BILL REQ. #:  H-2563.1 

READ FIRST TIME 2/28/07.   

     AN ACT Relating to tax credits for cogeneration facilities; and adding a new chapter to Title 82 RCW.

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

NEW SECTION.  Sec. 101   INTENT. The state of Washington has a large and growing need for electrical energy. The state of Washington possesses a great potential for the generation of electrical or mechanical power and useful heat energy through the process of cogeneration. It is the purpose and intent of the legislature to promote the growth of cogeneration in the state of Washington.

NEW SECTION.  Sec. 102   DEFINITIONS. As used in this chapter, the following terms have the meanings indicated unless the context clearly requires otherwise.
(1) "Certificate" means a cogeneration tax credit certificate granted by the department.
     (2) "Cogeneration" means a system that uses the same energy source for the simultaneous or sequential generation of electricity and steam or other forms of useful thermal energy, including heating and cooling applications.
(3) "Cogeneration facility" means any machinery, equipment, structure, process, or property, or any part thereof, installed or acquired for the primary purpose of high-efficiency cogeneration with an efficiency level above seventy percent by a person or corporation other than an electric utility.
(4) "Cost" means only the cost of a cogeneration facility which is in addition to the cost that the applicant otherwise would incur to meet the applicant's demands for useful heat. "Cost" does not include expenditures which are offset by cost savings, including but not limited to savings resulting from early retirement of existing equipment.
(5) "Department" means the department of revenue.
     (6) "Electric utility" means any person, corporation, or governmental subdivision authorized and operating under the Constitution and laws of the state of Washington which is primarily engaged in the generation or sale of electric energy.

NEW SECTION.  Sec. 103   ADMINISTRATION. (1) No certificate including a supplement thereto may be issued for a cogeneration facility with a generating capacity of more than one hundred megawatts.
(2) The department shall keep a running tabulation of the total cogeneration facility credits claimed.
     (3) The total amount of credits claimed shall not exceed one hundred million dollars.
(4) The department may adopt any rules under chapter 34.05 RCW necessary for the administration of this chapter.

NEW SECTION.  Sec. 104   TAX CREDIT. When a cogeneration facility is operational and a certificate pertaining thereto has been issued, a credit may be claimed against taxes imposed under chapter 82.04 RCW, if the due date for payment of the taxes is after the effective date of the certificate. However, the date on which the facility is operational may not be more than four years after the date of issuance of the certificate. The amount of the credit shall be three percent of the cost of a facility covered by the certificate for each year the certificate remains in force. The credits shall be cumulative and shall be subject only to the following limitations:
(1) The tax credit shall apply to capital costs only and shall not apply to operating costs.
(2) A person, firm, corporation, or organization which acquires a cogeneration facility shall be entitled to the credit only to the extent that it has previously not been taken. Under no circumstances may a credit be taken more than once against any cost or portion thereof of a cogeneration facility. An operator of a cogeneration facility shall be entitled to the credit if the operator is operating the cogeneration facility for an electric utility that is not eligible to receive the credit.
(3) No credit exceeding fifty percent of the taxes payable under chapter 82.04 RCW shall be allowed in any reporting period.
(4) The total cumulative amount of the credits allowed for any cogeneration facility constructed before June 30, 2007, covered by a certificate may not exceed fifty percent of the cost of the cogeneration facility or five million dollars, whichever is less.
     (5) The total cumulative amount of the credits allowed for any cogeneration facility constructed after June 30, 2007, covered by a certificate may not exceed fifty percent of the cost of the cogeneration facility or seven million five hundred thousand dollars, whichever is less.
(6) State credits may not become available until one year after final cost verification by the department.

NEW SECTION.  Sec. 105   CERTIFICATE ISSUANCE. The department shall send a certificate or supplement, when issued, by certified mail to the applicant. Notice of the department's refusal to issue a certificate or supplement shall likewise be sent to the applicant by certified mail.

NEW SECTION.  Sec. 106   CERTIFICATE REVOCATION. (1) Except as provided in subsection (2) of this section, the department shall revoke any certificate issued under this chapter if it finds that any of the following have occurred with respect to the certificate:
(a) The certificate was obtained by fraud or deliberate misrepresentation;
(b) The certificate was obtained through the use of inaccurate data but without any intention to commit fraud or misrepresentation;
(c) The facility was constructed or operated in violation of any provision of this chapter or provision imposed by the department as a condition of certification; or
(d) The cogeneration facility is no longer capable of being operated for the primary purpose of cogeneration.
(2) If the department finds that there are few inaccuracies under subsection (1)(b) of this section and that cumulatively they are insignificant in terms of the cost or operation of the facility or that the inaccurate data is not attributable to carelessness or negligence and its inclusion was reasonable under the circumstances, then the department may provide for the continuance of the certificate and whatever modification it considers in the public interest.
(3) Any person, firm, corporation, or organization that obtains a certificate revoked under this section shall be liable for the total amount of money saved by claiming the credits provided under this chapter. The total amount of the credits shall be collected as delinquent business and occupation taxes. Interest shall accrue on the amounts of the credits and exemptions from the date the taxes were otherwise due.
(4) The department of community, trade, and economic development shall provide technical assistance to the department in carrying out its responsibilities under this section.

NEW SECTION.  Sec. 107   SEVERABILITY. 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. 108   Captions used in this act are not any part of the law.

NEW SECTION.  Sec. 109   Sections 101 through 108 of this act constitute a new chapter in Title 82 RCW.