A Revised Rate Plan for EWEB

As president of the Eugene Water & Electric Board of Commissioners, I have read hundreds of comments in opposition to management’s recent rate restructuring proposal. The proposal clearly offended the community. It did not take into account how important the two-tiered energy charge structure is to customers who sacrifice comfort to save money. Similarly, our customers who recently invested in efficiency measures or solar energy rely on the tiered pricing to help pay themselves back. People are telling us that it’s not just the money. They feel an important principle would have been lost.

Also, EWEB failed to adequately engage the public about the proposal’s pros and cons ahead of the first budget hearing in November. As a consequence, we have lost some public trust, which we must now earn back.

While it may not be smart politics to say so, management’s 2016 budget and rates proposal was not entirely bad. There’s no question it failed in important ways. However, it did support some long-standing community values as well as anticipate changes in the utility industry that, left unaddressed, may cause significant troubles down the road.

Key pieces of that now dead proposal included:

• $1.5 million in bill relief to more than 4,000 low-income households. EWEB’s Customer Care program, funded by our ratepayers, provides up to $200 in bill credits annually per household. It is one of the most robust programs in the nation.

• $4 million annually in up-front conservation and efficiency incentives. These include rebates on ductless heat pumps, LED lighting and other measures. Incidentally, these up-front incentives often have a bigger impact on household decisions to invest in efficient appliances than the monthly bill savings resulting from tiered pricing.

• Reducing high winter bills. During a cold snap, like the one we had two years ago, bills can be several times higher than in summer. The proposal would have lowered winter bills by $5 to $30 for tens of thousands of customers. This provides particular relief to those living paycheck to paycheck.

• Incentivizing household transition from gas to electric cars by making additional electricity a little cheaper to buy. This supports the city of Eugene’s carbon reduction goals.

• More accurate budgeting. Many assumptions go into next year’s budget including how much water and electricity customers will buy. History shows that actual sales (and consequently the revenues EWEB receives) are very much driven by the weather. Cold winters and hot summers result in more power and water consumption — and higher revenues. Mild winters and summers mean revenues fall short of projections, which requires the board to either backfill with reserves or pass a rate increase the following year. The management proposal to increase the basic charge would have reduced over-dependence on the weather and allow for more predictable increases in the cost of electricity and water for our customers.

• Finally, the modified pricing structure tackles the dreaded “death spiral.” As more and more middle- and upper-income households invest in solar and efficiency and/or transition to natural gas heating, they pay less and less of the utility’s fixed costs. EWEB has little choice but to raise rates to cover the gap. Under the existing rate structure, those who haven’t done — or can’t afford to do — these things end up paying a larger and larger share of cost. Increasing the base charge spreads the fixed costs evenly across the entire community.

The proposal clearly offended the community. It did not take into account how important the two-tiered energy charge structure is to customers who sacrifice comfort to save money. Similarly, our customers who recently invested in efficiency measures or solar energy rely on the tiered pricing to help pay themselves back. People are telling us that it’s not just the money. They feel an important principle would have been lost.

Commissioners unanimously rejected the proposal earlier this month. Still, some restructuring is necessary if we are to preserve our community-owned utility and the values it upholds. I know that management has listened to the community and commissioners and is working to present four new rate proposals in the coming weeks. This is a good start. However, more community involvement is needed. At our December meeting, I will propose the creation of a ratepayer committee that will deliberate with management, commissioners and community and recommend a long-term rate restructuring plan in 2016 that balances the many challenges EWEB faces.

Finally, on a related note, I invite you to come out to EWEB’s ninth annual Run to Stay Warm on Sunday, Nov. 22. This staff-led and all-volunteer initiative brings out thousands of people to run, walk, and raise tens of thousands of dollars to support low-income neighbors struggling to pay high wintertime bills. This kind of event showcases our community at its best. — Steve Mital

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