California may come hunting soon for large amounts of wind power from the Pacific Northwest, and that has many Washington utilities worried about increased competition and higher electric bills for consumers.

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California may come hunting soon for large amounts of wind power from the Pacific Northwest, and that has many Washington utilities worried about increased competition and higher electric bills for consumers.

Gov. Arnold Schwarzenegger signed an executive order last week requiring California to get 33 percent of its energy from green sources such as wind, solar and geothermal by 2020. That’s up from an earlier 20 percent mandate.

Given California’s population of about 38 million people, the move is expected to create a major shift in the world of renewable energy.

“This is really going to be felt from the tip of northern British Columbia down to Mexico and all across the West,” said Steve Ernst, editor of the Northwest energy-policy newsletter Clearing Up.

One government estimate says California would need an additional 5,700 average megawatts of renewable energy — enough to power more than 3.7 million homes. Washington utilities, by comparison, are projected to need an additional 1,000 average megawatts of renewable energy by 2020 to meet their own requirements mandated by Initiative 937. An average megawatt is 1 megawatt of electricity delivered continuously for one year.

Mandate of our own

I-937, approved by voters in 2006, requires Washington electric utilities with 25,000 or more customers to meet 15 percent of their demand with renewable energy by 2020.

It’s not clear yet how much renewable energy California would try to import. Schwarzenegger’s order has to go through agency rule-making, where that issue will be debated.

Several utilities — including Seattle City Light and Tacoma Power, which serve more than a half-million customers combined — worry that California will try to snap up large amounts of the Northwest’s limited supply.

“We do believe the law will increase competition for renewable energy credits in the Northwest and will likely translate into higher cost for green power,” said Chris Robinson, the interim power manager for Tacoma Power. “Our biggest concern at Tacoma Power is … cost for our ratepayers.”

V. John White, executive director of the Center for Energy Efficiency and Renewable Technologies, a Sacramento, Calif.-based advocacy group, argued there should be enough green power for everybody. “I don’t know that the supply is so limited,” he said. “Between the Northwest and Nevada and Arizona, I think there’s a very large amount of renewables to choose from.”

But Ernst believes Northwest wind power, which accounts for the bulk of renewable energy in this region, is clearly in California’s cross hairs.

“In terms of renewable development, there really is not much else that they can go to,” he said. “Geothermal is not quite yet ready for prime time. Solar has a great deal of potential, but it’s still very early in the process and there’s not a lot online yet. In the near term, it’s Northwest wind.”

Moving to import

It’s been known for a while that California was headed to a 33 percent green power standard.

But it wasn’t clear if the state would try to produce most of its renewable energy within its borders or seek to import a significant amount from out of state.

The actions taken last week suggest the latter.

Schwarzenegger said he plans to veto Democratic bills approved in the Legislature setting a 33 percent renewable-energy standard, in part because they would limit how much green energy could be imported.

Instead, he issued an executive order that’s expected to allow imports.

Some Northwest utilities are particularly concerned about something the industry calls “unbundled renewable energy credits.”

Basically, California power companies could purchase green-energy credits from Northwest wind farms, but not pay to transmit the electricity to California. In other words, they’d leave the electricity here but still get credit for the green energy.

However, once a green-energy credit was purchased, the electricity left over could not be used by Washington utilities to meet I-937 requirements.

Schwarzenegger’s office said no decision has been made regarding a cap on the use of such credits to meet renewable-power obligations. In the past, though, he has supported a cap of at least 30 percent.

White, with the Center for Energy Efficiency and Renewable Technologies, said there’s an expectation the state will let California utilities buy such credits.

“Our view is that to get to 33 percent by 2020, we’re going to need all of the resources in state and out of state, and sometimes it will be convenient to not have to physically deliver energy to let it count,” he said.

Big power appetite

White said he does expect limits on how much green energy can be imported. But California’s needs are so huge that even meeting a relatively small proportion of its energy requirements could have big consequences in the Northwest.

The Northwest Power and Conservation Council projects there are about 1,700 average megawatts of untapped wind power that could be developed in Washington, Oregon, Idaho and Montana and brought online at a reasonable cost.

The power council was established by Congress to create plans to guide Northwest energy development at the lowest cost and least risk.

The Northwest is expected to need almost all of that untapped renewable energy to meet its own requirements through 2025.

Utilities’ outlooks differ

How the situation could play out in Washington depends on the utility.

Puget Sound Energy, which has more than 1 million customers, already owns and operates two wind farms and is developing a third in this state. The company says it’s not worried about increased competition from California driving up green-power costs because the utility already has a good supply.

“The bottom line for us is that by moving into wind energy early … we are well-positioned as it becomes a competitive market here,” said Andy Wappler, a company spokesman.

Tacoma Power and Seattle City Light are in a different boat. Both utilities said they’ll eventually need to buy more renewable energy and worry about increased costs.

I-937 cost limit

Rachel Shimshak, director of the Renewable Northwest Project, an alliance of nonprofits and renewable-energy companies, downplayed the concerns.

“The worry about cost is curious to me because in Oregon and Washington there are cost caps,” she said. “They were meant to anticipate if something funny was going on, that consumers not be harmed.”

I-937 limits the costs to utilities for acquiring renewable energy. This cost cap is complicated, but basically it means the additional cost for purchasing green power can’t exceed an amount equal to 4 percent of a utility’s annual revenue. Utilities can spend more if they want, but the law does not require them to do so.

Shimshak also said if California purchased a lot of renewable-energy credits but left the electricity in the Northwest, that would create an oversupply of power and depress prices in the region.

“So the cost of the renewable resource might be more expensive, but the price for buying power in the market as a general matter is going down,” she said.

Chris Robinson, with Tacoma Power, acknowledged the cost cap. His utility currently would have to spend more than $11 million a year extra on renewable energy for the cap to kick in, he said.

“We’re not spending that now,” he said. “Everybody wants to be able to comply without hitting the 4 percent cost cap. So this is going to get you to the cap faster.”

As for the prospect of California creating an oversupply of cheap energy that could drive down costs, Robinson said his utility won’t benefit if that happens.

Tacoma Power typically produces more power than it needs, so it wouldn’t have to buy energy on the open market and wouldn’t benefit from any lower prices, he said.

In fact, it could cost the utility money. Tacoma Power sells its surplus hydropower on the open market and uses the money to help keep rates low for customers, Robinson said.

A glut of cheap energy could mean Tacoma Power would earn less from the surplus power it sells.

Andrew Garber: 360-236-8266 or agarber@seattletimes.com