| State of Washington | 61st Legislature | 2010 Regular Session |
READ FIRST TIME 02/04/10.
AN ACT Relating to implementing a pilot program for energy conservation services for cities and towns located wholly within the electric service territories of Tacoma public utilities, Seattle city light, and Puget Sound energy; amending RCW 35.92.070; adding a new chapter to Title 35 RCW; and providing an expiration date.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 1 (1) The legislature finds that Washington
state has the opportunity to realize a prosperous, affordable, and
clean energy future through energy efficiency.
(2) The pilot financing mechanism established in this chapter may
enable local governments to expand and improve existing energy
conservation and energy efficiency loan programs to aid the private and
nonprofit sectors in undertaking residential, commercial, and
industrial energy efficiency upgrades.
(3) The legislature finds that this financing tool may lead to
reductions in household energy bills, provide incentives for the
creation of new family-wage jobs in construction, manufacturing, and
installation of energy-saving products, encourage investments by the
utility sector in a cleaner environment, decrease the need for new
power plant construction, and increase energy security.
NEW SECTION. Sec. 2 The definitions in this section apply
throughout this chapter unless the context clearly requires otherwise.
(1) "Energy conservation equipment" means equipment for the
conservation or more efficient use of energy, regardless of source,
installed at or near the intended place of use. However, the equipment
may not include any individual equipment or co-owned and controlled
cluster of equipment with a generating capacity that exceeds the net
metering system electrical generating capacity threshold established in
RCW 80.60.010(10)(a). Energy conservation equipment includes, but is
not limited to: Weatherizing equipment; energy-conserving lighting
systems, heating and cooling systems, equipment to replace inefficient
wood burning heating devices, and appliances; and equipment or systems
that permit owners or substantial users of property or equipment to
generate all or a portion of their own electricity through the on-site
installation of distributed electricity generation systems that use as
fuel solar, wind, geothermal, or hydropower, or other renewable
resources available on-site and not from a commercial source.
(2) "Energy conservation services" means the provision of services
to assist owners or substantial users of structures or energy
conservation equipment in the acquisition, installation, and operation
of energy conservation equipment, fixtures, or improvements. Energy
conservation services include, but are not limited to: Energy audit
services; weatherization services; energy conservation equipment
financing, acquisition, and installation services; services to replace
inefficient wood burning heating devices; and other measures to reduce
energy on-site consumption regardless of source. Energy conservation
services may not be considered "a conversion from one energy source to
another" that is limited to the change or substitution of one
commercial energy supplier for another commercial energy supplier.
(3) "Municipality" means a city or town.
NEW SECTION. Sec. 3 The provision of energy conservation
services under this chapter is declared to be a public use and a public
and municipal purpose, which may be conducted through a public utility
operated by a municipality. Energy conservation services may be
provided through an existing utility system already operated by the
municipality. A municipality that provides energy conservation
services under this chapter is declared to be engaged in the sale or
distribution of energy services under Article VIII, section 10 of the
state Constitution.
NEW SECTION. Sec. 4 (1)(a) The authority provided under this
chapter applies to municipalities wholly located within the electric
service territories of Tacoma public utilities, Seattle city light, and
Puget Sound energy as of the effective date of this section.
(b) The authorization in (a) of this subsection is limited to the
municipality's boundaries and do not extend to any unincorporated areas
in an electric utility's service area.
(2)(a) By ordinance, a municipality may create an energy
conservation services utility for the purpose of providing to its
inhabitants and property owners energy conservation services that lead
to the more efficient consumption of energy resources, from whatever
source generated, and may construct, purchase, acquire, lease, add to,
extend, maintain, and operate a system or program of energy
conservation services.
(b) Prior to creating an energy conservation services utility, the
legislative authority of the municipality must hold a public hearing
and make a legislative determination, based on presentations at the
hearing, that the energy conservation services proposed to be provided
by the municipality will make available additional or complementary
services, target underserved areas or populations, or otherwise add
incremental value to the preexisting programs and services provided by
an electric or natural gas energy distribution utility servicing the
municipality.
(c) Energy conservation services are only authorized under this
chapter if the cost per unit of energy saved or produced by the use of
such materials and equipment is less than the cost per unit of energy
produced by the next least costly new energy resource that could be
acquired to meet future demand.
(3) For the purpose of providing energy conservation services, the
municipality has the full power to operate and regulate such systems
and programs; to enter into agreements for the maintenance and
operation of any facilities, equipment, or systems, under such terms
and conditions as may be determined by the legislative authority of the
municipality to be in the municipality's interest; and other powers as
may be necessary for the provision and financing of energy conservation
services. Nothing in this chapter authorizes any municipality to
generate, transmit, distribute, or sell electricity. Nothing in this
chapter may be construed to restrain or limit the authority of any
individual, partnership, corporation, private utility, or public
utility from establishing and providing energy conservation services.
(4) The legislative authority of the municipality has full
authority to set rates or charges for energy conservation services
provided to customers of the energy conservation service utility if the
rates charged are uniform for the same class of customer or service.
In classifying customers served or services furnished, the legislative
authority may consider: The difference in cost of services to the
various customers; the location of the various customers within the
municipality; the difference in cost of maintenance, operation, repair,
and replacement of the various parts of the system; the different
character of the services furnished various customers; the quantity and
quality of the services furnished; and any other matters that present
a reasonable difference as a ground for distinction. The legislative
authority of the municipality has the full authority to regulate and
control the energy conservation services so delivered, together with
the right to handle and sell or lease any energy conservation
equipment, fixtures, or accessories of any kind, necessary and
convenient for the provision of energy conservation services.
(5) A qualifying utility under RCW 19.280.030 that serves a
municipality providing energy conservation services under this chapter
may exclusively claim the energy savings achieved by the energy
conservation services for purposes of complying with RCW 19.280.040.
At the request of the qualifying utility, municipalities must provide
the qualifying utility, the department of commerce, and the Washington
utilities and transportation commission with any relevant data to
effectuate this purpose.
(6) A municipality may issue general obligation or revenue bonds,
notes, warrants, or other evidences of indebtedness for the purposes of
providing all or part of the costs of providing energy conservation
services, which shall be issued and sold in accordance with chapters
39.44, 39.46, 39.50, and 39.53 RCW. No municipality may enter into a
contract to sell loans financed by an energy services conservation
utility to a third party for the purpose of securitizing those loans
without approval by the legislative authority of the municipality. Any
contract that requires a municipality to service loans that it
originated must limit the liability of the municipality by prohibiting
the commingling of its loans in a securities instrument with loans
issued by other parties. No indebtedness may be issued after June 30,
2015. However, indebtedness previously issued may continue to be
serviced.
(7) Municipalities providing energy conservation services under
this chapter must establish quality assurance programs that must
include the following: (a) A requirement that contractors be
prequalified; (b) the maintenance of a list of prequalified
contractors; (c) the creation of minimum standards for prequalified
contractors that include: (i) Legal compliance procedures; (ii) proper
classification of employees; (iii) use of a qualified energy efficiency
workforce if such workers are available; and (iv) maintenance of
records needed to verify compliance; and (d) a third-party, independent
verification process.
(8) The authority granted in this chapter must be consistent with,
and not limit, supplant, replace, or conflict with, any authority to
provide energy conservation services through an existing municipal
utility.
(9) Energy conservation service utilities formed under this chapter
must file annual reports stating the number of customers served, the
amount of assistance per customer, the estimated energy savings per
customer, and the effectiveness of their quality assurance programs.
Municipalities must submit their reports to the respective electric
utilities serving their residents, which must consolidate the reports
and submit them electronically to the appropriate legislative
committees by December 1st each year until the expiration of the pilot
program.
NEW SECTION. Sec. 5 (1) Any municipality engaged in the
provision of energy conservation services under this chapter is
authorized, within limits established by the Constitution of the state
of Washington, to assist the owners of structures or equipment in
financing the acquisition and installation of materials and equipment,
for compensation or otherwise, for the conservation or more efficient
use of energy in such structures or equipment pursuant to an energy
conservation plan adopted by the municipality if the cost per unit of
energy saved or produced by the use of such materials and equipment is
less than the cost per unit of energy produced by the next least costly
new energy resource that could be acquired to meet future demand. Any
financing authorized under this chapter may only be used for energy
conservation services in existing structures.
(2) Except where otherwise authorized, such assistance is limited
to:
(a) Providing an inspection of the structure or equipment, either
directly or through one or more inspectors under contract, to determine
and inform the owner of the estimated cost of purchasing and installing
conservation materials and equipment for which financial assistance
will be approved and the estimated life cycle savings in energy costs
that are likely to result from the installation of the materials or
equipment;
(b) Providing a list of businesses that sell and install the
materials and equipment within or in close proximity to the service
area of the municipality, each of which businesses must have requested
to be included and must have the ability to provide the products in a
workmanlike manner and to utilize the materials in accordance with the
prevailing national standards;
(c) Arranging to have approved conservation materials and equipment
installed by a private contractor whose bid is acceptable to the owner
of the residential structure and verifying the installation; and
(d) Arranging or providing financing for the purchase and
installation of approved conservation materials and equipment. The
materials and equipment must be purchased from a private business and
be installed by a private business or the owner.
(3)(a) Pay back must be in the form of incremental additions to an
existing local government utility or tax bill, billed either together
with use charge or separately. Loans may not exceed two hundred forty
months in length. The municipality may make assistance available in
the form of grants made under this chapter for energy conservation
improvements to existing structures owned or occupied by persons
qualifying as poor or infirm consistent with the state Constitution.
(4) The municipal legislative authority shall approve the aggregate
amount of such loans and the repayment terms by ordinance and may, by
ordinance, delegate to staff the approval of individual loans
consistent with loan program guidelines approved in the ordinance. The
municipality and the property owner shall enter into a loan agreement
setting forth the terms of the loan, which agreement may provide for
acceleration in the event a loan installment is delinquent. In order
to secure loans, the municipality shall have a statutory lien on the
property, not exceeding five percent of the assessed value of the
property as of the last assessment preceding the loan funding date, on
which energy conservation improvements so financed are installed or
constructed. The statutory lien shall be paramount and superior to any
other lien or encumbrance thereafter created except a lien for general
taxes, special assessment district assessments, and liens filed under
RCW 35.92.360, 54.16.280, or 36.94.460. Any lien for any amount in
excess of five percent of the assessed value of the property may be
obtained and perfected in accordance with applicable law. The loan
shall be a lien upon property from the time the loan agreement is
executed. If the municipal legislative authority in granting loans has
acted in good faith and without fraud, the loan shall be valid and
enforceable as such and the lien thereof upon the property shall be
valid.
(5) The municipality may foreclose a lien in an action in the
superior court. All or any of the tracts subject to such a lien may be
proceeded against in a single action, and all parties appearing of
record as owning or claiming to own or having an interest in or lien
upon the tracts involved shall be impleaded in the action as parties
defendant. An action to foreclose a lien must be commenced within two
years after the date that the loan first becomes subject to
acceleration under the loan documents. Liens to secure loans may be
foreclosed in the manner provided by RCW 35.67.250 through 35.67.270.
(6) The municipality may pledge revenues from loan payments to
secure and repay general obligation or revenue bonds, notes, or other
forms of indebtedness issued by or on behalf of the municipality, which
indebtedness shall be issued in accordance with this chapter and
chapters 39.44, 39.46, 39.50, and 39.53 RCW. For the purpose of
securing the payment of the principal of and interest on any bonds or
notes, the municipality may create a reserve fund. The principal
amount of any loan may include a proportionate share of the costs of
issuing the bonds, notes, or other indebtedness, and may include up to
an additional amount to fund a reserve fund, consistent with RCW
39.44.140. The bonds, warrants, or other evidences of indebtedness
shall be deemed to be for capital purposes within the meaning of the
uniform system of accounts for municipal corporations.
Sec. 6 RCW 35.92.070 and 1987 c 145 s 1 are each amended to read
as follows:
When the governing body of a city or town deems it advisable that
the city or town purchase, acquire, or construct any such public
utility, or make any additions and betterments thereto or extensions
thereof, it shall provide therefor by ordinance, which shall specify
and adopt the system or plan proposed, and declare the estimated cost
thereof, as near as may be, and the ordinance shall be submitted for
ratification or rejection by majority vote of the voters of the city or
town at a general or special election.
(1) No submission shall be necessary:
(a) When the work proposed is an addition to, or betterment of,
extension of, or an increased water supply for existing waterworks, or
an addition, betterment, or extension of an existing system or plant of
any other public utility;
(b) When in the charter of a city a provision has been adopted
authorizing the corporate authorities thereof to provide by ordinance
for acquiring, opening, or operating any of such public utilities;
((or))
(c) When in the judgment of the corporate authority, the public
health is being endangered by the discharge of raw or untreated sewage
into any body of water and the danger to the public health may be
abated by the construction and maintenance of a sewage disposal plant;
or
(d) When the governing body of a city or town deems it advisable to
form an energy conservation services utility under chapter 35.-- RCW
(the new chapter created in section 7 of this act).
(2) Notwithstanding subsection (1) of this section, submission to
the voters shall be necessary if:
(a) The project or work may produce electricity for sale in excess
of present or future needs of the water system;
(b) The city or town does not own or operate an electric utility
system;
(c) The work involves an ownership greater than twenty-five percent
in a new water supply project combined with an electric generation
facility; and
(d) The combined facility has an installed capacity in excess of
five megawatts.
(3) Notwithstanding subsection (1) of this section, submission to
the voters shall be necessary to make extensions to a public utility
which would expand the previous service capacity by fifty percent or
more, where such increased service capacity is financed by the issuance
of general obligation bonds.
(4) Thirty days' notice of the election shall be given in the
official newspaper of the city or town, by publication at least once
each week in the paper during such time.
(5) When a proposition has been adopted, or in the cases where no
submission is necessary, the corporate authorities of the city or town
may proceed forthwith to purchase, construct, and acquire the public
utility or make additions, betterments, and extensions thereto and to
make payment therefor.
NEW SECTION. Sec. 7 Sections 1 through 5 of this act constitute
a new chapter in Title
NEW SECTION. Sec. 8 Sections 1 through 6 of this act expire June
30, 2015.