Washington UTC Approves PSE-Microsoft Renewable Direct Access Contract

On July 13, 2017, the Washington Utilities and Transportation Commission (Washington Commission) approved a special contract between Puget Sound Energy (PSE) and Microsoft that was supported by a broad coalition of renewable energy advocates, independent power producers, environmentalists, ratepayer and low-income advocates, and the Commission Staff.   

In October, PSE filed a new rate schedule with the Washington Commission allowing Microsoft to purchase electricity service from third-party energy service suppliers to lower its costs and increase its renewable energy acquisitions. For about fifteen years, PSE has operated a very successful direct access program under which most of its large industrial customers purchase their electricity from third parties, but these customers continue to take distribution and transmission service from PSE. Many other industrial and commercial customers have sought similar market access to gain more control over their power supply so that they can lower their costs and meet other corporate goals, including purchasing additional renewable energy.

All the parties to this proceeding entered into a settlement agreement that would allow Microsoft to purchase from third parties, but under a special contract rather than a tariff. The parties supporting the settlement included Microsoft, PSE, Northwest and Intermountain Power Producers Coalition, Northwest Energy Coalition, Industrial Customers of Northwest Utilities, Wal-Mart, Kroger, Energy Project, Public Counsel, and Commission Staff.

Key provisions of the settlement included:
• Microsoft makes a $23.7 million exit fee payment that will be passed on to remaining captive customers;
• Microsoft will meet its energy needs with 25 percent “eligible renewable resources” from commencement of service under the special contract through 2020 and with 40 percent eligible renewable resources in subsequent years;
• Microsoft will require all of its power suppliers to provide carbon-free power (i.e., electricity produced by generation facilities that are not powered by fossil fuels which may not qualify as renewable under Washington’s RPS); and
• Microsoft will increase its financial commitment to PSE’s conservation and low-income programs.

While the Washington Commission did not address direct access for other commercial and industrial customers, this issue is likely to come before the Commission as an increasing number of customers desire to control their power supply decisions.

Sanger Law represented the Northwest and Intermountain Power Producers Coalition.

NIPPC represents electricity market participants in the Pacific Northwest, including independent power producers, electricity service suppliers and transmission companies. NIPPC is committed to facilitating cost effective electricity sales, offering consumers choice in their energy supply and advancing fair, competitive power markets.



These materials are intended to as informational and are not to be considered legal advice or legal opinion, nor do they create a lawyer-client relationship. Information included about previous case results does not assure a similar future result.