Why the average electric bill is about to go up ~$1

| Utilities | West Seattle news

(UPDATED 3:49 PM to clarify that the average bill will go up $1 – your bill may vary)

(Seattle City Light image: Gorge Dam)
The average electricity bill is going up about a dollar starting next month. Seattle City Light‘s announcement explains the surcharge it’s about to add, and might be keeping for a few years. In short – blame it on the weather:

Low revenue from the surplus energy Seattle City Light sells to other utilities has triggered a 1.5 percent surcharge on electricity rates, starting in August.

City Light generates power at its hydroelectric projects. When the utility has more electricity than its customers need, it sells that power to other utilities and uses the money to keep prices low for its retail customers. For 2016, City Light anticipated $60 million in revenue from such wholesale energy sales, but the utility is on track to earn only about $43.5 million as a result of warm spring weather at a time of low prices on the wholesale energy market. The warm weather melted mountain snow earlier than is typical, which meant City Light’s hydroelectric projects were producing surplus energy at a time of lower demand and lower prices than the utility might have seen in June or July.

To make up the difference between what was expected in the budget and actual revenue, City Light draws from a rate stabilization account created in 2010 to offset the volatility that comes with generating and selling hydropower. If the amount in the account dips to $90 million or below, a 1.5 percent surcharge is automatically applied to every customer’s bill until the account is refilled to $100 million.

The rate stabilization account had $89.1 million in it June 30, which triggers a surcharge that will be applied to customer bills, starting in August. The surcharge will add $1 to the typical residential customer bill every month. This is the first time an automatic surcharge has been triggered since the rate stabilization account was created.

Based on current financial forecasts, City Light projects that the surcharge could stay in place into 2019. Should the rate stabilization account’s balance fall to $80 million or below, the surcharge would automatically increase to 3 percent.

Once the account balance is refilled to $100 million, the surcharge is automatically removed. If strong surplus energy sales ever push the rate stabilization account’s balance to more than $125 million, the City Council can choose to reduce rates, have City Light pay down existing debt or direct the utility to pay for capital expenses with cash instead of borrowing money.

Scott Thomsenj July 6, 2016 (3:39 pm)

The 1.5 percent surcharge amounts to $1 a month for the typical residential customer. Your actual impact could be more or less depending on your usage. — Scott Thomsen, Seattle City Light

KT July 6, 2016 (7:32 pm)

Sure hope their estimate of an average $1 increase is more honest than the city continually saying the median price of a home is in the high $400,000 range when it really is in the $600,000 range now.

Sevenless July 6, 2016 (3:42 pm)

If I’m reading their release correctly, it’s not a flat $1 surcharge regardless of how much electricity you use, but a 1.5% surcharge that coincidentally works out to about $1 per month for a typical household (which means their “typical household” bill is $66.67 per month.)

WSB July 6, 2016 (3:49 pm)

Thanks for the clarifications, I seized on the $1, have rewritten the intro line.

Alkiobserver July 6, 2016 (3:55 pm)

Sometimes you just can’t win with these guys… You do your best to conserve more and more energy (as they rightfully urge) and whammo, they whack you with an upcharge that will likely increase since they are not selling enough energy. It would be funny in an ironic way if it was actually funny.

Sam-c July 7, 2016 (5:31 am)

Yes, true… Once upon a, oh, maybe 8 years ago, we signed up for their ‘green up’ program or whatever it’s called. Then after years of rate hikes, we couldn’t afford the green up program anymore. I never really quite understood what that program was anyway. Isn’t most of our power ‘green’ anyway? Hydro-electric?

Trickycoolj July 6, 2016 (4:38 pm)

Should I reinstall my portable AC and let it run when it’s 70 outside to help with the surplus? …. Kidding!

canton July 7, 2016 (8:24 am)

This is a bold faced lie by the city. See Daniel Beekman’s ST story a few months ago. He covered the council meeting where city light told the council they were nearly 40 mil over budget for a new “billing system”. This is exactly how they told them they would recoup the money, on the backs of ratepayers.

Sam-c July 7, 2016 (7:19 pm)

That is lame. Is there a video of that meeting saved somewhere?
- chemist July 7, 2016 (7:53 pm)
  
  Seattle Channel Council Briefing from 4-4-2016 about 45 minutes in they discuss the SPU billing.
  
  It’s on Seattle channel here.
  - sam-c July 12, 2016 (11:13 am)
    
    thanks

Alkiobserver July 7, 2016 (9:34 am)

This latest stunt by CL has all the hallmarks of classic bureaucratic incompetence. I say, let’s privatize the whole ball of electrical wax.

ConcernedRatePayer July 7, 2016 (9:39 am)

I may be misinterpreting this, but are ratepayers being
asked to cover a surplus of generation that SCL cannot off-load onto the
market? We are paid for the development
of the generation and are paying for the maintenance of the generation already
in our rates and now SCL is saying “oh, sorry we don’t need all of it and we
can’t sell it on the open market so we are going to charge you again.”

Everyone knows that energy usage is going down. Some of that is caused by the warmer weather,
but this year’s weather has not been that significantly different from
historical trends. Last year was another
story, it was much warmer. It is also
true that rate payers are implementing more and more conservation such as LED
bulbs, insulation, new windows and new appliances.

More than anything, I believe we are being asked to pay for
this excess generation because SCL has not managed their portfolio of
generation and conservation together but separate. The trends for the last few years have shown
that energy usage is not rising. What are
you doing about this SCL besides raising your rates?

Mark July 7, 2016 (1:18 pm)

The costs that your electric rate covers are made up of fixed vs. variable costs. For example there are some costs of operating the dams that are the same (fixed) whether you pour 100 gallons over the dam to generate electricity or 100 Million gallons. Then there are variable costs that go up and down based on how much water is passing through the system. Most of the costs are fixed and for fixed costs there are no savings if you run less water over the dam to generate electricity. They are the same either way. Another way to look at it is that when there are higher volumes of water available and a higher demand for electricity (like summers in California for running Air conditioning) you can generate more revenue if you have water at that time to generate electricity and sell on the open market. The dollars earned help subsidize rates. They do their best job of estimating what those revenues are going to be and build them into the rates so that you are paying less than the actual cost of running the system. However in a year like this when the snow pack melted off in early spring (April) instead of June-July like normal the value of the electricity in April is less than it would have been if it had melted out in June /July hence reduced revenues, reduced subsidy and the need to make up the difference.

Alkiobserver July 7, 2016 (3:34 pm)

So, again, in other words, we the rate payers (the CL wallet), are damned if we conserve energy just as much as if we don’t. The stooges running the show at CL will just charge us more one way or another.

Marty July 7, 2016 (5:32 pm)

Alkiobserver: that is pretty much it. I am not surprised, we get extra charges for schools, roads, transportation, bike lanes etc. so why not power too?

LFP Resident July 8, 2016 (11:55 am)

We are not damned if we do or don’t. SCL has some of the lowest rates in the nation. Sales are down, costs remain the same, and we have been protected until now by the rate stabilization fund. That needs to be replenished.

Sorry, comment time is over.