has shown that you can get up to 20 percent hydrogen 80 natural gas

1:04:38 um with you know the appliances can handle it um and there isn't uh there isn't substantial concerns about Knox emissions um so that that's that's where the science is right now but it's continuing to to evolve so follow-up question in my understanding is that currently with the natural gas supply system you can't really put more than 20 percent of hydrogen into that pipeline effectively anyway is that right um yes and no uh I know that Northwest Natural because they have the most modern and tightest system in one of the tightest systems in the in the country

1:05:23 and because of the material they're newer pipes um they actually believe they can get up to 35 percent um and and there are again there's lots of testing going on around the country Constellation Energy just successfully tested a blending of 38 in their system with no ill effects to the distribution system correct thanks um I'm excited about this I'm excited about the uh the opportunity for the the tax credits and the funding coming from the federal government to make the economics of this more palatable I think that that's something that

1:06:09 um our utility is my limited knowledge of this utility seems like we're poised to be able to to do that what with the type of generation we have the contract we have with Bonneville and our low carbon and rather than selling selling power in the open market at a rate where we could make more money with the tax credits and the and the hydrogen that we've never producing on off peak at times I think is is something that I'm really excited about um one of my questions would was uh when we talked about storage for the on

1:06:55 the the utility size you know you showed the big big Bank of batteries are there fuel cells that can do high megawatt outputs um you know you think of a fuel cell and you know it might put out one or two megawatts but you know under a peak low and if we're saying we want to use this during Peak we might need 10 or 20 megawatts are there fuel cells that are capable of those types of input and outputs today um I believe there are there's there there are lots of very large facilities that have stationary fuel cell backup systems

1:07:40 um uh but we can certainly you know Ballard power which is I'm right here in Vancouver Canada right now at a conference and I'm sitting in the Cradle of the full of the fuel cells um so this is where Ballard fuel cells it's been around for 40 years it's headquartered and I can certainly ask uh for more information on sort of what is the largest stationary uh application fuel cells can be stacked to meet whatever load is needed to be met but I do not know offhand I don't know what the largest uh stationary Powers power setup is at this point so they may we may be able to get to there but it would be similar to like those battery things you'd have several fuel cells that are in series yeah and

1:08:26 commissioner barovski when I looked at some of the I looked actually at Ballard when I was looking at some of the resiliency opportunities and it was at a substation sort of voltage level you could you could stack up so which is for us it's 12 000 volts it's distribution level now if we were looking at larger levels we'd have to I'd have to investigate that further but and then and then the last thing that this might be for Shell is the tax structures are incentivizing cleaner hydrogen are they going to disincentivize their dehydrogen I mean are we gonna are we going to say that if you're going to use dirty

1:09:12 produce and use dirty hydrogen it's going to cost you five dollars a gallon for that hydrogen as opposed to when you're purchasing it if it's green hydrogen it's going to cost you two dollars a gallon so that there isn't an incentive out there just to build a hydrogen boy that we may see coming um the point is that so there isn't any active or you know specific disincentivization disincentivizing of dirty hydrogen so to speak um but the hope is to get clean hydrogen at parity with fossil based hydrogen at this point parity cost and I guess my only concern about that is is if we're looking at parity

1:09:59 is it cheaper to build the infrastructure and for 30 hydrogen because the capital cost going to be cheaper for dirty hydrogen as it is for clean hydrogen because that would be okay yeah it's cheaper today for sure to to be doing you know hydrogen from fossil but I think a combination of the incentives from the federal government the funding from the federal government the hydrogen Hub activity um I think it's a function of um it be it does become increasingly uneconomic to do hydrogen the the dirty way and I think also markets are responding so there's going to be if you

1:10:47 no one's going to invest and help you build a dirty hydrogen plant they're just not it doesn't make any sense a question for us could also say that depending on the state there are different levels of carbon and cap and trade and other local legislation that could discourage that as well but it's really more of a pot you're looking at this from a positive you know let's make it economically as good or better to do clean hydrogen than dirty hydrogen that's that's the disincentive but there could also be other costs if you had not realized with clean hydrogen I guess the last part of that is once you have a molecule you can't tell where it came from

1:11:32 it's it's like the electrons you don't know where you know was that a call electron or was that a hydroelectron we don't know where the once it's produced and put into the system it's there this can't produce okay so I've got a number of questions starting kind of with inputs uh going towards losses and then finishing up with externalities and applications so if I definitely won't have enough time so I need to do some follow-up just trying to help understand the technology how much water does it take

1:12:18 to make one megawatt so um so we don't I I don't have the number in megawatts but but if we talk about sort of the equivalency when we talk about hydrogen often in measuring it we use a kilogram measurement and one kilogram of hydrogen is roughly energy equivalent to a gallon of gasoline um so here you can see from this slide how the water consumption breaks down the other thing to remember about electrolysis is you get some of that water back

1:13:03 uh um and when you're running a fuel cell vehicle um for instance the Toyota Mirai uh that that um vehicle will produce about a cup of water that is completely clean for every I think it's every few miles you travel and that water can be released in your driveway and it doesn't hurt anything um you know it's perfectly fine you could drive on your lawn and release the water in that would be okay um so so relatively speaking to some of the other Clean Energy Technologies we have um the the water you obviously you have to be considerate about where you're

1:13:50 producing hydrogen and a via electrolysis you know take into account water constraints um but if you think about we're going to be moving off of gasoline um then that if we use less water to produce gasoline we have more water to produce uh hydrogen and I've heard folks say that um there there isn't any way we'd use more water to produce hydrogen than we are currently using to make gasoline the 2018 study so we can get you that piece of information the limiting factor was not water from eweb's perspective the consumption of water was pretty low okay great

1:14:40 um does that so I saw that there was a cleaning system so does it have to be pre-treated clean water to be able to use to go through the system and if so what kind of I was going to say there's actually some advantages if the water is slightly dirty um in fact in many cases they they can add salt or other things it does not have to be Ultra Pure butter the application okay thank you and then so once the once you're treating it then are there any impurities or other kind of chemicals what are the what are the permanents that come out of this process

1:15:25 I mean in a in the process if you go back to the diagram I mean it really is just you're bringing um hydrogen in and you're making water in a field even the filtered calluses there's not a chemical or something that's used that comes out of it that's a Emerald I mean in the process here and the inputs and the outputs there's no problem the um the biggest environmental concern if you go back to some of these sustainability concerns here is about uh rare earth metals that go into the membranes and the pieces of equipment and they're looking at as they scale up some of those pieces of equipment what other opportunities are to reduce Reliance on rare earth metals in the pieces of equipment but the actual

1:16:10 process has no negative emissions that would be harmful okay well I'm at my three minutes thank you okay so um let's say we're using renewable energy to do this process so the amount of energy that goes in how much energy energy do we get out do you have any anything in the diagrams you say okay put in yeah the efficiency loss I have to look it up Michelle do you know I I do know that it's that it takes about 52 kilowatt hour what is it 52

1:16:55 kilowatts to make a kilogram of hydrogen and I can only do it as far as energy uses when it comes to Mobility applications so 52 kilowatts into a kilogram of hydrogen and a kilogram of hydrogen will move a vehicle about 127 miles so if we could do it maybe on a utility level yeah right sorry um yeah I had to get out the calculator when I read the report just to convert the units back and forth um so you talked about storage being a problem and I noticed on the diagram

1:17:41 that it was 253 degrees Celsius so what are the operating um I mean obviously that seems like a challenge because you have to keep it cold so what are the operating costs inputs to keep it at that level of temperature yeah the inputs there are and that is the challenge right so um when you think about storage you really want to understand what are you trying to store for and how long do you need to keep it stored right and so the reason that entities are looking at liquefaction and getting it down to that negative 253 degrees Celsius in order to liquefy is because when you liquefy you can get more product in a smaller space and so often

1:18:29 um uh back to commissioner Brown's question about Transportation application oftentimes an organization may not choose to have on-site generation of their own hydrogen they may choose to have drop you know hydrogen delivered to them and in order to have that and not have a constant stream of deliveries all day long you need to have a higher volume in each tube and delivered in a tube trailer and so um that's where the liquefaction comes in so you don't want to have it stored for that long for months on end because the cost and the energy losses can be significant that's where those intermediate chemistries come in to help manage that long-term storage that makes

1:19:15 sense yeah okay so on the on the space size again if we could just get some sort of you know like I noticed there was the nine nine nine thousand is the biggest like how much space does that take up just some sense of scale if we could get that are you talking about the one in the show um this yeah yeah and our applications will drive a different type of storage we're looking at a resiliency application where we need a week or two yeah yeah like so how much space would we need to to cover a week or two become a resiliency perspective that would be great if we could uh pump station or something like that those are the things that yeah and even from a resiliency standpoint if you get deliveries then

1:20:01 you want to make sure you have enough on site and in case the delivery was interrupted so you people want to um size their storage facilities to meet the needs even in case of a service Interruption um but it all depends on where the hydrogen is being produced and how it's being consumed so oftentimes the most efficient from a cost and from a carbon footprint standpoint is if you can produce the hydrogen very close to where it's being consumed because then you don't have to worry about turning it into a liquid and transporting it in potentially a non-hydrogen vehicle which might be having diesel emissions or other sorts of carbon in that life cycle

1:20:46 of the carbon intensity of that product so the closer you can put the production to the consumption is better and um but that also looks at how much space do you have available and there are certain setback requirements for for some of this and citing requirements that are being developed and formalized with natural regulatory bodies and there's some of those considerations the the chemicals that are combined with the hydrogen to make them the hydrides what are some of those and what other negative aspects do they have are those things that we would use at a utility level are those mostly for like the transportation purposes yeah the two most common uh intermediate

1:21:32 chemistries that um you know eweb has looked at um the the one that doesn't have carbon in it is ammonia um and so you can turn pure hydrogen into ammonia the chemical formula is NH3 so it combines with nitrogen and you know that's a you store it at a liquid and it's at you know normal temperatures so you don't have to keep it cold so the benefit is that you can store it in in that form you know it's easier to transport you can move it around another one we have looked at is there's actually a local company that turns hydrogen into something called formic acid um and that chemical formula is um

1:22:17 but here ch2o2 so there is a carbon atom as part of that and part of that ends up being how can you recycle that carbon atom to continually use in that storage process so that you're not releasing CO2 as part of that process so if you if you turn it into ammonia then how do you get it out of that do it again you have to put more electricity in to split it again to turn it back in the hydrogen thank you um um leaking issues so if the hydrogen gets out just it just it just recombines from

1:23:02 these oxygen and it becomes water again right so it's not it doesn't have the same kind of risks that you get with okay um and then would it just separate it is flammable so there are you know back to commissioner Brown's question about when you have to update your fleets uh you do have to update your shop to have hydrogen leak detection systems so that the lighting and things wouldn't cause a spark just like you would if you had a compressed natural gas kind of facility or something like that so very similar detection systems in a shop-based facility if you had it in a transportation application that was right into my next question that's kind of the risks of explosion and hydrogen because it's a smaller

1:23:47 molecule that's out more easily practice so it's there is a higher level of risk that you would Michelle isn't it less flammable than uh the traditional fossil fuels though so all of them I mean you have to be careful there is a risk of fire um but it is actually less uh explosive inflammable than our traditional uh gasoline diesel so um and there are established safety mechanisms and processes that you would follow just like you would with any sort of liquid fossil fuels um that's correct so so one of the advantages of hydrogen while it is flammable it because it's the lightest element it it escapes into the atmosphere at 44 miles an hour so it goes up and it goes out and it it

1:24:33 it tends not to concentrate in the atmosphere therefore unlike gasoline or propane fumes or you know gasoline is a or propane they they stick around on the ground hydrogen sort of goes up and out and the hydrogen flame actually is uh is let is lower in temperature than hydrocarbon Flames for what that's worth so it just leaves the atmosphere yeah right it wants to go up and out into the atmosphere okay you're like splitting water and then causing it's hard for all of us to leave

1:25:19 the atmosphere right we're kind of here unless you're dealing right okay does anybody else have any okay all right thank you all very much really appreciate the information you didn't know this was going to be a chemistry lesson this evening thank you so much it was great to it was great to be here have have a good rest of the evening and then we will move on to the next item on the agenda upriver meeting follow-up discussion

1:26:09 so we had we had this on the agenda in case there were thoughts and Lessons Learned From what we had I'll open it up if I um mentioned this in the email that I just felt like the staff team was really well prepared and really handled you know a lot of challenging questions from gracefully so my appreciation of the staff and to you Sonia for facilitating that um I had received a lot of emails ahead of

1:26:56 time and so I wasn't surprised by the questions that we think that um but I don't know how we combat 's misinformation I know that I I really believe that UF and staff did a fantastic job moving up to our decision on leebert with all of our Outreach that we did up there um and some people came but not a ton of people came some of the people that were at that meeting had attended multiple listening sessions and had opportunities to speak directly with staff and had their questions answered um so I don't I don't know that anybody

1:27:41 left that meeting feeling good I feel like um Folks up there maybe they just haven't we Convent um I feel like there was a misconception that we were still making the decision um you know I feel like we've been very clear about that so I'm not sure where that information came from or just how people read different things um I really don't know what we could have been done differently and I agree Sonia you did a fantastic job leading that meeting that was not easy I really appreciate that you were very calm and that you gave people into University um yeah but I don't know how

1:28:27 how we could have handled that meeting and had people leave feeling good about it so I I do think you did a great job I've been in that seat before and you notice there was probably my name was mentioned a few times I think I was trying to get that end of conversation because I would have asked a question I wish somebody would have asked the question about this mythical road that uh was going to wipe out all the people's properties and everything the road that we've designed and everything else because I could have easily said I have no idea what you're talking about because you know I unless I missed a meeting or something there's no Road designed and everything else but there was a lot of conversation about that from the residents about about the

1:29:13 road right away we're going to destroy the Japanese Gardens and we're going to be three feet from the house and all these others what are we talking about because they a lot of people spoke about that and I don't know why we didn't ask to see you know where did this come from or anything that would have would have kind of alleviated it I I wasn't going to say a word because I know the minute I opened my mouth if it's just going to be like sharp and blood is fine I know it's your turn but just about the world that is what I got the majority of emails about and I got a lot of emails about that and I answered every single email and so some of the people that spoke and talked about the people that I had responded directly to so and and

1:29:58 I don't know what what could have been done otherwise Frank you have a comment on the road in the moment oh I just said have some general comments I just you know I I came along with the impression that they had this idea that we're going to put in a too late so that we can wipe out the right way and we're going to do all this destruction to their properties because so we could use good pasture as the alternative and uh I have not read about that road or seen that road or discussed that road and so if I miss something that's okay but I don't know where they got that concept or that perception that doesn't do that right away taking and you know all these other things so and I don't know why we didn't ask for it or maybe it was just let sleeping

1:30:43 dogs lie you have comments on well I have a lot of comments um just in in general but specific to the road um we have talked about developing a South entrance or a South Side path and we've talked about potentially the bridge and going down going out the other direction um my primary comments have to do with being very specific about our scope and our role in this process going forward eweb is not the Transportation Authority we're not the Parks and Recreation agency

1:31:30 and I'll talk a little bit more about the dam removal piece but um regarding the road I can see where some people would interpret things but this is a long process and I'll I'll comment a little bit more about our role in that process after after people are done um yeah I mean for me it was it was Jekyll and Hyde okay because I for the past two years I've been the representative for the Mackenzie Watershed Council and I go to those meetings and all we get is is praise and boys for all of the stuff that we do up remember and so that's that's the feel that I came in going you know to that meeting with was look at all the good

1:32:15 work we've done up here and then to just get shouted at was uncomfortable I'll put it right out there I you know there was a guy standing up screaming in my face and it's just it wasn't comfortable I don't know how to alleviate that I think um one of the things that I think we need to concentrate on going forward we know that the transportation issue is is a big thing up there so bringing in the partners and talking to them and letting them know the the people that they need to scream at is not this board when it comes to Transportation issues that's that it's heatherbach and it's Steve

1:33:00 mulcarisky and it's the Oregon Department of Transportation but it was eye opening because there were a lot of people in that room that I see as as friendly faces and and then there were other ones up there that just it was not comfortable and I don't know um how to alleviate that but uh I'm open to any suggestions and John you know you've dealt with it before with the boat ramp you know you you laid the groundwork and said I know these people up there and get ready for it but I I can't get ready for that

1:33:45 so that's what's going on we're done I've said it before and I'll say it again you can do as much outrage before decisions made to the table and they will not pay attention and they will not give feedback until the decision is made is in nature people are very busy you know I mean and I think we did the right thing we had 20 plus meetings to try to solicit information and during that process we changed our minds because that's what you do during that process and I think

1:34:31 you know they're like oh well these all these meetings were just showy meetings that's clearly not the case because even during the conversation we had with people they said well you well this came out and then got different information and then you said this it's like yeah we've learned from that process and I know it's uncomfortable and that's it's unfortunate but it's also part of what we have to do selected officials because we're not going to please everybody and especially that group up there I mean we as we noted before like we were handed happy decision there were no good decisions that were going to appease the majority of the people and I really appreciate that staff and all of us

1:35:19 got to a place where we had a unanimous vote and we got to say look you know we've looked through all this information and none of us did grandstanding well I'm going to be the person that I'm your savior stood together and is it hard at all yeah but we did what we needed to do and as much as you know as much as the meeting itself was challenging um I just think that that we did the right thing getting to there and we're going to have to continue to have these yeah kinds of conversations I think the one thing that I would say that we could potentially improve on when we have these kinds of meetings you know we get really wonky here and the language that is used here

1:36:04 triple bottom line that sounds so businessy people are like oh you're a business and they inherently feel that as a business your whole deal is about making profit it's like but we're not we don't make profit that's not what we do but they still don't like they don't get that they don't know that they just see us as this entity that so to the extent that we can when we have these sorts of public meetings like take it down to the absolute Bare Bones and remove as much of that business lingo is humanly possible that is the way when I because I've I've gone through a ton of these Town Hall meetings when I worked for representative Barnhart and he was the chair of the tax policy committee nobody loves taxes but the way that we got to

1:36:49 connect with people was just talking about it in the most human terms possible and relating to people and so the extent possible we're gonna have more meetings up there this is going to be a long process next year people are still going to be unhappy and they're still going to be powering at us so the extent that next year we can try to do some more of that kind of down-to-earth language and rail that we've got um you know the decisions we've made like we did I think that's probably our best one other comment is um I can understand that it's difficult for people who live right on that Lake I mean we are directly affecting them I totally I understand that and I don't I

1:37:34 don't mean to minimize that at all um but I also know that part of this process will be to um landscape like once the dam comes down to landscape it into more of a natural area and so that I believe it will be beautiful and I think it's really important for us to emphasize that because I did get an email just talking about what's going to happen afterwards and it's just going to be a month left so I think just letting people know that we're not just taking down the dam and walking away or we're not taking down the dam and winding the roads to the walking away like our our whole intent is to restore it to a more natural state and um that it will be something that's that's really beautiful

1:38:20 platform before and after and Lessons Learned and then that's right in our backyard and they're doing the Klamath River dams they're doing four of them on the climates right now that have homes on them too and so hopefully we can learn from you know what they've done the examples of how they how they redid property lines and landscaped it and settlement you know because there's a lot of sediment there and all that stuff everything that that happened at before and after so we can learn from that and go from there because we you know not every day you can say you've got an example of taking a lake to a river and you've got homes but we do so I hope we could capitalize on that

1:39:08 yeah I was you know first of all just going to commend staff um you know for their their professional sorry for their professional and respectful and empathetic approach when I thought sorry just a second I'm getting choked up yeah no I I was I was really impressed with how they handled the information in the situation and and I also wanted to commend Commissioners for your willingness to engage in the community um on on a particularly impactful decision and so and I wanted to commend you for that I do think that there's a few things that we need to to make sure that we're clear on I think there's a there's a lot of details that are going

1:39:53 to come out of the action plan such as there will be a design review on on uh how the the area is repaired for example a couple of opportunities just just to adjust I I think we have to own a little bit more of the decision about around the dam removal specifically we decided not to generate any more at leberg I don't think it's fair to put all of the the theme of that on ferc to say oh ferc is going to make us take the dam out in fact it's more about the process that will lead to that outcome then Fork themselves Burke is going to um have the you know a settlement process similar to a re-licensing process and there are are a number of of

1:40:40 agencies and entities and stakeholders who will demand that the dam comes out once it's free has been removed and so I think we have a tendency to say that oh ferc is going to make us remove this well perk is part of the process and it's more about the further process and other stakeholders that will drive into that I also think the part that we need to own there is it's in our best interest not to own operate maintain and deal with the risk of an asset that has no um reason to to it has no fulfillment of our mission at some point you haven't you have to maintain your assets that that help you fulfill your mission and and a bridge or a dam without generation does not do

1:41:27 that and so I think it's it's not just a firm kind of for a process I think we look at it and I wouldn't recommend that we own operate and maintain assets that don't help us fulfill our mission as a utility I I just I don't think that's in the long-term best interest of the organization or our customers I felt like a lot of the public testimony either was sort of self-serving and misguided and a lot of it was very inaccurate but we really didn't engage in in the inaccuracies there um and I think that was that was part of being respectful listeners we had made a decision we've set a direction there's more details to come I think there's a recognition that it that it is impactful

1:42:14 um but I think I think we also need to be very clear about where our roles begin and end um and like I said earlier we will work very closely with Lane County we work very closely with the Oregon Department of Transportation um I have called Steve Moka high school he is aware of the issue he knows he has some Transportation issues to solve and by the way he has a 10 or 15-year advance notice as do the customers in that area I think that's important um the one thing I real I will actually specifically defend staff on were the comments about asbestos a particular individual who made that

1:42:59 comment we have responded to her multiple times via email copying Commissioners there is a very low likelihood that the cement has asbestos in it it was mixed on site it was not mixed at the Portland cement company where asbestos was known to have been used it is a very very low likelihood that that's the case is it a hundred hundred percent no but that's why we go through any sort of materials testing when you're demolishing a large structure like that but to portray this as oh staff being inadequate or not thinking about this or I I thought that was that was really done yeah with with ulterior motives and quite honestly poor

1:43:44 taste so I wanted to to that wasn't that was one example of just some inaccurate comments that um we chose not to engage on and and there were probably another 40 like that that we just chose not to engage on in that Forum I think staff has done an excellent job communicating factually when we needed to we'll continue to work with the community going forward on the details the many many details for over a decade that's that this process is going to take and we'll continue to be good listeners but I uh you can tell I'm a little riled up on a couple of things but I also think we need to um have some discussions and I'll I'll

1:44:29 have discussions when I have individual check-ins with Commissioners around how we would like to have the meeting format with the upriver community how we might want to make some adjustments to that format going forward to avoid a bit of the grandstanding type of approach that we saw just thanks for letting me thodist yeah just uh one thought response about the the DM itself I agree with you completely like I think it's reasonable for us to own the decision we're making and the implication for that damn I guess my thought is I've heard so many people say well can't you just leave the damn take out the roll Gates and use it as a bridge and I hear what you're

1:45:14 saying well why would we want to own that asset and someone might say well why don't you transfer that to Lane County and then they can own that asset I think the answer is I don't think First's going to let us do that right yeah we have actually approach that subject with Lane County and I'll have to actually talk to Steph about their specific response but I don't believe link Lane County wants to solve the transportation issue with that as an option that's the impression I got yeah because it doesn't matter if someone else wants to buy it as long as we don't miss the long-term obligation then that that would be an acceptable answer and I think that's going to have to come out in the action plan I agree with that and then only one other thought which is um that room is tight windfall

1:46:02 um and it kind of magnifies uh the energy especially when it's antagonistic and it feels like if we could find a bigger space a little bit more open venue it might not feel quite so strained I don't know the size of the new provided Community Center it helps we've met in the base they've moved the trucks out before and we've been in the Bays the only problem there is the Acoustics it's hard to hear and listen but maybe that won't say anything but you know that is an option

1:46:48 um I just last quick things I did want to you know think I thought one of the I know humanizing with all of the comments and when I called you out and you did such a great job saying hey I listened to it and I changed my mind I thought that that technically showed that hey this process and you listened you thought about it and you were presented with a whole bunch of other facts you can do a different conclusion and I think other I could see other people in the crowd as they looked out there but listen you know that that's the kind of thing that I do hope that we can summon to some extent people engage a little bit more in the inaccuracies that that's the challenge right doing it

1:47:34 in a calm way that doesn't invoke other emotions but you did a great job um and then I was curious you know we're talking about making it real on the cost side people don't well like oh well what's 400 million dollars like they have no sense of what that actually costs them individually if we can really boil that more down and say hey if we had voted on this on an average basis would have been this much was just I think that helps um individual people are not in the midst of this all the time get better and last Quick thought was could we actually do a follow-up with like if some of the questions that were asked

1:48:19 that were just blatantly inaccurate that we didn't combat at the time we didn't you know not combat but we didn't you know answer at the time could we maybe come up with something and put an article in the McKenzie river Reflections or on the website and maybe uh you know send it out to the some of the community members I think people signed in but good to get that outrage out there um can you change those rules too what remember they just just changed the rules yeah I I think on the communications question that President Carlson um I'd like to consult with

1:49:04 communication staff a little bit I think sometimes you can come across as defensive depending on how how your responses get structured in the format and I'm not sure whether the audience at least the audience in the room really wanted to hear the correct responses most of them actually are issues that we've published and and responded to already but I I think it's a good suggestion we'll probably look into it but like if people think that we're you know in charge of the road and we're making this and that's inaccurate I mean it's just and again I answered so many results

1:49:49 yes they were the same people um same thing with the asbestos I also directly answered about the asbestos so I just I I'm just concerned if we don't say anything about it that those people who are being very vocal are continuing to spread this inaccurate thing I do think some of that is in our FAQs right some of that was updated because of that okay so um I just want to say thank you for fielding so many questions from residents at River because I know I didn't receive any and I appreciate you taking that off yeah it's a lot of work and also um in my experience uh it can when there's misinformation like that it can be just nearly impossible to uh to get the

1:50:34 right information you feel like it comes to be so I I think there's just very diminishing returns and I feel like actually our team has worked really hard to put good information out there and done I think what what we expect okay so we move on all right um Drive resiliency board policy yeah president Carlson I know just just this is a quick agenda question for you for you I know that we have this item teed up we also have the next item which is the the capital plan improvements assumptions and priorities I I know

1:51:19 commissioner Brown has to leave and I didn't know if there was a particular interest on your part or of either of these subjects if there was a preferred subject I just wanted to offer that up that we could be flexible either way I appreciate that accommodation but I only had one question and that was just an assumption between three three and five percent for two years of inflation that's my only comment I think it's I wouldn't do that I'd give more like five percent for a longer period of time that I'm done with that agenda item okay so it sounds like this is this is good to go all right

1:52:08 so president Carlson uh Commissioners good evening uh I have just a few things to cover I know that um in your packet coming into the meeting uh you have a draft policy uh that the board actually had initiated as part of our policy review last December um this is uh the same as what was also communicated last month in in correspondence the intent is to have a discussion this evening have the board have a discussion and depending on the degree of potential modifications we could be prepared to bring that back for adoption with those edits uh next month the way that the policy is

1:52:54 structured um kind of similar to some of the other policies that we've started to use as a format especially policies that relate to procedures or directives not so much outcomes but these are policies that really try to drive process and thinking through the organization based on expectations are really oriented toward answering the question of why in this case we do recognize the importance of resiliency given our role in essential services in our community we go through and and talk a little bit about what that means how it's defined and then we get into what the policy is actually

1:53:39 directing the utility to do and that's um in this case to include resiliency considerations in how we design operate infrastructure and systems how we approach um opportunities and issues with our Workforce and the interactions that we have with our community and then a little bit about how we plan to implement those directives through plans risk assessments triple bottom line analysis how we incorporate that into the processes that that we currently have or are currently supported by existing board policy

1:54:25 and so one example of that I'll give and then open up really turn it back to you president Carson Carlson is when we think about infrastructure and systems uh an important aspect of resiliency is to looking uh to make sure that those operate and can be maintained under normal conditions but to also consider how those would be operated particularly in if you are in a recovery mode or if you're in a response mode and so that's that's called out specifically as an example in the infrastructure systems that we will take those considerations when we're doing designs or plans not just sort of the normal but also the the abnormal conditions and so that's an example of a of a directive

1:55:11 and I I won't go through the the rest of the directives I think that those were as part of part of the background but would be happy to turn it back to you president Carlson for really the board to deliberate this is a board policy so this is your policy um as as presented for consideration by management so I'll bring it back to you it's almost like we're adding another like a quadruple volume right like we're going to put resiliency in there sometimes when making the decisions but um how do we know that we're that we're including resiliency in

1:55:56 decision making like how will that be obvious well I think it depends on the scale of the of the project so um I'll just take for example infrastructure for example both the water and the electric utility do Master planning the the water utilities is a very formal process it's actually driven by a state requirement part of the specification or the scope of Master planning shouldn't should have content in there relative to to resiliency and in fact it probably has historically when we have major projects I think it's a it's a valid question to make sure that we have those in in the design and the scope those would be called out as type 2 so type 2 projects will probably

1:56:43 be fairly obvious when we get into the design and scope of the project I think in other ways and many of those would appear throughout our quarterly reporting for example uh the same if we have a specific annual annual objective but many of the results actually are driven by the overall performance of the organization as you as you get into these circumstances and the designs and the the workforce planning for example I guess my question is is there does there need to be anything specific that kind of codifies or mandates you're kind of you're writing this policy Monday

1:57:33 sure but how do we make sure like I guess is this specific enough do you think that other people won't follow this well I I do Rod was going to jump in but I'll follow up on that question as well kind of related but um so we're defining resiliency basically it's risk-based preparation management and then recovery so each one of those breakdowns has certain programs and there's you know there's a science around risk-based and so that's one of the things that we're working on in one of our business continuity group and so I think there'd be tangible ways outside of TBL or outside of a project because really this could apply to programs as well as as projects so but you ask a good question

1:58:18 right so how do you push the policy down in and so it takes time for it to take roots and grow but you know it starts here so but I mean I think by calling out those kpis and majoring and asking people to start to think about it be a big piece of that but culturally institutionalized yeah I think it it would it's it's typical for a guidance policy to focus on on the what you know what you're doing is you're directing the general manager to to take these things into consideration in the process um now that will be very specific outcomes if there's an area for example that we are not addressing or we have an

1:59:04 annual goal or it'll come right now it's an important part of our strategy so but it might not be as an important form strategically 10 years from now um but you'll see it in annual objectives and you'll see it in quarterly reporting and those those types of things but this being a a policy really around guidance is is naturally going to say here's what we want you to do as the general manager here's here's why and then there there is some in there around the implementation um especially when we do triple bottom line analysis it should have a component in there that that deals with Normal and abnormal conditions which would which would occur as part of resiliency

1:59:51 thank you by the way it's in the general manager's job description to another board policy just so you just so you know I'm just saying just not the future you know I grateful to see the workforce piece included I think that's super important and I think it's uh really uh added so thank you um I think the direction is fine like I don't have any objections with the the language and the way it's put together um but the language uh it's supportive but it's it's vague enough and I guess that kind of has some of the same questions that Mindy's asking about like oh we're actually doing this and so I think um the measurement and

2:00:39 how we measure progress here will be really important I'm really interested rod and how how you might propose to to measure this and from my perspective I'd like to see those metrics either included with it in this or um come up alongside you know as we're thinking about adopting this policy also have the metrics with it so we can see what it is that we're going to be measuring over time to me that would be really helpful to make this more concrete um it's clear to me that as an organization eweb is already as we said prioritizing resilience in a number of ways right our reliability standards Drive investments in resilient infrastructure we're working on the Wildfire mitigation plan working on business continuity planning I mean a

2:01:24 whole host of things that um that we do regularly but as you as you just mentioned Frank there's um this is kind of gives us a potential if there are places where think things are missing in the future and I actually feel like there are a couple of items that are more specific that as yet I haven't seen clear or Direction on but I think could actually I think should be incorporated in here and and from my perspective just to one is around local generation right we just we aren't generating a Libre anymore we have some questions coming up um in the future about whether or not to renew contracts for local generation that we have access to in event of some

2:02:09 larger grid failure and so I think actually this would be an appropriate place for for the board to provide some direction about you know what percentage of power do we either want control over or you know that we want to have yeah it's locally dispatchable or maybe it's storage I don't know but we've talked about this some um that kind of local value has such a resilience um connection that I think the appropriate thing to bake into here and the other is around our buildings um you know we've talked about construction of e-web facilities and the importance of them not only functioning normally but when there's a seismic event we really need these buildings to serve us and most buildings built to The

2:02:54 Standard Building Code are built for Life Safety which means you can get out without the building falling on your head which is fantastic but we need buildings that remain standing and at least usable even if the power and water don't work you need the buildings are made standing and be usable and repairable so buildings built a life safety standard often have to be demolished because they're so um structurally compromised that they can't be repaired and so from my perspective it'd be really valuable for us again I think it fits in here to bake in some more Direction about what's our expectation of any new buildings that we're I would put those two items as something that I I think we should consider

2:03:39 putting in here and and that's really the end of my comments thanks yeah I was just going to say that I actually believe they are in here um when I think about the design of a building what what this particular thing said what this policy draft says is that that building's uses both during normal times and have normal times needs to be considered in the design I don't think every building should be designed to a certain seismic standard I think it depends on the use of the building there will be times when different standards need need to be employed I think the same around

2:04:24 resource choices um and the contracts that you mentioned this policy to me would drive the consideration of what happens when the Grid's operating normally and what happens when the grid is not operating normally and so I interpret this not necessarily as big but that you will consider these in the major decisions whether that's a contract a building design or whatever I interpret that as as in there without being a specific metric um this type of policy governs a whole series of actions and Designs it's not you don't measure resiliency with one output so this is to guide the series of

2:05:11 decisions that relate to resiliency not just oh resiliency 6.0 Factor on the resilience because I don't even know that there is a resiliency scale but to your examples I view that as in there now the board may want it to be more specific and this is like I said this is important policy but I view it as in there as it's driving the process to consider what you just I I appreciate that and I appreciate that this is comprehensive in providing Direction um and I think that we may have the same understanding about local generation and building design standards but I'm not sure that the next person to Minnie's Point like I'm not sure the next person in your chair oh and to me to the extent

2:05:56 that we're very specific about a couple of those things it might be easier for us to make sure that we have the same understanding and then as far as seismic standards the buildings I agree with you not every building um highest seismic standard there are some maybe outbuildings that are just covering some tools we don't care about that I'm not really invested in those I think I will be talking about buildings that are occupied by people or essential equipment and then I would say like the default should be we'll build it to a higher seismic standard unless there's a pressing reason not to so that I don't want to be dogmatic about it I just feel like the default should be that and and my understanding is that with this building there was some seismic performance that was backed out as we got closer to building because if you couldn't afford it which I understand

2:06:41 like I I totally understand um the financial situation we were in and also I think I think it's good for us to be baking that into the cake never wherever we can I I don't want to get a metric in there that says that we have to have a certain percentage of local donation that takes away our negotiating power so if we come down and we've got IP and Seneca and their local generation they know we have to have a certain percentage of our portfolio local and and they can everybody knows where our power comes from it's public and and then we're negotiating and if we got a contract that we don't want to sign but we have a policy that says we have to set up a certain percentage there goes our

2:07:27 negotiating power so I don't I don't want a mandate that we do that I mean I think it's in the policy that we we rely on that as much as we can but we have to look at cost too I mean you know what what Seneca I mean I've never seen the contract but I was involved in it and then with the buildings I mean I was a committee that built this thing and the first we told the voters we wouldn't go over 70 million bucks it was 110 when we started and we had to do a lot of Earth that we had to get rid of the green roofs we had to get rid of a whole lot of building component items but essential service buildings cost about almost 40 percent more than a regular building a standard seismic spree and essential service for hospitals police stations and and fire stations and that's about it schools aren't even such a service and but they don't need to run but you stop thinking about the concept

2:08:13 they have to survive it well a lot of our buildings are basically our water treatment and our water testing and things such as that so I'm comfortable with the way this is written and not getting too specific because if it stops you in and takes away your your ability to have latitude and discretion um and I think we just have to make the assumption that the leadership and the board are going to continue to be as responsible as they have been in the past yeah you know I think this is a high level policy I hear resiliency right I'm thinking okay who gets who gets water first who gets power first you know that

2:08:58 that's the citizen right is is the hospital gonna get what what's the list you know that you put out to restoring right and and I'm sure there's a list there somewhere or I hope there's a list there somewhere because if there is an earthquake people are going to say if I get my water and how long until I get my power um you know kind of to man's point we can be 100 resilient it's it's the cost right you know it's and and that's that's going to be you know you were talking about the metrics and how do we measure the metrics the other question is when you're going through this

2:09:44 how do you balance cost against resiliency and and where that you know where is that lie we can have all of our pipes lined with redundant pipes and NASA grade you know if you're going to the Moon you've got three backups on four backups how many backups are we comfortable right and and at what point can we afford or not afford this or we I think we see it materialize and get our Second Source water and you know it's like we've realized that this is an area that we're weak in as far as resiliency or stepping up and going to invest and so

2:10:31 it could change to make sure that we're there so I like the policy I like the lens that it goes through the question I have about the lens is what prescription are you using how do you know which look at it again cost and didn't get into that triple bottom line because it's it's now instead of the three-legged stool it's a four it's it's a chair and you can sit on a stool with three legs more stable oh here it costs more than a stool

2:11:20 right I actually appreciate the conversation because I appreciate um that you know you're application of it right and I appreciate really several comments around you know it's the it's a Quattro bottom line now or or like a chair which can can rock by the way because now you're done in three legs even but um I guess I would really look at the intent of this policy as to Daylight and intentionalize those decisions if we were indeed making a trade-off that it would be done through a lens that would make it intentional it wouldn't it wouldn't just be a decision

2:12:06 based on Triple bottom line as it exists today there would be true consideration for what is the application under a different scenario after an earthquake what what is the cost and the risk associated with local generation in a resiliency type of situation I think at Daylights a lot of the things that we talk about but by policy now it takes that forward to whoever's in in these chairs I'm going to say my chair your chairs too whoever's in these chairs to make those decisions intentionally um I don't know the exact prescription it depends on whether the organization has diabetes or covid at the time you're

2:12:55 going to actually have to apply it under the conditions that and the priorities we we have in fact the next subject we'll talk about some of the guidelines we use for Capital if doing something more resiliently pushes up against the boundaries that the board has set around our capital and our rate increase targets there's an intentional conflict and intentional tension that that has to be resolved so I'm not sure what the prescription is but I know a policy like this will highlight it okay well the last couple I mean I I like the policy I tried to think about how the policy was I mean can you have

2:13:41 your utility you have electricity in the water you inherently have built-in rules regulations requirements already that forced us to think about how do we keep the lights on because we have to operate 24 hours a day and that I mean that in and of itself lends to it so I kept trying to think about okay how does the resiliency policy add in that additional layer and when I tried to think of the different items I mean the community aspect the staff aspect to me it's that reinforces it but then it's really about the culture that is built around it so this covered everything I thought would be in there or what you know any example I could

2:14:26 think of um I kept going in and finding it but then it is going to be that the kpis what is it how do we end up building that into the culture from the staff the GM the board level you know when our rules and expectations and thought process and design so I I love what is written there it's the first step in how do we just institutionalize it

2:15:14 just to be clear like I wasn't looking for specifics for any of these but I think like to estonia's point how how do we just make sure that it's more present um how to do that but even if they're including like little how latency point adjectives I think it gives it gives the board that tool as well um when we start having discussions around future resources and the iterations of the integrated resource plan well how is resiliency considered in some of these decisions going forward I think that's the intentious to pull those out and create that culture I'm

2:16:00 I'm not against metrics I think we have there are certain policies we have where there are components of it that have very specific outcomes that we're looking for I think that's really appropriate in those cases I struggle with how you would actually develop metrics for resiliency I know there's some great examples but to me a board level policies just highlights the process that addresses those as we as we go through those processes as those come across those issues become real for us we we need a tool so you you now can have a tool well how what resiliency what how did you consider resiliency in this project um you know okay I think that's a great

2:16:46 question and one that we're going to have to incorporate into and institutionalize I think to talking simple Spain earlier like the some of the metrics we already have in our kpis the financial targets the um you know delivery targets how how down were we those are the measurements of resiliency to some extent all right um just as a follow-up I you know if there's specific things that you see in here or phrases or words or other things that we are uncomfortable with or have ideas around or have further thoughts we

2:17:31 can go through those at our check-in um and then further than that unless there's something else we can we can either have another discussion I'll leave that up to the board either have another discussion or we can push ahead and then do like we always do a six months review which will actually be the end of the year we can incorporate any new procedure or policy into the year-end review to see if it's doing what we think it should be doing I'll just get a quick head knot are we comfortable bringing this back for Action next time I don't know if I can without some more metrics or something to tell us how or

2:18:19 whether we're doing it it's hard for me to get behind it it feels like it kind of it says all the right things but it's not um it's not specific enough so but it's just for me but that doesn't mean that we don't bring it back but maybe let's bring back for discussion next time and if there are things that you think of in the meantime that can dial it in then we can have that conversation next time your direction yeah okay well then um we have a break and so we'll take a break um 10 minutes we will come back at eight and then the rest of it

2:29:22 [Music] okay and we are back so we have the annual Capital Improvement plan assumptions and priorities turn over to Frank and Rod thank you president Carlson uh Commissioners with me as broad price assistant general manager we're here to sort of unofficially or officially kick off the financial planning season uh part of our annual process that we begin about this time of year and then we we work through really much of the rest of the year uh dealing and scheduling our capital and looking at trade-offs the agenda for this evening is to just give you a little bit of context and reminder

2:30:07 around where we are in the process and the opportunities for Commissioners to provide input and weigh in on different different pieces of it we'll talk about really two areas of some of the assumptions that we're we're going into this planning process with some of those around business and economics and others around sort of how our strategy and operational forecasts and priorities are weighing into that and then at the end try to Garner some board concurrence or guidance out of the assumptions that that we are are are making in this process a little bit of just context around the planning we we do go into this uh having driven a lot of the the priorities based

2:30:55 on a strategic work that the board and management is done there's also a number of things that contribute to Capital plans but really we're we're looking at the combination this evening really of guidance around economic assumptions and investment priorities as we see it and those will feed into the process that we go through for the long-term financial plan and the capital Improvement plans and then those eventually lead to our annual budgets and through the cost of service analysis to the actual impacts on our rates and then this this process then feeds back through our annual goals and through our quarterly reporting and then we we ended up we ended up doing it again next year

2:31:42 again this is where we are we're talking about some assumptions we'll be back again in July with more details around some of the preliminary results relative to Capital and long-term financial plan projections based on some of the principles and guidance that you provide this evening as well as as just the modeling that we do around the impacts and trade-offs between capital O M um and long-term financial plan assumptions and that will provide some guidance then to drive our Revenue requirement that ultimately drives this next year's budget I will classify and just make sure that we we understand that a long-term financial plan is really provides eweb with a long-term

2:32:29 view of the financial impacts that really inform the near-term decisions and so the board doesn't actually approve the long-term financial plan it's really a tool what actually eventually gets approved is the annual budgets the O M expense budget and then the two Capital budgets for electric and water it is an iterative process this part is a little bit behind the scenes very integrated process between how we're looking at our Capital needs over the next 10 years or or more and how those influence the long-term financial plan which at some point eventually forecasts annual rate adjustments or Revenue

2:33:16 require adjustments for our customers and this is over the next month or two in particular staff looks at a lot of trade-offs between Capital different Financial assumptions and how those interact eventually having an impact on our customers so this is a little bit of a of a look underneath the hood when it comes to engineering and finance staff as well as as other staff I.T Investments as well as Investments and other things such as our resources and how those will all play together this is really the the next two slides are the meat of the assumptions I know there's a lot of words on here Commissioners did receive this this presentation as well as the backgrounder

2:34:02 ahead of time just a few of the policy assumptions really uh communicate that we do have Financial metrics that we have established we also have processes that we've established that we adhere to in in this this process General economic assumptions a few things to highlight there we have some near-term pressures on some of the escalation factors that we have we have included I know that one of Commissioners Brown's questions had to do with capital escalation and um the fact that he felt the five percent

2:34:47 um or a year or two needed to be extended there are some impacts to that I'll just try and answer that one that one up front I think when you look at this escalator um if you uh first of all the the FED it it's part of their job is to manage inflation and the pressures um they have historically been pretty good at that we have seen some excursions but historical inflation and escalations have typically been anywhere from Two and a half to three and a half percent depending on that particular index that that you may be looking at um if we underestimate escalation then we have uh

2:35:32 the up the the outcome of that is we're reviewing projects and potentially looking at year by year adjustments potentially even within your adjustments through budget amendments if we underestimate the escalation what we end up doing is over collecting from our customers and so you kind of have to look at sort of the the over and the under and which one gives us the most flexible quality this seems like a sweet spot at least from our finance staff that we are recognizing there's some near-term upward pressures but recognizing that over the long term that'll be balanced through other fiscal policy and if we do um sort of over bake that into the into

2:36:18 the cake then we create some other issues for our customers and and so we we think that this is actually probably a good landing spot the the target age of system this impacts um how much we look at replenishing and replacing assets you'll note in the memo that typically we look at sort of routine replacement at roughly two and a half times the annual depreciation part of that factor comes from the fact that you're depreciating assets that were put in place a number of years ago and through escalation what we found was the replacement costs tended to be two in two to two and a half times higher than the original cost of the assets that we're replacing that's where that that

2:37:04 two and a half times annual depreciation to maintain your age of system was based in a couple electric and water specific assumptions some of those are conservative assumptions we've built in we built in for example around consumption we do build in a little bit of conservatism knowing that weather impacts significantly Water and Electric consumption based on our customers so for example in a long dry summer we might have more than more than that but we also want to be conservative when we when we talk about the revenue side a couple probably the a couple of really key points here um has to do with the fact that

2:37:51 um that we have or or plan to include in our assumptions um the pre-funding for Liebert beginning in 2024. um and that will push up some of our previous assumptions around trying to keep rates within a within a certain factor and I'll get to that here in a second Liebert generation being completely removed from the financial plan from a generation perspective and also incorporating the pre-funding in 2024 are two assumptions that that we've made but we would certainly like concurrence from the board that that's a good starting point anyway we have included some electrification growth

2:38:37 that is starting to have some favorable Revenue impact in the outer years of the long-term financial plan period the sort of the Strategic and operational these these again kind of relate back there's a little bit of a bit of History here um a lot of times and I guess one of the points is when we start to look at um what we agreed to was for the reasonable rate escalation for our customers it does compound so when we we think about something that's within a reasonable range of inflation um for example a three percent annual rate increase ends up being in the 34 to

2:39:22 35 percent over 10 years just to to give you a little bit of feel um for that type of a benchmark I will say that based on some of the economics we're seeing now and the incorporation some of some early assumptions we're starting to push push past that 33 to 35 percent original Benchmark and there'll be some explanations for that but we are starting to see some upward pressure we do look at customer not not a level change right now in customer care but there is a note there that the methodology is being refined we are looking at how we determine um what the eweb customer care level

2:40:07 should be um what we're doing there is looking at the percentage of the population in Eugene that can be financially burdened how much should eweb contribute to returning that energy or utility burden back to something that would be more median and so there's a little bit of calculations and work going on behind the scenes and there'll be more information coming out as we start to get into the specifics of the budgeting but I the original intent of looking at 10 percent of expenses for five percent of the residents we want to refine that a little bit to be to be have some more specific outcome intents behind it and that's going to have to do it also takes

2:40:53 into account the demographics of our population that we're serving and also the impacts of rates on on that demographic so so both of those things will be considered in that methodology that we're working on um water in electric investment priorities um any questions come up with that that's a broad's area of expertise to help walk us through uh we are on the water side looking at some continued Watershed Investments most of the Watershed Investments at this point in time are o m expense not necessarily Capital but it is listed here because it is and has been of our work and also we have a fee that we created that is is still in effect

2:41:38 um another couple of years the priorities water really base level water storage interconnecting some inner in town transmission for operational flexibility and also facilitate the storage and the uh Willamette Source development and treatment plant and that's a that's a big component in the in the waters long-term financial plan and capital plan it has it does make it pretty significant difference and it's a rate impact that roughly roughly doubles the rate increase over the 10 years with that with and without that water treatment plant in it that we're still very affordable from a water perspective but

2:42:25 more results coming on that we're just including that as a priority as the assumptions we go into it electric priority priorities um Carmen Smith the Libra Canal mitigation eventually decommissioning costs start to start to roll in in the 2030s dam safety and some emerging issues there are important and then really uh both Water and Electric are seen some more increases in emerging compulsory work some of that is aging equipment failures for example on the electric side they're a very specific reason for that Eugene was growing in the 60s and 70s a lot of infrastructure was put in

2:43:10 in the 60s and 70s and it simultaneously aging and reaching end of life and so um we we are starting to see more and more failures and therefore the replacement the compulsory replacement moving from that risk-based term to compulsory where we actually have to do it if you don't if you don't manage your risk you eventually have to respond and we're starting to see that both on on the water side and the and the electric side and then some shared priorities of infrastructure of Ami and EES EES being really the lake replacement of our Legacy I.T systems with both a business continuity benefit as well as a Strategic Benefit when we start to look

2:43:56 at new products going forward so um really what we're looking for this evening is is some feedback on the assumptions that we're making going into this process and whether we've missed anything whether the board has questions or is comfortable around any in particular the last two slides or has any questions about the drivers the next step after this in July we come back with more details around the specifics of the financials associated with capital Investments and also what that what the results are the initial results and assumptions of the long-term financial plan do anything

2:44:43 um two two things maybe one is um [Music] the mitigation costs for that some of it will be in the capital plan and some will be in O M because not all of it's going to show up into Capital accounting perspective so when you get the capital plan breakdown it won't have everything um the other thing Frank mentioned is electrification income is considered in the long-term financial plan but we're not entirely sure what needs to be done from an expansive point to YouTube that President Carlson affected I don't clarify your question can you go

2:45:28 back to the previous slide talking about the targeted age of system impacted at 2.5 into annual depreciation can you give an example of that I'm not just not sure I'm wrapping my head around what that means so I'll just use a Transformer as an example so the asympt system is really the relationship between the total value of the assets and the assets that are fully depreciated um as you're depreciating those assets you can drive that up or down based on your replacement rate what we've found in replacing that to really have an effect on the age of the system the items that we're replacing are two and a half times more expensive now than when they were originally put in so that when

2:46:15 you think about the relationship between what you're depreciating annually and what you have to do to replace it it's two and a half times that so that's in order to really impact Asia system up or down we have to spend at a rate that is significantly higher than what we are depreciating at that makes sense thank you I appreciate that I love that you did a good job but yeah that helped me yeah thank you a quick clarification can you talk to your second Point again I've been rolling over in my head and I've given right over me the switch point on which one uh Rod's second point on uh [Music] sure so that's um part of the assumptions made in the

2:47:02 long-term financial plan now so um we've heard a lot of information from the electrification study in the IRP and the sort of the electric patient location curve so you know we still have more electricity right so that's going to provide more income so to speak and so that piece goes into the the income side the we don't really understand what it'll take to realize that from an electric system perspective what we'll need to modify in the system figure Transformers your bigger wire W2 so we don't know how to connect an improvement because of the budgeting side most of these budgets are actually

2:47:48 the cost side that we have we know how to recognize the revenue it's really easy to collect um it's probably the way I phrase it but um in order to um you know you can't get the income if you don't have the wire to hook it up what does it cost to have the wire to pick it up if we need to make a bigger wire right okay we're not sure that it's free Revenue so and and what I mean by that is sometimes you have to make investments to realize Revenue right and there's a margin eventually that you're working on we we're starting to see Revenue coming into the outer years of the financial plan but we haven't fully accounted for what we think might be the Investments now that it we might be able

2:48:33 to mitigate through other programs and like demand response and some things like that it's not just going to be a oh a one for one but that's something that that um we're High we're just highlighting it's it's not huge it's it's impactful and it's escalating but it's reasonable and so there may be some some future costs that have come into play there okay other than that thank you clarifying questions on that point um is that just on the electric side or is it on both of the electrical water side it sounds like we were talking about just electric spider an electrification specifically right yeah and then when you say it's reasonable is that like less than 10 less than 25 percent it matches the original sort of

2:49:21 estimates from our electrification study that showed mostly it's around things like electric vehicles where there's specific um regulatory drivers such as the state of Oregon saying no internal combustion engines by 2035 you're starting to see certain trends that have developed I'd say reasonable it's not something that would be overly impactful in the next five years worth of decisions so again the long-term financial plan projects out we end up making sort of one or two year decisions from that but it is something that you'll start to see well revenue and some of these other things are starting to increase and it seems like it's not a mandated full 100 electrification it is ramping and it

2:50:07 seems like it's it's aligned with our electrification studies um a couple of things so on the budgeted depreciation rate ratios in the in the chart that we got in our in our packet we looked at water going to 4.3 because of the second source of those things it had electric it too not 2.5 so can you explain that I mean if we're seeing the Aging out it seems to me there should be at least a 2.5 not a 2 going forward

2:50:52 yeah I think what we did there was was we put in that's the actuals from last year's plan so I'm not sure we don't have enough information to calculate the finals at this point section okay um I think that was a 2023 and it well it had 20 so 2023 was two is what you're saying that's what that chart is okay um because yeah I think those are gonna be higher either figure out that 2.5 isn't especially with what you talked about about the Aging of the system 2.5 isn't going to get us to where we need to be and so let's try and hone that number to get it as as accurate as we can because it's a guess

2:51:37 right but yeah unfortunately it's like you know you need to go too far off in the tangent but it is a average across the whole electric which contains generation and T and D Silver so in your targeting areas there's also a few other nuances um Mr borowsky if that's based on what you're depreciating today you may have equipment that's already fully depreciated and that's that's the part that may not even may not be in that calculation so um there's there's some nuances to the age of your system versus how much and to Rod's Point sort of peanut butter to cross there it depends on whether you're talking about transmission or

2:52:22 distribution or generation there's some slight differences but I think we understand your point there I mean that's that's a major driver in one of the denominators that you need to really have to get honed in the second thing that I'm really encouraged by is that this is the first time that we're actually speaking to the costs of Libra you know in the last two long-term Financial plans we said where's Lieber where's lieberg whereas you'll get to see where Lee Park is on this one exactly and that that's encouraging because we've known it's coming um but this is the one that is going to start to show up in you know it won't affect the rates probably early on except for if we're pre-funding and that would be part of it but a lot of them

2:53:07 will be it's still in this is 20 24 to 34. so it's good it'll actually sort of so continuing so if we're pre-funding that means we're fully funding through rates which will extend beyond the 10-year window and so you'll get to see this will be an early and long opportunity um to finance that so you'll you'll see that the windows of that and pre-funding will start if if we go based on the board's guidance from two months ago I think it was when we had that discussion um that will start in 2024. there would

2:53:53 be a direct there would be a rating path next year and and you know I'm encouraged by that we're not putting our head in the sand and saying Don't Look Behind the curtains like the wizard boss right you know what's behind the curtain um but there's still some things behind the curtain that we're not looking at Walter bill is the second part of that and and I also believe that at some point I'll put it in later on but um the sake holes of the trail bridge is something that I'm concerned about because we heard about that about a year and a half I'd like to know what the progress on that is at this where are testing and stuff on evidence because that could be a driver to this

2:54:39 thing and that is a priority it is listed in there and that's why I'm saying it's it's finally starting to emerge as far as Financial States I'm glad to see these things are starting to bundle up I'm I'm also wary that this is going to have a fairly substantial impact on Race over the next 10 years you know we've held rates down for a long time a lot we've got a lot of capital projects that are going to drive those rates some of them it's on you know if you're talking about Liebert but seconds second sources is definitely

2:55:25 capital and three more storm status capital on the water side and then the Aging infrastructure on the lineup side is going to put a burden on our rate payers and so we need to be ready for that and be ready to meet that investment you know it's it's always the going back resiliency against costs right well we could stick with our old reservoirs and not be resilient thanks for understand ing thank you thank you we'll look forward to coming back next month with some initial numbers

2:56:11 and if they're too bad we'll have Deborah Hart presented something I'm just kidding I'm just kidding I'm paying attention [Laughter] oh now she's now she appeared yeah it was just fun to make sure she was listening I'm awake I'll be right there right behind you Deborah well we're getting close there future board agendas right but there's a new location what's that it's a prank but in a new location get into the location um no I actually don't have too many comments you have copies of it

2:56:57 we've in in August there are two informational items one is um we have two guest speakers one of them is to talk about the lower Snake River dams and the impacts of fish and the and the other one um yes mud will talk about some of their rental specific programs that I think the board requested so two guest speakers in August both informational items were reported those are those are new things that randomly but I think other thing everything else is pretty well scheduled you know she had some specific books thank you for

2:57:42 yeah for getting him and then brought any comments about the uploading poi Deputy team is going to go through the training and talk about setting it up and impact streamed I think um so laptops should be a fairly setting a lot of interaction

2:58:35 um can I just ask a question um so is there a possibility in the next few months for an update on government re-licensing and Trail bridge it's been a while since we've heard anything on the progresses of those and it's going to be spooled up and running and when campgrounds are going to open and sure that that stuff would be something that I'd be today if there's if there's room in a further agenda I don't know other people here to speak

2:59:35 but this may be yes expanded go ahead and add that to September Department Trail bridge re-licensing project update and five minutes or whatever you feel is appropriate again if you like damn safety and making a monthly update computers and all the good maps and all that stuff okay I had one thing that I missed during the opening session I also attended the EUC the first Friday and that web posted it was wonderful event

3:00:26 but I I was curious so eweb hosted this time so we got invited to it are we yeah I'll be sure best on the title for which organizations but thank you it's not just me see this building does funny things okay all right excellent so I guess if that is it unless

3:01:15 okay well let's adjourn okay go home thank you thank you saving measure just turn on one side