BILL REQ. #:  H-1874.2 

Read first time 02/12/2007.   Referred to Committee on Technology, Energy & Communications.

     AN ACT Relating to carbon dioxide mitigation; amending RCW 80.70.010 and 80.70.070; and adding new sections to chapter 80.70 RCW.

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

Sec. 1   RCW 80.70.010 and 2004 c 224 s 1 are each amended to read as follows:
     The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Applicant" has the meaning provided in RCW 80.50.020 and includes an applicant for a permit for a fossil-fueled thermal electric generation facility subject to RCW 70.94.152 and 80.70.020(1) (b) or (d).
     (2) "Authority" means any air pollution control agency whose jurisdictional boundaries are coextensive with the boundaries of one or more counties.
     (3) "Baseload generation" means electricity generation from a fossil-fueled power plant that is designed and intended to provide electricity at an annualized plant capacity factor of at least sixty percent.
     (4) "Carbon credit" means a verified reduction in carbon dioxide or carbon dioxide equivalents that is registered with a state, national, or international trading authority or exchange that has been recognized by the council.
     (((4))) (5) "Carbon dioxide equivalents" means a metric measure used to compare the emissions from various greenhouse gases based upon their global warming potential.
     (((5))) (6) "Cogeneration credit" means the carbon dioxide emissions that the council, department, or authority, as appropriate, estimates would be produced on an annual basis by a stand-alone industrial and commercial facility equivalent in operating characteristics and output to the industrial or commercial heating or cooling process component of the cogeneration plant.
     (((6))) (7) "Cogeneration plant" means a fossil-fueled thermal power plant in which the heat or steam is also used for industrial or commercial heating or cooling purposes and that meets federal energy regulatory commission standards for qualifying facilities under the public utility regulatory policies act of 1978.
     (((7))) (8) "Commercial operation" means the date that the first electricity produced by a facility is delivered for commercial sale to the power grid.
     (((8))) (9) "Commission" means the utilities and transportation commission.
     (10) "Council" means the energy facility site evaluation council created by RCW 80.50.030.
     (((9))) (11) "Department" means the department of ecology.
     (((10))) (12) "Fossil fuel" means natural gas, petroleum, coal, or any form of solid, liquid, or gaseous fuel derived from such material to produce heat for the generation of electricity.
     (((11))) (13) "Load-serving utility" means every consumer-owned and investor-owned utility serving electricity to end use customers in the state.
     (14) "Long-term financial commitment" means: (a) A new ownership investment in baseload generation; or (b) a new or renewed contract with a term of five or more years, which includes procurement of baseload generation.
     (15) "Mitigation plan" means a proposal that includes the process or means to achieve carbon dioxide mitigation through use of mitigation projects or carbon credits.
     (((12))) (16) "Mitigation project" means one or more of the following:
     (a) Projects or actions that are implemented by the certificate holder or order of approval holder, directly or through its agent, or by an independent qualified organization to mitigate the emission of carbon dioxide produced by the fossil-fueled thermal electric generation facility. This term includes but is not limited to the use of, energy efficiency measures, clean and efficient transportation measures, qualified alternative energy resources, demand side management of electricity consumption, and carbon sequestration programs;
     (b) Direct application of combined heat and power (cogeneration);
     (c) Verified carbon credits traded on a recognized trading authority or exchange; or
     (d) Enforceable and permanent reductions in carbon dioxide or carbon dioxide equivalents through process change, equipment shutdown, or other activities under the control of the applicant and approved as part of a carbon dioxide mitigation plan.
     (((13))) (17) "Order of approval" means an order issued under RCW 70.94.152 with respect to a fossil-fueled thermal electric generation facility subject to RCW 80.70.020(1) (b) or (d).
     (((14))) (18) "Permanent" means that emission reductions used to offset emission increases are assured for the life of the corresponding increase, whether unlimited or limited in duration.
     (((15))) (19) "Qualified alternative energy resource" has the same meaning as in RCW 19.29A.090.
     (((16))) (20) "Station generating capability" means the maximum load a generator can sustain over a given period of time without exceeding design limits, and measured using maximum continuous electric generation capacity, less net auxiliary load, at average ambient temperature and barometric pressure.
     (((17))) (21) "Total carbon dioxide emissions" means:
     (a) For a fossil-fueled thermal electric generation facility described under RCW 80.70.020(1) (a) and (b), the amount of carbon dioxide emitted over a thirty-year period based on the manufacturer's or designer's guaranteed total net station generating capability, new equipment heat rate, an assumed sixty percent capacity factor for facilities under the council's jurisdiction or sixty percent of the operational limitations on facilities subject to an order of approval, and taking into account any enforceable limitations on operational hours or fuel types and use; ((and))
     (b) For a fossil-fueled thermal electric generation facility described under RCW 80.70.020(1) (c) and (d), the amount of carbon dioxide emitted over a thirty-year period based on the proposed increase in the amount of electrical output of the facility that exceeds the station generation capability of the facility prior to the applicant applying for certification or an order of approval pursuant to RCW 80.70.020(1) (c) and (d), new equipment heat rate, an assumed sixty percent capacity factor for facilities under the council's jurisdiction or sixty percent of the operational limitations on facilities subject to an order of approval, and taking into account any enforceable limitations on operational hours or fuel types and use; and
     (c) For a load-serving utility, the amount of carbon dioxide emitted by a fossil-fueled thermal electric power plant over the duration of a long-term financial commitment.

NEW SECTION.  Sec. 2   A new section is added to chapter 80.70 RCW to read as follows:
     (1)(a) Any load-serving utility that enters into a long-term financial commitment for baseload generation located outside the borders of the state shall provide mitigation for twenty percent of the total carbon dioxide emissions produced by the fossil-fueled thermal electric power plant or plants over the period of the commitment.
     (b) The load-serving utility shall develop a carbon dioxide mitigation plan detailing how the utility plans to mitigate carbon dioxide emissions under this section.
     (2) The load-serving utility shall choose one or a combination of the following carbon dioxide mitigation options to mitigate for twenty percent of the total carbon dioxide emission:
     (a) Payment to a third party to provide mitigation;
     (b) Direct purchase of permanent carbon credits as specified under RCW 80.70.030; or
     (c) Investment in load-serving utility-controlled carbon dioxide mitigation projects, including combined heat and power (cogeneration).
     (3) If the load-serving utility chooses to pay a third party to provide the mitigation, the mitigation rate shall be one dollar and sixty cents per metric ton of carbon dioxide to be mitigated. For a cogeneration plant, the monetary amount is based on the difference between twenty percent of the total carbon dioxide emissions and the cogeneration credit.
     (a) The council may by rule adjust the rate per ton biennially as long as any increase or decrease does not exceed fifty percent of the current rate.
     (b) In adjusting the mitigation rate the council shall consider, but is not limited to, the current market price of a ton of carbon dioxide. The council's adjusted mitigation rate must be consistent with RCW 80.50.010(3).
     (4) The load-serving utility may choose to make to the third party a lump sum payment or partial payment over a period of five years.
     (a) Under the lump sum payment option, the payment amount is determined by multiplying the total carbon dioxide emissions by the twenty percent mitigation requirement under subsection (1)(a) of this section and by the per ton mitigation rate established under subsection (3) of this section.
     (b) No later than one hundred twenty days after the start of the long-term financial commitment, the load-serving utility shall make a one-time payment to the independent qualified organization for the amount determined under subsection (3) of this section.
     (c) As an alternative to a one-time payment, the load-serving utility may make a partial payment of twenty percent of the amount determined under subsection (3) of this section no later than one hundred twenty days after entering into a long-term financial commitment and a payment in the same amount or as adjusted according to subsection (3)(a) of this section, on the anniversary date of the initial payment in each of the following four years. With the initial payment, the load-serving utility shall provide a letter of credit or other comparable security acceptable to the council or the department for the remaining eighty percent mitigation payment amount including possible changes to the rate per metric ton made by the council by rule under subsection (3)(a) of this section.

NEW SECTION.  Sec. 3   A new section is added to chapter 80.70 RCW to read as follows:
     (1) The carbon dioxide mitigation option that provides for direct investment must be implemented through mitigation projects conducted directly by, or under the control of, the load-serving utility.
     (2)(a) For investor-owned utilities, mitigation projects must be approved by the commission.
     (b) For consumer-owned utilities, mitigation projects must be approved by the governing board.
     (c) Direct investment mitigation projects must be approved if the mitigation projects provide a reasonable certainty that the performance requirements of the mitigation projects will be achieved and the mitigation projects were implemented after July 1, 2004.
     (d) No load-serving utility is required to make direct investments that would exceed the cost of making a lump sum payment to a third party had the load-serving utility chosen that option under this chapter.
     (3) Mitigation projects must be fully in place within a reasonable time after the start of the long-term financial commitment. Failure to implement an approved mitigation plan is subject to enforcement under chapter 80.50 or 70.94 RCW.
     (4) The load-serving utility may not use more than twenty percent of the total funds for the selection, monitoring, and evaluation of mitigation projects and the management and enforcement of contracts.
     (5)(a) For facilities under the jurisdiction of the commission, the implementation of a carbon dioxide mitigation project, other than a purchase of carbon dioxide equivalent emission reduction credits, must be monitored by the commission.
     (b) For facilities under the jurisdiction of a governing board, the implementation of a carbon dioxide mitigation project, other than a purchase of carbon dioxide equivalent emission reduction credits, must be monitored by the governing board.
     (6) Upon promulgation of federal requirements for carbon dioxide mitigation for fossil-fueled thermal electric generation facilities, those requirements may be deemed by the commission or governing boards to be equivalent and a replacement for the requirements of this section.

Sec. 4   RCW 80.70.070 and 2004 c 224 s 7 are each amended to read as follows:
     The commission, council, department, and authority shall adopt rules to carry out this chapter.