1 STATUTORY OR OTHER AUTHORITY: The Washington utilities and transportation commission (commission) takes this action under Notice No. WSR 10-18-092, filed with the code reviser on September 1, 2010. The commission brings this proceeding pursuant to RCW 80.01.040, 80.04.160, and 80.08.060(8).

     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. Together, these documents provide a complete but concise explanation of the agency actions and its reasons for taking those actions.

     6 REFERENCE TO AFFECTED RULES: This order amends the following sections of the Washington Administrative Code: WAC 480-100-405 Electrical company generation resource compliance with the greenhouse gas emissions performance standard, 480-100-415 Electrical company applications for commission determination outside of a general rate case of electric generation resource compliance with greenhouse gas emissions performance standard, 480-100-425 Electrical company applications for exemption from the greenhouse gas emissions performance standard, and 480-100-435 Electrical company deferral of costs associated with long-term financial commitments -- Notice and reporting.

     7 PREPROPOSAL STATEMENT OF INQUIRY AND ACTIONS THEREUNDER: The commission filed a preproposal statement of inquiry (CR-101) on June 23, 2010, at WSR 10-13-161. The statement advised interested persons that the commission was considering development of proposed rules to implement statutory changes in RCW 80.80.010, 80.80.040, and 80.80.060 enacted in the state of Washington's 2009 regular legislative session. 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) and by sending notice to all regulated electric companies and the commission's list of utility attorneys. The commission posted the relevant rule-making information on its internet web site at http://www.utc.wa.gov/100865. The notice included discussion draft rules prepared by staff. The notice solicited comments from stakeholders on the discussion draft rules. Pursuant to the notice, the commission received written comments from Puget Sound Energy, Inc., Avista Corporation, PacifiCorp, the Public Counsel Section of the Washington Office of the Attorney General, and the Northwest Energy Coalition.

     8 NOTICE OF PROPOSED RULE MAKING: The commission filed a notice of proposed rule making (CR-102) on September 1, 2010, at WSR 10-18-092. The commission scheduled this matter for oral comment and adoption under Notice No. WSR 10-18-092 at 1:30 p.m., Wednesday, October 27, 2010, in the Commission's Hearing Room, Second Floor, Richard Hemstad Building, 1300 South Evergreen Park Drive S.W., Olympia, WA. The notice provided interested persons the opportunity to submit written comments to the commission.

     9 WRITTEN COMMENTS: The commission received written comments on the notice of proposed rule making from PacifiCorp, in which the company stated it had no further comments on the proposal. Summaries of all written comments and commission responses are contained in Appendix A following, and made part of, this order.

     10 RULE-MAKING HEARING: The commission considered the proposed rules for adoption at a rule-making hearing on Wednesday, October 27, 2010, before Chairman Jeffrey D. Goltz, Commissioner Patrick J. Oshie, and Commissioner Philip B. Jones. No interested person made oral comments.

     11 SUGGESTIONS FOR CHANGE THAT ARE REJECTED/ACCEPTED: Written comments at the preproposal, or CR-101, stage suggested certain changes to the draft rules. The suggested changes and the commission's reason for rejecting or accepting the suggested changes are included in Appendix A. No person suggested changes to the proposed rules published at WSR 10-18-092.

     12 COMMISSION ACTION: After considering all of the information regarding this proposal, the commission finds and concludes that it should amend and adopt the rules as proposed in the CR-102 at WSR 10-18-092.

     13 STATEMENT OF ACTION; STATEMENT OF EFFECTIVE DATE: After reviewing the entire record, the commission determines that WAC 480-100-405,

480-100-415, 480-100-425, and 480-100-435 should be amended to read as set forth in Appendix 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 4, 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 0, Amended 0, Repealed 0.

     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.

     14 THE COMMISSION ORDERS:

     15 The commission amends WAC 480-100-405, 480-100-415, 480-100-425, and 480-100-435 to read as set forth in Appendix 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).

     16 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, 34.05 RCW and 1-21 WAC.

     DATED at Olympia, Washington, November 9, 2010.

     Washington State Utilities and Transportation Commission

Jeffrey D. Goltz, Chairman

Patrick J. Oshie, Commissioner

Philip B. Jones, Commissioner

Section	Commenter	Comments	Staff Response
CR-102 Comments
Chapter 480-100 WAC, General comments.
In response to the proposed revised rules provided in the CR-102, only one letter was received from PacifiCorp. It stated that it had no comments, however, it reserved its right to provide further comments in the future if the need arises.
CR-101 Comments
WAC 480-100-405 Electrical company generation resource compliance with the greenhouse gas emissions performance standard.
480-100-405	Pacific Power (PacifiCorp or Company)	PacifiCorp proposes to move the staff proposed wording regarding long-term financial commitments with Bonneville power administration from WAC 480-100-405 (2)(d), which are the definitions for the chapter, to WAC 480-100-405(1). The proposed relocation of the proposed wording includes changing the wording from "definition" to "chapter" and replaces "include" to apply [it] to make it consist [consistent] with its placement within the rule.	Staff agrees. Staff [agrees] that there may be confusion of the term "long-term financial commitment" if there exists two definitions one in statute and one in the related WAC. Staff will adopt the proposed wording and relocation in the rule.
480-100-405	PacifiCorp	PacifiCorp states that the proposed change in WAC 480-100-405 (2)(g) raises a significant question as to the commission's ability to regulate facilities located outside the state. The company asks for the commission to provide an opportunity in this proceeding for the parties to discuss how the commission interprets its extraterritorial authority.	Staff disagrees. The commission is not regulating facilities outside Washington state. The commission is only regulating the power acquisition choices of the regulated company, whether the power comes from in-state or out-of-state. Plus, the rule only reflects the exact language of the statute. Staff believes the proposed meeting would not be productive.
WAC 480-100-415 Electrical company applications for commission determination outside of a general rate case of electric generation resource compliance with greenhouse gas emissions performance standard.
480-100-415	PacifiCorp	PacifiCorp suggests that the wording in WAC 480-100-415 (3)(a)(iii) and (b)(iii) that requires applicants to provide "[s]uch other information as is available concerning..." be changed. The wording, they argue, is "...vague and potentially unachievable." The company says that it "...may not be aware of all available emissions characteristics...."	Staff agrees. The company cannot provide information that it does not know about or that is unavailable to it. Staff proposes changing the language to "such other information as is available to or in the possession of the electrical company."
480-100-415(1)	NW Energy Coalition	The NW Energy Coalition believes that the proposed wording in WAC 480-100-415(1) confines the twelve percent from unspecified sources limitation to filings before the commission outside of a general rate case (GRC). They recommend either inclusion of the language in the definition of "long-term financial commitment" or by adding an additional provision clarifying that no long-term financial commitment would be considered within the context of a GRC if it includes more than twelve percent unspecified sources.	Staff disagrees. The examination of the rule by the NW Energy Coalition takes too broad of a perspective. The rule addresses filings of non-GRC applications. The proposed change merely adds the additional restriction provided in HB 2129. Staff believes the rule certainly could be broadened to include GRC applications but staff believes (1) it would widen the scope of the rule making beyond its original intent and (2) it is not necessary to effectively implement the twelve percent rule in a GRC.
WAC 480-100-425 Electrical company applications for exemption from the greenhouse gas emissions performance standard.
480-100-425	PSE	PSE recommended that the commission provide some guidance to utilities regarding the criteria that will be considered in establishing "extraordinary cost impacts on utility ratepayers" as used in WAC 480-100-425. At several points in their comments, PSE suggested language which would set a definite number to the threshold "extraordinary cost impacts." Specifically, PSE proposed adopting the following language into commission regulations, "Extraordinary cost impacts on utility ratepayers means that the average bill of all utility customers will increase by 20% or more on average."	Staff disagrees. The wording extraordinary cost impacts on utility ratepayers is from the legislative language in RCW 80.80.060(4). Without direct guidance from the legislature the commission must base is understanding of the term on the facts and circumstances of the case before it and cannot arbitrarily select a definition e.g., twenty percent of average bill.

OTS-3594.1

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

     (i) Routine or necessary maintenance;

     (ii) Installation of emission control equipment;

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

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

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

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

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

     (a) Annualized plant capacity factor;

     (b) Net emissions;

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

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

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

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

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

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

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

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

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

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

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

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

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

     (i) The proposed contract;

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

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

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

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

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

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

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

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

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

     (a) Unanticipated electric system reliability needs; or

     (b) Extraordinary cost impacts on utility ratepayers; or

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

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

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

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

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

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

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

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

     (c) A description of the extraordinary cost including:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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