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Get the Facts on City Light’s Rate Stabilization Account

Seattle City Light has produced a fact sheet to answer questions about how a recently approved rate stabilization fund will work.

Seattle’s City Council unanimously approved a rate stabilization account for Seattle City Light to help protect ratepayers and the utility against volatility in revenues from changes in energy prices for the surplus power City Light sells and changes in expected water supplies for the utility’s hydroelectric dams.

We’ve put together this fact sheet to help answer the questions you might have about how this account will work.

  • Seattle City Council unanimously passed the Rate Stabilization Account (RSA) Ordinance on March 22.
  • This Account is not intended to meet current budget shortfalls.  It is a future-looking account to be used when revenue forecasts aren’t met.  And, if City Light has surplus revenues, they can go into the fund.  If the Account exceeds $125 million the Council can decide to: reduce rates or to pay down existing debt or not issue new debt for capital expenses.
  • City Light gets revenue from two major sources:  customer rates and surplus power sales.  Surplus power sales help to keep rates low and fund utility costs that customers would otherwise have to pay.
  • The Account has a target minimum balance of $100 million, and is drawn on only when surplus power sales drop below expected levels.
  • A temporary initial 4.5% rate surcharge is scheduled to go into effect May 1, 2010 and remain until December 31, 2010 to begin funding the Account.
  • ONLY if it is needed will the surcharge continue into 2011.  If needed, the surcharge drops to 3% in the first Quarter of 2011; to 1.5% in July; and it is scheduled to be eliminated by October 2011 (assuming the amount in the Account has reached $100 million).
  • The monthly cost of the surcharge to the average Seattle City Light residential customer is $2.
  • City Light reduced its 2009 expenditures by $21 million in Operations & Maintenance (O&M) and $43 million in capital improvement programs.
  • City Light reduced its earlier approved 2010 O&M budget by $12 million and cut 59 positions.
  • City Council has asked for an additional $8 – $10 million reduction in City Light’s 2010 O&M budget and $30 million in the capital budget.
  • City Council also established a City Light Review Panel who represent City Light’s different customer groups.  They will work with the Mayor, Council, and City Light on a long-term strategic plan to address critical infrastructure and operational needs and to plan for future budgets and rates to meet those needs
  • Before 2010, Seattle City Light rates hadn’t been raised since 2002.  Between 2002 and 2010, rates dropped by 12.1%.  City Light remains one of the lowest cost electric service providers among urban centers, and has some of the lowest rates in the Northwest.

Seattle City Light is the ninth largest public electric utility in the United States and in 2005 became the first utility to be greenhouse gas neutral.