4. WATER. POWER. PEOPLE.
and the cost of our electricity is about in the middle of the pricing range when compared to
other Northwest utilities.
Our focused effort to stabilize finances required the utility to be more strategic and flexible,
in large part because of fundamental changes taking place in the utility industry. While the
economy is recovering and we are now on a firmer footing financially, there continue to be
challenges ahead.
If we learned anything, it’s that the days of a predictable utility business model are over.
Record-low wholesale energy prices, unpredictable weather patterns, and new technologies
are creating many challenges in the utility industry. We also know that customers are
looking for new ways to do business with us, and EWEB is committed to offering new
products and services to meet those expectations.
I can confidently say that your citizen-owned utility is poised to navigate an uncertain future
and adapt to the challenges ahead, so you can continue to rely on us. Finally, I want to thank
our community for your trust and confidence during my six years as General Manager.
This spring, I am leaving the utility for a new challenge in the Northwest. I trust EWEB’s next
leader will carry on with our 105-year-old mission of serving you with reliable power, clean
water and excellent services.
Roger Gray, General Manager
Eugene Water & Electric Board
4
PHOTO: QUENTIN FURROW PHOTO: RACHAEL CHILTON PHOTO: QUENTIN FURROW
5. 2015: The year in review
The previous year can be summed up as one of recovery — for our community’s economy and the financial stability
of the utility. EWEB met or exceeded nearly all of its yardsticks for success in the areas of financial health, electric
service reliability, water quality, employee and public safety, customer satisfaction, community support and other
services we provide to customers.
The utility was able to meet or exceed these goals despite some ongoing challenges. While our community’s
economy improved, the utility saw another year of lower-than-expected revenues, especially in sales of surplus
energy to other utilities in the region. EWEB was able to fill this budget gap by reducing spending and using cash reserves.
EWEB’s residential, commercial and industrial customers consumed $191.5 million in electricity in 2015, about
$800,000 less than in 2014. Total revenues, including the sale of surplus electricity in the West Coast wholesale
markets, was approximately $240 million. Wholesale revenues are down significantly from levels prior to the Great
Recession of 2008.
The good news is that due to cost reductions, retirement of some bond debt and other efforts, EWEB was able to
keep electricity prices the same in 2015 (no increase), and the 2016 increase of 2.5 percent covers only the cost
increase to EWEB from our major power supplier, the Bonneville Power Administration.
The water utility fared better than the electric utility, and was able to make progress with critical infrastructure
improvements while keeping costs to customers down. Small water price increases in 2015 and 2016, totaling less
than $3 per month for the average residential customer, are helping to pay for seismic upgrades and other system
improvements to keep our drinking water safe and reliable.
For a more complete look at EWEB’s 2015 financial report and audit, go to eweb.org/financialreports.
EWEB takes pride in exceptional customer service, and in 2015 we met or exceeded nearly all of its established
benchmarks. The reliability of electric service – as measured by the frequency of outages – is about three times
better than the national average. We also get customers’ power back on twice as fast as the national average.
Customer satisfaction with EWEB services also remains high. In our annual survey, more than 8 out of 10
customers said they were either satisfied or extremely satisfied with the service EWEB provides. More than
90 percent of customers are satisfied or extremely satisfied with the quality of their water and reliability of their
electric service.
On the next several pages, we highlight several projects, initiatives and programs of interest during 2015.
5
6. I-5
NORTH
126
Buford Park/
Mt. Pisgah
Natural Area
EUGENE
SPRINGFIELD
Future
Water Intake
Middle Fork
Middle Fork
Coast Fork
Willamette River
Willamet
te
River
6
DIVERSIFYING OUR
WATER SUPPLY
In 2015, EWEB took a significant
step in improving the reliability of
Eugene’s water supply. Currently,
all of our drinking water comes
from the Hayden Bridge Filtration
Plant on the McKenzie River. In
the summer months, EWEB has
only a one- or two-day supply of
water if an earthquake or other
disaster seriously disrupts the
distribution system.
The utility last year acquired
property along the Willamette
River for a new water intake
facility to augment our primary
source and reduce the risk of
relying on a single supply of water. The intake site is located upstream
from Eugene near the 4,500-acre Buford Park/Mt. Pisgah Natural Area,
a community resource that is preserved for open space and native
ecosystems. Testing since April 2013 shows that water quality at this
Willamette River location is similar to the McKenzie River intake.
Diversifying the water supply not only improves resiliency, it gives the
utility greater flexibility to take existing facilities off line for maintenance.
EWEB’s elected commissioners have established a special savings
account help pay for the early stages of this investment.
PREPARING FOR THE “BIG ONE”
Publication of a July 2015 cover story in The New Yorker
magazine called “The Big One” – about the looming
threat of a major earthquake in the Pacific Northwest –
significantly raised the public’s awareness of the need
to be prepared for a major disaster. But EWEB already
was ahead of the curve. For the past few years, the utility
has been working to prepare its customers, and its own
employees, for such an event.
One of the most popular components of this effort has
been the distribution of thousands of 3-gallon water
storage containers at a discounted price, in partnership
with the American Red Cross. Storing an emergency
supply of water, along with food and other life-sustaining
items, is a critical component of any household
emergency kit.
Starting in 2014 and continuing in 2015, EWEB has
handed out 8,300 of the containers to customers.
Thousands more will be distributed in 2016 and beyond.
In addition to the water containers, EWEB’s water
emergency preparation efforts include fortifying
and upgrading critical infrastructure such as water
distribution pipes, reservoirs and the Hayden Bridge
Filtration Plant on the McKenzie River.
Willamette
River
McKenzie
River
PHOTO: DAVID DONAHUE
7. 7
REDUCING OUR DEBT – AND OUR COSTS
One of EWEB’s financial-stability strategies is to look
at the utility’s debt, debt payments and assets that
might be deemed unneeded for future utility purposes.
In 2015, EWEB was able to pay off the debt incurred
when the utility invested in its Harvest Wind farm
several years ago.
EWEB Commissioners authorized the use of about
$29 million in cash reserves to pay off the bonds that
were issued several years ago as part of EWEB’s 20
percent ownership in the wind farm in south-central
Washington state. The bond payoff reduced EWEB’s total
amount of debt, which helps the utility maintain a high
bond rating. But the bond payoff also helped EWEB avoid
about $2.6 million in annual debt payments.
EWEB continues to look for other cost savings and is
exploring some asset sales in 2016. One is the likely
sale of the utility’s Smith Creek hydroelectric generating
facility in northern Idaho. That sale is expected to be
completed in the first half of 2016.
HELPING BUSINESSES GROW
In late 2014, with the economic upswing picking up
speed, EWEB developed a Business Growth and
Retention Program to help existing businesses
expand and assist new businesses in relocating to our
community. The program has two main components:
A low-interest loan to help businesses pay for the
upfront cost of water, electric and telecommunications
services, and a short-term “rate guarantee” designed
to encourage smart growth for expanding or new
businesses. Participating businesses must meet certain
criteria, such as adding new jobs to our community.
The program took full effect in 2015. Since inception,
nearly a dozen businesses (including Ninkasi, at right)
received a combined $800,000 in five-year loans or
a rate guarantee that will be phased out over time.
EWEB estimates that the program has helped to create
130 new jobs so far. EWEB will benefit in the form of
increased electric and water revenues that will more
than offset the investment EWEB is making in loans
and rate guarantees.
PHOTO: LANCE ROBERTSON
PHOTO:JOEHARWOOD
9. 9
BRINGING HIGH-SPEED
CONNECTIVITY TO DOWNTOWN
EWEB partnered with the city of Eugene, the
Lane Council of Governments and the Technology
Association of Oregon in 2015 to provide high-
speed Internet fiber optic connections to
20 businesses in three downtown buildings.
The pilot project takes advantage of EWEB’s
70-mile fiber optic loop installed in the late 1990s
that connects EWEB’s electric substations, water
reservoirs and other facilities. Working with the
city and LCOG, the utility helped fund “last mile”
connections to the buildings along Willamette
Street near Broadway Plaza. EWEB leases “dark
fiber” it doesn’t need for its own purposes to two
Internet Service Providers, who in turn provide
high-speed connectivity to the businesses.
The downtown network supports Internet speeds
up to 1 gigabyte per second – fast enough to
download an entire high-definition movie in less
than 36 seconds. The speed and capacity of the
network, at prices competitive with Portland and
San Francisco, provides vital infrastructure that
can attract and retain companies that offer
high-paying jobs.
EWEB will continue to work with its partners in
2016 to find affordable ways to further expand the
downtown fiber network.
PHOTO: LANCE ROBERTSON
PHOTO: JOE HARWOOD
PROTECTING OUR WATERSHED
The U.S. Forest Service last year recognized EWEB
Environmental Supervisor Karl Morgenstern (at right)
with a national watershed protection award for his efforts
to protect the McKenzie River and the public and private
lands the iconic river runs through. The agency chose
Morgenstern and EWEB for its “National Rise to the
Future – Watershed Resources Award.”
The national review panel cited Morgenstern’s innovative
approach to maintaining clean water and healthy riparian
lands throughout the McKenzie watershed, as well his ability
to reach out and connect with a broad spectrum of local people and agencies. The McKenzie
is the source of drinking water for Eugene.
Also in 2015, Carpe Diem West, a network of water protection professionals from around
the western United States, presented the inaugural “Healthy Headwaters Innovation Award”
to Morgenstern and EWEB for outstanding leadership and innovation for creating a program
that rewards landowners who maintain high-quality land along the McKenzie.
Accomplishments noted by the awards panels included EWEB’s McKenzie Watershed
Emergency Response System, the utility’s Septic System Assistance Program, the Healthy
Farms Clean Water program, EWEB’s contributions to the Berggren Demonstration Farm
and the Voluntary Incentive Program. Morgenstern played the primary role in the creation
of those programs.
10. 10
BIG STEP FORWARD IN REDUCING
CARBON FOOTPRINT
We are fortunate to have one of the cleanest power
portfolios in the nation, with almost no electricity sourced
from fossil fuels. But what about EWEB’s other operations?
In 2011, the utility adopted an ambitious goal targeting
transportation-related greenhouse gas emissions:
Reduce fossil fuel usage by 50 percent by 2030.
A multi-faceted approach was needed to hit this target.
Idle reduction policies were put in place, and an effort to
replace older vehicles with more fuel-efficient models,
including hybrid and electric vehicles, was undertaken.
Reducing fuel usage from heavy duty utility trucks was
a more difficult challenge. Fleet operators had some
success with bio-diesel fuel blending, but cold weather
performance was a limiting factor.
In 2015, a new product called renewable diesel, or R99,
caught EWEB’s attention. R99 is chemically similar to
traditional diesel but sourced from fats and/or vegetable
oils. No engine retrofitting is needed, which is one reason
why United Parcel Service (UPS) was an early adopter.
Last September, EWEB Fleet Supervisor Gary Lentsch
(at left) led an effort to secure a shipment of R99 for
field-testing, at a cheaper price than bio-diesel, and with
no performance hiccups. Testing confirmed the new fuel
had about 70 percent less carbon content than
conventional diesel.
A more fuel-efficient fleet and adoption of R99 and
bio-diesel is a winning combination. EWEB will surpass
what was first thought a lofty fossil fuel reduction goal
this year — not 2030!
PHOTO: QUENTIN FURROW
EWEB WINS GRANT TO TEST MICROGRID TECHNOLOGY
As part of a utility-wide resiliency initiative, EWEB last year launched a project
to test how electricity generated by solar panels and stored in large batteries
can keep vital systems operating in the event a disaster interrupts the power
distribution system in our community.
Funded in part by almost $300,000 in federal and state grants awarded through
the Oregon Department of Energy, the “microgrid” demonstration project will set
up small, local grids with their own power source that can continue to operate if
the larger power grid goes down. EWEB will test the systems at three locations:
A communications tower used by local police and fire departments on Blanton
Heights in south Eugene; a water pumping and storage facility in the South Hills;
and at EWEB’s Roosevelt Operations Center in west Eugene.
All three locations will connect to the larger grid to charge batteries when the sun
isn’t shining. Should a disaster such as an earthquake or fire knock out power, the
system will allow all three locations to continue operating. EWEB plans to have
the system up and running by the end of 2016.
11. WATER. POWER. PEOPLE.
Water, Power – and People
As a customer-owned utility, EWEB’s
commitment goes beyond the water and power
we deliver. Throughout EWEB’s 105-year history,
the utility has remained vitally connected to the
people and neighborhoods we serve.
EWEB gives back in the form of grant funding,
local sponsorships, charitable giving, and
employee volunteerism. In 2015, the utility gave
more than $2.5 million to help meet local needs
in education, energy assistance, sponsorships
and environmental protection. That total includes
more than $500,000 in grants to local school
districts and the awarding of $100,000 as part
of our Greenpower grant program.
Our employees volunteered more than 800 hours
in the community and donated more than $50,000
to local non-profit organizations. One example is
EWEB employees’ monthly visits to Food for Lane
County, helping the organization package and
repurpose donated food for distribution to those
in need (shown at right). Employees also have
spent many hours helping to rehab homes for
our returning veterans in need.
EWEB’s signature community event, the Run
to Stay Warm, raised more than $45,000 in 2015
— bringing the total to nearly $200,000 to assist
low-income families.
Since 1943, EWEB has contributed a portion of
electricity sales revenue to the City of Eugene and
City of Springfield in the form of“Contributions in
Lieu of Taxes,” or CILT. In 2015, nearly $13 million
from EWEB supplemented the City of Eugene’s
General Fund, supporting critical services
such as public safety. Springfield received
approximately $590,000 last year.
In keeping with EWEB’s public mission, we
strive to be good stewards of the resources
entrusted to us and to prioritize programs
that align with the utility’s mission. Some of
the other beneficiaries of our sponsorships,
event participation and volunteerism include
Food for Lane County, Butte to Butte, Veteran’s
Housing Project, St. Vincent de Paul, McKenzie
River Trust, and NAACP Lane County.
PHOTO: RACHAEL CHILTON
11
12. EWEB’s Budget:
WHERE DOES YOUR
DOLLAR GO?
Each year, EWEB’s five elected commissioners hold public
hearings and then deliberate on an annual budget. The budget
supports the utility’s delivery of electricity and water to
customers, which also includes a number of other programs
and services. The annual budget is approved each December,
for the next calendar year.
Looking ahead, commissioners last December
approved a 2016 budget for the electric and water utilities.
The combined budgets are approximately $312 million.
This includes $273 million for electric utility operations and
just under $40 million for water utility operations.
The combined 2015 budget was $330 million.
Nearly 60 percent of the electric utility budget pays to generate
or purchase electricity and transmit that power to customers.
Another 15 percent goes to keep maintain and upgrade the
electric system. For the water utility, about one-third of the
budget pays to treat water and distribute it to customers.
Another third of the budget pays for upkeep and upgrades
to the system of water pipes, reservoirs and other facilities.
Wages and benefits account for about 23 percent of EWEB’s
overall, combined budget.
Power purchases
Generating electricity
Transmission and delivery of electricity to customers
Capital expenses (upgrades and replacement of electrical system)
Customer service, accounting and other administrative expenses
Debt service (interest payments on bonds)
Contributions in lieu of taxes (to cities of Eugene and Springfield)
Energy conservation
ELECTRIC
2¢
ThegraphiclooksathowEWEBspends
eachdollaronelectricorwaterservices.
WATER
Water treatment
Transmission and distribution of water to customers
Capital expenses (upgrades and replacement of water system)
Debt service (interest payments on bonds)
Customer service, accounting and other administrative expenses
5¢
8¢
11¢
15¢
13¢
5¢
41¢
8¢
28¢
35¢
16¢
14¢
12
