AN ACT Relating to energy efficiency and conservation; amending RCW 19.27A.020, 80.28.025, 82.16.055, and 19.27.040; adding new sections to chapter 19.27A RCW; adding a new section to chapter 19.27 RCW; adding a new section to chapter 4.24 RCW; creating new sections; repealing RCW 19.27A.010, 19.27A.030, and 19.27A.040; providing effective dates; and declaring an emergency.

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

NEW SECTION. Sec. 1. The legislature finds that the electricity surplus in the Northwest is dwindling as the population increases and the economy expands. Energy efficiency will reduce the pressure for future rate increases. By keeping the cost of energy low, this region will maintain an important economic advantage.

It is declared policy of the legislature that using energy efficiently is one of the lowest cost ways to meet consumer demand for electrical energy. To that end, this act is directed to enhance energy efficient building methods. It is the intent of this act to make residential construction cost-effective for the consumer and encourage home builders to continue to build affordable housing for entry level consumers. Conservation and energy efficiency will stretch our current clean energy efficient resources into the future.

NEW SECTION. Sec. 2. A new section is added to chapter 19.27A RCW to read as follows:

Except as provided in RCW 19.27A.020(6), the state energy code for residential buildings shall be the maximum and minimum energy code for residential buildings in each city, town, and county and shall be enforced by each city, town, and county no later than July 1, 1990. The state energy code for nonresidential buildings shall be the minimum energy code for nonresidential buildings in each city, town, and county.

Sec. 3. Section 3, chapter 76, Laws of 1979 ex. sess. as amended by section 2, chapter 144, Laws of 1985 and RCW 19.27A.020 are each amended to read as follows:

(1) No later than January 1, 1990, the state building code ((~~advisory~~)) council shall ((~~promulgate rules, pursuant to chapter 34.04 RCW, for the purpose of adopting a revised~~)) adopt a state energy code. ((~~The revised code shall be designed to achieve reductions in energy consumption relative to buildings constructed to comply with the state energy code, June 30, 1980 edition, as amended.~~))

(2) The council shall follow the legislature's guidelines set forth in this section to design ((~~a revised~~)) the state energy code ((~~which requires~~)). The state energy code shall be designed to require new buildings to meet a certain level of energy efficiency, but allow((s)) flexibility in building design ((~~and~~)), construction, and heating equipment efficiencies within that framework. The state energy code shall be designed to allow space heating equipment efficiency to offset or substitute for building envelope thermal performance.

(3) The ((~~revised~~)) state energy code shall take into account regional climatic conditions ((~~and shall~~)). Climate zone 1 shall include all counties not included in climate zone 2. Climate zone 2 includes: Adams, Chelan, Douglas, Ferry, Grant, Kittitas, Lincoln, Okanogan, Pend Oreille, Spokane, Stevens, and Whitman counties.

(4) Until it is amended by the state building code council pursuant to section 5 of this act, the state energy code for residential buildings shall be designed according to the following guidelines:

(a) For new electric resistance heated residential buildings, the code shall be designed to achieve energy ((~~savings~~)) use equivalent to ((~~savings~~)) energy use achieved in typical buildings constructed with:

(i) Ceilings insulated to a level of R-38, except single rafter or joist vaulted ceilings may be insulated to a level of R-30 (R value includes insulation only);

(ii) In zone 1, walls insulated to a level of R-19 ((~~(total assembly)~~)) (R value includes insulation only), or constructed with two by four members, R-13 insulation batts, R-3.2 sheathing, and other normal assembly components; in zone 2 walls insulated to a level of R-24 (R value includes insulation only), or constructed with two by six members, R-22 insulation batts, R-3.2 sheathing, and other normal construction assembly components;

(iii) Below grade walls, insulated on the interior side, to a level of R-19 or, if insulated on the exterior side, to a level of R-10 in zone 1 and R-12 in zone 2;

(iv) Floors over unheated spaces insulated to a level of ((~~R-19 for areas with six thousand or less annual heating degree days and to a level of R-25 for areas with more than six thousand annual heating degree days~~)) R-30 except that in zone 1, if floor joists are constructed with two by eight members, to a level of R-25 (R value includes insulation only);

((~~(iv)~~)) (v) Slab on grade floors insulated to a level of R-10 at the perimeter;

(vi) Double glazed windows with ((~~tested R~~)) values not ((~~less~~)) more than ((~~1.79 when tested according to the procedures of the American architectural manufacturers association~~)) U-0.4, except that until July 1, 1993, the value shall not be more than U-0.5; ((~~and~~

(v) In areas with more than six thousand annual heating degree days a maximum of seventeen percent of the floor area in glazing; in areas with six thousand or less annual heating degree days a maximum of twenty-one percent of the floor area in glazing)) (vii) In zone 1 the maximum glazing area shall be seventeen percent of floor area. In zone 2 the maximum glazing area shall be fifteen percent of floor area. Throughout the state for the purposes of determining equivalent thermal performance, the maximum glazing area shall be fifteen percent of the floor area; and

(viii) Exterior doors insulated to a level of R-5.

(b) For new residential buildings which are space-heated with ((~~other fuels~~)) all other forms of space heating, the code shall be designed to achieve energy ((~~savings~~)) use equivalent to ((~~savings~~)) energy use achieved in typical buildings constructed with:

(i) Ceilings insulated to a level of R-30 in zone 1 and R-38 in zone 2 (R value includes insulation only);

(ii) Walls insulated to a level of R-19 ((~~(total assembly)~~)), or constructed with two by four members, R-13 insulation batts, R-3.2 sheathing, and other normal assembly components;

(iii) Below grade walls, insulated on the interior side, to a level of R-19 or, if insulated on the exterior side, to a level of R-10 in zone 1 and R-12 in zone 2;

(iv) Floors over unheated spaces insulated to a level of R-19 in zone 1 and R-25 in zone 2 (R value includes insulation only);

((~~(iv)~~)) (v) Slab on grade floors insulated to a level of R-10 at the perimeter;

(vi) Heat pumps with a minimum heating season performance factor (HSPF) of 6.8 or with all other energy sources with a minimum annual fuel utilization efficiency (AFUE) of seventy-eight percent;

(vii) Double glazed windows with ((~~tested R~~)) values not ((~~less~~)) more than ((~~1.40 when tested according to the procedures of the American architectural manufacturers association~~)) U-0.65 in zone 1 and U-0.60 in zone 2; and

((~~(v) In areas with more than six thousand annual heating degree days a~~)) (viii) In zone 1, the maximum ((~~of seventeen~~)) glazing area shall be twenty-one percent of the floor area ((~~in glazing; in areas with six thousand or less annual heating degree days a maximum of twenty-one percent of the floor area in glazing~~)). In zone 2 the maximum glazing area shall be seventeen percent of the floor area. Throughout the state for the purposes of determining equivalent thermal performance, the maximum glazing area shall be fifteen percent of the floor area.

((~~(c) For new nonresidential buildings,~~)) (5) The minimum state energy code for new nonresidential buildings shall be ((~~designed to achieve a ten percent reduction in energy consumption relative to buildings constructed to comply with~~)) the state energy code, June ((~~30, 1980~~)) 1986 edition((~~, as amended~~)).

(((2) In developing the revised code, the council shall consider possible health and respiratory problems caused by insulating buildings so tightly that the rate of air exchange is significantly retarded, thereby concentrating toxic pollutants at unhealthy high levels.

(3) The council shall publish the revision as proposed rules pursuant to chapter 34.04 RCW and provide for the rules to become effective January 1, 1986. All cities, towns, and counties shall enforce the revised state energy code not later than April 1, 1986.))

(6)(a) Except as provided in (b) of this subsection, the state energy code for residential structures shall preempt the residential energy code of each city, town, and county in the state of Washington.

(b) The state energy code for residential structures with electric resistance space heat does not preempt a city, town, or county's energy code for residential structures with electric resistance space heat which exceeds the requirements of the state energy code and which was adopted by the city, town, or county prior to March 15, 1989. A city, town, or county which has adopted an energy code for residential buildings with electric resistance space heat which is not preempted under this subsection may not amend its energy code in a manner which would cause the local energy code to exceed the state energy code. A city, town, or county which has adopted an energy code for residential buildings with electric resistance space heat which is not preempted under this subsection may amend its energy code to conform its energy code to the state energy code as it will exist on July 1, 1993.

(7) The state building code council shall consult with the state energy office as provided in RCW 34.05.310 prior to publication of proposed rules. The state energy office shall review the proposed rules for consistency with the state energy code. The director of the state energy office shall recommend to the state building code council any changes necessary to conform the proposed rules to the requirements of this section.

(8) U-values for glazing shall be determined using the area weighted average of all glazing in the building. U-values for glazing are the tested values for thermal transmittance due to conduction resulting from either the American architectural manufacturers' association (AAMA) 1503.1 test procedure or the American society for testing materials (ASTM) C236 or C976 test procedures. Testing shall be conducted under established winter horizontal heat flow test conditions using the fifteen miles per hour wind speed perpendicular to the exterior surface of the glazing as specified under AAMA 1503.1 and product sample sizes specified under AAMA 1503.1. The AAMA 1503.1 testing must be conducted by an AAMA certified testing laboratory. The ASTM C236 or C976 testing U-values include any tested values resulting from a future revised AAMA 1503.1 test procedure. Sealed insulation glass, where used, shall conform to ASTM E-774-81 level A or better.

(9) If any electric utility that purchases at least one percent of its firm energy load from a federal agency, pursuant to section 5.(b)(1) of the pacific northwest electric power planning and conservation act (P.L. 96-501), is unable to obtain from that agency at least fifty percent of the funds for payments required by section 4 of this act, the amendments to this section by this 1989 act shall be null and void, and the 1986 state energy code shall be in effect, except that a city, town, or county may enforce a local energy code with more stringent energy requirements adopted prior to March 15, 1989. This subsection shall expire June 30, 1996.

NEW SECTION. Sec. 4. A new section is added to chapter 19.27A RCW to read as follows:

(1) Electric utilities shall make payments to the owner at the time of construction of a newly constructed residential building with electric resistance space heat built in compliance with the requirements of the state energy code adopted pursuant to RCW 19.27A.020 or a residential energy code in effect pursuant to RCW 19.27A.020(6). All or a portion of the funds for payments may be accepted from federal agencies or other sources. Payments are required for residential buildings on which construction has begun on or after July 1, 1990, and prior to July 1, 1996. Payments are required for single family residences having one thousand eight hundred square feet or less of finished floor area and for all other residential units having one thousand two hundred and seventy-five square feet or less of finished floor area. The payment shall be at least forty cents per square foot of finished or unfinished heated floor area. Payment is required only for the first one thousand eight hundred square feet of heated floor area in a single family residence. For purposes of this section, a zero lot line home and each unit in a duplex and each attached housing unit in a planned unit development shall each be considered a single family residence.

(2) Electric utilities which provide electrical service in jurisdictions in which the local government has adopted an energy code not preempted by RCW 19.27A.020(6)(b) shall make payments as provided in subsection (1) of this section for residential buildings on which construction has begun on or after the effective date of this act and prior to July 1, 1990.

(3) Nothing in this section shall prohibit an electric utility from providing incentives in excess of the payments required by this section or from providing additional incentives for energy efficiency measures in excess of those required under RCW 19.27A.020.

(4) This section shall not apply to any electric utility that purchases at least one percent of its firm energy load from a federal agency, pursuant to section 5.(b)(1) of the pacific northwest electric power planning and conservation act (P.L. 96-501), and is unable to obtain from the agency at least fifty percent of the funds to make the payments required by this section. This subsection shall expire June 30, 1996.

(5) The utilities and transportation commission shall provide an appropriate regulatory mechanism which allows a utility regulated by the commission to recover expenses incurred by the utility in making payments under this section.

(6) Subsections (1) through (3) of this section shall expire July 1, 1997.

NEW SECTION. Sec. 5. A new section is added to chapter 19.27A RCW to read as follows:

The state building code council shall maintain the state energy code for residential structures in a status which is consistent with the state's interest as set forth in section 1 of this act. In maintaining the state energy code for residential structures, beginning in 1996 the council shall review the state energy code every three years. After January 1, 1996, by rule adopted pursuant to chapter 34.05 RCW, the council may amend any provisions of the state energy code to increase the energy efficiency of newly constructed residential buildings. Decisions to amend the state energy code for residential structures shall be made prior to December 1 of any year and shall not take effect before the end of the regular legislative session in the next year.

NEW SECTION. Sec. 6. Not later than January 2, 1993, the state building code council shall review the cost-effectiveness of the window standards established in RCW 19.27A.020(4). If the state building code council determines that window standards beyond those provided in the state energy code which will be in effect on July 1, 1993, would be cost-effective, the council shall report to the energy and utilities committees of the house of representatives and the senate on recommended changes in the window standards. In determining the cost-effectiveness of the window standards, the council shall consider factors which require an amortization of the window components over a period of not more than seven years and a discount rate computed at the current market rate for conventional home mortgages. The review shall be completed and a report, if necessary, made not later than January 2, 1993.

NEW SECTION. Sec. 7. A new section is added to chapter 19.27 RCW to read as follows:

(1)(a) Not later than January 1, 1990, the state building code council shall establish interim requirements for the maintenance of indoor air quality in newly constructed, electrically heated residential buildings. These requirements shall be in effect July 1, 1990, through June 30, 1993.

(b) The interim requirements shall include ventilation standards which provide for mechanical ventilation in areas of the residence where water vapor or cooking odors are produced. The ventilation shall be exhausted to the outside of the structure. The ventilation standards shall further provide for the capacity to supply outside air to each bedroom and the main living area through dedicated supply air inlet locations in walls, or in an equivalent manner. At least one exhaust fan in the home shall be controlled by a dehumidistat or clock timer to ensure that sufficient whole house ventilation is regularly provided as needed.

(c)(i) For single family residences, zero lot line homes, each unit in a duplex, and each attached housing unit in a planned unit development, the ventilation standards shall include fifty cubic feet per minute of effective installed ventilation capacity in each bathroom and one hundred cubic feet per minute of effective installed ventilation capacity in each kitchen.

(ii) For other residential units the ventilation standards may be satisfied by the installation of two exhaust fans with a combined effective installed ventilation capacity of two hundred cubic feet per minute.

(iii) Effective installed ventilation capacity means the capability to deliver the specified ventilation rates under the actual design conditions of the structure. Natural ventilation through operable exterior openings and infiltration shall not be considered acceptable substitutes for mechanical ventilation.

(d) The interim requirements shall include standards for indoor air quality pollutant source control, including the following requirements: All structural panel components of the residence shall comply with appropriate standards for the emission of formaldehyde; the back-drafting of combustion by-products from combustion appliances shall be minimized through the use of dampers, vents, outside combustion air sources, or other appropriate technologies; and, in areas of the state where monitored data indicate action is necessary to inhibit indoor radon gas concentrations from exceeding appropriate health standards, entry of radon gas into homes shall be minimized through appropriate foundation construction measures.

(2) No later than January 1, 1993, the state building code council shall establish final requirements for the maintenance of indoor air quality in newly constructed, electrically heated residences to be in effect beginning July 1, 1993. These requirements shall maintain indoor air quality equivalent to that provided by the mechanical ventilation and indoor air pollutant source control requirements included in the February 7, 1989, Bonneville power administration record of decision for the environmental impact statement on new energy efficient homes programs (DOE/EIS-0127F) built with electric space heating. In residential units other than single family, zero lot line, duplexes, and attached housing units in planned unit developments, ventilation requirements may be satisfied by the installation of two exhaust fans with a combined effective installed ventilation capacity of two hundred cubic feet per minute in locations appropriate for the effective removal of water vapor and other source pollutants.

NEW SECTION. Sec. 8. A new section is added to chapter 4.24 RCW to read as follows:

It is a defense in a civil action brought for damages for injury caused by indoor air pollutants in a residential structure with electric space heating on which construction was begun on or after July 1, 1990, that the builder complied in good faith, without negligence or misconduct, with:

(1) Building product safety standards, including labeling;

(2) Restrictions on the use of building materials known or believed to contain substances that contribute to indoor air pollution; and

(3) The ventilation requirements adopted under section 7 of this act.

Sec. 9. 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~~)) Payments made under section 4 of this act shall be considered a measure which improves the efficiency of energy end use.

(2) 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 in the rate base for ratemaking 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.

(3) The commission shall consider and may adopt other policies to protect a company from a reduction of short-term earnings that may be a direct result of utility programs to increase the efficiency of energy use. These policies may include allowing a periodic rate adjustment for investments in end-use efficiency or allowing changes in price structure designed to produce additional net revenue.

(4) 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,~~)) July 1, 1996. 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. 10. 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 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, including payments made pursuant to section 4 of this act.

(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~~)) July 1, 1996.

(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~~)) use 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.

Sec. 11. Section 4, chapter 96, Laws of 1974 ex. sess. as last amended by section 8, chapter 360, Laws of 1985 and RCW 19.27.040 are each amended to read as follows:

The governing body of each county or city is authorized to amend the state building code as it applies within the jurisdiction of the county or city. The minimum performance standards of the codes and the objectives enumerated in RCW 19.27.020 shall not be diminished by any county or city amendments. ((~~Amendments to RCW 19.27A.010 shall not result in structures that exceed the overall structural heat loss characteristics that would have resulted from conforming to RCW 19.27A.010.~~))

Nothing in this chapter shall authorize any modifications of the requirements of chapter 70.92 RCW.

NEW SECTION. Sec. 12. The following acts or parts of acts are each repealed:

(1) Section 3, chapter 96, Laws of 1974 ex. sess., section 8, chapter 110, Laws of 1975 1st ex. sess., section 11, chapter 14, Laws of 1977 ex. sess., section 1, chapter 76, Laws of 1979 ex. sess., section 1, chapter 8, Laws of 1980, section 1, chapter 101, Laws of 1984, section 1, chapter 144, Laws of 1985 and RCW 19.27A.010;

(2) Section 3, chapter 144, Laws of 1985, section 1, chapter 204, Laws of 1988 and RCW 19.27A.030; and

(3) Section 4, chapter 144, Laws of 1985, section 2, chapter 204, Laws of 1988 and RCW 19.27A.040.

NEW SECTION. Sec. 13. 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.

NEW SECTION. Sec. 14. Sections 1 through 4, 7, 9, and 10 of this act are necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately. Sections 11 and 12 (1) and (2) of this act shall take effect January 1, 1990. Sections 8 and 12(3) of this act shall take effect July 1, 1990.