High-tech group powers I-937 changes

Coalition says renewable-energy law needs to be friendlier to business

By Aaron Corvin, Columbian port & economy reporter

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Clark County’s lobby of high-tech employers is sharpening a message it will carry to the 2012 Legislature: Make Initiative 937 — the voter-approved renewable energy law — more friendly to business.

Aiming to limit future electricity rate hikes, the Clark County High Tech and Community Council wants to relax some of the renewable energy requirements and to give utilities more credit for conserving power.

To build support for its position, the council, which comprises 10 politically connected technology companies, is talking to Gov. Chris Gregoire and her administrators, Clark Public Utilities, and other major industrial users of electricity in the region.

The council spelled out what it wants in an Aug. 18 letter to Gregoire. Rob Bernardi, president and chief operating officer for Kokusai Semiconductor Equipment Corp. who is chairman of the council, said he expects to see draft legislation to modify I-937 by the end of this year.

Noting the Legislature faces a November special session aimed at more state budget cuts, Bernardi said, “I hope they solve that really quickly, so I-937 doesn’t get shoved off the agenda.”

It’s not the first time critics of I-937 have tried to change the law, which prods Washington state to feed its energy needs with more renewables and fewer fossil fuels. And environmentalists, while keeping the door open to improving the law, say they’ll oppose attempts to undermine it.

“The point is making (I-937) work better, not cutting the standards,” said Marc Krasnowsky, spokesman for Seattle-based NW Energy Coalition.

Law requires renewables

Washington voters approved I-937 in 2006, with about 52 percent in favor and 48 percent opposed. Clark County gave the initiative the green light, mirroring the statewide results.

The law requires large utilities to get 15 percent of their power from renewable sources by the year 2020, following step-up requirements of 3 percent in 2012 and 9 percent in 2016.

It defines “eligible renewable resources” as wind, solar, geothermal, landfill and sewage gases, wave and tidal power, and certain kinds of biomass and biodiesel fuels. It does not count hydroelectric power, which accounts for nearly three-fourths of state electricity generation, as a renewable source of energy.

In its letter to Gregoire, the Clark County High Tech and Community Council is proposing three changes to the law. They would:

• Remove any requirement forcing a utility to buy renewable energy — or renewable energy credits — beyond what’s needed to serve natural growth in demand for electricity. Replacing existing sources of energy “with renewable resources results in unnecessary unproductive costs to the region’s businesses without an economic return to the state’s economy,” according to the council’s letter.

• Exempt a utility from having to use renewable resources, as required by I-937, to meet the energy demands added by an existing customer or by a new one. “Without this exemption it will be extremely difficult for the region to effectively compete for expansion of its existing technology businesses or recruit new firms.”

• Make conservation a qualifying source of renewable energy under I-937. While the law calls on utilities to pursue “all available conservation that is cost-effective, reliable and feasible,” it does not consider conservation to be a source of renewable energy. “Conservation is widely recognized as the most cost effective renewable resource, and investment in this resource should be further stimulated,” according to the council’s letter.

Bernardi, chairman of the council, said the proposed changes aren’t intended to cripple the original intent of I-937. “We all want a greener world,” he said, adding that the proposed changes are aimed at keeping electricity costs cheap and predictable for employers.

Rate increases are inevitable with a law that requires utilities to purchase power from more expensive renewable sources, Bernardi said. He added, “If you’re SEH America or WaferTech, where your monthly electric bills are approaching or exceeding $1 million, that’s a lot of money.”

A powerful group

There’s no doubt the nonprofit Clark County High Tech and Community Council carries muscle behind its proposed changes. The council’s 10 members — including SEH America, WaferTech, nLight Photonics Corp., Sharp Microelectronics of the Americas and Kyocera Industrial Ceramics Corp. — employ about “3,000 people in Clark County at very good family wages,” according to Bernardi’s letter to Gregoire. “With the inclusion of other large industrial electric customers in Southwest Washington, we represent a vibrant group of companies with a very large employment base.”

And the group has the governor’s ear: Ben Bagherpour, a vice president of SEH America, serves on a state advisory committee that’s helping review the state’s energy strategy.

What’s more, during Gregoire’s visit to Washington State University Vancouver this summer, council representatives spoke with her about maintaining the state’s competitiveness for technology companies.

After that meeting, the council “acted on your suggestion to develop ideas and concepts to keep Southwest Washington companies competitive from a power standpoint,” Bernardi wrote in his letter to Gregoire outlining proposed changes to I-937.

Legislative review certain

Meanwhile, Rep. Dave Upthegrove, D-Des Moines, who is chairman of the House Environment Committee, has opened a review of Initiative 937, collecting suggestions for improving it from 22 stakeholders, including the Bonneville Power Administration, Longview Fibre Paper and Packaging Inc. and major utilities.

According to a document issued by Upthegrove, the goal of the review is to make I-937 “work more effectively for Washington’s environment, utilities, consumers and businesses without undermining the original intent of the initiative to generate additional renewable generation capacity in the state.”

However, previous attempts to loosen the requirements of I-937 have been unsuccessful.

In 2009, for example, state lawmakers introduced 16 bills to amend the law. Clark Public Utilities — a customer-owned public utility that provides electricity to more than 183,000 residential and business customers in Clark County — testified in favor of one of those bills. Part of that language sought to allow utilities to count conservation efforts toward meeting their renewable energy targets before they’re forced to turn to the purchase of renewable energy or energy credits.

One of the three changes proposed by the Clark County High Tech and Community Council revives that idea.

‘Comprehensive approach’

In an email to The Columbian, Lena Wittler, customer communications manager for Clark Public Utilities, said that as the agency has worked to comply with I-937 it has also kept “our customers, the governor and our legislators aware of the additional costs” generated by the renewable energy law.

To comply with I-937 — dubbed “The Energy Independence Act” — the utility’s elected three-member board in 2009 agreed to purchase the entire output of a 63-turbine wind farm near Milton-Freewater, Ore., at an estimated cost of $338 million over 20 years.

Wittler said the utility fully intends “to meet the renewable energy requirements beginning in January 2012.”

Open to ideas

Krasnowsky, the spokesman for Seattle-based NW Energy Coalition, which backed I-937 in its inception, said his group is open to changing the law so it serves people better. That would include lowering customer bills, boosting use of renewables, and increasing energy efficiency and conservation. “It really has to be a comprehensive approach,” he said.

Anything that would gut the foundation of the law — such as allowing cheap hydropower to count among the list of eligible renewables — is a nonstarter, Krasnowsky said.

Given that the hydropower system is essentially maxed out, Krasnowsky said, “the question becomes, what does our future energy look like? Is it going to become less clean by meeting new loads with fossil fuels? Or is it going to stay clean by diversifying to other renewables?”

Bernardi’s concern is that if I-937 remains as written it will erode one of Washington state’s — and Clark County’s — most important assets: cheap power.

“Energy has always been the county’s trump card when it comes to recruiting business and getting them to expand here,” he said.

Aaron Corvin: http://twitter.com/col_econ; http://on.fb.me/AaronCorvin; 360-735-4518; aaron.corvin@columbian.com.