Over the past couple of years, Washington lawmakers have wrestled with a daunting task.
The problem: The state’s largest utility, Puget Sound Energy, sells natural gas to nearly 1 million customers and burns gas and coal to electrify cities. That contributes millions of metric tons of planet-warming gases to the atmosphere.
It makes PSE one of the largest producers of greenhouse gas pollution in the state, ranked among fuel suppliers like Marathon, BP and Philips 66. And it represents a huge threat to the state’s ambitious climate goals.
Lawmakers’ original proposed fix would have been unprecedented in the country and required PSE to stop offering new commercial and residential natural gas hookups. But the version of the legislation signed into law by Gov. Jay Inslee last month didn’t go nearly that far and illustrates the intense debate over turning off the flow of natural gas.
Dozens of states have gone the other direction, passing legislation prohibiting local gas bans or electrification mandates, and municipalities that have attempted to restrict new gas hookups have faced litigation.
Last month, Berkeley’s ban on new gas connections was halted after the California Restaurant Association successfully opposed it in court. The Washington State Building Code Council has passed energy efficiency mandates intended to make it nearly impossible to install fossil-fueled appliances in new buildings — but not without legal challenges.
The state’s new law involving PSE, passed with narrow voting margins and industry scrutiny, aspires to set a course for a future, decades away, in which natural gas is a thing of the past.
Washington Sen. Joe Nguyen, who sponsored the final version of the bill, said the law is “a plan for a plan” and allows PSE to start thinking about how to decarbonize when proposing rates to its regulator, the Washington Utilities And Transportation Commission.
It allows PSE to potentially raise rates earlier to pay for clean-energy projects, spreading the cost out over a longer period, among other adjustments.
Supporters say the law represents one of the first efforts nationwide of a utility agreeing to decarbonize and comply with emissions goals in exchange for regulatory changes.
“Nobody has ever done this before,” Nguyen said. “There’s been no company in the United States that has gone from basically a 100% natural gas company to one that is more decarbonized with renewable energy, so [PSE is] trying to do something that is nation-leading.”
Nguyen and supporters say the law is a good first step, even if more legislation will be needed. However, the law also reflects concerns that an energy transition would disproportionately impact low-income ratepayers.
What does the new law do?
Seeing a tough road ahead to decarbonize, PSE requested help from lawmakers. A central issue has been about how to keep utility rates stable as the investor-owned utility expects to acquire a massive amount of renewable energy while methane gas use declines.
According to PSE, gas use dropped 7% for residential customers and 3% for commercial customers between 2022 and 2023 for several reasons, including air conditioning demand, energy efficiency programs and changing preferences. PSE has around 1.5 million customers in all, who buy either electricity, methane or both from the utility.
These changes come as PSE must comply with Washington’s two landmark climate laws — the Clean Energy Transformation Act, which will require the utility to become greenhouse gas neutral in its electricity generation by 2030, and the Climate Commitment Act, which gradually ratchets down emissions 95% by 2050.
The utility will need to buy or build 6,700 megawatts of renewable electricity by 2030, more electricity than it ever has acquired in its 150-year history, PSE spokesperson Matt Steuerwalt said.
“In the past six years, energy law in Washington state has changed more than in the previous 100,” PSE lobbyist Matt Miller said during a senate committee’s public testimony in January. “This bill helps us comply with that. We have a steep hill to climb, but … this bill provides us tools to do that.”
Historically, gas and electricity customers have been kept in silos and rebates have incentivized them to stay on their energy source if equipment breaks, said Kelly Hall, the director of Climate Solutions in Washington, an advocacy group in support of the law.
But the new law removes rebates for residential…
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