March 2017 Bar Bulletin
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March 2017 Bar Bulletin

The Toothless Washington Utilities and Transportation Commission

By Larry G. Johnson

 

You may include yourself among Washingtonians who pride themselves on how enthusiastically we protect our environment by promoting conservation and forward-looking technologies, often demanded by robust citizen activism.

So, it may come as a shock to you, as it did to me, just how backward and impotent the Washington Utilities and Transportation Commission (WUTC) is when it comes to its authority to pre-approve the construction of any new, major infrastructure project by a private power utility.

It has no such pre-approval authority. None at all. I will explain, but first .…

Some Background and History

I discovered just how powerless the WUTC is while working pro bono the past three years with a citizens group, CENSE, in opposing a $300-million project that Puget Sound Energy is trying to build on the eastside, called “Energize Eastside.” It would run 18 miles of new transmission lines and huge steel towers through densely populated residential areas in Redmond, Bellevue, Newcastle and Renton, placed in a narrow corridor with two existing petroleum pipelines that pump jet fuel under pressure from Blaine to the SeaTac and Portland airports.

The project has its roots in some interesting history. In 2006, Congress repealed a 1935 law called the Public Utilities Holding Company Act that prevented electric and gas utilities from being owned by foreign investors. The following year, half a dozen U.S. utilities were bought by Canadian, Australian, British and Singaporean investment groups.

One of the acquired utilities was Puget Sound Energy. The purchase was initiated in 2007 by Macquarie, an Australian investment firm, leading a consortium of Canadian retirement funds. The consortium planned to invest $5 billion in new infrastructure; no doubt incentivized by a state-guaranteed 9.8-percent return on that investment. Only one hurdle must be cleared to get those revenues: The WUTC must agree to charge ratepayers for each project. But the WUTC has never rejected a PSE project, so the hurdle is pretty low.

Macquarie bought PSE right during the 2007–08 financial crisis. Consumption of gas and electricity plummeted. There wasn’t any need for more infrastructure, and there certainly wasn’t any appetite to raise utility rates for customers.

Unfortunately for Macquarie, previous levels of energy consumption have never returned. In fact, both gas and electricity consumption in PSE’s service area, as generally everywhere else in the U.S., have continued to decline. PSE’s revenues are now 7 percent less than in 2009, when Macquarie completed its acquisition.

In December 2013, PSE dusted off an old project once designed to provide a perceived need to move more energy into Canada, and renamed it “Energize Eastside” as if it were something purely local and brand new. PSE justified it by pointing to all the new construction that began on the eastside after the post-2009 economic rebound (never mentioning the fact that eastside energy consumption is declining). The 9.8-percent return on infrastructure investment now looks like the only way the Macquarie investment can pay off.

Environmentalists and affected citizens said the project is an unnecessary boondoggle, and their views are backed up by Richard Lauckhart, a former vice president of power planning for PSE. With his extensive knowledge of the Northwest grid and 22 years of service with the company, Lauckhart did extensive scientific and engineering studies into the project, and he concludes there is no need for “Energize Eastside.”

First Stop, FERC

So, how to stop what Lauckhart, I and many other concerned citizens thought was a senseless and wasteful project? We figured an appropriate forum to approach was the Federal Energy Regulatory Commission (FERC) with a complaint, citing among other things Lauckhart’s expertise and computer model simulation evidence to support the claim that “Energize Eastside” was not needed and highly flawed in its technical assumptions.

To make a long story short, FERC dismissed the complaint for lack of jurisdiction. “This is a local project,” FERC said, so any remedies had to come from state or municipal authorities.

Calling the WUTC to the Rescue


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