"NEW SECTION.  Sec. 1   (1) It is the intent of the legislature to provide mechanisms for low-cost financing of energy systems on the distribution side of the electricity grid, to provide for consumer protection of customers of these systems, and to recognize electric utility efforts in being early adopters of programs that encourage energy independence by customers.
     (2) The legislature finds that access to distributed renewable energy systems installed on residential, commercial, and governmental real property facilitates energy independence by consumers. The ability to lease systems from third parties who finance upfront costs provides further opportunities for consumers to access the benefits of distributed renewable energy systems.
     (3) The legislature finds that many electric utilities are the most suitable and responsible entities to ensure the safety and reliability of leased systems and to provide for consumer protection with respect to those systems. However, due to the diversity of electric utilities operating in Washington, the capacity of electric utilities to fulfill these additional responsibilities varies. Therefore, the legislature intends to afford electric utilities the discretion to fulfill these responsibilities. Where utilities choose not to do so, the legislature recognizes the importance of taking steps to ensure public safety and consumer protection by conferring these responsibilities to the Washington utilities and transportation commission.

NEW SECTION.  Sec. 2   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1)(a) "Biomass energy" includes: (i) Organic by-products of pulping and the wood manufacturing process; (ii) animal manure; (iii) solid organic fuels from wood; (iv) forest or field residues; (v) untreated wooden demolition or construction debris; (vi) food waste and food processing residuals; (vii) liquors derived from algae; (viii) dedicated energy crops; and (ix) yard waste.
     (b) "Biomass energy" does not include: (i) Wood pieces that have been treated with chemical preservatives such as creosote, pentachlorophenol, or copper-chrome-arsenic; (ii) wood from old growth forests; or (iii) municipal solid waste.
     (2) "Electric utility" means a consumer-owned utility or investor-owned utility as those terms are defined in RCW 19.280.020.
     (3) "High efficiency cogeneration" means the sequential production of electricity and useful thermal energy from a common fuel source, where, under normal operating conditions, the facility has a useful thermal energy output of no less than seventy-two percent of the total energy output.
     (4) "Leased energy system" means a renewable energy system that is:
     (a) Located in Washington;
     (b) Installed on an individual's, business's, or local government's real property that is not leased and is provided electricity generated by an electric utility; and
     (c) Owned by:
     (i) An electric utility and leased to a customer; or
     (ii) A third-party vendor that has contracted with a customer of an electric utility to lease a renewable energy system.
     (5) "Renewable energy system" is a system that generates electricity from: (a) Water; (b) wind; (c) solar energy; (d) geothermal energy; (e) landfill gas; (f) wave, ocean, or tidal power; (g) gas from sewage treatment facilities; (h) biodiesel fuel as defined in RCW 82.29A.135 that is not derived from crops raised on land cleared from old growth or first-growth forests where the clearing occurred after December 7, 2006; (i) biomass energy; or (j) high efficiency cogeneration.
     (6) "Third-party vendor" means an entity that seeks to lease and install renewable energy systems to electric utility customers. An electric utility offering a leased energy program may not be considered a third-party vendor.

NEW SECTION.  Sec. 3   (1) An electric utility may offer a leased energy program. The leased energy program must offer to customers across all rate classes the opportunity to lease from the electric utility a renewable energy system with the nameplate electrical generating capacity of no more than twenty-five kilowatts that will be installed on the customer's property.
     (2) If an electric utility offers a leased energy program, no other entity may offer leases to the utility's customers.
     (3) If an electric utility does not offer a leased energy program that provides customers across all rate classes access to renewable energy systems with the nameplate electrical generating capacity of no more than twenty-five kilowatts on their property, third-party vendors may offer these systems through leases to the electric utility's customers.
     (4)(a) If an electric utility intends to offer a leased energy program, it must hold at least one public meeting to establish reasonable goals in the implementation plan for the utility leased energy program, publish a leased energy program implementation plan, and implement the program by December 31, 2015.     
     (b) Goals for a utility leased energy program must include, but are not limited to:
     (i) The number of renewable energy systems interconnected annually and during the life of the program;
     (ii) The amount of kilowatt-hours installed annually and during the life of the program; and
     (iii) The appropriate participation in the program by a wide range of participants based on income levels.

NEW SECTION.  Sec. 4   (1) An electric utility that offers a utility program as provided in section 3 of this act shall maintain a registry of qualified contractors operating in the electric utility's service area that are licensed to install renewable energy systems. The electric utility shall provide the names and contact information for the qualified contractors listed in the registry to customers who have indicated an interest in the utility program, in order to assist customers in identifying available renewable energy system installment services.
     (2) In the case of a consumer-owned utility that is subject to chapters 54.04 and 39.04 RCW, the consumer-owned utility must follow applicable laws governing procurement and public works.
     (3) In the case of an investor-owned utility, the investor-owned utility shall conduct an open and transparent process to facilitate participation by qualified contractors.

NEW SECTION.  Sec. 5   Electric utilities and third-party vendors are encouraged to offer to customers the option to purchase the renewable energy system at the end of the lease term.

NEW SECTION.  Sec. 6   (1)(a) In the event that a real property subject to a renewable energy system lease is sold, the remainder of the lease must be assumed by the buyer if a memorandum has been recorded reflecting the essential terms of the lease, unless the seller and buyer agree otherwise. The transfer of ownership of a property with a lease does not trigger any recertification of a system previously certified for incentives under chapter 82.16 RCW. If the buyer of such a property assumes a lease previously certified for these incentives and authorized by a utility, the buyer continues to qualify for all applicable incentives as originally certified under chapter 82.16 RCW, any other benefits of the lease and utility authorization.
     (b) Thirty days prior to closing, the seller of property subject to a lease shall notify any utility and third-party vendor affected by the lease whether the buyer will assume the lease. Within seven days of the seller's notice, the utility and third-party vendor shall provide the documentation necessary for assumption of the lease by the buyer or the procedures for termination of the lease and removal of the system. The utility and third-party vendor shall remove the renewable energy system from a property within twenty-one days of a written request of the property owner.
     (c) At the end of the lease term or earlier termination of a lease, the utility or third-party vendor is responsible for the removal of the leased energy system from the property and recover the cost thereof as specified in the lease and noted in the recorded memorandum. There are no damages for the premature termination of a lease unless the amount of the damages are specified as liquidated damages in the lease.
     (d) Renewable energy system leases may not grant utilities or third-party vendors any authority to approve or disapprove the transfer of real property associated with such a lease.
     (2) The lessor of a renewable energy system shall guarantee sufficient funds to properly dispose of the system at the end of the lease. The lessor is responsible for identifying hazardous and commercial valuable materials contained in the leased energy system and how those materials will be properly disposed of or reclaimed. The lessor must provide this information to the utilities and transportation commission upon request of the commission.

NEW SECTION.  Sec. 7   (1) The utilities and transportation commission shall publish, without disclosing proprietary information, a list of financing models being offered by investor-owned utilities or third-party vendors registered as competitive electrical companies.
     (2) If a consumer-owned utility opts to provide a leased energy program or contracts with a third-party vendor to offer a leased energy program, the governing board of a consumer-owned utility shall publish, without disclosing proprietary information, a list of financing models being offered by the utility or third-party vendor or vendors contracted by the utility as part of a utility program.

NEW SECTION.  Sec. 8   A new section is added to chapter 80.28 RCW to read as follows:
     (1) The legislature finds that:
     (a) Third-party vendors of distributed renewable energy systems are electrical companies as defined in this title and are subject to the jurisdiction of the commission.
     (b) A competitive marketplace with effective competition exists for the provision of leasing and installation of distributed renewable energy systems in the state of Washington.
     (c) Traditional rate of return, rate based regulation of electrical companies providing leasing and installation of distributed renewable energy systems may not provide the most efficient and effective means of achieving the public policy goals of this state as declared in RCW 80.28.024, 80.28.074, and this section. The commission is authorized to employ an alternative form of regulation if that alternative is better suited to achieving those policy goals.
     (d) The commission retains its authority to protect consumers of distributed renewable energy systems from deceptive practices. Nothing in this act precludes the office of the attorney general from exercising its statutory authority concerning consumer protection.
     (2) For the purposes of this section, "renewable energy system" has the same meaning as defined in section 2 of this act.

NEW SECTION.  Sec. 9   A new section is added to chapter 80.28 RCW to read as follows:
     (1) A third-party vendor must register with the commission as a competitive electrical company before beginning operations in this state to lease and install distributed renewable energy systems. The registration must be on a form prescribed by the commission and contain that information as the commission may by rule require, but must include at a minimum: The name and address of the company; the name and address of the company's registered agent, if any; the name, address, and title of each officer or director; the company's most current balance sheet; the company's latest annual report, if any; a description of the services the company offers or intends to offer; and disclosure of any pending litigation against it. Third-party vendor registration with the commission must occur on an annual basis.
     (2) As a precondition to registration, the commission may require the procurement of a performance bond sufficient to cover any advances or deposits the competitive electrical company may collect from its customers or order that the advances or deposits be held in escrow or trust.
     (3) The commission may deny registration to any company that:
     (a) Does not provide the information required by this section;
     (b) Fails to provide a performance bond, if required;
     (c) Does not possess adequate financial resources to provide the proposed service; or
     (d) Does not possess adequate technical competency to provide the proposed service.
     (4) The commission shall take action to approve or issue a notice of hearing concerning any application for registration within thirty days after receiving the application. The commission may approve an application with or without a hearing. The commission may deny an application after a hearing.
     (5) The commission shall adopt rules that describe the manner by which it will regulate competitive electrical companies, as well as the process for considering applications for registration under this title. The rules must at a minimum provide for the protection of consumers of renewable energy systems.
     (6) For the purposes of this section, "renewable energy system" has the same meaning as defined in section 2 of this act.

NEW SECTION.  Sec. 10   A new section is added to chapter 80.28 RCW to read as follows:
     (1) Competitive electrical companies must be subject to minimal regulation. A competitive electrical company shall at a minimum:
     (a) Keep its accounts according to rules as determined by the commission;
     (b) File financial reports with the commission as required by the commission and in a form and at times prescribed by the commission;
     (c) Post its prices on a public web site available to all potential customers;
     (d) Cooperate with commission investigations of customer complaints; and
     (e) At the request of the commission, provide information about the materials contained in a leased energy system, including all hazardous wastes and commercially valuable materials used in the system.
     (2) The commission may revoke any waivers it grants and may reclassify any competitive electrical company if the revocation or reclassification would protect the public interest.
     (3) The commission may waive the requirements of RCW 80.28.090 in whole or in part for a competitive electrical company if it finds that competition will serve the same purpose and protect the public interest.
     (4) Competitive electrical companies shall pay regulatory fees to the commission under chapter 80.24 RCW.
     (5) During a state of emergency declared under RCW 43.06.010(12), the governor may waive or suspend the operation or enforcement of this section or any portion of this section or under any administrative rule and issue any orders to facilitate the operation of state or local government or to promote and secure the safety and protection of the civilian population.

NEW SECTION.  Sec. 11   A new section is added to chapter 80.28 RCW to read as follows:
     (1) Upon request of the commission, investor-owned utilities and third-party vendors offering leased energy systems must provide information on the financial terms of leased energy systems currently under contract. The commission shall use this information to determine how each party to a lease energy system contract benefits financially. In compliance with RCW 43.01.036, the commission shall report its findings to the appropriate energy committees of the house of representatives and senate by December 1, 2017.
     (2) For the purposes of this section, "leased energy system" has the same meaning as defined in section 2 of this act.

NEW SECTION.  Sec. 12   Sections 1 through 7 of this act constitute a new chapter in Title 19 RCW."