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Washington regulators have approved rules to help the state achieve 100% carbon-free electricity, including sweeping new requirements for utilities to ensure that all customers benefit from the state’s energy transition.

But despite the rules’ emphasis on energy and environmental equity, some utility companies and one regulator are concerned that the regulations could result in higher costs for customers, running counter to the goals of Washington’s Clean Energy Transformation Act, a 2019 law mandating the state’s utilities to generate all electricity from carbon-free sources by 2045.

The plan from the Washington Utilities and Transportation Commission is the culmination of a yearlong effort to implement CETA, which also requires utilities to stop using coal-fired electricity by 2026 and become carbon neutral by 2030 (Greenwire, April 12, 2019). The rules apply to the state’s investor-owned utilities: Puget Sound Energy; Avista Corp.; and Pacific Power, a subsidiary of PacifiCorp.

Utilities now must ensure that the “energy and non-energy benefits” of their resource-making decisions are equitably distributed among customers, according to the rules approved Dec. 28. They state that the transition from fossil fuels should result in lower environmental health burdens of vulnerable populations, and that utilities should identify ways to prioritize assistance programs for households paying a high portion of their income on energy bills.

Environmental groups, Washington residents and local government officials who submitted comments to the commission generally supported the plan.

“We appreciate that the final proposed rules up for adoption today will keep us in the path to achieve 100% greenhouse gas-free electricity for all Washingtonians, in a way that advances equity and creates good jobs here,” wrote Breean Beggs and Kara Odegard, City Council president and manager of sustainability initiatives for the city of Spokane, Wash.

But while utilities said they are committed to working with the commission to comply and support decarbonization, they raised concerns about the feasibility of some of the new requirements and potential impacts on customer rates.

Puget Sound Energy questioned how it could prioritize energy assistance programs for low-income customers given that it lacks data on customers’ finances. Typically, social service and housing agencies implement initiatives for low-income ratepayers, such as weatherization assistance programs, Jon Pilaris, PSE’s director of regulatory affairs, wrote in its comments to regulators.

“If utilities were to become involved in every weatherization application, this would be a very difficult and time-consuming endeavor,” Pilaris wrote. “Thus, as our low-income assistance programs are structured today, it is not practical or realistic for PSE to comply with this prioritization requirement.”

Others said that the rules failed to account for the regional nature of the state’s industry.

Washington lawmakers have stressed that the implementation of CETA should not result in increased emissions in other states (Energywire, Oct. 13, 2020). But for Pacific Power, which operates in five other Western states through its parent company PacifiCorp, the ability to maintain fossil fuels elsewhere enables the company to pursue significant renewable energy projects in Washington and beyond, said Spencer Hall, a spokesperson for the company.

“There are some requirements on these portfolio requirements coming in CETA that might, depending on how things are taken through to completion, limit what we can do with buying on the market because of definitions on whether that promotes coal or is coal-based,” Hall said.

Pacific Power also said the level of detail imposed on utilities when they file requests for proposals for new electricity projects could result in “regulatory fatigue.”

“Pacific Power expresses continuing concern with the practicality of the rules and potential harm the rules may do to customers. Pacific Power asks for clarification or modification of the rules to ensure a fair and efficient acquisition process,” the company wrote in its comments.

‘Groundbreaking framework’

Under the rules, electric providers are required to account for the “social costs of greenhouse gas emissions” when making resource decisions and establishing conservation programs. Utilities must also conduct outreach with diverse electric suppliers, such as businesses owned by women or minorities, when submitting requests for proposals for new projects, the rules say. Efforts to engage with diverse businesses must be reported to state regulators.

“The information we gather from these reports will assist the Commission, stakeholders, and utilities in better understanding the current state of supplier diversity in utility contracting,” the rules state.

They offer a groundbreaking framework for utilities to prioritize energy and environmental equity in their engagement with the public and with energy companies and in making resource decisions, said Mariel Thuraisingham, clean energy policy lead at the Seattle-based environmental justice coalition Front and Centered.

“A lot of these demands are really new, but the thinking is there. Taking the equity dimension seriously, I think, is happening,” Thuraisingham said.

However, concerns about higher electricity rates for customers were also expressed by one commissioner.

Commissioner Jay Balasbas wrote in the final order on the plan that requiring utilities to account for the social costs of carbon when comparing clean and traditional resources could increase electricity rates. The regulations also fail to protect ratepayers from annual electricity cost increases of more than 2%, even though CETA establishes a 2% cap on yearly rate increases for ratepayers, Balasbas wrote.

“[The] typical utility ratepayer could now see rate increases of more than 5 percent per year on top of normal utility spending for safety and reliability of existing electric service infrastructure before the Commission would entertain any kind of rate relief to achieve the clean energy goals in statute,” he wrote.

Other commissioners, however, disagreed with Balasbas’ assessment, saying that adequate ratepayer protections would remain in place.

Thuraisingham, of Front and Centered, said her group’s priority is to ensure that those who are the most cost-burdened do not see rate increases.

“There might be costs; we acknowledge that,” she said. “That is something that is only concerning to the extent that it’s not equitable, that those costs are distributed in a way that [doesn’t] overly burden those who already struggle.”