Passed by the Senate April 21, 2011 YEAS 33   ________________________________________ President of the Senate Passed by the House April 11, 2011 YEAS 87   ________________________________________ Speaker of the House of Representatives | I, Thomas Hoemann, Secretary of the Senate of the State of Washington, do hereby certify that the attached is ENGROSSED SECOND SUBSTITUTE SENATE BILL 5769 as passed by the Senate and the House of Representatives on the dates hereon set forth. ________________________________________ Secretary | |
Approved ________________________________________ Governor of the State of Washington | Secretary of State State of Washington |
State of Washington | 62nd Legislature | 2011 Regular Session |
READ FIRST TIME 02/25/11.
AN ACT Relating to coal-fired electric generation facilities; amending RCW 80.80.040, 80.80.070, 80.50.100, 43.160.076, and 19.280.030; reenacting and amending RCW 80.80.010 and 80.80.060; adding new sections to chapter 80.80 RCW; adding a new section to chapter 43.155 RCW; adding new sections to chapter 80.04 RCW; adding a new section to chapter 80.70 RCW; adding a new chapter to Title 80 RCW; creating a new section; providing an expiration date; and providing a contingent expiration date.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 101 (1) The legislature finds that generating
electricity from the combustion of coal produces pollutants that are
harmful to human health and safety and the environment. While the
emission of many of these pollutants continues to be addressed through
application of federal and state air quality laws, the emission of
greenhouse gases resulting from the combustion of coal has not been
addressed.
(2) The legislature finds that coal-fired electricity generation is
one of the largest sources of greenhouse gas emissions in the state,
and is the largest source of such emissions from the generation of
electricity in the state.
(3) The legislature finds coal-fired electric generation may
provide baseload power that is necessary in the near-term for the
stability and reliability of the electrical transmission grid and that
contributes to the availability of affordable power in the state. The
legislature further finds that efforts to transition power to other
fuels requires a reasonable period of time to ensure grid stability and
to maintain affordable electricity resources.
(4) The legislature finds that coal-fired baseload electric
generation facilities are a significant contributor to family-wage jobs
and economic health in parts of the state and that transition of these
facilities must address the economic future and the preservation of
jobs in affected communities.
(5) Therefore, it is the purpose of this act to provide for the
reduction of greenhouse gas emissions from large coal-fired baseload
electric power generation facilities, to effect an orderly transition
to cleaner fuels in a manner that ensures reliability of the state's
electrical grid, to ensure appropriate cleanup and site restoration
upon decommissioning of any of these facilities in the state, and to
provide assistance to host communities planning for new economic
development and mitigating the economic impacts of the closure of these
facilities.
Sec. 102 RCW 80.80.010 and 2009 c 565 s 54 and 2009 c 448 s 1 are
each reenacted and 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 consumer-owned utilities under its jurisdiction; or
(b) an independent auditor selected by a consumer-owned utility that is
not under the jurisdiction of the state auditor.
(3) "Average available greenhouse gas emissions output" means the
level of greenhouse gas emissions as surveyed and determined by the
energy policy division of the department of commerce under RCW
80.80.050.
(4) "Baseload electric generation" means electric generation from
a power plant that is designed and intended to provide electricity at
an annualized plant capacity factor of at least sixty percent.
(5) "Cogeneration facility" means a power plant in which the heat
or steam is also used for industrial or commercial heating or cooling
purposes and that meets federal energy regulatory commission standards
for qualifying facilities under the public utility regulatory policies
act of 1978 (16 U.S.C. Sec. 824a-3), as amended.
(6) "Combined-cycle natural gas thermal electric generation
facility" means a power plant that employs a combination of one or more
gas turbines and steam turbines in which electricity is produced in the
steam turbine from otherwise lost waste heat exiting from one or more
of the gas turbines.
(7) "Commission" means the Washington utilities and transportation
commission.
(8) "Consumer-owned utility" means a municipal 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, or port district within which an
industrial district has been established as authorized by Title 53 RCW,
that is engaged in the business of distributing electricity to more
than one retail electric customer in the state.
(9) "Department" means the department of ecology.
(10) "Distributed generation" means electric generation connected
to the distribution level of the transmission and distribution grid,
which is usually located at or near the intended place of use.
(11) "Electric utility" means an electrical company or a consumer-owned utility.
(12) "Electrical company" means a company owned by investors that
meets the definition of RCW 80.04.010.
(13) "Governing board" means the board of directors or legislative
authority of a consumer-owned utility.
(14) "Greenhouse ((gases)) gas" includes carbon dioxide, methane,
nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur
hexafluoride.
(15) "Long-term financial commitment" means:
(a) Either a new ownership interest in baseload electric generation
or an upgrade to a baseload electric generation facility; or
(b) A new or renewed contract for baseload electric generation with
a term of five or more years for the provision of retail power or
wholesale power to end-use customers in this state.
(16) "Plant capacity factor" means the ratio of the electricity
produced during a given time period, measured in kilowatt-hours, to the
electricity the unit could have produced if it had been operated at its
rated capacity during that period, expressed in kilowatt-hours.
(17) "Power plant" means a facility for the generation of
electricity that is permitted as a single plant by a jurisdiction
inside or outside the state.
(18) "Upgrade" means any modification made for the primary purpose
of increasing the electric generation capacity of a baseload electric
generation facility. "Upgrade" does not include routine or necessary
maintenance, installation of emission control equipment, installation,
replacement, or modification of equipment that improves the heat rate
of the facility, or installation, replacement, or modification of
equipment for the primary purpose of maintaining reliable generation
output capability that does not increase the heat input or fuel usage
as specified in existing generation air quality permits as of July 22,
2007, but may result in incidental increases in generation capacity.
(19) "Coal transition power" means the output of a coal-fired
electric generation facility that is subject to an obligation to meet
the standards contained in RCW 80.80.040(3)(c).
(20) "Memorandum of agreement" or "memorandum" means a binding and
enforceable contract entered into pursuant to section 106 of this act
between the governor on behalf of the state and an owner of a baseload
electric generation facility in the state that produces coal transition
power.
Sec. 103 RCW 80.80.040 and 2009 c 448 s 2 are each amended to
read as follows:
(1) Beginning July 1, 2008, the greenhouse gas emissions
performance standard for all baseload electric generation for which
electric utilities enter into long-term financial commitments on or
after such date is the lower of:
(a) One thousand one hundred pounds of greenhouse gases per
megawatt-hour; or
(b) The average available greenhouse gas emissions output as
determined under RCW 80.80.050.
(2) This chapter does not apply to long-term financial commitments
with the Bonneville power administration.
(3)(a) Except as provided in (c) of this subsection, all baseload
electric generation facilities in operation as of June 30, 2008, are
deemed to be in compliance with the greenhouse gas emissions
performance standard established under this section until the
facilities are the subject of long-term financial commitments.
(b) All baseload electric generation that commences operation after
June 30, 2008, and is located in Washington, must comply with the
greenhouse gas emissions performance standard established in subsection
(1) of this section.
(c)(i) A coal-fired baseload electric generation facility in
Washington that emitted more than one million tons of greenhouse gases
in any calendar year prior to 2008 must comply with the lower of the
following greenhouse gas emissions performance standard such that one
generating boiler is in compliance by December 31, 2020, and any other
generating boiler is in compliance by December 31, 2025:
(A) One thousand one hundred pounds of greenhouse gases per
megawatt-hour; or
(B) The average available greenhouse gas emissions output as
determined under RCW 80.80.050.
(ii) This subsection (3)(c) does not apply to a coal-fired baseload
electric generating facility in the event the department determines as
a requirement of state or federal law or regulation that selective
catalytic reduction technology must be installed on any of its boilers.
(4) All electric generation facilities or power plants powered
exclusively by renewable resources, as defined in RCW 19.280.020, are
deemed to be in compliance with the greenhouse gas emissions
performance standard established under this section.
(5) All cogeneration facilities in the state that are fueled by
natural gas or waste gas or a combination of the two fuels, and that
are in operation as of June 30, 2008, are deemed to be in compliance
with the greenhouse gas emissions performance standard established
under this section until the facilities are the subject of a new
ownership interest or are upgraded.
(6) In determining the rate of emissions of greenhouse gases for
baseload electric generation, the total emissions associated with
producing electricity shall be included.
(7) In no case shall a long-term financial commitment be determined
to be in compliance with the greenhouse gas emissions performance
standard if the commitment includes more than twelve percent of
electricity from unspecified sources.
(8) For a long-term financial commitment with multiple power
plants, each specified power plant must be treated individually for the
purpose of determining the annualized plant capacity factor and net
emissions, and each power plant must comply with subsection (1) of this
section, except as provided in subsections (3) through (5) of this
section.
(9) The department shall establish an output-based methodology to
ensure that the calculation of emissions of greenhouse gases for a
cogeneration facility recognizes the total usable energy output of the
process, and includes all greenhouse gases emitted by the facility in
the production of both electrical and thermal energy. In developing
and implementing the greenhouse gas emissions performance standard, the
department shall consider and act in a manner consistent with any rules
adopted pursuant to the public utilities regulatory policy act of 1978
(16 U.S.C. Sec. 824a-3), as amended.
(10) The following greenhouse gas emissions produced by baseload
electric generation owned or contracted through a long-term financial
commitment shall not be counted as emissions of the power plant in
determining compliance with the greenhouse gas emissions performance
standard:
(a) Those emissions that are injected permanently in geological
formations;
(b) Those emissions that are permanently sequestered by other means
approved by the department; and
(c) Those emissions sequestered or mitigated as approved under
subsection (16) of this section.
(11) In adopting and implementing the greenhouse gas emissions
performance standard, the department of ((community, trade, and
economic development)) commerce energy policy division, in consultation
with the commission, the department, the Bonneville power
administration, the western electricity ((coordination [coordinating]))
coordinating council, the energy facility site evaluation council,
electric utilities, public interest representatives, and consumer
representatives, shall consider the effects of the greenhouse gas
emissions performance standard on system reliability and overall costs
to electricity customers.
(12) In developing and implementing the greenhouse gas emissions
performance standard, the department shall, with assistance of the
commission, the department of ((community, trade, and economic
development)) commerce energy policy division, and electric utilities,
and to the extent practicable, address long-term purchases of
electricity from unspecified sources in a manner consistent with this
chapter.
(13) The directors of the energy facility site evaluation council
and the department shall each adopt rules under chapter 34.05 RCW in
coordination with each other to implement and enforce the greenhouse
gas emissions performance standard. The rules necessary to implement
this section shall be adopted by June 30, 2008.
(14) In adopting the rules for implementing this section, the
energy facility site evaluation council and the department shall
include criteria to be applied in evaluating the carbon sequestration
plan, for baseload electric generation that will rely on subsection
(10) of this section to demonstrate compliance, but that will commence
sequestration after the date that electricity is first produced. The
rules shall include but not be limited to:
(a) Provisions for financial assurances, as a condition of plant
operation, sufficient to ensure successful implementation of the carbon
sequestration plan, including construction and operation of necessary
equipment, and any other significant costs;
(b) Provisions for geological or other approved sequestration
commencing within five years of plant operation, including full and
sufficient technical documentation to support the planned
sequestration;
(c) Provisions for monitoring the effectiveness of the
implementation of the sequestration plan;
(d) Penalties for failure to achieve implementation of the plan on
schedule;
(e) Provisions for an owner to purchase emissions reductions in the
event of the failure of a sequestration plan under subsection (16) of
this section; and
(f) Provisions for public notice and comment on the carbon
sequestration plan.
(15)(a) Except as provided in (b) of this subsection, as part of
its role enforcing the greenhouse gas emissions performance standard,
the department shall determine whether sequestration or a plan for
sequestration will provide safe, reliable, and permanent protection
against the greenhouse gases entering the atmosphere from the power
plant and all ancillary facilities.
(b) For facilities under its jurisdiction, the energy facility site
evaluation council shall contract for review of sequestration or the
carbon sequestration plan with the department consistent with the
conditions under (a) of this subsection, consider the adequacy of
sequestration or the plan in its adjudicative proceedings conducted
under RCW 80.50.090(3), and incorporate specific findings regarding
adequacy in its recommendation to the governor under RCW 80.50.100.
(16) A project under consideration by the energy facility site
evaluation council by July 22, 2007, is required to include all of the
requirements of subsection (14) of this section in its carbon
sequestration plan submitted as part of the energy facility site
evaluation council process. A project under consideration by the
energy facility site evaluation council by July 22, 2007, that receives
final site certification agreement approval under chapter 80.50 RCW
shall make a good faith effort to implement the sequestration plan. If
the project owner determines that implementation is not feasible, the
project owner shall submit documentation of that determination to the
energy facility site evaluation council. The documentation shall
demonstrate the steps taken to implement the sequestration plan and
evidence of the technological and economic barriers to successful
implementation. The project owner shall then provide to the energy
facility site evaluation council notification that they shall implement
the plan that requires the project owner to meet the greenhouse gas
emissions performance standard by purchasing verifiable greenhouse gas
emissions reductions from an electric ((generating)) generation
facility located within the western interconnection, where the
reduction would not have occurred otherwise or absent this contractual
agreement, such that the sum of the emissions reductions purchased and
the facility's emissions meets the standard for the life of the
facility.
Sec. 104 RCW 80.80.060 and 2009 c 448 s 3 and 2009 c 147 s 1 are
each reenacted and amended to read as follows:
(1) No electrical company may enter into a long-term financial
commitment unless the baseload electric generation supplied under such
a long-term financial commitment complies with the greenhouse ((gases
[gas])) gas emissions performance standard established under RCW
80.80.040.
(2) In order to enforce the requirements of this chapter, the
commission shall review in a general rate case or as provided in
subsection (5) of this section any long-term financial commitment
entered into by an electrical company after June 30, 2008, to determine
whether the baseload electric generation to be supplied under that
long-term financial commitment complies with the greenhouse ((gases
[gas])) gas emissions performance standard established under RCW
80.80.040.
(3) In determining whether a long-term financial commitment is for
baseload electric generation, the commission shall consider the design
of the power plant and its intended use, based upon the electricity
purchase contract, if any, permits necessary for the operation of the
power plant, and any other matter the commission determines is relevant
under the circumstances.
(4) Upon application by an electric utility, the commission may
provide a case-by-case exemption from the greenhouse ((gases [gas]))
gas emissions performance standard to address: (a) Unanticipated
electric system reliability needs; (b) extraordinary cost impacts on
utility ratepayers; or (c) catastrophic events or threat of significant
financial harm that may arise from unforeseen circumstances.
(5) Upon application by an electrical company, the commission shall
determine whether the company's proposed decision to acquire electric
generation or enter into a power purchase agreement for electricity
complies with the greenhouse ((gases [gas])) gas emissions performance
standard established under RCW 80.80.040. The commission shall not
decide in a proceeding under this subsection (5) issues involving the
actual costs to construct and operate the selected resource, cost
recovery, or other issues reserved by the commission for decision in a
general rate case or other proceeding for recovery of the resource or
contract costs.
(6) An electrical company may account for and defer for later
consideration by the commission costs incurred in connection with a
long-term financial commitment, including operating and maintenance
costs, depreciation, taxes, and cost of invested capital. The deferral
begins with the date on which the power plant begins commercial
operation or the effective date of the power purchase agreement and
continues for a period not to exceed twenty-four months; provided that
if during such period the company files a general rate case or other
proceeding for the recovery of such costs, deferral ends on the
effective date of the final decision by the commission in such
proceeding. Creation of such a deferral account does not by itself
determine the actual costs of the long-term financial commitment,
whether recovery of any or all of these costs is appropriate, or other
issues to be decided by the commission in a general rate case or other
proceeding for recovery of these costs. For the purpose of this
subsection (6) only, the term "long-term financial commitment" also
includes an electric company's ownership or power purchase agreement
with a term of five or more years associated with an eligible renewable
resource as defined in RCW 19.285.030.
(7) The commission shall consult with the department to apply the
procedures adopted by the department to verify the emissions of
greenhouse gases from baseload electric generation under RCW 80.80.040.
The department shall report to the commission whether baseload electric
generation will comply with the greenhouse ((gases [gas])) gas
emissions performance standard for the duration of the period the
baseload electric generation is supplied to the electrical company.
(8) The commission shall adopt rules for the enforcement of this
section with respect to electrical companies and adopt procedural rules
for approving costs incurred by an electrical company under subsection
(4) of this section.
(9) This section does not apply to a long-term financial commitment
for the purchase of coal transition power with termination dates
consistent with the applicable dates in RCW 80.80.040(3)(c).
(10) The commission shall adopt rules necessary to implement this
section by December 31, 2008.
Sec. 105 RCW 80.80.070 and 2007 c 307 s 9 are each amended to
read as follows:
(1) No consumer-owned utility may enter into a long-term financial
commitment unless the baseload electric generation supplied under such
a long-term financial commitment complies with the greenhouse ((gases))
gas emissions performance standard established under RCW 80.80.040.
(2) The governing board shall review and make a determination on
any long-term financial commitment by the utility, pursuant to this
chapter and after consultation with the department, to determine
whether the baseload electric generation to be supplied under that
long-term financial commitment complies with the greenhouse ((gases))
gas emissions performance standard established under RCW 80.80.040. No
consumer-owned utility may enter into a long-term financial commitment
unless the baseload electric generation to be supplied under that long-term financial commitment complies with the greenhouse ((gases)) gas
emissions performance standard established under RCW 80.80.040.
(3) In confirming that a long-term financial commitment is for
baseload electric generation, the governing board shall consider the
design of the power plant and the intended use of the power plant based
upon the electricity purchase contract, if any, permits necessary for
the operation of the power plant, and any other matter the governing
board determines is relevant under the circumstances.
(4) The governing board may provide a case-by-case exemption from
the greenhouse ((gases)) gas emissions performance standard to address:
(a) Unanticipated electric system reliability needs; or (b)
catastrophic events or threat of significant financial harm that may
arise from unforeseen circumstances.
(5) The governing board shall apply the procedures adopted by the
department to verify the emissions of greenhouse gases from baseload
electric generation under RCW 80.80.040, and may request assistance
from the department in doing so.
(6) For consumer-owned utilities, the auditor is responsible for
auditing compliance with this chapter and rules adopted under this
chapter that apply to those utilities and the attorney general is
responsible for enforcing that compliance.
(7) This section does not apply to long-term financial commitments
for the purchase of coal transition power with termination dates
consistent with the applicable dates in RCW 80.80.040(3)(c).
NEW SECTION. Sec. 106 A new section is added to chapter 80.80
RCW to read as follows:
(1) By January 1, 2012, the governor on behalf of the state shall
enter into a memorandum of agreement that takes effect on April 1,
2012, with the owners of a coal-fired baseload facility in Washington
that emitted more than one million tons of greenhouse gases in any
calendar year prior to 2008. The memorandum of agreement entered into
by the governor may only contain provisions authorized in this section,
except as provided under section 108 of this act.
(2) The memorandum of agreement must:
(a) Incorporate by reference RCW 80.80.040, 80.80.060, and
80.80.070 as of the effective date of this section;
(b) Incorporate binding commitments to install selective
noncatalytic reduction pollution control technology in any coal-fired
generating boilers by January 1, 2013, after discussing the proper use
of ammonia in this technology.
(3)(a) The memorandum of agreement must include provisions by which
the facility owner will provide financial assistance:
(i) To the affected community for economic development and energy
efficiency and weatherization; and
(ii) For energy technologies with the potential to create
considerable energy, economic development, and air quality, haze, or
other environmental benefits.
(b) Except as described in (c) of this subsection, the financial
assistance in (a)(i) of this subsection must be in the amount of thirty
million dollars and the financial assistance in (a)(ii) of this
subsection must be in the amount of twenty-five million dollars, with
investments beginning January 1, 2012, and consisting of equal annual
investments through December 31, 2023, or until the full amount has
been provided. Only funds for energy efficiency and weatherization may
be spent prior to December 31, 2015.
(c) If the tax exemptions provided under RCW 82.08.811 or 82.12.811
are repealed, any remaining financial assistance required by this
section is no longer required.
(4) The memorandum of agreement must:
(a) Specify that the investments in subsection (3) of this section
be held in independent accounts at an appropriate financial
institution; and
(b) Identify individuals to approve expenditures from the accounts.
Individuals must have relevant expertise and must include members
representing the Lewis county economic development council, local
elected officials, employees at the facility, and the facility owner.
(5) The memorandum of agreement must include a provision that
allows for the termination of the memorandum of agreement in the event
the department determines as a requirement of state or federal law or
regulation that selective catalytic reduction technology must be
installed on any of its boilers.
(6) The memorandum of agreement must include enforcement provisions
to ensure implementation of the agreement by the parties.
(7) If the memorandum of agreement is not signed by January 1,
2012, the governor must impose requirements consistent with the
provisions in subsection (2)(b) of this section.
NEW SECTION. Sec. 107 A new section is added to chapter 80.80
RCW to read as follows:
No state agency or political subdivision of the state may adopt or
impose a greenhouse gas emission performance standard, or other
operating or financial requirement or limitation relating to greenhouse
gas emissions, on a coal-fired electric generation facility located in
Washington in operation on or before the effective date of this section
or upon an electric utility's long-term purchase of coal transition
power, that is inconsistent with or in addition to the provisions of
RCW 80.80.040 or the memorandum of agreement entered into under section
106 of this act.
NEW SECTION. Sec. 108 A new section is added to chapter 80.80
RCW to read as follows:
(1) A memorandum of agreement entered into pursuant to section 106
of this act may include provisions to assist in the financing of
emissions reductions that exceed those required by RCW 80.80.040(3)(c)
by providing for the recognition of such reductions in applicable state
policies and programs relating to greenhouse gas emissions, and by
encouraging and advocating for the recognition of the reductions in all
established and emerging emission reduction frameworks at the regional,
national, or international level.
(2) The governor may recommend actions to the legislature to
strengthen implementation of an agreement or a proposed agreement
relating to recognition of investments in emissions reductions
described in subsection (1) of this section.
Sec. 109 RCW 80.50.100 and 1989 c 175 s 174 are each amended to
read as follows:
(1)(a) The council shall report to the governor its recommendations
as to the approval or rejection of an application for certification
within twelve months of receipt by the council of such an application,
or such later time as is mutually agreed by the council and the
applicant.
(b) In the case of an application filed prior to December 31, 2025,
for certification of an energy facility proposed for construction,
modification, or expansion for the purpose of providing generating
facilities that meet the requirements of RCW 80.80.040 and are located
in a county with a coal-fired electric generating facility subject to
RCW 80.80.040(3)(c), the council shall expedite the processing of the
application pursuant to RCW 80.50.075 and shall report its
recommendations to the governor within one hundred eighty days of
receipt by the council of such an application, or a later time as is
mutually agreed by the council and the applicant.
(2) If the council recommends approval of an application for
certification, it shall also submit a draft certification agreement
with the report. The council shall include conditions in the draft
certification agreement to implement the provisions of this chapter,
including, but not limited to, conditions to protect state or local
governmental or community interests affected by the construction or
operation of the energy facility, and conditions designed to recognize
the purpose of laws or ordinances, or rules or regulations promulgated
thereunder, that are preempted or superseded pursuant to RCW 80.50.110
as now or hereafter amended.
(((2))) (3)(a) Within sixty days of receipt of the council's report
the governor shall take one of the following actions:
(((a))) (i) Approve the application and execute the draft
certification agreement; or
(((b))) (ii) Reject the application; or
(((c))) (iii) Direct the council to reconsider certain aspects of
the draft certification agreement.
(b) The council shall reconsider such aspects of the draft
certification agreement by reviewing the existing record of the
application or, as necessary, by reopening the adjudicative proceeding
for the purposes of receiving additional evidence. Such
reconsideration shall be conducted expeditiously. The council shall
resubmit the draft certification to the governor incorporating any
amendments deemed necessary upon reconsideration. Within sixty days of
receipt of such draft certification agreement, the governor shall
either approve the application and execute the certification agreement
or reject the application. The certification agreement shall be
binding upon execution by the governor and the applicant.
(((3))) (4) The rejection of an application for certification by
the governor shall be final as to that application but shall not
preclude submission of a subsequent application for the same site on
the basis of changed conditions or new information.
NEW SECTION. Sec. 201 (1) A facility subject to closure under
either RCW 80.80.040(3)(c) or a memorandum of agreement under section
106 of this act, or both, must provide the department of ecology with
a plan for the closure and postclosure of the facility at least twenty-four months prior to facility closure or twenty-four months prior to
start of decommissioning work, whichever is earlier. This plan must be
consistent with the rules established by the energy facility site
evaluation council for site restoration and preservation applicable to
facilities subject to a site certification agreement under chapter
80.50 RCW and include but not be limited to:
(a) A detailed estimate of the cost to implement the plan based on
the cost of hiring a third party to conduct all activities;
(b) Demonstrating financial assurance to fund the closure and
postclosure of the facility and providing methods by which this
assurance may be demonstrated;
(c) Methods for estimating closure costs, including full site
reclamation under all applicable federal and state clean-up standards;
and
(d) A decommissioning and site restoration plan that addresses
restoring physical topography, cleanup of all hazardous substances on
the site, potential future uses of the site following restoration, and
coordination with local and community plans for economic development in
the vicinity of the site.
(2) All cost estimates in the plan must be in current dollars and
may not include a net present value adjustment or offsets for salvage
value of wastes or other property.
(3) Adoption of the plan and significant revisions to the plan must
be approved by the department of ecology.
NEW SECTION. Sec. 202 (1) A facility subject to closure under
either RCW 80.80.040(3)(c) or a memorandum of agreement under section
106 of this act, or both, must guarantee funds are available to perform
all activities specified in the decommissioning plan developed under
section 201 of this act. The amount must equal the cost estimates
specified in the decommissioning plan and must be updated annually for
inflation. All guarantees under this section must be assumed by any
successor owner, parent company, or holding company.
(2) The guarantee required under subsection (1) of this section may
be accomplished by letter of credit, surety bond, or other means
acceptable to the department of ecology.
(3) The issuing institution of the letter of credit must be an
entity that has the authority to issue letters of credit and whose
letter of credit operations are regulated by a federal or state agency.
The surety company issuing a surety bond must, at a minimum, be an
entity listed as an acceptable surety on federal bonds in circular 570,
published by the United States department of the treasury.
(4) A qualifying facility that uses a letter of credit or a surety
bond to satisfy the requirements of this act must also establish a
standby trust fund as a means to hold any funds issued from the letter
of credit or a surety bond. Under the terms of the letter of credit or
a surety bond, all amounts paid pursuant to a draft from the department
of ecology must be deposited by the issuing institution directly into
the standby trust fund in accordance with instructions from the
department of ecology. This standby trust fund must be approved by the
department of ecology.
(5) The letter of credit or a surety bond must be irrevocable and
issued for a period of at least one year. The letter of credit or a
surety bond must provide that the expiration date will be automatically
extended for a period of at least one year unless, at least one hundred
twenty days before the current expiration date, the issuing institution
notifies both the qualifying facility and the department of ecology of
a decision not to extend the expiration date. Under the terms of the
letter of credit, the one hundred twenty days will begin on the date
when both the qualifying plant and the department of ecology have
received the notice, as evidenced by certified mail return receipts or
by overnight courier delivery receipts.
(6) If the qualifying facility does not establish an alternative
method of guaranteeing decommissioning funds are available within
ninety days after receipt by both the qualifying facility plant and the
department of ecology of a notice from the issuing institution that it
has decided not to extend the letter of credit beyond the current
expiration date, the department of ecology must draw on the letter of
credit or a surety bond. The department of ecology must approve any
replacement or substitute guarantee method before the expiration of the
ninety-day period.
(7) If a qualifying facility elects to use a letter of credit as
the sole method for guaranteeing decommissioning funds are available,
the face value of the letter of credit must meet or exceed the current
inflation-adjusted cost estimate. If a qualifying facility elects to
use a surety bond as the sole method for guaranteeing decommissioning
funds are available, the penal sum of the surety bond must meet or
exceed the current inflation-adjusted cost estimate.
(8) A qualifying facility must adjust the decommissioning costs and
financial guarantees annually for inflation and may use an amendment to
increase the face value of a letter of credit or a surety bond each
year to account for this inflation. A qualifying facility is not
required to obtain a new letter of credit or a surety bond to cover
annual inflation adjustments.
NEW SECTION. Sec. 203 Sections 201 and 202 of this act
constitute a new chapter in Title
Sec. 301 RCW 43.160.076 and 2008 c 327 s 8 are each amended to
read as follows:
(1) Except as authorized to the contrary under subsection (2) of
this section, from all funds available to the board for financial
assistance in a biennium under this chapter, the board shall approve at
least seventy-five percent of the first twenty million dollars of funds
available and at least fifty percent of any additional funds for
financial assistance for projects in rural counties.
(2) If at any time during the last six months of a biennium the
board finds that the actual and anticipated applications for qualified
projects in rural counties are clearly insufficient to use up the
allocations under subsection (1) of this section, then the board shall
estimate the amount of the insufficiency and during the remainder of
the biennium may use that amount of the allocation for financial
assistance to projects not located in rural counties.
(3) The board shall solicit qualifying projects to plan, design,
and construct public facilities needed to attract new industrial and
commercial activities in areas impacted by the closure or potential
closure of large coal-fired electric generation facilities, which for
the purposes of this section means a facility that emitted more than
one million tons of greenhouse gases in any calendar year prior to
2008. The projects should be consistent with any applicable plans for
major industrial activity on lands formerly used or designated for
surface coal mining and supporting uses under RCW 36.70A.368. When the
board receives timely and eligible project applications from a
political subdivision of the state for financial assistance for such
projects, the board from available funds shall give priority
consideration to such projects.
NEW SECTION. Sec. 302 A new section is added to chapter 43.155
RCW to read as follows:
The board shall solicit qualifying projects to plan, design, and
construct public works projects needed to attract new industrial and
commercial activities in areas impacted by the closure or potential
closure of large coal-fired electric generation facilities, which for
the purposes of this section means a facility that emitted more than
one million tons of greenhouse gases in any calendar year prior to
2008. The projects should be consistent with any applicable plans for
major industrial activity on lands formerly used or designated for
surface coal mining and supporting uses under RCW 36.70A.368. When the
board receives timely and eligible project applications from a
political subdivision of the state for financial assistance for such
projects, the board from available funds shall give priority
consideration to such projects.
NEW SECTION. Sec. 303 A new section is added to chapter 80.04
RCW to read as follows:
The legislature finds that an electrical company's acquisition of
coal transition power helps to achieve the state's greenhouse gas
emission reduction goals by effecting an orderly transition to cleaner
fuels and supports the state's public policy.
NEW SECTION. Sec. 304 A new section is added to chapter 80.04
RCW to read as follows:
(1) On the petition of an electrical company, the commission shall
approve or disapprove a power purchase agreement for acquisition of
coal transition power, as defined in RCW 80.80.010, and the recovery of
related acquisition costs. No agreement for an electrical company's
acquisition of coal transition power takes effect until it is approved
by the commission.
(2) Any power purchase agreement for the acquisition of coal
transition power pursuant to this section must provide for modification
of the power purchase agreement to the satisfaction of the parties
thereto in the event that a new or revised emission or performance
standard or other new or revised operational or financial requirement
or limitation directly or indirectly addressing greenhouse gas
emissions is imposed by state or federal law, rules, or regulatory
requirements. Such a modification to a power purchase agreement agreed
to by the parties must be reviewed and considered for approval by the
commission, considering the circumstances existing at the time of such
a review, under procedures and standards set forth in this section. In
the event the parties cannot agree to modification of the power
purchase agreement, either party to the agreement has the right to
terminate the agreement if it is adversely affected by this new
standard, requirement, or limitation.
(3) When a petition is filed, the commission shall provide notice
to the public and potentially affected parties and set the petition for
hearing as an adjudicative proceeding under chapter 34.05 RCW. Any
party may request that the commission expedite the hearing of that
petition. The hearing of such a petition is not considered a general
rate case. The electrical company must file supporting testimony and
exhibits together with the power purchase agreement for coal transition
power. Information provided by the facility owner to the purchasing
electrical company for evaluating the costs and benefits associated
with acquisition of coal transition power must be made available to
other parties to the petition under a protective order entered by the
commission. An administrative law judge of the commission may enter an
initial order including findings of fact and conclusions of law, as
provided in RCW 80.01.060(3). The commission shall issue a final order
that approves or disapproves the power purchase agreement for
acquisition of coal transition power within one hundred eighty days
after an electrical company files the petition.
(4) The commission must approve a power purchase agreement for
acquisition of coal transition power pursuant to this section only if
the commission determines that, considering the circumstances existing
at the time of such a review: The terms of such an agreement provide
adequate protection to ratepayers and the electrical company during the
term of such an agreement or in the event of early termination; the
resource is needed by the electrical company to serve its ratepayers
and the resource meets the need in a cost-effective manner as
determined under the lowest reasonable cost resource standards under
chapter 19.280 RCW, including the cost of the power purchase agreement
plus the equity component as determined in this section. As part of
these determinations, the commission shall consider, among other
factors, the long-term economic risks and benefits to the electrical
company and its ratepayers of such a long-term purchase.
(5) If the commission has not issued a final order within one
hundred eighty days from the date the petition is filed, or if the
commission disapproves the petition, the power purchase agreement for
acquisition of coal transition power is null and void. In the event
the commission approves the agreement upon conditions other than those
set forth in the petition, the electrical company has the right to
reject the agreement.
(6)(a) Upon commission approval of an electrical company's power
purchase agreement for acquisition of coal transition power in
accordance with this section, the electrical company is allowed to earn
the equity component of its authorized rate of return in the same
manner as if it had purchased or built an equivalent plant and to
recover the cost of the coal transition power under the power purchase
agreement. Any power purchase agreement for acquisition of coal
transition power that earns a return on equity may not be included in
an imputed debt calculation for setting customer rates.
(b) For purposes of determining the equity value, the cost of an
equivalent plant is the least cost purchased or self-built electric
generation plant with equivalent capacity. In determining the least
cost plant, the commission may rely on the electrical company's most
recent filed integrated resource plan. The cost of an equivalent
plant, in dollars per kilowatt, must be determined in the original
process of commission approval for each power purchase agreement for
coal transition power.
(c) The equivalent plant cost determined in the approval process
must be amortized over the life of the power purchase agreement for
acquisition of coal transition power to determine the recovery of the
equity value.
(d) The recovery of the equity component must be determined and
approved in the review process set forth in this section. The approved
equity value must be in addition to the approved cost of the power
purchase agreement.
(7) Authorizing recovery of costs under a power purchase agreement
for acquisition of coal transition power does not prohibit the
commission from authorizing recovery of an electrical company's
acquisition of capacity resources for the purpose of integrating
intermittent power or following load.
(8) Neither this act nor the commission's approval of a power
purchase agreement for acquisition of coal transition power that
includes the ability to earn the equity component of an electrical
company's authorized rate of return establishes any precedent for an
electrical company to receive an equity return on any other power
purchase agreement or other power contract.
(9) For purposes of this section, "power purchase agreement" means
a long-term financial commitment as defined in RCW 80.80.010(15)(b).
(10) This section expires December 31, 2025.
Sec. 305 RCW 19.280.030 and 2006 c 195 s 3 are each amended to
read as follows:
Each electric utility must develop a plan consistent with this
section.
(1) Utilities with more than twenty-five thousand customers that
are not full requirements customers shall develop or update an
integrated resource plan by September 1, 2008. At a minimum, progress
reports reflecting changing conditions and the progress of the
integrated resource plan must be produced every two years thereafter.
An updated integrated resource plan must be developed at least every
four years subsequent to the 2008 integrated resource plan. The
integrated resource plan, at a minimum, must include:
(a) A range of forecasts, for at least the next ten years, of
projected customer demand which takes into account econometric data and
customer usage;
(b) An assessment of commercially available conservation and
efficiency resources. Such assessment may include, as appropriate,
high efficiency cogeneration, demand response and load management
programs, and currently employed and new policies and programs needed
to obtain the conservation and efficiency resources;
(c) An assessment of commercially available, utility scale
renewable and nonrenewable generating technologies including a
comparison of the benefits and risks of purchasing power or building
new resources;
(d) A comparative evaluation of renewable and nonrenewable
generating resources, including transmission and distribution delivery
costs, and conservation and efficiency resources using "lowest
reasonable cost" as a criterion;
(e) The integration of the demand forecasts and resource
evaluations into a long-range assessment describing the mix of supply
side generating resources and conservation and efficiency resources
that will meet current and projected needs at the lowest reasonable
cost and risk to the utility and its ratepayers; and
(f) A short-term plan identifying the specific actions to be taken
by the utility consistent with the long-range integrated resource plan.
(2) All other utilities may elect to develop a full integrated
resource plan as set forth in subsection (1) of this section or, at a
minimum, shall develop a resource plan that:
(a) Estimates loads for the next five and ten years;
(b) Enumerates the resources that will be maintained and/or
acquired to serve those loads; and
(c) Explains why the resources in (b) of this subsection were
chosen and, if the resources chosen are not renewable resources or
conservation and efficiency resources, why such a decision was made.
(3) An electric utility that is required to develop a resource plan
under this section must complete its initial plan by September 1, 2008.
(4) Resource plans developed under this section must be updated on
a regular basis, at a minimum on intervals of two years.
(5) Plans shall not be a basis to bring legal action against
electric utilities.
(6) Each electric utility shall publish its final plan either as
part of an annual report or as a separate document available to the
public. The report may be in an electronic form.
NEW SECTION. Sec. 306 A new section is added to chapter 80.70
RCW to read as follows:
(1) An applicant for a natural gas-fired generation plant to be
constructed in a county with a coal-fired electric generation facility
subject to RCW 80.80.040(3)(c) is exempt from this chapter if the
application is filed before December 31, 2025.
(2) For the purposes of this section, an applicant means the owner
of a coal-fired electric generation facility subject to RCW
80.80.040(3)(c).
(3) This section expires December 31, 2025, or when the station-generating capability of all natural gas-fired generation plants
approved under this section equals the station-generating capability
from a coal-fired electric generation facility subject to RCW
80.80.040(3)(c).
NEW SECTION. Sec. 307 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.