Thanks to Washington voters, Clark Public Utilities is a reluctant participant in the wind energy revolution.
Initiative 937, approved in 2006, requires large utilities to get 15 percent of their power from renewable sources by the year 2020, following step-up requirements of 3 percent in 2012 and 9 percent in 2016.
It’s already affecting Clark PUD’s bottom line.
In January, thanks to the new law, 63 turbines began spinning on 13,000 acres of farmland west of Milton-Freewater, Ore. Eurus Energy America Corp. built the $150 million Combine Hills wind farm only after Clark’s three elected commissioners agreed to purchase its entire output.
Over the next 20 years, Clark expects it will pay $338 million.
Utility officials are less than enthusiastic.
“Our customers are being required to purchase a product that they don’t need,” said Dean Sutherland, the utility’s government affairs manager.
Because it won’t be legally required to integrate the wind energy into its resource load until 2012, Clark is reselling the farm’s output at a loss of about $3.2 million this year. (That represents a small portion of the utility’s $388.6 million electric system budget for this year). Utility managers say reselling the wind power at a loss is cheaper than displacing energy generated by the dirt-cheap federal hydropower system or Clark’s own natural gas-fired River Road Generating Plant.
Once the law begins to take effect in 2012, utility officials say they may not have a choice.
Initiative supporters anticipated that utilities would need to invest in new power plants to meet growing demand for energy. As demand increased, the law was intended to nudge utilities toward investments in conservation or renewable resources such as wind or solar power – rather than buying energy generated from fossil fuels.
However, energy demand has sagged with the economic recession.
Clark Public Utilities, in fact, recently passed along a 5.7 percent rate increase for residential customers largely because of electric sales that fell well short of expectations. Until the economy turns around, chastened utility managers say they can’t assume increasing demand for electricity.
Initiative supporters maintain that, over the long run, energy demand will ramp up.
Danielle Dixon, a senior policy associate for the NW Energy Coalition in Seattle, said utilities such as Seattle City Light are going beyond the law’s minimum requirements. By making big renewable-energy investments now, she said, those utilities are well-positioned to meet future load growth.
“They don’t see it stagnating for a long time,” she said. “They do see it coming back.”
The law may be burdensome for some utilities, but the state as a whole will continue to need new power plants, said Chuck Murray, a senior energy policy specialist for the state Department of Commerce.
“As a state, we’re not long on power necessarily. We have utilities that are short, at least on a long-term planning scenario,” Murray said. “To acquire additional resources in the region is not unreasonable.”
The law’s supporters contend that the 15-percent standard came out of data generated by the four-state Northwest Power and Conservation Council and reflects a fairly conservative forecast for growth in energy demand.
“Relatively speaking, it’s a low number,” said Rachel Shimshak, executive director of Renewable Northwest Project in Portland.
She noted that Montana utilities will be faced with a 15 percent requirement by 2015, Oregon utilities will need to hit 25 percent by 2025, and California is on track for a 33-percent requirement within the decade.
The renewable standard adds a layer of complexity for Clark Public Utilities.
Pat McGary, the utility’s energy resources director, said the renewable-energy requirement coincides of a slew of other market and regulatory uncertainties hanging over the utility. Cap-and-trade climate legislation, new financing requirements and potential emission restrictions at its own gas-fired power plant all come on top of Initiative 937.
“If this was the only issue, we could handle it,” McGary said. “But we’ve got like nine of these bogies staring us in the face.”