BILL REQ. #:  S-0774.3 

Read first time 01/22/09.   Referred to Committee on Environment, Water & Energy.

     AN ACT Relating to creating incentives for the use of biomass in renewable energy production; amending RCW 19.285.030; adding a new section to chapter 82.04 RCW; adding a new section to chapter 82.08 RCW; adding a new section to chapter 82.12 RCW; creating a new section; and providing an effective date.

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

NEW SECTION.  Sec. 1   (1) The legislature finds that:
     (a) Communities across the state, including Everett, Longview, Grays Harbor, and Colville, have natural resource-based economies and rely on the use of biomass fuels to generate electricity for use in manufacturing and to serve local residents;
     (b) In 2007, by approving Initiative Measure No. 937, codified as chapter 19.285 RCW, citizens of the state authorized a law requiring electric utilities that serve more than twenty-five thousand customers in Washington to obtain fifteen percent of their electricity from new renewable resources by 2020 and to meet energy conservation goals;
     (c) Eight other western states have renewable energy standards, but most of those other laws, unlike chapter 19.285 RCW, allow existing biomass resources to count as renewable energy resources; and
     (d) By discriminating against our state's natural assets for producing renewable energy, chapter 19.285 RCW obligates local electric utilities to acquire more expensive renewable resource technologies.
     (2) The legislature declares that chapter 19.285 RCW should be amended to preserve our low electricity costs and its economic benefits to urban and rural communities alike, and to promote further development of the low cost, climate-friendly biomass resources that form the foundation of our present and future clean energy economy.

Sec. 2   RCW 19.285.030 and 2007 c 1 s 3 are each amended to read as follows:
     The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Attorney general" means the Washington state office of the attorney general.
     (2) "Auditor" means: (a) The Washington state auditor's office or its designee for qualifying utilities under its jurisdiction that are not investor-owned utilities; or (b) an independent auditor selected by a qualifying utility that is not under the jurisdiction of the state auditor and is not an investor-owned utility.
     (3) "Biomass energy" means energy produced from the combustion of (a) organic byproducts of the pulping process or algae; (b) animal waste; (c) solid organic fuels from wood; (d) forest or field residues; (e) wooden demolition or construction debris; (f) landfill gas or biogas produced from organic matter, wastewater, or anaerobic digesters; or (g) dedicated energy crops. "Biomass energy" does not include energy produced from the combustion of 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.
     (4) "Commission" means the Washington state utilities and transportation commission.
     (((4))) (5) "Conservation" means any reduction in electric power consumption resulting from increases in the efficiency of energy use, production, or distribution.
     (((5))) (6) "Cost-effective" has the same meaning as defined in RCW 80.52.030.
     (((6))) (7) "Council" means the Washington state apprenticeship and training council within the department of labor and industries.
     (((7))) (8) "Customer" means a person or entity that purchases electricity for ultimate consumption and not for resale.     
     (((8))) (9) "Department" means the department of community, trade, and economic development or its successor.
     (((9))) (10) "Distributed generation" means an eligible renewable resource where the generation facility or any integrated cluster of such facilities has a generating capacity of not more than five megawatts.
     (((10))) (11) "Eligible renewable resource" means:
     (a) Electricity from a generation facility powered by a renewable resource other than fresh water that commences operation after March 31, 1999, where: (i) The facility is located in the Pacific Northwest; or (ii) the electricity from the facility is delivered into Washington state on a real-time basis without shaping, storage, or integration services; ((or))
     (b) Incremental electricity produced as a result of efficiency improvements completed after March 31, 1999, to hydroelectric generation projects owned by a qualifying utility and located in the Pacific Northwest or to hydroelectric generation in irrigation pipes and canals located in the Pacific Northwest, where the additional generation in either case does not result in new water diversions or impoundments; or
     (c) Electricity from a biomass energy powered generation facility located in Washington that commenced operation before March 31, 1999.
     (((11))) (12) "Investor-owned utility" has the same meaning as defined in RCW 19.29A.010.
     (((12))) (13) "Load" means the amount of kilowatt-hours of electricity delivered in the most recently completed year by a qualifying utility to its Washington retail customers.
     (((13))) (14) "Nonpower attributes" means all environmentally related characteristics, exclusive of energy, capacity reliability, and other electrical power service attributes, that are associated with the generation of electricity from a renewable resource, including but not limited to the facility's fuel type, geographic location, vintage, qualification as an eligible renewable resource, and avoided emissions of pollutants to the air, soil, or water, and avoided emissions of carbon dioxide and other greenhouse gases.
     (((14))) (15) "Pacific Northwest" has the same meaning as defined for the Bonneville power administration in section 3 of the Pacific Northwest electric power planning and conservation act (94 Stat. 2698; 16 U.S.C. Sec. 839a).
     (((15))) (16) "Public facility" has the same meaning as defined in RCW 39.35C.010.
     (((16))) (17) "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.
     (((17))) (18) "Renewable energy credit" means a tradable certificate of proof of at least one megawatt-hour of an eligible renewable resource where the generation facility is not powered by fresh water, the certificate includes all of the nonpower attributes associated with that one megawatt-hour of electricity, and the certificate is verified by a renewable energy credit tracking system selected by the department.
     (((18))) (19) "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 or first-growth forests where the clearing occurred after December 7, 2006; and (i) biomass energy ((based on animal 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) black liquor byproduct from paper production; (iii) wood from old growth forests; or (iv) municipal solid waste)).
     (((19))) (20) "Rule" means rules adopted by an agency or other entity of Washington state government to carry out the intent and purposes of this chapter.
     (((20))) (21) "Year" means the twelve-month period commencing January 1st and ending December 31st.

NEW SECTION.  Sec. 3   A new section is added to chapter 82.04 RCW to read as follows:
     (1) In computing the tax imposed under this chapter, harvesters are allowed a credit against the amount of tax otherwise due under this chapter, as provided in this section. The credit is thirty dollars per harvested green ton of forest derived biomass sold, transferred, or used for production of electricity, steam, heat, or biofuel. Credit may not be claimed for forest derived biomass sold, transferred, or used before the effective date of this section. The amount of credit allowed for a reporting period may not exceed the tax otherwise due under this chapter for that reporting period. Any unused excess credit in a reporting period may be carried forward to future reporting periods for a maximum of two years.
     (2) For the purposes of this section, "harvested" and "harvesters" are defined in RCW 84.33.035, and "biofuel" is defined in RCW 43.325.010.

NEW SECTION.  Sec. 4   A new section is added to chapter 82.08 RCW to read as follows:
     (1) The tax levied by RCW 82.08.020 does not apply to sales of forest derived biomass used to produce electricity, steam, heat, or biofuel. This exemption is available only if the buyer provides the seller with an exemption certificate in a form and manner prescribed by the department. The seller must retain a copy of the certificate for the seller's files.
     (2) For purposes of this section, "biofuel" is defined in RCW 43.325.010.

NEW SECTION.  Sec. 5   A new section is added to chapter 82.12 RCW to read as follows:
     (1) The provisions of this chapter do not apply with respect to the use of forest derived biomass for production of electricity, steam, heat, or biofuel.
     (2) For purposes of this section, "biofuel" is defined in RCW 43.325.010.

NEW SECTION.  Sec. 6   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 7   Sections 3, 4, and 5 of this act take effect October 1, 2009.