Minutes of PUBLIC UTILITY DISTRICT NO. 1 OF PEND OREILLE COUNTY November 20, 2012 BOX CANYON CONFERENCE ROOM, NEWPORT, WA

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1 Minutes of PUBLIC UTILITY DISTRICT NO. 1 OF PEND OREILLE COUNTY November 20, 2012 BOX CANYON CONFERENCE ROOM, NEWPORT, WA Present: Staff Present: Others: Daniel L. Peterson, President Curtis J. Knapp, Vice-President Richard A. Larson, Secretary, via telephone John Jordan, General Manager Management/District Staff Karen Willner, Clerk of the Board Greg Vaughn, Ponderay Newsprint Company Janelle Atyeo, Newport Miner Following a Board Workshop, the meeting was called to order at 10:00 a.m. by Daniel L. Peterson, President. The minutes from the November 6, 2012 meeting and today s revised agenda were reviewed. CONSENT AGENDA: Vouchers audited certified by the auditing officer as required by RCW , and those expense reimbursement claims certified by RCW , have been recorded on a listing, which has been made available to the Board. As of this date, November 20, 2012, the Board, upon motion by Commissioner Knapp and second by Commissioner Peterson, approved the following: The minutes of November 6, 2012 meeting and the revised agenda for November 20, 2012 as amended. Payment of those vouchers, included in the list referred to above and further described as follows: Voucher No through in the total amount of $2,102,367.43; four wire transfers in the total amount of $5,703,771.51; 130 ACH Payroll transactions in the total amount of $249, BUSINESS FROM THE PUBLIC: There was no business from the public. MANAGEMENT REPORT: John Jordan, General Manager: He provided an update on the Rodenbough Jury Trial and reported the District had sent an offer to the attorney for the Rodenbough s and also filed with the court protesting the fees. The District received a counter offer back this morning from the Rodenbough attorneys. Discussion was held. He received information from Bonneville Power Administration (BPA) on the 2- year rate case which will start in the fall of next year. He reported that BPA did an analysis of the Block and Slice Product. He explained the product and noted it could mean a significant increase for the District. Costs were given for the fish and transmission. April Owen, District Assistant General Manager, explained the point-to-point transmission that the District is getting. Discussion was held. Mr. Jordan reported on a matter regarding a customer s yard light. He explained that when the yard light is on the District s side of the meter, the District replaces bulbs at its own cost. If the yard light is on the other side of the meter, it is the customer s responsibility. The District does not change the yard light for private citizens. Chris Jones, District Operations Manager, explained there are no electrical contractors in the area with a bucket truck. Discussion was held. Mr. Jones will contact the customer.

2 Janelle Atyeo, Newport Miner, joined the meeting. Mr. Jordan noted the action item today for appointing the District s Northwest Open Access Network (NoaNet) representation. He explained that the District needs to let NoaNet know how its representation would look under NoaNet s new governance structure. He recommended that one position should be held by a commissioner. He provided an overview of NoaNet s budget and reported on the Broadband Technology Opportunities Program Round 1 and Round 2 projects. He reported that Charlie O Hare, District Chief Operating Officer, is at Box Canyon Dam today to cover for Terry Borden, District Hydro Production Manager. He provided a brief Production update and reported on issues with the turbine hub. He explained that the District wanted an inspector to be there when the hub was ground down but that an Andritz subcontractor did the work without an inspector present. He reported that Mr. O Hare is hoping to hear tomorrow if the hub is accepted. He explained the hub is a critical path item and it may not be at Box Canyon Dam in time to meet the project timeline. He reported there is a change order coming on the turbine unit #2 (the third unit to be refurbished) discharge liner and that he signed a change order for the time and materials. He noted that if the change order exceeds $100,000, it may need to come before the Board for approval. Pat Buckley, Natural Resources Manager: He provided an update on the year-end work and reported the stream rehab work is shut down; the milfoil work is in hibernation; and the fisheries work is backing off. He reported there are a number of reports being worked on and annual meetings are being set up for aquatic weeds, noxious plants, and license-based with local agencies. He noted that if the Board and Mr. Jordan are interested he could give a presentation during the first Board meeting in December on the fish and bull trout study and the Box Canyon Dam model. Discussion was held. Discussion was held on a citizen s fish rearing project. Paul Boxleitner, Human Resources Manager: He reported that he appreciated being back in his former role at the District. He reported that as part of getting up to speed, he ran an employee listing and noted that about 1/3 of the District s workforce is age 55 years or older. He explained that from an HR standpoint, the District needs to be mindful of short and longer term succession planning. He provided an update on recruiting and reported that an employee hire will be needed to backfill for Mr. Jordan s and Ms. Owen s financial/auditing responsibilities. The recruiting process will be initiated in the next week or so. He provided a benefits update and reported the annual open enrollment period for flexible spending accounts is now underway. He reported that an was also sent to all eligible employees on the process and policy for cashing out personal leave. He reported that Unified Insurance Program (UIP) Trustees are discussing what to do next with regard to his previous position as the UIP Benefits Manager. He reported there is a teleconference scheduled for December 12 to further discuss the topic. He reported the latest wage/salary compensation survey results (for the northwest utility industry) from Milliman have arrived. He is currently reviewing the data and will be working with Mr. Jordan to evaluate how the survey results align with District compensation levels. He will provide more information to the Board at a later date. He reported that he visited with several employees at Box Canyon to get reacquainted. Page 2 Minutes, November 20, 2012

3 Commissioner Larson, via telephone, noted a desire that the District hire Pend Oreille County residents. Mr. Boxleitner reported that he understands that desire and will do his best. Chris Jones, Operations Manager: He provided an update on the crew work and reported they are working on line extensions including the Community Network System (CNS) hub electronics; they are continuing to change out the red tag poles; and they are working on the east side of the Pend Oreille River for the NoaNet Usk to Tiger Project. He reported the NoaNet makeready work on the west side of the river is complete and he is getting ready to order the fiber for the west side of the river. He provided an Operations update and reported that Bryant Kramer, District Senior System Operator, is working on a request for the North American Electric Reliability Corporation Tracking Program for PER-005 which states that system operators will be trained on a list of tasks that pertain to their utility. He reported that he has everything ready to go and he has picked the tracking program that they will be using. He noted this will be a benefit during audit time. Discussion was held on a letter that was sent from the Governor of New York to power authorities on the east coast regarding Hurricane Sandy. Discussion was held on the Pole Test and Treatment Program. April Owen, Assistant General Manager and Auditor/Senior Manager, Financial Planning: She attended a Public Utility Risk Management Services meeting on November 8 and reported that Dan Ashburn from Marsh Insurance is retiring. She explained that the District was to have an assessment before the end of the year and that it has been received. She is working on the updated Boundary Agreement. Discussion was held. Joe Onley, Community Network System Manager: He reported that Oral Hamilton, District Fiber to the Premise Overhead Drops Inspector, and Robert Fritz, District CNS Owner s Representative, visited with a customer regarding a fiber damage claim. He provided a Fiber Broadband Project construction update and reported the overhead backbone is done. He provided the number of overhead service drops and reported that work has started on the service drops. He provided the number of underground miles that is completed and reported the underground backbone projects should be completed soon. He provided the number of crews working on the plowing, trenching and boring. He provided an update on the NoaNet Round 2 Project and reported that all the fiber has arrived and that the District is storing it for NoaNet. He reported the make-ready work is complete on the west side of the river and the poles have been set on the east side of the river to tie the project together. He commented on a budget item. Discussion was held regarding the Planning Commission and the permits process. Mr. Jones reported that he is working on a blanket permit for the shoreline. Discussion was held regarding the redundancy when the NoaNet Round 2 Project is completed. Mr. Onley reported that he will be asking the National Telecommunications and Information Administration for a fiber project time extension and will convey to the program officer that the backbone is in and the hub cabinet electronics are in and should be operational soon. Discussion was held. Page 3 Minutes, November 20, 2012

4 Mark Cauchy, Director, Regulatory & Environmental Affairs: He provided a River Road Erosion Project update and reported that the project engineers review the invoices before payment is made by the Town of Cusick. The Town of Cusick will send an invoice to the District. He reported that last week he went to Sullivan Lake to meet with the Forest Service to finalize the plans for the cold water pipe. He reported it was a good meeting and things are moving along well. He reported that a survey for cultural and historical studies around Sullivan Lake Dam will start in December. Contact is being done with a landowner to try to get a wireless tower communication signal to Sullivan Lake Dam. Mark Scott, Water Systems Manager: He provided a Metaline Falls Water Project update and reported work is wrapping up on the right-of-way permit. He is working with the County and the Forest Service to get the right-of-way permit approved and he is waiting for a response back from the Spokane and Colville Indian Tribes. The design work should be done next month and the bids will be advertised in January or February. He reported the Global Positioning System work continues. ACTION ITEMS: Resolution No Metaline Falls Water System Rates. Ms. Owen explained the resolution is effective on all billings after December 1, 2012 and she provided an overview of the rates. A motion was made by Commissioner Knapp and seconded by Commissioner Peterson to adopt Resolution No Commissioner Knapp commented that Ms. Owen should let the Metaline Falls Water Committee know that the District is continuing to work on getting their costs down. Commissioner Larson asked for a mid-year report from the District s Water Department on how the costs are being reduced. The motion passed unanimously. Bid Award Poles for Fiber Project, Contract No Mr. Onley explained the details of the bid award. Based on staff recommendation, a motion was made by Commissioner Knapp and seconded by Commissioner Peterson to award the bid for the poles for the Fiber Project, Contract No to the apparent low bidder, Bell Lumber & Pole Company in the total amount of $25, The motion passed unanimously Northwest Open Access Network Representation. Mr. Jordan explained that once the Board appoints the District s NoaNet representation a letter will be drafted and sent to NoaNet. Discussion was held. A motion was made by Commissioner Knapp and seconded by Commissioner Peterson to appoint John Jordan as the Director and Commissioner Knapp as the Member Representative under the anticipated new NoaNet bylaws. The motion passed unanimously. Ms. Atyeo left the meeting. COMMISSION REPORT: The Board of Commissioners attended the Annual Legislative/PUDs Luncheon on November 13 in Colville. Commissioner Knapp reported that is was a good meeting and commended Mr. Jordan for doing a good job in presenting the District s topics. Commissioners Knapp and Peterson attended the Washington Public Utility Districts Association (WPUDA) meeting on November in Olympia. They provided an overview of the meeting. Commissioner Knapp and Mr. Jordan commended Mr. Onley on his NoaNet presentation at the meeting. Commissioner Larson attended the Kalispel Career Training Center s Career Fair on November 8 in Cusick. He commended Eileen Dugger, District Contracts & Public Page 4 Minutes, November 20, 2012

5 Information Administrator; Mr. Jones; Tommy Petrie, District Field Techician Aquatics; and Jake Hanson, District Power Supply Operator for their hard work in organizing the fair and for providing presentations to the attendees. Commissioner Peterson provided an overview of the WPUDA Government Relations meeting on November in Olympia. EXECUTIVE SESSION INDIVIDUAL EMPLOYEE PERFORMANCE EVALUATION: A 15-minute executive session on an individual employee performance evaluation was held at 11:46 a.m. The following were present: Board of Commissioners; John Jordan, General Manager; Mark Cauchy, Director, Regulatory & Environmental Affairs; Pat Buckley, Natural Resources Manager; April Owen, Assistant General Manager and Auditor/Senior Manager, Financial Planning; and Paul Boxleitner, Human Resources Manager. The executive session ended at 12:01 p.m. There was no action taken. Following a 30-minute working lunch, the meeting resumed. COMMISSION BUSINESS: City of Newport Funding Request for Hometown Christmas Event. Discussion was held. A motion was made by Commissioner Knapp and seconded by Commissioner Peterson to contribute $250 to the Hometown Christmas Event. This is a public relations benefit to the District. Ms. Willner will have Ms. Dugger contact the City of Newport for District advertising. The motion passed unanimously. Emergency Food Bank of Ione Funding Request. A motion was made by Commissioner Knapp and seconded by Commissioner Peterson to donate $150 to the Emergency Food Bank of Ione. This is a public relations benefit to the District. The motion passed unanimously. Hugh O Brian Youth Leadership Funding Request. Commissioner Larson noted that funding would not meet the Board s funding criteria because it would go to two individual Selkirk School District students. Discussion was held regarding the possibility of doing a District truck wash fundraiser. Ms. Willner will follow up. BUDGET WORKSHOP: Ms. Owen provided handouts and explained that Elaine Averyt, District Treasurer/Customer Services Manager, has been putting this information together but is gone today. She noted that a Budget Hearing is scheduled for December 4. She reported the budget is still being worked on but she wanted to provide an overview of what the District has at this time. She explained the budgets for Production, Capital Budget Projects, Electric System, CNS, Water Systems and Dues and Travel. Mr. Jordan thanked Ms. Owen for stepping in for Ms. Averyt today and commended both for their collaborative work on the budget. There being no further discussion to come before the Board, the meeting adjourned at 2:09 p.m. President ATTEST: Secretary General Counsel Page 5 Minutes, November 20, 2012