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<title>November 2006: Renewable Requirements Adopted in Washington State </title>
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<p align="left"><strong><small><font face="Arial">About The Author:</font></small></strong></p>
<p align="left"><font face="Arial" style="font-size: 9pt">Robert A. Olson is a partner in the law firm of
Brown, Olson & Gould, P.C. which maintains a nationwide practice in energy law,
public utility law and related commercial transactions.</font></p>
<p><small><font face="Arial"><font style="font-size: 9pt">He can be reached at:</font><br>
<br>
<b><font color="#0000FF">Brown, Olson & Gould, PC</font></b><br>
2 Delta Drive<br>
Suite 301<br>
Concord, NH 03301<br>
<a href="mailto:[email protected]">[email protected]</a><br>
(603) 225-9716<br>
<a href="mailto:[email protected]"></a></font></small></p>
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<p ALIGN="left"><b><u><br>
<br>
November 2006</u></b><font size="6"><b><br>
</b></font></p><b>
<font size="6">
<p>RENEWABLE REQUIREMENTS ADOPTED IN WASHINGTON STATE</p>
<p align="left"></font><strong>by Robert Olson -- Brown, Olson and Wilson, P.C.<font size="6"><br>
</font>
</strong>
</b><font size="6"><font face="Arial" size="2">(<em>originally published by PMA OnLine Magazine:
2008/01/05</em>)</font></p>
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<p ALIGN="left"><font face="Arial" size="2"><br>
</font>In November, voters in Washington state voted to adopt ballot
initiative 937 (“I-937”) to guarantee that no less than 15% of the
electricity from the state’s largest utilities will come from renewable
resources by 2020. Voters adopted I-937 by a vote of 52% to 48%. Under
I-937, electric utilities serving more than 25,000 customers in the state
must meet targets for the use of eligible renewable resources or the
acquisition of renewable energy credits (or a combination thereof). These
utilities must meet a target of at least 3% of load from eligible renewables
by January 1, 2012, 9% by January 1, 2016, and 15% by 2020 and each year
thereafter.</p>
<p ALIGN="LEFT">Eligible renewable resources include water; wind; solar
energy; geothermal energy; landfill gas; wave, ocean or tidal power; gas
from sewage treatment facilities; biodiesel (with certain protections for
old-growth and first-growth forests); biomass energy based on animal waste
or solid organic fuels from wood, forest, or field residues, or dedicated
energy crops that do not include either wood pieces that have been treated
with chemical preservatives, black liquor from paper production, wood from
old growth forests, or municipal solid waste. Facilities must have commenced
operations after March 31, 1999 and either be located in the Pacific
Northwest or deliver its power into Washington state on a real-time basis
without shaping, storage, or integration services.</p>
<p ALIGN="LEFT">Eligible renewable resources do not include hydro
facilities, which already account for approximately 66% of the state’s
electricity needs; however, certain efficiency improvements and additional
generation may qualify if they do not result in new water diversions or
impoundments. </p>
<p ALIGN="LEFT">Renewable energy credits include all non-power attributes of
the electricity they are associated with. Consequently, all environmentally
related characteristics, capacity reliability, and other electrical power
service attributes associated with the generation of electricity from a
renewable resource will be transferred with the purchase of a credit. These
characteristics include but are not limited to a facility’s fuel type,
geographic location, vintage, qualification as an eligible renewable
resource, avoided emissions of pollutants and greenhouse gasses. </p>
<p ALIGN="LEFT">Utilities may count certain types of distributed generation
facilities at double their output and may count both acquired resources or
credits at 1.2 times their base value if the associated facilities commence
operation after December 31, 2005 or the developer of the associated
facility used approved apprenticeship programs during facility construction.</p>
<p ALIGN="LEFT">Certain safeguards are placed on the amount of investment
made in renewable generation. A utility may avoid a portion of its purchase
requirement on a yearly basis if it invests four percent or more of its
total annual revenue requirement on the incremental costs of eligible
renewable resources, renewable energy credits, or a combination of both.
Additionally, utilities and their rate payers are relieved of the purchase
requirements for events beyond the reasonable control of the utility.
Investor-owned utilities are entitled to recover all prudently incurred
costs associated with compliance; however, they are not guaranteed recovery
for payment of administrative fines associated with the failure to comply.
These fines are initially set at $50 per MWH and are to be adjusted each
year for inflation. </p>
<p ALIGN="LEFT">Any fines collected by the state are to be deposited into
the “energy independence act special account,” which is created by I-937.
These funds are dedicated to the purchase of renewable energy credits or for
energy conservation projects at public facilities, local government
facilities, community colleges, or state universities. </p>
<p ALIGN="LEFT">The Washington Utilities and Transportation Commission is
given wide latitude to develop rules implementing I-937 as it applies to
investor-owned utilities. The Department of Community, Trade, and Economic
Development is charged with developing rules for non-investor-owned
utilities, and is restrained to developing rules concerning only process,
timelines, and documentation. Any rules need to implement the initiative
must be adopted pursuant to the state’s administrative procedure act and
must be adopted no later than December 31, 2007.</p>
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<p align="left"><font face="Arial">
<small>Robert A. Olson is a partner in the law firm of Brown, Olson &
Gould P.C.
which maintains a nationwide practice in energy law, public utility law and related
commercial transactions. He can be reached at:</small></font><p align="center">
<font face="Arial"><small><font color="#0000FF"><b>Brown, Olson & Gould, PC</b></font><br>
2 Delta Drive, Suite 301<br>
Concord, NH 03301 <br>
<br>
<a href="mailto:[email protected]">[email protected]</a> | (603) 225-9716<a href="mailto:[email protected]"></a></small></font>
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