08/08/1988 Meeting - Laserfiche WebLink

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Ms. Brody said that although the City's rates are lower compared with the e rest of the country, the difference between those of LEC and EWEB are about 24 percent. Ms. Brody said that the Metro Partnership has found that poten- tial customers are concerned about LEC's higher rates in the Willow Creek area. Ms. Brody said that after the council's 1986 work session, EWEB and LEC have participated in negotiations which have since broken down. In staff's view, the reason is seen as LEC's failure to negotiate in good faith, and action by the City Council would help further these negotiations. Ms. Brody said the Willow Creek area is critical to Eugene for light indus- trial development. She said other areas in West Eugene considered for this type of development will be constrained by major wetlands issues. She said that no new wetlands have been discovered in the Willow Creek area which will therefore heighten interest in developing this area. III . EWEB'S CONSULTANT'S REPORT Laurie Power of EWEB said that after negotiations broke down, EWEB wanted to examine what would be the impact of the transference of service on EWEB's existing customers, LEC's existing customers, and the existing and future Willow Creek area customers. Therefore, EWEB hired an independent consul- tant, R.W. Beck and Associates, to answer these questions. Ms. Power intro- duced Kurt Winnerfeld of R.W, Beck. I A. Assumptions e Mr. Winnerfeld said R.W. Beck consultants prepared a forecast for LEC and EWES to examine their financial operating results, load requirements, invest- ments, and rates with and without service to the Willow Creek area and then studied the cost impact on all customers, on LEC's customers, on EWEB's customers, ~nd on customers in the Willow Creek area. Responding to Mr. Holmer's query, Mr. Winnerfeld said that most of the LEC data did come from the CH2M-Hill report. He said they also relied on his- torical published operating results and trends and on a study done by LEC staff as a part of negotiations with EWEB. Responding to Ms. Bascom's re- quest for clarification, Mr. Winnerfeld said that even though LEC was not contacted for information because of confidentiality, the sources available did provide sufficient data to accurately complete the study. Mr. Winnerfeld said major assumptions that were common to both utilities were used. He said they assumed that the same level of development would occur despite the rate differentials and that the load growth would be the same. Mr. Winnerfeld said that despite the fact that EWES would be faster, the timing was assumed to be the same in order to keep the study results at a conser\'ative level. Mr. Winnerfeld said the inflation rate was assumed to be at 4.5 percent per year. City Manager Mike Gleason pointed out that this would tend to bias the study in favor of LEC. Mr. Winnerfeld said the dis- count rate was assumed to be 8.5 percent per year to account for opportunity costs or the present value of the dollars being spent. He said this is e MINUTES--City Council Work Session August 8, 1988 Page 2