Big payday.

Byline: SCOTT MABEN The Register-Guard

EUGENE WATER & ELECTRIC BOARD workers get only half of their annual pay raises starting this week - a rare move by the utility's leaders to cope with a budget crisis at a time when thousands of households are reeling from double-digit rate increases.

But an analysis of EWEB salaries shows that a job at the state's largest publicly owned utility is still very good work if you can get it.

And that remains true even after several years of pay cuts designed to put the brakes on salaries that raced ahead of industry standards.

EWEB salaries average $60,000 a year - more than twice Lane County's average salary of $29,000 and well more than the average countywide government salary of $35,600, state employment figures show. Add in benefits, and the utility's cost per employee goes up another $25,000.

It makes for an appetizing package for career-minded professionals. In the past decade, EWEB retirees on average left at age 57 after 23 years there.

"I believe that we pay a competitive rate," said General Manager Randy Berggren, who came to EWEB 17 years ago as its chief engineer and now oversees 453 employees. "The board has set policy guidelines that basically put us slightly above average and let us stay competitive in the (utility industry) market."

EWEB jobs generally beat those at the county, the city of Eugene and area school districts, and compete with those of state and federal employers.

"Historically, we'd look at EWEB's positions and say, 'Wow, they pay pretty well over there,' ' said Lauren Chouinard, Eugene's human resources and risk services director.

"We do lose employees to EWEB on occasion, and generally we lose them because they pay a little better," Chouinard said.

EWEB also competes aggressively in the West Coast utility market. Its 10 senior engineers, for example, earn $86,617 a year on average - well more than what public utilities pay in Sacramento, Seattle, Kennewick, Tacoma and Vancouver, Wash. Many other positions pay as well as or slightly better than public utilities from Puget Sound to Southern California.

In addition, EWEB compensates its executive managers at a higher level than other local public employers. Fourteen managers take home more than $100,000 per year, and half of those earn more than $120,000. City government, with more than three times as many employees, has nine managers who make more than $100,000.

Berggren earns more than $175,000 a year in total compensation, putting him in a league with University of Oregon President Dave Frohnmayer. Within the industry, however, his pay ranks just less than average for public utilities of similar size.

Ratepayers react

All this can be a sore point for ratepayers, who on average pay 43 percent more for electricity than 15 months ago.

Surges in power costs have been the driving force behind EWEB's rate increases. Of the past three rate increases, less than 1 percent can be attributed to higher labor costs, according to EWEB statistics.

Even so, some people struggling with their bills don't like it.

In a recent note to utility managers, a customer wrote, "What a great way to get a pay raise - just raise the old people's electric rate and water rate and, hooray, more money for your pockets." Another scrawled, "Quit raising your rates you selfish, greedy, bloodsucking leeches!!!"

Joyce Bright, a McKenzie River resident, wrote EWEB managers a letter in April chastising them for "gouging" ratepayers: "You keep giving people inflated salaries, wage increases ... and think nothing of the people who pay the bills."

Public criticism typically grows loudest when the EWEB board gives the general manager a hefty pay raise or approves a big rate increase.

While Berggren's most recent raise was 18 months ago, board members raised electric rates twice last year, switched to a controversial tiered billing system last fall and tacked on a temporary electric rate surcharge this spring. The series of changes provoked hundreds of customers to complain.

"We get a steady amount of back-of-the-bill comments on how our pay is too high and we live in this palace on the river," Board President Dorothy Anderson said.

The impression that EWEB indulges its workers at public expense is nothing new, said Susie Smith, who served on the utility's elected board for 11 years before stepping down earlier this year.

"I do think EWEB carries a stigma that its employees are highly paid," Smith said. "Do I believe they are out of whack with the marketplace? I can't answer that on a position-by-position basis."

But overall, employee pay today is more in line with marketplace realities and community expectations after an overhaul of the pay system approved by the board in 1998, she said.

"We saw a lot of constraining of salaries as a result of that," Smith said.

More recently, the board voted to cut pay raises in half for all employees this year as well as eliminate $250,000 in scheduled incentive pay and reduce associated benefit costs by $100,000.

The cuts were a small but symbolic piece of budget pruning to help offset a $10 million drop in reserves and $30 million in emergency loans.

EWEB took that $40 million hit last year as utilities weathered what has been dubbed the "perfect storm" of hardships, including low hydropower generation because of drought and skyrocketing wholesale power prices fueled by California's energy crisis.

During the spring budget-cutting sessions, some urged the board to freeze the pay of all employees to avoid raising rates for the third time in a year.

Commissioner Peter Bartel, who recently resigned from the board after losing a re-election bid, argued that an all-out salary freeze was justified because ratepayers were coping with multiple rate increases on top of a recession.

But others, including Commissioner Sandra Bishop, argued that a pay freeze could severely disrupt EWEB's recently revamped pay structure and might cost it some valued employees.

"If during a crisis you cut too deep, you could end up creating a longer crisis situation," she said. "Employees are the most valuable part of your business, and you need to balance immediate budget constraints with the need for a quality staff."

And EWEB officials say even deep pay cuts would do little for rate relief. If the 18 highest-paid EWEB employees took a 20 percent pay cut, the savings would lower the average customer's monthly bill by 30 cents. And if every EWEB employee took a 50 percent pay cut, the average bill could be reduced by about $8.40 a month, according to figures provided by EWEB.

Explaining salaries

Commissioners and top managers say they set salary targets for EWEB's $27 million payroll above the marketplace average to attract the best employees they can.

"If you get really good people, it actually saves money," Anderson said. "We can have fewer employees accomplish more if they're well-trained."

The utility is serving more customers with fewer employees, EWEB officials say. While the number of customers has risen 17 percent since 1992, the number of employees dropped 5.2 percent in that decade. The number of customers per employee grew from 144 in 1992 to 178 in 2001.

In the same period, salaries grew by 8.7 percent, not including increases because of inflation.

Utilities also pay higher wages because they require a wide variety of highly skilled employees for technical operations, from engineers and power traders to accountants and energy market forecasters, said Bob Valdez, spokesman for the Oregon Public Utilities Commission.

"It's a very specialized, complicated industry," Valdez said. "It's a lot more involved than turning on a switch and watching electricity go from point A to point B."

Jean Meyers, EWEB's human resources director, said the utility frequently recruits employees with unique skills and knowledge.

"We get many technical and professional staff from the local labor market, so I think there's a benefit to paying higher wages in the community," Meyers said.

And by many accounts, EWEB is in a class by itself. It generates some of its own power at hydroelectric plants and wind farms. It buys and sells power on the open market. It operates a steam generation plant and runs a fledgling high-speed telecommunications network.

EWEB also invests heavily in water and power conservation programs, is bullish on renewable energy projects and offers millions of dollars in low-income energy assistance to help those who can't afford its rates, commissioners say.

"There are no comparable utilities in the state and certainly none locally," Bishop said. "EWEB is one of the pre-eminent public utilities in the region. We have a very good reputation for running a very efficient, innovative utility."

Utilities also pay well in part because they operate as a high-stakes business. EWEB, for instance, bought and sold more than $300 million in power last year.

"We're working in an environment where one trade can cost this company in a nanosecond $5 million," Meyers said.

In this climate, investor-owned utilities such as Pacificorp and Portland General Electric have a big influence on pay scales, she said. When recruiting for managers to oversee power generation or water engineering, for example, EWEB competes with larger public utilities as well as private utilities.

That's a different dynamic than general purpose government encounters.

"Some people may consider them inflated wages," Chouinard said of EWEB's pay scales. "But if you're in that industry, you have to follow suit in order to attract talent and retain talent. Is it fair or not? Who's to say? But it's a reality."

In addition, pay for many of the labor-intensive jobs are dictated by prevailing union wages. Although EWEB employees have no union representation, the wage for linemen closely follows what union line workers make elsewhere.

"Linemen are paid a very good wage, and are paid extremely well in Portland and Seattle," Anderson said. "We've lost linemen to those places because they do pay more money."

Tide is turning

But even with that in mind, EWEB officials recognized that the utility's pay scale was out of kilter. They began scaling back the pay for many positions four years ago as part of a long-term strategy to bring pay levels in line with what the marketplace supports.

And now they're preparing to reduce some retirement benefits in the face of soaring health care costs.

Many employees saw their pay grow dramatically through the 1990s after the board set salaries at the 65th percentile of the marketplace. At that target, 65 percent of comparable employers paid less than EWEB for any given position.

In 1998, managers concluded that one in five employees was making too much. They froze the pay for 99 workers, including mechanics, dispatchers and water treatment plant operators.

Twenty-five came off the list as the marketplace caught up with their pay scales again, but 74 remain red-lined, and many won't be eligible for a raise for several more years.

"This was part of our effort to reconcile community perceptions that EWEB employees were being paid too much," Meyers said.

"In part that happened because of the subjective nature of the (previous pay) system: You already have a problem and you keep on compounding that problem with cost-of-living raises," she said. "And you don't realize it's a problem until you go check it against reality."

Raises are now tied to performance, and automatic salary increases have been eliminated.

Under the merit-based pay system, every employee must earn a raise by meeting specific benchmarks.

"If I'm meeting peak performance, I'll be recognized and rewarded for that," Meyers said. "If I'm not meeting peak performance - and just meeting the basic expectations of my job - I'm going to sit here for a long time."

EWEB also switched to a market-based compensation system four years ago and lowered its pay targets - to the 60th percentile for positions paying $40,000 or less and to the 55th percentile for jobs paying more.

Now EWEB consults industry surveys and conducts its own every year, alternating adjustments for individual jobs or for entire job families.

The changes have made EWEB more accountable, Meyers said.

"We have a very sound compensation system. I think it's fair and equitable," she said. "Why do I know that? It's based on industry standards that draw heavily from the utility sector. It also is balanced with general labor wages out there."

Now EWEB proposes cutting post-retirement medical benefits in response to escalating health care costs. The utility estimates that it will fall $32 million short of covering medical costs for retirees over the next 20 years.

In a controversial proposal that would reduce the shortfall to $18 million, EWEB would shift a greater proportion of medical, dental and vision premiums onto retirees over the next few years.

Still, EWEB commissioners say it's important to stay on top of the marketplace average.

"We want to keep EWEB's wages slightly above the middle so we can attract and retain quality employees," Bishop said. "You may be surprised by how many job offers our employees get, from management on down."

Deciding what to pay public employees remains a delicate balancing act, Smith said.

"You need to make sure you have qualified staff for specialty positions, and there's no doubt EWEB has those," she said. "But EWEB is still a community-owned public organization, and its pay plan has to jibe in some way with community expectations for public organizations."

TOP PAY

Fourteen Eugene Water & Electric Board managers make more than $100,000 a year. Their salaries are comparable to what counterparts make at other public utilities in the region, but are higher than what executive managers in the public sector generally earn in the Eugene-Springfield area.

Randy Berggren, general manager: $175,646 *

James Wiley, electric director: $138,090

Richard Helgeson, water/steam director: $124,198

Roseanna McArthur, corporate services director: $122,201

James Origliosso, financial services director: $122,201

Thomas Buckhouse, facilities services director: $120,834

Scott Spettel, power management & planning manager: $120,425

George Koski, electric operations manager: $113,563

Joann Andersen, customer services director: $113,014

Daniel Bedbury, trading floor manager: $111,105

Gerald L'Estrange, generation manager: $106,477

Melvin Damewood, water engineering manager: $102,112

Terry Bequette, information services manager: $102,112

Mathew Northway, energy management services manager: $101,124

* Total pay includes $46,269 in supplemental compensation. Of that, $35,000 is set aside and cannot be collected unless Berggren stays at EWEB through 2006.

- Eugene Water & Electric Board

CAPTION(S):

BRIAN DAVIES / The Register-Guard An EWEB crew works at 13th and Chambers. Because of the technical skills needed to perform utility work, EWEB salaries average $60,000 a year, more than twice Lane County's average salary of $29,000. TOP PAY Fourteen Eugene Water & Electric Board managers make more than $100,000 a year. Their salaries are comparable to what counterparts make at other public utilities in the region, but are higher than what executive managers in the public sector generally earn in the Eugene-Springfield area. Randy Berggren, general manager: $175,646 * James Wiley, electric director: $138,090 Richard Helgeson, water/steam director: $124,198 Roseanna McArthur, corporate services director: $122,201 James Origliosso, financial services director: $122,201 Thomas Buckhouse, facilities services director: $120,834 Scott Spettel, power management & planning manager: $120,425 George Koski, electric operations manager: $113,563 Joann Andersen, customer services director: $113,014 Daniel Bedbury, trading floor manager: $111,105 Gerald L'Estrange, generation manager: $106,477 Melvin Damewood, water engineering manager: $102,112 Terry Bequette, information services manager: $102,112 Mathew Northway, energy management services manager: $101,124 * Total pay includes $46,269 in supplemental compensation. Of that, $35,000 is set aside and cannot be collected unless Berggren stays at EWEB through 2006. - Eugene Water & Electric Board