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City staff outline Puget Sound Energy rate filing and projected impact to Federal Way budget
Summary
City staff briefed the committee on Puget Sound Energy’s three‑year rate filing and modeled its effect on city utility expenses and taxes: major increases to lighting/right‑of‑way schedules could raise city electric costs, partially offset by increased utility tax revenue but leaving shortfalls in 2027–2028.
City finance staff presented an analysis on June 1 of Puget Sound Energy’s (PSE) filed rate increases for 2027–2029 and modeled how those increases would affect the city’s 2026 budget baseline and future years.
Staff said PSE’s filing seeks substantial schedule‑specific increases — including a proposed 32% increase in 2027 for the lighting and right‑of‑way schedule that covers streetlights, traffic signals and irrigation — and that the filing is subject to review and modification by the Washington Utilities and Transportation Commission (UTC). For the city, staff projected that increased rates would raise annual electric costs (street lights, community center, park facilities) and that additional utility tax revenue would offset part, but not all, of the higher bills in the near term.
Using 2026 budget figures as a baseline, staff projected the city could be approximately $260,000–$660,000 over budget for electric costs in coming years depending on timing and the commission’s decision; staff further projected a modeled surplus by 2029 under the filing assumptions. Staff emphasized that the filed rates are not final — the UTC may change the schedule or timing of increases — and recommended continued monitoring and community engagement.
Councilmembers pressed staff on household impacts, low‑income assistance, executive compensation at PSE, and comparative rates in other jurisdictions. Staff said many residential customers will see different percentage changes based on usage and the mix of schedules; staff suggested the council could submit formal comments to the UTC and coordinate with regional bodies if it wishes to take an advocacy position. The city also noted limited options to offset rate decisions locally beyond federal/state regulatory engagement and targeted local assistance programs.
Staff recommended bringing the issue to the full council in a later meeting for potential formal comment to the UTC and described internal budget planning to absorb near‑term cost increases.
