Under the utility's plan, the monthly bill for a typical residential customer is projected to increase from $65 this year to nearly $85 in 2024.
The Seattle City Council voted 8-1 Monday to approve Seattle City Light’s new six-year strategic plan, which calls for electricity-rate hikes averaging 4.5 percent annually.
Under the utility’s plan, the monthly bill for a typical residential customer is projected to increase from $65 this year to nearly $85 in 2024, assuming the customer’s use remains constant.
The hikes would be higher had Mayor Jenny Durkan not recently directed City Light to scale back its projected costs by about $350 million over six years. The mayor ordered the reductions after the City Light Customer Review Panel rang the alarm over what it described as unsustainable spending by the utility.
Councilmember Kshama Sawant was the only opposing vote on the legislation endorsing City Light’s plan, arguing the utility’s rate structure should be changed to make big businesses responsible for a greater proportion of the revenue City Light collects. That would lessen the burden on residents and small businesses, Sawant said.
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“There continues to be a structural problem … with how City Light sets its rates,” Sawant said.
Under City Light’s existing rate design, how much certain customers pay can depend on who they are, how much electricity they use and when they use it.
Customers are grouped into classes, with residential customers in one class and businesses separated into different classes according to their size and location. The utility’s residential and small-business customers, on average, pay higher rates.
Councilmember Teresa Mosqueda, who chaired the council committee that examined the plan, said Monday’s legislation includes language directing the utility to work with the nine-member volunteer review panel and with community members on potential alterations to City Light’s rate structure.
The legislation calls for the council to receive an initial report by Jan. 15, 2019 and final recommendations by April 1, 2019, and to consider making changes by July 15, 2019.
“We need to make sure our rate design catches up with modern-day needs,” Mosqueda said before Monday’s vote, noting the last significant update was in the 1980s.
In 2014, Sawant proposed the council consider altering City Light’s rate structure to make big businesses pay more, possibly by moving to a single-rate class for all customers. At the time, no other council member supported even bringing the idea to a committee vote.
“I’m interested in looking at various models” with the goal of making the design more progressive and equitable, Mosqueda said in an interview Monday.
The review panel, which voiced approval for City Light’s plan after Durkan’s cuts, described the rate-structure rethink last month as “a challenging policy discussion.”
“It is essentially a zero-sum game,” the panel wrote in a letter to the council. “Any changes to the current design mean some will pay more, while some may pay less.”
In general, City Light says its rates must rise due to heavy spending on necessary capital projects and because its customers are buying less power, thanks to advancements in energy efficiency. Labor costs also are part of the picture.
The utility initially proposed annual average rate hikes of 5.1 percent through 2024, drawing opposition in May from the review panel, which pointed to cost overruns on major capital projects.
“Continual rate increases that significantly outpace the rate of inflation are threatening our diverse economy,” the panel wrote at the time. “The projected rate of growth … is not sustainable.”
Durkan responded by telling City Light to trim the hikes to 4.5 percent by reducing its spending plan. The utility does not yet know how it will achieve all the cuts, a spokesman said last week.
On Monday, Council President Bruce Harrell said City Light customers should remember that their rates among the “lowest in the country.” That’s the case among large cities, according to the utility.
Although City Light’s new plan calls for a 30 percent rate hike over six years, Councilmember Mike O’Brien noted customers who reduce their energy use will see their bills increase less.
In past years, reductions in consumption have softened rate hikes for the typical Seattle customer, according to City Light.