Item A: Joint Meeting with EWEB Board

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by rate adjustments. A 20 percent water rate increase is being proposed to take effect in 2009, which would address the loss of Hynix revenue, meet commitments for capital improvement projects, and continue to build a suitable level of financial reserve. On the electric side, a more complicated set of issues are in play, including increasing costs for EWEB to purchase power from the Bonneville Power Administration (BPA), growth in demand coupled with a temporary reduction of EWEB-produced power from the Carmen Smith facility during relicensing-related improvements, and debt service on renewable energy investments such as the Harvest Wind project. While no electric rate increase is planned for 2009, future financial conditions will determine the rate actions required for the electric utility. EWEB’s long-term strategy will continue to emphasize rate stability to shield customers from major cost shifts in an uncertain power supply future. For more information, please contact Patty Boyle @ 484-2411 ext. 3281. Steam Plant Transition Plan The future of EWEB’s steam utility has been examined extensively for the last 20 years. A significant driver for this effort has been an eroding customer base, which became an even more immediate issue with the recent departure of PeaceHealth, which represents 27 percent of EWEB’s steam utility revenue. The situation has also been compounded during the last year by natural gas price volatility, which is the fuel used for producing steam. To help mitigate these and other factors, EWEB steam operations have been extensively pared down to align with shrinking steam loads. For example, in 1985 there were 124 customers and 22 employees working in the steam utility. Today, six employees operate the steam plant while maintaining the aging distribution lines serving the remaining 78 downtown customers. With a continued loss of customers anticipated, there are no economically viable alternatives to sustain steam operations beyond the next two – five years. Costs to steam customers are already well above the cost of other fuel choices, while steam loss through the distribution system creates significant inefficiencies. Further, customer load could erode to a level that falls below the minimum threshold needed to operate the existing boiler, at which point an alternative boiler configuration would be needed. To mitigate this scenario, EWEB is exploring an alternative wholesale steam supply source via the University of Oregon. The EWEB Board has directed the General Manager to proceed with the following effort, to be completed by December 31, 2008: “Develop a long-range plan for the operation of the Steam Utility and make recommendations to the Board for positioning the utility to be able to shut down the utility as appropriate. The plan will consider all aspects of operation and decommissioning as well as the future needs and interests of existing steam customers.” Current status of the transition plan includes: ? On-going communication with customers, focusing primarily on individual and small groups of steam customers. Examples include periodic written updates to share information and alert customers of future board activity, and group presentations. 4