Nordstrom selects Seattle City Light as California energy provider

In California, new deregulation laws permit retail customers and aggregators of retail loads to buy bulk electricity from the provider of their choice. Following a competitive selection process, Nordstrom chose City Light as their provider based on our prices, services and well-established customer relationship. City Light will supply 15 to 30 megawatts of power to many of Nordstrom's California retail and warehouse facilities.

City Light owns 2,000 MW of low cost, environmentally sound electricity, supplied almost entirely from hydroelectric facilities. While our power supply is sized to meet local needs, renewable resources never exactly match the load of any group of customers. This mismatch often results in a power surplus.

Historically, about 75% of the surplus has been sold in the Northwest and 25% sold to three major investor owned utilities in California. This sale to Nordstrom is an alternative to the sales that have traditionally been made to the investor owned utilities. The revenue from surplus sales is used to offset costs that would otherwise be paid by Seattle customers and thus helps keep Seattle's rates among the lowest in the nation.

Seattle will sell power to Nordstrom at a price comparable to those paid by our local customers. It will be a fixed price including transmission costs to the California/Oregon border. Nordstrom will pay all utility costs once the power reaches California, including competitive transition, public benefits and remote metering costs. Having a set price for this power benefits Seattle, while having a dependable supplier benefits Nordstrom. The agreement allows both parties to avoid the volatile electricity spot market.

"After looking at various power providers for our California needs, we are happy we have reached an agreement with Seattle City Light," said Geri Capeloto, corporate facilities project manager for Nordstrom. "Our roots in Seattle go back to 1901 -- we are glad that we can get the power we need at a fair price and support our hometown in the process." Superintendent Zarker says, "We are owned by the public and it is important to equitably share the benefits of our system among all our customer-owners."

From the Superintendent...

Competition and customer choice are the catch words of the electric utility industry. As the restructuring debate intensifies, we continue to track the experiences of other utilities and industries and to learn from them. This is a complex industry -- restructuring can go in many directions. Some would result in negative outcomes for City Light and our customers. For example, one proposal being discussed in Washington, D.C. would prevent public utilities from selling surplus power outside their existing territories. This would be detrimental to utilities such as ours because these revenues help keep rates low. For City Light it is critical that restructuring legislation protect low rates, reliability and public benefits, while offering customers more choice. We work steadily to make our voice heard with regional and national policymakers.

City Light is alert to the rapid transformation of the electricity industry towards a competitive business environment. We are moving deliberately forward on several fronts. For example:

We recently competed for and won an agreement to provide electricity to Nordstrom facilities in California. City Light is taking advantage of new opportunities that open up because of industry restructuring. The lessons we learn here will help prepare us for future challenges.

Our Strategic Products & Services group is putting the final touches on several new commercial and industrial service offerings that will focus on energy concerns within the greater context of customers' overall business needs.

We are working closely with the Mayor and the City Council to establish standards against which to measure our actions during these changing times. These standards address the following areas: maintaining low rates, system reliability and safety, fostering community values, provision of retail customer services, defining our service territory, and power supply and marketing.

We are city-owned, therefore accountable to the citizens of Seattle. As industry restructuring unfolds, it is essential to build community awareness of the challenges we face and to engage our customers in discussion about them. Toward that end, during the next several months we will solicit customer opinions on deregulation through surveys, focus groups and neighborhood workshops. I am confident that together we can chart a course that meets our collective values and continues to bring real benefits to our citizen-owners.

Sincerely,

Gary Zarker

Restructuring the electricity industry: City Light perspectives

What are some principal City Light concerns with industry deregulation? What does the Utility recommend to its customers? To its Board of Directors? Here are City Light perspectives, stated by Director of Strategic Planning Marc Sullivan:

We recommend that our citizen owners inform themselves on restructuring issues and provide City Light, the Mayor and City Council with guidance and direction for City Light's future.

As a City-owned electric utility, City Light exists for the benefit of, and under the direction of, our citizen-owners and our community. At a time of potentially momentous change in the electricity industry it is important and appropriate that the utility and the City's elected officials seek direction from the community. We can provide information, and even recommendations, on a future direction for City Light. But the ultimate direction must come from those the utility serves.

With or without new legislation, City Light should protect low rates while maintaining and enhancing customer service.

Affordable electricity is important to all of our customers individually, and to the economic vitality of our community. We are committed to keeping electricity bills low; we will control costs, while making prudent investments in our dams and distribution system. We will help customers use energy efficiently.

We will retain full responsibility for the reliability of electric service in our community. We will seek out emerging telecommunications and monitoring technologies to enhance reliability and improve outage detection and correction.

We will enhance the flexibility and responsiveness of the service we provide each customer. It may even be that some customers -- due to the particular characteristics of their electricity use -- could benefit from buying power from a supplier other than City Light; we will work with such customers to address their situation.

Finally, we will continue to invest in public benefits which are consistent with our community's values. We will actively support conservation and the development of clean new renewable energy sources. We will not sacrifice the environment to shave another hundredth of a cent off our price. And we will continue to assure that all customers, including low-income and the elderly, have access to electricity for basic needs at an affordable price. All customers, whoever they purchase energy from, will contribute to these public benefits.

Restructuring legislation, nationally or in Washington state, must be very carefully crafted if its costs are not to exceed its benefits.

We expect relatively few benefits to our community from any restructuring legislation. But we recognize how important it is to respond to changing customer needs. We will be offering a wide range of new services in the years ahead, but we don't want restructuring to diminish the full service we now offer. Pressure from those not so fortunately situated may still drive Congress or the Washington State legislature to seriously consider legislation.

Seattle should support such legislation if it meets the following public interest tests:

Protects the first access of residents of Seattle and other Northwest residents to the low-cost hydroelectric power produced in our region;
Preserves the responsibility and authority of local utilities to maintain the reliability of electric service in their area;
Preserves local control of rate-making and utility operations by consumer-owned utilities;
Provides a workable mechanism to assure funding for public benefits, like conservation and affordable service for low-income, elderly and rural customers;
Provides consumer protection standards and mechanisms to assure that competition is fair and non-deceptive.

We produce low cost, reliable power

The Ross Hydroelectric Project is the newest of the three integrated complexes that make up the Skagit Project. Ross is particularly valuable in peaking and in shaping production from periods of light demand into periods of heavy load.

This year, 80 percent of the electricity purchased by our customers will come from generating sources owned by City Light. The remaining 20 percent will be purchased from a variety of long and short-term resources, including the Bonneville Power Administration, the spot market, and through an agreement with British Columbia Hydro.

Seven City Light-owned hydroelectric generating stations produce the bulk of our electricity:

Boundary, City Light's largest generating facility, located in northeastern Washington near the Canadian border, on the Pend Oreille River. Average output: 497 MW

Ross, Diablo, and Gorge are interrelated projects located in the North Cascades on the Skagit River. Average output: 307 MW

Cedar Falls, a cooperative operation with the Seattle Water Department, located on the Cedar River about 35 miles southeast of Seattle. Average output: 12 MW

South Fork Tolt is approximately 30 miles east of Seattle on the Tolt River on Seattle Water Department property. Average output: 8 MW

Newhalem Creek, Seattle's original Skagit plant, is also located on the Skagit River, across from the town of Newhalem. Average output: 2 MW

"Our customers enjoy the benefits of generating investments made in the past. These assets are largely paid for -- SCL pays renewal and replacement costs only," says Paula Green, Power Management Director. Due to low construction costs relative to today's prices, automatic operation, and the absence of fuel or transportation costs, the unit cost of power is low. Bundling these resources with other more expensive resources in our portfolio still gives customers excellent rates. The Boundary and Skagit projects, in particular, provide an excellent asset base for SCL's portfolio of hydroelectric resources.

Reliable Power: We Reinvest Our "Profits" Into the Utility

To remain competitive we aggressively seek innovative approaches, materials, and technologies to maintain our facilities. Whenever possible we invest in equipment that increases the efficiency and extends the operating life of our assets. For example,

We are developing individually-tailored asset management strategies for each powerhouse. These strategies weigh the cost of proposed maintenance projects against the economic value of the power generated at each plant.

We are undertaking a comprehensive rehabilitation project to improve the performance and efficiency of the Boundary Project. Some of the changes we are considering include redesign of the control system and replacement of equipment such as air coolers and turbine-generator governors. Improvements such as these will help maintain low-cost power from the Boundary, and give us a first-class facility.

Successfully relicensing our projects with the Federal Energy Regulatory Commission will help us maintain these economical resources. In 1995 we received a 30-year license for three of our Skagit facilities. We are in the early stages of developing a relicensing strategy for the Boundary Project, which is scheduled for relicensing in 2011.

We Value Our Northwest Environment

Environmental stewardship along with low-cost, reliable power are dividends for our stockholders, who are the citizens of Seattle. Our commitment to environmentally responsible operation of our generation resources has been ongoing, demonstrating that we can take steps to protect the environment while maintaining low rates. Environmental benefits that will flow from the initiatives we undertake will include stronger fish and wildlife populations, improved air quality, and more efficient use of the Northwest's natural resources.

We strive to keep the cost of City Light's hydroelectric power low and predictable for years to come.

You're Invited

Help shape the future direction of Seattle City Light. Participate in discussions about electric industry restructuring at one of the following community meetings. All meeting locations are in Seattle. Each meeting will begin at 7:00 p.m. For more information or to get on our mail list for future notices, please call (206) 684-3508.

January 20
Meadowbrook Community Ctr
10750 30th Avenue NE

January 21
Seattle Center
Fidalgo Room

January 26
Mt. Baker Community Club
2811 Mt. Rainier Drive

January 28
South Seattle Community College
6000 16th Avenue SW
Campus Center, Area A

February 4
Council Chambers
600 4th Avenue

New City Light services are coming your way

Utility Cost Watch staff discuss billing data updates that are sent electronically to customers. This feature can significantly reduce data entry costs for our customers.

City Light is offering the following new services to commercial and industrial customers. Please contact the Account Executives for implementation dates and more detailed information.

Advanced Metering

This service will provide you with temporary, advanced meters for short-term use in areas that do not have permanent metering. These meters will produce load survey data that you can analyze to determine sub-building load profiles.

Children's Hospital used this service when they needed load survey data to fulfill Department of Construction and Land Use permit requirements. Lead electrician Bob Sarff had City Light's temporary meters installed in more than a dozen locations within the facility. He was very happy with this service as it conveniently met an immediate project need.

Utility Cost Watch

If you have multiple accounts or sites, Utility Cost Watch will help you to:

Profile and benchmark the dollars spent for utilities (from facility to facility)

Identify ways to reduce use and costs of utilities including electricity, other fuels, water, wastewater, solid waste and recycling

Starbucks Coffee Company is a Utility Cost Watch customer. Rebecca Zimmer, Starbucks' Utilities Specialist says, "The project was executed in a highly professional, diligent and detailed manner. City Light demonstrated exceptional pro-active service in helping us to gain control of our utility costs and usage. It was an enormous success when considering the cost savings opportunities identified."

Operations and Resource Assessment (ORA)

A City Light energy management professional will meet with you or your representatives to learn about your operations, business needs and priorities, and to inventory your facility.

City Light will provide:

A summary report including a business profile, an energy usage description, an analysis of (applicable) fuel bills, and a list of cost-effective measures that will increase fuel efficiency and meet business needs.

An action plan identifying how City Light staff will work with you to achieve the measures you have selected. For eligible customers, we will build City Light financing into this plan.

Test customers for this service like the needs assessment approach and praise the consultant's expertise. They cite benefits beyond the basic identification of potential savings. For example, one customer had concerns with a lack of power that resulted in shutting down machinery. During the on-site inventory, City Light's representative pointed out that the electrical panels were out of balance. This piece of information led the customer to solving the power problem.

Electronic Commerce with Monthly Account Summary

This service will be available to your company if it can support electronic payment via Electronic Data Interchange or commercial banking's Automated Clearinghouse. As a participant, you will be able to make automatic electronic payments on each bill's due-date, track aggregated electricity usage patterns and costs, and identify billing problems. At your request, we will provide you with monthly summary statements that consolidate and summarize meter information, accounts, bills and payments.

Power Factor Correction

City Light engineers will analyze customers' power bills and advise you of whether installing correction equipment would be cost-effective for your company.

The engineer will provide referrals to pre-qualified consulting firms that can furnish you with equipment specifications and install the equipment.

Power Quality

An experienced City Light engineer will provide an on-site consultation to help you assess the cause of your power quality problems.

The engineer will refer the customer to a pre-qualified service provider who will pinpoint the cause of the problem, propose cost-effective solutions, and implement any solutions you have selected.

Account Executives, at your fingertip...

Henry Brown 684-3673, henry.brown@ci.seattle.wa.us

David Docter 684-3641, david.docter@ci.seattle.wa.us

Ann Emigh 684-3671, ann.emigh@ci.seattle.wa.us

Dena Peel 684-3637, dena.peel@ci.seattle.wa.us

Chuck Peterson 233-3752, chuck.peterson@ci.seattle.wa.us

Junko Whitaker 684-3624, junko.whitaker@ci.seattle.wa.us

Industries - become Climate Wise!!

Before the Industrial Revolution, global warming resulted from natural causes that usually took place over hundreds or thousands of years. Today, many scientists agree that human activity, including the burning of fossil fuels, has rapidly accelerated global warming.

In 1993, President Clinton implemented a Climate Change Action Plan designed to reduce greenhouse gas emissions in the U.S. through cost-effective measures. Included in this plan is Climate Wise, a voluntary government-industry partnership program where participants commit to specific efficiency measures that help reduce greenhouse gas emissions. Climate Wise is jointly sponsored by the Department of Energy and the Environmental Protection Agency. City Light staff are helping industrial customers to join this effort.

Making The Pledge

City Light is currently working with The Boeing Company to design a Climate Wise action plan. Fay Weaver, Boeing's Conservation Manager says, "As a company committed to environmental progress, we think these partnerships of public and private enterprise are critical. We move ahead faster together than we could on our own."

The City also has a Climate Wise action plan for its own facilities that includes: replacing red traffic signal lights with long-lasting light emitting diodes (LEDs), and retrofit projects for lighting, heating, cooling and ventilating systems. The City's goal is to save 700,000 to 900,000 kWh through these projects by May, 1998.

For more information about Climate Wise, please call Tim Newcomb at 684-3542, or Cynthia Blazina at 684-3954.