BILL REQ. #:  H-1654.1 

Read first time 02/07/2007.   Referred to Committee on Technology, Energy & Communications.

     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) "Cogeneration" means the sequential generation of electrical or mechanical power and useful heat from the same primary energy source or fuel.
(2) "Cogeneration facility" means any machinery, equipment, structure, process, or property, or any part thereof, installed or acquired for the primary purpose of cogeneration by a person or corporation other than an electric utility.
(3) "Certificate" means a cogeneration tax credit certificate granted by the department.
(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) "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 cogeneration facility costs in excess of ten million dollars for any application submitted under this chapter.
(2) The department shall keep a running tabulation of the total cogeneration facility costs incurred or planned to be incurred pursuant to certificates or supplements issued under this chapter. The department may not issue any new certificate or any supplement if the certificate or supplement would result in the tabulation exceeding one hundred million dollars. Nothing in this section shall be deemed to bar any certificate holder from amending the certificate or obtaining a supplement thereto so long as the amendment or supplement does not increase the total amount of cogeneration facility costs incurred or planned to be incurred under the original certificate.
(3) 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.
(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 covered by a certificate may not exceed fifty percent of the cost of the cogeneration facility less the total amount of federal investment credit or other federal tax credits applicable to the cogeneration facility.
(5) 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 and exemptions provided under this chapter. The total amount of the credits shall be collected as delinquent business and occupation taxes, and the total of the exemptions shall be collected and distributed as delinquent property 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.