Seattle Lowers Power Rates to Help Industrial Businesses

Seattle, WA - Legislation passed in December which temporarily lowers the electricity rates for businesses like Birmingham Steel, City Light Power Company's largest customer, in exchange for their agreement to temporarily forego power on short notice in times of diminished generation capacity. The bill, introduced by Energy Committee chair Heidi Wills, means that rather than cutting power to residential customers and most businesses during shortages or regional transmission problems, City Light will be able to maintain service. It also means that Birmingham Steel will remain in business.

Councilmember Wills observed, "As a public electric utility, we can craft creative solutions for the benefit of all our customers. This arrangement with Birmingham Steel and other heavy electricity users preserves a healthy industrial base in Seattle and protects family-wage jobs that might otherwise be in jeopardy. At the same time, it provides increased power security for residential and small business uses."

The ordinance provides short-term relief for Birmingham Steel and a few other industrial users during this difficult economic climate. City Light will waive Birmingham Steel's current electricity rate surcharges for two years. The company, and any other heavy power users who ask to use the new arrangement, will then repay City Light through higher rates over the subsequent five years. Under the provisions of the ordinance, other large manufacturing and industrial customers can come forward for a similar rate if they meet the specified high demand requirements.

This amounts to a payment plan similar to how the utility allows residential customers to pay a fixed monthly amount to avoid seasonal bill fluctuations. Wills adds, "This is not a public subsidy we are extending to Birmingham Steel. City Light will recover Birmingham's portion of power costs incurred during last year's energy crisis through an extension of the time frame for those payments."

A suspension of Birmingham Steel's operations in Seattle - a situation that was looming - would have meant the loss of several hundred family wage jobs, the region's largest recycler, and significant city tax revenue. Eddie Lehner, Birmingham's Seattle facility plant manager said, "This legislation is a key driver in our company's recovery. We applaud the Council's commitment to supporting family wage jobs, recycling, and the future of our industry in Seattle."

When the ordinance takes effect, Birmingham Steel's electricity rate will drop from the current $52.50 per megawatt-hour (during peak-hours) and $44.80 per megawatt-hour (off-peak) to $40 peak-hour and $35.60 off-peak. After two years, the company will pay regular rates plus an additional $7.25 per megawatt-hour toward repayment of the deferral.