Seattle City Councilmember Bruce Harrell

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Apr 26 2009

Seattle City Light Financial Situation:
It is Time to Get Creative

You may have tuned in to the Energy and Technology Committee meeting of April 1, 2009, and heard the presentation and ensuing discussion with City Light Superintendent Jorge Carrasco. The presentation painted a dire picture of the Utility’s current financial condition. In my opinion, the Utility’s proposed solution to cut some core customer service elements were presented as a precursor to a request for a rate increase. In a press release dated, April 1, 2009, Mayor Greg Nickels proclaimed that he would not request a rate increase in 2009 and that he is supportive of the proposed cuts. On April 9th, Council President Richard Conlin and I co-wrote a letter to the Superintendent, requesting that the Utility re-examine many of their cuts. Our concern was that some may be ill-advised and could possibly produce unintended consequences. For example, cutting costs in tree trimming, which is designed to reduce the frequency of power outages, may not produce the actual savings we desire. Also, City Light’s proposed cuts to conservation may not recognize the value of conservation by the freeing up of energy and therefore may overstate the net savings to the Utility. When making budget cuts, I would like the net savings to be measurable, predictable, quantifiable…and most of all…real.

The financial problems facing City Light are not a result of mismanagement or incompetence, but rather a circumstance of the national economy. Energy prices are driven primarily by the price of natural gas, which has plummeted from a highpoint of $12 per million British thermal units (mmBtu) in October 2008, to its current price of $4 or less per mmBtu. This resulted in lower prices than were projected for City Light’s surplus energy sales, which accounts for approximately $130 million of City Light’s revenue. City Light receives revenue from two sources: surplus sales and retail customer sales. With the economy as it is, I understand the need for cuts. However, as I stated above, I question some of the elements which are proposed to be cut.

As Chair of the Energy and Technology Committee, my main priorities are stable, low rates, exemplary customer service, and service reliability. I remind City Light of its central mission of being:

“. . .dedicated to exceeding our customers’ expectations in producing and delivering environmentally responsible, safe, low-cost, reliable power. We are committed to delivering the best customer service experience of any utility in the nation.”

For an organization whose mission is the “best customer service experience of any utility in the nation,” I will question the decision to propose cuts of elements which will directly impact customer service and, most of all, I would like the cuts to be real.

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