The privately owned operator of a natural gas power plant in Grays Harbor County is challenging the constitutionality of the state's Climate Commitment Act, which seeks to clamp down on greenhouse gas emissions — in part — by putting a price on some of the pollution.
Chicago-based Invenergy will be required to purchase pollution allowances, while regulated utilities that operate the other 12 natural gas plants in the state will receive them for free.
The lawsuit filed Tuesday in U.S. District Court in Tacoma comes ahead of the first auction of these allowances scheduled for February. It alleges the 2021 Climate Commitment Act runs afoul of the U.S. Constitution by "discriminating against independent owners of natural gas power plants in violation of the Equal Protection Clause." The lawsuit also alleges a violation of the Commerce Clause by unfair treatment of an out-of-state business.
Invenergy, as an independent power producer, closely monitors the regional markets for power that fluctuate each day. And it operates the Grays Harbor plant, west of Olympia, only when the prices are high enough to turn a profit.
Invenergy is concerned that regulated utilities, which will benefit from free allowances, will have a competitive advantage as they sell surplus power into regional markets, according to the lawsuit.
"Invenergy stands to lose substantial amounts of revenue in the coming years as a result of the ... discriminatory allocation," said the complaint, which estimated the costs of purchasing pollution allowances at tens of millions of dollars in 2023.
The lawsuits seeks a court ruling that the Climate Commitment Act "as applied is invalid and unenforceable." It requests the court to find that the state Ecology Department should be required to either provide free pollution allowances to the Grays Harbor plant or have utilities transfer some of their allowances to Invenergy.
"Invenergy fully supports Washington's leadership to combat climate change and is confident that when all energy suppliers are treated equally under the law, real progress can be made toward the state's bold climate goals," said a statement released Wednesday by Invenergy.
The state Department of Ecology, charged by the Legislature with implementing the law, commented in a written statement.
"We are reviewing the filing by Invenergy and [subsidiary] Grays Harbor Energy. As we work to implement the Climate Commitment Act and reduce the largest sources of carbon pollution in Washington, we are committed to following the direction set by Legislature," the statement said. "We believe courts will find that the law and Ecology's work to implement it are fully constitutional."
The Climate Commitment Act seeks to reduce Washington state greenhouse emissions from human sources to net-zero by 2050. It calls for a steadily declining cap in greenhouse gas emissions, and sets up a program where many of the largest emitters must purchase pollution allowances in auctions. Other state legislation passed in 2019 requires all state utilities by 2045 to move entirely to power sources that do not release greenhouse gases.
Outgoing State Sen. Reuven Carlyle, D-Seattle, a legislative champion of the laws, said he met many times with Invenergy representatives as they pressed their case that its plant should receive free carbon allowances. Carlyle was convinced the free allowances Invenergy sought should only go to the state-regulated, investor-owned utilities — operators of the other 12 natural gas plants — to help cushion the costs to ratepayers in the transition to cleaner fuels.
He said that Invenergy representatives never raised the constitutionality of the law in meetings with him. He called bringing up that argument in a lawsuit a "nuclear option."
"This issue has never been raised. They played the game politically. They actively participated," Carlyle said. "You (Invenergy) can't equate yourself with a regulated utility, which is subject to oversight."
Invenergy took ownership in 2005 of the Grays Harbor plant, which is able to generate more than 650 megawatt of electricity, enough to supply 100,000 homes. The lawsuit states Invenergy recently invested millions of dollars to "solidify Grays Harbor's position as one of Washington's cleanest and most efficient natural gas power plants."
But it still ranks as a big greenhouse gas emitter with 980,347 metric tons of carbon dioxide released in 2020. That put it in the top 20 of all emitters reporting to the state Department of Ecology, according to state data.
