Washington will join 21 other states and the District of Columbia in requiring certain electric utilities to generate a portion of their electricity from renewable sources.

I-937 establishes renewable energy targets starting at 3% of a qualifying utility's load by 2012 and escalating to 15% by 2020. Qualifying utilities are those public and private utilities serving more than 25,000 customers located in the State of Washington. Of Washington's 62 utilities, 17 would be considered qualifying utilities representing about 84% of Washington's load.

Targets must be achieved through the use of electricity generated from eligible renewable resources, by acquiring equivalent renewable energy credits (RECs), or a combination of both. Most electricity generated from Washington's hydroelectric facilities would not qualify-a subject of intense criticism by opponents of the measure. Qualifying utilities must also develop long-term conservation plans and achieve certain biannual pro rata targets.

For perspective, Snohomish County Public Utility District projects a base load of approximately 900 aMW in 2020 according to its 2004 Integrated Resource Plan (IRP). I-937 would therefore require 135 aMW to come from eligible renewable resources. According to its 2005 Least Cost Plan, Puget Sound Energy (PSE) forecasts electric annual energy load sales in 2020 at 3,139 aMW, thereby requiring 470.8 aMW to come from eligible renewable resources. PSE's two wind farms are expected generate 133 aMW when both are on-line, which should be adequate to satisfy PSE's three percent target in 2012. Neither of the utilities' load projections take into account conservation measures mandated by I-937.

I-937 provides that costs "prudently incurred" in compliance may be recovered from customers. Utilities failing to reach their renewable energy or conservation targets are penalized $50 per megawatt-hour, indexed for inflation. Customers must be notified of any penalty incurred, and investor-owned utilities may be permitted to recover the cost of the penalty in their electric rates. Receipts from penalties are placed into a new account to pay for RECs or conservation projects at public facilities, local government facilities, or public colleges and universities.

Arizona is also on the verge of increasing its Renewable Energy Standard by requiring the state's regulated utilities to have 15% of their power sales come from renewable sources by 2025 (see the Arizona Corporation Commission's press release, Order, and Stoel Rives' detailed summary for additional information).

Stoel Rives will host a seminar on December 12, 2006, in Seattle to discuss the implications and implementation of this measure for qualifying utilities, industrial ratepayers, regulators, and developers of renewable energy projects.

If you have any questions about this update or if you would like our assistance in connection with this matter, please contact Ashley Henry, Energy Industry Liaison, 503-294-9506. ahenry@stoel.com