Permitting & Environmental Review Case Study
Situation:
Towards the end of 2000, a large municipal electric utility located in Washington state realized it had a looming energy shortage on its hands, thanks to abnormally low rainfall in the Northwest and the collapse of California's energy deregulation policy. Prices for purchased electricity were running 10 to 100 times the normal cost.
Based on the utility's projections, they would not be able to provide sufficient electricity to its 146,000 customers at a rate that most consumers and businesses could afford, unless it could quickly add some temporary generation to its power supply portfolio.
Challenge:
To stay in business without drastically increasing its rates, the utility needed to supplement its generating capacity with low-emission diesel generators. To do this, the utility would have to secure all permits in just a couple of weeks; normally the process takes months.
Solutions:
The State Environmental Protection Act (SEPA) usually requires certain environmental analyses and public review before a permit can be issued. We argued that the utility should be allowed to go ahead and build the generators without going through all of the usual steps, for three main reasons:
An imminent threat to public health
Unexpected blackouts could cause medical emergencies, and people might lower temperatures to dangerous levels in an effort to cut down on electricity bills. Plus, significant surcharges would reduce the ability of senior citizens, and others on fixed incomes, to pay for critical health care and medicine.
A danger to public and private property
Without power, the city would be unable to upkeep its facilities or enter into contracts for essential public services. Businesses would shut down and foreclose on assets if prices went too high.
Serious environmental degradation
Customers would turn to alternative sources of electricity that would significantly reduce local air quality: open flames, wood burning stoves, emergency generators, etc.
To supplement the argument, our attorneys helped the utility to find compromises which would be acceptable to the air agency regulating it. The agency agreed to a plan whereby the utility committed to install additional emissions control equipment, retrofit conventional diesel fuel engines, mitigate for actual emissions, and reduce operations at the facility when it could.
Results:
In late January 2001, the utility received permission from the agency to begin operating 30 diesel generators, producing nearly 50 megawatts of power. Washington's Governor Locke soon thereafter agreed that our client and other power companies could operate diesel generators without air permits, provided that they started the permit process.
The people and businesses that rely on the utility continued to buy their electricity without additional rate increases, and the utility continued to operate without further significant financial consequences.