BILL REQ. #:  H-1196.1 

Read first time 01/31/2007.   Referred to Committee on Technology, Energy & Communications.

     AN ACT Relating to establishing greenhouse gases emission performance standards; and adding a new chapter to Title 80 RCW.

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

NEW SECTION.  Sec. 1   The legislature finds that the state has taken significant strides towards implementing an environmentally and economically sound energy policy through increasing reliance on energy efficiency, conservation, and renewable energy resources in order to promote a sustainable energy future that ensures an adequate and reliable energy supply at reasonable and stable prices. To the extent energy efficiency and renewable resources are unable to satisfy increasing energy and capacity needs, the state must rely on clean and efficient fossil fuel fired generation. The legislature encourages the development of cost-effective, highly efficient, and environmentally sound supply resources to provide reliability. The legislature finds that federal regulation of emissions of greenhouse gases is likely to occur in the near future. It is vital to ensure all electricity load-serving entities internalize the significant and underrecognized cost of greenhouse gas emissions and to reduce Washington's exposure to costs associated with future federal regulation of these emissions. The establishment of a policy to reduce emissions of greenhouse gases, including an emissions performance standard for all procurement of electricity by load-serving entities, is a logical and necessary step. A greenhouse gases emission performance standard for new long-term financial commitments to electrical generating resources will reduce potential financial risk to Washington consumers for future pollution control costs. The legislature intends to establish a greenhouse gases emission performance standard for utility procurement of baseload generation that is set no lower than levels achieved by a new combined-cycle natural gas turbine.

NEW SECTION.  Sec. 2   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Baseload generation" means electricity generation from a power plant that is designed and intended to provide electricity at an annualized plant capacity factor of at least sixty percent.
     (2) "Combined-cycle natural gas," with respect to a power plant, means the power plant employs a combination of one or more gas turbines and steam turbines in which electricity is produced in the steam turbine from otherwise lost waste heat exiting from one or more of the gas turbines.
     (3) "Commission" means the utilities and transportation commission.
     (4) "Consumer-owned utility" means 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, or a mutual corporation or association formed under chapter 24.06 RCW, that is engaged in the business of distributing electricity to more than one retail electric customer in the state.
     (5) "Department" means the department of community, trade, and economic development.
     (6) "Greenhouse gases" include all of the following gases: Carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.
     (7) "Investor-owned utility" means a company owned by investors that meets the definition of RCW 80.04.010 and is engaged in distributing electricity to more than one retail electric customer in the state.
     (8) "Load-serving entity" means every consumer-owned and investor-owned utility serving end-use customers in the state.
     (9) "Long-term financial commitment" means either a new ownership investment in baseload generation or a new or renewed contract with a term of five or more years, which includes procurement of baseload generation.
     (10) "Output-based methodology" means a greenhouse gases emission performance standard that is expressed in pounds of greenhouse gases emitted per megawatt hour and factoring in the useful thermal energy employed for purposes other than the generation of electricity.
     (11) "Plant capacity factor" means the ratio of the electricity produced during a given time period, measured in kilowatt hours, to the electricity the unit could have produced if it had been operated at its rated capacity during that period, expressed in kilowatt hours.
     (12) "Power plant" means a facility for the generation of electricity, and includes one or more generating units at the same location.
     (13) "Zero- or low-carbon generating resource" means an electrical
generating resource that will generate electricity while producing emissions of greenhouse gases at a rate substantially below the greenhouse gases emission performance standard, as determined by the commission.

NEW SECTION.  Sec. 3   (1) No load-serving entity may enter into a long-term financial commitment unless any baseload generation supplied under the long-term financial commitment complies with the greenhouse gases emission performance standard established by the commission, under section 5 of this act, for an investor-owned utility, or by the department, under section 6 of this act, for a consumer-owned utility.
     (2)(a) The commission shall adopt rules to enforce the requirements of this section for investor-owned utilities. The commission shall adopt procedures, for all investor-owned utilities, to verify the emissions of greenhouse gases from any baseload generation supplied under a contract subject to the greenhouse gases emission performance standard to ensure compliance with the standard.
     (b) In determining whether a long-term financial commitment is for baseload generation, the commission shall consider the design of the power plant and the intended use of the power plant, as determined by the commission based upon the electricity purchase contract, any certification received from the department, any other permit or certificate necessary for the operation of the power plant, and any other matter the commission determines is relevant under the circumstances.
     (3) A long-term financial commitment entered into through a contract approved by the commission, for electricity generated by a zero- or low-carbon generating resource that is contracted for, on behalf of consumers of this state on a cost-of-service basis, shall be recoverable in rates. The commission may, after a hearing, approve an increase from one-half to one percent in the return on investment by the third party entering into the contract with an investor-owned utility with respect to investment in zero- or low-carbon generation resources.

NEW SECTION.  Sec. 4   (1) The department shall adopt rules for the enforcement of this chapter with respect to a consumer-owned utility.
     (2) The department may, in order to ensure compliance with the greenhouse gases emission performance standard by consumer-owned utilities, apply the procedures adopted by the commission to verify the emissions of greenhouse gases from baseload generation.
     (3) In determining whether a long-term financial commitment is for baseload generation, the department shall consider the design of the power plant and the intended use of the power plant, as determined by the department based upon the electricity purchase contract, any certification received from the department, any other permit for the operation of the power plant, any procurement approval decision for the load-serving entity, and any other matter the department determines is relevant under the circumstances.

NEW SECTION.  Sec. 5   (1) On or before February 1, 2008, the commission, through a rule-making proceeding, and in consultation with the department and the department of ecology, shall establish a greenhouse gases emission performance standard for all baseload generation of load-serving entities, at a rate of emissions of greenhouse gases that is no higher than the rate of emissions of greenhouse gases for combined-cycle natural gas baseload generation. Enforcement of the greenhouse gases emission performance standard must begin immediately upon the establishment of the standard. All combined-cycle natural gas power plants that are in operation, or have final permit decision to operate as of June 30, 2008, are deemed to be in compliance with the greenhouse gases emission performance standard.
     (2) In determining the rate of emissions of greenhouse gases for baseload generation, the commission shall include the net emissions resulting from the production of electricity by the baseload generation.
     (3) The commission shall establish an output-based methodology to ensure that the calculation of emissions of greenhouse gases for cogeneration recognizes the total usable energy output of the process, and includes all greenhouse gases emitted by the facility in the production of both electrical and thermal energy.
     (4) In calculating the emissions of greenhouse gases by facilities generating electricity from biomass, biogas, or landfill gas energy, the commission shall consider net emissions from the process of growing, processing, and generating the electricity from the fuel source.
     (5) Carbon dioxide that is injected in geological formations, so as to prevent releases into the atmosphere, in compliance with applicable laws, rules, and regulations may not be counted as emissions of the power plant in determining compliance with the greenhouse gases emission performance standard.
     (6) In adopting and implementing the greenhouse gases emission performance standard, the commission, in consultation with the department shall consider the effects of the standard on system reliability and overall costs to electricity customers.
     (7) In developing and implementing the greenhouse gases emission performance standard, the commission shall address long-term purchases of electricity from unspecified sources in a manner consistent with this chapter.

NEW SECTION.  Sec. 6   (1) On or before June 30, 2008, the department, at a duly noticed public hearing and in consultation with the commission and the department of ecology, shall establish a greenhouse gases emission performance standard for all baseload generation of consumer-owned utilities at a rate of emissions of greenhouse gases that is no higher than the rate of emissions of greenhouse gases for combined-cycle natural gas baseload generation. The greenhouse gases emission performance standard established by the department for consumer-owned utilities must be consistent with the standard adopted by the commission for investor-owned utilities. Enforcement of the greenhouse gases emission performance standard must begin immediately upon the establishment of the standard. All combined-cycle natural gas power plants that are in operation, or that have a final permit decision to operate as of June 30, 2008, are deemed to be in compliance with the greenhouse gases emission performance standard.
     (2) In determining the rate of emissions of greenhouse gases for baseload generation, the department shall include the net emissions resulting from the production of electricity by the baseload generation.
     (3) The department shall establish an output-based methodology to ensure that the calculation of emissions of greenhouse gases for cogeneration recognizes the total usable energy output of the process, and includes all greenhouse gas emitted by the facility in the production of both electrical and thermal energy.
     (4) In calculating the emissions of greenhouse gases by facilities generating electricity from biomass, biogas, or landfill gas energy, the department shall consider net emissions from the process of growing, processing, and generating the electricity from the fuel source.
     (5) Carbon dioxide that is captured from the emissions of a power plant and that is permanently disposed of in geological formations in compliance with applicable laws, rules, and regulations, shall not be counted as emissions from the power plant.
     (6) In developing and implementing the greenhouse gases emission performance standard, the department shall address long-term purchases of electricity from unspecified sources in a manner consistent with this chapter.

NEW SECTION.  Sec. 7   The department, in a duly noticed public hearing and in consultation with the commission and the department of ecology, shall reevaluate and continue, modify, or replace the greenhouse gases emission performance standard when an enforceable greenhouse gases emission limit is established and in operation, that is applicable to consumer-owned utilities.

NEW SECTION.  Sec. 8   The commission, through a rule-making proceeding and in consultation with the department and the department of ecology, shall reevaluate and continue, modify, or replace the greenhouse gases emission performance standard when an enforceable greenhouse gases emission limit is established and in operation, that is applicable to load-serving entities.

NEW SECTION.  Sec. 9   Sections 1 through 8 of this act constitute a new chapter in Title 80 RCW.