HOUSE BILL REPORT

ESHB 2198

BYHouse Committee on Energy & Utilities (originally sponsored by Representatives Nelson, Hankins, Cooper, Miller, May, Jacobsen, Brooks, Todd and H. Myers) 

Pertaining to energy efficiency and conservation.

House Committe on Energy & Utilities

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass. (7)

      Signed by Representatives Nelson, Chair; Todd, Vice Chair; Cooper, Jacobsen, Jesernig, Miller and H. Myers.

Minority Report:  Do not pass. (5)

      Signed by Representatives Hankins, Ranking Republican Member; Brooks, May, R. Meyers and S. Wilson.

House Staff:Harry Reinert (786-7110)

Rereferred House Committee on Revenue

Majority Report:  The substitute bill by Committee on Energy and Utilities be substituted therefor and the substitute do pass.  (9)

      Signed by Representatives Wang, Chair; Pruitt, Vice Chair; Appelwick, Fraser, Grant, Haugen, Phillips, Rust and H. Sommers.

Minority Report:  Do not pass.  (5)

      Signed by Representatives Holland, Ranking Republican Member; Basich, Brumsickle, Morris and Van Luven.  (5) 

House Staff:      Rick Wickman and Bob Longman (786-7136)

AS PASSED LEGISLATURE

BACKGROUND:

The Legislature adopted guidelines for a revised energy code in 1985 and directed the state building code council to adopt an energy code.  The guidelines set standards for insulation of ceilings, walls, and floors over unheated spaces.  The guidelines also set standards for windows and glazing area.  The guidelines provide for different standards for two different climate zones. The climate zones are differentiated by heating degree days.  The guidelines also set different standards for residential housing heated with electric resistance and housing heated with other fuel sources.  The state building code council is directed to allow flexibility in building design through trade-offs between various elements of a building's structure, so long as the overall whole house energy performance is equivalent to the performance provided for in the guidelines.

The energy code adopted by the state building code council preempts local energy codes and must be enforced by all municipal and county governments, with a few exceptions.  If a local government adopted prior to January 15, 1988, requiring greater energy efficiency, that code is not preempted. A local government may determine that the state-energy code is not cost-effective in that jurisdiction and adopt a less stringent energy code.  A local government may also enforce a more stringent energy code if the builder or owner of new residential construction is reimbursed by a federal agency for the additional costs to the consumer of the more stringent code.  The state preemption of local energy codes expires January 1, 1990.

The Northwest Power Planning Council, pursuant to its federal charter, has adopted Model Conservation Standards (MCS). The MCS are designed to provide a cost- effective means for improving the energy efficiency. The Bonneville Power Administration (BPA) is required to assure that, in electric utility service areas in which it sells power, the MCS are being enforced.  If the MCS are not being enforced, or the utility is not moving towards implementation of the MCS, BPA is required to impose a surcharge on the rate it charges for power it sells to that utility.

BPA has funds that it will make available to utilities to assist in paying some of the costs of building to the MCS.  BPA has issued an Environment Impact Statement (EIS) governing indoor air quality in homes which are built to the Model Conservation Standards.  BPA has issued a record of decision on its EIS adopting four different methods of achieving the indoor air quality standards necessary for its new homes programs.  BPA will only make funds available to builders who build to the MCS if the builder complies with the record of decision.

The Utilities and Transportation Commission is directed to encourage electric and gas companies to develop measures and to invest in resources which increase energy efficiency or which use renewable resources.  One measure which the commission must authorize is an additional two percent on the rate of return for investments in energy efficiency, cogeneration, or renewable resources, including municipal wastes.  The incentives are available only for investments made prior to January 1, 1990.

Electric utilities, both public and private, are required to pay a tax on their income.  A deduction from income is allowed for investments in cogeneration or energy produced from renewable resources, including municipal wastes.  The deduction is available only for investments made prior to January 1, 1990.

The state building code council has authority to amend the uniform building codes adopted by the Legislature.  The amendments must be adopted by rule no later than December 1 and may not take effect until after the end of the next regular legislative session.

The 1985 Legislature directed the State Energy Office to contract with the University of Washington for a study of the cost- effectiveness of the 1985 energy code.  The study was originally due in 1988.  In 1988, the Legislature extended the report date to 1989 and required a review of the University of Washington study by a peer review panel.  The study has been completed, but the peer review panel has not had an opportunity to review the final report.

SUMMARY:

Each city, town, and county shall enforce the state energy code no later than July 1, 1991.  If prior to March 1, 1990, a city, town, or county has adopted a local energy code for residential buildings that exceeds the energy efficiency requirements of the state energy code, the city, town, or county may continue to enforce the local energy code, but may not further amend its energy code.  The state energy code for residential buildings is the minimum and maximum energy code.  The state energy code for non-residential buildings is the minimum energy code.

The state energy code must be adopted by the state building code council not later than January 1, 1991.  The state energy code shall recognize two climate zones.  The climate zones are established by county.  The guidelines for the energy efficiency of construction components in residential buildings are modified. Different guidelines for electric resistance and other space- heating systems are provided.  Guidelines for below grade walls and slab on grade floors are specifically included.  A guideline is established for exterior doors in electric resistance heated homes.  The state building code council shall also adopt a code for log homes and provide for pilot projects using innovative technology.

The minimum state energy code for non-residential construction is the June, 1986, edition of the state energy code.

The building code council is directed to consult with the state energy office in developing the state energy code.

Beginning July 1, 1991, electric utilities are directed to make payments for newly constructed residential buildings with electric resistance space heat.  Payments are required for buildings constructed between July 1, 1991, and July 1, 1995.  The payments must be at least $900 in single family houses and $390 per unit in a multifamily residence. Payments are not required for any single family residence with more than 2000 square feet of finished floor area. A utility in a jurisdiction which has a local energy code which is not preempted by the state energy code must make payments beginning with the effective date of this act. Utilities may provide incentives in addition to the payments and may provide incentives for additional energy efficiency measures. The Utilities and Transportation Commission (UTC) shall allow regulated electric utilities to recover expenses incurred in making the payments.

If a federal agency from which an electric utility purchases at least 1 percent of its firm energy load fails to make available at least 50 percent of the funds necessary to make the payments to builders, the amendments to the energy code and the requirement to make payments are null and void.  This provision expires June 30, 1995.

The energy code training account is established.  The state energy office will administer the account to provide training to local energy code enforcement officials.  The state energy office shall impose an assessment on each investor owned and publicly owned gas and electric utility in proportion to the number of housing starts served by that utility in 1989.  The assessment is $150 per energy code official within the service area of the utility.  Assessments may be made between January 1, 1991, and July 1, 1991.

An investor owned electric utility may obtain an additional two percent rate of return on builder payments and on programs that improve energy efficiency if priority is given to low-income individuals and senior citizens.  The commission may allow an additional rate of return on other investments to improve energy efficiency and may adopt other policies to protect a company from short-term earnings reductions resulting from energy efficiency programs.  The commission may also allow utilities required to make payments for code enforcement to recover those expenses.

Both public and investor owned utilities may deduct from gross income for purposes of calculating the utility tax the amount spent on builder payments and the amount spent on programs to improve energy efficiency if those programs give priority to senior citizens and low-income individuals.  Utilities required to make payments for code enforcement may deduct from the utility tax owed 50 percent of the amount of those payments.

The building code council is directed to develop by January 1, 1991, interim requirements for the maintenance of indoor air quality in newly constructed residential buildings.  The interim requirements will be in effect from July 1, 1991, to July 1, 1993.  The interim requirements shall provide for the ventilation of the bathroom and kitchen and the supply of outside air to each bedroom and the main living area.  By January 1, 1993, the state building code council must adopt final requirements for the maintenance of indoor air quality in newly constructed residential buildings.  The final requirements will take effect July 1, 1993.  The final requirements must comply with the Bonneville Power Administration record of decision for the environmental impact statement on energy efficient new homes programs.

Both the interim and final ventilation standards shall take into account different heating sources.  The final ventilation standards shall permit multifamily housing to meet the standards by the installation of fans with a total capacity of 200 cubic feet per minute.

The builder of and the design professional for a residential structure who in good faith and without negligence or misconduct complies with the state energy code and the ventilation standards adopted by the building code council has a defense against a lawsuit claiming injury from indoor air pollution.

Beginning in 1996, the state building code council shall review the state energy code for residential buildings every three years.  If the council determines that the state energy code should be changed to require increased energy efficiency, it shall adopt rules modifying the energy code.  The rules must be adopted by December 1 and may not take effect until the end of the next regular legislative session.

The requirement for a study of the cost-effectiveness of the 1985 energy code is repealed.

The provisions amending the energy code, requiring payments, and providing energy efficiency incentives are declared to be an emergency and take effect March 1, 1990.  Provisions repealing sections of the energy code which will be replaced by the energy code to be adopted by the state building code council by January 1, 1991 will take effect January 1, 1991.  The provision creating a defense for builders who comply with the ventilation standards takes effect July 1, 1991.

Fiscal Note:      Requested March 2, 1989.

House Committee ‑ Testified For:    (Energy & Utilities)  No one.

(Revenue)  No one.

House Committee - Testified Against:      (Energy & Utilities)  No one.

(Revenue)  No one.

House Committee - Testimony For:    (Energy & Utilities)  None.

(Revenue)  None.

House Committee - Testimony Against:      (Energy & Utilities)  None.

(Revenue)  None.