Cost of Qualifying Renewable Energy
Lewis County PUD serves the people of Lewis County, now approaching 90 years. “At your service” is emblazoned in our logo, and keeping Lewis County first in thought and action is what we do, delivering at-cost service, safely, reliably, and professionally to our customers every day.
As we set our biennium budget we remind readers that years of incremental regulatory layering adds costs, raising the price of what once was a simple, clean system. PUDs use rates — not taxes — to recover costs, and every external mandate on Lewis PUD is a cost to our customers — about $50 million net over twenty years, and rising.
Energy in Lewis County
The simplicity of early cost-based hydro rested on surplus; build large dams and share the benefits of electricity. The region met subsequent growth with thermal generation and energy imports. The coal plant in Centralia, for decades the largest coal-fired facility in the West, ran two 670-plus megawatt units within our service territory. The first unit came online in 1971, the second in 1972, fed by the adjacent mine.
The regulatory shift began with the federal Public Utility Regulatory Policies Act (PURPA) of 1978. Enacted during the energy crisis to promote renewables and efficiency, it forced local utilities to purchase independent power, fundamentally altering consumer rate structures — the first act to reach inside local boards' resource and rate decisions. Later, the Pacific Northwest attempted a nuclear build through the Washington Public Power Supply System (WPPSS), which collapsed in 1983 in what was then the largest municipal bond default in American history, roughly $2.25 billion. Consequently, marginal growth in the Northwest was increasingly served by coal, natural gas, and energy imports.
In 2006, industrial renewable energy arrived with the Energy Independence Act. Then the 2011 TransAlta Energy Transition Act stopped the coal plant's first unit from generating in 2020, and its second ceased at the end of 2025, even as U.S. Department of Energy emergency orders have directed the plant to remain available for operation.
Legislation changed the power dynamic and opened the toolkit for interested parties to direct how energy in the region is produced, acquired, and delivered.
Ongoing Regulatory Layering
Legislative mandates are the norm: EIA in 2006, CETA in 2019, and CCA in 2021. Additionally, regional markets added complexity through the Western Energy Imbalance Market, day-ahead markets, and the Western Resource Adequacy Program. Every one of these constructs requires modeling, reporting, counterparty management, and hedging sophistication. Some deliver real value by connecting supply availability to demand, but some create duplicative mandates.
EIA — Sell Water, Buy Wind
Via Initiative 937, Washington voters approved the Energy Independence Act in 2006 requiring by 2020 Washington's eighteen largest utilities to source 15 percent of load from “eligible renewable resources”, a definition written to exclude existing hydropower that already served the state carbon-free. For Lewis PUD, the compliance mechanics reduce to the title: we purchase wind energy we do not need to replace hydropower we always had, and also must buy Renewable Energy Credits (REC) to cover any variances. These obligations are the largest component of the clean-energy regulatory compliance money the District spends each year, buying little reliability and little resource certainty for our ratepayers.
CETA — Two Ledgers, One Target
Washington’s Clean Energy Transformation Act of 2019 removed coal from the energy mix, requires a greenhouse-gas-neutral portfolio by 2030, and requires 100 percent renewable or nonemitting supply by 2045. Unlike the EIA, CETA counts hydropower. It also adds a low-income funding mandate, growing with load and rates, with no sunset. CETA also arrives with its own planning, reporting, and social-cost-of-carbon apparatus layering on top so the District maintains two tracking ledgers.
The Legislature conceded the overlap and wrote a dual-ledger fix into the statute itself: the EIA code was amended when CETA passed. EIA’s RCW 19.285.040(2)(n) was amended to include:
(n) Beginning January 1, 2030, a qualifying utility is considered to be in compliance with an annual target in (a) of this subsection if the utility uses electricity from: (i) Renewable resources and renewable energy credits as defined in RCW 19.285.030; and (ii) nonemitting electric generation as defined in RCW 19.405.020, in an amount equal to 100 percent of the utility's average annual retail electric load.
Under this revision, beginning January 1, 2030, a utility complies with the EIA if 100 percent of its average annual retail load comes from renewable resources (read: all hydro now qualifies) and renewable energy credits as defined in the EIA itself, together with nonemitting (read: nuclear) electric generation as defined in CETA. Columbia Generating Station is roughly a tenth of the federal fuel mix that was not included under the original EIA. Hydro plus nuclear plus renewable energy credits reach 100 percent — the Legislature made a singular compliance target.
CCA — Carbon Market Trading
The Climate Commitment Act is a state program requiring carbon emitters to buy Department of Ecology-created allowances at quarterly auctions.
Utilities currently receive Ecology allowances at no cost, based on a forecast of each utility's supply, demand, and program cost burden. Lewis PUD consigns allowances to the quarterly Ecology-run auctions with proceeds used for the benefit of our ratepayers and low-income rate impact mitigation. Consigning our allowances provided funding offset since 2023, but it’s on a downward trend as Ecology rewrites the rules this month to reduce allocations (Ecology AO #24-02). Notably under CCA, no utility may receive no-cost allowances after 2045.
Judicial Rate Impacts
In February 2026 the federal district court in Oregon entered an amended preliminary injunction expanding fish-passage spill on the Columbia and Snake River dams: spring spill at The Dalles stays at 40 percent with a 169,000 cubic-feet-per-second cap around the clock, full summer spill was extended through the end of August, and around-the-clock fall and winter spill now includes March where several projects previously spilled only four hours a day. Due to this increased spill, BPA's multi-year study released this summer now models materially less federal generation from the same fixed-cost system. Lewis PUD purchases a share of the federal system's actual output, so the court order flows directly into our power costs.
Incremental Cost of Regulatory Requirements
Lewis County ratepayers spent on average $3 million annually since 2006 complying with Washington state’s Energy Independence Act (EIA). Twenty years in, the cumulative net cost to our customers stands at $60.1 million. That is about $1,846 per customer served since the start of these programs, equivalent to about $2,500 in 2026 dollars. This is the cost for wind energy contracts, renewable energy credits in a ledger, compliance audits, and external reporting, currently adding roughly 0.3 cents to every kWh in ratepayers’ bills.
Figure 1: Annual Net Regulatory Cost
Net cost, including CCA credit sales.
Lewis PUD has long-running low-income assistance programs for our community’s neediest, set in motion by your elected Commissioners — about $900,000 of ratepayer funds in 2025. CETA now makes that assistance a statutory obligation, with funding tied to "need" measured as energy burden, so the obligation grows with every rate increase — an estimated $200,000 of added annual cost by 2030, approaching $1 to 1.5 million by 2045.
The CCA returned on average $3 million annually to Lewis PUD since 2023 — $9.4 million to date — through Ecology allowances for low income and energy cost increase offsets. This has helped keep recent rate increases lower, but as mentioned Ecology’s largess won’t last long with revised rules to reduce allowances, leaving more CCA funds for the state's own use.
The February 2026 judicial spill order is estimated to increase costs by $0.5 million in 2026 and $1 million in 2027. According to BPA and third-party studies these costs will continue at an estimated $1–2 million per year increasing with inflation, load growth, and varying on water resource availability, adding about 1–2% to rates indefinitely, equivalent to 0.07 to 0.14 cents per kWh to ratepayers’ bills.
Statewide Rate Landscape
Rate pressure is not limited to public power. For perspective, Puget Sound Energy raised typical residential electric bills about 12 percent in each of 2025 and 2026 and has filed for roughly 30 percent more by 2029, attributing the pressure to power supply costs that have tripled since CETA passed, while press accounts put Avista near 14 percent next year pending docket verification.
Public power is on the same path: Seattle City Light increased 5.4 percent in 2026 and proposed back-to-back 9.5 percent increases for 2027 and 2028. Cowlitz PUD's 2024 rate increase was its first increase in seven years, with a 4 percent rate increase in 2025 to absorb BPA's 4.2 percent power and 12.4 percent transmission increases. Snohomish PUD raised 4.6 percent in 2025 with another 2.5 percent this April.
The pattern is the same everywhere — Klickitat, Pacific, Mason, Grays Harbor — imposed costs cause rate increases. The cost of power and transmission is over half of Lewis PUD's electric operating budget, in line with peers statewide. As a result, the majority of utilities’ budgets are set in Portland, Olympia, and federal courtrooms before any local decisions are made.
Conclusions and Solutions
Complying with the state's clean-energy statutes since 2006 averages about $79 per average customer per year for electricity, net of CCA credits.
Your energy bill has become the state's quiet method for incentivizing outcomes: a family's power, fuel, and heating purchases now fund multibillion-dollar state programs and wind farms without being called a tax, and no state or federal elected official is held to account for outcomes. Lewis PUD’s cost of generating, buying, and delivering power remains among the lowest in the nation thanks to abundant hydropower, but the price of policies carried on top of that system is increasing, contributing to upward pressure on electricity rates.
As Olympia revisits the overlap between the EIA, CETA, and the CCA, Lewis PUD works for plain-reading interpretations that count hydro, retire redundant targets, eliminate bureaucracy, and return conservation, not wealth redistribution, as the best path forward. The February 2026 spill order removes federal generation in the very months the system runs tightest, adding costs through litigation Lewis PUD is not a direct party to, under a spill regime our board of Commissioners did not vote on, and our customers pay the bill.