Seattle City Light will implement new rates effective Jan. 1, 2024, saying “atypical weather” is a cause, including drought conditions impairing hydropower production.
The new rates include a planned 4.5% base rate increase adopted by City Council last fall and two automatic surcharges:
A 1% “passthrough” increase to account for higher costs from the Bonneville Power Administration (BPA) in 2024.
A 4% Rate Stabilization Account (RSA) surcharge due to increased net wholesale power costs resulting from unfavorable weather and market price conditions.
City Light said that under typical hydro and weather conditions, its resources produce more power than customers can use. The surplus is sold on the wholesale market. Revenues from surplus electricity sales help keep customer rates low. When there are fluctuations in this revenue, City Light accesses the RSA, a cash reserve of about $100 million. The RSA helps to lessen the financial impacts of uncontrollable external factors like weather, market price changes, and hydroelectric production.
Over the past year, drought conditions reduced hydroelectric generation, which is the utility’s predominant resource. And colder winter and spring temperatures and warmer summer weather caused greater electricity demand regionwide. Customer demand exceeded the resources and City Light purchased the additional power needed to meet customer demand on the wholesale market when prices were very high, exceeding budgeted costs and drawing down the RSA. Per Seattle Municipal Code 21.49.086, if the RSA becomes depleted, a temporary rate surcharge is automatically added to customer bills until the RSA is refilled to $100 million. The surcharge was triggered at the end of September, and City Light said the RSA has a deficit of $70 million.
Federal power marketing administration BPA supplies about a third of City Light’s total energy. Every other year, BPA updates its rates and purchase amounts. An automatic power cost adjustment modifies customer rates to reflect these costs. The BPA passthrough is permanent until City Light implements its new retail rates, scheduled for Jan. 1, 2025.
City Light said the anticipated bill increase for a typical residential customer will be about $9 per month. A release said: “We understand that rate increases are never welcome. But with atypical weather and rising costs over the last year, they are necessary so we can continue delivering safe, reliable power.”
Seattle City Light is one of the largest community-owned electric utilities in the U.S. City Light serves more than 460,000 meters and 900,000 people across Seattle and parts of eight adjacent franchise cities. City Light’s hydroelectric projects on the Skagit and Pend Oreille rivers provide about half of the power customers need. The company’s power mix in 2016 was 88% hydro.
