Form revised May 5, 2009

2010-2011 BUDGET LEGISLATION FISCAL NOTE

Department:	Contact Person/Phone:	DOF Analyst/Phone:
Seattle City Light	Paula Laschober, 684-3168	Karl Stickel, 684-8085

Legislation Title: AN ORDINANCE relating to the rates, terms and conditions for the use and sale of electricity supplied by the City Light Department; and amending Seattle Municipal Code Chapter 21.49 in connection therewith.

· Summary of the Legislation:

This ordinance specifies an across-the-board increase of 13.8 percent applied to all rate elements of all rate schedules, including low income rates (which would thereby remain at 40% of regular residential rates).  This increase would take effect on January 1, 2010.

In addition, this ordinance updates Duct, Vault and Pole Rental Rates to increase the penalty for unauthorized attachments to City Light poles and other facilities.  The penalty increases from three times to five times the annual rental rate and will now include interest.

This ordinance also updates the Automatic Bonneville Power Administration (BPA) Cost Adjustment (SMC 21.49.081) in the following ways:  1) streetlight schedules, which are currently excluded from the automatic adjustment, would be included; and 2)  whenever an automatic adjustment is made, the energy charges of low-income rate schedules would be increased or decreased by 40%, rather than 50%, of the BPA increment. 

· Background: (Include brief description of the purpose and context of legislation and include record of previous legislation and funding history, if applicable):

Under current financial policies, City Light would require a rate increase of about 26% in 2010 to cover budgeted expenses, large enough to potentially cause customer hardship during this economically sensitive time.  The proposed 13.8% increase assumes about $16.8 million in net  reductions to 2010 O&M expense and is expected to be sufficient to achieve 1.8 debt service coverage in 2010.  This debt service target is slightly lower than the 2.0 mandated under the current financial policies but is high enough that City Light may be able to maintain its current bond rating for 2010.

The penalty for unauthorized attachments is being increased to provide a more meaningful deterrent; this updated penalty is more consistent with the national norm.  The BPA pass-through amount for residential low income schedules is being updated to be consistent with the percentage normally applied to this schedule when comprehensive rate changes are adopted, which is 40%.   

· Please check one of the following:

____ This legislation does not have any financial implications. (Stop here and delete the remainder of this document prior to saving and printing.)

__X__ This legislation has financial implications. Please complete all relevant sections that follow.

Summary of Changes to Revenue Generated Specifically From This Legislation:  For budget legislation that changes revenue (e.g., fees, taxes, etc.), please provide detail on each revenue-producing item that is being changed, when it was last changed, and how the item’s new overall cost compares with similar costs charged elsewhere in the region.

	Revenue Source	2010 Proposed
Total Fees and Charges Resulting From Passage of This Ordinance	City Light Retail Rates	$74.5 Million

(If new revenue is for a partial year, provide estimate for full year in the notes section below; also include the effect on the average customer, user or payer.)

Notes:  City Light Retail Rates most recent change (BPA pass-through adjustment) took effect October 1, 2009.  The last full rate review was a rate decrease in January 2007.

Anticipated Total Revenue from Entire Program, Including Changes Resulting From This Legislation:

Fund Name and Number	Revenue Source	Total 2010 Revenue
Light Fund-41000	City Light Retail Rates*	$614,753,920
TOTAL		$614,753,920

*Total 2010 retail rate revenue before rate discounts, including expected BPA pass-through of $.3/MWh expected to be effective October 1, 2010.

· What is the financial cost of not implementing this legislation? (Estimate the costs to the City of not implementing the legislation, including estimated costs to maintain or expand an existing facility or the cost avoidance due to replacement of an existing facility, potential conflicts with regulatory requirements, or other potential costs if the legislation is not implemented)

If City Light does not implement the proposed rate increase, insufficient revenues will compromise City Light’s future financial health and may adversely impact City Light customers’ rates in the long term.

· Does this legislation affect any departments besides the originating department?  • If so, please list the affected department(s), the nature of the impact (financial, operational, etc)., and indicate which staff members in the other department(s) are aware of this Bill.

The proposed City Light rate increase would generate approximately $4.4 million of additional utility tax revenue to the City’s General Subfund in 2010.

· What are the possible alternatives to the legislation that could achieve the same or similar objectives?  (Include any potential alternatives to the proposed legislation, such as reducing fee-supported activities, identifying outside funding sources for fee-supported activities, etc.)

None.  

· Is the legislation subject to public hearing requirements? (If yes, what public hearings have been held to date, and/or what plans are in place to hold a public hearing(s) in the future?)

No.

Please list attachments to the fiscal note below:

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