NW Natural has filed for a rate adjustment with the Washington Utilities and Transportation Commission (WUTC) to recover costs associated with the state-mandated Cap and Invest Program and associated new rules adopted by the Washington Department of Ecology. Starting January 1, 2024, this program will result in new costs to customer monthly bills if approved by the WUTC.
What is the Cap and Invest Program?
The Washington Cap and Invest Program stems from the 2021 Climate Commitment Act (CCA) passed by the Washington Legislature. This establishes a market-based program to reduce greenhouse gas (GHG) emissions and achieve state-set greenhouse gas (GHG) limits. It will impact every energy user in Washington. Learn more at the Washington Department of Ecology’s website.
How does it work?
Under the CCA, natural gas distributors, including NW Natural, transportation (vehicle) fuel suppliers and large stationary sources are required to reduce GHG emissions in line with limits set by the state that decrease aggressively over time. In Washington, impacted entities must purchase allowances equal to their covered GHG emissions, either through quarterly auctions hosted by the Washington Department of Ecology or on the secondary market.
How will customers’ bills change as a result of the CCA?
To comply with the Cap and Invest Program, NW Natural has filed an increase for overall natural gas rates. This adjustment has two components that follow the state’s rules. One is a State Carbon Reduction Charge – a projection of NW Natural’s costs to comply with the Cap and Invest Program – and the other is a State Carbon Reduction Credit, which projects revenues from allowances sold at auction. This credit is reserved for customers connected to NW Natural’s system prior to July 26, 2021, and Identified Low-Income Customers.