BILL REQ. #:  H-2146.3 

READ FIRST TIME 02/22/07.   

     AN ACT Relating to anaerobic digestion power; adding a new chapter to Title 43 RCW; and making an appropriation.

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

NEW SECTION.  Sec. 1   The legislature declares it to be a clear public purpose and governmental function to promote anaerobic digestion as both a waste treatment technology and a sustainable energy-producing technology. The legislature finds that anaerobic digester projects in the state provide numerous environmental benefits; they reduce odors from organic waste, control pathogens, minimize sludge production, conserve nutrients, and reduce greenhouse gas emissions. In addition to providing environmental benefits, anaerobic digestion produces power using a clean, renewable resource. Encouraging the development of anaerobic digestion power will reduce the state's reliance on other fossil fuel-based sources to meet existing and projected load requirements, which provides a substantial benefit to the citizens of the state.
     Despite the numerous environmental and energy-producing benefits that result from anaerobic digester projects, many potential anaerobic digester projects are not pursued in this state because of the high capital costs for construction of such projects. Therefore, it is the intent of the legislature to establish a clean streams grant program to assist anaerobic digestion power producers by bringing down the cost of the initial capital investment.

NEW SECTION.  Sec. 2   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Anaerobic digester project" means a facility that processes animal manure or agricultural waste into biogas and dried manure using microorganisms in a decomposition process within a closed, oxygen-free container.
     (2) "Department" means the department of community, trade, and economic development.
     (3) "Director" means the director of the department of community, trade, and economic development.
     (4) "Power producer" means an individual or business that generates power from an anaerobic digester located in the state, or an individual or business that anticipates generation of power from an anaerobic digester located in the state upon completion of the anaerobic digester project.

NEW SECTION.  Sec. 3   (1) In order to be eligible for a grant under section 4 of this act, a person or entity that is in the process of developing an anaerobic digester project in this state must, prior to completion of the project, submit a call for subscriptions seeking a power purchase agreement offer from an electric utility to purchase power from the anaerobic digester project.
     (2) Once a power purchase agreement offer has been made by a potential purchaser, the power producer must ask their local electric utility for transmission access to wheel the power from the generation site to the potential purchaser who submitted the highest bid, if the highest bid was not made by the local electric utility.
     (3) If an agreement for transmission access cannot be reached between the local electric utility and the power producer, the power producer may send a written purchase request to the local electric utility to request that the utility purchase the output of the anaerobic digester project at the utility's avoided cost as required under applicable federal law that obligates the utility to purchase power from a qualifying facility.
     (4) Once a power producer has secured a power purchase agreement offer from a potential purchaser and has secured transmission access for the power, the power producer may send a request to the department to apply for a clean streams grant.

NEW SECTION.  Sec. 4   (1) The department shall establish a clean streams grant program to encourage the construction of anaerobic digester projects in the state. A grant may be awarded to a producer of anaerobic digester power that seeks assistance to pay for the capital costs associated with their initial investment that have not been satisfied by other funding sources.
     (2) A power producer may apply for a clean streams grant by submitting (a) the power purchase agreement offer between the power producer and the purchaser, including the estimated revenue over the life of the contract, and (b) a detailed analysis of the initial capital investment cost of the anaerobic digester project.
     (3) The department shall review applications from eligible power producers. At a minimum, a power producer must meet the following criteria in order to be eligible to participate in the grant program:
     (a) The power producer is carrying original debt on the initial capital investment in the anaerobic digester project that has not been satisfied by other federal, state, or private funding sources;
     (b) The power producer has secured a power purchase agreement offer from a potential purchaser for the electricity; and
     (c) The power producer was unable to secure sufficient revenue from a potential purchaser to recover the initial capital investment over the length of the power purchase agreement offer.
     (4)(a) In determining the amount of the grant award, the department shall review an applicant's power purchase agreement offer. Any grant award determined by the department must supply the power producer with no more than the power producer's cost to finance the initial capital investment during the period of the power purchase agreement, minus the revenue to be generated by the power purchase agreement offer between the power producer and the potential purchaser, and minus any federal, state, or private funding received for the anaerobic digester project.
     (b) The grant award shall be based upon the annual electricity output of the anaerobic digester project. The grant will be reviewed annually. Upon review, the grant award may be adjusted to reflect actual power produced for the previous year as compared to the projected amount of power used to calculate the amount of the original grant award.
     (5) Once the department determines that a grant application satisfies the criteria outlined in subsection (3) of this section, the department shall, within sixty days, make a decision on whether to offer a grant to the power purchaser. If the department decides to extend a grant to a power producer, the grant award shall be contingent on the power producer demonstrating actual production of power from the anaerobic digester project.
     (6) The department may adopt rules as necessary to implement the grant award process under this section.
     (7) Availability of grant funding from the department is contingent on the availability of specific appropriations. If appropriations are insufficient to cover all anaerobic digestion projects applying for a grant, the department may prioritize and prorate grant awards as necessary.

NEW SECTION.  Sec. 5   The clean streams and clear sky subaccount is created in the energy freedom account. All receipts from appropriations made to the clean streams and clear sky subaccount shall be deposited into the subaccount. Expenditures from the subaccount may be used only for projects and activities authorized under this chapter and under the clear sky program established in chapter . . . (Proposed Substitute House Bill No. 1036 (H-2262.2/07)), Laws of 2007. No more than fifty percent of the moneys in the subaccount shall be used for a single program or technology.

NEW SECTION.  Sec. 6   The sum of three million dollars, or as much thereof as may be necessary, is appropriated for the fiscal year ending June 30, 2008, from the general fund to the department of community, trade, and economic development for the purposes of this act.

NEW SECTION.  Sec. 7   Sections 1 through 5 of this act constitute a new chapter in Title 43 RCW.