A significant and enduring drop in revenues from wholesale power transactions in the last year has been a majority contributor to a revenue shortfall at Seattle City Light. Closing the gap between expenditures and revenues is placing utility and city officials with a difficult set of options. Outgoing Mayor Greg Nickels has proposed a 2010 rate increase of 8.8% (on a base rate of approximately 5.6 cents/kWh) coupled with a Power Rate Adjustment Mechanism (PRAM) which would allow for automatic, but temporary, increases in rates when revenues deviate by a set threshold from quarter to quarter. Finally, the Mayor’s proposal includes a waiver from city policy on debt coverage ratios for the utilities outstanding debt service. A Rate Advisory Committee (Stan Price of NEEC is one of the members) has been tasked with issuing a set of recommendations to the Council and the Mayor on this rate issue. A decision by the City Council is likely in November. Of concern to many, including the energy efficiency business community, is the fate of SCL’s conservation budget in an environment where cost cutting is pitted against rate increases. Conservation spending at SCL, as explained by City Light officials at a recent lunch gathering, is already below that which was recommended in the utility’s recently adopted 5 Year Plan for conservation. Many fear that the “discretionary” nature of conservation spending leaves that budget open to additional reductions in the pressure to suppress a rate increase. Public comment opportunities to the City Council are open as this process moves forward.
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