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Washington State Has Low Electricity Prices.
Will It Stay That Way?

by Brett Davis
The Center Square, December 1, 2022

Adding new electricity generation is another key factor
in electricity costs going forward.

Electricity Rates by State, 2021 In terms of average retail price, Washington state has the seventh lowest electricity rate in the nation, 8.75 cents per kilowatt hour, according to a 2021 state electricity profiles report from the U.S. Energy Information Administration. The national average is 11.10 cents per kilowatt hour.

Washington's 2021 retail rate came in lower than neighboring Oregon at 8.95 cents, which ranked No. 11, but higher than Idaho's cheapest-in-the-country 8.17 cents.

Todd Myers, environmental director for the Washington Policy Center, explained why electricity is less expensive in the Evergreen State compared to much of the rest of the nation.

"Washington has some of the lowest electricity rates due to our hydro system," he said in an email to The Center Square. "Hydroelectric power is the best of both worlds -- low cost and able to be ramped up or down as demand requires."

The state Department of Commerce's "Choose Washington" website says as much.

"We offer businesses the largest coordinated hydroelectric system in the world," the website touts. "Nearly 75% of our power is derived from the many rivers that flow through the state and the state's legislature has mandated that 100% of all energy be derived from clean power sources by 2045. Energy costs can run as low as 2.88 cents per kWh and average 4.13 cents per kWh statewide for industrial customers, some of the lowest rates in the nation."

According to Myers, several factors will play a part in determining future electricity costs in Washington.

"California," he said. "Since we are on a grid with them, we compete to some extent for electricity. When spot prices shot up in California this summer, our spot prices did too."

Spot price refers to the current price of a commodity at which it can be bought/sold at a particular place and time.

"Most of the electricity used by utilities comes from contracts that are purchased well in advance, so spot prices don't tell the whole story, but very high prices for even a short time can add up," Myers said.

Adding new electricity generation is another key factor in electricity costs going forward.

"Nothing is as cheap as existing hydro, so prices will go up no matter what we do," Myers pointed out.

"Washington requires that all electricity be 100% renewable by 2030 and then that it must all be generated in-state from renewables by 2045. This second target is entirely unnecessary. We are on a grid and it doesn't matter where the electricity is generated. It would be better simply to purchase the lowest-cost renewables rather than forcing utilities to build expensively in Washington state. These are the types of nonsensical rules that drive up electricity costs without adding any environmental benefit."

Jim Kopriva, senior communications associate with the Governor's Office, took exception to Myers observation on the 2045 clean energy due date.

"The state's 2045 target does not limit Washington to power generated in-state," he told The Center Square in an email. "There's been a misunderstanding with that claim."

The Center Square asked Myers about Kopriva's claim.

"It was sold as all in-state and the incentives are for utilities to build in-state, but he is correct that it is not required," Myers clarified. "I would change 'in-state' to 'directly' to make it perfectly accurate."

He concluded, "My frustration is that the 2045 requirement adds no CO2 reduction beyond the 2030 requirement but does add cost."

Another consideration in electricity prices down the road in Washington involves the possibility of breaching four dams on the lower Snake River to save endangered salmon runs and maintain treaty obligations with Native American tribes.

Earlier this year, Gov. Jay Inslee gave his blessing to restoring the free flow of the river in a report co-signed by U.S. Sen. Patty Murray, D-Bothell, that says the benefits provided by the four giant hydroelectric dams must be replaced before the dams can be breached.

"The dams provide about 8% of what Washington state uses (people will claim that California buys the electricity, but that is a distinction without a difference since any electricity can be sold on the spot market to anyone on the grid)," Myers said. "If we destroy them, we need to replace that electricity and the only way to do that is by buying from sources that are much more expensive.

Power grid workers have consistently said the back-up electricity provided by the Snake River dams is essential to preventing power shortages when energy demand is high.

Kopriva is confident electricity prices in Washington will remain low.

"Hydropower is and will remain a significant source of clean, affordable power in Washington state," he said, "and the costs of renewable sources drop every year."

Brett Davis reports on Washington state government and previously worked for public policy organizations the Freedom Foundation and Washington Farm Bureau, as well as various community newspapers.
Washington State Has Low Electricity Prices. Will It Stay That Way?
The Center Square, December 1, 2022

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