[atlas:bill]

AN ACT Relating to extending eligibility for the public utility tax deduction for facilities generating energy from cogeneration; and amending RCW 82.16.055.

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

Sec. 1. RCW 82.16.055 and 1980 c 149 s 3 are each amended to read as follows:

(1) In computing tax under this chapter there shall be deducted from the gross income:

(a) An amount equal to the cost of production at the plant for consumption within the state of Washington of:

(i) Electrical energy produced or generated from cogeneration as defined in RCW 82.35.020; and

(ii) Electrical energy or gas produced or generated from renewable energy resources such as solar energy, wind energy, hydroelectric energy, geothermal energy, wood, wood wastes, municipal wastes, agricultural products and wastes, and end-use waste heat; and

(b) Those amounts expended to improve consumers' efficiency of energy end use or to otherwise reduce the use of electrical energy or gas by the consumer.

(2) This section applies ((~~only~~)) to new facilities for the production or generation of energy from cogeneration or renewable energy resources or measures to improve the efficiency of energy end use on which construction or installation is begun after June 12, 1980, and before January 1, 1990.

(3)(a) In addition, this section applies to new or expanded cogeneration from a facility on which construction or installation is begun after June 30, 2001, and before January 1, 2011.

(b) For purposes of this subsection, the following definitions apply:

(i) "Cogeneration facility" means any machinery, equipment, structure, process, or property, or any part thereof, installed or acquired by a person or corporation for the purpose of the sequential generation, in either order, of electrical energy and useful thermal energy, such as heat or steam, from the same primary energy source or fuel in which the useful thermal energy is used:

(A) For a manufacturing process;

(B) To improve the operating efficiency of a facility that produces electrical energy through biomass generation as defined in RCW 19.29A.010; or

(ii) "Expanded cogeneration" means the amount of electrical energy produced for sale at a facility that exceeds the amount of electrical energy sold on an average annual basis in the three years prior to June 30, 2001.

(i) A cogeneration facility fueled by diesel; or

(ii) A cogeneration facility that has a combined fuel conversion efficiency of less than sixty percent, unless the cogeneration facility is used to improve the operating efficiency of a facility that produces electrical energy through biomass generation as defined in RCW 19.29A.010, in which case this subsection shall apply unless the cogeneration facility has a combined fuel conversion efficiency of less than forty percent.

(d) By August 25th of each fiscal year in which a taxpayer intends to claim the deduction under this subsection, the taxpayer shall file with the department, on a form and in a manner prescribed by the department, the following information concerning production at the cogeneration facility during the previous twelve months:

(i) The amount of fuel consumed;

(ii) The energy content of the fuel measured in British thermal units per unit of fuel;

(iii) The amount of electricity produced measured in kilowatt hours;

(iv) The gallons of hot water or pounds of steam produced;

(v) The temperature of the hot water, or temperature and pressure of the steam, produced; and

(vi) The temperature of the hot water or condensate returned to the boiler.

(e) The department may disclose information received under (d)(i) through (vi) of this subsection to energy policy staff of the department of community, trade, and economic development or the Washington State University cooperative extension solely for the purpose of determining a taxpayer's eligibility for a deduction under this subsection. In addition, prior to the time a cogeneration facility has operated for a full fiscal year, the department may require such information that it finds necessary to determining a taxpayer's eligibility under this subsection, and may disclose the information received to energy policy staff of the department of community, trade, and economic development or the Washington State University cooperative extension solely for the purpose of determining the taxpayer's eligibility for a deduction under this subsection.

(4) Deductions under subsection (1)(a) of this section shall be allowed for a period not to exceed thirty years after the project is placed in operation.

((~~(4)~~)) (5) Measures or projects encouraged under this section shall at the time they are placed in service be reasonably expected to save, produce, or generate energy at a total incremental system cost per unit of energy delivered to end use which is less than or equal to the incremental system cost per unit of energy delivered to end use from similarly available conventional energy resources which utilize nuclear energy or fossil fuels and which the gas or electric utility could acquire to meet energy demand in the same time period.

((~~(5)~~)) (6) The department of revenue, after consultation with the utilities and transportation commission in the case of investor-owned utilities and the governing bodies of locally regulated utilities, shall determine the eligibility of individual projects and measures for deductions under this section.