Sustainability, City Light, Arts and Culture Committee 7/15/2024

Call to Order [Music] 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 Res 32139: A resolution related to the City Light Department 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 [Music] [Applause] 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 Office of Sustainability and Environment (OSE) Clean Heat 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