BILL REQ. #:  S-3424.1 

Read first time 04/20/2005.   Referred to .

     AN ACT Relating to providing incentives to industry and consumers to promote renewable energy; adding a new section to chapter 82.16 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 82.04 RCW; adding a new section to chapter 84.36 RCW; providing an effective date; providing an expiration date; and declaring an emergency.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 82.16 RCW to read as follows:
     (1) Any individual, business, or local governmental entity, not in the light and power business or in the gas distribution business, may apply to the light and power business serving the situs of the system, each fiscal year beginning on July 1, 2005, for an investment cost recovery incentive for each kilowatt-hour from a customer-generated electricity renewable energy system installed on its property. No incentive may be paid for kilowatt-hours generated before July 1, 2005, or after June 30, 2015.
     (2)(a) Before submitting for the first time the application for the incentive allowed under this section, the applicant shall submit to the department of revenue and to the climate and rural energy development center at the Washington State University, established under RCW 28B.30.642, a certification in a form and manner prescribed by the department that includes, but is not limited to, the following information:
     (i) The name and address of the applicant and location of the renewable energy system;
     (ii) The applicant's tax registration number;
     (iii) That the electricity produced by the applicant meets the definition of "customer-generated electricity" and that the renewable energy system produces electricity with:
     (A) Any solar inverters and solar modules manufactured in Washington state;
     (B) A wind generator powered by blades manufactured in Washington state;
     (C) A solar inverter manufactured in Washington state;
     (D) A solar module manufactured in Washington state; or
     (E) Solar or wind equipment manufactured outside of Washington state;
     (iv) That the electricity can be transformed or transmitted for entry into or operation in parallel with electricity transmission and distribution systems;
     (v) The date that the renewable energy system received its final electrical permit from the applicable local jurisdiction.
     (b) Within thirty days of receipt of the certification the department of revenue shall advise the applicant in writing whether the renewable energy system qualifies for an incentive under this section. The department may consult with the climate and rural energy development center to determine eligibility for the incentive. System certifications and the information contained therein are subject to disclosure under RCW 82.32.330(3)(m).
     (3)(a) By August 1st of each year application for the incentive shall be made to the light and power business serving the situs of the system by certification in a form and manner prescribed by the department that includes, but is not limited to, the following information:
     (i) The name and address of the applicant and location of the renewable energy system;
     (ii) The applicant's tax registration number;
     (iii) The date of the letter from the department of revenue stating that the renewable energy system is eligible for the incentives under this section;
     (iv) A statement of the amount of kilowatt-hours generated by the renewable energy system in the prior fiscal year.
     (b) Within sixty days of receipt of the incentive certification the light and power business serving the situs of the system shall notify the applicant in writing whether the incentive payment will be authorized or denied. The business may consult with the climate and rural energy development center to determine eligibility for the incentive payment. Incentive certifications and the information contained therein are subject to disclosure under RCW 82.32.330(3)(m).
     (c)(i) Persons receiving incentive payments shall keep and preserve, for a period of five years, suitable records as may be necessary to determine the amount of incentive applied for and received. Such records shall be open for examination at any time upon notice by the light and power business that made the payment or by the department. If upon examination of any records or from other information obtained by the business or department it appears that an incentive has been paid in an amount that exceeds the correct amount of incentive payable, the business may assess against the person for the amount found to have been paid in excess of the correct amount of incentive payable and shall add thereto interest on the amount. Interest shall be assessed in the manner that the department assesses interest upon delinquent tax under RCW 82.32.050.
     (ii) If it appears that the amount of incentive paid is less than the correct amount of incentive payable the business may authorize additional payment.
     (4) The investment cost recovery incentive may be paid fifteen cents per economic development kilowatt-hour unless requests exceed the amount authorized for credit to the participating light and power business. For the purposes of this section, the rate paid for the investment cost recovery incentive may be multiplied by the following factors:
     (a) For customer-generated electricity produced using solar modules manufactured in Washington state, two and four-tenths;
     (b) For customer-generated electricity produced using a solar or a wind generator equipped with an inverter manufactured in Washington state, one and two-tenths;
     (c) For customer-generated electricity produced using an anaerobic digester, or by other solar equipment or using a wind generator equipped with blades manufactured in Washington state, one; and
     (d) For all other customer-generated electricity produced by wind, eight-tenths.
     (5) No individual, household, business, or local governmental entity is eligible for incentives for more than two thousand dollars per year.
     (6) If requests for the investment cost recovery incentive exceed the amount of funds available for credit to the participating light and power business, the incentive payments shall be reduced proportionately.
     (7) The climate and rural energy development center at Washington State University energy program may establish guidelines and standards for technologies that are identified as Washington manufactured and therefore most beneficial to the state's environment.
     (8) The environmental attributes of the renewable energy system belong to the applicant, and do not transfer to the state or the light and power business upon receipt of the investment cost recovery incentive.

NEW SECTION.  Sec. 2   A new section is added to chapter 82.08 RCW to read as follows:
     (1) The tax levied by RCW 82.08.020 shall not apply to charges made for labor and services rendered in respect to the constructing of investment projects, and tangible personal property that will be incorporated as an ingredient or component of investment projects during the course of constructing, either of which is used for the manufacture of solar energy systems using photovoltaic modules into a solar energy system or for the manufacture of silicon components of such systems, located in a rural county. The exemption is available only when the buyer provides 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) To be eligible under this section the person must use the investment project for the manufacturing of solar energy systems using photovoltaic modules into a solar energy system or silicon components of such systems for an eight-year period, such period beginning the day the investment project commences commercial production, or a portion of tax otherwise due shall be immediately due and payable pursuant to subsection (3) of this section:
     (a) Before commencing commercial production at the investment project, the person must meet with the department to determine the date on which commercial production commences. This date shall be used throughout the eight-year period to determine whether any tax is to be repaid. This information is not subject to the confidentiality provisions of RCW 82.32.330.
     (b) No application is necessary for the tax exemption. The person is subject to all the requirements of chapter 82.32 RCW. A person taking the exemption under this section must report as required under RCW 82.32.--- (section 4, Engrossed Second Substitute Senate Bill No. 5111).
     (3) If the investment project is not used for manufacturing solar energy systems using photovoltaic modules or silicon components of such systems for any one calendar year, one-eighth of the exempt sales and use taxes shall be due and payable by April 1st of the following year. The department shall assess interest, but not penalties, on the taxes for which the person is not eligible. The interest shall be assessed at the rate provided for delinquent excise taxes under this chapter, retroactively to the date the exemption was claimed, and shall accrue until the taxes for which the exemption was claimed are repaid.
     (4) The definitions in this subsection apply throughout this section.
     (a) "Commencement of commercial production" is deemed to have occurred when the equipment and process qualifications in the investment project are completed and production for sale has begun.
     (b) "Investment project" means an investment in qualified buildings or qualified machinery and equipment, including labor and services rendered in the planning, installation, and construction of the project. An investment project does not include any portion of an investment project undertaken by a light and power business as defined in RCW 82.16.010(5), other than that portion of a cogeneration project that is used to generate power for consumption within the manufacturing site of which the cogeneration project is an integral part.
     (c) "Manufacturing" means the same as defined in RCW 82.04.120.
     (d) "Qualified buildings" means construction of new structures including parking facilities, and expansion or renovation of existing structures, for the purpose of increasing floor space or production capacity used for manufacturing, including plant offices and warehouses or other facilities for the storage of raw material or finished goods if such facilities are an essential or an integral part of a factory, mill, or plant, used for manufacturing. If a building is used partly for manufacturing and partly for other purposes, the applicable tax exemption shall be determined by apportionment of the costs of construction under rules adopted by the department.
     (e) "Qualified machinery and equipment" means all new industrial fixtures, equipment, and support facilities that are an integral and necessary part of a manufacturing operation. "Qualified machinery and equipment" includes manufacturing components such as belts, pulleys, shafts, and moving parts; molds, tools, and dies; operating structures; and all equipment used to control or operate the machinery.
     (f) "Rural county" means a county with a population density of fewer than four persons per square mile.
     (g) "Solar energy system" has the same meaning as provided in RCW 82.04.--- (section 2, Engrossed Second Substitute Senate Bill No. 5111).
     (5) No exemption may be taken after June 30, 2014, however all of the eligibility criteria and limitations are applicable to any exemptions claimed before that date.

NEW SECTION.  Sec. 3   A new section is added to chapter 82.12 RCW to read as follows:
     (1) The provisions of this chapter do not apply with respect to the use of tangible personal property that will be incorporated as an ingredient or component of investment projects, either of which is used for the manufacture of solar energy systems using photovoltaic modules into a solar energy system or for the manufacture of silicon components of such systems, located in a rural county, as defined in section 2 of this act, during the course of constructing such investment projects or to labor and services rendered in respect to installing, during the course of constructing, building fixtures not otherwise eligible for the exemption under RCW 82.08.02565(2)(b).
     (2) The eligibility requirements, conditions, and definitions in section 2 of this act apply to this section.
     (3) No exemption may be taken after June 30, 2014, however all of the eligibility criteria and limitations are applicable to any exemptions claimed before that date.
     (4) This section expires June 30, 2014.

NEW SECTION.  Sec. 4   A new section is added to chapter 82.04 RCW to read as follows:
     (1) Subject to the limits and provisions of this section, a credit is authorized against the tax otherwise due under RCW 82.04.---(section 2, Engrossed Second Substitute Senate Bill No. 5111) for each full-time employment position created by persons engaged in the business of manufacturing solar energy systems using photovoltaic modules into a solar energy system or the manufacturing of silicon components of such systems. For the purposes of this section "solar energy system" has the same meaning as provided in RCW 82.04.---(section 2, Engrossed Second Substitute Senate Bill No. 5111).
     (2)(a) The credit under this section shall equal three thousand dollars for each full-time employment position used in manufacturing process that takes place in investment projects exempt from sales and use tax under sections 2 and 3 of this act. A credit is earned for the calendar year a person fills a position. Additionally a credit is earned for each year the position is maintained over the subsequent consecutive years, up to eight years. Those positions that are not filled for the entire year are eligible for fifty percent of the credit if filled less than six months, and the entire credit if filled six months or more.
     (b) To qualify for the credit, the manufacturing activity of the person must be conducted at an investment project that qualifies for the exemption from sales and use tax under sections 2 and 3 of this act.
     (3) No application is necessary for the tax credit. The person is subject to all of the requirements of chapter 82.32 RCW. In no case may a credit earned during one calendar year be carried over to be credited against taxes incurred in a subsequent calendar year. No refunds may be granted for credits under this section.
     (4) If at any time the department finds that a person is not eligible for tax credit under this section, the amount of taxes for which a credit has been claimed shall be immediately due. The department shall assess interest, but not penalties, on the taxes for which the person is not eligible. The interest shall be assessed at the rate provided for delinquent excise taxes under chapter 82.32 RCW, shall be retroactive to the date the tax credit was taken, and shall accrue until the taxes for which a credit has been used are repaid.
     (5) A person taking the credit under this section must report under RCW 82.32.--- (section 4, Engrossed Second Substitute Senate Bill No. 5111).
     (6) Credits may be taken after July 1, 2005, for those investment projects at which commercial production began before June 30, 2014, subject to all of the eligibility criteria and limitations of this section.
     (7) This section expires June 30, 2014.

NEW SECTION.  Sec. 5   A new section is added to chapter 84.36 RCW to read as follows:
     (1) Machinery and equipment exempt under RCW 82.08.02565 or 82.12.02565 used exclusively in the manufacture of solar energy systems using photovoltaic modules into a solar energy system or the manufacture of silicon components of such systems, at an investment project exempt from sales and use tax under sections 2 and 3 of this act are exempt from property taxation. "Solar energy system" has the same meaning as provided in RCW 82.04.--- (section 2, Engrossed Second Substitute Senate Bill No. 5111).
     (2) A person seeking this exemption must make application to the county assessor, on forms prescribed by the department.
     (3) This section is effective for taxes levied for collection one year after the effective date of this section and thereafter.
     (4) This section expires December 31, 2014, for taxes levied for collection in the following year.

NEW SECTION.  Sec. 6   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 July 1, 2005.