BILL REQ. #:  S-2378.1 

READ FIRST TIME 02/28/07.   

     AN ACT Relating to generating electricity from tidal and wave energy; amending RCW 82.08.02567, 82.12.02567, and 82.16.055; adding a new section to chapter 43.31 RCW; and creating a new section.

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

NEW SECTION.  Sec. 1   The legislature finds that tidal and wave energy is a renewable energy resource, and that Washington's coastal areas and estuaries provide an abundance of potential resources for this emerging technology for the generation of electrical power. The legislature further finds that state assistance to this emerging technology is appropriate and should be comparable to assistance provided to other renewable energy technologies, including wind and solar power.

Sec. 2   RCW 82.08.02567 and 2004 c 152 s 1 are each amended to read as follows:
     (1) The tax levied by RCW 82.08.020 shall not apply to sales of machinery and equipment used directly in generating electricity using fuel cells, wind, sun, tidal or wave energy, or landfill gas as the principal source of power, or to sales of or charges made for labor and services rendered in respect to installing such machinery and equipment, but only if the purchaser develops with such machinery, equipment, and labor a facility capable of generating not less than two hundred watts of electricity and provides the seller with an exemption certificate in a form and manner prescribed by the department. The seller shall retain a copy of the certificate for the seller's files.
     (2) For purposes of this section and RCW 82.12.02567:
     (a) "Landfill gas" means biomass fuel of the type qualified for federal tax credits under 26 U.S.C. Sec. 29 collected from a landfill. "Landfill" means a landfill as defined under RCW 70.95.030;
     (b) "Machinery and equipment" means industrial fixtures, devices, and support facilities that are integral and necessary to the generation of electricity using fuel cells, wind, sun, or landfill gas as the principal source of power;
     (c) "Machinery and equipment" does not include: (i) Hand-powered tools; (ii) property with a useful life of less than one year; (iii) repair parts required to restore machinery and equipment to normal working order; (iv) replacement parts that do not increase productivity, improve efficiency, or extend the useful life of machinery and equipment; (v) buildings; or (vi) building fixtures that are not integral and necessary to the generation of electricity that are permanently affixed to and become a physical part of a building;
     (d) Machinery and equipment is "used directly" in generating electricity with fuel cells or by wind energy, solar energy, or landfill gas power if it provides any part of the process that captures the energy of the wind, sun, or landfill gas, converts that energy to electricity, and stores, transforms, or transmits that electricity for entry into or operation in parallel with electric transmission and distribution systems;
     (e) "Fuel cell" means an electrochemical reaction that generates electricity by combining atoms of hydrogen and oxygen in the presence of a catalyst.
     (3) This section expires June 30, 2009.

Sec. 3   RCW 82.12.02567 and 2004 c 152 s 2 are each amended to read as follows:
     (1) The provisions of this chapter shall not apply with respect to machinery and equipment used directly in generating not less than two hundred watts of electricity using fuel cells, wind, sun, tidal or wave energy, or landfill gas as the principal source of power, or to the use of labor and services rendered in respect to installing such machinery and equipment.
     (2) The definitions in RCW 82.08.02567 apply to this section.
     (3) This section expires June 30, 2009.

Sec. 4   RCW 82.16.055 and 1980 c 149 s 3 are each amended to read as follows:
     (1) In computing tax under this chapter there shall be deducted from the gross income:
     (a) An amount equal to the cost of production at the plant for consumption within the state of Washington of:
     (i) Electrical energy produced or generated from cogeneration as defined in RCW 82.35.020; and
     (ii) Electrical energy or gas produced or generated from renewable energy resources such as solar energy, wind energy, tidal or wave energy, hydroelectric energy, geothermal energy, wood, wood wastes, municipal wastes, agricultural products and wastes, and end-use waste heat; and
     (b) Those amounts expended to improve consumers' efficiency of energy end use or to otherwise reduce the use of electrical energy or gas by the consumer.
     (2) This section applies only to new facilities for the production or generation of energy from cogeneration or renewable energy resources or measures to improve the efficiency of energy end use on which construction or installation is begun after June 12, 1980, and before January 1, 1990.
     (3) Deductions under subsection (1)(a) of this section shall be allowed for a period not to exceed thirty years after the project is placed in operation.
     (4) Measures or projects encouraged under this section shall at the time they are placed in service be reasonably expected to save, produce, or generate energy at a total incremental system cost per unit of energy delivered to end use which is less than or equal to the incremental system cost per unit of energy delivered to end use from similarly available conventional energy resources which utilize nuclear energy or fossil fuels and which the gas or electric utility could acquire to meet energy demand in the same time period.
     (5) The department of revenue, after consultation with the utilities and transportation commission in the case of investor-owned utilities and the governing bodies of locally regulated utilities, shall determine the eligibility of individual projects and measures for deductions under this section.

NEW SECTION.  Sec. 5   A new section is added to chapter 43.31 RCW to read as follows:
     (1) The department of ecology shall contract with the William D. Ruckelshaus policy consensus center to organize and facilitate a stakeholder review of issues relating to the siting and operation of tidal and wave energy projects. Included within the review should be each state agency with regulatory or proprietary jurisdiction over the projects or sites on which projects are located, federal agencies with such jurisdiction, tribes, project sponsors, utilities purchasing power from or sponsoring such projects, nongovernmental organizations concerned with environmental quality and ocean resources, citizens, and local governments. The review must consider and build on the efforts of the interagency work group that has been examining these issues over the past year.
     (2) The center shall organize the review to address at a minimum the following:
     (a) Applicable state and federal regulatory and aquatic land proprietary management requirements, and ways to improve coordination and the timeline of reviews and approvals;
     (b) Whether a programmatic environmental analysis of tidal and wave energy technologies is needed to develop a foundation for state review of proposed projects; and
     (c) Current state policies regarding such projects and the need, if any, for a comprehensive state policy.
     (3) The center with oversight by the department, shall provide a report from the stakeholders and agencies, together with any recommendations for administrative or legislative changes, to the governor and appropriate committees of the senate and house of representatives by December 31, 2008.