For More Information Contact:
Sandra Bishop, 345-5001, or Lance Robertson, 984-4716
Eugene Water & Electric Board

Jan. 17, 2006

Sandra Bishop delivers 'state of the utility' message

During the Eugene Water & Electric Board's regular meeting on Jan. 17, Board President Sandra Bishop delivered the annual "state of the utility" message for 2006. Below is the text of her speech.

The Eugene Water & Electric Board has faced many challenges over the years. EWEB's elected commissioners have earned the trust of its customers by ?doing the right thing? for the citizens of Eugene whenever a new or difficult decision was at hand.

In 2006, as we celebrate a milestone ? our 95 th year as a citizen-owned utility ? EWEB will again be challenged with some key decisions that will leave a lasting legacy for the utility, Eugene and our customers.

Appropriately, one of these decisions is intricately tied to EWEB's historic connection to the McKenzie River.

Ninety-five years ago this March, the citizens of Eugene created the Eugene Water Board, a municipal utility, later renamed the Eugene Water & Electric Board. This citizen-owned utility provided clean and healthy drinking water to customers from the Willamette River, pumped with electricity generated from the Walterville hydro project on the McKenzie. In 1927, the utility moved the source of our drinking water from the Willamette to the McKenzie.

Today, the McKenzie provides a clean, abundant source of drinking water to nearly 200,000 people, and is used to generate electric power for more than 80,000 customers.

Relicensing Carmen-Smith

This brings us to the first of three key decision points the utility faces this year: the relicensing of the Carmen Smith Hydroelectric Project, our largest solely owned power source, with a nameplate capacity of more than 100 megawatts.

In 1959, the federal government granted EWEB a license to build the power plant on the upper McKenzie. When Carmen-Smith was completed in the early 1960s, it was hailed as one of the most environmentally benign, innovative and well-designed hydroelectric projects in the nation. It was built with the involvement of our citizens. We are proud of that legacy of stewardship. We are committed to continuing this heritage as we go about relicensing the project.

In 2008, our license to operate the project expires. The project has been generating low-cost energy and providing recreational opportunities that have greatly benefited the citizens of Eugene and the McKenzie River Valley for more than 40 years.

Right now, a team of EWEB energy and environmental experts is working hard to prepare this new license. Barring any unforeseen complications, the license will be submitted to federal regulators later this year.

We know, however, that re-licensing will come at a cost of tens of millions of dollars as we make the project even more efficient and environmentally friendly. These costs will likely have an impact on customer rates within a few years.

But just as EWEB's board in the 1950s had to weigh the cost-benefits of the project, this board also will have to determine what is in the best interest of our customers. Our decision will be the legacy of EWEB.

Relocation or not

Another decision with long-term consequences to the future of EWEB is likely to be resolved this coming year: Whether or when to relocate some or all of our facilities now situated on the bank of the Willamette River in downtown Eugene.

Construction of a major hospital on EWEB's riverfront property may be out of the picture, but that doesn't mean EWEB should not continue to explore a possible relocation. Our field operations building, warehouse, vehicle shop and other non-headquarters facilities are in desperate need of repair or replacement.

As we speak, pre-fab buildings are being assembled on the current EWEB site to house the over-flow of operations employees. Vital EWEB equipment, such as bucket trucks, is being parked out in the open.

We must decide whether to move and if so, what to move and when to do it. As with Carmen-Smith, tens of millions of dollars in investments are needed to improve our facilities. Such investment is necessary to continue to provide essential services to customers. But like Carmen-Smith, those costs, if incurred, will likely be passed on to our customers.

Our property is a valuable asset to the community, and should be put to the best use. Our decision will be the legacy of EWEB.

Secure water rights

In addition, this board and EWEB staff will be working this year to secure our water rights on the McKenzie River. Right now, we have enough water to serve our customers in the short-term. But due to some changes in state law, our much larger, long-term water rights are threatened. We must be vigilant in making sure Eugene has enough water for the next 100 years, or longer. Water is the most valuable asset under the stewardship of EWEB on behalf of the citizens of Eugene. It will only increase in value. We cannot afford to see this asset slip out of public control.

One strategy for securing our water future may be to become a regional water provider. EWEB could serve the water needs of other communities in central Lane County. Additional revenues from the sale of water to other communities would help keep water costs low for Eugene's citizens, while at the same time preserving water rights for future generations. This is a strategy that is at least worth examining.

As we look ahead in 2006, I'd like to mention a few other areas the board likely will work on this year:

•  We will continue to safeguard the financial stability of the utility. We are rebuilding our cash reserves and putting the utility on more solid financial footing.

•  We will pursue additional renewable power resources. Renewable power is a good choice environmentally and makes financial good sense.

•  We will complete bargaining on a labor contract that is acceptable to EWEB and our employees in the International Brotherhood of Electrical Workers.

•  We will continue to step up efforts to upgrade the EWEB electric distribution system.

As president of the Board this year, my goal is to help guide the utility as it navigates its way through these challenges, just as we have for the past 95 years. The three major ones I have outlined tonight ? Carmen-Smith relicensing, upgrading our facilities along with a potential relocation, and securing long-term water rights -- will leave a legacy for generations of EWEB customers.