BILL REQ. #:  S-1883.1 

READ FIRST TIME 02/25/11.   

     AN ACT Relating to coal-fired electric generation facilities; amending RCW 80.80.040, 80.80.070, 80.50.100, and 43.160.076; reenacting and amending RCW 80.80.010 and 80.80.060; adding new sections to chapter 80.80 RCW; adding a new section to chapter 43.155 RCW; adding a new section to chapter 43.06 RCW; adding a new section to chapter 80.04 RCW; adding a new chapter to Title 80 RCW; creating new sections; and providing an expiration date.

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

NEW SECTION.  Sec. 101   (1) Under RCW 70.235.020, the legislature required that statewide overall greenhouse gas emissions be reduced to 1990 levels by 2020.
     (2) The legislature finds that generating electricity from the combustion of coal produces large amounts of harmful pollutants, including ammonia, arsenic, lead, mercury, hydrochloric acid, nitrogen oxides, sulfuric acid, sulfur dioxide, particulate matter, and several toxic heavy metals, all of which have been determined by medical science to be harmful to human health and safety. In addition, the emissions from the combustion of coal in the state impact visibility in eight class I areas in the state. While the emission of many of these pollutants continues to be addressed through application of federal and state air quality laws, the emission of greenhouse gases resulting from the combustion of coal has not been addressed. Furthermore, these harmful by-products may be damaging the cultural history of Washington and its people by eroding ancient native American petroglyphs and pictographs and by accumulating in the soil and waters of the usual and accustomed areas for tribal hunting, fishing, gathering, and grazing.
     (3) The legislature has previously found that greenhouse gas emissions contribute to climate change and has found that Washington is especially vulnerable to climate change. The legislature now finds that coal-fired electricity generation is one of the largest sources of greenhouse gas emissions in the state, accounting for the largest source of such emissions from the generation of electricity in the state.
     (4) The legislature finds coal-fired electric generation may provide baseload power that is necessary for the stability and reliability of the electrical transmission grid and that contributes to the availability of affordable power in the state. The legislature further finds that efforts to transition power to other fuels requires the deliberate development of replacement generation, and any necessary transmission facilities, over a reasonable period of time to ensure grid stability and to maintain affordable electricity resources.
     (5) The legislature finds that coal-fired baseload electric generation facilities are a significant contributor to family-wage jobs and economic health in parts of the state and that transition of these facilities must address the economic future and the preservation of jobs in affected communities.
     (6) The legislature finds that coal-fired baseload electric generation facilities are large industrial facilities that require substantial planning and funding for closure and postclosure to ensure that the site is fully restored and free of contamination.
     (7) Therefore, it is the purpose of this act to provide for the reduction of greenhouse gas emissions from large coal-fired baseload electric power generation facilities, to effect an orderly transition of these facilities to cleaner fuels in a manner that ensures reliability of the state's electrical grid, to ensure appropriate cleanup and site restoration upon decommissioning of any of these facilities in the state, and to provide assistance to host communities planning for new economic development and mitigating the economic impacts of the closure of these facilities.

Sec. 102   RCW 80.80.010 and 2009 c 565 s 54 and 2009 c 448 s 1 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) "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 consumer-owned utilities under its jurisdiction; or (b) an independent auditor selected by a consumer-owned utility that is not under the jurisdiction of the state auditor.
     (3) "Average available greenhouse gas emissions output" means the level of greenhouse gas emissions as surveyed and determined by the energy policy division of the department of commerce under RCW 80.80.050.
     (4) "Baseload electric generation" means electric generation from a power plant that is designed and intended to provide electricity at an annualized plant capacity factor of at least sixty percent.
     (5) "Cogeneration facility" means a power plant in which the heat or steam is also used for industrial or commercial heating or cooling purposes and that meets federal energy regulatory commission standards for qualifying facilities under the public utility regulatory policies act of 1978 (16 U.S.C. Sec. 824a-3), as amended.
     (6) "Combined-cycle natural gas thermal electric generation facility" means a power plant that employs a combination of one or more gas turbines and steam turbines in which electricity is produced in the steam turbine from otherwise lost waste heat exiting from one or more of the gas turbines.
     (7) "Commission" means the Washington utilities and transportation commission.
     (8) "Consumer-owned utility" means a municipal utility formed under Title 35 RCW, a public utility district formed under Title 54 RCW, an irrigation district formed under chapter 87.03 RCW, a cooperative formed under chapter 23.86 RCW, a mutual corporation or association formed under chapter 24.06 RCW, or port district within which an industrial district has been established as authorized by Title 53 RCW, that is engaged in the business of distributing electricity to more than one retail electric customer in the state.
     (9) "Department" means the department of ecology.
     (10) "Distributed generation" means electric generation connected to the distribution level of the transmission and distribution grid, which is usually located at or near the intended place of use.
     (11) "Electric utility" means an electrical company or a consumer-owned utility.
     (12) "Electrical company" means a company owned by investors that meets the definition of RCW 80.04.010.
     (13) "Governing board" means the board of directors or legislative authority of a consumer-owned utility.
     (14) "Greenhouse ((gases)) gas" includes carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.
     (15) "Long-term financial commitment" means:
     (a) Either a new ownership interest in baseload electric generation or an upgrade to a baseload electric generation facility; or
     (b) A new or renewed contract for baseload electric generation with a term of five or more years for the provision of retail power or wholesale power to end-use customers in this state.
     (16) "Plant capacity factor" means the ratio of the electricity produced during a given time period, measured in kilowatt-hours, to the electricity the unit could have produced if it had been operated at its rated capacity during that period, expressed in kilowatt-hours.
     (17) "Power plant" means a facility for the generation of electricity that is permitted as a single plant by a jurisdiction inside or outside the state.
     (18) "Upgrade" means any modification made for the primary purpose of increasing the electric generation capacity of a baseload electric generation facility. "Upgrade" does not include routine or necessary maintenance, installation of emission control equipment, installation, replacement, or modification of equipment that improves the heat rate of the facility, or installation, replacement, or modification of equipment for the primary purpose of maintaining reliable generation output capability that does not increase the heat input or fuel usage as specified in existing generation air quality permits as of July 22, 2007, but may result in incidental increases in generation capacity.
     (19) "Clean fuel transition power" means the power purchased by an electric utility or other entity as part of implementing a memorandum of agreement entered under sections 106 and 107 of this act to achieve early emissions reductions of greenhouse gases.
     (20) "Memorandum of agreement" or "memorandum" means a binding and enforceable contract between the governor and an owner of a baseload electric generation facility in the state that provides for early greenhouse gas emissions reductions from the facility through the use of clean fuel transition power.

Sec. 103   RCW 80.80.040 and 2009 c 448 s 2 are each amended to read as follows:
     (1) Beginning July 1, 2008, the greenhouse gas emissions performance standard for all baseload electric generation for which electric utilities enter into long-term financial commitments on or after such date is the lower of:
     (a) One thousand one hundred pounds of greenhouse gases per megawatt-hour; or
     (b) The average available greenhouse gas emissions output as determined under RCW 80.80.050.
     (2) This chapter does not apply to long-term financial commitments with the Bonneville power administration.
     (3)(a) Except as provided in (c) of this subsection, all baseload electric generation facilities in operation as of June 30, 2008, are deemed to be in compliance with the greenhouse gas emissions performance standard established under this section until the facilities are the subject of long-term financial commitments.
     (b) All baseload electric generation that commences operation after June 30, 2008, and is located in Washington, must comply with the greenhouse gas emissions performance standard established in subsection (1) of this section.
     (c) A coal-fired baseload electric generation facility in Washington that has emitted more than one million tons of greenhouse gases annually in calendar year 2005 must comply with the following greenhouse gas emissions performance standard by the date established in a memorandum of agreement formed under section 106 of this act:
     (i) One thousand one hundred pounds of greenhouse gases per megawatt-hour; or
     (ii) The average available greenhouse gas emissions output as determined under RCW 80.80.050.
     (4) All electric generation facilities or power plants powered exclusively by renewable resources, as defined in RCW 19.280.020, are deemed to be in compliance with the greenhouse gas emissions performance standard established under this section.
     (5) All cogeneration facilities in the state that are fueled by natural gas or waste gas or a combination of the two fuels, and that are in operation as of June 30, 2008, are deemed to be in compliance with the greenhouse gas emissions performance standard established under this section until the facilities are the subject of a new ownership interest or are upgraded.
     (6) In determining the rate of emissions of greenhouse gases for baseload electric generation, the total emissions associated with producing electricity shall be included.
     (7) In no case shall a long-term financial commitment be determined to be in compliance with the greenhouse gas emissions performance standard if the commitment includes more than twelve percent of electricity from unspecified sources.
     (8) For a long-term financial commitment with multiple power plants, each specified power plant must be treated individually for the purpose of determining the annualized plant capacity factor and net emissions, and each power plant must comply with subsection (1) of this section, except as provided in subsections (3) through (5) of this section.
     (9) The department shall establish an output-based methodology to ensure that the calculation of emissions of greenhouse gases for a cogeneration facility recognizes the total usable energy output of the process, and includes all greenhouse gases emitted by the facility in the production of both electrical and thermal energy. In developing and implementing the greenhouse gas emissions performance standard, the department shall consider and act in a manner consistent with any rules adopted pursuant to the public utilities regulatory policy act of 1978 (16 U.S.C. Sec. 824a-3), as amended.
     (10) The following greenhouse gas emissions produced by baseload electric generation owned or contracted through a long-term financial commitment shall not be counted as emissions of the power plant in determining compliance with the greenhouse gas emissions performance standard:
     (a) Those emissions that are injected permanently in geological formations;
     (b) Those emissions that are permanently sequestered by other means approved by the department; and
     (c) Those emissions sequestered or mitigated as approved under subsection (16) of this section.
     (11) In adopting and implementing the greenhouse gas emissions performance standard, the department of ((community, trade, and economic development)) commerce energy policy division, in consultation with the commission, the department, the Bonneville power administration, the western electricity ((coordination [coordinating])) coordinating council, the energy facility site evaluation council, electric utilities, public interest representatives, and consumer representatives, shall consider the effects of the greenhouse gas emissions performance standard on system reliability and overall costs to electricity customers.
     (12) In developing and implementing the greenhouse gas emissions performance standard, the department shall, with assistance of the commission, the department of ((community, trade, and economic development)) commerce energy policy division, and electric utilities, and to the extent practicable, address long-term purchases of electricity from unspecified sources in a manner consistent with this chapter.
     (13) The directors of the energy facility site evaluation council and the department shall each adopt rules under chapter 34.05 RCW in coordination with each other to implement and enforce the greenhouse gas emissions performance standard. The rules necessary to implement this section shall be adopted by June 30, 2008.
     (14) In adopting the rules for implementing this section, the energy facility site evaluation council and the department shall include criteria to be applied in evaluating the carbon sequestration plan, for baseload electric generation that will rely on subsection (10) of this section to demonstrate compliance, but that will commence sequestration after the date that electricity is first produced. The rules shall include but not be limited to:
     (a) Provisions for financial assurances, as a condition of plant operation, sufficient to ensure successful implementation of the carbon sequestration plan, including construction and operation of necessary equipment, and any other significant costs;
     (b) Provisions for geological or other approved sequestration commencing within five years of plant operation, including full and sufficient technical documentation to support the planned sequestration;
     (c) Provisions for monitoring the effectiveness of the implementation of the sequestration plan;
     (d) Penalties for failure to achieve implementation of the plan on schedule;
     (e) Provisions for an owner to purchase emissions reductions in the event of the failure of a sequestration plan under subsection (16) of this section; and
     (f) Provisions for public notice and comment on the carbon sequestration plan.
     (15)(a) Except as provided in (b) of this subsection, as part of its role enforcing the greenhouse gas emissions performance standard, the department shall determine whether sequestration or a plan for sequestration will provide safe, reliable, and permanent protection against the greenhouse gases entering the atmosphere from the power plant and all ancillary facilities.
     (b) For facilities under its jurisdiction, the energy facility site evaluation council shall contract for review of sequestration or the carbon sequestration plan with the department consistent with the conditions under (a) of this subsection, consider the adequacy of sequestration or the plan in its adjudicative proceedings conducted under RCW 80.50.090(3), and incorporate specific findings regarding adequacy in its recommendation to the governor under RCW 80.50.100.
     (16) A project under consideration by the energy facility site evaluation council by July 22, 2007, is required to include all of the requirements of subsection (14) of this section in its carbon sequestration plan submitted as part of the energy facility site evaluation council process. A project under consideration by the energy facility site evaluation council by July 22, 2007, that receives final site certification agreement approval under chapter 80.50 RCW shall make a good faith effort to implement the sequestration plan. If the project owner determines that implementation is not feasible, the project owner shall submit documentation of that determination to the energy facility site evaluation council. The documentation shall demonstrate the steps taken to implement the sequestration plan and evidence of the technological and economic barriers to successful implementation. The project owner shall then provide to the energy facility site evaluation council notification that they shall implement the plan that requires the project owner to meet the greenhouse gas emissions performance standard by purchasing verifiable greenhouse gas emissions reductions from an electric ((generating)) generation facility located within the western interconnection, where the reduction would not have occurred otherwise or absent this contractual agreement, such that the sum of the emissions reductions purchased and the facility's emissions meets the standard for the life of the facility.

Sec. 104   RCW 80.80.060 and 2009 c 448 s 3 and 2009 c 147 s 1 are each reenacted and amended to read as follows:
     (1) No electrical company may enter into a long-term financial commitment unless the baseload electric generation supplied under such a long-term financial commitment complies with the greenhouse ((gases [gas])) gas emissions performance standard established under RCW 80.80.040.
     (2) In order to enforce the requirements of this chapter, the commission shall review in a general rate case or as provided in subsection (5) of this section any long-term financial commitment entered into by an electrical company after June 30, 2008, to determine whether the baseload electric generation to be supplied under that long-term financial commitment complies with the greenhouse ((gases [gas])) gas emissions performance standard established under RCW 80.80.040.
     (3) In determining whether a long-term financial commitment is for baseload electric generation, the commission shall consider the design of the power plant and its intended use, based upon the electricity purchase contract, if any, permits necessary for the operation of the power plant, and any other matter the commission determines is relevant under the circumstances.
     (4) Upon application by an electric utility, the commission may provide a case-by-case exemption from the greenhouse ((gases [gas])) gas emissions performance standard to address: (a) Unanticipated electric system reliability needs; (b) extraordinary cost impacts on utility ratepayers; or (c) catastrophic events or threat of significant financial harm that may arise from unforeseen circumstances.
     (5) Upon application by an electrical company, the commission shall determine whether the company's proposed decision to acquire electric generation or enter into a power purchase agreement for electricity complies with the greenhouse ((gases [gas])) gas emissions performance standard established under RCW 80.80.040. The commission shall not decide in a proceeding under this subsection (5) issues involving the actual costs to construct and operate the selected resource, cost recovery, or other issues reserved by the commission for decision in a general rate case or other proceeding for recovery of the resource or contract costs.
     (6) An electrical company may account for and defer for later consideration by the commission costs incurred in connection with a long-term financial commitment, including operating and maintenance costs, depreciation, taxes, and cost of invested capital. The deferral begins with the date on which the power plant begins commercial operation or the effective date of the power purchase agreement and continues for a period not to exceed twenty-four months; provided that if during such period the company files a general rate case or other proceeding for the recovery of such costs, deferral ends on the effective date of the final decision by the commission in such proceeding. Creation of such a deferral account does not by itself determine the actual costs of the long-term financial commitment, whether recovery of any or all of these costs is appropriate, or other issues to be decided by the commission in a general rate case or other proceeding for recovery of these costs. For the purpose of this subsection (6) only, the term "long-term financial commitment" also includes an electric company's ownership or power purchase agreement with a term of five or more years associated with an eligible renewable resource as defined in RCW 19.285.030.
     (7) The commission shall consult with the department to apply the procedures adopted by the department to verify the emissions of greenhouse gases from baseload electric generation under RCW 80.80.040. The department shall report to the commission whether baseload electric generation will comply with the greenhouse ((gases [gas])) gas emissions performance standard for the duration of the period the baseload electric generation is supplied to the electrical company.
     (8) The commission shall adopt rules for the enforcement of this section with respect to electrical companies and adopt procedural rules for approving costs incurred by an electrical company under subsection (4) of this section.
     (9) This section does not apply to a long-term financial commitment for the purchase of clean fuel transition power.
     (10) The commission shall adopt rules necessary to implement this section by December 31, 2008.

Sec. 105   RCW 80.80.070 and 2007 c 307 s 9 are each amended to read as follows:
     (1) No consumer-owned utility may enter into a long-term financial commitment unless the baseload electric generation supplied under such a long-term financial commitment complies with the greenhouse ((gases)) gas emissions performance standard established under RCW 80.80.040.
     (2) The governing board shall review and make a determination on any long-term financial commitment by the utility, pursuant to this chapter and after consultation with the department, to determine whether the baseload electric generation to be supplied under that long-term financial commitment complies with the greenhouse ((gases)) gas emissions performance standard established under RCW 80.80.040. No consumer-owned utility may enter into a long-term financial commitment unless the baseload electric generation to be supplied under that long-term financial commitment complies with the greenhouse ((gases)) gas emissions performance standard established under RCW 80.80.040.
     (3) In confirming that a long-term financial commitment is for baseload electric generation, the governing board shall consider the design of the power plant and the intended use of the power plant based upon the electricity purchase contract, if any, permits necessary for the operation of the power plant, and any other matter the governing board determines is relevant under the circumstances.
     (4) The governing board may provide a case-by-case exemption from the greenhouse ((gases)) gas emissions performance standard to address: (a) Unanticipated electric system reliability needs; or (b) catastrophic events or threat of significant financial harm that may arise from unforeseen circumstances.
     (5) The governing board shall apply the procedures adopted by the department to verify the emissions of greenhouse gases from baseload electric generation under RCW 80.80.040, and may request assistance from the department in doing so.
     (6) For consumer-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.
     (7) This section does not apply to long-term financial commitments for the purchase of clean fuel transition power.

NEW SECTION.  Sec. 106   A new section is added to chapter 80.80 RCW to read as follows:
     (1) The governor shall seek to enter into a memorandum of agreement with the owners of a coal-fired baseload facility that has emitted more than one million tons of greenhouse gases annually in calendar year 2005.
     (2) The memorandum of agreement must incorporate binding commitments to achieve the early reductions required by this section and include a schedule of major steps and investments necessary to achieve the reductions. The agreement must provide for the following minimum levels of emission reductions when measured on a calendar year basis as a percentage of the average annual emissions in calendar year 2005:
     (a) Between January 1, 2012, and December 31, 2016, the facility must achieve at least a ten percent average reduction; and
     (b) Beginning January 1, 2017, the facility must achieve further significant reductions as specified in the memorandum of agreement.
     (3) The memorandum of agreement must specify the date by which the facility must meet the emissions performance standard in RCW 80.80.040(3)(c). The date may be no sooner than December 31, 2020, and no later than December 31, 2025, and must be the earliest date by which the following factors can reasonably be addressed:
     (a) Impacts upon employment and other economic impacts in the community hosting the baseload electric generation facility;
     (b) The financial impact upon the baseload electric generation facility owner; and
     (c) The environmental effects of continued operation of the coal-fired baseload electric generation facility.
     (4) The memorandum of agreement must include provisions by which the facility owners will provide financial assistance to the community for planning for future site uses and preserving jobs. The financial assistance must be equivalent to the financial benefits to the facility from the tax exemptions provided under RCW 82.08.811 and 82.12.811.

NEW SECTION.  Sec. 107   A new section is added to chapter 80.80 RCW to read as follows:
     (1) A memorandum of agreement formed under section 106 of this act may describe the potential sources and types of fuel for electricity generation that may qualify as clean fuel transition power. When negotiating the issue of clean fuel transition power in any memorandum of agreement, the governor may consult with any entity necessary to ensure a regional dialogue concerning replacement power, transmission reliability, natural gas pipeline capacity, or any other relevant issue. An interested entity may become a party to the memorandum of agreement.
     (2) No state agency or political subdivision of the state may adopt a greenhouse gas emission performance standard, or other operating requirement or limitation, that is inconsistent with the provisions of a memorandum of agreement entered pursuant to this section. The memorandum of agreement may provide for its termination or suspension, or require modification to the satisfaction of the parties to the memorandum of agreement, in the event that a conflicting emission or performance standard, or other operational requirement or limitation directly addressing greenhouse gas emissions, is imposed by federal law, rules, or regulatory requirements.

NEW SECTION.  Sec. 108   A new section is added to chapter 80.80 RCW to read as follows:
     (1) A memorandum of agreement entered into pursuant to section 106 of this act may include provisions to assist in the financing of emissions reductions that exceed those required by RCW 80.80.040(3)(c) by providing for the recognition of such reductions in applicable state policies and programs relating to greenhouse gas emissions, and by encouraging and advocating for the recognition of the reductions in all established and emerging emission reduction frameworks at the regional, national, or international level.
     (2) Where the agreement includes the provisions referred to in subsection (1) of this section, electric utilities serving customers in this state must be afforded an opportunity to manage their future carbon regulatory risk through investments in early emission reductions under the agreement. Such an investment must be treated as if it were an equal reduction in the emissions generated by the utility and of any emissions resulting from the consumption of electricity by the utility's customers.
     (3) The governor may recommend actions by the legislature to strengthen implementation of an agreement or a proposed agreement relating to recognition of investments in early emissions reductions.

Sec. 109   RCW 80.50.100 and 1989 c 175 s 174 are each amended to read as follows:
     (1) The council shall report to the governor its recommendations as to the approval or rejection of an application for certification within twelve months of receipt by the council of such an application, or such later time as is mutually agreed by the council and the applicant. In the case of an application for certification of an energy facility proposed for construction, modification, or expansion for the purpose of providing clean fuel transition power assisting in implementing provisions of a memorandum of agreement entered pursuant to section 106 of this act, the council shall expedite the processing of the application pursuant to RCW 80.50.075 and shall report its recommendations to the governor within one hundred eighty days of receipt by the council of such an application, or a later time as is mutually agreed by the council and the applicant. If the council recommends approval of an application for certification, it shall also submit a draft certification agreement with the report. The council shall include conditions in the draft certification agreement to implement the provisions of this chapter, including, but not limited to, conditions to protect state or local governmental or community interests affected by the construction or operation of the energy facility, and conditions designed to recognize the purpose of laws or ordinances, or rules or regulations promulgated thereunder, that are preempted or superseded pursuant to RCW 80.50.110 as now or hereafter amended.
     (2)(a) Within sixty days of receipt of the council's report the governor shall take one of the following actions:
     (((a))) (i) Approve the application and execute the draft certification agreement; or
     (((b))) (ii) Reject the application; or
     (((c))) (iii) Direct the council to reconsider certain aspects of the draft certification agreement.
     (b) The council shall reconsider such aspects of the draft certification agreement by reviewing the existing record of the application or, as necessary, by reopening the adjudicative proceeding for the purposes of receiving additional evidence. Such reconsideration shall be conducted expeditiously. The council shall resubmit the draft certification to the governor incorporating any amendments deemed necessary upon reconsideration. Within sixty days of receipt of such draft certification agreement, the governor shall either approve the application and execute the certification agreement or reject the application. The certification agreement shall be binding upon execution by the governor and the applicant.
     (3) The rejection of an application for certification by the governor shall be final as to that application but shall not preclude submission of a subsequent application for the same site on the basis of changed conditions or new information.

NEW SECTION.  Sec. 201   The legislature finds that very large coal-fired baseload electric generation facilities are major industrial facilities whose closure, removal of structures, and site reclamation requires significant planning and funding. In order to ensure that the site of these facilities after closure is fully cleaned up, it is necessary to require that the facility owner demonstrate during the facility's operation that sufficient funding will be available for closure and postclosure activities. Since the degree of cleanup depends, in part, on the proposed future uses of a site, the closure and postclosure requirements must consider the land use designations and economic development plans of the host community. It is the intent of the legislature to facilitate the transition of these facilities by requiring facility decommissioning and site restoration plans that are coordinated and consistent with economic development plans of affected communities.

NEW SECTION.  Sec. 202   (1) A facility subject to closure under RCW 80.80.040(3)(c), or a memorandum of agreement under section 106 of this act, must provide the department of ecology with a plan for the closure and postclosure of the facility at least twenty-four months prior to its closure. This plan must include but not be limited to:
     (a) A detailed estimate of the cost to implement the plan based on the cost of hiring a third party to conduct all activities;
     (b) Demonstrating financial assurance to fund the closure and postclosure of the facility and providing methods by which this assurance may be demonstrated;
     (c) Methods for estimating closure costs, including full site reclamation under all applicable federal and state clean-up standards; and
     (d) A decommissioning and site restoration plan that addresses restoring physical topography, cleanup of all hazardous substances on the site, potential future uses of the site following restoration, and coordination with local and community plans for economic development in the vicinity of the site.
     (2) All cost estimates in the plan must be in current dollars and may not include a net present value adjustment or offsets for salvage value of wastes or other property.
     (3) Adoption of the plan and significant revisions to the plan must be approved by the department of ecology following consultation with the advisory board created in section 302 of this act.

NEW SECTION.  Sec. 203   (1) A facility subject to closure under RCW 80.80.040(3)(c), or a memorandum of agreement under section 106 of this act, must guarantee funds are available to perform all activities specified in the decommissioning plan developed under section 202 of this act. The amount must equal the cost estimates specified in the decommissioning plan and must be updated annually for inflation. All guarantees under this section must be assumed by any successor owner, parent company, or holding company.
     (2) The guarantee required under subsection (1) of this section may be accomplished by letter of credit that is acceptable to the department of ecology.
     (3) The issuing institution of the letter of credit must be an entity that has the authority to issue letters of credit and whose letter of credit operations are regulated by a federal or state agency.
     (4) A qualifying facility that uses a letter of credit to satisfy the requirements of this act must also establish a standby trust fund. Under the terms of the letter of credit, all amounts paid pursuant to a draft from the department of ecology must be deposited by the issuing institution directly into the standby trust fund in accordance with instructions from the department of ecology. This standby trust fund must be approved by the department of ecology.
     (5) The letter of credit must be irrevocable and issued for a period of at least one year. The letter of credit must provide that the expiration date will be automatically extended for a period of at least one year unless, at least one hundred twenty days before the current expiration date, the issuing institution notifies both the qualifying facility and the department of ecology of a decision not to extend the expiration date. Under the terms of the letter of credit, the one hundred twenty days will begin on the date when both the qualifying plant and the department of ecology have received the notice, as evidenced by certified mail return receipts or by overnight courier delivery receipts.
     (6) If the qualifying facility does not establish an alternative method of guaranteeing decommissioning funds are available within ninety days after receipt by both the qualifying facility plant and the department of ecology of a notice from the issuing institution that it has decided not to extend the letter of credit beyond the current expiration date, the department of ecology must draw on the letter of credit. The department of ecology must approve any replacement or substitute guarantee method before the expiration of the ninety-day period.
     (7) If a qualifying facility elects to use a letter of credit as the sole method for guaranteeing decommissioning funds are available, the face value of the letter of credit must meet or exceed the current inflation-adjusted cost estimate.
     (8) A qualifying facility may use an amendment to increase the face value of a letter of credit each year to account for inflation. A qualifying facility is not required to obtain a new letter of credit to cover annual inflation adjustments.

NEW SECTION.  Sec. 204   The department of ecology shall consult with the energy facility site evaluation council to harmonize the standards required under the rules adopted under section 202 of this act with rules adopted by the council for site restoration and preservation applicable to facilities subject to a site certification agreement under chapter 80.50 RCW.

NEW SECTION.  Sec. 205   Sections 201 through 204 and 302 of this act constitute a new chapter in Title 80 RCW.

NEW SECTION.  Sec. 301   The legislature finds that to achieve the state's greenhouse gas emissions limits established under RCW 70.235.020, very large emissions sources from fossil fuel electric generation facilities in the state are likely to be transitioned to lower-emitting fuels. It is in the public interest to assist local communities in which very large facilities may be closed, in order to plan for future economic uses of the site and in the community surrounding the site.

NEW SECTION.  Sec. 302   A new section is added to chapter 43.06 RCW to read as follows:
     (1) By January 1, 2016, the governor shall create a coal-fired electric generating facility transition advisory board for each facility that is operating on July 1, 2015, and that is subject to the standards applicable under RCW 80.80.040(3)(c). The advisory board shall serve the purpose of providing community involvement in facility and site decommissioning and planning for future economic development to mitigate the community impacts of facility decommissioning.
     (2)(a) Five members of the advisory board are voting members and must be appointed by the governor. One voting member must be a representative of the owner of the facility. One voting member must be a representative of the county economic development council where the facility is located. One voting member must be a representative of the majority of employees at the facility, chosen by those employees or a bargaining entity established to represent those employees. Two voting members must represent the general public. All voting advisory board members must comply with applicable provisions in chapter 42.52 RCW concerning any potential conflicts of interest. The governor shall appoint one of the general public members of the board as the chair.
     (b) In making the appointments to the advisory board, the governor shall seek a board membership that collectively provides strong fiscal and environmental oversight of the facility transition to cleaner fuels, that provides extensive knowledge of local government processes, and that has an understanding of issues relevant to the environment and economic development in Washington state. Vacant positions on the advisory board must be filled in the same manner as the original appointments. Advisory board members appointed by the governor shall serve for terms coextensive with the term of the governor. All advisory board members may be removed for cause.
     (3) In addition to the five voting members of the advisory board, the following shall serve as ex officio nonvoting members of the advisory board: The director of the department of ecology; the mayor of the city in which the qualifying facility is located; a representative from the city council in which the facility is located; and the chair of the county council in which the facility is located. The members serving in an ex officio capacity may designate a representative from their respective agencies or offices to serve on the board on their behalf. Such a designation must be made in writing.
     (4) The advisory board has the following powers and duties related to decommissioning of the facility and planning for future site uses:
     (a) To review and provide comments regarding the decommissioning and site restoration plan required by this chapter;
     (b) To advise the department of ecology on whether the decommissioning and site restoration plan is coordinated and consistent with economic development plans of affected communities; and
     (c) To set its meeting schedules and convene at scheduled times or meet at the request of a majority of its members or the chair.
     (5) Decisions of the advisory board must be made by a majority of its total voting membership.
     (6) Members of the board must be reimbursed as provided by RCW 43.03.050 and 43.03.060.
     (7) This section expires three years after the applicable date in RCW 80.80.040(3)(c). The governor's office must notify the code reviser's office in writing of the final expiration date.

Sec. 303   RCW 43.160.076 and 2008 c 327 s 8 are each amended to read as follows:
     (1) Except as authorized to the contrary under subsection (2) of this section, from all funds available to the board for financial assistance in a biennium under this chapter, the board shall approve at least seventy-five percent of the first twenty million dollars of funds available and at least fifty percent of any additional funds for financial assistance for projects in rural counties.
     (2) If at any time during the last six months of a biennium the board finds that the actual and anticipated applications for qualified projects in rural counties are clearly insufficient to use up the allocations under subsection (1) of this section, then the board shall estimate the amount of the insufficiency and during the remainder of the biennium may use that amount of the allocation for financial assistance to projects not located in rural counties.
     (3) The board shall solicit qualifying projects to plan, design, and construct public facilities needed to attract new industrial and commercial activities in areas impacted by the closure or potential closure of large fossil fuel electric generation facilities, which for the purposes of this section means a facility that has emitted more than one million tons per year of greenhouse gases in calendar year 2005. The projects should be consistent with any applicable plans for major industrial activity on lands formerly used or designated for surface coal mining and supporting uses under RCW 36.70A.368. When the board receives timely and eligible project applications from a political subdivision of the state for financial assistance for such projects, the board from available funds shall provide a priority for funding projects at the following levels:
     (a) For the 2011-2013 biennium, at least two hundred fifty thousand dollars;
     (b) For the 2013-2015 biennium, at least two hundred fifty thousand dollars;
     (c) For the 2015-2017 biennium, at least one million dollars;
     (d) For the 2017-2019 biennium, at least one million dollars;
     (e) For the 2019-2021 biennium, at least two million dollars; and
     (f) For the 2021-2023 biennium, at least two million dollars.

NEW SECTION.  Sec. 304   A new section is added to chapter 43.155 RCW to read as follows:
     The board shall solicit qualifying projects to plan, design, and construct public works projects needed to attract new industrial and commercial activities in areas impacted by the closure or potential closure of large fossil fuel electric generation facilities, which for the purposes of this section means a facility that has emitted more than one million tons per year of greenhouse gases in calendar year 2005. The projects should be consistent with any applicable plans for major industrial activity on lands formerly used or designated for surface coal mining and supporting uses under RCW 36.70A.368. When the board receives timely and eligible project applications from a political subdivision of the state for financial assistance for such projects, the board from available funds shall provide a priority for funding projects at the following levels:
     (1) For the 2011-2013 biennium, at least two hundred fifty thousand dollars;
     (2) For the 2013-2015 biennium, at least two hundred fifty thousand dollars;
     (3) For the 2015-2017 biennium, at least one million dollars;
     (4) For the 2017-2019 biennium, at least one million dollars;
     (5) For the 2019-2021 biennium, at least two million dollars; and
     (6) For the 2021-2023 biennium, at least two million dollars.

NEW SECTION.  Sec. 305   A new section is added to chapter 80.04 RCW to read as follows:
     (1) In any rate proceeding of an electrical company, the commission must allow the company to recover the cost to acquire clean fuel transition power, as defined in RCW 80.80.010, provided the power is needed by the company to serve its ratepayers and the acquisition is economical for the company and its ratepayers.
     (2) In determining whether the acquisition of clean fuel transition power is economical, the commission may consider:
     (a) The long-term economic benefit to the electrical company and its ratepayers of such a long-term purchase; and
     (b) The environmental benefits attributable to the production of clean fuel transition power.

NEW SECTION.  Sec. 306   No civil liability may be imposed by any court on the state, its officers, employees, instrumentalities, or subdivisions under sections 101, 201, or 301 of this act.