SHB 2176 -
By Representative Morris
Strike everything after the enacting clause and insert the following:
"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
Correct the title.
EFFECT: The striking amendment makes the following changes, as
compared to Substitute House Bill 2176:
Leased Energy Programs Offered by Electric Utilities.
Specifies that an electric utility offering a leased energy program
may not be considered a third-party vendor. Specifies that the
electrical generating capacity of a renewable energy system offered by
an electric utility in a leased energy program to be no more than 25
kilowatts. Removes the requirement that only leased energy systems
that can store up to 20 percent of the maximum total system hourly
output for four hours are eligible for net metering.
Requires electric utilities that have opted to offer a leased
energy program to hold at least one public meeting to establish
reasonable goals in the implementation plan of a leased energy program,
publish the leased energy program implementation plan, and implement
the program by December 31, 2015.
Requires electric utilities to maintain a registry of qualified
contractors operating in the electric utility's service area that are
licensed to install renewable energy systems. Requires investor-owned
utilities to conduct an open and transparent process to facilitate
participation by qualified contractors operating in the electric
utility's service area that are licensed to install renewable energy
systems.
Department of Ecology.
Requires competitive electrical companies to provide information at
the request of the Commission about the materials contained in leased
energy systems, including all hazardous wastes and commercially
valuable materials used in the system. Removes the assessment
conducted by the Department of Ecology of the environmental
consequences associated with leased energy systems and energy storage
systems. Removes a provision requiring the Department of Ecology to
convene appropriate parties to develop recommendations on the
responsible management of hazardous waste and the recovery of rare
earth minerals and other commercially valuable materials contained in
renewable energy systems at the end of a system's life.
Removes the requirement that the Department of Ecology report its
recommendations to the Legislature.
Transfer of Property.
Includes provisions relating to the transfer of a renewable energy
system lease in the event that the real property on which the system is
placed is sold. Requires the lessor of a renewable energy system to
guarantee sufficient funds to properly dispose of the system at the end
of the lease, identify hazardous and commercially valuable materials
contained in the leased energy system, and provide this information to
the Utilities and Transportation Commission upon request of the
Commission. Prohibits renewable energy system leases from granting
utilities or third-party vendors authority to approve or disapprove the
transfer of real property associated with the lease.
Third-party Vendor Registration.
Modifies the reporting requirement for third-party vendors to
ensure a third-party vendor must register with the Utilities and
Transportation Commission on an annual basis and must disclose any
pending litigation against it.
UTC Rules.
Requires the rules adopted by the Utilities and Transportation
Commission to, at a minimum, provide for the protection of consumers of
renewable energy systems.
Competitive Electrical Companies.
Removes provisions that the Utilities and Transportation Commission
may waive any regulatory requirement for competitive electrical
companies when the Commission determines that competition will serve
the same purposes as public interest regulation or if different
regulatory treatment is in the public interest.
Intent Section.
Provides additional intent language that finds, among other things,
that many electric utilities are the most suitable and responsible
entities to ensure the safety and reliability of leased energy systems
and to provide for consumer protection with respect to those systems.