Seattle's third tier electric rate was amended by the Seattle City Council in May, and the new rate structure took effect on June 14, 2002. The following provides information on these newly amended rates.

A - City Light rates…and rates for other Seattle City utilities…are set by the Seattle City Council in the form of a City ordinance. Ordinances have the force of law.

At the time it was set, July 2001, our region was in the midst of the second worst drought in history. Seattle's hydroelectric plants were producing half the power they normally would. At the same time, prices on the spot power market were astronomically high…10 to 20 times "normal"….blocks of power that had cost $25 at the beginning of the year were selling for $600 and more. To keep the lights on in Seattle, we were forced to supplement our own generation with this very expensive market power. There was no other choice.

The third tier electric rate was instituted by the City Council to give high users a financial incentive to use less electricity during this difficult time. The charge was set to reflect the cost of buying additional market power. The intent was to charge high-use customers their own cost of service, and not have the rest of our customers subsidize the few high users.

A - Seattle had never tried a third tier electric rate before, and as with many new things, the first version had flaws. One of these flaws was the thresholds at which the third tier rates were triggered.

In the winter months…October through March…third tier rates were charged for all usage exceeding 125 kWH per day. In the summer months of April through September, the threshold was 60 per day. This summer threshold was unrealistically low. When it took effect on April first, a lot of moderate use customers got caught in the third tier. There are two reasons for this:

• We had a cold spring this year, and customers were running their space heating well into April. If you have electric space heat, you would have had a hard time staying comfortable and keeping your usage below 60 kWH per day.
• Most of our bills cover a two-month period. If, for example, your billing period ran from February 15 to April 15, your average daily use for the period would take into account the colder, higher-use winter days of February as well as the more moderate days of early April. If this figure exceeded 60 kWH per day, you would have been charged third tier rates on all usage above this threshold for each day in April in your billing period. In effect, your usage during the "winter" months was affecting how you were being billed during "summer" months.

A - As soon as it became clear that lots of customers who had no business incurring third tier charges were doing so, City Light, the Mayor, and the City Council acted immediately to fix the third tier rate.

Here's what they did:

• They raised the thresholds. The winter threshold moved from 125 kWH per day to 167. The summer threshold moved from 60 per day to 100. This change was made after studying the bills and usage patterns of a cross-section of City Light customers…low use, moderate use and high use. The new thresholds bring the third tier back to its original purpose: to charge high-use customers at a rate that reflects the additional cost to serve them, and not have their high use subsidized by other customers.
• They lowered the third tier charge. Since the original third tier was enacted, the power market has returned to more normal price levels. City Light's cost to acquire the additional power to serve high-use customers has similarly dropped. Therefore, it makes sense to adjust the rate to reflect this. The original third tier charge was 16.53 cents per kWH. The new charge is 10.00 cents.

These changes took effect on June 14, 2002.

A - The majority of customers who incurred third tier charges this spring had daily usages between 60 and 100 kWH per day. By raising the threshold from 60 to 100, these customers will be protected from third tier charges in the future. Check your daily usage on your bill. If you're under 100, and your usage patterns remain the same, you won't be in the third tier.

A - The City Council chose not to do this when they amended the third tier rate. If you think this is something they should do, you may contact the Councilmember Heidi Wills who chairs the Council's Energy and Environmental Policy Committee. Her phone number is 206/684-8808 or you may e-mail her at heidi.wills@ci.seattle.wa.us.