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EWEB likely to raise rates 3.5% this fall.

Byline: Joe Harwood The Register-Guard

Eugene electricity rates will probably rise by 3.5 percent in November, a milestone that would mark the second increase this year and the sixth rate hike since 2000.

Under the scenario being considered as EWEB develops its 2005 budget, the utility would raise rates and cut $1 million in expenses by shaving money from its conservation, low-income assistance and school grant programs.

The rate hike would help replenish reserves depleted four years ago during the energy crisis that sent open market power prices into the stratosphere and would bridge the revenue gap that the utility anticipates for 2005 under more conservative revenue assumptions.

Though nothing is set in stone yet, a majority of EWEB commissioners on Tuesday signaled their support for the rate increase and program cuts this fall. Additional rate increases would follow in 2005 and 2006.

In years past, EWEB assembled its budget based on a "normal" water year in which plenty of rain and mountain snowpack kept rivers flowing and hydroelectric turbines spinning. But after four years of below-average river flows - and the midyear budget revisions needed to account for the lower water - the utility is taking a more conservative approach heading into 2005.

Instead of basing next year's budget on an average water year, EWEB is going to assume river flows will be about 85 percent of normal. That translates into a lower revenue forecast for the power the utility sells from its four hydro projects.

"We're going to be taking a hard look at the way we do things," EWEB spokesman Lance Robertson said.

Through June of this year, river flows were about 20 percent below normal, reducing the amount of money EWEB and other generators glean from selling excess power.

If the Bonneville Power Administration doesn't raise its wholesale rates in October, the federal agency, which markets power from a network of 27 Columbia River Basin dams, probably will increase prices in the spring. That leaves the specter of additional hikes hovering over Northwest utilities.

EWEB commissioners said they were loath to reduce money for a program that helps low-income residents with their bills and another that helps customers conserve electricity. But not reducing expenditures in those areas would result in higher rate increases.

"I'm concerned that the (proposed) rate increase puts EWEB in the middle of the pack nationally and on the high end for comparable rates in the Northwest," Commissioner Ron Farmer said, adding that he is inclined instead to reduce program expenses.

A scenario presented by the utility's staff died a quick death Tuesday, one that would have hiked rates 7.5 percent this fall with no additional increases in 2005 and 2006.

"Seven and a half percent is too much with the (6.6) percent we just added," said Dorothy Anderson, another commissioner. "It's too much in one year."

It's too early to tell whether a 5.7 percent electric bill surcharge instituted in 2002 will go away in April 2005 as EWEB officials planned.

EWEB in May raised rates 6.6 percent, marking the fifth electricity increase since 2000.

Even with the reductions in conservation, low-income assistance and the school grants it awards in lieu of property taxes, EWEB spends more on those programs than similar- and larger-sized Northwest utilities, an EWEB analysis found.

Budget discussions will continue through the summer before board members vote.
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Title Annotation:Utilities
Publication:The Register-Guard (Eugene, OR)
Date:Aug 4, 2004
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