Investments EWEB Must Make – Despite Construction Inflation
It’s budget season for EWEB. Staff across the utility are evaluating what they’ll need to provide reliable services – next year and looking ahead ten years into the future.
The finance department calculates the investments needed to facilitate work across divisions, then each group presents their projects to EWEB’s publicly-elected Commissioners, who contemplate how to balance project needs with impacts to customer rates.
Chief Electric Operations Officer Lisa Krentz acknowledged that challenge when presenting the ten-year Electric Capital Improvement Plan (CIP) budget at the July Board meeting.
"EWEB has multiple core values. Those core values don't always point in the same direction,” she said. "We have priorities such as safety, reliability, affordability, environmental stewardship, and serving our community, all of which are essential. But there are times when advancing one objective requires trade-offs with another.”
EWEB does not compromise on safety.
In her presentation, however, Krentz identified which projects are required by regulations and must be implemented, versus those that would improve service reliability but could be delayed to reduce costs.
Implementation of multiple, regulatorily-required projects as part of EWEB’s commitment to renew its Carmen-Smith Hydroelectric Project License represents the largest individual project in the Electric CIP at about $130 million yet to spend.
These investments in Carmen-Smith are not optional. They comprise dam safety requirements and reflect EWEB’s commitment to making improvements that reduce environmental impacts.
With many of the remaining projects requiring specialized construction and work at remote sites – the recent years of construction inflation have greatly affected the project costs.
COVID-era labor and supply chain disruptions are still impacting the economy, tariff uncertainties are increasing product costs and reducing availability, and higher priced petroleum is increasing construction implementation costs in many different ways. Construction costs are up 36% since 2020.
Despite this construction cost environment, EWEB remains dedicated to – and must – urgently complete a number of regulatorily-required dam safety and environmental projects.
