BILL REQ. #:  H-3810.2 

READ FIRST TIME 02/05/14.   

     AN ACT Relating to leased energy systems; adding a new section to chapter 80.60 RCW; adding new sections to chapter 80.28 RCW; adding a new chapter to Title 19 RCW; creating a new section; and providing an expiration date.

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

NEW SECTION.  Sec. 1   It is the intent of the legislature to provide mechanisms for low-cost financing of energy systems on the distribution side of the electricity grid, to provide for consumer protection of customers of these systems, and to recognize electric utility efforts in being early adopters of programs that encourage energy independence by customers.

NEW SECTION.  Sec. 2   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1)(a) "Biomass energy" includes: (i) Organic by-products of pulping and the wood manufacturing process; (ii) animal manure; (iii) solid organic fuels from wood; (iv) forest or field residues; (v) untreated wooden demolition or construction debris; (vi) food waste and food processing residuals; (vii) liquors derived from algae; (viii) dedicated energy crops; and (ix) yard waste.
     (b) "Biomass energy" does not include: (i) Wood pieces that have been treated with chemical preservatives such as creosote, pentachlorophenol, or copper-chrome-arsenic; (ii) wood from old growth forests; or (iii) municipal solid waste.
     (2) "Electric utility" means a consumer-owned utility or investor-owned utility as those terms are defined in RCW 19.280.020.
     (3) "High efficiency cogeneration" means 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 seventy-two percent of the total energy output.
     (4) "Leased energy system" means a renewable energy system that is:
     (a) Located in Washington;
     (b) Installed on an individual's, business's, or local government's real property that is not leased and is provided electricity generated by an electric utility; and
     (c) Owned by:
     (i) An electric utility and leased to a customer; or
     (ii) A third-party vendor that has contracted with a customer of an electric utility to lease a renewable energy system.
     (5) "Renewable energy system" includes: (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; (i) biomass energy; or (j) high efficiency cogeneration.
     (6) "Third-party vendor" means an entity that seeks to lease and install renewable energy systems to electric utility customers.

NEW SECTION.  Sec. 3   (1) An electric utility may offer a leased energy program. The leased energy program must offer to customers across all rate classes the opportunity to lease from the electric utility a renewable energy system that will be installed on the customer's property.
     (2) If an electric utility offers a leased energy program, no other entity may offer leases to the utility's customers.
     (3) If an electric utility does not offer a leased energy program that provides customers across all rate classes access to renewable energy systems on their property, third-party vendors may offer these systems through leases to the electric utility's customers.

NEW SECTION.  Sec. 4   (1) An electric utility that offers a utility program as provided in section 3 of this act shall maintain a registry of contractors operating in the electric utility's service area that are licensed to install renewable energy systems. The electric utility shall provide the names and contact information for the contractors listed in the registry to customers who have indicated an interest in the utility program, in order to assist customers in identifying available renewable energy system installment services.
     (2) In the case of a consumer-owned utility, the consumer-owned utility must follow applicable laws governing procurement and public works, as provided in chapters 54.04 and 39.04 RCW.
     (3) In the case of an investor-owned utility, the investor-owned utility is encouraged to include in the registry all licensed contractors known to work in the utility's service area and any licensed contractor who requests to be included in the registry.

NEW SECTION.  Sec. 5   Electric utilities or third-party vendors are encouraged to offer to customers the option to purchase the renewable energy system at the end of the lease term.

NEW SECTION.  Sec. 6   (1) Any customer leasing a renewable energy system from an electric utility or a third-party vendor must be able to transfer the obligation with any change of ownership of the underlying property.
     (2) Anticipating widespread adoption of leased energy systems and associated energy storage systems, the legislature finds it prudent to help facilitate the change of ownership of the underlying property by making sure owners disclose to customers and customers are fully informed of any environmental liabilities and disposal costs, if there be any, associated with the renewable energy system and any associated energy storage system.

NEW SECTION.  Sec. 7   (1) The department of ecology shall conduct an assessment of the environmental consequences, throughout the product lifecycle, associated with leased energy systems and energy storage systems installed in Washington containing hazardous materials, rare earth minerals, and other commercially valuable materials. The assessment must include a review of available and potential disposal and recycling options to properly manage hazardous wastes, and recover rare earth minerals and other commercially valuable materials.
     (2) The department of ecology shall identify and convene appropriate parties to develop recommendations on the responsible management of hazardous wastes and the recovery of rare earth minerals and other commercially valuable materials contained in renewable energy systems at the end of a system's life. The department of ecology shall present its report and recommendations to the legislature, consistent with RCW 43.01.036, by December 1, 2014.
     (3) This section expires June 30, 2015.

NEW SECTION.  Sec. 8   (1) The utilities and transportation commission shall publish, without disclosing proprietary information, a list of financing models being offered by investor-owned utilities or third-party vendors registered as competitive electrical companies.
     (2) The governing boards of customer-owned utilities shall publish, without disclosing proprietary information, a list of financing models being offered by the utility or third-party vendors registered as competitive electrical companies.

NEW SECTION.  Sec. 9   A new section is added to chapter 80.60 RCW to read as follows:
     (1) Only leased energy systems that can store up to twenty percent of the maximum total system hourly output for four hours are eligible for net metering.
     (2) Electric utilities or third-party vendors offering leased energy systems may offer centralized energy storage systems on the distribution system to meet the storage requirements in subsection (1) of this section.
     (3) For the purposes of this section, "leased energy system" has the same meaning as defined in section 2 of this act.

NEW SECTION.  Sec. 10   A new section is added to chapter 80.28 RCW to read as follows:
     (1) The legislature finds that:
     (a) Third-party vendors of distributed renewable energy systems are electrical companies as defined in this title and are subject to the jurisdiction of the commission.
     (b) A competitive marketplace with effective competition exists for the provision of leasing and installation of distributed renewable energy systems in the state of Washington.
     (c) Traditional rate of return, rate base regulation of electrical companies providing leasing and installation of distributed renewable energy systems may not provide the most efficient and effective means of achieving the public policy goals of this state as declared in RCW 80.28.024, 80.28.074, and this section. The commission is authorized to employ an alternative form of regulation if that alternative is better suited to achieving those policy goals.
     (d) The commission should retain its authority to protect consumers of distributed renewable energy systems from unreasonable deceptive practices. Nothing in this act precludes the office of the attorney general from exercising its statutory authority concerning consumer protection.
     (2) For the purposes of this section, "renewable energy system" has the same meaning as defined in section 2 of this act.

NEW SECTION.  Sec. 11   A new section is added to chapter 80.28 RCW to read as follows:
     (1) A third-party vendor must register with the commission as a competitive electrical company before beginning operations in this state to lease and install distributed renewable energy systems. The registration must be on a form prescribed by the commission and contain that information as the commission may by rule require, but must include at a minimum: The name and address of the company; the name and address of the company's registered agent, if any; the name, address, and title of each officer or director; the company's most current balance sheet; the company's latest annual report, if any; and a description of the services the company offers or intends to offer.
     (2) The commission may require as a precondition to registration the procurement of a performance bond sufficient to cover any advances or deposits the electrical company may collect from its customers or order that the advances or deposits be held in escrow or trust.
     (3) The commission may deny registration to any company that:
     (a) Does not provide the information required by this section;
     (b) Fails to provide a performance bond, if required;
     (c) Does not possess adequate financial resources to provide the proposed service; or
     (d) Does not possess adequate technical competency to provide the proposed service.
     (4) The commission shall take action to approve or issue a notice of hearing concerning any application for registration within thirty days after receiving the application. The commission may approve an application with or without a hearing. The commission may deny an application after a hearing.
     (5) The commission may adopt rules that describe the manner by which it will regulate competitive electrical companies, as well as the process for considering applications for registration under this title.
     (6) For the purposes of this section, "renewable energy system" has the same meaning as defined in section 2 of this act.

NEW SECTION.  Sec. 12   A new section is added to chapter 80.28 RCW to read as follows:
     (1) Competitive electrical companies must be subject to minimal regulation. The commission may waive any regulatory requirement under this title for competitive electrical companies when it determines that competition will serve the same purposes as public interest regulation. The commission may waive different regulatory requirements for different companies if the different treatment is in the public interest. A competitive electrical company must at a minimum:
     (a) Keep its accounts according to regulations as determined by the commission;
     (b) File financial reports with the commission as required by the commission and in a form and at times prescribed by the commission;
     (c) Post its prices on a public web site available to all potential customers; and
     (d) Cooperate with commission investigations of customer complaints.
     (2) The commission may revoke any waivers it grants and may reclassify any competitive electrical company if the revocation or reclassification would protect the public interest.
     (3) The commission may waive the requirements of RCW 80.28.090 in whole or in part for a competitive electrical company if it finds that competition will serve the same purpose and protect the public interest.
     (4) Competitive electrical companies must pay regulatory fees to the commission under chapter 80.24 RCW.
     (5) During a state of emergency declared under RCW 43.06.010(12), the governor may waive or suspend the operation or enforcement of this section or any portion of this section or under any administrative rule, and issue any orders to facilitate the operation of state or local government or to promote and secure the safety and protection of the civilian population.

NEW SECTION.  Sec. 13   A new section is added to chapter 80.28 RCW to read as follows:
     Upon request of the commission, investor-owned utilities and third-party vendors offering leased energy systems must provide information on the financial terms of leased energy systems currently under contract. The commission must use this information to determine how each party to a lease energy system contract benefits financially. In compliance with RCW 43.01.036, the commission shall report its findings to the appropriate energy committees of the house of representatives and senate by December 1, 2017.

NEW SECTION.  Sec. 14   Sections 1 through 6 and 8 of this act constitute a new chapter in Title 19 RCW.