Periodically, the Mayor and the Seattle City Council review Seattle City Light rates. In the past, this review has taken place every few years. Once a rate proposal is presented by the mayor, the council authorizes new rates by ordinance.

Background
As a result of the western power crisis of 2000-2001, electrical rates went up 58 percent. Customers were promised that, once the crisis passed and the utility returned to a solid financial footing, rates would be lowered. Since then, City Light has made substantial progress in restoring its financial health. It has repaid all of the short-term debt incurred in 2001 and 2002. This includes the funds City Light borrowed from the city's cash pool. The council adopted financial policies in 2003 and in 2005 to further bolster the utility's finances. City Light's long-term debt continues to be reduced; the debt-to-equity ratio is projected to decline from 83 percent to 69 percent by 2007. In addition, City Light now maintains a healthy cash balance.

Why a Rate Review is Important
The most recent rate review was conducted in 1999. It's time for rate payers to have a fresh opportunity to review how much they pay for electricity.

During this review, it will be important to remember that City Light still faces major challenges. City Light's capital spending program remains a major concern. For example, some infrastructure repair and replacement was deferred due the energy crisis. Most importantly, City Light has yet to implement an asset-management strategy to ensure that the utility's capital expenditures are made as effectively and efficiently as possible; on average, City Light has only been able to spend approximately 80 percent of its capital budget.

In 2005, City Light projected that rates could potentially be reduced by 6.5 percent in 2007. There are many factors we must consider in order to determine whether a rate reduction is called for and, if so, what rate is appropriate. Now is the time to have a transparent, open and inclusive discussion.

Possible Council Action and Timeline
The mayor is expected to propose rate changes in late June of this year. At that time, the council will encourage public discussion of rate changes through public meetings, testimony and facilitated discussions before the Energy and Technology Committee. Full council action is anticipated to take place in October, and a new rate structure will likely take effect at the beginning of 2007.

For more information contact Councilmember Jean Godden at (206) 684-8807. Or visit Seattle City Light's Rate Review web page at http://www.seattle.gov/light/news/issues/rateproc/.