BILL REQ. #:  H-1532.1 

READ FIRST TIME 02/15/11.   

     AN ACT Relating to renewable energy investment cost recovery program; amending RCW 82.16.130; and reenacting and amending RCW 82.16.110 and 82.16.120.

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

Sec. 1   RCW 82.16.110 and 2010 c 202 s 1 and 2010 c 106 s 225 are each reenacted and amended to read as follows:
     The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Administrator" means an owner and assignee of a community solar project as defined in subsection (2)(a)(i) of this section that is responsible for applying for the investment cost recovery incentive on behalf of the other owners and performing such administrative tasks on behalf of the other owners as may be necessary, such as receiving investment cost recovery incentive payments, and allocating and paying appropriate amounts of such payments to the other owners.
     (2)(a) "Community solar project" means:
     (i) A solar energy system that is capable of generating up to seventy-five kilowatts of electricity and is owned by local individuals, households, nonprofit organizations, nonprofit housing organization or nonutility businesses that is placed on the property owned by a cooperating local governmental entity ((that)), an institution of higher education, a nonprofit organization, or a nonprofit housing organization if the cooperating entity, institution, nonprofit organization, or nonprofit housing organization is not in the light and power business or in the gas distribution business;
     (ii) A utility-owned solar energy system that is capable of generating up to seventy-five kilowatts of electricity and that is voluntarily funded by the utility's ratepayers where, in exchange for their financial support, the utility gives contributors a payment or credit on their utility bill for the value of the electricity produced by the project; or
     (iii) A solar energy system, placed on the property owned by a cooperating local governmental entity ((that)), an institution of higher education, a nonprofit organization, or a nonprofit housing organization if the cooperating entity, institution, nonprofit organization, or nonprofit housing organization is not in the light and power business or in the gas distribution business, ((that)) and the solar energy system is capable of generating up to seventy-five kilowatts of electricity((,)) and ((that)) is owned by a company whose members are each eligible for an investment cost recovery incentive for the same customer-generated electricity as provided in RCW 82.16.120.
     (b) For the purposes of "community solar project" as defined in (a) of this subsection:
     (i) "Company" means an entity that is:
     (A)(I) A limited liability company, except for a limited liability company with a nonprofit housing organization participating as a managing member for the purposes of accessing assistance from the Washington state housing finance commission under chapter 43.180 RCW;
     (II) A cooperative formed under chapter 23.86 RCW; or
     (III) A mutual corporation or association formed under chapter 24.06 RCW; and
     (B) Not a "utility" as defined in this subsection (2)(b); and
     (ii) "Nonprofit organization" means an organization exempt from taxation under 26 U.S.C. Sec. 501(c)(3) of the federal internal revenue code of 1986, as amended, as of January 1, 2009; ((and))
     (iii) "Nonprofit housing organization" means an entity eligible for assistance under RCW 43.185A.040 and engaged in activities eligible for assistance under RCW 43.185A.030, including an entity materially participating as a managing member of a limited liability company, general partner of a partnership, or as an equivalent organization for the purposes of accessing assistance from the Washington state housing finance commission under chapter 43.180 RCW; and
     (iv) "Utility" means a light and power business, an electric cooperative, or a mutual corporation that provides electricity service.
     (3) "Customer-generated electricity" means a community solar project or the alternating current electricity that is generated from a renewable energy system located in Washington and installed on an individual's, businesses', or local government's real property that is also provided electricity generated by a light and power business. Except for community solar projects, a system located on a leasehold interest does not qualify under this definition. Except for utility-owned community solar projects, "customer-generated electricity" does not include electricity generated by a light and power business with greater than one thousand megawatt hours of annual sales or a gas distribution business.
     (4) "Economic development kilowatt-hour" means the actual kilowatt-hour measurement of customer-generated electricity multiplied by the appropriate economic development factor.
     (5) "Institution" or "institution of higher education" has the same meaning as provided in RCW 28B.92.030.
     (6) "Local governmental entity" means any unit of local government of this state including, but not limited to, counties, cities, towns, municipal corporations, quasi-municipal corporations, special purpose districts, and school districts.
     (((6))) (7) "Photovoltaic cell" means a device that converts light directly into electricity without moving parts.
     (((7))) (8) "Renewable energy system" means a solar energy system, an anaerobic digester as defined in RCW 82.08.900, or a wind generator used for producing electricity.
     (((8))) (9) "Solar energy system" means any device or combination of devices or elements that rely upon direct sunlight as an energy source for use in the generation of electricity.
     (((9))) (10) "Solar inverter" means the device used to convert direct current to alternating current in a photovoltaic cell system.
     (((10))) (11) "Solar module" means the smallest nondivisible self-contained physical structure housing interconnected photovoltaic cells and providing a single direct current electrical output.
     (12) "Stirling converter" means a device that produces electricity by converting heat from a solar source utilizing a stirling engine.
     (13) "Solar inverter system" means a device assembled at the manufacturing facility and ready for installation as part of a solar energy system. A solar inverter system must contain a solar inverter and, at a minimum, alternating current and direct current disconnects.

Sec. 2   RCW 82.16.120 and 2010 c 202 s 2 and 2010 c 106 s 103 are each reenacted and amended to read as follows:
     (1)(a) Any individual, business, local governmental entity, not in the light and power business or in the gas distribution business, or a participant in a community solar project may apply to the light and power business serving the situs of the system, each fiscal year beginning on July 1, 2005, for an investment cost recovery incentive for each kilowatt-hour from a customer-generated electricity renewable energy system.
     (b) In the case of a community solar project as defined in RCW 82.16.110(2)(a)(i), the administrator must apply for the investment cost recovery incentive on behalf of each of the other owners.
     (c) In the case of a community solar project as defined in RCW 82.16.110(2)(a)(iii), the company owning the community solar project must apply for the investment cost recovery incentive on behalf of each member of the company.
     (2)(a) Before submitting for the first time the application for the incentive allowed under subsection (4) of this section, the applicant must submit to the department of revenue and to the climate and rural energy development center at the Washington State University, established under RCW 28B.30.642, a certification in a form and manner prescribed by the department that includes, but is not limited to, the following information:
     (i) The name and address of the applicant and location of the renewable energy system.
     (A) If the applicant is an administrator of a community solar project as defined in RCW 82.16.110(2)(a)(i), the certification must also include the name and address of each of the owners of the community solar project.
     (B) If the applicant is a company that owns a community solar project as defined in RCW 82.16.110(2)(a)(iii), the certification must also include the name and address of each member of the company;
     (ii) The applicant's tax registration number;
     (iii) That the electricity produced by the applicant meets the definition of "customer-generated electricity" and that the renewable energy system produces electricity with:
     (A) Any solar inverters and solar modules manufactured in Washington state;
     (B) A wind generator powered by blades manufactured in Washington state;
     (C) A solar inverter manufactured in Washington state or solar inverter system manufactured in Washington state;
     (D) A solar module manufactured in Washington state; ((or))
     (E) A stirling converter manufactured in Washington state;
     (F) Solar or wind equipment manufactured outside of Washington state; or
     (G) A wind generator manufactured in Washington state with a generating capacity of no more than five kilowatts;
     (iv) That the electricity can be transformed or transmitted for entry into or operation in parallel with electricity transmission and distribution systems; and
     (v) The date that the renewable energy system received its final electrical permit from the applicable local jurisdiction.
     (b) Within thirty days of receipt of the certification the department of revenue must notify the applicant by mail, or electronically as provided in RCW 82.32.135, whether the renewable energy system qualifies for an incentive under this section. The department may consult with the climate and rural energy development center to determine eligibility for the incentive. System certifications and the information contained therein are subject to disclosure under RCW 82.32.330(3)(l).
     (3)(a) ((By August 1st of each year application for the incentive must be made to)) If required by the light and power business serving the situs of the system, persons receiving incentive payments must apply to the light and power by August 1st of each year by certification in a form and manner prescribed by the department that includes, but is not limited to, the following information:
     (i) The name and address of the applicant and location of the renewable energy system.
     (A) If the applicant is an administrator of a community solar project as defined in RCW 82.16.110(2)(a)(i), the application must also include the name and address of each of the owners of the community solar project.
     (B) If the applicant is a company that owns a community solar project as defined in RCW 82.16.110(2)(a)(iii), the application must also include the name and address of each member of the company;
     (ii) The applicant's tax registration number;
     (iii) The date of the notification from the department of revenue stating that the renewable energy system is eligible for the incentives under this section; and
     (iv) A statement of the amount of kilowatt-hours generated by the renewable energy system in the prior fiscal year.
     (b) Within sixty days of receipt of the incentive certification the light and power business serving the situs of the system must notify the applicant in writing whether the incentive payment will be authorized or denied. The business may consult with the climate and rural energy development center to determine eligibility for the incentive payment. Incentive certifications and the information contained therein are subject to disclosure under RCW 82.32.330(3)(l).
     (c)(i) Persons, administrators of community solar projects, and companies receiving incentive payments must keep and preserve, for a period of five years, suitable records as may be necessary to determine the amount of incentive applied for and received. Such records must be open for examination at any time upon notice by the light and power business that made the payment or by the department. If upon examination of any records or from other information obtained by the business or department it appears that an incentive has been paid in an amount that exceeds the correct amount of incentive payable, the business may assess against the person for the amount found to have been paid in excess of the correct amount of incentive payable and must add thereto interest on the amount. Interest is assessed in the manner that the department assesses interest upon delinquent tax under RCW 82.32.050.
     (ii) If it appears that the amount of incentive paid is less than the correct amount of incentive payable the business may authorize additional payment.
     (4) Except for community solar projects, the investment cost recovery incentive may be paid fifteen cents per economic development kilowatt-hour unless requests exceed the amount authorized for credit to the participating light and power business. For community solar projects, the investment cost recovery incentive may be paid thirty cents per economic development kilowatt-hour unless requests exceed the amount authorized for credit to the participating light and power business. For the purposes of this section, the rate paid for the investment cost recovery incentive may be multiplied by the following factors:
     (a) For customer-generated electricity produced using solar modules or solar stirling converter manufactured in Washington state, two and four-tenths;
     (b) For customer-generated electricity produced using a solar or a wind generator equipped with an inverter manufactured in Washington state or solar inverter system manufactured in Washington state, one and two-tenths;
     (c) For customer-generated electricity produced using an anaerobic digester, or by other solar equipment or using a wind generator equipped with blades manufactured in Washington state, one; ((and))
     (d) For all other customer-generated electricity produced by wind, eight-tenths; and
     (e) For customer-generated electricity produced by a wind generator manufactured in Washington state with a generating capacity of no more than five kilowatts, three and three-tenths.
     (5)(a) No individual, household, business, or local governmental entity is eligible for incentives provided under subsection (4) of this section for more than five thousand dollars per year.
     (b) Except as provided in (c) through (e) of this subsection (5), each applicant in a community solar project is eligible for up to five thousand dollars per year.
     (c) Where the applicant is an administrator of a community solar project as defined in RCW 82.16.110(2)(a)(i), each owner is eligible for an incentive but only in proportion to the ownership share of the project, up to five thousand dollars per year.
     (d) Where the applicant is a company owning a community solar project that has applied for an investment cost recovery incentive on behalf of its members, each member of the company is eligible for an incentive that would otherwise belong to the company but only in proportion to each ownership share of the company, up to twenty-five thousand dollars per year. The company itself is not eligible for incentives under this section.
     (e) In the case of a utility-owned community solar project, each ratepayer that contributes to the project is eligible for an incentive in proportion to the contribution, up to five thousand dollars per year.
     (6)(a) If requests for the investment cost recovery incentive exceed the amount of funds available for credit to the participating light and power business, ((the incentive payments must be reduced proportionately)) no new applications may be approved for the light and power business, except as provided in (b) of this subsection.
     (b) A new application may be approved for a light and power business when requests for the investment cost recovery incentive exceed the amount of funds available for credit to the participating light and power business, if the light and power business meets the requirements in section 3(1)(c) of this act and the incentive payments are reduced proportionately.
     (7) The climate and rural energy development center at Washington State University energy program may establish guidelines and standards for technologies that are identified as Washington manufactured and therefore most beneficial to the state's environment.
     (8) The environmental attributes of the renewable energy system belong to the applicant, and do not transfer to the state or the light and power business upon receipt of the investment cost recovery incentive.
     (9) No incentive may be paid under this section for kilowatt-hours generated before July 1, 2005, or after June 30, 2020.
     (10) A local government entity or an institution of higher education that qualifies for the community solar incentive program has an option to purchase a solar energy system located on its property from the owner at fair market value after the expiration of the cost recovery incentive program. The fair market value must take into consideration the following:
     (a) The energy production from the solar energy system over its remaining useful life;
     (b) The cost of the lease for the property that the solar energy system is located; and
     (c) Maintenance, insurance, and cost of removal of the solar energy system if the host facility decides not to renew the lease.

Sec. 3   RCW 82.16.130 and 2010 c 202 s 3 are each amended to read as follows:
     (1)(a) A light and power business ((shall be)) is allowed a credit against taxes due under this chapter in an amount equal to investment cost recovery incentive payments made in any fiscal year under RCW 82.16.120. The credit ((shall)) must be taken in a form and manner as required by the department. The credit under this section for the fiscal year may not exceed one-half percent of the businesses' taxable power sales due under RCW 82.16.020(1)(b) or one hundred thousand dollars, whichever is greater.
     (b) Except as provided in (c) of this subsection:
     (i) Incentive payments to participants in a utility-owned community solar project as defined in RCW 82.16.110(2)(a)(ii) may only account for up to ((twenty-five)) fifteen percent of the total allowable credit((.)); and
     (ii) Incentive payments to participants in a company-owned community solar project as defined in RCW 82.16.110(2)(a)(iii) may only account for up to ((five)) fifteen percent of the total allowable credit.
     (c) For light and power businesses providing electrical service solely within a county with a population between thirty-nine thousand and forty-three thousand five hundred, incentive payments to participants in a utility-owned community solar project as defined in RCW 82.16.110(2)(a)(ii) and incentive payments to participants in a company-owned community solar project as defined in RCW 82.16.110(2)(a)(iii) may only account for up to thirty percent of the total allowable credit.
     (2) The credit may not exceed the tax that would otherwise be due under this chapter. Refunds ((shall)) may not be granted in the place of credits. Expenditures not used to earn a credit in one fiscal year may not be used to earn a credit in subsequent years.
     (((2))) (3) For any business that has claimed credit for amounts that exceed the correct amount of the incentive payable under RCW 82.16.120, the amount of tax against which credit was claimed for the excess payments ((shall be)) is immediately due and payable. The department ((shall)) must assess interest but not penalties on the taxes against which the credit was claimed. Interest ((shall be)) is assessed at the rate provided for delinquent excise taxes under chapter 82.32 RCW, retroactively to the date the credit was claimed, and ((shall)) accrues until the taxes against which the credit was claimed are repaid.
     (((3))) (4) The right to earn tax credits under this section expires June 30, 2020. Credits may not be claimed after June 30, 2021.