BILL REQ. #:  H-1309.1 

Read first time 02/10/2003.   Referred to Committee on Technology, Telecommunications & Energy.

     AN ACT Relating to establishing a joint task force to examine the operational, economic, and regulatory obstacles to renewable resources development; creating new sections; providing an expiration date; and declaring an emergency.

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

NEW SECTION.  Sec. 1   The legislature finds that the Pacific Northwest benefits from having more than seventy percent of its electricity derive from a renewable resource, water. Other regions of the country are far more dependent on thermal power generation fueled by coal, nuclear fission, natural gas, and oil. These other regions can demonstrably benefit, in terms of reduced environmental degradation and reliance on foreign sources of fossil fuels, by acquiring solar, wind, biomass, hydroelectric, geothermal, landfill gas, and hydrogen-based generation resources. Washington can also benefit from diversifying its electrical generation resources, including conventional and renewable technologies; this is a trend that has already begun. The state's new generation resources will become more diversified than they are presently.
     The legislature also finds that as the economy and population of the state grows the need for additional generation resources, including conservation, increases as well. But the potential for greatly expanding hydroelectric capacity is limited mostly to upgrading existing facilities. That means other forms of electricity generation technologies will be acquired by utilities. Decisions made in this regard will be individualized because of the unique aspects of the electric industry in the state.
     Retail electric customers in this state are served by a variety of utilities. Many of them, notably the smaller ones, are full requirements customers of the Bonneville power administration, but others derive a portion of their power supply from resources they own. The largest municipal utilities obtain most of their electricity from their hydroelectric facilities. Some public utility districts generate all of their electrical supply from their own hydroelectric plants, while others own or contract for supply from gas-fired combined cycle combustion turbines, a nuclear plant, a landfill gas facility, a wind development, a small solar project, and small hydroelectric installations. Similarly, each investor-owned utility has unique generation attributes, with varying degrees of reliance on hydroelectric and thermal generation resources. Historically, the utilities in the state have acquired generation resources that best comport with their load requirements and least-cost considerations. That tradition has helped to maintain retail electricity prices that have been among the lowest in the nation.
     The legislature further finds that utilities in the state and region, as well as their customers, have experienced hardship because of a recent drought that severely reduced hydroelectric energy production and unprecedented wholesale electricity prices. A report by the United States energy information administration shows that Washington, which once had the second lowest electricity rates in the nation, now has the eighteenth highest rates. That situation may worsen, as the Bonneville power administration has warned that it may soon need to further increase electricity prices for its utility customers.
     The ability of utilities to plan and prepare for their future demand requirements will be critical in determining what will happen to future electricity rates for consumers. The availability of low-cost capital to many utilities and independent power producers has been limited, as commercial lenders and financial markets view the electric industry with skepticism. This has hampered development of generation resources, with one apparent exception.
     Washington and Oregon host the largest wind power project in the world; its owner reportedly has plans to expand it. Other smaller wind developments have been completed in recent years, and two additional large projects are being planned in Kittitas county. Soon the state may have nearly six hundred megawatts of total installed generating capacity of wind power, worth approximately two hundred average megawatts of energy. Wind power construction is growing steadily and retail electric consumers, judging from the subscriptions to green rates offered by large utilities as a matter of law, are receptive to buying wind power. Nevertheless, the operational characteristics and economics associated with wind generation, as well as certain regulatory policies, may hinder continued expansion of wind generation development.
     Therefore, the legislature declares that there is a need to examine the viability and feasibility of wind generation by identifying and assessing the operational, economic, and regulatory obstacles to its growth and utilization.

NEW SECTION.  Sec. 2   (1) The joint task force on renewable resource development is created to consist of the following four members:
     (a) Two members from the house of representatives from diverse geographic locations, one each from the two largest political caucuses, appointed by the speaker of the house of representatives;
     (b) Two members of the senate from diverse geographic locations, one each from the two largest political caucuses, appointed by the majority leader of the senate.
     (2) The task force shall be cochaired by one senator and one representative appointed by the senate majority leader and the speaker of the house of representatives, respectively.
     (3) The cochairs may appoint advisory committees of nonvoting advisors and experts to provide input on subjects of interest to the task force. For the purposes of this subsection, "advisors and experts" includes, but may not be limited to, representatives of: Cities, public utility districts, rural electric cooperatives, investor-owned utilities, counties, the utilities and transportation commission, environmental and consumer advocacy organizations, and generation development companies.
     (4) Any findings, conclusions, or recommendations of the joint task force must be agreed to by a majority of the legislative members; however, minority findings, conclusions, or recommendations may be included that are submitted by any member or group of members.
     (5) The joint task force shall commence by July 1, 2003, and it shall present a final report, including any legislative recommendations, to the legislature no later than January 1, 2004.
     (6) Staffing for the task force shall be provided by senate committee services and the office of program research.

NEW SECTION.  Sec. 3   (1) The joint task force on renewable resource development shall:
     (a) Identify the typical capacity factors for the following generation technologies: Wind, hydroelectric, combined cycle combustion turbines, nuclear, coal, solar, and biomass;
     (b) Identify how capital availability may impact the development of generation resources, including renewable resources, in the region;
     (c) Evaluate the operational and financial impacts of wind generation on the following aspects of the integrated electric grid: (i) Transmission; (ii) operating reserve requirements; (iii) voltage support; (iv) reliability; (v) hydroelectric generating facilities; and (vi) utility scheduling functions such as staffing;
     (d) Evaluate the impact of various levels of wind energy on wholesale spot market price levels;
     (e) Evaluate available methods and the potential for forecasting wind generation on an hour-ahead to week-ahead basis;
     (f) Evaluate the benefits, if any, of the Bonneville power administration to coordinating the integration of wind energy into the regional transmission grid;
     (g) Evaluate how state and local siting regulations can inhibit or delay the construction of wind generation facilities;
     (h) Evaluate the potential for voluntary optional pricing programs offered by utilities to their retail electric customers to advance the purchase of wind generation by consumers and utilities;
     (i) Evaluate how wind generation can meet or conflict with the operational and reliability requirements of utilities in the state;
     (j) Evaluate how wind generation compares with conventional generation resources and other renewable resources in terms of output cost, which should include, but may not be limited to: (i) The cost of environmental permits, (ii) capital, (iii) operations and maintenance, (iv) fuel, and (v) federal, state, and local taxes; and the value of federal, state, and local tax credits, if any;
     (k) Evaluate what conditions or requirements may factor into a decision by utilities, for example firming, to purchase wind generation;
     (l) Evaluate the possibilities and limitations for how wind generation can be integrated with hydroelectric generation, considering the different characteristics of several utility hydroelectric systems in the state; and
     (m) Identify what, if any, incentives or regulatory accommodations could be made to encourage utilities to acquire wind generation.
     (2) To minimize the expense of conducting evaluations under this section, these evaluations shall be based upon existing and readily available data and information.

NEW SECTION.  Sec. 4   This act expires June 1, 2004.

NEW SECTION.  Sec. 5   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.