With the passage of [http://www.secstate.wa.gov/elections/initiatives/text/I937.pdf Initiative 937] in 2006, Washington became the second state after Colorado to pass a renewable energy standard by ballot initiative. Initiative 937 calls for electric utilities that serve more than 25,000 customers in the state of Washington to obtain 15% of their electricity from new renewable resources by 2020 ''and'' to undertake all cost-effective energy conservation. Investor-owned utilities, municipal utilities, rural electric cooperatives, and public utility districts are subject to this standard.* Of Washington's 62 utilities, 17 are considered qualifying utilities, representing about 84% of Washington's load.
Utilities subject to the standard must use eligible renewable resources or acquire equivalent renewable energy credits (RECs), or a combination of both, to meet the following annual targets:
* At least 3% percent of its load by 1/1/2012, and each year thereafter through 12/31/2015;
* At least 9% of its load by 1/1/2016, and each year thereafter through 12/31/2019; and
* At least 15% of its load by 1/1/2020, and each year thereafter.
Investor-owned utilities subject to the standard are entitled to recover all prudently incurred costs associated with compliance.
"Renewable resources" include electricity produced from: water; wind; solar energy; geothermal energy; landfill gas; wave, ocean, or tidal power; gas from sewage treatment facilities; biodiesel fuel (must meet specified standards); and biomass energy based on organic byproducts of the pulp and wood manufacturing process, animal waste, solid organic fuels from wood, forest, or field residues, or dedicated energy crops. Specifically excluded from the definition are wood pieces that have been treated with chemical preservatives such as creosote, pentachlorophenol, or copper-chrome arsenic; wood from old growth forests; and municipal solid waste.
Electricity from renewable resources other than fresh water is eligible for compliance if the generation facility begins operation after March 31, 1999. The facility must be located in the Pacific Northwest or the electricity from the facility must be delivered into Washington State on a real-time basis. "Pacific Northwest" has the same meaning as defined for the Bonneville Power Administration in Section 3 of the Pacific Northwest Electric Power Planning and Conservation Act (94 Stat. 2698; 16 U.S.C. Sec. 839a). For qualifying utilities that serve customers in other states, the electricity from a non-fresh water generation facility if eligible for the RPS if the facility is located in the state where the qualifying utility serves retail electrical customers, and the utility either owns the facility in whole or part or has a long-term contract with the facility of a least 12 months. Electricity from qualified biomass energy that began operation prior to March 31, 1999 is eligible if it contributes to a qualifying utility's load and is owned by a qualifying utility or an industrial facility that is directly interconnected to electricity facilities of that qualifying utility. Hydroelectric generation projects are eligible if incremental electricity produced as a result of efficiency improvements completed after March 31, 1999, are made to:
* hydroelectric projects owned by a utility subject to this standard and located in the Pacific Northwest; or to
* hydroelectric generation in irrigation pipes and canals located in the Pacific Northwest, where the additional generation in either case does not result in new water diversions or impoundments.
Distributed generation, defined as a "generation facility or any integrated cluster of such facilities" with a capacity of five megawatts (MW) or less, may be counted as double the facility's electrical output if the utility owns the facility, has contracted for the distributed generation and the associated RECs, or has contracted to purchase only the associated RECs. Eligible renewables from a facility that began operation after December 31, 2005 where the developer used an approved apprenticeship program during facility construction may count 1.2 times its base value.
Utilities subject to the standard must also pursue all available conservation that is cost-effective, reliable, and feasible. Specifically, by January 1, 2010, utilities must (1) identify achievable cost-effective conservation potential through 2019, with reviews and updates every two years for the subsequent 10-years; and (2) establish and meet biennial targets for conservation. High-efficiency cogeneration owned and used by a retail electric customer to meet its own needs may be counted toward conservation targets.
On or before June 1, 2012, and annually thereafter, each utility must file a report with the Washington Utilities and Transportation Commission and the Department of Commerce regarding its progress in meeting its conservation and renewable resource targets during the preceding year. Although some exemptions apply, a utility’s failure to meet the energy conservation or renewable energy targets will result in an administrative penalty of $50/MWh (adjusted annually for inflation) paid to the state of Washington. The funds will be deposited in a special account for the purchase of renewable energy credits or for energy conservation projects at public facilities, local government facilities, community colleges, or state universities.
''* Public Utility Districts are subject to this legislation, but are not specifically listed under "applicable sectors", as they are a form of municipal utilities.''