PUBLIC UTILITY DISTRICT # 1 of Jefferson County

January 7, 2009 REGULAR MEETING

MINUTES

CALL TO ORDER The Regular Meeting of the Public Utility District No.1 of Jefferson County was called to order by the President of the Board of Commissioners at 5:00 p.m. at the District Office, 230 Chimacum Road, Port Hadlock, Washington. Commissioners and staff present were:

Wayne G. King, President Ken McMillen, Vice-President

Dana Roberts, Secretary James Parker, District Manager

Bill Graham, District Resource Manager Kate Pike, Brisa Services

AGENDA The Agenda was approved as submitted.

APPROVAL OF MINUTES

MOTION: By Commissioner Roberts, Second by Commissioner King, carried unanimously, to approve the Regular Meeting Minutes of December 10, 2008.

APPROVAL OF VOUCHERS MOTION: By Commissioner Roberts, Second by Commissioner King, carried unanimously to approve payment of: Warrants No.14494 through 14508 in the amount of $ 22,953.00; and Warrants No.14509 through 14524 in the amount of $ 22,232.74; and Warrants No.14525 through 14567 in the amount of $ 62,275.42

For a Total $ 107,461.16 acknowledging a VOID of Warrant No. 14453 in the amount of $53,757.46

ITEMS FROM THE FLOOR (not listed on the Agenda) Bob Henderson, Quilcene, expressed interest in any current issues in Quilcene.

COMMISSIONER'S REPORTS Commissioner Roberts: December 16: Attended the annual meeting of the Jefferson County Conservation District. January 5: Attended presentation by David Timmons at the meeting of the Port Townsend Chamber of Commerce. January 13: Expect to attend meeting of WRIA 17 Planning Unit. January 14: Expect to attend presentation by D. Hittle & Associates regarding public power. January 15: Expect to participate in the WPUDA water meeting via telecom. Commissioner King December 23: Met with District Manager and State Auditor in District Office. January 14: Expect to attend presentation by D. Hittle & Associates regarding public power. January 15: Expect to attend WPUDA legislative reception and water meeting.

ACTION ITEMS Bill Stuffing Policy MOTION: By Commissioner Roberts, Second by Commissioner McMillen, carried unanimously, to accept the Guidelines for Utility Bill Inserts from Community Groups as presented by the Manager.

DISCUSSION ITEMS a) Water Management Concepts Update - Norm MacLeod Mr. MacLeod, Gaelic Wolf Consulting, further updated the Board on water management opportunities' progress. He believes the information also should be made available to the Jefferson BOCC and Port Townsend City Council to inform what has been learned and what opportunities may present.

At the last Four Corners Group meeting, it was suggested to prepare legislation parallel to that being offered for Walla Walla, to make comparisons in light of east side and west side testing of concepts. Puget Sound Partnership efforts are concurrent, and can be beneficial to have these opportunities leveraged as well as possible. Norm has prepared draft legislation (submitted to the PUD Board, House of Representatives staff, and the office of Representative Kessler). It is desirable that the legislation would be sponsored by Representative Kessler and Senator Hargrove. The draft provides that the first line of funding be legislative appropriation, which Norm believes could be available. A first step is to approach the WRIA 17 Planning Unit to address any and all issues at that level. In answer to a query by Commissioner McMillen, Norm expects acceptance by the Department of Ecology is likely as that agency is engaged with the Walla Walla procedure; there will be opportunity to respond with any concerns. The draft legislation is partially based on the Walla Walla project, as well as the Water Roundtable group comprised of business, agriculture and environmental groups (i.e. Washington Environmental Council, American Rivers, Farm Bureau, Columbia Snake River Irrigators, realtors, PUDs, WPUDA). From here Norm advised that we review the draft and take comment.

Public Comment Bob LaCroix, City of Port Townsend Water Department, commented that the City of Port Townsend is not interested in managing anyone else's water nor in having anyone manage its water; and the City is not willing to be part of any proposed management board.

b) Power Authority The Manager reminded that authority of the PUD to supply power was granted by the 2008 general election and the authority allows for determining sources (hydro, tidal, solar, wind, gas, electric), entering into partnerships, initiating conservation programs, and acquiring distribution systems (by purchase, condemnation, new construction). The Manager is to meet with the Bonneville Power Administration to discuss power purchase options and D.Hittle & Associates is to present final revisions to its electric system acquisition feasibility study. The Board discussed some steps to proceed, with attention on providing good public information, receiving accurate information and advice from power sellers, legal counsel, financial counsel and appraisal experts. Members of the public commented on not excluding an address of alternative energies, focusing on a scope-of-effort and identifying steps in a process, along with the importance of purchasing through BPA and obtaining a CRC credit. c) Department of Ecology Water Right Application - Big Quilcene River The Manager presented the Board with historical information, relative to an inquiry by JPUD on a DOE water right application based on a 1980's IFIM study for hydro on the Big Quilcene River. Those proceedings were terminated, apparently by an inability to reach agreement on instream flows at the time. Staff would like to re-start the process and re-submit the 1980's water right application. Bob LaCroix„ City of Port Townsend, as a member of the public commented that, in addition to obtaining a water right, it is also necessary to get a special use permit from the U.S. Forest Service, which can be expensive and time-consuming. d) Office Phone and Computer Upgrade Proposal Bill Graham presented updated information from Voice & Data Technology, Inc. regarding upgrade of telephone and televantage network systems at the District office. After brief discussion of various options, the Board took the following ACTION: MOTION: By Commissioner McMillen, Second by Commissioner Roberts, carried unanimously, to authorize computer and office telephone upgrades at a cost of approximately $6,000.

Resolution - Kelly Hays T e Manager presented forPtilithitaltrEILIVIINSTR1Olicifwing appreciation to for er Co missioner M.Kelly Hays. of Jefferson County f) -solution - Accepting Marroaatibalkibacteollaztaktion The anager presented for review Rettclitatitiodit9M2 accepting Marrowstone I land Water ,ystem Improvements. January 14, 2009

SPECIAL WORKSHOP MANAGE 'S REPORT/OLD BUSINESSNUTES LUD 14 (M rowstone Island): Assessments are to be mailed imminently o residents from the Jeff son County Treasurer. The process of line installation o he causeway emita c-c- D R

:ofntifiBIPdbliet IdfifitriDislinien Itto..e1DIfplutfia eatthvlus dallasel tegaletEhelj tEdeff tub pfiltigatBgetdht Oefhalidaienditesildibeit@Oa oat Hain-griallkett Sehrarraildttyteet3 1fi 65ite3t§itatieAFteztitretilepoatilleVitaskirpgiztri• aldwrtilbsIrce-rers findaitaffOteffEibbm tly addressing JARPA and easements. Commissioner Positions: It is tthlaynroOdifiraj, ftitealiNtWayne King will serve as President; Ken McMille i will dteadViuNlilieehRtixsieBrdsinbalatilDan Roberts will serve as Secretary. Positions are o rotaidameRdbartygelleEretallitional , Commissioner McMillen has offered to s- itansetbefillsiWIDitictriatarltativgievv. h Commissioner Roberts as the alternate; and Corn ssikiate Rikg,hkisagSzeditese e as a WPUDA water committee representative. The purpose of the Special W• kshop was for an update •y Bob Schneider, President, BiRiffeliERgediStes (DHA), c. sultant to the PUD on e feasibility of providing eledititrAppadr. John Heberling, Vice-President, was Iso present for consultation. None Mr. Schneider first addressed the imiortance of pla ning a strategy, identifying goals Out12831Cd1)114M/Ilifb1iis, keeping all opt ins open a • maintaining support from the binnEnunity. A need to manage costs aid expen• tures was emphasized. He outlined four approaches to moving forward: CARIi?)PIEigaINEffildebn the 10-year time an• .ted to provide electric services by dOldbattisirfgpaitkiiiitEtslendrgie§ourglas) INIlaiittinglitterrttiast Public Power hticsIxijetittrnflumbetiiBtiofinew electric sem.— and purchase/take over of existing fb)diattdridentifyinglEtehicligigtgeodzes, borro in3 capabilities and exploring power Wiitteet(Eadiildreieseilleolaervkdrattibilt. • aril •)orhlaseliersuorptajeglaglittea PiojestmaffisagenddKitait Boofirblaisywork; 3)advancing with a slower "wait and s " approa

INAKAJIRNME1115- owners willlingness/ eed to exch itiPTdeillibiriAtiaturgrttissidruefiEFtbbEet , Second by C unani' ously, to adjo rn the Regul. Meeting at 7:31 Joh berling foci ss d on a revised acquisition a est d pur,h:s- o t was ide ► tified a $47.1 ap• I :1 NA') an 0 LD orig nal wit' 41 ;ji /14,A11Al2.x..A8.2 illion , a 1.

Rare rfg. KiNgr :44

exempt re -nue bonds al!" regard to energy requireme

38 mega

There were quest • ns from the public regarding notification restrictions, to hich Mr. Haberling replied that firstly, there are standards of service to be met prior t• obtaining power from BP At an earlier presentation by BPA to the PUD, the Board le: rued that those standard- for service include being formed in accordance with state and federal laws; owning a distribution system and being able to take power within a reaso able period of time. having the ability to pay for and purchase power in wholesale, commercial ounts; and having a general utility responsibility with adequate

.14 ill • ur

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etEriladiatam, ',beret yet Tier 2 rates are abo BPA rates (bond finan mitigation); however t residential exchange and assumed comp

ckno Arpt,

rojections of = likely number o tiliffrompeccrvi

is and power s ;ply, Mr. Heberlin d a peak dem nd of 66 MW. T

uires a 3-year qualification proces larger supply of PF power available with

t the same as PF. Several factors were id e charges, system upgrades, alternative ener e PUD could be able to take advantage of a 9/

credit. Mr. Heberling also noted some assumed o risons between PUD and PSE costs for service.

to determine either Puget Sound nge the system or portions; and

missioner McMillen, carried .m.

al .is of the electric s tem. An

• of n) of $34.9 illion, t t xing e of

e? k,70 million.

t- id tax- customer accounts. With

estimated an average BPA Tier 1 PF could be available as higher base rates,

tified as driving up y pursuits, fish

of a cent/kWh erating costs

e) Resolution - Kelly Hays The Manager presented for review Resolution 09-001 showing appreciation to former Commissioner M.Kelly Hays. f) Resolution - Accepting Marrowstone Island Construction The Manager presented for review Resolution 09-002 accepting Marrowstone Island Water System Improvements.

MANAGER'S REPORT/OLD BUSINESS LUD 14 (Marrowstone Island): Assessments are to be mailed imminently to residents from the Jefferson County Treasurer. The process of line installation on the causeway is to be begun. Olympic Mobile Village: A first draw of funds from the Department of Health has been requested. Staff is attempting to get the well on line. Residents are now being billed. Sahara Water System extension: A wetland report has been provided by Dr. Ken Brooks. Staff is currently addressing JARPA and easements. Commissioner Positions: It is to be noted that, for 2009 Wayne G. King will serve as President; Ken McMillen will serve as Vice-President; and Dana Roberts will serve as Secretary. Positions are to rotate every two years. Additionally, Commissioner McMillen has offered to serve as the PUDA representative with Commissioner Roberts as the alternate; and Commissioner King has agreed to serve as a WPUDA water committee representative.

STAFF REPORTS Auditor Report None

PUBLIC COMMENT None

CORRESPONDENCE 1) Letter from PUD No. 1 of Douglas County regarding Northwest Public Power Association representation 2) WPUDA water meeting agenda 3) Puget Sound Business Journal article regarding biomass energy project at the Simpson Tacoma Kraft Company

ADJOURNMENT MOTION: By Commissioner Roberts, Second by Commissioner McMillen, carried unanimously, to a•journ the Regular Meeting at 7:31 p.m.

VAI' Wayne T; mg, Pr- sr' enneth A. Mc 'lien, Vic Presi • e

Dana Roberts, Secretary