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Revised Draft I-937 Rules Suggest Significant Changes in Energy Conservation Compliance

October 08, 2013 posted by Eric Christensen

On October 4, the Washington Department of Commerce's Office of Energy issued a "Stakeholder Discussion Draft" of revisions to the Washington Administrative Code provisions governing compliance with Initiative 937 ("I-937") for Washington's consumer-owned electric utilities. While many of the revisions are intended simply to update the regulations to reflect recent statutory changes, the Office of Energy also proposes several changes that could complicate compliance for utilities attempting to demonstrate that they have met I-937's strict energy conservation requirements. Comments are due on the Stakeholder Discussion Draft by October 25 and a workshop will be held on October 29. Although no specific deadline has been set, it is anticipated that final regulations will be issued by the end of 2013. In addition to creating a Renewable Portfolio Standard for all Washington utilities with more than 25,000 customers, I-937 also requires those utilities to identify all "achievable cost-effective conservation potential," and to publish a plan every two years that identifies a conservation target and achieves that target. Washington's consumer-owned utilities must then submit to periodic audits demonstrating that they have achieved their conservation targets. The proposed regulations, if adopted, would create two potentially far-reaching changes to the regulations governing calculation of conservation goals and achievements. First, the regulations would omit reference to the Northwest Power & Conservation Council's Fifth Power Plan, and instead would require conservation achievements to be calculated using methodologies contained in the the most-recent version of the Council's Regional Power Plan. The Sixth Power Plan, adopted in 2010, is the current version, although the Council periodically adopts a revised plan and is currently developing the Seventh Power Plan. This issue has created some controversy among Washington's consumer-owned utilities, prompting the Washington State Auditor in July to request a formal opinion from the Attorney General on whether the Fifth Power Plan is the correct guidepost. The Attorney General has yet to issue its opinion. Second, the proposed regulations would eliminate the "conservation calculator" as a "safe harbor" option for utilities seeking an simplified approach to determining their conservation potential. Instead, while the utility may use a simplified approach to determine its conservation potential, it must justify that approach to the Auditor when it attempts to demonstrate that it has complied with the statute. The elimination of the "safe harbor" nature of the conservation calculator option therefore places an increased risk on the utility that the Auditor will find its conservation estimates to be invalid, placing it out of compliance and subject to I-937's substantial penalties. If you have any questions about I-937, the Office of Energy's proposed regulations, energy law in Washington, or other matters involving the energy or natural resources industries, please contact a member of GTH's Energy, Telecommunications, and Utilities or Environment & Natural Resources practice groups. We're proud that our partner Jim Waldo was recently named 2013 Lawyer of the Year for Energy and Natural Resources Law, and practice group members Don Cohen, Bill Lynn, and Brad Jones were all named among Seattle's Best Lawyers.