Utilities warn of “pancaking” carbon proposals

Utilities warn of “pancaking” carbon proposals
Two eastern Washington public utility districts have passed resolutions opposing Initiative 1631. Photo: Created by Dooder - Freepik.com

Two eastern Washington public utility districts (PUD) have passed resolutions opposing Initiative I-1631 which creats a carbon tax on certain emitters, saying they are already seeking to reduce their carbon footprint based on a 2017 analysis.

Combined, Franklin and Benton counties have more than 78,000 customers; their districts include the Tri-cities of Richland, Pasco and Kennewick, as well as the city of Prosser.

The resolutions include similar text that voice concerns already raised by both the trucking industry and business groups that have also warned about increased energy costs for ratepayers in a state with already low emissions, as well as problems they see with certain initiative provisions.

The PUDs rely primarily on hydroelectric power provided through the Bonneville Power Administration (BPA). Along with wind and nuclear power, the districts’ energy is more than 90 percent carbon-free. However, their resolutions claim that the $15 per-ton fee on carbon emissions beginning in 2020 would raise energy prices. Franklin PUD staff estimate it would add between $700,000-$1 million annually in energy costs for the district, while Benton anticipates it would cost $3-6.9 million between 2020-2022. For ratepayers in that district, the change would represent a 1-2 percent increase in their energy rates.

The districts are already anticipating additional carbon-related regulations. The Benton PUD resolution warns of “pancaking effects” of these policies including Initiative 937 passed in 2006, along with “regulatory requirements including…100% clean energy legislative proposals expected to be introduced in the 2019 legislative session.”

Although proponents tout the initiative as a way to reduce carbon by charging big emitters, many industries are exempt from the carbon fee if classified as “Energy Intensive Trade Exposed” industries (EITE) as defined by state law.

That includes coal plants that emit a significant amount of carbon and are scheduled for closure in 2024, which the Benton PUD Resolution notes will “substantially reduce emissions” in Washington. The state already is one of the greenest states in the country; it makes up 1.4 percent of total U.S. carbon emissions and .021 percent of total global emissions.

To encourage clean energy projects, I-1631 allows a qualifying utility to claim up to 100 percent of the fee if it has developed a Clean Energy lnvestment Plan (CEIP) approved by the state Department of Commerce.

However, the Benton PUD resolution argues that the qualifications to get a plan approved “are onerous and erode the principle of ‘local control’ valued by public power utilities by requiring the utility’s locally-elected board to consult with the Board and panels, as well as obtain approval from the Department of Commerce, which may not represent the values and interests of local citizens.”

The plans would also how to demonstrate long-term efforts to shift away from natural gas, which the resolutions describe as a “low cost resource” that allows the districts to meet sudden energy demands.

Efforts to discourage further use of natural gas would run contrary to a 2017 Pacific Northwest Low Carbon Scenario Analysis Study conducted by consulting firm Energy and Environmental Economics.

The study argues that “the most cost-effective opportunity for reducing carbon in the Northwest” is to replace coal with renewable energy, as well as natural gas. It also warns that “prohibiting the construction of new natural gas generation results in significant additional cost to Northwest ratepayers without a significant greenhouse gas reduction benefit.”

Both district resolutions also criticize the makeup of the Public Oversight Board, which would determine how the revenue would be spent. While that membership would require certain state agency heads, the initiative doesn’t demand any utility representative.

The Benton PUD resolution was passed at the commission’s Sept. 11 meeting, while the Franklin PUD commission approved its resolution on Aug. 28.

 

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