Work Session Minutes - Eugene Water & Electric Board

Work Session
October 2, 2012
Page 8 of 8
He also noted that property transactions will be approved by the Board but that staff may
come to them for analysis ahead of time, when targeting specific transactions.
rating.
Vice President Brown asked what the down side would be if EWEB loses their AA
General Manager Gray replied that EWEB is required to meet bond covenants regarding
borrowing, and that staff can’t implement EWEB’s current business strategy with the current
financial picture, so either rates will need to be raised or some of the activities on the above list
will have to be carried out. He added that there is a possibility that staff would go to the Federal
Energy Regulatory Commission (FERC) and renegotiate to delay the relicensing of Carmen-
Smith.
President Simpson asked if inertia would be created if EWEB dipped down to a single A
rating and then came back out of it. Ms. Bloom said that it would. She added that an additional
item might be an assessment of the current electric service territory to be sure it is optimal, and
to be sure that EWEB is serving the correct customers under statute.
Commissioner Helgeson asked how much improvement in the wholesale market staff
would have to see before EWEB could address the $20 million issue. General Manager Gray
replied that there would need to be a substantially higher increase in the curve. Mr. Helgeson
asked Mr. Churchman to follow up with him regarding that question.
General Manager Gray said that it would probably be in the range of $15-20/MW higher
than the current market price, but that this item will be brought back to the Board at a later time.
Commissioner Cunningham asked how EWEB’s bond rating affects the interest rate
EWEB receives. Ms. Bloom replied that EWEB was able to get the lowest interest rate ever
(3.07%) because staff went to market at the right time. She explained that the buyers weren’t
concerned, but the bankers were clear that EWEB can’t return to the market next year without
fixing the problem, and that if EWEB’s rating is single A, that might not get the deal done, as the
bond market has changed dramatically. She closed by saying that EWEB can spend the money
to go to market, but they may not get the money, and that this would affect the trading floor and
insurance.
President Simpson adjourned the Work Session at 7:20 p.m.
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Assistant Secretary President