Puget Sound Energy - Regulatory Environment

Regulatory Environment

While a private business, PSE's activities are heavily regulated directly, and indirectly, formally and informally, by a large number of governmental and non-governmental entities intending that PSE "play fair" with ratepayers and other interconnected utilities. The company is required to operate in a "safe and sane" manner such that their facilities and transmission lines do not endanger human life and safety. They are also required to operate at the "lowest reasonable cost" where "lowest reasonable cost" is defined in law to include resource cost, market-volatility risks, demand-side resource uncertainties, resource dispatchability, resource effect on system operation, the risks imposed on ratepayers, public policies regarding resource preference adopted by Washington state or the federal government and the cost of risks associated with environmental effects including emissions of carbon dioxide. This "lowest reasonable cost" must be consider from the point of view of both PSE and of their ratepayers. New power plants are required by I-937 to be at least as clean as a natural gas turbine plant, and incremental amounts of non-hydro renewable energy generation must be added resulting in 15% by 2020.

The primary regulator of PSE is Washington Utility and Transportation Commission who effectively permits or denies PSE actions including rate changes, new facilities built, and old facilities surplused. Additional federal regulation of transmission and sales is added by NERC and FERC. BPA controls integration of PSE wind power facilities within BPA's area, including forcing shutdown of those wind turbines during spring high water events, when there is more electricity than consumers who want it -- Oversupply—and where BPA prefers to generate power from their hydroelectric dams. BPA control interacts with Northwest Power and Conservation Council control over BPA, which sets regional goals for conservation (salmon recovery) and long-term planning, and in turn non-profit public interest and environmental groups including Northwest Energy Coalition and Sierra Club weigh in to represent their view of the general public's (ratepayer's) interests.