PUBLIC UTILITY DISTRICT NO. 1 of Jefferson County November 6, 2012

BUDGET HEARING

CALL TO ORDER The Budget Hearing of the Public Utility District No.1 of Jefferson County was called to order by the President of the Board of Commissioners at 5:00 p.m. at the District Office, 230 Chimacum Road, Port Hadlock, Washington. Commissioners and staff present were:

Barney Burke, President Wayne King, Vice-President

Ken McMillen, Secretary James Parker, District Manager

David Papandrew, District Finance Director

Kate Pike, Brisa Services

The Manager and the District Finance Director presented the 2013 Budget information that is currently on file in the District office. Public Comment None

Close of Budget Hearing The Budget Hearing was closed to the Regular Meeting at 5:03 p.m.

PUBLIC UTILITY DISTRICT NO. 1 of Jefferson County

DRAFT November 6, 2012

REGULAR MEETING MINUTES

The Regular Meeting of the Public Utility District No.1 of Jefferson County was called to order by the President of the Board of Commissioners at 5:00 p.m. at the District Office, 230 Chimacum Road, Port Hadlock, Washington. Commissioners and staff present were:

Barney Burke, President Wayne King, Vice-President

Ken McMillen, Secretary James Parker, District Manager

David Papandrew, District Finance Director Kevin Streett, District Electrical Superintendent

Kate Pike, Brisa Services

AGENDA The Agenda was approved with address of Discussion Items g) Blue Starr Banner moved to directly after MANAGER REPORT - electrical power transition update; and i) Quilcene PIF financial/sewer study to the first Discussion Item.

APPROVAL OF MINUTES MOTION: By Commissioner McMillen, Second by Commissioner Burke, carried with one abstention by Commissioner King, who was absent, to approve the Budget Hearing and Regular Meeting Minutes of October 16, 2012 and Special Meeting Minutes of October 23, 2012.

APPROVAL OF VOUCHERS MOTION: By Commissioner King, Second by Commissioner McMillen, carried unanimously, to approve payment of: Warrants No. 500029 through 500076 in the amount of $ 29,888.49;

and Warrants No.100218 through 100270 in the amount of $ 518,875.12:

with Warrants No.100211 through 100217 Voided; and Warrant No.100169 Voided

For a Total Amount of $ 548,764.21

COMMISSIONERS REPORTS Commissioner King October 30: Attended meeting of Public Infrastructure Fund. November 6: Attended a welcoming luncheon for the District's new Electrical Superintendent, Kevin Streett. November 15: Expect to attend meeting of WRIA 16 Planning Unit and WRIA 17 East Jefferson Watershed Council in Brinnon, Washington. November 16: Expect to attend a meeting of the Board of Directors of NoaNet. Commissioner McMillen November 8: Expect to attend meeting of PURMS (Public Utility Risk Management Services). Commissioner Burke October 17: Attended meeting of WPUDA government relations committee. October 19: Attended Jefferson County Superior Court Hearing regarding purchase of Coyle Peninsula Water District. October 24, 25, 26: Attended meeting of Energy Northwest Board of Directors. November 2: Attended meeting of Citizens for Local Power. November 6: Participated in NoaNet conference call. November 20: Expect to attend presentation in Port Townsend by Ted Beatty, Energy Northwest interim Vice President of Business Development.

MANAGER REPORT - electrical power transition update The Manager and the Board welcomed Kevin Streett , the District's new Electrical Superintendent. Also presented was a summary of total costs of $1,591,733.97. System adjusted values are approximately $4,012,979.

Supply and transmission steps continue, as well as progress toward agreement with Port Townsend Paper Company. The long range plan required by RUS for future project loan funds is pending after further progress with staff hiring and financial planning. Brown & Kysar is continuing design for the Shine Area three-phase plan. A customer transfer agreement is in development. The next Transition Advisory Committee is scheduled for November 28, 2012.

ITEMS FROM THE FLOOR (not listed on the Agenda) None

ACTION ITEMS a) County Regional Services Agreement The Manager presented a Regional Services Agreement for Computer, Network and Internet Support between the District and Jefferson County. After ACTION at this meeting, the Agreement will be executed by the Jefferson Board of County Commissioners on November 19, 2012. After brief discussion the Board took the following ACTION: MOTION: By Commissioner King, Second by Commissioner McMillen, carried unanimously, to authorize signing of the Regional Services Agreement for Computer, Network and Internet Support by and between Jefferson County and the Public Utility District No. 1 of Jefferson County by the President and by the Secretary of the Board. b) Kala Point Letter The Manager presented a letter to be sent to the Kala Point water customers regarding purchase, takeover, system changes and rates of that system by the District. After brief discussion and very minor edit, the Board took the following ACTION: MOTION: By Commissioner McMillen, Second by Commissioner King, carried unanimously, to authorize the Manager to forward said letter to customers of the Kala Point Water System.

DISCUSSION ITEMS a) Interim financing agreements The Manager presented for review bank proposal summaries for interim financing for electrical power provision. b) Budget Resolutions The Manager presented for review a draft Resolution to adopt a 2013 budget, an Exhibit B showing proposed 2013 water and sewer rates, a draft Resolution regarding reduced property tax revenue levy for the year 2013, a draft Resolution authorizing issuance of an Electric System Revenue Bond. c) RUS Resolution The Manager presented for review a RUS Bond Purchase Contract. d) Citizen Advisory Board The Manager presented for review a draft Resolution to establish a Citizen Advisory Board to support the PUD Board of Commissioners. Adoption of the Resolution is anticipated at the November 20, 2012 Regular Meeting. e) County Mail Stuffer The Manager presented for review flyers advertising the Jefferson County Sheriff and Port Townsend Police Department Drug Take-Back Program. There is a request to include flyers in PUD billing notices. f) Board positions, meeting schedules for 2013

Positions on the Board remain the same for 2013. Meeting schedule for 2013 was submitted. g) Steve Burnett - Blue Star Banner Steve Burnett addressed the Board regarding Blue Star Banners, an organization that seeks to install banners honoring members of the Armed Forces on power poles. No action was taken, but the manager and the board noted that the PUD should establish a policy as to whether pole attachments should be allowed before considering any such proposal can be considered. h) Local labor union contract The Manager presented for review correspondence to Laborers Local No. 252 for consideration of change to the Local Labor Union Contract agreement. i) Quilcene PIF financial/sewer study Linda Herzog addressed the Board regarding the PUD being the contractor for Public Infrastructure Fund award. j) PSE adjustment #19 The Manager presented for review Summary of Additions and Purchase Price Adjustments No. 19 regarding power facility purchase. k) Resolution Segregation The Manager presented for review information regarding draft legislative, regulatory and executive issues for 2013.

MANAGER'S REPORT/OLD BUSINESS Sparling Well: Pouring is underway. State Revolving Fund reimbursement is in progress. Kala Point: Sanitary inspections by Department of Health for Quimper Water System, Local Utility District No. 3 and Kala Point Water System have been completed, as well as ATEC pilot testing. Staff continues preparation of Kala Point consolidation bid and construction documents. NoaNet Contract signing has been delayed.

CORRESPONDENCE None

ADJOURNMENT MOTION: By Commissioner McMillen, Second by Commissioner King, carried unanimously, to adjourn the Regular Meeting at 6:49 p.m.

Barney Burl e, President Wayne King, Vice r sident

_ v Kenneth A. McMillen, Secretary