Hundreds lose out on $200 energy credit after Spokane Valley utility rejects state program
Mike Varallo had thought he found a way to pay for the next four to five months of his electricity bill without dipping into his limited funds.
After the Spokane Valley resident suffered a health scare last summer, he and his wife had to rely on their Social Security payments to get by.
So when he learned that he qualified for a state-funded $200 credit to help lower- to middle-income residents pay their power bill, he applied, hopeful to relieve some of the financial burden on his household.
Across Washington state, hundreds of thousands of lower-income households have received the credit, enough to completely pay for months of electricity in some cases. Avista alone was provided enough state funds to provide the credit to 52,500 households.
Elisanne McCutchen, a 63-year-old Chewelah resident, said in August that she was automatically approved for the $200 credit and was able to pay off a backlog she owed and the next month’s utility bill.
“I am disabled and I am elderly, and that means I can’t work extra hours or, you know, I can’t earn extra income anywhere. I have to budget everything,” she said.
Varallo, however, was not able to receive the same benefit. His power provider, Spokane Valley utility Modern Electric Water Company, declined to take part in the program that could have helped 1,800 of its fixed- and lower-income customers.
Modern is one of only six utilities that declined to take part, including three headquartered in Idaho with limited service area in Washington, and its customers had by far the most to lose, passing up on nearly four times as many credits as the other five utilities combined.
At the top of the member-owned utility’s website, Varallo believes he found the reason Modern declined to take part: political opposition to the program that funds the credits.
“I have read the ten points on your website and they are nonsense,” Varallo wrote a Modern representative in an Aug. 26 email.
In an ominously designed article featured at the top of the utility’s homepage on the Internet, government relations and communications manager Chelsea Martin details “What Washington Won’t Tell You…10 Astonishing Facts About Gov. Inslee’s Climate Commitment Act.”
Funding for the $200 credits comes from the Climate Commitment Act, which caps how much carbon can be emitted in the state each year and requires businesses that emit the most to bid for an “allowance” to emit a portion of that overall cap. Those quarterly auctions began in early 2023, and revenue has already exceeded $2 billion, which is funding programs across the state meant to further reduce greenhouse gases, mitigate the effects of climate change and otherwise invest in the environment.
One of four statewide initiatives on the ballot this November, Initiative 2117, seeks to kill this cap-and-trade system and bar state agencies from enacting anything similar in the future. Let’s Go Washington, the group behind the bid to quash what it calls a “hidden gas tax,” argues that the system is too costly for consumers.
Though residents like Varallo do not themselves pay into the auctions, they do pay some of the downstream costs, such as at the pump or through higher energy bills – Avista estimates that the average residential customer pays $1.33 to $14.96 more per month in their energy bills as a result of the cap-and-trade system, depending on the time of year and when the customer began their service, though lower-income customers eligible for the credits are exempt from those price increases, as required by state law.
In this way, residents receiving the credits aren’t getting free money, but rather those who could least afford it were getting some of their money back. Legislators who crafted the credit program say it was created to mitigate the cap-and-trade system’s financial impact on these lower-income households.
“This is an investment to ensure a just transition,” said Sen. Joe Nguyen, D-White Center, who chairs the Senate Environment, Energy and Technology Committee and was a key legislator crafting the credit program. “There’s always that period where you have to think through the short-term implications, which is why the vast majority of the (Climate Commitment Act) talks about easing the transition.”
“(Modern) can do whatever they want, freedom of speech, but you’re not really doing your customers justice when you’re hurting them to do a political point,” Nguyen added.
The utility’s featured article pulls heavily from Let’s Go Washington’s talking points, quoting at length its primary sponsor, Brian Heywood, and state Republicans who argue that the Climate Commitment Act is bad policy, to promote Initiative 2117 and to question whether the $200 credits are an attempt to sway voters.
That latter point was underscored by another article Martin titled “Is Gov. Inslee Buying Votes?”
Martin noted that this article, in which a fast-talking man from Olympia tries to sell a puzzled Washingtonian on the Climate Commitment Act, was written in her personal capacity and not a reflection of Modern’s official stance, though the utility posted the article in full on its official Facebook page.
Attempts to schedule an interview with Modern’s CEO Joe Morgan were unsuccessful. However, the utility sent a prepared statement attributed to Morgan, which echoed sentiments raised in the public-facing articles but did not address the utility’s statements that the credits amounted to a bribe ahead of the election.
“Completely, utterly false, without any basis in reality,” said Mike Faulk, a spokesman for the governor’s office. “Energy costs are higher right now – it’s not just because of CCA, and we think they will come down over time – but this is why this was done, because we heard that this was what communities wanted and needed right now.”
Modern’s article also lays out several other concerns with the program, including about sending customer data to a third-party vendor that helps manage the credits, as well as provisions in the contract with Commerce that “compels utilities to promote CCA before it appears on your ballot.”
“At Modern, our aim is to provide valuable information on energy and water issues while staying neutral on ballot initiatives and political candidates,” Modern wrote in a prepared statement. “We trust our customers to make informed decisions about government policies based on complete and unbiased information.”
Utilities had the option to design and run their own programs without providing data to a third party, wrote Cheryl Hardee, deputy director of the energy division of the state Department of Commerce. For utilities that decided to take the state’s help managing the credit, customer data was restricted to the program and could not be re-shared, sold or used for other purposes without explicit authorization by the individual customers, Hardee added.
In the statement, Modern wrote that it runs “a lean operation with only 30 employees,” including engineering staff and crews, and did not have the capacity to manage its own program.
Neighboring Vera Water and Power, another small utility that serves customers in eastern Spokane Valley primarily in the formerly separate community of Veradale, did elect to apply to the program through the third-party vendor and has provided credits to more than 2,600 customers.
It is true that utilities participating in the credit program were required to state that the credit was funded by the Climate Commitment Act and include a logo for the climate law. Modern wasn’t the only one to bristle at the implication that by accepting the funds and using the state’s logo, they would be tacitly endorsing the underlying law.
Benton and Franklin public utility districts had the same concern and included disclaimers stating that they did not take an official position on the cap-and-trade program.
“The following statement and logo are required to be included on this communication as a condition of receiving this grant and does not necessarily reflect the views and opinions of Benton PUD,” one disclaimer reads.
Public utilities are not legally allowed to engage in “politically affiliated statements,” said Jenny Sparks, a spokeswoman for Benton PUD, pointing to a state law that prohibits, among other activities, public agencies from supporting or opposing an initiative.
“The disclaimer is Benton PUD’s way of not taking a stance on any politically affiliated statements that were required” by offering the credits, Sparks said.
Sparks noted that Benton PUD had received more applications for credits than it would be able to fill, estimating the total number of households that received help with their energy bills to be roughly 10,000.
In a statement, Modern wrote that it did not believe it could have used a similar disclaimer, without running afoul of the contract and having to return the funds distributed for the credits, though the state Department of Commerce approved the disclaimers for Benton and Franklin PUDs.
Modern also raised concerns that ineligible customers could have abused the system to receive the $200 credit, as the state does not itself require income verification to apply. However, many other utilities, such as Avista, automatically provided the credits to customers that had applied for their existing in-house discount programs.
Modern isn’t unique with its concerns about the Climate Commitment Act itself.
“I would agree that we have concerns about the CCA and how and what those moneys are being used for … we disagree with the CCA,” said Jasen Bronec, CEO for Inland Power and Light, a member-owned cooperative covering a large swath of the region around Spokane.
Inland has already approved at least 75% of the credits it received through that program, however, Bronec said.
“Our primary objective is always to take care of our members and make sure that benefits are passed on to our members first and foremost,” he added. “We don’t want to stifle any moneys that could be used to help low-income or disadvantaged members.”
Modern’s decision to not provide credits to their customers is nearly unique.
For Idaho electric cooperative Northern Lights Incorporated, so few of their customers were on the Washington side of the border – just 10 – that the administrative burden of engaging with the program made no sense.
The Town of Ruston, a community of around 1,000 just north of Tacoma that passed up 128 credits, was not able to respond to a request for comment before deadline.
Kalispel Tribal Utilities, which passed up 91 credits, employs three people in their main office and was unable to take on the administrative load, said General Manager Steve Fisher. He had concerns about sending customer data to a third-party vendor, and his office didn’t have the staff needed to create its own program, nor does the tribal utility have the kind of existing income verification that investor-owned utilities could use to prevent funds from going to customers who weren’t eligible, he said.
Finally, the state contract presented to the utility in May seemed designed for nontribal utilities and would have likely taken months of legal review to be suitable for his agency, Fisher added.
To Varallo, politics seemed to be the main driver behind Modern’s decision.
“Frankly, I do not care about the politics of your Board of Directors, but I do care when their rightwing beliefs cost money for us and other clients,” Varallo wrote to Martin in an August email. “Your company should be neutral in its views and help their customers, not shortchange us.”
In response, Martin offered her condolences to Varallo for his financial difficulties, provided information about other discount services for seniors – including one that used a third-party organization to process his income information and application – and reminded him of how much money he was saving as one of their customers, compared to using other utilities.
Modern wrote that referring Varallo to a third-party organization to apply for a discount didn’t conflict with its prior statement that it was neither Modern’s “desire nor our intent to share customer data,” in part because Varallo would be the one providing his information, not Modern.
In addition, Modern claimed it would have been forced to hand over the data of every customer, not just those applying to the program, in order to receive the credit.
“… The state’s contractor is unfamiliar to us and many others in the industry,” Modern wrote in a follow-up statement. “We have no established relationship with them, and there is no assurance that they will handle our customer data with the same level of care and protection that we are committed to providing.”
No alternative
Like Varallo, paraeducator Lezah Palanuk had hoped to take advantage of the $200 energy bill credit.
“I live in a small apartment, so that would have helped me with probably four months of my electric bill,” she said. “Working as a paraeducator for a school district, I don’t make a lot of money, so that would have really helped.”
When she called and learned Modern had declined to participate in the program, she thought some of the reasons given over the phone were odd, including that the credits weren’t a legitimate use of funds from the cap-and-trade system. But Palanuk assumed that it really came down to workload.
“I know they’re small – Avista is a big operation, but Modern Electric isn’t,” she said. “In my mind, it’s probably a lot of paperwork, and they probably don’t have a lot of manpower.”
What was more surprising to Palanuk was that there was no alternative.
She tried calling the support line for the program, which is administered by the state Department of Commerce, to ask if she could receive the credit directly from the state. After all, she is indirectly paying the costs of the state’s cap-and-trade system, and the credit program was purportedly designed to help relieve some of its burden on people in her income bracket.
“The email I got back, it wasn’t a personal response, it seemed automated,” she said. “They said, ‘Your account’s not eligible, contact your utility provider directly.’ ”
Commerce’s hands are tied, Hardee told The Spokesman-Review in an email.
“Because the Legislature specified that the bill credit come from the utility, there is no alternate way to get the credit,” Hardee wrote.
“It just wasn’t something I was able to take part in,” Palanuk said.
Nguyen said the decision was made to pass financial relief through utilities because it was the quickest program that could be used to start the effort. Funding through the Climate Commitment Act only started being generated last year.
“Government moves at the speed of government, and the thought behind credits is the utilities already have that relationship with customers,” he said. “If we had done it any other way, if it was car tabs, for instance, or a means-tested credit through commerce, that could have been at least a year.”
The state also couldn’t have forced utilities to take part, Nguyen said.
“Our goal was to get it out as fast as possible,” he added. “The idea that some utilities would rather spite their customers is pretty shocking.”