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Ending Coal-Fired Power Production in Washington with Innovative Rate-Making Mechanisms

Case Number # 2268

Earthjustice, representing NW Energy Coalition, sought to increase energy efficiency in Washington State and reduce fossil fuel combustion at the state and regional level.

Powerlines. (iStockphoto)
The ruling allows PSE to help its customers to save even more energy and money, and to move away from coal and other highly polluting energy sources. (iStockphoto)

A combination of rulings resulting from this case, that some called the most important utility regulatory decision in decades, paves the way for Puget Sound Energy to boost energy efficiency savings, make low-income families’ homes more livable and facilitate a fair and orderly end to coal-fired power production in the state.

The Washington Utilities and Transportation Commission, which regulates Washington’s utilities including PSE, has adopted innovative ratemaking mechanisms supported by UTC staff, NW Energy Coalition, PSE, and The Energy Project. The ruling allows PSE to help its customers to save even more energy and money, and to move away from coal and other highly polluting energy sources. It also addresses PSE’s fiscal challenge of declining per-customer power use.

The final order adopts a comprehensive “decoupling” provision that will help the utility achieve even greater energy efficiency savings while making its revenue more predictable. Utility profits are generally tied to (coupled with) sales. Successful energy efficiency programs reduce sales, making it difficult for the utility to cover its costs. The order prevents PSE from being punished financially for improving its energy efficiency programs by removing the link between customer energy use and the utility’s ability to recover its costs for providing electric service.

With the financial disincentive to efficiency removed, PSE will be on a course to increase electricity savings by at least 5% from its already robust conservation programs, which include such measures as rebates for high-efficiency appliances and insulation projects. PSE will make available an additional $500,000 for weatherization of low-income homes. The order also requires the utility to increase its low-income bill assistance funding by $1.5 million, to a total of $21.7 million each year.

Press Releases

Wednesday, June 26, 2013
Washington regulators approve innovative rate-making mechanisms for Puget Sound Energy