SNOHOMISH COUNTY PUBLIC UTILITY DISTRICT

Regular Meeting April 23, 2019

The Regular Meeting was convened by President Sid Logan at 9:00 a.m. in the Commission Meeting Room. Those attending were Tanya Olson, Vice President; Rebecca Wolfe, Secretary; CEO/General Manager John Haarlow; General Counsel Anne Spangler; Assistant General Managers Tom DeBoer, Glenn McPherson, Guy Payne, and Brant Wood; other District staff; members of the public; Clerk of the Board Melissa Collins; and Deputy Clerks of the Board Allison Morrison and Lela Wall.

* Items Taken Out of Order **Non-Agenda Items

** A moment of silence was observed in honor of District employee Robert "Bob" Broughton.

1. CEO/GENERAL MANAGER BRIEFING AND STUDY SESSION

A. Updates

1. Media. Communications & Marketing Director Julee Cunningham reported on District related articles, and showed a KOMO 4 news clip on the launch of the District's Community Solar program.

2. Legislative Update. State Government and External Affairs Associate Clark Mclsaac provided an update on the State Legislative session and discussed high and medium priority bills.

In response to comments from Commissioner Wolfe about the term "low impact" being used to describe hydro, CEO/General Manager John Haarlow suggested a future presentation be provided by Manager Natural Resources Keith Binkley's Biology team on how that terminology factored in with what the District does.

3. Community Engagement. Senior Executive Account Manager Strategic Accounts Tom Hovde provided updates on Community Solar panel sales, the release of a new Plat Portal, the Port of Everett construction schedule, and noted that an updated packet of City Fact Sheets would be provided to the Commissioners.

4. Other: There were no other updates.

B. Audit Results Public Utility District No. 1 of Snohomish County

Senior Manager and Auditor Julia Anderson introduced Olga Darlington, with the public accounting firm of Moss Adams LLP, who presented the 2018 financial fiscal year audit results for the District.

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Performed in accordance with Government Auditing Standards, the audit report dated March 28, 2019, found no material weaknesses in internal control.

C. Energy Risk Management Report - 1st Quarter 2019

Senior Manager Rates, Economics, and Energy Risk Management Brian Booth provided an overview of the pt quarter of 2019 that included Supply, Demand, Forecast Demand over Time, Market Prices, and Forward Prices. Report results reflected unplanned record cold temperatures for February, followed by record warm temperatures in March.

The Credit Limit Analysis, Financial Load Resource Imbalance, and Price Volatility tests had no violations during the quarter.

The meeting recessed at 10:27 a.m. and reconvened at 10:36 a.m.

D. Water Supply Update

Short-Term Power Trader Mike Shapley provided a presentation on Water Year 2019 (WY' 19), which highlighted the PUD energy resource portfolio; WY' 19 existing conditions; Hydro generation update: PUD owned resources and Bonneville Power Administration (BP A) Slice; weather forecast; and the short-term price forecast and load resource balance.

It was noted that the water supply basin conditions were below average, reservoir storage increased and the Hydro reservoirs were above average. Weak El Nifio conditions existed for the Pacific Northwest and the District remained in a good position for water supply.

E. Residential Rate Redesign

Senior Manager Rates, Economics, and Energy Risk Management Brian Booth presented information on a Residential Rate Redesign, which included introductory "101" information for Cost of Service Analysis and a review of Rate Design Principles and Allocating of Expenses.

Due to time constraints, the Residential Rate Redesign update was continued to the afternoon session.

The meeting recessed at 11:25 a.m.

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RECONVENE REGULAR MEETING

The Regular Meeting was reconvened by President Sidney Logan at 1 :30 p.rn. in the Commission Meeting Room. Those attending were Tanya Olson, Vice President; Rebecca Wolfe, Secretary; CEO/General Manager John Haarlow; General Counsel Anne Spangler; Assistant General Managers Torn DeBoer, Glenn McPherson, Guy Payne, and Brant Wood; other District staff; members of the public; Clerk of the Board Melissa Collins; and Deputy Clerks of the Board Allison Morrison and Lela Wall.

* Items Taken Out of Order **Non-Agenda Items

Changes to the agenda were made as follows: Add the continuation of CEO/General Manager Briefing and Study Session item lE following Items for Individual Consideration.

2. COMMENTS FROM THE PUBLIC

Steven Keeler, Edmonds, provided a handout at places, and made a part of the packet and spoke about the Bonneville Power Administration (BP A) Balancing Authority.

Nancy Johnson, Edmonds, suggested that incentive programs, on items like heat pumps, be offered for people who do not currently have electric heat.

General Counsel Anne Spangler mentioned a State law provision that prohibits the District from providing incentives for fuel switching.

3. CONSENT AGENDA

A. Approval of Minutes for the Regular Meeting of April 9, 2019

B. Bid Awards, Professional Services Contracts and Amendments

Public Works Contract Award Recommendations Over $25,000: Request for Proposal No. Doc1692388474 with Kemp West, Inc. Formal Bid Award Recommendations $60,000 and Over: Request for Quotation No. Doc1630680434 with McWane Poles Request for Quotation No. Doc1653549166 with TransArnerican Power Products, fuc. Professional Services Contract Award Recommendations $200,000 and Over: None Miscellaneous Contract Award Recommendations $200,000 and Over: Request for Proposal No. Doc1431128225 with GeoSpatial funovations, Inc. Cooperative Purchase Recommendations: Contracts: None Amendments:

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Contract Number CW2222790 with Hewlett Packard, Inc. Sole Source Purchase Recommendations: None Emergency Declarations, Purchases and Public Works Contracts: None

April 23, 2019

Purchases Involving Special Facilities or Market Condition Recommendations: None Formal Bid and Contract Amendments: None Contract Acceptance Recommendations: Public Works Contract No. CW2227649 with Asplundh Tree Expert, LLC

C. Consideration of Certification/Ratification and Approval of District Checks and Vouchers

D. Consideration of a Resolution Approving Amendment No. 8 to the Collective Bargaining Agreement Between the Public Utility District No. 1 of Snohomish County and the International Brotherhood of Electrical Workers, Local No. 77, for the Period of April 1, 2017, Through March 31, 2020

E. Consideration of a Resolution Approving Amendment No. 9 to the Collective Bargaining Agreement Between Public Utility District No. 1 of Snohomish County and the International Brotherhood of Electrical Workers, Local No. 77, for the Period of April 1, 2017, Through March 31, 2020

A motion unanimously passed approving Agenda Items 3A - Approval of Minutes for the Regular Meeting of April 9, 2019; 3B -Bid Awards, Professional Services Contracts and Amendments; 3C - Certification/Ratification and Approval of District Checks and Vouchers; 3D - Resolution 5900 approving amendment No. 8 to the Collective Bargaining Agreement Between the Public Utility District No. 1 of Snohomish County and the International Brotherhood of Electrical Workers, Local No. 77, for the Period of April 1, 2017, Through March 31, 2020; and 3E-Resolution 5901 approving amendment No. 9 to the Collective Bargaining Agreement Between Public Utility District No. 1 of Snohomish County and the International Brotherhood of Electrical Workers, Local No. 77, for the Period of April 1, 2017, Through March 31, 2020.

4. PUBLIC HEARING

A. Public Hearing to Solicit Comments on the Proposed 2019 Integrated Resource Plan Update, and 2020-2021 Biennial Conservation Target

Senior Manager Power Supply Anna Berg, Senior Utility Analyst Dan Liska, and Principal Utility Analyst Garrison Marr provided phase three of an incremental update to the District's 2017 Comprehensive Integrated Resource Plan (IRP), which also included the proposed 10-year Conservation Potential and a two-year Biennial Target 2020-2021.

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The 2019 Proposed Long-Tenn Resource Strategy and 2019 Short-Term Action Plan included conservation methods across the portfolios, as well as resource planning efforts. Mr. Marr noted that, by making investments in conservation, which would be investments in the District's community, and by acquiring a short-term winter market product, the District would have the luxury of allowing the best possible long-term resource to emerge.

The process included a Public Comment period that occurred March 19, 2019, through April 19, 2019 and the State Environmental Policy Act (SEPA) process from April 5, 2019, through April 18, 2019. The next step was a tentative Public Hearing May 7, 2019, for Board consideration to adopt the 2019 IRP Update and 10-year Conservation target and the 2020-2021 Biennial Conservation Target.

Manager Market Segments Jessica Mitchell responded to Commissioner Wolfe's inquiry on the Energy Efficiency amounts dedicated in the portfolio, which led to a brief discussion about heat pump technology.

The following member of the public provided comments:

Steven Keeler, Edmonds, provided a handout at places, and made a part of the packet and read suggestions and questions regarding the District's proposed IRP update.

There being no further questions or comments from the public, President Logan closed the public hearing.

5. ITEMS FOR INDIVIDUAL CONSIDERATION

A. Consideration of a Resolution Authorizing the Assistant General Manager, Distribution and Engineering Services, of Public Utility District No. 1 of Snohomish County to Execute a Master License Agreement with ExteNet Systems, fuc. Establishing Terms and Conditions Regarding the Licensing of Wireless Communication Facilities on District Property

A motion unanimously passed approving Resolution No. 5902 authorizing the Assistant General Manager, Distribution and Engineering Services, of Public Utility District No. 1 of Snohomish County to execute a Master License Agreement with ExteNet Systems, fuc. establishing terms and conditions regarding the licensing of wireless communication facilities on District property.

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B. Consideration of a Resolution Authorizing the CEO/General Manager of Public Utility District No. 1 of Snohomish County to Execute an Interlocal Agreement with Snohomish County Regarding the Relocation of Water Utilities Associated with the South Machias Road and Machias Cutoff Intersection Improvement Project

A motion unanimously passed approving Resolution No. 5903 authorizing the CEO/General Manager of Public Utility District No. 1 of Snohomish County to execute an Interlocal Agreement with Snohomish County Regarding the relocation of water utilities associated with the South Machias Road and Machias Cutoff Intersection Improvement Project.

*1. CEO/GENERAL MANAGER BRIEFING AND STUDY SESSION

E. Residential Rate Redesign ( continued)

Senior Manager Rates, Economics, and Energy Risk Management Brian Booth continued the Residential Rate Redesign presentation to provide information on rate design options, impact analysis, and next steps.

Examples of fixed charges were provided and how those charges could be applied, with the goal being to find the right balance between energy rates and a fixed charge. Rate design options studied, such as Seasonal Rates and Inclining Block, were mentioned and Mr. Booth said that a reasonable range of rates would be what staff looked for. Potential impacts of putting more money into Energy Efficiency were also mentioned.

The Timeline of the Redesign was Roadmap Development from October 2018 through February 2019; Outreach, Design, Iterations from February 2019 through June 2019; and Communication and Implementation from June 2019 through December 2019. Mr. Booth would come back, sometime in July, with a recommendation, that included all of the impact analysis and phasing.

Discussion ensued regarding the need for the Board to be provided a solid understanding of the impact and scenarios. There would need to be a very clear and understandable message to the customer of what would be happening, the benefits, and any impact for the customer.

The following members of the public commented:

Steven Keeler, Edmonds, received responses from Mr. Booth regarding whether hot water or heating was the biggest fractional percentage of energy use for an all-electric dwelling and whether developers had a choice to split those two items.

Amy Wheeless, with the Northwest Energy Coalition (NWEC), said many of the issues raised were not unique to the District and she looked forward to a potential recommendation in the summer.

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6. COMMISSION BUSINESS

A. Commission Reports

Commissioner Wolfe participated in an Arbor Day event, the opening of the Interurban Trail, and attended an orientation.

Commissioner Olson represented the Board at the District's New Employee Orientation and attended, with Commissioner Logan, the State of the Navy [Economic Alliance Snohomish County's 25 Years at Naval Station Everett].

7. GOVERNANCE PLANNING

A. Governance Planning Calendar

Commissioner Logan mentioned the upcoming Board Retreat and Commissioner Wolfe noted her upcoming "Essentials of Electricity" class.

CEO/General Manager John Haarlow stated the Energy Efficiency presentation, scheduled for the May 21 st Commission meeting, would be rescheduled due to Commissioner Wolfe and Mr. Haarlow attending the Northwest Public Power Association (NWPPA) meeting during that time.

ADJOURNMENT

There being no further business or discussion to come before the Board, the Regular Meeting of April 23, 2019, adjourned at 3:37 p.m. An audio file of the meeting is on file in the Commission Office and available for review.

Approved this 2ist day of May 2019.

(absent) Secretary