Warm, dry weather throughout the Pacific Northwest this winter will hurt Seattle City Light’s power supplies throughout 2010 and cut revenues from surplus power sales dramatically. Warm, dry weather throughout the Pacific Northwest this winter will hurt Seattle City Light’s power supplies throughout 2010 and cut revenues from surplus power sales dramatically.
City Light depends on snowpack to provide the water that powers the hydroelectric dams that produce its low-cost electricity. Snowpack effectively serves as a “battery,” storing some of the dams’ power source for use in the summer and fall, as well as providing surplus power which is sold for revenue to keep customer rates low. Current snowpack conditions are among the lowest in the past 20 years.
“We’ll have enough power to meet all our customers’ needs, but much less to sell to other utilities, which is an important source of revenue for City Light,” Superintendent Jorge Carrasco said.
Updated snowpack forecasts translate to more than a 50 percent reduction in City Light’s expected revenue from surplus energy sales in 2010. The utility will be cutting spending to help offset those losses, which will mean reductions in some customer services.
The City Council is considering a rate stabilization fund for City Light that is designed to protect the utility and its customers from the uncertainty of winter snowfalls and wholesale energy prices. This fund would set aside $100 million to offset downturns in surplus energy sales revenue. In good years, revenues above projections could be distributed to customers as a rebate.
“Establishment of the Rate Stabilization Fund will help protect City Light and its customers from the uncertainties of the winter snowpack and fluctuations in wholesale revenue,” Councilmember Bruce Harrell said. “The stabilization fund is a forward thinking, preventative measure instead of a reactionary one and it will be a valuable tool in preventing significant rate increases.”
Seattle City Light is the ninth largest public electric utility in the United States. It has the lowest cost customer rates of any urban utility, providing reliable, renewable and environmentally responsible power to nearly 1 million Seattle area residents. City Light has been greenhouse gas neutral since 2005, the first electric utility in the nation to achieve that distinction.
Watch the news conference at http://www.seattlechannel.org/videos/video.asp?ID=4489