WSR 15-07-043

PERMANENT RULES

[Docket UE-131723, General Order R-578—Filed March 12, 2015, 9:44 a.m., effective April 12, 2015]

In the matter of amending, adopting, and repealing rules in chapter 480-109 WAC relating to the Energy Independence Act (EIA).

The Washington utilities and transportation commission (commission) adopts revised rules implementing chapter 19.285 RCW, the EIA. The commission's goals in this rule making are to incorporate legislative changes to the EIA since the commission's rules were first adopted in 2007, identify commission decisions and preferred practices implementing the EIA, and engage with stakeholders to address and resolve ambiguity where appropriate. The rules we adopt today are divided into sections addressing the EIA's energy efficiency resource standard (EERS) and the EIA's renewable portfolio standard (RPS). We defer our consideration of a reporting requirement for energy and emissions intensity metrics pending more discussion of methodology. The rules addressing the EERS generally codify our existing biennial conservation process, the use of advisory groups, and the use of conservation cost recovery adjustments. We also support conservation programs for low-income customers by modifying utilities' treatment of these important programs. The rules addressing the RPS generally incorporate our existing reporting process, including three options for calculating incremental hydropower and a new methodology for calculating incremental cost. Finally, we consider the application of these revised rules. While we have reviewed prior orders for consistency with these rules, we direct utilities to review existing orders and tariffs for consistency with the adopted rules, and make filings to remedy any conflicts.

1 STATUTORY OR OTHER AUTHORITY: The commission takes this action under Notice No. WSR 14-18-084, filed with the code reviser on September 3, 2014. The commission has authority to take this action pursuant to RCW 80.01.040, 80.04.160, and 19.285.080.

2 STATEMENT OF COMPLIANCE: This proceeding complies with the Administrative Procedure Act (chapter 34.05 RCW), the State Register Act (chapter 34.08 RCW), the State Environmental Policy Act of 1971 (chapter 43.21C RCW), and the Regulatory Fairness Act (chapter 19.85 RCW).

3 DATE OF ADOPTION: The commission adopts this rule on the date this order is entered.

4 CONCISE STATEMENT OF PURPOSE AND EFFECT OF THE RULE: RCW 34.05.325(6) requires the commission to prepare and publish a concise explanatory statement about an adopted rule. The statement must identify the commission's reasons for adopting the rule, describe the differences between the version of the proposed rules published in the register and the rules adopted (other than editing changes), summarize the comments received regarding the proposed rule changes, and state the commission's responses to the comments reflecting the commission's consideration of them.

5 To avoid unnecessary duplication in the record of this docket, the commission designates the discussion in this order, including appendices, as its concise explanatory statement. This order provides a complete but concise explanation of the agency's actions and its reasons for taking those actions.

6 REFERENCE TO AFFECTED RULES: This order amends, adopts, and repeals the following sections of the Washington Administrative Code: Amending WAC 480-109-010 Purpose and scope, 480-109-020 Application of rules, 480-109-030 Exemptions from rules in chapter 480-109 WAC, 480-109-040 Additional requirements and 480-109-050 Severability; adopting WAC 480-109-060 Definitions, 480-109-070 Administrative penalties, 480-109-100 Conservation resources and energy efficiency resource standard, 480-109-110 Conservation advisory group, 480-109-120 Conservation planning and reporting, 480-109-130 Conservation recovery adjustment, 480-109-200 Renewable portfolio standard, 480-109-210 Renewable portfolio standard reporting, 480-109-220 Alternatives to the renewable resource requirement and 480-109-999 Adoption by reference; and repealing WAC 480-109-001 Purpose and scope, 480-109-002 Application of rules, 480-109-003 Exemptions from rules in chapter 480-109 WAC, 480-109-004 Additional requirements, 480-109-006 Severability, and 480-109-007 Definitions.

7 PREPROPOSAL STATEMENT OF INQUIRY AND ACTIONS THEREUNDER: The commission filed a preproposal statement of inquiry (CR-101) with the code reviser on October 2, 2013, at WSR 13-20-127.

8 The statement advised interested persons that the commission was considering entering a rule making to consider whether the commission should modify rules in chapter 480-109 WAC to implement the statutory changes and provisions of chapter 19.285 RCW. The commission also informed persons of this inquiry by providing notice of the subject and the CR-101 to everyone on the commission's list of persons requesting such information pursuant to RCW 34.05.320(3). Pursuant to the notice, the commission convened a workshop for interested stakeholders on November 12, 2013, and solicited written comments by December 2, 2013. On April 9, 2014, the commission issued a notice announcing that it published informal draft revisions to the rules and soliciting written comments from stakeholders by May 9, 2014. The commission held a second workshop on May 15, 2014, where it received comments from stakeholders regarding the informal draft revisions to the rules.

9 NOTICE OF PROPOSED RULE MAKING: The commission filed a notice of proposed rule making (CR-102) with the code reviser on September 3, 2014, at WSR 14-18-084. The notice provided interested persons the opportunity to submit written comments to the commission by October 6, 2014. The commission scheduled this matter for oral comment and adoption on Wednesday, November 5, 2014, at 1:30 p.m., in the Commission's Hearing Room, Second Floor, Richard Hemstad Building, 1300 South Evergreen Park Drive S.W., Olympia, WA.

10 RULE-MAKING HEARING: The commission considered the proposed rules for adoption at a rule-making hearing on November 5, 2014, before Chairman David W. Danner, Commissioner Philip B. Jones, and Commissioner Jeffrey D. Goltz.1 The commission heard oral comments from Clint Kalich, representing Avista Corporation (Avista); Etta Lockey and Mary Wiencke, representing Pacific Power & Light Company (Pacific Power); Eric Englert, representing Puget Sound Energy (PSE); Mary Kimball, representing public counsel section of the Washington office of attorney general (public counsel); and Dina Dubson Kelley and Megan Decker, representing Renewable Northwest (RN); and Joshua Weber, representing Industrial Customers of Northwest Utilities (ICNU).

1 Since the November 5, 2014, adoption hearing, Commissioner Goltz retired, and the governor appointed Ann Rendahl as commissioner. Commissioner Rendahl joins in this order, having reviewed the proposed rules, the comments submitted in response to the proposed rules, and attended the adoption hearing while holding a staff position with the commission.

11 The commission's goals in this proceeding are to:

12 In this part of the order we provide a short overview of the rules we adopt today and the rationale for changes from the proposed rules or departures from commission precedent. Attachment A is a summary of oral comments made at the adoption hearing, written comments provided to us by stakeholders in response to the proposed rules, and our consideration of those comments. Some minor issues not discussed in this order are addressed in Attachment A to this order. Attachment A is hereby incorporated into, and made part of, this order.

13 WAC 480-109-100 through 480-109-130 describe the process that an investor-owned electric utility ("utility" as defined in WAC 480-109-060(31)) must follow to meet the requirement in RCW 19.285.040(1) to "pursue all available conservation that is cost-effective, reliable, and feasible." The utility industry and energy policy professionals use the term "energy efficiency resource standard" to describe state laws that require utilities to acquire conservation.2 We adopt this standard industry terminology as the title of WAC 480-109-100. The EIA contemplates a biennial conservation process for each utility, and we developed the conservation process, as codified in this rule making, over three biennial periods.3

2 Annie Gilleo, Anna Chittum, Kate Farley, Max Neubauer, Seth Nowak, David Ribeiro, and Shruti Vaidyanathan, The 2014 State Energy Efficiency Scorecard, American Council for an Energy-Efficient Economy Report No. U1408, at 21 (October 2014), available at http://aceee.org/research-report/u1408.

3 The commission's orders evaluating each utility's biennial conservation filings can be found in the dockets described in the following table.

14 WAC 480-109-100 details the process a utility must use to identify conservation potential, develop a conservation portfolio, implement conservation programs, adaptively manage a conservation portfolio, and evaluate conservation using cost-effectiveness tests. WAC 480-109-110 describes the process for, and role of stakeholder involvement in, a utility's conservation advisory group. WAC 480-109-120 discusses conservation plans and reports that a utility must file with the commission. Finally, WAC 480-109-130 provides the process that a utility must use to recover the costs of its conservation programs.

1. Pro rata

15 RCW 19.285.040 (1)(b) requires utilities to set a biennial conservation target "no lower than the qualifying utility's pro rata share" of its ten year conservation potential. This statutory requirement is reflected in WAC 480-109-100 (3)(b) of this adopted rule. The EIA does not define "pro rata," but the rules the commission promulgated in 2007 included a definition at WAC 480-109-007(14). The rules we adopt today change this definition.

16 Interpretation of the term "pro rata" was contested in the 2007 rule making. Some parties argued that when there is no statutory definition, the dictionary definition of "equal proportions" prevails, while others argued that the commission's definition should provide flexibility to account for uneven ramp rates typically found in new conservation programs. In 2007, the commission promulgated rules providing flexibility in the definition of "pro rata" because utilities needed to ramp up their conservation programs to comply with the EIA, in some cases doubling their conservation efforts.

17 Now that we are in the third biennial cycle of conservation, programs are no longer ramping up and we find that there is less need for this flexibility, and a greater need for consistency and certainty.

18 In this rule, we propose a new definition of "pro rata" in WAC 480-109-060(19), consistent with its customary definition meaning equal proportions. This definition requires a utility's biennial conservation target to be at least twenty percent of its ten year conservation potential.

19 Northwest Energy Coalition (NWEC) supports the commission's proposed definition as the plain meaning of "pro rata," citing its arguments from the 2007 rule making.4 PSE and Pacific Power suggest retaining the flexibility provided in the current rule, and argue that this definition is inconsistent with the methodology found in the Northwest Power and Conservation Council's (council) Sixth Regional Power Plan (Power Plan).5

4 May 9, 2014, Comments of NWEC, at 5.

5 October 6, 2014, Pacific Power comment form, Comment 1; October 6, 2014, PSE comment form, Comment 1.

20 In projecting the conservation potential of the region, the council does not establish targets for specific utilities or indicate how individual utility targets should be established. Specifically, the EIA refers to the council's methodology in RCW 19.285.040 (1)(a) when describing the projection of a utility's ten year conservation potential, but the EIA does not mention the council's methodology in RCW 19.285.040 (1)(b) when establishing utilities' biennial conservation target. Therefore, using our definition of "pro rata" for the purpose of establishing an individual utility's conservation target does not conflict with the council's methodology for projecting conservation potential.

21 We note that Avista and Pacific Power's approved 2014-2015 biennial conservation targets are lower than would be required under this definition.6 This order does not adjust Avista and Pacific Power's 2014-2015 biennial conservation targets; rather, the new definition of "pro rata" will apply when we set utilities' 2016-2017 biennial conservation targets.

6 Avista, UE-132045, Order 01 (December 19, 2013); Pacific Power, UE-132047, Order 01 (December 19, 2013).

2. Transmission voltage

22 The proposed rules included a definition of transmission voltage in WAC 480-109-060(30). PSE and Pacific Power suggested that the commission remove this definition as it is inconsistent with the way transmission voltage is defined by the utilities and other government agencies.7 To address this concern, we remove the definition and add to WAC 480-109-100 (3)(c)(iii) and 480-109-200 (8)(b) "For the purposes of this subsection, transmission voltage is one hundred thousand volts or higher." This more focused use of the term "transmission voltage" better reflects the limited use of that term in the statute and reduces the potential for misinterpretation.

7 October 6, 2014, Pacific Power comment form, Comment 2; October 6, 2014, PSE comment form, Comment 6.

3. Energy efficiency resource standard

23 WAC 480-109-100 codifies with minor changes the current process utilities use to identify conservation potential, develop, implement and adaptively manage conservation programs, establish and comply with biennial conservation targets, and evaluate conservation using cost-effectiveness tests. The commission established this process in previous orders approving utility biennial conservation plans and reports, with conditions, over the last three biennia. These orders imposed conditions on each utility that were negotiated by each utility, commission staff and stakeholders. The substance of the conditions varied slightly from utility to utility. For this section of the rule, our goal is to standardize those requirements and resolve ambiguity.

i. Pursue all

24 RCW 19.285.040(1) requires utilities to "pursue all available conservation that is cost-effective, reliable, and feasible." During the review of recent biennial conservation reports, parties disagreed about whether simply acquiring sufficient conservation to meet a biennial conservation target fulfills the requirement in the statute to "pursue all available conservation that is cost-effective, reliable, and feasible," or whether additional actions were necessary.8 This rule explicitly addresses this issue.

8 Dockets UE-100170, UE-100176, and UE-170177, In the Matter of Evaluating Electric Utility Conservation Achievements Under the Energy Independence Act, chapters 19.285 RCW and 480-109 WAC, Staff Comments, at 6-7 (July 16, 2012). See also Dockets UE-100170, UE-100176, and UE-170177, In the Matter of Evaluating Electric Utility Conservation Reports Under the Energy Independence Act, chapters 19.285 RCW and 480-109 WAC, Staff comments, at 14-15 (March 5, 2010).

25 WAC 480-109-100(1) defines the process utilities must follow to meet the obligation to pursue all required conservation. The steps of this process are consistent with the process utilities currently follow to manage their conservation efforts prudently. First, a utility must identify the cost-effective, reliable, and feasible conservation potential in its service territory, as required by RCW 19.285.040 (1)(a). WAC 480-109-100(2) provides additional detail about how a utility develops its ten year conservation potential.

26 Second, a utility must develop a portfolio designed to acquire available conservation identified in the potential. Utilities currently develop conservation portfolios designed to achieve or even exceed the biennial conservation target, the requirements for which are described in additional detail in WAC 480-109-100(3). As conservation programs have matured through the implementation of the EIA, it has become apparent that there are more types of conservation available than just end-use efficiency measures. As a result, the rule identifies a list of conservation types in WAC 480-109-100 (1)(b) that utilities must consider in the development of conservation portfolios.

27 The third, and arguably most important part of the conservation process required by RCW 19.285.040(1), is to implement programs that acquire cost-effective conservation savings. Utilities retain the responsibility to implement these programs.

28 Fourth, utilities must engage in adaptive management of conservation portfolios, to ensure that portfolios appropriately respond to changing market conditions during a biennium. Adaptive management of a conservation portfolio includes conducting pilot programs of new technologies or new approaches to engage customers in conservation, as described in WAC 480-109-100 (1)(c), and is part of pursuing all achievable conservation resources.

29 In addition to the process identified in WAC 480-109-100(1), we added a definition of the phrase "pursue all" in WAC 480-109-060(21) to make it clear that pursuing all available conservation that is cost-effective, reliable, and feasible is a more rigorous process than just acquiring enough conservation to meet the biennial target.

30 PSE suggested deleting the definition of "pursue all" in WAC 480-109-060(21) because the language redefined the requirements of the law to activities beyond approval of conservation forecasts and biennial targets.9 Public counsel commented that it does not believe that the language of WAC 480-109-060(21) and 480-109-100(1) establish separate requirements beyond the law, and that the proposed rule will help ensure a robust process for conservation portfolio development, implementation, and adaptive management.10

9 October 6, 2014, PSE comment form, Comment 4.

10 October 6, 2014, Public counsel comment form, Comment 1.

31 We reject PSE's argument that WAC 480-109-060(21) and 480-109-100(1) establish new requirements. Rather, the rule language describes a process that the utilities are already largely required to follow by statute, rule, and commission orders. We believe that each of these steps is an important element of ensuring prudent expenditure of ratepayer funds on conservation resources. Utilities' current conservation processes and plans are generally consistent with the rule we adopt today. Currently, each utility implements programs to acquire conservation savings from end-use efficiency, behavioral programs, and market transformation; additionally, each utility considers the availability of savings from production and distribution efficiency in the development of its biennial conservation plans. The only element of process we are listing explicitly for the first time is the consideration of all of the types of conservation in WAC 480-109-100 (1)(b).

32 Avista voiced uncertainty at the May 15, 2014, workshop regarding how a utility would demonstrate compliance with the requirements of WAC 480-109-100(1). Utilities will demonstrate compliance by submitting the plans and reports required in WAC 480-109-120 that document the actions taken to meet these requirements. Should a stakeholder believe a utility is deficient in meeting the requirements of WAC 480-109-100(1), it is appropriate for that stakeholder to raise the issue with the advisory group. Failing resolution through the advisory group process, a stakeholder may raise the issue with the commission during our review of the plans or reports in WAC 480-109-120. The commission retains the authority to impose appropriate conditions on the utility to remedy the deficiency, although the requirements of this section are not subject to the monetary penalties of RCW 19.285.060(1).

33 PSE suggested that the use of the phrase "emerging conservation technologies" in WAC 480-109-100 (1)(a)(iv) introduces ambiguity and could impact the development of conservation potential assessments.11 We recognize that there is no single industry definition of "emerging conservation technologies" and do not attempt to define the term in this rule. However, our intention is that "emerging conservation technologies" encompasses technologies that are available but not widely deployed, face barriers to achieving market penetration, or are under development.12 We look to utilities and their advisory groups to determine which technologies are appropriate to consider adding to a conservation portfolio.

11 October 6, 2014, PSE comment form, Comment 7.

12 The council also considers emerging technologies where appropriate. "[T]he conservation assessment incorporates new conservation opportunities brought about by technological advances." Sixth Northwest Conservation and Electric Power Plan, Northwest Power and Conservation, at 4-4 (February 2010), available at http://www.nwcouncil.org/media/6365/SixthPowerPlan_Ch4.pdf.

34 We are not persuaded by PSE's second argument that assessing emerging technologies would complicate conservation potential assessments. During program implementation, utilities must consider conservation savings from a variety of sources, including emerging technologies, as part of adaptive management of their conservation portfolios. This work is essential to the development of new programs during a biennium, and is not reserved to the conservation potential assessment.

35 Lastly, we make a few minor changes to improve clarity and consistency with the statute. PSE suggested that WAC 480-109-100 (1)(c) specify that pilots should be expected to be cost-effective within the current or immediately subsequent biennium.13 We agree, and add "within the current or immediately subsequent biennium" to WAC 480-109-100 (1)(c).

13 October 6, 2014, PSE comment form, Comment 8.

36 In WAC 480-109-100 (2)(a) we add the word "available" so the rule more closely mirrors RCW 19.285.040(1). Similarly, we replace "all achievable conservation" in WAC 480-109-100 (3)(a) with "all available conservation that is cost-effective, reliable and feasible" to improve consistency with the statute.

37 PSE and NWEC suggested that consistent language be used in the three places of WAC 480-109-100 (3)(c) that describe "the immediately subsequent two" biennia or biennial conservation targets.14 We agree and change the proposed rule to provide consistency.

14 October 6, 2014, PSE comment form, Comment 11; October 6, 2014, Comments of NWEC, at 1.

ii. Energy savings values and protocols

38 WAC 480-109-100(5) codifies existing precedent requiring utilities to use the regional technical forum's (RTF) unit energy savings values and protocols, unless a utility demonstrates to its advisory group that another value or protocol is based on generally accepted methods, impact evaluation data, or other reliable and relevant data that include verified savings levels. The proposed rule allowed non-RTF values to be used only by commission order. Pacific Power, PSE, and public counsel commented that requiring a commission order to use non-RTF values would create a significant administrative burden. We agree and remove the provision requiring a commission order for the use of non-RTF values.

iii. Low-income conservation

39 We recognize that conservation measures implemented at low-income residences have significant nonenergy benefits that are difficult to quantify, such as improved health, safety, and comfort. Low-income conservation programs often face higher barriers, and therefore costs, than other programs, such as generally older housing stock, a higher proportion of renters, and the availability of disposable income. As a result, utility low-income programs may struggle to demonstrate cost-effectiveness.

40 Utilities contract with community action agencies to determine participant eligibility and implement conservation measures. When agencies use federal weatherization assistance program funds, the conservation measures must be evaluated for cost-effectiveness using the savings-to-investment ratio (SIR) or targeted residential energy analysis tools (TREAT model), as described in the Weatherization Manual developed and maintained by the Washington state department of commerce (commerce), and which we adopt by reference in WAC 480-109-999(2). Using this approach, cost-effectiveness is determined on a project-by-project basis.

41 WAC 480-109-100 (10)(a) allows utilities to fully fund low-income conservation measures that are determined to be cost-effective consistent with the procedures in the Weatherization Manual, as well as associated repairs, administrative costs, and health and safety improvements. The Weatherization Manual is used by agencies across the state, and we believe using this existing framework could lessen the administrative burden on utilities and the community action agencies. WAC 480-109-100 (10)(b) allows utilities to exclude low-income conservation from portfolio-level cost-effectiveness screens. The SIR is a different cost-effectiveness test than the utilities use for the rest of the conservation portfolio, so it is reasonable to make separate calculations. In recognition that low-income conservation programs have significant nonenergy benefits, we find it appropriate for utilities to maintain robust low-income conservation offerings despite the unique barriers these programs face.

42 WAC 480-109-100 (10)(c) requires utilities to count savings from low-income conservation programs toward biennial conservation targets consistent with the test used to evaluate low-income program cost-effectiveness.

43 The proposed rule, WAC 480-109-100(8), addressed low-income conservation and we received substantial comments from stakeholders on this issue, both before and after the adoption hearing. The energy project commented that commerce had updated the title of the Weatherization Manual since we initiated this rule making.15 It suggested that the rule allow the use of the priority list developed by commerce and approved by the United States Department of Energy. The energy project also noted that the SIR indicates which measures should be installed, but fails to give an indication of what portion of the cost utilities should cover.

15 October 6, 2014, Comments of the energy project.

44 We appreciate the energy project's first comment and have used the updated title of the Weatherization Manual in the adopted rule. In our effort to reduce the administrative burden of low-income conservation programs, we agree with the energy project's suggestion to include the priority list of measures and the adopted rule allows for its use at WAC 480-109-100 (10)(a).

45 We also agree with the energy project that community action agencies face significant challenges in securing sufficient funding to cover costs not paid by utilities. Utilities do not always pay the full amount of low-income conservation measures or associated administrative costs. WAC 480-109-100 (10)(a) allows, and we encourage, utilities to fully fund low-income conservation measures determined to be cost-effective using the procedures of the Weatherization Manual, as well as associated repairs, administrative costs, and health and safety improvements. The rule does not require utilities to fully cover all of these costs because we are concerned that such a requirement could be in conflict with utilities' existing contracts with community action agencies. Further, it is appropriate for the utilities to discuss the level of incentive payments with their advisory groups.

46 Pacific Power suggested striking all references to evaluating the cost-effectiveness of low-income conservation programs until a review of all the possible ramifications of such a change could be evaluated with its advisory group.16 Pacific Power also raised concerns about how the SIR would impact the conservation potential assessment and integrated resource planning.

16 October 6, 2014, Pacific Power comment form, Comment 8.

47 Acknowledging Pacific Power's first concern, we revise the rule language to allow, rather than require, utilities to pursue low-income conservation that is cost-effective consistent with the procedures of the Weatherization Manual. We recognize that there may be implementation challenges, and expect the utilities to consult with their advisory groups and community action agencies prior to making any change. Regarding Pacific Power's second concern, we note that conservation potential assessments and integrated resource plans consider the total amount of conservation available and do not distinguish between low-income and nonlow-income residential conservation opportunities. Utilities determine the appropriate mix of low-income residential and other measures to pursue in the course of developing a conservation portfolio, not in the development of a conservation potential assessment or integrated resource plan.17 Therefore, there is no conflict between using the procedures of the Weatherization Manual and conservation potential assessments and integrated resource plans.

17 The different steps discussed here are outlined in WAC 480-109-100 (1)(a).

48 PSE commented that requiring utilities to use the procedures of the Weatherization Manual would increase administrative burden and costs.18 To address this concern of increased burdens and costs, we revise the rule language to be permissive rather than mandatory. We expect utilities to explore with their advisory groups and community action agencies ways to minimize the administrative burden of implementing WAC 480-109-100(10), while maintaining sufficient review of cost and savings assumptions.

18 October 6, 2014, PSE comment form, Comment 17.

49 ICNU suggested that WAC 480-109-100 (8)(a) specify that the portfolio-level cost-effectiveness analysis include administrative costs, in light of the increasing administrative costs that will be incurred in implementing the proposed rule.19 We decline to do this. First, we expect the change to use the procedures of the Weatherization Manual to reduce administrative costs. Second, we find this change unnecessary because administrative costs are already included in the portfolio-level cost-effectiveness test.

19 October 6, 2014, ICNU comment form, Comment 1.

50 NWEC commented that recognizing the unique benefits and costs of low-income conservation programs is appropriate and that the use of the procedures in the Weatherization Manual is appropriate for determining the cost-effectiveness.20 Further, NWEC suggested that the rule clarify that the Weatherization Manual may be updated over time and that utilities should use the most current version. We believe the inclusion of the Weatherization Manual in WAC 480-109-999(2) achieves this flexibility.

20 October 6, 2014, Comments of NWEC, at 2.

4. Conservation advisory group

51 WAC 480-109-110 codifies, with minor changes, certain conditions of our orders approving biennial conservation plans over the last three biennia regarding utility engagement with conservation advisory groups.21 As utility conservation efforts have matured with the implementation of the EIA, so have our expectations for utility engagement with their conservation advisory groups. Therefore, we find it appropriate to codify in rule those requirements that we do not expect to change in the future.

21 See supra, n.3, listing commission orders approving biennial conservation plans with conditions.

52 Although this section incorporates many of the conditions found in utilities' current conservation orders, we did not include every condition in rule. Certain conditions lack broad applicability across companies or biennia, and in those cases we find it appropriate to use different approaches for different utilities. The full effect of other newer conditions is not yet known. Therefore, we do not believe them ripe for inclusion in rule at this time. As conservation programs continue to evolve and mature under the EIA, we expect that some conditions will stabilize, some will cease to be necessary, and others will be added as utilities address new challenges.

53 WAC 480-109-110(1) describes the range of issues we expect utilities to discuss with their advisory groups. In the proposed rule, subsection (1) addressed specific aspects of conservation programs and measures. In the rule we adopt today, we add "conservation programs and measures" to WAC 480-109-110 (1)(a) to make explicit that conservation advisory groups should address all aspects of conservation programs and measures.

54 WAC 480-109-110(2) requires utilities to meet at least four times per year, with reasonable notice provided. The format of these meetings is not specified because we encourage advisory groups to hold meetings in formats other than in person. WAC 480-109-110(3) standardizes the timing in which utilities must provide draft filings to conservation advisory groups. WAC 480-109-110(4) requires utilities to inform conservation advisory groups of company or commission public meetings addressing conservation programs, tariffs, or the development of conservation potential assessments.

i. New programs

55 WAC 480-109-110 (1)(m) requires utilities to discuss the development and implementation of new and pilot programs with their conservation advisory groups. Public counsel commented that the proposed rule did not include a specific requirement for utilities regarding new programs that are initiated mid-biennium and not included in the biennial or annual conservation plans.22 Public counsel noted that each of the utilities was subject to a condition requiring the utility to present the details of new programs to its advisory group, and suggested similar language for WAC 480-109-120 (1)(c). Public counsel's suggested language would have also required utilities to file an update or addendum to the biennial or annual conservation plan when new programs go into effect.

22 October 6, 2014, public counsel comment form, Comment 3.

56 We agree with public counsel that utilities should discuss new programs with conservation advisory groups, and add WAC 480-109-110 (1)(m). However, we reject public counsel's suggestion requiring utilities to file an update or addendum to the relevant conservation plan in all circumstances because we believe that would place an unnecessary administrative burden on utilities. While an update or addendum to the relevant conservation plan is appropriate when utilities make significant additions or modifications to their conservation programs, we decline to adopt a rule that would require such a filing in all circumstances. A utility should file an update or addendum to its relevant conservation plan when requested by its conservation advisory group as a result of significant additions or modifications to conservation programs.

ii. Advance notice of filings exception

57 WAC 480-109-110(3) requires utilities to provide conservation advisory groups with a draft copy of filings thirty days in advance of the filing. The purpose of this requirement is to give advisory group members sufficient time to ask questions and suggest possible changes, and to give utilities sufficient time to address suggested changes in the filings.

58 PSE objected to this requirement because, unlike other utilities, it is required under its current ordering conditions to provide a draft sixty days in advance of the effective date of filings and meet specific biennial conservation plan deliverable dates.23 Additionally, PSE requested that an exception to the advance filing requirement be allowed for the annual conservation cost recovery adjustment filing required in WAC 480-109-100 - 480-109-130.

23 October 6, 2014, PSE comment form, Comment 20. See also Puget Sound Energy, Docket UE-132043, Order 01, Attachment A, Condition (8)(d).

59 We recognize that due to the limited availability of information required for the conservation cost recovery adjustment filing, it would be difficult for PSE to provide a draft thirty days prior to filing with the commission. Further, the current conditions for each utility require the annual conservation cost recovery adjustment filings to be made sixty days before its effective date. We believe this provides sufficient time for the review, and therefore, in the adopted rule we exempt the conservation cost recovery adjustment filings at WAC 480-109-130 from the advance notification of filings requirement at WAC 480-109-110(3).

60 PSE and NWEC suggested that the rule allow utilities to provide a copy of filings concurrent with filing with the commission.24 We reject this suggestion. Although circumstances may arise that delay or prevent a utility from providing an advance copy of filings to its conservation advisory group, a utility may request an exemption from the rule as provided by WAC 480-109-030 and 480-07-110. We believe this provision provides sufficient flexibility in extraordinary circumstances.

24 October 6, 2014, PSE comment form, Comment 20; October 6, 2014, Comments of NWEC, at 2.

5. Conservation planning and reporting

61 WAC 480-109-120 codifies the current conservation planning and reporting process with minor changes. In odd-numbered years, a utility submits a biennial conservation plan. In even-numbered years, it submits a biennial conservation report and annual conservation plan. Each year, a utility submits an annual conservation report.

62 WAC 480-109-120 (1)(a) requires utilities to file a biennial conservation plan on or before November 1 of odd-numbered years. Taken together with the advance notice provision of WAC 480-109-110(3), this rule requires utilities to provide an electronic copy of its biennial conservation plan to its advisory group thirty days earlier, in early October.25 Other sections of the rule require utilities to file an annual conservation plan on or before November 15 of even-numbered years, annual conservation reports on or before June 1 of each year, and biennial conservation reports on or before June 1 of even-numbered years. Nothing in this rule relieves a utility of the obligations found in its conservation orders and attached conditions lists.26 A utility may request modification or clarification of its orders as needed.

25 The requirements of a utility's conservation order and attached conditions list continue to apply. For example, condition 8(d) in Attachment A of Order 01 in Docket UE-132043 requires PSE to provide its advisory group a draft ten year conservation potential and two year target by August 1, 2015; draft program details, including budgets, by September 1, of the same year; and draft program tariffs by October 1, of the same year.

26 The requirements of a utility's conservation order and attached conditions list continue to apply. For example, condition 8(a) in Attachment A of Order 01 in Docket UE-132043 requires PSE to file an annual conservation plan by December 1. PSE must comply with condition 8(a) and WAC 480-109-120(2) by filing by November 15. Similarly, condition 8(b) in Attachment A of Order 01 in Docket UE-132047 requires Pacific Power to file an annual conservation report by March 31. Pacific Power must comply with condition 8(b) and WAC 480-109-120(3) by filing its annual conservation report by March 31.

63 This section also describes the contents, process for publication, and process for review of the various plans and reports. We are particularly pleased that this process provides the commission with an independent third-party evaluator's review of utilities' conservation potential and achievement.

64 PSE objected to the use of the term "evaluation" in proposed WAC 480-109-120 (3)(b)(iv) regarding portfolio- and program-level cost-effectiveness.27 Elsewhere in the rule, the term "evaluation" refers to impact, market, or process evaluations, typically those conducted by independent third parties. PSE also commented that the language in WAC 480-109-120 (3)(b)(iv) and (4)(b)(iv), which also addresses cost-effectiveness reporting, should be consistent.

27 October 6, 2014, PSE comment form, Comment 26.

65 We believe that it is appropriate for utilities to provide a narrative discussion of the inputs to and results of cost-effectiveness tests in annual and biennial conservation reports, and that such a discussion is consistent with the summary of steps taken to adaptively manage conservation programs required in WAC 480-109-120 (3)(b)(vi). We remove the word "evaluation" to prevent confusion with the independent third-party evaluations required in WAC 480-109-120 (3)(b)(v), and to promote consistency between the subsections (3)(b)(iv) and (4)(b)(iv). We also make grammatical edits to this subsection to clarify that a utility must report the portfolio- and program-level cost-effectiveness of conservation savings.

i. Commerce reporting

66 RCW 19.285.070 requires each qualifying utility to report to commerce on its annual progress toward meeting its targets. Commerce promulgated rules requiring consumer-owned utilities to submit this report.28 Commerce does not have authority to adopt rules regarding investor-owned utilities, as the EIA reserves that authority for the commission.29 Currently, the commission asks investor-owned utilities to provide the report described in WAC 194-37-060 to commerce, and proposed WAC 480-109-120 (3)(c) makes this an explicit requirement.

28 WAC 194-37-060.

29 RCW 19.285.080(1).

67 PSE objected to the requirement that each utility file with commerce the report described in WAC 194-37-060 because that chapter of the Washington Administrative Code does not apply to investor-owned utilities such as PSE.30 Additionally, PSE asserted that it provides the reports to commerce, rather than files them with commerce.31

30 October 6, 2014, PSE comment form, Comment 27.

31 October 6, 2014, PSE comment form, Comment 27.

68 We accept PSE's wording modification in WAC 480-109-120 (3)(c) and replace the word "file" with "submit." We also modify WAC 480-109-120 (5)(c) to clarify that the report referenced is the commerce report discussed here. However, we decline to accept PSE's argument that investor-owned utilities should not be required to submit reports to commerce. The reason our rules require investor-owned utilities to submit this conservation report is precisely because commerce lacks the authority to do so. State and federal policy makers rely on commerce's state wide data in evaluating energy policy. Requiring investor-owned utilities to report data in the same format as consumer-owned utilities enables administrative efficiency at commerce and ensures consistency in data from both investor- and consumer-owned utilities. Therefore, the rules we adopt today require investor-owned utilities to submit conservation reports in the form required by WAC 194-37-060.

6. Conservation cost recovery adjustment

69 We make several clarifications to proposed WAC 480-109-130, which codifies existing procedures utilities use to recover the costs of conservation programs. We add the word "cost" to the title and in subsections (1) and (2) to clarify that the tariff is for the recovery of costs. Accordingly, we modify proposed WAC 480-109-120 (3)(b)(iii) to reflect the new title of this section.

70 PSE requested several changes to the substance of this section. First, PSE requested that we add the word "all" to subsection (1).32 We agree, and add the word "all" to clarify that filings must not exclude expected changes in conservation costs and amortization of deferred balances.

32 October 6, 2014, PSE comment form, Comment 30.

71 Second, PSE requested that we modify this section to allow the recovery of nonconservation costs through this tariff, as PSE currently does.33 We decline PSE's request, because it is our preference that these tariffs include only the costs of conservation programs. These adjustments often appear on bills as a "conservation program charge," establishing an expectation that it only includes conservation costs.

33 October 6, 2014, PSE comment form, Comment 30.

72 Though we express our clear preference against the recovery of nonconservation costs from these tariffs, we see no need for a rigid rule prohibiting it. As PSE points out, in fact-specific circumstances we have allowed the recovery of nonconservation costs through these tariffs. Nothing in this rule prohibits the recovery of nonconservation costs through these adjustments, so there is no need to modify the proposed rules as PSE suggests.

73 Third, PSE requested that we add "or other rate recovery mechanisms as allowed in RCW 80.28.303 et. seq." to the end of subsection (1).34 WAC 480-109-130 merely codifies our existing practice, and is not intended to add new requirements to conservation cost recovery adjustments. Moreover, RCW 80.28.303(5) allows the commission to adopt "any other policies or programs intended to encourage utility investment in improving efficiency." The commission's existing practice, and the rule that codifies it, is consistent with RCW 80.28.303. We therefore decline to make the change proposed by PSE.

34 October 6, 2014, PSE comment form, Comment 30.

74 Fourth, PSE requested that the inclusion of conservation cost recovery procedures in tariffs be permissive, not mandatory, because accounting procedures are more appropriately placed in accounting rules rather than tariffs.35 This section of the rule is modeled after WAC 480-90-233, the commission's purchased gas adjustment rule, which requires the inclusion of procedures in the tariff. We intend for our rules on cost recovery adjustments to be consistent and detailed; therefore we decline to make the suggested change.

35 October 6, 2014, PSE comment form, Comment 30.

75 Fifth, PSE suggested requiring a "subsequent true-up" to recover actual program costs of the prior year.36 The commission's purchased gas adjustment rule provides for recovery of actual program costs of the prior year without a subsequent true-up. In effect, each year's conservation cost recovery adjustment filing serves the function of a true-up for the previous year, because, as described in the third sentence of WAC 480-109-130(3), utilities must "include the effects of variations in actual sales on the recovery of conservation costs in the prior year." For the reasons described in the paragraph above, we decline to make this change.

36 October 6, 2014, PSE comment form, Comment 31.

76 Finally, PSE suggested two clarifications to the second sentence of proposed WAC 480-109-130(3). The first highlights the forward-looking nature of conservation cost recovery and the second clarifies use of the term "program" versus "measure." We accept PSE's addition of "forward-looking" before budgeted conservation, and accept the substitution of "programs" for "measures" in both places in the same sentence. This change allows PSE to recover direct administrative costs through the tariff and maintain its existing practice.

77 WAC 480-109-200 through 480-109-220 describe the process that a utility must follow to meet the requirement in RCW 19.285.040(2) to acquire eligible renewable resources. The commission developed this renewable portfolio standard reporting process over the last three years.37

37 The commission's orders evaluating each utility's renewable portfolio standard filings are in the dockets listed in the following table.

78 WAC 480-109-200 details the method for calculating a utility's renewable resource targets by year, the process for acquiring and using certificates for compliance with the EIA, and three options for calculating the amount of incremental hydropower eligible for EIA compliance. WAC 480-109-210 discusses renewable portfolio standard reports that a utility must file with the commission. WAC 480-109-220 describes alternatives to the renewable resource requirement.

1. Certificate definition

79 We revise proposed WAC 480-109-060(3) to add a definition of the term "certificate." This simplifies the rule by allowing a single word to refer to the ownership of nonpower attributes of energy from eligible renewable resources.

80 The EIA defines "renewable energy credit" (REC) in RCW 19.285.030(20), to mean a "tradable certificate of proof of [energy from] an eligible renewable resource where the generation facility is not powered by fresh water." In other words, the EIA allows the use of incremental hydropower to meet the state's RPS, but prohibits incremental hydropower from producing RECs.38

38 Under RCW 19.285.030 (12)(b), incremental electricity produced as a result of efficiency improvements at certain hydroelectric generation facilities after March 31, 1999, is an "eligible renewable resource," and "eligible renewable resources" may be used to meet the RPS requirement in RCW 19.285.040 (2)(a).

81 This prohibition created an unwieldy proposed rule, where we used the cumbersome paired terms "renewable energy credits and qualifying hydroelectric generation" and "renewable energy credits and eligible renewable resources" to reference the ownership of nonpower attributes of energy from an eligible renewable resource. Providing a definition of the term "certificate" simplifies the rule by allowing for a single word to mean the ownership of the nonpower attributes of renewable energy credits and qualifying hydroelectric generation.

82 Proposed WAC 480-109-210(6) required the final compliance report to include a list of the "renewable energy credits" retired in WREGIS. Because the rules we adopt today replace the term "renewable energy credits" with "certificates," we are aware that we are expanding this requirement to include WREGIS documentation of energy from qualifying hydroelectric generation. This is appropriate in light of proposed WAC 480-109-200(3) requirement that "All eligible renewable resource generation … used for utility compliance with the renewable energy standards must be registered in WREGIS, regardless of facility ownership."39

39 As discussed in ¶ 88, the version of WAC 480-109-200(3) we adopt today slightly modifies the proposed rule, but does not alter its meaning.

2. Renewable portfolio standard

83 WAC 480-109-200 details a utility's renewable resource targets by year, the process for acquiring and using WREGIS certificates for compliance with the EIA, the available methods for calculating incremental hydropower, and the use of qualified biomass energy.

i. WREGIS registration

84 Proposed WAC 480-109-200(3) required that "All eligible renewable resource generation and all renewable energy credits used for utility compliance with the renewable energy standards must be registered in WREGIS, regardless of facility ownership." We require the use of WREGIS because RCW 19.285.030(20) authorizes commerce to select a renewable energy credit tracking system, and the department selected WREGIS.40

40 WAC 194-37-040(17); WAC 194-37-210. The Western Renewable Energy Generation Information System has a web site at http://www.wregis.org.

85 The intent of this subsection is to codify commerce's decision and our precedent requiring utilities to use WREGIS to prevent double counting of renewable energy credits and qualifying hydroelectric generation.

86 The phrase "regardless of facility ownership" is a significant codification of our prior orders. In orders discussing the 2014 RPS reports, the commission ordered each utility to file a final compliance report listing the certificate numbers in WREGIS for every megawatt-hour and renewable energy credit that Avista, Pacific Power, and PSE retired to meet the January 1, 2014, target.41 We separate "every megawatt-hour" and "renewable energy credit" because we require each megawatt-hour of incremental hydropower used for RPS compliance to be registered in WREGIS.

41 PSE, Docket UE-140800, Order 01 ¶ 29 (July 31, 2014); Avista, Docket UE-140801, Order 01 ¶ 28 (July 31, 2014); Pacific Power, Docket UE-140802, Order 01 ¶ 28 (July 31, 2014).

87 Regardless of facility ownership, we require registration of each megawatt-hour of incremental hydropower used to further the statute's goals of tracking RPS compliance and preventing any two utilities from using the same megawatt-hour for compliance. In every order entered regarding utilities' RPS reports, the commission has expressed concern about double counting.42 While we cannot and do not direct consumer-owned utilities to register their resources in WREGIS, we do have the authority and responsibility to ensure that eligible renewable generation claimed by investor-owned utilities is counted only once. It is appropriate to do this by requiring that ownership of all eligible renewable generation be verified and documented within WREGIS.

42 See supra, n.37. Our most recent orders include this discussion at PSE, Docket UE-140800, Order 01 ¶ 29 (July 31, 2014); Avista, Docket UE-140801, Order 01 ¶ 28 (July 31, 2014); Pacific Power, Docket UE-140802, Order 01 ¶ 28 (July 31, 2014).

88 We make four clarifying changes to WAC 480-109-200(3). We title this subsection "WREGIS registration." We change "renewable resource generation and all renewable energy credits" to "hydropower generation and all renewable energy credits" to clarify that the requirement to register hydropower generation is in addition to the requirement to register RECs. We modify "renewable energy standards" to "renewable resource target" to match the title of WAC 480-109-200(1). These clarifications do not modify the substantive requirements of the proposed rule.

89 The fourth clarification we make is to add a sentence making explicit that "[a]ny megawatt-hour of eligible hydropower or renewable energy credit that a utility uses for compliance must have a corresponding certificate retired in the utility's WREGIS account." This sentence was not included in the proposed rule, however, as we discuss below, it codifies the commission's decisions in prior orders and is a logical extension of the registration requirement discussed above.43

43 The commission stated in its 2012 final compliance reports: "[A] utility must retire any WREGIS certificates associated with the RECs and generation being used for compliance. Retirement of the certificates means the corresponding credits are no longer available for use." PSE, Docket UE-120802, Order 02 ¶ 11 (July 24, 2014); Pacific Power, Docket UE-120813, Order 02 ¶ 10 (July 24, 2014); see Avista, Docket UE-120791, Order 02 ¶ 11 (July 24, 2014).

90 We include this requirement because a certificate that is not retired may be sold or traded. The only way to prevent multiple utilities from using the same megawatt-hour for compliance is to retire the certificate associated with that megawatt-hour. Thus, to comply with the EIA's requirement to "use eligible renewable resources or acquire equivalent renewable energy credits" means retiring "any WREGIS certificates associated with the RECs and generation being used for compliance."44 Preventing double counting is consistent with the EIA's policy to increase "the use of appropriately sited renewable energy facilities," and is a central premise of the renewable portfolio standard in the law.45

44 RCW 19.285.040 (2)(a); PSE, Docket UE-120802, Order 02 ¶ 11 (July 24, 2014); Pacific Power, Docket UE-120813, Order 02 ¶ 10 (July 24, 2014); Avista, Docket UE-120791, Order 02 ¶ 11 (July 24, 2014).

45 RCW 19.285.020.

91 NWEC and RN commented in support of the WREGIS registration requirement.46

46 October 6, 2014, Comments of RN and NWEC, at 3.

92 Avista asserts that the EIA does not require WREGIS registration of qualifying hydroelectric generation, and that this requirement will disqualify a significant amount of incremental hydropower it purchased because the seller does not wish to participate in WREGIS.47 Avista suggests that a consumer-owned utility certify that there is no double counting of its incremental hydropower.48 In an order discussing Avista's 2014 RPS report, the commission responded:

[T]he EIA does not expressly require eligible hydropower resources to be registered in WREGIS, but neither does the statute preclude the commission from adopting such a requirement. We conclude that the commission has discretion under the EIA to take actions to further the statute's goals of tracking RPS compliance and ensuring that resources are not being double counted. We exercise that discretion to require Avista to register in WREGIS all incremental hydropower facilities on which the company intends to rely to demonstrate RPS compliance.49

47 October 6, 2014, Comments of Avista, at 3-4.

48 Id.

49 Avista, Docket UE-140801, Order 01 ¶ 15 (July 31, 2014).

50 PSE, Docket UE-140800, Order 01 ¶ 15 (July 31, 2014); Pacific Power, Docket UE-140802, Order 01 ¶ 14 (July 31, 2014).

51 October 6, 2014, Chelan PUD, UTC Draft Incremental Hydro Language.

94 We considered the comments of Chelan PUD and the review process in this proceeding. The rule we adopt today requires a utility to file a final compliance report two years after the target year, demonstrating that it retired certificates in WREGIS for the target year.52 We find, based on the record in this proceeding, that registration of certificates in WREGIS does not present a significant administrative burden on utilities.53 Our rule provides utilities two years between the target year and the final compliance report. That is sufficient time for the owners of qualifying hydroelectric facilities to register their incremental hydropower production in WREGIS, transfer the certificates to a utility, and for that utility to retire the certificates.54

52 WAC 480-109-210(6).

53 At the adoption hearing, Avista noted that it registers its incremental hydropower facilities in WREGIS and does not find the administrative burden to be onerous. Clint Kalich for Avista, November 5, 2014, Audio Recording, at 6:55-11:15.

54 If a utility purchasing incremental hydropower is unable to comply with this requirement when submitting its 2013 final compliance report in 2015, it may provide documentation and request a one-time exemption from this rule. The commission's orders regarding the 2014 RPS reports included clear direction regarding this issue. See supra, nn.49-50. Therefore, we do not anticipate that compliance with the rule will present a problem in the 2014 or subsequent final compliance reports.

ii. Incremental hydropower calculation

95 We now discuss the process that utilities use for calculating incremental hydropower. Proposed WAC 480-109-200(7) incorporated the commission's precedent regarding how utilities calculate the incremental production of their upgraded hydropower facilities, which may be counted as eligible renewable energy.55 While the EIA recognizes incremental hydropower as an eligible renewable resource, it does not prescribe how utilities should calculate it. A stakeholder workgroup convened under Docket UE-110523 identified three methods for a utility to make this calculation; we have recognized and allowed each of those methods. We incorporate these methods into the rule with minor refinements based on stakeholder comments and experience reviewing the methods during the last two RPS reporting cycles.

55 RCW 19.285.030 (12)(b).

96 We revise proposed WAC 480-109-200 (7)(a) to make several clarifications. We require that a utility must use the same method across all hydropower facilities that it owns to prevent a utility from selecting a different method for each facility based on which method offers the most favorable outcome for that facility. We prohibit a utility from changing methods to prevent a utility from selecting a different method each year based on which method offers the most favorable outcome given that year's circumstances. Additionally, requiring each utility to use one method will lessen the administrative burden on the commission and stakeholders reviewing the RPS reports.

iii. Incremental hydropower: Method one

97 WAC 480-109-200(7)(b) explains method one. In this method, a utility determines the river discharge at a given facility during the target year, then runs it through two power-curve production models, one representing the preupgrade facility and the other representing the upgraded facility. The utility reports the difference between the two as the facility's incremental hydropower production.

iv. Incremental hydropower: Method two

98 WAC 480-109-200 (7)(c) explains method two. In this method, a utility determines the river discharge at a facility during each year of a historical period of at least five consecutive years, then runs each year's discharge through two power-curve production models – one representing the preupgrade facility and the other representing the upgraded facility. The utility then calculates the mean production of the preupgrade facility and the mean production of the postupgrade facility during the historical period, then determines an efficiency gain factor by dividing the mean production of the upgraded facility by the mean production of the preupgrade facility and subtracting one. Once this is done, the utility multiplies the facility's production each year by the factor that it calculates and reports the resulting figure as the facility's incremental hydropower production. Pacific Power uses method two for calculations from the facilities it owns.

v. Incremental hydropower: Method three

99 WAC 480-109-200 (7)(d) explains method three. This method is similar to method two in that a utility determines the river discharge at a facility during each year of a historical period of consecutive years, then runs each year's discharge through two power-curve production models. However, rather than determining a factor as in method two, the utility subtracts the mean production of the preupgrade facility from the mean production of the upgraded facility and reports the difference as the facility's incremental hydropower production in perpetuity. Since the reporting began in 2012, staff has consistently expressed reservations with this method, which as a one-time calculation would not capture the effect of future changes in long-term stream flow patterns.56 As a result, the proposed rule characterized method three as a pilot method. Avista uses method three for calculations from its facilities.

56 Dockets UE-140800, UE-140801, and UE-140802, commission staff comments regarding 2014 Renewable Resource Reports, at 7 (June 30, 2014).

100 We revise the treatment of method three from the proposed rule to remove language that designates method three as a pilot method that would expire after 2017. This change makes the rule more closely reflect the commission's intent outlined in previous orders. In the order approving Avista's 2013 RPS target, the commission agreed with Staff's assertion that comparing method three, which calculates incremental hydropower production using solely historical data, to method two, which includes an annual calculation, will aid the evaluation of method three.57 Method three may prove less reliable over time because climate models indicate that the region's summer river flows may decline over time.58 To address this matter, the commission directed Avista, the only utility using method three at the time, to provide an analysis in its final compliance report comparing the amount of incremental hydropower that the company claimed since 2012 using method three to what it would have claimed had it used method two over the same period.59

57 Avista, Docket UE-131056, Order 01 ¶ 26 (September 9, 2013).

58 United States Environmental Protection Agency, Climate Impacts in the Northwest (January 13, 2015, 1:41 PM), http://www.epa.gov/climatechange/impacts-adaptation/northwest.html.

59 Avista, Docket UE-131056, Order 01 ¶ 44 (September 9, 2013).

101 In comments on the proposed rule, Avista objected to method three's designation as a pilot method, arguing that such treatment was not consistent with the commission's order in the 2013 RPS docket and unfairly prejudged the method.60 Avista also provided a comparison of the results of method three to the other two methods over a ten year period for its facilities on the Clark Fork River.61 This analysis showed that the variance between the methods is small, and that the company actually would have claimed slightly less incremental hydropower over that period under method three than it would have with either of the other methods.62

60 October 6, 2014, Comments of Avista, at 4-6.

61 October 6, 2014, Comments of Avista, at 4-6.

62 October 6, 2014, Comments of Avista, at 4-5.

102 Based on the analysis Avista provided on October 6, 2014, we agree that designating method three as a pilot method is not appropriate. Avista's analysis demonstrates that method three provided an accurate calculation of incremental hydropower production by the company's facilities between 2002 and 2011. We therefore revise the proposed rule by removing the pilot designation in the first sentence of WAC 480-109-200 (7)(d) and adding a new subsection regarding the five-year evaluation. In the rule we adopt today, WAC 480-109-200 (7)(e) states that beginning in 2019 and every five years thereafter, any utility using method three must provide an analysis comparing that method with one of the other two methods for every year method three was used. Given that no other utility is currently using method three, and that Avista provided data demonstrating that method three is performing satisfactorily for its facilities on the Clark Fork River at present, it is appropriate to "reset" the five-year clock to begin in 2019.63

63 October 6, 2014, Comments of Avista, at 4-6. Avista also owns incremental hydropower facilities on the Spokane River, but did not provide the comparison for those smaller facilities. The Clark Fork River facilities comprise approximately eighty-nine percent of the certificates generated from eligible hydropower facilities that Avista owns. Avista, Docket UE-140801, Compliance Report of Avista Corporation, at 5 (May 30, 2014).

103 We also add the last sentence of WAC 480-109-200 (7)(e) to clarify that the commission may order a utility to use a different method if the analysis shows that the utility claimed a significantly different amount of incremental hydropower using method three compared to what it would have claimed using one of the other methods.

vi. Incremental hydropower: Historical period length

104 The commission discussed the length of the historical period required for the calculation in methods two and three in each RPS compliance cycle. Beginning in 2013, staff consistently advocated a historical period of at least five years, with a preference for at least ten years of data.64 In a notice issued on April 9, 2014, the commission asked stakeholders to: (1) Consider changing river discharge rates as a result of climatic variability and cyclical climate patterns, and (2) examine the incremental hydro models and recommend an appropriate number of years for the historical period used in methods 2 and 3, balancing the commission's desire for increased precision against the administrative burden of managing large data sets. Avista was the only utility to provide a full response to this request.

64 Dockets UE-131056, UE-131063, and UE-131072, staff comments regarding 2013 RPS Reports, at 18 (July 1, 2013).

105 Avista analyzed periods of five, ten, twenty, and eighty years, and based on the tradeoffs between increased accuracy and increased administrative burden, recommended a period of at least ten years.65 PSE did not respond to the question in written comments, but company representatives stated at the May 15, 2014, workshop that the period should probably be longer than five years. Pacific Power stated that five years is appropriate because that was the consensus reached by the workgroup in Docket UE-110523, but did not provide analysis in support of its statement.66 At the May 15, 2014, workshop Pacific Power informed the commission that it recently updated its method two calculation to include a six year historical period, an approach consistent with the requirements in Oregon. Pacific Power stated that it would like to use the same method in both states, as performing two different calculations would impose additional administrative burden.

65 May 9, 2014, Comments of Avista, at 2-3.

66 May 9, 2014, Comments of Pacific Power, at 5.

106 As methods two and three vary in their ability to account for long-term variation in river flows, it is appropriate to require different historical periods for methods two and three. Method two uses a historical period to determine a factor that is then applied to actual generation each year. As a result, actual river discharge and the resulting generation in the target year is the most important variable driving how much incremental hydropower a utility claims. Method three's calculation, by contrast, is based solely on the historical period and not on actual river discharge and generation in the target year. Therefore, in method two it is less important to require a long historical period that accounts for a broad range of river flow conditions, as use of actual river discharge and generation each year will ensure that long-term variations are reflected in the calculation. By the same logic, it is more important to ensure that method three's historical period is large enough to account for a wide range of river discharge conditions.67

67 Dockets UE-140800, UE-140801, and UE-140802, staff comments on 2014 Renewable Resource Reports, 7 (June 30, 2014).

107 In weighing the concerns raised by staff and stakeholders, we agree with Pacific Power that a historical period of at least five years is appropriate to use with method two, given that method's reliance on actual generation data each year. Any gains in accuracy that could be achieved by using a historical period of more than six years would likely not justify the increased burden. Accordingly, we require that method two calculations use a historical period of at least five years.

108 As noted above, we believe that method three requires a longer historical period to account for the wide variability of river discharge conditions. Ten years represents a fair tradeoff between the need for greater accuracy and our desire to limit the administrative burden on utilities.

3. Renewable portfolio standard reporting

109 WAC 480-109-210 outlines the components of RPS reports that utilities must file with the commission and the two-step reporting process for monitoring RPS compliance. In this process, each utility must file an annual report by June 1 that identifies the resources that the utility has acquired or contracted to acquire to meet its target for that year. Then, as explained in proposed WAC 480-109-210(6), the utility must file a second report within two years, documenting that it retired enough WREGIS certificates to meet its target. This process is unchanged from the proposed rule and consistent with the process the commission has required in previous orders.68

68 See e.g., Avista, Docket UE-131056, Order 01 ¶ 2 (September 9, 2013); Pacific Power, Docket UE-131063, Order 01 ¶ 2 (September 9, 2013); PSE, Docket UE-131072, Order 01 ¶ 2 (September 9, 2013). Avista, Docket UE-120791, Order 01 ¶ 54 (September 13, 2012); Pacific Power, Docket UE-120813, Order 01 ¶ 60 (September 13, 2012); PSE, Docket UE-120802, Order 01 ¶ 50 (September 13, 2012).

110 The section also prescribes a uniform methodology that utilities must employ in calculating the incremental cost of RPS compliance, as required by RCW 19.285.070(1). It institutes additional reporting requirements to assist staff in reviewing the prudency of the utilities' renewable resource and certificate management.

111 RN and NWEC ask us to clarify that "the target year" in WAC 480-109-210(1) refers to the target of the same year in which the report is filed.69 That is out [our] intent. However, we decline to change "the" to "that," as NWEC suggests, because we believe the rule and this order clearly reflect our intent.

69 October 6, 2014, Comments of RN and NWEC, at 1.

i. Incremental cost methodology

112 RCW 19.285.070 requires utilities to report "the incremental cost of eligible renewable resources and the cost of renewable energy credits." RCW 19.285.050 (1)(b) defines this as:

[T]he difference between the levelized delivered cost of the eligible renewable resource, regardless of ownership, compared to the levelized delivered cost of an equivalent amount of reasonably available substitute resources that do not qualify as eligible renewable resources, where the resources being compared have the same contract length or facility life.

113 However, the EIA does not prescribe precisely how this calculation should be performed. The absence of a defined method for calculating incremental costs has resulted in diverging approaches among utilities, which, according to staff, "precludes a valid assessment of the overall added expense to Washington ratepayers of complying with the renewable portfolio standard."70 There is a clear public interest in publishing incremental cost data that is accurate and comparable across utilities.

70 Dockets UE-131056, UE-131063, and UE-131072, Staff comments regarding 2013 RPS Reports, at 12 (July 1, 2013).

114 The methodology we codify today emerged from a collaborative and iterative process involving staff, utility representatives, and other stakeholders.71 Stakeholders provided a number of constructive, clarifying comments that we incorporated into the rules adopted today, and we are not aware of any outstanding concerns related to this methodology.72

71 We recognize that the incremental cost methodology we adopt today does not include all the benefits associated with renewable resources. Other benefits may include reduced exposure to fuel price risk, reduced carbon emissions, reduced exposure to market price risk, and potentially lower market prices. While the complexity of creating an incremental cost framework precluded the type of in-depth analysis that would have been required to address these topics in this proceeding, we may choose to address them in the future.

72 October 30, 2014, Supplemental comments of PSE; November 7, 2014, Additional comments of Avista.

a. Historic acquisitions

115 We add language to proposed WAC 480-109-210 (2)(a)(i) clarifying that where a utility calculates the incremental cost of historic resource acquisitions, it must use the information that was available at the time of the resource's acquisition.

b. Renewable resource integration study

116 ICNU asks us to clarify that a utility's renewable resource incremental cost should be the same as that determined in the wind integration study of the utility's most recent integrated resource plan.73 Our intent in WAC 480-109-210 (2)(a)(i)(A) is to give each utility the ability to determine integration costs based on the unique characteristics of its system, and ICNU's proposal is consistent with that intent. We revise proposed WAC 480-109-210 (2)(a)(i)(A) to incorporate this suggestion, but use the more generic phrase "renewable resource integration study" rather than "wind integration study."

73 October 6, 2014, ICNU comment form, Comment 2.

c. Eligible resource capacity value

117 Proposed WAC 480-109-210 (2)(a)(i)(B) instructed utilities to estimate the amount of capacity a renewable resource produces by modeling the renewable resource's output at the time of the utility's peak. We revise this subsection to give utilities more flexibility in determining the capacity value of a renewable resource.

118 RN commented that the proposed rule offered an inaccurately low capacity value by examining only the production of a renewable resource in a single hour of the year.74 Instead, RN suggested that utilities use an approximation of the effective load carrying capability method, which determines a capacity value for renewable resources based on their contribution to reducing outages on the utility's system. At hearing, ICNU and Avista suggested requiring a utility to value capacity in the same way it does in its integrated resource plan.75 This would allow a utility [to] use a capacity value vetted by stakeholders in the utility's advisory group, and ultimately reviewed and acknowledged by the commission. We note that Pacific Power has adopted a version of the effective load carrying capability approach for modeling the capacity value of renewable resources in the company's 2015 integrated resource plan, with the support of its advisory group.

74 October 6, 2014, Comments of Renewable Northwest and NWEC, at 1-2.

75 Clint Kalich for Avista, November 5, 2014, Audio Recording, at 15:00; Joshua Weber for ICNU, November 5, 2014, Audio recording, at 1:25:00-1:26:00.

119 While we support the use of approximations of the effective load carrying capability method, we recognize that this topic is the subject of ongoing research and we decline to require the use of a specific method at this time. Rather, we revise proposed WAC 480-109-210 (2)(a)(i)(B) to state that a utility must "[i]dentify the capacity value of each eligible renewable resource as calculated in the utility's most recent integrated resource plan acknowledged by the commission." This approach allows utilities to adopt emerging best practices after advisory group and commission review.

d. Noneligible resource cost assumption

120 Proposed WAC 480-109-210 (2)(a)(i)(E) requires utilities to use their most recently acknowledged integrated resource plan for determining the lowest cost, noneligible resource for the capacity portion of the incremental cost calculation. Avista suggested allowing utilities to use cost information from other sources, on the grounds that the cost information included in the most recently acknowledged integrated resource plan may be outdated. We recognize Avista's concern and in the rule we adopt today allow a utility to use cost information from another source, with documentation of that source and an explanation of why the cost data in that source is more accurate than the cost data in the utility's last integrated resource plan.

121 Pacific Power asks us to clarify that in a purchase power agreement, the life of the facility should equal the term of the agreement.76 We clarify proposed WAC 480-109-210 (2)(a)(i)(E) by adding "or contract length" to the length of time over which the noneligible resource's energy and capacity costs may be levelized.

76 October 6, 2014, Comments of Pacific Power, at 3.

e. Legacy resources

122 In comments on the proposed rule, Avista also suggested that utilities use zero dollars as the incremental cost of any eligible renewable resource that was acquired prior to the EIA's passage in 2006. Avista argued that since the EIA was not a factor in the acquisition of those resources, their costs should not be considered incremental for purposes of the EIA.77

77 October 6, 2014, Comments of Avista, at 8.

123 We decline to implement this suggestion, because doing so would assign a cost of zero to a large portion of the incremental hydropower resources that utilities use for compliance. While we recognize that the EIA may not have had an impact on a utility's decision to upgrade a hydropower facility prior to 2006, it does allow use of any renewable resource acquired after March 31, 1999, for compliance.78 Given that incremental hydropower facilities upgraded between 1999 and 2006 represent a significant share of the resources utilities use to meet their renewable resource target, Avista's suggestion would skew the incremental cost calculation. A complete and accurate incremental cost calculation includes the costs of all eligible incremental hydropower. Furthermore, the cost data for the noneligible resource to which the incremental hydropower resources will be compared are readily available in utilities' integrated resource plans.

78 RCW 19.285.030(12).

124 However, since the passage of the EIA, the Legislature has amended the law to allow certain qualified biomass facilities acquired prior to March 31, 1999, to count as eligible resources.79 It is likely that these older qualified biomass facilities were significantly depreciated before the Legislature allowed their use to meet the RPS, and will likely have a very small incremental cost. This does not justify the administrative burden associated with performing the calculation described in WAC 480-109-210 (2)(a). Therefore, we add subsection (2)(a)(i)(G), allowing a utility using an older qualified biomass facility to deem its incremental cost as zero.

79 RCW 19.285.030(18).

ii. Certificate sales

125 WAC 480-109-210 (2)(f) requires utilities to report the sale of certificates to the commission. PSE suggests that we delete this requirement because the EIA does not explicitly require that a utility disclose sales, and PSE is concerned that the reporting may disclose confidential information. We decline to delete this section, and note that the commission has rules for handling confidential information that PSE may invoke in its filing. Additionally, we note that utilities will include much of this information in the accounting of REC sales required by WAC 480-109-210 (2)(a)(ii) for an accurate calculation of incremental costs.

126 Pacific Power asks us to clarify that this requirement only applies to the sales of RECs allocated to Washington. We agree and make that clarification.

4. Alternatives to the renewable resource requirement

127 Proposed WAC 480-109-220 describes the alternatives to the RPS provided for in the EIA. Early in this proceeding, RN and NWEC requested that we modify the opening sentence of this section "to avoid the erroneous implication that qualifying for an alternative to the renewable energy target completely eliminates the need to use or acquire eligible renewable energy or RECs in that year."80 We agree and in the proposed rule we added "fully" as the third word of this section and to WAC 480-109-210 (2)(b), clarifying that it does not excuse a utility from using renewable energy to fulfill as much of its RPS obligation as possible. RN and NWEC support this proposal.81

80 May 9, 2014, Comments of RN and NWEC, at 6 (emphasis added); December 2, 2013, Comments of RN and NWEC, at 6.

81 October 6, 2014, Comments of RN and NWEC, at 4.

128 Proposed WAC 480-109-300 described reporting requirements for energy and emissions intensity metrics.82 Under this proposed rule, utilities must report annual values for each metric for the preceding ten calendar years. Metrics must be based on the annual energy or emissions from all generating resources providing service to customers in Washington, regardless of the location of the generating resources. For unknown generation, or "spot market" purchases, the utility shall report emission metrics using the average electric power carbon dioxide emissions rate described as the net system mix in the Washington state electric utility fuel mix disclosure reports compiled by commerce pursuant to RCW 19.29A.080. The report must include narrative text and graphics describing trends and analysis of the likely causes of changes, or lack thereof, in the metrics.

82 The report shall include the following metrics: (a) Average MWh per residential customer, (b) average MWh per commercial customer, (c) MWh per capita, (d) million tons of CO2 emissions, and (e) comparison of annual million tons of CO2 emissions to 1990 emissions.

129 In written and oral comments, RN and NWEC supported the inclusion of this section. RN cited the work of the 2013 Climate Legislative and Executive Workgroup, which identified the EIA as the state's most effective policy for reducing greenhouse gases,83 and stated at the hearing that the reporting requirements in this section will provide important performance metrics to evaluate the effectiveness of the EIA.84

83 October 6, 2014, Comments of RN and NWEC, at 3. The workgroup was established by the legislature. E2SSB 5802. Chapter 6, Laws of 2013. State of Washington Climate Legislative and Executive Workgroup (CLEW), Evaluations of Approaches to Reduce GHG Emissions in Washington State, October 14, 2013.

84 Dina Dubson Kelley for RN, November 5, 2014, Audio recording, at 1:00:02.

130 In contrast, PSE and Pacific Power recommended deleting this section in its entirety. PSE questioned the need for additional reports not specifically required in statute.85 Pacific Power also commented that this section lacks "appropriate statutory support or authorization," and that the multi-jurisdictional nature of its operations would make complying with this section unduly burdensome.86 Avista commented that the reporting requirements contemplated in this section warrant further discussion, and recommended that the commission hold a workshop.87

85 October 6, 2014, Comments of PSE, at 38.

86 October 6, 2014, Comments of Pacific Power, at 1.

87 October 6, 2014, Comments of Avista, at 9.

131 For the reasons we discuss below, we reject the utilities' requests to delete this section in its entirety. However, as there remain sufficient concerns over the methodology for reporting certain metrics, we do not adopt the rules in this order today. Instead, we direct staff to engage in further discussion with stakeholders to develop an appropriate methodology for the per capita measurement, as well as guidelines to allocate emissions for multistate utilities. After additional discussion, we plan to consider for adoption a proposed rule that includes reporting requirements for energy and emissions intensity metrics.

132 First, the commission has a responsibility to "ensure the proper implementation and enforcement of [the EIA] as it applies to investor-owned utilities."88 In this role, the commission has a duty to ensure that the EIA is implemented in a manner consistent with the policy goals of the statute. The EIA includes a stated policy goal to "increas[e] energy conservation."89 While the existing reporting requirements enable the commission to track biennial compliance, the statute contains no further guidance on how or how often the commission should track utilities' long-term progress toward meeting the state's conservation goals. We believe that developing energy intensity metrics is reasonable, and consistent with the EIA's goal to increase energy conservation in the state.

88 RCW 19.285.080(1).

89 RCW 19.285.020.

133 The EIA further states a policy to "protect clean air and water." Reducing greenhouse gas emissions clearly fits within this broad policy goal.90 In its January 2014 report to the legislature, the CLEW attributed more reductions in greenhouse gas emissions to the EIA over the next twenty years than any other state policy.91 While neither the drafters of Initiative 937 nor the legislature has specified how to measure the EIA's impact on the carbon intensity of generation used to serve Washington customers, establishing metrics to assess the EIA's effectiveness in reducing greenhouse gas emissions is appropriate.

90 Id.

91 The report attributed 10.9 MMTCO2e of greenhouse gas emissions reductions to the Energy Independence Act in 2035. A Report to the Legislature on the Work of the Climate Legislative and Executive Workgroup, at 10 (January 2014), available at http://www.governor.wa.gov/sites/default/files/documents/CLEWfinalCombinedReport20140130.pdf.

134 In addition to its authority under the EIA, the commission also has authority under RCW 80.04.080 to require companies subject to its jurisdiction to file periodic or special reports. Such reports include information based on metrics to assess the EIA's impact on the carbon intensity of generation used to serve Washington customers.

135 Second, we do not agree that reporting requirements would be unduly burdensome. At the adoption hearing, Pacific Power and PSE indicated that the data needed to calculate these metrics is available, and will likely continue to be available in the future.92

92 Etta Lockey and Mary Wiencke for Pacific Power, November 5, 2014, Audio recording, at 34:00-41:00; Eric Englert for PSE, November 5, 2014 Audio recording, at 57:00-60:00.

136 Pacific Power and PSE raised concerns about the use of non-utility data, such as census data, to report the MWh per capita metric in proposed WAC 480-109-300 (2)(c).93 We recognize that it may be difficult to reconcile utility service territories with census tract data. At the adoption hearing, PSE suggested that we consider adopting a metric for MWh per customer, instead of per capita, or use a factor to determine the number of people per meter.94 The impact of this change would depend on the average number of people per meter in each utility's service territory. Proposed WAC 480-109-300 (2)(a) and (b) provide energy intensity metrics on a per customer basis. Our intent in proposing the MWh per capita metric is to compare energy intensity across service territories while removing other factors, such as the number of multifamily dwellings and the average family size in each service territory.

93 October 6, 2014, Comments of Pacific Power, at 2.

94 Eric Englert for PSE, November 5, 2014, Audio recording, at 59:00.

137 At the adoption hearing, PSE stated that this challenge could be addressed by simply specifying the source of the per capita data.95 The company further speculated that it could obtain the data needed to meet this reporting requirement going back to the "early 2000s." Pacific Power also raised concerns about the administrative burden of the ten year look back required in the proposed rule.96 Pacific Power stated that, while it is not impossible to gather the necessary data, it would be "a burdensome exercise" to compile data going back ten years on a system-wide basis and allocate it to Washington.97 The result would not be the actual MWh delivered to Washington, but an approximation based on cost allocation across the six states in which the company operates. We recognize that Pacific Power does not currently allocate system-wide emissions on a state-by-state basis, and that it has no similar reporting requirement in other jurisdictions.

95 Eric Englert for PSE, November 5, 2014, Audio recording, at 57:30.

96 Etta Lockey for Pacific Power, November 5, 2014, Audio recording, at 33:00.

97 Mary Wiencke for Pacific Power, November 5, 2014, Audio recording, at 37:10-39:00.

138 As the companies acknowledge, the data required to calculate the proposed metrics is readily available.98 Collecting this data and reporting on energy and emissions intensity metrics will be instructive in guiding state energy policy. It may assist in the state's efforts in meeting the statutory obligation to reduce greenhouse gas emissions, and prove useful in the event state or federal regulations of carbon dioxide emissions are adopted in the future.99 However, given that questions remain concerning the appropriate methodology for collecting the data, we find it premature to adopt the proposed rule in this order. We encourage staff to work with stakeholders to clarify the appropriate methodology and options for calculating these metrics. While we do not believe a full workshop is necessary to develop these methodologies, we do request further comments and discussion. Today we file a proposed rule-making continuance regarding these metrics. Once stakeholders and staff discuss the methodology further, we will consider adopting a rule requiring reporting of energy and emissions intensity metrics.

98 Etta Lockey and Mary Wiencke for Pacific Power, November 5, 2014, Audio recording, at 34:00-41:00; Eric Englert for PSE, November 5, 2014 Audio recording, at 57:00-60:00.

99 RCW 70.235.020.

139 The proposed rules in chapter 480-109 WAC, as revised by this order, are applicable to plans and reports filed with the commission on or after the date the rules are effective. The rules in chapter 480-109 WAC we adopt in this order do not require the revision of plans or reports approved by commission order prior to the effective date of the rules.

140 The rules in chapter 480-109 WAC we adopt in this order are applicable to commission orders discussing the requirements of the chapter that are currently in effect. The commission has reviewed its orders that discuss the requirements of chapter 480-109 WAC to determine if those orders are consistent with the revised rules. However, we request that the utilities review these orders as well to ensure consistency. If a utility determines that a prior commission order that currently imposes a requirement on that utility conflicts with the rules we adopt in this order, that utility must petition the commission for modification of that order within thirty days of the effective date of these rules.

141 The rules in chapter 480-109 WAC we adopt in this order are also applicable to the utilities' tariffs. Utilities must review their tariffs that discuss the requirements of chapter 480-109 WAC and ensure those tariffs are in compliance with the rules we adopt in this order. If a utility determines that its tariff conflicts with the revised rules, that utility must file a revised tariff with the commission within sixty days of the effective date of these rules.

142 After considering all of the information regarding this proposal, the commission finds and concludes that it should amend, adopt, and repeal the rules as proposed in the CR-102 at WSR 14-18-084 with the changes described above and in Attachment A.

143 STATEMENT OF ACTION; STATEMENT OF EFFECTIVE DATE: After reviewing the entire record, the commission determines that chapter 480-109 WAC should be amended, adopted, and repealed to read as set forth in Attachment B, as rules of the Washington utilities and transportation commission, to take effect pursuant to RCW 34.05.380(2) on the thirty-first day after filing with the code reviser.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 10, Amended 5, Repealed 6.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.

144 The commission amends, adopts, and repeals chapter 480-109 WAC sections to read as set forth in Attachment B, as rules of the Washington utilities and transportation commission, to take effect on the thirty-first day after the date of filing with the code reviser pursuant to RCW 34.05.380(2).

145 This order and the rules set out below, after being recorded in the register of the Washington utilities and transportation commission, shall be forwarded to the code reviser for filing pursuant to chapters 80.01 and 34.05 RCW and 1-21 WAC.

146 Utilities must review commission orders that discuss the requirements we adopt in chapter 480-109 WAC and determine if those orders are in compliance with the rules adopted in this order. If a utility determines that a prior commission order that currently imposes a requirement on that utility conflicts with the adopted rules, that utility must petition the commission for modification of that order within thirty days of the effective date of the rules.

147 Utilities must review their tariffs that discuss the requirements of chapter 480-109 WAC and determine if those tariffs are in compliance with the revised rules. If a utility determines that its tariff conflicts with the adopted rules, that utility must file a revised tariff within sixty days of the effective date of the rules.

DATED at Olympia, Washington, March 12, 2015.

David W. Danner, Chairman

Philip B. Jones, Commissioner

Ann E. Rendahl, Commissioner

The following sections of the Washington Administrative Code are repealed: