Energy regulators want closer look at utilities’ coal plant costs
OLYMPIA, Wash. – After months of review and public comment hearings, state regulators today formally acknowledged the updated 20-year energy resource plans for Washington’s three investor-owned electric utilities, but called for greater scrutiny of the companies’ plans for future fossil-fuel generation investments.
The Utilities and Transportation Commission directed Avista Corporation, Pacific Power, and Puget Sound Energy to reconsider on-going reliance on coal-fueled power plants and directed the companies to use a more robust cost of carbon estimate in future resource plans.
The UTC offered the following direction to companies regarding their 2017 Integrated Resource Plans:
Coal-fired Power Plants
The commission stated its concern about the costs of continued operation of the companies’ coal-fueled resources and the magnitude of economic risk the companies face by continuing to invest in those generation sources.
The commission asked companies to answer detailed questions about the future financial viability of their coal-fired power plants and asked all three companies to undertake complete examinations of the costs of continued operations of and investments into those resources.
For Puget Sound Energy and Avista, these resources include the Colstrip Power Plant in Colstrip, Montana. For Pacific Power, these include both the Colstrip Power Plant and the Jim Bridger Power Plant in Point of Rocks, Wyoming.
Costs of Carbon
The commission also directed companies to place more emphasis on studying and responding to developments in state and federal carbon policy.
“It is imperative that utility planners recognize the risks and uncertainties associated with greenhouse gas emissions and identify a reasonable, cost-effective approach to addressing them,” the commission stated, pushing companies to incorporate the cost of future greenhouse gas regulation and known regulations in their long-term energy portfolios.
The commission instructed utilities to use a comprehensive, peer-reviewed estimate of the monetary cost of climate change damages, suggesting estimates produced by the Interagency Working Group on Social Cost of Greenhouse Gases.
Commissioner Jay Balasbas concurred with Chair Dave Danner and Commissioner Ann Rendahl that economic risks of future greenhouse gas regulations should be incorporated into future IRPs, but disagreed with the majority on the use of social cost of carbon as the representation for future greenhouse gas regulation.
The companies’ latest plans, which by law are updated every two years, provide a snapshot of each company’s energy mix to inform the commission as it oversees and regulates the rates and services of investor-owned utilities.
Spokane-based Avista serves more than 237,000 electric and nearly 149,000 natural gas customers in Washington.
Bellevue-based Puget Sound Energy provides electricity service to more than 1.1 million electric customers living in eight Washington counties: King, Pierce, Island, Kitsap, Kittitas, Skagit, Whatcom, and Thurston. The company also operates a 12,000-mile natural gas distribution system and supplies natural gas to 785,000 customers, primarily in the Puget Sound area of Washington.
Pacific Power is a division of Portland, Ore.-based PacifiCorp, which is owned by Berkshire Hathaway Energy of Des Moines, Iowa. The company provides electric service to about 133,000 customers in five Eastern Washington counties: Kittitas, Columbia, Garfield, Walla Walla and Yakima. Cities in the company’s service territory include Yakima, Toppenish, Sunnyside, Selah, Pomeroy, Walla Walla, and Dayton.
The three-member commission regulates the private, investor-owned electric and natural gas utilities in Washington. It is the commission’s responsibility to ensure regulated companies provide safe and reliable service to customers at reasonable rates, while allowing them the opportunity to earn a fair profit.