EWEB likely to avoid power rate increase.

Byline: Jeff Wright The Register-Guard

Instead of a possible rate increase this fall, Eugene Water & Electric Board officials plan to take a hard look at how soon they can retire an electricity surcharge that has appeared on customers' bills for the past year and a half.

It's good news for customers who already have seen three rate increases in 2001 and 2002 - including an unprecedented 36 percent raise two falls ago in direct response to higher wholesale rates charged by the federal Bonneville Power Administration.

The most recent increase, a net 2.6 percent surcharge, was imposed in April 2002 to help pay for debt and spent reserves from the previous year. The utility has paid off all of its short-term debt and now is trying to rebuild its reserves, said Dick Varner, EWEB's financial services manager.

EWEB commissioners will discuss in October how much the utility needs in reserve before they can erase the surcharge. A rule of thumb, Varner said, is that reserves should be about $25 million - representing 30 days worth of cash flow and about half of what would be needed to cover a drought similar to 2001's.

The utility is about $10 million short of that reserve level, Varner said. EWEB had hoped to retire the surcharge by spring 2005, but it could be sooner depending on how quickly reserves are built back up, he said.

Also, the board on Tuesday is expected to approve Varner's recommendation that no rate hike be imposed this fall. Earlier in the year, EWEB officials said they might need to bump up rates in anticipation of rate increases by Bonneville.

The BPA, whose dams on the Columbia and Snake rivers supply most of the Northwest's electricty, warned EWEB and other utilities to brace for a fall rate increase of 15 percent or more. In the spring, however, EWEB officials said a rate hike of about 5 percent - representing an extra $5 a month to a typical residential user - was more likely.

As a result of cost-trimming, refinancing and other savings at Bonneville, no rate hike at EWEB appears necessary, Varner said.

Bonneville's block purchase rate is actually going up, but EWEB also buys some of its power under a "slice" rate that's headed down, Varner said. As a "slice" customer, EWEB is guaranteed a certain percentage of Bonneville's power output each year.

A heavy snowpack, thanks to late snowfall in March and April, has improved water availability but played only a small role in Bonneville's new rates, Varner said.

EWEB, meanwhile, has been able to sell more surplus power than what it projected earlier this year, with profits going into the utility's reserves, he said.