HOUSE BILL REPORT
HB 1913
As Reported by House Committee On:
Finance
Title: An act relating to repealing the public utility tax credit for home energy assistance.
Brief Description: Repealing the public utility tax credit for home energy assistance.
Sponsors: Representative Berg.
Brief History:
Committee Activity:
Finance: 2/20/25, 2/26/25 [DP].
Brief Summary of Bill
  • Repeals the public utility tax credit for home energy assistance.
HOUSE COMMITTEE ON FINANCE
Majority Report: Do pass.Signed by 10 members:Representatives Berg, Chair; Street, Vice Chair; Mena, Parshley, Ramel, Santos, Scott, Springer, Walen and Wylie.
Minority Report: Do not pass.Signed by 5 members:Representatives Orcutt, Ranking Minority Member; Jacobsen, Assistant Ranking Minority Member; Abell, Chase and Penner.
Staff: Tracey Taylor (786-7152).
Background:

Public Utility Tax.

The gross income derived from the operation of publicly and privately owned utilities is subject to the public utility tax (PUT), unless otherwise exempt.  The tax is imposed in lieu of business and operations (B&O) tax and is applied only on sales to consumers.  Other income of the utility, such as retail sale of tangible personal property, is subject to the B&O tax.  There are six different PUT rates, depending on the specific utility activity.  The rates are:

  • 3.852 percent on telegraph companies, distribution of natural gas, and the collection of sewage;
  • 3.8734 percent on the generation or distribution of electrical power;
  • 0.642 percent on urban transportation and watercraft vessels under 65 feet in length;
  • 1.926 percent on motor transportation, railroads, railroad car companies, and all other public service businesses;
  • 5.029 percent on the distribution of water; and
  • 1.3696 percent on log transportation.

 

A taxpayer who engages in one or more businesses subject to the PUT is fully exempt from the tax if their total gross income is $2,000 or less per month.  Any taxpayer that has a total gross income greater than $2,000 per month does not receive an exemption or deduction under this provision.

 

A business does not have to file an excise tax return for the PUT if the business does not owe other taxes or fees to the Department of Revenue and has annual gross proceeds of less than $24,000.

 

Public Utility Tax Credit for Home Energy Assistance.

Electric and gas utilities can request a PUT credit for up to 50 percent of the energy assistance they give to low-income customers. 

 

Energy assistance includes discounted energy bills for low-income households and contributions to community action agencies (CAAs).  Community action agencies take customer applications, review eligibility, and distribute funds to utilities to reduce the energy bills of eligible customers.

 

The statewide annual cap for credit is $2.5 million and is allocated amongst 60 utilities based on a formula in proportion to the utility's share of federal Low-Income Home Energy Assistance Program (LIHEAP) energy assistance grants it receives. 

 

The LIHEAP provides home energy assistance to low-income households.  It is a federal block grant program, administered through the Washington Department of Commerce, which distributes the funds through CAAs. 
Summary of Bill:

The PUT credit for home energy assistance is repealed.
Appropriation: None.
Fiscal Note: Available.
Effective Date: The bill takes effect on January 1, 2026.
Staff Summary of Public Testimony:

(In support) According to the Joint Legislative Audit and Review Committee study, this energy tax credit does not influence the amount of energy assistance provided by utilities.  Commerce has suggested that the Legislature take a comprehensive approach to reducing the energy burden of low-income households and that there are more effective policy mechanisms that could be deployed to better align with the needs of low-income households.  Only 35 utilities have this problem and seven of them are the largest utilities in the state.  

 

(Opposed) The demand for bill assistance from utility customers continues to grow and this tax credit is part of the way we fund this.  The tax credit is indexed to the public utility tax and with a large number of customers paying the PUT, the larger utilities get a larger credit than the smaller utilities.  This program augments other utility programs to provide assistance to low-income customers.  This bill does not propose an alternative incentive, so it would be better to keep the current program.

 

(Other) In the 11 years that the utility has utilized this tax credit, it has been able to pass through $950,000 in savings to customers seeking assistance.  Although this is not all that the utility does to assist customers in need, this is a piece of the pie.
Persons Testifying:

(In support) Representative April Berg, prime sponsor.

(Opposed) John Rothlin, Avista Corp; Jasmine Vasavada, WPUDA; and Dever Haffner-Ratliffe, Public Utility District No. 1, Cowlitz County.
(Other) Matt Miller, Puget Sound Energy.
Persons Signed In To Testify But Not Testifying: None.