Washington

State Profile
7,170,351
08
Utility Revenue (Millions) $928.60
$849.20
n/a
$72.00
$7.40
Consumption (Billion Cubic Feet or BCF)

Consumption by Sector In-State

25,072
290
72
50
77
91
Customers 1,239,280
1,133,629
102,266
3,385
Industry Infrastructure
n/a
n/a
23,177
Utility Gas Efficiency Program Funding $19,208,825.00
$9,588,443.00
$1,142,667.00
$6,241,407.00
$2,236,308.00

Sources

AGA Survey and Statistics System; AGA-CEE Natural Gas Efficiency Programs Survey: Utility expenditures for gas efficiency programs exclude data that have not been released by participating companies at the state level; U.S. Energy Information Administration; and U.S. Department of Transportation.

Avista Utilities features CHP as part of its Energy Efficiency Program. In January of 2015, In January of 2015, the Washington Legislature took up House Bill 1095. This bill is designed to encourage combined heat and power (CHP) systems throughout the state. This bill was signed by the Governor on July 6, 2015.

Drafted by the Department of Commerce in 2012, the Washington State Energy Strategy Update and Biennial Energy Report has the following goals: Maintain competitive energy prices that are fair and reasonable for consumers and businesses and support the state’s continued economic success; Increase competitiveness by fostering a clean energy economy and jobs through business and workforce development; Meet obligations to reduce GHG emissions. The 2012 strategy is focused on transportation efficiency, buildings efficiency and distributed energy and outlines the following recommendations: Transportation: Support electric vehicles; Renewable fuel standard; Diesel engine fuel efficiency improvements; Electric vehicle mileage pricing pilot. Buildings: Meter-based financing; Energy efficient Property Conversions; Minimum standards for rental housing; Sustaining investment in low income weatherization programs. Distributed Energy: Facilitating DE development through interconnection standards, net metering policies, streamlined permitting for distributed energy; Rationalize DE financial incentives; Carbon pricing.

Conservation programs for natural gas utilities in Washington have generally been implemented as a companion to an electric conservation program for dual-fuel utilities Avista and Puget Sound Energy, or as a response to a settlement for natural-gas-only utilities Cascade and NW Natural. In January 2006, the Washington Utilities and Transportation Commission (UTC) adopted new rules related to integrated resourced planning for investor-owned gas utilities. These rules state that gas utilities must develop plans that describe the “mix of natural gas supply and conservation designated to meet current and future needs at the lowest reasonable cost to the utility and its ratepayers.” In achieving “lowest reasonable cost,” utility analyses are required to consider, among other factors, “the cost of risks associated with environmental effects including emissions of carbon dioxide.” On October 9, 2013, the commission issued a policy statement on the evaluation of the cost-effectiveness of natural gas conservation programs. This statement encouraged utilities and other stakeholders to work with Commission staff to establish a standardized schedule and format of conservation plans, and to publish their technical workbooks supporting cost-effectiveness calculations.

In January 2014, two pieces of legislation were introduced with the goal of expanding access to natural gas to more Washington homes and businesses. HB 2177 would direct the Washington Utilities and Transportation Commission (UTC) to grant recovery and authorize mechanisms or adjustments as are necessary for a natural gas utility to recover capital costs associated with investments in natural gas infrastructure, if those investments will promote the security or convenience of the public. Under the terms of the bill, security or convenience of the public includes but is not limited to infrastructure in rural or underserved areas of the state that: promote economic development, improve environmental conditions or enhance public health. HB 2101 would create a rural Washington natural gas access and investment account to provide a funding source for eligible infrastructure projects. These bills died at the end of the legislative session. On October 6, 2014, The UTC opened an Investigation into natural gas distribution infrastructure expansion. The UTC held a workshop as a recessed open meeting on Monday, November 3, 2014 to discuss the need for natural gas distribution infrastructure expansion, and investigate the options available to implement such expansion. On July 29, 2015, The Northwest Power & Natural Gas Planning Taskforce released a whitepaper entitled Northwest Gas Infrastructure – Looking Forward. The whitepaper concluded that large new gas users could have more control over future infrastructure expansions than existing users, including utilities. Utilities may have to adapt their preferred gas supply and infrastructure strategies based on the location and timing of infrastructure projects chosen by large new gas users. The whitepaper also concluded that utilities need reliable pipeline transportation from a robust gas supply. As new users enter the region, and existing users change their gas consumption patterns, what is considered to be a robust supply may change. This could cause utilities to change their preferred gas supply portfolio and/or transportation product (firm or non-firm) needed to ensure reliable delivery of gas to the point of consumption. The Taskforce is a joint effort of the Northwest Gas Association and PNUCC. The Taskforce’s members largely consist of natural gas utilities, pipelines, electric utilities that consume gas to generate power and industrial user representatives. On February 23, 2016, the Washington Utilities and Transpiration Commission issued an order approving Avista’s petition to modify its line extension policy. Staff reviewed the Petition and found that the company’s revised methodology produces the maximum line extension allowance that is economically-viable for the Company. Staff also found that the proposed accounting ratemaking treatment is appropriate. Avista proposed adopting a new methodology for the calculation of line extension allowances, known as the Perpetual Net Present Value method, which uses figures that are established by the Commission during a rate case. Staff supported using this methodology because it produces the maximum line extension allowance that is economically viable for the Company. Avista also proposed a rebate program for existing single-family, Residential Schedule 101 customers that receive a natural gas line extension as part of conversion to natural gas from another fuel source. In cases where the customer’s line extension allowance exceeds the cost of providing the line extension, an “excess allowance” remains. Customers in these circumstances can, within 90 days, apply for a rebate to cover the costs of purchasing and installing high-efficiency natural gas appliances for space-heating and water-heating. Avista also sought to defer the excess allowance rebates paid to Washington residential customers upon conversion to natural gas from another fuel source. Staff found that deferring these expenses for later recovery is appropriate and that the three-year period requested for this treatment provides a reasonable timeframe in which to expect the Company to file a general rate case, which will serve as an opportunity to review the program. After reviewing the company’s Petition and giving due consideration to all relevant matters and for good cause shown, the Commission found that it was consistent with the public interest to grant Avista’s Petition on a temporary basis for a three-year period and authorize both the changes to the Company’s natural gas line extension tariff and accounting ratemaking treatment.

In December 2012, the Washington UTC issued a policy statement aiming to enhance safety and modernize and update the state’s pipeline system. In November 2013, the UTC approved the plans of Avista Corporation, Puget Sound Energy Inc., Cascade Natural Gas Corporation and Northwest Natural Gas Company. The plans involve the replacement of hundreds of miles of older "elevated risk" pipes with plastic pipe. As an incentive, the UTC permitted these utilities to recover costs annually instead of waiting for future formal rate proceedings. The companies are also required to update their modernization plans every two years.

On August 28, 2013, Puget Sound Energy, Inc. filed with the Washington Utilities and Transportation Commission revisions to its currently effective Tariff WN U-2, Natural Gas Service designating a new rate schedule for optional gas compression service. The tariff would create an optional service to install gas compression facilities for eligible, non-residential natural gas customers on the customer’s premises to enable fueling of natural gas vehicles with compressed natural gas.

Avista operates under a decoupling mechanism that applies only to residential and small commercial gas customers. Avista defers 45% of the margin difference (i.e., fixed costs), which are recovered from or returned to customers, subject to an earnings test and a demand-side management conservation target test. Rate adjustments associated with the mechanism are capped at 2% of jurisdictional revenues. On June 25, 2013, Puget Sound Energy's (PSE's) electric and gas operations were authorized to operate under full revenue decoupling mechanisms and an associated rate plan that provide for annual increases in allowed revenue per customer. The decoupling mechanism and rate plan are to remain in place until the effective date of new rates in PSE's next general rate case. On November 25, 2014, The Washington UTC approved Avista Corp.’s request to implement full electric and gas decoupling mechanisms for five years, as well as the use of a third-party evaluation, paid for by Avista shareholders, which is to be completed following the end of the third full year of the implementation of the mechanisms. On July 7, 2016, the Washington Utilities and Transport Commission (WUTC) adopted a settlement permitting Cascade Natural Gas to implement a full revenue per customer decoupling mechanism, which is to be evaluated by a third party auditor following the end of the third full year that the program is in place. The mechanism incorporates an earnings test and a conservation target, and annual increases under the mechanism are to be capped at 3%, with unrecovered balances carried forward to future years; decoupling related credits are not subject to a cap.