Supporting Washington’s clean energy economy and planning for a clean, affordable and reliable energy future

BELLEVUE, Wash. (11/8/2024) 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 facts

• 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.
• 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 request to increase rates.
• Nothing in the bill forces electrification. What it does is requires PSE to develop a scenario demonstrating the costs of electrification that will be part of the integrated system plan we submit to our regulators in 2027.
• Most of House Bill 1589 is unchanged by the passage of Initiative 2066. The biggest impact of Initiative 2066 to PSE is changes to the state building codes. Those codes required substantial improvements in energy use by new commercial and residential buildings and limited the options for the way gas could be used in new construction. The passage of Initiative 2066 also allows us to continue offering customers rebates for the installation of natural gas appliances or equipment.

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. We must also comply with Washington’s Climate Commitment Act.

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.
• Regulatory mechanisms — The bill clarifies the application of two 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.