Role of the Regulator –

The Washington Model

Outline

• Utilities and Transportation Commission context

• Layers and levels of electricity jurisdiction

• EE in utility investment planning

• Identifying targets and timelines

• Utility program design structure and approval

• Stakeholder coordination

• Utility cost recovery

• Communications and outreach

• Vulnerable customers and EE programs

• Administrative matters

Washington Utilities and Transportation

Commission

• Three commissioners, appointed by Governor and confirmed by state Senate for 6-year terms.

• Law requires political balance.

David Danner

Chairman

Ann Rendahl

Commissioner

Jay Balasbas

Commissioner

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5

UTC Energy Regulation

• 3 Electric Companies (45% of state electric customers)

- Puget Sound Energy (Western WA)

- Avista Corporation (Eastern WA)

- PacifiCorp d/b/a Pacific Power and Light (Southeastern WA)

• 4 Natural Gas Companies (1.1 M customers statewide)

- Puget Sound Energy (Western WA)

- Avista Corporation (Eastern WA)

- Cascade Natural Gas (Across WA)

- Northwest Natural Gas (Southwestern WA)

• UTC does not regulate – publicly owned electric utilities, e.g.,

municipalities, PUDs, cooperatives.

ELECTRICITY JURISDICTION

Layers and levels of electricity jurisdiction

• Federal: the government of the United States = BiH state

• Regional: The Pacific Northwest region is composed of

four states: Washington, Oregon, Idaho, and western

Montana

• State: Washington = BiH Entities

• Local: Public utility districts and municipalities (cities) =

BiH cantons or local utilities like KomunalnoBrcko

Electricity Jurisdiction

h

~

MBPA/Federal Generation

& Transmission

FUtility

Utility-Owned

Generation

Non-Utility Generation

(Independent Power Producers)

3DSIs

(Aluminum)

AIndustrial

SCommercial

BResidential

GenerationDistribution

TransmissionRetail

FERC Regulates

Wholesale & Transmission

UTC / Local Government / Boards

Regulate

Distribution & Retail

~~

~ h

h

Layers and levels of electricity jurisdiction (federal)

Federal Energy Regulatory Commission

• Regulation of wholesale generation and transmission

• Uniform system of accounts (where to record EE

spending)

United States Department of Energy

• Sets appliance and equipment standards

• Coordinates and funds national research laboratories

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Layers and levels of electricity jurisdiction (regional)

Pacific Northwest Power and Conservation Council

• Development of regional power plan

• Gathers input through advisory committees

• Coordinates regional technical forum (RTF) for EE measures

Bonneville Power Administration

• Owns and operates hydroelectric and transmission projects

• Regional energy efficiency programs

Northwest Energy Efficiency Alliance

• Market transformation programs

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Layers and levels of electricity jurisdiction (state)

Energy efficiency resource standard (EERS)

• Must pursue all available conservation that is cost-effective,

reliable and feasible

Washington Department of Commerce

• EERS rules for 14 consumer-owned utilities WAC 194-37

Washington Utilities and Transportation Commission (UTC)

• Regulates rates and services offered by investor-owned utilities

• EERS for all three investor-owned utilities WAC 480-109

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Layers and levels of electricity jurisdiction (local)

EERS for 14 consumer-owned utilities such as public utility

districts and municipalities (cities)

• Each one regulated by its own elected board

• Sets its own targets

• Approves its own programs

• WA state auditor does compliance and enforcement

EERS covers 88 percent of retail electric sales

• 46 small utilities are exempt from EERS

WA Electric

Fuel Mix

Source: Washington Dept. of Commerce

Combined utility EERS achievement in WA

Cumulative savings compared to 2009 load

EERS AND REGULATION

EERS in utility investment planning

Northwest Power and Conservation Council (regional)

• Establishes regional EE targets through the regional power

plan

Utilities and Transportation Commission (state)

• Staff participate in advisory groups during the

development of integrated resource plans

Utility-specific EE targets (utility)

• Develop targets through integrated resource plans

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Identifying targets and timelines

Utilities and Transportation Commission

• Timelines and penalties are established in statute RCW

19.285

• Obligation period is two years

• Penalty is $62 for each MWh below the target

• Targets are established through integrated resource plans

• UTC approves utility-specific targets

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Sample regulatory documents from Puget Sound

Energy

Biennial Conservation Plan

• Reviewed and approved by UTC order

Advisory group meetings

• Attended by UTC staff

• Held quarterly

Biennial Conservation Report

• Reviewed and approved by UTC order

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Utility program design structure

Northwest Power and Conservation Council (regional)

• Establishes regional EE potential through the regional power

plan

• Maintains catalog of savings from EE measures (RTF)

Utility-specific EE program design (utility)

• EE potential assessment

• Stakeholder advisory groups review plans

Utilities and Transportation Commission (state)

• Approval of utility-specific plans

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Sample EE programs from Puget Sound Energy

Residential rebates

• Specifications based on deemed savings developed by the

regional technical forum

• Rebates available for appliances, heating equipment,

insulation, lighting, water heating, smart thermostats,

windows, and water-saving devices

• Instant discounts are available through shopPSE, an online

store where customers can buy discounted LED lighting

and low-flow showerheads

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Stakeholder coordination

Northwest Power and Conservation Council

• Conservation resources advisory committee

• Regional technical forum

Northwest Energy Efficiency Alliance

• Advisory committees for cost-effectiveness, regional

portfolio analysis

Utility-specific

• Each utility hosts quarterly advisory group meetings

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Utility cost recovery

Utilities and Transportation Commission

• Utilities operate programs under approved accounting

petitions

• Utilities defer expenses for one year

• Staff review expenses, and then recommend recovery or

disallowance

• Utilities include one year of budgeted expenses in rates

• Annual filings are required

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Communication and outreach to customers

Utility-specific

• Utilities develop outreach and marketing as part of their

biennial conservation plans

• Commission staff review these plans for appropriateness

• Recovery of costs associated with EE marketing is

explicitly allowed by administrative rule WAC 480-100-

223

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Vulnerable customers and EE programs

Department of Commerce

• Coordinates low-income weatherization program

• Currently working to include health impacts of EE

Utility-specific

• Each utility includes low-income weatherization in its

biennial conservation plan

Utilities and Transportation Commission

• Relaxed cost-effectiveness criteria for low-income

programs WAC 480-109-100(10)

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Administrative matters

• 6 staff members overseeing about $130 million in electric

utility expenditures

• Section manager, senior planning manager, and 4

regulatory analysts

• Skillsets

– Scientific method, reliance on data, curiosity, willingness to ask

questions, ability to explain complex ideas, negotiation, writing

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Typical tasks for a regulatory analyst

• Weekly phone calls with regulated utility

• Two utility advisory group meetings each month

• Two regional advisory group meetings each month

– Advisory group meetings are typically a full day, and require pre-

meeting review of a meeting packet, followed by review of

meeting minutes and follow-up questions

• One tariff filing every other month (requires review,

stakeholder coordination, staff memo and open meeting

presentation)

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Benefits of energy efficiency in Washington

• Saving more than 1 percent of load annually

• Average cost per kWh $0.03 compared to the average

retail rate per kWh $0.09

• Utilities have met and exceeded targets every year since

2010

• Over 62,000 energy efficiency jobs in Washington state

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Washington

• Target in annual savings

• Target in MWh

• Target size is moderate

• Obligation period 2 years

• Regulator sets target

• Regulator administers

• Electric and natural gas

• Distributors obligated

• All sectors covered

BiH EEO Scheme

• Target in lifetime savings

• Target in MWh

• Target size is moderate

• Obligation period 4 years

• Ministry sets target

• Regulator administers

• Electric

• Distributors obligated

• Residential sector covered

Washington

• Standardized and custom

measures included

• Catalog of savings

developed by RTF

• Direct contracts used

• Summary reporting

• Evaluation, monitoring and

verification framework

• Penalty is $62/MWh

• Costs $0.03/kWh

BiH EEO Scheme

• Standardized measures

included

• Catalog of savings

developed by GIZ

• Direct contracts used

• Direct reporting

• Monitoring and verification

platform

• Penalty recommended

• Costs not yet known

DEBORAH REYNOLDS

Washington Utilities and Transportation Commission

Assistant Director of Conservation and Energy Planning

Deborah.Reynolds@utc.wa.gov