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 Commissioner Jeff McClure 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; Fred Disch, Water Systems Supervisor; Paul Siegmund, Process and Control Engineer; Duane Holden, Project Manager; Rebecca Schlotterback, Water Resource Technician; Lew Gaskill, Accountant 1; and Dennis Yabsley, Electric System Supervisor. Public attending: Tom Perry, Murray, Smith and Associates; Dave Olson, Cornerstone Management.

• Public Comment
No comments made.

• Approval of the Meeting Minutes and Claims
The Commissioners were presented with the minutes of the regular meeting held April 12, 2011, and the following claims of April 26, 2011.

ACTION: Commissioner McClure motioned to approve the minutes of the regular meeting held April 12, 2011, and the claims of April 26, 2011. Commissioner Kenner second the motion. Motion passed unanimously.

• North County Nitrate Water Systems Project Presentation
Background: Dave Olson, Cornerstone Management Inc. presented the final update on the feasibility study focused on resolving nitrate issues for several water associations in North Whatcom County. Olson said the study was recently submitted to the WA State Department of Health (DOH). He added that the water systems included in the study wanted to convey their thanks to the Commission for the District's involvement in the study.

The study addressed many issues but in particular, Sumas and Lynden, and the area west of Lynden and north of Everson (between Lynden and Sumas). The original plan identified the City of Lynden as a water source but Lynden does not have enough water rights to supply the need. Next identified was the City of Sumas who has water rights and the source to supply and basically a change in water rights could meet the water systems' requirements. If the water systems could be combined, the infrastructure is mostly in place. To make improvements at the well field in Sumas and run a pipeline would cost approximately $3 to $5 million dollars. The current ERU (Equivalent Residential Unit) cost runs between $30 and $60 per month. The Meadowbrook Water Association (excluding Everson and Hampton Water Association) has domestic water rights. Approximately 40% serves residential customers the remaining 60% is used as stock watering rights mainly for dairy farms.

Olson thinks a unique vision to leverage to solve multiple issues and direction for the nitrate solution would use available water sources. It may be possible to idle some water rights; however, Lynden will need more water rights to serve some water associations.

Commissioner McClure inquired about how many associations would consolidate. Olson said there are three associations to consolidate that would be able to operate more efficiently as a group than individuals. Commissioner Kenner asked if Sumas is now out of the loop. Olson said that Sumas would be "Plan C" by means of changing the point of withdrawal. He added that to supply some areas west of Lynden, the Department of Ecology had funded a pipeline from Lynden to the Willeys Lake area.

Jilk thanked Olson for his work on the study and said projects like this provide an opportunity for the PUD to be seen as a problem solver. There are many more opportunities where the District can engage in and send a message to the Department of Ecology via the Department of Health that the District is helping to resolve these kinds of problems.

ACTION: Information only. No requested action.

• Cancellation of Warrant - Resolution No. 627
The District issued a warrant in the amount of $10,026.25 for a Whatcom County Planning and Development Services Conditional Use Permit fee on April 19, 2011. The District was notified that the amount of the fee has changed and as such, the District has requested that the County cancel the warrant due to the amount difference. There is no fiscal impact and a new warrant will be issued for the correct amount.

ACTION: Commissioner McClure motioned to approve Resolution No. 627 authorizing cancellation of Warrant No. 854145. Commissioner Kenner second the motion. Motion passed unanimously.


• BPA Transmission Operators Agreement (11TX-15210)
Background: The District is registered with the North American Electric Reliability Council (NERC) as a Transmission Owner (TO) because its electric system includes a 115 kV transmission line, which is considered to be part of the Region's Bulk Electric System (BES). The BES falls within NERC's jurisdiction of responsibility for assuring the maintenance and enhancement of reliability of the nation's electric systems. As a TO, the District is responsible for compliance with those electric reliability standards specific to transmission facilities. Among those responsibilities are the monitoring of transmission line operating parameters and the notification to other utilities connected to its electric facilities of planned or emergency events that take the District's transmission line out of service. A further responsibility is to make arrangements for electric power to flow over other transmission path(s) should the District's line be out of service.

With approval of the Agreement, BPA will be the responsible party for assuring the arrangements for alternative paths for power flows needed when the District's 115 kV line circuit is out of service. The District will retain responsibility for maintenance of the transmission facilities involved and for notifying BPA in the event of planned outages for the 115 kV line. This division of responsibilities between BPA and the District is similar to current practice. However, with the implementation of the NERC enforced electric reliability standards, such practices and procedures among electric utilities operating portions of the BES must be formally adopted.

Walters said that formal approval of the Transmission Operator Agreement will help assure the District's compliance with some of the requirements associated with the standards applicable to Transmission Owners.

If approved, the Agreement will have no fiscal impact on the District's 2011 budget. The cost of the services to be provided by BPA is embedded in the current BPA transmission services rates and there will be no additional charges assessed by BPA.

ACTION: Commissioner McClure motioned to approve the BPA Transmission Operator Agreement (No.11TX-15210) and authorize the District's General Manager to sign the agreement. Commissioner Kenner second the motion. Motion passed unanimously.

• Pacific Surveying and Engineering Work Order No. 5 - Environmental Permitting Activities
Background: The District has executed an Agreement for Professional Land Surveying Services with Pacific Surveying and Engineering (PSE). Work performed under Work Order No. 5 will be performed consistent with the Agreement. Walters said that the District will be expanding the Refinery Substation yard for placement of equipment. As a result the Re-Design Project will impact a small area designated as Wetlands (Category 3) of approximately two thousand square feet. Due to this future impact, the District must implement mitigation approved by the permitting agencies with jurisdiction.

Work Order No. 5 involves preparation of a Mitigation Plan, SEPA Checklist, and JARPA to be submitted to the County and Corps of Engineers as part of the Project (CIP E-14) permitting activities. In addition, Walters said that PSE has already accomplished survey work for the District and will assist in investigating the feasibility and strategies for developing an advanced wetlands mitigation site on the District's Trigg Road property. If developed, such mitigation would be used as environmental offsets for future District projects.

Commissioner McClure asked who owns the land that the substation is on. Walters replied that the land is owned by ConocoPhillips; however, the District has the easement. He added that waiting for ConocoPhillips mitigation activities might slow up the District's work.

PSE has divided the scope of work under Work Order 5 into two task groups. Task I and subtasks cover the preparation of the Mitigation Plan. Task II and subtasks cover the advanced wetlands mitigation site activities. PSE's estimate for accomplishing Task I and II above is a cost not-to-exceed amount of twenty-two thousand two hundred five dollars ($22,205.00). A detailed scope of work and breakdown of costs is available in the District's office for review, if requested.

The work to be performed has been anticipated and is included in the 2011 Budget. Task I under Work Order No. 5 (Mitigation Plan) is included as part of the permitting activities associated with the Refinery Substation Re-Design Project (CIP E-14). Compensation for the work tasks performed will have no additional financial impact on the District.

ACTION: Commissioner McClure motioned to approve Work Order No. 5 between the District and Pacific Surveying & Engineering Inc, (PSE) for wetland mitigation activities related to the District's Refinery Substation Re-Design Project (CIP E-14) in an amount not to exceed of $22,205.00 and authorize the District's General Manager to sign and execute the work order. Commissioner Kenner second the motion. Motion passed unanimously.

• Substation Control House Bid Award
Background: In order for the Project (CIP E-14) to be completed within a timeframe that accommodates certain time constraints due to ConocoPhillips Refinery operations, the District must order certain key equipment components several months in advance of project construction. One of these items is the new control house for the District's Refinery Substation.

Walters said that three bids were received by the advertised deadline, 2:00 PM on Thursday, April 14. Bids results are as follows:

Based on initial review of the bid packages submitted, District staff rejected one bid as non-responsive. For the remaining two bids, Schweitzer Engineering Labs (SEL) had the apparent low bid price. Crown's bid was the highest apparent price of the three submitted.

District staff then asked its electrical engineering consultant, Elcon Associates Inc. (Elcon), to assist in thoroughly reviewing compliance of SEL's and Crown's bid proposals with the equipment specifications and other specific requirements contained in the District's bid documents provided the bidders. Based on the review conducted by staff and Elcon, it was determined that SEL's bid proposal was non-responsive as well. Crown's bid proposal was determined to be responsive and below the Engineer's estimate for the equipment to be provided

The bid submitted by Crown is a lump sum one hundred fifty-one thousand six hundred fifty-nine dollars ($151,659.00), sales tax not included. With 8.5% sale tax, the total is $164,550.02. The bid amount includes delivery of the Control House to the Refinery Substation project site. The Engineer's Estimate for the Control House, as specified, is one hundred ninety-four thousand dollars ($194,000.00). Staff's recommendation is to accept the Crown Technical Systems, Inc. bid proposal as the lowest cost responsive bid and to reject the other two bids as non-responsive.

The cost of the control house is included in the capital improvement project budget for the Refinery Substation Re-Design Project and is under the Engineer's Estimate prepared by the District's electric engineering consultant, Elcon and will have no fiscal impact on the District's 2011 budget.

ACTION: Commissioner McClure motioned to award the bid for the Control House for the Refinery Substation Re-Design Project to Crown Technical Systems, Inc. in the amount of $164,550.02 and authorize the District's General Manager to sign and execute the contract. Commissioner Kenner second the motion. Motion passed unanimously.

• Three-Way Switch and Metal Pole Bid Results
The District's Capital Improvements Program includes the construction of a new 115 kV transmission line to be routed south to north along the west side of Imhoff Road outside Ferndale. As part of this project, the District issued a Request for Bids for key components of the project, a three-way switch and steel pole. Two bids were received by the advertised deadline, 2:00 PM on Thursday, April 21. Bid results are as follows:

Based on initial review of the bid packages submitted, District staff determined that both bids exceeded the District's Engineering Estimate for the equipment to be provided. RCW 54.04.080 states that bids that exceed 15% of the engineering estimate must be rejected.

Walters said if the Commission approves rejecting the two bids, then District staff will confer with Elcon, the District's electrical engineering consultant and Engineer of Record for the Project (CIP E-10) and prepare a new Engineering Estimate used for the bid evaluation and re-advertise the bid once the internal review is completed.

Rejection of the bids have no fiscal impact on the District's 2011 budget. The District will be able to re-advertise the equipment bid request without any significant impact on the project timeline.

ACTION: Commissioner McClure motioned to reject all bids submitted for the 3-Way Switch and Steel Pole for the Imhoff Road 115 kV Transmission Line Project (CIP E-10) as both exceeded the engineer's estimate plus 15%. Commissioner Kenner second the motion. Motion unanimously passed.

• Manager's Report
Salmon Summit - A formal invitation for the Commissioners will be arriving in the mail soon for this year's Salmon Summit on Thursday, May 19, from 10 am to 2 pm.

WPUDA Workshop - The workshop will focus on working more collaboratively amongst members for planning and preparation of the 2012 Legislative Session. It is scheduled for Wednesday, May 18.

Bellingham City Club - The Pacific Gateway Terminal project will be the main topic to be presented at tomorrow's meeting at Northwood Hall, beginning at 11:45 a.m.

• There being no further business for the regular meeting, the Commission adjourned the regular meeting at 8:50 a.m.

President/Commissioner

Secretary/ Commissioner

Commissioner