City Hall's Power Trip

Should he stay or should he go? The man in question is Seattle City Light Superintendent Gary Zarker, who last week began a tough reconfirmation process before the Seattle City Council. On the face of it, the question might seem laughably simple. Zarker ran up City Light's credit card to the tune of $600 million during the energy crisis of 2000-2001, bringing the utility's debt load to a staggering $1.6 billion—the largest ever. Standard & Poor's, the financial world's Solomon, responded by downgrading City Light's credit rating three times in a 22-month period.

In order to pay off this debt, rates have been raised 58 percent in the past three years. During the same period, City Light struggled with billing problems, overcharging residential customers by thousands of dollars, and compounded that by refusing, at first, to acknowledge the mistakes.

The venerable Municipal League of King County has expressed "no confidence in the current Seattle City Light senior management." The Muni League's energy chair, Bruce Carter, asks pointedly: "If [Zarker] was working for Puget Sound Energy," a private utility, "where would he be?"

Zarker has his defenders, however. The most important one is Mayor Greg Nickels, who "proudly" sent Zarker's name to the City Council for reconfirmation last week. "At the end of the day, [Zarker] has done a good job," says Nickels. "I consider him a friend and an outstanding public servant."

Numerous solons within the energy industry also support Zarker, believing his strengths outweigh his weaknesses.

Zarker himself makes a strong case for his leadership, demonstrating an encyclopedic knowledge of both Seattle City Light and the issues facing the electrical industry in the 21st century. He contends that the majority of City Light's problems stem from the utility being the victim of the "unparalleled corporate swindle" perpetrated by corrupt energy traders like Enron.

The debate over Zarker over the next six weeks will culminate in a vote by the City Council on March 10. "It's not the first time I've been scarred up," says Zarker bemusedly. "I've been around City Hall long enough that I know the interest in departments waxes and wanes. [Now] it's City Light's turn. You make the best of that while the light is shining on you."

SEATTLE'S 'CROWN JEWEL'

Seattle City Light is one of the metropolitan area's most important institutions. It became a full-fledged city department in 1910 and has grown to serve about 680,000 people in a 131-square-mile area from Seattle to Lake Forest Park and Shoreline to the north, and Burien and Tukwila to the south. It employs 1,700 people, has an annual budget of more than $900 million, and is the nation's seventh-largest publicly owned electric utility.

City Light generates 45 percent of its power from dams it owns in Washington state. Long-term contracts, which also primarily involve hydroelectric generation, make up another 46 percent of the utility's portfolio. Rounding out City Light's energy resources are contracts for wind power (3 percent) and power generated by gas-fired turbines (6 percent). Since hydroelectricity is relatively low cost—"the fuel is free," Zarker quips—City Light has been able to provide rates that compare very favorably. Even after all of the utility's problems in recent years, Seattle still has the cheapest electricity among the nation's 25 largest cities.

Zarker's critics prefer to use other local utilities to measure City Light's performance. The Muni League says Tacoma Power, that city's public utility, has lower rates, even though it faced the same challenges.

A TOUGH, BRAINY VETERAN

"Don't jump," Zarker jests as he catches me admiring the sweeping view of downtown and Elliott Bay from his office window 32 stories high in the city-owned Key Tower. If Zarker ever considered leaping himself during the energy crisis of 2000-2001, he wouldn't let on. Zarker is a tough, brainy survivor who has spent 24 of his 54 years on the planet as an employee of Seattle city government.

In 1979, at age 30, he joined Mayor Charles Royer's Office of Management and Budget. Four years later, he was heading the department. He went on to direct the Seattle Engineering Department for eight years under both Royer and Norm Rice. At the time, the Engineering Department oversaw solid waste, sewage, and transportation. He was in the middle of the huge debate over whether to build a municipal incinerator or institute one of the nation's first comprehensive curbside recycling programs.

In 1994, Rice tapped Zarker to take over City Light. The utility had been hit with a heap of lawsuits over discrimination on the basis of gender and race and over sexual harassment. Zarker made headway on internal cultural issues. Moreover, as a veteran of many City Hall wars and regime changes, he has proven adept at the political part of the superintendent's job. He receives high marks from a variety of observers in a number of other key areas: conservation, alternative energy, providing for low-income customers, making the dams fish-friendly, and leadership on regional and national energy issues. From a public relations point of view, for six years Zarker kept City Light out of the headlines.

The energy crisis of 2000-2001 changed all that.

NO SHELTER FROM THE STORM

All sides in the debate over Zarker's tenure admit that corrupt energy traders manipulated the energy market during 2000-2001, driving prices that had been as low as $20 per megawatt hour to as high as $3,000 per megawatt hour. The debate centers on City Light's response to the crisis.