Z-0405.1

HOUSE BILL 1664

ByRepresentatives Slatter and Doglio; by request of Office of the Governor

AN ACT Relating to advancing electric transportation; amending RCW 46.17.323, 70.120A.010, 35.92.355, and 80.28.360; adding a new section to chapter 82.08 RCW; adding a new section to chapter 82.12 RCW; adding a new section to chapter 46.17 RCW; adding a new section to chapter 70.120A RCW; adding a new section to chapter 35.92 RCW; adding a new section to chapter 80.28 RCW; creating new sections; providing an effective date; providing contingent expiration dates; and declaring an emergency.

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

(2) The legislature categorizes these tax preferences as ones intended to provide tax relief for certain businesses or individuals, as indicated in RCW 82.32.808(2)(e).

(3) It is the legislature's specific public policy objective to make electric vehicles more accessible and affordable to everyone.

(4) If the review finds that the cumulative number of qualifying vehicles titled in the state equals or exceeds two percent of all passenger cars, light duty trucks, and medium duty passenger vehicles titled in the state, then the legislature intends to extend the expiration date of these tax preferences.

(5) In order to obtain the data necessary to perform the review in subsection (4) of this section, the joint legislative audit and review committee may refer to any data collected by the state.

NEW SECTION.  Sec. 102. A new section is added to chapter 82.08 RCW to read as follows:

(1) Beginning with sales made or lease agreements signed on or after the qualification period start date:

(a) The tax levied by RCW 82.08.020 does not apply as provided in (b) of this subsection to sales or leases of new or used passenger cars, light duty trucks, and medium duty passenger vehicles that:

(i) Are exclusively powered by an electric battery; and

(ii)(A) Have at the time of sale a lowest manufacturer's suggested retail price of forty-five thousand dollars or less, as determined by the department of licensing, for the base model; or

(B) Have at the inception of the lease a lowest manufacturer's suggested retail price of forty-five thousand dollars or less, as determined by the department of licensing, for the base model.

(b)(i) Except as provided otherwise in (b)(ii) of this subsection, the exemption in this section is applicable for up to one thousand dollars of:

(A) The total amount of the vehicle's selling price, for sales made; or

(B) The total lease payments made plus any additional selling price of the leased vehicle, if the original lessee purchases the leased vehicle before the qualification period end date, for lease agreements signed.

(ii) If the tax on any vehicle that meets the criteria of (a) of this subsection is less than one thousand dollars, all of the tax levied by RCW 82.08.020 is exempt.

(2) The seller must keep records necessary for the department to verify eligibility under this section.

(3) The department of licensing must maintain and publish a list of all vehicle models qualifying for the sales tax exemption under this section until the expiration date of this section.

(4) On the last day of January, April, July, and October

(5)(a) By the end of the fifth working day of each month, until this section expires, the department of licensing must determine the cumulative number of vehicles that qualify for the exemption under this section titled on or after the qualification period start date, and provide notice of the cumulative number of these vehicles to the department.

(b) The department of licensing must notify the department once the cumulative number of vehicles that qualify for the exemption under this section titled in the state on or after the qualification period start date, equals or exceeds ten percent of all passenger cars, light duty trucks, and medium duty passenger vehicles titled in the state.

(6) By the last day of July 2019, and every six months thereafter until this section expires, based on the best available data, the department must report the following information to the transportation committees of the legislature: The cumulative number of vehicles that qualify for the exemption under this section titled in the state on or after the qualification period start date, as reported to it by the department of licensing; and the dollar amount of all state retail sales and use taxes exempted on or after the qualification period start date, under this section and section 103 of this act.

(7) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.

(a) "Base model" means the lowest priced version of the vehicle model for which the exemption under this section or section 103 of this act is sought that:

(i) Is the same model year as the vehicle for which the exemption under this section or section 103 of this act is sought;

(ii) Meets the same criteria of subsection (1)(a)(i) or (ii) of this section as the vehicle for which the exemption under this section or section 103 of this act is sought; and

(iii) Is available for retail sale or lease to consumers.

(b) "Qualification period end date" means the date identified in subsection (8)(a) of this section.

(c) "Qualification period start date" means sixty days after the effective date of this section.

(d) "Used" means a passenger car, light duty truck, or medium duty passenger vehicle that has been previously owned by a person.

(8)(a) Sales of vehicles delivered to the buyer or leased vehicles for which the lease agreement was signed after the last day of the third calendar month immediately following the month the department receives notice from the department of licensing under subsection (5)(b) of this section do not qualify for the exemption under this section.

(b) All leased vehicles that qualified for the exemption under this section before the qualification period end date must continue to receive the exemption as described under subsection (1)(b) of this section on any lease payments due through the remainder of the lease before the expiration date of this section.

(c) For the purposes of (a) of this subsection, if the department of licensing provides the department with notice under subsection (5) of this section after the end of the fifth working day of the month, the notice is deemed to have been received by the department the following month.

(9)(a) Upon receiving notice from the department of licensing under subsection (5)(b) of this section, the department must provide:

(i) Written notice of the qualification period end date and the expiration date of this section to affected parties, the chief clerk of the house of representatives, the secretary of the senate, the office of the code reviser, and others as deemed appropriate by the department; and

(ii) Electronic notice of the qualification period end date and the expiration date of this section on its web site as soon as practicable.

(b) Nothing in this subsection (9) may be construed to affect the validity of any exemption properly allowed by a seller under this section before the expiration date of this section and reported to the department on returns filed after the expiration date of this section.

(10) This section expires four years from the qualification period end date.

NEW SECTION.  Sec. 103. A new section is added to chapter 82.12 RCW to read as follows:

(1) Beginning with sales made or lease agreements signed on or after the qualification period start date:

(a) The provisions of this chapter do not apply as provided in (b) of this subsection in respect to the use of new or used passenger cars, light duty trucks, and medium duty passenger vehicles that:

(i) Are exclusively powered by an electric battery; and

(ii)(A) Have at the time of sale a lowest manufacturer's suggested retail price of forty-five thousand dollars or less, as determined by the department of licensing, for the base model; or

(B) Have at the inception of the lease a lowest manufacturer's suggested retail price of forty-five thousand dollars or less, as determined by the department of licensing, for the base model.

(b)(i) Except as provided otherwise in (b)(ii) of this subsection, the exemption in this section is applicable for up to one thousand dollars of:

(A) The total amount of the vehicle's purchase price, for sales made; or

(B) The total lease payments made plus any additional purchase price of the leased vehicle if the original lessee purchases the leased vehicle before the qualification period end date, for lease agreements signed.

(ii) If the tax on any vehicle that meets the criteria of (a) of this subsection is less than one thousand dollars, all of the tax levied under this chapter is exempt.

(2) The seller must keep records necessary for the department to verify eligibility under this section.

(3) On the last day of January, April, July, and October of each year, the state treasurer, based upon information provided by the department, must transfer from the electric vehicle account created in section 104 of this act to the general fund a sum equal to the dollar amount that would otherwise have been deposited into the general fund during the prior calendar quarter but for the exemption provided in this section. Information provided by the department to the state treasurer must be based on the best available data.

(4)(a) Vehicles purchased or leased vehicles for which the lease agreement was signed after the qualification period end date do not qualify for the exemption under this section.

(b) All leased vehicles that qualified for the exemption under this section before the qualification period end date must continue to receive the exemption as described under subsection (1)(b) of this section on any lease payments due through the remainder of the lease before the expiration date of this section.

(5) The definitions in section 102 of this act apply to this section.

(6)(a) When the department of licensing determines under section 102(5)(b) of this act that the cumulative number of vehicles that qualify for the exemption under this section titled in the state on or after the qualification period start date equals or exceeds ten percent of all passenger cars, light duty trucks, and medium duty passenger vehicles titled in the state, this section expires four years from the qualification period end date.

(b) The department must provide:

(i) Written notice of the qualification period end date and the expiration date of this section to affected parties, the chief clerk of the house of representatives, the secretary of the senate, the office of the code reviser, and others as deemed appropriate by the department; and

(ii) Electronic notice of the qualification period end date and the expiration date of this section on its web site as soon as practicable.

NEW SECTION.  Sec. 104. A new section is added to chapter 46.17 RCW to read as follows:

The electric vehicle account is created in the custody of the state treasurer. All receipts from electric vehicle registration renewal fees collected under RCW 46.17.323 must be deposited into the account. Expenditures from the account may be used for electric vehicle purchase and lease incentives, electric vehicle support equipment incentives including the electric vehicle infrastructure bank, electric vehicle awareness and education programs, and state road operations, maintenance, and preservation. The state treasurer must transfer funds from the account as provided in sections 102 and 103 of this act. An appropriation is not required for expenditures.

Sec. 105. RCW 46.17.323 and 2015 3rd sp.s. c 44 s 203 are each amended to read as follows:

(1) Before accepting an application for an annual vehicle registration renewal for a vehicle that both (a) uses at least one method of propulsion that is capable of being reenergized by an external source of electricity and (b) is capable of traveling at least thirty miles using only battery power, the department, county auditor or other agent, or subagent appointed by the director must require the applicant to pay a one hundred dollar fee in addition to any other fees and taxes required by law. The one hundred dollar fee is due only at the time of annual registration renewal.

(2) This section only applies to a vehicle that is designed to have the capability to drive at a speed of more than thirty-five miles per hour.

(3)(((a))) The fee under this section ((is imposed to provide funds to mitigate the impact of vehicles on state roads and highways and for the purpose of evaluating the feasibility of transitioning from a revenue collection system based on fuel taxes to a road user assessment system, and)) is separate and distinct from other vehicle license fees. Proceeds from the fee must be ((used for highway purposes, and must be deposited in the motor vehicle fund created in RCW 46.68.070, subject to (b) of this subsection.

))deposited in the electric vehicle account created in section 104 of this act.

(4)(a) In addition to the fee established in subsection (1) of this section, before accepting an application for an annual vehicle registration renewal for a vehicle that both (i) uses at least one method of propulsion that is capable of being reenergized by an external source of electricity and (ii) is capable of traveling at least thirty miles using only battery power, the department, county auditor or other agent, or subagent appointed by the director must require the applicant to pay a fifty dollar fee.

(b) ((The fee required under (a) of this subsection must be distributed as follows:

))All of the proceeds of the fee collected under (a) of this subsection must be deposited into the electric vehicle account created in section 104 of this act.

Sec. 201. RCW 70.120A.010 and 2010 c 76 s 1 are each amended to read as follows:

(1) Pursuant to the federal clean air act, the legislature adopts the California motor vehicle emission standards in Title 13 of the California Code of Regulations, effective January 1, 2005, except as provided in this chapter. The department of ecology ((shall))must adopt rules to implement the emission standards of the state of California for passenger cars, light duty trucks, and medium duty ((passenger)) vehicles, and ((shall))must amend the rules from time to time, to maintain consistency with the California motor vehicle emission standards and 42 U.S.C. Sec. 7507 (section 177 of the federal clean air act). ((Notwithstanding other provisions of this chapter, the department of ecology shall not adopt the zero emission vehicle program regulations contained in Title 13 section 1962 of the California Code of Regulations effective January 1, 2005. During rule development, the department of ecology shall convene an advisory group composed of industry and consumer group representatives. Any proposed rules or changes to rules shall be subject to review and comment by the advisory group, prior to rule adoption. The order of adoption for the rules required in this section shall include the signature of the governor.)) The rules ((shall be))are effective only for those model years for which the state of Oregon has adopted the California motor vehicle emission standards. This section does not limit the department of ecology's authority to regulate motor vehicle emissions for any other class of vehicle.

(2) Motor vehicles with a model year equal to or later than the first model year for which new vehicles sold to Washington state residents are required to comply with California motor vehicle emission standards are exempt from emission inspections under chapter 70.120 RCW.

(3) The provisions of this chapter do not apply with respect to the use by a resident of this state of a motor vehicle acquired and used while the resident is a member of the armed services and is stationed outside this state pursuant to military orders.

NEW SECTION.  Sec. 202. A new section is added to chapter 70.120A RCW to read as follows:

The department of ecology must adopt the zero emission vehicle program regulations contained in Title 13, section 1962, 1962.1, and 1962.2 of the California Code of Regulations effective July 1, 2018, and must amend the rules from time to time, to maintain consistency with the California motor vehicle emission standards and 42 U.S.C. Sec. 7507 (section 177 of the federal clean air act).

The legislature further finds that the transportation sector is Washington's largest contributor to greenhouse gas emissions and hazardous air pollutants, as defined by federal national ambient air quality standards and mobile source air toxics rules, and that state policy can achieve the greatest return on investment in reducing greenhouse gas emissions and improving air quality by expediting the transition to alternative fuel vehicles and equipment, including electric vehicles and equipment.

The legislature finds that as with traditional energy conservation programs that provide financing for more efficient use of energy in existing buildings and structures, programs that directly provide for electrification of transportation or that provide financing of such electrification have the potential to enable utilities and their customers to achieve more efficient use of energy resources and electric distribution system infrastructure.

Sec. 302. RCW 35.92.355 and 1993 c 204 s 5 are each amended to read as follows:

(1) The conservation of energy in all forms and by every possible means is found and declared to be a public purpose of highest priority. The legislature further finds and declares that all municipal corporations, quasi-municipal corporations, and other political subdivisions of the state which are engaged in the generation, sale, or distribution of energy should be granted the authority to develop and carry out programs which will conserve resources, reduce waste, and encourage more efficient use of energy and energy infrastructure by consumers and utilities.

(2) In order to establish the most effective statewide program for energy conservation and energy infrastructure efficiency, the legislature hereby encourages and authorizes any company, corporation, or association engaged in selling or furnishing utility services to assist their customers in the acquisition and installation of materials and equipment, for compensation or otherwise, for the conservation ((or))and more efficient use of energy and energy infrastructure, including electric vehicle supply equipment. The use of appropriate tree plantings for energy conservation is encouraged as part of these programs.

NEW SECTION.  Sec. 303. A new section is added to chapter 35.92 RCW to read as follows:

Any city or town engaged in the generation, sale, or distribution of energy and that has four hundred thousand or more customers may, within limits established by the Constitution of the state of Washington:

(1) Assist its customers in financing the acquisition and installation of materials and equipment, for compensation or otherwise, for the electrification of transportation; and

(2) Offer programs, services, or investments in the electrification of transportation for its customers in such a way as to benefit ratepayers, pursuant to an electrification of transportation plan adopted by the governing body of the city or town.

NEW SECTION.  Sec. 304. A new section is added to chapter 80.28 RCW to read as follows:

(1) An electric utility regulated by the commission under this chapter may submit to the commission an electrification of transportation plan that deploys electric vehicle supply equipment or provides other electric transportation programs, services, or incentives to support electrification of transportation, provided that such electric vehicle supply equipment, programs, or services may not increase costs to customers in excess of one-quarter of one percent above the benefits of electric transportation to all customers over a period consistent with the utility's planning horizon under its most recent integrated resource plan.

(2)(a) In reviewing an electrification of transportation plan under subsection (1) of this section, the commission must consider the following:

(i) The applicability of multiple options for electrification of transportation across all customer classes;

(ii) The impact of electrification on the utility's load, and whether demand response or other load management opportunities, including direct load control and dynamic pricing, are operationally appropriate;

(iii) System reliability and distribution system efficiencies;

(iv) Interoperability concerns, including the interoperability of hardware and software systems in electrification of transportation proposals;

(v) The benefits and costs of the plan actions; and

(vi) The overall customer experience.

(b) The commission must issue an acknowledgment of an electrification plan within four months of the submittal of the plan. The commission must establish by rule the requirements for preparation and submission of an electrification of transportation plan.

Sec. 305. RCW 80.28.360 and 2015 c 220 s 2 are each amended to read as follows:

(1) In establishing rates for each electrical company regulated under this title, the commission may allow an incentive rate of return on investment on capital expenditures for electric vehicle supply equipment that is deployed ((for the benefit of ratepayers))consistent with an electrification of transportation plan submitted by a utility, provided that the capital expenditures do not increase costs to ratepayers in excess of one-quarter of one percent. The commission must consider and may adopt other policies to improve access to and promote fair competition in the provision of electric vehicle supply equipment.

(2) An incentive rate of return on investment under this section may be allowed only if the company chooses to pursue capital investment in electric vehicle supply equipment on a fully regulated basis similar to other capital investments behind a customer's meter. In the case of an incentive rate of return on investment allowed under this section, an increment of up to two percent must be added to the rate of return on common equity allowed on the company's other investments.

(3) The incentive rate of return on investment authorized in subsection (2) of this section applies only to projects which have been installed after July 1, 2015((, and which are reasonably expected, at the time they are placed in the rate base, to result in real and tangible benefits for ratepayers by being installed and located where electric vehicles are most likely to be parked for intervals longer than two hours)).

(4) The incentive rate of return on investment increment pursuant to this section may be earned only for a period up to the depreciable life of the electric vehicle supply equipment as defined in the depreciation schedules developed by the company and submitted to the commission for review. When the capital investment has fully depreciated, an electrical company may gift the electric vehicle supply equipment to the owner of the property on which it is located. The incentive rate of return expires December 31, 2030.

(5) By December 31, 2017, the commission must report to the appropriate committees of the legislature with regard to the use of any incentives allowed under this section, the quantifiable impacts of the incentives on actual electric vehicle deployment, and any recommendations to the legislature about utility participation in the electric vehicle market.

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