EC Seattle Successfully Opposes Electricity Rate Design Plan
When Seattle City Light (SCL), Seattle’s municipal electric utility, proposed a major change in rate design as part of its Strategic Plan Update, Emerald Cities Seattle concluded that several components of the plan were bad for energy conservation and social equity.
Specifically, SCL was proposing a fixed customer charge for all customers, with a lower variable rate for electricity consumed, meaning that energy efficiency projects would deliver less savings and have longer payback periods. The company also proposed lowering rates and payments from large customers and increasing payments from small customers to better align its revenue with the cost of providing services.
Concern About Declining Revenues
These steps were prompted by SCL’s concerns about the effect of declining revenues on the company’s ability to support infrastructure costs, given projections of flat demand growth despite population and customer base growth – positive things, ironically, in terms of energy efficiency and customer costs
Most large energy efficiency projects consider payback term as a major component in the decision making process, as the shorter the payback period, the more likely someone will pursue an energy efficiency project. While raising rates send a price signal that conservation has strong economic benefits, in this case, reducing rates – which leads to longer payback periods – sends the opposite signal.
“Although SCL’s proposed actual rate adjustment was relatively minor at this time, we believed that the change in rate design was a major shift and set a bad precedent,” explained Seattle Local Director Steve Gelb. “We also believed that the problems SCL foresees are still many years away, and we wanted to propose other solutions.”
Taking it to the Council, Building Alliances
EC Seattle suggested that the utility consider alternatives, including de-coupling rates from electricity usage. When the utility did not change direction, EC Seattle approached the Seattle City Council, which governs the utility. Members of the EC Seattle local council met with key city councilmembers to express their concerns with the policy and ask for removal of the rate design from the Strategic Plan Update.
EC Seattle then joined forces to oppose the rate design with the Seattle 2030 District, Building Owners and Managers Association and Northwest Energy Efficiency Council. Based on information in the report The Utility of the Future and the Role of Energy Efficiency by the American Council for an Energy-Efficient Economy and local input, EC Seattle emailed the council and testified at council hearings on the rate plan.
In the end, EC Seattle and its allies succeeded in convincing the Seattle City Council to amend the Strategic Plan Update by taking out the rate design changes and recommending that SCL make a decision on the rate design issue by the end of April 2015. EC Seattle has asked to be part of the stakeholder group that will meet to consider other rate design options.
“This is a great victory for conservation in Seattle and for the power of our coalition!” Gelb declared.