Power rates about to jump again

City Light proposes a 9% increase in July, says even bigger one is likely in December

Friday, May 4, 2001

By KERY MURAKAMI SEATTLE POST-INTELLIGENCER REPORTER

Seattle City Light officials proposed a 9 percent rate increase beginning July 1 and warned that another rate boost of about 22 percent is all but certain in December.

The 9 percent boost would be the third so far this year as utility officials try to cope with what they've described as a "perfect storm" of skyrocketing energy prices and drought conditions.

City Light Superintendent Gary Zarker had warned the Seattle City Council that additional increases would be necessary when its members approved an 18 percent increase in March. Even so, utility officials and council members had hoped rain and electricity prices would begin falling before they'd have to jack up the rates.

But neither happened.

For council members, the decision is not whether to raise rates but how to spread the increase around.

Councilwoman Heidi Wills, chairwoman of the Energy and Environmental Policy Committee, said she favors a structure that would charge much higher rates to customers who use the most electricity. Wills also favors exempting low-income families from the rate increases.

With such decisions unsettled, the exact hit on the average family remains up in the air.

In broad terms, utility officials said an average family who uses 860 megawatts of electricity a month faces a $4.21 increase in July. That would raise their monthly bill from $53.66 to $57.87. That bill would be $14.87 more a month than the roughly $43 the same family paid last year.

City Light raised rates 10 percent on New Year's Day and 18 percent in March.

The projected 22 percent increase in December is because of the higher rates being charged by the Bonneville Power Administration. The BPA is facing the same problems as City Light: no rain and high prices.

City Light won't know exactly how much more they will have to pay the BPA for power until the end of the month. But Zarker said a doubling of BPA's rates is "in the ballpark." If so, Everson said, average families could pay another $10 a month, beginning Dec. 1, raising their monthly bill to $67.87.

Wills said council members may restructure the increases, increasing rates more in July so customers won't get nailed with a 22 percent increase just before Christmas. If so, rates would go up about 14 percent July 1, she said.

Wills said setting the higher rate now could encourage people to conserve more electricity, reducing the amount of power City Light has to buy.

"It's always a good idea to conserve electricity, but we need to conserve now, not later," Wills said.

However, charging December's increase now would mean an even higher rate increase in July -- just two months before September's mayoral and council primaries. And Wills conceded, "There are political implications."

City Light has responded to the energy crisis by weaning itself away from private power suppliers. By Oct. 1, it will stop all power purchases from the private market, relying instead on lower-cost power from BPA.

So far, City Light has had to borrow $689 million to keep the lights on -- debts that will not be repaid until May 2003.

But assuming it rains more next year and electricity prices do not drop sharply, City Light expects to sell enough hydroelectric power to make $563 million.

The utility hadn't wanted to figure in next year's forecast in determining this year's rates because the market is as volatile as the weather.

Carol Everson, City Light's finance director, said the utility decided to factor in half those projected sales -- $287 million -- to keep March's increase at 9 percent.

"We're not going to count all our eggs before they're hatched," she said. "But we're going to count one or two of the eggs."

http://seattlep-i.nwsource.com/local/21567_power04.shtml

-- Martin Thompson (mthom1927@aol.com), May 04, 2001