Electricity Rate Hikes on Working Families



Mere weeks after they repealed the Amazon Tax that would have funded affordable housing, the Seattle City Council voted on July 9th to approve a plan to increase electricity rates on working families by about 30% over the next 6 years. Unfortunately, I was the only NO vote. Below are my comments explaining why I voted no, and why my office is advocating to overhaul the existing regressive rate structure into a progressive one, and why rate increases should be paid for by big business, not by working people or small businesses.

 

Over the past four years, I have voted against City Light rate increases, and I will be voting no on this resolution, which will be the basis for a future ordinance on rate increases. There continues to be a structural problem, which is nothing new with how City Lights set its rates. Its a structure that puts the cost disproportionately on working families rather than on big businesses and this is especially problematic. Not only by itself, but within the context that we have a model where revenues need to be received from ratepayers at the same time that the ratepayers are being told about conservation.

 

Mathematically, it’s just not a program that can work and it has already shown itself to be quite deficient. Utilities have a process called cost allocation, in which they divide customers into classes, and have a formula for deciding how much of the utility’s costs each class is responsible for. The results of City Light’s cost allocation methodology is the average residential customer pays almost twice per kilowatt-hour as big businesses like Nucor Steel. This is nothing new. I have said this for several years.

 

The problem may seem buried in technicalities, but the solution is not beyond the technical capacities of the City’s experts. The real question is the lack of political will on the part of elected officials. My office headed the Energy and Environment committee in the past years and we have repeatedly discussed the questions of City Light rates. I have made it clear, year after year, that I do not support a rate structure that puts rate increases and the costs disproportionately on the shoulders of working families and also some of the most struggling businesses. In 2014, my office proposed one solution, which would be to eliminate all the rate classes. If this happened, residential customers (working families) would see a rate cut, not an increase.

 

Unfortunately, the Council at that time did not support this. At that time, I requested that City Light provide us with cost estimates for making this shift, so the Council can clearly see the choices when voting on the rate bills, but that was never done by City Light, and it has not been included in this year’s strategic plan either.

The proposed new rate increases are especially galling given how much of City Light’s real cost are driven by the changes to the city driven by big business. Amazon’s expansion, for example, in South Lake Union has necessitated new substations that will cost thousands to millions of dollars. The Alaskan Way tunnel, which primarily benefits the property values of downtown owners, has forced City Light to spend hundreds of millions moving lines.

 

Big businesses and the wealthy disproportionately benefit from the city’s public resources. Big businesses also make huge profits. It should also be mentioned that many of these businesses were among those who blocked the Amazon Tax some months ago, and they are also among those who don’t want to pay their fair share of City Light bills. It is a political question of whether or not the City Council will fight for a strategic plan that puts the rate increases on big business and not on working families.

 

I also wanted to mention one other issue that is not directly related to the strategic plan but is related to City Light, which is the uncharacteristically high utility bills reported in the media. My office continues to hear from constituents via email and phone about this, and I wanted to encourage Seattle City Light and Seattle IT to find the root of the problem.

 

If Councilmembers are interested in working together on making the rate structure progressive, I will welcome that and am happy to work together on it.

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