[atlas:bill]

AN ACT Relating to extending eligibility for the public utility tax deduction for facilities generating energy from cogeneration; and adding a new section to chapter 82.16 RCW.

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

NEW SECTION. Sec. 1. A new section is added to chapter 82.16 RCW to read as follows:

(1)(a) In computing tax under this chapter there shall be deducted from the gross income an amount equal to the cost of production at the plant for consumption within the state of Washington of electrical energy produced or generated from cogeneration at new or expanded cogeneration facilities.

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

(i) "Cogeneration" means 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) In 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) "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 cogeneration.

(2)(a) This section applies only to the amount of electrical energy produced at a new or expanded cogeneration facility on which construction or installation begins after June 30, 2001, and before January 1, 2011. In the case of a cogeneration facility producing electrical energy on or before the effective date of this act, this section applies to the amount of electrical energy produced for sale from that facility that exceeds the amount of electrical energy sold from that location on an average annual basis in the three years prior to June 30, 2001.

(b) This section does not apply to:

(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 section applies unless the cogeneration facility has a combined fuel conversion efficiency of less than forty percent.

(3) By August 25th of each fiscal year in which a taxpayer intends to claim the deduction under this section, the taxpayer shall file with the department, on a form and in a manner prescribed by the department, information concerning production at the cogeneration facility during the previous fiscal year, including but not limited to the following:

(a) The amount of fuel consumed;

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

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

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

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

(4) The department may disclose information received under subsection (3)(a) through (f) of this section 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 section. In addition, prior to the time a cogeneration facility has operated for a full fiscal year, the department may require any information that it finds necessary to determining a taxpayer's eligibility under this section, 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 section.

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

(6) 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.

(7) 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.