SB5659 – Allows gas utilities to develop a wide range of renewable energy projects, and creating a tax exemption for renewable gas.
Prime Sponsor – Senator Boehnke (R; 8th District; Tri-Cities) (Co-Sponsor Liias – D)
Current status – Had a hearing in the Senate Committee on Environment, Energy & Technology February 14th.
Next step would be – Action by the committee.
Legislative tracking page for the bill.

Comments –
The bill adds to the provisions of HB1619 in several ways.

Summary –
The bill would authorize gas companies to develop projects that reduce greenhouse gas emissions from the combustion of natural gas delivered to in-state customers and from electricity generated from fossil fuels that’s used by retail electric customers in the state. They could seek to recover the cost of those investments in their rates through the UTC. Those investments might include residential and commercial rooftop solar, including battery storage and supplemental solar; community solar projects designed to offset carbon associated with the use of conventional natural gas; ground source heat pumps for district heating and targeted load reduction in new buildings used as a strategy for complying with the State’s cap and trade requirements; renewable gaseous fuels projects, including renewable natural gas and green electrolytic hydrogen, along with associated facility and pipeline infrastructure, upgrades, and improvements for industrial and heavy duty transportation; carbon capture and sequestration projects associated with natural gas projects and facilities; and research, development, and pilot efforts pertaining to nonemitting natural gas equipment and technologies. (Unlike HB1619, the bill would have the UTC consider purchases of energy derived from such projects outside the state and investments in them as being “in the state’s interest” if the carbon emissions from them were only booked and claimed in Washington. This bill also specifies that a gas company could claim investments in residential and commercial rooftop solar, including associated battery storage, and in community solar projects as reductions against its cap and invest carbon compliance obligations if it surrendered the renewable energy credits they produced.)

The bill would also create a ten year sales and use tax exemption for machinery and equipment used for generating renewable natural gas or connecting it to a pipeline. (The exemption would also apply to labor and services for installing that.) Renewable natural gas would be defined as what’s generated from “the decomposition of organic material in landfills, wastewater treatment facilities, and anaerobic digesters.”

It would authorize gas companies to propose renewable natural gas programs for the UTC’s review. If approved, a company could supply renewable natural gas as part of the natural gas sold or delivered to their retail customers. The environmental attributes of that renewable natural gas would have to be retired using procedures established by the Commission, though it could also approve procedures for banking and transferring those. (The Commission could also approve the inclusion of other sources of gas if the gas was produced without consumption of fossil fuels. I think this probably includes green hydrogen.)

Unlike HB1619, the bill would provide exemptions from any state or local restrictions or limitations on the use of natural gas in buildings where the amount of gas consumed in the building was equal to an amount of renewable natural gas acquired by the utility serving the site; there was a real estate covenant on the building confirming that only renewable natural would be provided to it; and the utility had certified to the UTC that only renewable natural gas would be “provided to” the building. It would allow dual fuel heat pumps using both natural gas and electricity to be installed in any building for use as a peaking resource alternative under CETA when natural gas space and water heating supplements electric space and water heat pumps in a way that reduces the consumption of electricity when ambient temperatures fall below 40° F.