Proposed Avista Acquisition Settlement Protects Consumers and Environment

The NW Energy Coalition, the Natural Resources Defense Council, and Renewable Northwest joined a proposed settlement today that, if approved by the Washington Utilities and Transportation Commission, would provide Ontario-based Hydro One with the green light from Washington State to acquire Avista Utilities. The settlement contains important commitments in the areas of low-income weatherization, energy efficiency, consumer protection, renewable energy acquisition, and transportation electrification.

Avista is an electric and natural gas utility that serves more than 600,000 customers in Washington, Idaho, Montana, and Oregon, and owns a separate electric utility in Alaska.

The proposed settlement ensures that the new owners will continue to improve upon Avista’s history of clean energy and affordability and provide a net benefit to Washington State customers.

Under the terms of the settlement, Avista agrees to, among other commitments:

• Provide $6 million in funding to low income energy efficiency programs, including a focus on the replacement of energy-inefficient manufactured homes.
• Create an on-bill repayment program that customers can use to pay for efficiency improvements directly on their utility bill.
• Eliminate security deposits for new residential customers and return existing deposits held for more than six months.
• Initiate a two-phase commitment to increasing renewable resources serving customers, with 50 aMW acquisition planned by 2022 and an expected 90 aMW to replace a portion of the power from Avista’s share of Colstrip power plant’s coal-fired Units 3 and 4 when they retire.
• Provide $5 million for new renewable energy projects that benefit low-income customers.
• Advance transportation electrification efforts, including a commitment to increase programs that benefit low-income customers.

At the same time, residential customers will receive rate relief in the form a credit that will reduce bills over the next five years.

The settlement also includes provisions designed to pay down financial obligations associated with Colstrip Units 3 and 4 and help the community of Colstrip, Montana address transitional issues as the town’s coal-fired power plant begins to gradually phase out operating units, starting with Units 1 and 2 in 2022. Specific provisions related to Avista’s ownership of Colstrip 3 and 4 include:

• Setting an accelerated depreciation date of 2027 for Avista’s ownership in Units 3 and 4, which would match the depreciation schedule recently agreed to by a co-owner, Puget Sound Energy, in a manner that avoids raising customer rates.
• Recovering undepreciated costs utilizing existing tax credits so that customer rates do not increase.
• Committing $3 million in funding toward a Colstrip community transition fund.
• Developing a transition plan to ensure that Avista’s ownership in Colstrip transmission assets remains useful after retirement of the power plant.

Avista agrees in the settlement to reach out to tribal communities to encourage participation in the benefits of these commitments.

“This settlement reflects the fact that Avista and its proposed new owner, Hydro One, recognize the need to protect customers and the environment and to advance renewable energy and energy efficiency, especially in highly impacted communities,” said Wendy Gerlitz, policy director at the NW Energy Coalition, who advocated strongly for the consumer and environment protections contained in the settlement.

Rachel Shimshak, Executive Director of Renewable Northwest, emphasized that this agreement will contribute to economic development in eastern Montana and improve Washington customers’ access to clean and affordable energy. The agreement addresses the use of the additional transmission capacity that will become available when coal-fired units at Colstrip are retired. “We are pleased that the settlement includes commitments for clean energy, and that it creates the opportunity for Montana’s energetic wind resource to benefit Washington and Montana citizens.”

Noah Long, legal director of NRDC’s Western Energy Project, added, “The proposed Avista Utilities settlement offers numerous benefits for customers and communities affected by the merger. All the parties involved in this agreement worked hard to ensure a smooth transition to a cleaner energy future that provides opportunities for everyone.”

The proposed settlement was filed with the UTC on March 27. State regulators in Alaska, Idaho, Montana, and Oregon are also considering the acquisition.

The text of the proposed settlement can be viewed here.

For questions, please contact Wendy Gerlitz, Policy Director at the NW Energy Coalition, at wendy@nwenergy.org or 503-449-0009.