Seattle City Light submitted to the City Council today a rate schedule for the next two years that follows the directions Mayor Jenny Durkan gave us during development of our Strategic Plan, which was approved in June.
Mayor Durkan was clear: She directed City Light to identify more areas where we could control costs to reduce the impact on ratepayers. We did just that. Additionally, the mayor expects whomever is selected to become City Light’s next general manager and CEO later this year to continue to look at how to cut costs.
This 2019-2020 rate schedule is designed so that your nonprofit, community owned utility can collect just enough revenue to cover its operating expenses while addressing some of the challenges we face, such as changing energy usage, declining retail energy consumption and an aging workforce.
We will reduce our operations and maintenance budget by 6 percent, beginning with an initial and permanent cut of $18 million in 2019. Additionally, we will cut capital spending over the next six years by over $240 million – a 9 percent reduction.
We’ll carefully manage these budget reductions to minimize future service impacts and financial risk through a rigorous capital prioritization framework, budget review and monitoring of performance metrics.
Even with such cost-saving measures, our costs to operate and maintain generation facilities, transmission lines and our distribution grid continue to rise. To account for those costs, we will need to make some changes to customer electricity rates.
In our planning process, we had initially proposed a plan that projected a 5.1 percent six-year average rate increase and included a 6.5 percent increase in retail rates in 2019 and 2020.
The plan Mayor Durkan submitted and the City Council approved includes a lower electricity rate path with an average of 4.5 percent increases over the next six years. For a typical residential customer, those changes would amount to an $3.77 per month in the first year and less in subsequent years. Participants in the City’s Utility Discount Program would pay an additional $1.50 per month in the first year. And a small business, such as a coffee shop, could pay approximately an additional $42 per month in the first year.
If approved by the City Council, the rate changes would go into effect Jan. 1.