Working for a safe, affordable, vibrant, innovative, and interconnected city.
Learn More
Seattle.gov Home Page
Seattle.gov This Department
Follow UsTwitterFacebookFlickrpodcastCouncil Connections blogRSS feeds
Seattle City Council Home Page

Visit Individual
Councilmember Pages

Seattle City Council
   Home    Contact Us Council Calendar News & Updates Committees & Agendas Current Issues Council Live Research City Laws  About Us 
Council Blogs
& Social Media Links
Meeting Agenda Archive
Meeting Video Archive
 

Current Issues
Past Issues
Audit Committee
OPA Review Board (OPARB)
Boards, Panels & Commissions
Seattle Transportation Benefit District
Customer Service Bureau
 

About Us/
Frequently Asked Questions
Contact Us
Visiting City Hall
Access to City Hall for Individuals with Disabilities
 

Full Council Action Summary
Work Program
2012 Action Plan
2011 Annual Report
Council Visitors'
Sign in Sheets
Legislative Records
 

LIVE! Council Meetings
Seattle Channel
City Inside/Out
Audio Podcast

Council News Release


FOR IMMEDIATE RELEASE:   
3/22/2010  2:57:00 PM
FOR MORE INFORMATION CONTACT:
Michael Jerrett, Councilmember Harrells office, 206-684-8804 Dana Robinson Slote, (206) 615-0061

Councilmember Bruce Harrell
Council President Richard Conlin
Councilmember Nick Licata
Councilmember Mike OBrien

City Council Establishes $100 Million Rate Stabilization Account
Reserve fund provides long term rate stability for City Light customers

SEATTLE Today the Seattle City Council approved Council Bill 116817 by a 9-0 vote. The ordinance creates a $100 million Rate Stabilization Account (RSA) for Seattle City Light. The account provides protection for Seattle City Light customers from the volatility of the wholesale power market. In addition to providing an insurance program against the fluctuations of the wholesale power market, the fund also shores up the bond rating of City Light, allowing the utility to borrow at lower rates and ultimately deliver lower cost power to its electricity customers.

The RSA is a forward thinking mechanism that will serve City Light customers so that they will not be subject to unreasonable rate fluctuations, stated Councilmember and Energy, Technology and Civil Rights Committee (ETC) chair, Bruce Harrell. Simultaneously the RSA will address the more immediate need of preserving the Utilitys bond rating at the highest level possible. This means significant savings to the customers.

The ETC also established a new City Light Review Panel, and approved resolution 31187 that sets City Lights debt service at 1.8 times coverage and directs the Utility to fund 40 percent of its six year capital improvement program with cash from operations. The Council will evaluate the efficacy of these policies before the end of 2011. To address the immediate shortfall caused by the eighth lowest snowpack in the last 50 years, the ETC has directed City Light to identify spending cuts in their Operations & Management and Capital budgets and for a plan to be presented to the committee by March 31, 2010.

Council President Richard Conlin said, Council has worked hard to protect the long term interests of City Light customers. The RSA will help ensure that City Light maintains its favorable bond rating and continue to deliver the cleanest, cheapest power in the nation. The RSA will be funded by several sources including approximately $50 million in refinancing of City Light bonds, up to $25 million from City Lights existing Contingency Reserve Account, $10 million from surplus property sales, and a temporary 4.5 percent customer surcharge through 2011. As the reserve fund grows, the surcharge paid by customers will drop; to 3 percent when the RSA reaches $80 million, 1.5 percent when it reaches $90 million and zero when the account reaches $100 million.

Councilmember Nick Licata added, This action sends a message to the rating agencies that the Council will make prudent decisions to ensure City Lights financial stability and protect customers from rate fluctuations caused by wholesale revenue volatility.

City Light has been subject to serious wholesale revenue shortfalls in the past. Last year, there was a $74 million shortfall caused by low energy prices. This year, the eighth lowest snowpack in the last 50 years, has caused an estimated $80 million shortfall. Economists are predicting that energy consumption will remain low, further eroding City Lights bottom line.

Given the volatility of the past two years, I believe this mechanism will be a great tool to protect the customers, said Councilmember Mike OBrien.

There is no such thing as a normal water year anymore, said Mayor Mike McGinn. The RSA takes an important step toward long term sustainability by helping Seattle City Light manage fluctuations in wholesale revenue caused by reduced snowpack levels. We will continue to work with Councilmember Harrell and the City Council to improve long term financial planning, review capital investments and ensure the Utility is managed as effectively and efficiently as possible.

Seattle City Council meetings are cablecast live on Seattle Channel 21 and Webcast live on the City Councils website at http://www.seattle.gov/council/. Copies of legislation, archives of previous meetings, and news releases are available on http://www.seattle.gov/council/. Follow the Council on Twitter at twitter.com and on Facebook at Seattle City Council.

Contact us



   
City of Seattle LogoSeattle City Hall
600 Fourth Ave. 2nd Floor
Seattle, WA 98104
Visiting City Hall

Access to City Hall for Individuals with Disabilities
Mailing Address:
PO Box 34025
Seattle, WA 98124-4025
Phone: 206-684-8888
Fax: 206-684-8587
TTY/TDD: 206-233-0025
Listen Line: 206-684-8566

Non -English Language Information