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State Regulators Green Light Microsoft-PSE Renewable Energy Contract

OLYMPIA, Wash. – Today the Utilities and Transportation Commission approved an all-party settlement that will allow Microsoft to achieve its corporate commitments to carbon neutrality and renewable energy while at the same time protecting PSE’s ratepayers from costs shifts, and furthering state policies regarding the development of renewable resources and supporting low-income initiatives.

The settlement agreement, approved by the three-member commission, establishes a special contract between Microsoft and PSE that allows the technology company to source energy from the wholesale market or construct its own generation, while making commitments to:

  • Procure only renewable and carbon free energy resources,
  • Maintain Microsoft’s contributions to PSE’s energy efficiency program, and
  • Pay a $23.6 million transition fee that PSE will return to its customers.

In the settlement, Microsoft agreed to maintain its current contributions to PSE’s low-income bill assistance program, and provide additional funds for low-income energy efficiency services and renewable energy technology.

“Microsoft has demonstrated that it is committed to achieving 100 percent carbon-free electricity to power its operations in Washington state,” said UTC Chairman David Danner. “The agreement we approve today supports the company’s impressive efforts in this area, and does so without impacting Puget Sound Energy’s other customers.”

The commissioner’s stated in the order that:

“The settlement, in these broad terms, has much to commend it in terms of advancing important public policy goals, including policies directed to protection and even improvement of environmental quality, and policies that ease the burden on low-income households for whom essential energy services costs demand a disproportionately high share of available financial resources. The settlement appears to be protective, too, of the interests of PSE’s remaining retail customers in not being called upon to bear additional costs in the near term as Microsoft’s departure from retail service leaves significant stranded costs.”

The settlement did not address whether Microsoft would be responsible for a portion of the costs of decommissioning PSE’s coal-fired electric plants in Colstrip, Montana, in the event those plants are retired. However, the commission agreed that as a long-time PSE customer, Microsoft is responsible for those costs.

Commissioner Jay Balasbas issued a separate statement to express his view that approval of the agreement should have also been conditioned on Microsoft’s acknowledgement of its responsibility for those costs. He stated that “conditioning approval of the settlement agreement on the Colstrip issue would have further advanced Microsoft’s commitment to PSE’s remaining ratepayers.”

Chairman David Danner and Commissioner Ann Rendahl responded that such a condition was not necessary. “[W]e determine as a matter of law that Microsoft is responsible for its share of Colstrip costs, regardless of whether we approve the settlement or Microsoft becomes a non-core customer of PSE. While we may have preferred Microsoft to accept that responsibility as part of the settlement, we believe that such acceptance is not a prerequisite to Microsoft’s obligation.”

In October 2016, PSE filed a tariff to create a new retail service for large industrial or commercial customers that could acquire energy from power suppliers other than PSE.

The all-party settlement was filed in April and signed by UTC staff, PSE, Microsoft, the Public Counsel Unit of the Attorney General’s Office, the Kroger Company, The Energy Project, the Northwest & Intermountain Power Producers Coalition, Sam’s West Inc. and Walmart Stores Inc., the Industrial Customers of Northwest Utilities, and the NW Energy Coalition.

Bellevue-based PSE provides electricity service to more than 1.1 million electric customers in eight Washington counties: King, Pierce, Island, Kitsap, Kittitas, Skagit, Whatcom, and Thurston.

The UTC is the state agency that regulates private, investor-owned electric and natural gas utilities in Washington. It is the commission’s responsibility to ensure regulated companies provide safe and reliable service to customers at reasonable rates, while allowing the utility the opportunity to earn a fair profit.