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1.ttachrent N MINUTES OF THE
("J WASHINGTON PUBLIC POWER SUPPLY SYSTEM REGULAR BOARD OF DIRECTORS' MEETING GLENN C. WALKLEY ROOM, MULTIPURPOSE FACILITY RICHLAND, WASHINGTON APRIL 23, 1982 - 9:00 A.M.
The Regular Meeting of the Board of Directors of Washington Public Power Supply System was called to order by President Cain at 9:00 a.m. There was a cuorum present. President Cain stated this was an open public meeting of the Supply System. Mr. G. E. C. Doupe', Acting Chief Counsel, reported that an environmental analysis of the April 23, 1982 Board of Directors' agenda had been prepared which showed that all item 3 on the agenda were categorically exempt from procedural requirements of the State Environmental Protection Act.
ROLL CALL PUD No. 1 of Benton County Donald R. Clayhold Present PUD No. 1 of Chelan County Robert O. Keiser Present PUD No. 1 of Clallam County A..E. Fletcher Present
, PUD No. 1 of Clark County Ed Fischer Presert PUD No. 1 or Cowlitz County Howard B. Richman Present PUD No. I of Douglas County Howard Prey Present PUD No. I of Ferry County William G. Kuehne Present PUD No. 1 of Franklin County Kenneth R. Cochrane Present f PUD No. 2 of Grant County Harold F. Nelson Present
( PUD No. 1 of Grays Haroor County Jack Welen Present PUD No. I of Kittitas County Roger C. Sparks Present PUD No. 1 of Klickitat County Marion C. Babb Present PUD No. 1 of Lewis County John Kostick Present PUD No. 3 of Mason County Robert C. Olsen Present PUD No. 1 of Okanogan County Stanton H. Cain Present PUD No. 2 of Pacific County John E. Dunsmoor Present PUD No. 1 of Skamania County Parker Knight Present PUD No. 1 of Snohomish County C. Stanford Olsen Present PUD No. 1 of Wankiakum County David L. Myers Present City of Ellensburg Larry Nickel Present City of Ricnland Thomas Logston Present City of Seattle Joe Recchi Present City of Tacoma Paul J. Nolan Present Others Present: Peter T. Johnson, E. Willard, R. Ratcliffe, J. Curtis, Ea Sienkiewicz, J. R. Lewis, Bonneville Power Aoministration; Ray Foleen, Con-sultant to the WNP-4/5 Participants' Committee; J. A. Hare, Administrative Auditor; Frank Hensley, Legislative Budget Committee; Francis Coleman, Goldman Sachs; Jim Seagraves, R. W. Beck & Associates; J. P. Laspa, Bechtel Power Cor-paration; Gordon Culp, Bud Krogh and Robert Marritz, Culp, Owyer, Gutersor. &
Grader; T. S. Hundal, United Engineers and Constructors, Inc.; Congressman Sid Morrison; Senator Max E. Benitz; Washington State Pepresentatives Shirley Hankins, Ray Isaacson and Dor. Hastings; Senator Sue Gould; Glenn Walkley ano
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g 9 g 81 840824 1C60TM1 COHEN 64-603 pop
' ' ~ ' " " " ' ~ ' " " "~" ' - " " '~ ~ '~"
BOARD OF OIRECTORS' MINUTES April 23, Puget Power & Light; David De LorenzoJohn Go of Directors; D. S. Spelle Columoia Pasco Basin Apartment City Council; Dean Association;, HanfordBHigh School; Nancy De Lorer Sundouist, . James, Energy Fair 1983; Susan Boo E. Roy Mundy and Seattle City Light; William Barn OkanoganLarry County Peterson, Grant PUD; Al Pflugrath, Chela Donald InformationJ.
t Smith, Kennewick High Research School; County Harry H PUO; David urless, Citizen Marks, Citiz International, Ltd.
Guin,John Sandy Dodd, Tim Powell, Tori Rouse; N. K. Sol Karamtaries Rubenste Olsen, Poyner , J:
and Frank , Meridee Rouse, Donald Grondin, O WashingtonEnterprises; Eugene Piazza, Stoel, Citizens; RivesPennington, George Garlick, GarI; Hanford C Voice of Energy; Thompson, onstruction Craft; Regional Sheet Metal WorkersJames John Searing, Cowlitz County PU Union, Hubenthal, Consultants; Lewis Count Stewa.
Smoot, Millweights Union, Dale Snediger, Local 242; Northwest local 1699; Sue Blakely, Fir- y P Carpenters Union, local 1849; Ronai CecilClark Boach, Hendricks, Operating Engineers UnionGeorge Elgin, Kennewick County PUO; Brendan O'Brien, Local 370; Paul Runyan and Bruc Wood & Dawson; Donald Anderson Times; Sandra McDonough,Benton County PU Mueller, KOIN TV; The Oregon,ian; Steve , KATUTaylorGodfrey, TV Rochelle Tri-City 0gershahaFra Lane, Seatti-Herald Tri-City Herald , KREM TV; Denni:
Roy Musitelli, , KGW TV; Roger Republic.;aolty, KOMO TV; G
complete, inasmu;ch as the attendance Yakima Herald book was not (This list is not
_ Staff Present: A. circulated to all present.)
D. A. Incres J. J.J.Wentz, Squire, J. 0. Perko, G. E. C. Doupe' S. A. Reese. en, J. Read, D. W. Mazur,,D. W.R. A. De Lorenzo, Clement and President Cain announced that President wh ich was in progress.
Cain recessed the ofBoard n of Diof 12,000 the Su supporters the Multipurpose Facility.
9:02 a.m. The Board The Board of rectors' meeting to observe the rally Directors' immediately their agenda. recessed to permit u the Execmeeting was recessed tiof Directors' meetingat w 4:10 p.m. The Regular Boaro at 9:20 a.m. and of Directors've Board to conduct the b meeting was reconvened MINUTES at meetings held on JanuaryThe of 22, 1982 Minutes of the Special Joint Board presented for consideration.theng Special , rectors' Board and ofExecutive Directors' Boardmee districuted. held on February1982, 11,1982, were as Mr. Richman secondeo theMOTION Mr. Kuehne moved motion.that the Minutes be proved as ap CARRIED.
106?.':;G2 !
j; 3 ,
BOARD OF DIRECTORS' MINUTES April 23, 1982 l
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REPORT BY THE DEPUTY MANAGING OIRECTOR Mr. A. Squire, Deputy Managing Director, reported that R. L. Ferguson, Managing Director, was recuperating from his recent surgery; and it was antic-ipated that Mr. Ferguson would return to work part-time in the near future.
REPORT BY THE WNP-4/5 TERMINATION PROGRAM OIRECTOR Mr. R. A. De Lorenzo, WNP-4/5 Termination Program Director, pointed out that two documents pertaining to the WNP-4/5 Termination Program were included in the Board mereers' folders. He stated that the Termination Program was proceeoing in accordance with the draft Management Plan which had been adopted.
He reported that it was estimated that as of the end of June,1982 the Ter-mination Program would have a positive cash balance. If this were the case, the infusion of loans from the participants would not be recuired at tnat time.
Following 6 review of the cumulative disbursements, Mr. De Lorenzo reviewed the contract status at Projects 4 'and 5 as of the end of March 1982. He j reported that to date, 23 contracts had been terminated at WNP-4, with seven '
, contracts being terminated at WNP-5. Following further review, Mr. De Lorenzo ;
highlighted the major milestones which had been completed in March. He re- '
ported that the participants had committed $70.5 million to the controlled Termination Program for Projects 4 and 5. The major milestones to be completed during the month of April inch.ded approval of the final Management Plan, f approval of the final Site Termination Plan, preparation of the Fiscal Year
( 1983 buoget and the establishment of a sales team for assets disposal.
Mr. De Lorenzo also recorted that an agreement with Pacific Power & Light had been reacned. The agreement established procedures for the management of ter-mination of WNP-5. He stated that this matter would be adoressed later in the meeting by Mr. G. E. C. Daupe', Acting Chief Counsel.
Mr. De Lorenzo turned to the next chart contained in the package entitled
" Costs to Preserve Assets and Maintain Licenses in Phase I". He pointed out that this chart represented a revised estimate of the costs to maintain the termination program in Phase I. It was originally estimated that it woulo cost approximately $10 million to $15 million to preserve the assets and licenses in Phase I. As a result of reevaluation, it had been determined that the monthly cost to preserve the assets and maintain the licenses for Projects 4 and 5 is approximately $695,000 or $8,340,000 for a one-year period.
i Mr. Clayhold referred to the WNP-4/5 cash flow forecast which was in-cluded in the Board members' folders. He suggested that in future issues of
- this forecast, the item entitled " Interest Transfer /Other" be changed to reflect the fact that this included participants' loans. Mr. Keiser asked how long Phase I would be extended. Mr. De Lorenzo replied that figures identi-fied in the costs to preserve the assets and maintain the licenses had been i determined by using the period April through Decemoer 1982. Mr. .Sauire
[ pointed out that the reduced figure for costs to preserve the assets and main-tain the licenses during Phase I did not reduce the total cost of the Termina-tion Program, only the amou'it for maintaining the assets and, licenses. Tne it.6C%G3
_ - _ . ~ . .
BOARD OF DIRECTORS' MINUTES :
April 23, 198
.t t savings realized J
for use in other aspects of the Termination rogram.
Pin this area of will be transferret
, cussion, Mr. Clayhold asked what the effects would be Followin WNP-4 Mr.
j if action were taken to slow down the on the c termination of !
pressed by Don Mazur duringeeting. the Executive Board erns which had been ex- '
WNP-4/5 PARTICIPANTS' COMMITTEE REPORT
(
4 that much attention was being given 0 as required c pants'to the fMr.
Comittee, statedRay F a- 1 s
it was anticipated that this Oversight tioning in the very near future.
Comitin ment Plan. the Termin He stated that 2
i
'3 Plan for the participants. termination of Projects Mr. Foleen 4 andalso 5 had reported that the M )
M comment period. The Plan has been sent to the participants fornot yet been approve }
Mr. Foleen stated that the election review and a Jantzen Beach Thunderbird.Comittee ,
1982 members in Portland,ofwas new to be held Participants'
- Oregon at the 4
- The following motion was presented foron
- considerati 0_ WNP-4/5 TERMINATION, BE AUTHORIZED AM OIRECTOR, T
WITH PACIFIC POWER SUPPLY & LIGHT HE ' FOR AGREEDMANAGEMEN PROCEDURES ON BEHALF 0F THE SYSTEM.* TERMINATION OF WNP-5' E Mr.
cedures to be followed uponDoupe' npointed out that the '0wner
- Pacific Power & Light hastermination asserted of thatthethproject.did not describe the pro-ship Agreement by terminating the project, but HePP&L continued hethat Supply ; S in termination has reserved and has paid its ten perc asserted tnat the right to withhold suchent share of termination costs.as agreed costs PP&L has no such right. and PP&L Advance TerminationMr.Costs. procedures ns which agreementare similar provides for to the p
- ment approval has been lowered to $100 ,
000 withDoupe' that the contract settle-that Pac pointed o
[ Light will be consulted fic Power & Light will prior to negotiations onagreement
,: such settlement. Also, Paci-
,1 Sale of Assets Plan when drafted. approve the Plan, Management future budgets and He continued that the to either tor, the project consultant under depending on the action g
will submit thetheOagreemen dispute I involved and Pacific Power & Light have reserv.ed In addition,wnership both Agreement or an arbitra-t the Supply System
- ting the Termination Program to go . aterforwaroand date while permit-the issu
- 1 .c. .
- ' Ece; tc.2 t i.
N I
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p, i..
BOARD OF DIRECTORS' MINUTES April 23, 1982
~f.-.' Following this review, Mr. Prey moved that the motion be adopted.
Mr. Fletcher seconded the motion. Mr. Foleen ooserved that the participants i had not seen the proposed agreement witn Pacific Power & Light. He asked if I the agreement contained anything which was significantly different from the proposed responsibilities of the Oversight Comittee. Mr. Doupe' replied that-3 an attempt had been made to create parallel arrangements for Pacific Power &
Light and the participants. Mr. Foleen expressed his concern that the Over-sight Comittee may.have a greater interest in providing a day-to-day oversight
- function than what was contained in the agreement with Pacific Power & Light.
Mr. Stan Olsen expressed his concern that the proposed agreement had not been reviewed by the Participants' Comittee. He suggested that the motion could be amended to include language indicating that authorization to execute the procedures would be subject to concurrence by the Participants' Comittee.
Mr. Squire indicated that he did not feel this would be acceptacle, inasmuch as the Supply System had agreements with both Pacific Power & Light Company and the Participants' Comittee. Therefore, the Supply System was working with two different entities. Mr. Squire indicated that he did not feel the agreements between the parties should be subject to the soproval of the other party.
Mr. Clayhold asked if the procedures for the agreement with Pacific Power
& Light had been agreed upon only recently. Mr. De Lorenzo replied that the final details hao been agreed to as late as the day prior to this meeting. He f also stated that approval was being requested at this Board of Directors' meeting, inasmuch as there was not anotner Board meeting scheduled in the near
( future. Following further discussion, the question was called for. MOTION CARRIED. ROBERT OLSEN V0TED "N0".
ELECTION OF EXECUTIVE COMMITTF.E MEMBER FOR CLASSIFICATION NO. 5 (CLARK /KLICKITAT/SKAMANIA) AC ELECTION OF EXECUTIVE BOARD MEMBER Mr. Doupe' pointed out that the Board members' folders contained letters from Clark County PUD, Klickitat County PUD and Skamania County PUD.
Mr. Doupe' explained that when the Executive Board was formed, the existing
- Executive Comittee was transferred to the memoership of the Executive Board by resolution. He continued tnat due to Mr. Fischer's resignation, who repre-sented Classification No. 5, it was Mr. Doupe's opinion that the Board of Directors now had an obligation to elect an Executive Comittee memoer to replace Mr. Fischer from among the three representatives of Classification No. 5. He continued that tne Rules of the Bearo of Directors further provice that the Board members from the classifications shall submit nominations. In the event the Board menters representing the utilities in the classification failed to agree, the Board was to elect an Executive Comittee member from among those nominees.
I b
106C7565 i
t BOARD OF DIRECTORS' MINUTES April 23 T Mr. Doupe' report Babo.
nominated Paul Runyan;ed that the nomin sented replace, Inasmuch ment to the Executive as thereCommittee was notm nated agree Marion !
Mr. Fischer requested that rectors to elect Mr. Fisc Board took place.of Directors This would until after the elhe be permitted to rem member of t selection of his successor. permit him the opportun 1
pate in td meating was reconvened atrectors' 5:00meetingp.mPresident C
. at 4: 55 p.m.
Mr. Th resignation letter anDoupe' stated that during the reces County commissioners.d his attached state the comissioners and stated: made to the Clarb tne Washington Public Power Suppl "That Connissioner Ed ao beenFischer eplaced on b made to become effective when y System thePoardSupply SPaulbyRun of Directors Co oner meeting of the full Board of Directo ambert as Alternate and this thataction event, ystem takes action at a special or re mean thatthis Mr. not be later than April rs of30the Supply System and that gular 1982."
until such time as Executive Committee. the Board of Directors Mr. Doupe' tFischer interpreted this woto his successor to the Executive omittee.
CForook thisaction reason,toMr. replaceFischerhim w e alloweo to vote on President Cain statedthat were tions. Paul Runyan and Marion CBabb.
the motion.
the two nominations which had b Mr. Nelson moved that Henstheaskednominatio een received be closed.if there were furtn na-THE NOMINATIONS WERE US VOTE.Mr. CLOSED FletenerBY sec C. Stanford Olsen made the following motion:
CLASSIFICATION HELD BY BALLOT."
Mr. Recchi UTIVENO. 5 COMMITTEE EXECUTIVE BOARD MEMBE AND MEMBER E seconded the motion.
polling as the Execuof the ballots, it was announc e dMOTION CARRIED.
Board memoer.tive Committee that Marion member C. Babbfor hadCla e
be 5 and the Executive Board of Directors' Resolution
)
THE EXECUTION AGREEMENT (CONTRACT OF NO. AMENDATORY AGREEMENT AND WASHINGTON presented for a consiceration. Mr.
NO.
PU3LICBETWEEN 3 TO P0' ER THE SUPPLY BONNEVILLE ADMINIST POWER 14-03-37 VE SYSTEM Ocupe' pointed - HANFORD GENERA out that was 1(.6('iCGG tnis resolution q.
L_ .m - ~~
6.
- e' BOARD OF DIRECT 0P.S' MINUTES April 23, 1982-h authorized an aaministrative change in the agreement between the Bonneville Power Acministration and the Supply System. Mr. Nolan moved that the resolu-tion be adopted. C. Stanford Olsen seconded the motion. BOARD OF DIRECTORS' RESOLUTION 1219 ADOPTED BY UNANIMOUS VOTE.
DISCUSSION OF ACTION REQUIRED UNDER AMENDED EXECUTIVE BOARD LEGISLATION (SB 4996)
Mr. Doupe' stated that.he had sent a letter, dated April 13, 1982, to the Board of Directors which outlined the changes contained in the new legislation.
He stated that a procedure needed to be established to elect the five inside Executive Board members. The Rules of the Executive Board and Board of Direc-tors will need to be substantially revised. Mr. Doupe' reported that the Act had been signed by the Governor on Tuesday, April 20, and goes into effect imediately. The Act also states that the organizational meeting of the restructured Executive Board must be within 60 days after the date the legis-lation was enacted or on or before June 19, 1982.
Following some discussion regarding the actions necessary to revise the Rules of the Boaro of Directors, C. Stanfora Olsen, Chairman of the Ad Hoc Search Committee, reported that the Search Comittee had held meetings to dis-cuss the selection of candidates for the outside Executive Board members. The legislation states that the members of the Executive Board shall conduct their
( business in a manner which is in the best interests of all ratepayers affected
( by the joint operating cgency and its projects. With this in mino, Mr. Olsen suggested that ballots be cast by the Board of Directors which containec spaces for five names to be inserted. The five Board memoers receiving the most votes would then be elected to the Executive Board. Mr. Nelson voiced his reluctance to elect the Executive Board based strictly on a democratic vote. He stated that he felt consideration should be given to the percentage of financial interest of the members. Mr. Clayhold urged that the election of the five inside members be held as soon as possible 50 that the candidates for the outside positions would have this information when considering whether or not t. hey wished to serve on the Executive Board. Following further discussion, Presioent Cain pointed out that the Search Committee consisted of C. Stanford Olsen, Paul Nolan, Marion Babb, Howard Richman and Harold Nelson.
Board of Directors' Resolution 1218 entitled "A RESOLUTION APPROVING A QUARTERLY REPORT OF CHANGE ORDERS - WASHINGTON PUBLIC POWER SUPPLY SYSTEM NUCLEAR PROJECTS 4 AND 5" was presented for consideration. Mr. Fletcher moved that the resolution be adopted. Mr. Kuehne seconded the motion. BOARD OF DIRECTORS' RESOLUTION 1218 AD0PTED BY UNANIMOUS VOTE.
Board of Directors' Resolution 1220 entitled "A RESOLUTION APPROVING A QUARTERLY REPORT OF CONTRACT AWARDS - WASHINGTON PUBLIC POWER SUPPLY SYSTEM" was presented for consideration. Mr. Welch moved that the resolution be adopted. Mr. Babb seconded the motion. BOARD OF DIRECTORS' RESOLUTION 1220 ADOPTED BY UNANIMOUS VOTE.
106C7567
I BOARD OF DIRECTORS' MINUTES April 23, 1982
_ CLAIM VOUCHERS _
i I
provided that none of the claim vouchers uchers be were approved, for theM
-costs
- 14540 associated through with Initiative 394: payment of litigation
! 14706; NUCLEAR PROJECT NO.HANFORD GENERATING PROJECT 7464; 5 CONSTRUCTION TRUST ACCOUNT -
- 5509 through 5595; NUCLEAR PROJECTS 4/5 14-82; the motion. PACKWOOD LAKE REVENUE FUND - ers .
- 5392 11-82through through 5432 ingcalled was did for. not contain items related to the paymentFollowing u er list- as MOTION CARRIED. of these costs, the question 5:35 April President Cain recessed the Regular Board of Director 28,p.m 1982 ,instating the Lopez that Room tne meeting would be reconvened at at 2 Seattle Center, Seattle p.m. on Notice of Adjournment which was and made a part of these Minutes.
po,sted at the meetin Washington. The g place ,is attached hereto WEONE50AY, APRIL 28, 1982 -
The Regular Wednesday, Board April 28, 1982. of Directors' meeting was reconvened at 2:00 p.m. on thisApril for was 23,a1982.continuation of the Regular BoardPresident of DiThere Cain statedwas a quorum rectors' meeting scheculed ROLL CALL At the time the meeting was reconvened, the followi ng were in attendance:
(
PUD No. I of Benton County PUO No. I of Chelan County Donald R. Clayhold Present PUD No. 1 of Clallam County Robert O. Keiser Present PUD No. 1 of Clark County A. E. Fletcher Present PUD No. 1 of Cowlitz County Paul Runyan Present PUO No. 1 of Douglas County Howard B. Richman Howard Prey Present PUD No.1 of Ferry County Present PUD No. 1 of Franklin County Kenneth Coyle (Alt.) Present PUD No. 2 of Grant County Kenneth R. Cochrane Present PUD No. I of Grays Haroar County Harold F. Nelson Present PUD No, I of Kittitas County Jack Welch Roger C. Sparks Present PUD No. 1 of Klickitat County Present PUO No. 1 of Lewis County Marion C. Bebb John Kostick Present PUD No. 3 of Mason County Present PUD No. 1 of Okanogan County Robert C. Olsen Present PUD No. 2 of Pacific County Stanton H. Cain Present PUD No. 1 of Skamania County John E. Dunsmoor Absent PUD No. I of Snohomish County Parker Knight Present PUD No. 1 of Wahkiakum County C. Stanford Olsen Present David L. Myers Present 1.GU;cce (
m 4 .
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,l BOARD OF DIRECTORS' MINUTES
-g- April 23, 1982 j City of Ellensburg Larry Nickel Present City of Richland Thomas Logston Present
' City.of Seattle Joe Recchi Present y City of Tacoma Paul J. Nolan -Present i i
Others Present: Peter T. Johnson, Bonneville Power Administrator. (This list 8 I
is not complete, inasmuch as the attendance book was not circulated to all present. It is estimated that there were approximately 500 citizens in atten-dance at the meeting.) There were an estimated 3,000 supporters of the Supply
. System's projects gathered outside of the meeting room at the Seattle Center. )
1 I
Staff Present: A. Squire, D. A. Thoresen, G. E. C. Doupe' and S. A. Reese.
President Cain updated ~ the Board members on the chronology of events leading to this meeting. He stated that an urgent need existed to determine the construction schedules for the net billed projects. This decision would allow financing to proceed for the Supply System's projects under construc-tion. He continued that for the purposes of making a decision in this matt'er, the Board had convened on Friday, April 23, 1982. However, the Board was pre-vented from acting on this matter because of an injunction issued by the Benton County Superior Court which stated that the Board could not act to slow down construction on Project I as recomended by Peter Johnson, the Bonneville Power Administrator. President Cain then explained the contractual coliga-
[ tions whicn existed between the Supply System.and the Bonneville Power Adrtin-( istration. He stated that under the Project Agreements, BPA has the authority to approve financing and construction budgets. President Cain continued that prior to April 19, the Executive Board Finance Committee asked the Bonneville Power Administration to make a recomendation concerning future financing of the net billed projects. On April 19, the Bonneville Power Administrator recommended an extended construction delay of Nuclear Project 1. On April 23,
- the Finance Committee received a letter from the Administrator which answered l
Questions previously posed by Board memoers regarding the BPA recommendation.
These Questions were discussed oy tne Board on April 23, 1982. President Cain pointed out tnat this meeting was a continuation of the oiscussions held on April 23.
President Cain stated that he had been advised by counsel that the injunction had been lif ted and that a reconsideration motion had been heard in Benton County Superior Court on the morning of this meeting; however, that L
l motion was denied. President Cain continued that a decision must be mace l-Quickly by the Bonneville Power Administration and tne members of the Board.
He pointed out that this decision would have an effect on an eight-state region in the Pacific Northwest. He stated that the Board was meeting at this time to allow additional public coment prior to making that decision.
President Cain then called on Jack Welch, Chairman of the Executive Board Finance Committee, for comments relating to this issue. Mr. Welch stated that at tne April 23, 1982 Board meeting, a motion had been passed which directed o
k ,
! 1G6L'iSCD
,,.v:--r-,,,,,s n,y ,- 9
. BOARD OF DIRECTORS' MINUTES .
April 23, 198!
- -posals the staff which to develop possible options to th present these options to the Finance Comanditwere to prepare such options and worked th m tee.
financingreco pros ower Administration an net billed projects. working papers which showed several var ons regarding the managem people had appeared at this or. meeting tomitte e Finance Mr. Welch stated Com-that these coments be heard prior r to the Boa dpresent that many pu The Board of Directors then heardtaking publicaction in this matter.H one-half citizens preshour period from a numoer John Poynor, ented their views and su of intere t s ed individuals.coments dur IBEW Local 77Ricnland Mayor Pro Tem; pport Mark Naulty, PipefitterCharlie Silvernail,of the Suppl V stern Environ; mental Trade Associati at WNP-1; Chuck Business Manager, tor Adecuate Electricity; Maidment John B l Keenan, Operations R Hankins a,nd Ray Isaacson;esearen oConsultant; and, Concerned State Citizen yof Representatives Sheila Renberger, Bill Sebero, Benton County CommissionSShirley
, Port of Kennewick l west Energy CoalitionKennewick City Council; Dr.er; Neal Shulm
- Chamber of Comerce;s Harbor, Grays Harbo Council; Clancy Pirtel, ocal 374 Steve Russell Peters, Secretary, Piercend Cou t Grays;Haroor Steamfitters Local;' William Council; Grostick Teamsters Union; James Myton n y Builoing Trades Claude Oliver, Benton , President P Boo Dilger, County Ccmission_er;Harold JayMaHolman, Port struction Trades Council; Executive Secretary, Washingtonenton; Bill Sarver. tthews, Franklin Peter Pelcouin, Teamsters Union Future Generation of Washingtonians; Concerned Citizen; State J dBus Jerry Dennis Bu Ernie 0000, Electrician; and Stella uM y Bell, Housewife and r, W
. Sonner, ;
Marc Sullivan, Don't Bankrupt Director, Northwest Washi Senior Citizen of Kennewick.
Brigade; and Aubrey O. Dodd, Coalitionngton;Act Conservation Senator King Lysen; Jr., Mark Reis, must be made with regard to this issuesuggestions North Seattle offeredSeattle Ligh their u d deal with the decisions whic Board of Directors' meeting 50 p.m.,,
at 4:Following this public c Seattle, Washington. reconvened at President stating 2:00that Cain p.m. onrecessed April 29the Regula
,1982 in the Boaro Roomthe meeting would oe ing place is attached The nereto Noticeandof madAdjournment which e was pos,t dS e a part of these Minutes. at the meet-1CGC'q/0 I
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BOARD OF DIRECTORS' MINUTES -11 April 23, 1982 THURSDAY, APRIL 29, 1982 The continuation of the Regular Coard of Directors' meeting was called to order by President Cain at 2:05 p.m. There was a quorum present.
At the time the meeting reconvened, the following were in attendance:
ROLL CALL PUD No. 1 of Benton County Donald R. Clayhold Present PUD No. 1 of Chelan County Robert O. Keiser Present
, PUD No. 1.of Clallam County A. E. Fletcher Present PUD No. I of Clark County Paul Runyan Present PUD No. 1 of Cowlitz County Howard B. Richman Present PUD No. 1 of Douglas County Howard Prey Present PUD No. I of Ferry County Kenneth Coyle (Alt.) Present PUD No. 1 of Franklin County Kenneth R. Cochrane Present PUD No. 2 of Grant County Harold F. Nelson Present PUD No.1 of Grays Harbor County Jack Welen Present PUD No. I of Kittitas County Roger C. Sparks Present PUD No. 1 of Klickitat County Marion C. Babb Present PUD No. 1 of Lewis County John Kostick Present PUD No. 3 of Mason County Robert C. Olsen Present PUD No. I of Okanogan County Stanton H. Cain Present PUD No. 2 of Pacific County John E. Dunsmoor' Absent PUD No.1 of Skamania County Parker Knight Present PUD No. 1 of Snohomish County C. Stanford Olsen Present PUD No. I of Wankiakum County David L. Myers Present City of Ellensburg Larry Nickel Present City of Richland Thomas Logston Present City of Seattle Joe Recchi Present City of Tacoma Paul J. Nolan Present Others Present: Peter T. Johnson, Bonneville Power Administration; and Dr. Sergen Patterson, Citizen. (This list is not complete, inasmuch as the attendance book was not circulated to all present.)
Staff Present: A. Squire, D. A. Thoresen, G. E. C. Doupe' and S. A. Reese.
President Cain called on Mr. Welch, Chairman of the Executive Board Finance Committee, for a report. Mr. Welch reviewed the history of tne issue which was being discussed. He st&ted that at the direction of the Executive Board, the staff had preparea a number of options and alternatives to the Bonneville Power Administration proposal. The Finance Committee considered these proposals and reviewed them with tne staff of the Bonneville Power Administration. A response to these alternatives had been received in the form of a letter addressed to Stanton H. Cain. Mr. Welch called on Mr. A. Souire, Deputy Managing Director, to provide a general summary of the options whicn were presented to the Finance Comittee anc the Bonneville Power Administration.
'13607571
BOARD OF OfRECTORS' MINUTES April 23, 1982 Mr. Squire reported that directed at how the basic approach Projects 1 and 3 between this time earl which hadand period beenthethetaken was to maximize funoing. cash flow for Su the cash flow reouirements for the five months it was determinedbHe saidthat that was determined that a 20 percent cash flow Itreo rget schedules.
1 prejudice was thethat determined target a 15 schedules, but also the a offici lon at WNP-1 w schedule for WNP-1 plished without prejudice. to thepercent target schedule. cash flow reduction at WNP-3 It cou WNP-2 ect 2. Mr. was not considered due to the overridi A reduction of cash flow at
- and had Other accomplished. indicated possiele sources that a bond offeringeenincontacted .
the are million could be i
possible ferred alternatives.
alternatives, these alternatives .
reduced Following examined a weresel including r,eview of 15 to the two most pre-Mr.
discussed with the Finance Committeeesand the BSou wnich had been One alternative provided for constructiononneville and 3 until Novemoer 1, 1982.
at Power Administration.
$720 million and would the present rate for Projects 1 This alternative would require a bond sale o million from fuel sales. include BPA funding of $200 million, as well as $100 provided for a bond offeringm of er 1982.$750 million a d he amount of 5200 million to be receivedcontemplated Following further discussion, n
from SPAfunding in. the This alternative
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been April 29, 1982. from Peter Johnson, received President Cain readPower Bonneville
! the letter which hao The letter stated, in part, as follows: Administrator, dated "I naveofrevieweo tion each the alternatives with to my therecommendation staff ofower theAdministra- Bonneville P 1982 into which have been presented to me account of April 19, In addition, I have taken meeting of Aprilthe many 28, 1982. public statements included in your Board All of the alternatives incorporate onelowing basic or to add capital: temporarily reduce costs in. construction with (1) temporarily reduce cash flow by a slowdown little risk to target schedules; (2 available capital by the sale of certain nuclear (3) further increase capital _by an increase in the fuel as)s increase ets; and posed May bond sale. After size of the pro-tives letter in ofthe April light19,of1982, the criteria I and objectifull consideration of these a interest is better ves described in my am of the opinion that tne public served by adherence to the recommendation made ItG C 2
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. . l April 23, 1982 BOARD OF DIRECTORS' MINUTES-
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h' - in said letter. I therefore must advise -you and the meinsers of your Board that I could not in good conscience approve moving for-
. ward on the basis of any of the alternatives presented or a finan-cing plan or bond resolution which was inconsistent with the origi-nal recommendation. For the purpose of achieving the best balance of the many factors concerning us all, I again urge the Board to entrace the BPA reconsnendation and to instruct the Supply System staff to take the necessary steps to implement that reconsnendation. . ."
Peter ' Johnson, Bonneville Power Aaministrator, stated that the alterna-tives had been reviewed and that he admired He stated thewanted that he creativeness of the ideas to compliment con-the staff tained in the alternatives.
on the creativeness of the ideas set forth; however, he stated that he did not feel these alternatives represented good fiscal financing. For these reasons, he felt that it was not prudent to waver from his previous recommendation.
Mr. Sparks stated that he appreciated the examination which had occurred with respect to the recommendation to slow down the construction at WNP-1. He expressed his concern that . construction at WNP-1 would be slowed down too fast. Mr. Johnson replied that one of the insistences the Bonneville Power Administration had made was that the construction slowdown at WNP-1 be done in a reasonable, prudent manner. He continued that it was necessa:y to reduce the staffing level to a point where the Project could be preserved and re-started in the-shortest possible time period.
Mr. Squire stated that if additional funding was not to be raised for WNP-1 and if the decision was made to slow down construction on May 1, 1982, the Supply System's analysis indicated that there were sufficient funds avail-able to permit an oroerly slowdown of construction activities. Following further review of 'the actions which would bc necessary to accomplish an orderly construction slowdown, Mr. Recchi asked Peter Johnson if he would authorize any funding which was necessary to carry out an orderly construction slowdown. Mr. Johnson replieo that it was his understanding that acequate funds were available to carry the project through Novemoer 1, 1983 in an cxtended construction delay mode. Following that cate, the necessary mainte-c nance costs could be paid out of tna revenues of Bonneville Power Administra-
' tion. He added that it is contemplated that engineering and other analyses will be performed which would add value to the resource. He continued that he felt it would be appropriate to go forward with financing for these types of activities. Mr. Recchi asked if money was available to continue with engi-neering at the pro, ject. Mr. Squire replied that money was available for some engineering. He continued that it would be necessary to make a detailed review of the engineering which needed to be continued and that which could be discontinued. He indicated that a question existed as to how much of the engineering would need to be reexamined or redone following a construction delay of up to five years.
k 10607573
N BOARD OF DIRECTORS' MINUTES April 23, 1982 orderly In summary, slowdown of WNP-1 Mr. Souire stated that the funds available would allo and w for an level until Novemoer 1983. would maintain ~ the project in a maintenance slowdown in load forecasts.activity was being experienced across the countr change sel from others who have had a similar experience -
so could at be developed the least cost in the shortest to save the time.
possible resource and 50 the arted resource co e ure -
this' resource was one which was needed in the region He continued that he .
, Mr. Nelson stated that from lems and D. W. Mazur, Director of Projects, on April 23the Board of Directors h Mr. Nelson asked if it would be economically viable to co project.
p ete the project if it were to be slowed down for two or more years.
viable, could not be finished,the Supply System wouldcompleted have a 60 percentIf project which it was not Mr. Johnson responded that BPA had made an economic an ldue to .
On a present value basis, it was believed that the actuala ysis on tnis subje ramping down and ramping back up would be approximat million. l additional cost of which could This notwould be recovered. be the only additional cost above theecost of the y 5250 resource to oe cost ineffective. This additional project cost would not render the pleting No. 3 if WNP-1 was placedMr. Cochrane asked y would be ofwhat com- Mr. Johns Johnson replied that output of Projects 1, the 2 and 3 and ne felt them Sonneville Power Acministrationin had purchased tne Mr. an ex resources Mr. which would be neeoed in the future to serve thto be economical, viable Johnson stated that it was his hope that at e needs somee, offuture the region.tim and 5 would also be determined to be viable Projects 4 resources for the reg oe acouired by the Bonneville Power Administration. on and could ~ '
Mr. Recchi far.tonthat the Supply System tion had made a determination toasked w two plants, rather than three. proceed with construc-cause on futureconcern bond sales.in the investment comunity and result in a higherHe ask interest rate type were becoming more common throughout the countryMr. Jo matter with the investment comunity, Mr. Johnson stated that hWhen discuss by the investment bankers to do what was prudent and e had been told responsible.
further discussion, Mr. Nelson pointed out thatFollowin within two mon structured present Executive Board of Directors and Executive Board.
Board would be assuming the responsioilit...
Mr. Nelson stated that it would be drastically changing the Supply ,System's gram.
the Board proapp pointed no action; out that one however, option whicn is available to the r C.Boa d Olsen Stanford ~
if this option were chosen, of Directors was the Supply System would not 1060';071 g
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BOARD OF DIRECTORS' MINUTES April 23, 1982 f
have sufficient funds to . operate for the next 60-day period after which time the restructured Executive Board would assume their responsibilities. He stated that he felt it was necessary to make a decision at the present time
- due to the financial _ obligations facing the Supply System.
Robert Olsen stated that he felt construction should be continued on Project I due to the f act that . this project was closer to completion and therefore, its power 'would be more economical than Project 3. He continued that by postponing the completion of WNP-1, the Supply System would also be postponing receiving revenue from the project. He continued that Plant No. I was welcomed in the Tri-C'.ty area but, by contrast, Plant No. 3 was disliked and unwanted by a majority of the residents in the Satsop, area. Mr. Olsen i urged that the nuclear plants be kept -in one location--the Tri-Cities--
because this is where the nuclear plants were accepted, desired, understood and closely safeguarded. If _this were the case, there would be no need to ship or . handle potentially hazardous material or ship nuclear waste material into Western Washington. Mr. Olsen continued that no plant whicn had ever
'been curtailed or mothballed in the United States had ever been restarted.
Robert Olsen then discussed the subject of the ownership of the plants ano the fact. that WNP-1 was 100. percent publicly owned, while WNP-3 had a i
30' percent ownership by the private utilities. The f act that WNP_-3 was par-tially owned by the private utilities had oeen one of the reasons expresseo for considering the extended construction delay for Project 1 due to the dif-( ficulty in curtailing the construction on WNP-3. Mr. Olsen asked why the pri-vate utilities couldn't be offered 30 percent ownersnip of WNP-1. Mr. Olsen stated that he felt the matter of selling 30 percent of WNP 1 to the privates could be negotiated. Following further comments, Mr. Olsen urged the Board to exercise their best independent and intelligent judgment in arriving at a decision at this meeting. Regardless of tne decision which was made, the Board will have met their responsibilities. Mr. Olsen concluded by stating that "the rest of it is then up to BPA".
Mr. Logston stated that he was totally opposed to a construction delay of WNP 1, inasmuch as there was a serious cuestion as to the validity of the BPA power forecast. He stated that many puolic officials and others in private industry have openly criticized the BPA forecast as being extremely conserva-tive. Mr. Logston stated that he felt the need for power was not decreasing, but increasing. He stated that he would not be a party to any action that would recuire the State of Washington and the Pacific Northwest to turn away b
future industry because of a lack of power. He continued that he would not be a party to creating economic chaos in the State by placing thousands of con.
struction workers out of work. He also stated that he woulo not be a party to supporting an unfounded and unwarranted political reconinendation from the Bonneville Power Administration. Mr. Logston continued that WNP-1 was now over 60 percent con +.ete, coming in under budget and on schedule. He stated that a delay which would result in major cost increases would do nothing more than increase electrical rates for the future and play into the hands of the h
106C7575
BOARD OF DIRECTORS' MINUTES April 23, 1982 antinuclear :,
what they perceive to be cost overruns. advocates who are constantly for criticizing the Pacific Northwest needed the power which would be generated , the by W ratepayers of the Pacific Northwest needed the savings which would result if WNP-1 needed the was finished economic on schedule, staoility which would and be the lost citizens of the State of Washingt if the project was delayed. L Folicwing of political further pressure.remarks, Mr. Logston urgeo the Board not to vote as a result -
Mr. Recchi asked for input from legal counsel r
, Project had oeen3suggested and the by arrangements Robert Olsen. which would be necessary for the transfer which :-
Grader, replied that Mr. Rob Marritz, Culp, Dwyer, Guterson & -
plish, such an arrangement would be very difficult to accom- '
inasmuch as the net billing agreements require that in order to assign an interest to be secured. in any of the plants, the consent of the participants would have -
agree to the assignment.Therefore, all of the parties to the project would have to -
ments for such a transfer of ownership would be very complex.Even if =
vidualsMr.in Welch the Graysdelivered Harbor area.a number of letters which he had received -
from tne City Councils of He continued that two of the letters were the Cities of Elma and Montesano. The letters continuation of construction of Project 3. represented the citizens of thos Considerable discussion followed concerning the adoption of Executive Board Resolution 71 which directed h*=
Projects 1, 2 and 3 and an extended construction delay for AProject 1a i fina
. sum-mary 1982. of this discussion is included in the Executive Board Minutes of April 29 Board of Directors' Resolution 1221 entitled FINANCING AND CONSTRUCTION PROGRAM FOR PROJECTS 1, 2 AND 3 AND EXTENDED CONSTRUCTION DELAY FOR PROJECT 1" was presented for consideration.
Olsen moved that the resolution be adopted, C. Stanford which had been made to Executive Board Resolution 71 reflecting the same amendment the resolution to read: This amendment caused delayed for a period of up"Thetoconstruction five years." completion schedule of Project i be Frank Lambert, Clark County PUD, statedMr. Welch seconded the motion.
that he felt the Executive Board should not have voted for the slowdown of construction of Project 1 He con.
tinued that prudent thepractice.
utility Board's responsibility was to operate within the standard of violated. He stated tnat he believeo this standard had been cost effectiveness of slowing down the construction of this proje He stated the opportunity of voting onthat by taking this action, the Executive Board ha i the issue under Initiative 394 He continued that he did not believe all of the alternatives had been considered.
He stated that it appeared that every time the Board took action, it was done at the i t,G L* R 7 G 1
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1 BOARD OF DIRECTORS' MINUTES - April 23, 1982 ;
-h urging of someone.
Mr. Lambert stated that he believed this was deliberate and planned 50 that.the Board would not have an opportunity to make the proper deliberations oefore arriving at a decision. Mr. Lambert stated that he felt
- it would be more cost effective to slow down the construction on WNP-3 than it I
would be to slow down construction on WNP-1. Mr. Lambert stated that the Board of Directors' responsibility was to make the decision that was best for
- 1. _ their ratepayers, not the decision which was best for BPA, Initiative 394 or
! the private utilities.
Mr. Welch stated that he felt adoption of this resolution was in the best interests of the ratepayers of the region. Mr. Welch pointed out that before 4 -decision was made in this matter, the Finance Comittee had contacteo the private owners. of WNP-3 to secure their reaction to the possible construction slowdown at Project 3. .The owners replied that they would not accept such a decision and that they would exercise their rights under the Project Agree- ;
ments. This action would result in an approximate delay of up to 100 days.
Such a celay would jeopardize further financing of all three projects and could tnerefore result in closing down all three of the projects, rather than cnly kNP-1. Such an action would certainly not be in the best interests of the ratepayers, because it would add more cost to the projects. !
Mr. Nelson stated that the issue before the full Board of Directors con-
. cerned the future financing of WNP-3, as well as the construction schedule for
( WNP-1. He stateo that with this in mind, he felt the Board should Concur with
( the action taken by the Executive Board. j Mr. Cochrane stated that he believed all five of the projects should be completed, inasmuch as all indications pointed to the need for power.
Mr. Myers stated that Wahkiakum County PUD was opposed to slowing down construction on WNP-1, because they wer* not convinced that such action would be cost effective in the long run for their retail customers. He continued that it was suspected that the BPA recommendation was made on other grounos, such as investor-owned utility or direct service industry politics or BPA budget considerations. Mr. Myers reiterated Wahkiakum's protest regarding tne timing of BPA's recommendation, inasmuch as this timing effectively destroyed the utilities' policy options. He concluoed by stating that considering the forcefulness of BPA's rejection of the alternatives, as well as their control over the net billed plant finances and the need to reach a decision immediately to avoid jeopardizing the bond sale, Wahkiakum reluctantly acceced to the Bonneville Power Administration recommendation.
I Mr. Fletcher stated that he Considered the Bonneville Power Administra-tion recomendation to be a directive. He considered that in consideration of the impacts which would result from a contrary decision by the Board of Direc-tors, he, too, supported the resolution.
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10607577
BOARD OF'0! RECTORS' MINUTES April 23, 1982 1
i Mr. Knight stated that .due to the reasons previously stated , he felt that Skamania County PUD had no alternative but to support' the BP{
Mr. Sparks stated that the major points to consider in this were decisi (1) the unemployment'which would result in the Richland area Washington; (2 the ability to preserve. a e of construction on) the project whenthe assets of WNP-1 and desired to restart rapid this construction decision may nave and its impact upon ;ra(tepayers; and3) the ability to f Mr.' Sparks state (4) the effect that 1 - making process, c tnat the on need the election for power tohad be held not been under a part Initiative 3h.
of his decisio
+
so equal that no clear economic choice could be made.becau However, the unemploy-ment which would' be _ caused by the construction slowdown upon him until it was pointed out to him that the workers themselv economic fallout of thatstopped stoppa construction on tne plants for approx The facing its present difficulties.ge was, in part, wny the Supply System was He ' stated that sonal questioning of BPA reprasentatives had satisfied him that t i
' tion of WNP-1 assets and subsequent future startup was possible .
. Thereafter, He continued tion builoing plants at any that cost.the Supply System is perceive ecision.
n organiza-in inforce this viewthe face of the Bonneville Power AdministrationAny dec and would defeated at the November election. In adoition increase of a bond the issue likelihoodrec being to be subjecteo to severe rate increases as a, result of the tethe ratepay Projects 4 ano 5 and the cost of interest payments onrmination netofoilled theplants.
(.
In view the of these facts, Mr.- Sparks stated that his decision with BPA recommendation. was to remainedcost necessary in terms Heofstated the need thatfor hepower.
concluded the Projects 2 and 3 remained remained prudent in terms of the legal commitment ties.
- wned utili-to the factHe thatstated that WNP-1 would be his choice to continu or owned utilities the Supply 3.
on Project System was contractually obligated to the investor -
should be completed on schedule.Mr. Runyan stated that ,Clark 2 ano Count 3
be placed back on schedule very shortly.He stated that it was his hope WNP-1 wou Following these comments, the cuestion was called for.
1 OIRECTORS' 16 "YES" V0TES; 5 "N0" RESOLUTION VOTES; 1 ABSTENTION. 1221, AS PREVIOUSLYBOARD AMENDEDOF COMMENTS FROM MEMBERS OF THE PUBLIC WNP-1.
{
Following a review of his background and item on the agenda was considered. financ
, the next 1 6eE78 l'
,e p .--,y _ _ _ .-_. .-a .._..,,.,.,.c.,.y . , . - , . - . . , y,-.- . , . ,- -,en -
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- t BOARD OF. DIRECTORS' M'INUTES April 23, 1982 (b. MEETINGS President Cain announced that a Joint Meeting of the Board of Directors and Executive Board would be held on May 6,1982 at 1:30 p.m. in the Sea-Tac Office, Seattle, Wasnington.
ADJOURNMENT Hearing no objection, President Cain adjourned the Regular Board of Directors' meeting at 4:45 p.m.
Respectfully submitted, k k Shirley A. eese Administrative Assistant - Legal Attachments Q.
19607579 I
e r Washington Public Power Supply System P.O. Box 968 3000 George Washington Way Richland. Washington 99352 (509)372 5000
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NOTICE OF. ADJOURNMENT
- OF E REGULAR MEETING OF BOARD OF DIRECTORS 0F e
WASHINGTON PUBLIC POWER SUPPLY SYSTEM Notice is hereby given that the Regular Meeting of the Board t of Directors of Washington Public Power Supply System scheduled for
_ 9:00 a.m. on April 23, 1982 is adjourned to 2:00 p.m. on April 28, 1982 in the Lopez Room, Seattle Center, Seattle, Washington.
Dated this 23rd day of April, 1982.
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h& W ~
Secretar)
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s E
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