H-808                _______________________________________________

                                                    HOUSE BILL NO. 213

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State of Washington                              50th Legislature                              1987 Regular Session

By Representatives Nelson and Holm

Read first time 1/20/87 and referred to Committee on Energy & Utilities.

AN ACT Relating to energy efficiency improvements by utility companies; and amending RCW 82.16.055.

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

        Sec. 1.  Section 3, chapter 149, Laws of 1980 and RCW 82.16.055 are each amended to read as follows:

          (1) In computing tax under this chapter there ((shall)) may be deducted from the gross income:

          (a) An amount equal to the cost of production at the plant for consumption within the state of Washington of:

          (i) Electrical energy produced or generated from cogeneration as defined in RCW 82.35.020; and

          (ii) Electrical energy or gas produced or generated from renewable energy resources such as solar energy, wind energy, hydroelectric energy, geothermal energy, wood, wood wastes, municipal wastes, agricultural products and wastes, and end-use waste heat; and

          (b) Those amounts expended to improve consumers' efficiency of energy end use or to otherwise reduce the use of electrical energy or gas by the consumer:  PROVIDED, That the deduction authorized by this subsection (1)(b) shall be allowed on or after January 1, 1988, only for those electrical companies and gas companies that have made energy efficiency improvements on more than twenty-five percent of the electrically heated and gas heated residences, respectively, in their service territories by January 1, 1988, and that do not utilize the tax credit provisions of subsection (6) of this section.

          (2) This section applies only to new facilities for the production or generation of energy from cogeneration or renewable energy resources or measures to improve the efficiency of energy end use on which construction or installation is begun after June 12, 1980, and before January 1, ((1990)) 1992.

          (3) Deductions under subsection (1)(a) of this section shall be allowed for a period not to exceed thirty years after the project is placed in operation.

          (4) Measures or projects encouraged under this section shall at the time they are placed in service be reasonably expected to save, produce, or generate energy at a total incremental system cost per unit of energy delivered to end use which is less than or equal to the incremental system cost per unit of energy delivered to end use from similarly available conventional energy resources which utilize nuclear energy or fossil fuels and which the gas or electric utility could acquire to meet energy demand in the same time period.

          (5) The department of revenue((, after consultation with the utilities and transportation commission in the case of investor-owned utilities and the governing bodies of locally regulated utilities,)) shall determine by rule the eligibility of individual projects and measures for deductions ((under this section)) and credits under this section.

(6) After January 1, 1988, forty percent of the amounts expended to improve the consumer's efficiency of energy end use or to otherwise reduce the use of electrical energy or gas by the consumer that exceed the amount expended for that purpose during the previous calendar year, or average of the previous three years, whichever is greater, shall be allowed as a credit against the tax otherwise owed under this chapter.  Any tax credit authorized shall be passed on by the utility for the benefit of its ratepayers.