For many reasons, energy bills are surging across the West: white-hot demand for electricity to power everything from electric cars to data centers; the rising risks and devastation wrought by wildfire; and the modernization of an antiquated grid, to name a few.
But nowhere in Washington state are costs rising faster than for Puget Sound Energy ratepayers, whose bills have nearly doubled since 2020. The average monthly PSE bill today is already about $40 more than for a customer of neighboring Seattle City Light. Things could soon get even more lopsided.
This year, PSE requested an additional 30% increase in ratepayers’ bills over the next three years, or an average of $51 more each month. Much of that will fund new clean energy resources, as required by state law. Many customers, already struggling under Washington’s high cost of living, will devote even more of their incomes to energy costs, if the state’s Utilities and Transportation Commission approves those increases.
The result is that PSE’s customers are paying a disproportionately high price to meet the state’s climate goals, an escalating problem Gov. Bob Ferguson and members of the state Legislature must address.
The primary driver of those unequal costs is that PSE has much further to go in meeting Washington’s ambitious Clean Energy Transformation Act than almost any other electricity provider in the state.
State lawmakers gave the UTC authority to approve PSE’s rate increases when the regulated monopoly constructs wind and solar farms, utility battery storage and new transmission lines. The utility has already invested about $2.2 billion into green infrastructure to meet the law and is planning billions of dollars in additional projects.
But it’s clear at this moment the CETA law has begun exacerbating a cost chasm between PSE and other electricity providers in Washington state. Ignoring that gulf is unfair to PSE’s customer base, which is bearing an outsized burden in tackling climate change.
PSE’s heavy lift
Passed by the Democratic-dominated Legislature in 2019, CETA’s trident of mandates are coming due. In 2025, Puget Sound Energy abandoned the use of coal as an energy source as required; and in 2030, its electricity portfolio must be 80% clean power. The final step, in 2045, is for every utility to use nothing but renewable energy sources to power Washington’s grid.
In the fight against climate change, these were, and are, worthy goals.
But when it comes to PSE’s public power counterparts, many have hardly had to lift a finger so far. For decades, the Bonneville Power Administration has supplied cheap, federal hydropower that meets CETA’s mandates as a clean source of power to public entities. The portfolios of Seattle City Light, Tacoma Power and the Snohomish Public Utilities District, for example, already hover around 90% for green energy.
With coal and natural gas fueling much of its energy mix, PSE, by contrast, began in 2020 at just 34% toward the state goal. Though the utility’s green power has surged to about 57%, attaining the 80% target — plus offsetting all of the rest of its emissions to be net zero — is driving customers’ bills to unsustainable levels.
CETA included an “offramp” to help with high costs, but the policy does not relieve the utility from steep fines for failing to meet the 80% goal by 2030. Only Ferguson and lawmakers have the power to give the utility additional flexibility. They should consider legislation to do so in 2027.
Yes, PSE is a private utility with shareholders that public utilities don’t have to answer to. Its executives are paid more than their public utility counterparts. State Attorney General Nick Brown has even asked the UTC to reduce PSE’s guaranteed rate of return for PSE shareholders to be reduced from a requested 10.8% to 8.17% in an effort to control costs. But even if that effort succeeds, PSE bills will still need to sharply rise to hit the 80% clean target.
A potential death spiral
An additional risk looms: the prospect of tipping PSE itself into a death spiral. Fed-up customers could choose to stand up their own public utility districts as a way around PSE for electricity service. That’s exactly what’s being considered in Kitsap County, in a ballot measure this year.
Going public offers an advantage PSE cannot match: access to cheaper electrons. Known as “preference” power, Kitsap, and other areas desiring to go public, could initiate a process that dates to the creation of the Bonneville Power Administration.
Under the nearly 90-year-old law, voters in Kitsap, which is entirely served by PSE, could vote to give the local public utility district the legal authority to build or buy electric infrastructure. Angela Bennink, Kitsap PUD’s general manager, said a wave of customers began calling and writing her office complaining of higher PSE winter bills. Should the measure pass, the PUD could study a takeover, and, once complete, would require only a majority vote of its three commissioners to proceed with operating electrical service.
Other Puget Sound Energy customers could follow Kitsap’s example, and lead to PSE’s territory being picked apart. The Bonneville Power Administration could find itself with a run on electrons that could max out the power marketer’s supply, at a time hydroelectric power is itself more precarious due to climate change.
It’s up to the governor, and state lawmakers, to find a way through this problem. A solution is not one that lets PSE off the hook from its clean energy obligations under CETA. But a path forward must be a sustainable one financially for all of PSE’s customers, too.
During the legislative debates before CETA’s passage in 2019, lawmakers discussed whether a cost rift would open between public and private utilities. Former Democratic Rep. Gael Tarleton, who helped negotiate CETA, said on the House floor that lawmakers included mechanisms to keep “dramatic shocks” in price and reliability from happening. The law would ensure the electricity grid would continue “working as a system and not as individual pieces on a chess board,” she said.
It’s clear now that PSE doesn’t believe the law’s cost offramps absolve it from meeting an 80% clean portfolio.
A chess board, in Tarleton’s analogy, has emerged.
The residents of Washington state don’t get to choose their energy provider. Ferguson and the state Legislature need to strike a balance that maintains PSE’s pursuit of clean energy while making sure its 1.2 million customers can afford the clean energy transition.
