Washington Regulators Adopt Measures that Move the State’s Largest Utility Toward Clean Energy, But More is Needed

January 16, 2025

Washington Regulators Adopt Measures that Move the State's Largest Utility Toward Clean Energy, But More is Needed

More progress to transition off fossil fuels will be needed to meet Washington's climate goals; Initiative 2066 cited as a major barrier

Contacts

Elizabeth Manning, Earthjustice, [email protected], (907) 277-2555

Kim Petty, Sierra Club, [email protected], (360) 362-8467

Jill Wasberg, NW Energy Coalition, [email protected], (206) 790-8151

Charlie McAteer, Front and Centered, [email protected], (917) 696-1321

Legal document

Seattle, WA-

In a mixed decision that highlights the urgency and complexity of Washington state's clean energy transition, state regulators rejected a request from Puget Sound Energy (PSE) to sharply increase gas and electricity rates while taking steps to transition the utility to clean energy. The ruling by the Washington Utilities and Transportation Commission both moves PSE towards clean energy while also highlighting some of the barriers to meeting Washington's climate goals.

Today's ruling incorporated some key electrification proposals requested by three environmental groups (known as the Joint Environmental Advocates, or JEA) represented by Earthjustice - Front and Centered, Sierra Club, and NW Energy Coalition - who intervened in PSE's general rate case. Rate cases before the Commission determine what utilities like PSE can charge their customers.

Specifically, the decision requires PSE, going forward, to engage in an analysis of alternatives before major spending on investments in the gas system. These alternatives, called "non-pipeline alternatives," ensure that utilities are not making long-term investments in the gas system at the same time state law requires rapid electrification to meet climate goals. Such a requirement only exists in a handful of states. The requirement will represent a significant shift in PSE's approach to gas system investments going forward.

The Commission also rejected a proposal from the utility to rapidly depreciate its gas infrastructure, which would have sharply raised customer's costs without doing anything to reduce PSE's reliance on fossil fuels. And it adopted several measures to ensure that PSE's energy systems address historic equity concerns and ensure that the energy transition is fair to lower income and marginalized customers. JEA supports both of those decisions.

Unfortunately, the Commission rejected the JEA's proposal for a rapid acceleration of support for customers who choose to transition from the gas system to electrification. The JEA proposed a target of electrifying over 180,000 gas customers by 2030 in order to meet the state's climate targets, and reduced financial incentives for investments in the gas system. The Commission found such efforts to be inconsistent with the November 2024 ballot Initiative 2066, which prohibits the Commission from adopting rate plans that incentivize the termination of gas service. The legality of Initiative 2066 is being challenged in court, with a hearing set for March. In lieu of the JEA's proposal, the Commission directed PSE to propose voluntary electrification projects in future proceedings.

Overall, while much more work will be needed, the decision by the Commission is a step toward helping Washington meet its goals to reduce climate-harming greenhouse gas emissions while ensuring Washington residents have access to reliable and affordable clean energy.

Statements from Earthjustice and our clients

"While past electrification pilot programs have successfully helped thousands of Puget Sound Energy customers install efficient electric heating equipment, it's time now for the utility to offer customers more on a much bigger scale," said Lauren McCloy, Utility & Regulatory Director for the NW Energy Coalition. "We know these programs work well for both customers and the utility and reduce greenhouse gases while maintaining reliable and affordable clean energy. We're disappointed that the Commission did not do more to continue this progress, and we will continue to seek opportunities to advance this important work."

"We are encouraged to see the Commission taking some steps to ensure a just and equitable energy transition for all ratepayers," said Mariel Thuraisingham, outgoing Clean Energy Policy Lead for Front and Centered. "Communities of color, Indigenous people, low-income folks, and immigrants and refugees must not be left behind or burdened with stranded gas costs - utilities must continue to be clearly guided to carefully manage a transition to clean energy that is affordable and reliable for frontline communities and for all Washingtonians. With that in mind, we urge the Commission to ramp up its efforts in the Equity Docket, A-230217, to ensure utilities have the relevant guidance moving forward."

"Transitioning away from natural gas will improve public health, save energy and costs over time, reduce air pollution and help the state meet its statutory climate targets," said Dylan Plummer, Campaign Advisor, Sierra Club. "Instead of keeping customers hooked on polluting fossil fuels, which harm public health and the climate, the Commissioner's order can help PSE and its customers transition to a healthier future powered by clean, renewable electricity. But much more will be needed in the years ahead."

"While Puget Sound Energy is taking some steps to transition off fossil fuels toward clean energy, the pace and scale of PSE's transition is nowhere near where it needs to be to meet the urgency of the climate crisis," said Earthjustice attorney Jan Hasselman. "While we are encouraged that the Commission agreed with us that PSE needs to analyze non-pipeline alternatives to gas system investments, the decision reveals that the passage of I-2066 is a major barrier to clean energy progress."

Background

In 2019, Washington passed legislation requiring utilities to transition to 100% clean electricity generation energy by 2045 and ensure that transition is equitable. In addition, the Washington State Legislature first enacted statewide greenhouse gas emissions targets (which cover emissions from gas distribution, electricity generation, and other sectors) in 2008 and in 2020 strengthened those to include a 45% reduction below 1990 emission levels by 2039, and a 95% reduction by 2050. These targets are implemented in part by the state's Climate Commitment Act legislation, which was recently retained by Washington voters by a wide margin of 62% to 38% in a ballot challenge in November 2024.

Today's order builds on prior victories before Washington's public utility commission that have helped move PSE toward clean energy. In 2022, Earthjustice intervened in a prior PSE rate case. A settlement ended a proposed expansion of PSE's gas system and set up a pilot program to electrify gas customers through various incentives. That program, according to a recent PSE presentation, proved popular, reduced gas consumption and overall energy use, and saved customers money. In June 2023, the Commission required PSE to make sweeping changes to its Clean Energy Implementation Plan, including more community solar projects, increased targets for demand response programs that save customers money on their energy bills, new pilot programs, requirements to offer clean energy programs to the most highly impacted populations and more.

The outdoor unit of a heat pump system. (Dennis Schroeder / NREL)

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