HOUSE BILL REPORT
SSB 5948
BYSenate Committee on Energy & Utilities (originally sponsored by Senators Benitz, Williams, Stratton, Sutherland, Owen, Nelson, Bluechel and Pullen)
Extending the period for conservation investments.
House Committe on Housing
Majority Report: Do pass with amendments. (8)
Signed by Representatives Nutley, Chair; Leonard, Vice Chair; Winsley, Ranking Republican Member; Anderson, Inslee, Padden, Rector and Todd.
House Staff:Kenny Pittman (786-7392)
Rereferred House Committee on Revenue
Majority Report: Do pass as amended by Committee on Housing as such amendments are amended by Committee on Revenue. (15)
Signed by Representatives Wang, Chair; Pruitt, Vice Chair; Holland, Ranking Republican Member; Horn, Assistant Ranking Republican Member; Appelwick, Basich, Fraser, Fuhrman, Grant, Haugen, Morris, Phillips, Silver, H. Sommers and Van Luven.
Minority Report: Do not pass. (1)
Signed by Representative Rust
House Staff: Rick Wickman (786-7136)
AS REPORTED BY COMMITTEE ON REVENUE APRIL 3, 1989
BACKGROUND:
The Utilities and Transportation Commission (Commission) has general responsibility to regulate the rates of water, gas, and electrical utility companies. The Commission is required to assure that rates charged by the utility 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.
Washington State law currently allows regulated gas and electrical utilities to earn a higher profit (an extra two percent) on their investments in conservation, renewable energy resources, and cogeneration. Utility companies can also deduct the cost of these investments in calculating their state public utilities tax. This legislation is set to expire January 1, 1990.
SUMMARY:
BILL AS AMENDED: The Utilities and Transportation Commission (Commission) is given extended authority to encourage energy conservation and efficiency. The incentives that allow an increased rate of return and deductions from the state's public utility tax, for energy conservation and efficiency measures, are extended for an additional six year period to January 1, 1996.
Payments made to owners of newly constructed residential buildings affected by the proposed state energy code (model conservation standards) are considered investments in conservation, and renewable resources by utility companies.
With the exception of energy generated from municipal waste, investments in conservation and renewable resources by utility companies can earn a return of an extra two percent. Utility companies are allowed to deduct investments in conservation, and renewable resources from gross income in calculating state public utilities taxes.
The Commission is also required to consider and may adopt policies to protect utility companies from reduction of short-term earnings as a result of these programs.
Utility companies are required to provide a detailed breakdown of the activities claimed for either the increased rate or return of the utility tax deduction. Information on the amounts targeted to low-income weatherization and number of persons served by the weatherization activities must be transmitted by the Utilities and Transportation Commission to the Department of Community Development.
A Low-Income Weatherization Incentives Task Force (Task Force) is created. The Task Force membership consists of four members of the legislature, one from each caucus of the House of Representatives and the Senate; three members, one each from the Building Association of Washington, the Department of Community Development, and the Utilities and Transportation Commission; members representing the consumer interests, and members representing the major energy suppliers. The chair of the House of Representatives' Committee on Housing or the chair's designee shall act as chair of the task force.
The task force is to: (a) review existing financial incentives to energy utility companies for weatherization; (b) review existing materials on weatherization and housing affordability; (c) determine methods and incentives to encourage increased participation from energy utility companies in weatherization measures in present law; (d) identify impediments to low-income weatherization; and (e) provide a written report to the Housing Committee and Energy and Utilities Committee of the House of Representatives, and the Economic Development and Labor Committee and the Energy and Utilities Committee of the Senate by September 1, 1990, that presents the findings and recommendations of the task force.
Members of the task force will receive no compensation. Legislative members shall be reimbursed for travel expenses.
AMENDED BILL COMPARED TO SUBSTITUTE: The extension to the Utilities and Transportation Commission's authority to provide incentives to encourage energy conservation and efficiency is reduced from January 1, 2000 to January 1, 1996.
Adds payments made to owners of newly constructed residential buildings affected by the proposed state energy code (model conservation standards) are considered investments in conservation, and renewable resources by utility companies.
Energy generated through the use of municipal waste is deleted as as an activity eligible for the increased rate of return and utility tax deduction incentives.
Utility companies are required to provide a detailed breakdown of the activities claimed for either the increased rate of return or the utility tax deduction.
A Low-Income Weatherization Incentives Task Force is created.
CHANGES PROPOSED BY COMMITTEE ON REVENUE: Utility companies may deduct costs of municipal waste energy projects from gross income for utility tax purposes.
Fiscal Note: Available.
House Committee ‑ Testified For: (Housing) Mike Tracy, Puget Sound Power and Light Company; Ron Newbry, Pacific Power; Jake Fey, Tacoma City Light; and Greg Hanon, Tacoma City Light (with concern).
(Revenue) None Presented.
House Committee - Testified Against: (Housing) None Presented.
(Revenue) None Presented.
House Committee - Testimony For: (Housing) The incentives have been in effect for the past 10 years. The incentives have been very effective in encouraging conservation measures by electrical utility companies. Conservation is considered an investment in resources to the utility companies and is cheaper than building new power plants. The proposed 10 year period in the bill is reasonable due to extended planning time lines needed by the utility companies when determining future energy needs. Low-income Weatherization is also considered an investment in resources by the utility companies. The removal of energy generated through the use of municipal waste as an eligible activity to qualify for the incentives will be a disincentive to projects that use this technology.
(Revenue) None Presented.
House Committee - Testimony Against: (Housing) None Presented.
(Revenue) None Presented.