BILL REQ. #:  S-0955.2 

Read first time 02/01/2005.   Referred to Committee on Water, Energy & Environment.

     AN ACT Relating to renewable energy tax credits; adding a new section to chapter 82.16 RCW; and creating new sections.

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

NEW SECTION.  Sec. 1   The legislature finds that:
     (1) Washington's utilities have been historical leaders in developing low-cost renewable hydroelectric energy, greatly benefiting the state economy;
     (2) Washington has a long tradition of energy policies that support renewable resource development. These policies, which include financial incentives, have stimulated economic development, encouraged the development of renewable resources within the state, and protected the environment;
     (3) Continuing and expanding financial and other incentives will stimulate the market for renewable energy technologies and renewable resources, helping to diversity the energy resources used to serve Washington's consumers while hedging against future fuel price risk;
     (4) Fuel diversity, economic, and environmental benefits from renewable resources accrue to the public at large, and therefore it is the policy of the state of Washington to encourage consistent development of these resources to meet the state's electric demand and stabilize electricity prices.

NEW SECTION.  Sec. 2   A new section is added to chapter 82.16 RCW to read as follows:
     Subject to the limitations of this section, beginning January 1, 2006, an electric utility may take a credit each fiscal year against the tax imposed under this chapter.
     (1) An electric utility subject to tax under this chapter is eligible for a credit against the tax owed if the electric utility contracts for the purchase of or generates a renewable resource for distribution and sale to its retail customers.
     (2) The credit is equal to 0.003 dollars per kilowatt hour times the number of kilowatt hours of a renewable resource purchased or generated by an electric utility and distributed to its retail customers.
     (3) If an electric utility purchases, or otherwise possesses and retires renewable energy credits without purchasing the corresponding renewable resource, the electric utility is eligible for a credit equal to 0.001 dollars per kilowatt hour times the number of kilowatt hours equivalent of the renewable energy credits.
     (4) Credits under this section shall be allowed for a period not to exceed ten years after the renewable resource generating facility from which the renewable resource or renewable energy credit originates is placed in commercial operation and shall only be prospectively applied to renewable resources or renewable energy credits generated or purchased after the effective date of this act.
     (5) The department, after consultation with the utilities and transportation commission in the case of investor-owned utilities and the governing bodies of consumer-owned utilities, shall determine the eligibility of individual projects for credits under this section.
     (6) An electric utility shall not receive a tax credit under this section when the utility also receives credit or funding for those same renewable resources under a renewable resource standard established by legislation in another state or if that facility has received funding from a system benefit charge from another state.
     (7) The application for credit shall be in a form and manner prescribed by the department and may require certification, by the utilities and transportation commission for investor-owned utilities and by their governing bodies for consumer-owned utilities, that the source of electricity meets the definition of a renewable resource contained in this act.
     (8) The following definitions apply throughout this section:
     (a) "Commission" means the Washington state utilities and transportation commission.
     (b) "Consumer-owned utility" includes a municipal electric utility formed under Title 35 RCW, a public utility district formed under Title 54 RCW, an irrigation district formed under chapter 87.03 RCW, a cooperative formed under chapter 23.86 RCW, a mutual corporation or association formed under chapter 24.06 RCW, a port district formed under Title 53 RCW, or a water-sewer district formed under Title 57 RCW, that is engaged in the business of distributing electricity to one or more retail electric customers in the state.
     (c) "Electric utility" means a consumer-owned or investor-owned utility.
     (d) "Governing body" means the elected board of directors of a corporation or the city council, commissioners, or other elected decision-making board of any consumer-owned utility.
     (e) "Investor-owned utility" means a corporation owned by investors that meets the definition in RCW 80.40.010 and is engaged in distributing electricity to more than one retail electric customer in the state.
     (f) "Pacific Northwest" has the same meaning as defined in section 3 of the Pacific Northwest electric power planning and conservation act, P.L. 96-501 (16 U.S.C. Sec. 389a; 94 Stat. 2698).
     (g) "Renewable energy credit" means a tradable certificate of proof, not yet retired, of either one megawatt hour or one kilowatt hour, as appropriate, corresponding to an equivalent amount of a renewable resource that is: (i) Not powered by fresh water; and (ii) qualified as a renewable energy credit from a renewable energy credit program identified by the department of community, trade, and economic development or the western governor's association.
     (h) "Renewable resource" means electricity generated by an electric generation facility or the expanded portion of an electric generation facility that is located in the Pacific Northwest, where the facility or expansion commences operation after July 1, 2005, and before July 1, 2015, and where the new or expanded electric generation facility is fueled by: (i) Wind; (ii) solar energy; (iii) geothermal energy; (iv) landfill gas; (v) 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; (vi) wave or tidal power; (vii) gas from sewage treatment facilities; or (viii) water that flows through hydroelectric generating facilities in water supply pipes or irrigation pipes or canals that are located in the state of Washington and that do not result in any new water diversions.
     (i) "System benefits charge" means a state legislative or regulatory standard requiring electric utilities to invest a specified portion of their annual retail revenues in renewable energy, conservation and efficiency, or other designated public benefits.

NEW SECTION.  Sec. 3   On or before December 1, 2007, and every two years thereafter, the department shall submit a report to the legislature on the amount of incentives provided for renewable resources, the amount of renewable resources produced by each type of renewable resource generation facility, the name and location of each generating facility, and the participating electric utilities.

NEW SECTION.  Sec. 4   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.