For More Information Contact:
Lance Robertson 984-4716 or 954-7509 (cell)
Eugene Water & Electric Board

On Tuesday, Feb. 18, EWEB President Patrick Lanning delivered the annual "state of the utility" message at the start of the Board's regularly scheduled meeting. Lanning, who represents Wards 1 and 8 on the elected board, is serving his first term as EWEB Board President. Here is the text of his message:

"For the second time in three years, the Eugene Water & Electric Board faces some tough financial challenges. The external factors of another Bonneville Power Administration rate increase and a severe lack of snowfall in the mountains this winter will continue to place financial issues at the forefront of our work.

"Unfortunately, this year looks to be shaping up much like 2001, only without the skyrocketing wholesale prices brought on by the California energy crisis. But as we learned in our work session earlier this evening, the financial picture does not look good, and the Board will have to face the challenge of raising electric rates, again.

"Fortunately, we (FERC, Bonneville, and EWEB) have all learned from the experience of the 2001 energy crises, and thus, customers throughout the Pacific Northwest will not need to experience a repeat of the large increases that occurred in 2001. The ability to avoid large rate increases is essential, given that the economy is still sputtering, too many people are out of work, and local schools and governments continue to face their own financial crises. Our customers need EWEB to keep electricity costs down as much as possible.

"It is too bad we are facing continued external challenges, because EWEB's Board and staff have worked hard over the past year to deal with the financial difficulties brought on by the 2001 energy crisis. A year ago, we developed a "tool kit" to pay off $30 million in borrowing and replenish EWEB's cash reserves. We cut the utility's operating budget, let a number of positions go unfilled, reduced planned pay raises and took other actions to revise our 2002 budget and restore the utility to good financial health.

"And it was working. As late as November, we were on track to end the temporary electric rate surcharge earlier than originally projected. That optimism now has faded with Bonneville raising wholesale rates by another 15 percent and a dismal snow pack that will reduce our own ability to generate power.

"Based on our successes dealing with financial adversity over the past 18 months, I am confident that EWEB will meet these new challenges. It will require some hard decisions by the Board, and this will test each commissioner's ability to make effective and efficient policy decisions.

"Our current challenges remind me of a quote that I read, as a new Board member, from Norman F. Stone's (1986) book: Bountiful McKenzie: The Story of Eugene Water & Electric Board. The quote reads:

"Over many years EWEB has tended to function in a light-cavalry mode. It has avoided the pitfall of becoming a sluggish bureaucracy. It has moved quickly and decisively when required to do so in the interests of its customers. And it seems to have understood the dynamics of change."

"We will make the hard choices, then move on, because the needs of the community and the utility don't grind to a halt whenever there's a financial crisis. As we look forward to the next year, we must use our employees' vast skills, expertise, and dedication to continue with many current initiatives and face the broader task of running a utility in an ever-changing and volatile industry.

"The challenges are many:

The board has made a commitment to improve customer service with the hiring of five new customer service representatives to reduce the number of lost calls and deal with an increasing number of phone calls due to customer growth, the effects of the poor economy and our billing structure.

2002 was a banner year for our conservation efforts. EWEB set an all-time record of more than 21 million kilowatt-hours of installed energy savings in our commercial program alone. We must continue our sustainable business practices with a strong commitment to energy conservation.

Energy markets will continue to be volatile and unpredictable. We must keep the pressure on BPA to cut its costs as a way of avoiding more rate increases. We also must work with our allies to preserve the Bonneville system for the benefit of the Northwest's public power consumers.

We must continue to deal with our own internal costs, specifically health care and PERS.

We will continue with the upgrades to our McKenzie River hydroelectric facilities. While expensive, customers, as well as the health of the river and its fish, will benefit from this work.

We took a big step in 2002 with development of the first drinking water wells in north Eugene. The wellfield project will provide customers with a backup source of clean water in the event of an emergency.

EWEB also is upgrading its Hayden Bridge Filtration Plant to meet future growth needs. A new, 15-million-gallon storage reservoir was constructed in 2002, helping to ensure an adequate supply of water for years to come.

We must deal with an aging electric distribution infrastructure to maintain a high level of service reliability. This will take some creative thinking on the part of EWEB, given our current financial picture.

We must work to improve our relationship with the city of Eugene at a time when there are many ongoing and contentious issues, such as CILT negotiations, the siting of new reservoirs and development of the riverfront.

We must continue to focus on improving our operational performance throughout the utility. We have established "operational performance measures" for many of the things we do on a daily basis to help us keep track of how well we are doing, and then to improve in areas where we need help.

We must keep searching for new energy resources that are affordable and environmentally acceptable. If anyone had doubts about the need to diversify our generation "portfolio," two droughts in three years should be a wakeup call to the community about the vulnerability of relying too much on hydropower.

"The work ahead cannot be left to just EWEB's employees. As I stated during our vote for Board officers, I am committed and determined to focus on board governance work. It is imperative that we fill our vacant board seat with a competent and capable commissioner, and move quickly to our board governance retreat. Our governance work is essential for effective decision-making and board accountability in these challenging times.
Board Governance work can:

Clarify the expectations and policies of the board;

Provide a sound framework to set executive and organizational performance criteria;

Ensure timeliness in board monitoring of operational performance;

Allow the board to agree on what is important to monitor; and

Make sure that the work being done is supported by the board as a whole.

"Finally, I want to thank the employees of EWEB for their hard work and dedication during some rocky financial times. You rose to the challenge, and succeeded. I have faith that you will continue to make EWEB a world-class utility. One in which our customers will be proud to call their own."

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