Hearing Slated for Planned Rate Cutby Joe Harwood
The Register-Guard, September 5, 2005
The Eugene Water & Electric Board is contemplating a second consecutive decrease in electric rates for residential customers this fall, a phenomenon that may be a first for the public utility.
The utility in April stopped a steady, four-year run-up in electric rates by reducing the average cost to residential customers by 1.5 percent. That saved the average household using about 1,250 kilowatt-hours of electricity about $1.45 a month.
On Tuesday, EWEB commissioners will hold the first of two public hearings on a proposal to cut rates again, beginning in October, by about 2 percent for residential customers. That would translate into about a $2 decrease in average monthly bills, said Dick Varner, the utility's fiscal services supervisor.
Asked whether EWEB had ever pulled off back-to-back rate cuts, Varner said, "We don't know. No one has an institutional memory that goes back that far."
Large customers, such as businesses, would see rate decreases of 2.5 percent to 3.5 percent under the proposal because electricity is a bigger proportion of their bills than for residential ratepayers, Varner said.
The reduced rates would appear on bills sent out in early November.
In March, the utility's five-member Board of Commissioners voted unanimously to reduce charges in hopes of providing some relief to ratepayers. Customer wallets suffered mightily beginning in 2000 after below-average river flows and the West Coast energy crisis - sparked in part by illegal market manipulations by companies such as Enron - sent energy prices skyward.
Since then, EWEB and other utilities have been trying to hold down rates and pass on any savings from the Bonneville Power Administration. The federal power marketing agency is signaling that it will reduce the amount it charges utilities for the power generated by 27 Columbia basin dams.
EWEB buys about 70 percent of its electricity from Bonneville. Many other local utilities, including the Springfield Utility Board and the Emerald Peoples Utility District, rely on Bonneville for all their power.
Varner said the potential savings this fall comes from a combination of Bonneville reducing its operating costs through bond debt refinancing, and strong open-market power prices. Bonneville has been able to sell its surplus power on the open market at good prices.
The rate decreases aren't set in stone, however. Varner said Bonneville could decide in the next few weeks to institute more modest discounts if the agency determines its operating costs will be higher than in preliminary forecasts.
But whatever the case, ratepayers shouldn't get used to the reductions.
EWEB probably will have to boost rates by 5 percent to 6 percent in the spring, Varner said. In addition to an increase to account for inflation - which would be the first hike due to rising prices since 2000 - the utility's debt payments will go up starting in 2006.
Varner said when the energy crisis hit four years ago, the utility borrowed money to buy open market power at some historically high prices. In order to keep its operating cash at acceptable levels, EWEB has been making interest-only payments on the debt.
Beginning next year, those deferred principal payments will start coming due.
The utility will hold a second hearing on the proposed decrease Oct. 4.
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