Governor Gary Locke’s Remarks
Press Conference Announcing Bipartisan Legislative Package on Energy
January 24, 2001

Thank you all for joining us this morning. We have a long list of people who will be participating today. I'd like to acknowledge some of them now, and some of them will be speaking later - Al Aldridge of the Snohomish PUD, Tim Hogan with Puget Sound Energy, Tom Taylor with Home Depot, Dr. Robert Kahn, Andrew Lofton with Seattle City Light, Stu Trefry with the Washington PUD Association, Gerry Niller from Goldendale Aluminum, Mark Glyde of the NW Energy Efficiency Coalition, John Walsh with Community Action Council of Mason-Lewis-Thurston Counties, and Rhys Roth of Climate Solutions. Thank you for joining us.
We also have a lot of legislators here today, including Representative Glenn Anderson, Representative Sarah Casada, Representative Kelli Linville, Senator Bob Morton, Senator Karen Fraser, Representative Lynn Kessler, Representative and Co-Speaker Frank Chopp, Representative John Pennington, Representative Richard DeBolt, Representative Geoff Simpson, Representative Dave Mastin, Representative Laura Ruderman, Representative Larry Crouse, Representative Erik Poulsen, Senator Jim Honeyford, and Senator Debbie Regala. Elected representatives from both political parties will help all of us ensure that Washington continues to have a plentiful supply of electricity at fair prices.

In a minute I'll announce our package of legislative proposals to address Washington's growing energy crunch.

But before I do that, let me give you a brief rundown of where we are on other fronts.

Regional Power
We are well aware of California's very real energy crisis. Millions of Californians experienced rolling blackouts for two days last week, and that is only the most visible impact of a deregulated electricity market gone haywire.

We, here in Washington didn't deregulate our retail energy sales, despite pressure four years ago to do so. So we're not in California's predicament.

But we are very concerned and we must be involved because Washington and California are on the same grid.

Normally, in the summer, we ship power to California. In the winter, they ship power to us. In fact, in normal years, we receive between 15 percent and 25 percent of our power from California.

And as California staggers under its failed attempt to deregulate the electricity market, we must cope with a lack of snow in the mountains to generate hydropower.

It is vital that we stabilize the regional power market, not just now, but in the future. To that end, I am meeting in Portland on February 2nd with other Western governors and the appropriate federal authorities to discuss a series of ideas and proposals to see what can be done. And I've invited legislators to join me.

For starters, Governor Kitzhaber and I continue to press the Federal Energy Regulatory Commission to cap wholesale energy prices to stabilize the market, damaged as it is by California's problems.

And we recently met with California Governor Gray Davis and urged him to get his state's energy crisis stabilized.

I have also asked and continue to strongly urge our citizens to do everything they can to conserve power. The goal is to reduce power usage by 10 percent.

This long-term conservation campaign has just started, and already power usage in Washington is down by three to four percent.

We fully expect to see even better conservation as the message is driven home to the public. We must treat energy as a precious resource we cannot afford to waste. I have ordered state government to cut energy use by 10 percent, and my agencies are taking steps to do that.

In the longer term, I am working with Northwest governors and the congressional delegation to make sure that the Bonneville Power Administration, a major source of power in the West, remains the Northwest's primary source of power.

Here at the Legislative level, I will be working with House and Senate members on both sides of the aisle on a core package of legislative measures with bipartisan support.

This package has three objectives -- First, to spur energy conservation; second, to increase electrical generation in the state; and third, to protect our most vulnerable citizens from energy price increases.

Conservation
In the area of conservation, we propose to establish stricter energy efficiency standards for new public facilities funded with state dollars; require energy audits and other steps to use less electricity in existing state facilities, and diversify sources of energy by requiring utilities to draw from alternative sources for some of their power. These sources include wind, solar, fuel cells, and biomass. Utilities could offset this requirement through investments in conservation.

And finally, I propose to exempt the sales tax on the purchase of energy-efficient lighting and appliances, namely dishwashers and clothes washers. These are appliances labeled with the "Energy Star'' signifying that the federal government considers them energy efficient.

And I also am pursuing plans to have our state's utilities develop, in the next decade, energy management systems to allow "smart metering.'' What this amounts to, in essence, is that consumers would have a choice as to when they used power, and would pay less during non-peak hours.

Generation
We all know that the bottom line is that we aren't generating enough electricity to keep up with the demands of our high-tech economy and population growth.

We have several tax incentive proposals to encourage more electrical generation.

We propose a sales tax exemption on even small-scale solar panels or wind generators for homes, farms and small businesses generating as little as 200 watts!

This means a family who decided to install a solar panel on the roof could buy the equipment tax-free.

We propose to provide sales-and-use tax exemptions for the purchase of pollution control equipment installed on natural gas-fired thermal electric "peaking" power plants. These are older plants, operating only about four hours a day because of air pollution control standards. They could operate far more frequently with proper pollution control equipment.

Finally, we propose several tax incentives to encourage "direct service industry'' power customers (DSIs) who buy directly from BPA, to invest in gas-fired facilities to generate their own electricity.

This would greatly benefit our aluminum industry and also the BPA by taking pressure off the BPA to supply power to them and thus free up more power for the rest of Washington.

Vulnerable Citizens
I believe we need to protect the people who are most vulnerable to increases in electricity prices -- our seniors on fixed incomes and our low-income citizens.

To that end, we propose granting a public utility tax credit to power and natural gas suppliers who provide rate discounts to people who qualify.

I'm confident that this package, combined with the other work we're doing, will go a long way toward helping Washington keep available, affordable energy. However, the unstable energy market is in many ways outside our control, and will require the help and involvement of the federal government.

I want to close by stressing once again that our best insurance right now is in the hands of each and every one of us.

We simply must conserve.

If this year has taught us anything, it is that we cannot rely too heavily on too few sources of energy.

We must turn off lights and computers when we're not using them.

We must use appliances wisely and economically.

Each and every one of us has the power to save power.

And we must use that power to save every day in every way we can.

Financial Markets
I want to direct my next comments to the financial markets:

I am aware that uncertainties about the stability of the wholesale market and questions about the ability of California utilities to pay their debts have concerned the financial markets.

This is affecting our own utilities' ability to secure financing for operations and resource acquisition.

It is important to make a distinction between ourselves and California - and that is in part what we are declaring today.

Our utilities are doing everything they can to make it through the current challenge and they are planning for their future responsibly.

Our legislative package today makes clear that it is the policy of the state of Washington that the acquisition of generation assets by utilities serves the long-term public interest.

Our utilities have my support for what they're doing. I can assure you that we will not have the same problems California is experiencing today.

Thank you.

(The governor introduces each of the following speakers -- Rep. Crouse, Rep. Poulsen, Sen. Fraser, Sen. Morton, Al Aldridge, Tim Hogan, Tom Taylor, and Dr. Robert Kahn -- and then takes questions from the media.)