SB 5293 — Concerning energy efficiency.

S-2484.1SECONDZ-0412.1SENATE SUBSTITUTE SENATE BILL 5293State of Washington66th Legislature2019 Regular SessionBySenateSessionBySenators Ways & Means (originally sponsored by Senators Carlyle, Nguyen, Palumbo, Das, Billig, Kuderer, Keiser, McCoy, Hunt, Liias, Frockt, Pedersen, and Wellman;

by request of Governor Inslee)READInsleeRead FIRSTfirst TIMEtime 03/01/19.AN01/17/19.Referred to Committee on Environment, Energy & Technology.AN ACT Relating to energy efficiency;

amending RCW 19.27A.140, 19.27A.170, 19.27A.015, 19.27A.020, 19.27A.025, and 19.27.540;

A new section is added to chapter 19.27A RCW to read as follows:The definitions in this section apply throughout sections 3 through 6 of this act unless the context clearly requires otherwise.(1) "Agricultural structure" means a structure designed and constructed to house farm implements, hay, grain, poultry, livestock, or other horticultural products, and that is not a place used by the public or a place of human habitation or employment where agricultural products are processed, treated, or packaged.(2) "Baseline energy use intensity" means a building's weather normalized energy use intensity measured the previous calendar year prior to making an application for an incentive under section 4 of this act.(3) "Building owner" means an individual or entity possessing title to a building.(4) "Building tenant" means a person or entity occupying or holding possession of a building or premises pursuant to a rental agreement.(5) "Conditional compliance" means a temporary compliance method used by building owners that demonstrate the owner has implemented energy use reduction strategies required by the standard, but has not demonstrated full compliance with the energy use intensity target.(6) "Consumer-owned utility" has the same meaning as defined in RCW 19.27A.140.(7) "Covered commercial building" means a building where the sum of nonresidential, hotel, motel, and dormitory floor areas exceeds fifty thousand gross square feet, excluding the parking garage area.(8) "Department" means the department of commerce.(9) "Director" means the director of the department of commerce or the director's designee.(10) "Electric utility" means a consumer-owned utility or an investor-owned utility.(11) "Eligible building owner" means:

"Energy use intensity" is reported as a value of thousand British thermal units per square footfoot.(14) per year.(14) "Energy use intensity target" means the net energy use intensity of a covered commercial building that has been established for the purposes of complying with the standard established under section 3 of this act.(15) "Gas company" includes every corporation, company, association, joint stock association, partnership, and person, their lessees, trustees, or receiver appointed by any court whatsoever, and every city or town owning, controlling, operating, or managing any gas plant within this state.(16) "Greenhouse gas" includes carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.(17)(a) "Gross floor area" means the total number of square feet measured between the exterior surfaces of the enclosing fixed walls of a building, including all supporting functions such as offices, lobbies, restrooms, equipment storage areas, mechanical rooms, break rooms, and elevator shafts.(b) "Gross floor area" does not include outside bays or docks.(18) "Investor-owned utility" means a company owned by investors, that meets one of the definitions of RCW 80.04.010, and that is engaged in distributing electricity to more than one retail electric customer in the state.(19) "Multifamily residential building" means a building containing sleeping units or more than two dwelling units where occupants are primarily permanent in nature.(20) "Net energy use" means the sum of metered and bulk fuel energy entering the building, minus the sum of metered energy leaving the building.(21) "Qualifying utility" means a consumer-owned or investor-owned gas or electric utility that serves more than twenty-five thousand customers in the state of Washington.(22) "Savings-to-investment ratio" means the ratio of the present value savings to the present value costs of an energy or water conservation measure.

A new section is added to chapter 19.27A RCW to read as follows:(1)(a) By NovemberJuly 1, 2020, the department must establish by rule a state energy performance standard for covered commercial buildings.(b) In developing energy performance standards, the department shall seek to maximize reductions of greenhouse gas emissions from the building sector.

The department shall use ANSI/ASHRAE/IES standard 100-2018must asinclude antechnical initialand modelprofessional requirements for standardimplementation. development.

The department shall use ANSI/ASHRAE/IES standard 100-2018 as a model for standard development.

The department must consider regional and local building energy utilization data, such as existing energy star benchmarking data, in establishing targets for the standard.standard;(b) May consider building occupancy classifications from ANSI/ASHRAE/IES standard 100-2018 and the United States environmental protection agency's energy star portfolio manager when developing energy use intensity targets;(c) May implement lower energy use intensity targets for more recently built covered commercial buildings based on the state energy code in place when the buildings were constructed;(d)(i) Must adopt a conditional compliance method that ensures that covered commercial buildings that do not meet the specified energy use intensity targets are taking action to achieve reduction in energy use, including investment criteria for conditional compliance that ensure that energy efficiency measures identified by energy audits are implemented to achieve a covered commercial building's energy use intensity target.

EnergyThe usecriteria intensity targets must berequire developedthat for two or more climate zones and be representative of energy use in a normal weather year;(b) May consider building occupancyowner classificationsadopts fromall ANSI/ASHRAE/IES standard 100-2018 and the United States environmental protection agency's energy starefficiency portfoliomeasures managerrequired whento developingmeet energythe use intensity targets;(c) May implement lower energy use intensity targetstarget, foror more recently built covered commercial buildings based on thea statethirty energyyear codelife-cycle incost placeanalysis, when the buildingsbuilding wereowner constructed;(d)(i)must Must adopt aan conditionaloptimized compliancebundle methodof thatenergy ensuresefficiency thatmeasures covered commercial buildings that doprovides notmaximum meet the specified energy usesavings intensitywithout targetsresulting are taking action to achieve reduction in energyan use,savings-to-investment includingratio investmentof criterialess forthan conditional1.0, complianceexcept thatas ensureexempted thatin energy(d)(ii) efficiencyof measuresthis identifiedsubsection. by energy audits are implemented to achieve a covered commercial building's energy use intensity target.

The criteria must require that a building owner adopts all energy efficiency measures required to meet the energy use intensity target, or based on a thirty year life-cycle cost analysis, the building owner must adopt an optimized bundle of energy efficiency measures that provides maximum energy savings without resulting in a savings-to-investment ratio of less than 1.0, except as exempted in (d)(ii) of this subsection.

For each reporting date, the building owner must submit documentation to demonstrate that:(a) The weather normalized energy use intensity of the covered commercial building measured in the previous calendar year is less than or equal to the energy use intensity target;target;(b) The covered commercial building has received conditional compliance from the department based on energy efficiency actions prescribed by the standard;

or(b) The covered commercial building has received conditional compliance from the department based on energy efficiency actions prescribed by the standard;

and(c) Rules that provide a mechanism for appeal of any administrative penalty imposed by the department under this section.(13) Upon request by the department, each county assessor must provide property data from existing records to the department as necessary to implement this section.(14)section.NEW TheSECTION.  Sec. department must report to the appropriate committees of the legislature on the implementation of the energy efficiency measures established under this section, by January 15, 2021, and annually thereafter until 2028.

The report must include information regarding the adoption of the ANSI/ASHRAE/IES standard, the level of incentives provided under section 4 of this act, as well as any other significant issues associated with implementation of this act.NEW SECTION.  Sec.

Building energy reporting for the incentive program must be consistent with the energy reporting requirements established under section 3 of this act.(3) UponThe receiving documentation demonstrating that a building owner qualifies for an incentive under this section, the department must authorizeestablish eachprofessional applicablequalifications entityfor administeringpersons incentivecompleting payments,building asenergy providedreporting inrequired sectionfor 6the of this act, to make an incentive paymentprogram. to the building owner.

WhenBuilding aenergy buildinguse isintensity servedreporting bymust morebe thancompleted oneby entitypersons offeringmeeting incentivesthe orrequired moreprofessional thanqualification.(4) oneUpon fuel,receiving incentivedocumentation paymentsdemonstrating mustthat bea proportionalbuilding toowner thequalifies energyfor usean intensityincentive reductionunder ofthis eachsection, specificthe fueldepartment providedmust byauthorize each entity.(4)applicable Anentity eligibleadministering building owner may receive an incentive paymentpayments, inas theprovided amounts specified in subsectionsection (6)6 of this sectionact, onlyto ifmake thean followingincentive requirementspayment areto met:(a)the The building isowner. either:

When a building is served by more than one entity offering incentives, incentive payments must be proportional to the energy use intensity reduction of the specific fuel provided by each entity.(5) An eligible building owner may receive an incentive payment in the amounts specified in subsections (7) and (8) of this section only if the following requirements are met:(a) The building is either:

or (ii) a multifamily residential building where the floor area exceeds fifty thousand gross square feet, excluding the parking garage area;(b) The building's baseline energy use intensity exceeds its applicable energy use intensity target by at least fifteen energy use intensity units;(c) At least one electric utility, gas company, or thermal energy company providing or delivering energy to the covered commercial building or multifamily residential building is participating in the incentive program by administering incentive payments as provided in section 6 of this act;

and(d) The building owner complies with any other requirements established by the department.(5)(a)department.(6)(a) An eligible building owner who meets the requirements of subsection (4)(5) of this section may submit an application to the department for an incentive payment in a form and manner prescribed by the department.

The application must be submitted in accordance with the following schedule:(i) For a building with more than two hundred twenty thousand gross square feet, beginning JulyJanuary 1, 2021, through June 1, 2025;(ii) For a building with more than ninety thousand gross square feet but less than two hundred twenty thousand and one gross square feet, beginning JulyJanuary 1, 2021, through June 1, 2026;

and(iii) For a building with more than fifty thousand gross square feet but less than ninety thousand and one gross square feet, beginning JulyJanuary 1, 2021, through June 1, 2027.(b) The department must review each application and determine whether the applicant is eligible for the incentive program and if funds are available for the incentive payment within the limitation established in section 5 of this act.

If the department certifies an application, it must provide verification to the building owner and each entity participating as provided in section 6 of this act and providing service to the building owner.(6)owner.(7) An eligible building owner that demonstrates early compliance with the applicable energy use intensity target under the standard established under section 3 of this act may receive ana base incentive payment of eighty-fivefifty cents per gross square foot of floor area,area.(8) excludingAn parking,eligible unconditioned,building orowner semiconditionedthat spaces.(7)qualifies for the base incentive under subsection (9) of this section and demonstrates compliance with the applicable energy use intensity target for the next three consecutive years may receive an additional incentive payment of thirty-five cents per square foot of floor area.(9) The incentives provided in subsectionsubsections (6)(7) and (8) of this section are subject to the limitations and requirements of this section, including any rules or procedures implementing this section.(8)section.(10) The department must establish requirements for the verification of energy consumption by the building owner and each participating electric utility, gas company, and thermal energy company.(9)company.(11) The department must provide an administrative process for an eligible building owner to appeal a determination of an incentive eligibility or amount.(10)amount.(12) By September 30, 2025, and every two years thereafter, the department must report to the appropriate committees of the legislature on the results of the incentive program under this section and may provide recommendations to improve the effectiveness of the program.(11)program.(13) The department may adopt rules to implement this section.NEW SECTION.  Sec.

A new section is added to chapter 19.27A RCW to read as follows:(1)(a)follows:(1) Each qualifying utility must administer incentive payments for the state energy performance standard early adoption incentive program established in section 4 of this actact, on behalf of its customers who are eligible building owners of covered commercial buildings and multifamily residential buildings who qualify as provided under this section, consistent with the requirements of this section.

Any thermal energy company, electric utility, or gas company not otherwise required to administer incentive payments may voluntarily participate by providing notice to the department in a form and manner prescribed by the department.(b)department.(2) Nothing in this subsection (1) requires a qualifying utility to administer incentive payments for the state energy performance standard early adoption incentive program established in section 4 of this act for which the qualifying utility is not allowed a credit against taxes due under this chapter.(2) An entity that administers the payments for the incentive program under this section must administer the program in a manner that is consistent with the standard established and any rules adopted by the department under sections 3 and 4 of this act.(3) Upon receiving notification from the department that a building owner has qualified for an incentive payment, each entity that administers incentive payments under this section must make incentive payments to its customers who are eligible building owners of covered commercial buildings and multifamily residential buildings who qualify as provided under this section and at rates specified in section 4(6)4 (7) and (8) of this act.

When a building is served by more than one entity administering incentive payments, incentive payments must be proportional to the energy use intensity reduction of the participating entities' fuel.(4) The participation by an entity in the administration of incentive payments under this section does not relieve the entity of any obligation that may otherwise exist or be established to provide customer energy efficiency programs or incentives.(5)incentives. An entity that administers the payments for the incentive program under this section is not liable for excess payments made in reliance on amounts reported by the department as due and payable as provided under section 4 of this act, if such amounts are later found to be abnormal or inaccurate due to no fault of the business.NEW SECTION.  Sec.

Energy efficiency savings achieved through an incentive program that are unique from any other savings claims may be used by the entity to meet regulatory requirements to acquire conservation and energy savings, unless otherwise prohibited or restricted by law.NEW SECTION.  Sec.

., Laws of 2019 (section 8 of this act), and it is the intent of the legislature to allow the tax preferences to expire upon its scheduled expiration date.(4)date.NEW In order to obtain the data necessary to perform the review in subsection (3) of this section, the joint legislative audit and review committee may refer to the number of building owners receiving an incentive payment from qualifying utilities taking the public utility tax preference under section 8 of this act, the amount of the incentive payment, and the energy use intensity reduction of the buildings as a result of the incentive program, as reported by the department of commerce.NEW SECTION.  Sec.

and(b) Documented administrative cost not to exceed eightfive percent of the incentive payments.

(2) The credit must be taken in a form and manner as required by the department.(3) Credit must be claimed against taxes due under this chapter for the same calendar year in which the incentive payments were made and administrative expenses incurred.

Credit earned in one calendar year may not be carried backwardforward butor maybackward beand claimed against taxes due under this chapter during the same calendar year and for thea followingdifferent two calendar years.year.

Within sixty days of receiving a written or electronic request and authorization of a building owner, the utility must provide the building owner with monthly energy consumption data as required to benchmark the specified building.(8) For any covered commercial building with three or more tenants, an electric or gas utility that is not a qualifying utility must, upon request of the building owner, provide the building owner with aggregated monthly energy consumption data without requiring prior consent from tenants.(9) AnQualifying electricutilities or gas utility must ensure that all data provided in compliance with this section does not contain personally identifiable information or customer-specific billing information about tenants of a covered commercial building.NEW SECTION.  Sec.

(1) The legislature finds that natural gas is a fossil fuel, the burning of which produces carbon dioxide pollution, and the production, distribution, and transmission of which results in the leakage of methane, an extremely potent greenhouse gas.

In 2014, the intergovernmental panel on climate change found that the global warming potential for methane gas is eighty-four times that of carbon dioxide over a twenty-year period and twenty-eight times that of carbon dioxide over a one hundred year period.

Washington has adopted targets to reduce greenhouse gas emissions, in order to mitigate the impacts of climate change on the environment, economy, health, and livelihoods.

Natural gas is used as a fuel in Washington to generate electricity, move vehicles and vessels, fuel industrial processes, and heat water and buildings.

Under current policy, natural gas usage in Washington and associated greenhouse gas emissions have nearly doubled since 1990.

Current state policy does not take recent scientific findings into account.(2) It is the policy of the state to make progress toward limiting and reducing fossil-based natural gas consumption where cleaner options exist or can be developed.

In order to reach short-term and long-term emissions goals, Washington needs to improve the efficiency of natural gas consumption, switch to cleaner options when they are available, and reduce the carbon intensity of natural gas.NEW SECTION.  Sec.

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