HB1128 – Authorizes alternative forms of regulation for utilities.
Prime Sponsor – Representative Morris (D, 40th District, Mount Vernon)
Current status – Referred to the Committee on Environment & Energy.  Reintroduced and retained in present status for 2020 session.
Next step would be – Scheduling a hearing.

Comments –
This bill’s provisions for a greenhouse gas planning adder and for alternative systems of utility regulation have been incorporated in the new substitute version of HB1211, though that sets the initial value of the adder higher and doesn’t make it depend on the imposition of carbon pricing.

Summary –
Authorizes the Utility and Transportation Commission to develop new systems for regulating electric and gas utilities to better achieve state policy goals, and allows a utility to submit a proposal for changing how it’s regulated to the Commission.

If the Legislature imposed “a tax, fee, or other monetary price on the carbon content of the sale or use of fossil fuels and electricity in the state,” the bill would require the use of an adder for the cost of carbon emissions by the UTC and utilities in conservation planning and in intermediate and long-term resource planning, under the current regulatory system or any alternative one. The adder would be the dollars per metric ton of greenhouse gases implied by the legislated price on carbon, or $40/tonne for 2018 (increasing by one and a quarter percent a year, apparently without an inflation adjustment) – whichever was larger.

Details –
The bill gives the UTC the authority to adopt any new forms of utility regulation that it determines are in the public interest, providing it considers, to the degree that it’s relevant, the extent to which each new system is expected to:

• Align a utility’s regulatory incentives with the public interest;
• Maintain and enhance its ability to provide safe, adequate, and efficient service;
• Support prudent and efficient use of the electrical or natural gas system and utility operations;
• Maintain and enhance overall electrical system reliability, security, and resilience;
• Allow a company to support and participate in market transformation, enabling technologies without harming competition;
• Allow a company to be financially indifferent about the ownership of the property providing service to its customers or the quantity of electricity or gas sold to them;
• Reasonably protect customers, including low-income ones, from short and long-term risks;
• Ensure an appropriate level of consumer protection;
• Help achieve state emissions reduction goals;
• Reduce or avoid adverse environmental impacts;
• Provide the company with the opportunity to earn a reasonable rate of return on investment; and,
• Provide for broad customer engagement to promote participation by a diversity of customers, particularly underserved communities or segments thereof, in programs to help achieve these goals.

The UTC may begin consideration of alternative forms of regulation on its own initiative. A utility may also petition the UTC to change the way it’s regulated, submitting a plan for an alternative form of regulation. That must be developed with customer and stakeholder input, and include a proposal for appropriate performance metrics (and enforcement or remedial steps in the event those are not met), a plan transitioning to the proposed system, and its proposed duration. It may include provisions for ensuring a reasonable rate of return on investment.

After notice and hearing, the UTC must accept, modify, or reject a utility proposal within eleven months, although it may extend the period for good cause. If the Commission authorizes some new form of regulation for a utility which has proposed a plan, the utility must accept or decline to adopt it within sixty days.

The Commission may waive other current regulatory requirements for a utility operating under a new form of regulation if it concludes that will facilitate its implementation, though it may not waive any legal rights established by the State’s laws about utilities (80.28 RCW) or regulations (80.04 RCW). It may waive different requirements for different companies or services, if it determines that’s in the public interest.

The Commission or any person can file a complaint claiming that a utility has not complied with the terms and conditions of its new form of regulation, but bears the burden of proving the allegations.

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