BILL REQ. #:  H-2086.1 

READ FIRST TIME 02/20/09.   

     AN ACT Relating to requiring certain providers of electric service to purchase electricity from eligible distributed generators; adding a new chapter to Title 19 RCW; and prescribing penalties.

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

NEW SECTION.  Sec. 1   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Capacity" means the electrical capacity that a generator of eligible distributed generation may produce during regular operations.
     (2) "Commission" means the Washington utilities and transportation commission.
     (3) "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.
     (4) "Department" means the department of community, trade, and economic development.
     (5) "Distributed generation" means a renewable resource where the generation facility or any integrated cluster of these facilities has a generating capacity of five megawatts or less.
     (6) "Eligible distributed generator" means the distributed generation located on the premises of an individual, business, or local government. Distributed generation by an individual, business, or local governmental entity in the electricity distribution business or in the gas distribution business is not considered an eligible distributed generator.
     (7) "Investor-owned utility" has the same meaning as defined in RCW 19.29A.010.
     (8) "Premises" means any residential property, commercial real estate, or lands owned or leased by an eligible distributed generator within the service area of a single qualifying utility.
     (9) "Qualifying utility" means an electric utility, as the term "electric utility" is defined in RCW 19.29A.010, that serves more than twenty-five thousand customers in the state of Washington. The number of customers served may be based on data reported by a utility in form 861, "annual electric utility report," filed with the energy information administration, United States department of energy.
     (10) "Renewable resource" means: (a) Water; (b) wind; (c) solar energy; (d) geothermal energy; (e) landfill gas; (f) wave, ocean, or tidal power; (g) gas from sewage treatment facilities; (h) biodiesel fuel as defined in RCW 82.29A.135 that is not derived from crops raised on land cleared from old growth forests where the clearing occurred after December 7, 2006; (i) byproducts of pulping or wood manufacturing processes located in Washington, including but not limited to bark, wood chips, sawdust, and lignin in spent pulping liquors; (j) black liquors derived from any source; and (k) biomass energy based on animal waste, food waste, yard waste, or solid organic fuels from wood, forest, or field residues, or dedicated energy crops that do not include (i) wood pieces that have been treated with chemical preservatives such as creosote, pentachlorophenol, or copper-chrome-arsenic; (ii) wood from old growth forests; or (iii) municipal solid waste.
     (11) "Small wind turbine" means any wind turbine with a rotor blade swept area of no more than two thousand square feet.

NEW SECTION.  Sec. 2   (1)(a) Beginning six months after the effective date of legislation that implements power purchase agreement rates, a qualifying utility shall interconnect an eligible distributed generator to the utility's distribution systems within one hundred eighty days of such a request by the owner of an eligible distributed generator.
     (b) A qualifying utility that refuses to connect an eligible distributed generator to the distribution systems of a qualifying utility is subject to a fine of not more than one hundred dollars per day that the qualifying utility is in violation of this subsection.
     (2) The costs associated with the interconnection of eligible distributed generators must be included in the surcharge under section 3 of this act.
     (3) An individual, business, or local governmental entity may not enter into a power purchase agreement with a qualifying utility if the individual, business, or local governmental entity is participating in the investment cost recovery incentive payment program under chapter 82.16 RCW or in the net metering program under chapter 80.60 RCW.
     (4) Qualifying utilities shall enter into power purchase agreements for a term of not less than twenty years to purchase all electricity from eligible distributed generators in this state.
     (5)(a) An eligible distributed generator shall include, at the owner's expense, all equipment necessary to meet applicable safety, power quality, and interconnection requirements established by the national electrical code, national electrical safety code, the institute of electrical and electronics engineers, and underwriters laboratories.
     (b) The commission, in the case of an electrical company, or the appropriate governing body, in the case of other electric utilities, after appropriate notice and opportunity for comment, may adopt by rule additional safety, power quality, and interconnection requirements for distributed generators, including limitations on the number of distributed generators and total capacity of distributed generators systems that may be interconnected to any distribution feeder line, circuit, or network that the commission or governing body determines are necessary to protect public safety and system reliability.
     (6) By December 1, 2009, the department, in consultation with the commission, shall develop and submit recommendations to the legislature regarding an appropriate power purchase agreement rate structure to promote the deployment of eligible distributed generators. The department must recommend to the legislature rates for solar electric and solar thermal, off-shore and on-shore wind, wave, tidal, biomass, biogas, geothermal, and hydropower. In developing its rate recommendations, the department must consider appropriate rates for at least the following: Small wind systems; large wind systems; free-standing solar power systems; rooftop solar power systems; and façade cladding solar projects.

NEW SECTION.  Sec. 3   (1)(a) The commission shall, after notice and hearing, annually approve a distributed generation factor that is a nonbypassable surcharge payable by every customer of an investor-owned utility. The surcharge must be payable by all customer classes. The commission shall set the surcharge at a level sufficient to pay the costs of electricity purchased under section 2 of this act and any interconnection costs under section 2 of this act.
     (b) The commission shall approve a standard contract to be used in all power purchase agreements under this chapter. The contract must include the prices paid for each kilowatt hour generated, the duration of the contract, and any adjustments of those prices for inflation. The standard contract must be designed to provide for graduated payments for electricity supplied by eligible distributed generators. The graduate payments must be reduced over the twenty-year term of the contract, equaling zero dollars for the last payment of the contract. The commission shall provide utilities with standard contracts within three months after the effective date of legislation that implements power purchase agreement rates.
     (c) The commission shall review the rates every two years and adjust those rates as necessary to account for inflation, assist in the profitable development of eligible distributed generators, prevent excessive profits for eligible distributed generators, and prevent unnecessary costs to ratepayers. The commission shall reduce the rates to reflect any federal or state subsidies, tax credits, or other incentives that an eligible distributed generator is receiving.
     (2)(a) The governing board of a consumer-owned utility shall, after notice and hearing, annually approve a distributed generation factor that must be a nonbypassable surcharge payable by every customer of the utility. The surcharge must be payable by all customer classes. The governing board shall set the surcharge at a level sufficient to pay the costs of electricity purchased under section 2 of this act and any interconnection costs under section 2 of this act.
     (b) The governing boards of consumer-owned utilities shall, in a coordinated fashion, develop a standard contract to be used in all power purchase agreements under this chapter. The contract must include the prices paid for each kilowatt hour generated, the duration of the contract, and any adjustments of those prices for inflation. The standard contract must be designed to provide for graduated payments for electricity supplied by eligible distributed generators. The graduate payments must be reduced over the twenty-year term of the contract, equaling zero dollars for the last payment of the contract. Governing boards of consumer-owned utilities shall develop the standard contract within three months of the effective date of legislation that implements power purchase agreement rates.
     (c) Governing boards of consumer-owned utilities shall review the rates every two years and adjust those rates as necessary to account for inflation, assist in the profitable development of eligible distributed generators, prevent excessive profits for eligible distributed generators, and prevent unnecessary costs to ratepayers. Governing boards of consumer-owned utilities shall reduce the rates to reflect any federal or state subsidies, tax credits, or other incentives that an eligible distributed generator is receiving.

NEW SECTION.  Sec. 4   (1) Within two years after the effective date of legislation that implements power purchase agreement rates, and every four years thereafter, the commission shall file a report with the governor and the energy committees of the legislature that includes all of the following:
     (a) The number of new eligible distributed generators in this state and the environmental effects of the addition of those generators;
     (b) Recommendations for legislation and changes to the rates, if any; and
     (c) Actions taken by the commission to implement this chapter.
     (2) Within two years after the effective date of legislation that implements power purchase agreement rates, and every four years thereafter, the department shall file a report with the governor and the energy committees of the legislature that includes all of the following:
     (a) The number of new eligible distributed generators in this state and the environmental effects of the addition of those generators;
     (b) Recommendations for legislation and changes to the rates, if any; and
     (c) Actions taken by consumer-owned utilities to implement this chapter.

NEW SECTION.  Sec. 5   (1) Eligible distributed generators served by an investor-owned utility shall upon request provide the commission with any information that may be relevant to the commission performing its duties under this chapter.
     (2) Eligible distributed generators served by a consumer-owned utility shall upon request provide the department with any information that may be relevant to the department performing its duties under this chapter.

NEW SECTION.  Sec. 6   The department must provide the code reviser's office with written notification that identifies the legislation that implements the power purchase agreement rates referenced in sections 2(1)(a), 3(1)(b), 3(2)(b), and 4 (1) and (2) of this act.

NEW SECTION.  Sec. 7   Sections 1 through 6 of this act constitute a new chapter in Title 19 RCW.