MINUTES OF THE MEETING OF THE COMMISSION

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, Commissioner Mike Murphy and Legal Counsel Rich Davis. Staff: Steve Jilk, General Manager; Ann Grimm, Administrative Assistant; Brian Walters, Director of Utility Operations; Barbara Shosten, Director of Finance; Annette Smith, Assistant Director of Finance; Fred Disch, Water System Supervisor; Paul Siegmund, Process Engineer; Mike Macomber, IT/SCADA Technician; Rebecca Schlotterback, Water Resource Technician; Duane Holden, Director of Engineering and Project Development; Alec Strand, Project Manager; and Lew Gaskill, Accountant 1. 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 December 13, 2011 and the following claims of December 20, 2011.

ACTION: Commissioner Murphy motioned to approve the Minutes of December 13, 2011 and the claims of December 20, 2011. Commissioner McClure second the motion. Motion passed unanimously.

• Resolution No. 643 - Approval of Hartford Deferred Compensation Specimen Plan Document
Background: The Commission established the Hartford Deferred Compensation Plan (Plan) to provide District employees the opportunity to invest in retirement programs funded by the employee. In October, Hartford proposed that the District begin using a Deferred Compensation Specimen Plan Document that is customized specific to the District. The plan document includes variable provisions and was drafted based upon the provisions selected.

The new plan document has been updated to reflect all changes in the law including the Pension Protection Act of 2006 (PPA), the Heroes Earnings Assistance Act of 2008 (HEART, including HEART Notice 2010-15), and the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA), which are intended as good faith compliance with the requirements of these legislative changes and any guidance issued there under.

In order to begin utilizing the new plan specimen document, Resolution No. 643 will need to be adopted prior to 31 December 2011, which will authorize the Commission to execute the new plan specimen document and make the Plan fully effective in accordance with its terms and intent. There is no fiscal impact to the District.

ACTION: Commissioner Murphy motioned to approve Resolution No. 643 authorizing the District to utilize the Hartford Deferred Compensation Specimen Plan Document. Commissioner McClure second the motion. Motion passed unanimously.

• Approve Water Supply Agreement with Puget Sound Energy (PSE) - Pt. Whitehorn Facility
Background: Puget Sound Energy currently has an agreement to purchase industrial grade water from the District to serve PSE's Pt Whitehorn gas fired generation facility. This agreement terminates on December 31, 2011. District staff and legal counsel have been in discussions with PSE representatives with the goal of completing a draft of a concluding an agreement to renew this agreement. A draft agreement has been concluded and this is a recommendation for Commission approval.

Jilk said the draft agreement has language similar to other industrial water supply agreements completed in the last few years and reflects the Commission's directive to address issues of water rights, rates and charges and reimbursements stemming from reduction of water quantities and fees paid by the customer. The new contract reflects the same water quantities identified in the current contract with options for PSE to increase those quantities under the terms established by the District and applied to other customers. The term of this agreement is January 1, 2012 to December 31, 2026 (15 years).

There is no fiscal impact on the District. Rates and Charges for PSE continuing this service through 2012 are already factored into the 2012 budget. Any out of pocket costs experienced by the District in development of the contract will be covered by a one-time fee charge to PSE in the amount of $5000.00 to cover the cost of development of the new agreement that will cover District out of pocket costs.

ACTION: Commissioner McClure motioned to approve the Agreement for Industrial Water Purchase between Public Utility District No. 1 of Whatcom County and Puget Sound Energy and authorize the General Manager to sign. Commissioner Murphy second the motion. Motion passed unanimously.

• Commission Officer Elections and District Representatives for 2012
Each year the Commission elects officers for the Commission for the upcoming calendar year and acts to approve Commission and staff representatives to agencies that the District is a member of. The Commission takes action on the election of officers without recommendation from staff. Nomination and selections of Commission Officers for year 2012 were made as follows:

President:
ACTION: Commissioner McClure motioned to nominate Commissioner Murphy as President. Commissioner Kenner second the motion. Motion passed unanimously.

Vice President:
ACTION: Commissioner McClure motioned to nominate Commissioner Kenner as Vice President. Commissioner Murphy second the motion. Motion passed unanimously.

Secretary:
ACTION: Commissioner Kenner motioned to nominate Commissioner McClure as Secretary. Commissioner Murphy second the motion. Motion passed unanimously.

Washington Public Utility Districts Association Representative:
Commissioner Murphy currently holds this position.

Energy Northwest Board of Directors Representative (Elected) and Alternate (Staff): Commissioner Murphy retained the elected representative for 2011; General Manager Steve Jilk as alternate.

Northwest Economic Council (NWEC) Board Member:
Commissioner McClure currently holds this position.

Whatcom County Economic Development Investment Board:
Commissioner McClure currently holds this position.

Public Utility Risk Management Services (PURMS) - (Elected) Representative:
Commissioner Kenner currently holds this position.

ACTION: Commissioner McClure motioned to retain all District representatives as is for 2012. Commissioner Murphy second the motion. Motion unanimously passed.

• Approve 2012 Commission Meeting Schedule
Jilk asked that the Commission approve the meeting schedule for 2012. It follows the regular meeting schedule of 2nd and 4th Tuesdays and allows for consideration of any federal holidays.

ACTION: Commissioner McClure motioned to approve the Commission Meeting Schedule for 2012. Commissioner Murphy second the motion. Motion passed unanimously.

• Membership in State of Washington Purchasing Cooperative
Background: The District has been a member of the State's Purchasing Cooperative since 2005. As a member of this cooperative, the District has access to over 200 purchasing contracts covering a wide variety of products and services. Through this agreement, the District has purchased vehicles, computer hardware and software, printers/copiers and office furniture in the past. Due to state budget cuts, the program is undergoing a re-evaluation period and has been moved under the Department of Enterprise Services. Jilk said he recommended the District sign up for the purchasing contract but pay on an annual basis since the future of the program could be questionable. Fiscal impact to the District is $1,000 per year and the cost is offset by the savings the District experiences by using the Purchasing Cooperative to purchase items identified in the District's budget and available through the Cooperative. The membership fee is included in the operating budget.

ACTION: Commissioner McClure motioned to approve membership in the State of Washington Purchasing Cooperative. Commissioner Murphy second the motion. Motion passed unanimously.

• Manager's Report
Jilk had no report. Commissioner Murphy expressed his thanks for a nice employee recognition event earlier in the week.

• There being no further business for the regular meeting, the Commission adjourned the regular meeting at 8:09 a.m.

President/Commissioner

Secretary/Commissioner

Commissioner