Seattle City Council
4/27/2005 10:47:00 AM
Tom Van Bronkhorst (206) 684-8807
COMMITTEE PASSES POLICIES KEEPING CITY LIGHT SOUND
Policies maintain financial stability and reduce long-term debt
SEATTLE –The Energy and Environmental Policy Committee has unanimously passed financial policies aimed at keeping Seattle City Light fiscally sound, while working to reduce the utility’s long-term debt.
“We approach this with caution and balance,” said Committee Chair, Jean Godden. “We want to meet our common goal to stay the course with sound fiscal policies while allowing for a future review to consider returning the public power rate advantage to our customers as soon as possible.”
The resolution retains the 95% probability of having positive net revenue for capital that is in the current policy. The contingency reserve fund or rainy day account will remain at $25 million dollars and will be funded right away with dollars moved from a bond reserve account. Long-term debt will also be paid down with the remaining funds from this account.
A new section introduces a 2.0 coverage ratio for first and lien debt that will be used instead of the variability allowance. This is slightly more conservative than the 95% probability and is also easier to understand and calculate.
In addition, the following policies are included in the revised proposal:
- A debt to capitalization ratio target of 60% is established and will be met by 2010.
- An Asset Management Program is to be implemented by 2007.
- A performance reporting system will also be implemented with input from ratepayers and with annual reports to customers.
“This proposal,” says Councilmember David Della, “keeps our focus on ensuring the long-term financial stability of City Light while demanding greater accountability. It will ensure we chart a more plausible course while keeping in mind the goal of stable and affordable rates for everyone.”
Councilmember Richard Conlin said, “I hope that, with the financial stability we have achieved by making tough decisions, we can renew our efforts in conservation and our commitment to our public interest obligations. Conservation is the surest way to reduce everyone’s electric bills.”
These financial policies will be reviewed no later than the point at which City Light’s debt to capitalization ratio is reduced to 70% with the goal being to regain the rate advantages of public power.