AN ACT Relating to low-income weatherization; and amending RCW 70.164.040, 80.28.025, and 82.16.055.

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

Sec. 1. Section 4, chapter 36, Laws of 1987 and RCW 70.164.040 are each amended to read as follows:

(1) The department shall solicit proposals for low-income weatherization programs from potential sponsors. Until the funds distributed to the state from oil overcharge settlements or judgments has been expended, a proposal shall state the amount of the sponsor match, the amount requested from the low-income weatherization assistance account, the name of the weatherizing agency, and any other information required by the department. When the funds distributed to the state from oil overcharge settlements or judgments has been expended, a proposal shall state the amount of the sponsor grant, the amount requested from the low-income weatherization assistance account, if any, the name of the weatherizing agency, and any other information required by the department.

(2)(a) A sponsor may use its own moneys, including corporate or ratepayer moneys, or moneys provided by landlords, charitable groups, government programs, the Bonneville Power Administration, or other sources to pay the sponsor match or sponsor grant.

(b) Moneys provided by a sponsor pursuant to requirements in this section shall be in addition to and shall not supplant any funding for low-income weatherization that would otherwise have been provided by the sponsor or any other entity enumerated in (a) of this subsection.

(c) No proposal may require any contribution as a condition of weatherization from any household whose residence is weatherized under the proposal.

(d) Proposals shall provide that full levels of all cost-effective structurally feasible measures, as determined by the department, shall be installed when a low-income residence is weatherized.

(3) The department may in its discretion accept, accept in part, or reject proposals submitted. The department shall allocate funds appropriated from the low-income weatherization assistance account among proposals accepted or accepted in part so as to achieve the greatest possible expected monetary and energy savings by low-income households and other energy consumers and shall, to the extent feasible, ensure a balance of participation in proportion to population among low-income households for: (a) Geographic regions in the state; (b) types of fuel used for heating; (c) owner-occupied and rental residences; and (d) single-family and multifamily dwellings. The department may allocate funds to a nonutility sponsor without requiring a sponsor match if the department determines that such an allocation is necessary to provide the greatest benefits to low-income residents of the state.

(4) (a) A sponsor may elect to: (i) Pay a sponsor match as a lump sum at the time of weatherization, or (ii) make yearly payments to the low-income weatherization assistance account over a period not to exceed ten years. If a sponsor elects to make yearly payments, the value of the payments shall not be less than the value of the lump sum payment that would have been made under (i) of this subsection.

(b) The department may permit a sponsor to meet its match requirement in whole or in part through providing labor, materials, or other in-kind expenditures.

(5) The department shall adopt rules to carry out this section.

Sec. 2. Section 2, chapter 149, Laws of 1980 and RCW 80.28.025 are each amended to read as follows:

(1) In establishing rates for each gas and electric company regulated by this chapter, the commission shall adopt policies to encourage meeting or reducing energy demand through ((~~cogeneration as defined in RCW 82.35.020,~~)) measures which improve the efficiency of energy end use((,)) and new projects which produce or generate energy from renewable resources, such as solar energy, wind energy, hydroelectric energy, geothermal energy, wood, wood waste, municipal wastes, agricultural products and wastes, and end-use waste heat. ((~~These policies shall include but are not limited to~~))

(2)(a) Subject to the limitations of (b) of this subsection, the commission shall adopt a policy allowing a return on investment in measures to improve the efficiency of energy end use((~~, cogeneration,~~)) or projects which produce or generate energy from renewable resources ((~~which~~)). The return on investment is established by adding an increment of two percent to the rate of return on common equity permitted on the company's other investment and allowing the capitalization of carrying costs associated with the investment in such measures until they are included in the rate base for rate-making purposes. The rate of return increment shall be allowed for a period not to exceed thirty years after the measure or project is first placed in the rate base.

(b) The commission shall only allow an additional return on investment if the company (i) until January 1, 1993, has at least twenty percent of its investments under this section made in matching funds pursuant to RCW 70.164.040, and (ii) beginning January 1, 1993, has at least thirty percent of its investments under this section made in grants pursuant to RCW 70.164.040.

(3) Measures or projects encouraged under this section are those for which construction or installation is begun after June 12, 1980((~~, and before January 1, 1990, and which,~~)). At the time they are placed in the rate base, ((~~are~~)) the measures or projects must 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~~)) use nuclear energy or fossil fuels and which the gas or electric company could acquire to meet energy demand in the same time period. ((~~The rate of return increment shall be allowed for a period not to exceed thirty years after the measure or project is first placed in the rate base.~~))

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

(1) Subject to the limitations under subsection (6) of this section, in computing tax under this chapter there shall 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.

(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~~)).

(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 the eligibility of individual projects and measures for deductions under this section.

(6) Until January 1, 1993, the deduction under this section may only be taken if at least twenty percent of the amount expended by the utility eligible to take the deduction is in the form of matching funds made pursuant to RCW 70.164.040. Beginning January 1, 1993, the deduction under this section may only be taken if at least thirty percent of the amount expended by the utility eligible to take the deduction is in the form of a grant made pursuant to RCW 70.164.040.

NEW SECTION. Sec. 4. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.