WHEREAS, City Council established new rates for City Light services for the period 12/23/99 through 2/28/03 in Ordinance 119747 on November 22, 1999; and

WHEREAS, in discussing those rates, City Council raised issues for which it expects a response from Seattle City Light in 2000.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEATTLE, THE MAYOR CONCURRING, THAT:

Section 1: Public Purposes

The Executive will propose a policy framework to guide City Light investments in a wide variety of public benefits in the community. This shall be transmitted for review in the second quarter of 2000. This framework will also provide the back-drop for Council review and possible action on guidelines for responding to and prioritizing neighborhood planning requests for additional or signature lighting and underground services and transmission.

Section 2: Power Marketing Unit

In the 1999 Budget, City Council approved the Executive's request to set up a power marketing unit and created nine new positions to accomplish this. City Light will report to the appropriate Committee by the end of the first quarter 2000 on:

a. the "Draft Seattle City Light Power Management Plan Beyond 19992000", and any changes the department would recommend to the unit's operations, procedures, and/or risk management policies and guidelines in light of the experience gained to date;

b. an audited review of the performance of the unit relative to initial expectations; and,

c. what procedures and processes are in place to evaluate in a regular way the unit's performance.

Section 3: Risk Management and Power Portfolio/Strategic Resource Assessment

The City Council is concerned that with the reduction in its purchase of energy from the Bonneville Power Administration and the sale of the Centralia Steam Plant, City Light is increasingly obliged to serve its load from spot market purchases. This exposes the utility to increased market risk as it becomes a net purchaser of electricity on the market. In light of this concern, City Council directs City Light to finalize the Strategic Resources Assessment, and in that document to present alternative power portfolios and risk management strategies. It will report to the appropriate Committee by the end of the second quarter 2000 on its findings and recommendations. In particular, City Light will:

a. Analyze and develop recommendations on an optimal balance between market purchases and dependence on power purchase contracts (including but not limited to BPA and purchase of combustion turbine energy) that lock in prices for a period of several years. The analysis should also consider and make recommendations regarding reducing market exposure by achieving a closer balance between purchases and sales in the power market by selling more power on the open market (rather than by fixed price contract) and buying less power on the open market (depending instead on fixed price contracts). The analysis should show impacts on City Light's revenue requirements and financial performance (net income, debt service coverage, and cash balances) over a broad range of possible future power market conditions for each of the alternative power purchase and sales strategies, and discuss how City Light might deal with revenue shortfalls resulting from higher than forecast purchase power prices.

b. Study whether its current financial policies are adequate to buffer the utility from swings in net revenue that may result from its recommendation to increase significantly its dependence on market purchases to meet its load.

In the event financial policies are not adequate, develop options for revising them and make recommendations regarding any revisions. Financial policy recommendations should be considered in relation to power purchase and sales strategy recommendations so that the two work together to provide adequate financial stability.

c. Consider the risks associated with possible transmission cost increases and bottlenecks, and how its resource recommendations will help to mitigate those risks.

Section 4: City Commitment to New Non-hydro Renewable Resource Development

Consistent with the policy guidance outlined in Resolution 30021, City Light will actively pursue options to expand the investments in new non-hydro renewable resources as part of the Strategic Resources Assessment Update. Every effort will be made to leverage the use of its resources to ensure that the most cost-effective non-hydro renewables are developed. The Department will provide periodic briefings to the appropriate Committee on the status of new investment opportunities available for City Light.

Section 5: Nordstrom Contract

City Light will review the value of the contract to serve Nordstrom stores in California relative to other uses of the energy and capacity involved, and in relation to the benefits accruing to Nordstrom, and will make a recommendation on the continuation of the contract. This review will be presented to the appropriate Committee by the end of the second quarter 2000.

Section 6: Network Review Committee.

The rates passed by City Council will, for the first time, create a differential rate for some customer classes in the downtown network. In response to customer requests, Seattle City Light will set up an advisory committee to assist it in reviewing certain aspects of its network strategic plan, its network costs and cost allocation. The intent of Council is that the committee would be established and working by the end of the first quarter 2000. To facilitate this, Seattle City Light will return to the appropriate Council Committee by the end of February 2000 with a recommendation on the composition of this committee, and a resolution establishing the committee, its scope of work, and the timeline for reporting back to the Council Committee on its findings and recommendations.

Section 7: Net Metering.

City Light shall develop policies and procedures to address customer requests for net metering as defined under SHB2773, and present them for consideration to the relevant Committee by the end of the first quarter 2000.

Adopted by the City Council the _____ day of _______________, 2000, and signed by me in open session in authentication of its adoption this _____ day of _______________, 2000. ________________________________________ President of the City Council

THE MAYOR CONCURRING: ________________________________________ Paul Schell, Mayor

Filed by me this _____ day of _______________, 2000. ________________________________________ City Clerk 12/1/99 V #2