WUTC Approves PSE 2021 RFP With Modifications

On June 14, 2021, the Washington Utilities and Transportation Commission (Washington Commission) issued an order approving of Puget Sound Energy’s (PSE) All-Source Request for Proposals (RFP), with two significant modifications. First, the Washington Commission required PSE to remove a cost adder on PPA bids for a potential return on power purchase agreements (PPAs). Second, the Washington Commission required PSE to accept comments and hold a workshop on Effective Load Carrying Capability (ELCC) calculations. PSE expects that bids will be due September 1, 2021. 

On April 1, 2021, PSE filed its RFP with the Washington Commission. Citing their own 2021 Integrated Resource Plan (IRP), PSE pointed to a need for additional energy and capacity. PSE’s demand forecast demonstrated a need for 369 MW of new electric capacity resources in 2026 that is expected to increase to 527 MW in 2027. According to Washington’s rules, a utility must issue an RFP if their IRP indicates a need within the next four years. PSE requested proposals from bidders who could supply up to 1,942 GWh of Clean Energy Transformation Act (CETA) eligible resources and up to 1,506 MW of capacity resources. After a period of comments from stakeholders and Washington Commission Staff, and revisions by PSE, the Washington Commission approved the RFP, with modifications.

The Washington Commission received comments from the Commission Staff, Northwest & Intermountain Power Producers Coalition (NIPPC), GB Energy Park Holdings, LLC, NW Energy Coalition, Oregon State and Washington State Building and Construction Trades Councils, PowerPlus, LLC, Renewable Northwest, Swan Lake and Goldendale, and Washington Public Counsel.

One of the primary concerns raised by commenters was the addition of a cost adder in the RFP for only PPA bids. NIPPC, among others, were concerned that the adder could penalize PPA bids because the addition could make non-utility-owned generators less economically attractive. PSE included the cost adder because CETA authorizes the Washington Commission to allow utilities to earn a return on PPAs that win RFPs an amount between the utility’s cost of debt and the utility’s authorized rate of return on utility-built resources. However, the Washington Commission has not made a decision whether or not to allow utilities to earn any return on PPAs. PSE’s draft RFP assumed the Commission’s decision was already made and that there would be a return on PPAs at least equal to the cost of debt. NIPPC noted that the Proposed RFP should recognize that the bid adder on a PPA could be zero, and that including any bid adder could penalize PPA bids. The Washington Commission ordered PSE to remove from the RFP the requirement for a cost adder for a return on PPAs.

Another major concern was that certain commenters claimed that the RFP was based on incomplete and inaccurate ELCC calculations. PSE included ELCC calculations from its IRP, which was still being reviewed by stakeholders and the Washington Commission at the time PSE filed its RFP. In response, PSE agreed to hold a workshop on the ELCC calculations after the RFP is approved. Stakeholders remained concerned that PSE might not change its ELCC methodology in the RFP after the workshop. The Washington Commission recognized that PSE’s ELCC calculations needed further review. In addition, the Commission determined that PSE must post an ELCC review and primer and any other workshop materials to its RFP website at least seven calendar days prior to the workshop and file a response to stakeholder comments after the workshop. Finally, the Washington Commission also stipulated that, if PSE agrees with stakeholders that a revision of the ELCC calculations or implementation in the RFP is needed, PSE must notify the Washington Commission about the change.

There were a number of other issues that commenters raised. There was a concern that PSE’s RFP was too subjective and that the non-price factors should be limited, and the price factors clarified. They also noted that the proposed RFP’s pro forma PPA imposed an inappropriate jury trial waiver, which PSE removed. The Proposed RFP’s preference for network integration transmission system was also described as confusing, and it was mentioned that it did not provide adequate information for bidders to choose a cost-effective point of delivery. Commenters noted that, for the sake of clarity and openness, PSE should provide an opportunity for the public to comment on any developing QF interconnection documents and procedures prior to RFP approval. PSE agreed to invite public comment before implementing any changes to the QF interconnection process.

Sanger Law represented NIPPC in this proceeding.

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 choices 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.