BILL REQ. #:  H-3986.1 

Prefiled 01/05/10. Read first time 01/11/10.   Referred to Committee on Technology, Energy & Communications.

     AN ACT Relating to creating a standard offer contract for certain renewable energy systems; adding a new chapter to Title 80 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) "Commission" means the Washington utilities and transportation commission.
     (2) "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, 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.
     (3) "Department" means the Washington department of commerce.
     (4) "Electric utility" means a consumer-owned or investor-owned utility located in Washington as defined in this section.
     (5) "Investor-owned utility" means a corporation owned by investors that meets the definition of "corporation" as defined in RCW 80.04.010 and is engaged in distributing electricity to more than one retail electric customer in the state.
     (6) "Owner" includes: Residential, commercial, and industrial customers of electric utilities located in Washington; electric utilities; independent power producers; federal, state, and local governments; tribal governments and their political subdivisions; and nonprofit agencies.
     (7) "Renewable energy system" means a facility of an owner located in Washington that produces electricity from the following sources of energy:
     (a) Biomass, including: (i) By-products of pulping and wood manufacturing process; (ii) animal waste; (iii) solid organic fuels from wood; (iv) forest or field residues; (v) wooden demolition or construction debris; (vi) food waste; (vii) liquors derived from algae and other sources; (viii) dedicated energy crops; (ix) biosolids; and (x) yard waste. "Biomass energy" does not include wood pieces that have been treated with chemical preservatives such as creosote, pentachlorophenol, or copper-chrome-arsenic; wood from old growth forests; or municipal solid waste;
     (b) Gas from sewage treatment facilities and landfills;
     (c) Geothermal;
     (d) On-shore and off-shore wind;
     (e) Solar electric;
     (f) Solar thermal;
     (g) Tidal;
     (h) Water, where the hydroelectric generation facility is positioned in irrigation pipes or canals, and the generation does not result in new water diversions or impoundments; and
     (i) Wave.
     (8) "Interconnection standards" means technical, engineering, operational, safety, and procedural requirements for interconnection to the electric distribution and transmission grid of an electric utility.

NEW SECTION.  Sec. 2   (1)(a) Beginning July 1, 2011, all electric utilities must provide standard offer contracts for the purchase of electricity produced from renewable energy systems eligible under this chapter with a generating capacity of two megawatts or less.
     (b) An electric utility shall purchase electricity from renewable energy systems on a first-come, first-served basis until the cumulative nameplate generating capacity of renewable energy systems equals five percent of the utility's peak demand during 2007. An electric utility's share of the cumulative nameplate generating capacity may not be more than the twelve percent of the total cumulative generating capacity permitted under this subsection.
     (c) Electric utilities must purchase the electricity from renewable energy systems at a fixed rate, as determined by the commission, for investor-owned utilities, and by the department, for customer-owned utilities, for the duration of the contract.
     (2)(a) All electric utilities must offer to owners of renewable energy systems standard offer contracts of no less than twenty years.
     (b) An electric utility may offer a standard offer contract of less than twenty years if an owner requests a shorter term.
     (3) If a renewable energy system under a standard offer contract is transferred to a new owner, the new owner must notify the electric utility within thirty days of the transfer in order to continue receiving payments under existing terms of the previous owner's standard offer contract for the electricity generated from the renewable energy system.
     (4) An owner is not eligible to enter into a standard offer contract with an electric utility if the owner 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.
     (5) All electric utilities shall distribute evenly across each individual customer class the cost of the electricity purchased from renewable energy system owners with a standard offer contract.

NEW SECTION.  Sec. 3   (1)(a) An electric utility shall connect renewable energy systems eligible under this chapter with a nameplate generating capacity of ten kilowatts or less to its distribution or transmission grid within sixty days of receiving an owner's written request to connect.
     (b) An electric utility shall connect renewable energy systems eligible under this chapter with a nameplate generating capacity of more than ten kilowatts to three hundred kilowatts to its distribution or transmission grid within one hundred eighty days of receiving an owner's written request to connect.
     (c) An electric utility shall connect renewable energy systems eligible under this chapter with a nameplate generating capacity of more than three hundred kilowatts and up to two megawatts to its distribution or transmission grid within three hundred sixty-five days of receiving an owner's written request to connect.
     (d) If an electric utility fails to connect a renewable energy system to its distribution or transmission grid within the time allowed under this section, the electric utility must pay a two thousand dollar per day penalty to the owner until the system is connected to distribution or transmission of the electric utility.
     (2) An owner is responsible for the costs of equipment needed to connect the renewable energy system to the electric utility's distribution or transmission grid. A renewable energy system must include, at the owner's expense, all equipment necessary to meet applicable safety, power quality, and interconnection requirements established by the commission, for investor-owned utilities, or by the department, for consumer-owned utilities, as well as meet the standards set by the national electrical code, national electrical safety code, the institute of electrical and electronics engineers, and underwriters laboratories.
     (3) The owner and the electric utility shall share the cost of upgrading the distribution system or transmission grid, if additional upgrades are necessary solely to connect a renewable energy system. The owner's share of the cost equals fifty percent of the cost of the necessary upgrades and the electric utilities' share of the cost equals fifty percent of the cost of the necessary upgrades.
     (4)(a) By June 1, 2011, the commission, for investor-owned utilities, shall review existing interconnection standards and adopt interconnection standards for renewable energy systems eligible to interconnect under this chapter.
     (b) By June 1, 2011, the department, for consumer-owned utilities, shall adopt interconnection standards for renewable energy systems eligible under this chapter.
     (c) The commission and department shall consult with each other in developing the interconnection standards under this section.
     (d) In adopting interconnection standards, the commission and the department may not require owners of renewable energy systems to:
     (i) Acquire insurance;
     (ii) Install external disconnect switches if the inverter of the renewable energy system meets standards established by the institute of electrical and electronic engineers;
     (iii) Pay a fee of more than one hundred dollars for an interconnection application; or
     (iv) Pay standby fees.
     (5) By July 1, 2011, electric utilities shall develop, publish, and provide transparent and nondiscriminatory rules for connecting a renewable energy system to the utilities distribution or transmission grid. Electric utilities must apply these standard rules for connecting renewable energy systems to its distribution or transmission grid.

NEW SECTION.  Sec. 4   (1) By June 1, 2011, the commission, for investor-owned utilities, and the department, for consumer-owned utilities, shall develop and adopt through their respective rule-making authorities a standard offer contract rate in kilowatt hours for the electricity generated by renewable energy systems and supplied to the distribution or transmission grid of an electric utility.
     (2) The commission and department shall adopt fixed, levelized rates for each renewable energy system to equal the average generation costs of each renewable energy system plus a rate of return of ten percent. The commission and department shall include, but not be limited to, the following factors in calculating the average generating cost of a renewable energy system:
     (a) Installed capital costs;
     (b) Fixed and variable operation and management expenses;
     (c) Fuel costs;
     (d) Cost of financing;
     (e) Land costs or leases;
     (f) Insurance;
     (g) Transmission and interconnection costs;
     (h) Net capacity factors; and
     (i) Estimated project life and projected generation degradation.
     (3) In developing the rate, the commission and department shall ensure the rate is reasonable and fair to the owner of a renewable energy system and to the ratepayers of electric utilities.
     (4) The commission and department shall develop standard offer contract rates that are differentiated based on the size of the system. The following tiers must be used to differentiate rates:
     (a) Tier one equals the nameplate generating capacity of a renewable energy system up to ten kilowatts;
     (b) Tier two equals the nameplate generating capacity of a renewable energy system greater than ten kilowatts and up to three hundred kilowatts; and
     (c) Tier three equals the nameplate generating capacity of a renewable energy system greater than three hundred kilowatts and up to two megawatts.
     (5)(a) By June 1, 2013, the commission, for investor-owned utilities, and the department, for consumer-owned utilities, shall review the average generation costs of renewable energy systems and adopt standard offer contract rates based on the methods described in subsection (2) of this section.
     (b) Beginning July 1, 2013, all electric utilities shall offer standard offer contracts to new applicants using rates adopted under (a) of this subsection.
     (c) The department and commission shall consult with each other in reviewing the average generation costs of each renewable energy system.
     (6) On June 30, 2016, and by June 30th every three years thereafter, the commission and department shall review and adopt new standard offer contract rates using methods described in subsection (2) of this section. Beginning July 1st, following the review and adoption of standard offer contract rates, all electric utilities shall provide standard offer contracts using standard offer contract rates to new applicants.
     (7) In developing standard offer contract rates under this section, the department and commission must consult with each other.

NEW SECTION.  Sec. 5   Renewable energy system owners and electric utilities may negotiate with each other regarding who receives the renewable energy credits associated with the renewable energy system. If a renewable energy system owner decides to maintain the renewable energy credits associated with their system, this has no bearing on the responsibilities of electric utilities under this chapter.

NEW SECTION.  Sec. 6   (1) Renewable energy system owners served by investor-owned utilities shall upon request provide the commission with any information that may be relevant to the commission performing its duties under this chapter.
     (2) Renewable energy system owners 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. 7   Sections 1 through 6 of this act constitute a new chapter in Title 80 RCW.