Washington State Legislature introduces another bill putting pressure on State RPS
The second of two bills that would drastically impact the Washington State Renewable Portfolio Standard (RPS) was recently introduced in the Washington State Legislature. HB 1890 would cut in half the amount of energy utilities are required to obtain from new renewable resources, and also allow them to offset renewable energy requirements with energy from fresh water sources and sources that predate March 31, 1999.
Currently, electric utilities in Washington that serve more than 25,000 customers are required to obtain the following percentages of their electricity from new renewable resources:
- At least 3% by January 1, 2012
- At least 9% by January 1, 2015
- At least 15% by January 1, 2020
This has been the case since the passage of the Washington Energy Independence Act (EIA) in 2006. HB 1890 would cut these percentages in half -- requiring eligible utilities to acquire only 1.5% of their energy from renewable sources by 2012, only 4.5% by 2015, and only 7.5% by 2020.
In addition, the EIA treats as eligible only incremental electricity produced as a result of efficiency improvements completed after March 31, 1999 and excludes energy from fresh water resources. HB 1890, however, would count as eligible all electricity from an existing generation facility powered by a fresh water renewable resource that commenced operation before March 31, 1999. In other words, fresh water energy resources that have been operating since before March 31, 1999 -- and are unchanged and unimproved since that time -- would count toward the RPS.
For more information on this bill including its full text, see the Washington State Legislature website.
Washington HB 1890 is sponsored by Rep. Brad Klippert (R-8th Dist.), Rep. Jan Angel (R-26th Dist.), Rep. Dan Kristiansen (R-39th Dist.), Rep. Shelley Short (R-7th Dist.), Rep. Larry Haler (R-8th Dist.), Rep. Barbara Bailey (R-10th Dist.), and Rep. Jim McCune (R-2nd Dist.). It was introduced and referred to the Environment Committee on February 8, 2011.
Another bill that would essentially wipe out the Washington State RPS altogether was introduced earlier this session. The blog post on that bill, SB 5563, is available here.
Washington Senate Bill has potential for eliminating state renewable energy requirements
Currently, electric utilities in Washington that serve more than 25,000 customers are required to obtain the following percentages of their electricity from new renewable resources:
- At least 3% by January 1, 2012
- At least 9% by January 1, 2015
- At least 15% by January 1, 2020
This has been the case since the passage of the Washington Energy Independence Act in 2006. The current Legislature has introduced a bill which, if passed, would essentially wipe out these RPS requirements. SB 5563 -- which was introduced in the Washington State Legislature on January 31, 2011 -- plainly states its intention of “temporarily suspending provisions of the energy independence act during periods of economic downturn.” If SB 5563 passes, qualifying utilities would be deemed to have met the 2012 target and, from 2015, the target for any year in which the the Washington unemployment rate goes above six percent. Furthermore, utilities would be deemed to have met their renewable target not only for that year but for four subsequent years, regardless of the unemployment rate during the look back period.
A historical look at Washington’s unemployment rate shows that a look back period for four years would be able to eliminate the RPS standards in even the most prosperous economic times. For example, Washington state’s unemployment rate[1] for the past 20 years was below 6% during only five calendar years (1998, 1999, 2000, 2006, 2007) and never for more than three consecutive years. That means if SB 5563 had been in effect for the past two decades -- decades that included some of the most robust economic times this generation has known -- at no time would utilities have been required to meet the renewable energy requirements of the EIA. Given where the U.S. economy currently stands, it’s highly unlikely SB 5563 would play out any differently for the next 20 years, much less between now and 2020.
For more information on this bill including its full text, see the Washington State Legislature website.
Washington SB 5563 is sponsored by Sen. Jerome Delvin (R-8th Dist.), Sen. Mark Schoesler (R-9th Dist.), Sen. Mike Hewitt (R-16th Dist.), Sen. Jim Honeyford (R-15th Dist.), and Sen. Tim Sheldon (D-35th Dist.) and was referred to the Environment, Water & Energy Committee on January 31, 2011.
[1] Not seasonally adjusted.
Washington Revising its State Energy Strategy
The Washington State Department of Commerce (formerly the Department of Community, Trade and Economic Development or CTED) has announced that it is attempting to revise Washington’s comprehensive energy plan (the “State Energy Strategy”).
The State Energy Strategy was last revised in 2003, and it does not serve current energy realities and forecasts. Therefore, the Washington State Legislature has tasked the Department of Commerce with updating the State Energy Strategy while taking account the following three goals and nine principles:
Goals:
1) Maintain competitive energy prices;
2) Foster a clean energy economy and jobs; and
3) Meet obligations to reduce greenhouse gas emissions.
Principles:
1) Pursue all cost-effective energy efficiency and conservation as the state's preferred energy resource, consistent with state law;
2) Ensure that the state's energy system meets the health, welfare, and economic needs of its citizens with particular emphasis on meeting the needs of low-income and vulnerable populations;
3) Maintain and enhance economic competitiveness by ensuring an affordable and reliable supply of energy resources and by supporting clean energy technology innovation, access to clean energy markets worldwide, and clean energy business and workforce development;
4) Reduce dependence on fossil fuel energy sources through improved efficiency and development of cleaner energy sources, such as bioenergy, low-carbon energy sources, and natural gas, and leveraging the indigenous resources of the state for the production of clean energy;
5) Improve efficiency of transportation energy use through advances in vehicle technology, increased system efficiencies, development of electricity, biofuels, and other clean fuels, and regional transportation planning to improve transportation choices;
6) Meet the state's statutory greenhouse gas limits and environmental requirements as the state develops and uses energy resources;
7) Build on the advantage provided by the state's clean regional electrical grid by expanding and integrating additional carbon-free and carbon-neutral generation, and improving the transmission capacity serving the state;
8) Make state government a model for energy efficiency, use of clean and renewable energy, and greenhouse gas-neutral operations; and
9) Maintain and enhance our state's existing energy infrastructure.
The Department of Commerce is opening a collaborative process to update and revise the State Energy Strategy and has invited stakeholders to participate. In order to assist collaboration, the Department of Commerce has created a website hosting information about past energy strategies, guiding legislation, advisory and technical committee activities, and a schedule of events. Moreover, the public can sign up for list serve to receive updates and provide feedback.
May 11 Public Hearing Regarding Changes to Washington's Renewable Energy System Cost Recovery Program
Our Seattle tax attorneys (listed below) have told us about Washington Department of Revenue's ("DOR") public hearing on May 11 regarding proposed amendments to its rule governing administration of the Renewable Energy System Cost Recovery program.
Kim Risenmay at (206) 386-7525 or gkrisenmay@stoel.com
Carl Lewis at (206) 386-7688 or cslewis@stoel.com
Erin Toland at (206) 386-7563 or emtoland@stoel.com
Pursuant to this program, participating light and power companies may make incentive payments to customers who purchase and use renewable energy systems, and the light and power companies then receive offsetting tax credits against their Washington Public Utility Tax liabilities.
The DOR has indicated that the rule will be updated to reflect recent changes to Washington law, (1) increasing the annual payments that light and power businesses can make to individual customers; (2) increasing the total amount of incentive payments that participating light and power businesses can make to their customers; (3) changing the formula used to determine payment amounts based on “economic development kilowatt-hours;” (4) extending the incentive program to include community solar projects; (5) creating three categories of eligible community solar projects; (6) setting limitations on total incentive payments for community solar projects; and (7) setting capacity generating restrictions on systems in community solar projects.
If you're interested in attending the hearing which begins at 10:00 a.m. on Tuesday, May 11, 2010, go to the DOR's Fourth Floor Executive Conference Room at Capital Plaza Building,
1025 Union Avenue SE, Olympia, WA 98501
IRS Circular 230 notice: Any tax advice contained herein was not intended or written to be used, and cannot be used, by you or any other person (i) in promoting, marketing or recommending any transaction, plan or arrangement or (ii) for the purpose of avoiding penalties that may be imposed under federal tax law.
Show me the Money: Recovery Act Finance Opportunities Conference
On July 17, 2009, the Puget Sound Regional Council hosted a Regional American Recovery and Reinvestment Act Coordination meeting. At this meeting, there was a presentation on Bond Financing, Loan Guarantees, and Tax Credits plus a discussion on monetizing energy efficiency savings.
In case you missed this meeting, I want you to be aware of a couple of resources.
First, on July 31, 2009, there is a workshop regarding Recovery Act Finance Opportunities in Washington. The workshop will be hosted by the Washington Department of Commerce (formerly the Department of Community Trade and Economic Development or CTED) and held in Bellevue, and you can register here.
Second, our tax group has issued an informative, yet concise, alert regarding the grant in lieu of the production tax credit (available here).
Show me the Money: Applications Available for the Washington State Energy Program
Washington previously received $60.9 million in Recovery Act funding for its State Energy Program (“SEP”). The Washington Legislature later provided $38.5 million to the Washington State Community, Trade and Economic Development (“CTED”) agency to administer a loan and grant program for eligible projects in the areas of energy efficiency, renewable energy and clean energy innovation (see our earlier blog entry here for more details). The deadline for submitting a notice of intent to apply is July 27, 2009 at 5:00 p.m. Pacific time, and the application is due August 17, 2009 at 5:00 p.m. Pacific time.
I attended an informational meeting held by CTED on July 13, 2009. The meeting provided an overview of the loan and grant program, as well as funding details, eligibility guidelines and evaluation criteria. Eligible projects can receive between $500,000 to $2 million in loans and grants in the first round, with the requirement that applicants provide other sources of funding at least equal to the amount of the loan or grant request. The non-SEP funding may include amounts spent or committed to the project since January 1, 2009. Projects will be evaluated based on the feasibility and quality of the project plan, the experience and qualifications of the project team, the ratio of matching funds to SEP funds, job creation, and energy savings/production. CTED intends to announce award decisions in September 2009.
Prosperity Partnership Issues a Guide to Recovery Funds
The Prosperity Partnership, a coalition of over 300 government, business, labor and community organizations from King, Kitsap, Pierce, and Snohomish counties in the state of Washington, has developed a beginner’s guide to the Recovery Act entitled: “A Basic Introduction to Energy-Related ARRA Funding Opportunities.” The goal of the guide is to help local (i.e. Washington state) entities identify and apply for ARRA funding opportunities, especially competitive grants or contracts. The focus of the guide is on energy-related funding opportunities, and contains useful information describing the process for submitting applications for federal and Washington state funds.
You can download the guide at http://prosperitypartnership.org/recovery/PP-ARRAGuide.ppt.
FERC and Washington Sign MOU on Hydrokinetic Projects
Late last week, the Federal Energy Regulatory Commission (“FERC”) and the State of Washington signed a Memorandum of Understanding (“MOU”) to coordinate their review of hydrokinetic energy projects in Washington state waters. The MOU is intended to reduce some of the regulatory barriers associated with siting and permitting such projects, while also ensuring that projects are undertaken in an environmentally and culturally sensitive manner.
As described in the MOU, FERC and Washington have pledged to collaborate in the following ways: (1) notifying each other of potential applicants for a preliminary permit, pilot project license, or license; (2) agreeing upon a schedule for processing license applications that will include milestones and encourage collaboration among various stakeholders; (3) coordinating the environmental reviews of projects proposed in Washington state waters and consulting with stakeholders on the design of applicable studies; and (4) agreeing that if Washington prepares a comprehensive plan with respect to the siting of hydrokinetic projects, in determining whether to approve a project license, FERC will consider whether the project is consistent with the state plan. Notably, the MOU recognizes that Washington may submit an amendment to its coastal zone management plan to the National Oceanic and Atmospheric Administration (“NOAA”) for approval, and that such a plan may identify a limited number of areas within Washington state waters where hydrokinetic projects may be initially located. Whether NOAA would approve such a plan is unclear.
