Facts about HB 1589
BELLEVUE, Wash. (3/29/2024) HB 1589, passed by the state legislature in March 2024, is a planning bill. It will help PSE, under the supervision of the Washington Utilities and Transportation Commission (UTC), thoughtfully plan for the electric and natural gas choices of our customers consistent with our state’s aggressive climate goals.
There has been a lot of misinformation about HB 1589 as it changed over the course of two legislative sessions, from when it was first introduced in January 2023 to passage by the legislature in March 2024.
HB 1589 does not include a ban on natural gas, and it does not change PSE’s obligation to serve natural gas to our customers.
Why is this necessary?
- PSE is currently required to file a multitude of different plans for the gas and electric business on different timelines with the UTC. These plans are duplicative and time consuming. This process brings more alignment to our planning for customers and stakeholders while maintaining important standards and benchmarks.
- Natural gas energy use is declining—down 7% for residential and 3% for commercial customers in 2023 and forecasted to continue to decline over the next five years. Electricity use is increasing and forecasted to continue to rise.
- Washington state has some of the most aggressive climate policies in the nation. Under state law, PSE must have 80% non-emitting resources by 2030 and 100% by 2045.
- PSE has dramatically expanded our low-income bill assistance programs and established a new bill discount rate for qualifying customers to protect them through this long transition.
Key provisions
- Planning — The bill consolidates multiple existing system plans into an integrated plan, streamlining processes and providing more transparency for customers. There will be three years of rulemaking and planning prior to the submission in 2027 of PSE’s first integrated system plan to the UTC.
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Regulatory mechanisms — The bill clarifies the application of three important regulatory mechanisms for PSE.
- Certificate of Public Convenience and Necessity (CPCN): To reach our state’s 2030 targets as established by the Clean Energy Transformation Act (CETA), PSE must build or buy more electric generation than we have in our past 150-plus years. A CPCN would help us do that more efficiently. For example, when PSE has a major project—like a transmission line or generation facility--the UTC would review the project at the outset, and then again once the project is completed. This gives the UTC two reviews to make sure the project is prudent and allows regulatory review before PSE invests a significant amount of money.
- Construction Work in Progress (CWIP): With this tool, costs associated with capital intensive projects with longer lead times could be recovered before the project is completed with UTC approval. This helps protect customers from rate shock as costs are captured over time in smaller amounts, as opposed to being added to customer bills all at once.
- Accelerated Depreciation: The bill requires PSE to file new depreciation schedules for the natural gas business each time the company files a multi-year rate plan (which PSE did in the filing we made in February). It requires the UTC to set depreciation rates for all the gas plants in service as of July 2024 so that those assets are fully depreciated by 2050. Accelerated depreciation ensures that current customers who are benefiting from the gas infrastructure pay their fair share of the costs before leaving the system, helping to protect against an undue cost burden falling on an increasingly smaller group of customers, particularly those who can least afford it.
FAQ
How will existing customers get natural gas service?
Same as you do now. The bill, as passed by the legislature, does not include a ban on natural gas or any changes to our obligation to serve natural gas.
Will I have to switch my home to all electric? How am I going to pay for that? PSE’s own study says this will cost thousands.
No. The bill, as passed by the legislature, does not include a ban on natural gas or any changes to our obligation to serve natural gas.
As part of the integrated system plan that we will submit in 2027, we will be required to show what electrification is cost effective. We do this today—an example is the extensive planning we do to establish which energy efficiency measures are most cost effective. Some pencil out. Others do not, including the heat pumps that we have studied. If these don’t change by a good bit, the plan won’t show them as cost effective. And we won’t pursue them under our obligation to provide service at the least cost to our customers.
We know many consumers are choosing to electrify their homes and businesses and are taking advantage of state and federal incentives. That choice is not changed by HB 1589.
How much will my monthly bill increase?
There is no rate increase associated with HB 1589. It’s a planning bill, and there will be three years of rulemaking and work before we submit an integrated system plan to our regulators. That will only be a plan—it will not include a rate increase.
We currently have a two-year rate plan pending with the UTC. It is not related to HB 1589. The rate plan maintains essential utility services and invests in our infrastructure to ensure the safe and reliable delivery of energy to customers, while implementing some of the most aggressive energy, environmental and climate policies in the nation. Natural gas rates for residential customers are proposed to increase by 20% over the two-year period to help protect against an undue share of the cost burden falling on an increasingly smaller group of customers, particularly those who can least afford it.
PSE wants to combine rates for natural gas and electric customers. I hear this will push rates higher and that I might have to pay for costs associated with a system that I’m not even served by. How can that be right?
To make a change of this magnitude, our regulators would have to agree that it provides a net benefit to customers and includes reasonable rate protections for low income customers. There would be an extensive examination and public process with multiple opportunities for customers and others to have a say in the decision making before anything happens. We do not currently have a proposal to do this nor do we expect to make one soon.
Will I be able to add gas to my home for cooking, heating or water heating?
HB 1589 does not affect adding natural gas to your home. However, new State Building Codes went into effect on March 14, 2024. The new codes include increased requirements that would add substantial costs to the construction of homes for owners who choose to use natural gas for space and/or water heat.
Will I be able to add gas to my business for cooking, heating or water heating?
HB 1589 does not affect adding natural gas at your business. However, new State Building Codes went into effect on March 14, 2024. The new codes include increased requirements that would add substantial costs to the construction of buildings to use natural gas for space and/or water heat.
Why can’t I receive a rebate or incentive for natural gas appliances and equipment?
Residential customers will no longer be able to receive rebates for natural gas appliances starting Jan. 1, 2025. This was added to the legislation to reduce the financial incentive to continue using natural gas.
Commercial and industrial gas customers will no longer be able to utilize rebates for natural gas appliances and equipment effective Jan. 1, 2031. This was added to the legislation to reduce the financial incentive to continue using natural gas.
What happens if I am a PSE gas customer but served by a different electricity provider (Seattle City Light, SnoPUD, Tacoma Power)?
Nothing. You will continue to receive natural gas from PSE if you do not choose to electrify your appliances. We’re currently partnering with Seattle City Light on a joint utility pilot that began before HB 1589 was even introduced that seeks to accelerate heat pump adoption within an underserved Seattle neighborhood for approximately 15-20 homes.
If there are no changes to natural gas service for existing customers, why am I getting emails from PSE offering a free home electrification assessment?
While HB 1589 does not change how we serve our customers today, we realize there is growing interest among our customers in electrification for a variety of reasons. PSE’s free electrification assessments provide customers with information so they can decide what is best for their home or business. The assessments are informational-only, there is no obligation to do anything after receiving the assessment.
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