Item 3: Resolution 5022 Concerning the Sale of Water to the City of Veneta

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ATTACHMENT C January 14, 2011 Mayor and Council, The Eugene Area of Commerce supports EWEB’s proposal to sell wholesale water to the city of Veneta. Two of the three water rights EWEB holds to provide drinking water to its customers are perfected. The utility must demonstrate to state water authorities that it can put the volume granted under the third water right to beneficial use within a reasonable time frame. Selling surplus water to wholesale customers helps EWEB show it is using that water. By continuing to serve surrounding utilities and districts, EWEB can obtain “partial certification” for the third water right. Such a certification would preserve EWEB’s ability to access 25% of the water granted under the unperfected water right in succeeding years. Eugene risks losing access to this water unless partial certification can be achieved. Under the terms of the proposed contract the City of Veneta would be responsible for funding and building the 10-mile interconnection between its system and EWEB’s water system. In times of water shortage or drought, City of Eugene customers would have first priority to the water. Per the proposed contract, Veneta will maintain a secondary source of water in case of water shortage. Regional water agreements are common throughout the state including Portland, Hillsboro, and Medford. EWEB has access to high quality water, has ample treatment capacity, and a robust watershed protection program, allowing it to responsibly deliver surplus drinking water through wholesale contracts to our neighbors for decades. EWEB’s current wholesale customers include the River Road, Santa Clara, Willamette Water Co. Utilities. Wholesale deliveries of surplus water represent 7.7 percent of EWEB’s total annual water sales. Wholesale water supply contracts benefit water utilities and districts by allowing them to forego expensive infrastructure investments, and also helps reduce costs for EWEB customers by selling surplus water. Treating and delivering water comes with high fixed overhead costs. Spreading those costs over a wider retail and wholesale base helps lower per capita costs and minimize the magnitude of future rate increases. In an average year, EWEB delivers about 10 billion gallons of water to wholesale and retail customers, or about 1 percent of the river flow. On a typical august day, the McKenzie River is running a 2,320 CFS at EWEB’s Hayden Bridge water intake. EWEB diverts about 3.5% of that water on an average august day.