General Comments on HB3034 and SB6672 Bills amending I-937

Looking back over the past 5 years it is very exciting to see the growth in the energy efficiency and renewable energy industry in Washington and the Northwest.  Energy savings are up and more renewable energy projects are in the works than ever before.  This level of activity is due to the strong public policy signals in place in Washington, Oregon, Montana and nationally as well as the competitiveness of clean energy technologies.   It is vital for Washington to maintain these strong policies to invest in energy efficiency and 21st Century renewable energy technologies.

This bill reflects a clear compromise by many parties and attempts to walk the tightrope between maintaining the integrity of the existing statute and providing more flexibility to utilities. We appreciate the support from legislators in helping all interests to find common ground.   In particular, it is important to walk through the major provisions that our organizations feel keep this bill in balance:

• Expansion to the WECC in 2012
• Including efficiency upgrades from hardware improvements at federal hydro facilities
• Including the output from pre-1999 biomass facilities that have been significantly modified
• Adding pulping liquor to the definition of biomass
• Increasing the renewable energy requirement by 1.25% in 2016 and 2020
• Adding a 20% renewable energy goal for 2025
• Modifications to the REC banking language

The proposed increase in the standard by 1.25% starting in 2016 is essential to maintain this careful balance of provisions and maintain the state’s commitment to new renewable resource development.  While we acknowledge the above provisions as key elements of this package, there are four changes that we propose that are critical for our support for this bill.

1) We have reached an agreement with other parties to change the date by which utilities must demonstrate compliance.  Rather than having to show compliance “by January 1” of each compliance year, as the existing law requires, we have agreed to change the language and give qualifying utilities the entire year in which to reach the target – a substantial increase in their compliance period.

In addition, these parties have reached agreement on changes to the implementation plan referenced in Section 3 (1).  This plan would be filed with the appropriate governing and regulatory bodies by January 1, 2012 and each year thereafter.  This implementation plan does not take the place of the formal compliance report filed on June 1, 2013 and each year thereafter as required in RCW 19.285.070 but it is necessary given the change in the date by which the utilities would show compliance.  Language has been drafted for both of these changes and will be provided to the committee.  We recommend that this agreed to language be substituted for the current proposed changes in Section 3 (1) and (2).

2) The two times multiplier for solar facilities in Washington and using components manufactured in Washington through 2017 may be too generous.  First, there needs to be clarification that distributed generation projects under 5 MW that already get 2 times credit in the law do not add these two provisions together to claim 4 times credit.  Second, the language must be clarified to remove some ambiguity as to the application of the multiplier.  We recommend that the multiplier be applied to the resource when it is used to meet targets between the effective date of this section and December 31, 2017.  After that timeframe the output is counted at its actual output with no multiplier.

3) The proposed study by the joint legislative audit and review committee on the conservation and renewables targets is focused only on costs and not benefits.   We recommend that JLARC examine the electricity bill reductions from conservation measures, the cost of non-renewable electricity and the projected loads of qualifying utilities.  We also recommend that the study be completed by December 1, 2013 as utilities will only have filed their first compliance report by June 30, 2013.

4) Inclusion of a rulemaking process for Department of Commerce and the Utilities and Transportation Commission following the issuance of each new regional power plan remains a critical issue as it is fundamental to capturing all cost-effective conservation.

Finally, we have some specific language changes that we believe improve clarity while maintaining balance or have no substantive impact on implementation.

A) We do not support the elimination of the reference to “first growth” in the biodiesel definition in (1)(18)(h).  We understand there is confusion surrounding the use of this term, and for many members of the environmental community it designates a special class of forest habitat. Rather than remove the term, we recommend:  Section 1 – (1)(18) “Renewable resource” means:  …(h) biodiesel fuel as defined in RCW 82.29A.135 that is not derived from crops raised on land cleared from forests that have never been harvested commercially or old growth forests where the clearing occurred after December 7, 2006; .…

B) Inclusion of efficiency upgrades at hydro facilities where the power is marketed by the Bonneville Power Administration is an acceptable additional resource for qualifying utilities.   However, it is our intent that this resource be available only to the qualifying utility to which the BPA markets power and can not be resold.  We recommend the following language which was included in the conference report from the 2009 session:  Add to Section 2 – (2)(g)(iii) Efficiency improvements to hydroelectric generation facilities whose energy output is marketed by the Bonneville power administration that are attributable to any utility other than the qualifying utility.

It is also important to make the language on water diversions and water storage parallel throughout subsection 10.  We recommend the following addition to the definition in Section 1 (10) (b): Incremental electricity produced as a result of efficiency improvements completed after March 31, 1999, to hydroelectric generation facilities … where the additional generation in either case does not result in new water diversions or an increase in the amount of water storage;
C) The clarification of the definition of high efficiency co-generation is a good one and will make the provision easier to implement.  However, the deletion of some of the text in Section 2(1)(c) changes the application of the use of high efficiency co-generation toward conservation. The intent of this provision is for a utility to be able to count as conservation the efficiency achieved as a result of a cogeneration facility being highly efficient, not the entire output of the facility.  We recommend the following modification to Section 2 (1)(c):

…The reduction in load due to high-efficiency cogeneration shall be (i) calculated as the difference between the overall thermal conversion efficiency of the cogeneration facility and the average overall thermal conversion efficiency of cogeneration facilities operating in Washington that are not high efficiency, and (ii) counted towards meeting the biennial conservation target in the same manner as other conservation savings.

D) We understand the intent of the JLARC study to analyze the use of hydropower to integrate other renewable resources.  We recommend the following language to sharpen the focus of the study:  Section 4 (2)(a) The department of commerce shall contract with a mutually acceptable person or entity to study the feasibility of measuring hydroelectric power that is used under contract to integrate an eligible renewable resource and whether classifying such hydroelectric power as an eligible renewable resource will further the purposes of chapter 19.285 RCW to expedite the development of new renewable technologies. The study must be presented to the appropriate committees of the legislature by December 1, 2013.