Recently in Utilities & Transportation Commission Category

Join GTH at the Washington Future Energy Conference

September 9, 2014

Please join us at the Washington Future Energy Conference on November 5. Gordon Thomas Honeywell is proud to be a major sponsor of this event. Now in its fifth year, the Future Energy Conference brings together energy innovators, utilities, scientists, investors, and many others to discuss the future of the energy industry in our state.

Speakers include GTH partner Eric Christensen, who will moderate a panel discussing the electrification of Washington's transportation system. The panel will include Steve Marshall of the Center for Advanced Transportation and Energy Solutions, Charles Knutson, Senior Policy Advisor to Washington Governor Jay Inslee, and John McCoy, Legislative Director for the Seattle Electric Vehicle Association.

We look forward to seeing you November 5.

Sending Up a Flare, Washington UTC Provides Guidance on Jurisdiction for Third-Party Solar Leases

August 1, 2014

This week, the Washington Utilities & Transportation Commission ("UTC") issued its long-awaited policy statement concerning UTC jurisdiction over third-party owners of net-metered electric facilities, such as roof-top solar systems. The Interpretive Statement indicates that the UTC likely would assert at least limited jurisdiction over third-party owners of rooftop systems who contract with ordinary homeowners. Much of the Interpretive Statement, however, is a cry for help addressed to the Washington legislature, urging it to enact legislation addressing the unique jurisdictional and regulatory issues arising in this unique context.

As noted here, the UTC last year concluded that Washington's net metering statute allows for third-party ownership of rooftop solar systems, opening the door to innovative financing structures that have allowed rapid growth of distributed solar power in other states. However, the UTC left open one critical legal question -- whether the third-party owners of net metered systems operating under such leasing structures would be subject to UTC jurisdiction, and therefore potentially subject to the full range of utility-style regulation. While the Interpretive Statement is likely to disappoint those looking for a definitive statement from the UTC, it provides useful guidance both as to the UTC's concerns with third-party financing arrangements and the type of regulation the UTC likely would impose in those situations where it asserts jurisdiction. While not definitive, the Interpretive Statement, along with Washington's lucrative incentives for solar development and a recent change in the state's building code reducing upfront engineering costs, should spur development of distributed generation in the state.

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Iowa Supreme Court Clears Regulatory Path for Rooftop Solar Providers, Concluding They Are Not Regulated "Public Utilities"

July 16, 2014

Last week, in a decision that is likely to have far-reaching consequences both for the solar power industry and for traditional utilities, the Iowa Supreme Court found that a solar rooftop leasing company is not a "public utility" subject to regulation by the Iowa Utilities Board. The Iowa Court is the first to address whether a company leasing solar panels on a customer's rooftop is a regulated "public utility" under state utility laws. If followed in other states, the court's conclusion will greatly reduce the regulatory burdens faced by sellers of solar rooftop systems, especially those using innovative leasing/PPA arrangements, while intensifying pressure on traditional utilities from the growing market for customer-owned solar power. (SZ Enterprises, LLC d/b/a Eagle Point Solar v. Iowa Utilities Board, No. 13-0642 (Iowa Sup. Ct., issued July 11, 2014).

As noted previously, the Washington Utilities and Transportation Commission ("UTC") last year cleared some regulatory roadblocks for third-party owners of distributed generation systems such as rooftop solar generators. However, it reserved the question whether such third-party owners are "public service companies" subject to UTC regulation, and has yet to issue an guidance on that question. The Iowa court's conclusion therefore may hold particular sway in this state.

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Decoupling: Washington Muddles Toward a New Utility Model

July 15, 2014

Several trends have converged in recent years to put traditionally-structured utilities under increasing stress. First, the growth rate of electricity consumption in the United States has steadily declined over the last several decades, to the point that the Energy Information Administration ("EIA") recently projected consumption in the future will grow at less than one percent annually. Second, limits on greenhouse gas emissions and other environmental regulations place increasing economic pressure on traditional central-station generation, especially coal-fired plants. Third, economic trends, including steady declines in prices for equipment and state policies favoring renewable generation, make distributed generation and other alternatives to power from traditional utilities increasingly attractive, especially in high-cost states.

Because traditional utility rates are based on the amount of energy sold (e.g., cents per kWh of electricity sold to the end-use consumer), these trends put utilities in a difficult position. Utilities must finance huge infrastructure investments, including the transformation of the nation's generation fleet, especially aging coal-fired plants, to a low-carbon future and major updates and expansions of the nation's electric transmission system. At the same time, demand for their products is likely to be essentially stagnant, and they face increasing competitive pressure from non-utility alternatives. As a result, predictions of a "utility death spiral" abound.

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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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Beginning of the End for Colstrip? Washington UTC Rejects Puget Sound Energy's Analysis of Coal Plant Economics

February 7, 2014

The Washington Utilities & Transportation Commission ("UTC") yesterday rejected Puget Sound Energy's ("PSE") economic justification for continued operation of its Colstrip coal plant. The UTC's action, while not sealing the fate of Colstrip, sends PSE back to the drawing board and casts doubt on the future of the plant, which is already the subject of legal action brought by a coalition of environmental groups.

The UTC's findings were made in the context of PSE's 2013 Integrated Resource Plan. Under Washington law, the state's investor-owned utilities are required to develop and submit an Integrated Resource Plan to the UTC, which must be updated every two years. The Integrated Resource Plan is intended to analyze the alternatives available to meet the utility's anticipated load, and to identify the least-cost alternatives.

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Washington UTC Clears The Path for Innovative Solar Financing

July 30, 2013

The Washington Utilities and Transportation Commission ("UTC") earlier this month issued an order laying the legal groundwork for innovative financing of small renewable energy systems in the state. The UTC's ruling, which amends its small generation interconnection standards, RCW 480-108, addresses three questions of particular importance to the future of solar energy in the state. The order answers two of those questions in a manner that will ease the way for expansion of small solar systems but defers the third question.

The first and most important question addressed in the UTC order is whether third parties may own and operate net metering systems, which are small renewable systems located on the property of a utility customer that feed power back into the utility grid. The UTC order concludes that third-party ownership is permissible under Washington's net metering statute. This determination is critical because it opens the door for innovative financing arrangements in which a private company owns and operates rooftop solar systems on behalf of utility customers. These arrangements allow rooftop solar systems to be constructed with little or no upfront cost to the consumer, thus overcoming a major barrier to expansion of distributed solar generation. Such innovative financing arrangements are often credited with allowing the rapid expansion of rooftop solar systems in other states, especially California. Increasingly, these arrangements are being used for other types of distributed generation, as well.

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Gov. Inslee Fills Key Energy and Natural Resource Positions With A Mix of Insiders and Experienced Government Hands

February 12, 2013

With this week's announcement that David W. Danner has been appointed the new Chairman of the Washington Utilities & Transportation Commission ("UTC"), Washington Governor Jay Inslee has completed the slate of key positions influencing energy and natural resources policy in the state. The key appointments are a mixture of long-time Inslee confidants and individuals with long experience in state government.

Mr. Danner is typical of Inslee appointees who have worked for many years in Washington state government. Mr. Danner has served since 2005 as the Executive Director of the UTC. Prior to that, he served as Gov. Gary Locke's policy advisor on energy and environmental issues, and served on the State's Pollution Control Hearings Board and Shoreline Hearings Board. Mr. Danner will fill the seat recently vacated by Commissioner Patrick Oshie. He will replace Jeff Goltz as UTC Chair, although Commissioner Goltz will continue to serve on the UTC along with Commissioner Phil Jones.

Other key appointments include:

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