(The Center Square) – A $1.5 billion settlement with three native tribes allowing Seattle City Light to continue to use hydroelectric dams on the Skagit River to provide electricity for Seattle customers could be costly to ratepayers.
Planned rate hikes disclosed last week in the agreement between the tribes and the city of Seattle-owned utility were calculated at 0.5% rate per year from 2027 to 2032.
But in an interview, Chris Townsend, director of natural resources and hydro-licensing for Seattle City Light, said that rate increase does not factor in the full costs that will need to be passed to customers.
He said only design work is figured into the rates for a $979 million project to trap and haul salmon by specialized motor vehicles around the three dams.
Townsend said construction costs for the salmon bypass project will be another factor impacting rates.
“More rate increases will be needed,” he said without offering specific numbers.
He said the actual estimate of how much the design work will cost, compared to construction and operational costs of the program, is still being calculated.
The trap and haul program is aimed at getting the salmon around the three dams on the Skagit River, 65 miles north of Seattle, and ultimately to allow the salmon to reach upstream gravel beds for spawning.
Additional increases will also be needed for $1.8 billion in capital construction costs that were part of the agreement to upgrade the three dams and their powerhouses.
That agreement still needs to be approved by the Seattle City Council, Skagit County officials, and federal and state regulators.
Townsend said how those costs would break down into rate hike has also yet to be determined.
The city utilities lease with the three tribes for the operation of the dams, which provides 20% of the Seattle’s electricity, expired last April 30. A new lease could go for up to 50 years.
Townsend said what is calculated in the initial rate hike of 0.5% per year is the $350 million that would go to three tribes: the Upper Skagit, Swinomish and Sauk-Suiattle for restorations.
The tribes had fought Seattle City Light for years over the dams’ blockage of salmon passage to upstream habitats, which they claimed violated treaty rights.
The rate hikes from the settlement are in addition to others already scheduled for the around 350,000 customers of Seattle City Light.
The utility said $2 billion is needed to replace 330 miles of 60-year-old underground cable while $1 billion is required to upgrade other long-deferred grid components of the electrical system.
Seattle City Light put into place a 5.6% rate increase for customers in January and said in a newsletter to customers that more increases will occur starting next year.
“Looking ahead to 2027 and beyond, we anticipate annual rate increases of 7 to 10% to support major investments in infrastructure, modernizing the grid, and advancing clean energy,” the newsletter said.
The utility said it would be updating its strategic plan by mid-year.
“The plan will identify rates to address rising costs due to inflation and the critical investments we need to make to keep our electric system reliable, resilient, and ready for the future,” it said.
The utility said customers are experiencing increasing outages and the primary reason is outdated equipment.
“We are increasingly relying on aging infrastructure that is now well beyond its intended lifespan,” Seattle City Light said.
