Twist in climate-change fight pits corporations against each other

By Warren Cornwall and Ralph Thomas
Seattle Times staff reporters

In the global-warming debate, the classic battle has featured environmentalists squaring off against big industry, arguing about the potential costs to the economy compared with the potential costs to the planet.

But as legislation meant to curb climate change has moved through Olympia this year, the fight has shifted. This time, the corporations are turning on each other.

Big electricity users, including Boeing and Microsoft, are locked in a showdown with the state’s biggest utilities. The issue: how much power might cost if the measures become law.

The companies say the utilities have been offered too much latitude over prices to quell their opposition to restrictions on coal power and the resulting greenhouse-gas emissions. The utilities say they won’t support the measures otherwise.

And the whole dispute, involving some of Olympia’s most powerful lobbies, has become big enough that backers of the measures worry the whole effort may be in jeopardy.

“Big business hasn’t liked this bill since Day One,” said Sen. Erik Poulsen, D-Seattle, a chief sponsor. “They don’t want to see climate-change goals set in law. I don’t think business is focused on the long-term picture. Their concern is here and now.”

Utilities on board

The legislation at issue aims to get Washington to mount a comprehensive assault on climate change. It would set goals for reducing statewide emissions of greenhouse gases, such as carbon dioxide.

Two bills now in the Legislature would tackle the issue in essentially the same way. While the Senate has voted in favor of the legislation, the House has yet to vote on it.

Generally, the bills would forbid Washington utilities from making new investments or signing long-term contracts to get power from plants that produce a lot of greenhouse gases.

That would have the most immediate impact on utilities by essentially declaring new coal power off-limits.

So to get the state’s biggest utilities not to resist, lawmakers have added several provisions to the bills relating to how highly regulated power rates get set.

“It’s just a recognition that, in order for it to work, you want these utilities to not be fighting the process,” said Senate Majority Leader Lisa Brown, D-Spokane.

Taken together, the provisions would give for-profit power companies, such as Puget Sound Energy and Spokane-based Avista, permission to raise electricity rates to recover more expenses, and more certainty that they would be able to pay off new investments.

For example, power companies could be guaranteed an extra 2 percent return on some of their investments, while public utilities could get a tax credit. Companies also could get faster approval for new power plants or power investment.

“It’s a Christmas tree, and everybody’s hanging ornaments on it,” Mercer Island-based energy consultant Robert Kahn said of the legislation. “It’s those kind of things that make for peace in Olympia.”

Businesses opposed

That hasn’t won over all utilities. For example, Energy Northwest has warned that the emissions restrictions could kill its plans to build a power plant near the Columbia River west of Portland. That plant would be fueled with coal or waste from petroleum refineries.

But the legislation has forged an unusual alliance between the state’s biggest utilities and environmentalists, who say it would reward investment in cleaner energy production.

And if those provisions don’t survive, it could jeopardize the whole deal. Avista won’t support the legislation without them, said its lobbyist, Collins Sprague.

However, some of the biggest power users in the state contend the provisions would hand too much power to the utilities, potentially translating into higher power bills.

“The common denominator for our members is that electric-energy costs are a very significant portion of their costs,” said Tim Boyd of the Industrial Customers of Northwest Utilities.

He said he is joined by lobbyists for Microsoft and Boeing in fighting the legislation.

Boyd questioned why this legislation must single out the electric utilities.

Instead, he said the issues should be considered by a new state task force expected to make recommendations to next year’s Legislature for a comprehensive approach to regulating greenhouse gases.

Environmentalists say there’s no time to wait. And Avista’s lobbyist, Sprague, says those companies have been exaggerating the potential effects on their power rates.

For instance, a higher rate of return on investments would encourage Avista to spend money on energy efficiency, he said — and that could lead to lower electricity bills overall.

And the early-approval provisions for power investments will help companies get over their concern that environmental regulation of utilities might thwart their projects.

Those changes would have hardly any effect on power rates, Sprague said.

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