BILL REQ. #:  S-0180.2 

Read first time 01/15/09.   Referred to Committee on Environment, Water & Energy.

     AN ACT Relating to extending tax incentives for renewable resources, including tidal and wave energy; amending RCW 82.08.02567, 82.12.02567, and 82.16.055; providing an effective date; and declaring an emergency.

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

Sec. 1   RCW 82.08.02567 and 2004 c 152 s 1 are each amended to read as follows:
     (1) The tax levied by RCW 82.08.020 shall not apply to sales of machinery and equipment used directly in generating electricity using fuel cells, wind, sun, tidal or wave energy, geothermal resources, or landfill gas as the principal source of power, or to sales of or charges made for labor and services rendered in respect to installing such machinery and equipment, but only if the purchaser develops with such machinery, equipment, and labor a facility capable of generating not less than two hundred watts of electricity and 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) For purposes of this section and RCW 82.12.02567:
     (a) "Landfill gas" means biomass fuel of the type qualified for federal tax credits under 26 U.S.C. Sec. 29 collected from a landfill. "Landfill" means a landfill as defined under RCW 70.95.030;
     (b) "Machinery and equipment" means industrial fixtures, devices, and support facilities that are integral and necessary to the generation of electricity using fuel cells, wind, sun, or landfill gas as the principal source of power;
     (c) "Machinery and equipment" does not include: (i) Hand-powered tools; (ii) property with a useful life of less than one year; (iii) repair parts required to restore machinery and equipment to normal working order; (iv) replacement parts that do not increase productivity, improve efficiency, or extend the useful life of machinery and equipment; (v) buildings; or (vi) building fixtures that are not integral and necessary to the generation of electricity that are permanently affixed to and become a physical part of a building;
     (d) Machinery and equipment is "used directly" in generating electricity with fuel cells or by wind energy, solar energy, or landfill gas power if it provides any part of the process that captures the energy of the wind, sun, or landfill gas, converts that energy to electricity, and stores, transforms, or transmits that electricity for entry into or operation in parallel with electric transmission and distribution systems;
     (e) "Fuel cell" means an electrochemical reaction that generates electricity by combining atoms of hydrogen and oxygen in the presence of a catalyst.
     (3) This section expires June 30, ((2009)) 2019.

Sec. 2   RCW 82.12.02567 and 2004 c 152 s 2 are each amended to read as follows:
     (1) The provisions of this chapter shall not apply with respect to machinery and equipment used directly in generating not less than two hundred watts of electricity using fuel cells, wind, sun, tidal or wave energy, geothermal resources, or landfill gas as the principal source of power, or to the use of labor and services rendered in respect to installing such machinery and equipment.
     (2) The definitions in RCW 82.08.02567 apply to this section.
     (3) This section expires June 30, ((2009)) 2019.

Sec. 3   RCW 82.16.055 and 1980 c 149 s 3 are each amended to read as follows:
     (1) In computing tax under this chapter there shall be deducted from the gross income:
     (a) An amount equal to the cost of production at the plant for consumption within the state of Washington of:
     (i) Electrical energy produced or generated from cogeneration ((as defined in RCW 82.35.020)); and
     (ii) Electrical energy or gas produced or generated from renewable energy resources such as solar energy, tidal or wave energy, geothermal resources, wind energy, hydroelectric energy, geothermal energy, wood, wood wastes, municipal wastes, agricultural products and wastes, and end-use waste heat; and
     (b) Those amounts expended to improve consumers' efficiency of energy end use or to otherwise reduce the use of electrical energy or gas by the consumer.
     (2) (a) Except for tidal and wave energy and geothermal facilities, this section applies only to new facilities for the production or generation of energy from cogeneration or renewable energy resources or measures to improve the efficiency of energy end use on which construction or installation is begun after June 12, 1980, and before January 1, 1990.
     (b) This section applies to new facilities for the production and generation of energy from tidal and wave energy, and from geothermal resources, on which construction or installation is begun after January 1, 2009, and before January 1, 2019.
     (3) Deductions under subsection (1)(a) of this section shall be allowed for a period not to exceed thirty years after the project is placed in operation.
     (4) ((Measures or projects encouraged under this section shall at the time they are placed in service be reasonably expected to save, produce, or generate energy at a total incremental system cost per unit of energy delivered to end use which is less than or equal to the incremental system cost per unit of energy delivered to end use from similarly available conventional energy resources which utilize nuclear energy or fossil fuels and which the gas or electric utility could acquire to meet energy demand in the same time period.
     (5))) The department ((of revenue)), after consultation with the utilities and transportation commission ((in the case of investor-owned utilities)) and the governing bodies of locally regulated utilities, shall determine the eligibility of individual projects and measures for deductions under this section.

NEW SECTION.  Sec. 4   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 June 30, 2009.