The story behind City Light's 'perfect storm' of 2001

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Today's provocative story about Seattle City Light started with two simple questions: Why is my bill so high? What happened?

City Light raised rates nearly 60 percent last year, and the worst isn't over.

Utility officials have described what happened as the "perfect storm," a combination of volatile energy markets and a severe drought. The Seattle Times assigned reporters Lynda V. Mapes, Alwyn Scott and Jim Brunner to question that assertion.

"The gist of this story was taking a second, more probing look at City Light's calamitous 2001, when they were forced to borrow about $700 million to buy electricity," said Tom Boyer, one of two editors overseeing the story.

"They have always maintained that they were victimized by energy profiteers and lax federal regulators. But we demonstrate that, in fact, City Light was the victim of its own lack of preparation for the energy crisis," he said.

Or, as today's story says:

"City Light was poorly positioned to weather a market storm, let alone the 'perfect storm' of 2000-2001.

"Its strategies were ineffective, its oversight by the City Council was lax and uninformed, and when deregulation tossed California's energy markets into turmoil and led to shortages and skyrocketing prices, City Light, unlike some other Northwest utilities, missed clues and didn't respond quickly enough."

Tomorrow and Tuesday, The Times examines how the mess might have been avoided and what still needs fixing. It's complicated.

"Readers are going to have to work a little," warned Andrea Otanez, the other editor on the project. "It's not going to be a trip through the park, but it's worth it."

Making the effort to understand this complex situation is important because people are paying for what happened.

Last week, officials said the utility must either raise rates even more or go further into debt to prevent a projected $160 million budget hole by April 2003. So, City Light's historic low rates are gone for the foreseeable future.

This is a huge story that, frankly, would never be fully told if The Times hadn't pursued it. And we couldn't get it without committing a team of journalists.

Mapes knows energy as well as any reporter in the region, Scott understands how markets work, and Brunner's beat is City Hall. Together they were able to ask the right questions.

"Understanding this story took a lot of patience and digging and help from utilities that opened their trading logs and other documents to help us see how the crisis unfolded," Mapes said. "It was a complicated story to understand and I was grateful to have the time and ability to team up with other reporters to tell it. Each of us brought different expertise and background to the story that made the final story more than the sum of each of our parts."

She said she gained a new appreciation of "the truly bad choices utility managers faced. I found myself realizing, too, the degree to which they were navigating a market that was allowed by the Federal Energy Regulatory Commission to rage out of control month after month, despite a federal mandate to ensure just and reasonable prices."

Mapes added she is grateful for the cooperation of utility planners, managers, traders and finance experts, "even when it was not a story they would probably be clipping to send home to Mom."

Scott and Brunner agreed that readers need to know how much effort City Light officials, including Superintendent Gary Zarker, put into working with them. "That sort of cooperation and openness is exemplary," Scott said.

"Of course, they put the best light on what they were telling us, as most officials do. But we kept at it and finally arrived at what we believe is a fair and accurate depiction of what went wrong — one that takes into account their explanations and the facts we've gathered," he said.

Stories like this are hard to get, even when they start with simple questions.

"It's a slog," Otanez remarked. "Energy is not a glamorous beat, but it affects people where they live, so we couldn't let it go."

Inside the Times appears in the Sunday Seattle Times. If you have a comment on news coverage, write to Michael R. Fancher, P.O. Box 70, Seattle, WA 98111, call 206-464-3310 or send e-mail to mfancher@seattletimes.com. More columns at www.seattletimes.com/columnists.