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Proposed Renewables, Efficiency Benchmarks Expire in Washington Legislature Mark Ohrenschall Con.Web, February 27, 2004

Falling Short

Proposed statewide benchmarks for renewable energy and energy efficiency have failed to pass muster in the Washington Legislature.

A bill that would have established renewables and efficiency requirements for Washington utilities was approved by two House of Representatives committees, but didn't get a full House vote by the Feb. 17 legislative deadline.

Legislators and stakeholders reportedly negotiated near to the deadline, focused toward the end on a revised version that would have created voluntary statewide renewables goals and offered tax incentives for utilities to reach them. This approach would have eliminated the energy efficiency provisions, and required integrated resource planning by all Washington utilities.

However, the time for legislative action expired. "In the end we didn't reach an agreement that everybody was happy with," said Heather Rhoads-Weaver of Northwest SEED.

Washington public utility districts had opposed mandated renewables/efficiency requirements but "were very close to signing on" to the revised proposal, said Washington PUD Association government relations director Dave Warren. However, he said the association disliked certain IRP provisions, and withdrew support. Other entities reportedly also balked.

Still, Warren and other stakeholders and one legislator contacted by Con.WEB believe the legislative debate on green energy advanced this winter despite the failure of standards legislation. "I saw a lot of good discussion on both sides of the aisles on renewables," said Warren. "People are starting to understand they're viable. It's going to be good for the state to encourage renewables. It's really how do we do it."

All sides expect an ongoing policy look at the state's role in promoting efficiency and renewables.

Meanwhile, some other state bills affecting renewables and conservation were still alive as of Con.WEB deadline Feb. 26, including proposed incentives for the solar electric industry and incentive payments for energy production from small-scale solar and wind systems.

Renewables, Efficiency Proposals

In the early days of Washington's short 60-day 2004 legislative session, two bills emerged on statewide renewables and efficiency, taking different approaches.

House Bill 2333 would have required all but small publicly owned utilities to meet increasing standards for renewables and efficiency in their resource portfolios, based on retail loads. The renewables minimum was 5 percent by 2010, 10 percent by 2015 and 15 percent by 2023. Utilities also would have had to meet 0.75 percent of annual retail load with conservation program savings by 2006, continuing annually through 2009 and growing to 0.85 percent from 2010 through 2012.

HB 2477 would have based the renewables targets on load growth, and allowed utilities to decide whether and when to participate. It would have offered tax benefits for complying utilities. (See Con.WEB, Jan. 30, 2004 for more on these bills).

Although compromises between these policy paths were under discussion at the end of January, the House Technology, Telecommunications and Energy Committee on Feb. 4 approved a substitute (but similar) version of HB 2333, on an 11-6 vote. HB 2477 never went to a committee vote.

Substitute HB 2333 then squeaked out of the House Appropriations Committee 14-13.

This is believed to be the furthest legislative progress for renewables/efficiency standards in Washington--but it proved to be the last passage.

Alternative Version

As the Feb. 17 deadline neared for passing legislation out of its chamber of origin, the efficiency/renewables standards discussion switched toward an alternative put forth by Rep. Jeff Morris, according to Danielle Dixon of the Northwest Energy Coalition.

Morris' proposed language eliminated requirements, and instead listed a statewide goal of 15 percent renewables to serve retail utility loads by 2023. Utilities could try to meet the original SB 2333 renewables targets, or seek to supply 60 percent of annual retail load growth with eligible renewables. It offered tax credits and deductions as incentives. "A lot more carrots were put in, and no sticks as far as I could tell," said Robert Pregulman of Washington State Public Interest Research Group.

Also proposed was mandatory integrated resource planning for investor-owned as well as publicly owned utilities, with exemptions for smaller publics and full-requirement Bonneville Power Administration customers.

Absent was any reference to energy efficiency standards or goals. Morris could not be reachd for comment, but Pregulman said the efficiency omission was an attempt to streamline and simplify the legislation, to focus on renewables.

This didn't please Stan Price of the Northwest Energy Efficiency Council. "While most states have focused their portfolio standards on renewables only, that hardly seems like justification to abandon the region's most cost-effective energy resource in this legislation," he told Con.WEB via e-mail. "It would seem most unfortunate to have a policy which leads to an energy future where Washington state had just enough renewable energy production to power incandescent light bulbs and inefficient motors. Washington's clean energy future needs a full complement of both efficiency and renewables."

Meanwhile, the abandonment of mandated renewables acquisitions by certain dates was met favorably by the PUD Association. Warren said PUDs worried that slow-growing utilities would have to displace lower-cost resources with higher-cost renewables, potentially causing rate increases. Others also had voiced a preference for a voluntary approach with incentives attached.

With the original HB 2333, "There's at least a perception it will cause an increase in electricity rates," Rep. Toby Nixon, prime sponsor of HB 2477, told Con.WEB in early February. He thought tax incentives would help alleviate the capital costs of added renewables.

Morris' alternative approach generated many hours of discussion, and a measure of agreement, in the days before the Feb. 17 deadline, according to stakeholders.

But no proposed legislation received a House vote. "Ultimately we ran out of time, in terms of negotiations," said Dixon. "Really we were beaten by the clock."

The PUD Association had agreed to required IRPs, Warren said, but had an ultimately unresolved concern that utilities could be sued for assumptions used in their planning. "It didn't come out the final day in a form we could support," he said. "We needed a few more days to negotiate."

Other stakeholders also reportedly had reservations, according to participants.

Beyond the energy issues, stakeholders said other factors came into play this legislative year. The session is short, elections are looming in November, the House and Senate are closely divided among Republicans and Democrats, and major legislation of any kind is difficult to pass. Price believes the debate over HB 2333 became relatively more ideological. "It seemed difficult during this legislative session to maintain the focus of the discussion on what was good energy policy for the state," he said. "Much of the discussion was framed in the context of the issues of local control and state mandates."

Now What?

Proponents of renewables/efficiency standards expressed disappointment at this year's outcome.

"We think that Washington has probably missed a significant opportunity in really moving forward with … both jobs and rural economic development as a result of ensuring we move forward with efficiency and renewables," said Dixon.

Still, she and others believe green energy has gained a higher profile in policy discussions. "I think we have laid a good foundation for working together in the future and a better understanding of what the issues are," said Rhoads-Weaver.

Nixon e-mailed that the wide range of stakeholders held "an open and frank discussion of how to move forward on a renewable portfolio standard. There seemed to be a sincere consensus in the room that expanding the availability and use of renewable energy was an important state goal."

Rhoads-Weaver described as "really creative" the combining of benchmarks and incentives for renewables and efficiency. "I really hope we come up with a way to move this forward. I think from the advocates' perspective, we're looking for regulatory assurances that these technologies are going to get their fair consideration, that they're going to be utilitized in the future. Utilities are looking to make sure they can cover their costs and it's not a big impact to their customers."

Nixon, too, wants to press on with this issue. "I look forward to continuing the discussion over the interim in hope of achieving success in the next session," he said.

Stakeholders had yet to figure out future strategies, but for standards supporters, said Dixon, "All options are on the table." That includes legislative possibilities as well as a ballot inititiave.