SENATE BILL REPORT

 

 

                                   ESHB 2198

 

 

BYRepresentatives Nelson, Hankins, Cooper, Miller, May, Jacobsen, Brooks, Todd and H. Myers 

 

 

Pertaining to energy efficiency and conservation.

 

 

House Committe on Energy & Utilities

 

 

Rereferred House Committee on Revenue

 

 

Senate Committee on Energy & Utilities

 

      Senate Hearing Date(s):March 28, 1989; March 31, 1989; January 16, 1990; January 18, 1990

 

Majority Report:  Do pass as amended.

      Signed by Senators Benitz, Chairman; Bluechel, Vice Chairman; Nelson, Patrick, Stratton, Sutherland.

 

      Senate Staff:Phil Moeller (786-7445)

                  January 19, 1990

 

 

Senate Committee on Ways & Means

 

      Senate Hearing Date(s):January 22, 1990

 

Majority Report:  Do pass as amended by Committee on Energy & Utilities.

      Signed by Senators McDonald, Chairman; Craswell, Vice Chairman; Amondson, Bailey, Bauer, Bluechel, Cantu, Gaspard, Hayner, Johnson, Lee, Moore, Owen, Saling, Smith, Talmadge, Williams, Wojahn.

 

      Senate Staff:Bill Freund (786-7715)

                  January 22, 1990

 

 

          AS REPORTED BY COMMITTEE ON WAYS & MEANS, JANUARY 22, 1990

 

BACKGROUND:

 

The Legislature adopted guidelines for a revised energy code in 1985 and directed the State Building Code Council to adopt an energy code.  The guidelines set standards for insulation of ceilings, walls, and floors over unheated spaces.  The guidelines also set standards for windows and glazing area.  The guidelines provide for different standards for two different climate zones.  The climate zones are differentiated by heating degree days.  The guidelines also set different standards for residential housing heated with electric resistance and housing heated with other fuel sources.  The State Building Code Council is directed to allow flexibility in building design through tradeoffs between various elements of a building's structure, so long as the overall whole house energy performance is equivalent to the performance provided for in the guidelines.

 

The energy code adopted by the State Building Code Council preempts local energy codes and must be enforced by all municipal and county governments, with a few exceptions.  If a local government adopted prior to January 15, 1988 requiring greater energy efficiency, that code is not preempted.  A local government may determine that the State Energy Code is not cost-effective in that jurisdiction and adopt a less stringent energy code.  A local government may also enforce a more stringent energy code if the builder or owner of new residential construction is reimbursed by a federal agency for the additional costs to the consumer of the more stringent code.  The state preemption of local energy codes expires January 1, 1990.

 

The Northwest Power Planning Council, pursuant to its federal charter, has adopted Model Conservation Standards (MCS).  The MCS are designed to provide a cost-effective means for improving energy efficiency.  The Bonneville Power Administration (BPA) is required to assure that, in electric utility service areas in which it sells power, the MCS are being enforced.  If the MCS are not being enforced, or the utility is not moving towards implementation of the MCS, BPA is required to impose a surcharge on the rate it charges for power it sells to that utility.

 

BPA has funds that it will make available to utilities to assist in paying some of the costs of building to the MCS.  BPA has issued an Environmental Impact Statement (EIS) governing indoor air quality in homes which are built to the Model Conservation Standards.  BPA has issued a record of decision on its EIS adopting four different methods of achieving the indoor air quality standards necessary for its new homes programs.  BPA will only make funds available to builders who build to the MCS if the builder complies with the record of decision.

 

Until recently, the Utilities and Transportation Commission was directed to encourage electric and gas companies to develop measures and to invest in resources which increase energy efficiency or which use renewable resources.  One measure which required commission approval was an additional 2 percent on the rate of return for investments in energy efficiency, cogeneration, or renewable resources, including municipal wastes.  The incentives are available only for investments made prior to January 1, 1990.  This section expired on January 1, 1990.

 

Utilities, both public and private, are required to pay a tax on their income.  A deduction from income is allowed for investments in conservation, cogeneration or energy produced from renewable resources, including municipal wastes.  The deduction is available only for investments made prior to January 1, 1990.  This section expired on January 1, 1990.

 

The 1985 Legislature directed the State Energy Office to contract with the University of Washington for a study of the cost-effectiveness of the 1985 energy code.  The study was originally due in 1988.  In 1988, the Legislature extended the report date to 1989 and required a review of the University of Washington study by a peer review panel. 

 

SUMMARY:

 

Each city, town, and county shall enforce the State Energy Code no later than July 1, 1990.  If a city, town, or county has adopted a local energy code for electrically heated residential buildings prior to March 15, 1989 that exceeds the energy efficiency requirements of the State Energy Code, the city, town, or county may continue to enforce the local energy code, but may not further amend its energy code.  The State Energy Code for residential buildings is the minimum and maximum energy code.  The State Energy Code for nonresidential buildings is the minimum energy code.

 

The State Energy Code must be adopted by the State Building Code Council not later than January 1, 1990.  The State Energy Code shall recognize two climate zones.  The climate zones are established by county.  The guidelines for the energy efficiency of construction components in residential buildings are modified.  Different guidelines for electric resistance and other space-heating systems are provided.  Guidelines for below grade walls and slab on grade floors are specifically included.  A guideline is established for exterior doors in electric resistance heated homes.  The standard for the energy efficiency of windows in electric resistance heated homes will change on July 1, 1993 to require greater efficiency.

 

The minimum State Energy Code for nonresidential construction is the June, 1986 edition of the State Energy Code.

 

The Building Code Council is directed to consult with the State Energy Office in developing the State Energy Code.

 

Beginning July 1, 1990, electric utilities are directed to make payments for newly constructed residential buildings with electric resistance space heat.  Payments are required for buildings constructed between July 1, 1990 and July 1, 1996.  The payments must be at least $0.40 a square foot of heated floor area.  Payments are not required for any single family residence with more than 1800 square feet of finished floor area or for any unit in a multi-family residential building with more than 1275 square feet of finished floor area.  A utility in a jurisdiction which has a local energy code which is not preempted by the State Energy Code must make payments beginning with the effective date of this act.  Utilities may provide incentives in addition to the payments and may provided incentives for additional energy efficiency measures.  The Utilities and Transportation Commission shall allow regulated electric utilities to recover expenses incurred in making the payments.  The payments are available for buildings constructed between July 1, 1990 and July 1, 1996.

 

If a federal agency from which an electric utility purchases at least 1 percent of its firm energy load fails to make available at least 50 percent of the funds necessary to make the payments to builders, the amendments to the energy code and the requirement to make payments are null and void.  This provision expires July 1, 1996.

 

The incentives to encourage electric and gas companies to make investments in energy efficiency and renewable energy sources are continued until 1996.  Projects involving cogeneration or municipal waste are no longer eligible for the incentives.  The commission shall allow a utility to recover carrying costs between the time the measure is initiated and when it is placed in the rate base.  Payments required to be made to builders are considered a measure which improves end use energy efficiency.

 

The utility tax deduction for investments in energy efficiency and renewable resources is continued until 1996.  The deduction is not available for cogeneration or the use of municipal waste.  Payments required under this act may be deducted from income.

 

The Building Code Council is directed to develop by January 1, 1990 interim requirements for the maintenance of indoor air quality in residential buildings with electric space heat.  The interim requirements shall provide for the ventilation of the bathroom and kitchen and the supply of outside air to each bedroom and the main living area.  By January 1, 1993, the State Building Code Council must adopt final requirements for the maintenance of indoor air quality in residential structures with electric space heat.  The final requirements must comply with the Bonneville Power Administration record of decision for the environmental impact statement on energy efficient new homes programs.  The builder of a residential structure with electric space heat who in good faith and without negligence or misconduct complies with the State Energy Code and the ventilation standards adopted by the Building Code Council has a defense against a lawsuit claiming injury from indoor air pollution.

 

The State Building Code Council is directed to study the cost-effectiveness of the window standards which will go into effect on July 1, 1993.  The study must be completed by January 2, 1993.  If the council determines that increased window standards would be cost-effective, the council shall report to the Energy and Utilities Committees of the House and Senate.  The measure of cost-effectiveness is whether there would be a seven-year payback on the cost of the windows to the homeowner.

 

Beginning in 1996, the State Building Code Council shall review the State Energy Code for residential buildings every three years.  If the council determines that the State Energy Code should be changed to require increased energy efficiency, it shall adopt rules modifying the energy code.  The rules must be adopted by December 1 and may not take effect until the end of the next regular legislative session.

 

The requirement for a study of the cost-effectiveness of the 1985 energy code is repealed.

 

The provisions amending the energy code, requiring payments, and extending energy efficiency incentives are declared to be an emergency and take effect immediately.  Provisions repealing sections of the energy code which will be replaced by the energy code to be adopted by the State Building Code Council by January 1, 1990 will take effect January 1, 1990.  The provision creating a defense for builders who comply with the ventilation standards and the provision repealing a report required to be made to the Legislature on the cost-effectiveness of the 1985 energy code are each repealed effective July 1, 1990.

 

 

SUMMARY OF PROPOSED SENATE AMENDMENT:

 

A striking amendment was adopted.

 

The State Energy Code is amended to increase most code component levels in both climate zones for residences heated with electric space heat and for residences heated with other forms of heat.  By January 1, 1991, the State Building Code Council (SBCC) shall promulgate rules on the new State Energy Code.

 

The new code will be enforced no later than July 1, 1991.  The new code shall serve as the minimum and maximum code, except in local jurisdictions that have adopted a more efficient code prior to the effective date of the bill.

 

Climate zones are differentiated by county.  The SBCC shall establish energy code guidelines for log-built homes.  The SBCC may approve energy efficient residential construction pilot projects.

 

The SBCC shall study the cost-effectiveness of window efficiency code levels for residences heated with other than electric space heat.  If economically justified, these levels may then be amended in 1994.

 

The SBCC shall maintain a list of the efficiency levels for window products, and shall conduct a study on energy code enforcement in the state.

 

Payments are required to the owner (at the time of construction) of a new residential structure heated with electric space heat.  Payments are in the amount of $900 per house provided the house contains less than 2,000 square feet of finished floor area.  Payments are $390 per unit of multi-family housing.  Payments are made by electric utilities for residences constructed between July 1, 1991 and July 1, 1995.  If an electric utility receives at least 1 percent of its firm energy load from a federal agency and such utility is unable to receive at least 50 percent of its funds needed for payments under this section, the current State Energy Code will remain in effect.

 

After January 1, 1996 the SBCC may amend the State Energy Code provided the amendments are adopted prior to December 1 of any year and do not take effect before the end of the regular legislative session in the next year.

 

An energy code training account is established in the state treasury.  Funds for the account are derived from assessments by the State Energy Office on utilities in proportion to the number of housing starts served by each utility in 1989, based on an amount of $150 per code official.  Federal funds may be used by a utility to cover its assessment.

 

The SBCC shall establish interim ventilation requirements for new residential buildings to be in effect July 1, 1991 through June 30, 1993.  The SBCC is directed to develop permanent ventilation standards to be in effect beginning July 1, 1993.  In developing the interim and permanent standards, differences in heating fuels and heating system types shall be taken into consideration.

 

A builder or design professional is granted a defense in a civil action related to indoor air quality if the person complies with building product standards, restrictions on use of materials that cause indoor air pollution and the ventilation requirements of the bill.

 

The Washington Utilities and Transportation Commission (WUTC) shall adopt a policy allowing an extra 2 percent rate of return for regulated utilities making builder payments under the bill, and for conservation programs which give priority to senior citizens and low income persons.  The WUTC may adopt other policies protecting a regulated company from short-term revenue losses resulting from conservation programs, and for recovery of a utility's expenses for the energy code training account.

 

Public utilities are allowed to deduct from gross income, for the purposes of computing the public utility tax, certain payments.  These include the builder payments in the bill and conservation programs if priority is given to senior citizens and low-income persons.  A utility is allowed a 50 percent tax credit against the public utility tax for unrecovered payments to the energy code training account.

 

Language is deleted to conform with new sections.  Certain sections are repealed.

 

Appropriation:    none

 

Revenue:    yes

 

Fiscal Note:      requested January 17, 1990

 

Effective Date:Sections 1, 2, 3, 4, 6, 7, 9 and 10--March 1, 1990

Sections 11 and 12--January 1, 1991

Section 8--July 1, 1991

Sections 5 and 13--90 days after adjournment

 

Senate Committee - Testified: ENERGY & UTILITIES:  Representative Dick Nelson, prime sponsor; Marc Sullivan, Northwest Conservation Act Coalition (pro); Tom Mortimer, Washington PUD Association (pro); Bjorn Thuesen, Thuesen Homes (con); Don McDonald, citizen (con); Dick Watson, Washington State Energy Office (pro); Doug Herman, citizen

 

Senate Committee - Testified: WAYS & MEANS:  No one