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Governor to Unveil a Sweeping Energy Plan by Angela Galloway and Neil Modie Seattle Post-Intelligencer, January 23, 2001

Ending state hydroelectric dependence is key element of bipartisan package

OLYMPIA -- Gov. Gary Locke is to unveil a broad energy legislation package tomorrow that includes everything from a sales tax exemption for major home appliances to mandatory adoption of alternative power sources.

The package, negotiated with lawmakers from both parties, is expected to include bills aimed at mitigating the Western energy crisis' impact in Washington through energy conservation and generation. It is also expected to include $2.5 million to help pay energy bills for low- income households over the next two years.

Diversification of Washington's energy portfolio, or a move away from dependence on hydroelectric power, is a key element, said Rep. Erik Poulsen, D-Seattle and co-chairman of the House Technology, Telecommunications and Energy Committee.

"That's the heart and soul of the package," said Poulsen, who added that only 1 percent of Washington's current renewable energy production comes from sources other than hydroelectric dams. "The whole philosophy is to diversify our portfolio to spread the price risk."

His co-chairman, Rep. Larry Crouse, R-Spokane, called the package a good start in tackling a problem that also requires multistate and federal efforts. For example, Crouse said, the Northwest must be given more ability to keep its own power and needs more transmission capacity.

"Even if we get everything passed that we know we need to do, that's only part of the solution," he said. "We're going to do what we can do where we have authority to do it. But we have no control over Oregon (and) California. We're going to try to influence them."

The package, which would require legislative approval, is expected to encourage more power generation through:

Tax breaks for development of alternative renewable energy generators, such as wind and solar.

Weaning major industries such as aluminum plants off their dependence on the Bonneville Power Administration by giving them tax breaks to build their own generators.

"The idea is to free up more BPA power for our citizens and businesses by shifting it away from the aluminum companies," Poulsen said.

Tax deductions to encourage efficient co-generation plants that use steam that is a byproduct in electrical generation to drive other equipment. The plants often burn wood or agricultural waste as fuel.

Tax breaks for air pollution control technology for older plants to operate longer.

"In the long run, we just want to make Washington as self-sufficient as possible so we don't fall victim to the extortion of the energy marketplace," Poulsen said.

Locke's plan would encourage conservation until those plants are on line. Those measures include:

A requirement that within ten years utilities diversify 10 percent of their generation to alternatives sources such as wind farms, solar cells and geothermal energy.

A mandate that public buildings, including schools and universities, become more energy efficient.

A sales tax exemption for energy-efficient lighting products, clothes dryers and dishwashers bearing the "Energy Star" certification.

Once the bipartisan package is released, lawmakers are likely to propose a number of more contentious and partisan bills. For example, some Republicans want tax breaks to encourage construction of more generators. However, some Democrats worry that would increase demand on the already strained natural gas market, which often fuels the plants.

Lawmakers from both parties are praising the bipartisanship brought by a perceived crisis. In fact, lawmakers proposed many of the components in the package in prior years.

"We just haven't been able to make a lot of headway because the need hasn't been as high as it is now," Poulsen said.

But Crouse cautioned that lawmakers can only do so much.

"Each state has to do what they can. Then the states have to work together," Crouse said. "And then we better pray for not too hot, not too cold (of weather.)"

"In spite of all of our efforts, we still could be facing some real severe problems in the future," he said.

Meanwhile, the state Utilities and Transportation Commission yesterday said it would impose a "soft cap" on the rates paid by 13 large industrial customers of Puget Sound Energy.

The industrial customers, who included Boeing and King County Metro Wastewater Treatment Division, elected several years ago to switch to variable market-based rates rather than fixed rates. That became a problem for those customers last year when wholesale electric rates shot up.

Those customers filed for relief. Puget Sound Energy argued the customers had knowingly assumed the risk of market-based rates and were trying to shift their increased power costs to the rest of the utility's customers.

The commission said the industrial customers didn't have effective means of hedging their bets on market-based prices, and said it will set a soft cap for Puget's rates to them; Puget can only charge more if it has to pay more to acquire electricity to serve those customers.

The UTC on Monday will hold a hearing to determine whether the cap will be $125 or $150 a megawatt hour.