Form revised February 4, 2010

 

FISCAL NOTE FOR NON-CAPITAL PROJECTS

 

Department:

Contact Person/Phone:

DOF Analyst/Phone:

LEG

Tony Kilduff/4-3580

 

 

Legislation Title:

 

AN ORDINANCE relating to the City Light Department; establishing parameters with respect to the Rate Stabilization Account within the Light Fund created by Ordinance 121637; and adding a new Section 21.49.086 to the Seattle Municipal Code; and ratifying and confirming certain prior acts.

 

 

·         Summary of the Legislation:

 

This ordinance establishes rules for the operation of the Rate Stabilization Account within City Light established by Ordinance 121637.

 

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

 

In 2009, City Light budgeted for about $142 million in net wholesale revenue.  It realized around $69 million.  The forecast for 2010 similarly shows an anticipated shortfall relative to forecast of around $50 million.  These shortfalls result both in significant disruption in City Light’s program planning and performance, negatively impacting its customers, and in erratic and reactionary changes in rates.

 

The ordinance seeks to minimize the impact of uncertain wholesale revenue on the utility and its customers by establishing a buffer to absorb the shocks.  The utility may use the account when revenues are down relative to forecast, thus stabilizing its financial situation, and the legislation also provides for automatic rate surcharges as a corrective when the fund reaches certain thresholds.  This allows for a more orderly adjustment of rates to volatility in revenues.

 

The legislation also establishes a methodology for establishing the forecast that does not depend on City Light’s models, but rather depends on the history of observed net wholesale revenue.

 

·         Please check one of the following:

 

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