Reflecting new Gov. Jay Inslee's strong interest in renewable energy and climate change, these issues were hot topics during this year's legislative session. With the conclusion of the regular session at the end of April, the fate of most energy-related bills has now been decided. Because Gov. Inslee has called an executive session to address unresolved tax and budget issues, the final story has not yet been written. But a number of bills important to electric utilities, renewable energy developers, and others in the energy industry have now become law.
As has become routine in recent years, Washington's Renewable Portfolio Standard, Initiative 937 ("I-937") continues to be a flashpoint for controversy. Although comprehensive reforms reflecting a "grand bargain" between environmental and industry interests once again eluded the legislature, three important changes to I-937 were enacted. These are:
SB 5400 (signed April 23): This legislation allows a utility subject to I-937 to count wind energy imported from states where the utility has retail customers toward the utility's I-937 compliance obligations. The bill provides a limited waiver from I-937's requirement that renewable power must come from the Pacific Northwest. For reasons we have previously discussed, this provision is, at best, constitutionally suspect. It is also probably counterproductive because California has used similar territorial restrictions to limit access to its renewables marketplace, causing havoc in the Pacific Northwest renewables industry. As a practical matter, the result of the bill is somewhat limited, allowing PacifiCorp to count otherwise-excluded Wyoming wind resources toward its I-937 compliance obligations.
HB 1154 (signed May 1): This bill amends I-937's prohibition against double-counting of the environmental benefits of renewable generators so that biomass and biogas producers can sell carbon offsets attributable to the destruction of methane (a powerful greenhouse gas), while still receiving credit for renewable energy production under I-937. This change will allow dairy digesters, landfill gas generators, and similar renewable generators to participate in emerging carbon-offset markets like those in California. These markets promise a potentially substantial revenue stream for operators of biomass and biogas facilities. This legislation may therefore kick-start construction of such facilities in Washington.
SB5297 (Governor's signature pending): This bill is follow-up legislation to the complex legislative package passed in 2011 to facilitate the transition of the Centralia Steam Plant from coal to natural gas. Part of the 2011 legislation allowed utilities to purchase long-term "coal transition power" contracts from Centralia to provide the financial assurances necessary for the refueling of the plant. This bill helps facilitate contracts for "coal transition power" by permitting utilities to purchase coal transition power without threatening their eligibility for I-937's "safe harbor" for no-growth utilities. The "safe harbor" provision allows utilities with no load growth to comply with I-937 by spending 1% of their retail revenues on eligible renewable resources, even if that spending does not achieve otherwise-applicable portfolio requirements for renewable resources.
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