BILL REQ. #:  S-0798.3 

Read first time 01/28/09.   Referred to Committee on Environment, Water & Energy.

     AN ACT Relating to achieving greater energy efficiency in buildings; amending RCW 70.164.020, 70.164.040, 70.164.050, 70.164.060, 19.285.040, 35.92.360, 54.16.280, 36.94.460, 43.19.675, 43.19.680, and 43.41.170; adding a new section to chapter 70.164 RCW; adding a new section to chapter 35.92 RCW; adding a new section to chapter 43.185 RCW; adding a new chapter to Title 70 RCW; creating new sections; and declaring an emergency.

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

NEW SECTION.  Sec. 1   FINDINGS. (1) The legislature finds that improving energy efficiency in structures is one of the most cost-effective means to meet energy requirements, and that while there have been significant efficiency savings achieved in the state over the past quarter century, there remains enormous potential to achieve even greater savings. Increased weatherization and more extensive efficiency improvements in residential and commercial buildings achieves many benefits, including reducing energy bills, avoiding the construction of new electricity generating facilities with associated climate change impacts, and creation of family-wage jobs in performing energy audits and improvements.
     (2) It is the intent of the legislature that financial and technical assistance programs be expanded to direct state and federal funds, as well as electric and natural gas utility funding, toward greater achievement of energy efficiency improvements. To this end, the legislature establishes a policy goal of assisting in weatherizing twenty thousand homes and businesses in the state in each of the next five years. The legislature also intends to attain this goal in part through supporting programs that rely on community organizations and that there be maximum family-wage job creation in fields related to energy efficiency.

NEW SECTION.  Sec. 101   DEFINITIONS. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Account" means the energy efficiency assistance account created in section 107 of this act.
     (2) "Board" means the state board for community and technical colleges.
     (3) "Director" means the director of the energy efficiency assistance program created in section 102 of this act.
     (4) "Customers" means residents, businesses, and building owners.
     (5) "Direct outreach" means:
     (a) The use of door-to-door contact, community events, and other methods of direct interaction with customers to inform them of energy efficiency and weatherization opportunities; and
     (b) The performance of energy audits.
     (6) "Energy audit" means an assessment of building energy efficiency opportunities, from measures that require very little investment and without any disruption to building operation, normally involving general building operational measures, to low or relatively higher cost investment, such as installing timers to turn off equipment, replacing light bulbs, installing variable speed drives, replacing equipment with higher efficiency equipment, and similar measures. The term includes an assessment of alternatives for generation of heat and power from renewable energy resources, including installation of solar hot water heating and equipment for photovoltaic electricity generation.
     (7) "Energy efficiency services" means weatherization, energy efficiency retrofits, and other activities to reduce a customer's energy consumption, and includes assistance with paperwork, arranging for financing, and other post-energy audit assistance and education to help customers meet their energy savings goals.
     (8) "President" means the president of Washington State University.
     (9) "Program" means the energy efficiency assistance program created in section 102 of this act.
     (10) "Sponsor" means any entity or group of entities that submits a proposal under section 103 of this act, including but not limited to any nongovernmental nonprofit organization, local community action agency, community service agency, public service company, county, municipality, publicly owned electric, or natural gas utility.
     (11) "Sponsor match" means the share, if any, of the cost of efficiency improvements to be paid by the sponsor.
     (12) "University" means Washington State University.
     (13) "Weatherization" means making energy and resource conservation and energy efficiency improvements.

NEW SECTION.  Sec. 102   ENERGY EFFICIENCY ASSISTANCE PROGRAM CREATED. (1) The energy efficiency assistance program is created within the energy program of Washington State University. The program must be managed by a director appointed by the president. The director must:
     (a) Establish a process to award grants on a competitive basis using funds from the account.
     (i) Grants must be used to either:
     (A) Conduct direct outreach;
     (B) Deliver energy efficiency services; or
     (C) Both conduct direct outreach and deliver energy efficiency services.
     (ii) Grants must be targeted to residential structures occupied by households that are not eligible for weatherization assistance under chapter 70.164 RCW and to commercial structures whose owners have reported on average less than one million dollars of gross revenue annually in the preceding five years;
     (iii) Grants must be matched, in amounts determined by the director, by resources provided by the sponsor;
     (b) Provide technical assistance:
     (i) To grant recipients in carrying out their obligations to conduct direct outreach and deliver energy efficiency services; and
     (ii) For farm energy assessment activities as specified in section 106 of this act;
     (c) Cooperate and coordinate with the department of community, trade, and economic development and those entities providing energy audit and efficiency improvements training to maximize the assistance provided in the program and encourage:
     (i) The use of service delivery models by grant recipients that have proven effective in existing programs; and
     (ii) The development of geographic information about direct outreach to be shared between grant recipients and low-income weatherization providers to minimize duplication in targeting customers;
     (d)(i) Distribute a minimum of sixty percent of program funding as grants, at least seventy-five percent of which must be for direct outreach activities; (ii) distribute a minimum of twenty percent of program funding as training resource moneys as specified in section 401 of this act; and (iii) distribute a minimum of ten percent of program funding for technical assistance;
     (e) Retain a maximum of ten percent of program funds for program administration and the administrative overhead of the university.
     (2) The director shall adopt guidelines addressing best practices for direct outreach and energy efficiency services.

NEW SECTION.  Sec. 103   GRANTS AUTHORIZED. The director shall solicit grant applications from sponsors. The director may provide grants that fully or partially fund a sponsor's proposal. The director shall require the following in the grant application:
     (1) Information on:
     (a) The amount and sources of funding for the sponsor match. A sponsor may use its own moneys, including corporate or ratepayer moneys, or moneys provided by landlords, charitable groups, government programs, the Bonneville power administration, or other sources to pay the sponsor match. The director may permit a sponsor to meet its match requirement in whole or in part through providing labor, materials, or other in-kind expenditures;
     (b) The amount requested from the account;
     (c) The entities participating as sponsors and any entities that will provide administrative support, direct outreach, energy efficiency services, or financing assistance; and
     (d) Any other information required by the director;
     (2) A demonstration of effective fiscal accountability measures;
     (3) Performance measures by which to assess the monetary and energy savings of proposed efficiency projects following project completion;
     (4) A work plan detailing the means and methods by which the sponsor will carry out the required direct outreach or energy efficiency services;
     (5) Convincing evidence that a sponsor providing energy efficiency services will be capable of helping customers achieve a savings-to-investment ratio of at least one over a payback period of ten years or less;
     (6) Convincing evidence of a sponsor's capacity to create or maintain living-wage jobs located within the geographic area reached by the sponsor's proposal; and
     (7) Convincing evidence that the sponsor will be able to efficiently and expeditiously provide direct outreach or energy efficiency services, including details on the sponsor's proposed hiring practices, means of oversight of employees or contractors, and the use of quality control measures.

NEW SECTION.  Sec. 104   EXPEDITED GRANTS IN 2009. (1) The legislature finds that conducting energy audits and performing efficiency improvements in residences and commercial structures creates family-wage jobs and will stimulate local economies where this work is conducted. Therefore, the legislature directs that where appropriations are made from the account specifically for the purpose of expedited grants, the director shall accord priority to making such grants over all other duties in the program. The director shall award at least fifty percent of such funds appropriated for expedited grants by July 15, 2009, and the remainder of the funds by September 30, 2009.
     (2) By November 1, 2009, the director shall report to the appropriate fiscal and policy committees in the senate and house of representatives on the status of grant awards under this section. The report may be combined with that made by the department of community, trade, and economic development under section 206 of this act.

NEW SECTION.  Sec. 105   PILOT GRANTS FOR COMMUNITY-WIDE URBAN RESIDENTIAL AND COMMERCIAL EFFICIENCY UPGRADES. (1) The legislature finds that comprehensive energy efficiency retrofits in the residential and smaller commercial markets are significantly underutilized due in part to the complex set of decisions that property owners are faced with in securing an energy audit and then arranging the financing and contractor to perform the retrofit work. While these retrofits have previously been viewed as primarily benefiting the property owner with energy cost savings, the additional benefits of the avoided costs of new generation and the environmental and climate benefits of reduced carbon emissions call for new ways of reaching residential and business building owners to deliver energy efficiency services. Therefore, the purpose of this section is to encourage programs that will combine utility, government, and private investments in residential and commercial building energy efficiency upgrades, with a community-based outreach component to overcome the hurdles that property owners face in considering these upgrades.
     (2) The director shall award not less than three grants for programs that:
     (a) Provide assistance for energy audits and improvements to both residential and commercial structures in specified urban neighborhoods where the objective is to achieve a high rate of participation among building owners within the pilot area;
     (b) Utilize volunteer support to reach out to potential customers through the use of community-based institutions;
     (c) Employ certified energy auditors to perform the energy audits using recognized retrofit measures that are cost-effective;
     (d) Select and provide oversight of contractors to perform retrofit work. The contractors must agree to participate in quality control and efficiency training, pay prevailing wages, meet minimum apprentice utilization standards, and hire from the community in which the program is located;
     (e) Work with customers to secure financing for their portion of the project and apply for and administer utility, public, and charitable funding provided for energy audits and retrofits; and
     (f) Commit to a sponsor match of at least two dollars for each dollar awarded.

NEW SECTION.  Sec. 106   FARM ENERGY ASSESSMENTS. (1) The legislature finds that increasing energy costs put farm viability and competitiveness at risk and that energy efficiency improvements on the farm are the most cost-effective way to manage these costs. The legislature further finds that current on-farm energy efficiency programs often miss opportunities to evaluate and conserve all types of energy, including fuels and fertilizers.
     (2) The director shall form an interdisciplinary team of agricultural and energy extension agencies to develop and offer new methods to help agricultural producers assess their opportunities to increase energy efficiency in all aspects of their operations. The interdisciplinary team must develop and deploy:
     (a) Online energy self-assessment software tools to allow agricultural producers to assess whole-farm energy use and to identify the most cost-effective efficiency opportunities;
     (b) Energy auditor training curricula specific to the agricultural sector and designed for use by agricultural producers, conservation districts, agricultural extensions, and commodity groups;
     (c) An effective infrastructure of trained energy auditors available to assist agricultural producers with on-farm energy audits and identify cost-share assistance for efficiency improvements; and
     (d) Measurement systems for cost savings, energy savings, and carbon emission reduction benefits resulting from efficiency improvements identified by the interdisciplinary team.
     (3) The director shall seek to obtain additional resources for this section from federal and state agricultural assistance programs and from other sources.

NEW SECTION.  Sec. 107   ACCOUNT CREATED. The energy efficiency assistance account is created in the state treasury. All receipts from appropriations and all federal funds received for the purpose of assisting with energy efficiency assessments or audits and improvements, which are not directed to the low-income weatherization program under chapter 70.164 RCW under federal limitations to low-income weatherization assistance, must be deposited in the account. The funds, gifts, grants, and endowments from public or private sources, in trust or otherwise, may be directed into the account. Any moneys received from sponsor match payments must be deposited in the account. Moneys in the account may be spent only after appropriation. Expenditures from the account may be used only for the purposes of this chapter.

NEW SECTION.  Sec. 108   CONTRIBUTIONS TO THE ACCOUNT. Payments to the account must be treated, for purposes of state law, as payments for energy conservation and are eligible for any tax credits or deductions, equity returns, or other benefits for which conservation investments are eligible.

Sec. 201   RCW 70.164.020 and 1995 c 399 s 199 are each amended to read as follows:
     ((Unless the context clearly requires otherwise,)) The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Department" means the department of community, trade, and economic development.
     (2) "Energy ((assessment)) audit" means an analysis of a dwelling unit to determine the need for cost-effective energy conservation measures as determined by the department.
     (3) "Household" means an individual or group of individuals living in a dwelling unit as defined by the department.
     (4) "Low income" means household income ((that is at or below one hundred twenty-five percent of the federally established poverty level)) as defined by the department.
     (5) "Nonutility sponsor" means any sponsor other than a public service company, municipality, public utility district, mutual or cooperative, furnishing gas or electricity used to heat low-income residences.
     (6) "Residence" means a dwelling unit as defined by the department.
     (7) "Sponsor" means any entity that submits a proposal under RCW 70.164.040, including but not limited to any local community action agency, tribal nation, community service agency, or any other participating agency or any public service company, municipality, public utility district, mutual or cooperative, or any combination of such entities that jointly submits a proposal.
     (8) "Sponsor match" means the share((, if any,)) of the cost of weatherization to be paid by the sponsor.
     (9) "Sustainable residential weatherization" or "weatherization" means ((materials or measures, and their installation, that are used to improve the thermal efficiency of a residence)) using moneys administered by the department to preserve a dwelling unit occupied by a low-income household for activities and materials that result in energy and resource conservation and energy efficiency improvements; repair, indoor air quality, and health and safety investments; and client education. To the extent feasible, moneys must be used to support and advance sustainable technologies.
     (10) "Weatherizing agency" means any approved department grantee, tribal nation, or any public service company, municipality, public utility district, mutual or cooperative, or other entity that bears the responsibility for ensuring the performance of weatherization of residences under this chapter and has been approved by the department.

Sec. 202   RCW 70.164.040 and 1987 c 36 s 4 are each amended to read as follows:
     (1) The department shall solicit proposals for low-income weatherization programs from potential sponsors. A proposal shall state the amount of the sponsor match, the amount requested ((from the low-income weatherization assistance account)), the name of the weatherizing agency, and any other information required by the department.
     (2)(a) A sponsor may use its own moneys, including corporate or ratepayer moneys, or moneys provided by landlords, charitable groups, government programs, the Bonneville power administration, or other sources to pay the sponsor match.
     (b) Moneys provided by a sponsor pursuant to requirements in this section shall be in addition to and shall not supplant any funding for low-income weatherization that would otherwise have been provided by the sponsor or any other entity enumerated in (a) of this subsection.
     (c) No proposal may require any contribution as a condition of weatherization from any household whose residence is weatherized under the proposal.
     (d) Proposals shall provide that full levels of all cost-effective, structurally feasible, sustainable residential weatherization materials, measures, and practices, as determined by the department, shall be installed when a low-income residence is weatherized.
     (3)(a) The department may in its discretion accept, accept in part, or reject proposals submitted. The department shall allocate funds appropriated from the low-income weatherization assistance account among proposals accepted or accepted in part so as to:
     (i) Achieve the greatest possible expected monetary and energy savings by low-income households and other energy consumers ((and)) over the longest period of time;
     (ii) Identify and correct, to the extent practical, health and safety problems for residents of low-income households; and
     (iii) Leverage, to the extent feasible, environmentally friendly sustainable technologies, practices, and designs.
     (b) The department shall, to the extent feasible, ensure a balance of participation in proportion to population among low-income households for: (((a))) (i) Geographic regions in the state; (((b))) (ii) types of fuel used for heating, except that the department shall encourage the use of energy efficient sustainable technologies; (((c))) (iii) owner-occupied and rental residences; and (((d))) (iv) single-family and multifamily dwellings.
     (c) The department may allocate funds to a nonutility sponsor without requiring a sponsor match if the department determines that such an allocation is necessary to provide the greatest benefits to low-income residents of the state.
     (4)(a) A sponsor may elect to: (i) Pay a sponsor match as a lump sum at the time of weatherization, or (ii) make yearly payments to the low-income weatherization assistance account over a period not to exceed ten years. If a sponsor elects to make yearly payments, the value of the payments shall not be less than the value of the lump sum payment that would have been made under (a)(i) of this subsection.
     (b) The department may permit a sponsor to meet its match requirement in whole or in part through providing labor, materials, or other in-kind expenditures.
     (5) The department shall adopt rules to carry out this section.

Sec. 203   RCW 70.164.050 and 1987 c 36 s 5 are each amended to read as follows:
     (1) The department is responsible for ensuring that sponsors and weatherizing agencies comply with the state laws, the department's rules, and the sponsor's proposal in carrying out proposals.
     (2) Before a residence is weatherized, the department shall require that an energy ((assessment)) audit be conducted.
     (3) To the extent possible, the department shall maximize available federal funding for weatherization projects.

Sec. 204   RCW 70.164.060 and 1987 c 36 s 6 are each amended to read as follows:
     Before a leased or rented residence is weatherized, written permission shall be obtained from the owner of the residence for the weatherization. The department shall adopt rules to ensure that: (1) The benefits of weatherization assistance ((in connection with a leased or rented residence)), including utility bill reduction and preservation of affordable housing stock, accrue primarily to low-income tenants occupying a leased or rented residence; (2) as a result of weatherization provided under this chapter, the rent on the residence is not increased and the tenant is not evicted; and (3) as a result of weatherization provided under this chapter, no undue or excessive enhancement occurs in the value of the residence. This section is in the public interest and any violation by a landlord of the rules adopted under this section shall be an act in trade or commerce violating chapter 19.86 RCW, the consumer protection act.

NEW SECTION.  Sec. 205   A new section is added to chapter 70.164 RCW to read as follows:
     The department shall coordinate with the Washington State University energy efficiency assistance program created in section 102 of this act in order to maximize the extension of weatherization assistance across low-income and middle-income households. The department may solicit proposals for low and middle-income weatherization projects, if providing funding specifically for additional projects. The department shall determine a priority ranking system for determining the order of preference for projects for low and middle-income households. In determining the ranking, the department must give first priority to low-income households that are at or below eighty percent of the state area median income.

NEW SECTION.  Sec. 206   EXPEDITED LOW-INCOME HOUSEHOLD ENERGY AUDIT PROGRAM GRANTS IN 2009. (1) The legislature finds that conducting energy audits and performing efficiency improvements in low-income households creates family-wage jobs and will stimulate local economies where this work is conducted. Therefore, the legislature directs that where appropriations are made from the low-income weatherization assistance account created in RCW 70.164.030 specifically for the purpose of expedited grants, the department of community, trade, and economic development shall accord priority to making such grants over all other duties. The department of community, trade, and economic development shall award at least fifty percent of the money by July 15, 2009, and the remainder by September 30, 2009.
     (2) By November 1, 2009, the department of community, trade, and economic development shall report to the appropriate fiscal and policy committees in the senate and house of representatives on the status of grant awards under this section. The report may be combined with that made by the director of the energy efficiency assistance program under section 104 of this act.

Sec. 301   RCW 19.285.040 and 2007 c 1 s 4 are each amended to read as follows:
     (1) Each qualifying utility shall pursue all available conservation that is cost-effective, reliable, and feasible.
     (a) By January 1, 2010, using methodologies consistent with those used by the Pacific Northwest electric power and conservation planning council in its most recently published regional power plan, each qualifying utility shall identify its achievable cost-effective conservation potential through 2019. At least every two years thereafter, the qualifying utility shall review and update this assessment for the subsequent ten-year period.
     (b) Beginning January 2010, each qualifying utility shall establish and make publicly available a biennial acquisition target for cost-effective conservation consistent with its identification of achievable opportunities in (a) of this subsection, and meet that target during the subsequent two-year period. At a minimum, each biennial target must be no lower than the qualifying utility's pro rata share for that two-year period of its cost-effective conservation potential for the subsequent ten-year period.
     (c) In meeting its conservation targets, a qualifying utility may count high-efficiency cogeneration owned and used by a retail electric customer to meet its own needs. High-efficiency cogeneration is the sequential production of electricity and useful thermal energy from a common fuel source, where, under normal operating conditions, the facility has a useful thermal energy output of no less than thirty-three percent of the total energy output. The reduction in load due to high-efficiency cogeneration shall be: (i) Calculated as the ratio of the fuel chargeable to power heat rate of the cogeneration facility compared to the heat rate on a new and clean basis of a best-commercially available technology combined-cycle natural gas-fired combustion turbine; and (ii) counted towards meeting the biennial conservation target in the same manner as other conservation savings.
     (d) The commission may determine if a conservation program implemented by an investor-owned utility is cost-effective based on the commission's policies and practice.
     (e) The commission may rely on its standard practice for review and approval of investor-owned utility conservation targets.
     (2)(a) Each qualifying utility shall use eligible renewable resources ((or)), acquire equivalent renewable energy credits, acquire donation credits under (i) of this subsection, or a combination of ((both)) the three, to meet the following annual targets:
     (i) At least three percent of its load by January 1, 2012, and each year thereafter through December 31, 2015;
     (ii) At least nine percent of its load by January 1, 2016, and each year thereafter through December 31, 2019; and
     (iii) At least fifteen percent of its load by January 1, 2020, and each year thereafter.
     (b) A qualifying utility may count distributed generation at double the facility's electrical output if the utility: (i) Owns or has contracted for the distributed generation and the associated renewable energy credits; or (ii) has contracted to purchase the associated renewable energy credits.
     (c) In meeting the annual targets in (a) of this subsection, a qualifying utility shall calculate its annual load based on the average of the utility's load for the previous two years.
     (d) A qualifying utility shall be considered in compliance with an annual target in (a) of this subsection if: (i) The utility's weather-adjusted load for the previous three years on average did not increase over that time period; (ii) after December 7, 2006, the utility did not commence or renew ownership or incremental purchases of electricity from resources other than renewable resources other than on a daily spot price basis and the electricity is not offset by equivalent renewable energy credits; and (iii) the utility invested at least one percent of its total annual retail revenue requirement that year on eligible renewable resources, renewable energy credits, or a combination of both.
     (e) The requirements of this section may be met for any given year with renewable energy credits produced during that year, the preceding year, or the subsequent year. Each renewable energy credit may be used only once to meet the requirements of this section.
     (f) In complying with the targets established in (a) of this subsection, a qualifying utility may not count:
     (i) Eligible renewable resources or distributed generation where the associated renewable energy credits are owned by a separate entity; or
     (ii) Eligible renewable resources or renewable energy credits obtained for and used in an optional pricing program such as the program established in RCW 19.29A.090.
     (g) Where fossil and combustible renewable resources are cofired in one generating unit located in the Pacific Northwest where the cofiring commenced after March 31, 1999, the unit shall be considered to produce eligible renewable resources in direct proportion to the percentage of the total heat value represented by the heat value of the renewable resources.
     (h)(i) A qualifying utility that acquires an eligible renewable resource or renewable energy credit may count that acquisition at one and two-tenths times its base value:
     (A) Where the eligible renewable resource comes from a facility that commenced operation after December 31, 2005; and
     (B) Where the developer of the facility used apprenticeship programs approved by the council during facility construction.
     (ii) The council shall establish minimum levels of labor hours to be met through apprenticeship programs to qualify for this extra credit.
     (i) A qualifying utility may donate funds to the energy efficiency assistance account created in section 107 of this act and to the low-income weatherization assistance account created in RCW 70.164.030. Donated funds in an amount equivalent to the market value of a renewable energy credit, at the time the donation was made, may be claimed as donation credits with a compliance value equivalent to two renewable energy credits. The donation credits may be used only by the qualifying utility to comply with any current or future annual target in (a) of this subsection, and may not be traded or sold. Qualifying utilities participating in the renewable energy system cost recovery program in chapter 82.16 RCW may not receive donation credits.
     (j) A qualifying utility shall be considered in compliance with an annual target in (a) of this subsection if events beyond the reasonable control of the utility that could not have been reasonably anticipated or ameliorated prevented it from meeting the renewable energy target. Such events include weather-related damage, mechanical failure, strikes, lockouts, and actions of a governmental authority that adversely affect the generation, transmission, or distribution of an eligible renewable resource under contract to a qualifying utility.
     (3) Utilities that become qualifying utilities after December 31, 2006, shall meet the requirements in this section on a time frame comparable in length to that provided for qualifying utilities as of December 7, 2006.

NEW SECTION.  Sec. 401   WORKFORCE TRAINING FOR THE PERFORMANCE OF ENERGY AUDITS AND RETROFITS. (1) The legislature finds that it is in the interest of building owners, building residents, and the state that energy audits and energy efficiency services be performed in a manner that is both consistent with current best practices and that provides increased occupational skills training to workers in the state. The director, in collaboration with the board, the workforce training and education coordinating board, the employment security department, the Washington state building and construction trades council, and the Washington state apprenticeship and training council shall identify the necessary skills and qualifications required to perform the energy audits and energy efficiency services authorized under this act.
     (2) The board shall work with the Washington apprenticeship and training council to jointly develop, by June 30, 2009, curricula and training programs, to include on-the-job training, classroom training, and safety and health training, for the development of the skills and qualifications identified by the director under subsection (1) of this section.
     (3) Training resource moneys may be provided from the account for the following purposes:
     (a) To develop curricula and training programs in accordance with subsection (2) of this section;
     (b) For the expansion of existing high school, community college, and apprenticeship training programs providing energy audit and energy efficiency services training;
     (c) For the implementation of new training programs developed under the terms of this chapter; and
     (d) To supplement internship and apprenticeship programs using curricula developed under subsection (2) of this section.
     (4) The director shall direct the delivery of training resource moneys as necessary to meet demands for jobs, giving priority in distribution of training resource moneys to those who provide convincing evidence that they can complete their work expeditiously.
     (5) The board shall target existing allocation of higher education full-time employees as needed to ensure capacity for training programs developed under this section.
     (6) The Washington apprenticeship and training council shall evaluate the potential of a low-threshold apprenticeship program that would quickly produce workers with the skills needed to conduct energy audits and provide energy efficiency services.
     (7) The board shall provide an interim report to the appropriate committees of the legislature by December 1, 2011, and a final report by December 1, 2013, detailing the effectiveness of, and any recommendations for improving, the worker training curricula and programs established in subsection (2) of this section.

NEW SECTION.  Sec. 402   DESIGNATION OF WORKFORCE TRAINING PROGRAMS FOR THE PERFORMANCE OF ENERGY AUDITS AND RETROFITS. (1) Curricula and training programs developed under section 401 of this act and already existing programs that meet the requirements of section 401 of this act must be recognized as programs of study under RCW 28B.50.273.
     (2) Subject to available funding, the board may grant enrollment priority to persons who enroll in curricula and training programs developed in accordance with section 401 of this act and who also qualify for waiver under RCW 28B.15.522.

NEW SECTION.  Sec. 501   A new section is added to chapter 35.92 RCW to read as follows:
     MUNICIPAL ENERGY EFFICIENCY UTILITIES AUTHORIZED. (1) A municipality may construct, purchase, acquire, add to, extend, maintain, and operate a system of conservation facilities, equipment, and programs for the conservation of energy, within or without its limits, for the purpose of providing to its inhabitants and other persons, services that lead to the more efficient consumption of energy resources, from whatever source generated, with full power to regulate and control the use, distribution, and price of such efficiency measures, and to enter into agreements for the maintenance and operation of conservation facilities under terms and conditions determined by the legislative authority of the municipality. A conservation utility may be operated as a separate utility or may be combined with an existing electric, water, wastewater, solid waste, heating or other utility operated by the municipality.
     (2) For the purposes of meeting the state's goals relating to greenhouse gas emissions in RCW 70.235.020 and reducing the state's dependence on foreign oil, the provision of conservation services and the establishment and operation of conservation utilities by a municipality under this section are declared to be a public use and a public and municipal purpose. A municipality that forms a conservation utility under this section is declared to be engaged in the sale or distribution of energy services for purposes of Article VIII, section 10 of the state Constitution, and is authorized to operate the loan programs authorized in RCW 35.92.360 or 54.16.280, as applicable.
     (3)(a) The legislative authority of the municipality has full authority to control the use distribution and rates or charges for energy conservation services and facilities provided to customers of the system if the rates charged are uniform for the same class of customer or service.
     (b) In classifying customers served or service furnished, the legislative authority may consider: (i) The difference in cost of service to the various customers; (ii) the location of the various customers within or without the municipality; (iii) the difference in cost of maintenance, operation, repair, and replacement of the various parts of the system; (iv) the different character of the service furnished various customers; (v) the quantity and quality of the conservation services furnished; and (vi) any other matters that present a reasonable difference as a ground for distinction.
     (4) The legislative authority of the municipality has full authority to regulate and control the conservation services delivered, together with the right to handle and sell or lease any meters, lamps, motors, transformers, and conservation equipment or accessories of any kind, necessary and convenient for the use, distribution, and sale thereof.
     (5) The associated reductions in greenhouse gas emissions from any energy conservation services and facilities provided by the conservation utility are owned by the conservation utility unless otherwise expressly provided in the rates and charges or contracts for energy conservation.
     (6) The associated reductions in greenhouse gas emissions from any energy conservation services and facilities provided by the conservation utility may be sold by the conservation utility to: (a) Cities, counties, and public utility districts to mitigate the greenhouse gas emissions of those jurisdictions pursuant to the authority to purchase offsets provided in RCW 35.92.430, 36.01.250, and 54.16.390; or (b) electric utilities as renewable energy credits pursuant to chapter 19.285 RCW to the extent that the reductions in greenhouse gas emissions result from a reduction in electric energy usage.
     (7) The authority in this section is in addition to any authority granted in other law and does not limit the ability to provide conservation services through an existing electric, water, wastewater, or heating utility. The election procedures under RCW 35.92.070 and 54.08.070 and chapter 80.52 RCW or other law have no application to the formation of a conservation utility formed under this section. Nothing in this section authorizes any municipality to generate, transmit, distribute, or sell electricity. Nothing in this section may be construed to restrain or limit the authority of any individual, partnership, corporation, or private utility from establishing and providing conservation services.
     (8) For purposes of this section, "municipality" means any city, town, county, or public utility district.

Sec. 502   RCW 35.92.360 and 2002 c 276 s 2 are each amended to read as follows:
     (1) Any city or town engaged in the generation, sale, or distribution of energy is hereby authorized, within limits established by the Constitution of the state of Washington, to assist the owners of structures or equipment in financing the acquisition and installation of materials and equipment, for compensation or otherwise, for the conservation or more efficient use of energy in such structures or equipment pursuant to an energy conservation plan adopted by the city or town if the cost per unit of energy saved or produced by the use of such materials and equipment is less than the cost per unit of energy produced by the next least costly new energy resource which the city or town could acquire to meet future demand. Any financing authorized under this chapter shall only be used for conservation purposes in existing structures, and such financing shall not be used for any purpose which results in a conversion from one energy source to another.
     (2) For the purposes of this section, "conservation purposes in existing structures" may include projects to allow a municipal electric utility's customers to generate all or a portion of their own electricity through the on-site installation of a distributed electricity generation system that uses as its fuel solar, wind, geothermal, or hydropower, or other renewable resource that is available on-site and not from a commercial source. Such projects shall not be considered "a conversion from one energy source to another" which is limited to the change or substitution of one commercial energy supplier for another commercial energy supplier.
     (3) Except where otherwise authorized, such assistance shall be limited to:
     (((1))) (a) Providing an inspection of the structure or equipment, either directly or through one or more inspectors under contract, to determine and inform the owner of the estimated cost of purchasing and installing conservation materials and equipment for which financial assistance will be approved and the estimated life cycle savings in energy costs that are likely to result from the installation of such materials or equipment;
     (((2))) (b) Providing a list of businesses who sell and install such materials and equipment within or in close proximity to the service area of the city or town, each of which businesses shall have requested to be included and shall have the ability to provide the products in a workmanlike manner and to utilize such materials in accordance with the prevailing national standards((.));
     (((3))) (c) Arranging to have approved conservation materials and equipment installed by a private contractor whose bid is acceptable to the owner of the residential structure and verifying such installation; and
     (((4))) (d) Arranging or providing financing for the purchase and installation of approved conservation materials and equipment. Such materials and equipment shall be purchased from a private business and shall be installed by a private business or the owner.
     (((5))) (4) Pay back shall be in the form of incremental additions to the utility bill, billed either together with use charge or separately. Loans shall not exceed one hundred twenty months in length. The city or town may make assistance available in the form of grants made under this section for conservation improvements to existing structures owned or occupied by persons qualifying as poor or infirm consistent with the state Constitution.
     (5) The legislative authority of the city or town shall approve the aggregate amount of such loans and repayment terms by ordinance and may, by ordinance, delegate to staff to approve individual loans consistent with the terms set forth in the ordinance. The city or town and the property owner shall enter into a loan agreement setting forth the terms of the loan, which agreement may provide for acceleration in the event a loan installment is delinquent. In order to secure loans, the city or town must have a statutory lien on the property on which conservation improvements so financed are installed or constructed. The lien is paramount and superior to any other lien or encumbrance theretofore or thereafter created, except a lien for general taxes and special assessment district assessments. The loan is a lien upon property from the time the loan agreement is executed. If the legislative authority of the city or town has acted in good faith and without fraud in granting a loan, the loan is valid and enforceable as such and the lien upon the property is valid.
     (6) The city or town may foreclose a lien in an action in the superior court. All or any of the tracts subject to such a lien may be proceeded against in a single action, and all parties appearing of record as owning or claiming to own or having an interest in or lien upon the tracts involved must be impleaded in the action as parties defendant. An action to foreclose a lien must be commenced within two years after the date the loan first becomes subject to acceleration under the loan documents. Liens to secure loans may be foreclosed in the manner provided by RCW 35.67.250, 35.67.260, and 35.67.270.
     (7) Loans may be used to secure and repay general obligation or revenue bonds, notes, or other forms of indebtedness issued by or on behalf of the city or town. For the purpose of securing the payment of the principal of and interest on any bonds or notes, the city or town may create a reserve fund. The principal amount of any loan may include a proportionate share of the costs of issuing the bonds, notes, or other indebtedness, and may include up to an additional ten percent of the loan amount to fund a reserve fund.
     (8) This act applies prospectively and does not affect the validity of any loan issued under this section prior to the effective date of this section.

Sec. 503   RCW 54.16.280 and 2002 c 276 s 3 are each amended to read as follows:
     (1) Any district is hereby authorized, within limits established by the Constitution of the state of Washington, to assist the owners of structures or equipment in financing the acquisition and installation of materials and equipment, for compensation or otherwise, for the conservation or more efficient use of energy in such structures or equipment pursuant to an energy conservation plan adopted by the district if the cost per unit of energy saved or produced by the use of such materials and equipment is less than the cost per unit of energy produced by the next least costly new energy resource which the district could acquire to meet future demand. Any financing authorized under this chapter shall only be used for conservation purposes in existing structures, and such financing shall not be used for any purpose which results in a conversion from one energy source to another.
     (2) For the purposes of this section, "conservation purposes in existing structures" may include projects to allow a district's customers to generate all or a portion of their own electricity through the on-site installation of a distributed electricity generation system that uses as its fuel solar, wind, geothermal, or hydropower, or other renewable resource that is available on-site and not from a commercial source. Such projects shall not be considered "a conversion from one energy source to another" which is limited to the change or substitution of one commercial energy supplier for another commercial energy supplier.
     (3) Except where otherwise authorized, such assistance shall be limited to:
     (((1))) (a) Providing an inspection of the structure or equipment, either directly or through one or more inspectors under contract, to determine and inform the owner of the estimated cost of purchasing and installing conservation materials and equipment for which financial assistance will be approved and the estimated life cycle savings in energy costs that are likely to result from the installation of such materials or equipment;
     (((2))) (b) Providing a list of businesses who sell and install such materials and equipment within or in close proximity to the service area of the district, each of which businesses shall have requested to be included and shall have the ability to provide the products in a workmanlike manner and to utilize such materials in accordance with the prevailing national standards((.));
     (((3))) (c) Arranging to have approved conservation materials and equipment installed by a private contractor whose bid is acceptable to the owner of the residential structure and verifying such installation; and
     (((4))) (d) Arranging or providing financing for the purchase and installation of approved conservation materials and equipment. Such materials and equipment shall be purchased from a private business and shall be installed by a private business or the owner.
     (((5))) (4) Pay back shall be in the form of incremental additions to the utility bill, billed either together with use charge or separately. Loans shall not exceed one hundred twenty months in length. The district may make assistance available in the form of grants made under this section for conservation improvements to existing structures owned or occupied by persons qualifying as poor or infirm consistent with the state Constitution.
     (5) The legislative authority of the district shall approve the aggregate amount of such loans and repayment terms by ordinance and may, by ordinance, delegate to staff to approve individual loans consistent with the terms set forth in the ordinance. The district and the property owner shall enter into a loan agreement setting forth the terms of the loan, which agreement may provide for acceleration in the event a loan installment is delinquent. In order to secure loans, the district must have a statutory lien on the property on which conservation improvements so financed are installed or constructed. The lien is paramount and superior to any other lien or encumbrance theretofore or thereafter created, except a lien for general taxes and special assessment district assessments. The loan is a lien upon property from the time the loan agreement is executed. If the legislative authority of the district has acted in good faith and without fraud in granting a loan, the loan is valid and enforceable as such and the lien upon the property is valid.
     (6) The district may foreclose a lien in an action in the superior court. All or any of the tracts subject to such a lien may be proceeded against in a single action, and all parties appearing of record as owning or claiming to own or having an interest in or lien upon the tracts involved must be impleaded in the action as parties defendant. An action to foreclose a lien must be commenced within two years after the date the loan first becomes subject to acceleration under the loan documents. Liens to secure loans may be foreclosed in the manner provided by RCW 35.67.250, 35.67.260, and 35.67.270.
     (7) Loans may be used to secure and repay general obligation or revenue bonds, notes, or other forms of indebtedness issued by or on behalf of the city or town. For the purpose of securing the payment of the principal of and interest on any bonds or notes, the district may create a reserve fund. The principal amount of any loan may include a proportionate share of the costs of issuing the bonds, notes, or other indebtedness, and may include up to an additional ten percent of the loan amount to fund a reserve fund.
     (8) This act applies prospectively and does not affect the validity of any loan issued under this section prior to the effective date of this section.

Sec. 504   RCW 36.94.460 and 1992 c 25 s 3 are each amended to read as follows:
     (1) Any county engaged in the sale or distribution of water or in the sale and distribution of energy services through an energy conservation utility formed under section 501 of this act, is hereby authorized, within limits established by the Constitution of the state of Washington, to assist the owners of structures that are provided water or energy conservation services by the county in financing the acquisition and installation of fixtures, systems, and equipment, for compensation or otherwise, for the conservation or more efficient use of water or energy in the structures under a water or energy conservation plan adopted by the county if the cost per unit of water saved or conserved by the use of the fixtures, systems, and equipment is less than the cost per unit of water supplied by the next least costly new water source available to the county to meet future demand.
     (2) Except where otherwise authorized, assistance shall be limited to:
     (((1))) (a) Providing an inspection of the structure, either directly or through one or more inspectors under contract, to determine and inform the owner of the estimated cost of purchasing and installing conservation fixtures, systems, and equipment for which financial assistance will be approved and the estimated life cycle savings to the water system and the consumer that are likely to result from the installation of the fixtures, systems, or equipment;
     (((2))) (b) Providing a list of businesses that sell and install the fixtures, systems, and equipment within or in close proximity to the service area of the county, each of which businesses shall have requested to be included and shall have the ability to provide the products in a workmanlike manner and to utilize the fixtures, systems, and equipment in accordance with the prevailing national standards;
     (((3))) (c) Arranging to have approved conservation fixtures, systems, and equipment installed by a private contractor whose bid is acceptable to the owner of the structure and verifying the installation; and
     (((4))) (d) Arranging or providing financing for the purchase and installation of approved conservation fixtures, systems, and equipment. The fixtures, systems, and equipment shall be purchased or installed by a private business, the owner, or the utility.
     (3) Pay back shall be in the form of incremental additions to the utility bill, billed either together with (([the])) the use charge or separately. Loans shall not exceed one hundred twenty months in length. The county may make assistance available in the form of grants made under this section for conservation improvements to existing structures owned or occupied by persons qualifying as poor or infirm consistent with the state Constitution.
     (4) The legislative authority of the county shall approve the aggregate amount of such loans and repayment terms by ordinance and may, by ordinance, delegate to staff to approve individual loans consistent with the terms set forth in the ordinance. The county and the property owner shall enter into a loan agreement setting forth the terms of the loan, which agreement may provide for acceleration in the event a loan installment is delinquent. In order to secure loans, the county must have a statutory lien on the property on which conservation improvements so financed are installed or constructed. The lien is paramount and superior to any other lien or encumbrance theretofore or thereafter created, except a lien for general taxes and special assessment district assessments. The loan is a lien upon property from the time the loan agreement is executed. If the legislative authority of the county has acted in good faith and without fraud in granting a loan, the loan is valid and enforceable as such and the lien upon the property is valid.
     (5) The county may foreclose a lien in an action in the superior court. All or any of the tracts subject to such a lien may be proceeded against in a single action, and all parties appearing of record as owning or claiming to own or having an interest in or lien upon the tracts involved must be impleaded in the action as parties defendant. An action to foreclose a lien must be commenced within two years after the date the loan first becomes subject to acceleration under the loan documents. Liens to secure loans may be foreclosed in the manner provided by RCW 35.67.250, 35.67.260, and 35.67.270.
     (6) Loans may be used to secure and repay general obligation or revenue bonds, notes, or other forms of indebtedness issued by or on behalf of the city or town. For the purpose of securing the payment of the principal of and interest on any bonds or notes, the county may create a reserve fund. The principal amount of any loan may include a proportionate share of the costs of issuing the bonds, notes, or other indebtedness, and may include up to an additional ten percent of the loan amount to fund a reserve fund.
     (7) This act applies prospectively and does not affect the validity of any loan issued under this section prior to the effective date of this section.

NEW SECTION.  Sec. 601   A new section is added to chapter 43.185 RCW to read as follows:
     ENERGY AUDITS AND RETROFITS IN PUBLICLY FUNDED HOUSING. (1) The legislature finds that growing preservation and rehabilitation needs in the housing trust fund property portfolio provide opportunities to advance energy efficiency and weatherization efforts for low-income individuals in Washington state while protecting the state's six hundred million dollars in affordable housing investments. Preservation of existing affordable housing, when done in conjunction with weatherization activities, is a cost-effective, prudent, and environmentally friendly strategy to ensure that low-income housing remains durable, safe, and affordable.
     (2) The department shall review all housing properties in the housing trust fund real estate portfolio and identify those in need of major renovation or rehabilitation. In its review, the department shall survey property owners for information including, but not limited to, the age of the building and the type of heating, cooling, plumbing, and electrical systems contained in the property. The department shall prioritize all renovation or rehabilitation projects identified in the review by the department's ability to:
     (a) Achieve the greatest possible expected monetary and energy savings by low-income households and other energy consumers over the greatest period of time;
     (b) Promote the greatest possible health and safety improvements for residents of low-income households; and
     (c) Leverage, to the extent feasible, technologically advanced and environmentally friendly sustainable technologies, practices, and designs.
     (3) Subject to the availability of amounts appropriated for this specific purpose, the department shall use the prioritization of potential energy efficiency needs and opportunities in subsection (2) of this section to make offers of energy audit services to project owners and operators. The department shall use all practicable means to achieve the completion of energy audits in at least twenty-five percent of the properties in its portfolio that exceed twenty-five years in age, by June 30, 2011. Where the energy audits identify cost-effective weatherization and other energy efficiency measures, the department shall accord a priority within appropriated funding levels to include funding for energy efficiency improvements when the department allocates funding for renovation or rehabilitation of the property.

Sec. 602   RCW 43.19.675 and 2001 c 214 s 26 are each amended to read as follows:
     ENERGY EFFICIENCY IN STATE AGENCY BUILDINGS. For each state-owned facility, the director of general administration, or the agency responsible for the facility if other than the department of general administration, shall conduct an energy audit of that facility. This energy audit may be conducted by contract or by other arrangement, including appropriate agency staff. Performance-based contracting shall be the preferred method for implementing and completing energy audits. For each state-owned facility, the energy consumption surveys shall be completed no later than October 1, ((2001)) 2009, and the walk-through surveys shall be completed no later than July 1, ((2002)) 2010.

Sec. 603   RCW 43.19.680 and 2001 c 214 s 27 are each amended to read as follows:
     (1) Upon completion of each walk-through survey required by RCW 43.19.675, the director of general administration or the agency responsible for the facility if other than the department of general administration shall implement energy conservation maintenance and operation procedures that may be identified for any state-owned facility. These procedures shall be implemented as soon as possible but not later than twelve months after the walk-through survey.
     (2) If a walk-through survey has identified potentially cost-effective energy conservation measures, the agency responsible for the facility shall undertake an investment grade audit of the facility. Investment grade audits shall be completed no later than December 1, ((2002)) 2010. Installation of cost-effective energy conservation measures recommended in the investment grade audit shall be completed no later than June 30, ((2004)) 2012.
     (3) For each biennium until all measures are installed, the director of general administration shall report to the governor and legislature installation progress, (([and])) and measures planned for installation during the ensuing biennium. This report shall be submitted by December 31, ((2004)) 2010, or at the end of the following year whichever immediately precedes the capital budget adoption, and every two years thereafter until all measures are installed.
     (4) Agencies may contract with energy service companies as authorized by chapter 39.35C RCW for energy audits and implementation of cost-effective energy conservation measures. The department shall provide technically qualified personnel to the responsible agency upon request. The department shall recover a fee for this service.
     (5) To the extent possible through the budget process, agencies may retain any cost savings resulting from implementing energy conservation measures identified through investment grade audits.

Sec. 604   RCW 43.41.170 and 1989 c 11 s 15 are each amended to read as follows:
     The office of financial management shall ensure that to the extent possible through the budget process ((shall allow)), state agencies implementing energy conservation ((to)) measures identified in RCW 43.19.680 may retain the resulting cost savings for other purposes, including further energy conservation.

NEW SECTION.  Sec. 701   Sections 101 through 108, 401, and 402 of this act constitute a new chapter in Title 70 RCW.

NEW SECTION.  Sec. 702   Captions and part headings used in this act are not any part of the law.

NEW SECTION.  Sec. 703   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. 704   This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately.