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Portland General Electric Co., Annual Financial Report for Year 2022
	ML23146A043
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Issue date:	05/10/2023
From:	; Eugene Water & Electric Board, Portland General Electric Co
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Table of Contents PAGE Board of Commissioners and Officers 1 Report of Independent Auditors 2-4 Management's Discussion and Analysis Financial Statements Statements of net position 22-23 Statements of revenues, expenses, and changes in net position 24-25 Statements of cash flows 26-28 Statements of fiduciary net position - OPEB 29 Statements of changes in fiduciary net position - OPEB 30 Notes to financial statements 31-81 Required supplementary Information Schedule of proportionate share of the net pension liability - pension 82 Schedule of contributions - pension 83 Schedule of employer contributions - OPEB 84 Schedule of changes in total OPEB liability and related ratios - OPEB 85 Schedule of investment returns - OPEB 86 Supplementary Information Electric system long-term bonded debt and interest payment requirements, including current portion (unaudited) 87-88 Water system long-term bonded debt and interest payment requirements, including current portion (unaudited) 89 Electric system analysis of certain restricted cash and investments for debt service (unaudited) 93 Water system analysis of certain restricted cash and investments for debt service (unaudited) 91 Sustainability accounting standards disclosures (unaudited) 92-93 Audit Comments Report of Independent Auditors on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Oregon Minimum Audit Standards 94-95

Board of Commis~loliers Mr. John BroWT) Wards 4& 5 President Ms. Sonya Carlson Wards 6& 7 Vice-President Ms. Mindy .Schlossberg "At Large" Member

-Mr. John Barofsky Wards 2 & 3 Member Mr. Matt McRae Wards 1 & 8 Member Officers

. Mr. Frank Lawson General Manag_er, Secretary Ms. Anne Kah* Assistant Secretary Ms. Deborah Hart Treasurer Ms. TiaMarie Harwood Assistant Treasurer Commissioners' contact Information may be found at www.eweb.org. Written communication may be*sent

.to* the.attention of commissioners or ¢ficers* ~t this address: *

EWEB 4200 Roosevelt Boulevard *

Eugene, OR 97402 1

MOSS~DAMS Report of Independent AuditQrs The Board of Directors Eugene Water & Electric Board Report on the Audit of th~ Financial Statements Opinion We have audited the accompanying statements of net position* of the Electric System, Water System and Combined Total Systems, and the statements of fiduciary net position of the Retirement Benefits Tru.st (the Trust) of E1,.1gene Water & Electric Board (the "Boardj, as of December 31*, 2022 and 2921, and the related statements of revenues, expenses and chang~ In net position and cash flows of the Electric System, Water System:and Combined_ Total Systems for the years then encle:d, and. the

statements of changes in fiduciary net P9sltfon of the Trust for the years then ended, *and the related notes to the flr:ianci~I 'statements, which collectively. comprise the Board's basic flnanciai statements as listed in the table of contents.

In our opink>n, the accompanying financial statements referred to above prese11t fairty, in *au material

~Peets, the respective financial position of the of the Eugene Water & Electric Board as* of:

December 31, 2022 and 2041, *and the respective changes in financial position and, where appilcable, cash flows thereof for the years then ended In accordance with accounting principles generally a~~*if\ the United*States of America .. * * * "

Basisfo-r Opinion W~ *condu~ our audits'in accordance with auditing standards gene~ily accepted in the United States of America (GAAS) and the standards applicable to financial audits contained In *GoV9fTl,nent

Auditing Standards (Government Auditing Standards), issued by the Comptroller General of the Uril_ted States. Our responsibilities under th~ standards are further described in the Auditor's Responsibilities for the Audit of the Financlal Statements section of our report. We are required to be independent of the Board and to meet our other ethica"I responsibilities, in accordance with the relevant ethlcal requirements relating to our audit We belie~ that the audit evidence we* have

obtained is .suff:lcient and appropriate to provide a basis for our audit opinions.

Emp~ qfMatter

As discussed In Note 1 to the financial sta~ements,_the Board recently.adopted the pr:ovtslons of Governmental Accounting Stand~ Board (GASB) No. 87, Leases; ef!ective for periods.endi~g after

. December 30, 2021. The adoption of this resulted in the restatement of previously reported amounts for the year ended ~cemb~ 30, 2(?~1. Our opinion I~ not modified with respect to this matter.

Responsibilitiea qfManci.gementfor the Financial Statemenis :

Management Is responsible for the preparation and fair presentation of~ flrianclii statements in accordance with accounting principles generally accepted in the United States of America, and for the design, Implementation, and maintenance of internal control relevant to the preparation .and fair presentation of financial statements that are tee ~ material misstatement, wh~ther due _to fra~d or error.

2

In preparing the financial statements, management Is required to evaluate whether there are conditions or events, considered In the aggregate, that raise substantial doubt about the Board's ablllty to continue as a going concern for twelve months beyond the financial statement date, Including any currently known lnfonnation that may raise substantial doubt shortly thereafter.

Auditor'* Responnoilitiesfo r the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to Issue an auditor's report that Includes our opinion. Reasonable assurance Is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud Is higher than for one resulting from error, as fraud may involve collusion, forgery, Intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material If there Is a substantial llkellhood that, lndMdually or In the aggregate, they would Influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS and Government Auditing Standards, we

Exercise professional judgment and maintain professional skepticism throughout the audit

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures Include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Obtain an understanding of Internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of EWEB's Internal control. Accordingly, no such opinion is expressed.

Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about EWEB's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings and certain Internal control-related matters that we identified during the audit.

Required Supplementary I,iformation Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and pension and OPEB schedules on pages 5 through 21 and 85 through 89 be presented to supplement the financial statements. Such information Is the responsibility of management and, although not a part of the financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the financial statements in an appropriate operational, economic, or historical context We have applied certain limited procedures to the required supplementary information in 3

accordance with auditing standards. generally accepted In the-United States of Am.erica, which consisted.of Inquiries of management about the methods of preparing the.information and comparing the* lrifurmatlon fo~ consistency with management's responses to our inquiries, the financial .

statements,. and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or-provide any *assurance on the Information* because the limited p~ures do not ptovide us with sufficient evidence to express an opinion or provide any assurance.

Other_ Illfonnation Management is responsible for the other information included in the annual report. The other information comprises 'the Electric System and Water System long-term bonded debt and Interest payment requi~men~ (indudl~ current portion) ~edules and the Electric System ~ Water System analysis of certain restricted cash and investments for bond service schedules and sustainability accounting standards disclosures ("supplementary lnformationj but does not Include the basic financial s~ements and our auditor's report thereon. Our opinions on the basic financial statements do not *cover the other information, and we do not express an opinion or any form of .

assurance thereon. . .

In connection with our audit of the basic financial statements, our responsibility is to read the other:

Information ana consider whether a. material inconsistency. exists between the other lnformalioo and the basic financial statemen-ts, or the other information otherwise appears to 'be materlaily . misstated.

If, based on the work performed, we conclude that an uncorrected material misstatement of the otl')er Information exists, we are required to describe it in our report

Otb~-~rtlng ~ by Government Auditing Stcm.d.cp:cu In accordance with Government '

Auditing Standards, we have also issued our report dated March 17, 2023 on our consideration of Eugene Water & El~ctr.lc Board'!? internal control over financial reporting and on our tests of Its compliance with certain provisions of laws, regulations, contracts, and grant agreem~ts and other ma~rs. The purpose of that report Is solely to de~be the scope of our testing of int~ !X)ntrol over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of Eugene ,Water & Electric:: Board's Internal control

over financial reporting or on compliance~ That report Is ah Integral part of an audit performed In*

accordance with Government Auditing Standards In-considering Eugene Water & Electric -Board's Internal control over fin'ancial reporting and cor:npllance.

Report on Other Legal and Regulatory Requirements In accordance wi~ the Minimum Standards for Audits.of Oregon Municipal Corporations, we have iss'ued our report dated March 17, 202;3, on our 1:9nsideratlon of the Board's compliance with certain.

provisions of laws and regulations, Including the provisions of Oregon Revised Statues as specified in Oregon A9mlnlstratlve Rules*. The purpose of that report is to.desaibe the scope of our testing of com_pllance and the results of that testing and not.~ provide an opinion on compliance.

M~~/JP Portland, Oregon

. March 17,. 2023 4

Eugene Water & Electric Board Management's Discussion and Analysls The followlng discussion provides an overview of the financial results of the Eugene Water & Electric Board (EWEB) for the years ended 2022 and 2021. This unaudited discussion Is intended to be used In conjunction with the financial statements and note disclosures following this section.

EWEB is the largest publlcly owned electric and water utility In Oregon. The City of Eugene (the City) commenced utility operations in 1908 with the purchase of a privately-owned water system. In 1911, upon completion of the City's first municipal hydroelectric power plant, the City organized the Eugene Water Board to operate the City's electric and water utilities. The name of the Eugene Water Board was changed to the Eugene Water & Electric Board in 1949.

EWEB is chartered by the aty and supplies electric and water service within the city limits of Eugene and to certain areas outside the city limits. EWEB operates as a primary government and Is not considered a component unit of the City. EWEB is governed by a five-member Board of Commissioners who are elected by voters residing In the City. The Board of Commissioners has authority to set prices for water and electrlc services. Prices are set based on the cost-of-service delivery, Including operating, capital, and debt service expenses.

The Statements of Net Position report assets, deferred outflows, llabllltles, deferred inflows and net position at the end of the financial year, December 31. The Statements of Revenues, Expenses and Changes In Net Position report revenues and expenses occurring during the financial year. The Statements of Cash Flows report cash from operating activities, investing activities, non-capital financing activities as well as capltal and related financing activities.

Electric System The Electric System supplies service to 97,000 residential, commercial, and Industrial customers within the City of Eugene and areas along the McKenzie River between the cities of Walterville and Vida where two of EWEB's hydro-power plants are located. The total service area covers 236 square mlles. The Electric System owns and operates approximately 1, 150 circuit mlles of overhead and underground distribution lines, 126 circuit mlles of transmission lines, and 38 distribution substations. Power delivered to customers Is supplied by Bonneville Power Administration (BPA) contracts, EWEB-owned generation resources, other contracted resources, and purchases from the wholesale energy markets. EWEB's power supply sources are primarily hydropower, but also include wind, biomass, steam, and solar.

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Eugene Water & Electric Board .

Management's Discussion and Analysis MWh Power resource attributes 2022 2021 2020 Hyq~r 2,754,,565 . 2,4:4.1,552 2,583;553 Wind 151,888 178,014 186,900

.Stearn 82,570 136,796 231,357 Biomass 145,433 119,932 121,193 Other market purch~ 882,751 7581~23 1,047,442 4,017,207 3,6341917 4,1701445

Power resources - owned, contracted. or market ..

EWES-Owned generation 423,299 430,596 530,943

'Contracted generation 2,688,189 2,445,698 2,592,060 Mark~t purchases 882,751 7581623 1,047,442 3,994,239 3,634,917 4,170,445 6

Eugene Water & Electric Board Management's Discussion and Analysis Electnc System Condensed Financial Information (In thousands of dollars) 2022 2021 2020 (as restated)

Net utility plant $ 432,157 $ 444,355 $ 429,157 Current assets 169,973 138,491 147,456 Other assets 97787 117,609 125,995 Total assets 699,917 700,455 702,608 Deferred outflows of resources 34,015 35,655 43,938 CUrrent Ilabll ltles 52,416 37,682 36,491 Long-tenn debt 206,489 217,864 228,371 Other liabilities 56,765 41,646 70,126 Total Habnlties 315,670 297,192 334,988 Deferred inflows of resources 24,043 43,491 24,018 Net Investment In capital assets 236,582 254,288 251,254 Restricted 4,026 4,791 6,435 Unrestricted 153,611 136,348 129,851 Total net position $ ~~.iHi s 395,427 $ 3§,.~o Resldentlal $ 108,625 $ 102,529 $ 99,374 Commercial and Industrial 101,020 93,497 92,941 Sales for resale and other 104,093 61,719 51,585 Operating revenue 313,738 257,745 243,900 Purchased power 164,546 141,721 134,594 System control 4,546 4,287 4,637 Wheeling 12,975 12,052 11,248 steam and hydraulic generation 17,012 13,482 12,142 Transmission and distribution 26,746 24,507 24,510 customer accounting 9,184 8,054 8,242 Conservation expenses 4,853 4,176 4,014 Administrative and general 26,185 22,879 20,751 Depreciation on utility plant 26,838 24,492 21,594 Operating expenses 292,885 255,650 241,732 Net operating income 20,853 2,095 2,168 Non-operating revenue 2,713 10,110 11,960 Non-Operating expense (7,467) (7,781) (7,637)

Income before capital contributions 16,099 4,424 6,491 Gap/tal contributions 2,544 3,463 2,806 Extraordinary Item (19,851) lntersystem transfer (196)

Change, In net position (1,208) 7,887 9,101 Total net position - beginning of year 395,427 387,640 378,439 Total net position - end of year $ 394]~9 s m.4~, $ ~7.54~

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Eugene Water & Electric Board Management's Discussion and Analysis Analysis of financial position and results of operations The Electric System's overall financial position declined in 2022 due primarily to the permanent Impairment of the Leaburg Hydroelectric Project generating assets. This resulted in a loss of $19.9 mllllon recognized as an extraordinary item. Overall financial position Improved in 2021 as a measure of overall increases in net position and net operating income.

The net investment in capital assets component of net position, reflecting the value of capital assets net of the debt incurred to acquire those assets, decreased In 2022 due to the aforementioned Impairment of Leaburg generating assets. The net Investment In capital assets Increased in 2021 due to steady Infrastructure investments that Increased net utlllty plant balances while annual debt service payments reduced the associated debt Capltal asset and debt activity are discussed further In sections below.

Restricted net position is subject to external legal restrictions on its use and Is primarily representative of reserves for payments of debt service, customer donations, and amounts deposited In escrow accounts relating to the Harvest Wind Project. Restricted net position decreased in 2022 due to the transfer of debt service reserves In excess of requirements. In 2021 restricted net position decreased following the termination of an agreement related to initial financing of the Harvest Wind Project. Funds held In escrow were released without restriction.

Unrestricted net position represents the accumulation of net position that are not capital assets, or subject to external restrictions on their use. Factors contributing to the unrestricted net position increase in 2022 were varied. A primary driver of the 2022 increase was the strong operating results of the Electric system.

Electric system net operating income was $20.9 million In 2022 and $2.1 million In 2021. The Increase was driven by strong retail demand and higher wholesale energy prices, which more than offset increased power purchases. Depressed economic activity during the COVID-19 pandemic reduced demand In 2021.

Analysis of balances and transactions Operating revenue varies from year to year based on customer load, generation available for sale, and corresponding power market prices.

Residential customers make up approximately 90% of EWES's customer base and approximately 50% of customer revenue. Sales to resldential customers are variable based on weather trends, and traditionally, EWES has been a winter-peaking utlllty. Recent peak loads during extreme summer weather reacted stronger than expected indicating growth of cooling load (building air conditioning) in EVVES's service territory. There were notable heat waves in July and August 2022 and June and August of 2021 where peak loads were comparable though still lower than winter peak loads. Annual average temperatures for 2022 and 2021 were above normal by approximately 1 and 2 degrees Fahrenheit, respectlvely.

Commercial and industrial accounts make up approximately 10% of the EWES customer base, and approximately 50% of customer revenue. Commercial and industrial sales are more reactive to economic conditions rather than weather conditions. Measures taken to stop the spread of COVID-19 restricted businesses' ability to operate to varying degrees throughout much of 2021.

Overall load reductions due to COVID-19 were no longer observed beginning in the third quarter of 2021 and throughout 2022, and commercial demand has recovered to levels prior to pandemic mltlgatlon measures.

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Eugene Water & Electric Board Management's Discussion and Analysis EWEB sold power supply in excess of load Into wholesale markets. The Electric System has an active hedging program to manage price risk associated with wholesale power sales. Reglonally, stronger than normal water supply for hydropower In 2022 contributed to higher wholesale volumes, and market prices increased compared to budget. This Increased the value of EWEB's surplus, but it also Increased the cost of market purchases made during extreme peak load events. In 2021 market prices were higher due to decreased hydro-electric generation In the region.

Electric System operating expenses Include purchased power and wheeling expenses. Prices are set for BPA and contracted resources by thel~ respective contracts, which may escalate over time. Market purchases are made at times when resources aren't adequate for customer load or to support the EWEB hedging program and are subject to price varlabllity to the extent not fully hedged. Purchased power costs increased In 2022 and 2021 as a result of higher market prices, noted above.

Increased fuel costs for a co-generation plant In 2022 and 2021 contributed to the rise in steam and hydraulic generation costs. In addition, there were higher labor, dam safety, and maintenance expenses In 2022.

Collection and customer assistance costs increased in 2022 compared to 2021 due to labor Increases and purchased services.

Administrative and general costs Increased In 2022 and 2021 due to multlple factors, Including labor Increases, software costs, Insurance and purchased services.

Depreciation expense increased In 2022 and 2021 as a function of prior year capltal closeout activity.

Various assets were finished near the end of the year, including improvements at the Carmen Smith facllity, and depreciation recognition began early in the following year.

For the Electric System, n~peratlng revenue was primarily miscellaneous revenue from sources unrelated to core business functions, Including Investment earnings and losses, rental revenue and claims revenue.

Non-operating revenue decreased in 2022 compared to 2021. In 2021, non-operating revenue included recognition of a $3.5 mlllion public assistance grant from FEMA tied to the 2020 Hollday Farm Fire. Also, In 2021 earnings from equity investments, Western Generation Agency (>NGA) and Harvest Wind, were

$3.2 mlllion. In addition, investment losses increased In 2022 as rising Interest rates contributed to unrealized losses in the Investment portfolio.

Early in 2021, WGA agreed to sell its generation assets to the mill where WGA's generation plant is located, Georgia Pacific in Wauna, Oregon. The $3.5 mlllion sale occurred in Aprll 2021 and non-operating revenues recognized In 2021 Include EWEB's allocation of sale proceeds.

Non-operating expense Is primarily interest expense for long-term debt and other revenue deductions Including taxes and losses on the disposition of property.

Extraordinary and special Items consisted of the recognition of the permanent Impairment of generating assets at the Leaburg Hydroelectric Project 9

Eugene Water & Electric Board Management's Discussion and Analysis Other transactions of note Include the Oregon Public Employee Retirement System (OPERS) valuation.

The net pension llablllty for the Electric System Increased by $13.5 million from 2021 to 2022. From 2020 to 2021, the net pension liability decreased by $27 mllllon for the Bectrlc System. For more information, see Note 16 - Retirement Benefits.

Significant variations in original and flnal budget amounts The Board of Commissioners has authority to set prices and annually budgets for spending in two categories: Capital and Operations & Maintenance (O&M). Annual budgets dictate revenue requirements and rate changes among different customer classes based on a cost-of-service analysis.

Recent residential price adjustments have been as follows:

2022 3.25%

2021 No change 2020 No change For the Electric System, significant variations In the original and final O&M budget tend to revolve around purchased power costs. Volatllity in regional energy markets has Increased in recent years and Is accentuated by supply and/or demand during extreme weather events. Purchased power budgets were set under the assumptions of a 90% water flow year for regional hydro generation and included reduced demand due to COVID-19.

2022 proved Operations & Maintenance Budgets $

es*

Purchase Power otal O&M Budget Amendment $

otal Amended o&M Bud ets $

An increase of $22.0 million to the Electric O&M budget was approved In December 2022 as purchase power costs exceeded budgeted amounts due to Increased retail demand and portfolio balancing activity.

Due to a strong water year and higher wholesale energy prices, additional wholesale revenue exceeded budget by $26.1 million. In addition, retall demand exceeded budget by $15.6 mllllon. Favorable revenues In retail and wholesale more than offset additional purchase power costs.

Electric capital budgets were not amended In 2022.

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Eugene Water & Electrlc Board Management's Discussion and Analysis

~

pproved Operations & Maintenance Budgets $ 217,700, r *anal n es*

Purchase Power oftware shift from Capital to O&M otal O&M Budget Amendment $ 29,000,

$246700 The 2021 O&M budget was amended to authorize additional spending of $25.1 *milllon for purchased power costs related to higher wholesale market prices, Increased retail demand, portfolio balancing activity, and unbudgeted outages at EWEB owned facilities. The Increased wholesale market prices impacted both purchased power costs and wholesale revenue, as did the Increased portfolio balancing activities. The Increases In purchased power costs were offset by increases In retail and wholesale I-revenues.

Lower projected capital spending shifted costs from capital to O&M, as noted In the table. The 2021 Capital budget was initially approved at $51.3 million and was amended to $47.4 million.

Significant capital asset activity Type 1 General Capital Is budgeted year-by-year for routine capital expenditures less than $1 mllllon and is funded with rates and customer contributions. Typical examples include "pole replacements* as part of Transmission & Distribution.

2021 activity Included:

Procurement of property off Bertelsen Road, near the Roosevelt Operations Center

Fleet purchases accelerated from the 2022 budget year_

2022 activity included:

Restoration of the Stone Creek transmission line following fire damage

Renewal and expansion of the distribution system related to new customer work and replacements and renewals

Fleet purchases accelerated from the 2023 budget year

Replacement of failed transformer regulator at Cal Young and Hayden Bridge substations.

Seismic strengthening across the system. Completed overhaul of the Westmoreland substation 115kV breakers

Installation of fiber backbone for Hayden Bridge filtration plant

Decommissione d 69kV lines in the lower McKenzie River valley Type 2 capital projects are discrete, with a defined completion period, and lifetime expenditures over $1 million. Depending on the project, this work may be funded with rates, customer contributions, or bond funds.

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Eugene Water & Electric Board Management's Discussion and Analysis 2021 activity included:

In early 2020, the Currin Substation rebuild project was Initiated and an engineering contractor began work in fall 2021 with design estimated to be completed In 2022. Engineering started procuring long lead items and drafting temporary system designs to support construction

Advanced Metering Infrastructure {AMI) - Mass meter deployment occurred in 2021. Due to supply chain issues, the deployment of electric meters was postponed In October 2021. Mass meter deployment will resume once EWEB's meter vendor is able to restart mass production 2022 activity included:

Survey, design and permitting associated with the newly purchased Bertelsen Property

Downtown Network - Vault and transformer replacements and cable renewal

Currin Substation - Line re-rating and rebuild design on Currin Substation. Demolition and full rebuild expected to begin in 2023

Leaburg Canal mitigation and International Paper switchgear and relay renewals Type 3 projects are large strategic programs with long term impacts and are generally bond-funded. The only current type 3 project for the Electric System is Carmen Smith.

2021 activity Included:

Completion of fish passage design, and Initiation of design for habitat improvement projects and Smith Dam spillway expansion.

Review critical dam safety elements of the fish passage designs, as well as potential project impacts associated with the discovery of sinkholes in Trail Bridge Reservoir.

Relocation of a section of the transmission line and rebuilding the Chinook Salmon Spawning Channel were completed.

Construction of improvements to Trail Bridge Campground achieved more than 50-percent completion.

Rehabilitation of the first turbine generator unit at the Carmen Plant started In July and the construction of reliability Improvements at Trail Bridge went under contract for execution in 2022.

2022 activity Included:

Rehabilitation of the second turbine generator unit at the Carmen Plant

Improvements to the Trail Bridge power plant electrical systems

Recreation, vegetation and wildlife management improvements to meet dam safety and license requirements More information about plant activity can be found In the note disclosures to the financial statements, Note 3 - Utility Plant 12

Eugene Water & Electric Board Management's Discussion and Analysls Long-term debt actMty, credit ratings, debt service coverage The Electric System issues revenue bonds or notes payable to fund certain capital projects. During 2022 and 2021, the Electric System made scheduled debt service payments. For more information, see Note 12 - Lon1rTerm Debt.

Electric System bonds are rated as follows:

Moody's Investors Service Aa2 S&P Global Ratings M-Fltch Ratings M-The Electric System monitors Debt Service Coverage as a requirement under its master bond resolution.

Under the resolution, net revenues avallable for debt service must be at least 1.0x the annual debt service on all outstanding bonds. Within financial policy, the Board targets a range of 1.75x - 2.0x for debt service coverage.

Net Revenue Available Debt Annual Debt Service Year for Debt Service Service (OOOs)

(000s} Coverage 2022 $50,754 $16,679 3.0x 2021 $34,725 $15,340 2.3x 2020 $32,297 $16,112 2.0x Water System The source of supply for the Water System is the McKenzie River, with headwaters in the Cascade Range east of Eugene. Intake and purification of water occurs at the Hayden Bridge Water Filtration Plant. In addition to the filtration plant, the Water System owns and operates 22 storage tanks, 25 pump stations, and approximately 800 miles of transmission and distribution mains. The Water System provides water service to 55,000 residential, commercial, and Industrial customers within the EWES service territory, and supplies wholesale water to the River Road and Santa Clara water districts outside Eugene.

In addition, EWEB has surplus water contracts with the City of Veneta and the Willamette Water Company.

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Eugene WatE;)r & Electric Board Management's Discussion and Analysls Wafaf System Condensed Financial Information (In thousands of dollars) 2022 2021 2020 Net utility plant $ 230,177 $ 209,504 $ 196,316 Current assets 32,921 39,078 42,610 Other assets 25,899 34,189 34,094 Total assets 288,997 282,771 273,020 Deferred outflows of resources 10,652 10,736 13,201 Current Ila billtles 8,822 7,690 6,584 Long-teml debt 63,067 65,899 69,008 Other llabllltles 23,596 18,861 28,087 Total liabilities 95,485 92,450 103,679 Deferred Inflows of resources 7,468 13,297 7,330 Net Investment In capital assets 158,146 138,942 131,358 Restricted 706 4,048 6,484 Unrestricted 37,844 44,770 37,370 Total net position $ 196,~ $ 1~7.760 $ 11s,:m1 Residential $ 20,483 $ 21,409 $ 20,508 Commercial and lndustnal 15,435 15,167 14,052 Sales for resale and other 8,143 5,542 4,320 Operating revenue 44,061 42,118 38,880

1ransmlssl and distribution 7,758 6,632 7,269 Sources of supply, pumping, and purification 12,909 9,736 7,671 Customer accounting 1,845 1,782 1,975 Conservation expenses 581 545 520 Administrative and general 4,929 4,504 5,111 Depreciation on utll lty plant 8,061 7,263 6,805 Operating expenses 36,081 30,462 29,351 Net operating Income 7,980 11,658 9,529 Non-operating revenue 1,319 1,031 762.

Non-operating expense (2,202) (2,494) (2,307)

Income before capital contributions 7,097 10,193 7,984 Capital contributions 1,839 2,355 2,353 lntersyatem transfer 198 Change In net position 8,936 12,548 10,533 Total net position - beginning of year 187,760 1751212 164,679 Total net position - end of year $ 196,696 $ 187,760 $ 175,212 14

Eugene Water & Electric Board Management's Discussion and Analysis Analysis of flnanclal position and results of operations overall The Water System's overall financial position improved In 2022 and 2021 as a measure of Increases In net position and net operating Income.

assets net The net Investmen t in capital assets componen t of net position, reflecting the value of capital increased in 2022 and 2021. Capital asset additions such as of the debt incurred to acquire those assets, main replaceme nts and improveme nts, advanced metering Infrastructu re, and storage tank constructio n, Bridge Improvem ents have Increased plant values and decreases in associated debt occurred as Hayden annual debt service payments were made. ,

tive of Restricted net position Is subject to external legal restrictions on Its use and Is primarily representa Developm ent Charges (SDC). The use of SDC reserves for payment of debt service and System payment of Improvem ent reserves for capital improveme nts and SDC reimburse ment reserves toward ment reserves toward debt service decreased restricted net position in 2022. The use of SDC reimburse payment of debt service decreased restricted net position In 2021.

or subject to Unrestricted net position represents the accumulat ion of assets that are not capital assets, in 2022 due the use of unrestricte d external restrictions on their use. Unrestricted net position decreased net assets for capital Improvements.

Analysis of balances and transactions year with Consumpt ion of water varies depending on the season and the weather patterns of a particular consumpti on decreased as drought conditions eased.

peak consumpti on in the summer months. In 2022, correspon ded with higher-tha n-In 2021, overall consumpti on increased as drought conditions in Oregon was the highest normal consumpti on through the spring and summer months. Annual water production since 2008.

identified In the wake of the Holiday Farm Fire during Septembe r 2020, significant recovery needs were source protection and water quality within the McKenzie River Watershed . In planning for Increased is assessed to efforts, a Watershed Recovery Fee took effect In July 2021. The Watershed Recovery Fee all residential and commercia l customers based on meter size. For most residential and business customers ,

customers , the fee is a flat $3 per month (based on a 1-lnch or smaller water meter). Some such as large businesse s and those with extensive Irrigation needs, pay more ($4.50 to $30 per month) based on meter size.

tely 60% of Resldentlal accounts make up 90% of the customer base of the Water System, and approxima to weather retail consumpti on. Similar to the Electric system, residential consumpti on Is more responsive 2021 consumpti on and revenue increased, due to drought conditions than commercia l and Industrial.

eased, with conditions beginning earty In the year. 2022 consumpti on decreased as drought conditions to 2021, which delayed peak the second quarter seeing an increase of over 7 inches In rainfall compared consumpti on In the summer months.

and Commerci al and industrial accounts make up 10% of the Water System's customer base, al sales Increased In 2021, with drought conditions early In approxima tely 40% of retail sales. Commerci the year and an early start to the irrigation season. In 2022 consumpti on decreased due to Improvem ent in drought conditions , while revenues were consistent due to rate increases.

and the Wholesale sales include sales to River Road and Santa Clara Water Districts, the City of Veneta, WIiiamette Water Company.

15

Eugene Water & Electric Board Management's Discussion and Analysis The Water System pumps and purifies all water sold and does not have wholesale purchase expense.

The largest production expenses are purification and transmission and distribution of water. Other significant expenses are administrative and general, and depreciation. 2022 and 2021 Increases In source of supply were geared toward the McKenzie River Watershed restoration efforts In the wake of the Holiday Farm fire. Increased costs are funded through the Watershed Recovery Fee that took effect July 2021, noted above, and grant funding, when available. Transmission and distribution costs were higher In 2022 due to contract work for patching and paving and increased labor costs in operating expense.

Administrative and general costs increased In 2022 due to multiple factors, including labor Increases, software costs, Insurance and purchased services.

Similar to the Electric System, depreciation expense Increased in 2022 and 2021 as a function of prior year capital closeout activity. Various assets were finished near the end of the year and depreciation recognition began early In the following year.

Other transactions of note Include the OPERS valuation. The net pension llablllty for the Water System Increased by $4.2 million from 2021 to 2022. From 2020 to 2021, the net pension llablllty decreased by

$8.5 mllllon for the Water System. For more Information, see Note 16 - Retirement benefits.

Analysis of significant variations between original and final budget amounts The Board of Commissioners has authority to set prices and annual budgets for spending in two categories: capital and Operations & Maintenance (O&M). Annual budgets dictate revenue requirements and rate changes among different customer classes based on a cost-of-service analysis.

Recent residential price adjustments have been as follows:

2022 4.00%

2021 No change 2020 No change Watershed recovery efforts leveraged grant programs and partnership funding through the course of 2022.

Additional spending authority of $1.2 million corresponds to increased watershed efforts tied to grant programs and partnerships. Grant revenue and reimbursable work offset this increased level of spending.

~

pproved Operations & Maintenance Budget $ 26,515, atershed Recovery 1,200, hlft from Capital to O&M 1500 otal O&M Budget Amendment $

29 215 Deferred capital activity related to distribution system facllitles, pipes, and services shifted labor, equipment, and material costs from capital to O&M. An increase in O&M costs was approved and offset by a decrease to capital budgets as noted below.

16

Eugene Water & Electric Board Management's Discussion and Analysls The shift from Cap Ital to O&M for the Water Utility Increased O&M by $1.5 mlllion and would typically reduce budgeted capital spending. However, contracted construction projects continued pace Into the end of the year and $1.5 million was maintained for sufficient budget authority for the ongoing work.

Contracted capital activities, such as the East 40 storage project, do not cause a transfer of costs from th capital to O&M the same way internally resourced work does and are contingent on the timing and pace of work. Accordingly, overall capital spending was at budget for the year, however due to the nature of the projects, there is an expected shift to O&M for some costs that had previously been budgeted in capital.

The net effect to capital budgets did not require an amendment pproved Capital Budget $

Shift from Capital to O&M ontracted Capital otal Projected Capital Budget Amendment Following the Holiday Farm Fire during September 2020, significant recovery needs were Identified within the McKenzie River Watershed. Budgeted spending for 2021 was categorized as Risk Based, Resiliency, and Strategic, and Included activities such as erosion control, revegetatlon, floodway acquisitions and restoration, and reforestation.

~

proved Operations & Maintenance Budget $

Reslllency trateglc otal O&M Budget Amendment $

otal Amended O&M Bud ets Water capital budgets were not amended in 2021.

Description of significant capital asset activity during the year Type 1 General Capital Is budgeted year-by-year for routine capital expenditures less than $1 million and is funded with rates and customer contributions. Typical examples include "main replacements* as part of Distribution & Pipe Services.

17

Eugene Water & Electrlc Board Management's Discussion and Analysis 2021 activity Included:

Source - Water Intakes & Filtratlon Plant: Improvements at the Hayden Bridge FIitration Plant include starting improvements for the chlorine building and continued work on powder activated carbon system retrofits.

Distribution Pipe and Services - Water main replacements and improvements are the largest component of the Type 1 work. Large main replacements for 2021 included areas of Cross Street, Crest Drive, and the Willaglllespie area in North Eugene.

2022 activity Included:

Source - Water intakes & FIitration Plant: Numerous smaller projects were completed at Hayden Bridge in 2022. These Included significant progress on the new powder activated carbon system and replacement of variable frequency drives at the finish water pump station. In addition, the project to replace the water utlllty Supervisory Control and Data Acquisition (SCADA) system was Initiated with significant progress made over the course of the year.

Distribution Pipe and Services - Water main replacements and improvements are the largest component of the Type 1 work. Whlle supply chain Issues continued to affect projects, several 111 large projects were completed. These include main replacements on Polk Ave, 8 Ave, Candlelight Dr., and Lorane Highway.

Type 2 capital projects are discrete, with a defined completion period, and lifetime expenditures over $1 million. Depending on the project, this work may be funded with rates, customer contributions, or bond funds.

2021 activity included:

Second phase of a 42-lnch transmission main project extending from the EWEB headquarters site across University of Oregon property

E. 40th Reservoir - Excavation work occurred for two tanks at this site

AMI - The deployment of water meters continues but at the rate of 30% of the original plan 2022 activity included:

E. 40111 Reservoirs - Significant construction progress was made on this project with approximately 80% of the concrete pours competed for the two storage tanks.

Hilyard St Transmission Main - Design was completed for this water transmission project which will serve the new E. 40111 Reservoirs.

Shasta 975 Reservoirs - Design was completed to a 90% level for this upper-level reservoir replacement.

Type 3 projects are large strategic programs with long term impacts and are generally bond funded.

18

Eugene Water & Electric Board Management's Discussion and Analysls 2021 activity included:

Work in this area was focused on contlmJed efforts to construct emergency water distribution sites. Effort was largely focused on the South Eugene site. Coordination efforts with the Eugene School District, City of Eugene, and the YMCA delayed construction on this site. Planning efforts continued tor potential emergency sites in Southeast and ~uthwest Eugene 2022 activity Included:

Emergency Water Distribution Sites - The majority of work In this area was focused on continued efforts to construct emergency water distribution sites at two locations: at the new YMCA in South Eugene and at Churchill High School. Wells were drilled and water treatment equipment purchased. Construction is In progress at both sites.

Willamette Treatment Plant - Land Use and Federal Permitting efforts were initiated In late 2022 for this project as well as a value engineering evaluation of the proposed river Intake.

More Information about plant activity Is available in Note 3 - Utility Plant, In the note disclosures to the financial statements.

Long-term debt activity, credit ratings, debt service coverage The Water System issues revenue bonds or notes payable to fund certain capital projects. During 2022 and 2021, the Water System made scheduled debt service payments. For more information, see Note 12

- Long-Term Debt and Note 13 - lntersystem Items.

Water System bonds are rated as follows:

Moody's Investors Service Aa2.

S&P Global Ratings AA Rtch Ratings AA+

The Water System monitors Debt Service Coverage as a requirement under its master bond resolution.

Under the resolution, net revenues available for debt service must be at least 1.25x the annual debt service on all outstanding bonds. Within financial policy, the Board targets a range ,of 2.0x - 2.5x for debt service coverage.

Net Revenue Available Debt Annual Debt Service Year for Debt Service Service (000s)

(000s) Coverage 2022 $16,080 $4,930 3.3x 2021 $20,040 $4,927 4.1x 2020 $8,240 $3,821 2.2x Currently known facts, decisions, or conditions expected to have a significant effect on financial position or results of operations.

Current capital projects expected to have significant effects on financial position are storage tank projects 111 noted In the capital asset section: East 40 , College HIii, and Hawkins Hill.

Eugene Is the largest metro area in the Pacific Northwest with a single source of water. The Board owns property along the WIiiamette River and has been planning to build a second source filtration plant to

. create additional resiliency to the water supply. Construction Is tentative to start In 2025.

19

Eugene Water & Electric Board Management's Discussion and Analysis Retirement Benefits Trust The Eugene Water & Electric Board Retirement Benefits Trust (the Trust) was created In 2007 to fund other post-employment benefits (OPEB). The plan provides $5,000 life insurance coverage for all retirees and subsidies toward health insurance coverage under either the EWEB group plan or the Oregon PERS Health Insurance Program (Oregon PHIP) Medicare plans for retirees meeting ellgiblllty criteria. Plan changes in 2016 and 2017 removed the health care subsidies available to employees upon retirement If they were hired after 2002.

Financial statements for the Trust, Including accompanying notes, are a set of two statements. The statement of fiduciary net ppsitiorr reports the assets, llablllties, and net position held In trust on the day of December 31 for the years presented. The statement of changes in net position, reflects the sources and uses of plan assets over the one-year periods presented. More Information about the plan Is provided In Note 16 and the Required Supplementary Information.

Significant totals from the financial statements are below.

2022 2021 2020 Total assets $15,564 $20,371 $20,059 Total liabilities 13 34 28 Total net position $15,551 $20,337 $20,031 Contributions $ 865 $ 859 $ 1,202 Net Investment income (loss) (3,169) 2,233 2,527 Total additions (2,304) 3,092 3,729 Benefits 2,380 2,706 2,858 Administrative expenses 102 80 90 Total deductions 2,482 2,786 2,948 Net lncrease/(decrease) in net position $ ~4,786i $ 306 $ 781 Analysis Assets are primarily the Trust's investment portfolio, which Increases with investment Income and contributions from the Board. Assets decrease for benefit payments and reductions In the market value of Investments held. Liabilities were for administrative and benefit payments pending at the end of each year.

/

Total assets and net position are sensitive to investment earnings. The return on Investments was -16%

for the year ended December 31, 2022, which was a significant decrease from investment returns of 12%

for 2021 and 14% for 2020.

20

Eugene Water & Electric Board Management's Discussion and Analysis Contributions were relatlvely stable for years 2020 through 2022. They were primarily from retirees. The plan reports contributions from retirees who have EWEB group health care. Those contributions are applled directly to insurance premiums. So, those payments are reported in equal measure as contributions and benefit expenses. Contributions from retirees were $568,000 In 2022, $684,000 In 2021, and $740,000 in 2020. The decrease In contributions each year corresponds to decreases in the number of retirees enrolled In EWEB group coverage. There were increases In premiums for that coverage during each of the years presented in the Condensed Financial lnfonnatlon.

Contributions from the Board to the Trust are based on the most recent actuarlally determined contribution (ADC) for the OPEB plan. ADC amounts are based on expected cash flows from the Trust over the expected life of the plan. Those cash flows are less than implled by the Board's OPEB liability, which is reported by the Electric and Water systems. The Board's OPEB llability, detennlned with GASB standards, Includes an impllcit liablllty, which won't be paid from the Trust. Also, the assumed investment return for the ADC, is reduced when detennlnlng the OPEB llabllity by blending the rate of return with the rate of 20-year municipal general obligation bonds. The ADC for 2022, received In 2023, was $348,000.

The Board contributed $297,000 during 2022. The ADC for 2021, based on Trust assets which had appreciated from strong investment returns, was $0. The Board contributed $176,000 to the Trust in 2021. The Board's contributions were $462,000 during 2020.

Deductions are prlmarlly'benefit expenses. Benefit expenses declined gradually each year as retirees became Medicare eligible. When retirees become Medicare eligible, they are no longer covered under the EWEB group plan. Retirees who meet the Board's OPEB plan eligibility requirements can enroll in a Medicare supplement plan offered through Oregon's PHIP with a subsidy from EWEB. Those retirees also make contributions toward their coverage. Those contributions are reported with the Oregon PERS financial statements. Premiums for the Medicare supplement plans are substantially less than the premiums for EWEB group coverage. Most of the Board's OPEB plan participants who have medical coverage are Medicare ellglble. Retirees participating In Medicare related coverage were 80% of EVVEB's OPEB plan participants with medical coverage when measured as of August 31, 2022. This was a 6%

increase frop, August 31, 2020.

While the plan's net position declined during 2022, the plan was still well funded based on the ADC.

Benefit expenses are expected to continue to decline due to the plan's design which limits eliglblllty for subsidized medical care.

21

Eugene Water & Electric Board Statements of Net Position December 31, 2022 and 2021 ElectncSystem Wet<< System Total System 2022 2021 2022 2021 2022 2021 (aa reatated) (as restated)

ASSETS Capltalaueta Utdlty plant m service $ 848,288,217 $ 833,289,35'4 $ 352,042,352 $ 339,684,612 $ 1,200,310,569 $ 1,172,873,966 Leu accumulated depreclatJon <193, 532,898 469,310,376 150,697,698 1<12,306,939 64<11130, 796 611,617 316 Net ublrty plant m aeTV1C0 35'4,735,319 363,978,978 201,44<1,"'64 197,277,673 556,179,773 561,266,861 Property held for future use 20,2"'6,074 38,336,396 2,322,906 2,320,699 22,568,960 40,666,094 Construction work Ill progr-eas 57 175,038 42,040.231 26,<109,715!5 9 906,618 83,564i793 51,9"'5,849 Net utilrty plant "'3211561"'31 """'1'1604 230 177115 2091603,990 662,33315"'6 6531958169"'

Cumintaneta C8sh and cash equivalents 32,858,820 16,<117,613 <1,223,805 7,888,023 37,082,425 24,306,636 Short-term investments 16,046,946 11,192,666 2,670,944 3,197,125 18,916,890 14,389,691 Reatrlcted cash and 1nveatmenta 17,2~.672 23,98<1,!112 828,690 <1,575,504 18,077,282 28,660,3115 Designated cash and 11'1\/!l&tments 48,543,976 <12,514,187 18,706,7<11 17,830,662 87,252,717 60,3+4,739 Recehleblea, less alowances "'3,943,118 33,631,458 4,364,180 4,1"'8,754 48,297,298 37,680,212 Due from Water System 391,736 383,331 Matenala and aupphes 9,666,283 8,302,146 1,671,2<!0 1,310,842 11,237,623 9,612,967 Preplllds 1,37<1,891 9"'1,848 263,"'68 127,258 1,638,369 1,069,106 Option premiums shon-term 112231066 1~1066 TotaJ current aueta 169 973,2<12 1381<191,026 g020,066 39107!1,068 20215021<174 177185,763 Non-<:UTT811t auets lrMlltm&nts-dM!gnated 26,632,621 32,241,661 10,225,613 13,522,230 36,768,234 45,763,891 Investments - unrestncted 15,63"', 160 15,314,315 2,779,376 4,37<1,491 18,313,536 19,688,806 Investments - restricted 10,258,405 19,290,846 778,257 3,863,99"' 11,036,662 23,1<<,839 ReceMlblea, coosarvatlon, and other 3,325,457 3,221,838 321,887 159,522 3,8"'7,344 3,381,360 Due from Water System 5,670,306 6,049,708 lnwstment In WGA 11,770 11,770 Investment In Harvest Wind 16,466,835 17,688,387 18,466,835 17,688,367 Pral11111nary tnvesbgallons 152,840 262,199 1,682, 1<13 1,302,818 1,834,783 1,566,015 Other auets 19,846,840 23,528,317 10,112,133 10 975 676 29,958773 34,503,893 Total llO!H:Urrant 9S8ts 97,787 08"' 117,809,040 26,899,<109 34,188,728 118,018,167 1"'6,7<18,061 DEFERRED OlITFLOWS OF RESOURCES 3"',015,370 36,665,368 10,6S1,666 10 736,278 <<,6661936 46,391 846 Total anets and deferred outllowa of rMOUrcea $ 733,932,107 $ 736,110,038 $ 299,&49,0!58 $ 293,507,065 $ 1,027,619,123 $ 1,023,18"'106"'

Note: Inter-system obllgaflooa and payments are efmlnated In the total aystems columns.

22 See accompanying notes.

Eugene Water & Electric Board Statements of Net Position December 31, 2022 and 2021 Electnc System water System Total System 2022 2021 - 2022 2021 2022 2021

( BS restated) (as restated)

LIABILITlES Current llebilltlea Payables 34,962,578 $ 20,924,463 $ M92,362 $ 2,190,092 $ 38,5&4,940 $ 23,114,555 Acaued payroll and beneft!B 4,960,994 4,989,239 1,547,389 1,510,950 6,498,3e3 6,600,189 Due to Electnc Syatem 391,736 383,331 Payable from restncted assets Acaued lnterlllt on long-term debt 3,407,316 3,608,017 900,563 945,691 4,307,899 4,4!53,708 Long-term debt dull Within one ye r 9 095,000 8,260,000 2,390,000 2,660,000 11,485,000 10,920,000 Total CUrTllflt liabrtrbea 62 416 888 37,881 719 8,822,060 7,8900&4 60,846~2 441988,452 N=rrant ~!bes long-term debt 208,489,230 217,864,002 83,067,191 &5,898,768 269,556,421 283,762,788 Due to Eleclnc System 5,870,308 e,0411,1oa Net pen11011 lmi>'llty 43,811,455 30,359,133 13,835,198 9,587,094 57,846,651 39,948,227 Net OPEB llab!hty 12,056,944 9,256,616 3,807,456 2,923,142 15,8&4,400 12, 179,7!58 Othllr llblrtlea 896,741 2,030,381 283,181 302,188 1,179,922 ~33216-49 TotaJ llllbilllM 31616701258 297,191,851 96,486,380 92,45019-42 405,09311586 383.209?64 DEFERRED INFLOWS OF RESOURCES 24,042,655 43,491,1;1 7,467,633 13,298,529 31,610,168 66,787,719 NETPOSmON Net lnveslrnllnt In capttJ auets 236,562,589 254,288,224 1!58, 145,478 138,941,911 394,nB,087 393,230, 135 Restnctlld 4,025,772 4,791,132 706,-28,4 4,047,965 4,732,036 8,839,117 Unrestrtctad 1631810,833 136,347,6-40 37,13-44,403 44,769,689 1911455~ , 181,117 329 Total net posrtlon 39-4,219,194 396,426,996 1961696, 145 187,7!59,585 590,9151339 583,188,581 Total llllbfirtiea, dllflllTed lllflowa of reaou-cea, 1111d net position $ 733,932,107 $ 738,110,038 $ 299,649,058 $ 293,507,055 $ 1,027,!519,123 $ 1,023,164,054 Note. lnter-cyalllm obhgabona and paymenta 111'11 lllmlnated m the total system* columns.

See accompanying notes. 23

Eugene Water & Electric Board Statements of Revenues, Expenses, and Changes In Net Position Years Ended December 31, 2022 and 2021 Electnc System Water Sy9tem Total S}'9tem 2022 2021 2022 2021 2022 2021 (asreataied} (as restated)

Res!dentlal $ 108,1124,489 $ 102,528,959 $ 20,482,883 $ 21,408,604 $ 129,107,372 $ 123,937,563 Commercial and ndllStnal 101,020,323 93,496,715 15,434,908 16,186,TTII 116,455,231 108,863,491 SalM for resale and other 10410931127 61719367 8143 578 515421505 112~,705 67~11872 Operabngrevenuea 313?371939 257,7451041 << 061 389 42,1171166 357 799,308 299111821926 Purchaaed~ 164,545,623 141,720,706 164,545,1123 141,no,106 System control 4,545,722 4,287,467 4,545,722 4,287,467

'M111ehng 12,975,645 12,052,379 12,976,645 12,052,379 Steam and hydraulic generation 17,012,038 13,481,492 17,012,038 13,481,492 Tl'llllllllfnlon and dlStrlnrt!on 211,745,670 24,507,045 7,756,235 6,632,413 34,501,906 31,139,458 Source of supply, p ~ . and punllcabon 12,909,352 9,736,907 12,909,352 9,735,907 Customer accoooflng 9,184,503 8,054,473 1,645,290 1,781,613 11,029,793 9,838,086 Conaarvallon expenses 4,853,314 4,175,787 580,642 545,056 5,433,958 4,720,843 Mmlnlstrabve and general 26,184,732 22,879,082 4,928,579 4,504,107 31,113,311 27,383,169 Depraaabon on ~rty plant 261837?60 241491?28 8 O&O 910 7~21502 34 898 670 31i754~0

()peratmgaxpenSM 29~8851007 255111501139 361081,008 3014811598 328,9661015 288111737 Net operating lllCOITl8 20,8521932 2,094 902 7,980,3111 111656~87 28,833,293 13,751,189 Investment lo89M (1,175,518) (46,699) (425,176) (13,899) (1,600,694) (60,598)

Interest earrungs, Weter 152, 1711 161,133 Otherl"IIY9llll8 3,736,632 9,995,815 1744613 1,045,124 51461~45 11,040,939 Non-oper81Jng rweouea 2 713 290 101110~4G 1 319,437 11031~ 3,880,551 10,980,341 Note* Inter-system obllgabons and payments are el1mlll8ted In the total systems columna CI 24 See accompanying notes.

Eugene Water & Electric Board Statements of Revenues, Expenses, and Changes in Net Position Years Ended December 31, 2022 and 2021 Electric System Weier System Total System 2022 2021 2022 2021 2022 2021 (as restated) (as restated)

Other revenue deduc1Jon1 $ 484,300 $ 428,976 $ 16,629 $ 199,TT6 $ 600,929 $ 628,754 Interest expense and related amortization 6,982,190 7,361,923 2,033,304 2,133,670 9,015,494 9,485,593 Interest expense, Eleclrlc 152,176 161,133 Non-operatmg expenses 7,466,490 7,780,899 2.202, 109 2,494,581 9,5161423 10,114 347 Income before capital cootnbubon* and specielrteml 161099?32 41424~2 7 097,689 10192931 23 1g"T 421 14,617 183 Contrlbutrone In aid of conatrucbon 2,263,359 2,680,049 601,151 an,1195 2,864,510 3,657,744 Contributed plant Uletl 280,483 783,239 637,562 217,697 918,035 1,001,138 System development charges 600,166 1,158 670 600,168 1,168,670 Csprtel corrtr1butfon1 216431842 3,463,288 1,838,671 ~364,262 4,382,713 518171550 Extraordinary rtem (19,861,3761 . (19185113761 Change 11 net posmon (1,207,802) 7,887,540 8,938,680 12,547,193 7,728,758 20,434,733 Totel net p08illon et beg1rt11lng of year 39614261996 36715391466~ 187,759,685 175121~392 5831186,581 sa2i7s1 1848 Total net polllion et end ct YMf" 394,21g, 194 $ $ $ 583,186,681 Note* lnter-ayatem obllga1lonl and payments are ehmlnated In the total systems columns.

3g514211,996

' 19611196, 145 1e1i75g sas 1

50019151339 See accompanying notes. 25

Eugene.Water & Electric Board Statements of Cash Flows Years Ended December 31, 2022 and 2021 Electric System Water Syatem Total System 2022 2021 2022 2021 2022 2021 CASH FLOWS FROM OPERATING ACTIVITlES Recetpts from customers $315,554,920 $269,318,471 $ 43,667,685 $ 41,1506,287 $ 359,222,605 $310,824,768 Other receipts 5,030,747 3,432,409 . 1,694,604 427,075 6,725,251 3,8&0,384 Power purchases (153,309,976) (142,708,469) (153,309,976) (142,708,469)

Payments to employees, employer paid beneflta (54,390,291) (48,674,097) (17,146,338) (15,0915, 101) (71,636,629) (83,770,198)

Psyments to aupplre~ (44,628,599) (42,819,767) (10,281,439) (7,254,459) (54,910,038) (50,074,226)

Contnbu1Jorl8 m heu of taxes (131523,026) (12,967,399) (1315231025) 112.967,399l Net cash from operating actMMa $54,733,776 26,681,148 17,934,412 19,563,702 72,668,188 45,164,850 CASH FLOWS FROM INVESTING ACTIVITlES Purchases of Investment &eCW1!lea (66,498,134) (72,695,106) (8,564,779) (19,340,204) (153,062,913) (92,035,310)

Proceeda from aale and maturrtlea of IIMISffllQflts 62,631,976 79,834,' 15,368,494 19,457,639 77,900,470 99,292,193 Intereat on llVeltJnents 1,462,856 1,644,603 361,668 457,389 1,814,324 2,301,992 Distnbutlonl from equity lnveltmenb 1,639,799 7,464,006 1639799 7,464,006 Net cash from llVM1mg aclMtlM 9,126~7 16,436,066 9,165,383 574,824 18,291,680 17,012,880 CASH FLOWS FROM NON-CAPITAL FINANCING ACTMTIES lmersystem obligaboml paid to EJectnc from water 370,242 361,303 (370,242) (361,303)

Interest rece4ptl/(paymenta) to 8ectnc from Water 162,931 161,870 (152,931) (161,670)

Net cash from ~ flnanang acttvlbes 523,173 623,173 1s23 1113l (623,173)

Note: lnteraystem obligations and payments era eliminated In the total systeme columnt1.

26 See accompanying notes.

Eugene Water & Electric Board Statements of Cash Flows Years Ended December 31, 2022 and 2021 ElectrlcSyst&m WeterSystem Total System 2022 2021 2022 2021 2022 2021 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTMTIES Pnncfpal payments $ (8,260,000) $ (8,7-45,000) s (2,880,000) s (2,555,000) $ (10,920,000) $ (9,300,000)

AddrtJoos to plant and ~ r t y property, net (3-4,932,596) (40,182,879) (28,685,653) (20,036,112) (63,618,249) (80,218,991)

Imerest payments {8,419,242) (8,694,849) (2,289,669) (2,372, 132) (10,888,901) (10,966,981)

Addrbon1 to prehmlnary 11urwya and o1her 79,136 (79,922) 79,13S (79,922)

Caprtaf contr1butlona 2 543,841 31463,288 1,838 871 2,364,282 4 382 712 6,817,660 Net cash from capllal and related flnancs,g actlvrtJea (48,988,882) ' (52, 139,382) (31,TTB,441) (22,808,982) (80,786,303) (74,746,344)

CHANGE IN CASH AND CASH EQUIVALENTS 16,394,384 (9,698,985) (5,199,819) (2,973,629) 10,194,586 (12,570,814)

CASH AND CASH EQUIVALENTS, beg111ntng of year 46~63,748 54,850,733 17 594,664 20,588183 82,846,302 76 418,918 CASH AND CASH EQUIVALENTS, end of year lndudlng Clllh and cash equrvalenta l'Mtnct8d and delllgnated $27,789,512 and $8,170,929

($28,836,134 and $9,706,629112021) for Eleclrlc and Water, reapectMlly $ 80 848,132 s 4!,263,748 $ 12,394,735

17,694,554 $ 73,042,887 $ 82,848,302 NON-CASH CAP1TAL ACTIVITY In 2022, plant auets contrmuted by cleveloperl WM! $280,483 for the electnc system and $637,552 for Iha water system ($783,239 for the electnc lyslem and $217,897 for Iha water lystem1112021).

Note: lnter-ayatam obllgat]on11 and paymenta are ehmlnated 111 the total systemll column*.

See accompanying notes. 27

Eugene Water & Electric Board Statements of Cash Flows Years Ended December 31, 2022 and 2021 Bectrlc~tem water System Total System 2022 2021 2022 2021 2022 2021 RECONCILIATION OF NET OPERATING INCOME TO NET CASH FROM OPERATING ACTIVITIES Net operating mcom!! $ 20,852,932 $ 2,094,902 $ 7,980,381 $ 11,656,285 $ 28,833,293 $ 13,761,187 Adjustments to lllCOllClle net oparatJng Income to net cash from operating activltlel 08preclatlou, lncfudng allocated 28,014,259 25,740,058 8,060,910 7,262,502 36,075,169 33,002,558 Oih8rl'IM!lnue 3,741,Be2 6,944,873 1,520,635 417,074 5,262,297 6,381,947 other revenue d8ductlons (332,840) (355,561) (15,281) (44,316) (347,921) (399,877}

Oncrease) decrease In assets

- Rl!Clllwbles (10,574,2<<) (4,828,095) (205,425) (571,129) (10,TT9,669) (5,399,224)

Matenals and supplies (1,264,137) (3,625,283) (360,398) (231,893) (1,624,535) (3,856,876)

Prepaymenta and apeaaJ depoarta (433,043) (26,397) (136,211) 3,351 (589,254) (23,046)

Conservation loans, net 58,961 313,508 58,981 313,506 Other aaaeta 2,219,548 148,362 2,219,548 148,362 Decreaae 111 deferred outflows Fair vahl!I of hedging denvatrYes 1,188,111 176,947 1,188,111 178,947 Increase (decraue) i1 lta~rt181 Accounts payabl!!, ltCCl'Ued payrol, andbeneffla 13,388,059 (98,294) 1,089,821 1,091,628 14,475,880 993,334 Otherliabtlrt!es (1,133,640) (481,043) (1,133,640) (481,043) lncrea11e (decr&aSe) 111 deferr8d Inflows of lllS04.D'C8S (99010501 579175 (99010501 579175 Nat cash from opMltJng llc!Mtles $ 54,733TT6 $ 2515811148 $ 17 934,412 $ 191583?02 $ 72,8881188 $ 45,1841850 28 See accompanying notes.

Eugene Water & Electrlc Board Statements of Fiduciary Net Position - OPEB December 31, 2022 and 2021 Retirement Benefits Plan 2022 2021 ASSETS Money market lnvesbnents $ 117,542 $ 133,293 Interest and dMdends receivable 343 2 Prepaid expenses 1,300 1,300 lnvesbnents, at fair value Mutual funds and exchange traded funds Fixed income 6,050,386 7,590,426 International 3,199,733 4,420,157 Domestic 4,938,590 7,189,272 Real estate 1,256,294 1,036,432 Total investments 15,445,003 20,236,287 Total assets $ 15,564,188 $ 20,370,882 LIABILITIES Administrative costs payable $ 12,800 $ 17,423 Benefits payable 16,120 Total liabilities 12,800 33,543 Net position restricted for postemployment benefits other than pensions $ 15,551,388 $ 20,337,339 See accompanying notes. 29

Eugene Water & Electric Board Statements of Changes in Fiduciary Net Position - OPEB Years Ended December 31, 2022 and 2021 Retirement Benefits Plan 2022 2021 ADDITIONS Contributions Employer $ 297,000 $ 175,500 Retirees - EWEB group plan, only 567,544 683,609 Total contributions $ 864,544 $ 859,109 Investment income Net increase (decrease) In fair value of Investments (3,783,036) 1,586,541 Interest 1,504 3,696 DMdends 454,292 460,139 Capital gain distributions 206,861 238,241 (3,120,379) 2,288,617 Less investment expense 48,573 55,290 Net Investment income (loss) (3, 168,952) 2,233,327 Total additions $ (2,304,408) $ 3,092,436 DEDUCTIONS Benefits $ 1,812,546 $ 2,022,858 Benefits funded by retirees - EWEB group plan 567,544 683,609 Administrative expenses 101,453 80,101 Total deductions 2,481,543 2,786,568 Net Increase (decrease) in net position (4,785,951) 305,868 NET POSmON RESTRICTED FOR POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS Beginning of year 20,337,339 20,031,471 End of year $ 15,551,388 $ 20,337,339 30 See accompanying notes.

Eugene Water & Electric Board Notes to Financial Statements Note 1 - Summary of Significant Accounting Pollclea Reporting entity The Eugene Water & Electric Board (Board or EWEB) Is an administrative unit of the City of Eugene, Oregon. However, as established by the Governmental Accounting Standards Board (GASB) definition of a reporting entity, the Board is a primary government and is not a component unit of another entity. The Board is responsible for the ownership and operation of the Electrlc and Water Systems, and the basic financial statements include these two Systems.

The Board has a trust for funding post-employment retirement benefits other than pensions (OPEB),

which is a component unit of the Board. Financial statements for the OPEB trust are presented as a fiduciary fund.

The Board provides energy and water service to residential, commercial, and industrial customers located in a 236 square mile area, including the City of Eugene and adjacent suburban areas. The Board has the authority to fix rates and charges. In order to secure power resources, the Board has taken ownership of various generation facilities and entered into various power purchase agreements.

In addition, the Board has partial ownership in various generation facilities, which are joint ventures or separate entities where the Board has taken an equity position. The operations and sale of energy generated from the Board's relationship with each of the facilities is subject to certain risks. Operations are contingent on various factors, such as regulation, licensing agreements, river flow levels and weather patterns.

The Board is subject to various forms of regulation under federal, state and local laws and is subject to various Federal Energy Regulatory Commission (FERC) regulations. Laws and regulations are subject to change and may have a direct impact on the operations of the Board.

Ellmlnatlons Amounts receivable and payable between the Electric and Water Systems and related Interest earnings and expenses are eliminated in the Total Systems columns of the financial statements (see Note 13).

Method of accounting The Board maintains Its accounting records In accordance with accounting principles generally accepted In the United States of America. The Board applies accounting and reporting standards of the GASB. The financial statements use a flow of economic resources measurement focus to determine financial position and the change in financial position. The accounting principles used are similar to those applicable to businesses In the private sector and are maintained on the accrual basis of accounting. Revenues are recognized when earned, and expenses are recognized when Incurred.

31

Eugene Water & Electric Board Notes to Flnanclal Statements Note 1 - Summary of Significant Accounting Pollcles (continued)

In June 2017, GASB Issued statement No. 87, Leases. The Statement requires recognition of certain lease assets and liabilities that were previously defined as operating leases. Under this Statement, a lessee Is required to recognize a lease llabllity and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred Inflow of resources. The amended effective date was for periods beginning after June 15, 2021.

Changes adopted to conform to the provisions of Statement 87 were applied retroactively by restating the financial statements for 2021. The adjustment did not have a material effect on the change In net position for the year ended December 31, 2021. Leases were recognized If their estimated undiscounted value as of January 1, 2021, met a policy threshold of $500,000 per contract or In the aggregate for a category of assets where contract terms are substantially alike. For the years ended December 31, 2022 and 2021, this resulted in recognition of Electric System leases receivable for pole attachment agreements, which met this threshold with its aggregate value.

Electric System As Oriainallr Reeortec:1 As Restated Effect of Chanae Statement of Net Position Receivables, less allowances $ 33,399,835 $ 33,531,458 $ 131,623 Receivables, conservation, and other 2,887,762 3,221,838 334,076 Deferred Inflows of resources (43,046,317) (43,491,191) (444,874)

Unrestricted net position c136 132s 1a15l (136 1347 1640l c20,825l

$ (143,085,535) $ (143,085,535l $

Statement of Revenues, Expenses and Changes In Net Position Change In net position $ 7,866,715 $ 7,887,540 $ 20,825 Beginning net position 387,539!456 387!539!456 Ending net position $ 395,406,171 $ 395,426,996 $ 20,825 In April 2022, GASB Issued Statement No. 99, Omnibus 2022. The objectives of this Statement are to enhance comparabilfty in accounting and financial reporting and to improve the consistency of authoritative literature by addressing (1) practice issues that have been identified during implementation and application of certain GASB Statements and (2) accounting and financial report for financial guarantees. Portions of the Statement were effective Immediately and the Board adopted the provisions for the year ended December 31, 2022, resulting in no current year Impact 32

Eugene Water & Electric Board Notes to Financial Statements Note 1 - Summary of Significant Accounting Pollcles (continued)

Use of estimates The preparation of financial statements In conformity with accounting principles generally accepted in the United States of America requires managemen t to make estimates and assumptions affecting the reported amounts of assets and llabllities and disclosure of contingent assets and liablllties at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

Utlllty plant In service and depreciation Utlllty plant is stated at orlglnal cost. Costs include labor, materials, and related indirect costs, such as engineering and transportation. Additions, renewals, and betterments with a cost of $5,000 or greater per item are capltallzed. Repairs and minor replacements are recorded as operating expenses. Depreciation Is computed using straight-line group rates. When property Is retired, the property cost and any removal costs are charged to accumulated depreciation. The estimated useful lives of assets are those used commonly in the utlllty industry, or they are based on the Board's experience with simllar assets.

Estimated Depreciable Lives Asset Class in Years Electric Water System System Land n/a n/a Intangible assets n/a n/a Distribution plant 20-50 Hydraulic production 15--50 Steam production 15-50 Other production 15--50 Telecommun ications 10 Transmissio n plant 25--50 General plant 3-50 3-50 Pumping plant 15-50 Supply plant 20-50 Treatment plant 15-50 Transmission & distribution plant 15-50 33

Eugene Water & Electric Board Notes to Flnanclal Statements Note 1 - Summary of Significant Accounting Policies (continued)

Cash equivalents For purposes of these statements, cash equivalents are defined as short-term, highly liquid Investments both readlly convertlble to known amounts of cash and so near maturity they present Insignificant risk of changes In value because of changes In Interest rates. Generally, only Investments with original maturities of three months or less meet this definition. The Board considers money market accounts and government investment pool holdings to be cash equivalents.

Fair value of flnanclal Instruments The carrying amounts of current assets, including unrestricted, designated and restricted cash and Investments, and current llabilities approximate fair value due to the short-term maturity of those instruments. The fair value of the Board's investments and debt are estimated based on the quoted market prices for the same or simllar Issues.

Restricted assets Cash and investments restricted by provisions of bond resolutions and agreements with other parties are Identified as restricted assets. When the restricted. assets are expendable within the terms of the agreements, it Is the Board's policy to spend restricted resources first, then unrestricted resources as needed.

Leases Leases receivable or payable are the present value of lease payments expected during a lease term.

Recognition Is limited to contracts where the undiscounted value met a pollcy threshold of $500,000 per contract or in the aggregate for a category of assets where contract terms are substantially alike.

Materials and supplies Materials and supplies provide for additions and repairs to utlllty plant and are stated at weighted average cost Prellmlnary Investigations Preliminary Investigations consist of costs for projects the Board believes will be viable In the future.

Regulatory assets The Board has other assets to be charged to future periods matching the reporting periods when the expenses are included for rate-making purposes.

Conservation assets - Conservation assets for the Electrlc System represent installations of energy saving measures at customer properties. The conservation asset balance Is reduced as costs are recovered, which for the most part represent debt service payments Included In rates for related borrowing.

Unamortized bond Issue costs - Unamortized bond Issue costs represent the remaining expense related to various debt Issuances. The asset Is amortized over the duration of the related debt and recognition of these costs is included In the rate making process.

34

Eugene Water & Electrlc Board Notes to Flnanclal Statements Note 1 - Summary of Significant Accounting Policies (continued)

Pension debits - Pension debits represent a portion of the change In net pension liability, as defined under GASB Statement No. 68. Regulatory accounting is used fo recognize pension expense In accordance with the required employer contribution rates set by the Oregon Public Employees Retirement System.

Other Post-employment Benefits (OPEB) debits - OPEB debits represent a portion of the change in net OPEB liability, as defined under GASB Statement No. 75. Regulatory accounting Is used to recognize components of OPEB expense In accordance with employer contributions made by the Board.

Debt refunding&

For current and advance refundlngs resulting In defeasance of debt, the difference between the reacquisition price and the net carrying amount of the old debt (gain or loss) Is deferred and amortized as a component of Interest expense over the remaining llfe of the old debt or the new debt, whichever is shorter. These amounts are reported as a' deferred outflow of resources on the statement of net position.

Compenaated absences Employees accrue vacation leave in varying amounts according to their years of service. The maximum vacation accrual an employee can carry over Is 240 hours0.00278 days 0.0667 hours 3.968254e-4 weeks 9.132e-5 months . At the end of each calendar year, employees with over 240 hours0.00278 days 0.0667 hours 3.968254e-4 weeks 9.132e-5 months , who have used at least 80 hours9.259259e-4 days 0.0222 hours 1.322751e-4 weeks 3.044e-5 months of vacation within the calendar year, wlll receive a lump sum payout for unused vacation above the 240 hour0.00278 days 0.0667 hours 3.968254e-4 weeks 9.132e-5 months maximum. If an employee has not used 80 hours9.259259e-4 days 0.0222 hours 1.322751e-4 weeks 3.044e-5 months or more of vacation, then vacation accruals above 240 hours0.00278 days 0.0667 hours 3.968254e-4 weeks 9.132e-5 months at the end of the year are forfeited.

Employees terminating for any reason are ellgible to receive payment for unused vacation leave balances. Accrued liabilltles for vacation leave were $4.4 million and $4.1 million at December 31, 2022 and 2021, respectively, and presented as part of the accrued payroll and benefits liability.

Sick leave accrues bl-weekly, at a rate of 3.69 hours7.986111e-4 days 0.0192 hours 1.140873e-4 weeks 2.62545e-5 months per pay period (pro-rated for part-time employees).

There Is no limlt to the amount of sick leave an employee can accrue. Retiring employees have cash out options depending on their PERS ner. Employees terminating prior to retirement forfeit unused sick leave. Sick leave liabilities are estimated based on sick leave accumulated as of December 31 by those employees who currently are eligible to receive termination payments, as well as other employees who are expected to become eligible In the Mure to receive such payments. Accrual for those employees who are expected to become eligible In the Mure are based on assumptions concerning the probability an individual employee will become ellglble to receive terminatlo_n benefits at retirement. Accrued liablllties for sick leave were $1.2 million and $1.1 million at December 31, 2022 and 2021, respectively, and presented as part of the other liabilities.

35

Eugene Water & Electric Board Notes to Flnancial Statements Note 1 - Summary of Significant Accounting Policies (continued)

Net position Net position consists of:

Net Investment In capital assets - Net investment in capital assets is capital assets, net of accumulated depreciation and outstanding balances of any bonds and other borrowings attributable to the acquisition, construction, or improvement of those assets.

Restricted - Restricted components of net position have constraints placed on their use. Constraints Include those imposed by creditors (such as through debt covenants), contributors, or laws or regulation of other governments or constraints Imposed by law through constitutional provisions or through enabling legislation.

Unrestricted - The unrestricted component of net position Includes remaining amounts neither "restricted" nor "net investment In capital assets.*

Operating revenue and expense Operating revenues are recorded on the basis of service dellvered while operating expenses Include the cost of sales and services, administrative expenses, and depreciation on capltal assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

Revenues are derived primarily from the sale and transmission of electricity and from the sale of water.

Revenue Is recognized when power or water Is delivered to and received by the customer. Estimated revenues are accrued for power and water delivered but not yet bllled to customers.

At the discretion of management, a deposit may be obtained from the customer. Concentrations of credit risk with respect to receivables for residential customers are limited due to the large number of customers comprising the Board's custome~ base. Credit losses have been within management's expectations.

Similar to its evaluation of residential, commercial and Industrial customers' credit reviews, _the Board continually evaluates its wholesale power customers (sales for resale revenue) by reviewing credit ratings and financial credit worthiness of existing and new wholesale customers.

Recelvables are recorded net of the allowance for doubtful accounts. The allowance is determined by an examination of write off experience in the preceding five years, and consideration of other influences as appropriate.

Contributions In lleu of taxes In accordance with ORS 225.270, Use of surplus earnings, the Electric System makes contributions in n

lieu of tax (CIL payments to the City of Eugene at the rate of 6% of retail sales and a fixed component equal to $825,000. The fixed amount Is subject to certain annual Inflationary adjustments. The Board makes CILT payments to the City of Springfield at the rate of 3% of retall sales for a customer within the boundaries of the City of Springfield.

36

Eugene Water & Electric Board Notes to Financial Statements Note 1 - Summary of Significant Accounting Pollcles (continued)

Envlronmental expenses Fish and plant habitat enhancements, as well as pollution prevention Improvements are expensed or capitalized depending on their future economic benefits. Most pollution remediation outlays, legal obllgatlons to address existing pollution, do not qualify for capltallzatlon and are accrued as liabllltles and expenses according to the estimated remediation costs on a current cost basis (rather than present value of future costs) ..

Note 2 - Power Risk Management The Board's Power Risk Management Guidelines set forth policies, llmlts and control systems governing power purchase and sale actMtles for the Electric System. The objectives of such policies are to maximize benefits to the customers from wholesale activities while minimizing the risk wholesale activities will adversely affect retail prices. The Board does not enter Into contracts for speculative purposes.

During periods when resources are in excess of retail load, the Board may sell excess capacity into the wholesale markets and Is exposed to commodity price risk. The Board enters Into forward contracts intended to manage the price risk associated with power sales In the wholesale market Derivative flnanclal Instruments In accordance with policy guidelines, the Board utilizes derivative Instruments to minimize Its exposure to commodity price risk. Hedging derivatives are reported on the statement of net position at fair value. The fair value of options and swaptions are determined using the Black formula. The fair value of financial swaps Is determined by comparing the contract prices with the forecasted market prices.

All potential hedging derivatives were evaluated for effectiveness using the consistent crltlcal terms method. A derivative Instrument Is effective under criteria for consistent crltlcal terms when the significant terms of the hedging instrument and the hedgeable Item are alike. The significant terms for hedging derivatives are the time period, quantity, price index, and point of dellvery.

As of December 31, 2022, there were no hedging derivatives or related deferred Inflows or outflows.

Changes In fair value are reported as an increase In other assets or other llabllitles and deferred inflows or outflows of resources until the time of settlement When hedging derivatives settle, revenue or expense Is recorded as either purchased power or wholesale sales.

37

Eugene Water & Electric Board Notes to Flnanclal Statements Note 2 - Power Risk Management (continued)

Investment derivatives Hedging derivatives found through testing to be ineffective are classified as investment derivatives. At that time, the fair value, including any fair value changes previously deferred on the balance sheet, are recorded as investment revenue and a deferred inflow or outflow. A gain of $35,000 was recognized in invesbnents earnings from derivatives In 2022. As of December 31 ,2022 there were no invesbnent derivatives. A loss of $35,000 was recognized in investment earnings from derivatives In 2021. As of December 31, 2021, Investment derivatives with a fair value of $6,500 were recorded as deferred outflows of resources, and Investment derivatives with a fair value of $41,000 were recorded as deferred Inflows of resources.

Options Hedging Derivatives Investment Derivatives 2022 2021 2022 2021 Notional value $ - $ 2,081,646 $ - $ 41,420 Fair value - asset 899,228 6,465 Fair value - liablltty 1,181,646 41,420 Cash paid 1,915,046 41,420 Reference rates Mld-Clndex Mld-C Index Dates entered Into 10/20 - 9/21 9/21 Dates of maturity 1/22 - 6/22 4/22 Credit risk The Board enters Into forward purchase and sale contracts for electricity with other Industry participants such as public and investor-owned utilities, financial Institutions, gas and oll producers, and energy marketers. Through this participation, the utility Is exposed to credit risk related to the possibility of non-performance by Its counterpartles. To llmlt the risk of counterparty default or non-performance, the Board uses an evaluation process assigning an Internal measure of credit worthiness to the Board's counterpartles and sets llmits to the dollar value of business transacted with counterpartles. On a case-by-case basis, the Board may require letters of credit, cash collateral, pre-payment or other forms of credit support to ensure counterparty performance. Other assu~nces may Include accelerated invoicing or pre-payment In addition, the Board generally establishes netting arrangements with counterpartles.

As of December 31, 2022 there were no derivative Instrument assets.

Termination risk Hedging derivative contracts may be terminated by mutual agreement of the Board and the counterparty, or upon the occurrence of a termination event Termination events include non-payment, non-delivery, deterioration of creditworthiness, or other material adverse changes. During the years 2022 and 2021, there were no terminations.

38

Eugene Water & Electric Board Notes to Financial Statements Note 3 - Utillty Plant The major classifications of utility plant in service are as follows:

Electric utility Plant Balance Balance December 31, December 31, 2021 Increases Decreases 2022 Plant In service not subject to depreciation Land $ 9,820,003 $ - $ - $ 9,820,003 Intangible assets 231,716 231,716 Plant In service subject to depreciation Intangible assets 23,685,422 726,939 24,412,361 Steam production 10,619,188 3,030 10,622,218 Hydro production 134,640,819 2,941,341 (8,564) 137,573,596 Transmission 89,301,988 199,031 (143,950) 89,357,069 Distribution 355,219,738 14,945,254 (3,568,488) 366,596,505 Telecommunications 22,008,981 1,738,264 (22,619) 23,724,726 General plant 177,323,609 4,222,516 (229,203) 181,316,922 Completed constructl(j>n, not yet classified 10,437,889 4,613,099 i10,437,889~ 4,613,099 Total utility plant in service 833,289,354 29,389,475 (14,410,613) 848,268,217 Accumulated depreciation (469,310,376) (28,361,149) 4,138,627 (493,532,898)

Plant not subject to depreciation Property held for future use 38,335,395 17,613,266 (35,702,587) 20,246,074 Construction work In progress 42,040,231 30,447,266 ~15,312,459) 57,175,038 Net utility plant $ 444,354,604 $ 49,088,859 $ ~61,287,032) $ 432,156,431 39

Eugene Water & Electric Board Notes to Financial Statements Note 3 - Utllity Plant (continued)

Electric Utlllty Plant Balance Balance December 31, December 31, 2020 Increases Decreases 2021 Plant In service not subject to depreciabon Land $ 9,612,734 $ 207,269 $ - $ 9,820,003 Intangible assets 231,716 231,716 Plant In service subject to depree1atlon Intangible assets 23,531,393 154,029 23,685,422 Steam production 10,367,544 251,644 10,619,188 Hydro production 122,850,376 11,795,945 (5,502) 134,640,819 Transmission 84,290,110 5,644,520 (632,642) 89,301,988 Distribution 337, 195,650 20,781,466 (2,757,378) 355,219,738 Telecommunications 19,792,206 2,216,775 22,008,981 General plant 163,031,899 19,871,525 (5,579,815) 177,323,609 Completed construction, not yet classified 32,829,055 10,437,889 !32,829,055~ 10,437,889 Total utlllty plant in service 803,732,684 71,361,062 (41,804,392) 833,289,354 Accumulated depreciation (451,027,186) (25,740,055) 7,456,865 (469,310,376)

Plant not subject to depreciation Property held for future use 37,049,750 1,285,645 38,335,395 Construction work In progress 39,401,817 34,487,762 ~31,849,348~ 42,040,231 Net utlllty plant $ 429,157,065 $ 81,394,414 $ ~66, 196,875~ $ 444,354,604 40

Eugene Water & Electric Board Notes to Flnancial Statements Note 3 - Utility Plant (continued)

Water Utility Plant Balance Balance December 31, December 31, 2021 Increases Decreases 2022 Plant In service not subject to depreciation Land $ 1,294,957 $ - $ - $ 1,294,957 Intangible assets 58,188 58,188 Plant In service subject to depreciation Source of supply 26,519,959 475,875 25,995,834 Pumping 14,427,980 33,231 14,461,211 Water treatment 47,288,423 157,921 47,446,344 Transmission & distribution 201,463,806 9,554,219 (147,584) 210,870,441 General plant 43,424,217 1,389,009 44,813,226 Completed constructlon, not yet classified 6,107,082 7,102,151 ~a.101,0B2l 7,102,151 T otaJ utility plant in service $ 339,584,612 $ 18,712,406 $ (6,254,666) $ 352,042,352 Accumulated depreciation (142,306,939) (8,464,343) 173,384 (150,597,898)

Plant not subfect to depreciation Property held for future use 2,320,699 2,207 2,322,906 Construction work in progress 9,905,618 26,819,642 ~10,315,505} 26,409,755 Net utility plant $ 209,503,990 $ 37,069,912 $ ~16.396,1an $ 230,177,115 41

Eugene Water & Electrlc Board Notes to Financial Statements Note 3 - Utility Plant (continued)

Water Utility Plant Balance Balance December 31, December 31, 2020 Increases Decreases 2021 Plant In service not subject to depreciation Land $1,294,957 $ - $ - $ 1,294,957 Intangible assets 58,188 58,188 Plant in service subject to depreciation Source of supply 25,452,336 67,623 25,519,959 Pumping 14,251,074 176,906 14,427,980 water treatment 38,918,359 8,535,883 (165,819) 47,288,423 Transmission & dlStribution 189,273,114 12,333,015 (142,323) 201,463,806 General plant 39,562,931 4,847,979 (986,693) 43,424,217 Completed construction, not yet classified 11,872,769 6,107,082 ~11,872, 769~ 6,107,082 Total utility plant In sel'Vlce 320,683,728 32,088,488 (13,167,604) 339,584,612 Accumulated depreciation (135,864,192) (7,614,080) 1,171,333 (142,306,939)

Plant not subject to cleprecratlon Property held for future use 1,999,288 321,411 2,320,699 Construcbon work in progress 9,496,706 17,605,738 ~17,196,827~ 9,905,618 Net utlUty plant $ 196,315,530 $ 42,381,557 $ F9, 1s3,098) $ 209,503,990 Capltal contributions Contributions in Aid of Construction and System Development Charges are paid by developers and customers to cover the cost of new electric and water infrastructure (capital assets). When developers install and cover the costs of the infrastructure directly, those assets are referred to as Contributed Plant Assets.

Note 4 - Cash and Investments The Board maintains cash and investments In several fund accounts In accordance with bond resolutions and Board authorization. Descriptions of these fund account types are as follows:

Restricted cash and Investments Customer deposits and other - Used to account for 1) deposits collected from retail customers and held for future refund or application to customer account balances, and 2) donations to the Customer Care Program.

Terrestrial wlld/lfe habitat fund - Used to account for funds required to be held In reserve for the creation and management of terrestrial wildlife habitat. Including early seral habitat, during the term of the Carmen Smith operating license.

42

Eugene Water & Electrlc Board Notes to Financial Statements Note 4 - Cash and Investments (continued)

Harvest Wind escrow accounts - Funds include amounts held in escrow related to EVVEB's Investment in the Harvest Wind Project, consisting of funds deposited to escrow from the receipt of federal energy grant funds in 2010, and a deposit in lieu of a letter of credit regarding the Project's transmission contract with Klickitat PUD. Toe funds related to the federal energy grant were released from escrow In 2021.

Construction funds - Used to account for legally restricted cash and investments for the purpose of construction of capital projects. Funds Include proceeds from the Issuance of bonds and notes.

System development charge reserves - Used to account for charges assessed and collected in conjunction with Installation of new water services In the Water System and are restricted by State of Oregon Statutes to system enhancements and other related capital expenditures.

Debt service reserves - Deposits held for debt service coverage pursuant to bond Indentures and/or in lieu of bond sureties.

Investments for bond principal and Interest - Used to account for cash and Investments restricted by Bond Indentures of Trust for future payment of principal and interest on debt.

Detailed amounts for restricted cash and investments were as follows:

2022 2021 Electric Water Electric Water System System System System Debt service reserves $ 5,858,070 $ 1,519,515 $ 6,694,970 $ 1,491,743 Customer deposit and other 1,741,057 1,525,925 Terrestrial wildlife habitat fund 75,486 48,947 Harvest Wind escrow accounts 521,223 549,012 Construction funds 19,311,229 34,456,786 3,401,675 System development charge reserves 87,328 3,536,074 Investments for bond prlnclpal and interest 12 4 17 6 Total restricted cash and investments $ 27,507,077 $ 1,606,847 $ 43,275,657 $ 8,429,498 Designated cash and Investments Rate stabillzatlon fund - Used to account for cash and Investments the Board has designated to reserve for one-time expenditures, with any allocations made at Board discretion.

Power reserve - Used to account for cash and Investments the Board has designated to reserve for fluctuations in purchased power costs, load, generation levels, or margin requirements.

Capital Improvement reserve - Used to account for cash and Investments the Board has designated to reserve for capital Improvements.

43

Eugene Water & Electric Board Notes to Financial Statements Note 4 - Cash and Investments (continued)

Second source fund - Used to account for cash and Investments the Board has designated to reserve for costs Incurred to create alternate water sources.

Operating reserves - Used to account for cash and Investments the Board has designated for payments of emergency operating costs and self-insured claims.

Pension and medical reserves -* Used to account for cash and Investments the Board has designated for pension and post-retirement medical costs.

Detailed amounts for designated cash and investments were as follows:

2022 2021 Electric Water Electric Water System System System System Rate stabilization fund $ 26,668,927 $ 15,300,000 $ 24,468,927 $ 10,000,000 Power reserve 21,000,000 17,000,000 Capital improvement reserve 20,423,670 7,249,162 26,424,242 14,345,616 Second source fund 4,488,136 5,253,796 Operating reserve 5,720,000 1,351,056 5,856,679 1,358,370 Pension and medical reserve 11264,000 546,000 1,006,000 395,000 Total designated cash and Investments $ 75,076,597 $ 28,934,354 $ 74,755,848 $ 31,352,782 Deposits with financial Institutions are comprised of bank demand deposits, certificates of deposit, and money market accounts. The total bank balances, as recorded In bank records at December 31, 2022, were $28.9 million. Of the bank balances, $3.9 mllllon were covered by federal depository insurance and

$25 mlllion were collaterallzed with securities.

Custodial credit risk for deposits Is in the event of fallure of a depository financial institution a depositor will not be able to recover deposits or will not be able to recover collateral securities In possession of an outside party. Deposits not covered by depository Insurance are exposed to custodial credit risk when collateral for deposits Is held by the pledging Institution or Its trust department or agency, but not In the name of the depositor. Within the Public Funds Collaterallzation Program (PFCP) In Oregon, securltles pledged by financial Institutions are required to be held in the name of the pool, and, therefore, cannot be In the Board's name. However, provided an entity is recognized by the PFCP administrator as an entity covered by the pool, balances in excess of Fo-lC are covered by the collateral of the pool.

The Board's investments during the year, which included obllgatlons of the U.S. Government, are authorized by State of Oregon Statutes and bond resolution and by the Board's investment policy.

Authorized Investments include the Oregon Local Government Investment Pool (LGIP), U.S. Treasury securities, U.S. Government Agency securities, public funds money market accounts, corporate commercial paper and bonds, and other Investments enumerated in and authorized by ORS 294.035, Investments of funds of po/It/cal subdMsions.

44

Eugene Water & Electric Board Notes to Financial Statements Note 4 - Cash and Investments (continued)

The LGIP Is Included In the Oregon Short Term Fund (OSTF), which was established by the State Treasorer. The OSTF Is not subject to SEC regulation. The OSTF Is subject to requirements established In Oregon Revised Statutes, Investment policies adopted by the Oregon Investment Council, and portfolio guidelines established by the OSTF Board. The Governor appoints the members of the Oregon Investment Council and OSTF Board. The fair value of the Board's position in the pool is the same as the value of the pool shares. Financial statements for the OSTF may be obtained from the Oregon State Treasurer's website.

As of December 31, 2022, the Board held the following investments (Electric and Water Systems combined):

Weighted Average Investment Type Credit Ratina Carrying Value Maturity (Years) % of Portfoho Local Government Investment Pool Unrated $ 51,204,155 0.00 27.7%

U.S. Agency Securities FHLB 20,904,718 11.3%

FNMA 7,821,540 4.2%

FHLMC 11,768,488 6.3%

FFCB 21,434,790 11.5%

FAMCA 3,167,098 1.7%

Subtotal U.S. Agency AA 65,096,634 1.04 35.0%

U.S. Treasury Securities AAA 56,447,902 1.13 304%

Municipal Bonds' AA 2,209,684 1.52 1.2%

Corporate Bonds AAA 10,640,640 0.97 5.7%

Subtotal all securities 134,394,860 1.07 72.3%

Total $ 185,599,015 0.78 100.0%

45

Eugene Water & Electric Board Notes to Financial Statements Note 4 - Cash and Investments (continued)

As of December 31, 2021, the Board held the following Investments {Electric and Water Systems combined):

Weighted Average Investment Type Credit Ratl !:!a Canyi~ Value Maturity (Years~ % of Portfolio Local Government Investment Pool Unrated $ 50,515,399 0.00 23.5%

U.S. Agency Securlbes FHLB 13,718,000 3.4%

FNMA 7,978,980 6.3%

FHLMC 9,953,040 9.9%

FFCB 20,534,880 11.5%

FAMCA 3,297,300 3.8%

Other Agency 2,019,900 1.9%

Subtotal U.S. Agency AA 57,502,100 1.32 36.8%

U.S. Treasury Securities AAA n,012,236 1 20 30.7%

Munlcipal Bonds AA 3,630,480 1.32 1.4%

Corporate Bonds AA 151144,800 1.51 7.6%

Subtotal all securities 1531349,616 1.28 76.5%

Total $ 203,865,015 0.96 100.0%

Concentration risk is when Investments are concentrated in one issuer. This concentration presents a heightened risk of potential loss. This does not apply for pooled investments or Investments directly in the U.S. government ORS 294.035 limlts investment In any single Issuer of bonds to 5% of a portfollo; there is not a limit for Investment In U.S. Agencies. Many government-sponsored agency securities are not backed by the full faith and credit of the U.S. government, including those held by the Board, although market participants widely believe the government would provide financlal support to an agency if the need arose. The Board does not have a policy for Investment concentration In those agencies. Regarding the LGIP, with the exception of pass-through funds, the maximum amount of pooled investments to be placed 1\1 the pool ls limited by ORS 294.810, Local governments authorized to place 1/mited funds in pool, to $56.8 million as of December 31, 2022.

The "weighted average maturity in years" calculation assumes all investments are held until maturity.

46

Eugene Water & Electric Board Notes to Flnanclal Statements Note 4 - Cash and lnveatments (continued)

As a means of limltlng Its exposure to fair value losses resulting from changes In Interest rates, the Board's investment policy limits et least 25% of its investment portfolio to maturities of less than 180 days.

Investment maturities ere llmlted as follows:

Maturity Minimum Investment Less than 180 days 25%

Less than 1 year 40%

Less than 3 years 100%

Custodial credit risk for Investments.is In the event of the failure of the counterparty, the Board will not be able to recover the value of its investments or collateral securities In the possession of en outside party because they ere neither Insured nor registered and they ere held by the counterparty or the counterperty's trust department or agent, but not In the investor's name. All of the aforementioned Investments, and the Investments in the LGIP, which are not evidenced by securities, are held in the Board's name by a third-party custodian. The Board's policy, which adheres to Oregon statutes, is to limit its Investments to the top two ratings issued by nationally recognized credit rating organizations. As a general practice, and in a further effort to minimize credit risk, the Board Invests primarily In U.S. agency investments and In the LGIP.

Cash end investments consisted of the following:

Cash and Cash Equivalents and Total Carrying Total Carrying Restricted Cash Short-Term Designated /Vnotmt Amount and Investments Investments Funds 2022 2021 ELECTRIC SYSTEM Cash on hand $ $13,560 $ $13,560 $13,560 Cash In bank 979,372 18,836,057 19,815,429 7,002,332 lnwstments In the state of Oregon local government investment pool 5,672,924 14,009,003 21,137,216 40,819,143 38,237,856 lnvestrneru- U.S. Agencies, Treasuries, and Corp. 20,854?81 3116801106 5319391381 10813741268 115?021251 Total electr1c system 21 1501 10n 641438?26 7510761597 167,0221400 16019551999 WATER SYSTEM Cash In bank 107 2,009,615 2,009,722 5,317,011 Investments In the state of Oregon local government investment pool 24,586 2,214,190 8,148,236 10,385,012 12,2TT,543 Investments - U.S. Agencies, Treasuries, and Corp. 115821154 516501320 2017881118 281020 1592 3716471365 TotaJ water system 116061847 918741125 2819341354 4014151326 55~411919

$291113,924 $741312,851 $10410101951 $ 2071437,726 $21611971918 47

Eugene Water & Electric Board Notes to Financial Statements Note 5 - Fair Value Measurement The Board categorizes Its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy Is based on the valuation Inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 Inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs.

The Board determines disclosures related to these investments only need to be dlsagg'regated by major type because investing is not a core part of the Board's mission. The Board has the following recurring fair value measurements:

As of December 31, 2022:

Fair Value Measllrements Us1!:!9 Quoted Prices In Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs 2022 ~Level 1! ~Level 2! ~Level 3!

Investments by fair value level Debt securities U.S. treasury securtbes $ 56,447,902 $ 56,447,902 $ $

U.S. agenCl86 65,096,634 65,096,634 Corporate bonds 10,640,640 10,640,640 Municipal bonds 2,209,684 2,209,684 Total debt securities $ 134,394,860 $ 56,447,902 $ 77,946,958 $

48

~ugene Water & Electric Board Notes to Financial Statements Note 5 - Fair Value Measurement (continued)

As of December 31, 2021:

Fair Value Measurements Using Quoted Prices In Significant Active Markets for Significant other Unobservable Identical Assets Observable Inputs Inputs 2021 (Level 1) (Level 2) (Level 3) lnve11tments by fair value level Debt securities U.S. treasury securities $ 77,072,236 $ 77,072,236 $ $

U.S. agen~ 57,502,100 57,502,100 Corporate bonds 15,144,800 15,144,800 Municipal bonds 3,630,480 3,630,480 Total debt securities $ 153,349,616 $ 77,072,236 $ 76,277,380 $

Derivative instruments Investment derivative-asset $ 6,465 $ $ 6,465 $

Investment derivative-liability (41,420) (41,420)

Effective hedge-asset 899,228 899,228 Effective hedge-liability (1,181,646) (1,181,646)

Total derlvabves $ (317,373) -$=-===- - $ (317,373) =$=--==---=

Debt securities classified In Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those securities.

Debt securities classified in Level 2 of the fair value hierarchy are valued using various market and industry inputs, including institutional bond quotes.

Derivative Instruments classified in Level 2 of the fair value hierarchy are valued using an approach considering contract prices with forecast market prices.

49

Eugene Water & Electric Board Notes to Flnancial Statements Note 6 - Receivables Significant receivables were as follows:

2022 2021 Bectrlc Water Electric Water S~em S~tem System S~tem (as restated) current receivables Accounts receivable $ 39,699,743 $ 4,144,947 $ 27,447,276 $' 3,960,162 Allowance for doubtful accounts {346,164~ {34,869~ {326,389! {351584~

Net accounts receivable 39,353,579 4,110,078 27,120,887 3,924,568 Loans to customers 1,503,286 124,387 1,719,738 78,579 Receivable from FEMA 1,194,TT9 3,455,921 Interest receivable 475,134 119,715 471,019 145,607 Leases receivable 152,064 127,138 Miscellaneous receivables 1,264,276 636,755 Receivables, less allowance $ 43,943,118 $ 4,354,180 $ 33,531,458 $ 4,148,754 Long-term receivables Loans to customers $ 3,04p,253 $ 321,887 $ 2,887,762 $ 159,522 Leases receivable 280,204 334,076 Long-term receivables $ 3,325,457 $ 321,887 $ 3,221,838 $ 159,522 Total amounts written off for the year ended December 31, 2022 were $507,000 ($530,000 for 2021) for the Electric System and $47,000 ($55,000 for 2021) for the Water System.

Leases Receivable The Bectric System has agreements allowing telecommunication companies to attach their equipment to Its poles and towers. Leases receivable reflects the present value of payments expected over the lease term of these agreements which have fixed payments. Leases receivable totaled $432,000 for the year ended December 31, 2022 ($461,000 in 2021 ). The Electric system recognized approxlmately $159,000, including approximately $5,000 In interest, as Other Revenue for the year ended December 31, 2022, for these contracts (approximately $126,000, including approximately $5,000 in interest for the year ended December 31, 2021 ).

The Electric System also has contracts for telecommunicatlon pole attachments where pricing Is determined by application of Oregon Revised Statutes. The Board considers the pricing to be regulated.

Pricing does not include fixed components with which to measure future minimum payments. The Electric System recognized Other Revenue for these leases, which was approximately $196,000 for the year ended December 31, 2022 (approximately $205,000 for the year ended December 31, 2021 ).

50

Eugene Water & Electric Board Notes to Financial Statements Note 7 - Payables Current payables were as follows:

2022 2021 Electric Water Electric Water System System System System Accounts payable $ 9,574,283 $ 1,061,465 $ 6,353,881 $ 955,781 Accrued purchased power 21,650,439 11,637,857 Construction payables 845,338 2,384,945 982,156 1,229,018 Contributions In lieu of truces 1,224,150 1,284,507 Customer deposits 762,761 519,721 Equipment purchases 831,631 134,199 50,579 Miscellaneous payables 50,620 11,753 41,982 5,293 Preliminary Investigations payables 23,356 53,780 Total payables $ 34,962,578 $ 3,592,362 $ 20,924,463 $ 2,190,092 Note 8 - Other Assets and Other Liabilities Other assets and other llabilities were as follows:

2022 2021 Electric water Electric Water System System System System Other assets Non-utility property $ 95,196 $ 577,815 $ 61,587 $ 579,162 Derivatives at fair value 899,228 Prepaid transmission expense -

Harvest Wind 575,405 672,657 Regulatory assets Pension debits 11,060,715 6,586,463 12,655,975 7,090,229 OPEB debits 5,926,774 2,396,357 6,903,859 2,704,910 Conservation assets 966,931 993,554 Unamortized bond issue costs 1,221,619 551,498 1,34\457 601,375 Other assets $ 19,846,640 $ 10,112,133 $ 23,528,317 $ 10,975,676 other llablllties Derivatives at fair value $ - $ $ 1,181,646 $

Sick leave - upon retirement 896,741 283,181 848,735 268,022 System development charges 34,146 Other liabilities $ 896,741 $ 283,181 $ 2,030,381 $ 302,168 51

Eugene Water & Electric Board Notes to Financial Statements Note 9 - Deferred Outflows of Resources and Deferred Inflows of Resources Deferred outflows of resources and deferred inflows of resources were as follows:

2022 2021 Electric Water Electrfc Water S~em System S~em System (as restated)

Deferred outflows of resources Accumulated decrease in fair value of hedging derivatives $ - $ $ 1,181,646 $

Accumulated Increase In fair value of Investment derivatives 6,465 Unamortized losses on bond refunding 4,893,683 1,455,241 5,712,078 1,655,693 Pension - differences between expected and actual experience 2,126,693 671,587 2,841,814 897,415 Pension - changes of assumptions 6,874,254 2,170,817 7,699,805 2,399,938 Pension - differences between Board contributions and proportionate share of contributions 9,075,497 2,865,948 13,463,234 4,251,549 Pension contributions subsequent to measurement date 3,870,581 1,222,289 2,971,136 938,254 Pension - changes in proportion 4,441,081 1,402,446 OPEB - net difference between projected and actual earnings on investments 1,448,179 467,320 OPEB - changes of assumptions 1,285,402 405,918 1,879,190 593,429 Deferred outflows of resources $ 34,015,370 $ 10,651,566 $ / 35,655,368 $ 10,736,278 Deferred Inflows of resources Accumulated Increase In fair value of hedging derivatives $ - $ $ 899,228 $

Accumulated decrease in fair value of Investment derivatives 41,420 Leases 395,472 444,874 Pension - net difference between projected and actual earnings on Investments 7,832,641 2,473,465 22,474,630 7,097,262 Pension - differences between expected '

and actual experience 273,216 86,279 Pension - changes of assumptions 62,803 19,833 79,898 26,231 Pension - differences between Board contributions and proportionate share of contributions 4,542,716 1,434,542 Pension - changes in proportion 8,882,052 2,804,858 14,574,364 4,602,431 OPEB - net difference between expected and actual experience 2,053,755 648,556 3,381,017 1,067,691 OPEB - net difference between projected and actual earnings on Investments 1,595,760 503,923 Deferred Inflows of resources $ 24,042,655 $ 7,467,533 $ 43,491,191 $ 13,296,528 52

Eugene Water & Electrlc Board Notes to Financial Statements Note 10- Investment In Western Generation Agency The Board was a party to an Intergovernmental Agency, Western Generation Agency (>NGA), which was governed equally by the Board and Clatskanie PUD.

On April 6, 2021, WGA ceased operations when it sold Its 36 MW nameplate cogeneration project {the Project) located In Wauna, Oregon to Georgia Pacific. A condition of the sale required WGA to continue to exist for 18 months after the sale or until all pending claims for performance by WGA were satisfied.

WGA was terminated effective December 31, 2022.

The Board recognized a loss of approximately $9,000 upon termination. Prior to ceasing operation the investment In WGA consisted of 50% of net income and losses, and distributions from excess cash.

During 2022, the Board received approximately $3,000 as a final distribution. During 2021, $5.6 mllllon In distributions was received Including $1.7 million from sale proceeds of the Project. The balance of the Investment as of December 31, 2022, was $0 {approximately $12,000 as of December 31, 2021 including estimated income of $2.4 million). Income and losses have been reported with Investment earnings.

The Board and Clatskanie PUD each purchased 50% of the Project's output until the date of its sale.

Financial Information for the Project Is Included in the financial statements of WGA and may be obtained from Clatskanie PUD.

Note 11 - Investment in Harvest Wind The Board is a party to a joint ownership agreement, whereby the Board made an equity Investment In the Harvest Wind project, a 98.9 MW wind generating facility located in Klickitat County, Washington. The Board's ownership share of Harvest Wind Is 20%. Other owners are Peninsula Light Co., 20%, Cowlitz PUD, 30%, and Lakeview Light & Power, 30%. Commercial operations began on December 15, 2009.

During 2009, the joint owners of Harvest Wind elected to classify the project as an association taxable as a corporation. At the time of the election, all project assets were treated as contributed to the corporation.

The corporation received a 4% share, and the joint owners received shares in proportion to their ownership. Owners share In power output, Income and expenses according to their ownership shares.

The investment in Harvest Wind consists of the Board's share of costs to develop the project, 20% of the Project's net income and losses, and any distributions. At December 31, 2022, the balance of the Board's Investment in Harvest Wind was $16.5 mlllion ($17.7 mllllon at December 31, 2021) including estimated Income of $415,000 ($645,000 In 2021) and distributions of $1.6 mllllon ($1.9 milllon in 2021 ).

The Board Is committed, through an energy purchase agreement, to purchase Its share of the output from the Project and pay its share of project expenses through year 2029. Additionally, the Board Is committed, through a transmission service agreement and a transmission payment agreement, to subsidize the construction and replacement of transmission lines, deposit funds to ensure contract performance, and purchase transmission from the owner of the transmission lines through the year 2029.

53

Eugene Water & Electric Board Notes to Financial Statements Note 11 - Investment In Harvest Wind (continued)

Under the terms of a payment agreement, the Board deposited $1,340,000 from 2010 treasury grant proceeds In an escrow account to ensure payment of Its share of contingent llabilitles of the corporation.

The funds were released to the Board from escrow during 2021.

Under the terms of a transmission agreement, the Board has $521,000 as of December 31, 2022

($549,000 at December 31, 2021) on deposit In an escrow account to ensure the payment of monthly transmission Interconnection expenses.

Financial Information for the project Is Included In the financial statements of the project and may be obtained from the Board.

Note 12- Long-Tenn Debt The Board has defeased bonds by piecing proceeds and other sources of cash in irrevocable trust or escrow accounts to provide for all future debt service payments on the old bonds. Accordingly, those assets and the liability for the defeased bonds are not included In the Board's financial statements. At December 31, 2022, $4.1 million of Electric System bonds are considered defeased ($28 million of Electric System bonds as of December 31, 2021 ).

The resolutions authorizing the Issuance of revenue bonds contain various covenants, sinking fund requirements and obligations with which the Board must comply. The principal and interest requirements are reflected In the supplementary schedule "Long-Term Bonded Debt and Interest Payment Requirements.* To comply with sinking fund deposit requirements, the Board makes semi-annual deposits with the trustee, less accumulated Interest earnings. The Interest payments are made semi-annually on February 1 and August 1, and principal payments on August 1. At December 31, 2022, and 2021, no assets were pledged as security for the outstanding bonds of the Electric and Water Systems.

54

Eugene Water & Electric Board Notes to Financial Statements Note 12 - Long-Tenn Debt {continued)

Bonds and notes payable were as follows:

2022 2021 Electric Utility System Revenue and Refunding Bonds 2011 Series B, 6-08-11 issue Serial bonds 1.00%--4.35%, due 2013-2023 $ 985,000 $ 1,930,000 2012 Series, 8-1-12 issue Serial bonds 2.00%-5.00%, due 2013-2032 8,370,000 8,885,000 Term bonds, 3.75%, due 2039-2042 8,475,000 8,475,000 2016 Series A, 9-7-16 issue Serial bonds 2.00%-5.00%, due 2017-2036 77,105,000 79,450,000 Term bonds 4.00%, due 2037-2040 8,085,000 8,065,000 2016 Series B, 9-7-16 Issue Serial bonds .835%-1.840%, due 2017-2022 4,455,000 2017 Series, 9-21-17 Issue Serial bonds 5.00%, due 2027-2043 23,635,000 23,635,000 Term bonds 5.00%, due 2043-2047 10,160,000 10,160,000 2020 Series A, 6-11-20 issue Serial bonds 3.00%-4.00%, due 2027-2040 19,840,000 19,840,000 Term bonds 4.00%, due 2041-2045 9,910,000 9,910,000 Term bonds 4.00%, due 2046-2049 9,450,000 9,450,000 2020 Series B, 6-11-20 Issue "'

Serial bonds 1.341%-2.827%, due 2024-2038 16,790,000 16,790,000 192,785,000 201,045,000.

Add unamortized premium 22,799,230 25,079,002 Electric System bonds payable 215,584,230 226,124,002 Less current portion 9,095,000 8,260,000 Electric System bonds payable, net of current portion 206,489,230 217,864,002 55

Eugene Water & Electric Board Notes to Financial Statements Note 12 - Long-Tenn Debt (continued) 2022 2021 Water Utility System Revenue and Refunding Bonds 2016 Series, 5-19-16 Issue Serial bonds, 2.00%-5.00%, due 2017-2037 $21,605,000 $ 23,635,000 Term bonds, 4.00%, due 2038--2045 6,860,000 6,860,000 2020 Series A, 6-04-20 issue Serial bonds, 3.00%-4.00%, due 2023-2040 10,490,000 10,490,000 Term bonds, 3.00%, due 2041-2044 3,290,000 3,290,000 Term bonds, 3.00%, due 2045-2049 4,690,000 4,690,000 2020 Series B, 6-04-20 Issue Serial bonds, .923%-2.631%, due 2021-2035 9,225,000 9,855,000 Term bonds, 3.123%, due 2036-2040 4,430,000 4,430,000 60,590,000 63,250,000 Add unamortized premium 4,867,191 5,308,766 Water System bonds payable 65,457,191 68,558,766 Less current portion 2,390,000 2,660,000 Water System bonds payable, net of current portion 63,067,191 65,898,766 Total System long-term debt, net of current portion $ 269,556,421 $ 283,762,768 The schedule of maturities for principal and Interest on bonded debt is as follows:

Electric System Water System Princie!I Interest Princie!!! I Interest 2023 $ 9,095,000 $ 8,177,558 $ 2,390,000 $ 2,161,399 2024 7,980,000 7,747,310 2,490,000 2,070,062 2025 8,275,000 7,370,236 2,575,000 1,986,913, 2026 8,095,000 7,006,032 2,660,000 1,899,646 2027 9,475,000 6,647,914 2,770,000 1,792,303 2028-2032 52,795,000 26,529,591 13,940,000 7,236,328 2033-2037 35,635,000 16,771,773 13,9(55,000 4,815,030 2038-2042 34,395,000 10,030,142 10,930,000 2,447,464 2043-2047 22,130,000 4,068,800 6,915,000 901,150 2048-2049 4,910,000 296,600 1,955,000 88,350

$ 192,785,000 $ 94,645,955 $ 60,590,000 $ 25,398,635 56

Eugene Water & Electric Board Notes to Flnanclal Statements Note 12 - Long-Tenn Debt (continued)

Long-term debt activity for the year ended December 31, 2022, was as follows:

Outstanding Olrtstanding December 31, Due Within Jan~1 1 2022 .Addbons ReductJom 2022 One Year Bectrlc revenue bonds $ 201,045,000 $ - $ (8,260,000) $ 192,785,000 $ 9,095,000 Water revenue bonds 6312501000 {2166010002 6015901000 213901000 Total bonded debt $ 26412951000 $ - $ {10192010002 $ 25313751000 $ 1114851000 Long-term debt activity for the year ended December 31, 2021, was as follows:

Outstanding Outstanding December 31, DueWlthln Janu!!!11 1 2021 Addrtlona Reductions 2021 One Year~

Electric revenue bonds $ 207,790,000 $ - $ (6,745,000) $ 201,045,000 $ 8,260,000 water revenue bonds 6518051000 {21555,0002 6312501000 216601000 Total bonded debt $ 2731595,000 $ - $ {91300,000) $ 264,2951000 $ 101920,000 Note 13 - lntersystem Items Obligatlons 2022 Electric Water Total System S~m S~tems Due from Water, (Due'to) Electric Current Interest $ 12,334 $ (12,334) $

Roosevelt Operations Center 379,402 {379,402~

Total current 391,736 (391,736)

Non-current Roosevelt Operabons Center 5,670,306 \5,670,306~

Totals $ 6,062,042 $, (6,062,042~ $

57

Eugene Water & Electric Board Notes to Flnanclal Statements Note 13 - lntersystem Items (continued) 2021 Electric Water Total System System Systems Due from Water, (Due to) Electrlc Current Interest $ 13,089 $ (13,089) $

Roosevelt Operations Center 370,242 ~370,242}

383,331 (383,331)

. Non-current Roosevelt Operations Center 6,049,708 ~6,049! 708}

Totals $ 6,433,039 $ ~6,433,039~ $

Amounts receivable and payable between the Electric and Water Systems and related Interest earnings and expense are elimlnated in the Total System columns of the financial statements.

Roosevelt Operations Center The Electric System financed the acquisition and construction of the Board's Roosevelt Operations Center consisting of land, bulldlngs, equipment and personal property placed Into service during November 2010. Both the Electric and Water Systems occupy the property. A payment schedule was established in November 2010 whereby the Water System will repay the Electric System for its estimated share of the fair value of the property and the associated financing costs incurred by the Electric System without gain to the Electric System. The Roosevelt Operations Center was recorded in equal amounts as Plant In Service and an obligation for the Water System, along with depreciation expense and a receivable for the Electric System.

Payments are revised for refinancing of underlying debt Incurred by the Electric System. The obligation Is also revised for capitalized improvements at the facility If they are financed by the Electric System.

Monthly payments were approximately $44,000 as of December 31, 2022, and December 31, 2021, on a capitalized value of $17 .6 million for the Water System.

Annual totals for payments (Including interest) as of December 31, 2022, were as follows:

2023 $ 523,173 2024 523,173 2025 523,173 2026 523,173 2027 523,173 2028-2032 2,615,863 2033-2037 1,866,773

$ 7,098,501 58

Eugene Water & Electric Board Notes to Flnancial Statements Note 14 - Net Position Components of net position as of December 31, 2022 and 2021 are as follows:

2022 2021 Electric Water Electrlc Water System System System System (as restated)

Net Investment In capital assets $ 236,582,589 $ 158,146,478 $ 254,288,224 $ 138,941,911 Restricted for:

Customer care program 978,296 1,006,203 Harvest Wind escrow 521,223 549,012 Terrestrial wildlife habitat 75,486 48,947 System development changes 87,328 3,501,928 Debt service 2,450,767 618,936 3,186,970 546,057 4,025,772 706,264 4,791,132 4,047,985 Unrestricted 153,610,833 37,844,403 136,347,640 44,769,689

$ 394,219,194 $ 196,696,145 $ 395,426,996 $ 187,759,585 Note 15 - Power Supply Resources Bonnevllle Power Administration Bonneville Power Administration Contracts - A contract was signed on December 4, 2008 providing

~ r to EWEB from October 1, 2011 through September 30, 2028. The Board reselected a combination of both Block and Slice System power products from those offered by Bonneville Power Administration (BPA} In the previous contract which ended September 30, 2011. Whlle Slice and Block are still the offered products, BPA Implemented new policies on how it sells power and what it will charge to meet customer's future load growth. Under BPA's tiered rate methodology policy, BPA has allocated the power output and operational costs of the existing low-cost federal resources Into a tier 1 pool. The tier 1 power was allocated to public power customers like EWEB based on each customer's 2010 actual weather-adjusted load. The allocatlon determined the maximum planned amount of tier 1 power.

Each product provides attributes bringing different kinds of flexibility to the Board's power portfolio. The Slice product provides a percentage of BPA's resources rather than a guaranteed amount of power and in exchange the Board pays Its Slice contract percentage share of BPA's costs. Slice output, in combination with the Block and other EWEB resources, may be more or less than what is needed to serve EWEB's hourly retail loads. In the spring months, available must-run water In the Columbia system is typically high due to the runoff from snow melting, and the Increased power generation may require BPA to rely on spllllng water as a tool to balance generation with demand. However, to maintain safe water conditions to protect fish, spills are limited. The risk associated with the Slice product Is managing the water variability and available Slice storage to economically meet hourly load obligations and to optimally dispatch the value of the surplus portion of the Slice product

..J 59

Eugene Water & Electric Board Notes to Financial Statements Note 1S - Power Supply Resources (continued)

The Slice product consists of a Slice share of BPA's Federal Base System generation. Under the contract, the Board's Initial Slice percentage share is 1.81 %. The amount of actual power received under the Slice product will vary with seasonal water year conditions, the performance of the Columbia Generating Station nuclear plant and the performance and availablllty of all other Federal Base System resources. In years of heavy water flow and lack of overall storage In the Federal System, the Board may have rights to power In excess of their needs, and In low water years the Board would need to augment its share of Slice output with its own generation, market purchases, or storage releases from EWEB's share of Sllce storage.

The second BPA product purchased Is the Block, which provides a fixed hourly amount for a given month and varies by month. The value of the Block product is the certainty of a fixed volume of energy, shaped to monthly load requirement, and the monthly predictablllty of prices for the known quantity of power.

The annual amount of power the Board is entitled to under this contract Is based on the actual weather adjusted load during the period between October 1, 2009 and September 30, 2010, with some adjustments specified In BPA's tiered rate methodology, Is approximately 250 aMW. The current contract term extends through September 30, 2028 and regional discussions about the next BPA contract have begun. The Board will have a priority right to BPA power products available under the next contract BPA Transmission Contract- In 2001, the Board signed the Network Integration Transmission Service contract with BPA to provide transmission for the Board's generation projects and BPA power to serve EWEB's load. The current contract term extends through September 30, 2028. EWEB has firm roll-over rights with this contract.

EWEB-owned resources Garmen-Smith Hydroelectric Project - EWEB owns and operates the Cannen-Smith Hydroelectric Project (Carmen-Smith Project) within the McKenzie River basin. The Carmen-Smith Project Includes the Carmen Powerhouse with two generating units with a nameplate capacity of 52 MW each. The Carmen-Smith Project also Includes the Trail Bridge re-regulating facility, with an addltlonal generating unit with a nameplate capacity of 10 MW.

60

Eugene Water & Electric Board Notes to Financlal Statements Note 15 - Power Supply Resources (continued)

A new 40-year federal operating license for the Cannan-Smith Project was issued on May 17, 2019. The llcense, which Includes requirements for fish, wlldllfe, vegetation, water quality, land and road management and recreation enhancements, Is supplemented by a Settlement Agreement that was flied with FERC In November 2016. Of note, EWEB will be modifying the Cannen-Smlth Project for fish passage at Trall Bridge Dam. When complete, the Trail Bridge Powerhouse will transition from a re-regulating generation facility to the low-level outlet from Trall Bridge R~servolr. In addition, the Board is refurbishing the power plant to perfonn over the life of the new llcense.

International Paper Industrial Energy Center Cogeneratlon Project - The Board and International Paper Company jointly operate a cogeneration facility at the International Paper Springfield plant The unit, which has a nameplate capacity of 25.4 MW (average output Is approximately 20 aMW}, is owned by the Board, with International Paper providing operation support and fuel. Under tenns of the current agreement (which expires in September 2023), the project costs and output for this unit are shared equally by the parties. The Board and International Paper are participating in discussions to extend the current agreement Leaburg Walterville Hydroelectric Project - The Board owns and operates the Leaburg Walterville Hydroelectric Project (L-W Project} on the McKenzie River in Lane County, Oregon. The L-W Project Is comprised of two run-of-river facilities located at different points on the McKenzie River. The Leaburg facillty Includes a diversion dam on the McKenzie River, a canal and two generating units with a combined nameplate capacity of 15.9 MW. See note 20 -Asset Impairment for additional Information.

The Walterville facility includes a canal diverting water from the McKenzie River and one generating unit with a nameplate capacity of 8 MW. In April 2000, FERC granted the Board a new hydroelectric llcense for the L-W Project. The license is for a tenn of 40 years.

Stone Creek Hydroelectric Project - The Stone Creek Project has one turbine with a peak capacity of 12 MW. The facility Is on the Clackamas River approximately 45 miles southeast of Portland. The project Is a run-of-the-river development located between two hydroelectric facilities that are owned and operated by Portland General Electrlc (PGE}. The Stone Creek facility Is operated and maintained for EWEB by Energy Northwest and is llcensed through August 2039.

Jolntly owned resources Harvest Wind Project- The Board, Cowlitz PUD, Lakeview Light and Power, and Peninsula Light Company are the joint owners of the Harvest Wind Project, with the Board having a 20% ownership share. The project has a nameplate capacity of 98.9 MW and is located in Klickitat County, Washington.

All project assets are held by a corporation formed by the owners. The *Board and other owners have committed to purchase power from the corporation in proportion to their ownership shares through December 2029.

Western Generation Agency-The Board and Clatskanie People's Utility District (CPUD) equally governed the Western Generation Agency, which owns a 36 MW nameplate cogeneratlon project at the Georgia Pacific mill in Wauna, Oregon. The generation facility includes a steam turbine and a fluidized bed boiler. EWEB and CPUD each purchased 50% of the output until the project was sold to Georgia Paclflc on April 6, 2021.

61

Eugene Water & Electric Board Notes to Flnancial Statements Note 15- Power Supply Resources (continued)

Contract resources State/Ina Wind Project - In 2002, the Board agreed to purchase 25 MW from Phase 1 of the Stateline Wind Project located in Walla Walla County, Washington and Umatilla County, Oregon. The project consists of 454 wlnd turbines with a total project nameplate capacity of 300 MW. The contract for this power expires on December 31, 2026.

Klondike Ill Wind Project - In 2006, the Board agreed to purchase 25 MW from Phase 3 of the Klondike Wind eroject located near the town of Wasco in Sherman County, Oregon. The project consists of 125 wind turbines with a total nameplate capacity of 224 MW. The contract for this power expires on October 31, 2027.

Seneca Sustainable Energy- In 2010, the Board entered Into a Renewable Power Purchase Agreement with Seneca Sustainable Energy LLC to purchase the total output of the biomass fueled electric cogeneration facillty located In Eugene, Oregon. Nameplate capacity Is 19.8 MW. Expected average output Is approximately 14 a MW. The contract for this power expires on April 5, 2026.

Priest Rapids and Wanapum Hydroelectric Projects - The Board purchases power from the Priest Rapids Project composed of the Priest Rapids Dam and the Wanapum Dam, two large hydroelectric developments on the Columbia River in Washington owned by Publlc Utility District No. 2 of Grant County, Washington (Grant County PUD). Under this contract, EWEB's share of purchased physical power from Grant County PUD Is 0.14% of the project output or about 1.4 aMW per year. The contract for this power continues through March 31, 2052.

Energy Northwest- Energy Northwest Is a Washington municipal corporation, engaged In the ,

construction of five nuclear generation facllltles (Projects Nos. 1,2,3,4 and 5), of which EWEB purchased

_a 0.061 percent share of Project No 1. The Board Is not a member of Energy Northwest EWEB, Energy Northwest, and Bonneville entered Into a separate Net BIiiing Agreement, under which EWEB purchased from Energy Northwest, and In tum, assigned to Bonneville, EWEB's share of the capablllty. Construction of Project No 1 was terminated In 1994. However, under the Net Bllllng Agreement, Bonneville is responsible for EWEB's percentage share of the total annual cost of Project No 1, including debt service on revenue bonds issued to finance the cost of construction, whether or not the Project was completed.

This has resulted in zero payments by, or credits to EWEB under the Net Billing Agreement In the event that Bonneville fails to make a payment, or the parties terminate the agreement to directly pay, the origlnal obllgations of the Net Bllllng Agreements would resume. Bonneville has always met all of its obligations to Energy Northwest.

Solar PV Purchases - EWEB supports the development of Solar PV generation In Eugene through the provision of net metering rates to those customers with small systems that wlsh to self-generate power and renewable generation rates for customers with larger systems. To date, EWEB's Net Metered program has a total Installed capacity of sllghtly over 6.8 MW and 0.80 aMW of energy and direct generation contracts with a total capacity of just over 2.6 MW and 0.31 aMW of energy.

62

Eugene Water & Electric Board Notes to Financial Statements Note 16- Retirement Benefits

1. Pension Plan Plan description-- Board employees are provided with pensions through OPERS. It Is a cost sharing multiple employer defined benefit pension plan. All Board employees are eliglble to participate In OPERS after six months of employment. Oregon PERS, a component unit of the State of Oregon, issues an annual comprehensive financlal report, which may be obtained from the OPERS website, www.oregon.gov/pe rs.

Description of Benefit Terms - All benefits of the OPERS are established by the leglslature pursuant to ORS Chapters 238 and 238A.

Tler OnelTler Two Retirement Benefit (Chapter 238) Tier Onemer Two Retirement Benefit plan Is closed to new members hired on or after August 29, 2003.

Pension benefits - The PERS retirement allowance is payable monthly for llfe. It may be selected from 13 retirement benefit options. These options Include survivorship benefits and lump-sum refunds. Retirement benefits are determined as 1.67 percent of the employee's final average salary times the employee's years of retirement credit. Benefits may also be calculated under either a formula plus annuity (for members who were contributing before August 21, 1981) or a money match computation If a greater benefit results.

A member is considered vested and will be eligible at minimum retirement age for a service retirement allowance If he or she has had a contribution In each of five calendar years or has reached at least 50 years of age before ceasing employment with the Board. General service employees may retire after reaching age 55. Tier One general service employee benefits are reduced If retirement occurs prior to age 58 wlth fewer than 30 years of service. lier Two members are ellgible for full benefits at age 60 or 30 years of service.

Death benefits - Upon the death of a non-retired member, the beneficiary receives a lump-sum refund of the member's account balance (accumulated contributions and interest). In addition, the beneficiary will receive a lump-sum payment from employer fun_ds equal to the account balance, provided one or more of the following conditions are met the member was employed by a PERS employer at the time of death, the member died within 120 days after termination of PERS-covered employment, the member died as a result of injury sustained while employed in a PERS-covered job, or

the member was on an official leave of absence from a PERS-covered job at the time of death.

63

Eugene Water & Electric Board Notes to Flnanclal Statements Note 16 - Retirement Benefits (continued)

Dlsabllity benefits - A member with 10 or more years of creditable service who becomes disabled from other than duty-connected causes may receive a non-duty disability benefit A disability resulting from a job-Incurred injury or Illness qualifies a member (including PERS Judge members) for disability benefits regardless of the length of PERS-covered service. Upon qualifying for either a non-duty or duty disability, service time is computed to age 58 (55 for police and fire members) when detenninlng the monthly benefit Benefit changes after retirement - Members may choose to continue participation in a variable equities investment account after retiring and may experience annual benefit fluctuations due to changes in the market value of equity investments.

Under ORS 238.360 monthly benefits are adjusted annually through cost-of-lMng adjustments (COLA). Under current law, the COLA Is a blended rate capped at 2 percent for service on or before October 1, 2013, 1.25 percent for service credits subsequent to that date and 0.15 percent on annual benefits above $60,000.

OPSRP Pension Program Pension Benefits Pension benefits - The Pension Program (ORS Chapter 238A) provides benefits to members hired on or after August 29, 2003.

This portion of OPSRP provides a life pension funded by employer contributions. Benefits are calculated with the following fonnula for members who attain nonnal retirement age: General service: 1.5 percent is multiplied by the number of years of service and the final average salary.

Normal retirement age for general service members is age 65, or age 58 with 30 years of retirement credit A member of the OPSRP Pension Program becomes vested on the earliest of the following dates: the date the member completes 600 hours0.00694 days 0.167 hours 9.920635e-4 weeks 2.283e-4 months of service In each of five calendar years, the date the member reaches nonnal retirement age, and, If the pension program Is tenninated, the date on which tennination becomes effective.

Death benefits - Upon the death of a non-retired member, the spouse or other person who Is constitutionally required to be treated In the same manner as the spouse, receives for life 50 percent of the pension that would otherwise have been paid to the deceased member.

Dlsablllty benefits -A member who has accrued 10 or more years of retirement credits before the member becomes disabled or a member who becomes disabled due to job-related Injury shall receive a disability benefit of 45 percent of tt,e member's salary determined as of the last full month of employment before the disability occurred.

Benefit changes after retirement - Under ORS 238A.210 monthly benefits are adjusted annually through cost-of-lMng adjustments. Under current law, the COLA Is a blended rate capped at 2 percent for service on or before October 1, 2013, 1.25 percent for service credits subsequent to that date and 0.15 percent on annual benefits above $60,000.

64

Eugene Water & Electric Board Notes to Flnanclal Statements Note 16 - Retirement Benefits (continued)

Contributions PERS funding policy provides for monthly employer contributions at actuarially determined rates. These contributions, expressed as a percentage of covered payroll, are intended to accumulate sufficient assets to pay benefits when due. This funding policy applies to the PERS Defined Benefit Plan and the Other Postemployment Benefit Plans.

Effective in 2017, the Board elected to join the State & Local Government Rate Pool {SLGRP) rather than continue as an Independent employer. The Board made a one-time contribution of $32.6 million In 2018 to cover the transition liability associated with joining the pool. The transition liablllty was the estimated amount needed to achieve rate equity with other members of the pool. During 2019, the Board made a lump-sum contribution to a side account of $22 mllllon to qualify for a matching contribution from the Oregon Employer Incentive Fund of $5.5 mllllon. The Board's employer contribution rates were reduced, effective November 1, 2019, as a result of these contributions.

Employer contribution rates are based on a percentage of payroll and are established each biennium of odd-numbered years. The Board's rates during July 1, 2021, through June 30, 2023, were based on the December 31, 2019 actuarial valuation. Rates during this period were 19.16% for Tier One/Tier Two members and 15.94% for OPSRP. The Board's rates during November 1, 2019, through June 30, 2021 were 19.35% for Tier Onemer Two members and 13.79% for OPSRP based on the December 31, 2017 actuarial valuation and the effects of the side account deposit made in 2019. Employer contributions based on payroll for the year ended December 31, 2022, were $9 mllllon ($7.4 million In 2021).

The state of Oregon and certain schools, community colleges, and political subdivisions have made Jump sum payments to establish side accounts, and their rates have been reduced. In addition to the side account deposit the Board made in 2019, the Board elected to make lump-sum payments to OPERS during 2007 and 2001, which has had the effect of lowering the employer contribution rates.

Pension llablllty, pension expense, deferred outflows of resources, and deferred Inflows of resources related to pensions At December 31, 2022, the Board reported a net pension liability of $57.6 million for Its proportionate share of the OPERS net pension liabllity ($39.9 milllon in 2021 ). The net pension liablllty was measured as of June 30, 2022 {as of June 30, 2021, for December 31, 2021) and the total pension liability for each plan used to calculate the net pension liability was determined by an actuarial valuation as of December 31, 2020, rolled forward to June 30, 2022, and an actuarial valuation as of December 31, 2019, rolled forward to June 30, 2021, using standard update procedures. The Board's proportion of the net pension liability was based on a projection of the Board's long-term share of contributions to the plan relative to the projected contributions for all participating employers, actuarially determined. The Board's proportionate share of the net pension liability as of June 30, 2022 was 0.37648006% {0.33381769% as of June 30, 2021 ).

65

Eugene Water & Electric Board Notes to Financial Statements Note 16 - Retirement Benefits (continued)

For the year ended December 31, 2022, the Board's proportionate share of system pension expense was

$8. 7 million ($5.8 mllllon In 2021 ). The Board has elected to use regulatory accounting to *recognize pension expense in conjunction with the required employer contribution rates. Accordingly, the Board recognized pension expense related to lier One/Tier Two and OPSRP of $9 mllllon ($7.4 million In 2021 ).

The Board reported deferred outflows of resources and deferred Inflows of resources related to pensions from the following sources:

December 31, 2022 Deferred Deferred Outflows of Inflows of Resources Resources Net difference between projected and actual earnings on plan investments $ $ 10,306,106 Differences between expected and actual experience 2,798,280 359,495 Changes In assumptions 9,045,071 82,636 Changes in employer proportion 5,843,527 11,686,910 Differences between employer contributions and proportionate share of contributions 11,941,445 5,9n,25s Pension contributions subsequent to measurement date 5,092,870

$ 34,721,193 $ 28,412,405 December 31, 2021 Deferred Deferred Outflows of Inflows of Resources Resources Net difference between projected and actual earnings on plan investments $ $ 29,571,882 Differences between expected and actual experience 3,739,229 Changes in assumptions 9,999,743 105,129 Changes in employer proportion 19,176,795 Differences between employer contributions and proportionate share of contributions 17,714,783 Pension contributions subsequent to measurement date 3,909,390

$ 35!363,145 $ 48,853,806

$5.1 million reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension llabillty in the year ended December 31, 2023 ($3.9 million .as of December 31, 2022).

66

Eugene Water & Electrlc Board Notes to Financlal Statements Note 16 - Retirement Benefits (continued)

Other amounts reported as deferred outflows of resources and deferred Inflows of resources related to pensions are to be amortized as pension debits and pension credits as follows:

Doff9rBnce Dllfwooce Be1-l s-,

Dlllerenc88 Dlllereoces Employer Employer

~ Be!ween Contnbwonl Corbbnons Net DIIJerence El!p&Cl8dand E><peded Bild and Proporllcnale 1111d Proportlol 11t,

~

2023

~

on--

Projected ll!ld

-Emmgo (2,326,789)

Actual Ellpef1eoce (Dolorrod-

., _ l (79,888)

Actulll E>cpenellce (DofalredOutl,-

ot-l 1,246,717 Changes ol AalunpllalJ

.,_, "'-i

([)ole!Tod-(32,g-]4)

~

Changes of (Dololrod~

2,-441,098

~- "'-

Changa&m Proport,an o1-....i (8,578,ij3g)

~u, Proportion

{llolt<re<I~

1,298,661 Shilre of Contm.tlona (Delo<rod~

"'-..,,_l 5,-488,640 Share of ContnlMonl (Delo<rod-o!-l (1,328,280)

(3,821,8-46) (79,888) 761,682 (32,g-]4) 2,430,929 ~.788.~) 1,298,661 4,961,rn (1,328,280) 2024 202!; (7,058,662) (79,888) 61Q,441 (1M88) 2,"'86,"'°"' (1,1Q0,638) 1,288,681 1,466,l!Qe (1,328,280) 2026 2DZ7 3,000,061 (79,888) e!!,e43!

238,788 41,752 1,386,923 320717 (148,806) 1,296,661 649,283

"'*~ (1,328,280)

~-1~

s Q,046,071 s !i,84J,527 s 11,841,445 s

~-~

$(10,31~ $ (358.~ $ 2,79e,280 $ S !11,688,91gj \6,977~

Actuarial methods and assumptions used In developing the total pension liablllty The total pension liability was determined using the following actuarial assumptions.

Valuation date December 31, 2020 December 31, 2019 Measurement date June 30, 2022 June 30, 2021 Actuarial cost method Entry age normal Entry age nonnal Actuarial assumptions*

Discount rate 6.90% 6.90%

lnflabon 2.40% 2.40%

Payroll growth 3.40% 3.40%

Projected salary Increase 3,,4()% 3.40%

Investment rate of return 6.90% 6.90%

Mortallty rates for healthy retirees and beneficiaries were based on the Pub-2010 sex-distinct tables, as appropriate. Mortality rates for active members are a percentage of healthy retiree rates that vary by group, as described in the valuation. For disabled retirees, mortality rates are based on the Pub-2010 generational disabled mortality sex-distinct table.

Actuarial valuations of an ongoing plan involve estimates of the value of projected benefits and assumptions about the probability of events far Into the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. Experience studies are performed as of December 31 of even numbered years. The methods and assumptions shown above are based on the 2020 Experience Study which reviewed experience for the four-year period ending on December 31, 2020.

67

Eugene Water & Electric Board Notes to Flnanclal Statements Note 16 - Retirement Benefits (continued)

Discount rate The discount rate used to measure the total pension liability was 6.90 percent for the Defined Benefit Pension Plan . The projection of cash flows used to determine the discount rate assumed contributions from plan members and those of the contributing employers are made at the contractually required rates, as actuarially determined. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members.

Therefore, the long-term expected rate of return on pension plan Investments for the Defined Benefit Pension Plan was applied to all periods of projected benefit payments to determine the total pension liability.

Long-term expected rate of return To develop an analytical basis for the selection of the long-term expected rate of return assumption for June 30, 2022, and June 30, 2021, the PERS Board reviewed long-term assumptions developed by both Mllliman's capital market assumptions team and the Oregon Investment Council's {OIC) Investment advisors. The table below shows Mllliman's assumptions for each of the asset classes In which the plan was Invested based on the OIC long-term target asset allocation. The OIC's description of each asset class was used to map the target allocation to the asset classes shown below. Each asset class assumption Is based on a consistent set of underlying assumptions and Includes adjustment for the inflation assumption.

These assumptions are not based on historical returns, but instead are based on a forward-looking capital market economic model.

Assumptions for returns by asset class as of June 30, 2022 and June 30, 2021:

Compound Annual Return Asset Class Target (Geometric)

Global Equity 30.62% 5.85%

Private Equity 25.50% 7.71%

Core Fixed Income 23.75% 2.73%

Real Estate 12.25% 5.66%

Master Limited Partnerships 0.75% 5.71%

Infrastructure 1.50% 6.26%

Commodities 0.63% 3.10%

Hedge Fund of Funds - Multlstrategy 1.25% 5.11%

Hedge Fund Equity - Hedge 0.63% 5.31%

Hedge Fund - Macro 5.62% 5.06%

US Cash -2.50% 1.76%

Assumed Inflation - Mean 2.40%

68

Eugene Water & Electric Board Notes to Financial Statements Note 16 - Retirement Benefits (continued)

Sensitivity of net pension llabillty to changes in the discount rate as of June 30, 2022:

Current 1% Decrease Discount Rate 1% Increase Employers' Net Pension Liability (5.9%) (6.9%) (7.9%)

Defined Benefit Pension Plan $ 102,231,348 $ 57,646,651 $ 20,331,317 Sensitivity of net pension llabillty to changes In the discount rate as of June 30, 2021:

Current 1% Decrease Discount Rate 1% Increase Employers' Net Pension Liability (5.9%} (6.9%} (7.9%)

Defined Benefit Pension Plan $ 78,444,821 $ 39,946,227 $ 7,736,893 Pension plan fiduciary net position Detailed information about each pension plan's fiduciary net position is available in the separately issued OPERS financial reports.

Payable to the pension plan The Board had no contributions payable to the pension plan for the year ended December 31, 2022.

Changes In plan provisions during the measurement period There were no changes In plan provisions during the meas~rement period.

Changes In plan provisions subsequent to the measurement period In 2021,the assumed earnings rate was decreased from 7 20% to 6.90% for ller 1 members. Death benefits were Increased from 50% of the actuarially determined value to 100% for all members. Changes were effective January 1, 2022.

Defined contribution pension -lndMdual Account Program Pens/on benefits - The IAP Is an account-based program for all Tier One/ller Two and OPSRP members who were in a qualifying position since January 1, 2004. An IAP member becomes vested on the date the employee account is established or on the date the rollover account was established. If the employer makes optional employer contributions for a member, the member becomes vested on the earliest of the following dates: the date the member completes 600 hours0.00694 days 0.167 hours 9.920635e-4 weeks 2.283e-4 months of service in each of five calendar years, the date the member reaches normal retirement age, the date the IAP is terminated, the date the active member becomes disabled, or the date the active member dies.

Upon retirement, a member of the IAP may receive the amounts in his or her employee account, rollover account, and vested employer account as a lump-sum payment or in equal installments over a 5-, 10-,

15-, 20-year period or an anticipated life span option. Each distribution option has a $200 minimum distribution limit.

69

Eugene Water & Electric Board Notes to Flnancial Statements Note 16 - Retirement Benefits (continued}

Death benefits - Upon the death of a non-retired member, the beneficiary receives In a lump sum the member's account balance, rollover account balance, and vested employer optlonal contribution account balance. If a retired member dies before the Installment payments are completed, the beneficiary may receive the remaining Installment payments or choose a lumi>-sum payment.

Recordkeeplng - PERS contracts with VOYA Financial to maintain IAP participant records.

Contributions - Covered employees are required to contribute 6% of their salary to the plan. The Board has chosen to pay the employees' contributions to the plan. For 2022, the Board contributed $3.2 million for employees ($2.8 million for 2021).

Changes In plan provisions during the measurement period There were no changes in plan provisions during the measurement period.

Changes In plan provisions subsequent to the measurement period In 2021, the definition of salary was changed to include income that is or would be taxable under Oregon state Income tax. The death benefit for all members was Increased from 50% of the actuarially determined value to 100%. These changes were effective January 1, 2022.

2. Postemployment Benefits Plan Other than Pensions

/

Eugene Water & Electric Board Retirement Benefits Trust Summary of significant accounting pollcles Basis of accounting - The accrual basis of accounting Is used; plan member contributions are recognized when they are due, benefit expenses and refunds are recognized wt:ien they are due and payable.

Employer contributions are recognized only when they are due and accompanied by a formal commitment from the employer to pay them. Changes In the fair value of investments are recognized as increases or decreases to income.

Investment values - Investments are measured at fair value as provided by the Corporate Co-Trustee using recognized pricing services. Purchases and sales are recognized on a trade-date basis. Investment income is recognized as it Is earned.

Plan description The Board provides postemployment health care and life insurance benefits to certain employees who retire under OPERS with at least 11 years of service at EWEB. The plan is administered by a board of trustees, acting solely on the authorization of EWEB, as the Eugene Water & Electric Board Retirement Benefits Trust (The Trust). The board of trustees consists of 5 voting members and one commissioner of EWEB who serves as an ex-officio member with no voting power. The plan is a single employer defined benefits plan. Plan assets are dedicated solely to providing benefits to retirees and their beneficiaries, and plan assets are legally protected from creditors of the Board and the p!an's administrators.

70

Eugene Water & Electric Board Notes to Financial Statements Note 16 - Retirement Benefits (continued)

The life Insurance benefit is a fixed amount of $5,000 per retiree. Health care coverage Is provided in the form of a subsidy toward insurance premiums. The subsidy varies with years of service and the benefits offered by the Board at the time of an employee's hire and retirement Medicare eligible retirees choose from Medicare plans offered through the Oregon PERS Health Insurance Program (PHIP). The subsidy for Medicare coverage Is established by the Board; however, the coverage is administered by OPERS as a cost sharing plan. Eligible retirees under the age of 65 receive coverage under the group plan the Board offers to Its active employees, until such time as retirees are Medicare ellgibile. Those group benefit provisions are established by the Board. Dental and/or vision benefits are offered in a retiree group plan for retirees with earlier hire and retirement dates.

During 2016 and 2017, the Board changed plan provisions for active employees hired on or after January 1, 2003. At retirement, those employees will not receive a subsidy toward health care coverage.

Employees retiring before age 65 continue to have access to EWEB health care Insurance offered to the active employees; however, the retirees pay the insurance premiums In full. This access to coverage before age 65 is also requir~ by Oregon law.

The obligation for payment of insured benefits rests with the Insurance companies providing coverage.

The Board does not guarantee benefits in the event of an Insurance company's insolvency.

The plan does not issue a stand-alone financial report.

Plan membership Enrolling in health care coverage is at the time of retirement. Therefore, there are no inactive plan members entitled to but not yet receiving benefits. Once a retiree opts out of coverage, there Is no reinstatement. The plan's latest actuarial valuation dated August 31, 2021, rolled forward to December 31, 2022, included 537 retirees or surviving spouses of retired employees, of which 136 opted out of or were Ineligible for health care coverage, and 495 active employees.

Investments The Trust has a third-party Investment manager who has discretionary Investment authority within the guidelines of the Trust's investment policy as approved by the board of trustees. The invesbnent policy has a long-term objective of full funding for the plan through capita I appreciation and reasonable consistency of earnings and growth. The policy acknowledges ongoing needs for llquldlty to pay benefits and diversification of investments to minimize capital erosion. The Trust's adopted asset allocation as of July 31, 2019, has targets of40% fixed income, 55% equities and 5% real estate. Investments In debt securities are to be single-A rated or better and diversified with respect to average maturity and duration.

The Trust did not hold any debt securities on December 31, 2022, or December 31, 2021.

For the years ended December 31, 2022, and 2021, the annual money-weighted rate of return on Investments, net of Investment expense, was -16.6% and 12.0%, respectively. The money-weighted rate of return expresses Investment performance, net of investment expense, adjusted for changing amounts actually Invested.

\

71

Eugene Water & Electric Board Notes to Flnanclal Statements Note 16- Retirement Benefits (continued),

Custodia/ credit risk - Custodia I credit risk for Investments Is the risk that In the event of the counterparty's failure, the Trust would not be able to recover the value of Its investments that are in the possession of an outside party. Investments of the Trust are book entry securities held by the Corporate Co-Trustee who is both the investment manager and custodial trustee. Investments are held in a trust account under the name of the Corporate Co-Trustee, however, custodlal credit risk is avoided because the custodian's internal records Identify the Trust as the owner of the securities.

Bank trust accounts, being neither depository nor brokerage accounts are not Insured.

Fair value measurements - Fair values are the estimated prices that would be received to sell these Investments In th,eir principal markel Level 1 inputs showing a quoted market price for an Identical asset In an active market provides the most reliable evidence of fair value. Level 2 Inputs are quoted prices for similar assets in active markets. Level 3 Inputs Include valuatlon techniques which make use of unobservable inputs using the best Information avallable under the circumstances. All investments held by the Trust as of December 31, 2022, and December 31, 2021, are Level 1.

Contributions Contributions toward health care premiums required from retirees are established In the plan and may be amended by the Board. Contributions from participating retirees are either a flat rate or a percentage of premium costs and vary by participant according to the benefits in place when the participant was hired and/or retired. The Board's subsidies toward premiums are capped for the more recent retirees. The cap is expressed as a percentage of the Board's share of premium increases each year compared to premiums beginning in a base year of 2003. The cap was 6% beginning In 2017 and Is to remain that amount each year thereafter.

During 2022, the plan recognized $568,000 in contributions from retirees who had insurance coverage under the Board's group plan for active employees ($684,000 during 2021 ). The contributions are applied to Insurance premiums. Retirees with Medicare coverage also pay a portion of their premiums; however, those contributions are recognized by the OPERS OPEB plan.

Funding It is the Board's intent to pay the actuarially determined contribution (ADC) to the trust annually.

The ADC for 2022, which was updated after year's end, was approximately $348,000. The Board contributed $297,000 during 2022. The plan was considered fully funded as of December 31, 2021, based on cash flows expected to be paid from the Trust for explicit benefits. Accordlngly, the ADC was $0 for 2021. The Board contributed $176,000 in 2021. Contributions were recognized In administrative and general expenses: $225,720 for the Electric System and $71,280 for the Water System In 2022 ($133,380 for the Electric System and $42, 120 for the Water System in 2021 ). The expenses differ from the Board's OPEB expense determined on an actuarial basis, which was negative $325,000 for 2022, due to amortizations which reverse the direction of total OPEB expense ($2.7 million for 2021 ). The Board has elected to apply regulatory accounting to recognize OPEB expense based on the timing and amount of contributions included In the rate making process.

72

Eugene Water & Electric Board Notes to Flnanclal Statements Note 16 - Retirement Benefits (continued)

Components of the actuarially detennlned OPEB expense are shown below:

Retirement Benefits Plan 2022 2021 Service cost $ 386,929 $ 373,844 Interest cost 987,9TT 1,006,215 Expected earnings (1,278,546) (1,247,739)

Administrative expenses 150,026 135,390 Change In benefits 552,275 Recognitlon of deferred outflows 2,097,174 4,741,464 Recognition of deferred Inflows {2,6681529} {218921651}

$ {324,969} $ 2!668,798 The Board reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

December 31 z2022 Deferred Deferred Outflows of Jnflows of Resources Resources Differences between expected and actual experience $ $ 2,702,311 Changes of assumptions 1,691,319 Net difference between projected and actual earnings on OPEB plan investments 1,905,500 Total $ 3,596,819 $ 2,702,311 December 31, 2021 Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual experience $ $ 4,448,708 Changes of assumptions 2,472,619 Net difference between projected and actual earnings on OPEB plan Investments 2,099,683 Total $ 2,472,619 $ 6,548,391 73

Eugene Water & Electric Board Notes to Financial Statements Note 16- Retirame!1t Benefits (continued)

Amounts recorded as deferred inflows and outflows of resources will be subject to amortization and regulatory deferral In Mure years as follows:

Net Deferred Outflows/(1 nflows)

Amortization 2023 $ (917,125) 2024 334,535 2025 609,696 2026 867,402 2027

$ 894,508 Net OPES llabillty Components of the net OPES liability and funded percentage are below:

December 31, 2022 2021 Total OPES liability $ 31,415,788 $ 32,517,097 Plan fiduciary net position (15,551,388) (20,337,339)

EWES's net OPES liability $ 15,864,400 $ 12,179,758 Plan fiduciary net position as a percentage of the total OPES liability 50% 63%

74

Eugene Water & Electric Board Notes to Financial Statements Note 16 - Retirement Benefits (continued)

Changes In the net OPEB llabllity The Board's total net OPES liability of $15.9 million was measured as of December 31, 2022.

TotalOPEB Fiduciary Net NetOPEB Liability Position Llablllty Beginning of year 1/1/2022 $ 32,517,097 $ (20,337,339) $ 12,179,758 Employer contributions (297,000) (297,000)

Retiree contributions (567,544) 567,544 Expected investment income (1,278,546) (1,278,546)

Difference between expected and actual Investment Income 4,447,498 4,447,498 Benefit payments - implicit (663,669) (663,669)

Benefit payments (1,245,002) 1,245,002 Administrative and trust expenses 101,453 101,453 Service cost 386,929 386,929 Interest on total OPEB liability 987,977 987,977 End of year 12/31/22 $ 31,415,788 $ (15,551,388) $ 15,864,400 The Board's total net OPES liability of $12.2 mllllon was measured as of December 31, 2021:

Total OPEB Fiduciary Net Net OPEB Liability Position Liability Beginning of year 1/1/2021 $ 33,594,237 $ (20,031,471) $ 13,562,766 Employer contnbutions (175,500) (175,500)

Retiree contributions (683,609) 683,609 Expected investment income (1,247,739) (1,247,739)

Differe~ between expected and actual Investment Income (1,040,878) (1,040,878)

Benefit payments - implicit (664,657) (664,657)

Benefit payments (1,339,250) 1,339,250 Administrative and trust expenses 135,390 135,390 Service cost 373,844 373,844 Interest on total OPEB liability 1,006,215 1,006,215 Change in benefit terms 552,275 552,275 Changes of assumptions 2,234,085 2,234,085 Difference between expected and actual experience (2,5561043! (2,556,043!

End of year 12/31/21 $ 32,517,097 $ (20,337,339i $ 12,179,758 75

Eugene Water & Electric Board Notes to Financial Statements Note 16 - Retirement Benefits (continued)

Actuarial assumptions The total OPEB liability as of December 31, 2022, and 2021, was determined using the following significant actuarial assumptions and inputs for both years:

Discount rate 3.12%

Inflation rate 2.5%

Salary Increases 3.5%

Health care cost trend rates 3%-6%

Mortality Pub-2010 Withdrawal OPERS experience study Jul 2019 Retirement Experience study Nov 2020 Mortality rates are concurrent wlth those used for general service employees in the Oregon PERS Actuarial Valuations.

The discount rate of 3.12% as of December 31, 2021, and rolled forward to December 31, 2022, was based on an expected 6.53% long-term rate of return on plan assets. Employer contributions are not assumed to occur for years beyond the latest valuation year, 2021. At that time, the fiduciary net position was projected to be available to make projected OPEB payments for plan participants through 2037.

Therefore, the expected long-term rate of return was blended with the December 31, 2021 rate from the 20-year General Obligation Municipal Bond Index as published by the Bond Buyer. 2.06%.

The long-term expected rate of return on the Trust's investments was determined using a building-block method in which estimates of expected Mure real rates of return (expected returns, net of investment expense and Inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the current asset allocation percentage, and by adding expected Inflation. The asset allocation estimates of arithmetic real rates of return for each asset class for years ended December 31, 2022, and 2021 are summarized below:

Expected Long-Term

% of Total Real Rate Fund Type Portfolio of Return Domestic equity 35% 5.9%

Foreign equity 22% 6.3%

Fixed income 37% 1.5%

Real estate 5% 5.4%

3-month Treasury bills 1% -1.9%

100%

76

Eugene Water & Electric Board Notes to Financial Statements Note 16 - Retirement Benefits (continued)

The following table presents the sensitivity of the net OPES liability to changes In the discount rate, assuming the current rate, and rates that are one percentage point lower, and one percentage point higher than the current rate as of December 31, 2022:

1% Decrease Current Rate 1% Increase (2.12%) (3.12%) (4.12%)

Total OPEB liabllity $ 35,954,243 $ 31,415,788 $ 28,474,838 Fiduciary net position (15,551,388) (15,551,388) (15,551,388)

Net OPES llability $ 20,4021855 $ 15,864,400 $ 12,923,450 The following presents the sensitlvity of the net OPES liablllty to changes In the healthcare cost trend rates assuming the current rate, rates that are one percentage point lower, and one percentage point higher than the current rate as of December 31, 2022:

1% Decrease Current Rates 1% Increase Total OPEB llability $ 28, 180,620 $ 31,415,788 $ 36,289,900 Fiduciary net position (15,551,388) (15,551,388) {15,551,388)

Net OPES liability $ 12,629,232 $ 15,864,400 $ 20,738,512 Sensitivity of the net OPEB llabillty to changes in the discount rate, assuming the current rate, and rates that are one percentage point lower, and one percentage point higher than the current rate as of December 31, 2021:

1% Decrease Current Rate 1% Increase (2.12%) (3.12%) {4.12%)

Total OPEB llability $ 36,816,706 $ 32,517,097 $ 28,974,219 Fiduciary net position (20,337,339) (20,337,339) (20,337,339)

Net OPEB liability $ 16,479,367 $ 12,179,758 $ 8,636,880 Sensitivity of the net OPEB llabllity to changes In the healthcare cost trend rates assuming the current rate, rates that are one percentage point lower, and one percentage point higher than the current rate as of December 31, 2021:

1% Decrease Current Rates 1% Increase Total OPEB liability $ 28,948,395 $ 32,517,097 $ 36,813,207 Fiduciary net position (20,337,339) (20,337,339) (20,337,339)

Net OPEB liability $ 8,611,056 $ 12,179,758 $ 16,475,868 77

Eugene Water & Electric Board Notes to Financial Statements Note 16 - Retirement Benefits (continued)

The actuarlal funding method used to determine the plan cost is the entry age normal cost method. Under this method the actuarlal present value of the projected benefits of each active employee Included In the valuation is allocated on a level percentage of pay basis over the service life of the employee between entry age (date of hire) and assumed exit age.

Note 17 - Deferred Compensation The Board offers all employees a deferred compensation plan created in accordance with Internal Revenue Code (IRC) Section 457. The plan permits them to defer a portion of their salary until Mure years. Participation In the plan is optional. Payment from the plan Is not avallable to employees until termination, retirement, death, or unforeseeable emergency.

The Board 1NOrks with separate investment providers who also provide third-party administration for all deferred compensation program funds. Participating employees have several Investment options with varying degrees of market risk. The Board has no liability for losses under the plan.

The Board has llttle administrative involvement with the plan, does not perform the investing function and does not make contributions to the plan. In accordance with GASB Statement 97, Certain Component Unit Criteria and Accounting and Financial Repo,tlng for Internal Revenue Code Section 457 Deferred Compensation Plans, the plan assets are not included in the accompanying Statements of Net Position.

Note 18 -Trojan Nuclear Plant The Trojan Nuclear Plant (Project) is jointly owned by Portland General Electric Company (PGE), 67.5%;

the City of Eugene, acting by and through Eugene Water & Electric Board, 30%; and Pacific Power and Light Company, 2.5%; as tenants In common. The Project ceased commercial operation in 1993 and is decommissioned. The Project is now classified as an Independent Spent Fuel Storage Installation. In accordance with GASB Statement 61, The Rnancial Reporting Entity, the Project is reported as a joint venture on the equity method of accounting.

In 1970, the Board assigned to BPA and other publlc agency participants Its 30% share of the output of Trojan. Under the terms of a Direct Pay Agreement, BPA is obligated to pay the Board amounts sufficient to cover all of the Board's costs related to the Project. BPA pays those costs In cash, but In some cases could make payments by Issuing credits against the Board's purchases of electr!clty from BPA. The Board Is required to transfer from Its Electric System Fund to the Trojan Project Fund an amount equal to all payments received from BPA for Project related costs. The Board Is then responsible for making payments from the Trojan Project Fund to the Trojan Project for the Board's share of costs.

78

Eugene Water & Electric Board Notes to Flnanclal Statements Note 18 - Trojan Nuclear Plant (continued)

Since BPA is obligated to pay the Board's share of all Project costs and has provided the Board with legally binding written assurances of Its commitment to that obligation, the Board does not expect the closure and decommissi oning of the Project to have any adverse effect on the Board's Electric or water Systems. As such, the equity Interest In the Project Is zero. However, if one of the tenants In common falls to perform their flnanclal obligation, the other tenants may be liable. This obligation may not be covered under the Direct Pay Agreement mentioned previously. However, the Board believes this risk Is minimal.

A summary of the balance sheets for EWEB's share of the Trojan Project as of September 30, 2022, and September 30, 2021, Is as follows.

Unaudited Unaudited September 30, September 30, 2022 2021 ASSETS Current assets $ 5,319,451 $ 2,650,464 Long-term receivable, BPA, net 25,983,191 30,117,970 Total assets $ 31,302,642 $ 32,768,434 LIABILITIES Current liabilities $ 5,016,000 $ 2,349,772 Accumulated provision for decommissio ning costs 26,286,642 30,418,662 Total liabilities $ 31,302!642 $ 32,768,434 The Trojan Nuclear Plant financial statements can be obtained from the Board.

Note 19- Commitmen ts and Contingencies Electric Projects Carmen-Smith Project- Contractual commitments were $23. 7 mllllon at December 31, 2022, primarily for powerhouse Improvemen ts, and relicenslng requirements for fish protection, and habitat development

($22.2 million for powerhouse Improvements, relicensing requirements and dam safety Inspections at December 31, 2021 ).

The Board has an arrangemen t with the U.S. Forest Service to provide for maintenance and enhancemen t measures on the National Forest Service land where the project Is located. The Board expects to make annual payments of varying, prescheduled amounts to the Forest Service In accordance with settlement provisions. The payments are to total approximately $1.5 million before Inflation Indexing over the life of the license.

79

Eugene Water & Electric Board Notes to Flnanclal Statements Note 19 - Commitments end Contingencies (conti~ued}

Distribution projects - Contractual commitments for a substation rebulld and seismic anchoring were $7 .5 million as of December 31, 2022 ($602,000 as of December 31, 2021 ).

Generation projects - Commitments were $626,000 for replacement of swl~gear and relays as of December 31, 2022 ($671,000 at December 31, 2021, for Improvements to a dam hoist system, stormwater outlet and replacement of switchgear and relays).

Weter projects Construction contracts primarily for storage tanks, a pump station and main replacements were approximately $13.4 million at December 31, 2022 ($2.9 million as of December 31, 2021 for storage tanks and main replacements).

Other projects Contractual commitments for advanced metering were $1.4 million, and $263,000 for construction at Roosevelt Operations Center as of December 31, 2022 ($1.2 million for vehicles and $1.4 million for advanced metering as of December 31, 2021 ).

Self-Insurance The Board Is exposed to various risks of loss because of the Board's self-insurance retention, up to the first $2,000,000 of exposure, per occurrence. Excess liablllty coverage protects the Board after the Board's self-Insured limit is exhausted. However, public entities are also protected under State of Oregon tort limits ORS 30.260 - 30.300, Tort actions against pub/le bodies, which reduce the liability for any single occurrence for property damage or personal injury. Limits are adjusted for the cost of living annually by the Oregon State Court Administrator. The most recent limits are $132,200 for a single claimant and $661,000 to all claimants for property damage. For Injury or death, the most recent limits are

$806,100 for a single claimant and $1,612,000 for multiple claimants. Consequently, except in extreme cases, the Board's exposure Is mitigated by law. The limit is subject to change by State of Oregon legislation.

Claims llabllltles recorded In the financial statements are based on the estimated ultimate loss as of the statement of net position date, adjusted from current trends through a case-by-case review of all claims, Including Incurred but not reported claims. Non-incremental claims adjustment costs such as salaries are

'not included in the claims estimates. At December 31, 2022, a total clalms liablllty of approximately

$62,000 Is reported in the financial statements. All prior and current-year claim liabilities were fully reserved and have not been discounted.

Current Year l..Jabillty Balance Claims and at Beginning Changes in LI ability Balance of Year Estimates CIBJm Payments at End of Year 2020 General Llabflrty $ 99,290 $ 160,738 $ (151,648) $ 108,380 2021 General Liability $ 108,380 $ 532,392 $ (594,645) $ 46,127 2022 General Liability $ 46,127 $ 295,494 $ (279,771) $ 61,850 80

Eugene Water & Electrlc Board Notes to Financial Statements Note 19 - Commitments and Contingencies (continued)

Clalms and other legal proceedings 13 lawsuits, representing approximately 750 plaintiffs, are pending against EWEB seeking damages related to the 2020 Hollday Farm Fire. These actions allege a variety of claims against EWEB and assert unproven damages. All plaintiffs were previously Informed that EWEB's electric lines were d~nergized at the time and location that the Holiday Farm Fire Is alleged to have started. As of December 31, 2022 and 2021, no accrual has been made In the financial statements for the Hollday Farm Fire.

The Board Is involved in various other litigations. In the opinion of management, the ultimate outcome of these claims will not have a material effect on the Board's financial position beyond amounts already accrued as of December 31, 2022.

Note 20 - Asset Impairment The service utlllty of the Leaburg hydroelectric project has significantly declined. Following increased seepage along the canal, indicative of unstable soils, FERC deemed the canal a publlc safety risk and ordered the canal to be dewatered in 2018. I Without water, the Leaburg generation plant ceased operations. This was unexpected in the life of the project Seepage along the canal has occurred for decades and because of the regulatory action taken by FERC, the nature of the impairment was judged to be temporary as of December 31, 2021. Carrying values for the project's assets were classified as property held for future use on the Statements of Net Position as of December 31, 2021. '

In 2022 It was determined that the project was permanently impaired due to the low likelihood of any future generation. The remaining net book value of the assets related to the generation of electrlclty were written off resulting in a recognized loss of $19.9 million categorized as an extraordinary Item for the year ending December 31, 2022. Carrying values for the project's assets related to stormwater conveyance were classified as property held for future use on the Statements of Net Position as of December 31, 2022.

Note 21 - Subsequent Event On January 30, 2023 the Eugene City Council approved terms for the City of Eugene to purchase the Board's former headquarter location for use as a city hall and office space for the amount of $12 mlllion.

As part of the sale, the Board will maintain approximately 1,000 square feet of shared public facing space where customers can make appointments to conduct business with the Board. The sale is expected to close In the second quarter of 2023.

/

81

Eugene Water & Electric Board Schedule of Proportionate Share of the Net Pension Liability

As of June 30, 2022 Last Ten Years*

2014 20111 2016 2017 2018 2019 2020 2021 2022 Pr0pOl1lon of Ile net pension auetl(l1abllly) 086138969% 0.792!S03&4% 0 70531024% 0.62730522% 059283304% 0 4463340!!% 0.34!!S2008% 033381788% 0.37648Cl08%

Proportlonale share ~ Iha net pe1llion auatl(Uabilrty) $ 19,525,2111 $ (-46,501,290) s (105,883,444) $ (84,560,981) $ (86,806,387) s (77,032,126) $ (711,,404,366) $ (39,946,227) $ (57,64e,661)

~ payroll $ 41,130.1-43 $ 45,250,685 $ 44,141,193 s 44,353,971 s 39,905,750 s 43,024,470 $ 44,541,698 s 48,500,2315 s 48,552,280 Proportlorlme ahare ~ the net pellllOll aaset/(MbJkty) .. percentage ~

~ payroll 47% 101% 240% 191% 2211% 179% 160% 82% 118%

Plan's fiduaary net pos,llon $ 65,401,492,682 $ 64,923,626,094 $62,082,069,102 $86,371,703,247 $ 89,327,500,4411 S 70,203,720,619 $ 68,319,296,993 $ 84,331,316,437 $ 83,789,652,864 Plan's llduclll{}' net poert!on a percentage ~ 019 tolal pension lrabdJ!y 10360% 91.00% 80.50% 83.10% 82.10% 8020% 71180% 87.60% 84.50%

"10 year trend lnfofmaffon ri be p ~ prospedively.

82

Eugene Water & Electric Board Schedule of Contributions Pension As of June 30, 2022 Last Ten Years*

2014 2015 2016 2017 2018 2019 2020 2021 2022 Conlraclually reqlll"ed conlnbutJon (actuanaly~

ConlnbutlonB 11 r9labon lo the IIC!l&1ally s g,6-44,586

9,734,173 $ 8,189,904 $ 8,2ee,0&9

' 9,413,237 $ 7,880,1562 $ 7.~.528 $ 7,215,306 $ 15,172,7"3 delemlmd contnbubon $ 9,544,586 $ 9,734,173 $ 8,189,904 $ 8,258,oee $ 9,413,237 s 10,682,356 $ 33,680,eee $ 7,270,193 s 7,'i!m,'1JJ5 Conlrbut!onl delloency (excen) $ $ $ $ $ s (3,001,784) $ (25, 737,<<cl) s (5",S87) $ 7,Joe,638

$ 41,130,143 $ 45,250,885 $ 44,141,1~ $ 44,353,971 $ 39,905,750 $ "3,024,470 $ 44,5"1,MIS $ 48,590,236 $ 49,562,260

~~

ConlnbulonJ 81 a p91C8!1lage of

~ payroll 2321% 2151% 18.55% 1861% 2369% 2478% 7562% 1"96% 1588%

Notaa to Sohlldllll Method am a-,mp11on1 Ul&d to delermme C0IWbt.tJon ~

Slng.e end ag,,rl! mployeB Entry age norm!II Enlry age nom,g! Entry age normal Entry age normal Entry ~ normal Entry age T\0TTn8I En1ry age noonal Entry age normal Entry age normal 2012, ptbhshed 2012, publllhed 2014, publllhed 2014, ~llhed 20HI, pl.t)hhed 2016, pubnhed 2018, pubuhed 2018, pubuhed 2020,pubahed Expnenca lludy r-i,ort Seplermer18,2013 Seplember 18, 2013 Septomber 23, 2015 Seplember 23, 2015 July 215, 2017 July 215, 2017 24-Ju--19 2.wu-1g 20-.u-21 L8V81 percentage of l.8"111 percentage of l.svul percenlaQe of Lewi percenlage of Levelpercenlagaof LeYIII percentage of L.eYlllpwcenlageof LIYII percenlage of Lewi percemage of AmOltlzabonmelhod payroll, c!oed payroll, cloNd payroll, dosed payrol, closed payroll, doMd payrcll, cloNd payrol~ do9ed payroll, dosed payrol~do9ed RemGllTT'IQ arnor1Jmon penod Tl8T" ona/!Jw two - Tter onelber two - Tl<lf' one/trer two - Tier one/tJlr two - Tl8T' one.'ber two - Tler one/Iler two - Tier one1ber two - Tier one/lier two - Tier onelbw two -

20~0PSRP- 20year.OPSRP- 20 year, OPSRP - 20year;OPSRP- 20ves;OPSRP- 20 year, OPSRP - 20 year, OPSRP - 20 year, OPSRP - 20ym;OPSRP-16yuon 16~ 16yet 1!1 years 16ye8'1 16ye,m 1!1 )'8IIB 1!1 yes,, 16yewa Auel valllln'Ol1 method Markel vatu of snetl Mllll(el YMJe of anell Ma,l(el wlue of BAetl Mrkat \IIN8 of anelt Markll value of ase!1 F* value l4llrk8t value of 8IS8II Markel value of asset, Market value of rmets lrdlabon 275% 275% 260% 250% 2.50% 250% 250% 240% 2"0%

Salary11\Cf89181 375% 375% 350% 360% 350% 3ro% 350% 3-40% 340%

tnwetmentr111eofreturn 775% 775% 760% 750% 720% 720% 720% !190% 6110%

Retrrement ago 55 for Tier 1/Tler 2, 56 for T tr 1fTllf 2, 55 for Tter 1fTrer 2. 65 for T11r 1fT,er 2, 55 for TIBT' 1fTter 2, 55 for Tier 1fTl9T' 2, 55 for T111r 1,r,.- 2, 55 for TIii' 1fTter 2, 55 for Tier 1/Tler 2, 65forOPSRP 65forOPSRP !ISforOPSRP 66forOPSRP 65forOPSRP !15 for OPSRP !16 for OPSRP 66forOPSRP 65forOPSRP RP-2000 Sex-Mmct RP-2000 Sex-<111t111ct RP-2000 ~llncl RP-2000 Sex-d,slmct RP-2014 Sex-d,llmcl R P - 2 0 1 4 ~ Ptb-20_10 Sel<-dllllmcl Ptb-2010 SIX-distnct Pub-2010 Sex-d<llrnct tables tab! .. tabl&s tables lable9 tab!u tab! .. tllb!ea tables

[Mcounlrate 775% 775% 750% 750% 720% 720% 720% 680% 690%

10 yea- trend irtormallon \WI be prM<<ll9d prospedNely 83

Eugene Water & Electric Board Schedule of Employer Conbibutlons OPEB As of December 31, 2022 Last Ten Years*

2022 2021 2020 2019 2018 2017 Acluartllly deteTmned conlnbullon (ADC) $ 347,885 $ $ 214,406 $ 501,3-42 $ 1,284,204 $ 1,348,797 Emplr,ye,; coolnbullOm In relstlon lo the ADC/

Contrlbtmn ~ by !he plan 297,000 1715,600 482,000 1,137,500 3,3,48,797 980,298 Conlnbulton excess (delk:lency) $ (50,886) $ 175,500 $ 247,59-4 $ 636,158 $ 2.084,593 $ (368,499)

Cowred-ooiployepayrol , ea,321,112 s 51,259,823 s 51,560,eoo s 47,799,139 * <<,eoo,e1s $ 44,343,971 Conlnbubonl as a percenlage of covered-employ payroll 0.53% 0 34% 0 90% 2 38% 7 46% 221%

10 year trend lnformallon Y.-11 be pl'9l9ll!ed prospecbYely Valuation dales Augut! 31, 2021, Augut 31, 2019, end Decerrber 31, 2017 Method end alSUIT1)bona ued to delemine contnbuhon rate Acluarlal cost melhod En!Jy BOO noTTT191 Amonlzallon method Level percentage of payroll, open Arnof1izabon penod 10yeln AaNt vatuallon melhod Mllllte!Vlllue lnftatlon 25%

Heallhcare cost trend increMM PERS Haellh lnslJrance Program - Medicare 5%

Dental 5%

Vmon 3"

- EWEB group memcal, Decerrber 31, 2019 valuation: 7%, decreaa,g to ulbmate rala of 4% by 2027 EWEB ~ p mEdcal, December 31, 2017 valuabon* 10%, deaealng to lilfmale rate of 4% by 2025.

Selaly ITlCl1llllM 3,5"'

Rel!remenl age:

e&--68 76% 10% 10% 10% - 10%

59--61 16% 16%

69-M 15% 15% 16% 15%

62--M 30% 30%

ee 100% 100% 100% 100% 100% 100%

Wllhdmwlage 18--29 83% 83% 8.3% 83%

30-49 47% 47% 47% 4.7%

eo--M 3.7% 3.7% 37% 3.7%

Wl1h<hwel anumphons begirvmg 'Mlh 2021 YearsofMf1/ICII Male Female 0 11500% 1500%

5 7.19% 723%

10 4.13% 4.77%

15 293% 3.43%

20 208% 2.47%

25 147% 178%

30 140% 140%

8q:>enence t!udy raport 11/3/2020 11f3/2020 2014 2014 2014 2014 Mortalrty Pub-2010 Pub-2010 Pub-2010 RP-2014 Ganera1 Service 111111311ment rate of rettm 312% 312% 378% 432%

86

Eugene Water & Electric Board Schedule of Changes In Total OPEB Llability and Related Ratios OPEB As of December 31, 2022 Last Ten Years*

Total OPEB Ltabtllly 2022 2021 2020 2019 2018 201, Service cost $ 388,929 s 373,844 s 240,509 s 235,056 $ 279,685 s 270,227 lnlerMI 9f57,977 1,008,215 1,268,479 1,468,903 1,747,818 977,~7 Changes ., benellt loons 562,27!! (263,950)

Differences between 9Xp8Cled end actual e,q>enence (2,656,043) (8,148,782) 4,969,184 Changeeln~ 2,234,085 1,723,170 15,538,408 Benelft payments ~6~1~ ~687,61~ !2.820,74:!l BBTT~ !3,402.1~ ~.280.201!

Not change m OPEB lablrty !1,101,309! !1,077,140! !1.311,7~ !5,599,500! !1,374,839! 18,210,713 Total OPES llabllrty- beglnrmg 32,517,0Q7 33,594,237 34,905,998 40,505,498 411890,135 2318891422 Total OPES ilabllly - ending $ 31,415,788 s 32,517,097 s 33,594,237 $ 34,90!5,998 s 40,506,488 s 41,880,135 Plan Fldu!:!l: Net Poc!ron mi 2021 2020 2019 2i518 RH1 Conlnbubons s (297,000) s (175,500) s (482.000) s (1,137,500) $ (3,348,797) s (980,298)

Contnbullons from plsn rell"oos - EWEB ~ Insurance (567,544) (883,609) (740,292) (718,580) (775,345) (740,089)

Net IIMYlmenl lncoma 3,168,952 (2,233,327) (2,627,084) (3,280,384) 952,424 (2,204,942)

Beneftt paymen!a 2,380,090 2,706,487 2,858,549 2,922,208 3,381,982 3,385,729 AdmWlllrabve expense 101,453 80,101 89,779 132,931 88,919 81,078 Net cllllnga In plan lduc:lary net poartron 4,786,9!11 ~.~ Q'.81,~ ~1079~ 279,163 !4!!8.s24l Plan lioooaTy net poa!Oll - begwmg ~1337~ ~.031,471! !19,250,423! !17,1711138! !17,4&11301) !161991,!Zrl Plan tlcluaary net pollllon - ending Net OPEB llablllly

$ 115,551,=i s 15,864,400 s

s

~,337=

12,179,758 s

s e!!,ro1,411i 13,562,788

!19,250,~

15,655,573

$ 111,111,1;:i

$ 23,334,358 s

s 111.~,301!

24,429,834 Plan tlduamy net pod!on as a percenlllge of !he lollllOPEBlabilly 485% 825% 598% 651% 424% 417%

eo-ed-employee payroll Net Qpaj hablllly IIS 8 percenlltge of covered ptlyflll s 58,321,112 282%

51,259,823 238%

$ 51~.898 26.3%

$ 47,799,139 32.8%

s 44,880,815 520%

s 44,3!13,971 55.1%

"10 year trend lnformallon wll be presenled prMpedlvefy.

Notes to Khedulr.

Benetit chonaes Dumg 2018 Bild 2017, the Slmskly f o r ~ lnred on or llftel' JlnJaiy 1, 2003 - clacontfnued, and an 1ncenbY9 peymanl for opmg out of health lnstnne8 aubsidlea at rabrement 'MIS lmplemenled. The lllC801!1111-. recognzed u a benefit chenge Ul !he 2021 \lllluabon. '

CbOfdJft! ID IIHIIDPk9o*

2017 The d!scoool rate deaened from 8% lo 4 32% Heal!, care cost nod lncreaM for the Oregon PERS Medrarra plana and E'NEB supplemental Rx plana Wftlll up from 4% to 5% The mortaty table, RP-2000, proj&cled to 2016 uang Scale AA, - replaced wrth RP-2014 2019 The mcpecled long-leTm rate of return - deaellS8d from 7% lo 6 53% Each December 31, that rate IS blended wrth lhe 20-yeer General Obilgallon Mur,aplll Bond Index rate lo IIITMI at Ille lrMSlmenl and discount rate for !he yYI(

2021

Retrremenl and Yl!lhdmwl rllle& were updaled ~ on a 2020 mcpllllence study 85

Eugene Water & Electric Board Schedule of Investment Returns OPEB Trust As of December 31, 2022 Last Ten Years*

2022 2021 2020 2019 2018 2017 Annual money-weighted rate of return, net of investment expense -16.2% 12.0% 14.0% 19.8% -5.6% 14.1%

1 0 year trend information will be presented prospectively.

86

Supplement ary Information Eugene Water & Electric Board Electric System Long-Term Bonded Debt and Interest Payment Requirements, Including Current Portion Year Ended December 31, 2022

_ Revenue Reft.ndmg Revenue end Revenue Refl.lldlng Revenue Refunding Revenue 2011 B Ser1es 2012 Serles 2016 A Serles 2017 Serles 6-29-11 9-11-12 9-7-16 9-12-17 Prlncle!!! Interest Pr1nc1ea1 Interest Principal Interest Pmctpal Interest 2023 $ 985,000 $ 42,848 $ 1,810,000 $ 609,569 $ 6,300,000 $ 3,931,150 $ - $ 1,689,750 2024 1,040,000 537,169 6,625,000 3,616,160 1,689,750 2025 495,569 6,875,000 3,284,900 1,689,750 2028 495,569 6,675,000 2,941,150 1,689,760 2027 495,569 6,000,000 2,607,400 945,000 1,689,750 2028 495,569 6,400,000 2,307,400 995,000 1,642,500 2029 1,315,000 495,569 - 6,615,000 1,987,400 1,045,000 1,592,750 2030 1,360,000 454,475 6,945,000 1,656,650 1,095,000 1,540,500 2031 1,-400,000 410,275 7,290,000 1,309,400 1,150,000 1,485,750 2032 1,445,000 364,775 6,935,000 1,017,800 1,206,000 1,428,260 2033 317,813 5,175,000 740,400 1,270,000 1,368,000 2034 317,813 1,685,000 533,400 1,330,000 1,304,500 2035 317,813 1,755,000 -466,000 1,400,000 1,238,000 2036 317,813 1,830,000 395,800 1,465,000 1,188,000 2037 317,813 1,900,000 322,600 1,540,000 1,094,750 2038 317,813 1,975,000 246,600 1,620,000 1,017,750 2039 2,005,000 317,813 2,050,000 167,600 1,700,000 936,760 2040 2,080,000 242,625 2,140,000 85,600 1,785,000 851,750 2041 2,155,000 16-4,625 1,875,000 762,500 2042 2,235,000 83,813 1,965,000 668,750 2043 2,065,000 570,500 2044 2,170,000 467,250 2045 2,275,000 358,760 2046 2,390,000 245,000 2047 2,510,000 125,500 2048 2049 985,000 42,848 16,6-45,000 7,569,862 85,170,000 27,617,400 33,795,000 28,316,250 Less current portion 985,000 118101000 6 13001000

- $ 27,6171400 33,795.000 $ 2s 31e 2so

$ $ 421848 $ 1510351000 i 7,5691862 $ 781870,000 $

1 1 87

Eugene Water & Electric Board Electric System Long-Term Bonded Debt and Interest Payment Requirements, Including Current Portion Year Ended December 31, 2022 Revenue Rewrn.ia 2020ASenaa 2020B8enes 6-11-20 6-11-20 Total Electric System P~ents PnncJP8] lnlere!t Pnnde!!I Interest Pr111C1e!! Interest Total6 2023 $ $ 1,516,250 $ - $ 387,991 $ 9,095,000 $ 8,177,558 $ 17,272,558 2024 1,516,250 315,000 387,991 7,980,000 7,747,310 15,727,310 2025 1,516,250 1,400,000 383,787 8,275,000 7,370,236 15,646,236 2026 1,618,250 1,420,000 363,313 8,096,000 7,006,032 15,101,032 2027 1,086,000 1,516,250 1,445,000 338,945 9,475,000 6,647,914 16,122,914 2028 1,130,000 1,472,860 1,475,000 312,704 10,000,000 8,231,023 16,231,023 2029 1,175,000 1,427,650 283,643 10,150,000 5,788,912 15,936,912 2030 1,225,000 1,380,850 283,543 10,625,000 5,315,818 15,940,818 2031 1,270,000 1,331,860 283,543 11,110,000 4,820,618 16,930,618 2032 1,326,000 1,280,860 283,543 10,910,000 4,375,218 15,286,218 2033 1,375,000 1,227,850 1,680,000 283,543 9,500,000 3,937,606 13,437,806 2034 1,430,000 1,172,860 1,720,000 242,770 6,165,000 3,571,333 9,736,333 2035 1,490,000 1,115,660 1,765,000 199,305 6,410,000 3,336,768 9,746,788 2036 1,550,000 1,056,050 1,810,000 153,821 6,655,000 3,091,484 9,746,484 2037 1,810,000 994,050 1,866,000 105,368 8,905,000 2,834,661 9,739,581 2038 1,875,000 929,650 1,906,000 53,854 7,175,000 2,666,867 9,740,887 2039 1,725,000 879,400 7,480,000 2,301,563 9,781,563 2040 1,775,000 627,650 7,780,000 2,007,625 9,787,826 2041 1,830,000 774,400 5,880,000 1,701,626 7,661,525 2042 1,900,000 701,200 8,100,000 1,453,763 7,553,763 2043 1,980,000 625,200 4,046,000 1,195,700 5,240,700 2044 2,060,000 546,000 4,230,000 1,013,250 5,243,260 2045 2,140,000 463,600 4,415,000 822,350 5,237,350 2046 2,225,000 376,000 4,615,000 623,000 5,238,000 2047 2,315,000 289,000 4,825,000 414,500 5,239,500 2048 2,405,000 196,400 2,405,000 196,400 2,801,400 2049 215051000 100,200 21505,000 100 200 21605,200 39,200,000 26,752,050 16,790,000 4,347,546 192,785,000 94,645,956 287,430,956 Legg current portron 9,0961000

$ 39,200,000 $ 26,752,050 $ 16,790,000 $ 4,347,546 $ 183,690,000 $ 94,6451956 $ 2871430,956 88

Eugene Water & Electric Board Water System Long-Term Bonded Debt and Interest Payment Requirements, Including Current Portion Year Ended December 31, 2022 Revenue end Revenue Refunding Revenue Revenue Refunding 2016 Sanes 2020ASenes 2020 B Sanes 5-9-16 6-4-20 6-4-20 Total Water System P~ents Pnnc1pal Interest Pnncle!! Interest Pnn!:!e! Interest Pnnclpal Interest Totals 2023 $ 1,340,000 $ 1,218,000 $ 415,000 $ 610,050 $ 635,000 $ 333,349 $ 2,390,000 $ 2,161,399 $ 4,551,399 2024 1,416,000 1,151,000 430,000 693,450 645,000 325,602 2,490,000 2,070,052 4,660,062 2025 1,470,000 1,094,400 450,000 676,250 655,000 316,263 2,575,000 1,986,913 4,661,913 2026 1,530,000 1,035,600 465,000 568,250 665,000 305,796 2,660,000 1,899,646 4,559,648 2027 1,610,000 959,100 485,000 539,650 675,000 293,663 2,770,000 1,792,303 4,562,303 2028 1,690,000 878,600 505,000 620,260 685,000 280,451 2,880,000 1,679,301 4,569,301 2029 1,770,000 794,100 526,000 500,050 700,000 265,991 2,995,000 1,560,141 4,555,141 2030 1,860,000 706,600 646,000 479,060 716,000 250,724 3,120,000 1,435,374 4,555,374 2031 1,125,000 631,200 570,000 457,250 735,000 234,772 2,430,000 1,323,222 3,753,222 2032 1,176,000 588,200 690,000 434,460 760,000 217,840 2,615,000 1,238,290 3,763,290 2033 1,225,000 539,200 815,000 410,850 770,000 199,407 2,610,000 1,149,467 3,759,467 2034 1,270,000 490,200 840,000 386,250 790,000 179,918 2,700,000 1,056,388 3,756,368 2035 1,320,000 439,400 660,000 387,050 805,000 169,628 2,785,000 965,978 3,760,978 2036 1,375,000 386,600 875,000 347,250 830,000 138,349 2,880,000 872,199 3,752,199 2037 1,430,000 331,600 700,000 327,000 860,000 , 112,428 2,990,000 771,028 3,761,028 2038 1,486,000 274,400 720,000 306,000 886,000 85,570 3,090,000 865,970 3,766,970 2039 680,000 215,000 740,000 284,400 910,000 57,932 2,330,000 557,332 2,887,332 2040 710,000 187,800 760,000 262,200 945,000 29,512 2,415,000 479,512 2,894,512 2041 735,000 159,400 785,000 239,400 1,520,000 398,800 1,918,800 2042 765,000 130,000 810,000 215,850 1,575,000 345,850 1,920,860 2043 795,000 99,400 835,000 191,560 1,630,000 290,950 1,920,950 2044 630,000 67,600 860,000 166,500 1,690,000 234,100 1,924,100 2045 860,000 34,400 885,000 140,700 1,745,000 175,100 1,920,100 2046 910,000 114,160 910,000 114,150 1,024,150 2047 940,000 86,850 940,000 86,850 1,026,860 2048 985,000 68,650 965,000 68,650 1,023,650 2049 990,000 29 700 990,000 29,700 1,019 700 28,465,000 12,408,800 18,470,000 9,203,050 13,855,000 3,786,785 60,590,000 26,398,635 85,988,635 Less current porbon 1,340,000 415 000 635,000 21390,000

$ 27,125,000 $ 12,408,800 $ 18,065,000 $ 9,203,050 $ 13,020,000 $ 3,788,786 $ 581200,000 $ 25,398,635 $ 85,988,635 89

Eugene Water & Electric Board Electric System Analysis of Certain Restricted Cash and lnvesbnents for Bond Service Year Ended December 31, 2022 Investments for Customer& Terrestrial Bond Principal Debt Service Construction Escrow Deposit Wildlife Habitat Total

& Interest Reserve Funds Reserve Fund All Funds Ending balance - December 31, 2021 $ 17 $ 6,694,970 $ 34,456,786 $ 2,074,937 $ 48,947 $ 43,275,657 Deposits from general fund 16,679,219 447,305 26,877 17,153,401 Investment earnings {losses) 18 113,100 {344,386) 2,066 {338) {229,540)

Other transfers Receipts 16,679,237 113,100 (344,386) 449,371 26,539 16,923,861 Principal payments 8,260,000 8,260,000 Interest payments 8,419,242 8,419,242 Transfers to general fund 950,000 14,801,171 ~62,028 16,013,199 Other transfers Disbursements 16,679,242 950,000 14,801,171 262,028 32,692,441 U.S. securities, at market 5,857,316 13,231,874 1,713,869 51,722 20,854,781 Cash In bank 12 754 894,183 80,928 3,495 979,372 State of Oregon Local Government Investment Pool 5,185,172 467,483 20,268 5,672,924 Ending balance - December 31, 2022 $ 12 $ 5,858,070 $ 19,311,229 $ 2,262,280 $ 75,486 $27,507,077 90

Eugene Water & Electric Board Water System Analysis of Certain Restricted Cash and lnvesbnents for Bond Service Year Ended December 31, 2022 Investments for Bond Principal Debt Service Construction Total

& Interest Reserves SDC Reserves Funds All Funds Ending balance - December 31, 2021 $ 6 $ 1,491,743 $ 3,536,074 $ 3,401,675 $ 8,429,498 Deposits from general fund 4,929,652 535,052 5,464,704 Investment earnings (losses) 5 27,772 (38,101) (38,005) (48,329)

Receipts 4,929,657 27,772 496,951 (38,005) 5,416,375 Principal payments 2,660,000 2,660,000 Interest payments 2,269,659 2,269,659 Transfers to general fund 3,945,697 3,363,670 7,309,367 Disbursements 4,929,659 3,945,697 3,363,670 12,239,026 U.S. securities, at market 1,519,412 62,742 1,582,154 Cash In bank 4 103 107 State of Oregon Local Government Investment Pool 24,586 24,586 Ending balance - December 31, 2022 $ 4 $ 1,519,515 $ 87,328 $0 $1,606,847 91

Eugene Water & Electric Board Sustainability Accounting Standards Disclosures Years Ended December 31, 2022, 2021 and 2020 The following metrics are standardized disclosures recommended by the Sustainability Accounting Standards Board for electric and water utilities.

The disclosures are voluntary and are not meant to demonstrate compliance with laws or regulations.

Electric System Topic Metric 2022 2021 2020 Number of customers served In markets subject to renewable portfollo standards (RPS). 97,000 96,000 95,000 (All retail customers)

Greenhouse Gas Emissions & Energy 473,884 MWh 485,707 M\Nh RPS target before exempbons 482,635 M\IVh Resource Planning Percentage fulfillment of RPS target by market 100% Greater than 100% Greater than 100%

Number of Incidents of non-comphance with water quality and/or None None Water Management None quantity permits, standards, and regulations Total recordable fnJury rate 2.03 4.4 4.1 Workforce Health & Safety Fatallty rate 0 0 0 Customer electricity savings from 15,034 MVVh 10,624 MWh 15,053 MVVh efficiency measures End-Use Efficiency 2 3 MW reduction In 3.1 MW reduction In 3.7 M'/11 reduction In (In total across all customer types) peak demand peak demand peak demand System Average Interruption Durabon Index (SAIDI), 62.22 minutes 46.21 minutes 41 49 minutes per customer Grid Res~lency System Average Interruption Frequency Index (SAIFI), 0.48 outages 0.33 outages 0.32 outages per customer Customer Average Interruption Duration Index (CAIDI), 130.90 minutes 138.98 minutes 130.15 minutes per outage RPS compliance lnfonnatlon above Is preliminary. Flnel Information Is ptjllfshecl to eweb.org annuaDy by June 1. Savings from efficiency measures are calculated based on the Regional Tecmlcal Forum of the Nortt,,,wst Power and Conservation Counc8 as adopted by Bomevlle Power Ad11 di ilsb alk>n for Its regional resource acquisitions.

92

Eugene Water & Electric Board Sustalnablllty Accounting Standards Disclosures Years Ended December 31, 2022, 2021 and 2020 Water System Topic Metric 2022 2021 2020 Total fresh water sourced from regions with high or extremely None None None high basenne water stress Water Scarcity Fresh water purchased from a third party None None None Volume of recycled water delivered None None None Number of acute health-based, non-acute health-based, and non-Drinking Water Quality None None None health-based drinking water violations Distribution Network .3% of 817 miles 2% of 817 miles .2% of 816 miles Water pipe replacement rate Efficiency 2.30 miles or 1.8 miles or 1.8 mOes Treatment plant Is Treatment plant Is Treatment plant Is Water treatment capacity located In FEMA Special Flood outside flood zone, outside flood zone, outside flood zone, Network Resiliency & Hazard Areas Intake ts within Intake Is within Intake Is within Impacts of Clfmate Change 222 267 257 Number of service disruptions, population affected, and 972 Customers 1319 customers 1043 rustomers average duration 80 minutes 112 minutes 94 minutes Water pipe is distribution pipe for potable water measuring 2 inches to 60 inches In diameter. Replacements do not include new construction. Total miles for these pipelines is all pipe including new construction.

93

Audit Comments

@Moss~DAMS Report of Independent Auditors Required by Oregon State Regulations Board of Commissioners Eugene Water & Electric Board We have audited the individual and combined financial statements of the Eugene Water & Electric Board (the "Board") as of and for the year ended December 31, 2022 and have Issued our report thereon dated March 17,,2023. We conducted our audit in accordance with auditing standards generally accepted In the United States of America and the provisions of the Minimum Standards for Audits of Oregon Municipal Corporations, prescribed by the Secretary of State. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement Compliance As part of obtaining reasonable assurance about whether the Board's basic financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, including provisions of Oregon Revised StaMes {ORS) as specified in Oregon Administrative Rules (OAR) 162-010--0000 to 162-010-0330, of the Minimum Standards for Audits of Oregon Munlclpal Corporations, noncompliance with which could have a direct and material effect on the financial statements: However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion.

We performed procedures to the extent we consid~red necessary to address the required comments and disclosures which included, but were not limited to, the following:

Accounting records and Internal control

Public fund deposits

Indebtedness

Insurance and fidelity bonds

Programs funded from outside sources

Investments

Public contracts and purchasing In connection with our testing, nothing came to our attention that caused us to believe the Board was not In substantial compliance with certain provisions of laws, regulations, contracts, and grant agreements, Including the provisions of ORS as specified in 0~ 162-010-0000 through 162-010-0330 of the Minimum Standards for Audits of Oregon Municipal Corporations.

94

Internal ~ntrol Over Finan~ Reporting

_In planning *and performing our audit of µie. financial statements, we consider~ the Board's internal

-control over financial 'reporting (internal control} to deter:n,ine the audit procedures ~tare

*appropriate.In *the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose ¢ expreulng an opinion on the effectiveness of the Board's internal control. Accordingly, we do 'riot ~xpress an opinion on the effectiv~ness of the Bo~rd's

internal control:

A deficiency In Internal control exists when the design qr operation of.a control does not all~ .

management or employees, In the normal course .of performing their assigned functions, tc:i prevent, or detect and correct, misstatements on a tl_mely basls .. A material weakness is a deficiency, or a combination _of defi<::lencles, In Internal control such that there Is a reaspriable possibility that a material !'Jlisstatement of the entity's financial stafements will not be :prevented, or detected and a

corrected, on a timely basis. A slgnlflcaf?( deffcJency is deficiency, or a combination of deficiencies, In il'!te~I control that Is less severe than a mat~rlal weakness, yet important enough to merit attention by those charged wfttJ goven:iance. . .

Our consideration of Internal control was for the Umlted purpose described in ~ first paragraph of this section and was not designed to identify all deficiencies in internal control that ryilght be material

.

weaknesses or significant' deficiencies. Given these limitations, during* our audit we *did not Identify

. any deficiencies

' . In internal

. control that we consider to be material weaknesses. However, .material weaknesses or significant deficiencies may exist that have not been Identified.

Purpose of this Report The purpose of this report Is solely to describe the scope of our testing of lntemal control and com.pllance. an~ the results of that testing, and not 10 provide an opinion on the effectiveness of the entity's-internal control or on compliance. Accordingly, this communication is not suitable for any other purpose.

This report is .intended ~lely ~*r the lnformatlori l;lfld use *of th*e board of _commissioners, _management of Eugene Water & Efl:)ctric Board and the Oregon Secretary of State and Is not intended to be and '

should not be used by anyone c:,ther than these parties ..

Julie Desimone, Partner for Moss Adams LLP Portland; Oregon March 17, 2023 95

ML23146A043

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