Settlement achieved in Microsoft bid to buy energy directly
For the last several months, the Coalition has been involved in a case at the Washington Utilities and Transportation Commission (UTC) under which Puget Sound Energy (PSE), in response to a request from Microsoft, proposed to establish a tariff under which large customers would be eligible to purchase electricity directly from the market while relying on PSE only for transmission services.
We are pleased to announce that a settlement agreement has been reached by Microsoft and PSE, along with other parties to the docket including the Coalition, the Public Counsel Unit of the Attorney General’s Office, the Energy Project, the Industrial Customers of Northwest Utilities, the Northwest & Intermountain Power Producers Coalition, and companies including Walmart Stores Inc.
If it is approved by the UTC, the agreement will allow Microsoft to purchase energy directly from the wholesale market under a special contract.
Microsoft will be required to:
1) Continue to participate and contribute to PSE energy efficiency programs as if they remained a customer under their existing schedule. This will ensure that PSE and Microsoft pursue all cost-effective energy efficiency.
2) Continue to make payments at the current rate to PSE’s low-income assistance programs, and in addition, contribute another 50% of its current payment to a separate fund to expand access to energy efficiency and renewable energy for low-income customers.
3) Meet 25% of its power needs with Energy Independence Act eligible renewable resources from 2018-2020, 40% eligible renewable resources from 2021 forward (matching any additional increase if the RPS requirements are legislatively increased). Remaining power needs will be met with carbon-free sources.
4) Make a $23,685,000 transition payment that PSE will pass along to remaining customers in order to hold customers harmless from the costs of Microsoft deciding to decline PSE’s power services.
Also, the terms specifically state that the special contract does not address or resolve Microsoft’s potential obligation to contribute to recovering costs associated with the decommissioning, remediation, or accelerated depreciation of the Colstrip generating units.
The Coalition entered the case because the original tariff proposal could have opened the door for large customers who are not currently covered by state laws to move toward direct retail access. Such a trend could result in reduced investment in renewable resources and energy efficiency, reductions in funding for low-income bill assistance and home weatherization, and the shifting of stranded costs to remaining customers.
Instead, the agreement fulfills Coalition principles of ensuring that direct retail access results in a win-win outcome in which customers and the environment see increased benefits as compared to the status quo, the public interest in promoting renewable energy and energy efficiency is enhanced, and that the risks to customers and the public are outweighed by enhancements to low-income, energy efficiency and renewable energy efforts and policies.
The agreement allows Microsoft to meet its corporate goals for sustainability and carbon neutrality and ensures that the company provide meaningful commitments to state policy goals for renewable energy, energy efficiency and low income assistance, it also contains important collateral benefits. As an agreement between parties, it does not specifically encourage or give sanction to other cases in which large customers pursue the ability to purchase energy directly. Should such cases arise, the agreement reinforces the need and provides a template for addressing public interests.
The agreement does not, however, completely resolve the question of how requests for direct access will be handled going forward. Some parties to the agreement requested that the Commission initiate a discussion on the broader question of direct retail access. The Coalition took no position on this request, but will monitor the situation closely and will participate in any such proceeding if it occurs.