BILL REQ. #: H-3702.1
State of Washington | 62nd Legislature | 2012 Regular Session |
Read first time 01/17/12. Referred to Committee on Environment.
AN ACT Relating to creating an additional compliance mechanism for the energy independence act by allowing the use of alternative compliance credits; amending RCW 19.285.040, 19.285.060, 43.180.260, and 19.285.030; and adding a new section to chapter 43.180 RCW.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1 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, advanced
renewable resource compliance credits, or a combination ((of both))
thereof, 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 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.
Sec. 2 RCW 19.285.060 and 2007 c 1 s 6 are each amended to read
as follows:
(1) Except as provided in subsection (2) of this section, a
qualifying utility that fails to comply with the energy conservation or
renewable energy targets established in RCW 19.285.040 shall pay an
administrative penalty to the state of Washington in the amount of
fifty dollars for each megawatt-hour of shortfall. Beginning in 2007,
this penalty shall be adjusted annually according to the rate of change
of the inflation indicator, gross domestic product-implicit price
deflator, as published by the bureau of economic analysis of the United
States department of commerce or its successor.
(2) A qualifying utility that does not meet an annual renewable
energy target established in RCW 19.285.040(2) is exempt from the
administrative penalty in subsection (1) of this section for that year
if the commission for investor-owned utilities or the auditor for all
other qualifying utilities determines that the utility complied with
RCW 19.285.040(2) (d) or (i) or 19.285.050(1).
(3) A qualifying utility must notify its retail electric customers
in published form within three months of incurring a penalty regarding
the size of the penalty and the reason it was incurred.
(4) The commission shall determine if an investor-owned utility may
recover the cost of this administrative penalty in electric rates, and
may consider providing positive incentives for an investor-owned
utility to exceed the targets established in RCW 19.285.040.
(5) A qualifying utility may acquire advanced renewable resource
compliance credits from the sustainable energy trust program under RCW
43.180.260 in the amount of twenty-five dollars for each megawatt hour
of projected eligible renewable resource need. A qualifying utility
may acquire advanced renewable resource compliance credits up to five
years in advance of an eligible renewable resource target. A
qualifying utility may not acquire more than twenty percent of its
projected eligible renewable resource target requirements for any given
target year.
(6) Administrative penalties and advanced renewable resource
compliance credit proceeds collected under this chapter shall be
deposited into the energy independence act special account ((which is
hereby)) created in RCW 43.180.260(2)(b). ((All receipts from
administrative penalties collected under this chapter must be deposited
into the account. Expenditures from the account may be used only for
the purchase of renewable energy credits or for energy conservation
projects at public facilities, local government facilities, community
colleges, or state universities. The state shall own and retire any
renewable energy credits purchased using moneys from the account. Only
the director of general administration or the director's designee may
authorize expenditures from the account. The account is subject to
allotment procedures under chapter 43.88 RCW, but an appropriation is
not required for expenditures.))
(6) For a qualifying utility that is an investor-owned utility, the
commission shall determine compliance with the provisions of this
chapter and assess penalties for noncompliance as provided in
subsection (1) of this section.
(7) For qualifying utilities that are not investor-owned utilities,
the auditor is responsible for auditing compliance with this chapter
and rules adopted under this chapter that apply to those utilities and
the attorney general is responsible for enforcing that compliance.
Sec. 3 RCW 43.180.260 and 2009 c 65 s 3 are each amended to read
as follows:
(1)(a) If economically feasible, the commission shall develop and
implement a sustainable energy trust program to provide financing for
qualified improvement projects. In developing the sustainable energy
trust program, the commission shall establish eligibility criteria for
financing that will enable it to choose eligible applicants who are
likely to repay loans made or acquired by the commission and funded
from the proceeds of commission bonds.
(((2))) (b) The commission shall, if economically feasible:
(((a))) (i) Issue bonds, as defined in RCW 43.180.020, for the
purpose of financing loans for qualified energy efficiency and
renewable energy improvement projects in accordance with RCW
43.180.150;
(((b))) (ii) Participate fully in federal and other governmental
programs and take actions that are necessary and consistent with this
chapter to secure to itself and the people of the state the benefits of
programs to promote energy efficiency and renewable energy
technologies;
(((c))) (iii) Contract with a certifying authority to accept
applications for energy efficiency and renewable energy improvement
projects, to review applications, including binding fixed price bids
for the improvements, and to approve qualified improvements for
financing by the commission. For solar electric systems, the
certifying authority must use an application certification process
similar to the investment cost recovery incentive application process
provided under RCW 82.16.120. No work by a certifying authority may
commence under this section until a request has been made by the
commission; and
(((d))) (iv) Before entering into a contract with a certifying
authority as defined in RCW 43.180.020(2)(b), consult with the
Washington State University ((energy)) extension (([extension energy]))
energy program to determine which potential improvement technologies
are appropriate.
(((3))) (2)(a) The commission shall develop a program to offer
advanced renewable resource compliance credits to qualifying utilities
as provided under RCW 19.285.060.
(b) The energy independence act special account is created in the
custody of the state treasurer. All receipts from administrative
penalties and advanced renewable resource compliance credit proceeds
under chapter 19.285 RCW and interest payments on loans authorized
under this chapter must be deposited into the account. Expenditures
from the account may be used only to provide grants and loans to
support the development of distributed generation and energy
conservation projects. Only the commission may authorize expenditures
from the account. The account is subject to allotment procedures under
chapter 43.88 RCW, but an appropriation is not required for
expenditures.
(3) For the purposes of this section:
(a) "Advanced renewable resource compliance credit" means a credit
sold by the commission to a qualifying utility that is used to satisfy
a portion of the qualifying utility's annual renewable energy target
under RCW 19.285.040(2);
(b) "Energy conservation" has the same meaning as "conservation"
defined in RCW 19.285.030; and
(c) "Qualifying utility" has the same meaning as defined in RCW
19.285.030.
(4) No general fund resources may be expended to implement this
section.
NEW SECTION. Sec. 4 A new section is added to chapter 43.180 RCW
to read as follows:
(1) The commission shall convene a work group to investigate and
make recommendations on the use of energy efficiency credits for energy
conservation compliance purposes under RCW 19.285.040 and the creation
of a program at the commission to sell energy efficiency credits to
qualifying utilities.
(2) The work group must consider and make recommendations on the
following:
(a) The design of a program that authorizes the commission to sell
energy efficiency credits to qualifying utilities for energy
conservation compliance purposes under RCW 19.285.040;
(b) Whether energy efficiency credits purchased by a qualifying
utility should be allowed to count at two times the amount of energy
conservation acquired;
(c) Whether energy efficiency credits purchased by a qualifying
utility may represent conservation that might not be built at the time
of purchase but could be verified up to three years after the calendar
year in which the credits are sold;
(d) The price at which the commission may sell energy efficiency
credits to qualifying utilities;
(e) The design of a program for the acquisition of conservation
through making financial assistance, in the form of loans, grants, or
similar products, available to residential, nonprofit, governmental,
commercial, and industrial energy users for the purpose of
accomplishing energy conservation measures;
(f) A system for the verification of the amount of conservation
acquired by such energy conservation measures through an energy audit
certifying the amount of conservation obtained;
(g) A system to track the verified conservation, the related energy
efficiency credits, and the bundling of multiple verified conservation
sources into any single energy efficiency credit; and
(h) A reasonable fee that the commission may charge for operating
an energy efficiency credit program.
(3) No general fund resources may be expended to implement this
section.
(4) For purposes of this section, the definitions in RCW 43.19.670
apply, except as follows:
(a) "Conservation" has the meaning given in RCW 19.285.030.
(b) "Energy audit" means a determination of the energy consumption
characteristics of a building or facility that consists of the
following elements:
(i) An energy consumption survey that identifies the type, amount,
and rate of energy consumption of the building or facility and its
major energy systems.
(ii) A walk-through survey that determines appropriate energy
conservation maintenance and operating procedures and indicates the
need, if any, for the acquisition and installation of energy
conservation measures and energy management systems.
(iii) An investment grade audit, which is an intensive engineering
analysis of energy conservation and management measures for the
facility, net energy savings, and a cost-effectiveness determination.
(c) "Energy efficiency credit" means a tradable certificate of
proof of at least one megawatt-hour of conservation where the
conservation is verified by an energy audit. The certificate includes
all of the nonpower attributes associated with that amount of
conservation, and the certificate must be verified by a tracking system
selected by the commission.
Sec. 5 RCW 19.285.030 and 2009 c 565 s 20 are each amended to
read as follows:
The definitions in this section apply throughout this chapter
unless the context clearly requires otherwise.
(1) "Attorney general" means the Washington state office of the
attorney general.
(2) "Auditor" means: (a) The Washington state auditor's office or
its designee for qualifying utilities under its jurisdiction that are
not investor-owned utilities; or (b) an independent auditor selected by
a qualifying utility that is not under the jurisdiction of the state
auditor and is not an investor-owned utility.
(3) "Commission" means the Washington state utilities and
transportation commission.
(4) "Conservation" means any reduction in electric power
consumption resulting from increases in the efficiency of energy use,
production, or distribution.
(5) "Cost-effective" has the same meaning as defined in RCW
80.52.030.
(6) "Council" means the Washington state apprenticeship and
training council within the department of labor and industries.
(7) "Customer" means a person or entity that purchases electricity
for ultimate consumption and not for resale.
(8) "Department" means the department of commerce or its successor.
(9) "Distributed generation" means an eligible renewable resource
where the generation facility or any integrated cluster of such
facilities has a generating capacity of not more than five megawatts.
(10) "Eligible renewable resource" means:
(a) Electricity from a generation facility powered by a renewable
resource other than freshwater that commences operation after March 31,
1999, where: (i) The facility is located in the Pacific Northwest; or
(ii) the electricity from the facility is delivered into Washington
state on a real-time basis without shaping, storage, or integration
services; or
(b) Incremental electricity produced as a result of efficiency
improvements completed after March 31, 1999, to hydroelectric
generation projects owned by a qualifying utility and located in the
Pacific Northwest or to hydroelectric generation in irrigation pipes
and canals located in the Pacific Northwest, where the additional
generation in either case does not result in new water diversions or
impoundments.
(11) "Investor-owned utility" has the same meaning as defined in
RCW 19.29A.010.
(12) "Load" means the amount of kilowatt-hours of electricity
delivered in the most recently completed year by a qualifying utility
to its Washington retail customers.
(13) "Nonpower attributes" means all environmentally related
characteristics, exclusive of energy, capacity reliability, and other
electrical power service attributes, that are associated with the
generation of electricity from a renewable resource, including but not
limited to the facility's fuel type, geographic location, vintage,
qualification as an eligible renewable resource, and avoided emissions
of pollutants to the air, soil, or water, and avoided emissions of
carbon dioxide and other greenhouse gases.
(14) "Pacific Northwest" has the same meaning as defined for the
Bonneville power administration in section 3 of the Pacific Northwest
electric power planning and conservation act (94 Stat. 2698; 16 U.S.C.
Sec. 839a).
(15) "Public facility" has the same meaning as defined in RCW
39.35C.010.
(16) "Qualifying utility" means an electric utility, as the term
"electric utility" is defined in RCW 19.29A.010, that serves more than
twenty-five thousand customers in the state of Washington. The number
of customers served may be based on data reported by a utility in form
861, "annual electric utility report," filed with the energy
information administration, United States department of energy.
(17) "Renewable energy credit" means a tradable certificate of
proof of at least one megawatt-hour of an eligible renewable resource
where the generation facility is not powered by freshwater, the
certificate includes all of the nonpower attributes associated with
that one megawatt-hour of electricity, and the certificate is verified
by a renewable energy credit tracking system selected by the
department.
(18) "Renewable resource" means: (a) Water; (b) wind; (c) solar
energy; (d) geothermal energy; (e) landfill gas; (f) wave, ocean, or
tidal power; (g) gas from sewage treatment facilities; (h) biodiesel
fuel as defined in RCW 82.29A.135 that is not derived from crops raised
on land cleared from old growth or first-growth forests where the
clearing occurred after December 7, 2006; and (i) biomass energy based
on animal waste or solid organic fuels from wood, forest, or field
residues, or dedicated energy crops that do not include (i) wood pieces
that have been treated with chemical preservatives such as creosote,
pentachlorophenol, or copper-chrome-arsenic; (ii) black liquor by-product from paper production; (iii) wood from old growth forests; or
(iv) municipal solid waste.
(19) "Rule" means rules adopted by an agency or other entity of
Washington state government to carry out the intent and purposes of
this chapter.
(20) "Year" means the twelve-month period commencing January 1st
and ending December 31st.
(21) "Advanced renewable resource compliance credit" means a credit
sold by the housing finance commission to a qualifying utility as
provided in RCW 19.285.060 that is used to satisfy a portion of the
qualifying utility's annual renewable energy target under RCW
19.285.040(2).