EWEB bracing for a 15% utility rate increase

By Bayla Orton

The Carmen-Smith Hydroelectric Project’s increased costs, supply chain shortages, and other Eugene Water & Electric Board projects could soon translate to a 15% increase in utility bills for the utility's customers.

Costs for the Carmen site were up $21 million - or 3.3% - last week, creating new issues for budgeting, board officials said. Concerns include requirements for the safe passage of Chinook salmon and bull trout along an 8-mile stretch of the McKenzie River.

There are now questions surrounding the effectiveness of that anticipated construction work and passing on costs to the general public, officials said.

General manager Frank Lawson and board president Matt McRae were both concerned about how the rate increase would impact insecure households.

“Nobody wants a 15% increase in electricity rates,” McRae said. “We are doing all we can to control our rates relevant to inflation. I think this increases the importance for all of us to keep track of those who are utility-burdened.”

Key factors pushing up expenses are mostly out of the board’s control.

“The allotted funds for these projects has been steadily increasing since 2016 and can be attributed to factors like inflation, long-lead times for materials and equipment, labor shortages, compliance requirements, and overall safety procedures,” according to generation manager Lisa Krentz.

“We’ve seen factors where we have looked at specific assets of somewhere between one and a half and two times the replacement costs, versus the original costs," Lawson added. "If you think about $750 million to $800 million worth of assets, that means we’re talking about $1.6 billion worth of replacement on the electric side over time.”

A budget extension of $200,000 was approved in the board's consent calendar. Krentz informed commissioners that half that amount had already supplemented Leaburg dam removal costs and kickstarted work for the Carmen-Smith Project.

The board is forecasting future spending while saying the process is an almost impossible task "based on inflation and unforeseeable issues or natural events."

“Trying to budget for Carmen-Smith over the next 10 years seems like a wild hair with all the things that pop up seemingly monthly with that project,” according to board vice president John Barofsky.

“It seems like a lot of the challenge we are facing is that there are fewer and fewer suppliers of the products we need,” Commissioner Sonya Carlson added. “I fear that that number will continue rising, but I’m glad we continue to adjust and increase this number based on the crystal ball that no one has.”

She added, “I wonder if we as a board have become a little bit more complacent about large dollar figures - these numbers dramatically impact the rates we are getting each year. I want to make sure we are fully scrutinizing projects like this.”

The price of decommissioning the Leaburg hydro project has already impacted utility bills for EWEB customers living in the western McKenzie Valley and the Eugene metro area. The fate of the Walterville and Carmen-Smith facilities is likely to continue to play significant roles as the utility develops its 20-year electric forecast, now scheduled for discussion on the board's September agenda.