2333-S AMH MORR H5104.1

SHB 2333 - H AMD 1038

By Representative Morris

Strike everything after the enacting clause and insert the following:

"NEW SECTION. Sec. 1. It is the intent of the legislature to establish a goal of encouraging the construction and development of renewable energy in the state of Washington to meet increasing demands for affordable and reliable electricity. Since electricity supply may lag behind electricity demand, the result may be a sharp increase in electricity prices. The legislature finds that it is desirable to shorten the time it takes to bring new electricity generation to market. Washington is a leader in the development of renewable energy technologies and the legislature acknowledges that encouraging the development of renewable technologies in meeting increased electricity demand will create jobs for Washington's citizens.

NEW SECTION. Sec. 2. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.

(1) "Commission" means the Washington state utilities and transportation commission.

(2) "Consumer-owned utility" includes a municipal electric utility formed under Title 35 RCW, a public utility district formed under Title 54 RCW, an irrigation district formed under chapter 87.03 RCW, a cooperative formed under chapter 23.86 RCW, a mutual corporation or association formed under chapter 24.06 RCW, a port district formed under Title 53 RCW, or a water-sewer district formed under Title 57 RCW, that is engaged in the business of distributing electricity to one or more retail electric customers in the state.

(3) "Cost-effective" has the same meaning as in RCW 80.52.030.

(4) "Department" means the department of community, trade, and economic development.

(5) "Distributed generation" means either an electricity generation system that uses as its fuel an eligible renewable resource or a fuel cell as defined in RCW 43.19.651, and: (a) Is available on-site and not from a commercial source, and (b) has a generating capacity of not more than twenty-five kilowatts.

(6) "Electric utility" means a consumer-owned or investor-owned utility.

(7) "Eligible renewable resources" means:

(a) Electricity generation facilities powered by a renewable resource, including only those hydro projects that use the natural gravity induced by the flow of the river to produce electricity and do not require the construction of an impounding dam with a large reservoir that commenced operation after April 1, 1999, and that are located in the Pacific Northwest; and

(b) Additional power generation achieved, above original design specifications, at hydroelectric facilities, irrigation pipes, and canals, operating on April 1, 1999, that are located in the Pacific Northwest, and do not result in any new water diversions.

(8) "Full requirements customer" means a utility that relies on the Bonneville power administration for all of the power needed to supply its total load requirement other than that served by nondispatchable generating resources totaling no more than six megawatts.

(9) "Governing body" means the board of directors, city council, commissioners, or board of any consumer-owned utility.

(10) "Integrated resource plan" or "plan" means a plan describing the mix of generating resources and improvements in the efficient use of electricity that will meet current and future needs at the lowest reasonable cost to the utility and its ratepayers.

(11) "Investor-owned utility" means a corporation owned by investors that meets the definition in RCW 80.04.010 and is engaged in distributing electricity to more than one retail electric customer in the state.

(12) "Pacific Northwest" has the same meaning as defined in section 3 of the Pacific Northwest electric power planning and conservation act, P.L. 96-501 (16 U.S.C. Sec. 389a; 94 Stat. 2698).

(13) "Renewable energy credit" means a tradable certificate of proof of one megawatt-hour of electricity generated from a renewable resource that: (a)(i) Is located in the Pacific Northwest and commenced operation after December 1, 2001; or (ii) is located in the United States portion of the western region as defined by the western electricity coordinating council or its successor entity and commenced operation after July 1, 2003; (b) is not powered by fresh water; and (c) is verified by the renewable energy credit trading system selected by the department.

(14) "Renewable resources" means electricity generation facilities fueled by: (a) Water; (b) wind; (c) solar energy; (d) geothermal energy; (e) landfill gas; (f) biomass energy based on animal waste or solid organic fuels from wood, forest, or field residues, or dedicated energy crops that do not include wood pieces that have been treated with chemical preservatives such as creosote, pentachlorophenol, or copper-chrome-arsenic; (g) wave or tidal power; or (h) gas from sewage treatment facilities.

(15) "Retail load" means the amount of kilowatt-hours of electricity delivered by an electric utility to its Washington retail customers.

(16) "Retail load growth" means the average annual increase in the amount of kilowatt-hours of electricity delivered by an electric utility to its Washington retail customers during a calendar year compared to the prior five consecutive calendar years.

NEW SECTION. Sec. 3. (1) Each electric utility must develop an integrated resource plan consistent with the provisions of this section. Such a plan shall be updated on a regular basis and, at a minimum, must include:

(a) A range of forecasts of future customer demand using methods that examine the effect of economic forces on the consumption of electricity and that address changes in the number, type, and efficiency of electrical end-uses;

(b) An assessment of technically feasible improvements in the efficient use of electricity, including load management and fuel switching, as well as currently employed and new policies and programs needed to obtain the efficiency improvements;

(c) An assessment of technically feasible generating technologies including but not limited to renewable resources, cogeneration, power purchases, and thermal resources;

(d) An evaluation comparing the cost-effectiveness of generating resources with the cost-effectiveness of improvements in the efficient use of electricity;

(e) The integration of the demand forecasts and resource evaluations into a long-range integrated resource plan describing the mix of resources and efficiency measures that will meet current and future needs at the lowest reasonable cost, including an assessment of risk associated with fuel price, fuel availability, hedging, and future environmental regulations, to the utility and its ratepayers;

(f) A short-term plan outlining the specific actions to be taken by the utility consistent with the long-range integrated resource plan; and

(g) For all plans subsequent to the initial integrated resource plan, a progress report that relates the new plan to the previous plan.

(2)(a) Investor-owned utilities shall submit integrated resource plans to the commission. The commission shall establish by rule the requirements for preparation and submission of integrated resource plans.

(b) The commission may adopt additional rules as necessary to clarify the requirements of subsection (1) of this section as they apply to investor-owned utilities.

(3)(a) Each consumer-owned utility shall develop and publish a work schedule for the preparation of an integrated resource plan. The work schedule shall set forth the proposed content of the integrated resource plan, the proposed schedule of preparation, and provisions for public involvement in the preparation and review of the plan. The governing body of each utility shall approve an integrated resource plan only after it has provided public notice and hearing on the proposed plan. Upon approval of its governing board, each consumer-owned utility shall publish a final integrated resource plan either as part of an annual report or as a separate document available to the public.

(b) Each consumer-owned utility shall transmit a copy of its integrated resource plan to the department by July 31, 2006, and transmit subsequent plans every two years thereafter.

(c) Consumer-owned utilities that are full requirements customers of the Bonneville power administration, that purchase all of their power from a single nonaffiliated energy supplier, that have fewer than twelve thousand five hundred customers, or have an average of seven or fewer customers per mile of distribution line, are exempted from the requirements of this section. However, utilities exempted under this section are encouraged to consider preparation of integrated resource plans under this chapter.

(d) Consumer-owned utilities may develop integrated resource plans jointly with other consumer-owned utilities. Data and assessments included in joint reports must be identifiable to each individual utility.

(e) A consumer-owned utility exempt under (c) of this subsection is not eligible for tax incentives under sections 7 and 8 of this act unless it develops an integrated resource plan under guidelines established by the department.

(4) The department shall review the integrated resource plans of consumer-owned utilities and prepare a report to the legislature assessing the utilities' conformance with this section. The report shall include a statewide summary of utility load forecasts, load/resource balance, and utility plans for the development of thermal generation, renewable resources, and efficiency resources. The commission shall provide the department with data summarizing activities of investor-owned utilities for use in the department's statewide summary. The department shall submit the initial report by December 1, 2006, and subsequent reports every two years thereafter. Where appropriate, the department may include reports required by this section within the biennial report required under RCW 43.21F.045.

NEW SECTION. Sec. 4. A statewide renewable energy goal is established. The goal is to encourage electric utilities to acquire eligible renewable resources that represent fifteen percent of the retail load that serves Washington customers by 2023. An electric utility may contribute toward meeting the statewide goal by increasing the mix of resources it uses to serve its Washington customers to include a greater percentage of eligible renewable resources. An electric utility may choose to increase the percentage of eligible renewable resources relative to its annual retail load under section 5 of this act or increase the percentage of eligible renewable resources used to meet its annual retail load growth under section 6 of this act.

NEW SECTION. Sec. 5. (1) The renewable energy target for electric utilities that use a percentage of annual retail load is as follows:

(a) By January 1, 2010, and each year thereafter through December 31, 2014, five percent of the annual retail load represented by eligible renewable resources or equivalent renewable energy credits, or a combination of both.

(b) By January 1, 2015, and each year thereafter through December 31, 2022, ten percent of the annual retail load represented by eligible renewable resources or equivalent renewable energy credits, or a combination of both.

(c) By January 1, 2023, and each year thereafter, fifteen percent of the annual retail load represented by eligible renewable resources or equivalent renewable energy credits, or a combination of both.

(2) Nothing in this chapter limits electric utilities from exceeding this renewable energy target.

(3) In meeting this renewable energy target, an electric utility may contribute eligible renewable resources even if it also receives credit or funding from the Bonneville power administration for those resources.

(4) In meeting this renewable energy target, a consumer-owned utility that is a customer of the Bonneville power administration can contribute that portion of its load served by eligible renewable resources that are part of the Bonneville power administration's system mix. A utility also can contribute credit toward meeting this target for the portion of environmentally preferred power it purchases from the Bonneville power administration that meets the definition of an eligible renewable resource.

(5) An electric utility that offers an optional pricing program that charges a higher rate for electricity generated from qualified alternative energy resources under RCW 19.29A.090 may contribute only the energy generated under such a program that qualifies as eligible renewable resources toward meeting this statewide renewable energy target. An electric utility must separately disclose the energy generated under an optional pricing program. An electric utility may not use energy generated under an optional pricing program to meet the eligibility requirements for tax incentives under sections 7 and 8 of this act.

(6)(a) An electric utility may contribute additional credit toward meeting the renewable energy target if it acquires eligible renewable resources physically located in Washington state:

(i) Where the eligible renewable resource commenced construction after December 31, 2003; and

(ii) Where the electric utility purchased or contracted for the eligible renewable resource by December 31, 2007.

(b) An electric utility that acquires energy from an eligible renewable resource that meets the criteria under this section may count that resource above its base value toward meeting the renewable energy target according to the following benchmarks:

(i) Energy from an eligible renewable resource purchased or contracted by December 31, 2004, can be counted at one and one-tenth times its base value;

(ii) Energy from an eligible renewable resource purchased or contracted by December 31, 2005, can be counted at one and nine-hundredths times its base value;

(iii) Energy from an eligible renewable resource purchased or contracted by December 31, 2006, can be counted at one and eight-hundredths times its base value; or

(iv) Energy from an eligible renewable resource purchased or contracted by December 31, 2007, can be counted at one and seven-hundredths times its base value.

(7)(a) An electric utility may contribute additional credit toward meeting the renewable energy target if it acquires eligible renewable resources physically located in Washington state or renewable energy credits from an eligible renewable resource physically located in Washington state:

(i) Where the eligible renewable resource commenced construction after December 31, 2003; and

(ii) Where the renewable energy developer used apprenticeship programs during construction of the eligible renewable resources.

(b) The apprenticeship programs must be approved by the apprenticeship council under its authority in chapter 49.04 RCW, according to the following benchmarks:

(i) Minimum levels of apprenticeship programs shall be ten percent of total labor hours for projects commencing construction after December 31, 2007;

(ii) Minimum levels of apprenticeship programs shall be twelve and one-half percent of total labor hours for projects commencing construction after December 31, 2014; or

(iii) Minimum levels of apprenticeship programs shall be fifteen percent of total labor hours for projects commencing construction after December 31, 2021.

(c) The apprenticeship council will determine if construction of an eligible renewable resource meets one of the benchmarks listed in (b) of this subsection.

(d) An electric utility that acquires energy or renewable energy credits from an eligible renewable resource that meets the criteria under this section may count that resource at one and two-tenths times its base value toward meeting the renewable energy target.

(8) An electric utility may contribute eligible distributed generation toward meeting the renewable energy target if the utility: (a) Owns the distributed generation facility and the renewable energy credits produced by the facility; or (b) through contract with a retail electric customer has purchased the renewable energy credits of a distributed generation facility.

(9) An electric utility may contribute credit toward meeting the renewable energy target for resources when the utility also receives credit or funding for those same resources under a renewable standard established by federal legislation. However, an electric utility may not contribute credit toward meeting the renewable energy target for resources when the utility also receives credit or funding for those same resources under a renewable standard established by legislation in another state.

NEW SECTION. Sec. 6. (1) The renewable energy target for electric utilities using a percentage of annual load growth is to have sixty percent of the annual retail load growth represented by eligible renewable resources or equivalent renewable energy credits, or a combination of both, beginning on the effective date of this act and on each January 1st thereafter.

(2) Nothing in this chapter limits electric utilities from exceeding this renewable energy target.

(3) For purposes of determining contributions toward the renewable energy target established in subsection (1) of this section, an electric utility may apply the criteria under section 5 (3) through (9) of this act.

NEW SECTION. Sec. 7. A new section is added to chapter 82.16 RCW to read as follows:

(1) Effective January 1, 2010, a credit is allowed against the tax due under this chapter to a light and power business that acquires an amount of eligible renewable resources that: (a) Is in addition to any renewable resource acquisition amount that is identified in the integrated resource plan of the business; and (b) will be used to contribute toward the statewide renewable resource goal.

(2) The amount of credit allowed under this section during a reporting period is the product of the average cost per megawatt-hour of the additional renewable resources acquired and the number of megawatt-hours of additional renewable resources acquired.

(3) "Eligible renewable resources," "renewable resources," "integrated resource plan," and "statewide renewable resource goal" mean the same as in sections 2 and 4 of this act.

(4) The credit may not exceed the amount of tax that would otherwise be due under this chapter.

(5) A light and power business is eligible for the tax credit under this section if it meets the renewable energy targets under sections 5 or 6 of this act to enable it to contribute to the statewide renewable energy goal.

NEW SECTION. Sec. 8. A new section is added to chapter 82.16 RCW to read as follows:

(1) In computing tax under this chapter, an eligible light and power business may deduct from gross income an amount that is equal to the product of (a) the number of megawatt-hours of electricity produced or acquired during the reporting period for the specific purpose of meeting the renewable energy targets established in section 5 or 6 of this act and (b) the difference in (i) the average wholesale cost per megawatt-hour of the electricity produced or acquired during the reporting period for the specific purpose of meeting the renewable energy targets and (ii) one hundred ten percent of the average wholesale price per megawatt-hour of electricity traded at the mid-Columbia hub in the three calendar years prior to the calendar year in which the contract was first signed for delivery of the electricity or in which a facility generating the electricity becomes operational.

(2) For the purposes of this section, "eligible light and power business" means a light and power business that:

(a) Meets the percentage in section 5(1)(b) of this act for its annual retail load; or

(b) Meets sixty percent of its annual retail load growth for each year beginning with calendar year 2010 through 2014.

(i) For an electric utility that chooses to meet the renewable energy target under section 5(1)(b) of this act, "annual retail load" means the average annual retail load during the immediate five consecutive calendar years prior to January 1, 2015.

(ii) For an electric utility that chooses to meet the renewable energy target under section 6 of this act, "annual retail load growth" means the average annual retail load growth during the previous five consecutive calendar years.

(3) For purposes of this section:

(a) "Annual retail load" means the average annual retail load during the immediate five consecutive years prior to January 1, 2015;

(b) "Annual retail load growth" means the average annual retail load growth during the previous five consecutive calendar years;

(c) "Retail load" means the amount of kilowatt-hours of electricity delivered by an electric utility to its Washington retail customers; and

(d) "Retail load growth" means the average annual increase in the amount of kilowatt-hours of electricity delivered by an electric utility to its Washington retail customers during a calendar year compared to the prior five consecutive calendar years.

(4) No deduction may be taken under this section before January 1, 2015.

NEW SECTION. Sec. 9. (1) By January 1, 2008, and biennially thereafter, each electric utility that chooses to contribute toward the statewide renewable energy target, must report on the renewable energy it has acquired to meet the target and its annual retail load. Consumer-owned electric utilities provide this information to the department and investor-owned utilities provide this information to the commission. The department shall coordinate with the commission to include information relating to the investor-owned utilities. The department shall include this information as part of its biennial report required under RCW 43.21F.045.

(2) The department shall review the accomplishments of the electric utilities in meeting the statewide targets established in this chapter. Reviews will be conducted during 2009, 2014, and 2024. The reviews will include comment from all interested parties on recommendations for changes in the statewide renewable energy targets, collection of necessary information, and methods for improving the contributions of utilities toward meeting the targets.

NEW SECTION. Sec. 10. 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. 11. Sections 1 through 6, 9, and 10 of this act constitute a new chapter in Title 19 RCW."

Correct the title.

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