BILL REQ. #:  H-2261.1 

READ FIRST TIME 03/05/03.   

     AN ACT Relating to providing tax incentives to promote the production and distribution of electricity from alternative sources of energy; amending RCW 82.08.02567 and 82.12.02567; adding a new section to chapter 82.16 RCW; creating a new section; and providing expiration dates.

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

NEW SECTION.  Sec. 1   It is the intent of the legislature to encourage and expand the commercial generation of electrical power from alternative energy sources to meet the long-term energy needs of the state. It is the further intent that incentives provided by the state encourage free-market principles that foster technological innovation and entrepreneurial investment in alternative energy sources. This intent is best served by encouraging commercially viable, independent generators of alternative energy-based electrical power to provide such power to established utility distribution networks.
     It is also the intent of the legislature that, to promote the use of alternative energy sources for the purpose of electrical generation, tax incentives should be provided in RCW 82.08.02567 and 82.12.02567 for the acquisition of certain machinery and equipment to all qualifying sectors of the state economy, including industrial, commercial, and residential.

Sec. 2   RCW 82.08.02567 and 2001 c 213 s 1 are each amended to read as follows:
     (1) The tax levied by RCW 82.08.020 shall not apply to sales of machinery and equipment used directly in generating electricity using ((fuel cells, wind, sun, or landfill gas as the principal source of power)) renewable resources or fuel cells, or to sales of or charges made for labor and services rendered in respect to installing such machinery and equipment((, but only if the purchaser develops with such machinery, equipment, and labor a facility capable of generating not less than two hundred watts of electricity and provides)). The purchaser must provide the seller with an exemption certificate in a form and manner prescribed by the department. The seller shall retain a copy of the certificate for the seller's files.
     (2) For purposes of this section and RCW 82.12.02567:
     (a) "Landfill gas" means biomass fuel of the type qualified for federal tax credits under 26 U.S.C. Sec. 29 collected from a landfill. "Landfill" means a landfill as defined under RCW 70.95.030;
     (b) "Machinery and equipment" means industrial fixtures, devices, and support facilities that are integral and necessary to the generation of electricity using ((wind, sun, or landfill gas as the principal source of power)) renewable resources or fuel cells;
     (c) "Machinery and equipment" does not include: (i) Hand-powered tools; (ii) property with a useful life of less than one year; (iii) repair parts required to restore machinery and equipment to normal working order; (iv) replacement parts that do not increase productivity, improve efficiency, or extend the useful life of machinery and equipment; (v) buildings; or (vi) building fixtures that are not integral and necessary to the generation of electricity that are permanently affixed to and become a physical part of a building;
     (d) Machinery and equipment is "used directly" in generating electricity ((with fuel cells or by wind energy, solar energy, or landfill gas power)) using renewable resources or fuel cells if it provides any part of the process that captures the energy ((of the wind, sun, or landfill gas)), converts that energy to electricity, and stores, transforms, or transmits that electricity for entry into or operation in parallel with electric transmission and distribution systems;
     (e) "Fuel cell" means an electrochemical reaction that generates electricity by combining atoms of hydrogen and oxygen in the presence of a catalyst;
     (f) "Renewable resources" means wind energy, solar energy, hydroelectric energy, geothermal energy, landfill gas, biomass energy based on animal waste or 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.
     (3) This section expires June 30, ((2009)) 2018.

Sec. 3   RCW 82.12.02567 and 2001 c 213 s 2 are each amended to read as follows:
     (1) The provisions of this chapter shall not apply with respect to machinery and equipment used directly in generating ((not less than two hundred watts of)) electricity using ((wind, sun, or landfill gas as the principal source of power)) renewable resources or fuel cells.
     (2) The definitions in RCW 82.08.02567 apply to this section.
     (3) This section expires June 30, ((2009)) 2018.

NEW SECTION.  Sec. 4   A new section is added to chapter 82.16 RCW to read as follows:
     (1) In computing tax under this chapter, a light and power business may deduct from gross income amounts equal to the cost of production from an electrical generating facility using renewable resources or fuel cells.
     (2) For the purposes of this section, the definitions in RCW 82.08.02567 apply.
     (3) This section expires January 1, 2018.