BILL REQ. #:  H-4341.1 

Read first time 01/17/08.   Referred to Committee on Technology, Energy & Communications.

     AN ACT Relating to sales tax incentives for highly energy efficient appliances and equipment; adding new sections to chapter 82.08 RCW; adding new sections to chapter 82.12 RCW; creating a new section; providing an effective date; and providing an expiration date.

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

NEW SECTION.  Sec. 1   The legislature finds that improving energy efficiency is key to achieving the state's goals to reduce greenhouse gas emissions to 1990 levels by 2020. The legislature further finds that increased energy efficiency saves Washington businesses and residents money, which in turn helps the state and local economy, as energy bill savings can be spent on local goods and services. Washington state and federal appliance standards passed since 2005 will produce about 80,000 metric tons of greenhouse gas emissions savings toward Washington's 2020 target. However, there are a number of commonly used large appliances and equipment on the market that are not subject to those standards. In addition, there are many new products on the market that are much more energy efficient than required by such standards, but because they may be more expensive than standard models, they represent only a small percentage of sales. Many large appliances and equipment, once purchased, will be in use for ten to fifteen years; therefore, the more energy efficient they are, the greater the energy and cost savings and reductions in climate pollution.
     Thus, the legislature intends to enact tax incentives as a means to encourage Washington residents and businesses to purchase certain high efficiency appliances and equipment and to maximize the energy savings opportunity available through increased and sustained market share of those appliances and equipment.

NEW SECTION.  Sec. 2   A new section is added to chapter 82.08 RCW to read as follows:
     (1) The tax levied by RCW 82.08.020 does not apply to sales of the following appliances and equipment:
     (a) Refrigerators for residential use that meet the federal energy star standard in effect as of April 28, 2008;
     (b) Commercial freezers and refrigerators meeting consortium for energy efficiency tier 2 specifications dated July 31, 2007;
     (c) Gas or propane furnaces for residential use, which meet the federal energy star standard rating as of October 27, 2006, and that have an annual fuel utilization efficiency rating of ninety percent or higher;
     (d) Oil furnaces for residential use, which meet the federal energy star standard rating as of October 1, 2008, and that have an annual fuel utilization efficiency rating of eighty-five percent or higher;
     (e)(i) High efficiency air source heat pumps for residential use that have a heating seasonal performance factor of nine, a seasonal energy efficiency ratio of fifteen or greater, unless for a manufactured home.
     (ii) If for a manufactured home, the heat pump must meet a heating seasonal performance factor of seven and one-half and a seasonal energy efficiency ratio of twelve or greater;
     (f) Natural gas hot water or propane hot water heaters for residential use that have an energy factor of 0.62 or higher, a capacity of twenty to one hundred gallons of storage, and a maximum input of seventy-five thousand BTUs per hour, or an energy factor of 0.82 or greater for an instantaneous model (tankless);
     (g) Residential electric water heaters (tank type) with an energy factor of 0.91 (efficiency) or greater;
     (h) High efficiency commercial clothes washers meeting consortium for energy efficiency specifications dated November 14, 2007;
     (i) High efficiency clothes washers for residential use meeting tier 3 consortium for energy efficiency specifications dated January 1, 2007;
     (j) Commercial ice makers meeting consortium for energy efficiency specifications dated January 1, 2006;
     (k) Commercial full-sized gas convection ovens with interior measurements of six cubic feet or larger;
     (l) Commercial deep fat fryers which are rated energy star as of August 2003;
     (m) Commercial hot food holding cabinets which are rated energy star as of August 2003; and
     (n) Commercial electric and gas steam cookers, also known as compartment cookers, which are rated energy star as of August 2003.
     (2) Sellers of the equipment and appliances under subsection (1) of this section must keep records necessary for the department to verify eligibility under this section.
     (3) No later than July 1, 2008, the department must create and make available a detailed list, including brand names and model numbers, of all the appliances and equipment that meet the requirements of this section.
     (4) The department of community, trade, and economic development must prepare and deliver a report to the legislature no later than December 30, 2010, assessing the overall energy and cost saving impacts of sections 1 through 7 of this act.
     (5) The definitions in this subsection apply throughout this section, unless the context clearly requires otherwise:
     (a) "Annual fuel utilization efficiency" means the measurement of the amount of fuel converted to space heat in proportion to the amount of fuel entering the furnace. This is commonly expressed as a percentage;
     (b) "BTU" means British thermal unit, which is the quantity of heat required to raise one pound of water by one degree Fahrenheit;
     (c) "Commercial refrigerators and freezers" means:
     (i) Refrigerators, freezers, or refrigerator-freezers designed for use by commercial or institutional facilities for the purpose of storing or merchandising food products, beverages, or ice at specified temperatures that: (A) Incorporate most components involved in the vapor-compression cycle and the refrigerated compartment in a single cabinet; and (B) may be configured with either solid or transparent doors as a reach-in cabinet, pass-through cabinet, roll-in cabinet, or roll-through cabinet.
     (ii) "Commercial refrigerators and freezers" does not include: (A) Products with eighty-five cubic feet or more of internal volume; (B) walk-in refrigerators or freezers; (C) consumer products that are federally regulated pursuant to 42 U.S.C. Sec. 6291 et seq.; (D) products without doors; or (E) freezers specifically designed for ice cream;
     (d) "Commercial clothes washer" means a soft mount horizontal or vertical-axis clothes washer that: (a) Has a clothes container compartment no greater than three and one-half cubic feet in the case of a horizontal-axis product or no greater than four cubic feet in the case of a vertical-axis product; and (b) is designed for use by more than one household, such as in multifamily housing, apartments, or coin laundries;
     (e) "Commercial hot food holding cabinet" means an appliance that is designed to hold hot food at a specified temperature, which has been cooked using a separate appliance;
     (f) "Commercial ice maker" means a factory-made assembly, not necessarily shipped in one package, consisting of a condensing unit and ice-making section operating as an integrated unit with means for making and harvesting ice. It may also include integrated components for storing or dispensing ice, or both;
     (g) "Commercial open, deep-fat fryer" means an appliance, including a cooking vessel, in which oil is placed to such a depth that the cooking food is essentially supported by displacement of the cooking fluid rather than by the bottom of the vessel. Heat is delivered to the cooking fluid by means of an immersed electric element or band-wrapped vessel (electric fryers), or by heat transfer from gas burners through either the walls of the fryer or through tubes passing through the cooking fluid (gas fryers);
     (h) "Compartment steamer" has the same meaning as a "steam cooker" in this section;
     (i) "Consortium" means the consortium for energy efficiency, a United States nonprofit public benefits corporation that promotes the manufacture and purchase of energy efficient products and services. The consortium's members include utilities, statewide and regional market transformation administrators, environmental groups, research organizations, and state energy offices in the United States and Canada;
     (j) "Energy star" is an energy efficient product that meets the federal environmental protection agency's and federal department of energy's criteria for use of the energy star trademark label, or is in the upper twenty-five percent of efficiency for all similar products as designated by the federal energy management program. Energy star is a voluntary labeling program designed to identify and promote energy efficient products to reduce greenhouse gas emissions;
     (k) "Energy efficiency ratio" is a measure of the instantaneous energy efficiency of cooling equipment. Energy efficiency ration is the steady-state rate of heat energy removal (e.g., cooling capacity) by the equipment in BTU per hour divided by the steady-state rate of energy input to the equipment in watts. This ratio is expressed in BTU per hour per watt;
     (l) "Energy factor" means the measure of the overall, and not relative, energy efficiency and is computed based on total energy consumed by the appliance or equipment;
     (m) "Furnace" means a heating unit with a heat input rate of less than two hundred twenty-five thousand BTUs per hour whose function is the combustion of fossil fuel for space heating with forced hot air. The heating unit must include a burner, heat exchanger, blower, and connections to heating ducts. A heating unit that meets this definition and also provides hot water for domestic or other use may be considered a furnace for purposes of this section;
     (n) "Heating seasonal performance factor" means a measure of a heat pump's energy efficiency over one heating season. It represents the total heating output of a heat pump, including supplementary electric heat, during the normal heating season, measured in BTUs, as compared to the total electricity consumed in watt hours during the same period;
     (o) "Heat pump" means one or more factory-made assemblies, which normally include an indoor conditioning coil, compressor, and outdoor coil, including means to provide a heating function and to provide the function of air heating with controlled temperature, and may include the functions of air cooling, air circulation, air cleaning, dehumidifying, or humidifying;
     (p) "Performance tested comfort system" means a heat pump program with standards developed by the Northwest power and conservation planning council regional technical forum;
     (q) "Refrigerators for residential use" means refrigerators and refrigerator-freezers designed for storing food and beverages in noncommercial settings;
     (r) "Seasonal energy efficiency ratio" means a measure of equipment energy efficiency over the cooling season. It represents the total cooling of a central air conditioner or heat pump in BTUs during the normal cooling season as compared to the total electric energy input in watt hours consumed during the same period; and
     (s) "Steam cooker" means a device with one or more food steaming compartments, in which the energy in the steam is transferred to the food by direct contact. Models may include countertop models, wall-mounted models and floor models mounted on a stand, pedestal, or cabinet-style base.

NEW SECTION.  Sec. 3   A new section is added to chapter 82.12 RCW to read as follows:
     (1) The provisions of this chapter do not apply to the use of labor and services rendered in respect to appliances and equipment listed under section 2(1) of this act.
     (2) Sellers of labor and services under subsection (1) of this section must keep records necessary for the department to verify eligibility under this section.

NEW SECTION.  Sec. 4   A new section is added to chapter 82.08 RCW to read as follows:
     (1) The tax levied by RCW 82.08.020 does not apply to sales of, or charges made for, labor and services associated with the following:
     (a) Optimizing heat pump efficiency by testing and correcting for the proper amount of refrigerant charge and airflow when performed by contractors approved by the local electric or gas utility or certified by performance tested comfort system, or both; and
     (b) Furnace duct testing and sealing performed by contractors approved by the local electric or gas utility or certified by performance tested comfort system, or both.
     (2) Sellers of the labor and services under subsection (1) of this section must keep records necessary for the department to verify eligibility under this section.
     (3) No later than July 1, 2008, the department must create and make available a detailed list of approved contractors for performing labor services that meet the requirements of this section.
     (4) The definitions in section 2 of this act apply to this section.

NEW SECTION.  Sec. 5   A new section is added to chapter 82.12 RCW to read as follows:
     (1) The provisions of this chapter do not apply to the use of labor and services associated with the following:
     (a) Optimizing heat pump efficiency by testing and correcting for the proper amount of refrigerant charge and airflow; and
     (b) Furnace duct testing and sealing performed by contractors approved by the local electric or gas utility or certified by performance tested comfort system, or both.
     (2) Sellers of the labor and services under subsection (1) of this section must keep records necessary for the department to verify eligibility under this section.
     (3) The definitions in section 2 of this act apply to this section.

NEW SECTION.  Sec. 6   A new section is added to chapter 82.08 RCW to read as follows:
     The provisions of this chapter do not apply to sales of, or charges made for, labor and services rendered in respect to repairing, cleaning, altering, or improving the appliances and equipment listed under section 2(1) of this act.

NEW SECTION.  Sec. 7   A new section is added to chapter 82.12 RCW to read as follows:
     The provisions of this chapter do not apply to the use of labor and services rendered in respect to repairing, cleaning, altering, or improving the appliances and equipment listed under section 2(1) of this act.

NEW SECTION.  Sec. 8   This act takes effect July 1, 2008.

NEW SECTION.  Sec. 9   This act expires June 30, 2010.