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 Mike Murphy, 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; Dennis Yabsley, Electric System Supervisor; Fred Disch, Water Systems Supervisor; Mike Macomber, IT/SCADA Technician; Duane Holden, Director of Engineering and Project Development; Alec Strand, Project Manager; Rebecca Schlotterback, Water Resource Technician; and Lew Gaskill, Accountant 1. Public attending: Rick Maricle, ConocoPhillips; Steven Kenner, visitor; Jon Hutchings, Whatcom County Public Works; Roger Brown, Birch Bay Water and Sewer District; George Reich, BPA; Tom Perry, MSA; and Pete Kremen, County Executive.
• Public Comment
No comments made.

• Approval of the Meeting Minutes and Claims
The Commissioners were presented with the minutes of the regular meeting held June 28, 2011, and the following claims of July 12, 2011.

ACTION: Commissioner McClure motioned to approve the minutes of the regular meeting held June 28 2011, and the claims of July 12, 2011. Commissioner Murphy second the motion. Motion passed unanimously.

• George Reich, Bonneville Power Administration
The District's account executive from the Bonneville Power Administration (BPA) is George Reich. Reich will retire at the end of July after assisting the District with power sales and other roles after 35 years. Reich gave an update to the Commission on BPA current topics and a status report on the District's power sales contract. Highlights included:

Tidbit of History - Reich passed around an original Edison 60 watt light bulb, much larger in size than typical light bulbs of today, such as CFLs at 13 watts and LEDs at 1-1/2 watt which can burn for 700 hours at a cost of three cents.

BPA/District Contract - The new contract extends through 2028, power is purchased at cost in the new tier rate design. Reich expects a rate increase in the 9 to 11% range for the next three year rate period. An exhibit revision will be done which will cover the District's recent additions of the Ferndale and Enterprise substation. A new customer portal for ordering power "on demand" will go live in October.

Snowpack and Salmon - This previous winter's snowpack hasn't melted very fast and there is concern over flood control. BPA doesn't like to spill over the dams because it adds nitrogen to the water which in turn, creates a high kill rate of the fish.

Wind Power as a Renewable - Unlike hydro-electric power, wind cannot be forecasted or stored energy. Wind farms are producing about 3000 megawatts of power. An average load in Seattle is about 1000 megawatts. The over-generated power is being sold to the California market.

Resolution No. 633
Commissioner Kenner thanked Reich for his outstanding service to the District and presented Resolution No. 633 honoring Reich upon his retirement. Resolution No. 633 expressed the Commissioners' sincere appreciation for his valued service to the District since 1976. Reich served the District "...most capably with the interests of the PUD always foremost, and gave generously of his time and talents in performing the duties of his job as the District's BPA Account Executive..."

Kenner presented Reich with a framed copy of the signed resolution and vintage photograph of the dedication of the original substation in 1954.

ACTION: Commissioner Murphy motioned to approve Resolution No. 633 honoring George Reich upon his retirement after 35 years as Bonneville Power Administration's account executive and "engineer extraordinaire" to the District. Commissioner McClure second the motion. Motion passed unanimously.

• Executive Kremen - Water Supply Planning
Background: The PUD was asked by the WRIA 1 Joint Board to complete the work for Objective No. 3 of the development of an action plan to implement the Joint Board's Watershed Management Plan for WRIA1. The source of funds for Objective No. 3 was identified as coming from the Whatcom County EDI fund. (The estimated budget for the five year period for Objective No. 3 is just under $400,000.)

Kremen expressed his thanks for the opportunity to come before the Commission and personally acknowledge how much he has appreciated the work of Jilk and WRIA 1 Joint Board, notably Jilk's leadership role in taking the necessary steps towards a most economical decision/activity in the rural Whatcom community. Kremen said he was proud to be a part of it and how the water supply planning will have a profound benefit for every person in the county. Commissioner McClure agreed with Kremen adding it is a significant step for long term planning.

Jilk thanked Kremen for his comments and support and said he also appreciated the assistance and support from Jon Hutchings (County Assistant Public Works Director).

Also announced was the invitation to participate in the Economic Stimulus Forum on July 25 at the Building Industry Association of Whatcom County. The focus is on bringing together County, City partners and the Port of Bellingham in a collaborative effort to identify economic opportunities for advancing infrastructure, findings and recommendations to the regional economic strategy, changes to the EDI and capital projects in our cities and throughout Whatcom County.

Commissioner Kenner thanked Kremen for his visit as well as his 16 years of service as County Executive.

ACTION: Information only. No requested action taken.

• Manager's Report
Lake Samish Water Supply
Jilk said he met with the Skagit PUD and in a very cordial discussion, Skagit indicated they are not interested in supplying water for the Lake Samish customers at this time. Other development in the Samish area may lead to the Skagit PUD's interest in supplying water to the Samish District. Jilk also met with the Samish Water and Sewer District to discuss this idea. The Samish Water and Sewer District is interested in working with Skagit PUD and if there is a benefit, the Whatcom PUD in the future on this water supply.

WPUDA Update
The latest from WPUDA is that they have terminated their agreements with four (4) lobbyists for the remainder of the year. Of these four contracts, the one of greatest concern to water-service PUDs is the person who addresses the lobbying needs of water-service PUDs. At the WPUDA Water Committee meeting last week, committee members discussed the value, and strong support for taking quick, constructive steps to keep the contract in place with the lobbyist and WPUDA.

Commissioner Murphy said that the WPUDA is facing hard times and there is the possibility of charging higher membership fees in order to pay for lobbyists. Murphy strongly suggested that the District should discuss at some point what direction to go with our membership.

McClure asked when the membership rate increases are expected at the end of the year that it could a point of discussion at that time whether or not to stay involved as a member. Sitkin added he had just been to the WPUDA attorney's meeting in Semiahmoo. Word is that Grays Harbor County PUD has not fully backed out of WPUDA membership just yet. This issue will be discussed at the PUD's budget workshop later in the year.

Projects Update
Easement Mowing Contract
Holden said that the easement mowing contract for the 115kV transmission line has been awarded to True Green Lawn Service in the amount of $6200.00. Engineer's estimate for the project was $10,600.00

Plant No. 2 East Pond Solids Removal Project
Holden said the "Notice to Proceed" to Interwest Construction Inc. for the cleaning and excavation of the District's Plant No. 2 East Settling Pond will go out this afternoon. Due to the significant amount of sediment the clarification process produces, the settling ponds need to be cleaned and excavated on an annual basis.

• Executive Session
Jilk requested an Executive Session to discuss water rights litigation with possible action to be taken on the last item on the agenda, DOE grant, afterwards. Legal Counsel was present. There being no further business for the regular meeting, the Commission adjourned at 9:05 a.m. to Executive Session.

• There being no action taken or further business for Executive Session, the Commission adjourned Executive Session at 9:20 a.m. to Regular Meeting.

• Department of Ecology - Nooksack Streamflow Negotiations
Background: The District has received/administered grants from the Department of Ecology (DOE) for fiscal year 2010 and 2011 for the purpose of providing through contracted services and District staff, support to the Nooksack Streamflow negotiating team.

Through this grant program the District contracted with outside legal and facilitation services to conduct the negotiations and District staff administered these contracts and the grant itself.

The last two years of the negotiations have focused on the Three Forks area of the Nooksack Basin and these negotiations are ongoing. This new grant, fiscal year 2012 is being offered by the DOE is set at $25,000. Tentatively there is a 2013 fiscal year grant amount of $150,000 for the same purpose. This grant may be available beginning July 1, 2012 if negotiations in the Nooksack Basin are ongoing and proving successful. Because of fiscal constraints at the state level, the 2012 fiscal period grant has been reduced to $25,000. Additionally, it is expected that the $25,000 will be sufficient to bring the Three Forks negotiations to a conclusion.

The Department of Ecology is requesting the District accept the 2012 grant for Nooksack streamflow negotiations and administer the grant under the terms of the offer. All costs the District incurs for hiring consultants to work on the negotiations will be covered by grant funds and the costs of District staff administering the grant and filing appropriate reports will be charged to the DOE.

ACTION: Commissioner McClure motioned to accept the grant being offered by Department of Ecology in the amount of $25,000.00 to continue the support of the Nooksack streamflow negotiations for State fiscal year 2012 and authorize the General Manager to sign and execute the grant agreement. Commissioner Murphy second the motion. Motion passed unanimously.

• There being no further business for the Regular Meeting, the Commission adjourned the regular meeting at 9:25 a.m.

President/Commissioner

Secretary/ Commissioner

Commissioner