A Case Study in Energy Over-Regulation
Denial of the Sumas 2 Generating Facility
2001-11
Washington is facing a severe energy shortage. Low rainfall and California’s botched regulatory restructuring have made the problem worse, but none of them alone are the direct cause.
The primary cause is lack of generating capacity. In the past decade Washington’s population has grown enormously, yet our energy producing-capacity has failed to keep pace. The state-level Energy Facilities Site Evaluation Council (EFSEC) has played a major regulatory role in preventing the creation of enough energy production to keep up with the state’s growing needs. This is a role that is contrary to the agency’s primary mission.
According to its authorizing statute, EFSEC is charged to “seek courses of action that will balance the increasing demands for energy facility location and operation in conjunction with the broad interests of the public.” This includes the responsibility “to provide abundant energy at reasonable cost.”
Submitting an application to EFSEC costs $25,000. In addition, the applicant must pay for “a hearing examiner, a court reporter, additional staff salaries, wages and employee benefits, goods and services, travel expenses within the state and miscellaneous expenses.” EFSEC bills the applicant as the process unfolds. Total costs charged to the applicant can exceed $350,000 and the permitting process can last more than three years. In contrast, it takes about 18 to 24 months to actually build a power plant when or if it is approved.
Despite all the expense and effort involved, EFSEC has been remarkably ineffective. In the thirty-one years since it was established not a single plant has been built that has to go through EFSEC. A handful have been permitted, but none completed, and at least one of the already permitted plants is having additional conditions placed on it. The lone EFSEC-regulated plant is the nuclear Columbia Generating Center and it was permitted in 1972. In the 1990s not a single plant over 250 MW was built.
The failure of EFSEC to carry out its statutory responsibilities is dramatically illustrated by the agency’s denial of the Sumas 2 power plant application.
In January 1999 Sumas Energy 2, Inc. proposed a 660 MW natural-gas powered electric generation plant (Sumas 2) with an associated 200+ kilovolt transmission line and 5.9 mile natural gas transmission line (5.3 miles would be in Canada). The site selected was a 37-acre industrially-zoned lot in the town of Sumas, Washington, a half-mile from the Canadian border. The proposed plant would generate enough power to supply half-a-million homes. After more than two years of study, EFSEC turned down the proposal.
EFSEC acted in an arbitrary manner in recommending denial of site certification. The Sumas 2 proposal met all federal and state pollution regulations. Yet EFSEC fell back on subjective considerations in voting for rejection and further took into account global warming considerations without legal mandate or scientific support.
The legislature recently made some changes in the EFSEC process, but the agency remains an impediment to meeting the state’s energy needs. State policymakers can consider streamlining the complex energy regulatory process and remedy EFSEC’s obstructionist role by adopting one or more of the following policy recommendations.
1. The legislature should consider eliminating EFSEC. It has become a strongly politicized regulatory body which gives more weight to environmental concerns than are warranted by science or mandated by law. The primary impact of EFSEC is to prevent substantially-sized power plants from being built in Washington, no matter their merit or location. The state needs an agency that will fulfill EFSEC’s original responsibility.
2. If such legislation is not politically practical, the agency can be reformed by raising the threshold for plants which fall under EFSEC’s purview to 1,000 MW or more.[1] Viable, clean plants which can significantly enhance quality of life in Washington without degrading the environment are being rejected, or worse, never even proposed, because of EFSEC’s actions. The results of the current power plant siting process are higher energy prices and recurring energy shortages.
3. Limit EFSEC’s rulemaking authority. The agency has demonstrated that it makes rules arbitrarily and based on selectively chosen evidence.
4. EFSEC is an encapsulated and easy-to-study example of what is likely wrong in general with the regulation of energy generation in Washington. The governor or the legislature should convene a task force to:
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Examine current environmental regulations to ensure they are based on solid science and exist only where truly necessary.
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Ensure that other regulatory bodies throughout the state are correctly implementing the law and not inventing rules based on subjective opinions
5. No regulatory agencies should take into account CO2 emissions out of concern for global warming impact. There is no solid science to support such considerations nor is there a legal mandate to do so.
If there is an energy crisis in Washington, either in prices or in supply, the blame largely lies with burdensome state regulation through agencies such as EFSEC. This agency’s actions illustrate how government environmental regulations have created an atmosphere where virtually zero impact will be tolerated and therefore effectively zero major, new energy production can be brought on line. Common sense reforms will help return state energy policy to its primary responsibility: providing abundant, affordable power balanced with reasonable safeguards for the environment.
[1] The legislature recently raised EFSEC’s review threshold from 250 MW to 350 MW. This change would have had no effect on the Sumas 2 case.