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Future of the Leaburg Canal


The Leaburg Canal helped power the development of the McKenzie Valley and Eugene, serving our community with clean and reliable hydropower for nearly 100 years. Built by our ancestors in the late 1920's with teams of horses and mules, the canal today unfortunately has structural deficiencies that must be addressed. Therefore, EWEB’s elected Commissioners have directed the utility to determine the most appropriate future for the facility while ensuring the canal’s safe and reliable operation.

EWEB does not believe there is an imminent danger of a canal breach.

EWEB staff will continue to carefully monitor the performance of the Leaburg Canal throughout the evaluation process, particularly in wet weather season and during storm events when tributary creek flows rise. EWEB staff are poised to identify and respond to any unexpected developments along the full length of the canal and will inform canal neighbors of any changes of concern.

Please watch this video to learn more about the history of the project, how EWEB generates electricity at Leaburg, the structural issues with the Leaburg Canal, the four proposed alternatives for the future of the project, and how EWEB's elected commissioners will evaluate their decision:

Frequently Asked Questions

Triple Bottom Line Assessment

EWEB Commissioners and the Leaburg Canal Team are aware that their decision could impact the community of Leaburg and all of our electricity customers. We are committed to making the best decision based on a Triple Bottom Line Assessment that considers the financial costs and environmental impacts, as well how the Board’s decision will affect our customers. We will share updates on the Board’s decision-making process here, and we will reach out to our community members for feedback on how we can mitigate potential impacts.

Please continue to look out for project updates here, as well as opportunities to provide feedback as we determine the most responsible future for the Leaburg Canal, EWEB customers, the McKenzie Valley community, and EWEB’s power generation portfolio.

How the Leaburg Hydroelectric Project Works:

Update: August 3, 2021

Update: April 11, 2022

Update: May 17, 2022

Update: August 17, 2022

Update: November 21, 2022

Provide Public Comment

Background

The Leaburg Canal has been operating as a stormwater conveyance facility since October 2018, following observations of increased seepage and internal erosion of the canal embankments that prompted EWEB to dewater the canal and cease power generation. In response to new information on earthquake safety risks, EWEB initiated a comprehensive assessment of the entire canal in late 2019 to better understand the level of investment that would be required to ensure long term safe and reliable operation.

EWEB staff is administering a Triple Bottom Line Assessment to evaluate the financial, environmental, and social implications of making these repairs. The team is evaluating multiple scenarios to make sure the financial costs of repairing the canal to full functionality will pay off for our customers. The team is also considering the environmental and social impacts of each scenario and the costs of mitigating them.

August 2021: Findings of the preliminary Triple Bottom Line Assessment

EWEB staff prepared a preliminary TBL assessment (presented to the Board on August 3, 2021) so the Board could better understand the environmental, social, and economic impacts of two near-term (current license term) options:

- Option 1: Storm Water Conveyance (SWC) - indefinitely cease power generation and repair the canal’s ability to function as a tributary of the McKenzie River and carry water from run-off and creeks to the river.

- Option 2: Return to Service (RTS) - restore the Leaburg Canal’s ability to provide hydropower generation in both the near (current FERC license term) and long term (future relicensing).

The preliminary TBL suggests that the Storm Water Conveyance option is favorable for financial, public safety, and some environmental reasons in the near term. It is the lower cost option, significantly reduces the likelihood and effect of a structural failure and restores a more natural flow regime in the McKenzie River, which generally benefits fish and improves mainstem water quality. 

Based on 2019 forward wholesale prices, the net present value (NPV) for returning to service for safe and reliable power generation for the remainder of the license period (2040) was an $80 million loss.

The analysis predicted the stormwater conveyance option would result in a $50 million loss.

While both options demand substantial canal safety improvements, the NPV results clearly indicated that the required investment to return to service will likely substantially exceed the expected returns from power generation. For context, in order to recover the cost of investing to return to service for the remainder of the license period, market power prices would need to increase from the current forecast value of about $40 per MWh to at least $105 per MWh for low-cost repair scenarios and up to $180 per MWh for high-cost repair scenarios. Should Leaburg ultimately not return to service, the source and expense of replacement power will be further defined as part of the Integrated Resource Plan due at the end of 2022. 

The Return To Service option has favorable aspects from a local community/social impact perspective because it preserves a locally owned, low-carbon electric generation facility, and prolongs neighbors’ ability to access water from the canal for irrigation.

Pursuit of either scenario has implications for the long-term decision to either decommission or relicense the project. In order to provide the Board with enough information to make an informed decision on the near-term path forward by the fourth quarter of 2022, EWEB staff will expand the TBL with more detailed analyses of the social, environmental, and financial impacts of the decision, including an evaluation of decommissioning relative to relicensing.

Download the August 3, 2021 Board Memo: Leaburg Canal Water Rights Summary

Update: April 11, 2022: Four Canal Alternatives for Further Assessment

Guided by complex evaluations of multiple potential solutions to address these structural issues with the canal, the Leaburg Canal Strategic Evaluation Team has identified four alternatives to study in further detail.

Each alternative places the safety of EWEB employees and the community as its highest priority. 

The alternatives will help EWEB Commissioners decide the ultimate fate of the Leaburg Project, whether it is “returned-to-service” or decommissioned and used solely for “stormwater conveyance.” 

Of the four alternatives, two are on opposite ends of the “stormwater conveyance” vs. “return-to-service” spectrum.

Alternative 1 represents the full removal of all facilities to pre-project conditions – as if the Leaburg Project were never built.

Leaburg Canal Alternative 1: Full decommission

Alternative 2 would entail a full renovation of all facilities back to peak performance configuration.

Leaburg Canal Alternative 2: Full restoration

These bookended scenarios would be the most expensive due to the extensive construction and repairs required throughout the entire project and facilities.

Alternative 3 includes a mix of a “return-to-service” and “stormwater conveyance” strategies. This alternative proposes adding a new power generation facility higher up the canal at the Luffman Spillway (about 1 mile from the dam), with repairs and alterations to the canal downstream of the new powerhouse to transition it to a stormwater conveyance facility. This alternative compares the costs of repairs and alterations to the potential power and revenue generation that EWEB would be able to recoup. It also preserves EWEB water rights for power generation. 

Leaburg Canal Alternative 3: Luffman Spillway Powerhouse

Alternative 4 would decommission the canal, combining “stormwater conveyance” alterations to sections of the canal with the restoration of other parts of the Leaburg Project to pre-project conditions, including a new spillway at Johnson Creek and modification to the Luffman spillway. This alternative is a flexible option that converts short-term risk reduction measures that are under consideration into a long-term solution.

Leaburg Canal Alternative 4: Stormwater Conveyance conversion

The Project Team will continue to work with our consultants and EWEB employees from multiple departments to study the financial, social and environmental impacts to the utility, our customers, and the upriver community.

Meanwhile, the Project Team will carry on with the prioritization of near-term risk reduction alternatives. Risk reduction measures will include reversible canal configuration changes, such as isolating portions of the canal from the high flow creeks, and canal-wide efforts, such as proactive removal of unhealthy trees that could fall into the canal during a storm and obstruct water flow.

On April 5, the Board of Commissioners approved the purchase of two properties along the canal that recently became available on the real estate market. Both properties are adjacent to the canal near to where EWEB expects to be constructing risk reduction improvements in the future. Purchasing these properties will ease construction access to work on the canal, whether that work involves canal restoration or decommissioning.

Download the April 5, 2022 Board Memo: Leaburg Canal Triple Bottom Line (TBL) & Strategic Assessment Update

Update: May 17, 2022: Community Members' questions at the 2022 Upriver Board Meeting

EWEB Commissioners and staff held a public meeting at the McKenzie Fire & Rescue Training Center in Leaburg on April 19. EWEB staff presented about several subjects, including watershed recovery efforts and EWEB’s developing wildfire mitigation plan.  

EWEB Generation Manager Lisa Krentz and Generation Engineering Supervisor Mark Zinniker presented an update about the Leaburg Canal, including the near-term risk mitigation work EWEB is implementing, as well as the four long-term alternatives EWEB and its consultants are evaluating for the future of the Leaburg Project. 

After the brief presentations, Board President John Brown moderated a question and answer session that lasted over an hour and fifteen minutes. Questions were primarily about the future of the Leaburg Project.  

We have summarized the Q & A session below. Although there were many questions and concerns, and each person brought their own perspectives to the meeting, the questions generally fell into the categories of:  

  1. Clarifying the four alternatives EWEB and our consultants are studying further, 
  2. EWEB’s two recent property acquisitions, 
  3. Concerns about accessing water from the Leaburg Canal, and 
  4. If the project were to be decommissioned, what would happen to Leaburg Lake.

Questions and concerns shared at the April 19 public meeting have been documented for consideration as part of EWEB’s Triple Bottom Line (TBL) Analysis. The analysis, which considers financial, environmental and social impacts, will help the Board compare and evaluate solutions to this complex problem. Other opportunities for public input include participating in an upcoming community survey and contacting EWEB Commissioners directly.   

You can watch the entire Upriver Board Meeting here.

To read the summary of the Q&A, starting on Question 11 of the Leaburg Canal FAQ.

August 2022: Project Alternatives Baseline Cost Estimates and Net Present Values

On Tuesday, August 2, at 6:30 p.m., the Leaburg Project team presented the latest information (click to download their memo) to EWEB's elected Commissioners.  

The Board Meeting (Video Recording) included updated cost estimates for each of the four proposed alternative configurations of the Leaburg Project, as well as the net present value (NPV - the difference between future costs and incomes) of each based on three varying projections of future electricity prices and upfront capital costs.  

BASELINE COST ESTIMATES 

The team worked with engineering consultants to calculate the costs of carrying out the proposed configurations for each alternative, including construction, construction management, licensing and permitting, site restoration, and many other costs. The cost estimates include a contingency for going over by 50% or coming in up to 30% under budget, as recommended by the American Association of Cost Engineering due to the project being in the “study or feasibility” phase.

Cost engineering feasibility accuracy

Given the project’s early stages and the uncertainties of future costs, the cost estimates are as follows: 

Leaburg Project Alternatives Baseline Cost Estimates

The work required to bring the project safely to a decommissioned or operational state involves significant upfront capital costs. As a publicly owned utility, expenses are largely funded through rate increases to EWEB’s customer-owners. However, EWEB will look for federal, state, and other grants to help with the costs of any alternative. The team has proposed an extended project timeline to attenuate the impacts of the potential rate increases:

Leaburg Project timeline

Percent of Capital Spending over time

Regardless of the alternative, EWEB would have to increase electricity rates to finance the required capital spending. Due to the complex calculations and pending decisions on other projects that would affect EWEB’s borrowing power, the Finance department is still calculating the potential rate increases each alternative would entail and will present that information to commissioners in October.  

NET PRESENT VALUES 

The net present value (NPV) for each alternative is substantially negative. Even when accounting for future incomes from electricity generated in the Return to Service alternatives, and including the optimistic projection of higher-than-anticipated market electricity rate and lower-than-expected capital construction cost, losses of over $130M are anticipated: 

Net Present Values of proposed alternatives

The Project Team worked with EWEB’s Generation, Power Planning, and Finance departments to calculate the costs and incomes for each alternative. Calculation inputs consider initial build costs, operation and maintenance, generation potential based on varying river flows, generation revenue based on varying power market prices, and incomes from Renewable Energy Credit and carbon markets that provide financial benefits for renewable energy projects: 

Net Present Values inputs

Based on expected, high market, and low market wholesale energy prices, the potential revenue generated by the Return to Service alternatives would not outpace projected O&M costs. The retail price of selling electricity directly to EWEB customers would provide income to cover O&M costs after the construction period: 

NPV of power revenue projections

Preliminary NPV Summary

TRIPLE BOTTOM LINE ASSESSMENT

Although the financial calculations will help Commissioners direct EWEB to pursue one of these four proposed alternatives for the future of the Leaburg Project, there are additional factors to consider. Commissioners have requested a Triple Bottom Line Assessment so they can compare financial considerations with environmental and social impacts to best reflect EWEB and community values: 

Leaburg Project economic impacts

Leaburg Project environmental impacts

Leaburg Project social impacts

The Project Team held six Leaburg Lake Listening Sessions to hear from the upriver community about how the proposed alternatives would affect them and are planning additional information sessions for Eugene customers in September and October. A summary of customers’ concerns gathered through these sessions and submitted through the Public Comment Form (until Oct. 10) will be shared with Commissioners to advise them of the social impacts. 

EWEB customers are invited to EWEB's Roosevelt Operations Center (4200 Roosevelt Blvd.) for screenings of the "Determining the Future of the Leaburg Hydroelectric Project" video and Q&A sessions on the following dates:

  • Monday, September 12, 2022 (5:30 - 7:30pm)
  • Wednesday, September 28, 2022 (5:30 - 7:30pm) 
  • Thursday, October 6, 2022 (4-6:00 pm)

In addition, EWEB staff will present virtual webinars for “Lunch & Learn” sessions. Click on the dates below to register:

Commissioners Barofsky and Schlossberg meet with Leaburg residents

Commissioners will discuss the Triple Bottom Line Assessment in an open-form Board Meeting on October 25 and are expected to make a decision in December 2022.

Update: November 21, 2022: GM to Make Recommendation at Dec. 6 Board Meeting

EWEB’s publicly-elected Commissioners met with the Leaburg Hydroelectric Project Strategic Evaluation Team for a Work Session on October 25. Their goal was to find alignment on how they would prioritize the impacts of each of the four alternatives EWEB has proposed for the future of the Leaburg Project: full decommission, partial decommission, full return-to-service, or a partial return-to-service.

Prior to their three-and-a-half-hour conversation, Commissioners evaluated the alternatives based on a triple bottom line (TBL) assessment of the economic, environmental, and social impacts.

Their TBL exercise had two parts: EWEB staff have assigned a positive or negative score to each evaluated impact for each alternative based on interviews with our subject matter experts and public input.

Leaburg TBL scoring

To read a thorough explanation of how EWEB and our consultants assigned these scores, please download the full memo to the Board and go to “Attribute Scoring Approach” on page 13. 

As a group average, Commissioners placed:

  • 32% of the weight of the decision on the Economic Impacts,
  • 28% on the Environmental Impacts, and
  • 40% of the weight on the Social Impacts.

This weighting applied to the positive and negative scoring above yields Alternative 4: Partial Decommission (SWC) with the highest (least negative) score:

Commissioners' combined TBL score

Staff also provided a scoring mechanism that reduces the impacts considered to the top three in each category to simplify the decision. When taking the scores for the top 3 impacts for each Commissioner, their average preference remains Alternative 4:

Commissioners' top 3 weighting score

Despite these results, Commissioners emphasized that the TBL scoring tool won’t be the determining factor for their decision but instead an exercise to help them measure the quantitative and qualitative tradeoffs their decision implies.

At the Work Session, staff presented these results to Commissioners, noting the similarities and differences in Commissioners’ weighting priorities to guide their conversation: 

  • Common/Unique “Weighting” by Commissioners: All Commissioners provided significant TBL weight to the following considerations:
    • Economic – Project Costs/Rate Impacts, Financing & Bond Impacts 
    • Environmental – Water Quality, Aquatic Resources, Carbon Footprint
    • Social – Public Safety
  • Wider discrepancies in weighting occurred in the following areas, potentially warranting further discussion:
    • Economic – Economic Risk (Power Prices, Licensing, Construction, etc.)  
    • Environmental – Terrestrial/Avian Species, Wetlands 
    • Social – Local Economic Activity, Fish Hatcheries, Recreation 
  • (Note, most variance between Commissioner weighting occurred in the Social attributes/issues.)

Throughout the Work Session, Commissioners asked staff for further context on many of the impacts, each carefully evaluating tradeoffs from the varieties of perspectives of their constituents. (Watch a recording of their discussion on EWEB’s YouTube Channel). 

The discussion did not seem to lead Commissioners closer to choosing an alternative, and by the end of the evening, they decided to postpone their decision for at least another month, with President Brown saying “I’ve always believed it’s better to be late than wrong.”

Staff will present additional answers to their detailed questions at the next Board Meeting on December 6.

General Manager Frank Lawson will also propose an official recommendation for a decision representing staff expertise.

Commissioners will have time over the holidays to consider the staff recommendation, with the current plan to reconvene at the start of the new year for their directional decision.






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