The regular meeting of the Board of Commissioners of Public Utility District No. 1 of Whatcom County was called to order at 8:00 a.m. by Commissioner Paul Kenner. Said meeting was open to the public and notice thereof had been given as required by law. Those present included Commissioners Jeff McClure and Mike Murphy and Legal Counsel Jon Sitkin. Staff: Steve Jilk, General Manager; Ann Grimm, Administrative Assistant; Brian Walters, Director of Utility Operations; Barb Shosten, Director of Finance; Annette Smith, Assistant Finance Director; Lew Gaskill, Accountant I; Fred Disch, Water Systems Supervisor; Rebecca Schlotterback, Water Resource Technician; Paul Siegmund, Process and Control Engineer; Mike Macomber, IT/SCADA Technician; Dennis Yabsley, Electric System Supervisor, and Duane Holden, Project Manager. Public attending: Tom Perry, Murray, Smith and Associates.

• Public Comment
No comments made.

• Approval of the Meeting Minutes and Claims
The Commissioners were presented with the minutes of the regular meeting held January 11, 2011, and the following claims of January 25, 2011.

ACTION: Commissioner McClure motioned to approve the minutes of the regular meeting held January 11, 2011, and the claims of January 25, 2011. Commissioner Murphy second the motion. Motion passed unanimously.

• Work Order No. 4 - Pacific Surveying and Engineering, Inc. (PSE)
As part of its extraordinary maintenance activities for 2011 the District will excavate and remove stockpiled materials from the east sediment basin pond at Water Plant 2 (RW-M-2). For this work, PSE's tasks would include supplemental surveying and mapping necessary to provide the District's staff and its engineer Murray, Smith & Associates, (MSA) updated information for determining the volume of materials to be excavated from the pond. A secondary task will be to verify and stake the northern boundary of the District's property adjacent to the pond for purposes of determining whether the District will require a construction easement from the property owner north of the project.

The work will also assist in preparation for the upcoming capital project involving the improvements to Water treatment Plant 2, survey of the area of material removal, and provide an updated topographic map to the engineer.

Specific tasks to be completed under Work Order No. 4 include:
Task I: Pre Construction
1) Topographic Surveying and location of sediment pond (verify & update relative to previous topo work);
2) Set Temporary Vertical Benchmark (TBM) at sediment pond site for construction;
3) Preparation of Supplemental mapping to include updated location and topography of easterly pond;
4) Verify and stake the northern boundary margin of District's property adjacent to ponds.

Task II: Post Construction
1) Topographic Surveying and location of excavated area;
2) Preparation and mapping of area excavated.

The scope of work includes providing topographic surveying and mapping, utilizing pre-established horizontal and vertical survey control at the project site. Scope of work is limited to the easterly sediment pond area and does not include any construction staking or survey assistance at the time of pond removal. Once the pond has been removed PSE will provide as-built topographic survey and mapping data to allow for District's engineers and/or others to calculate quantities excavated. Office work will include AutoCAD base mapping, project management, and coordination with District and engineer.

PSE will perform the survey services, as described above and in Work Order No. 4, for a not to exceed cost of nine thousand five hundred and ninety dollars ($9,590.00). The work to be performed has been anticipated and is included in the 2011 budget as an extraordinary maintenance item included in the capital improvement budget, identified as item RW-M-2. Compensation for the work tasks performed will have no additional financial impact on the District.

Commissioner Murphy inquired whether or not the material removed from the pond could be used somewhere on the Trigg Road site instead of being hauled away and disposed of. Disch said this pond has not been fully excavated before. In the past a small amount of the material from this pond had been spread on the Trigg Road property but this amount would be over 3,000 truck loads and it would not be possible to dispose of this amount on site.

ACTION: Commissioner Murphy motioned to approve Work Order No. 4 between the District and Pacific Surveying & Engineering Inc, (PSE) for land surveying services associated with the District's east sediment pond at Water Plant 2 for a not to exceed cost of nine thousand five hundred and ninety dollars ($9,590.00) and authorize the District's General Manager to sign and execute the work order. Commissioner McClure second the motion. Motion passed unanimously.

• Resolution No. 625 - Sole Source Supplier Mitsubishi 115 kV Breakers
For the planned re-design of the substation to improve reliability of electric service to its customer, the District needs to purchase an additional three power circuit breakers to install as part of the upcoming electric project. Existing structures and equipment foundations at the substation are based on the Mitsubishi design parameters and weighting and the District's substation electricians have experience and training in the operation and maintenance of the breakers.

Walters said that the District would like to standardize this equipment type for the substation because it avoids the need to maintain separate equipment parts inventories and the necessity for electric staff to obtain additional operations and maintenance training related to any non Mitsubishi power circuit breakers. As such, District staff has requested a Sole Source designation for the procurement process.
RCW 39.04.280 (1)(b) states that the competitive bidding requirement may be waived by the governing body of the municipality, if the purchases involve special facilities or market conditions.

There could be possible reduction in operation & maintenance costs associated with the District's Refinery Substation; however, no negative financial impact. McClure inquired about the cost of the Mitsubishi breakers perhaps being more expensive than others. Walters explained the cost is about right. The engineering estimate was $63,000 and the cost of the Mitsubishi breakers are $69,000 each, which includes a number of factory services.

ACTION: Commissioner McClure motioned to adopt Resolution No. 625 approving the use of Sole Source for the procurement of Mitsubishi 115 kV power circuit breakers for the District's Refinery Substation. Commissioner Murphy second the motion. Motion unanimously passed.

• Approve Purchase of Mitsubishi Power Circuit Breakers for District Refinery
As noted above, the Commission approved Resolution No. 625, sole source procurement for Mitsubishi 115 kV power breakers. The equipment procurement and construction phase of the District's Refinery Substation Re-Design Project (CIP No. E-14) will proceed this year. As part of the re-design, the existing two breakers, single 115 kV bus configuration will be changed to a five breaker, ring bus scheme. When completed, the re-design will improve the reliability of electric service to the District's refinery customer, ConocoPhillips, by eliminating the N-1 contingency failure condition that exists within the Refinery Substation. Currently, the failure of a single major component of the substation can result in a de-energization of the substation's 115 kV bus, causing an interruption of power supply to the refinery.

In transforming the Refinery Substation from a two breaker set-up to a five breaker ring bus configuration, the District will retain the two breakers currently in operation and purchase and install three new power circuit breakers. As stated above and for the reasons identified in Resolution No. 625, District staff recommends the purchase of three Mitsubishi Power Circuit Breakers, matching the brand and type of breaker already installed.

The firm price quote from MEPPI includes the following:
• Three Mitsubishi SF6 gas power circuit breakers (PCBs).
• Interior 120 VAC light with door switch and 120 VAC, 20 amp ground fault receptacle for each PCB.
• Manual jack and a gas fill adaptor.
• Services of a Mitsubishi field service representative for on-site inspection and certification that the equipment purchased has been properly installed and is ready for service.
• Warranty covering 12 months from date breakers are energized.

The firm cost for the Mitsubishi Breakers, including delivery (FOB Refinery Substation) is $69,560 per breaker. Total cost of the purchase, including tax is $226,418.00.

The power circuit breakers are part of the Refinery Substation Re-Design Project (CIP No. E-14). This project is included in the Capital Improvement Budget, which is part of the overall 2011 District Budget approved by the Commission so there is no fiscal impact due to the purchase of the breakers. Walters said the breakers will be delivered in August.

ACTION: Commissioner Murphy motioned to approve purchase of three Mitsubishi power circuit breakers and associated items from Mitsubishi Electric Products, Inc at a cost not to exceed amount of $226,418.00. Commissioner McClure second the motion. Motion unanimously passed.

• Approve Amendment No. 1 for Task Order No. 14 - Murray Smith and Associates
The District and MSA have entered into an Agreement for Professional Engineering Services (Agreement). Tasks to be completed under this work order will be performed according to the terms and conditions of the Agreement.

Background: On October 6, 2009 the Commission approved Task Order No. 14 for MSA to provide On-Call Support Services, not to exceed $20,000.00. These services may include but are not limited to the following:
• Coordinate with the District via telephone, e-mail, and meetings to provide professional engineering consultation.
• Provide consultation and program management services to support the District's Capital Improvements Plan.
• Perform on-site field investigations, as necessary, to support the on-call tasks requested by the District.
• Prepare memorandums, as necessary, to summarize on-call work performed and provide recommendations, as appropriate.
• Prepare memorandums, as necessary, to summarize on-call work performed and provide recommendations, as appropriate.
• Provide such other services as may be requested by the District for small projects completed by District staff or consultants on the District's small works roster.

District staff would like to continue using MSA's services, such as those listed above, under Task Order No. 14 during calendar year 2011 and recommend that the budget be increased by $50,000.00 for a total budget, not to exceed of $70,000.00 through December 31, 2011.

Jilk added that MSA bills on an agreed upon hourly basis for their services. The recommended increase in the cost not to exceed amount for this work order will not impact the District's approved budget for 2011. The District's 2011 budget includes funding for these types of services.

Commissioner Murphy asked if using the same consultant many times over again would create an issue with the auditors. Jilk said that using the task order system (which are approved by the Commission) is how the District tracks the expenditures and time spent and that managing the control of on-call services work which require an estimate prior to starting. He added that Extraordinary Maintenance for 2011 is comprised of engineering services and surveying services that are not project specific. This process is sufficient for auditing purposes.

ACTION: Commissioner Murphy motioned to approve Amendment No. 1 for Task Order No. 14 for Murray Smith & Associates (MSA) to assist the District with On-Call Support Services and authorize the District's General Manager to sign and execute Amendment No. 1, at a total cost not to exceed $70,000.00. Commissioner McClure second the motion. Motion unanimously passed.

• Projects Review
Project Manager Duane Holden presented an update with slideshow of the vegetation management work of hazardous tree removals, mowing and site cleanup accomplished last spring and summer by District crew and also the Washington Conservation Corps.
• Alcoa meter house - removed dilapidated structure;
• East Lake Terrell Road - mowing;
• Line near Slater Road and railroad tracks - large trees cleared;
• Grandview well station - garbage removed and fence built around structure;
• Aldergrove Road - new cathodic protection test station installed;
• DOT Mitigation site at Trigg Road property - trees removed so field can now be mowed;
• Plant 1 and Substation - trees, shrubs and vegetation cleared and removed from around building and substation, and a level pad was built as a site for compressors during frazil ice conditions.

ACTION: Commissioner Kenner asked that this update become a regular presentation for the Commission. No action taken, information only.

• Approve Resolution No. 626 - General Manager Contract Revisions
Jilk said the revisions included salary changes to be considered for 2011 as well as indicating the past changes to the contract for the last three years (as a summary into one document.)

ACTION: Commissioner McClure motioned to approve Resolution No. 626, setting 2011 salary for the District General Manager. Commissioner Murphy second the motion. Motion unanimously passed.

• General Manager's Report
2011 Legislative Session
Jilk said there are 851 new bills being introduced. Of them, the Washington Public Utility Districts Association (WPUDA) is monitoring 107. These include subject matters as
• Negotiating the sale of water systems from a PUD to a City. The current law reflects a vote of the people to sell the system (i.e. Grandview water system to City of Ferndale).
• The Public Works Trust Fund generates some $55 million dollars per year and the legislature is dipping into that account to fund general fund budget deficits.
• The WA Department of Ecology will be reorganizing and Department of Health and some Department of Ecology funding, including budget cuts to reduce watershed planning grants.

There are also a number of bills passed to impact utility operators however these mainly focused on cuts on consolidation, etc. and will reduce money for grants such as the District's North County Feasibility Study.

Governor's Press Release
Jilk was interviewed by KGMI radio and The Bellingham Herald regarding Governor Gregoire's and WA Department of Commerce's press release authorizing nearly $100 million in tax exempt in last two months of 2010 to fund local economic development, energy conservation and infrastructure projects in four counties. The press release stated that the PUD received $30 million for treatment plant renovations and electrical system upgrades: (1) Renovate a water treatment plant, including replacing mainline valves; and (2) Purchase Puget Sound Energy-owned substations, storage facilities and an operations center. Jilk indicated to the press that the amount of the bonds was $23 million and a portion of the bond proceeds will cover the cost of acquiring and upgrading a PSE substation (only) that provides electricity needs for the water system.

• Executive Session
Commissioner Kenner called an Executive Session to discuss potential litigation with no formal action expected to be taken afterwards. Legal Counsel was present. There being no further business for the regular meeting, the Commission adjourned at 8:40 a.m. to Executive Session.

• There being no further business for the regular meeting, the Commission adjourned the regular meeting at 9:05 a.m.

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