H-2672

AN ACT Relating to the taxation of coal-fired thermal electric generating facilities placed in operation before July 1, 1975; amending RCW 43.79A.040 and 80.04.130; adding a new section to chapter 82.08 RCW; adding a new section to chapter 82.12 RCW; adding a new section to chapter 82.16 RCW; creating new sections; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. (1) The legislature finds that:

(a) Thermal electric generating facilities play an important role in providing jobs for residents of the communities where such plants are located; and

(b) Taxes paid by thermal electric generating plants help to support schools and local and state government operations.

(2) It is the intent of the legislature to assist thermal electric generating facilities placed in operation before July 1, 1975, to update their air pollution control equipment and abate pollution by extending certain tax exemptions and credits so that such plants may continue to play a long-term vital economic role in the communities where they are located.

NEW SECTION. Sec. 2. A new section is added to chapter 82.08 RCW to read as follows:

(1) For the purposes of this section, "air pollution control facilities" mean any treatment works, control devices and disposal systems, machinery, equipment, structures, property, property improvements, and accessories, that are installed or acquired for the primary purpose of reducing, controlling, or disposing of industrial waste that, if released to the outdoor atmosphere, could cause air pollution, or that are required to meet regulatory requirements applicable to their construction, installation, or operation.

(2) The tax levied by RCW 82.08.020 does not apply to:

(a) Sales of tangible personal property to a light and power business, as defined in RCW 82.16.010, for construction or installation of air pollution control facilities at a thermal electric generation facility; or

(b) Sales of, cost of, or charges made for labor and services performed in respect to the construction or installation of air pollution control facilities.

(3) The exemption provided under this section applies only to sales, costs, or charges:

(a) Incurred for air pollution control facilities constructed or installed after the effective date of this act and used in a thermal electric generation facility placed in operation before July 1, 1975;

(b) If the air pollution control facilities are constructed or installed to meet applicable regulatory requirements established under state or federal law, including the Washington clean air act, chapter 70.94 RCW; and

(c) For which the purchaser provides the seller with an exemption certificate, signed by the purchaser or purchaser's agent, that includes a description of items or services for which payment is made, the amount of the payment, and such additional information as the department reasonably may require.

(4) This section does not apply to sales of tangible personal property purchased or to sales of, costs of, or charges made for labor and services used for maintenance or repairs of pollution control equipment.

(5) If production of electricity at a thermal electric generating facility for any calendar year after 2002 and before 2023 falls below a twenty percent annual capacity factor for the generating facility, all or a portion of the tax previously exempted under this section in respect to construction or installation of air pollution control facilities at the generating facility shall be due as follows:

Portion of previously

Year event occurs exempted tax due

2003 100%

2004 95%

2005 90%

2006 85%

2007 80%

2008 75%

2009 70%

2010 65%

2011 60%

2012 55%

2013 50%

2014 45%

2015 40%

2016 35%

2017 30%

2018 25%

2019 20%

2020 15%

2021 10%

2022 5%

2023 0%

NEW SECTION. Sec. 3. A new section is added to chapter 82.12 RCW to read as follows:

(2) The provisions of this chapter do not apply in respect to the use of air pollution control facilities installed and used by a light and power business, as defined in RCW 82.16.010, in generating electric power.

(3) The exemption provided under this section applies only to air pollution control facilities that are:

(a) Constructed or installed after the effective date of this act and used in a thermal electric generation facility placed in operation before July 1, 1975; and

(b) Constructed or installed to meet applicable regulatory requirements established under state or federal law, including the Washington clean air act, chapter 70.94 RCW.

(4) This section does not apply to the use of tangible personal property for maintenance or repairs of the pollution control equipment.

NEW SECTION. Sec. 4. A new section is added to chapter 82.16 RCW to read as follows:

(1) Light and power businesses engaged in the generation of electric energy at thermal electric generating facilities placed in operation before July 1, 1975, and that are subject to taxation under this chapter, shall be allowed a tax credit equal to the amount of sales and use taxes paid on coal used by the facility in generating electricity plus the amount of property taxes paid and associated with new air pollution control facilities constructed after the effective date of this act.

(2) The credit shall be taken against taxes due for the same calendar year in which the amounts, for which the credit is claimed, were paid on sales, use, or property taxes by the light and power business.

(3) A thermal electric generating facility may not claim any credits under this section until the department of ecology certifies that the thermal electric generating facility emitted no more than ten thousand tons of sulfur dioxide during the previous calendar year.

(4) The sulfur dioxide abatement account is created in the custody of the state treasurer. During each year after 1998, if the department of ecology certifies that a thermal electric generating facility made reasonable progress in installing sulfur dioxide pollution control equipment during the previous year, the state treasurer shall deposit in the account the portion of any public utility tax paid by the thermal electric generating facility that would be allowed as a credit under this section if the thermal electric generating facility emitted no more than ten thousand tons of sulfur dioxide during the previous calendar year.

(5) When a thermal electric generating facility emits no more than ten thousand tons of sulfur dioxide during a calendar year, the department of ecology shall so certify to the state treasurer by January 31 of the following year. Within thirty days of receipt of certification under this subsection, the state treasurer shall release any moneys in the sulfur dioxide abatement account to the owners of the thermal electric generating facility. No appropriation is required for release of moneys under this section.

(6) Any moneys in the sulfur dioxide abatement account on March 1, 2005, shall be transferred to the state general fund. The sulfur dioxide abatement account shall cease to exist after March 1, 2005.

(7) Credits cannot be claimed under this section against taxes due in a calendar year if the thermal electric generating facility received a notice of violation for excessive sulfur dioxide emissions from a regional air pollution control authority or the department of ecology during the previous calendar year.

(8) Credits cannot be claimed under this section against taxes due in a calendar year if less than seventy percent of the coal consumed at the thermal electric generating facility during the previous calendar year was produced by a mine located in the same county as the facility or in a county contiguous to that county.

(9) For the purposes of this section, "air pollution control facilities" mean any treatment works, control devices and disposal systems, machinery, equipment, structures, property, property improvements, and accessories, that are installed or acquired for the primary purpose of reducing, controlling, or disposing of industrial waste that, if released to the outdoor atmosphere, could cause air pollution, or that are required to meet regulatory requirements applicable to their construction, installation, or operation.

Sec. 5. RCW 43.79A.040 and 1996 c 253 s 409 are each amended to read as follows:

(1) Money in the treasurer's trust fund may be deposited, invested and reinvested by the state treasurer in accordance with RCW 43.84.080 in the same manner and to the same extent as if the money were in the state treasury.

(2) All income received from investment of the treasurer's trust fund shall be set aside in an account in the treasury trust fund to be known as the investment income account.

(3) The investment income account may be utilized for the payment of purchased banking services on behalf of treasurer's trust funds including, but not limited to, depository, safekeeping, and disbursement functions for the state treasurer or affected state agencies. The investment income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for payments to financial institutions. Payments shall occur prior to distribution of earnings set forth in subsection (4) of this section.

(4)(a) Monthly, the state treasurer shall distribute the earnings credited to the investment income account to the state general fund except under (b) and (c) of this subsection.

(b) The following accounts and funds shall receive their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The agricultural local fund, the American Indian scholarship endowment fund, the Washington international exchange scholarship endowment fund, the energy account, the fair fund, the game farm alternative account, the grain inspection revolving fund, the rural rehabilitation account, ((~~and~~)) the self-insurance revolving fund, and the sulfur dioxide abatement account. However, the earnings to be distributed shall first be reduced by the allocation to the state treasurer's service fund pursuant to RCW 43.08.190.

(c) The following accounts and funds shall receive eighty percent of their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The advanced right of way revolving fund, the federal narcotics asset forfeitures account, the high occupancy vehicle account, and the local rail service assistance account.

(5) In conformance with Article II, section 37 of the state Constitution, no trust accounts or funds shall be allocated earnings without the specific affirmative directive of this section.

Sec. 6. RCW 80.04.130 and 1993 c 311 s 1 are each amended to read as follows:

(1) Whenever any public service company shall file with the commission any schedule, classification, rule or regulation, the effect of which is to change any rate, charge, rental or toll theretofore charged, the commission shall have power, either upon its own motion or upon complaint, upon notice, to enter upon a hearing concerning such proposed change and the reasonableness and justness thereof, and pending such hearing and the decision thereon the commission may suspend the operation of such rate, charge, rental or toll for a period not exceeding ten months from the time the same would otherwise go into effect, and after a full hearing the commission may make such order in reference thereto as would be provided in a hearing initiated after the same had become effective. The commission shall not suspend a tariff that makes a decrease in a rate, charge, rental, or toll filed by a telecommunications company pending investigation of the fairness, justness, and reasonableness of the decrease when the filing does not contain any offsetting increase to another rate, charge, rental, or toll and the filing company agrees to not file for an increase to any rate, charge, rental, or toll to recover the revenue deficit that results from the decrease for a period of one year. The filing company shall file with any decrease sufficient information as the commission by rule may require to demonstrate the decreased rate, charge, rental, or toll is above the long run incremental cost of the service. A tariff decrease that results in a rate that is below long run incremental cost, or is contrary to commission rule or order, or the requirements of this chapter, shall be rejected for filing and returned to the company. The commission may prescribe a different rate to be effective on the prospective date stated in its final order after its investigation, if it concludes based on the record that the originally filed and effective rate is unjust, unfair, or unreasonable.

For the purposes of this section, tariffs for the following telecommunications services, that temporarily waive or reduce charges for existing or new subscribers for a period not to exceed sixty days in order to promote the use of the services shall be considered tariffs that decrease rates, charges, rentals, or tolls:

(a) Custom calling service;

(b) Second access lines; or

The commission may suspend any promotional tariff other than those listed in (a) through (c) of this subsection.

The commission may suspend the initial tariff filing of any water company removed from and later subject to commission jurisdiction because of the number of customers or the average annual gross revenue per customer provisions of RCW 80.04.010. The commission may allow temporary rates during the suspension period. These rates shall not exceed the rates charged when the company was last regulated. Upon a showing of good cause by the company, the commission may establish a different level of temporary rates.

(2) At any hearing involving any change in any schedule, classification, rule or regulation the effect of which is to increase any rate, charge, rental or toll theretofore charged, the burden of proof to show that such increase is just and reasonable shall be upon the public service company.

(3) The implementation of mandatory local measured telecommunications service is a major policy change in available telecommunications service. The commission shall not accept for filing or approve, prior to June 1, 1998, a tariff filed by a telecommunications company which imposes mandatory local measured service on any customer or class of customers, except that, upon finding that it is in the public interest, the commission may accept for filing and approve a tariff that imposes mandatory measured service for a telecommunications company's extended area service or foreign exchange service. This subsection does not apply to land, air, or marine mobile service, or to pay telephone service, or to any service which has been traditionally offered on a measured service basis.

(4) The implementation of Washington telephone assistance program service is a major policy change in available telecommunications service. The implementation of Washington telephone assistance program service will aid in achieving the stated goal of universal telephone service.

(5) If a utility claims a sales or use tax exemption on the pollution control equipment for an electrical generation facility and abandons the generating facility before the pollution control equipment is fully depreciated, any tariff filing for a rate increase to recover abandonment costs for the pollution control equipment shall be considered unjust and unreasonable for the purposes of this section.

NEW SECTION. Sec. 7. The department of revenue may adopt rules to implement this act.

NEW SECTION. Sec. 8. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 9. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately.