Debate over whether utilities meeting clean-energy goals

EVERETT — When an initiative was proposed six years ago to require large utilities to provide energy from renewable sources, supporters said it would do more than just help the environment.

It would spur investment and create jobs, save ratepayers money through conservation and through cheaper power, which in turn would help the economy.

Opponents said it would cost money and jobs by raising utility rates to cover the cost of new, unproven technology that’s more expensive than the economical hydropower prevalent in the region. That hydropower — with its effect on salmon runs aside — is Earth-friendly in that it doesn’t pollute the air and doesn’t have to be mined.

The initiative was supported primarily by environmental groups and opposed by some business groups and utilities in the state. Voters in November 2006 approved I-937 by roughly 52 percent to 48 percent.

The initiative requires utilities with more than 25,000 customers — 17 of them qualify — to meet 15 percent of their annual load with resources such as wind power, solar energy or biofuels by 2020. Most hydropower doesn’t count.

On the way to that goal, they’re supposed to reach 3 percent by the end of this year and 9 percent by the end of 2016.

The Snohomish County PUD and Puget Sound Energy, the two utilities that serve Snohomish and Island counties, both say they’ve met the requirement so far. The PUD gets 6.7 percent of its power from renewables while Bellevue-based Puget Sound Energy is at about 10 percent, officials said. Most of that power for both utilities comes from wind.

The PUD also is pursuing a tidal power pilot project and has been test drilling for geothermal power.

If utilities don’t comply with the requirement, they’ll have to pay $50 for every megawatt hour they come up short — a price that could run into the millions.

In the first benchmark year, the initiative’s effect is tough to determine.

While I-937 has been an influence, there’s no statewide yardstick to measure the impact, said Tony Usibelli, who heads the energy policy division for the state Department of Commerce.

“It certainly has driven utilities to invest more in renewable projects,” he said.

Still, even supporters who say increased use of wind power, solar power and biofuels is good for the economy can’t say how much of it has been because of the initiative. A lot of that investment was going on beforehand, both sides point out.

The Renewable Northwest Project, a Portland-based group that advocates for use of environmentally friendly energy sources, estimates that $8 billion has been invested in the renewable energy business in Washington state by private companies.

“The vast majority of that investment has happened in the past 10 years. It’s not possible to pin that success on any one condition or policy,” said Erin Greeson,a spokeswoman for the group.

Initiative opponents said in 2006 it would result in higher power rates by forcing changes before the market is ready.

“You have to take on renewable power before you need it,” said Snohomish County PUD Commissioner Kathy Vaughn, who opposed the initiative.

The Association of Washington Business, based in Olympia, opposed I-937 in 2006. Clean-power incentives and rebates and conservation measures could have some positive effect for commercial ratepayers, said Courtney Barnes, government affairs director for environmental policy for the association.

But overall the business group sees the initiative as a negative, she said.

“Washington’s energy mandates tend to be more restrictive than the laws for the neighboring states, and it puts Washington at a competitive disadvantage because we draw on cheap power to attract new industry,” she said.

Officials with the PUD would like to see new, low-impact hydroelectric projects, such as its own recently completed Youngs Creek dam and powerhouse on a stream near Sultan, count toward the requirement.

“We try to look in our own back yard,” PUD general manager Steve Klein said. With small dams such as Youngs Creek, “we’ll own them forever.”

Another part of the initiative requires utilities to actively promote conservation. Programs run by the PUD have saved ratepayers millions of dollars the past couple of years alone, spokesman Neil Neroutsos said.

Again, though, it’s hard to determine the role of the initiative in those savings, Usibelli said.

“The utilities have been doing a very large amount of conservation, long before I-937,” he said. “It’s been going on in the Pacific Northwest for more than 30 years.”

Vaughn said one of her problems with the initiative is that it doesn’t allow utilities to count conservation as a renewable energy source. She said she didn’t campaign against the initiative despite her misgivings.

“I felt it was important for the ratepayers to make that decision themselves because it was going to cost them more money in rates,” she said. It costs more right now to develop renewables than to buy cheap hydropower from Bonneville Power Administration, she said.

Puget Sound Energy and the PUD each have had some rate increases the past few years. Factors such as Bonneville Power Administration rate increases and improvements and upgrade projects were the biggest reasons, but the investments in renewable energy and conservation contributed as well, officials said.

“Developing new resources does add to the cost,” Klein said. The investments will pay off over time, he said, partly because new hydropower can’t keep up with the eventual growth of the region. No new large dams are being built.

“We can’t get any more, so what do you do next?” he said. With the renewables, “in the end after you’ve got the project established and built, the fuel is free. Once you get them into your portfolio, over time they hold down costs.”

The PUD started buying wind power, which makes up most of its renewable portfolio, in 2006 but not because of the initiative, Klein said. Vaughn agreed.

“I think that we were going to do right for the utility and the environment and we proved we didn’t need to have a bill to be able to do that,” she said.

Puget Sound Energy built its first wind farm, Hopkins Ridge near Dayton in Eastern Washington, in 2005 and planned its second, Wild Horse near Ellensburg, before I-937, spokesman Roger Thompson said.

“Long term we know we’re going to need new power supplies and new sources of energy,” he said. With no new hydropower on the horizon, “it was the lowest cost power supply we could find. By a considerable margin, it was an easy and obvious choice for us.”

The third farm, Lower Snake River, was probably pushed ahead a bit by I-937, Thompson said.

In the past few years, natural gas has dropped in price to make it competitive with wind, he said.

To fulfill the remainder of Puget Sound Energy’s requirement under I-937, the utility will study the options “to see which one makes the most sense for our customers.”

Puget Sound Energy recently came under fire from the Sierra Club for getting close to 30 percent of its power from coal. The utility buys power from the Colstrip Generating Station in Montana, which, according to the U.S. Environmental Protection Agency, is the eighth-worst greenhouse gas generator among power plants in the U.S.

“Balance is critical, and that is really where our focus is. And that’s to produce as clean a power as we can, and to keep our customer bills affordable,” said Grant Ringel, a spokesman for PSE told the Los Angeles Times.

Klein said the PUD will strongly pursue geothermal power. Test drilling so far in the Cascades near Index has come up empty, so the utility plans to look elsewhere in the mountains.

“I’m sure it’s up there,” he said.

Bill Sheets: 425-339-3439; sheets@heraldnet.com.

Where power comes from

Snohomish County PUD

Supplies electricity to 322,228 customers in Snohomish County and Camano Island.

PUD power sources:

@bull; 90 percent hydropower: The vast majority of that comes from the Bonneville Power Administration, which is mainly the hydroelectric dams along the Columbia and Snake rivers, and a small slice comes from the PUD’s own Jackson Hydroelectric Project and Youngs Creek dams.

@bull; 6.7 percent green energy: Of this amount, purchased wind power accounts for nearly all of it. The PUD also gets some power from biomass — or wood waste — landfill gas and some solar.

@bull; 3.3 percent: Nuclear (from Bonneville) and other sources.

Breakdown of qualifying green energy under I-937:

The PUD powers 38,000 homes with clean energy. Of this amount, wind power purchased from three wind farms is 92.4 percent; biomass (wood waste) is 5 percent; landfill gas is 2 percent; Woods Creek dam (small additions qualify) is 0.4 percent; and solar is 0.2 percent. The PUD has invested $24.8 million in clean energy that qualifies for I-937 in 2012, the first year of reporting required under the initiative, and $39 million for conservation in 2010 and 2011.

Estimated savings in dollars for customers from conservation, rebates and incentives (2007-2011):

$64 million saved on utility bills; $47.6 million paid in rebates and incentives for programs such as energy-efficient heat pumps and refrigerator trade-ins; $11.2 million paid out in low-interest loans for weatherization projects and other energy-efficient equipment.