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--- economies-of-scale and lower resource costs. There would also be a slight e decrease in rates to EWEB's other customers, given the assumption of constant rate design. Furthermore, Mr. Winnerfeld said there would be a small in- crease in rates to LEC's other customers. Mr. Winnerfeld said that some of the key factors influencing the study re- sults are the rates paid by customers in the Willow Creek area: higher rates mean fewer benefits to Willow Creek customers but greater benefits to other customers. Two other factors would include new investment and the pace and level of local development. Mr. Winnerfeld displayed a graph of LEC's average electric rates over a 20-year period. Depending on the timing of new investment, the benefits of LEC serving Willow Creek would be mixed for the first 10 years or so, but the latter 10 years would mean 6/10 of a cent benefits. The average over the 20 years would bring a 2-1/2 percent rate reduction. Mr. Winnerfeld displayed a graph of EWEB's average electric rates over 20 years. The first 10 years would be about the same, while the latter 10 would show a barely noticeable benefit to customers. Mr. Winnerfeld said the bottom line of the study says it would be difficult for LEC to offer rates lower than EWEB. D. Questions and Answers I Ms. Ehrman asked what EWEBls motive is for wanting to serve this area since the impact of the next 20 years would be miniscule. Ms. Power said there e would be no real gain for EWEB. Mr. Gleason said there would be a 25 percent rate reduction for customers in the City and a tremendous cost differential of $4-$5 million; so the rate is only one analysis. Ms. Brody said it is in the City's overall best interest for economic development to have EWEB pro- vide the service. She said EWEB concurs that they are considering it because of the overall public benefit. Ms. Power added that EWEB could absorb the Willow Creek area without a rate increase. Ms. Ehrman remarked that it should be made clear to the public that this move would be for the public benefit, not because of EWEB's self-interest. Mr, Holmer said the report from LEC suggests that they were not given equal opportunity. Mayor Obie said that LEC has been asked to submit information and have a representative meet with major potential firms. He said LEC has said to these potential customers that they would be glad to provide service to the Willow Creek area, but only if a substation were built which the provider would pay for at $2.5 million over a 10-year period of time. Ms. Brody said the Metro Partnership has been actively promoting the Willow Creek area for potential industry and has not been disparaging LEC's service. Ms. Bascom said that in the historical context, the issue in the 1930s was how to provide electricity to rural people, but there is now a different game in which we are trying to provide urban electricity at the lowest possible costs. She said it seems that inclusion of this pocket within EWEBls terri- tory makes sense. - MINUTES--City Council Work Session August 8, 1988 Page 4