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Lawmakers Seek Compromise on Energy Mandate by Jordan Schrader The News Tribune, January 27, 2012

Power companies this month are facing mandates imposed by voters in 2006 to either produce green energy or buy credits from those who do.

Utilities complain Initiative 937 requires them to buy power they don't need -- especially with the economic downturn depressing demand -- and say they are passing costs to their customers.

Environmentalists credit the law for Washington's burgeoning green-power industry, which they say has invested $7.5 billion in the state.

Now, the chairmen of the House and Senate energy committees, Rep. Dave Upthegrove and Sen. Kevin Ranker, have crafted what they hope will be a step toward compromise.

But at their proposal's first public hearings Monday and Tuesday, it was clear the potential changes satisfied almost no one.

Many interested parties would rather see nothing happen than give up too much.

"The most common thing I heard was if there are no changes, it's not the end of the world," Ranker, D-Orcas Island, told his committee. "If we can't compromise, this will implode as it has in the past."

Opposition from Tacoma lawmakers helped kill a 2009 batch of changes to I-937.

But Upthegrove, D-Des Moines, said the warring factions have "calmed down a little bit" since then.

Both sides seem to agree. Environmental lobbyist Clifford Traisman told lawmakers this year's dialogue is less contentious. Robert Mack, Tacoma Public Utilities public affairs chief, said everyone is "trying to avoid a repeat" of the 2009 debate.

That doesn't mean they will agree on anything.

"The issues are very difficult," Mack said. "That hasn't changed."

There are a host of proposals to change the initiative. Republicans such as Sen. Janea Holmquist Newbry of Moses Lake and Rep. Larry Haler of Richland say the state simply should recognize hydroelectricity as a renewable resource.

Like a majority of states, Washington requires utilities to produce a set amount of their electricity from renewable resources. Voters called for power to be 15 percent renewable by 2020, with the phase-in starting at 3 percent Jan. 1 of this year.

Benton PUD is among the agencies forced to buy energy it does not need in order to meet renewable requirements, said Karen Miller, spokeswoman for Benton PUD. Wind turbines at the White Creek and Energy Northwest's Nine Canyon wind farms create 3 percent of Benton PUD's energy, she said.

But that 3 percent could have been satisfied by existing power coming from hydroelectric or nuclear sources, she said.

"We support the use of renewable resources, but we need to be strategic with our power purchases," Miller said. "Purchasing power we don't need is paid for through our customers' rates."

Seventy percent of Benton PUD's energy is hydroelectric, and 11 percent is nuclear, Miller said.

At the moment, wind energy costs Benton PUD $57 per megawatt hour, compared to hydroelectric energy, which costs $27 per megawatt hour, she said.

Unlike many states, Washington relies on water for as much as 70 percent of its electrical power, reducing its dependence on fossil fuels.

Utilities say hydro power should be counted toward the mandate. Environmentalists and wind-energy companies say voters intended to promote new sources of energy rather than existing ones.

Virinder Singh of enXco, a San Diego-based company that has developed wind farms in central Washington, told lawmakers, "Hopefully we'll not have a result where we're going out with the new and in with the old."

The bill by Upthegrove and Ranker would change what qualifies toward the state's renewable-energy mandate.

Hydropower added after 1999 would count -- as would electricity created from biomass, benefiting Weyerhaeuser and other companies with pulp and paper mills.

Pre-1999 biomass plants would be grandfathered in, but would need to pay a new fee.

The fee's proceeds would go toward grants for efforts to reduce car pollution, such as electric-car charging stations and greener government fleets.

The bill also would delay mandates by a year and would make it easier for utilities, such as Benton PUD, to get exemptions if they don't need more power.

To balance those kind of industry- and utility-requested changes, growing utilities would be required to meet all of their new power needs with renewable energy until green power accounts for 20 percent of their energy portfolio.

Industry and utilities oppose those tougher standards, while environmentalists say they are essential to offset any new exemptions.