• City Light makes $5M mistake as part of budget overrun

    By: Linzi Sheldon

    Updated:

    Seattle City Light is attributing a $17.4 million budget overrun on its smart meters program to the city’s population growth, increased costs per meter, increased installation costs, and a $5.4 million mistake someone made while reviewing the costs of thousands of meters.

    “I don’t understand why you wouldn’t have known what the taxes would have been before actually purchasing them,” KIRO 7 reporter Linzi Sheldon said in an interview with City Light’s Director of Customer Care Kelly Enright.

    “Because we had the quote, and it did not include—the tax item was a separate item buried within the contract that we had not seen, that the people who were doing the budgeting did not see [it],” Enright said. 

    “You say the people who were doing the budget. Is that City Light employees?” Sheldon asked.

    “Yes, it was City Light that missed it,” she said. “Clearly we made a mistake in missing that information.”

    “The tax information?” Sheldon asked.

    “Correct,” Enright said. 

    “And so now, you’re seeing all the costs of the tax,” Sheldon said.

    “And it’s more than obviously was expected,” Enright said. “Five point four million dollars.”

    A memo from City Light’s Interim CEO to City Council members Teresa Mosqueda, Sally Bagshaw, and Debora Juarez laid out the problem. The smart meter program, which is designed to replace people’s current meters with advanced ones that send reads of electricity usage directly to the billing system, was estimated at $84.1 million as recently as 2016. It now needs $17.4 million, for a total of $101.5 million.

    “I don’t want to call it an overrun,” Enright said. “This budget was originally built in 2012, based on our business case then for 410,000 meters.”

    Enright said City Light knew they would need more meters, given the massive growth in Seattle, but believed they could handle the extra expense.

    “We were really working hard to try to absorb all of those cost within the budget, that meter growth,” she said. “We did not want to go and ask for any additional funding because we thought, given how we were working the program, we could manage the budget.”

    But it became apparent, Enright said, that they needed more money. City Light has to buy 8,000 more meters, and costs have added up, with each meter increasing from $113 to $122, the cost of installation increasing due to a Labor & Industries ruling on how many supervisors were needed per installer, and of course, the missing sales tax adding millions to the budget.

    The extra costs were no shock to Rod Guevara, who was a City Light meter reader for 27 years and retired in October of 2017.

    “I’m not surprised and no one down there is surprised,” he said. “From what I've seen, there just seems to be a lack of control over what they’re doing and how they predict what they're doing.”
    Guevara spoke with KIRO 7 in May about problems he described with the city’s rollout of its new billing system, the New Customer Information System, which was also over budget.

    Due to the system’s inclination to enter higher estimates when, according to previous data, it perceived the electricity reading to be too low, customers complained about receiving significantly higher bills than expected. At one point, City Light had a backlog of thousands of billing issues.

    “We know how poorly done the computer rollout was with the new NCIS system,” Guevar said. “How poorly that was done.”

    Next, City Light will have to ask City Council for permission to move money from other City Light projects to cover the added costs in the smart meter program, deferring work on what it describes as “facilities improvements at the Skagit Hydroelectric Project, streetlight projects, underground equipment and conversion, and various capital projects and conservation incentives.”

    Mayor Durkan commented on the budget overrun on Wednesday.

    “We have to get these budget issues under control,” she said. “We've got to have more transparency so people know costs might go up, and when they do, we're really transparent about why. And at the same time, we have to be holding every department responsible for the money they're spending.”

    Enright said customers’ rates will not be affected in any way.

    “We're not asking for above and beyond what our current budget is,” she said. “It’s just simply transferring a pocket of budget from one program to another.”
     
     


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