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Washington Efficiency/Renewables Widely Supported, but Proposed Policy Paths Diverge Mark Ohrenschall Con.Web, January 30, 2004

Searching for Common Ground

Expanding renewable energy and energy efficiency in Washington is a widely shared goal.

But how to pursue that goal through state energy policy is less agreed, as shown by two proposed renewables/efficiency bills in the Washington House of Representatives, and discussions about them.

The policy debates illustrate a wide range of beliefs and approaches on spurring efficiency and renewables, touching on the role of state government, along with economic perspectives and energy issues.

Both pieces of introduced legislation would set renewables/efficiency standards for utilities, increasing over time--but with major differences.

House Bill 2333 would link renewables/efficiency targets to retail electric loads and specific years, with some cost limitations. HB 2477 would also establish renewables/efficiency standards, but make them voluntary for utilities and base renewables targets on load growth, while offering tax exemptions and deductions.

Neither bill is expected to emerge whole from the House Technology, Telecommunications and Energy Committee; compromise legislation was reportedly in the works as of Con.WEB deadline.

Apple Pie, Motherhood and Renewables/Efficiency
More efficiency energy use and increased renewables are a commonly expressed aspiration among state legislators, utility officials, advocacy groups, business interests and other stakeholders discussing Washington standards legislation.

"It's clear we need to have state energy policy that encourages the deployment of more power generation through renewable resources," said Republican Rep. Toby Nixon, prime sponsor of HB 2477, at a Jan. 20 TTE committee hearing on his proposed legislation. "The question is how do we accomplish that."

He listed a number of attractions for more Washington renewables: greater energy independence, less reliance on long-distance power transmission and natural gas, reduced price fluctuations compared to fossil fuels, rural economic gains and environmental benefits.

Those are strikingly similar to the roll call of benefits mentioned by environmental lobbyist Clifford Traisman, at a Dec. 5 TTE hearing on what became HB 2333. Traisman cited energy independence, job creation, rural economic development, stable electric rates and environmental protection as reasons why environmentalists like the proposed legislation.

Paths Diverge
However, the preferred path toward more renewables/efficiency tends to diverge.

One significant fork in the road splits over the role of government.

Proponents of renewables/efficiency standards believe that the myriad gains for the state justify utility requirements for those energy resources. "It's an expression of public policy, the kind of energy future we want," policy director K.C. Golden of Climate Solutions told the TTE committee Jan. 20.

They also argue that Washingtonians largely favor efficiency and renewables. Ann Gravatt of Renewable Northwest Project told TTE members that a recent statewide poll found nearly two-thirds support for renewables/efficiency standards.

But others are hesitant or opposed to what they consider a state mandate. "We need to encourage power producers toward achieving a statewide goal on renewable energy," Nixon said. "If we take an approach that's all stick and no carrot, we're going to end up with nothing" passing the Legislature. "I think it's very important we get on the right road and be headed in the right direction, even if we don't manage to get as far as we'd like initially."

Some utility officials, meanwhile, are leery of the requirement approach. "We support one that is voluntary and rewards progress toward goals," said general manager Dave Clinton of Washington Rural Electric Cooperative Association, speaking at the HB 2477 hearing. Still, he suspected many and perhaps most rural utility managers would not sign up for voluntary standards. One bugaboo is the proposed 20-year planning horizon. "I believe [utility] managers will perceive this as an erosion of local control."

The Washington PUD Association and its members "have taken the position we oppose mandates, but nonetheless we are already building and operating and purchasing renewable energy for our ratepayers," said government relations director Dave Warren. Energy Northwest's Nine Canyon Wind Project and Last Mile Electric Cooperative's planned wind venture are prominent examples. The association prefers an approach tied to load growth, with incentives, he said.

Washington investor-owned utilities also are trending toward substantially increased renewables, through least-cost plans and requests for wind proposals, said IOU representatives. "We're planning to secure more renewables than the target" in HB 2333, said PacifiCorp representative Kathleen Collins; the utility also has a rate surcharge to fund conservation. "We support developing incentives for public and private entities to use for renewable energy and also for efficiency."

Efficiency/renewables proponents also like incentives, but they believe the HB 2477 strategy would generate insufficient development. "We do not opposed combining meaningful standards with incentives," said Danielle Dixon of the Northwest Energy Coalition. However, "Implementing this bill as written would cost the state substantially for minimal results," leading in 20 years to 1 percent non-hydro renewables for total retail loads, she said.

Golden said HB 2477 lacks a "significant engine" to "put us in a position to compete successfully for clean energy businesses and jobs and technologies." Utility aggregation of ratepayer dollars "is the money that will define whether we're clean energy leaders in the future."

Varying Economic Perspectives
Varying economic perspectives also factor into the debate.

Utility rate impacts are one issue. "These eligible renewable resources are still relatively high cost by comparison to the market," said Tim Boyd of Industrial Customers of Northwest Utilities. Renewables acquisitions that would drive up electricity rates represent "our single greatest concern." Renewables costs are dropping, he said, but the marketplace should determine the role of renewables.

Washington rural cooperative officials worry about rate increases stemming from the "aggressive" conservation goals outlined in HB 2477 (0.85 percent of load from annual efficiency acquisitions in 10 years), WRECA's Clinton said. "Much of the low-hanging fruit has already been acquired."

Cost issues are addressed, said Robert Pregulman of Washington Public Interest Research Group. HB 2333 includes a cap of 4.5 cents per kilowatt-hour on renewables acquisitions, he said--a provision requested by utilities. The bill also would require cost-effective efficiency program portfolios for utilities.

Meanwhile, renewables/efficiency advocates are emphasizing potential economic advantages.

"At a time when Washington's economy is suffering, [standards legislation] would bring much needed economic development benefits--in the form of increased tax revenues and jobs--to our state," according to a document from the state's environmental community listing energy standards as one of its top four legislative priorities this session.

The state's utility-private sector collaboration on energy efficiency generates $900 million of annual economic activity in Washington, and the efficiency industry statewide supports 4,000 jobs, said Stan Price of the Northwest Energy Efficiency Council at a Jan. 8 forum in Olympia. Efficiency businesses want a stable marketplace, as opposed to the historical funding swings, he said.

Most of the money spent on natural gas plants goes for imported fuel, and only 5 percent covers in-state labor, said consulting economist Jim Lazar at the same forum. For wind energy investments, in-state labor is 20 percent, while efficiency spending is 50 percent in-state labor. Lazar also listed the marginal cost of new gas at the equivalent of 10 cents/KWh, above some renewables.

Rural Washingtonians are excited about renewables potential, said Randy Smith of Northwest Sustainable Energy for Economic Development. Biomass is available virtually everywhere in rural Washington, while wind power fits well in certain areas. "There are no silver bullets for farmers," said Smith, himself a Chelan County fruit farmer, at the Jan. 8 forum. "We're looking for tools that are building blocks for our economic future. Renewable energy really could be one of those."

Energy Issues
Energy issues are yet another facet of the discussion.

On required standards, some point out that Washington utilities have considerably different load and resource situations, now and in the future.

HB 2477 recognizes that by basing the renewables targets on incremental load growth, said Collins Sprague of Avista Utilities. It also lets utilities choose when and whether they participate, which are "attractive" features, he said.

Many Washington PUDs have plenty of power resources to serve their customers, Warren told the TTE committee. If they're required to add a certain amount of non-hydro renewables, "What they are faced with is having to buy an energy resource that may not be necessary," Warren said he supports renewables and believes wind can be very cost-effective, but he worries that fixed standards "may or may not mix with resource choices already made in the past."

He also described disparities in efficiency potential among utilities, depending on the nature of their customer base.

Pregulman said the HB 2333 renewables standards wouldn't kick in until 2010, allowing "ample planning time." He also said the efficiency cost-effectiveness requirement would guard against concerns over conservation potential