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Washington Legislators Consider Proposals for Expanded Renewables/Efficiency Mark Ohrenschall Con.Web, January 30, 2004

Uncertain Fates

Washington state legislators are considering proposals to expand renewable energy and energy efficiency in the Evergreen State.

But the legislative fates were uncertain as of Jan. 30.

One proposed legislation, House Bill 2333, would require utilities to meet increasing standards for renewables and efficiency over time, based on retail loads. Another proposed bill, HB 2477, also would establish renewables/efficiency standards for utilities, but would make them voluntary and, for renewables, based on load growth; it would offer tax benefits to complying utilities.

Both bills are in the House Technology, Telecommunications and Energy Committee, and compromise discussions were ongoing in late January.

"We've been negotiating," TTE committee chair Rep. Jeff Morris told Con.WEB Jan. 30. "We don't have agreement yet on a vehicle that's got bipartisan support … We're not quite there yet, but we're getting close."

Mandatory or voluntary standards are a big issue, he said, as is the very diverse nature of Washington's publicly owned and investor-owned utilities. Setting targets at retail loads or load growth is yet another question. So is renewables qualification.

Although no consensus had emerged as of Jan. 30, Morris described some potential concepts under consideration: mandatory standards with lower thresholds, voluntary standards with higher targets and tax incentives, and treating some public-power utilities separately from IOUs.

He anticipated committee action in early February. "I'm committed to have a vote," he said. "It's just a question of voting on something along partisan lines, or another vehicle that would have bipartisan support and [could reach] the governor's desk."

Proposed Efficiency/Renewables Standards Legislation
HB 2333 and HB 2477 both feature utility standards for energy efficiency and renewables.

But, as HB 2477 prime sponsor Rep. Toby Nixon noted, they "give different perspectives on how to address" expansion of renewables and efficiency in Washington.

HB 2333's introduction highlights its preferred strategy: "Aggregation of utility purchasing power under statewide goals to acquire additional renewable generation and energy efficiency resources on behalf of all ratepayers is vital to create high-quality jobs, promote rural economic development, and stabilize energy supplies and prices."

The bill would require Washington publicly owned and investor-owned utilities (except small utilities) to supply increasing percentages of annual retail load with renewables or renewables credits: a minimum 5 percent by 2010, 10 percent by 2015 and 15 percent by 2023. Eligible renewables are defined as newly upgraded Northwest hydro, wind, solar, geothermal, landfill gas, biomass (meeting certain criteria), wave or tidal power, and sewage gas.

Bonneville Power Administration renewables would count, though renewables from retail green power programs would not. Additional credits would be available for new resources located in Washington.

HB 2333 includes a maximum renewable resource cost of 4.5 cents per kilowatt-hour. If a utility can't meet targets "due to insufficient availability of eligible renewable resources and renewable energy credits in an amount equal to or below the cost cap," it can ask for lower standards.

Under HB 2333 energy efficiency standards also would apply to utilities. They would have to meet 0.75 percent of annual retail load with conservation program savings by 2006, and continuing annually through 2009. The requirement would increase to 0.85 percent from 2010 through 2012.

The bill would allow utility conservation with BPA credit or funding, as well as proportional shares of Northwest Energy Efficiency Alliance savings, which could furnish up to 20 percent of the annual requirement for utilities contributing to the Alliance. High-efficiency cogeneration could account for up to 15 percent of annual utility efficiency targets. At least 5 percent of energy savings would have to come from low-income efficiency services.

Energy-saving program portfolios would have to be cost-effective, and reach different customer classes. If a utility lacks "sufficient opportunities for acquiring conservation," it can ask for lesser targets.

HB 2333 efficiency/renewables standards also apply to market customers, for their non-utility loads.

Although the bill has some reporting requirements, there are no specified enforcement methods or penalties.

Voluntary, Incentive-Based Approach
HB 2477 opens with an indication of its voluntary, incentive-oriented nature: "Fuel diversity, economic, and environmental benefits from renewable energy and efficiency resources accrue to the public at large, and therefore all consumers and utilities should support consistent development of these resources to meet the state's electric demand and stabilize electricity prices through tax incentives for renewable resource and energy efficiency investments."

Like 2333, this bill would establish acquisition standards for utilities, but for renewables the targets would be based on load growth, not total loads. Utilities would choose whether to participate, and when. Proposed tax benefits would be available for complying utilities.

Within five years of the effective date of an agreement with the state Department of Revenue, participating utilities would need to acquire eligible renewables or credits equal to 15 percent of incremental retail load growth. The target rises to 25 percent within 10 years and 35 percent within 15 years. The renewables definitions are similar to HB 2333.

Utilities would need to prepare 20-year incremental load growth forecasts, prior to agreement with DOR. They would also have to analyze long-term costs; only those renewables that cost more than conventional power resources would get tax benefits, according to a bill summary.

Utility energy efficiency targets and criteria are virtually identical to HB 2333, though the target dates start within five years of a DOR agreement.

The bill also contains various additional credits, and the potential for lower standards under certain circumstances.

Utilities that meet the renewables standards would be eligible for certain income tax deductions for the public utility tax; sales and use tax exemptions for machinery and equipment; and sales tax exemptions for labor and services for renewables installations. For reaching the efficiency standards, an income tax deduction would be offered.