"NEW SECTION.  Sec. 1   The legislature intends to promote the development of sustainable energy resources and smart energy technologies and to improve system reliability by establishing utility-based sustainable energy trusts that can be used to reduce the cost of deploying sustainable energy projects and smart energy technologies in the state.

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 authorized to and engaged in the business of distributing electricity or natural gas to one or more retail customers in the state.
     (3) "Department" means the energy policy division of the department of community, trade, and economic development.
     (4) "Electric utility" means an investor-owned utility and consumer-owned utility that is authorized to and engaged in the business of distributing electricity to one or more retail customers in the state.
     (5) "Investor-owned utility" means a corporation owned by investors that meets the definition of RCW 80.04.010 and is engaged in distributing electricity or natural gas to more than one retail electric customer in the state.
     (6) "Natural gas utility" means an investor-owned utility or a consumer-owned utility that is authorized to and engaged in the business of distributing natural gas to one or more retail customers in the state.
     (7) "Smart energy" means the use of technology to allow electrical networks to operate efficiently and to link small-scale sustainable energy resources to the grid.
     (8) "Sustainable energy resources" means (a) an eligible renewable resource, as defined in RCW 19.285.030; (b) high-efficiency cogeneration with an efficiency level above seventy percent; or (c) other emerging energy technologies that significantly reduce pollution from existing technologies and have significant potential for commercialization.

NEW SECTION.  Sec. 3   If approved by the commission, for investor-owned utilities, or the governing board, for consumer-owned utilities, all electric and natural gas utilities may collect a monthly smart and sustainable energy charge from all retail electricity and natural gas customers served by the utility. The purpose of the smart and sustainable energy charge is to foster the growth, development, and commercialization of sustainable energy resources of five megawatts or less or smart energy technologies that are connected to the distribution system of an electric utility. To encourage utility investment in distributed generation, as defined in RCW 19.285.030, and high-efficiency cogeneration, proceeds collected through the charge may be used to cover above market costs of those resources.

NEW SECTION.  Sec. 4   (1) Before collecting a smart and sustainable energy charge, a consumer-owned utility must prepare and submit to its governing board a sustainable energy trust proposal consisting of the following: A list of proposed sustainable energy resource or smart energy technology projects; a project management plan for each proposed project containing technical milestones and stage-gates; the cost of each project; the amount required to be collected through a smart and sustainable energy charge to develop each project; and the estimated time frame for collecting the smart and sustainable energy charge.
     (2) Consumer-owned utilities shall make available upon request the list of proposed and approved projects and the project management plans for each project.

NEW SECTION.  Sec. 5   (1) Upon application by an investor-owned utility, the commission may approve a sustainable energy trust proposal and smart and sustainable energy charge if it determines, after a public hearing, that the sustainable energy trust proposal is complete and in the public interest and that collection of the charge from retail customers is neither unduly discriminatory nor preferential.
     (2) A sustainable energy trust proposal must include: A list of the proposed sustainable energy resource or smart energy technology projects; a project management plan for each proposed project containing budgets, technical milestones, and performance criteria; the cost of each project; a detailed description of how each sustainable energy resource or smart energy technology project could ultimately produce benefits for the investor-owned utility's customers and the potential magnitude of the benefits; the amount required to be collected through a smart and sustainable energy charge to develop each project; and the estimated time frame for collecting the smart and sustainable energy charge.
     (3) In approving a sustainable energy trust proposal, the commission shall consider factors such as: The particular circumstances and needs of the investor-owned utility's energy supply and delivery systems; the magnitude of the potential benefits of proposed projects for the utility's customers; whether the potential customer benefits are unique to the proposing utility's system; whether the proposed projects duplicate or could be coordinated with research and development already underway at another utility or in another relevant context; whether the proposed project costs and budgets are reasonable and commensurate with the potential customer benefits; whether the utility has secured all reasonably available grants or funding to combine with customer funds to be generated by the smart and sustainable energy charge; whether the utility's shareholders are contributing funds or otherwise bearing a fair portion of the research risk; and any other matter the commission determines is relevant to the proposal.
     (4) The commission may retain the services of one or more experts to assist in its review of an investor-owned utility's sustainable energy trust proposal.
     (5) The commission may adopt rules as necessary to govern applications, review, approval, and oversight of sustainable energy trust proposals and projects.
     (6) Investor-owned utilities shall make available upon request the list of proposed and approved projects and the project management plans and budget for each project.

NEW SECTION.  Sec. 6   (1)(a) Upon approval of the sustainable energy trust proposal by the governing board, a consumer-owned utility may collect a smart and sustainable energy charge for a time approved by the governing board.
     (b) Upon approval of the sustainable energy trust proposal by the commission, an investor-owned utility may collect a smart and sustainable energy charge in an amount, for the purposes of and for a time approved by the commission.
     (2) The monthly smart and sustainable energy charge shall be up to and no more than one dollar and ninety cents per customer and may vary by rate class.
     (3) Funds collected from the smart and sustainable energy charge shall be used by an electric or natural gas utility solely to develop sustainable energy resource or smart energy technology projects as approved by a governing board or the commission.
     (4) Funds collected from the smart and sustainable energy charge shall be deposited in a sustainable energy trust account established and maintained by the utility and separate from other accounts.
     (5) Interest accrued to the account must be reinvested into the sustainable energy trust account and spent on sustainable energy resource or smart energy technology projects.
     (6) No more than five percent of funds may be used by an electric or natural gas utility for administrative purposes.
     (7)(a) Beginning on November 1, 2008, each electric consumer-owned utility whose governing board has approved the collection of a smart and sustainable energy charge shall submit the approved sustainable energy trust proposal to the department.
     (b) The department of community, trade, and economic development shall utilize the information received in (a) of this subsection in the biennial energy report.

NEW SECTION.  Sec. 7   Sections 1 through 6 of this act constitute a new chapter in Title 80 RCW."