Dive Brief:

• In an 8-1 vote, the Seattle City Council approved public electric utility Seattle City Light's new six-year strategic plan that includes electricity rate hikes.
• Customer bills will increase by about 30% over the next six years, at an average of 4.5% each year. Next year the monthly bills will be about $3.77 higher.
• The legislation includes language requiring the utility to collaborate with a review panel, industry experts and key community partners to reexamine and update its rate structure, "to more equitably apply rates beginning next summer."

Dive Insight:

City Light recognizes that getting customers to reduce energy consumption to such a significant degree has been a win, but it still has to cover base costs that do not decrease when consumption lessens. The utility requested the increase because consumers are boosting their energy efficiency to such a degree that power usage is declining and is projected to continue doing so. The power company says it needs to cover the expense of maintaining electricity production and transmission infrastructure such as hydroelectric dams, power poles and transmission lines. 

This problem is not unique to Seattle's electric utility. Many portions of the electric power industry are struggling to cover costs in light of reduced electricity usage. Grid operators in New York and New England are among the others who have reported energy use declines, after originally having predicted growth for the next 10 years. Still, rate hikes seems counterintuitive to many customers who worked to decrease their energy consumption both for environmental reasons and cost savings.

While some find the rate increase reasonable due to steady operating costs, critics point out that the utility has overspent by more than $17 million on its current project of installing smart meters that will wirelessly send customer usage data to City Light. That kind of funding management — or perhaps mismanagement — has prompted further calls for the utility to rework its budgeting and business model. The utility does plan to decrease its spending by $240 million over the next six years.

A key part of the legislation requires the utility to start work on updating its rate structure, which "hasn’t been significantly updated since the 1980’s, and this work is long overdue," Councilmember Teresa Mosqueda said in a statement. She said she would like to see the new plan keep a focus on conservation while implementing changes to decrease the burden of utility rate increases on working families and small businesses.

That sentiment is also what prompted the one dissenting vote to Seattle City Light's new strategic plan, from Councilmember Kshama Sawant. She has repeatedly said that the utility's current rate structure disproportionately puts costs and increases onto families and small businesses, rather than onto big businesses.

Although the rate hike certainly will be met with public disapproval, Mosqueda notes that the approved annual 4.5% increase is less than the 5.1% annual rate hike that City Light originally had proposed. That proposal was deemed unsustainable because it outpaced the rate of inflation.

Seattle City Light and the city council said that customers who continue to decrease their energy consumption will be less affected by rate increases, as has happened in the past.