HB1226 – Revising the Energy Independence Act (I-937)
Prime Sponsor – Representative DeBolt (R, 20th District, Chehalis)
Current status – Had a hearing before the House Environment & Energy Committee on January 21st. Amended and passed out of committee February 5th. Had a hearing in the House Committee on Finance February 14th. Reintroduced and retained in present status for 2020 session.
Next step would be – Action by the committee.
Legislative tracking page for the bill.
House Bill Analysis

Comments –
One amendment by the Environment and Energy Committee removed the sections that would basically have repealed the Energy Independence Act (I-937) if the State put a price of any sort on the carbon content of fuels or electricity. Another removed the provisions allowing utilities to meet their renewable energy requirements under the Act by using “clean energy resources” as well as the renewables the Act allows, and  making carbon reduction investments for at least as much as complying with the Act’s requirement would cost. The amended bill also added a tax break with an annual cap of $83 million for investments in forest fire risk reduction, allowing a lot of companies to get a credit for those on their B&O taxes, and allowing utilities to get a credit for them them on their public utility taxes.

Summary –
At this point, beginning in January 2020, utilities with over 25,000 customers will be required by Initiative 937 (the Energy Independence Act) to provide at least 15% of their retail sales from “eligible renewable resources,” which do not include nuclear power or power from the existing dams on the Columbia and other rivers (except for some new power from increased efficiency at those).

The bill expands the area in which renewable resources, and additional power produced by increases in efficiency at dams that utilities own, can be used to meet the requirement – from the Pacific Northwest to roughly the part of the country west of the Great Plains. In the same way, it expands the area in which the percentage of energy coming from biomass in a plant co-fired by that and fossil fuel can be used to meet the requirement.

Expanded eligible resources would now also include a utility’s share of any additional power produced from efficiency improvements at the old BPA dams and (for private utilities) the renewable energy credits associated with whatever hydroelectric power they get from BPA.

It goes on to create a new definition of “clean energy resources”, which includes any renewables, as well as any other resources that don’t emit CO2, like nuclear plants. Starting in 2020, a utility would meet the requirement if it got 100% of its load from these “clean energy resources”, and it made “carbon reduction investments in a dollar amount that is at least equal to the incremental cost of complying with the annual target.” (I think this means they only have to make the investments if they fall short of the target, which I don’t think will ever happen to the public utilities now that their old hydro allotments count under these new rules, but it might conceivably mean they have to spend enough money to meet the target, and then spend that much again on other investments that reduce carbon.) These investments could range from EV chargers, demand management, or storage, to forest health projects. (Removed by amendment in the House Environment and Energy Committee.)

Starting in 2029, utilities would also have to meet any new energy or capacity needs with “clean energy resources”. (This would not allow any new gas plants to provide occasional backup for variable renewables.) This includes procurements through new contracts; those would also have to specify the sources of the power. However, the governing bodies of utilities could waive these requirements if it was necessary for system reliability or if meeting them was going to raise power costs more than 5% above the “lowest reasonable cost resource”.)

In any case, they can continue to use, for as long as they want to or can:

• Power purchased from the BPA;
• Short-term spot market purchases;
• Electricity from renewing or extending contracts in effect as of January 1, 2020, if that doesn’t lead to any expansion of the power or capacity provided;
• Coal power from the Transalta plant;
• Currently-owned generation resources and increased generation from those;
• Power from increased efficiency from a utility-scale renewable resource or distributed energy resource (such as a combined heat and power plant), and,
• Power required to maintain reliable service and comply with applicable standard of the North American Electric Reliability Corporation (NERC). They are explicitly authorized to procure one or more gas plants if that’s needed to avoid “potential conflicts with or compromises to” their ability to meet NERC’s reliability standards.

The bill creates a number of tax exemptions, deductions and credits for industries, pipelines, and utilities.

The requirements of I-937 and the bill’s requirements for clean energy and capacity are all repealed if the Legislature puts a tax, fee, or other price (at any level) on the carbon content of fuels and electricity. [Removed by amendment in the House Environment and Energy Committee.]

Details –

Tax Breaks

The bill creates sales and use tax exemptions, to expire in 2029, for expenditures to reduce or offset the emissions at an energy intensive, trade-exposed facility; and for ones to reduce emissions from natural gas pipelines. It provides up to $50 million to provide public utility tax credits to refund the businesses that pay that (including railroads, transportation companies, water companies, gas distribution companies and others as well as gas and electric utilities) for the entire costs of projects to reduce their greenhouse gas emissions, and a deduction from those taxes for the “cost of production of power from” any new renewable facilities built or installed between 2019 and 2028. (I think this probably means the a deduction for the additional lifetime levelized cost of power from the facility, rather than an annual deduction for the extra cost in each of those eight years, but I’m not sure.)