Original Notice.

     Preproposal statement of inquiry was filed as WSR 10-13-161.

     Title of Rule and Other Identifying Information: WAC 480-100-405, 480-100-415, 480-100-425 and 480-100-435, regarding greenhouse gas emissions.

     Hearing Location(s): Richard Hemstad Building, Commission Hearing Room 206, Second Floor, 1300 South Evergreen Park Drive S.W., Olympia, WA 98504-7250, on October 27, 2010, at 1:30 p.m.

     Date of Intended Adoption: October 27, 2010.

     Submit Written Comments to: Washington Utilities and Transportation Commission, 1300 South Evergreen Park Drive S.W., P.O. Box 47250, Olympia, WA 98504-7250, e-mail records@utc.wa.gov, fax (360) 586-1150, by October 4, 2010.

     Assistance for Persons with Disabilities: Contact Susan Holman by October 13, 2010, TTY (360) 586-8203 or (360) 664-1243.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The proposed rules would implement statutory changes in RCW 80.80.010, 80.80.040 and 80.80.060 enacted in the state of Washington's 2009 regular legislative session. On April 20, 2009, and May 11, 2009, respectively, the governor signed SB 5989, chapter 147, Laws of 2009, and HB 2129, chapter 448, Laws of 2009, with the common title "greenhouse gas emissions performance standard."

     The proposed rules revise standards and/or procedures under which electric utilities, either inside or outside of a general rate case, will seek a determination by the Washington utilities and transportation commission that their long-term financial commitments comply with the greenhouse gas emissions performance standards found in RCW 80.80.005, et seq. The proposed rules also revise standards and/or procedures under which electric utilities that do not meet the greenhouse gas emissions performance standards may request exemption from the standards from the commission. Finally, the proposed rules include certain renewable resources, the cost for which electric utilities are allowed to defer for later commission consideration.

     Reasons Supporting Proposal: See above.

     Statutory Authority for Adoption: RCW 80.01.040, 80.04.160, and 80.80.060(8).

     Statute Being Implemented: Not applicable.

     Rule is not necessitated by federal law, federal or state court decision.

     Name of Proponent: Washington utilities and transportation commission, governmental.

     Name of Agency Personnel Responsible for Drafting: Danny Kermode, 1300 South Evergreen Park Drive S.W., Olympia, WA 98504, (360) 664-1253; Implementation and Enforcement: David W. Danner, 1300 South Evergreen Park Drive S.W., Olympia, WA 98504, (360) 664-1208.

     No small business economic impact statement has been prepared under chapter 19.85 RCW. The proposed rules will not result in or impose more than minor costs. Because there will not be more than minor increase in costs resulting from the proposed rule changes, a small business economic impact statement is not required under RCW 19.85.030(1).

     A cost-benefit analysis is not required under RCW 34.05.328. The commission is not an agency to which RCW 34.05.328 applies. The proposed rules are not significant legislative rules of the sort referenced in RCW 34.05.328(5).

September 1, 2010

David W. Danner

Executive Director

and Secretary

OTS-3594.1

AMENDATORY SECTION(Amending Docket UE-080111, General Order R-553, filed 11/14/08, effective 12/15/08)

WAC 480-100-405   Electrical company generation resource compliance with the greenhouse ((gases)) gas emissions performance standard.   (1) No electrical company may enter into a long-term financial commitment after June 30, 2008, for the supply of baseload generation unless such generation complies with the greenhouse ((gases)) gas emissions performance standard. Electrical companies bear the burden to prove compliance with the greenhouse ((gases)) gas emissions performance standard under the requirements of WAC 480-100-415 or as part of a general rate case. For electrical companies that fail to carry their burden of proof, the commission may disallow recovery of some or all costs in rates, impose penalties, or take such other action as is consistent with law. Electrical companies seeking to prove compliance with the greenhouse ((gases)) gas emissions standard as part of a general rate case must submit all of the information specified in WAC 480-100-415. This chapter does not apply to any long-term financial commitment with the Bonneville power administration.

     (2) The following definitions apply for purposes of this section, WAC 480-100-415, 480-100-425, and 480-100-435:

     (a) "Baseload electric generation" means electric generation from a power plant that is designed and intended to provide electricity at an annualized plant capacity factor of at least sixty percent.

     (b) "Electricity from unspecified sources" means electricity that is to be delivered in Washington pursuant to a long-term financial commitment entered into by an electrical company and whose sources or origins of generation and expected average annual deliveries cannot be ascertained with reasonable certainty.

     (c) "Greenhouse ((gases)) gas emissions performance standard" means the standard established in RCW 80.80.040, WAC 173-407-120 and 173-407-130, and the verification and measurement procedures contained in WAC 173-407-140, 173-407-230, and 173-407-300.

     (d) "Long-term financial commitment" means either a new ownership interest in baseload electric generation or an upgrade to a baseload electric generation facility; or a new or renewed contract for baseload electric generation with a term of five or more years for provision of retail power or wholesale power to end-use customers in this state.

     (e) "New ownership interest" means a change in the ownership structure of a baseload power plant or a cogeneration facility or the electrical generation portion of a cogeneration facility affecting at least:

     (i) Five percent of the market value of the power plant or cogeneration facility; or

     (ii) Five percent of the electrical output of the power plant or cogeneration facility.

     The above thresholds apply to each unit within a multiunit generation facility. A direct or indirect change in ownership of an electrical company does not constitute a new ownership interest in baseload electric generation.

     (f) "Plant capacity factor" means the ratio of the electricity produced during a given time period, measured in kilowatt hours, to the electricity the unit could have produced if it had been operated at its rated capacity during that period, expressed in kilowatt hours.

     (g) "Power plant" means a facility for the generation of electricity that is permitted as a single plant by ((the energy facility site evaluation council or a local jurisdiction)) a jurisdiction inside or outside the state.

     (h) "State" means the state of Washington.

     (i) "Upgrade" means any modification made for the primary purpose of increasing the electric generation capacity of a baseload electric generation facility or unit. Upgrade does not include:

     (i) Routine or necessary maintenance;

     (ii) Installation of emission control equipment;

     (iii) Installation, replacement, or modification of equipment that improves the heat rate of the facility; or

     (iv) Installation, replacement, or modification of equipment for the primary purpose of maintaining reliable generation output capability that does not increase the heat input or fuel usage as specified in existing generation air quality permits as of July 22, 2007, but may result in incidental increases in generation capacity.

[Statutory Authority: RCW 80.01.040, 80.04.160 and 80.80.060. 08-23-047 (Docket UE-080111, General Order R-553), § 480-100-405, filed 11/14/08, effective 12/15/08.]

     (a) The electrical company's most recent integrated resource plan filed under WAC 480-100-238 and a description of how the proposed electric generation resource meets the resource need, resource investment strategies and other factors identified in the integrated resource plan)).

     (((b))) (2) If an electrical company submits an application under this subsection regarding a long-term financial commitment with multiple power plants, each power plant will be considered individually in determining:

     (a) Annualized plant capacity factor;

     (b) Net emissions;

     (c) Compliance with RCW 80.80.040(1) except as provided in RCW 80.80.040 (3) through (5).

     (3) Any request under this subsection must include the following information:

     (a) If the proposed electric generation resource is a specific power plant located in the state:

     (i) The plant technology, design, fuel and fuel consumption;

     (ii) Any site certificate or other permits necessary for operation of the power plant, including, ((for power plants located in Washington,)) any determination made by the department of ecology, local air authority or the energy facility site evaluation council regarding compliance with the greenhouse ((gases)) gas emissions performance standard;

     (iii) Such other information as is available to or in the possession of the electrical company concerning ((the)) exhaust emissions ((characteristics of the)) including total annual pounds of greenhouse gas from each power plant((; and

     (iv) The expected cost of the power generation to be acquired from the plant)).

     (b) If the proposed electric generation resource is a specific power plant located outside the state:

     (i) The plant technology, design, fuel and fuel consumption;

     (ii) Any site certificate or other permits necessary for operation of the power plant;

     (iii) Such other information as is available to or in the possession of the electrical company concerning exhaust emissions characteristics of the plant including total annual pounds of greenhouse gas from each power plant;

     (iv) Documentation of emissions verifications and measurement procedures which show consistency with the state's emissions performance standard.

     (c) If the proposed electric generation resource is a power purchase contract including contracts for delivery of electricity from unspecified sources:

     (i) The proposed contract;

     (ii) The technology, location, design, fuel and fuel consumption of any power plant, or plants, identified in the contract as the source of the contracted power deliveries, including such information as is knowable regarding the proportionate share each power source, or type of plant, will contribute to deliveries on an annual basis over the life of the contract;

     (iii) Such other information as is available to or in the possession of the electrical company concerning the exhaust emissions characteristics of the plant(s) supporting contracted power deliveries((; and)) including total annual pounds of greenhouse gas from each power plant.

     (iv) A calculation of the percent of electricity delivered under the power purchase contract from unspecified resources.

     (((iv))) (v) The contract term ((and expected cost of the power to be acquired through the)) of the power purchase agreement.

     (((2))) (4) The commission ((will)) may consider ((the)) an application filed under this section pursuant to chapter 34.05 RCW (Part IV) following the procedures established in chapter 480-07 WAC((. The schedule for a proceeding under this subsection will take into account both:

     (a) The needs of the parties to the proposed resource acquisition or power purchase agreement for timely decisions that allow transactions to be completed; and

     (b) The procedural rights to be provided to parties in chapter 34.05 RCW (Part IV), including intervention, discovery, briefing, and hearing.

     (3) The commission)), but the commission will not decide in ((a proceeding)) any application under this section, issues involving the actual costs to construct and operate the selected resource, cost recovery, or other issues reserved by the commission for decision in a general rate case or other proceeding authorized by the commission for recovery of the resource or contract costs.

[Statutory Authority: RCW 80.01.040, 80.04.160 and 80.80.060. 08-23-047 (Docket UE-080111, General Order R-553), § 480-100-415, filed 11/14/08, effective 12/15/08.]

     (a) Unanticipated electric system reliability needs; or

     (b) Extraordinary cost impacts on utility ratepayers; or

     (c) Catastrophic events or threat of significant financial harm that may arise from unforeseen circumstances.

     (2) An electrical company's application under subsection (1)(a) of this section must include:

     (a) A description of the electric system reliability needs including an explanation of why these needs were not anticipated, and why they cannot be addressed with other baseload electric generation that complies with the greenhouse ((gases)) gas performance standard.

     (b) The estimated duration of the exemption necessary to address the reliability need.

     (c) A description of any long-term financial commitment the company proposes to enter into to address the reliability need including all of the information specified in WAC 480-100-415.

     (3) An application under subsection (1)(b) of this section must include:

     (a) Identification of the long-term financial commitment that will result in extraordinary costs to ratepayers.

     (b) Criteria used by the applicant to judge cost as extraordinary.

     (c) A description of the extraordinary cost including:

     (i) Total system, jurisdictional and per-customer cost impact.

     (ii) Company proposed alternatives, if any, to address the extraordinary costs.

     (iii) The estimated duration of the exemption necessary to address the extraordinary cost impact.

     (4) An electrical company's application under subsection (1)(((b))) (c) of this section must include:

     (a) A description of the catastrophic event or threat of significant financial harm and an explanation of why the circumstances from which the event or harm arose were not foreseen including:

     (i) An explanation of why the circumstances cannot be addressed with baseload generation that complies with the greenhouse ((gases)) gas performance standard;

     (ii) What the anticipated negative financial impact would be to the company if such exemption were denied;

     (b) The estimated duration of the exemption necessary to address the catastrophic event or threat of significant financial harm.

     (c) A description of any long-term financial commitment the company proposes to enter into to address the catastrophic event or threat of significant financial harm including all of the information specified in WAC 480-100-415.

     (((4))) (5) An electrical company may propose recovery of costs associated with an application under this rule as part of a general rate case.

[Statutory Authority: RCW 80.01.040, 80.04.160 and 80.80.060. 08-23-047 (Docket UE-080111, General Order R-553), § 480-100-425, filed 11/14/08, effective 12/15/08.]

     (a) Baseload electric generation((, including)); or

     (b) An eligible renewable resource as defined in RCW 19.285.030 that the electrical company owns or has entered a power purchase agreement for a term of five or more years.

     (2) Deferred costs may include operating and maintenance costs, depreciation, taxes, and cost of invested capital.

     (((2))) (3) An electrical company deferring costs under subsection (1) of this section must:

     (a) Notify the commission within ten business days of its intent to defer such costs; and

     (b) File quarterly with the commission a report documenting the balances of costs deferred in a form specified by the commission.

     (((3))) (4) The deferral begins with the date on which the power plant begins commercial operation or the effective date of the power purchase agreement and continues for a period not to exceed twenty-four months; provided that if during such period the company files a general rate case or other proceeding for the recovery of such costs, deferral ends on the effective date of the final decision by the commission in such proceeding. Creation of such a deferral account does not by itself determine the actual costs of the long-term financial commitment, whether recovery of any or all of these costs is appropriate, or other issues to be decided by the commission in a general rate case or other proceeding authorized by the commission for recovery of these costs.

[Statutory Authority: RCW 80.01.040, 80.04.160 and 80.80.060. 08-23-047 (Docket UE-080111, General Order R-553), § 480-100-435, filed 11/14/08, effective 12/15/08.]

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