[atlas:bill]

AN ACT Relating to diversification of state electricity supply and demand management; amending RCW 80.60.005 and 80.60.010; adding new sections to chapter 80.60 RCW; adding a new section to chapter 43.21F RCW; adding a new section to chapter 80.28 RCW; 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 providing expiration dates.

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

NEW SECTION. Sec. 1. This chapter may be known and cited as the diversification of electricity supply and demand management act.

Sec. 2. RCW 80.60.005 and 1998 c 318 s 1 are each amended to read as follows:

The legislature finds that it is in the public interest to:

(1) Encourage private investment in renewable energy resources;

(2) Stimulate the economic growth of this state; ((~~and~~))

(3) Enhance the continued diversification of the energy resources used in this state; and

(4) Promote conservation and efficiency in electricity usage.

Sec. 3. RCW 80.60.010 and 2000 c 158 s 1 are each amended to read as follows:

The definitions in this section apply throughout this chapter unless the context clearly indicates otherwise.

(1) "Alternative energy resources" means electricity generation facilities fueled by: (a) Wind; (b) solar energy; (c) geothermal energy; (d) landfill gas; (e) wave or tidal action; (f) gas produced during the treatment of wastewater; or (g) biomass energy based on solid organic fuels from wood, forest, or field residues, or dedicated energy crops that do not include wood pieces that have been treated with chemical preservatives such as creosote, pentachlorophenol, or copper‑chrome‑arsenic.

(2) "Commission" means the utilities and transportation commission.

((~~(2)~~)) (3) "Conservation and efficiency resources" means measures that yield a decrease of energy consumption while providing the same level of energy service.

(4) "Customer-generator" means a user of a net metering system.

((~~(3)~~)) (5) "Department" means the department of community, trade, and economic development.

(6) "Electrical company" means a company owned by investors that meets the definition of RCW 80.04.010.

((~~(4)~~)) (7) "Electric cooperative" means a cooperative or association organized under chapter 23.86 or 24.06 RCW.

((~~(5)~~)) (8) "Electric utility" means any electrical company, public utility district, irrigation district, port district, electric cooperative, or municipal electric utility that is engaged in the business of distributing electricity to retail electric customers in the state.

((~~(6)~~)) (9) "Irrigation district" means an irrigation district under chapter 87.03 RCW.

((~~(7)~~)) (10) "Municipal electric utility" means a city or town that owns or operates an electric utility authorized by chapter 35.92 RCW.

((~~(8)~~)) (11) "Net metering" means measuring the difference between the electricity supplied by an electric utility and the electricity generated by a customer-generator that is fed back to the electric utility over the applicable billing period.

((~~(9)~~)) (12) "Net metering system" means a fuel cell or a facility for the production of electrical energy that:

(a) Uses as its fuel either solar, wind, or hydropower;

(b) Has a generating capacity of not more than twenty-five kilowatts;

(d) Operates in parallel with the electric utility's transmission and distribution facilities; and

(e) Is intended primarily to offset part or all of the customer-generator's requirements for electricity.

((~~(10)~~)) (13) "Port district" means a port district within which an industrial development district has been established as authorized by Title 53 RCW.

((~~(11)~~)) (14) "Public utility district" means a district authorized by chapter 54.04 RCW.

(15) "Qualified diversity resources" means alternative energy resources or conservation and efficiency resources.

(16) "Small electric utility" means any consumer‑owned utility with twenty‑five thousand or fewer electric meters in service, or that has an average of seven or fewer customers per mile of distribution line. "Electric meters in service" means those meters that record in at least nine months in any calendar year not less than two hundred fifty kilowatt hours per month.

NEW SECTION. Sec. 4. (1) By January 1, 2007, and each year thereafter through December 31, 2011, each electric utility shall ensure that at least five percent of its resources used to serve its Washington customers are qualified diversity resources. Of the five percent, not less than one and one‑quarter percent must be alternative energy resources and not less than one and one‑quarter percent must be conservation and efficiency resources.

(2) By January 1, 2012, and each year thereafter, each electric utility shall ensure that at least ten percent of its resources used to serve its Washington customers are qualified diversity resources. Of the ten percent, not less than two and one‑half percent must be alternative energy resources and not less than two and one‑half percent must be conservation and efficiency resources.

(3) An electric utility that as of March 1, 2001, owns or has under contract sufficient resources to meet one hundred percent of its forecasted needs to serve its customers is exempt from this section until such time as those resources are no longer sufficient to serve at least ninety-five percent of its forecasted needs.

(4) A small electric utility that purchases all of its electric supply from the Bonneville power administration is exempt from this section in any year for which the Bonneville power administration does not offer, when the contract for purchase is executed, resources that enable the utility to comply with this section.

NEW SECTION. Sec. 5. (1) By March 1, 2003, and by each March 1st thereafter, each electric utility, except electrical companies, shall report to the department its activities undertaken to achieve the requirements of section 4 of this act.

(2) Beginning March 1, 2003, and by each March 1st thereafter, each electrical company shall report to the commission its activities undertaken to achieve the requirements of section 4 of this act.

(3) By July 1, 2007, and by July 1, 2012, the department and the commission must jointly report to the legislature and the governor whether and how the standards in section 4 of this act have been met for the previous five calendar years.

NEW SECTION. Sec. 6. A new section is added to chapter 43.21F RCW to read as follows:

(1) The department shall adopt rules governing the reporting requirements in section 5(1) of this act.

(2) The department shall adopt rules establishing criteria for determining whether resources qualify as alternative energy resources or conservation and efficiency resources as defined in RCW 80.60.010. To the extent practicable, these criteria shall be consistent with any pertinent recommendations of the regional technical forum of the Pacific Northwest electric power and conservation planning council created under P.L. 96‑501, 16 U.S.C. Sec. 839. The rules shall include criteria for qualifying expenditures for weatherization of low‑income households as conservation and efficiency resources.

(3) By July 1, 2002, the department shall develop and report to the legislature recommendations concerning a credit and credit‑trading program for qualified diversity resources, designed to provide electric utilities with a tool for collectively and efficiently achieving the requirements of section 4 of this act.

NEW SECTION. Sec. 7. A new section is added to chapter 80.28 RCW to read as follows:

The commission shall adopt rules to implement sections 4 and 5 of this act with respect to electrical companies.

NEW SECTION. Sec. 8. Each electric utility, as defined in RCW 80.60.010, shall undertake and complete by January 1, 2003, a feasibility study to determine effective methods for reducing by at least three percent use of electricity during daily peak periods of electricity demand. Each utility shall report the results of its study under section 5 of this act. The study shall consider the feasibility and effectiveness of such factors as: Providing consumers information on the cost of electricity at different times of day or season; "smart meters" technology or other energy management systems that enable consumers and utilities to improve management of electricity supply and cost; and rate structures that create an incentive for demand reduction dispatched by utilities.

NEW SECTION. Sec. 9. Any direct service industrial customer that obtains a sales and use tax exemption or deferral or business and occupation tax or public utility tax credit under chapter . . . (House Bill No. 1404, Senate Bill No. 5539, or other similar legislation), Laws of 2001 must meet the obligations under sections 4 and 5 of this act as if it were an electric utility.

NEW SECTION. Sec. 10. A new section is added to chapter 82.08 RCW to read as follows:

The tax levied by RCW 82.08.020 does not apply to sales of smart metering technology purchased after July 1, 2003, by an electric utility as defined in RCW 80.60.010, up to a selling price of fifty dollars per utility customer to be served by the technology. "Smart metering technology" means equipment, including specialized meters, that provide two‑way electronic communication between the utility and a customer's electric meter or electric appliances, and that will enable the utility to charge different rates during different times of day or to physically reduce or interrupt demand for electricity. The utilities and transportation commission shall provide information to the department and to the electric utility in regard to how many customers are being served by smart metering technology on June 30, 2001, and how many additional customers will be served by application of the smart metering technology after July 1, 2001.

This section expires June 30, 2007.

NEW SECTION. Sec. 11. A new section is added to chapter 82.12 RCW to read as follows:

The provisions of this chapter do not apply in respect to smart metering technology purchased after July 1, 2003, by an electric utility as defined in RCW 80.60.010, up to a selling price of fifty dollars per utility customer to be served by the technology. "Smart metering technology" means equipment, including specialized meters, that provide two‑way electronic communication between the utility and a customer's electric meter or electric appliances, and that will enable the utility to charge different rates during different times of day or to physically reduce or interrupt demand for electricity.

This section expires June 30, 2007.

NEW SECTION. Sec. 12. A new section is added to chapter 82.16 RCW to read as follows:

In computing tax under this chapter for any electric utility as defined in RCW 80.60.010 that has been certified by the utilities and transportation commission to have, as of July 1, 2001, installed smart metering technology for at least thirty percent of its customers, there may be deducted from the gross income an amount equal to the purchase price of smart metering technology purchased in the calendar year, up to one hundred dollars per additional customer enabled to be served by such technology beyond the number of customers that were served by smart metering technology in the previous calendar year. "Smart metering technology" means equipment, including specialized meters, that provide two‑way electronic communication between the utility and a customer's electric meter or electric appliances, and that will enable the utility to charge different rates during different times of day or to physically reduce or interrupt demand for electricity. The utilities and transportation commission shall provide information to the department and to the electric utility in regard to how many customers are being served by smart metering technology on June 30, 2001, and how many additional customers will be served by application of the smart metering technology after July 1, 2001.

This section expires June 30, 2003.

NEW SECTION. Sec. 13. Sections 1, 4, 5, and 9 of this act are each added to chapter 80.60 RCW.

NEW SECTION. Sec. 14. If chapter . . . (House Bill No. 1404, Senate Bill No. 5539, or other similar legislation), Laws of 2001 does not become law by June 30, 2001, section 9 of this act is null and void.

NEW SECTION. Sec. 15. 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.