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UTC staff recommend $730,000-plus PacifiCorp penalty

Docket Number: UE-220376

Editor's Note: This news release reflects the position of staff of the Washington Utilities and Transportation Commission (UTC) and NOT the views of the three-member commission. It discusses enforcement actions and penalties that the commissioners have not yet reviewed. Any positions taken or comments offered by UTC staff regarding this proceeding should be attributed clearly to staff members and NOT to the UTC. 

Company failed to consider the social cost of carbon in its energy resource planning

LACEY, Wash. - Yesterday the Washington Utilities and Transportation Commission filed a complaint against PacifiCorp, doing business as Pacific Power & Light Company, for failing to consider the social cost of greenhouse gas emissions in the resource planning portion of its clean energy implementation plan.

The Clean Energy Transformation Act of 2019 (CETA) requires UTC-regulated electric utilities to consider the social cost of greenhouse gases – the cost of damages created by one extra ton of carbon dioxide emissions – when choosing intermediate and long-term investments to make sure that they have enough energy supply to meet the needs of their customers while working toward a carbon-free future by 2045.

UTC staff found that PacifiCorp violated state law and a related commission order by not including this cost in its preferred investment portfolio. Per the complaint, staff believes this omission could have a meaningful impact on the company’s investment decisions.

UTC staff recommend that the commission consider imposing the maximum penalty allowed for a company’s failure to follow UTC rules, up to $1,000 per day. Based on this calculation, at the time of filing staff recommends the commission impose a total penalty of up to $730,000, with an additional $1,000 per violation for each day the company fails to submit an updated plan.

The three-member commission is not bound by staff’s recommendation and will hold a virtual prehearing conference on June 30 to establish a procedural schedule.

The social cost of greenhouse gases, also known as the social cost of carbon, is a critical calculation used in utility regulation and environmental justice work to measure the impacts of carbon and other greenhouse gas emissions on climate change, and the long-term economic outcomes of those changes. If a short-term cost saving contributes to a higher cost of greenhouse gases over time, the long-term negative economic impacts could vastly outweigh the immediate benefit.

BACKGROUND

In 2019, the Washington State Legislature passed the Clean Energy Transformation Act, requiring Washington’s electric utilities to eliminate coal-fired generation by 2025, transition to a carbon-neutral supply of electricity by 2030, and source 100% of their electricity from renewable or non-carbon-emitting sources by 2045.

To show how they are working toward those goals, CETA requires investor-owned electric utilities to submit clean energy implementation plans to the Utilities and Transportation Commission for approval.

In December 2020, the commission issued an order clarifying language in CETA to direct electric utilities to include this cost in both their short- and long-term energy planning and actual investment decisions.

In November 2021 PacifiCorp filed its draft clean energy implementation plan and requested an exemption from the requirement. At that time, UTC staff noted that the company did not include the social cost of greenhouse gases in its decision on what resources to purchase.

On Dec. 13, 2021, the commission denied the company’s exemption request and ordered PacifiCorp to include the social cost of greenhouse gases in all of its energy portfolio planning. PacifiCorp submitted its final plan to the UTC on Dec. 30, 3021, without the requested change, and also failed to update the calculation to account for the social cost of greenhouse gases when correcting a spreadsheet error in April 2022.

Portland, Ore.-based PacifiCorp is owned by Berkshire Hathaway Energy of Des Moines, Iowa. The company provides electric service to about 130,000 customers in six Eastern Washington counties: Kittitas, Columbia, Garfield, Benton, Walla Walla, and Yakima. Cities in the company’s service territory include College Place, Dayton, Grandview, Naches, Pomeroy, Prescott, Selah, Sunnyside, Toppenish, Union Gap, Waitsburg, Walla Walla, Wapato, Yakima, and Zillah. 

The UTC is the state agency that regulates private, investor-owned electric and natural gas utilities in Washington. It is the commission’s responsibility to ensure regulated companies provide safe and reliable service to customers at reasonable rates, while allowing them the opportunity to earn a fair profit. The 2019 Legislature tasked the commission and the Department of Commerce with implementing the Clean Energy Transformation Act.

 

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Editor's note: The complaint is available in Docket UE-220376 on the UTC’s website www.utc.wa.gov.

Topic(s)
Energy
General