HOUSE BILL REPORT

HB 2172

BYRepresentatives Nutley, Nelson, Winsley and Schoon

Pertaining to low-income weatherization.

House Committe on Housing

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (9)

      Signed by Representatives Nutley, Chair; Leonard, Vice Chair; Winsley, Ranking Republican Member; Anderson, Ballard, Inslee, Padden, Rector and Todd.

House Staff:Kenny Pittman (786-7392)

Rereferred House Committee on Revenue

Majority Report:  The substitute bill by Committee on Housing as amended by Committee on Revenue be substituted therefor and the substitute bill as amended do pass.  (11)

      Signed by Representatives Wang, Chair; Pruitt, Vice Chair; Holland, Ranking Republican Member; Appelwick, Brumsickle, Fraser, Grant, Haugen, Phillips, Rust and H. Sommers.

Minority Report:  Do not pass.  (2)

      Signed by Representatives Morris and Van Luven.

House Staff:      Rick Wickman and Bob Longman (786-7136)

AS REPORTED BY COMMITTEE ON REVENUE MARCH 4, 1989

BACKGROUND:

The Utilities and Transportation Commission (commission) has general responsibility to regulate the rates of public water, gas, and electrical companies.  The commission is required to assure that rates charged by the companies are not unjust, unreasonable, unjustly discriminatory, or unduly preferential.  The commission must also assure that the rates yield a reasonable compensation for the service.

In 1980, the Legislature directed the commission to adopt policies to encourage conservation and production from renewable sources of electricity and gas.  One policy the commission was specifically directed to adopt was a policy to allow an additional return of 2 percent on investments in efficiency and conservation measures.  Investments made between the effective date of the 1980 legislation and January 1, 1990 are eligible for the incentive.

Public utilities pay a tax to conduct business in the state.  The tax is imposed on both privately owned and publicly owned public utilities.  Public utilities are allowed to take a deduction from the tax expenditures for cogeneration, energy generated from renewable resources, and amounts used to improve consumers' efficiency.  The deduction is available for expenditures made from the effective date of the 1980 legislation.  The exemption expires January 1, 1990.

SUMMARY:

SUBSTITUTE BILL:  The Utilities and Transportation Commission (commission) is given extended authority to encourage energy conservation and efficiency.  With the exception of energy generated through cogeneration, the policies adopted by the commission may include an additional return of up to 2 percent for investments for voluntary measures to improve efficiency.  The additional return shall be allowed in the same manner as a return is allowed on funds invested in generating plants.  The expiration date on the commission's authority to encourage energy efficiency is extended for an additional 10 year period to January 1, 2000.

The allowed deduction for conservation and efficiency expenditures from the gross income of utility companies in determining the state utility tax to be paid is extended for an additional 10 year period to January 1, 2000.  The utility tax deduction cannot be taken for electrical energy produced or generated from cogeneration, or electrical energy or gas produced or generated from municipal wastes.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  The requirement, to provide matching funds or direct grants to the state's Low-Income Weatherization program, to qualify for the increased return on investment and the utility tax deduction is removed.

Language to extend the programs of increased return on investment and the utility tax deduction for energy conservation and efficiency measures for an indefinite period is removed.

Language to the low-income residential weatherization program that allows the Department of Community Development to review proposals for low-income weatherization projects by sponsors funded with grants provided through utility companies is removed.

CHANGES PROPOSED BY COMMITTEE ON REVENUE:  The deduction for energy conservation and efficiency expenditures from the gross income of utility companies in computing the utility tax is extended to January 1, 1996 instead of January 1, 2000.

Revenue:    The bill has a revenue impact.

Fiscal Note:      Requested February 24, 1989.

House Committee ‑ Testified For:    (Housing)  None Presented.

(Revenue)  None Presented.

House Committee - Testified Against:      (Housing)  Mike Tracy, Puget Power and Light Company;  Ron Newbry, Pacific Power.

(Revenue)  None Presented.

House Committee - Testimony For:    (Housing)  None Presented.

(Revenue)  None Presented.

House Committee - Testimony Against:      (Housing)  The incentives in the bill are needed to continue efforts in energy conservation and efficiency measures by the utility companies.  The provisions that require a percentage set aside to the state's low- income weatherization program to qualify for the incentives is not needed.  The utility companies currently spend a majority of their funds for energy conservation so this provision is not needed.

(Revenue)  None Presented.