Recently in Northwest Power & Planning Council Category

Pot and Power: Power Planning Council Estimates Demand Growth and Conservation Potential

September 9, 2014

As Washington's experiment in legalization of recreational marijuana use moves gradually toward full implementation, the consequences for Washington's utilities are begining to come into focus. Confirming more general studies we've discussed previously, the Northwest Power & Conservation Council ("NPCC") this week will be discussing a staff report that quantifies the range of increases in electric consumption that may arise from marijuana legalization in Washington, as well as other Northwest states that may follow Washington's lead.

Consistent with other studies, the NPCC study recognizes that, although indoor marijuana cultivation offers a number of advantages to the grower, it is extremely energy intensive. This fact is dramatically illustrated by comparing the energy intensity of indoor marijuana production with the energy intensity of aluminum production, perhaps the most energy-intensive of the Northwest's traditional industries. Aluminum production, the study notes, requires roughly 16 kWh of electricity to produce one kilogram of aluminum, while indoor grow operations require a whopping 4,000-6,000 kWh to produce one kilogram of marijuana. All told, the NPCC estimates, marijuana legalization in Washington will produce an increase in electricity consumption in the range of 60 to 160 average MW over the next two decades, while demand will grow approximately 240 aMW in the four-state region by 2035. In addition, the study notes, the demand from grow operations varies significantly over the course of the day, and a proliferation of grow operations may therefore add to utility peak-hour demands.

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Governor Inslee Issues Comprehensive Executive Order on Climate Change

April 29, 2014

Washington Governor Jay Inslee today issued an Executive Order that will address Washington's greenhouse gas ("GHG") emissions on many different fronts. Issued in apparent response to the legislative logjam that has developed around the Climate Legislative and Executive Workgroup, the Executive Order (No. 14-04), requires actions in the following areas:

Cap-and-Trade Legislation: The Executive Order creates a new Carbon Emissions Reduction Task Force to develop a legislative recommendation for a "cap and-market" mechanism, which would limit carbon emissions and establish an emissions allowance trading system designed to achieve GHG reductions in the most efficient manner. The Task Force, which includes 21 members from business, labor, health, and public interest organizations, meets for the first time today. It is instructed to provide recommended legislative by November 21, 2014.

Coal-Fired Electricity: The Executive Order directs the Governor's Legislative Affairs and Policy Office ("LAPO") to seek "negotiated agreements with key utilities and others" to reduce coal-fired electricity imported from outside the state and transition to cleaner sources. With the transition of Washington's only coal-fired plant at Centralia now well underway, Washington's remaining sources of coal-fired electricity will be generators located in states to the east, such as the Colstrip plant in Montana. Addressing the "coal-by-wires" issue is therefore the last remaining front for attacking significant GHG emissions in the electricity sector. The Executive Order requests help from the Washington Utilities and Transportation Commission ("UTC") and the Northwest Power and Conservation Council to "actively assist and support" the transition away from coal-fired electricity, although, as we've previously discussed, the UTC has already moved significantly in this direction.

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I-937 Updates: New Legislation and New Administrative Rules May Alter Washington's Renewable Portfolio Standard

April 7, 2014

As a result of both legislative and administrative action, several notable changes to Washington's Initiative 937 ("I-937", also known as the Washington Energy Independence Act) are on the horizon. While rejecting large-scale reform, the legislature made significant course corrections related to treatment of conservation and conduit hydro projects under the initiative. Those changes, and possibly several others, will be addressed in ongoing rulemaking proceedings at the Washington Department of Commerce and Washington Utilities & Transportation Commission ("UTC").

Two changes to I-937 were enacted in the 2014 session of the Washington Legislature. First, HB 1643, popularly known as the "conservation smoothing" legislation, allows utilities that achieve conservation in excess of specified targets to credit the excess toward future compliance periods, within limits. As originally enacted by the voters in 2006, I-937 required all covered utilities to obtain all "achievable cost-effective conservation." This mandate was carried out in a two-year process, which requires utilities first to identify conservation targets, then to adopt a plan to achieve those targets. In carrying out this mandate, many utilities, especially smaller utilities, found that conservation is not achieved in neat blocks, but instead is often achieved in major increments that may exceed specific biennial conservation targets. In these circumstances, I-937 both denied utilities the benefit of conservation achieved above biennial targets and created a perverse incentive to delay these conservation achievements.

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Ninth Circuit Orders Amendments to Northwest Power & Conservation Council's Sixth Power Plan

September 19, 2013

While rejecting the potentially most far-reaching claim of the environmental petitioners, the U.S. Court of Appeals for the Ninth Circuit yesterday remanded the Northwest Power and Conservation Council's ("Council") Sixth Power Plan to correct two perceived errors. The opinion is the latest chapter in the Pacific Northwest's "salmon wars," a decades-long political and legal struggle to balance the health of the region's iconic salmon runs with its economically vital hydroelectric power system. Northwest Resource Information Center, Inc. v. Northwest Power & Conservation Council, No. 10-72104 (issued September 18, 2013).

The Council is the body designated under the Northwest Power Act to develop a plan that provides a robust regional fish and wildlife conservation program, while preserving the value of the regional hydroelectric system. The power planning process is the core mechanism employed by the Council to achieve this balance. Hence, changes to power planning process can have far-reaching consequences.

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Washington's Attorney General Will Address I-937 Conservation Requirements

July 17, 2013

Yesterday, the office of Washington Attorney General Bob Ferguson issued a notice that it will provide a formal opinion on several legal questions that are critical to determining how Washington utilities comply with Initiate 937's requirement that they acquire all "cost-effective, reliable and feasible" energy conservation. Those wishing to comment must notify the Attorney General by August 14.

In addition to the more well-known requirements for utilities to meet specific targets for the purchase of renewable energy, I-937, also known as the "Washington Energy Independence Act," requires utilities with more than 25,000 customers to plan and implement energy conservation programs on a two-year cycle. Beginning in 2010, and every two years thereafter, a covered utility must publish a plan identifying its "acheivable cost-effective conservation potential," set a target for conservation for the two-year period, then implement a plan to achieve the conservation target.

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Eric Christensen to Speak at July 8 Northwest Power & Conservation Council Symposium

July 2, 2013

Please join us on July 8 here in Seattle for the Northwest Power & Conservation Council's Symposium on Pacific Northwest Power Markets. GTH partner Eric Christensen will present "Everything You Wanted To Know About FERC But Were Afraid to Ask." He will describe the functions of the Federal Energy Regulatory Commission ("FERC"), the peculiar outlines of its jurisdiction in the Pacific Northwest, and a number of recent FERC initiatives that are likely to affect the power markets in our region.

State Energy Office Concludes Non-Utility Conservation Can Be Used for I-937 Compliance

June 13, 2013

The Washington State Energy Office (which operates within the Department of Commerce) recently issued an Advisory Opinion of considerable importance to utilities required to meet Initiative 937's energy conservation targets. The Advisory Opinion concludes that a utility may count documented and cost-effective energy savings toward I-937 conservation targets even if the utility has no direct involvement in carrying out the conservation measure.

Passed by Washington voters in 2006, I-937 (also known as the Washington Energy Independence Act) is well known for imposing a Renewable Portfolio Standard that requires covered utilities to purchase an increasing amount of qualified renewable resources, ultimately requiring 15% of their portfolios to be supplied by renewables by 2020. Less well know, but equally important, I-937 also requires covered utilities to develop and carry out plans for acquiring "all available conservation that is cost-effective, reliable, and feasible." The Advisory Opinion answers some important questions for utilities carrying out this conservation mandate.

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Power Planning Council Suggests Need for 350 MW of New Generation by 2017

December 14, 2012

The most recent projections from the Northwest Power & Conservation Council ("NPCC") suggest that electric demand in the Pacific Northwest is finally recovering from effects of the Great Recession, and that new generation will be needed to meet peak needs by 2017. The NPCC's Northwest Resource Adequacy Forum, a committee of experts from utility planning staffs, state agencies and other interested parties, presented its most recent report at the NPCC's December meeting. The report predicts that the region will need to build 350 MW of new generation, after accounting for energy conservation, in order to meet peak demands in 2017.

The Resource Adequacy Forum uses a model which aims to keep the likelihood of an energy shortfall at 5 percent or less. The Forum now predicts that, without additional capacity, the likelihood of a shortage will grow to 6.25% by 2017. The largest driver, according to the Forum, is projected drop of 1,500 MW of capacity from California, with availability from California estimated to fall from 3,200 MW to 1,700 MW, primarily due to retirements of coastal water-cooled thermal plants. In addition, the Forum projects within-region demand, net of energy efficiency savings, will grow by about 300 MW from 2015 to 2017. The overall result is an unacceptably high risk for resource adequacy, especially for peaking power in the months of January, February, and August. The Forum did not analyze demand response programs, but suggested such programs might be one mechanism to reduce peak demands and bring supply projections back within acceptable limits.

The Forum's report also highlights the importance of both independent energy producers and the California market for the Pacific Northwest. The Forum notes that independent power producers now operate about 3,450 MW of generation capacity in the Northwest. The Forum assumes that much of this generation will be available to meet winter peaks, but in the summer, it is mostly committed to the California market.
Further, much of the uncertainty in the Forum's projections is attributable to uncertainties about the California market. For example, under an extreme scenario assuming high load growth and no resources from California, the risk of inadequacy jumps to 16.8% in 2017. On the other hand, with low load growth in the Northwest and no loss of generation availability from California, the probability of resource inadequacy falls to 3.2%.

If you have any questions about the NPCC report, energy development, or other utility-related matters, please contact a member of GTH's Energy, Telecommunications and Utilities practice group practice group. We have years of experience in energy regulation, the Northwest's energy industry, complex administrative matters, appellate litigation, and related fields and we are regularly recognized as one of the best energy and natural resources practices in both the region and the nation.