Interim Assessment (RCW 19.405.080) — Glenn Blackmon and Austin Scharff, Energy Policy Office, November 2023
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A November 2023 presentation from the Energy Policy Office of the Washington State Department of Commerce on the interim assessment of the Clean Energy Transformation Act required by RCW 19.405.080, marked version v1.4. The slides set out the assessment elements Commerce must report to the legislature by January 1, 2024 and every four years thereafter, and summarize the Act's 2025, 2030 and 2045 clean electricity standards. They describe the greenhouse gas neutral standard as requiring renewable or non-emitting electricity equal to 80% of Washington retail load with alternative compliance for up to 20%, and report 2021 coal shares of utility power sources of 16% for Avista, 41% for PacifiCorp and 24% for Puget Sound Energy. The assessment states that it is premature to assess the impacts of the 2030 and 2045 standards and recommends no changes to the Act's list of renewable resources.
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“Interim Assessment (RCW 19.405.080) — Glenn Blackmon and Austin Scharff, Energy Policy Office, November 2023.”
Original at app.leg.wa.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2023-2023-interim-assessment-clean-energy-transformation-act-final-094b96ca/
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Interim Assessment (RCW 19.405.080)
Glenn Blackmon and Austin Scharff
ENERGY POLICY OFFICE
NOVEMBER 2023
v1.4
HOUSING AND INFRASTRUCTURE AND SMALL BUSINESS
HOMELESSNESS BROADBAND ASSISTANCE ENERGY
PLANNING AND TECH COMMUNITY CRIME VICTIMS AND ECONOMIC
ASSISTANCE SERVICES AND FACILITIES PUBLIC SAFETY DEVELOPMENT
WASHINGTON STATE DEPARTMENT OF COMMERCE 2
By January 1, 2024, and at least every four years thereafter and in compliance with RCW 43.01.036, the department [of Commerce] must submit a report to the legislature. The report
must include the following:
(1) A review of the standards described in RCW 19.405.030 through 19.405.050 focused on technologies, forecasts, and existing transmission, and an evaluation of safety,
environmental and public safety protection, affordability, and system reliability.
(2)(a) An evaluation, produced in consultation with the commission, electric utilities, transmission operators in Washington, the reliability coordinator for electric utilities, any regional
planning organization serving electric utilities, public interest and environmental organizations, and the regional entity for the western interconnection identifying the potential benefits,
impacts, and risks on system reliability associated with achieving the standards described in RCW 19.405.040 and 19.405.050. The evaluation must assess whether electric utilities
have sufficient electric generation resources to meet forecasted retail electric load in addition to adequate transmission capability to implement
RCW 19.405.030 through 19.405.050 without: (i) Violating mandatory and enforceable reliability standards of the North American electric reliability corporation; (ii) violating prudent
utility practice for assuring resource adequacy; or (iii) compromising the power quality or integrity of the electricity system. Subject to funding appropriated for this purpose, the
department must consult with a national laboratory with expertise in grid reliability, security, and resilience.
(b) The evaluation should assess the anticipated financial costs and benefits of investments necessary to correct those deficiencies at the lowest reasonable costs as identified by
electric utilities, transmission operators in Washington, the regional entity for the western interconnection, or any regional planning organization serving electric utilities. The
assessment of these investments in the report is not deemed to be approval of such investments for rate recovery by any authorizing entity.
(3) An evaluation identifying the nature of any anticipated financial costs and benefits to electric utilities, including customer rate impacts and benefits including, but not limited to:
(a) Greenhouse gas emissions of electric utilities;
(b) The allocation of risk between customers and electric utilities;
(c) The allocation of financial costs among electric utilities in the state and whether retail electric customers are equitably bearing the financial costs of implementing
RCW 19.405.030 through 19.405.050;
(d) The timing of cost recovery for electricity generated by nonemitting electric generation or renewable resources;
(e) The resource procurement process of electric utilities; and
(f) The barriers to, and benefits of, implementing RCW 19.405.040 and 19.405.050.
(4) An evaluation of new or emerging technologies that could be considered to be a renewable resource.
(5) An assessment of the impacts of RCW 19.405.030 through 19.405.050 on middle-income families, small businesses, and manufacturers in Washington.
WASHINGTON STATE DEPARTMENT OF COMMERCE 3
Washington’s 100% clean electricity law (2019)
• Clean
• Affordable
IoT
• Reliable
• Equitable
WASHINGTON STATE DEPARTMENT OF COMMERCE 5
IoT
Applies to all electric utilities serving retail
customers in the state
• 2025: Eliminate coal from retail portfolios
• 2030: Greenhouse gas neutral standard
• Use electricity from renewable or non-
emitting sources in an amount equal to 80%
of Washington retail load
• Alternative compliance options for up to 20%
• 2045: 100% renewable or non-emitting
retail electricity supply
WASHINGTON STATE DEPARTMENT OF COMMERCE 6
Enhanced emphasis on resource adequacy
• Utilities must adopt an explicit resource adequacy standard
and apply it in resource planning
• Allows temporary suspension to protect reliability
• Regular assessment of reliability and resource adequacy by
Commerce
WASHINGTON STATE DEPARTMENT OF COMMERCE 7
• Clean energy implementation plans
• Utilities prepare at start of each 4-year period, starting in
2022
• Specific targets and actions
• Indicators to evaluate equity and distributional impacts
• Public process for development
• Compliance or performance reports
• Utilities submit at end of each 4-year period, starting in 2026
• Annual reports on fuel mix and GHG content
WASHINGTON STATE DEPARTMENT OF COMMERCE 8
An equitable and affordable transformation
• Legislative finding that “public interest” includes equitable
distribution of benefits
• Among other things, utilities must
• Consider non-energy impacts in resource decisions
• Assess impacts on vulnerable populations and highly impacted
communities (as defined in statute)
• Standards incorporate equitable distribution goals
WASHINGTON STATE DEPARTMENT OF COMMERCE 9
RCW 19.405.080
• RCW 19.405.080 requires Commerce to review and evaluate the
law every four years, starting Jan. 1, 2024.
WASHINGTON STATE DEPARTMENT OF COMMERCE 11
Interim assessment elements
from RCW 19.405.080
1. Review of the 2025, 2030, and 2045 clean electricity
standards
2. Evaluation of system reliability impacts for 2030 and 2045
3. Financial costs and benefits to utilities and customers
4. Review of new technologies that could be considered
renewable
5. Assessment of impacts on middle-income families, small
businesses, manufacturers
WASHINGTON STATE DEPARTMENT OF COMMERCE 12
• The 2024 assessment occurs before any of CETA’s three clean
electricity standards take effect.
• It may be difficult at this phase of CETA’s implementation to
discern any specific and substantial impact of CETA itself.
WASHINGTON STATE DEPARTMENT OF COMMERCE 13
• Washington enacted the Climate Commitment Act, an economy-
wide regulation of greenhouse gas emissions that covers
electricity generated or imported to the state.
• Federal government enacted historic tax and incentive
provisions encouraging the development of renewable and non-
emitting energy resources to replace fossil fuels.
• Impacts of CETA cannot be separated from impacts of CCA and
federal actions.
WASHINGTON STATE DEPARTMENT OF COMMERCE 14
• Identify published studies, reports, and other analyses that
should be considered in conducting the analysis required by
RCW 19.405.080.
• Provide written comment on the CETA assessment topics.
WASHINGTON STATE DEPARTMENT OF COMMERCE 16
• Renewable Hydrogen Alliance
• Snohomish Public Utility District
• Avista
• Puget Sound Energy (PSE)
• Public Generating Pool (PGP)
• Joint Utilities (NW Requirements Utilities, PGP, PSE)
• Bonneville Power Administration
• Renewable Northwest
https://deptofcommerce.app.box.com/v/CETA-interim-2023
WASHINGTON STATE DEPARTMENT OF COMMERCE 17
• Approximately 70 participants
• Reviewed written comments
• No new issues identified
WASHINGTON STATE DEPARTMENT OF COMMERCE 18
• RCW 19.405.030: “Each electric utility must eliminate coal-fired
resources from its allocation of electricity”
• Accelerated depreciation and rate recovery for any retired generation or
associated transmission of Investor Owned Utilities (IOUs)
• Commerce and UTC adopted rules to clarify treatment of short-term
market purchases of unspecified power, and to provide an
attestation mechanism for compliance
• 2021 coal shares of utility power sources:
• Avista 16% (Colstrip)
• PacifiCorp 41% (Colstrip, Jim Bridger)
• Puget Sound Energy 24% (Colstrip, TransAlta Centralia)
• Unspecified source purchases are also a potential coal source
WASHINGTON STATE DEPARTMENT OF COMMERCE 20
• Concern that the 2025 No Coal Standard is incompatible with
wholesale power markets and system purchases
• Utility efforts to develop a coal-free contract product have been
unsuccessful
• CETA No Coal Standard prevents utilities from purchasing
unspecified source electricity for terms of greater than one month
• Stakeholder suggestions:
• Extend the existing no-coal standard exemption for short-term contracts to all
contracts where the source of the electricity is unknown
• Exempt retail utilities from having to provide documentation that they did not
use coal-fired resources through system power purchases
• Clarify that existing hedging practices are permissible
WASHINGTON STATE DEPARTMENT OF COMMERCE 21
• CETA constrains design rules for organized markets
• Organized markets trade in short-term intervals, such as hour ahead and day ahead
• CETA does not permit any purchases specified as coal – even within organized markets
• CETA restriction on unspecified purchases of more than one month term does not affect
organized market design
• CETA does not interfere with hedging practices using standardized one-
month forward contracts to limit price risk
• CETA allows utilities to make one-month long contracts for future purchases of
unspecified power
• Commerce rule prohibits serial one-month contracts only if their purpose is to evade the
no-coal standard
• Longer duration contracts must identify the power source as non-coal
• Information on actual multi-month purchases was not provided
• No agency authority to allow either multi-month unspecified purchases or
spot market purchases of coal
WASHINGTON STATE DEPARTMENT OF COMMERCE 22
• RCW 19.405.040: Utilities must use renewable or non-emitting electricity in
an amount equal to 100% of Washington retail load
• Fossil and unspecified power may be used in an amount up to 20% of load
• Fossil and unspecified power must be matched with alternative compliance
instruments
• Commerce rule clarifies “use” standard for 80% portion (WAC 194-40-410)
• Requires forward-looking hourly analysis to show that at least 80% of load can be met
with renewable or non-emitting supplies. Supplies must be available for delivery to
the utility’s Washington customers
• Statewide aggregate fuel mix in 2021 exceeds 20% fossil and unspecified:
• Coal – 9%
• Natural gas – 13%
• Unspecified power – 13%
https://www.commerce.wa.gov/wp-content/uploads/2023/08/2022-FMD-Report.pdf
WASHINGTON STATE DEPARTMENT OF COMMERCE 23
• Concern that Dept. of Ecology has not identified emissions
reduction project types that could qualify for alternative
compliance credit
• Need for more robust bulk power transmission capacity to
deliver renewable electricity to loads
• Need to monitor adequacy of resource supplies and secure
implementation of the region’s new resource adequacy program
WASHINGTON STATE DEPARTMENT OF COMMERCE 24
• Energy transformation projects (ETPs)
• Ecology adopted ETP rules in 2021 (Chapter 173-444 WAC)
• Ecology has not identified specific categories or projects
• Utility commenters did not identify specific categories or projects
• ETPs may not be a financially viable compliance approach
• ETPs require expensive protocol development and verification
• ETPs must compete on cost against unbundled renewable energy certificates
• With CCA and the Clean Fuels Standard, the range of eligible emissions sources is greatly
restricted
• Widespread consensus on the pressing need for:
• Expanded transmission capacity
• Faster siting and interconnection of renewable generating projects
• Timely implementation of the binding phase of the Western Resource Adequacy
Program
• Active participation and advocacy by Washington agencies (UTC, Commerce,
Ecology) and stakeholders in western electricity market development efforts
WASHINGTON STATE DEPARTMENT OF COMMERCE 25
• RCW 19.405.050: Renewable and non-emitting sources must
supply 100% of all sales of electricity to Washington retail
electric customers by 2045
WASHINGTON STATE DEPARTMENT OF COMMERCE 26
2045 100% clean electricity standard -
comments
• Need to clarify treatment of market transactions – short-term
power purchases in the wholesale electricity market
• Utilities expect to rely on new and emerging technologies to
maintain adequate capacity
• Aware of no study demonstrating feasibility of 2045 standard
WASHINGTON STATE DEPARTMENT OF COMMERCE 27
2045 100% clean electricity standard -
assessment
• Wholesale power market design
• Market rules are being developed with state 100% clean electricity requirements in
mind
• Commerce’s 2045 rule provides a vision for this design: A market that trades
exclusively in clean electricity
• New and emerging technologies
• Existing technologies are available: demand response, diverse wind/solar with
transmission, combustion turbines fired with non-fossil fuels
• Innovations to support Washington’s long-term climate and clean energy
requirements: battery chemistries, offshore wind, advanced geothermal, heat pumps,
grid management, many others
• Feasibility: With existing technologies, 100% clean is feasible
• 2021 State Energy Strategy
• 2023 Net Zero Northwest
• Other economy-wide decarbonization studies
WASHINGTON STATE DEPARTMENT OF COMMERCE 28
• Northwest Power and Conservation Council
• Pacific Northwest Power Supply Adequacy Assessment for 2027 (Jan.
2023)
• Western Electricity Coordinating Council
• Western Assessment of Resource Adequacy (Nov. 2022)
• Northwest Power Pool (Nov. 2022)
WASHINGTON STATE DEPARTMENT OF COMMERCE 30
• Conclusions:
• Under expected future conditions, the reference resource strategy
delivers an adequate supply with a loss of load probability (LOLP) of
less than 5%.
• For the regional power supply to be adequate in 2027, the region will
need to develop new resources at least as quickly as the 2021 Power
Plan outlines. The 2027 regional power supply would not be adequate
if the region relied solely on existing resources, existing reserve levels,
and with no new energy efficiency measures.
• 2021 Power Plan resource strategy is effective at eliminating nearly all
summer shortfalls, when resource needs peak in the rest of the
Western grid.
WASHINGTON STATE DEPARTMENT OF COMMERCE 31
WECC: Western Assessment of Resource Adequacy
NWPP-NW
includes WA
WASHINGTON STATE DEPARTMENT OF COMMERCE 32
WECC: Western Assessment of Resource
Adequacy
• While there has been some improvement in near-term (2–3
years) resource adequacy risk, it has not been eliminated.
• Consider actions such as retirement delays and expedited
building of resources.
• For the overall West, likelihood and magnitude of resource
adequacy risk have increased compared to previous analyses.
• Long-term, the risk increases over the next 10 years.
• Both demand variability and supply variability drive resource
adequacy risk, and variability increases over the next decade.
WASHINGTON STATE DEPARTMENT OF COMMERCE 33
• Existing resources are not sufficient, utilities are investing in new
resources
• Clean generating resources
• Transmission
• Demand-side resources: Conservation, demand response, virtual power plants
• Enhanced grid management capabilities
• Western Resource Adequacy Program is a key element of
maintaining resource adequacy
• Concern that implementation of binding phase is delayed
• Variability is a factor on both demand and supply side.
• Analysis must use more robust metrics and longer time horizons.
WASHINGTON STATE DEPARTMENT OF COMMERCE 34
Financial costs and benefits to utilities and
customers - assessment
• Premature to assess impacts of 2030 and 2045 standards.
• Costs and benefits are attributable to multiple policies.
• Other drivers of resource investment choices could include:
• Technology cost changes
• Federal tax credits for clean electricity technologies
• Demand changes due to business and consumer preferences for clean energy in
transportation and buildings
• Other regulatory requirements, notably Washington Climate Commitment Act
• No announced plans to use CETA’s cost threshold provision.
• Legislature has addressed cost recovery for investor-owned utilities.
• Economy-wide energy models find additional spending on electricity will
be offset by reduced spending on gasoline, natural gas, and other fossil
fuels.
WASHINGTON STATE DEPARTMENT OF COMMERCE 36
• U.S. Energy Information Administration:
• Renewable energy is energy from sources that are naturally
replenishing but flow-limited; renewable resources are virtually
inexhaustible in duration but limited in the amount of energy that is
available per unit of time.
Source: https://www.eia.gov/energyexplained/renewable-sources/
WASHINGTON STATE DEPARTMENT OF COMMERCE 38
• "Renewable resource" means • “Biomass energy” includes:
• Water • Organic by-products of
pulping and the wood
• Wind manufacturing process
• Solar energy • Animal manure
• Geothermal energy • Solid organic fuels from wood
• Renewable natural gas • Forest or field residues
• Renewable hydrogen • Untreated wooden demolition
or construction debris
• Wave, ocean, or tidal power
• Food waste and food
• Biodiesel fuel that is not derived processing residuals
from crops raised on land cleared • Liquors derived from algae
from old growth or first growth • Dedicated energy crops
forests • Yard waste
• Biomass energy
Source: RCW 19.405.020
WASHINGTON STATE DEPARTMENT OF COMMERCE 39
New or existing technologies that could be
considered renewable
• Comments
• Facilitate access to resources already defined as renewable.
• Assessment
• No recommended changes to CETA list of renewable resources.
WASHINGTON STATE DEPARTMENT OF COMMERCE 40
Impacts on families, small business,
manufacturers – comments
• PSE estimates actions in 2021 implementation plan will cost
$6/month per residential customer in 2025.
• CETA directs utilities to assess energy burden but does not
identify funding source or program design for energy
assistance.
WASHINGTON STATE DEPARTMENT OF COMMERCE 42
Impacts on families, small business,
manufacturers – assessment
• No identifiable specific impacts on these groups, consistent
with discussion in (3) above.
• RCW 19.405.120 places energy assistance responsibility on
individual utilities
• Commerce study said utility-by-utility approach may lead to uneven
results and low participation levels.
• Many utilities are reluctant to spread costs across utilities and wish to
maintain existing programs.
• At Legislature’s direction, Commerce is exploring framework for
statewide approach.
WASHINGTON STATE DEPARTMENT OF COMMERCE 43
• CETA reflects the Legislature’s vision of 100% clean electricity
as the cornerstone of Washington’s energy and climate laws.
• The extended deadlines – 2030 and 2045 – reflect the
investment and engineering challenges of this transition.
• Since 2019, clean electricity has become even more important
as consumers and businesses shift from fossil fuels in
transportation, buildings, and industry.
• Utilities and policy makers have acted to make investments,
develop markets and programs, strengthen resource adequacy,
and reduce barriers to new facilities.
WASHINGTON STATE DEPARTMENT OF COMMERCE 45
Glenn Blackmon
DIRECTOR, ENERGY POLICY OFFICE
Glenn.Blackmon@commerce.wa.gov
360 556.7888
www.commerce.wa.gov
Austin Scharff
SENIOR ENERGY POLICY SPECIALIST
Austin.Scharff@commerce.wa.gov
(360) 764-9632
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