Sawant Questions Likely City Light Surcharges
City Light staffers tell council members that a surcharge on electric bills later this year is probably inevitable.
At the first meeting of the city council's energy committee this morning, the new energy chair, council member Kshama Sawant, made it clear that this whole socialism thing is no joke.
City Light director Jorge Carrasco (after screening a slightly condescending video explaining what City Light does and explaining terms like "watt" and "energy usage") told council members that some level of surcharge to replenish the utility's Rate Stabilization Account (RSA)—a reserve the city can dip into if market prices drop too low or revenue from surplus wholesale electricity dips too far—is probably inevitable. The council unanimously passed an ordinance creating the RSA in 2010.
If the account dips below $90 million, Carrasco said, a surcharge of 1.5 percent would automatically kick in, likely in August; if it goes below $80 million, that surcharge would increase to 3 percent, likely in November; and if it dips below $70 million, it would go up to 4.5 percent.
Earlier this month, Sawant objected to the potential surcharge on the grounds that it would be "unacceptable at a time when working people are already struggling." She added that "the council has an obligation to make sure this doesn't happen."
City Light's funding shortfall is a long-term problem, with only about $50 million in revenue each year to replenish a fund of $100 million. "This is not episodic—this is chronic," central staffer Tony Kilduff told the committee.
"While the main job of this committee is to discuss City Light … it is important to remember that [discussion] is happening in the context of the overall skyrocketing cost of living." —Kshama Sawant
Although the city has routinely shored up the account by dipping into funds that would otherwise pay for City Light operations or capital programs, that isn't sustainable in the long run. Long-term energy prices are declining (thanks in part to cheap natural gas produced by fracking) and climate change has regularly wreaked havoc on snow pack in the Cascades, the source of Seattle's hydro power.
"We can only delay surcharges this year; we're unlikely to be able to avoid them," Kilduff said. "If we had not moved $45 million [from other programs into the RSA] in the last two years, we would be in a world of hurt right now. We've had three years of saying, this isn't working. I don't see any reason to be sanguine about it going forward. There's no reason to believe ... that the situation is going to improve."
In the past, low-income ratepayers have been exempted from temporary City Light surcharges.
Also at this morning's meeting, Sawant—who, as the council's only socialist member, is under intense scrutiny both here and nationally—Sawant repeatedly brought the conversation back to the plight of the "working people" of Seattle, at one point waving the front page of today's Seattle Times, which led with a story about unrelated pending utility hikes at Seattle Public Utilities (the purview of a different committee), in the air.
And she questioned why so few people eligible for low-income rate assistance are getting it—an issue her fellow committee member Mike O'Brien has raised in the past.
"I want to be conscious of the people who most need representation," Sawant said. "While the main job of this committee is to discuss City Light … it is important to remember that that is happening in the context of the overall skyrocketing cost of living … and we have to make that commitment to make life more affordable regardless of the committee we're serving in."