City Light can't buy pollution "offsets," court says

The campaign to reduce Seattle's contribution to global warming suffered a blow Thursday when the state Supreme Court declared that the city couldn't tack on charges to electric bills to pay for the effort.

The court, in a 5-to-4 decision, rejected a Seattle City Light program to compensate for its own emissions of greenhouse gases by paying other agencies and companies to pollute less.

These "offsets" represent roughly one-fifth of the greenhouse-gas reductions Seattle needs to meet the goals in the international Kyoto treaty on climate change.

Mayor Greg Nickels has made global warming a high priority for his administration, mounting a much-publicized campaign to get U.S. cities to promise to meet the Kyoto treaty, even though the federal government won't.

"We remain fully committed to the target. But we might have to find a different way to get there," said Steve Nicholas, head of the city office coordinating the Mayor's global-warming program.

City officials and environmental groups might now ask the Legislature to change state law and allow programs such as the disputed City Light one. The ruling threatens City Light's declared status as the first major U.S. utility to become "carbon neutral" — meaning its operations don't contribute to global warming with gases like carbon dioxide.

The utility relies mostly on hydropower that doesn't produce greenhouse gases. But some of its electricity comes from other sources that produce greenhouse-gas emissions, such as natural-gas-fired power plants.

To make up for that, City Light relied on paying other polluters to pollute less. The cost of those payments was included in the electric bills paid by customers.

City Light has paid King County's bus system and the state ferry system hundreds of thousands of dollars to use biodiesel, a plant-based fuel. The utility also paid DuPont $615,000 to cut its emissions at a plant in Kentucky.

The decision followed in the steps of recent rulings that ratepayer money couldn't be used to pay for Seattle street lights or for public art in places like the Ballard Bridge.

While using money from ratepayers to fight global warming might be a good thing, Chief Justice Gerry Alexander wrote, such actions provide a general public benefit, not one closely tied to the utility's main job.

State law requires that utilities expenditures have a connection to their operations.

The majority opinion, however, doesn't prohibit City Light from spending money to reduce greenhouse-gas emissions from its own operations. The problem is when that money is used to pay other companies to reduce pollution not directly related to City Light operations.

Justice Richard Sanders, who sided with the majority, went even further in a separate opinion signed by fellow Justice James Johnson. He belittled the utility's efforts as irrelevant in the face of global production of greenhouse gases.

"City Light's program of paying others not to emit greenhouse gases has about as much effect on global warming as making a bonfire out of ratepayers' hard-earned dollars," he wrote.

The dissenting justices, in an opinion written by Justice Susan Owens, challenged the distinction between letting City Light pay to reduce its own emissions but blocking it from paying others to do the same.

Proponents of offsets say the end result is the same because greenhouse gases from everywhere mix together in the upper atmosphere.

"The offset program actually saves the ratepayers money in comparison with a mitigation program limited to City Light's own facilities," wrote Owens.

For Rud Okeson, a former City Light manager, it's a third victory in his campaign to keep City Light from spending customers' money on things he believes are unrelated to the utility's work.

The Seattle resident and three others are behind the suits challenging City Light payments for streetlights and public art. Another case challenging franchise payments City Light makes to suburban cities it serves is now in King County Superior Court. The greenhouse case will go back to King County Superior Court, where a judge will decide what to do about the more than $1.2 million City Light already has spent on the program. Dave Jurca, Okeson's attorney, said that amount might be small enough that it's not worth a refund to ratepayers.

His lawsuit doesn't mean he opposes fighting global warming, Okeson said. But he wants utilities to deal with their own pollution and calculate the price into what they sell rather than paying someone else to deal with the problem.

"To me, it's kind of voodoo economics," he said.

Warren Cornwall: 206-464-2311 or wcornwall@seattletimes.com