Note: If you’d like to know more about energy-related issues, get my monthly Energy News sent to your inbox. Sign up using the form in the upper right corner of this webpage.
Headquartered in Spokane, WA, Avista provides electric and gas services to the major portion of North Idaho. Last September, Avista asked the Idaho Public Utilities Commission for approval to merge with Hydro One, a utility that serves Ontario, Canada. ICL joined the case to make sure that this purchase would benefit Idaho’s environment and citizens. We have some success to share.
First, a Little Background
The Idaho Public Utilities Commission must ensure that the purchase meets three criteria:
- Hydro One has the intent and financial ability to maintain Avista operations in Idaho.
- Utility rates will not increase.
- The deal is "in the public interest."
ICL intervened in this proceeding because it is a rare opportunity to shape future investments and plans of a major utility.
What ICL Did
As is often the case, ICL was the only voice at the table focused on replacing fossil fuels with conservation and clean energy. Our participation resulted in direct and meaningful benefits for Idahoans and our environment. These benefits arise directly from Hydro One and Avista’s shareholders investing tens of millions into our state over the next ten years.
The overall structure of the settlement came out of Washington state. Our allies – the NW Energy Coalition, Renewable Northwest, National Resources Defense Council and Sierra Club – negotiated a deal in Washington that had many good features.
Hydro One and Avista brought this Washington deal to Idaho as the framework for our negotiations here. ICL played the major role in negotiations to shape this framework to preserve the most important parts: increasing funding for conservation measures and placing Colstrip on a path to early retirement.
Paving a Path Toward a Coal-free Idaho
Avista owns a portion of the Colstrip plant in Montana, one of the biggest coal plants in the West. As recently as this March, Avista maintained that it would operate this plant through at least 2037 and, as utilities do, established rates allowing the company to recoup its investment in the plant within this same timeline.
The major hurdle to accelerating closure of Colstrip was figuring out how to pay off the outstanding costs over a shorter timeline. In technical terms, the utility would accelerate depreciation of the Colstrip asset. Normally, this accelerated schedule would require a rate increase. As part of this merger, ICL secured a commitment by Avista to plan for a 2027 closure.
Washington regulators came up with a novel plan to use the Trump tax cut to pay this faster closure of Colstrip. Because of the federal tax cut, utilities are collecting more in rates than they need for taxes. Instead of returning the excess to ratepayers immediately, ICL shaped this proposal to work for Idaho by agreeing to a step-by-step set of decisions to consider the total amount of tax money available and the amount that could be fairly applied to the Colstrip plant. We are working through these details this summer.
Growing Clean Energy
To help ensure that the utilities replace coal with clean energy, ICL crafted all the settlement terms that affect future clean energy options. The key step is to require specific improvements to the process for developing utility integrated resource plans. This planning process is where ICL can influence the decision to pursue clean energy instead of fossil fuels.
Increasing Funding for Energy Conservation
To show that Hydro One purchasing Avista is in the public interest, the utility shareholders are investing $5.3 million over ten years into new conservation programs in North Idaho. ICL worked with staff of the Idaho PUC to create an Idaho stakeholder group that will allocate these funds. ICL is a member of this group along with our low-income community allies. This new stream of money is not bound by strict cost-effective criteria; rather, we can invest directly in communities with the least economic power and most inefficient housing stock.
Increasing Grants from the Avista Foundation
Also to show a broad public interest, the utility shareholders promised to increase annual giving by the Avista foundation to $4 million annually. Historically, Idaho entities have received 12 to 18% of this spending. ICL inserted a term that should cause the foundation to direct about 30% of this total toward community causes like food banks and educational programs.
Promoting Electric Transportation
Electrifying our transportation is the most important thing we can do to protect Idaho’s local air quality. But moving toward electric vehicles (EVs) is a slow, complicated process. ICL created an Idaho stakeholder group to develop a plan for the beneficial electrification of cars. This is a key term. "Beneficial electrification" is a means to grow the number of electric cars in a way that avoids construction of new power plants and actually helps integrate wind and solar, all while reducing costs to traditional electricity customers. This strategy will be key to building support for EVs at the Idaho PUC while maximizing the environmental benefits.
Years of Hard Work Pay Off
This deal is the culmination of many years of ICL’s energy program. Our expertise across the range of issues – coal plants, conservation programs and clean energy sources, as well as taxation and depreciation – enabled us to secure meaningful, long-term benefits for Idaho’s environment and its citizens.