State Energy Performance Standard.

The State Energy Performance Standard (Standard) requires the Department of Commerce (Commerce) to establish rules for energy performance standards for covered commercial buildings, to collect data on compliance, and to report on outcomes.  The Standard seeks to maximize reductions in greenhouse gas emissions from the building sector.  The Standard includes energy use intensity targets by building type, as well as requirements for an energy management plan, operations and maintenance program, energy efficiency audits, and investments in energy efficiency measures.

The Standard applies to two categories of buildings:

• Tier 1 covered commercial buildings are buildings where the sum of nonresidential, hotel, motel, and dormitory floor areas exceed 50,000 square feet, excluding the parking garage area.
• Tier 2 covered buildings are commercial buildings greater than 20,000 square feet but less than 50,000 square feet, and multifamily residential buildings greater than 20,000 square feet.

All elements of the Standard apply to Tier 1 buildings.  Tier 2 buildings are responsible for the energy management and benchmark requirements; they are not responsible for complying with the energy use intensity targets.

Required compliance dates are phased in, with the largest Tier 1 buildings needing to report on compliance by June 2026, and all Tier 1 buildings needing to report on compliance by June 2028.  Tier 2 buildings must report on compliance to Commerce beginning in July 2027.

Commerce may certify incentive payments for building owners who comply with the Standard early.  Utilities administer the incentive payments and are allowed a public utility tax credit equal to the incentive payments and some administrative costs. 

Early adoption incentive payments are capped at $75 million total for Tier 1 buildings and $150 million total for Tier 2 buildings.

Commerce may impose administrative penalties for building owners failing to submit documentation demonstrating compliance.  For Tier 1 buildings, the penalty may not exceed $5,000 plus no more than $1 per year per gross square foot for the duration of any continuing violation.  For Tier 2 buildings, the penalty may not exceed 30 cents per square foot, for failing to submit documentation demonstrating compliance with energy management and benchmarking requirements.

The Joint Legislative Audit and Review Committee (JLARC) must review and report to the Legislature on the costs to state and local agencies to comply with the Standard.  The JLARC must build off of the work done for the financial analysis in the Clean Buildings Workgroup November 2024 Report to the Legislature. 

The JLARC must select a sample of covered buildings owned by state agencies, including buildings from the east and west sides of the state and buildings representing a broad selection of building types, such as office buildings, higher education buildings, kindergarten through twelfth grade schools, and correctional facilities.  

For this sample, the JLARC must:

• compile state expenditures for compliance, broken out by fiscal year, starting with fiscal year 2020, the source of the funds, the amounts spent of capital upgrades, and amounts spent of energy management and benchmarking;
• include the timeline over which any capital investments will be cost-effective, the estimated costs that would have been incurred without a Standard, and a quantification of energy savings from the expenditures;
• estimate the number of jobs created as a result of the expenditures for work on capital upgrades and energy management and benchmarking;
• analyze trends of completed energy audits based on the ages of the buildings, type of building, and estimated costs of capital upgrades needed to meet compliance; and
• identify sources of potential state, federal, and local funding available to implement the required capital upgrades.

The JLARC must submit a final report to the Legislature by June 30, 2027.

If funding is not provided for this bill by June 30, 2025, the bill is null and void.

(In support) It has become evident that there are costs to the state from the Clean Buildings laws.  The costs of energy audits are high, and projects may be reprioritized to achieve the goals of these laws.  There are large appropriation requests from state universities for decarbonization efforts.  We need to prioritize, not unintentionally impact the budgets by these compliance costs, and be prepared for what might be needed to comply with these laws.  An additional study of the Clean Buildings Program will be helpful.  We appreciate efforts to fine-tune this program to meet the needs of the state and building owners.  Buildings should be brought up to a modern standard.  Some schools are in property-poor areas and do not have the same luxuries as larger institutions.  Assessments are costly.

(Opposed) None. 

(In support) This JLARC study will provide a project management schema, which will be helpful for appropriation and capital budget obligation management.  The goal is to save energy and reduce carbon for buildings in Washington.

(Opposed) None. 

Representative Mary Dye, prime sponsor; Steve Fisk, Odessa School District; and Peter Godlewski, Association of Washington Business.

Representative Mary Dye, prime sponsor.