COUNCIL COMMITTEE APPROVES REVISED NUCOR ENERGY CONTRACTS; IMPROVES DEAL, PRESERVES JOBS
Steel manufacturer to pay $9 million up front, promises to invest $2 million in local plant
SEATTLE – Two energy rate contracts with Nucor Steel Seattle, Inc., the City’s largest electrical user, were approved today in a 3-2 vote by the Seattle City Council’s Energy & Environmental Policy Committee.
The contracts set Nucor’s electricity rate within a certain range ($42 - $51/megawatt-hour), and allow Seattle City Light to interrupt power to the steel plant if electricity can be sold at a price above that range. The final price Nucor will pay for electricity in 2004 will not be determined until City Light undergoes a formal rate-setting process to re-evaluate and reset power prices among all classes of customers.
Nucor will pay City Light $9 million up front to settle a previous contract it inherited from bankrupt Birmingham Steel, whose assets Nucor assumed last year. Nucor has also promised in a written letter to Mayor Greg Nickels and Councilmember Jean Godden to invest at least $2 million in its Seattle operations.
“When these contracts were first presented to the Council earlier this year, my colleagues and I had many questions and concerns, such as whether the City was getting the best possible deal, and could we do better at preserving good jobs while being fair to ratepayers?” said Godden, who chairs the Energy Committee.
“What we did was begin a citywide dialogue with all parties including Nucor, the Mayor’s office, and the public. In the meantime, by working together we ended up with a better agreement that involved the public and may ultimately save the public close to a million dollars,” she said.
The new contracts, negotiated by Council members and the Mayor, reflect a $2/megawatt-hour increase in the upper limit of Nucor’s price range over the previously negotiated contract. That price difference could provide an additional $750,000 - $800,000 to City Light and its ratepayers.
“This is a responsible and responsive agreement that answers all my concerns regarding the precedent of rate setting. In fact, it sets the stage for the upcoming rate setting process and helps put Seattle City Light on a solid course,” said Councilmember David Della.
“This year, we put a focus on preserving and growing blue collar jobs, and I’m pleased to see Council’s work on preserving jobs at Nucor,” said Mayor Nickels. “My thanks to Jean Godden for her leadership on this work. We saw a need and we acted.”
The committee also included language in its authorizing legislation directing City Light to report back monthly to the Council on any revenues earned on the interruptibility provisions of the contract. City Light also is directed to assess options for changing the structure of industrial electricity rates as part of the rate process, a request raised by other industrial customers during the debate on the Nucor contracts.