Electricity rates may surge again City Light looking at 50 percent boost over last year

Thursday, January 25, 2001

By KERY MURAKAMI SEATTLE POST-INTELLIGENCER REPORTER

Western Washington's continuing drought could force Seattle City Light to raise rates even higher than expected, with ratepayers seeing a cumulative increase of about 50 percent over the course of the year, city officials said yesterday.

City Light last raised rates 10 percent on Jan. 1, and has asked for another 18 percent increase that is expected to win Council approval on Monday.

The city-owned utility had also warned that rates could go up another 7 percent in July, followed by yet another 7 percent in October if the Bonneville Power Administration raises wholesale power rates as much as expected.

Now, the utility may need a 15 percent increase in July to balance its books, officials said yesterday.

City Councilwoman Heidi Wills, chairwoman of the Energy and Environmental Policy Committee, said the latest blow to ratepayers underscores the need to conserve energy.

The bad news came yesterday when the utility determined that this year's unusually dry winter will probably produce even less snow than expected. That means the utility will generate less hydroelectric power at its dams this spring and will buy even more electricity from private suppliers at a time when prices are spiraling out of control, said Carol Everson, City Light's finance director.

Everson said the utility had been expecting the Skagit River to run at about 85 percent of normal this spring, but new snowpack estimates show that 65 percent is more likely.

City Light also has revised estimates of stream flows on the Pend Oreille River, which was expected to run at 70 percent of normal but now is pegged at 59 percent.

"I keep waiting for the forecasts to get better, but they just keep getting worse," Everson said.

City Light spokesman Dan Williams cautioned the new estimate reflects a pessimistic view. July's 15 percent increase would be reduced to 8 percent if the federal government caps wholesale electricity prices on the West Coast, as California, Oregon and Washington have requested. City Light Superintendent Gary Zarker has said a cap is possible, but not a sure bet.

And the 15 percent July increase assumes a 5 percent cut in consumption. Williams said electric use has gone down by about 4 percent in the past two weeks. Additional conservation could let City Light avoid expensive power purchases, which would pay off for ratepayers.

While the City Council is expected to approve the 18 percent increase on Monday, Wills said the council will postpone a decision on the size of the July increase in the hope that either conservation or federal help will make it unnecessary.

"Our forecast does not look favorable to our ability to generate our own power, which makes us more susceptible to market volatility. That's why we're initiating an aggressive, 10 percent conservation campaign, intend to work on a price cap and pray for rain.

"But in the short term, the more we conserve, the more money we save."

In addition, Wills' committee today is likely to back a proposal to reward those who do save electricity by setting higher rates based on volume used.

Council members also plan to use the additional $4 million in utility taxes generated by the rate boosts to avoid raising rates for low-income families, and may expand the program to families with slightly higher incomes.

The potential increase in City Light rates is in line with those at other public power generators in the region.

Tacoma Power set a 50 percent surcharge on electric rates on Dec. 20, and yesterday took the unusual step of testing 30 locomotive-size diesel generators that would supplement the utility's regular power supply.

The generators will add another 48 megawatts of power -- nearly as much as the 50 megawatt output of Tacoma Light's Alder Dam.

"We aren't sure when they'll be online," Tacoma Power spokeswoman Sue Veseth said.

Burning diesel is usually far more expensive than using water to turn generators, but with power costs soaring, the $150 per megawatt-hour cost of the generators is 75 percent less than power bought on the open market, Veseth said.

The generators are specifically designed to be less polluting than usual diesel engines, she said.

Julee Cunningham, a spokeswoman for the Snohomish County Public Utility District, said the utility raised rates by 35 percent in December, and plans no additional increase this year.

Meanwhile, Gov. Gary Locke formally unveiled a nine-bill legislative package yesterday aimed at helping ease the energy crunch. His plan includes a sales-tax exemption for energy-efficient home appliances, as well as tax incentives for homes, farms and small businesses that tap power from small-scale wind and solar sources.

Locke proposes spending $5 million on tax credits for power and natural-gas suppliers in exchange for rate discounts for Washingtonians who qualify for low-income home energy assistance.

Aluminum plants and other major industries that buy electricity directly from the federal Bonneville Power Administration would get tax breaks for building their own generators, thus reducing the BPA's load. And operators of older, part-time power plants would get tax incentives to upgrade air-pollution controls so the plants could run full time.

Republican lawmakers said Locke's plan tinkers with the problem without addressing the main cause -- the lack of new power plants to keep up with the state's growth. Environmental groups said the plan, while laudable for its emphasis on energy conservation, doesn't have enough teeth to require utilities to restore cuts in investments in energy efficiency measures that cost less than building new plants.

The package now goes to the state Legislature for action.

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-- Martin Thompson (mthom1927@aol.com), January 25, 2001