Our Affordability Initiative is already delivering positive results for customers, with a water price decrease set to go into effect Feb. 1, 2018, and no electric price change for the second year in a row.
EWEB commissioners voted unanimously on Dec. 5 to adopt a 2018 budget of $300.9 million – $6.1 million less than the 2017 budget. The improved financial position allowed us to absorb the estimated $2.7 million impact from the Bonneville Power Administration’s wholesale price increase for energy without passing those additional costs on to our customers.
Launched last spring, our Affordability Initiative seeks to deliver value to customers and to better align spending levels to what our customers-owners expect.
The initiative builds on a multi-year program to improve the financial strength of EWEB by reducing operating costs, paying off or restructuring debt, delaying or reducing certain capital projects, and eliminating some programs that don’t directly impact safety or reliability.
In 2017, financial savings initiatives included:
•$1.9 million of O&M savings
•Staff reductions that will reduce net labor costs by $3.8 million in 2018
•Electric utility defeased $35 million in debt, saving $3.2 million in debt service for 2018
•Water utility paid $11 million to the Electric utility for reducing intercompany debt for an overall $600,000 savings in debt service
This work directly supports Phase I of the Strategic Plan to enhance customer confidence.
The tangible results of these efforts include an overall water price decrease of about 3 percent. On average, residential customers will realize a 4.5 percent drop in water prices effective Feb. 1.
Electric prices will not increase in 2018 – marking the third time in four years that we have been able to keep electric prices flat. We did not increase electric prices in 2017 or 2015.
Some of the key 2018 budget assumptions include:
•0 percent health insurance premium increase
•3.5 percent wage escalation
•Retail electric load approximately the same as 2017
•Slight increase in water consumption
The decrease in water prices is largely achieved by removing a 3 percent price increase was implemented in 2014 for development of a Willamette River water filtration plant. Our emergency water supply program is now focused on developing our capabilities to deliver water at a number of distribution sites throughout the community. The 2018 budget includes $1.3 million for alternative water supply projects and programs.
While reducing costs, we have been able to retain programs that are important to the community and our customer-owners. The 2018 budget includes an increase in spending on conservation incentive programs of approximately $250,000 compared with 2017 program levels. And we continue to be a strong community partner as evidenced by our Customer Care Program that provides bill payment assistance for limited income customers of approximately $1.5 million.
“The 2108 budget positions both the electric and water utilities to continue financial resiliency enhancements and to rise to the challenge of enhancing customer confidence,” said GM Frank Lawson in a memo to the Board of Commissioners. “I’m proud of how EWEB has rallied around this new focus, and I want to thank staff, management and commissioners for their assistance in helping achieve our mission ‘to enhance our community’s vitality by delivering drinking water and electric services consistent with the values of our customer-owners’.”