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2013-14 Biennial Rate Review

On Sept. 17, 2012, the Seattle City Council unanimously adopted City Light's 2013-2014 rates. The new retail rates align with City Light's six-year Strategic Plan, which calls for average rate increases for Jan. 1, 2013, and Jan. 1, 2014, of 4.4 percent and 5.6 percent, respectively. The Strategic Plan outlines the revenue required to meet City Light's basic operations, capital improvements, and modest initiatives to improve utility services.

Cost of Service 2013-2014


City Light's previous cost of service study was completed in 2006. Since that time, energy costs have decreased while distribution costs have increased. Also, the revenue the utility receives from selling surplus power has declined as energy prices have decreased, which requires City Light to increase retail revenue (revenue from customer rates).

HIGHER DISTRIBUTION COSTS, LOWER ENERGY COSTS, LOWER WHOLESALE CREDIT
$M 2007-2008 2013 Change
Energy $477.1 $471.9 ($5.2)
Distribution $163.3 $255.5 $92.2
Other $68.6 $73.7 $5.1
Total Operating Costs                           $708.9 $801.0 $92.1
Wholesale Revenue $169.7 $90.0 ($79.7)


Customer Bill Impacts


Customer impacts ranged from minor to significant in 2013. Customers who receive utility service with high associated distribution costs tended to see the higher bill impacts. Network customers saw the most significant bill increases because network service includes distribution redundancy to increase reliability.

2013 AVERAGE RATE CHANGES
  Total Residential Small Medium Large High Demand
All Areas 4.4% 6.2% 3.4% 3.1% 5.3% -3.3%
City 3.6% 6.8% 3.8% 0.2% 0.2% -4.1%
Network 12.2%     12.0% 12.5%  
Tuwila+Shoreline 1.6% 4.8% 1.0% -0.2% -1.0% -0.7%
Other Suburbs 2.8% 4.0% 0.8% -0.9% 0.2%  

While percent changes in average rates by customer class are more uniform in 2014 than in 2013 there are still some notable differences which are explained by a relatively higher change in energy costs and a relatively lower change in distribution costs between 2013 and 2014, which are shown in the table below.

Higher energy costs translate into higher rate increases for general service customers. Lower increase in distribution costs leads to the smaller rate increases for network customers. Suburban customers see a higher rate increase because franchise contract payments are based on energy costs. Higher revenues from the suburban customers assigned to Seattle Residential customers are not sufficient enough to offset the cost increase associated with absorbing the costs of network residential customers. Therefore, Seattle Residential customers have a rate increase higher than the system average increase in 2014.

HIGHER DISTRIBUTION COSTS, LOWER ENERGY COSTS, LOWER WHOLESALE CREDIT
$M 2014 2013 Change
Energy $504.5 $471.9 $32.7
Distribution $259.5 $255.5 $4.0
Other $76.9 $73.7 $3.2
Total Operating Costs                           $840.9 $801.0 $39.9
Wholesale Revenue $85.0 $90.0 ($5.0)


The table below summarizes average rate increases from Jan. 1, 2013 to Jan. 1, 2014, which incorporate an average system rate increase of 5.6 percent adopted on Sept. 17, 2012 and a 1.2 percent automatic BPA pass-through effective Oct. 1, 2013.

2014 AVERAGE RATE CHANGES
  Total Residential Small Medium Large High Demand
All Areas 6.8% 7.2% 6.7% 6.5% 5.7% 7.7%
City 6.8% 7.2% 6.7% 6.6% 4.9% 7.8%
Network 6.5%     6.3% 6.7%  
Tuwila+Shoreline 6.7% 7.1% 6.4% 6.6% 4.7% 7.5%
Other Suburbs 7.1% 7.3% 6.6% 6.6% 5.0%  

More detailed information about the results of City Light's 2013-2014 rate review can be found on the reports and publications page.

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