At a meeting of the city council's energy committee this afternoon, representatives of Seattle City Light told council members they would need to increase electric rates 4.2 percent a year starting in 2012 to maintain its current "financial baseline." The rate increases would be on top of a 4.3 percent increase this year, one of the highest rate increases in recent history; last year, the city council approved increasing rates next year's increase by 3.2 percent.

Major reasons for the likely rate increase include: Higher debt service, increasing power costs, and increasing costs for operations and maintenance. City Light is also assuming wage increases higher than the rate of inflation, a rate Phil Leiber from City Light told council members was necessary to be competitive with other utilities.

To reduce the rate increases, City Light could borrow from the rate stabilization account, sell off more of its property, or cut or delay more programs. The utility already plans to save $165 million by delaying some programs, including advanced metering infrastructure (a system designed to save energy), a new electric substation north of downtown, and programs to prevent interruptions in service, or "transmission congestion mitigation."

Another reason for the rate increase? The need to relocate utilities for construction of the downtown deep-bore tunnel, which City Light estimates will cost the city $122 million over the next six years.

Over six years, the tunnel ranked sixth on a list of ten major capital improvement projects City Light will undertake. "System automation and transmission and distribution" will cost the most, at $304 million over six years.