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Home / Washington Business - April 2006 / Points of View: I-937 Moves Us Toward More Renewable Power |
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Points of View: I-937 Moves Us Toward More Renewable Power |
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Written On: April 2006 |
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Written By: by Chris Taylor |
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Initiative 937 will direct Washington's largest electric utilities to increase the amount of reasonably priced, new renewable energy such as wind, biomass and solar to 15 percent of their overall energy mix by 2020. It also calls upon those utilities to help immediately reduce their customers' bills by taking full advantage of the cost-saving energy efficiency opportunities in their service territories. I-937 establishes reasonable goals, in line with similar standards already in place in 20 other states. Passing this initiative, which was recently endorsed by the Washington Public Utility Districts Association, is a wise choice for our economy and our environment. A September poll conducted by the Ballot Initiative Strategy Center demonstrated that 80 percent of Washington voters want a more ambitious effort to build a secure, clean energy future.
Building more renewable energy projects here in Washington will create new jobs, new business opportunities for local firms, and dramatically increase the property tax base in rural communities, all without spending any tax dollars. I-937 will also help protect electricity consumers from the price hikes we have seen in recent years due to the volatile price of natural gas.
The development of a clean energy industry in Washington will strengthen and diversify our economy. We all know that the sustained growth of any industry requires a long-term, stable investment climate. Currently, investments in clean energy projects and manufacturing (and the jobs and tax revenue they generate) are being targeted to other states with more favorable policies.
I-937 creates a more competitive market in a state in which the traditional way of doing things (build more fossil fuel-fired plants) is institutionally favored. Coal and natural gas resources are often chosen based on short-term thinking, and we end up exposed to very volatile prices. We have often failed to invest in cost-saving energy conservation because of the up-front costs, even though conservation more than pays for itself in a relatively short time. I-937 requires long-term, strategic planning and is a better choice for Washington's economy.
With no new large dam projects in sight, any additional Northwest hydropower will come primarily from efficiency upgrades at existing hydro facilities, which I-937 specifically counts toward the renewable standard. In fact, the initiative rewards early commitments to water resource stewardship by extending the efficiency upgrade credit back to projects completed as early as 1999.
I-937 has been intelligently crafted specifically to ensure consumers will not experience significant rate increases. A 4 percent cap on any utility's retail revenue requirement provides robust consumer protection from potential rate impacts, which are highly unlikely, based on experience elsewhere. Wind energy, for example, is already cost-competitive with traditional resources, so there is no reason to expect price increases. There are also exemptions if no cost effective renewable resources are available in any given year.
Compare this to a utility that generates 30 percent of its power from natural gas. There is no cost cap provision for consumers when natural gas prices increase due to market swings, utilities simply pass on that increased cost. We know for a fact that over reliance on volatile fossil fuel resources is bad for consumers. Just look at the past few years.
• Natural gas prices increased by 48 percent in just the last five months.
• Average retail residential and commercial electricity rates have increased approximately 30 percent since 1999, the last year before the West Coast energy crisis. Industrial prices increased about 50 percent.
Output from renewable energy projects like wind and geothermal is typically purchased on 20-year contracts, so we know what the true long-term costs of such resources will be. With coal and natural gas, it comes down to an educated guess about the future prices of these resources.
Finally, diversification of Washington's energy sources is smart policy. In the same way that wise investors diversify their investment portfolios, planning for our future by including energy conservation and renewable resources will help us avoid the most damaging effects of price spikes in fuel costs, low-water years and other unforeseen events.
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