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Mandate, Cost Concerns Mark Ohrenschall Con.Web, March 27, 2003

Proposed Utility Conservation, Renewables Standards Fail in Washington Legislature

Proposed renewable energy and energy conservation standards for Washington utilities have met their apparent demise in the state Legislature, a victim of concerns notably including government mandates and costs.

A conservation/renewables standards bill has expired in the House of Representatives Appropriations Committee, after receiving narrow approval in early March from the House Technology, Telecommunications and Energy Committee.

The TTE-approved version--slimmed down from the original bill--called for Washington utilities to meet 5 percent of their retail loads with renewables and conservation by 2009, increasing to 10 percent by 2014.

Such energy portfolio standards are "obviously a pretty contentious issue" despite "a lot of positive things" about them, said spokesman Todd Morrison of the House Democratic Caucus. They represent a significant, complex and conceptually new policy matter for the Legislature, he said. "Anytime you're creating standards, nobody wants it to be a burden on business. That's why it kind of got bogged down. It's hard to please everybody."

The mandatory nature of portfolio standards along with cost worries were troubling for many Washington public-power utilities, said Stu Trefry of the Washington PUD Association.

Although the bill died in the Appropriations Committee, energy portfolio standards theoretically could emerge in another form this legislative session. But, "At this point it's looking like it's not going to make it," Morrison told Con.WEB March 20.

He and others, including Trefry, anticipate portfolio standards will continue to be discussed for the Evergreen State. "It's got legs, just maybe not this session," said Morrison.

Energy Portfolio Standards
House Bill 1544, as originally written, would have required investor-owned and publicly owned Washington utilities to serve 5 percent of retail loads with qualifying renewables by 2010, 10 percent by 2015 and 15 percent by 2023. Efficiency standards would have started with annual program savings equaling three-fourths of 1 percent of retail load beginning in 2005, climbing to 3.75 percent by 2009. A slightly different set of energy-saving requirements would have been in effect from 2010 to 2015.

Sponsored by Rep. Zack Hudgins, a freshman House Democrat from Tukwila, HB 1544 was the subject of a spirited two-hour hearing Feb. 18 before the House Technology, Telecommunications and Energy Committee (see Con.WEB, Feb. 27, 2003).

Supporters promoted the bill and its standards as a way to surmount market barriers to conservation and renewables, generate big economic benefits, diversify Washington's energy supply and stabilize utility energy-saving spending. Consultant Jim Lazar testified the efficiency standards would slightly raise power rates but would substantially lower customer bills, while the renewables standards would have no discernible rate or bill impacts over 20 years. He also forecast $2.2 billion in cumulative savings from HB 1544 through 2023.

But representatives of some utilities, industrial customers and businesses raised concerns and opposition, focused on issues relating to mandates, lack of incentives, reduced local control and potentially high costs.

A revised version of HB 1544 passed the committee on a 9-7 vote in early March. In addition to lowered standards from the original--5 percent conservation and renewables by 2009, 10 percent by 2014--the proposed bill offered exemptions if renewables exceeded certain cost thresholds and for small utilities that would double their Bonneville Power Administration conservation and renewables discount spending.

Hudgins called this substitute bill "a little step sideways" to move energy portfolio standards out of the TTE Committee. But he also acknowledged, in a March 6 interview with Con.WEB, continuing concerns over potentially high costs and compulsory aspects.

The Appropriations Committee didn't act on the proposed legislation before the deadline for bills to be passed out of the House, according to committee analyst Heather Flodstrom. "Things always get resurrected in the wee hours and it could get amended into another bill, but this bill as we know it is probably not moving," she said March 18.

Reactions
Just as the Feb. 18 committee hearing revealed deep disagreements over energy portfolio standards, reaction to the legislation's apparent failure also spanned a range of opinion.

"What we told the Legislature is that we're developing renewables and we're doing a lot of it, and what we were objecting to were the requirements in the bill, the mandates basically, for having a certain amount of percentages by a certain date," said Trefry of the Washington PUD Association.

Utility resource portfolios 20 years in the future are difficult to predict, he said, and it's unclear whether sufficient wind sites would be available to meet the standards. On the efficiency side, "A lot of utilities have done a lot of efficiency already. A lot of the low- and medium-hanging fruit has already been picked. The rest is hard to get, and it would penalize those utilities that have already done a lot."

At the federal government level, tradable tax credits and/or full funding of the Renewable Energy Production Incentive program "would get get more publicly owned renewables [developed] than you would through anything the state would pass," Trefry said.

The PUD association is open to continuing discussions on energy portfolio standards, but, "We're more interested in incentive activity than requirements," he said. And with many Northwest public-power retail rates having risen in the range of 40 percent to 70 percent since the energy crisis, "We're not interested in stuff that's going to raise rates."

At the Northwest Energy Efficiency Council, executive director Stan Price said his efficiency business trade group is "extremely disappointed" in HB 1544's downfall. "An energy diversity standard ... offers both the least-cost approach for serving the electrical energy needs of the state and it creates jobs and much needed economic activity. The energy efficiency goals in this legislation would have stimulated increased business activity in the efficiency industry--that means more energy savings projects at customer facilities, providing both jobs at NEEC member companies and many more jobs for sheet metal workers, plumbers and electricians who do the installation work for these projects."

Price suggested "a broader coalition of support from labor groups and other interests in the state must be forged to impress legislators of both parties that energy diversity is one of the foundations of good energy public policy."

Related Sites:
Washington State Legislature (includes links to bills and committees)
Con.WEB Feb. 27, 2003, story on legislative committee hearing on proposed energy conservation/renewable energy standards bill

Related Pages:
Bill Pushes Renewable Energy by Richard Roesler, The Spokesman Review, 2/20/03