Thu February 13, 2014
Seattle City Light Customers: Brace For Higher Bills This Year
Customers of Seattle City Light are likely to see an increase in their bills later this year.
The utility is facing lower than expected revenues, and that could mean an automatic 3 percent surcharge for customers.
The utility relies on the sale of surplus power from its hydroelectric projects on the Skagit and Pend Oreilles Rivers to help fund its operations.
This year, it had expected to receive about $80 million from those sales.
Jorge Carrasco, general manager of Seattle City Light, said two things have conspired against that plan. The utility hasn't had as much surplus power to sell because of lower than expected snow levels. Snow melt powers the dams.
And what they do have to sell isn't worth as much. Increased natural gas production, mostly through fracking, has caused a glut in the energy market and depressed prices.
"So the combination of low water and low prices makes the revenue from surplus power less, and that is what we are struggling with,” Carrasco said.
Since 2010 the utility has maintained a rate stabilization fund that helps protect customers if surplus power revenues take a hit.
Anytime the fund drops below a certain level, it triggers automatic surcharges.
The utility expects a 3 percent surcharge in November. That's about $2 a month more on the average residential bill. But that surcharge could increase to 4.5 percent in 2015, according to an analysis prepared by Seattle City Council staffer Tony Kilduff.
The surcharges are temporary and are removed as soon as the fund is replenished.
On Wednesday, members of the City Council acted to delay the surcharges. The council’s Energy Committee gave initial approval to a bill that would transfer $21 in excess funds from City Light to the rate stabilization fund.
According to Carrasco, that means the surcharge would not take effect until November. But if there is less snow pack in the mountains than expected and surplus power production takes a hit the surcharge could take effect before then.
Kshama Sawant, the newly-elected Socialist council member who now chairs the council's Energy Committee, said she wants to make businesses bear more of the cost. Currently, both business and residential customers pay the same flat rate.
“In the post-recessionary period; working families are already struggling,” Sawant said. "If there are new costs to be imposed then they should not be imposed on working families because they are already dealing with too much."
But council members and utility officials appeared to agree that the utility should cut its reliance on surplus power sales in the future. That would likely mean City Light customers will see more permanent increases to their electric rates in the future.
Correction 2/13/2014: This story has been edited to correct a statement that the surcharge may triple in 2015. In fact the surcharge would increase again by 50 percent, from 3 to 4.5 percent.