Bill Summary – FastDemocracy

S-1475.1
                           SUBSTITUTE SENATE BILL 5562
     State of Washington         68th Legislature        2023 Regular Session
     By Senate Environment, Energy & Technology (originally sponsored by
     Senators Nguyen, Lovelett, Hunt, Keiser, Liias, Saldaña, Wellman, and
     C. Wilson)
     READ FIRST TIME 02/15/23.
      AN ACT Relating to supporting Washington's clean energy economy
  and transitioning to a clean, affordable, and reliable energy future;
  amending RCW 80.28.010; adding a new chapter to Title 80 RCW;
  creating a new section; prescribing penalties; and declaring an
  emergency.
  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
     NEW SECTION. Sec. 1. (1) The legislature finds that the state's
 gas and electrical companies face transformational change brought on
 by new technology, emerging opportunities for customers, and state
 clean energy laws. Chapter 19.405 RCW, the Washington clean energy
 transformation act, and chapter 70A.65 RCW, the Washington climate
 commitment act, mean these companies must find innovative and
 creative solutions to equitably serve their customers, provide clean
 energy, reduce emissions, and keep rates fair, just, reasonable, and
 sufficient.
     (2) Gas companies with over 500,000 customers that are also
 electrical companies, or large combination utilities, play an
 important role in providing affordable and reliable heating and other
 energy services, and in leading the implementation of state climate
 policies. As the state transitions to cleaner sources of energy,
 large combination utilities are an important partner in helping their
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 customers make smart energy choices, and actively supporting the
 replacement of fossil fuel-based space and water heating equipment
 with high-efficiency nonemitting equipment. Programs to accelerate
 the adoption of efficient, nonemitting appliances have the potential
 to allow large combination utilities to optimize the use of energy
 infrastructure, improve the management of energy loads, better manage
 the integration of variable renewable energy resources, reduce
 greenhouse gas emissions from the buildings sector, mitigate the
 environmental impacts of utility operations and power purchases, and
 improve health outcomes for occupants. Legislative clarity is
 important for utilities to offer programs and services, including
 incentives, in the decarbonization of homes and buildings for their
 customers.
     (3) In order to meet the statewide greenhouse gas limits in the
 energy sectors of the economy, more resources must be directed toward
 achieving decarbonization of residential and commercial heating
 loads, while continuing to protect customers, especially low-income
 customers and vulnerable communities. The legislature finds that
 regulatory innovation may be needed to remove barriers that large
 combination utilities may face to meet the state's public policy
 objectives and expectations. The enactment of chapter 188, Laws of
 2021 (Engrossed Substitute Senate Bill No. 5295) began that
 regulatory transition from traditional cost-of-service regulation,
 with investor-owned gas and electrical companies using forward-
 looking multiyear rate plans and taking steps toward performance-
 based regulation. These steps are intended to provide certainty and
 stability to both customers and to investor-owned gas and electrical
 companies, aligning public policy objectives with investments,
 safety, and reliability.
     (4) The legislature finds that as Washington transitions to 100
 percent clean electricity and as the state implements the Washington
 climate commitment act, switching from fossil fuel-based heating
 equipment to high-efficiency nonemitting equipment will reduce
 climate impacts and fuel price risks for customers in the long term.
 This new paradigm requires a thoughtful transition to decarbonize the
 energy system to ensure that customers are protected, are not subject
 to sudden price shocks, and continue to receive needed energy
 services. This transition will require careful and integrated
 planning across utilities and with customers as well as new
 regulatory tools.
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     (5) It is the intent of the legislature to require large
 combination   utilities  to   decarbonize  their   systems  by:   (a)
 Prioritizing the most efficient and cost-effective measures to
 achieve emissions reductions at the lowest reasonable cost to
 customers; (b) investing in the energy supply, storage, delivery, and
 demand-side resources that will be needed to serve any increase in
 electrical demand affordably and reliably; (c) maintaining safety and
 reliability as the gas system undergoes transformational changes; (d)
 integrating zero-carbon and carbon-neutral fuels to serve high heat
 and industrial loads that require gaseous fuels; (e) managing peak
 demand of the electric system; and (f) ensuring an equitable
 distribution of benefits to, and reduction of burdens for,
 overburdened communities that have historically been underserved by
 utility energy efficiency programs, and may be disproportionately
 impacted by rising fuel and equipment costs or experience high energy
 burden.
     (6) It is the intent of the legislature to support this
 transition by adopting requirements for large combination utilities
 to conduct integrated system planning to develop specific actions
 supporting gas system decarbonization and electrification. These
 plans must be approved, rejected, or approved subject to conditions
 by the utilities and transportation commission. Once approved, an
 integrated system plan may be included in a multiyear rate plan.
     Sec. 2.   RCW 80.28.010 and 2011 c 214 s 11 are each amended to
 read as follows:
     (1) All charges made, demanded, or received by any gas company,
 electrical company, wastewater company, or water company for gas,
 electricity or water, or for any service rendered or to be rendered
 in connection therewith, shall be just, fair, reasonable and
 sufficient. Reasonable charges necessary to cover the cost of
 administering the collection of voluntary donations for the purposes
 of supporting the development and implementation of evergreen
 community management plans and ordinances under RCW 80.28.300 must be
 deemed as prudent and necessary for the operation of a utility.
     (2)(a) Every gas company, electrical company, wastewater company,
 and   water  company   shall   furnish   and  supply   such   service,
 instrumentalities and facilities as shall be safe, adequate and
 efficient, and in all respects just and reasonable.
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     (b) No large gas company that serves more than 500,000 retail
 natural gas customers in the state of Washington on June 30, 2023,
 may furnish or supply gas service, instrumentalities, and facilities
 to any commercial or residential location that did not receive gas
 service or have filed applications for gas service as of June 30,
 2023.
     (3) All rules and regulations issued by any gas company,
 electrical company, wastewater company, or water company, affecting
 or pertaining to the sale or distribution of its product or service,
 must be just and reasonable.
     (4) Utility service for residential space heating shall not be
 terminated between November 15th through March 15th if the customer:
     (a) Notifies the utility of the inability to pay the bill,
 including a security deposit. This notice should be provided within
 five business days of receiving a payment overdue notice unless there
 are extenuating circumstances. If the customer fails to notify the
 utility within five business days and service is terminated, the
 customer can, by paying reconnection charges, if any, and fulfilling
 the requirements of this section, receive the protections of this
 chapter;
     (b) Provides self-certification of household income for the prior
 twelve months to a grantee of the department of commerce, which
 administers federally funded energy assistance programs. The grantee
 shall determine that the household income does not exceed the maximum
 allowed for eligibility under the state's plan for low-income energy
 assistance under 42 U.S.C. 8624 and shall provide a dollar figure
 that is seven percent of household income. The grantee may verify
 information provided in the self-certification;
     (c) Has applied for home heating assistance from applicable
 government and private sector organizations and certifies that any
 assistance received will be applied to the current bill and future
 utility bills;
     (d) Has applied for low-income weatherization assistance to the
 utility or other appropriate agency if such assistance is available
 for the dwelling;
     (e) Agrees to a payment plan and agrees to maintain the payment
 plan. The plan will be designed both to pay the past due bill by the
 following October 15th and to pay for continued utility service. If
 the past due bill is not paid by the following October 15th, the
 customer is not eligible for protections under this chapter until the
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 past due bill is paid. The plan may not require monthly payments in
 excess of seven percent of the customer's monthly income plus one-
 twelfth of any arrearage accrued from the date application is made
 and thereafter during November 15th through March 15th. A customer
 may agree to pay a higher percentage during this period, but shall
 not be in default unless payment during this period is less than
 seven percent of monthly income plus one-twelfth of any arrearage
 accrued from the date application is made and thereafter. If
 assistance payments are received by the customer subsequent to
 implementation of the plan, the customer shall contact the utility to
 reformulate the plan; and
     (f) Agrees to pay the moneys owed even if he or she moves.
     (5) The utility shall:
     (a) Include in any notice that an account is delinquent and that
 service may be subject to termination, a description of the
 customer's duties in this section;
     (b) Assist the customer in fulfilling the requirements under this
 section;
     (c) Be authorized to transfer an account to a new residence when
 a customer who has established a plan under this section moves from
 one residence to another within the same utility service area;
     (d) Be permitted to disconnect service if the customer fails to
 honor the payment program. Utilities may continue to disconnect
 service for those practices authorized by law other than for
 nonpayment as provided for in this subsection. Customers who qualify
 for payment plans under this section who default on their payment
 plans and are disconnected can be reconnected and maintain the
 protections afforded under this chapter by paying reconnection
 charges, if any, and by paying all amounts that would have been due
 and owing under the terms of the applicable payment plan, absent
 default, on the date on which service is reconnected; and
     (e) Advise the customer in writing at the time it disconnects
 service that it will restore service if the customer contacts the
 utility and fulfills the other requirements of this section.
     (6) A payment plan implemented under this section is consistent
 with RCW 80.28.080.
     (7) Every gas company and electrical company shall offer
 residential customers the option of a budget billing or equal payment
 plan. The budget billing or equal payment plan shall be offered low-
 income customers eligible under the state's plan for low-income
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 energy assistance prepared in accordance with 42 U.S.C. 8624(C)(1)
 without limiting availability to certain months of the year, without
 regard to the length of time the customer has occupied the premises,
 and without regard to whether the customer is the tenant or owner of
 the premises occupied.
     (8) Every gas company, electrical company, wastewater company,
 and water company shall construct and maintain such facilities in
 connection with the manufacture and distribution of its product, or
 provision of its services, as will be efficient and safe to its
 employees and the public.
     (9) An agreement between the customer and the utility, whether
 oral or written, does not waive the protections afforded under this
 chapter.
     (10) In establishing rates or charges for water service, water
 companies as defined in RCW 80.04.010 may consider the achievement of
 water conservation goals and the discouragement of wasteful water use
 practices.
     NEW SECTION.    Sec. 3.     The definitions in this section apply
 throughout   this   chapter   unless   the   context   clearly   requires
 otherwise.
     (1) "Alternative energy resource" means biogas, renewable natural
 gas, renewable syngas, renewable hydrogen, carbon dioxide removal,
 carbon-free district energy, any electrification programs approved as
 part of an electrification plan pursuant to section 5 of this act,
 and any carbon-neutral fuel as defined in statute.
     (2) "Carbon dioxide equivalent" has the same meaning as defined
 in RCW 70A.65.010.
     (3) "Carbon dioxide removal" has the same meaning as defined in
 RCW 70A.65.010.
     (4) "Combination utility" means a public service company that is
 both an electrical company and a large gas company that serves more
 than 800,000 retail electric customers and 500,000 retail natural gas
 customers in the state of Washington as of June 30, 2023.
     (5)   "Commission"    means   the   utilities    and   transportation
 commission.
     (6)   "Cost   target"    means:   (a)   With   respect   to   a   gas
 decarbonization plan for a large gas company, the cost target
 identified in section 7(1) of this act; and (b) with respect to an
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 electrification plan for a combination utility, the cost target
 identified in section 7(2) of this act.
     (7) "Costs of greenhouse gas emissions" means the costs of
 greenhouse gas emissions established in RCW 80.28.395.
     (8) "Carbon-free district energy" means a network of hot water
 pipes and cold water pipes used to provide thermal energy to multiple
 buildings that does not result in the emissions of greenhouse gases.
     (9) "Electrical company" has the same meaning as defined in RCW
 80.04.010.
     (10) "Electrification" means the installation by a combination
 utility of electric end-use equipment provided that installation: (a)
 Will result in a net reduction in statewide greenhouse gas emissions
 over the life of the equipment as compared to the most efficient
 commercially available natural gas or alternative energy resource
 alternative; and (b) reduces the sales of natural gas by the large
 gas company. Electrification programs of a combination utility may
 include, but are not limited to, programs that facilitate deep energy
 retrofits or the installation of electric air-source heat pumps with
 gas backups in existing buildings. However, electric air-source heat
 pumps with gas backups may not be part of any plan filed pursuant to
 section 5 of this act.
     (11) "Emissions baseline" means the actual cumulative greenhouse
 gas emissions of a large gas company, calculated pursuant to chapter
 173-441 WAC, for the five-year period beginning January 1, 2018, and
 ending December 31, 2022.
     (12) "Emissions reduction period" means one of five periods of
 five calendar years each, with the five periods beginning on January
 1st of calendar years 2030, 2035, 2040, 2045, and 2050, respectively.
     (13) "Gas company" has the same meaning as defined in RCW
 80.04.010.
     (14) "Greenhouse gas" has the same meaning as defined in RCW
 70A.45.010.
     (15) "Highly impacted community" has the same meaning as defined
 in RCW 19.405.020.
     (16) "Large gas company" means a gas company that serves more
 than 500,000 retail natural gas customers in the state of Washington
 on June 30, 2023.
     (17) "Renewable hydrogen" has the same meaning as defined in RCW
 19.405.020.
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     (18) "Low-income" has the same meaning as defined in RCW
 19.405.020.
     (19) "Multiyear rate plan" means a multiyear rate plan of a gas
 company filed with the commission pursuant to RCW 80.28.425.
     (20) "Natural gas" has the same meaning as defined in RCW
 19.405.020.
     (21) "Renewable natural gas" has the same meaning as defined in
 RCW 19.405.020.
     (22) "Renewable resource" has the same meaning as defined in RCW
 19.405.020.
     (23) "Renewable syngas" means any fuel derived by processing:
     (a) Manure of agricultural livestock, including litter, wood
 shavings, straw, rice hulls, bedding material, and other materials
 incidentally collected with the manure;
     (b) Any nonhazardous, cellulosic, or ot