Washington's Clean Energy Future
Washington is making the change to a carbon-free electricity supply by 2045. Avista is working to ensure energy stays safe and reliable during the transition.
[Ariana Lake:] Heather and Scott, thank you so much for sitting down with me today. We know that energy is obviously a big part of our lives because we work at Avista Utilities. It's also a part of everybody's life. And the reality is for many people, we just don't think about our utility company, what they're doing, the choices they make.
And in some ways it's a good thing, right? Because we all have so much to worry about. On the other hand, life is changing. Costs across all areas of life are going up. Energy is changing and people have a lot more questions. And I know you hear questions from people in the community. I do working on our communications team.
And so today is all about just setting the stage to better understand where does energy come from? How are we thinking about managing costs? What are some of the dynamic laws and the different programs that are in place impacting us, and what can customers do to take advantage of programs to help them?
So I'm looking forward to the conversation. So if we can just get started, can you to just frame up why this kind of conversation is important at this time.
[Heather Rosentrater:] We're at a time that things are changing faster than they ever have before, and so it feels like a really good time to give more information, share more information about what's changing, why it's changing, and what we're doing to mitigate the impacts of that change, and just prepare for more change into the future.
[Ariana Lake:] Because we have everything from new energy legislation to different technologies. I know that's your area of expertise is where the power comes from, how we get it to people's houses, right. Can you talk a little bit about that foundation, just so we can set the stage for anyone who's new to this topic?
[Scott Kinney:] Yeah, I think it's important to understand really how we started as a company. I mean, so for 136 plus years, we've been using hydropower as really our primary resource. And that's really what we were built on to serve our initial customers back then. And, you know, it's a great resource for us because it's reliable.
It's affordable. It's clean. Right. And that's really where the industry is transitioning to. So today we have about55% of our energy capacity that comes from hydro. Most of that's owned and operated. We do have some long-term contracts for some other utilities to fill in the gap there. And then beyond that, we have about another 10% of our resource mix from a capacity perspective that comes from solar and wind, primarily wind. And we'll look to continue to acquire more wind resources as well as we continue this clean energy transition. And then the remaining third of our generation mix really comes from the use of natural gas as a fuel in our thermal generation plants.
And natural gas is really critical from serving our electric customers. It's kind of our backstop fuel. It's to fill the gap. So if we don't have hydro or water in our in our rivers to help serve our customers or, or the wind and solar isn't producing the capacity that we expect out of them, then we fill it in with natural gas.
And so, it really is a really critical backstop fuel for us, and it's also an opportunity, if we have excess that we can sell in the market, and it creates additional revenue for our customers to help bring down rates.
[Ariana Lake:] We'll talk a little bit more about the transition to clean energy in Washington and how that gets into that mix, because we have a lot of questions about that. But I think it's also important to talk about, you know, we were founded on the banks of the Spokane River. You talked about that. We see the Washington Water Power Company building downtown. I know I have a sense of pride when I see it. It's iconic. Can you talk more about our history here? And like, why are we the utility in Eastern Washington?
[Heather Rosentrater:] There were several local businesses that recognized they could be even more competitive if they had electricity. And so they decided to form Washington Water Power and, and leverage the resources that we uniquely have here to generate electricity back 137 years ago.
[Ariana Lake:] Can you both talk about maybe some of the other things that people should be understanding more about when we talk about what's driving the changes in our electric system and, and that sort of thing?
[Scott Kinney:] Sure. I'll start off and then, Heather, if you want to fill in. You know, I've been in this industry for about 35 years and it's gone quick. But I can say the last five years, the change we've seen in our industry is, is equivalent to the previous 30 in my career. And there's a lot of things that are impacting that. A couple of the key ones, from my perspective, especially more recently, is we've seen a really significant uptick in load growth and forecasted demand over the last couple of years and then going forward.
[Ariana Lake:] Can I ask what is load growth and forecasted demand mean?
[Scott Kinney:] Yeah, absolutely. You know, it's really how our customers use their energy. And we're seeing them use it more and more, as well as other opportunities for industrial commercial growth within our service territory, even with existing customers, as well as other potentially new things like data centers and things like that.
But, you know, we do a lot of planning to try to figure out what's the best way to serve that, that demand growth. But we've seen a significant uptick. In fact, in the last 3 or 4 years, we've set both summer and winter peak demand in our history. So of course, that's just a good representation. That demand is growing.
So that's one of the key factors or changes that we're seeing, because in the previous decade we hadn't really seen a lot of growth. So that's really impacting us and our infrastructure and what we need to to either increase or build new to meet that growth. Another area I think that's having a significant impact on not only Avista, but even the region as a whole, is the transition to clean energy and using cleaner resources to meet that, that current demand and future demand.
And, you know, we're built on hydro, which is a great clean base to build off of. And like I mentioned earlier, we're continuing to add more wind and solar to our portfolio, which is great, right? It's really good for the environment and our customers. But with that, though, we do, because those types of resources are more variable in nature and they're not always there when we need them necessarily to meet those peak load hour events.
It requires us to really add more than we necessarily need, so that we ensure that we do have adequate energy created when we need it. And then along with that, though, we have to get that energy to our customers, to the homes. So we need to invest in additional transmission and distribution to be able to deliver that energy to the homes.
And so that's something else that we're working a lot on as we bring on new energy and new resources to serve our customers. And then finally, you know, we've already talked about it. We're 136 plus year company. Some of our facilities have been around almost that long, so it's time to reinvest in them and refurbish them, upgrade them where we can.
But so we've got a lot of work to do there as well, just to replenish all of those facilities. Is it really served our customers over our existence? And we still need them and more going forward.
[Ariana Lake:] It's surreal to walk through. We did a tour of the dam, and it was my first time inside of a hydroelectric facility, and they were pointing out parts of the dam and technology that has been there since the 30s, the 40s, the 50s to know that the company is being a steward of those resources for so long, it makes me feel good, and it's neat to hear about that.
[Heather Rosentrater:] Yeah, and I would add that related to when we are ready to change the equipment out, that the cost of that equipment, of course, has gone up since the 20s 30s and 40s. And even just in the last couple of years, we've seen significant increases from inflation on the cost of our infrastructure. One of our large transformers, for example, in our substations, has gone up from being about 425,000, which is still significant just over the last couple of years, increased to about $1.25 million for that same transformer.
So beyond the increased work we're doing to manage the increased risk around wildfire and extreme weather conditions. A lot of the work we're doing is just normal business operations that we've always done, and that is important to continue to keep the same level of reliability on our system. And unfortunately, just over the last five years, the cost to do that work has increased significantly.
[Scott Kinney:] Yeah, even with our larger facilities like our dams. Right. They age over time and we've maintained them and we've replaced them over time as well. And we continue to do that. But as Heather indicated, the cost to do that is increasing. And these facilities are fairly large, so that impact to our customers can be a little bit more now than it was in the past.
[Ariana Lake:] So there's this term that gets thrown around grid hardening. What does that mean?
[Heather Rosentrater:] So as we talk about these increased risk related to wildfire and increased extreme weather conditions that we experience, grid hardening helps make our system more resilient.
[Ariana Lake:] Okay. So if that's happening in my neighborhood, what does it look like?
[Heather Rosentrater:] Yes. So we're there's a lot of different things that we do based on the situation. So usually if it's a more mature neighborhood and depending on the ground type and how costly it is to underground, then if it's basalt, then we're probably going to be doing things like changing wood poles to steel poles and changing out wood cross arms to fiberglass cross arms, even putting in covered conductor.
And then in areas that are more cost effective for undergrounding than we're going to be undergrounding that infrastructure inflation and the impact of that on our equipment and material and labor costs is one of the biggest drivers of those costs that we're seeing. Just an example related to grid hardening. The cost per mile of doing that work has increased over double in the last few years, from about $51,000 per mile to about $108,000 per mile just for that one program.
[Ariana Lake:] And these are not optional things like we are here to keep our community safe and make sure they have waht they need. Right?
[Scott Kinney:] You know, it's really about finding the sweet spot that that we that we look for solutions that are reliable, affordable and then sustainable. Right. And so it's getting harder and harder to thread that needle for us to meet all three of those objectives. But that's how we really look at our long term planning is what solutions can meet all three of those and the best way they can.
[Heather Rosentrater:] We're responsible for providing reliable service to our customers, and unfortunately, the ability to provide that reliable service continues to get more complicated from a cost perspective related to inflation and the type of work we need to do to mitigate extreme weather conditions and mitigate risks as they're increasing around wildfire. All of that is causing increased costs. And fortunately, as part of the process, we work with the Washington Utility Transportation Commission to ensure there is a balance between reasonable prices and making sure that we can attract investment into the system to continue to support that safe and reliable system.
[Scott Kinney:] Our customers are going to incur some additional costs as we have to either replace the equipment, deal with weather events, and or expand our system. But, you know, I think the approach that we're taking is to really look at all opportunities and to look at things maybe differently than we have in the past. Look at innovation. How can we do things differently? Right. To help as best we can control those costs for our customers. Because, you know, we live in the community, our families, our friends do as well. Right. So we're a part of this as well. And so again, it's important for us to turn over all the stones. Look at all the opportunities and just see what we can do, how we can do things differently going forward.
Ariana Lake:] Interesting. I know one of the things that your teams deal with is understanding how clean energy legislation in Washington impacts us, and that impacts the cost of energy. Can you talk a little bit about that?
[Scott Kinney:] Yeah, I'm going to try. This is a tough one. I'm going to try to talk about it in a way that people can understand, because it's really complicated. But there are two pieces of legislation in the state of Washington around carbon emission reductions. And the first one I'll talk about is called the Clean Energy Transformation Act or CETA. And that one really is focused on electric utilities only in the state of Washington. And the effort there is to really transition to cleaner resources and start to eliminate carbon emitting resources to serve customers in Washington. So the specifics around that piece of legislation is by 2030, we need to serve 80% of our customers with clean, non-emitting carbon emitting resources. And then by 2045 to really serve our customers with 100% clean energy. So that's the requirements specific for electric utilities. With our existing baseline and hydro plays into that, talked about that already, and some new resources, primarily wind, that we plan on bringing into our portfolio in the next three to four years. We should be positioned to meet that 2030 objective of serving our customers with 80% clean energy in a really affordable way. So we're pretty happy about that. So that's the first piece of legislation, again primarily around electric customers.
The second piece of legislation in Washington is called the Climate Commitment Act, CCA for short. We like to use acronyms. And that piece of legislation is more encompassing across the state. And really, it's to get all industries or larger emitting industries and customers that emit more than 25,000 metric tons of emissions annually to reduce those emissions. And it's facilitated through what's called a cap and trade or a cap and invest mechanism. And so the state set a baseline several years ago and then they reduce that baseline by a certain percentage every year to try to get to their objective to be 95% reduction in emissions by 2050. So that's the ultimate goal.
[Heather Rosentrater:] We have broader clean energy goals beyond just what policy is driving for us, and we recognize the the value of advancing it. We've had clean energy as part of our portfolio and our history, and know that we can always get better and want to think about how that can benefit our entire community as we move down that path and think about how we move in that direction in a way that ensures reliability and considers affordability. And that's a tough challenge. But we do hard things, and we're committed to continuing to apply innovation and to figure out how we continue to move in that direction.
[Ariana Lake:] Mhm. Anything else you'd add?
[Scott Kinney:] We're built on clean energy, right. We have been since our existence and and we continue to look for those clean energy opportunities really to reduce the carbon footprint because it's important for our communities, right? And it's important for our customers. And so that's a focus for us. It'll always be a focus for us. And, you know fortunately we've got a great base to build off and we'll continue to build going forward. But the other thing that we factor in, of course, as we look at our clean energy transition is, and Heather hit on it, is trying to do it in in a most cost-effective way, right? Because that's also important. It's something that we have to factor in, but we can't forget about reliability as well. So, it's finding that I talked about it earlier that threading that needle in a way and looking for those opportunities. But clean energy is who we are.
[Ariana Lake:] Another big topic that we're hearing about from our customers is around large customers coming into the area, such as a data center, and they have these huge energy needs and there are folks wondering, am I going to foot the cost if you have to build more infrastructure for them? And so we actually have a video from one of our customers and a member of our Equity Advisory Group. That is a group that advises Avista. And they have a question on that topic, so I'm just going to pull that up here.
[Lynn]: Hi, I'm Lynn and I sit on the Avista Equity Advisory Group. In that capacity, I represent rural areas of Eastern Washington in the Avista service area. My question is, what is Avista's strategy to support and manage both the extraordinary increase in electrical demand created by these data centers and the very large cost created by developing and installing the required electrical infrastructure necessary for such data centers to be up and running without passing much, if any, of that cost directly on to Avista's consumers.
[Heather Rosentrater:] We've talked a lot about things that are increasing costs for us and our customers, and so we are always looking for ways to support cost, reducing that cost pressure. And one of the things we have identified is we think large loads, growth data centers can be an important tool that actually reduces cost pressure for customers because we have fixed costs that our existing customers are paying for. And so if we have more customers or more megawatt hours that we can spread those fixed costs amongst, then that does reduce rate pressure, pressure for our existing customers. And so we do see large loads as being a way to actually support affordability for our customers. And we believe that we have the right tools through special contracts to ensure that our system continues to be reliable and that the data centers cover the costs, any additional costs that they would be creating on the system and actually provide a net benefit back to our existing customers from an affordability perspective.
[Ariana Lake] Interesting. Wow, I'm learning so much. I'm so glad that Lynn asked that question. So, let's talk since we're talking about cost management and what Avista does on its end to think about the cost that customers are going to be facing. Let's dig into that. And we actually have another customer question on this topic. So, I'm going to go ahead and pull that up.
[Margie:] Hi, my name is Margie and I work for Spokane Regional Clean Air Agency and I serve on Avista's Equity Advisory Group and I am here today to ask a question. There is not a perfect source of electricity as far as the environment goes. What is Avista doing to promote energy conservation and reduce energy demands?
[Heather Rosentrater:] So we have a a longstanding history of supporting energy efficiency programs on our system. We recognize that the least cost energy is the energy that you don't use. And so we have a lot of programs that support energy efficiency for our customers that help manage our energy needs for our customers. And we also don't stop at just energy efficiency for our customers. We do a lot on our system that supports the way we operate to be as energy efficient as possible. Over the years, we've made operational changes to our system that takes advantage of new technology advances that have, over the years, reduced the energy usage of an equivalent of thousands of home's usage based on just operational changes that we make that don't change the experience our customers have with how we serve them.
[Ariana Lake:] Interesting.
[Scott Kinney:] Yeah, maybe I'll add in too, you know, when it comes to conservation, you know, we just issued a request for proposal where we go out for a competitive bid for new resources based on our demand growth. But what with that request, we also ask for demand response programs. So, how can we get our customers to reduce their load during those peak load hours, which then reduces the amount of generation that we need? So, it's not about adding more megawatts, it's actually about reducing megawatts on our system. And so through our our competitive process, we are going to be working with two different consulting companies that are called aggregators and they'll go out and either work with our residential customers to look for opportunities to save during the peak load hours. And then one of the other programs is to work with our commercial industrial programs. And so through those both of those programs, we're hoping to reduce our peak load by about 40 megawatts over the last next couple of years. So we are very engaged in the conservation side as well.
[Ariana Lake:] Interesting. Can you give us perspective of 40 megawatts, what that would be? I don't know if you know off the top of your head for like. is that like an average neighborhood in Spokane for a year?
[Scott Kinney:] Yeah, you know it's it's quite a bit. It's tens of thousands of customers for sure, but it's also equivalent of several of our dams that are on the Spokane River that we operate.
[Ariana Lake:] Energy is changing in so many ways and so dynamically as we've talked about and innovation is really at the core of a lot of the decisions you all make and the conversations we're having. Can you talk more about the role of innovation at Avista and in the future of energy here in the Inland Northwest?
Heather Rosentrater:] Yeah, we pride ourselves of having innovation as just a part of our DNA and we see it as an opportunity for continuous improvement and to support affordability for our customers. We know as technology advances then we have new ways of doing things. And so we've used innovation around automation technology, metering technology as it's advanced, communication technology as it's advanced. Being able to apply that to our system, to be able to operate in even more effective ways that support safety for our employees and support enhanced reliability for our customers and supports affordability for our customers. One of the things that our employees has taken on as a moniker is, how might we? And I love that it enables a way of looking at things. Being a company that's over 130 plus years old it can feel sometimes like, well, haven't we already figured things out? But again, with new technology as it advances and new challenges that we're having to manage, having that how might we philosophy, I think has really helped us and it motivates our employees and it's exciting to see the new solutions that they come up with.
[Ariana Lake:] Let's talk a little bit about the programs and resources available to customers. I know when I first came to Spokane from Montana and I saw that Avista had a portal where I could look and see what was using energy in my household, that amazed me. And I'm not just saying that because I work here. I really was like that is really neat to see. So can you talk a little bit about some of the programs that help customers take energy understanding and energy use into their own hands?
[Heather Rosentrater:] That's been part of the the innovation and technology advances has allowed us to deliver more information to our customers than we ever have before. And so it is exciting to be able to have customers get enough information that they can have their bills predicted for the month and set a level that they want to budget at and if they're trending above that, to get some kind of an alert and then be able to dig into their usage and understand better that temperature impacts usage significantly. And so sometimes customers can feel like, I went from having three people in the house to two people in the house over the last couple months. Why did my energy prices go up? And a lot of it might be because we moved into a colder period of the year. And so even though you have fewer people, you have colder temperature, your heating system is running more often. And so to be able to give that kind of insight to customers so they're not feeling in the dark about what's going on is really exciting place to be.
[Scott Kinney:] Yeah. I mean we look for opportunities really to try to help educate our customers in their usage and and also on our business, right? And so we have a lot of opportunities to do that and I think what I would add is we want our customers to engage with us and there's a lot of ways for them to do that. We have multiple advisory committees that are very specifically focused about different things, but they're open for our customers to be a part of and we need that information. We value it to help us make the right decision, right, on behalf of our customers. So again, we ask our customers, please engage with us. Reach out to us. There's information out on the internet. They can call in to our customer services folks and they can direct it to the right place. But that information is important for us to help us make the right decisions.
[Ariana Lake:] It's really helpful to understand that there are programs for us to better understand our energy use. But what about folks who are saying, I'm looking at my bill and I don't know how I'm going to pay that this month. Can you talk about some of the resources there?
[Heather Rosentrater:] So, we know that especially now more than ever, our customers are experiencing significant challenges from cost perspectives in many aspects of their life. And so to have the energy increases as well is really challenging. And we want our customers to connect with us, to reach out to us when they're experiencing those challenges. And we've been there for our customers through our 137 years and we're still here for them. We have a lot of programs that they might not be aware of and so if our customers are struggling with paying their energy bills, we want them to reach out so we can connect them with possible resources.
[Ariana Lake:] This has been such a great conversation. We've covered a lot. So what would you want as the one or two sentence takeaway for customers to keep in mind?
[Scott Kinney:] Yeah, I think you know we recognize we provide an essential service for our customers, right, to help them in their lives. And as we work through the transitions that we're going through that we talked about today, we really need customers to engage, right? Provide us some feedback, input, things that are important for them that then we can factor in to our decision making as well as coordinate with them in really making sure that we're meeting their needs. And so that customer interaction engagement is really critical for us. And there's multiple ways for our customers to engage with us. They can reach out to our website, they can call us, they can email us. But again, what's important is for us to get that feedback and to partner with them.
[Heather Rosentrater:] Yeah, I would just say we're in this together and we know how important energy is to just modern life. And as we move forward to support that future of clean energy while being still affordable and continuing to ensure reliability, it will be more important than ever to work together and work with our communities and our customers. And we again want our customers to reach out when they have questions, when they have concerns, and we look forward to helping to support that clean, affordable, reliable energy future together with our customers.
[Ariana Lake:] Well said. Well, thank you so much for the conversation today.
Adjusting our resources and reducing our carbon footprint.
Going forward, energy production across Washington will move away from fossil fuels that emit pollution and greenhouse gases. This aligns with Avista’s goal of offering a mix of renewable energy solutions to our Washington customers.
About 60% of Avista’s energy already comes from naturally occurring resources, like wind, solar, hydropower and biomass. The changes we are making ensure that 100% of our energy is naturally occurring, lessening our environmental impact on the next generation.
Our clean energy commitment involves:
- Helping customers save energy with efficiency programs
- Reducing our greenhouse gas emissions
- Keeping electricity reliable and affordable
What's next?
The Clean Energy Transformation Act (CETA) requires that all Washington energy be free of greenhouse gas emissions by 2045. As we work toward that goal, we will:
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Eliminate all coal-fired electricity by the end of 2025 |
Use a carbon-neutral supply of electricity by 2030 |
Source 100 percent of electricity from renewable or non-carbon-emitting sources by 2045 |
We support equity in energy.
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Named Communities Investment Fund (NCIF)Named Communities are those most vulnerable to the effects of pollution and climate change, due to socioeconomic and other factors. NCIF is a competitive grant program that provides funding for projects, programs, and initiatives benefiting these communities. |
Equity Advisory Group (EAG)A group of community partners in Washington that provide Avista with input, feedback, and guidance around equity and community engagement as it relates to the shift to clean energy. |
Learn more
- Sign up for our newsletter and get the latest updates.
- Be a part of the CEIP advisory group that is involved in our clean energy plan.
- Attend our upcoming public participation meetings.
- View frequently asked questions (FAQs)
If you still have questions, want to share ideas, or would like to join a committee, please write to us below.