BILL REQ. #:  H-4518.1 

READ FIRST TIME 01/25/06.   

     AN ACT Relating to a public utility tax credit for gas distribution businesses that invest in energy efficiency measures for certain food processing and other businesses; adding a new section to chapter 82.16 RCW; 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:
     (1) Rising costs of natural gas are creating an economic hardship for Washington's small business and food processing industries.
     (2) Natural gas costs are unlikely to return to historically low levels of a few years ago making investments in energy efficiency increasingly important.
     (3) Washington investor-owned and consumer-owned natural gas utilities are uniquely well positioned to help small business and food processors improve the efficiency of natural gas use and reduce current and long-term energy costs.
     (4) The state of Washington can assist gas utility energy efficiency efforts by providing small public utility tax credits for installation of high-efficiency equipment and processes that might not otherwise occur.

NEW SECTION.  Sec. 2   A new section is added to chapter 82.16 RCW to read as follows:
     (1) Subject to the limitations in this section, a gas distribution business may claim a credit against the tax imposed under this chapter.
     (2) The amount of credit is equal to the amount of qualifying customer incentives and qualifying food processing incentives paid by a gas distribution business between July 1, 2006, and June 30, 2007.
     (3) The credit may be claimed only after the qualifying customer incentives or qualifying food processing incentives are paid. The credit shall be claimed against taxes due for the same fiscal year in which the qualifying customer incentives or qualifying food processing incentives are paid. The credit for each reporting period shall not exceed the amount of tax otherwise due under this chapter for the reporting period. Credits earned for fiscal year 2007 shall not be carried forward or backward and claimed against taxes due for prior or subsequent fiscal years. Refunds may not be granted in the place of a credit. Any unused credit expires.
     (4) The total amount of credit that may be claimed by a gas distribution business is limited to its maximum credit as determined by the department. The total amount of credit that may be claimed by all gas distribution businesses shall not exceed one million five hundred thousand dollars.
     (5) The commission in the case of investor-owned gas distribution businesses, or the governing board in the case of consumer-owned gas distribution businesses, shall provide the department, upon request, information necessary to determine the maximum credit. By June 1, 2006, the department shall publish the maximum credit allowed for each gas distribution business. The rule-making provisions of chapter 34.05 RCW do not apply to the determination of the maximum credit by the department.
     (6) Unless the context clearly requires otherwise, the definitions in this subsection apply throughout this section.
     (a) "Base fiscal year" means the fiscal year beginning July 1, 2003, for purposes of calculating the maximum credit.
     (b) "Commission" means the Washington utilities and transportation commission.
     (c) "Food processing business" means a person that operates a food processing plant as defined in RCW 69.07.010.
     (d) "Incremental cost" means the difference between the higher cost of a qualifying energy efficiency measure and the cost of a same type of nonenergy efficient piece of equipment. However, the incremental cost of a service that is a qualifying energy efficiency measure is the total cost of the service.
     (e) "Maximum credit" means the maximum amount of credit against the tax imposed by this chapter that each gas distribution business may claim for the fiscal year beginning July 1, 2006, as calculated by the department. The maximum credit is equal to the proportionate share that the in-state retail natural gas revenues received by each gas distribution business in the base fiscal year bears to the total in-state retail natural gas revenues received by all gas distribution businesses in the base fiscal year, multiplied by one million five hundred thousand dollars. Revenues from wholesale sales of natural gas or from transporting natural gas shall not be included in calculating the maximum credit.
     (f) "Qualifying customer" means a manufacturing, industrial, or other commercial business located in this state that is a retail natural gas customer of a gas distribution business. "Qualifying customer" does not include any board, commission, institution, department, or agency of federal, state, local, or tribal governments; a business operated out of a personal residence or that has no physical location; or a nonprofit organization as defined in RCW 82.04.3651.
     (g) "Qualifying customer incentive" means the amount paid by a gas distribution business to a qualifying customer for the purchase of a qualifying energy efficiency measure. The amount of incentive that may be paid is limited to no more than twenty-five percent of the incremental cost or fifteen thousand dollars, whichever is less.
     (h) "Qualifying energy efficiency measure" means equipment or services that are purchased by a qualifying customer or qualifying food processing business that meet or exceed the required level of energy efficiency of natural gas consumption. "Qualifying energy efficiency measure" includes high-efficiency boilers; high-efficiency water heaters; high-efficiency furnaces; high-efficiency blanching; control equipment that improves the energy efficiency operations of HVAC equipment, boilers, or water heaters; energy efficiency equipment repair or replacement services; and boiler and furnace tune-up services. A qualifying energy efficiency measure shall be consistent with the cost-effectiveness standards in the utility tariff on file with the commission in the case of investor-owned gas distribution businesses, or determined and approved by the governing board in the case of consumer-owned gas distribution businesses.
     (i) "Qualifying food processing business" means a food processing business that purchases only natural gas transportation services from a gas distribution business.
     (j) "Qualifying food processing incentive" means the amount paid by a gas distribution business to a qualifying food processing business for the purchase of a qualifying energy efficiency measure. The amount of incentive that may be paid is limited to no more than twenty-five percent of the incremental cost or fifteen thousand dollars, whichever is less.
     (k) "Required level of energy efficiency" means the minimum energy efficiency standards allowable in programs offered under utility tariffs on file with the commission in the case of investor-owned gas distribution businesses, and minimum energy efficiency standards approved by the governing board in the case of consumer-owned gas distribution businesses.
     (7) This section expires July 1, 2007.

NEW SECTION.  Sec. 3   The expiration of section 2 of this act does not affect the right of a person to claim a credit under that section on or after July 1, 2007, on a return for a reporting period that includes tax liability incurred between July 1, 2006, and June 30, 2007, if the return is filed by the due date or any extension granted by the department of revenue.

NEW SECTION.  Sec. 4   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.