Not the time for another City Light rate increase
With the economy still recovering, Mayor Mike McGinn has proposed raising Seattle City Light rates by another 10 percent. Guest columnists Jerome O. Cohen and Mike Kelly say such a hike would be a great burden on urban manufacturers, other businesses and citizens.
Special to The Times
IN his latest report on Washington's economy, the state's chief economist said "economic activity has slowed to an agonizing crawl ... there is considerable drag in the economy and increased uncertainty." Seattle area manufacturers don't need a report to tell them times are tough. Over the past decade, the Seattle area has lost more than 45,000 manufacturing jobs.
In this economic environment, adding to the cost of doing business is the last thing the city should do. Yet that is exactly what has been proposed. Mayor Mike McGinn has asked for Seattle City Light rate increases of almost 10 percent over the next two years.
This is bad policy, bad economics and bad for Seattle jobs.
It was only last November that the City Council, in a divided vote, increased City Light rates by a whopping 13.8 percent. Those favoring the double-digit increase argued that it would provide rate stability. That increase took effect in January and cost Seattle ratepayers almost $78 million. Mayor Greg Nickels refused to sign the rate-increase legislation, saying "I do not support charging more for utility services than is absolutely necessary."
It was just four months later the City Council again raised rates by establishing a revenue-stabilization fund and imposing a 4.5 percent rate surcharge. This surcharge will cost ratepayers another $20 million to $25 million.
Now, less than a year after the rate increase that promised rate stability and eight months after imposition of the additional rate surcharge, we are faced with yet another increase of almost 10 percent over the next two years. The first part of that increase would take effect in January and cost Seattle ratepayers another $25 million.
Enough is enough.
We simply cannot afford another rate increase. Seattle City Light commercial and industrial rates are already higher than six comparable Northwest hydro utilities. We have all had to tighten belts and learn to do more with less. We have absorbed large rate increases that are challenging our bottom line and costing jobs.
Before raising rates again, City Light needs instead to tighten its belt and learn to live within its means.
According to a City Light report to its advisory panel, recent benchmarking studies that compared City Light with other electric utilities point to some troubling financial issues:
• City Light's power distribution cost of $14,000 per circuit mile is 137 percent higher than the next closest utility at $5,900 per circuit mile.
• Seattle City Light's transmission and distribution expenses at approximately $103 per customer exceeded the group per customer average by 32 percent.
• The utility had the highest staffing levels at 225 employees per 100,000 customers, 60 percent higher than the next closest utility in the ranking. (City Light reported 130 more employees in 2009 over 2008.)
The mayor recently announced contract concessions with 19 city employee unions to help the city deal with Seattle's budget problems. The union representing City Light workers declined to renegotiate existing labor contracts.
Coming on the heels of two rate increases and with no strategic plan in place, the City Council should reject these proposed rate increases. Before asking ratepayers for even more money during this deep recession, perhaps it's time for a belt tightening at Seattle City Light.
Jerome O. Cohen, is board chairman of the West Seattle Chamber of Commerce and Mike Kelly is CEO of Asko Processing Inc.