Strike everything after the enacting clause and insert the following:

NEW SECTION.  Sec. 1.  "The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.

(1) "Eligible coal plant" means a coal-fired electric generation facility that: (a) Had two or fewer generating units as of January 1, 1980, and four generating units as of January 1, 2016; (b) is owned by more than one electrical company as of January 1, 2016; and (c) provides, as a portion of the load served by the coal-fired electric generation facility, electricity paid for in rates by customers in the state of Washington.

(2) "Eligible coal unit" means any generating unit of an eligible coal plant.

(2) Regulatory liabilities placed in a retirement account pursuant to subsection (1) of this section must: (a) Not be used for any purpose other than the funding and recovery of prudently incurred decommissioning and remediation costs for such eligible coal units; (b) except as provided in RCW 80.04.350, not be reduced, altered, impaired, or limited from the date of commission approval of the inclusion of the regulatory liabilities in the retirement account until all prudently incurred decommissioning and remediation costs for such coal units are recovered or paid in full; and (c) provide that any remaining funds in the retirement account, after recovery by the electrical company of all prudently incurred decommissioning and remediation costs for such eligible coal units, be returned to customers.

(2) Subsection (1) of this section does not apply if an electrical company demonstrates to the commission that a decision to retire from service an eligible coal unit that commenced commercial operations before January 1, 1980, prior to December 31, 2022:

(a) Is prudent as determined by evidence showing the continued operation of an eligible coal unit is economically or technologically unfeasible or requires a capital investment that is outside the scope of a prudent improvement or investment or the eligible coal unit has reached the end of its useful life; or

(b) Does not meet the standard in (a) of this subsection but is attributable to the actions of a co-owner or operator of the eligible coal unit over whom the electrical company does not exercise control.

Sec. 4.  RCW 80.80.060 and 2011 c 180 s 104 are each 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 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 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 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 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 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) A long-term financial commitment for the purchase of coal transition power with termination dates consistent with the applicable dates in RCW 80.80.040(3)(c); or (b) a long-term financial commitment for the acquisition of an increased interest of not more than two hundred fifty megawatts of nameplate capacity of an eligible coal unit that commenced commercial operations after January 1, 1980, provided that eligible coal units that commenced commercial operations before January 1, 1980, have been permanently retired from service. Nothing in this subsection may be construed to exempt an electrical company from a general rate case or other adjudication by the commission under this title.

(10) The commission shall adopt rules necessary to implement this section by December 31, 2008.

NEW SECTION.  Sec. 5.  Sections 1 through 3 of this act constitute a new chapter in Title 80 RCW."

On page 1, beginning on line 1 of the title, after "Relating to" strike the remainder of the title and insert "a pathway for a transition of eligible coal units; amending RCW 80.80.060; and adding a new chapter to Title 80 RCW."

EFFECT: Allows an electric company to use regulatory liabilities for decommissioning and remediation costs for coal units that commenced operation before January 1, 1980.

Prevents an electric company from using regulatory liabilities for decommissioning and remediation costs for coal units that commenced operation before January 1, 1980, prior to December 31, 2022. However, the electric company may use the regulatory liabilities if it demonstrates to the utilities and transportation commission (UTC) that a decision to close these coal units prior to December 31, 2022, is: (1) Prudent and in the best interest of its customers; or (2) not prudent nor in the best interest of its customers but attributable to actions of a co-owner or operator.

Allows a waiver of the greenhouse gas (GHG) emissions performance standard for an increased interest of no more than 250 MW in a coal unit that commenced operations after January 1, 1980, provided that coal units that commenced operations before January 1, 1980, are permanently retired.

A waiver of the GHG emissions performance standard does exempt an electrical company from other UTC proceedings.