Sen. Chris Marr, D-Spokane, who spearheaded a bill in the 2009 Washington Legislature to give electric utilities more ways to meet voter-approved renewable-energy standards, predicts the main points of the legislation will re-emerge in 2010. The bill died in the waning hours of the latest session.

"In some form or fashion, this will move ahead at the next session. It has to," says Marr, who worked on the bill with Senate Majority Leader Lisa Brown, also of Spokane.

The potential for the renewable-energy standards—spelled out in Initiative 937—to cause "rate shock" among utility customers remains a concern, he says, adding that he expects continued softness in the economy to "highlight the need to balance environmental objectives with economic impact."

"This issue won't go away," Marr says.

I-937, approved by voters two years ago, requires utilities with at least 25,000 customers to obtain 15 percent of their power from renewable sources, such as wind, solar, or biomass, by 2020. That benchmark is to be phased in over eight years, beginning at 3 percent in 2012 and bumping up to 9 percent in 2016.

Marr's bill, Senate Bill 5840, would have increased the 2012, 2016, and 2020 renewable-energy mandates to 4 percent, 10 percent, and 16 percent, respectively, and would have added a 21 percent target for 2025. It also, though, would have incorporated several changes designed to make it easier for utilities to hit the thresholds.

For example, it would have lowered the percentage requirement for renewable energy to each utility's growth rate in demand for power, if that growth rate were less than the higher fixed percentage specified in the initiative.

It also would have allowed utilities to count renewable energy acquired from throughout the Western energy grid, rather than just in the Northwest, toward the requirement. Also, it would have enabled them to count power from small hydropower projects—less than 30 megawatts—as well as power plants built before 1999 that burn biomass such as bark and wood chips, food and yard wastes, and black liquors derived from algae. Further, the bill would have allowed utilities to count energy saved from newly implemented conservation measures and efficiency upgrades at hydroelectric dams toward meeting those targets.

Under I-937 as currently written, qualifying utilities experiencing little if any growth would have to dump some of their cheap hydroelectric power supply and buy higher-priced resources or renewable energy credits to meet their renewable energy targets, which is contrary to the logic of I-937, Marr asserted while promoting his bill. He said that under his bill, those utilities could have satisfied the renewable requirement by meeting all of their new power supply demands through new conservation measures.

"As much as anything, this bill promotes energy conservation," Marr said in a March interview. "It recognizes that the greenest form of energy is the energy that isn't consumed. This is good business, it's good environmental stewardship, and it's great for ratepayers."

Spokane's two major electric utilities, investor-owned Avista Corp. and customer-owned Inland Power & Light Co., both strongly supported Marr's bill.

"We spent a lot of time in Olympia working on it, and we were really disappointed to see it fail," says Kris Mikkelsen, Inland Power's CEO. Unless something is done to add more flexibility to I-937, "our members will be paying more for electricity than they would otherwise" in a few years, she says.

Environmentalists and the wind-power industry opposed Marr's bill, contending it would "gut" the initiative and ease needed pressure on utilities to pursue cleaner energy. Mikkelsen says the contention that it would have decimated I-937 "simply wasn't true in my view."

Inland Power is what's called a "full-requirements" customer of the Bonneville Power Administration, meaning that the BPA, which markets the electricity generated by the Northwest's federal dams, provides all of the co-op's power requirements at cost-based rates.

One of the key components of Marr's bill from Inland Power's perspective was language that would have allowed the co-op to count the money it contributes for federal dam hydropower efficiency improvements toward meeting I-937 renewable-energy standards, Mikkelsen says.

"I think there are some common sense changes that absolutely need to be made" to I-937, she says. "I hope that we end up with a broad-based coalition to do that. I think there were just many aspects of I-937 that were not well understood by the public" when voters approved the initiative.

Mikkelsen contends that there's already "a tremendous amount of pressure on electric rates," and says, "We need to make sure we're not doing things to add to those pressures in a way that doesn't provide real value."

Avista spokeswoman Anna Scarlett says, "We're disappointed that the bill failed. We're encouraged, though, that there's interest in bringing it back" in some form, and are prepared to support further efforts to help soften the impact of the renewable-energy standards on electric rates.

She notes that the bill would have allowed Avista to count the output of its 25-year-old Kettle Falls, Wash., biomass plant, which burns wood waste, toward meeting its renewable-energy targets.

Marr's bill appeared for a time to be moving briskly through the legislative process, albeit with some changes along the way, and he says, "We ended up with what we thought was a fairly workable compromise," despite attempts by some environmentalists to vilify the measure.

It ended up dying, though, after a coalition of Tacoma and Vancouver legislators concerned about its potential effects on their respective utilities, Tacoma Power and Clark County Public Utility District, used it to hold several key budget measures hostage shortly before the slated on-time, midnight adjournment of the 105-day 2009 legislative session. Those legislators contended the bill would have caused ratepayers from that area of the state to bear an unfair share of the cost of forcing the state's utilities to obtain more sources of renewable energy, according to published reports.

Promoting the bill put Marr at odds with some environmentalists just a year after the Washington Environmental Council named him its environmental legislator of the year, and he says, "I think there's some healing that needs to happen there."

He's not apologetic about the bill, though, saying environmentalists "have to stop taking a rigid approach to this, where renewable basically relates to wind energy. We have to look beyond that," and realize there are ways to achieve the same desired environmental goals without raising energy rates unnecessarily.

Part of the guidance on developing I-937-modification strategy for the next legislative session likely will come from the Washington State Public Utility Districts Association, which is "really kind of weighing where we go on this," as well as from other stakeholders who have been involved in the debate, Marr says. "I think all of us are going to have to regroup."