Washington Gov. Jay Inslee signed a bill Tuesday that commits Washington to a carbon-free energy future but which means more uncertainty and instability for Cowlitz PUD ratepayers.
Senate Bill 5116 aims to make the state carbon-neutral by 2030, and while it won’t have immediate impact on PUD ratepayers, it will mean “a brave new world” for the utility, Cowlitz PUD General Manager Steve Kern said Wednesday.
“I see that bill having an additional cost to customers,” Kern said, “(but) how to quantify it, I don’t know.”
By the end of 2025, the bill mandates that Washington state utilities must eliminate coal from their energy sources or pay stiff penalties, such as $150 per megawatt-hour of coal production. (The average residential customer in the Pacific Northwest uses about 11 megawatt-hours of energy per year, according to the Northwest Power and Conservation Council, and the PUD said approximately 1.5 percent of its power comes from coal.)
Electricity sales must become carbon-neutral by 2030, meaning a utility’s power generation and purchases do not contribute to the overall amount of greenhouse gas in the earth’s atmosphere.
By 2045, 100 percent of electric sales must come from carbon-free sources such as hydroelectric, wind, solar and nuclear power.
Kern said he’s in favor of phasing out coal, but he’s concerned about the bill’s timing and what it could mean for power grid reliability. The Pacific Northwest already faces power capacity and supply problems, Kern said, and cutting fossil fuels and other non-renewables from the power market too quickly could add to the trouble.
The PUD gets most of its power from the Bonneville Power Administration, which markets renewable, low-cost Columbia River hydroelectric dams. A good water year — one with lots of snow and rain — allows the BPA to generate more power and revenue, indirectly benefiting the PUD.
However, in a poor water year, the PUD could face instability and price surges when BPA or the PUD itself need to find other power sources. Eliminating natural gas- and coal-fired energy from the options would reduce its options and could drive up costs.
“You take a situation like this last winter — lower water conditions, natural gas limitations in British Columbia, California — and we saw the whole power, natural gas markets blow out completely,” Kern said. “That was all driven by lack of supply in the short term. ... We’re all interconnected electrically. The net result (of this bill) is going to put a lot of pressure on resource costs in the Northwest.”
The specifics of the bill’s enforcement will be hammered out in rule-making sessions over the next 18 months.
“It will be some roll up your sleeves, a lot of work and effort ... to sit down and figure this out,” Kern said. “The devil’s in the details.”