Sustainability, City Light, Arts and Culture Committee 3152024

Good morning.

The March 15th, 2024 meeting of the Sustainability City Light Arts and Culture Committee will come to order.

It is now 9.32 a.m.

I'm Tanya Wu, chair of the committee.

Will the committee clerk please call the roll?

Councilmember Moore?

Present.

Councilmember Morales?

Here.

Councilmember Saka?

Here.

Councilmember Strauss?

Present.

Chair Wu?

Present.

Chair?

There are five members present.

If there are no objections, the agenda will be adopted.

Hearing no objections, the agenda is adopted.

So 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.

Clerk, how many speakers are signed up today?

Currently, we have no in-person speakers and there are no remote speakers signed up.

Right, so we will proceed to our items of business.

Members of the public are encouraged to either submit written public comment on the signup cards available near the podium or email the council at council at seattle.gov.

And so we will now move on to our item of business.

Will the clerk please read items one through eight into the record.

Agenda items one through eight appointment to 766 through appointment to 773 the appointment of samantha Wong as a member of the international special review district board for a term to November 30 2024. The reappointment of Adrian lamb as a member of the international special review district board for a term to December 31 2025. the appointment and reappointments of Megan Kiskadon, Deanna Garcia, Yolanda Spencer, Joelle Barquiol-Tunn, Linda Chavez-Lowry, and Ricky Grabowska as members of the Seattle Arts Commission for term December 31st, 2025 for briefing, discussion, and possible vote.

Thank you.

All eight items have been read into the record.

We will first consider a vote on the two appointments to the International Special Review District Board, followed by consideration of the six appointments to the Seattle Arts Commission.

So the department coordinators and nominees for the International Special Review District Board have joined us here at the table.

So when you're ready, please introduce yourselves, your commission, and then we will learn more about our two nominees.

Yes, thank you.

Good morning, council members, on this beautiful Friday.

I'm Rebecca Freested.

I work with the Department of Neighborhoods Historic Preservation Program, and I coordinate two of the city's eight historic districts.

So those are the International Special Review District, which we're here to discuss today, and then the Columbia City Landmark District.

The International Special Review District has a board of seven members made up of individuals who are elected, five of whom are elected through the process of a community-based election, and then two members who are appointed by city council, excuse me, appointed by the mayor's office and confirmed by council.

And so the five elected members consist of business owners, property owners, and an at-large seat.

And then the two appointed members we reserve for architects and individuals who have that technical experience to bring to the board.

So our two candidates today are slated to fill position three, which is actually an elected seat, but that seat became vacant at the end of 2023. And in accordance with the board's rules, the mayor will appoint a replacement to fulfill the remainder of the term, which runs through November of this year.

And then position seven, which is an elected, an appointed seat, and this is a position up for reappointment.

The board is charged with reviewing applications for changes of use, the underlying principle use of a space within the boundaries of the historic district and for any exterior alterations or site alterations for properties within the district.

And that includes public rights of way and open spaces in addition to private property.

So I wanna introduce Samantha Wong and she is being appointed to position three.

She's an architect with five years of working experience in a broad range of projects and has volunteer experience working within the district.

And then Adrian Lum, who's been serving on the board for the past two years and is currently serving as board chair.

So this would be an appointment for a second two-year term.

And Adrian is also an architect who's got over 20 years of experience working in the field.

So I'll turn it over to Ms. Wong and Mr. Lum.

Hi, I'm Samantha.

I'm very excited to be here in this appointed position.

I'm interested in the historic preservation of the Chinatown International Business District, and I look forward to serving on the board.

Good morning, council members.

Good morning, council members.

I'm Adrian Lum.

And as Rebecca said, I have over 25 years of experience working in Seattle and have been both on the applicant and in the last two years serving on the board.

My primary interest really is to provide relevant comments to kind of expedite the process that the applicants go through.

That way, you know, we represent both the community but also be a nice counterpoint to the professionals.

Thank you.

Well, thank you for being here today.

Colleagues, any questions or comments?

Great.

So I also served on the ISRD board, as I've told you earlier, and I believe I was on both sides.

I was working with the board in redeveloping Louisa Hotel and then later served.

And so I understand the importance of the ISRD in terms of preserving the Asian cultural characteristics of the district and making sure that there is meaningful development and community outreach as well.

And so I move that the special...

I move that the committee recommend confirmation of appointments 2772 and 2773 to the International Special Review District Board.

Is there a second?

Second.

It is moved and seconded to confirm the appointments.

Are there any further comments?

Will the clerk please call the roll on the confirmation of the appointments?

Council Member Moore?

Aye.

Council Member Morales?

Yes.

Council Member Saka?

Aye.

Council Member Strauss?

Yes.

Chair Wu?

Yes.

Chair, five in favor, zero opposed.

The motion carries and the recommendation that the appointments be confirmed will be sent to the Seattle City Council.

Thank you.

Thank you very much.

So now we will discuss the six appointments to the Seattle Arts Commission.

Will the department coordinators and nominees for the Seattle Arts Commission please join us at the table.

Once ready, please introduce yourselves, your commission, and then we'll learn more about our six nominees.

Chair Wu and council members, my name is Allie Lee.

I'm the executive assistant at the Office of Arts and Culture and department liaison to the Seattle Arts Commission.

Good morning, my name is Allie McGehee.

I'm the interim deputy director for the Office of Arts and Culture.

I'd like to start with a brief overview of the Seattle Arts Commission.

The Seattle Arts Commission is comprised of 16 community member volunteers appointed by the Mayering City Council, and they support the work of the Office of Arts and Culture.

Commission members include artists, art professionals, and administrators, and citizens with strong connections to Seattle's arts community.

The mayor appoints seven of the commissioners, the city council appoints seven, the commission itself appoints one member, and the 16th member is selected through the YMCA's Get Engaged program.

The Seattle Arts Commission supports the city by advocating for arts policy, creating access for equitable participation in the arts, and fostering arts engagement for all residents.

There are three subcommittees of the Arts Commission, which are the Facilities and Equitable Development Committee, the Cultural Investments Committee, and the Public Art Advisory Committee.

The first council appointment candidate is Megan Kiskadon.

Megan is the executive director of On the Boards, Seattle's home for contemporary performance.

And previously she led the education and community engagement division at San Francisco Museum of Modern Art.

And she also served on the San Francisco Arts Commission.

She has quickly immersed herself in the Seattle arts community and has developed a reputation as an arts leader to watch, and her commissioners believe that she will bring a fresh perspective to the Seattle Arts Commission.

I believe Megan is on Zoom.

I am.

Hi.

The system won't allow me to turn on video, but I wanted to say hello.

Thank you so much for consideration.

And here we go.

Hi, everyone.

Thank you so much for consideration.

I really look forward to serving the city of Seattle that I now call home and advocating for the arts and the ways that they enrich our lives.

Thank you, Megan.

Our next council appointment candidate is Diana Garcia.

Diana Garcia is an international butoh performer and a professional ballet and modern dancer of Mexican descent, and has a fierce talent for centering the movement arts as an instrument for healing and transformative practice.

Our commissioners feel that her advanced understanding of our shared human condition will support the collaborative work and vision of the Seattle Arts Commission.

So I believe Diana is joining us a bit later.

We'll just move her to the very end of the presentation.

Got it, thank you.

Next is commission appointment, Yolanda Spencer.

Yolanda Spencer is a member of the Confederated Tribes of Yakama Nation, as well as Lummi Nation in Washington, and she is the community services director and program director for the reentry program at Chief Seattle Club.

Yolanda has embraced art and arts integration as a powerful tool for reengaging and healing the communities she serves, and the Seattle Arts Commission would like to appoint Yolanda to their commission-appointed seat.

Yolanda is here with us.

Good morning, everyone.

I'm Yolanda Spencer, and I'm very honored to be selected to join this great committee of people to not only represent our city, but the people that we serve daily.

And I just would be honored to be part of the Arts Commission.

Thank you.

Thank you, Yolanda.

The next appointment, next council appointment candidate is Joel Barakiel Tan.

Joel is the Executive Director of the Wing Luke Museum of the Asian Pacific American Experience, and previously the Director of Community Engagement at Yerba Buena Center for Arts in San Francisco.

His dynamic career has reflected his lifelong commitment to racial equity, social justice, and creative expression, evident in his three-plus decades of experience in cultural advocacy and leadership in the arts, public health, civic engagement, community development, and sustainable tourism.

And our commissioners believe that he will be an asset to the Seattle Arts Commission.

Joelle?

Joelle, you're on mute.

Oh, I wanted to say happy Friday.

Aloha Friday to everyone.

Joel, but I killed Tan.

It's an honor to serve in the in the interest of arts and culture.

We very much believe that that work continually drives and creates better health, better economy and better government.

So super excited and particularly to champion the Chinatown International District.

neighborhood.

Thank you.

Thank you, Joelle.

Next appointment is Linda Chavez Lowry.

Linda is the Director of Opportunities at Seattle Magazine, Executive Director of Arts Unlimited, and leads the communication and PR firm DSA Solutions.

Our commissioners feel that her focus on enhancing relationships through connections with the private and nonprofit sector and her initiatives for promoting diverse and equitable communities would be an asset to the Seattle Arts Commission.

Linda.

Yes, thank you so much.

I'm from District 1, and Rob Sacca is my council representative.

And I would also like to give a warm welcome to the new council members, Tanya Wu, Kathy Moore, Robert Kettle, Maritza Riviera, and Joy Hollingsworth.

And a good morning to our other council members, Sarah Nelson, Dan Strauss, and Tommy Morales.

I am deeply committed to being of service to the artistic community of our city as an art commissioner.

And my goal is to make art accessible to everyone by integrating it into our daily lives, from public installations to community art projects.

And I'll be a strong advocate for our local artists by providing them with the necessary support and resources to flourish.

Additionally, I will promote cooperation and communication among the creative community, the corporations, educational institutions, and community groups to tackle societal problems.

I will also prioritize arts education and encourage young artists to explore their talents and express themselves freely.

As a brain aneurysm survivor, I had to make some adjustments to my lifestyle in order to attend theater productions and music concerts.

However, I'm so grateful for the efforts that our community, our art community has made to be more aware of the sensitivities that a neurodivergent person may have And it's heartening to see some of the theater productions that are inclusive to the neurodivergent audience.

And I believe that my diverse perspective would be a valuable addition to the arts commissions.

Thank you.

Thank you, Linda.

And the next is a council reappointment, Ricky Grabowski.

Ricky Grabowski is the executive director of The Verit Project, which is an all ages music venue, arts incubator, excuse me, and community center in Seattle.

Ricky has dedicated his time to advocating for the DIY scene and community-centered cultural spaces, building all ages programming at the intersection of art and activism.

He also currently serves as the chair of the Facilities and Equitable Development Committee of the Arts Commission and is seeking reappointment as council-appointed commissioner.

I believe Ricky is not able to join us today.

Great, thank you for those who are able to join us.

Colleagues, any questions or comments?

Awesome, I am so honored and proud to see so many distinguished people who are willing to serve on the Arts Commission.

It's a very important role in the city.

So I move that the committee recommends confirmation of appointments 2766 through 2771 to the Seattle Arts Commission.

Is there a second?

Second.

It is moved and seconded to confirm the appointments.

Are there any further comments?

Will the clerk please call the roll on the confirmation of the appointments?

Council Member Moore?

Aye.

Council Member Morales?

Yes.

Council Member Saka?

Aye.

Council Member Strauss?

Yes.

Chair Wu?

Yes.

Chair, there are five in favor, zero opposed.

The motion carries and the recommendations that the appointments be confirmed will be sent to the City Council.

Thank you.

Thank you.

Thank you.

We will now move on to our next item of business.

Will the clerk please read the short title of item nine into the record.

Agenda item number nine, a resolution relating to City Light Department endorsing City Light's wholesale energy risk management policy for briefing and discussion.

Thank you.

Our presenters are currently joining us here at the table.

When ready, please share your presentation, introduce yourselves, and begin.

Good morning, better?

Thank you.

I am Dawn Lindell.

I am the interim general manager and CEO for Seattle City Light.

Maura Brugger, I'm Director of Government and Legislative Affairs at Seattle City Light.

Good morning.

Kirstie Granger, City Light Chief Financial Officer.

Siobhan Doherty, I'm the Director of the Power Management Division at Seattle City Light.

Raman Vishwanathan, Director of Risk Oversight at City Light.

Good morning.

Eric McConaughey, I'm the Council Central Staff.

Okay, we will dive right in.

I am so pleased to join you this morning at my very first committee meeting as the Interim General Manager and CEO of Seattle City Light.

I look forward to meeting with each of you individually prior to the confirmation process at Council, but I would like to add just a few remarks about my background and interest in serving as General Manager of City Light.

I bring more than 20 years of experience in the utility industry.

Most recently, I served as the general manager in that CEO role at Burbank Water and Power in the media capital of the world in Southern California.

Previously, I was with Western Area Power Administration, which provides hydroelectric power generated by 57 federal dams across 15 states in the West.

There I served first as Chief Information Officer, then Chief Operating Officer, and led two of the multi-state regional utilities.

Prior to that, I started my career with Colorado Springs Utilities, another large public power organization serving water, wastewater, gas, and electric, to the greater Colorado Springs area.

I served as the leader of customer service, completed a stint in operations, and then served in their CIO role, Chief Information Officer role, for nine additional years.

I was drawn to Seattle City Light because my values align with the values of the organization.

And I couldn't pass up the opportunity to be part of an organization that is an industry leader in clean energy and environmental stewardship.

The energy industry is undergoing several monumental shifts.

We are seeing load increases into the foreseeable future as we continue to electrify buildings and transportation, reducing greenhouse gas.

We are seeing increasingly variable weather patterns.

We know that to meet the growing load, we need to source new carbon-free generation and storage.

I believe this is the adaptive challenge of our time, and I want to be part of the solution, figuring out how to solve this issue that has not been tackled before, alongside an amazing group of creative professionals, many of whom are sitting here, in an innovative community committed to finding solutions.

This morning, we will brief you on a proposed resolution that would adopt changes to the wholesale energy risk management policy, the worm, oddly named, for Seattle City Light.

To provide electricity to our customers 24 hours a day, seven days a week, City Light actively participates in buying and selling wholesale energy products.

In today's dynamic energy sector, electric utilities establish policies and procedures to effectively manage risk and risk exposure associated with wholesale energy purchases and sales.

This is known as the wholesale energy risk management policy for City Light.

Multiple business units at City Light participate in the development of the inputs and outputs that are part of identifying, monitoring, controlling, and reporting on the risk exposure of our activities in the wholesale energy market.

In our presentation today, we will discuss City Light's engagement in the wholesale markets, the evolution of our wholesale energy risk management policy, its implementation at City Light, and why we are recommending changes to the policy to make sure that we keep those policies current and ensure appropriate review and approval.

We want to engage with you in finding the right balance, enabling City Light to respond to rapidly changing market conditions while also enabling City Council to have insight and confidence in our process.

This effort has been under construction by staff for many months.

It is time to bring Seattle City Lights thoughts to our council committee for review and discussion.

So I'm going to hand off to our fine chief financial officer, Kirstie Granger, to run through the presentation for you.

Thank you.

Great, thanks.

So, as Interim General Manager Lindell said in her introduction, part of City Light's business as an electric utility is operating in the wholesale market.

Every hour of every day, Siobhan and her team are transacting in the wholesale market 24 hours a day, seven days a week.

Can you hear me closer?

Okay.

Thank you.

And so this real time balancing of our supply of electricity with the demand from our customers is a part of our business.

And this chart on the slide illustrates that.

On the vertical axis, that's the volume of electricity in average megawatts.

And then across the horizontal axis is time.

And so this is just an example, a snapshot of a week of operation.

It just happens to be the first week of January back in 2023. And the light blue bars, that's City Light's resources.

This is the power generated by our hydroelectric dams as well as long-term contracts we have in our resource portfolio.

And then the dark blue line, that's the demand from City Light customers, or we call this load.

And so, as I said, every hour of every day, City Light is balancing our supply and our demand.

And that means that if our resources, the light blue, is below the load, then City Light is out in the wholesale market buying electricity.

Conversely, if the load exceeds the amount that we need for our customers, as you can see where the light blue goes above the load line, then we would be selling that power into the wholesale market, because that's a surplus.

And so these wholesale market transactions are a significant financial risk for us.

They're a significant part of our budget and our operations, to give you some context.

Last year, City Light spent $131 million in the market purchasing power on the wholesale market, and we also sold 66 million worth of power in the wholesale market.

And so these are just indicative numbers, but we want you to understand that that for us wholesale energy market transactions are in the tens and even hundreds of millions of dollars.

It's a significant part of our budget.

And so wholesale energy risk management is a set of policies and procedures that help City Light make prudent risk based decisions around our wholesale energy transactions.

Thank you, now the next slide.

This is a slide that it's a little bit of a history.

So way back in the 1990s, power trading in Seattle for City Light was primarily about reliability.

Electricity in the region was plentiful.

It was low priced.

And if City Light needed power, you picked up the phone and called and bought some.

And in the 1990s, City Light made the strategic move to divest ourselves of Bonneville and some other resources, presuming that the wholesale market would have ample and expensive power available when we needed it.

And then in 2000, 2001, came what we now call the Western Energy Crisis.

And for Seattle, what this meant was that drought conditions left us very, very short of power.

We were in the market buying.

And as we were buying, the price of electricity skyrocketed.

And what this meant was for financially, City Light spent over $700 million in the market.

We burned through our cash reserves.

We found ourselves over $500 million in debt.

Our credit was downgraded.

And we were in council regularly.

There was emergency rate increases that ultimately totaled almost 60% for customers.

So this was a very, very serious, very serious crisis for Seattle City Light.

And in the aftermath of the Western energy crisis, City Light made some, we made some big moves here in Seattle.

We restructured the utility.

We established a new risk oversight function that's separate from our power trading, and that's Ramon's team now.

And we also moved to add the Bonneville Power Administration contract to our portfolio.

And that was what we were here two weeks ago, I think, talking with you.

And if anybody listening out in the world wants to look that up on the Seattle channel, I believe you can watch that video out there.

So, you know, today City Light gets over one-third of our electricity from Bonneville.

And this was a move we made in the aftermath of the energy crisis in response to that move.

Over the years, since then, we've put into place new policies, procedures, and these have continued to evolve and mature.

The first warm policy was adopted by city council back in 2008. And since then, we've updated it regularly.

Not all of those are shown here on this timeline.

And then in 2011 the RSA or the rate stabilization account was established, and this is an important mechanism that helps insulate City Light customers from this financial risk that the utility is exposed to.

It's a cash reserve and a set of rules around the operation of it that helps buffer the financial impacts of our wholesale transactions.

And this was established by city council in 2011. In 2018, council approved extending City Light's transaction authority from two to five years.

And then in 2020, City Light joined the California ISO EIM, which is an automated real-time market.

And this represented a big change in policy the way that City Light operates in the market because this is an automated real-time market.

It's more dynamic and it's just changed how we how we trade electricity.

And then that brings us to today.

So the last time that city council formally adopted a warm policy was 2015. And we're back here today with a proposed update that both establishes an updated policy and then also authorizes City Light to make updates to this policy going forward without council legislation.

And we'll talk a little bit more about why that is later in the presentation.

Actually, sorry, can I back up one more thing?

I wanted to stress that the purpose of this timeline and this history isn't to be alarmist or scare anyone.

It's to provide context and history.

And I hope that we've illustrated here just how much things have changed in the last 24 years.

And then I want to ensure that the purpose of this is to show that maturation and why things are different today than they were back in 2024. I mean, 24 years ago in 2000s.

So what does a wholesale risk management policy do?

The policy includes, it sets roles and responsibilities for power trading within City Light.

It sets which electricity products the utility is allowed to buy and sell.

It establishes the forecast and metrics that we use that inform our decisions.

It sets procedures for how each step of a decision to buy or sell power gets signed off on.

It sets the frequency of monitoring reports, and it designates who they go out to, and also how frequently audits, and this would be both conducted by internal staff and also by external auditors should be conducted.

So it's a very detailed document.

There's a policy component as well as a procedures component, and it's a very robust and technical in some places document.

This is one illustration of our worm policies in action.

This shows the segregation of duties and power trading.

So the colors on these boxes that you see here correspond to a division within City Light, which means that the different colors roll up to a different senior leader.

And so the green is the power management decision.

Siobhan's wearing green.

The blue is the finance division.

Risk oversight is dark blue.

This is going really.

And then Brown is the utility technology division.

So four different divisions contribute to decision-making around buying and selling power in the wholesale market.

And we have a risk oversight council that was established as a part of our first policy.

And this is a cross-functional team made up of at least three different senior leaders who oversee every decision that we make with respect to our power hedging.

And if any of these senior leaders have concerns or there's a split vote in a decision, they have the authority to take that to our general manager.

And so having these different perspectives feeding into our decision making and then also having separate backend performance reporting helps keep a healthy dialogue and oversight around our wholesale trading operations.

I should show that on the left side, those are the inputs in the decisions.

So you can see that there's an array of forecasts and analysis and metrics that are all produced by different groups.

And then on the backend, the finance and risk oversight divisions produce tracking reports that report on how the power management group is doing.

So there's a separate set of tracking reports on that.

And to really illustrate how this has matured compared to the 1990s, if we had drawn this same picture back then, almost every box on here would be green in that it all happened in one part of our organization.

So again, things have changed a lot.

So the question, obviously, why would City Light propose to update our policy and propose to change how we make updates to our policy now?

So we've talked a little bit about how City Light's risk management practices have evolved and matured, and that's part of it.

Another part of it is that the utility and the regulatory landscape that we operate in has also evolved and matured.

At the federal level, FERC, which is the Federal Energy Regulatory Commission, they have new regulations in place that weren't there two decades ago, in particular relating to market manipulation, which was a factor during the Western energy crisis.

I'm sure everybody remembers the company Enron.

So there's federal rules now that would prevent some of those things from happening again.

As well as at the state level, there are new state requirements.

An example of that is the integrated resource plan.

You'll be hearing about the IRP or the integrated resource plan later this year, which is a state requirement that City Light do an analysis of the resources that we have to meet our customer's load.

And so that's something that we have to produce by state law.

You as our regulators have to approve it.

The IRP is something that also didn't exist 20 years ago.

In short, the strategy that City Light took back in the 90s to be short would never be allowed today.

The regulatory landscape, it's more mature, it's evolved, but it's also more complex and more dynamic.

What we are seeing as a utility is new operating rules coming out, new product options, evolving requirements from the organized market, the CalISO that we operate in.

And so what we're finding is that things are more established, but also they're changing more frequently and becoming more dynamic.

And so it's important for us to be able to have a policy and procedures that reflects the reality of today that we're operating in and to be able to update those policies to reflect the markets and the landscape that we're operating within.

So to summarize, this resolution approves a new worm policy, and it also grants the City Light General Manager authority to approve updates to this policy going forward.

The benefits, it allows the utility to make regular updates without going through the full legislative process, which allows us to more nimbly make policy adjustments to align with the current landscape.

we can respond to the dynamic market conditions that we're experiencing, and this helps us maintain reliability and adaptability within the wholesale energy markets.

It also helps us maintain compliance with our regulatory obligations and requirements, which are consistently expanding.

And this policy is, we have to use it for various entities such as bond issuers, financial auditors, regional transmission organizations, other energy providers like Bonneville, like the Cal ISO.

And so having this document updated allows us to meet those needs promptly.

I want to stress that this proposed change does not reduce City Council's authority over City Light operations.

City Council is our regulator and delegates authority to City Light and to the City Light General Manager to enter into wholesale power agreements within parameters that are codified within the Seattle Municipal Code, which I've got up there.

The Seattle Municipal Code also sets the rules for the rate stabilization account operation, which is this rate stabilization account, or RSA, is a very important wholesale risk management tool for Seattle.

Council must also explicitly approve long-term power contracts, so contracts over five years in duration.

Market decisions, you approve our integrated resource plan.

And you'll be hearing more about all of these, about contracts, market decisions, and the IRP in the coming year.

And you also will, you do and you will continue to receive robust reporting on our wholesale operations and the financial outcomes of our operations, as well as we propose to provide annual updates on policy changes.

So that was, those are the slides that we had today.

I'll turn it over to Maura to talk about next steps.

Or I would be happy to answer any questions that you have.

Let's go ahead and take questions.

Okay.

Colleagues, any questions or comments?

Oh, I think Council Member Moore.

Okay.

Thank you, Madam Chair.

So thank you for this overview and thank you for joining us again this morning.

So a couple questions.

Maybe I'll start first with I would appreciate your help helping me better understand the sort of underlying dynamics of the market at play here, the wholesale power.

And so it sounds like we are currently operating under a deficit.

We basically, you had a slide up there, it shows that we purchase more wholesale power than we sell.

Why is that exactly?

And yeah, I'll start there.

Okay, I'll start, and then if my experts here have more to add, I'll...

But so, yeah, the chart here, just to be clear, was one week in the winter.

And so it depends a lot in the winter on weather.

So when the temperatures are unseasonably cold or unseasonably hot, that would be a time where we would see demand from City Light customers go higher, and then we might be in the market buying.

The other big factor that determines whether City Light is buying or selling in the market is hydro production.

We are predominantly a hydroelectric utility, and so when the snowpack is good, when it's raining, we have more electricity, and when it's dry and we have drought conditions, we have to buy on the market to supplement.

So in 2023, it was very, very dry.

And so that's a reason why City Light was a net buyer in the market was because the production out of Skagit and Boundary, our hydroelectric facilities, was lower than it would have been if the water conditions were more normal.

Is that generally considered?

I mean, so that one...

In this one slide here, that third bullet, we're operating under $65 million.

That's what we're, the deficit we're operating.

Last year there was a deficit.

Last year.

So is that representative of all years?

Is that generally the case?

We're deficit, we're operating under deficit every year.

Are we ever deficit neutral?

Are we ever operating under surplus?

What would contribute to those conditions?

Is that a good thing?

Great question and very, you've really got at the heart of a really big strategic issue for City Light at this time right now in 2024. It is true that more and more we are finding ourselves deficit and that water conditions are below what would have historically been considered normal.

And it appears that climate change and other factors mean that it is...

And if anybody here is a skier, you've probably noticed the snow tends to not be very good in the winter.

We've had a lot more bad ski years than good ones recently.

And so we are seeing less hydro production than we would have considered normal in our 100 year history.

And We're working to understand that, how much of that is climate change, how much of it is bad luck.

But it is a big issue, and City Light does need to procure additional resources so that we can maintain a prudent level of firm supply for our customers and not find ourselves in the wholesale market more than we want to be.

And I might add, I mentioned in my opening, Don Lindell, general manager, interim general manager for Seattle City Light again.

I might add that as we move toward more transportation electrification and more building electrification, we are adding load.

So we will see that dark line go up considerably.

And we've got to procure additional resources to meet that load on an ongoing basis.

It's a matter of balancing cost and meeting the load with resources we own.

So whatever we buy, we pay for regardless.

And so we don't want to have We don't want to procure.

too much energy that we own all the time because our rate payers would pay for that all of the time.

And so it makes sense to go to market and buy to meet that differential when it's occasional.

When it can get very expensive, though, are on those high highs and low lows in terms of weather.

So I would add that as well.

But based on what I'm hearing, it sounds like it would be a good thing to try and given the market conditions and cost variances and to try and be deficit neutral as much as possible.

Yeah, definitely have to meet the load or the demand here.

Yeah, this is a challenge that I would like to better understand the dynamics of, and I'm glad this is a briefing, but In any event, so thank you for that.

My other question is, what is the primary purpose or goal of this specific proposed legislation?

And how is it this legislation specifically designed to help us obtain that objective?

I understand, like, I understand that we have a rapidly evolving regulatory landscape.

That same principle is true for a lot of industries, by the way.

I guess as a lawyer, I'll say maybe that's just good job security for lawyers and all the lawyers and compliance professionals out there.

But in any event, yeah, so there's a rapidly evolving regulatory landscape.

This, it sounds like I'm hearing, you know, amongst the benefits, it will help us, City Light, be more dynamic and nimble, which is not in and of itself a bad thing, generally good, but I would love to hear a more compelling justification from your perspective.

What is the specific problem, and how is this specifically designed to help achieve that objective?

Thank you.

Sure, so, the first, like I said, the first, very first wholesale energy risk management policy was adopted by city council fairly recently in 2008, and that across the industry, pre-Western energy crisis, very few utilities even had such a thing, it wasn't.

It wasn't a thing.

And so working closely with council in the aftermath of the Western energy crisis to set up these policies and establish all this was very, very important.

Since then, the updates of the policy have tended to be more and more with increased administrative.

It's not new.

It's just adjusting it to reflect our changing needs that are determined by the markets we operate in and the regulatory landscape.

And so we need to update this policy frequently so that it's up to date.

We haven't updated it since 2015 officially with city council.

There is an unofficial version that we are constantly updating.

And as you know, the legislative process takes several months start to finish.

It's a deliberative and as it should be process, but it doesn't lend itself well to having an administrative document kept up to date constantly.

And so that's why we're proposing to streamline the policy document, have more of the detail in the procedures, and then authorize the general manager to keep those updated and then change council's role from being one where each update is explicitly approved to more general oversight where you receive reports from us on what updates are happening.

but that you aren't approving every edit as we're doing them.

It's less practical, and I think that compared to where we were 20 years ago, it doesn't make so much sense anymore.

We had a great conversation with council staff as we were preparing for today's briefing, and a great question that came up was, what are other utilities doing in this space?

It's my favorite question.

Your staffers are doing you a solid then.

And so we reached out to some of our peers and what we learned was that Tacoma Public Utilities did something very similar a few years ago where they went to their utility board and they moved responsibility for updating their wholesale policy to their, within the utility.

Puget Sound Energy, they're an investor-owned utility, but another one who's neighboring.

They have a more simple policy that goes to their board once a year, but most of their documentation is in a procedure document that is maintained internally.

Who am I forgetting, Ramon, is there?

Eugene?

Yeah, Eugene.

And we talked with Austin Energy as well, who is farther away, but they're the other utility in the country who is overseen by a city council like we are.

So we were curious to understand what they do as well.

And what we heard was...

In the same line, that utilities are recognizing that maintaining this policy is less of a new emergent issue as it is an administrative function related to how we operate within the regulatory landscape of the federal government, the state government, and the markets we operate in.

And so every utilities policy is a little different.

Like they, some of them, as we understood, set their budget within their policy.

And of course we set our budget through the city budget process.

And so there are differences, but it does seem like the industry is moving in this direction.

So thank you for that explanation.

And thank you, thank you, kudos, shout out for understanding what, peer jurisdictions are doing and the approaches that they're taking, at least at a high level.

Excellent, actually.

Thank you.

That is something that's really important to me, and I've mentioned many times before.

And I ask a lot of questions to department heads about that.

And if the answer is, I don't know, or I'm responsible for Seattle.

In my view, that's a wrong answer and totally off base and increasingly unacceptable.

So thank you for understanding, at least at a high level, what's going on.

And I'll stop and let my, thank you, Madam Chair.

Awesome, Council Member Strauss.

Oh, yes, sorry.

Good morning.

Just wanted to thank you for the briefing that we had and the understanding of where we've come from in the sense that it was a pretty unregulated market for power purchasing.

We divested the...

we divested in our, where we're getting our energy from.

Council Member Strauss, could you talk into the microphone?

Sure, thank you.

Sorry, good.

I shared that feedback earlier, so thank you for sharing that with me.

Just to say, when we had this crisis in the late 90s, early aughts, that we provided a framework for accountability, which is what is in here and what we're talking about, as well as we created that straight, direct connection to Bonneville Power Administration to fill in that bank.

In the time since then, it was really great to hear from you the deep explanation about how the market has become more regulated and how we've entered into these imbalanced markets.

We're now looking at the day ahead markets.

So that we can prevent this hourly purchasing that got us into the mess.

It was also really helpful to hear all of the different other pieces of accountability that you've created internally within your organization.

So that I can feel comfortable releasing some of this accountability while still at the same time.

So that we can be more flexible and dynamic while city council is still retaining ultimate responsibility.

authority on ensuring that you are protecting us from that crisis we experienced in the late 90s.

I guess there's not a question there.

Just a thank you for the briefing.

Appreciate it.

Thank you.

So if and thank you so much for being so attentive to answering all my questions at a time and I'll chat with other amongst our colleagues to see if we may need more briefings regarding this.

But thank you so much and we'll definitely direct questions your way.

So we have reached the end of today's meeting agenda.

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.