Seattle electric bills may go down

Electricity rates could be coming down in Seattle over the next two years because of prudent money management and plentiful rainfall, Mayor Greg Nickels said Wednesday.

Sticking to his promise to reduce rates after they went up 58 percent during the 2000-2001 energy crisis, Nickels proposed a systemwide average rate decrease of 4.8 percent over the next two years, with midsize businesses such as groceries saving the most.

Residential customers and small businesses would save a little more than 2 percent under the mayor's proposal. Depending on how much power they use, commercial customers could see their bills go down 9 to 13.8 percent. The total savings to customers amounts to $56 million over a two-year period.

"The proposal I'm announcing is the largest rate reduction for City Light in 35 years," Nickels said at a news conference Wednesday.

The average residential customer could save about $13 a year. High-demand customers, such as the University of Washington or steel company Nucor, could save up to $800,000 a year. A midsize business could save about $6,000 annually.

The City Council will consider the mayor's proposal and hold public hearings to discuss it. Councilwoman Jean Godden, who chairs the council's City Light oversight committee, said she hopes the council will approve new rates in November. Customers would start paying new rates Jan. 1.

In 2000 and 2001, the city-owned power company raised rates dramatically and borrowed heavily to deal with the California energy crisis and a local drought. The utility relies almost entirely on hydropower.

Former Councilwoman Heidi Wills, who at the time chaired the committee that oversaw City Light, called the increase a "temporary surcharge" and said rates eventually would come down.

Wills lost her council seat in 2003 to David Della, who highlighted City Light troubles in his campaign. City Light Superintendent Jorge Carrasco, who took the job after Gary Zarker left in 2003, said the financial problems ran deeper than the energy crisis: The utility had been borrowing too much money, which kept rates artificially low.

On Wednesday, Carrasco said that $307 million in short-term debt was paid off in 2004, the utility has $25 million in emergency reserves and projects net revenue of $120 million this year. The utility's long-term debt at the end of 2008 will be $1.3 billion. City Light's finances were also helped this year because a mild winter and average rainfall made it possible for the utility to sell excess power.

In June, the Seattle business community put pressure on Nickels to reduce rates by 10 percent for all customers, and the Greater Seattle Chamber of Commerce sent a letter to the mayor's office asking for the rate reduction.

Although Nickels did not propose cutting rates by 10 percent for all customers, Steve Leahy, the president of the chamber, called the proposed rate decreases a positive step.

"We're pleased to see this from Mayor Nickels, and we think it will help to increase an already recovering economy here," Leahy said. "Even though some think the good times are back, that's a day-to-day recalibration."

Sharon Pian Chan: 206-464-2958 or schan@seattletimes.com