so good morning happy Monday the July
15th special committee meeting of the
sustainability City Light arts and
culture committee will come to order
it's 9:34 a.m. I am Tanya woo chair of
the committee will the committee clerk
please call the role
Vice chair
Moore who is presid come back to pres
council member Morales here council
member Strauss present chair woo present
chair there are four members present
thank you council member Saka has been
excused from today's meeting and council
member Mort is excused to leave at 10:55
a.m. if there are no objections the
agenda will be
adopted hearing no objection the agenda
is adopted
we will now open the hybrid public
comment period public comments should
relate to items on today's agenda and
within the purview of this committee how
many speakers are signed up for today
currently we have no in-person speakers
um and no remote speaker signed up as a
reminder members of the public are
encouraged to either submit written
public comment on the signup cards
available on the podium or email the
council at Council
cal.gov so we will will move on to the
first item of business will the clerk
please read item one into the
record agenda item one a resolution
related to the city light department
adopting a 2025 to 2030 strategic Plan
update for the city light department and
endorsing the associated six-year rate
path for briefing and discussion thank
you will our presenters please join us
at the table and share your presentation
once ready please introduce yourselves
and begin your presentation a
actually yeah so let me go ahead and
good morning good morning council member
chair woo and um the rest of the council
members we are so glad to see you this
morning my name is Don Lindell I'm the
general manager and CEO for Seattle City
Light and um I have with me at the table
a wise cohort and that includes the
chair of our uh Seattle City Light
review panel and I'm going to have us go
ahead and run down the uh line here and
introduce ourselves and then we will
hear first from the chair of our review
panel thank you I'm Lee Bara I'm the
manager of strategic planning and
performance at City Light obviously City
Light good morning kisty Granger City
Light Chief Financial Officer good
morning Siobhan dhy power supply officer
for SLE City L good morning Leo lamb I'm
the chair of the review panel good
morning Jenny lves external
Communications manager at Seattle City
Lake very good and so with that I will
ask our chair to uh the chair of our
review panel chair lamb to go ahead
okay so good morning chair woo and
council members of the sustainability
City Light arts and culture committee my
name is Leo lamb and I'm the chair of
the City Light review panel it's my
pleasure to present the review panel's
comments on the proposed Seattle City
Light strategic plan updates for 2025 to
2030 first of all I would like to thank
our entire panel for their dedication
and contributions to the plan and the
letter I would also like to thank Julie
Ryan the panel facilitator Baraka and
Mora buer at cight in particular for
their support of the panel's
work seatt CD light is a leader in the
public utility space focusing on
affordable reliable and sustainable
electricity surface the review panel
recognizes the scope and the vast and
complex responsibilities and we are
thankful for their leadership teams
transparency in helping us perform our
responsibilities as a former faculty and
research scientists in electrical
engineering at the University of
Washington I'm very impressed by the
their managements in their goals of
providing reliable electricity to seato
now while continuing to improve and
Advance with technology to ready the
utility for the next decade and more I
have been honored to be part of the
selection committee for the new general
manager Don lelle having witnessed the
former general manager Deborah Smith's
leadership and having been through the
reg rigorous selection process I'm very
confident that CD light is in good hands
for this important transition period of
electrification of the
city today is my pleasure to provide a
summary of our letter and we are pleased
to endorse the 2024 Plan update and
support this adoption as
presented I'll quickly summarize first
the achievements since 2022 and then the
challenges
first the achievements CD light
installed many level two EV Chargers and
curbside charging stations with plans
for public DC fast charging projects for
grid modernization cite developed an
internal grid modernization plan for
investment in transmission and
distribution to maintain system
reliability since 2022 CD light has
distributed over 14 million in emergency
bill assistance and lowincome home
energy assistance program funds it has
simplified the application process
leading to a much improved customer
experience for the utility assistance
program for Financial Health City Light
implemented a road to recovery strategy
to tackle the effect of the pandemic to
reduce aging receivable risk and
stabilized
revenues it has also updated Financial
policies with conservative credit
metrics and a debt management strategy
to maintain High credit
ratings in short cite has made good
progress on his strategic plan
priorities and is continuing to focus on
the next steps this leads to the
challenges and changes the citylite is
facing the challenge is the shift to
renewable energy has increased power
supply costs due to the intermittent
nature of wind and solar resources CD
light also faces higher demand growth
from electrification of buildings and
transportation which will result in
higher costs in the rate path a major
issue facing City Light is its depleted
Financial reserves due to low hydr
production and extreme weather demand in
2023 another issue is rising costs
higher power supply and material costs
along with increased interest rates will
impact future rates the proposed rate
path is higher than the prior plan based
upon the external factors with a focus
on minimizing rate increases and
managing generation assets for energy
and capacity needs besides rates City
Light will need to address surface
connections delays and improve the
predictability of service timelines CD
light will need to pay competitive
salaries and address compensation
disparities to attract and retain
talents it will need toe Ser serve Hydro
resources for balancing and storage and
continue maintenance and relicensing
work on the scheduled Hydro project in
conclusion while the rate path in the
plan is higher than has been adopted in
the last strategic plan the review panel
believes it to be reasonable and
appropriate given the challenges facing
the utility however there are certain
uncertainties in the forecast and
therefore if cost decline from the
originally projected levels the panel
would like to revisit the rate path with
CD light
again Seattle CD light is better
positioned than many other utilities but
faces challenges from demand growth
regulatory changes new Energy
Technologies and severe weather events
the review panel supports a conservative
planning approach to maintain customer
trust a committed Workforce clean energy
resources and a reliable delivery
system we appreciate the cultural shift
towards greater inclusion and
transparency and we look forward to
continued collaboration with SE C
Delight thank
you thank thank you Cher woo so I also
want to add my thanks to his or chair W
chair lamb I'm so sorry I was looking up
here when I said that um thank you uh I
would add like to add my thanks to uh
chair Wu and the members of the
committee for being here today as we
present the C City Light uh 2025 to 2030
strategic plan for you we appreciate
your flexibility and your willingness to
meet uh for the special committee
meeting on such an important topic on a
Monday morning citylight strategic plan
is the utilities Compass it reminds us
of our shared purpose and it points Us
in the direction toward our longterm
longer term goals while we navigate the
evolving energy
landscape every six years Seattle City
Light develops a full strategic plan to
outline the key strategies that it will
focus on and the the the wonderful men
and women who work there will focus on
over that next six-year period and then
we update that every two years to
highlight the progress that we've made
and also to adjust for impactful changes
along the way so the plan stays relevant
wow what a difference the last two years
have
made so we have included incorporating
customer feedback Community feedback and
employee feedback to ensure that our
plans and our day-to-day work continue
to reflect the diverse needs and
perspectives in our
Community Financial stability is
essential to everything we do this plan
looks at mid-range Financial stab
stability and um brings us uh to a
financially uh stable place in the very
near term we need to take a good long L
look out um much farther much like our
IRP does for power supply we need to
look at Assets in a similar way this
plan does not take the longterm look but
does allow for us to do that analysis in
the next two years so that we can be
better prepared as we prepare our next
plan the plan establishes a rate path
that's built on a foundation of
responsible planning we continue our
commitment to
affordability we are walking a fine line
of balance between ensuring that we can
meet the Power needs of the community
and that we can keep rates as affordable
as possible we are working toward a
sustainable and a predictable approach
to setting rates over time
it also means providing new pricing
options to help customers better manage
their energy through or their energy
bills excuse me through efficient use of
our products and services this also
helps us to achieve our conservation
goals City Light is a public not
for-profit utility that works hard to
keep rates as low as we can for everyone
we provide individual assistance to
those who are struggling and we remain
steadfast in delivering on our mission
to safely provide our customers with
affordable reliable and environmentally
responsible Energy
Services so I am going to um turn this
over to Lee Berea who manages this
process for us she uh actually was hard
at work on this before I ever got here
and uh has guided me and um all of the
rest of us through through it so I think
she's the right one to present today
thank you um Nina I think we can go to
um
slide uh four Don um covered this first
right here right um the city as Don
mentioned we have City Light review
panel is one of the the stakeholder
groups that we work closely with in
developing the plan and for City Light
our review panel is made up of nine
members rep representing city-like
customers and partners and uh experts in
different
fields they review and assess our
proposed strategic plan and as you saw
provide an opinion on the merits of the
plan as well as the accompanying rate
path this group was established by
Seattle City council ordinance in
2010 five positions are assigned by the
mayor
four assigned by the city council but
all nine positions are voted in by the
Seattle City
council
next this is our seventh strategic
planning cycle the chart beginning in
2012 illustrates the timeline for
completion of full plans as well as
updates the plan we're Pres presenting
to you today is an
update we expect to submit a fully new
plan for approval in the spring of
2026 with this would be general manager
lindell's First full
plan with us thank
you during each planning cycle we engage
our race and social justice program team
their in ins sites related to diversity
equity and inclusion provide valuable
guidance in the development of program
plans and budgets that are key to
achieving the work contained in the
plan in fact all major utility planning
efforts such as our
transportation electrification Strategic
investment plan and our integrated
resource plan are reviewed through a
similar lens plans such as these inform
the Strategic plan and rate
path in addition each planning cycle
includes multiple types of
Outreach this cycle was no different our
Outreach efforts have informed the
contents of this
update we met with stakeholder groups
such as the Northwest Energy Coalition
and NW the business owners and Managers
Association Bulma City Lights key
customers Suburban franchise City
representatives and we also analyze data
from customer surveys and engaged with
our own customer advocacy
team as we've said before the review
planel pays a big role in helping to
surface issues related to reflect their
constituencies interests and
concerns over the next six years we will
continue conversations that we've
started with community-based
organizations customers and stakeholder
groups here are a couple of findings
from our Outreach
work customer Bills remain a high
priority across all stakeholder
groups according to the Clean Energy
Future survey customers customers have
interest in additional programs and
education surrounding Renewable Energy
electric vehicles and solar
power the top area of Interest was the
development of solar in our region most
notably solar incentives residential
solar solar education and Community
solar
programs residential customers expect
expressed interest in receiving
personalized and educational messaging
related to utility rebates incentives
and ways to conserve
energy commercial customers commercial
and residential customers as well as
Cityline employees would like to be
included in decision making with
citylight earlier in the process when
their input can shape the
outcomes we have teams in place at City
Light such as our employee experience
Communications employee advisory and
race and social justice teams that can
help us engage with customers and
employees earlier throughout the
planning
process because this planning cycle was
for an update to the previous plan and
includes few new
programs and perhaps more importantly we
were between General managed throughout
the bulk of the development time frame
our Outreach efforts for this update
were not as robust as they would be if
we were developing a new
plan a fully new plan working with
general manager Lindell we've already
begun a lessons learn process that will
include an expansion of our Outreach
efforts exploring how we can broaden the
audience from from whom we hear from
grammatically
incorrect finally in 2025 we're entering
into a 2-year pilot partnership with a
department of
neighborhoods through this partnership
we will be working with do to reach
customers with whom we have had little
contact in the past we're very excited
to start this work together
great the 2023 plan helped us keep our
sight set on the future as we dealt with
the pandemic in the rear
view City Light is now ready to face the
clean energy Trad transition it's time
to get
going that's what this plan is about
acknowledging the progress we've made
reaffirming our vision and continuing to
meet the challenging
landscape we are powering
ahead for this update our highlevel
business strategies or key areas of
focus remain the
same we know the future is uncertain and
success is dependent on approaching
opportunities and challenge with energy
creativity curiosity and a commitment to
equity economic recovery is happening
all around us and customer needs are
changing as a community owned utility
our job is to help our customers thrive
in the future we are creating
together one thing that's slightly
different is this plan this update is
that we have identified outcomes for
each
priority what we commit to achieving
with this plan detailed initiatives and
work plans are the way we will achieve
the
outcomes each outcome that you see will
have measurable targets that we will
review
monthly this monthly review will help
help us stay flexible as IND as our
industry heads into a new era of new
challenges customer service remains a
top
priority City Light is focused on
enhancing our understanding of customer
needs so we can offer products and
services that make a different in their
difference in their
lives some regions of City Light service
area experienced above average power
outages we are committed to changing
that in addition citylight is improving
processes that will enable us to provide
customers awaiting service connections
with predictable
timelines that will allow them to plan
accordingly
change isn't just coming it's here and
we need to be
responsive we aim to have enough
different renewable energy sources to
keep up with growing needs we're
planning ahead with the help of our
integrated resource plan or
IRP trying new ideas like asking big
energy users to cut back during peak
times and the use of utility scill
batteries as general manager Lindell
mentioned our our uh access to power is
growing is the need is growing in
2022 our IRP indicated a need to
increase our power portfolio by 400
megaw over a 10e
period the 2024 update just 2 years
later
is showing a need to increase the
portfolio by
1,825 megaw over 10
years and it also includes adding almost
120 megaw of customer
conservation making the switch to
electricity for transportations and
buildings will be a tremendous change we
are committed to equitably supporting
all customers big and small in their
decarbonization
efforts the move to 100% carbon free
energy across the nation is the right
thing to do but it also comes with cost
costs electrification is expected to
increase our load much more rapidly than
we predicted two years
ago building
electrification is growing three times
FAS
fter primarily from commercial and
residential heat pump
adoption Transportation electrification
growth is up by
70% primarily due to Fleet
electrification and creating our Energy
Future depends on ensuring our
infrastructure can meet the evolving
needs of our grid to support a two-way
flow of electricity as well as increased
demand not only from
electrification but also from increased
usage during severe and increasingly
frequent weather
events City Light faces a challenge in
updating and modernizing our existing
assets for example we have 330 miles of
direct buried cable that has passed its
useful life and is increasingly
impacting service
reliability replacement of this cable
will be an expensive
Endeavor this strategic plan includes a
study of how to do that most
effectively this priority is all about
making sure we have the right mix of
skilled employees to do the work not
just for today but also in the
future we're focused on responding to
the needs of employees to increase
satisfaction across many of our
teams we use our employee survey to
identify ways to support employees and
managers throughout the many changes to
our
work we're also focused on supporting
our employees at every stage in their
career ensuring they have the tools and
resources they need to explore the
opportunities and take on new
roles our recruitment strategy
particularly in trades will help us
ensure we have the right people to
perform the work and deliver essential
services but be prepared for future
staffing
needs City Light prioritizes maintaining
a diverse Workforce in our recruitment
efforts
we do Outreach to build Partnerships
with community colleges and other
community-based organizations to
increase our access to a diverse pool of
talent in addition all staff who
participate in any hiring process are
required to take a training titled
minimizing bias in employment
decisions next thank you
we take very seriously our role as
Financial stewards of rate payer
dollars to do this we must be ever
mindful of the ways we can reduce
expenses and limit rate impact for our
customers to reduce volatility and power
costs and improve rate stability for
customers we are adapting our internal
risk forecasting monitoring and cont
Contracting Contracting practices to
respond to changes in the wholesale
power
Market adjusting our resourcing
strategies to better match customer
priorities is a
win-win for example time of use pricing
rewards customers with lower rates for
using electricity when power is cheaper
and demand is lower customers enjoy cost
savings and we all benefit from A
reduced strain on the electric
grid by definition energy burden is the
share of annual household income used to
pay home energy
bills a household that pays 6% or more
of its income on energy costs is
considered a high energy burden
household
City Light is committed to ensuring a
low energy burden and that all customers
have access to clean affordable
electricity no matter their financial
circumstances we will continue
supporting and improving programs that
help assure that customers can afford
their utility bills and get assistance
when they need
it one Improvement that will help in the
near term is that City Light will be
raising our income
threshold for participation in our
financial assistance programs from 70%
of the state median income to
80% in alignment with new state
regulatory
requirements for example this change
will increase the gross the maximum
gross yearly income for a household of
three from approximately
71,000 to 90,000 based on 2024 income
guidelines we power represents much of
our Core
Business we're implementing initiatives
to ensure that we continue to have a
reliable power source in a changing
environment this includes implementation
of our Wildfire risk reduction strategy
as well as planning for at least one
annual strong weather
event as we've seen in the last four
years these events impact us
operationally and
financially proactive planning will
ensure we are ready to handle such
occurrences as we plan for the future of
providing affordable reliable and
environmentally responsible Energy
Services we commit to meeting regulatory
requirements such as dam safety
relicensing and Emissions
requirements we are investing in
technology and cyber infrastructure
enhancements to ensure we continue to be
responsive and resilient to the
challenges
presented by a challenging energy
landscape the technology needs will be
expensive to help us meet these we've
applied for a $40
million grid resilience and Innovative
partnership Grant otherwise known as
grip
Grant if we receive this grant it will
be a huge help and it but it also
requires a $50 million
match if we're lucky enough to to get
the grant we'll be coming back to
council to discuss the supplemental
budget
approval next I'd like to introduce our
CFO Kirsty Granger to walk through the
rate path thank
you thank you Lee we move on to the next
slide so I'm going to talk a little bit
about the rate path that's associated
with the Strategic
plan this slide shows City Lights rate
increases by year both the history
proposed and projected
that top row there is a little bit of
history and it shows rate increases
approved by city council for the last
four years so for 21 and 2022 uh some
might remember that part of Seattle's
pandemic response effort was to keep
utility rates low and so the increases
you see here for 2021 and 2022 reflect
that the city council's intention in
this space uh for example in 2021 the
council approved a rate increase of 3%
but it was designed to take effect at
the same time a 3% search charge for the
RSA rolled off and so the rates
customers experienced in 2021 were
actually the same as in
2020 uh we did 22.1% for
2022 and then for 2023 and 2024 these
increases were a little bit higher um to
catch up for the impacts of inflation um
as we had fallen behind during pandemic
recovery in 2024 the total incre
increase for customers was quite
substantial uh in addition to the
increase shown here there was also a 4%
RSA sech charge that automatically took
effect at the same time uh and we'll
talk more about that uh later in the
presentation so the second row shows the
increases projected by our strategic
plan two years ago
3% and the bottom row shows the
increases we're proposing for 2025 and
202 26 which are
5.4% for each of those years and these
increases represent the price for the
Investments That City Light needs to
make to continue to deliver our critical
surface as well as deliver on uh the
Strategic outcomes that Lee just walked
you
through 5.4% translates to about $5 a
month for a typical residential customer
and then for customers who are enrolled
in Seattle's utility discount program
it's about $2
for subsequent years we are projecting
5% annually again I want to reinforce as
as Don said at the top of the
presentation this is a forecasted
placeholder there's a lot of uncertainty
around this um and that that will be
informed by studies of our assets um and
and other things and so we'll be talking
more about that in the
future so these are substantial
increases and they are higher than what
we were projecting two years ago and so
for the B of the presentation I'll be
discussing the reasons why we are
proposing this higher
increase Nina you're awesome you're like
on it thank you um so this bar chart
summarizes uh the Investments that are
contributing to the need for City Lights
rate increase proposal the horizontal
access is years and then the vertical
access is the increase in costs in
millions of dollars above the budget for
2024 so if the cost is is the same as
2024 it's
zero the orange bar is power costs and
this is the single single largest driver
um for rate pressure particularly for
the next bium and power cost reflects
the impact of high wholesale market
prices low hydr production levels uh as
well as City Lights need to procure new
power resources these are going to be
those wind and solar resources and we're
going to discuss this more
later blue is onm our operating costs
are rising due to wages needing to catch
up with Market inflation and cost for
materials to maintain our infrastructure
as well as uh operating costs related to
compliance yellow is capital recovery
this is the cost of paying Upfront for
our Capital improvement work um as well
as paying for the principal and interest
payments on the bonds that we sell to
fund our Capital
program Capital recovery costs are
expect to rise significantly especially
in the later part of the six-year
planning Horizon we anticipate
significant costs associated with uh
fulfilling the terms of the license for
the new the new license for the gadget
project as well as for transmission and
distribution costs associated with
adding capacity and addressing aging
assets and these are needed to ensure
service reliability and then also
addressing the growing needs of our CI
Seattle continues to grow
the gray other category is mostly taxes
we pay a 10% Revenue tax so that grows
along with everything
else okay so one thing that is driving
our our new rate Outlook and something
that has changed a lot in the last two
years is the policy landscape this is
legislation at the federal state and
local level and they are all having a
profound impact on the electric utility
industry so at the Federal level you may
have heard of the uh infrastru
infrastructure investment and jobs act
um and then there's also the inflation
reduction act and these both of these
acts include billions of dollars uh to
support Clean Energy Technologies
decarbonization as well as overhauling
the nation's power grid and this
includes that grip grant that uh lee had
just discussed that Seattle is pursuing
and so as you can imagine uh this these
federal dollars are fueling a lot of new
investment in the electric industry
space now at the state level Washington
State's clean energy transformation act
or sometimes people call it Ceda uh this
is this sets specific Milestones to
reach 100% clean electricity Supply in
the state by
2045 which is pretty pretty soon All
Things Considered it's a ambitious and
and under this law before 2030 all
utilities must phase out Coal Fired
electricity and also become greenhouse
gas neutral now for Seattle City Light
we are already greenhouse gas neutral um
and we don't have any coal in our in our
resource stack already so we are well
situated from that standpoint but we're
still impacted directly because as other
utilities work to clean up their
resource portfolios and get the coal out
of there get to greenhouse gas neutral
what we're seeing is that it's making
the market for electricity tight
everywhere and the price for Renewables
uh renewable electricity like solar new
wind projects has risen significantly
and so Seattle we are out looking for
new solar and wind projects and so what
we're seeing is that the price for that
electricity is is going to be
higher the state CCA climate commitment
act uh caps and reduces greenhouse gas
emissions from Washington's largest
emitters this is exciting it's expected
to fuel a big increase in vehicle
electrification and so uh that'll be
great from a greenhouse gas perspective
and it will also incre demand for
electricity as well as for vehicle
charging infrastructure throughout the
city so everyone can charge these
vehicles and then here in Seattle we
have the building emissions performance
standard or beeps and this was adopted
by city council last year thank you um
and this is expected to significantly
contribute to new electrification of
buildings as we look to move away from
fossil fuels within the city
and so this too is going to translate to
a demand for more
electricity and so now uh to
underscore all of those things on that
chart it's okay Nina we're going to keep
moving forward um all these things
happened in the last two years and and
it's exciting and transformative time in
the industry and and brings challenges
as well so I'm going to turn it over now
to Siobhan Doty our power supply officer
to discuss a little bit what all this
transition means for Seattle and for our
power
supply great thank you so as Christie
mentioned our one of the areas driving
our rates is power cost we are
anticipating significant increases in
the demand for electricity in Seattle
this chart shows City Lights actual and
forecast electricity demand from the
customers we serve what we call our
retail load the horizontal axis is
showing us years from 2010 through
2040 and the vertical axis shows our
average annual load in average megawatts
note here that the axis is zoomed in to
900 to 1350 to allow us to see the
changes um best The Gray Line here shows
actual load from 2010 through
2023 over the past decade Seattle sought
declining electricity usage this was
driven by advancements in efficiency
like LED lights and heat pumps which
more than offset our City's growth the
dark blue line is our 2024 load forecast
and we can compare this to the 2022 load
forecast which is in the light gray line
and the Shaded area shows the years
covered by the Strategic plan
Horizon what we can see is that our 2024
line is much higher than our 2022 line
with electrification load is expected to
increase and the latest forecast Pro
much faster than we were expecting just
two years ago compared to two years ago
expected building electrification growth
is three times faster this is primarily
from commercial and residential heat
pump
adoption Transportation electrification
load growth has increased 70% just over
the past two years again driven by Fleet
electrification so thinking about Amazon
electric delivery vehicles and electric
school
buses so electrification really good
news it means that we're making
meaningful progress towards our climate
goals but it also means City Light has a
lot of work to do new resources new
transmission and peaking capacity in our
distribution system will be needed to
reliably meet this future
demand you this slide shows City Lights
annual historical actual and forecast
load and
resources along the vertical axis we
have the quantity of each element in
average megawatts or Peak megawatts this
is the same as the previous slide but
we've zoomed out to start at zero so the
load is looking flatter the horizontal
axis has years from 2013 through
2030 the black line indicates our
average annual load this is the same
line that we saw on the previous slide
we've also layered on our Peak load in
the Orange Line This is the highest
instantaneous load for that year so
while City Lights load is increasing
each year Peak load is increasing even
more quickly and our need for new
resources is primarily driven by that
increasing Peak load each of the bars
here represents City Lights average
resources for the year the light blue
portion of the bar shows the volume
received through our long-term contract
with the bonerville power Administration
we get about 40% of our resources
through our contract with BPA
the dark blue shows generation from City
Lights owned
resources gray represents our contracts
and then yellow shows new resources that
we're planning to add to our portfolio
to meet that increasing
demand in the Years where the um bars
exceed the load line were long and we
were able to sell resources to other
Utilities in years where the bars do not
meet the load line so particularly
looking at 2023 we were short and we had
to go out and procure more resources
from the market and from our other
utilities this is a simplified view in
that it's showing average load and
average generation throughout the year
in reality we need to meet load um every
hour of the day and that looks um more
dramatic than this we've recently
executed two solar ppas to meet our
increasing load and we will be
conducting additional competitive
solicitations to acquire new resources
to meet these changing
conditions while the volume of um our
load is growing we're also seeing
changes to prices and new resources are
more costly than just two years
ago this chart shows daily prices in the
Northwest from 2001 through April
2024 the vertical axis represents prices
in dollar per dollars per megawatt hour
and then the horizontal axis has time
each column represents that price for a
particular day over the time
period where we see prices spiking we've
indicated the event associated with that
particular price
spike historically prices have been
relatively stable with small increases
however since 2019 we've seen more
frequent extreme events driving prices
to spike higher the first event that we
identify here is the Western energy
crisis in 2001 driven by enron's market
market manipulations and you can see
prices Spike to over $400 per megawatt
hour after that prices are bumpy but we
don't see anything close to the 2001
event until February 2019 when a British
Colombia natural gas pipeline ruptured
and sent prices to $1,000 per megawatt
hour after that it's all about weather
events we're seeing at least one massive
weather event each year and we're
needing to budget for that change
over the MLK weekend in January 2024 the
Northwest experienced a cold event that
drove prices close to $1,000 a megawatt
hour during this weekend City Light
exceeded the peak glad set in December
2022 which was our newest Peak by over
100
megawatts
luckily which had a very large impact on
um us last weekend we also had a heat
event luckily um we had adequate Hydro
to sell to help cover the additional
energy that our customers used over that
weekend however were this event to
happen in the second half of the year
whether we experienced a hot event or a
cold event it's very likely this would
not be the case and we would be subject
to much more extreme volatility in
pricing the increasing frequency and
intensity of these extreme events is
driving price spikes at a much more
rapid rate than we saw the first 20
years of the
2000s at the bottom of this slide we've
also also shown average prices for
different time periods for the first 20
years average prices were $38 per
megawatt hour over the past three years
prices have more than doubled to $80 per
megawatt hour so while we're
experiencing increasing load and need to
add new resources we're also seeing a
dramatic increase in the cost of
resources and volatility in energy
pricing this is driving the in increased
power cost that we see in rates here I'm
going to hand it back over to Christie
thanks
Shan all right so this chart shows the
balance in the rate stabilization
account or RSA the RSA is a cash Reserve
that citylight uses to buffer our costs
and revenues from wholesale Market
transactions and the RSA helps protect
rate payers from this in unavoidable
Financial Risk that that we are exposed
to in the wholesale electricity
Market the balance of the RSA is shown
on the vertical
axis so uh at 125 million the RSA is
full and it's empty at zero also marked
on this chart are the operational rules
for the RSA and these are set by
Municipal Code um so if the RSA Falls
below designated thresholds automatic
sech charges come on to refill the
RSA so what's happened is that over the
last two years two water years due to
the drought and these challenging market
conditions that Siobhan just talked
about the RSA cash Reserve has become
depleted which is illustrated by the
bars declining as you know it was full
back in October 2022 and then you can
see the bars moving downwards as we um
went through
2023 and and what's even more concerning
about this is to take that you have to
take into account that this decline
included $100 million in operating cash
that city council authorized us to
transfer into the RSA last year to try
to shore it up and avoid the SE charge
from
occurring so even with that $100 million
that we deposited over 2023 the RSA
still fell below $50 million which
triggered the 4% surcharge that's now in
effect and this surcharge uh stays in
place and it is automatically lifted
when the RSA reaches 100
million the blue dotted line on this
chart shows our forecast for the RSA
balance through the year it's a little
stale at this point but um the concept
is that as it gets drier through the
summer uh the RSA has been depleted
depleted so we're struggling to refill
it even with the search charge that's on
right now and this has to do with the
warm dry summer prices and being being
strong um so nobody likes search charges
and we understand that but I want to
underscore that this is a very challeng
challenging time in the in the industry
um City light is not in crisis um but we
are concerned this Reserve is depleted
we're in a little bit of a tenuous Place
financially and it is important it's
very important that we replenish this
Reserve so that the RSA can continue to
do its job of protecting rate payers
from this Market risk that we are facing
and and weathering through right
now um managing this risk prudently is
also really important because it um it
affects our credit ratings City Light
sells bonds uh each year and so
maintaining a good credit rating getting
good interest rates helps us keep rates
stable for the long term as
well so a plan to uh replenish this
Reserve is is part of the Investments
That is included in our rate
proposal it includes conservative
budging for net wholesale revenues that
we'll discuss later
another important investment accounted
for in our rate increase proposal is
catching our wages up to the local
market and to be clear by local market I
don't mean put sound energy or investor
owned utilities we mean Snohomish PUD to
the north and Tacoma power to the South
so what's been happening is that over
the past several years citylite has
struggled to recruit and retain
particularly in skilled trades and our
vacancy rate has been very high as we
lose employees to snow PUD and Tacoma
power in these neighboring utilities
where the um pay rates are higher and
the cost of living is lower and so as
you can imagine our high vacancy rate it
contributes to longer processing times
lower service qualities even as our
employees are are working um often times
on untenable levels of overtime to
continue to deliver um you know good
service to our
customers so to be able to attract and
retain a skilled and effective Workforce
it's critical for us to be able to
provide the safe reliable Affordable
highquality Electric Service that our
our customers expect and
deserve labor agreements recently
negotiated by the city and are currently
in process these are expected to
increase our labor cost by 18% compared
to 2022 and this is Illustrated in this
bar chart here the last time that um the
current labor agreements were settled
was back in 2022 we're a little bit
behind I think it's post-pandemic
recovery and so we've been working to
get all of those
updated AWI reflects cost of living
inflation and we had accounted for this
in our projections but what we didn't
account for is that yellow bar there the
market wage increases and it is
significant uh catching up to Market
wages is expected to increase our omm
costs by $17
million um and you can use a a rough 17
million about $10 million is equivalent
to 1% in rates and so rough math $17
million is
1.7% of rate
pressure so taking a step back um paying
our employees a fair wage it's a good
thing it's in line with our values as a
city but it also means that our our
costs are
rising another space where our costs are
we're feeling pressures is in uh the
price for materials um as you can
imagine we're a infrastructure company
we do a lot of work we build a lot of
things and and what we've seen is that
the prices for the uh supplies that we
need to do our work this is wires cables
poles
Transformers uh the prices for these
materials have doubled tripled and more
since
2019 and we've also seen lead times
increase from weeks to sometimes years
um and so you know this is another
struggle that we have as we're trying to
meet our customers timelines but we're
needing to buy parts to do that work
years in advance and so this is another
cost pressure that is uh incorporated
into our rate
proposal okay we got just a few more
slides and this is a a big deck um so uh
here's um a mathematical breakdown of
what is causing our rate proposal to go
from the 3% from two years ago to the
5.4% that we're project we're we're
requesting your approval for
today uh first and largest power cost
increases that's
3.7% this is for uh costs for contracts
we already have like with the Bonville
power Administration as well as for new
power
resources also RSA is depleted we're
trying to be conservative with net
wholesale Revenue so that we can
replenish the RSA and that's
contributing
1.9% to
rates om andm accounts for inflation of
Labor and
materials and you'll note here that we
have 1.6% here and I just mentioned a
few slides ago that just the wage impact
is equivalent to 1.7 and so this is a
space in our omm where we've really um
done a lot of work to scrub our budget
we're really trying to fund emergent
work with savings and reallocations and
so you'll be seeing that in our budget
proposal that comes through um with the
mayor later this
summer um other is mostly taxes and then
for 20225 Capital recovery Capital work
is not um a main driver it's it's more
aor in the outer years so sub totaling
all these costs comes to 7.1% in rate
pressure but we do have a revenue offset
because we are anticipating higher uh
sales of kilowatt hours that will
generate additional revenue and so that
helps offset some of these cost
increases and then the net impact is uh
gets us to the 5.4
and this is a system average
increase and so on the next slide this
is just a reminder of what comes next um
this isn't the last you'll see of us
this summer pursuant to the adoption of
um this strategic plan resolution City
Light will be bringing to this Committee
in August an ordinance that would uh
codify new rates for 2025 and
2026 and this is just a reminder that
the 5.4% is an average for the whole um
everybody in that citylight serves and
what the rates will do is to break that
down by residential commercial and then
set individual fees in charges um and
this rate making entails assigning cost
recovery um and and adjusting the rate
design and so our goals here are to
recover the right amount of Revenue and
then ensure that customers pay their
fair share and then what this means is
that for customers sometimes their their
bill increase might vary a little bit
from that 5.4
um so as a reminder we are again as as
we all know reminder for the folks
listening at home City Light is a non
not for-profit Municipal utility um and
our goal is just to collect the right
amount of Revenue to recover our costs
and then collect it in such a way that
everyone pays their fair
share all right so how does 5.4% compare
with other Utilities in the region oh go
back once
thanks um so this table Compares
residential rate increases that have
been announced or in the case where only
the system average is available we've
included that as an
indicative and so as we've been
surveying our utility peers reading the
news on on what others are saying about
rate increases what we're hearing is
that many are facing the same challenges
that we've discussed with you today
they're feeling the impacts of changing
regulations um both federal state and
local they're feeling higher costs for
bulk power they're seeing a more
challenging wholesale Market Rising
wages and higher material costs so you
know Seattle is not alone in in facing
these challenges it's a challenging time
for all utilities in the
region um so you can see on this chart
here uh Tacoma power is projecting rate
increases in the 5% range put Sound
Energy
6.9 Portland 7.4 and then a Vista they
serve Spokane um
13.8 a couple more
slides we understand rate increases are
hard and we know that every dollar that
we collect from our customers is one we
need to take care of and spend
thoughtfully so this is just a table to
illustrate that in the last 12 months
citylight is doing work to stretch our
rate pair dollars um just in the last
year we' found $ 56.4 million in SA
savings uh through process improvements
pursuing grants and uh through project
savings and so we want to ensure you
that this is uh something we take
seriously being good stewards of our
customers dollars and we are going to
keep looking for Savings in 2025 and
2026 to save and stretch every dollar
that we collect from our rate
pairs last slide um so we've talked
about how we are transitioning to this
exciting Clean Energy Future this
transition does have a price energy
costs need to increase and this makes
sense electricity shouldn't be super
lowc cost or free because it has a price
for our planet and everyone needs to
understand and and feel that so we can
you know weather this transition
together but at the same time everyone
needs access to
electricity power our laptops light our
homes charge our phones keep our food
from spoiling and much more and so as we
move through this clean energy
transition as we need to increase our
rates to keep Pace with our costs and
make these critical Investments
affordability is something that we take
very very seriously so for our closing
slide we wanted to highlight again
programs that customers can access if
they uh need help paying their bills so
for income eligible Seattle has the
utility discount program that offers a
60% Bill count discount for customers
who are behind on their bills we have an
emergency bill assistance program that
will provide credits on pass du bills
and we can also help customers Access
Federal and State programs that will
help get them caught up and for anyone
who wants some help managing their
energy bills we have a budget billing
billing program which will set the their
bill to a consistent amount every month
and then it readjusts just once a year
and then we have flexible repayment
plans that give uh customers 60 days to
catch up on P du
bills uh and then as Lee mentioned
earlier one exciting Improvement that's
coming up is that we're looking to
broaden our income threshold for our
financial assistance programs from 70%
of the state's median income to 80% of
the area median income and as you can
imagine Seattle's area median income is
higher than the state and so this means
that more people in our Community
hopefully will be able to access the
great programs that Seattle
provides so to close once again
citylight we are not for profit we exist
to serve our community and we know our
our rates are we need to we need to
propose to increase them so that they
can keep caught Pace with the costs and
so we can make investments to continue
to deliver safe high quality reliable
and environmentally responsible electric
service and even as we do this we know
that maintaining affordability is a
Cornerstone of our core Mission and so
we'll continue to look for ways to
ensure that the vital service we provide
is attainable and affordable for
everyone thank you for your time and
we'd be happy to answer any questions
that you have thank you for your
presentation um colleagues so I'm hoping
we can vote on this on August 2nd if
there are more questions today um we
love to invite everyone back for our
Friday um July 19th meeting um because
we do have another presentation today so
I will love to hear if anyone has any
questions and we'll take questions till
about 10:55 before um transitioning to
the next presentation councilman verore
you had a your hand up during the
presentation I'm fine thank you
chair anyone have any
questions C member Strauss thank you
chair uh and thank you to City Light for
joining us today colleagues you might
notice I've lost my voice I was is
serving salmon for 6 hours plus About
Seafood Fest this weekend and you can't
have salmon and Ballard without a little
bit of yelling um and so thank you all
for coming here I will Kirsty I
appreciate your presentation I will say
though that energy costs could be you
know as low as we I think that they
should be as low as possible um there is
a cost associated with transitioning off
of uh primarily fossil fuel energy
sources throughout the nation um I think
the Highlight here is uh slide 26
demonstrated this very well that without
generating power for ourselves we would
be seeing a if we could go you know if
we could go to slide
26 um I just want to make sure I get my
numbers correct which is um without the
ability to sell Power we would be
increasing this plus 4.7 % on top of the
5.4% that we have so just noting that we
are also able to keep our rates lower
because we are a unique Municipal power
source
um I will just go kind of ticking
backwards the RSA search charge as you
noted has been difficult to refill
because it is the safety net that we use
to make sure that we stay fiscally
solvent it is working as designed
because we are not in a fiscal crisis
and that is because of the RSA search
charge and it has been hard to refill
and replenish because it is doing its
correct job that said I think we are all
waiting with baited breath for us to
refill it so that we can drop the RSA SE
charge and return to standard standard
rates uh looking at our uh our neighbors
psse is already at 8.7% followed by 6.9
and
99.6% Portland is currently at
18% followed by 7% charge a Vista has a
133% rate increase on on the horizon and
we're talking about a 5.4 or
5.5% increase granted I'm I still have
lots of questions as you know from our
last meeting uh I have a lot of
questions about why and how did we get
from a 3% in our last proposed iic plan
to a a 5.4% but again your slide 26
pretty clearly states how and why um if
you could go back to the um cost
increase slide I didn't write down what
slide it is it's got the picture of all
22
22 oh there it was U sorry looks like 2
I I've got the slide deck up myself um
18 it
is 25
I think that 25 is just a very good
visual of the components in your table
and the different prices and the the
increases that we've seen in these
prices as compared to the actual
elements sorry you had it there on
25 um I'm a pictures person as well and
so you can see each of the elements
provided in this picture graphic are the
components within your table as well
take this time to note that thank you
for keeping rates flat during the
pandemic I don't know how many other
utilities were able to keep rates flat
during the pandemic but you know when we
were able to pull the RSA search charge
off you noted that rates didn't change
between I believe it was 2020 and
2021 that that is incredible it is
unusual and we are now in a more stable
economy than we were in 2020 and we're
now having to address some of the issues
that we put off and some of that was
inflation
related these haven't been questions
mostly because we had a very long and
intense briefing but I'll go back to um
what was stated at the very beginning
Leo lamb thank you for being here with
us thank you for your volunteer service
you had stated that reviewing uh you're
comfortable with with this rate path as
long as we're able to review the plan if
the financial
uh Outlook
improves uh I guess so this is the
question now for CEO and Lee and kiry
what are our mechanisms to in the future
if the financial Outlook improves how
are we able to bring rates down
rapidly and adjust this plan that we've
that we are planning to approve I I
think our first um the first thing will
be that we we share your um uh
anticipation of being able to to see
that RSA sear charge be be lifted and so
I think that would be the the first
thing it is it is an automatic mechanism
um but if for some reason the you know
the market changed or what not that
that's we we understand that lifting
that se charge is a is a priority and I
I think it is as well for the mayor um
and uh and then after that we would be
watching we um transmit financials to to
city council mon each month that tracks
our our debt service coverage ratio and
if we are ahead that would be a space
where we would um let city council know
and then we can make adjustments from
there but I think that's how we would we
would is the first thing is going to be
to look to have that RSA search charge
roll off and then um and then manage
from from there
um and then we'd be coming back as as
part of the next strategic plan and if
if we're in a better Financial um status
with our reserves replenished everything
else then then that will mean that the
next uh two years that we posos as well
will be will reflect that fantastic
thank you thank you thank you chair are
there additional
questions so I have a quick question for
chair uh lamb uh just for the Public's
understanding could The Chair Talk a bit
about the review panel's role and
decision-making process on the rate path
and what were some factors that were
considered as a group sure the review
panel is a group of nine people that um
considered all of the pre presentations
we got the briefings from uh Seattle
City Light and on multiple topics uh
from rate path to uh energy Supply
to um you know all the relicensing work
that we do um and we carefully
considered and challenged all of the
assumptions that Seattle City Light made
uh and to make sure that they are
reasonable
and appropriate for a nonprofit uh
utility and that's how we came to the
conclusion that the rate path is
reasonable given given all the external
factors that are affecting Seattle City
Lights thank you um
so there just for the Public's knowledge
um what Outreach has been done together
input on these proposed rate changes
because you talk about Do's partnership
in 2025 but what input have we gotten
for this current
plan uh let me
see Jenny do you want to join in sure I
could take that um from October 20123 to
March
2024 uh we met with various customer
groups and stakeholder groups we talked
to over
130 uh customers and stakeholders and
and presented the priorities for the
plan and gathered their feedback um and
identify listen to their questions and
concerns and listen about their
priorities and so that's reflected in
the the plan and the presentation that
you've seen before you
today if I might add um we will be the
partnership that we've created excuse me
recently with um Department of
neighborhoods we're really excited about
and I can tell we're really excited
because last week I had a lunch with
director chow and she let me know that
over 20 different
um business units and and um um areas
I'll just say areas of Seattle City
Light have already reached out to them
to go to um talk about what how we might
be able to um utilize the skills and
talents of that group to help us reach
different people so I think that that uh
pilot program will be well used and will
enable us to dig to um dig deeper
and be with be with uh communities that
we have not been able to be with in the
past I think that will be really
important for
us thank you is there a a plan or
communication um plan to ensure that
people understand and can prepare for
these rate increases like for
individuals who reive this bill or is
there any way to communicate the changes
and and ab they changing abely once once
the plan is adopted we will absolutely
be communicating that with our external
Communications team we are having some
in um employee information session
starting tomorrow to share to bring them
up we've we've met with employee groups
but tomorrow we're going to share this
presentation as well so that there's a
full understanding of of what we're
presenting to you today and part of our
our
communication needs to be that
partnership with Department of
neighborhoods because people can't take
advantage of our programs to help them
if they don't know about them and so
we're going to really broaden that reach
we are going to work through um
community centers through local churches
and other nonprofits that we haven't
tapped before to ensure that we get the
word out so that people can take full
advantage um especially with the
increased uh um salary availability uh
for people to
qualify and I I assume this is also for
all the resources that can help people
if they need help with B bill payment um
and so that's probably not going to be
done on individual basis but through
community centers and do yes exactly you
know sometimes we um I think we do a
really good job in communicating through
social media and communicating on our
website um often our underserved
communities are underserved because they
don't have time working two jobs to
spend research searching programs so we
want to bring the programs to them in a
way that in ways that we haven't tried
before and see if we can't increase that
participation awesome thank you so I
have a quick question for if when you
come next time is it possible to get the
other rates within Eastern
Washington um in terms of I'm so sorry
what slide was that that
was some of them will not share them
until they're public they've got um
they've got bars um I don't know what
you would call it debarment I'm not
that's not the right term but they will
not make public their rate increases
until they're ready to make them public
so we can only get those who are willing
to tell us or who have already made them
public so that may may be a struggle
unless they unless they make them public
in the next five days I would say yeah
um we can do that we also do some some
research comparing Seattle to other
large cities across the country um as
you can imagine uh there's there's not
uh you know Seattle's a sort of unique
in the state and that we are a a big
Urban um city and so that's another uh
lens that we like to look through as
well and and Seattle
is really compared to a lot of other
cities AC big cities across the country
particularly on the west coast we have
very affordable rates but we could we
could bring we could bring a slide with
that if that would be help helpful but
also show thank you and then I have some
really hyper specific questions um I
know we don't have very much time but I
I'll probably send these to you offline
um but under the page 33 in the
Strategic Plan update summary under onm
review requirements inflation numbers 18
million in 2024 29 in 2025 43 in 2026 55
in 2027 all the way to 94 in 2030 so
look like between 2024 and 2025 that's a
61% increase followed by a 48 increase
in 2025 to 2026 want I see if I did my
math correctly so I'll send these
questions to you also have a question
regarding forecast and inflation looks
like it might be going down from
previous highs that we are increasing
the state of plan is this due to
unforeseen hyperinflation from the
pandemic um and also in
2022 distributed 9.8 in state pandemic
funds um to 6 169 um well to several
customers to help reduce past du
balances it's just still going on and
included in current forecast so I'll
send these questions to you um but I
want to thank you um I think if there
are no further questions and we may not
need you to have to come back this
Friday we'll probably have you come back
on August 2nd unless anyone has any
comments regarding
that okay so yes so we look forward to
seeing you on August 2nd for more
discussion
um and we will hopefully be able to vote
in committee then so thank you so much
for coming down on a Monday and for your
very comprehensive um presentation thank
you and so um we will now move on to the
next item of business will the clerk
please read item two into the record
item two office of sustainability and
environment clean Heat Program overview
for discuss for briefing and discussion
thank you will our presenters please
join us at the table and share your
presentation once ready please introduce
yourselves and begin your presentation
also love to uh thank you for your um
patience um and uh please begin when
ready good morning members of the
committee Madam chair my name is Jess
frell I'm the director of the office of
sustainability and environment thank you
so much for having us today we will jump
right into our presentation as
Christine's uh getting ready but just
wanted to thank our partners at Seattle
City Light in particular uh GM the GM
and the rest of the presentation there
is a real Nexus uh to what they just
presented and what we're going to be
talking about in our clean heat
presentation and so without further Ado
I will pass it over to
Christine right good morning chair
members of the committee my name is
Christine bunch I am a climate and
energy strategic adviser with the office
of sustainability and environment and I
will also introduce my colleague from
the office of housing good morning my
name is Daniel Mario I'm the programs
and contracts division manager in the
office of
housing thank you so much for the
opportunity to provide you a briefing on
the clean Heat program today we'll be
providing an overview of the program the
goals of the program and an update on
how we're
doing next slide
please thank
you all right well earlier this year uh
director Ferell provided this committee
with an overview of os's core service
and you can see how the clean Heat
program is listed here as one of our
important ghg or greenhouse gas emission
reduction initiatives as part of our
building decarbonization
portfolio the city's policies and
programs are data informed we track and
Report our city-wide emissions every two
years and through that reporting we know
that buildings are one of Seattle's
largest sources of climate pollution
contributing 37% of our core greenhouse
gas emissions and about half of those
buildings or building emissions come
from the residential sector primarily
single family
homes the clean Heat Program Builds on
City priorities and commitments
expressed in our climate action plan
climate strategies and executive orders
specifically the climate action plan
targets a 32% emiss reduction in the
residential sector by
2030 and some of you may be surprised to
know that Seattle still has homes
heating with oil in fact heating oil
represents about 9% of Total Building
related emissions and 18% of residential
emissions so for this reason we've
established a goal of eliminating all
oil heating in Seattle by 2030 and
specifically supporting households
convert to clean clean and energy
efficient heat
pumps the clean Heat program is one of
our most impactful programs delivering
real and Lasting benefits with moderate
Investments these Investments are key to
leveraging additional funding from
private state and federal sources that
further support this important
work so why do we care about oil oil oil
contributes to a host of environmental
impacts not just when used at the home
but also throughout the supply chain
from extraction to refining to storage
and transport oil is expensive volatile
in price and carbon intensive homes
using heating oil primarily store in
tanks stored underground and since the
majority of homes in Seattle were built
before
1960 we know that underground or oil
tanks are beyond their useful life which
also increases the likelihood of a
leak switching to energy efficient heat
pumps provide a host of benefits
including reduced heating costs year
round
Comfort especially since heat pumps also
provide air
conditioning this has become
increasingly necessary as Seattle uh
experiences the impacts of longer and
hotter Summers combined with Wildfire
smoke
events so our goals are simple and
straightforward one phase out
Residential Heating Oil by
2030 and two Advance the Equitable
adoption of electric heat
pumps the city's clean Heat program has
been instrumental to the phase out of
heating oil for both moderate income and
income qualified households through this
program we're enabling our residents to
to reap the benefits of cleaner heating
lower heating costs improved comfort and
improved indoor air
quality in addition space heating
electrification for households with
lower incomes provides a pathway to
weatherization Services provided by the
office of housing further redu reducing
utility costs and energy
burden the clean Heat program has two
main Strate iic areas of focus one is
through an instant rebate model which
the office of sustainability and
environment
implements um it serves mostly moderate
income
households um we we OS manage a contract
with jensco which is one of the region
Region's largest HVAC distributors to
support program implementation and
Partnerships with heat pum manufacturers
such as Mitsubishi
additionally we partner with more than
50 local HVAC contractors participating
in the program who are primarily small
businesses these companies are a key
component of marketing the program and
selling the benefits of heat pumps their
participation in the program creates
more business for their
companies uh which in turn supports the
hiring of more employees in the clean
energy
sector and I'll just note that this
program has strong connections to
recently announced City Investments that
will support upwards of 250 workers with
pre-apprenticeship
training and job Readiness and that
ultimately support the skilled labor
force needed to meet our building
efficiency and decarbonization
goals since we launched the program 7
years ago the city has helped more than
1500 households
convert the second area oh and I'll just
say the 400 rebates we did 400 rebates
in 2023 and our goal is to convert 400
homes in
20124 and then the second area of focus
is providing income qualified households
with no cost conversion services and
this work is managed and offered by the
office of
Housing and since uh 2019 the office of
housing has converted approximately 400
homes
oops so I'll talk a little bit more
about the rebates themselves so um OS
provides as I mentioned earlier OS
manages that program we've provided we
provided $22,000 instant rebate that
goes directly to the homeowner through
one of our participating
contractors the home owners get no cost
estimates and ultimately choose the
contractor that they want to work with
after the installation the contractor
provides the instant rebate directly
onto that homeowner's
invoice so they don't have to you know
fill out a lot of other paperwork they
get it
immediately the Contractors Supply all
of this information this data to jensco
our partners and who in turn invoice the
city or
osc um for re rebate
reimbursement the city's portion of this
$2,000 rebate is ,500 and we're
averaging private dollars that come from
both jensco and Mitsubishi of 500 so
that's just an example of how we're able
to through this program leverage
additional dollars that support
homeowners be able to um afford this um
afford heat
pumps since the average cost for a heat
pump is about $220,000 this rebate
especially when combined with the
federal $2,000 tax credit does really
help with affordability
OS implements marketing and out Outreach
campaigns which include Direct Mail
digital advertising community outreach
and more more recently we partnered with
other local jurisdictions including King
County Pierce County city of Tacoma and
others on an educational campaign called
the switch is on the campaign provides
information about home electrification
benefits available incentives and tax
credits to Western Washington residents
and folks can go on to uh switches
on.com to find out more
information and now I'll pass it over to
Daniel Mario from the office of housing
to provide some more information about
uh their
services thank you um thank you
Christine as Christine mentioned the
office of housing does provide a program
for income qualified residents uh at 80%
of aor median income or below this
program is part of our larger
anti-displacement effort in the office
of housing that goes beyond just
investing in new homes but also making
sure that people in existing homes can
uh remain have the ability to to to to
remain this work involves replacing an
oil furnace with a high efficiency heat
pump to achieve all the benefits that
have been described prior uh this
includes decommissioning the old oil
tank um as this work is part of our
larger weatherization program uh a
homeowner will also re or program
participant will also receive a home
energy audit and in fact the Improvement
the heat pump is often met with other
weatherization to include uh insulation
uh air duct sealing as well as other
sealing efforts so that the the the
benefits of the of the heat pump are are
experienced by by the household um in
addition as our partners at Seattle City
Light referenced before um those those
in households that are already on the
utility discount program this will be
added benefit to them because uh their
their services will be discounted and so
they're uh because their services are
already discounted at at
60% next slide
please in terms of how we reach out to
our eligible qu households so as
mentioned we do have ongoing
collaborations with Seattle City Light
as well as our partners here at osc and
we have a letter campaign uh which has
proven quite successful uh particularly
to those who are on the utility discount
program we do other Outreach to include
social media campaigns direct mail and
online advertising uh we do participate
in ongoing events um out in the
community senior centers neighborhood
Council meetings to really get the word
out into the community itself uh we are
working with the affordable City Seattle
program to create a
uh online application process to again
uh better
provide access and then finally uh
developing in language access strategies
to increase applications from
non-english speaking residents so with
that I'll turn it back over to
Christine thank you Daniel um so here's
just a overview of really where we're at
how how things are going um the good
news is that um we are on track to
eliminate heating oil by 2030 um each
year we use data points like the Census
Data mechanical permits electrical
permits King County ass assessor data to
make sure we're tracking um in the right
direction um we project that heating oil
um with it with this data we project uh
again that will be phasing out all
heating oil by 2030 and you can see in
this graph that back in 2017 we
identified about 18,000 homes heating
with oil and now we're at around 9,000
that's due and so this success is due in
large part due to the clean Heat Program
generating awareness of heating
electrification creating Market
transform and creating Market
transformation so through like our
rebates and through the work of the
office of housing uh folks are able to
transition from Dirty oil um and then
there's also what we call the Market
transformation and what that means is
folks who do have the me are are making
the transition without the city's
influence um in terms of a rebate um but
do we do want to take credit for that
because we are putting a lot of
awareness out in the market we're
generating a lot of awareness about heat
pumps which again Seattle City our
college at Seattle City Light mentioned
that heat heat pumps are very um popular
now and they do provide um year round
comfort as well as air conditioning
which is really important right now for
folks um so Market transformation is
happening um the city's rebates um and
no cost conversions have resulted in
avoiding more than 11 million gallons of
oil from consumption and more than
100,000 metric tons of greenhouse gas
emissions that's the equivalent
equivalent of taking 24,000 gas powered
cars off the road for a
year through our rebate program we've
also been able to increase the number of
participating contractors who are so
instrumental in advancing the adoption
of heat
pumps oops actually and one other thing
I wanted to mention is that um we're
also proud that the program has been a
model for other cities and counties in
the state to emulate um which has
ultimately supported Market
transformation heat pumps have become
increasingly popular for the second year
in a row we learned that heat pumps
pumps outsold gas furnaces in the US um
and that's in part due to programs like
clean heat and other programs across the
state and
Country so our current and upcoming
priorities are focused on continuing to
deliver services that have real impacts
and that Advance our climate and Equity
goals for OS we expect to support 400
households each year and for the office
of housing they expect to provide about
about 80 no cost conversions per
year both departments will implement the
recently awarded 3.2 million do from the
Washington State Department of Commerce
and that was funded through the climate
commitment act um otherwise known as the
the cap and trade bill or uh law um and
when osc will be using these funds to
increase our existing $2,000 rebate for
moderate income households who make up
to 150,000 of area meeting income
that will help to offset inflation and
increase
affordability and then the office of
housing will expand their services to
convert approximately 40 homes from gas
to heat
pumps and then finally the state is
expected to implement the federal home
electrification program that is funded
through the inflation reduction Act and
the state is implementing um those
rebates starting probably in about q1 or
Q2 of next year so we expect to
coordinate very closely with the state
on program design implementation
strategy and Outreach and then finally
OC has hired a clean heat coordinator
who will support this coordination with
the
state and I think that's it that's the
end of our presentation and we're happy
to take any
questions well thank you for coming
before us and talking about this Council
bill um colleagues any questions or
comments c m St thank you chair uh voice
is still lost still serve salmon all
weekend um thank you for your
presentation this is really great work
I'm just looking at slide um says 11 on
the
PDF demonstrating that you've gone from
approximately 18,000 homes on heating
oil to approximately 9,000 oh yeah this
one here yes that's the one um are we
have we already reached a 9,000 number
are we on track to and also if you need
to follow up with me offline that's
totally fine this is an exciting slide
yeah we think so too um we have already
reached the 9,000 these are estimates
it's probably not going to be you know
to to the home um because we're using a
variety of data sources like the Census
Data the King County Assessor data
mechanical permits Etc we're kind of
mashing all of those data sources
together so this is our best estimate um
and we track this we've been tracking
using these data sources since 2017 so
we feel pretty confident great thank you
and that's the good news the hard news
is that the first to join such a program
are probably the easiest to get the loow
hanging fruit if we will uh for the next
you know if this is half the next two
quartiles of reduction are going to
become increasingly difficult uh and
again if you don't have the answer today
that's totally fine because this is
forward looking and forward working so
I'm happy to meet with you in my office
later but I'm interested to know what is
the plan for the next two quartiles of
homes that are probably going to be
increasingly difficult to get off of
oil well thank you for that question um
and we're happy to follow up with some
more information with your office I I
think at a high level um you know we
need to continue
to offer rebates those are very
important folks to be able to to afford
heat pumps um getting the funding
through the state is going to be um very
important as well because we're able to
stack those rebates what we call
stacking or braiding where we're using
our uh city funding and then braiding
that with State funding and then folks
can also take advantage of the tax
credit so kind of when you start tax
stacking all of this folks can start
getting $10,000 off of a heat pump and
that's what we're talking about real um
real money you know for folks who are
sort of on the fence or maybe they
moderate income and they're not able to
afford um we do know that the inflation
reduction act funding coming through the
state will also help with that work and
that those funds will last through
um probably 2030 although it's limited
and so it depends on how how fast they
go through that that that pot of money
great um and then of course with the
office of housing the work that they're
doing do you want to speak speak to that
Daniel and and your plan yeah I think
you know as we continue reach out and
participate in more events and really
increase our our capacity around
Outreach I think that's going to be a
huge help it already is a huge help um
so I think that's going to be we hope
that it'll bear fruit for us going
forward uh we'll see how it goes but I
think those are some of the strategies
that we we hope to to do um you know as
costs continue to increase uh
identifying additional uh support for
those costs because these you know as
mentioned prior in the prior
presentation cost for heat pumps are
going up cost for labor obviously is
going up so you know depend that's all
dependent upon you know what what uh how
we're able to address that uh and and
deal with those those increases that are
in itable um but yeah so those are just
some of the ways in which we we hope to
reach out to those particularly our
low-income Community who will really
benefit from this program great and
chair just one more you may um thank you
both for being here I'm glad that we
have two different departments working
on this but you might see where my
question's going which is is there a
reason that this line of business is
split between two different departments
is it historically that o was doing
doing this before osc was set up and now
osc is taking more of a role I guess to
the point is I'm having difficulty
tracking the difference between the two
programs because they seem so similar so
the question is are they different or is
it is there a historical reason why the
line of business is split between
departments sure thank you for that
question um so to give a little bit of
History um back in 2017
we um office of sustainability um
started this new program um pilot and
serving about 200 households with a
rebate um once we got sort of our you
know got some experience with the
program um I work directly with the
office of housing to see how might we
incorporate this benefit for um folks
who have lower incomes um oil conversion
was not part of the office of housing
portfolio if you will their
weatherization services so um we were
able to get some city funding to to work
with office of Housing and they were
able to do a pilot of about 25 homes so
again kind of started slow and started
ramping up we've ALS always worked
together very collaboratively since 20
2017 and um and office of housing
started their pilot in
2019 there was a lot to learn right as
you're converting households from oil um
everything from as I mentioned the under
underground oil tank and how how to deal
with that and decommission that working
with contractors who know what they're
doing the office of Housing and Os
worked really closely together in
getting that pilot up and running um in
terms of how we present the program you
know we really want to go with one
Seattle approach and that is it's a the
clean Heat Program we're really serving
two audiences one is uh you know folks
who have um lower incomes or income
qualified and the other is more of a
what we call market rate um and so it
it's um but the benefits are the same we
want to ensure that everyone who is
converting from oil are able to reap the
same benefits um or more um so yeah we
want to continue to have that one
Seattle approach and how we um promote
our program um and but I'm we're
definitely open to suggestions if you
have any and we're always evolving I
would say the program so thank you for
your great work thank
you yes thank you for your amazing work
and thank you for your presentation I
have two quick questions um so we know
50% is Seattle renters there are a lot
of apartment
buildings what's the difference between
this program and what's Nexus for beeps
the building missions program for
apartment buildings and how do we is
apartment buildings also part of your
graph that we were just looking at yeah
very good question so heating oil is
primarily only in residential homes so
you know one to four units so single
family or um duplexes and that type of
thing um we very rarely will see any
heating oil in a multif family building
um May it might be a very like lowrise
building but um it's they're very small
maybe like a six unit because if you
think about the under underground oil
tank has to distribute oil to all those
units so they just really didn't build
multif family homes or or buildings for
uh to heat with oil um so we kind of
don't have that issue with beps um beps
is um a building emissions portfolio
standard um that requires buildings over
20,000 Square ft and above to meet
targets over time um so there really
isn't any um overlap
um we there may be if there is a very
large building that does have oil um
they would still have to meet the
building emissions performance standard
um but there are some incentives that
will be coming down the pike next year
as I mentioned the inflation reduction
act program that the state is
implementing will be able to support
multif family
homes thank you and um can you speak
more a little about the Outreach
regarding non-english speakers or
immigrant Refugee
communities sure um so for the rebate
program um our program is a little bit
more uh so we provide a lot of do a lot
of direct mail um it's more of a broad
net of folks that we try to reach out to
so we're doing translation we're doing
work uh predominantly with kind of
inperson events where like maybe we'll
work with like the Beacon Hill Council
or we'll work with the damus river
cleanup Council or other nonprofits and
community- based organizations to get
the word out um but really our
contractors in our rebate program are
the boots on the ground they're out
there doing the marketing they're
meeting with folks um the office of
housing I think uh has done a lot more
of kind of specific uh work with
immigrant Refugee communities um and
I'll just
pass it over not to put you on the spot
if you want to take that one yeah thank
you um I I will say that you know a key
to this work is around building our
language access plan and being very
thoughtful and intentional about how
that's built out and then doing the
analysis to make sure that we target
whatever Outreach that we target to
those specific communities who one could
really benefit from the program and and
and also who could qualify for the
program um that's currently in
development here in a couple of months
through our our community engagement
team in the office of housing um so we
hope to I don't know the outcomes of
that but we we hope to really build that
up a little bit more so I'm happy to to
share whatever whatever comes from that
process in the future um if I may uh I
also want to mention that uh we do have
a multif family weatherization program
that while not specific to clean heat or
or or oil to Electric uh does uh other
measures as well so happy to provide
more information about what that multif
family uh work looks like um but I just
wanted to to also make a mention of that
and and a little bit to go to sorry to
go back if I may for the the other
question around the coordination I mean
I think you know our oil to Electric
program is also part of a larger
weatherization program and so this is
part of the services that are uh
provided that and this program has
existed for for for many many years so I
just wanted to since I had the
microphone just want to make those
couple comments but happy to sorry but
happy to provide more information about
the language access and in our Outreach
uh when I have more information to
provide thank you council member Morales
thank you um um staying on this slide uh
my recollection uh from a couple years
ago is that we were at about 16,000 oil
heated homes but only about a thousand
of them were low-income households or
um uh who would be eligible for
assistance with the UDP so um my
understanding is that the greatest
burden would likely Fall on people who
are on a fixed income but don't qualify
so seniors or others um and I want to
clarify my understanding about the
potential costs because you said a heat
pump costs about
$220,000 uh decommissioning a tank is
also about $20,000 or justes is that
like one potential cost um
decommissioning a tank which means you
either fill it in place you have to pump
all the oil out and then fill it in
place with concrete or some kind of foam
um or you could remove it that's
considered decommissioning that's um
regulated by the fire Seattle Fire
Marshall um that costs between $700 to
$1,000 to decommission your tank um
maybe a little bit more if you want to
really like if you pull it out and have
extensive gardening or I don't know
whatever you have to do to get it back
into place might cost more than that um
and then additionally if there is
cleanup required because of a a leak
from the tank that could potentially be
tens of thousands of dollars more so I
guess what I'm trying to understand is
particularly for those folks who might
um qualify for the assistants or for
seniors who are on a fixed income um but
don't qualify if there is these
additional costs um in their attempt to
make this
conversion are there other programs you
mentioned several other state federal
resources that are available that could
be stacked are those kinds of costs also
eligible for assistance for
families um yeah that's a good good
question um so just to kind of go back
uh you you mentioned
16,000 um we were we started around
18,000 so yeah every year we've we've
been making good progress um a thousand
back in 2017 we identified a thousand
folks who were on the utility discount
program who are also heating with oil um
that data essentially people are self
identifying how they're heating their
home so we knew a thousand are on UDP um
who are also heating with oil but we do
know that there are folks heating with
oil who are not participating in UDP
right so they're still income qualified
but for some reason are not signing up
for the utilities program or maybe
they're just sort of on the cusp um with
that 80% Ami so that is where the office
of housing really does
support as long as you're 80% of am Ami
or below you would be able to qualify
for the program um for a moderate income
to what you're saying for folks who are
on the cusp or their seniors on fixed
income I think that's where we
anticipate that 3.2 million coming to
the city um from Department of Commerce
um OS out of that will get about uh 1.1
million to support people making up to
150% so that's actually I think going to
be able to cover quite a quite a good
number of folks who are sort of on the
bubble um and then uh the other program
so there is a federal tax credit that is
in place now $2,000 tax credit that goes
through
2031 um and then the state will be
implementing the inflation reduction act
money rebate starting next year that can
support um electric uh infrastructure so
like if you need a new panel in your
home to accommodate the heat pump um you
know like electrical wiring and that
type of thing it covers the heat pump it
covers things like heat pump water
heaters insulation and other things it
does not cover decommissioning however
okay yeah I was looking at the um
switches on website and it lists those
different programs which is helpful but
it looks like you could potentially get
four $5,000 in different yeah rebates um
but it seems like it's for the heat pump
itself and not for those other things
that
might become an issue so I just wanted
to get clarity about that yeah the
decommissioning is not covered under as
far as I understand any other okay
Federal program yeah and I thought I'd
just emphasize thank you Christine for
that answer but I just wanted to
emphasize that stacking and how
important that is to be able to get at
that slightly expanded group of folks
who may be on un fixed income but not
under the threshold so the stacking of
city and state and federal resources is
really important yeah thank
you any further questions
great well thank you for this update um
and thank you for all your work and so
we have reached the end of today's
meeting is there any further business to
come before the committee before we
adjourn hearing no further business to
come before the committee we are
adjourned thank you
n