BILL REQ. #:  H-4841.1 

READ FIRST TIME 02/06/04.   

     AN ACT Relating to mitigating carbon dioxide emissions resulting from fossil-fueled electrical generation; adding a new section to chapter 70.94 RCW; adding a new chapter to Title 80 RCW; and creating a new section.

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

NEW SECTION.  Sec. 1   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Applicant" has the meaning provided in RCW 80.50.020 and includes a fossil-fueled thermal electric generation facility subject to RCW 70.94.152.
     (2) "Authority" means any air pollution control agency whose jurisdictional boundaries are coextensive with the boundaries of one or more counties.
     (3) "Commercial operation" means the date that the first electricity produced by a facility is delivered for commercial sale to the power grid.
     (4) "Council" means the energy facility site evaluation council created by RCW 80.50.030.
     (5) "Department" means the department of ecology.
     (6) "Fossil-fueled thermal electric generation facility" means an electric generation facility with an aggregate, net generating capacity of twenty-five thousand kilowatts or more, measured using maximum continuous electric generating capacity, less minimum auxiliary load, at average ambient temperature and pressure.
     (7) "Fossil fuel" means natural gas, petroleum, coal, or any form of solid, liquid, or gaseous fuel derived from such material to produce heat for the generation of electricity.
     (8) "Mitigation project" means one or more of the following:
     (a) Projects or actions that are implemented by the certificate holder or order of approval holder, directly or through its agent, or by an independent qualified organization to mitigate the emission of carbon dioxide produced by the fossil-fueled thermal electric generation facility. This term includes but is not limited to the use of, energy efficiency measures, clean and efficient transportation measures, renewable energy resources, demand side management of electricity consumption, and carbon sequestration programs;
     (b) Direct application of combined heat and power (cogeneration); and
     (c) Market carbon credits that can be traced to real and identifiable carbon dioxide mitigation projects.
     (9) "Total carbon dioxide emissions" means the amount of carbon dioxide emitted over a thirty-year period that must be mitigated based on the manufacturer's or designer's guaranteed total net generating capacity, new equipment heat rate, and taking into account any enforceable limitations on operational hours or fuel types and use.

NEW SECTION.  Sec. 2   (1) The provisions of this chapter apply to fossil-fueled thermal electric generation facilities:
     (a) For which an application for site certification is made to the council after July 1, 2004;
     (b) For which an application for an order of approval has been submitted under RCW 70.94.152 to the department or authority after July 1, 2004; or
     (c) That have an existing site certification agreement or order of approval and, after July 1, 2004, apply to the council, department, or authority, as appropriate, to increase the output of the carbon dioxide emissions by fifteen percent or more through permanent changes in facility operations or modification of equipment.
     (2)(a) A proposed site certification agreement submitted to the governor under RCW 80.50.100 must include an approved carbon dioxide mitigation plan.
     (b) For fossil-fueled thermal electric generation facilities not under jurisdiction of the council, the order of approval shall include the approved carbon dioxide mitigation plan.
     (3) An applicant for a fossil-fueled thermal electric generation facility must include one of the following carbon dioxide mitigation options as part of its mitigation plan:
     (a) Payment to a third party; or
     (b) Direct investment in carbon dioxide mitigation projects.
     (4) Fossil-fueled thermal electric generation facilities that receive site certification approval or orders of approval shall provide mitigation for twenty percent of the total carbon dioxide emissions produced by the facility.
     (5) A capacity factor of sixty percent, or sixty percent of the operational limitations contained in the order of approval issued under RCW 70.94.152, shall be used in determining the total carbon dioxide emissions.
     (6) If the certificate holder or order of approval holder chooses to pay a third party to provide the mitigation, the mitigation rate shall be one dollar and sixty cents per metric ton of carbon dioxide emitted.
     (a) Through rule making, the council may adjust the rate per ton biennially as long as any increase or decrease does not exceed fifty percent of the current rate.
     (b) In adjusting the rate the council shall consider, but is not limited to, the current market price of a ton of carbon dioxide and the economic feasibility for potential applicants for fossil-fueled thermal electric generation facilities.
     (7) The certificate holder or order of approval holder may choose a lump sum payment or partial payment over a period of five years.
     (a) Under the lump sum payment option, the payment amount is determined using the per ton rate established under subsections (4) and (5) of this section for total carbon dioxide emissions multiplied by thirty years.
     (b) No later than one hundred twenty days after the start of commercial operation, the certificate holder or order of approval holder shall make a one-time payment to the independent qualified organization for the amount determined under subsection (6) of this section.
     (c) As an alternative to a one-time payment, the certificate holder or order of approval holder may make a partial payment of twenty percent of the amount determined under subsection (6) of this section no later than one hundred twenty days after commercial operation and a payment in the same amount or as adjusted according to subsection (6)(a) of this section, on the anniversary date of the initial payment in each of the following four years. With the initial payment, the certificate holder or order of approval holder shall provide a letter of credit or other comparable security acceptable to the council or the department for the remaining eighty percent mitigation payment amount including possible changes to the rate per metric ton from rule making under subsection (6)(a) of this section.

NEW SECTION.  Sec. 3   (1) The carbon dioxide mitigation option that provides for direct investment by the certificate holder or order of approval holder is implemented through mitigation projects conducted directly by the certificate or order of approval holder.
     (2) Mitigation projects must be approved by the council, department, or authority, as appropriate, and included in the proposed and final site certification agreement or order of approval. Direct investment mitigation projects must meet the following criteria:
     (a) The project plan provides a reasonable certainty that the performance requirements of the carbon dioxide mitigation plan will be achieved;
     (b) The extent to which external events can reduce the amount of carbon dioxide offset is minimized;
     (c) The project plan accomplishes carbon dioxide reductions that would otherwise not have taken place; and
     (d) The project plan provides for carbon dioxide mitigation for the appropriate duration based on the mitigation option that is included in the site certification agreement or order of approval.
     (3) Mitigation projects must be fully in place within a reasonable time after the start of commercial operation.
     (4) The certificate holder or order of approval holder may not use more than twenty percent of the total funds for the selection, monitoring, and evaluation of mitigation projects and the management and enforcement of contracts.
     (5) The implementation of a carbon dioxide mitigation project shall be monitored by an independent entity for conformance with the performance requirements of the carbon dioxide mitigation plan.
     (6) If federal carbon dioxide legislation is adopted, compliance with this section may entitle the certificate holder or order of approval holder to benefits applicable to that legislation.

NEW SECTION.  Sec. 4   (1) The council shall maintain a list of independent qualified organizations with proven experience in emissions mitigation activities and a demonstrated ability to carry out their activities in an efficient, reliable, and cost-effective manner.
     (2) An independent qualified organization shall not use more than twenty percent of the total funds for selection, monitoring, and evaluation of mitigation projects and the management and enforcement of contracts. None of these funds shall be used to lobby federal, state, and local agencies, their elected officials, officers, or employees.
     (3) Before signing contracts to purchase offsets with funds from certificate holders or order of approval holders, an independent qualified organization must demonstrate to the council that the mitigation projects it proposes to use meet the following criteria:
     (a) The project plan provides a reasonable certainty that the performance requirements of the carbon dioxide mitigation plan will be achieved;
     (b) The extent to which external events can reduce the amount of carbon dioxide offset is minimized;
     (c) The project plan accomplishes carbon dioxide reductions that would otherwise not have taken place; and
     (d) The project plan provides for carbon dioxide mitigation for the appropriate duration based on the mitigation option that is included in the site certification agreement or order of approval.
     (4) The independent qualified organization shall permit the council to appoint up to three persons to inspect plans, operation, and compliance activities of the organization and to audit financial records and performance measures for carbon dioxide mitigation projects using carbon dioxide mitigation money paid by certificate holders or order of approval holders under this chapter.
     (5) An independent qualified organization must file biennial reports with the council and the department on the performance of carbon dioxide mitigation projects, including the amount of carbon dioxide reductions achieved and a statement of cost for the mitigation period.

NEW SECTION.  Sec. 5   The following types of fossil-fueled thermal electric generators are exempt from carbon dioxide requirements under sections 2 through 4 of this act:
     (1) Fossil-fueled thermal electric generation facilities that are standby electric generation facilities including the physical structures necessary to install and connect standby generators, that provide temporary electric energy in the event of a power outage and that are physically incapable of being interconnected with the transmission grid; and
     (2) Temporary electric generation facilities with electric generation capacity of no more than five hundred kilowatts, measured using maximum continuous electric generating capacity, less minimum auxiliary load, at average ambient temperature and pressure, that are located at a site for no more than one year.

NEW SECTION.  Sec. 6   A new section is added to chapter 70.94 RCW to read as follows:
     (1) The department of ecology or local air pollution control authority shall implement the carbon dioxide mitigation program for fossil-fueled thermal electric generation facilities as described in chapter 80.-- RCW (sections 1 through 5 of this act).
     (2) For mitigation projects conducted directly by the applicant, the department or local air authority shall conduct a public hearing on the mitigation plan. Taking into consideration comments from the public, the department or local air authority shall approve or deny the mitigation plan.
     (3) The department or authority may determine, assess, and collect fees sufficient to cover the costs of administering the carbon dioxide mitigation program requirements.

NEW SECTION.  Sec. 7   Sections 1 through 5 of this act constitute a new chapter in Title 80 RCW.

NEW SECTION.  Sec. 8   Nothing in this act shall be construed to either expand or diminish statutory authority granted under other provisions of state law.