AWC Legislative Bulletin - Final Bulletin
2007 Regular Session
61st Legislature
January 8 to April 22, 2007  (Plain Text Version)

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In this issue:
From the Director - 2007 Legislative Session: Productive For Cities
Energy & Telecommunications
Environment & Water
General Local Government
Infrastructure, Transportation, & Economic Development
Land Use & Housing
Law & Justice
Municipal Finance
Personnel & Labor Relations

Energy & Telecommunications

Session Overview

It turned out to be a busy session in both the energy and telecommunications arena – many bills were introduced, but not all passed. Bills that had been discussed during the past couple of years came back again this year, such as transmission siting, net metering, and mandatory electronic bill payment. Other issues that haven’t been around for a decade or more showed up in bill form this year, such as pole attachments rates and telecommunications franchise agreements. A brand new issue was introduced as well, and passed, to try to curtail the burgeoning theft of scrap metal property. While some of these issues seem to be resolved now, many are expected to be back again next year.

AWC was anticipating that transmission siting would settle down after the passage of ESHB 1020 in 2006. That bill was a compromise bill that gave limited siting authority to EFSEC over corridors of national interest. However, the Chair of the Energy Facility Site Evaluation Council (EFSEC) and some utilities brought a more comprehensive preemption bill forward that, as originally written, was unacceptable to the cities.

After much wrangling and redrafting, an uneasy compromise was reached that allows cities to prepare in advance for utility corridors but puts the coordination and ultimate decision-making of certain types of transmission projects in the hands of the EFSEC Council. Cities were able to bifurcate the projects that are completely new versus those that already exist in city rights-of-way needing modification or reconstruction or are below a certain size.

Under this scenario, cities would still have control over transmission facilities that are at 115kv or below and are already in the city rights-of-way. For the rest of the projects, cities would have the chance to participate in a pre-application process with developers and other jurisdictions to try to come to agreement prior to an application being filed with the EFSEC. EFSEC will develop the pre-application process this interim in rulemaking, where cities will have the opportunity to participate.

Another issue that arose that has not been debated in more than a decade was pole attachment fees. While the bill this session only applied to PUDs, the cities and rural cooperatives were uneasy about the precedence the bill would have set in future pole attachment rate cases. The bill ultimately did not pass, so the prime sponsor will hold interim discussions with all public utilities on the issue.

Finally, this year was the first in a long time to discuss telecommunications franchise agreements. This has been a topic in Congress for more than a year, but not at the state legislature until this session. The bill would have taken away local franchising authority by creating a statewide franchising process for telecommunications companies interested in expanding the types of services they offer. The bill did not get past the first policy committee, but we fully expect to see this issue again next year in the state legislature.

Minor Bills

Transmission Siting (SHB 1037)

This bill was a compromise with the investor-owned utilities and the PUDs because the utilities are anticipating a need for new transmission facilities to serve future renewable energy sources coming online in the next few years, such as wind power in eastern Washington. The bill preserves some local government siting authority on the modification of facilities that already exist in city rights-of-way and for moderate-sized facilities frequently located in urban areas. The bill:

• Gives transmission developers the ability to opt-in to the Energy Facility Site Evaluation Council (EFSEC) process with completely new transmission facilities at or above 115kv (reconstruction or modification of 115kv facilities would still be permitted at the city);
• Gives transmission developers the ability to opt-in to the EFSEC process on new construction, reconstruction, or modification projects above 115kv;
• Creates a pre-application process to allow the developers and the local governments an opportunity to come to agreement on transmission corridors prior to the developer filing an application with EFSEC;
• Takes out the size limit of transmission projects that could go to EFSEC in national interest corridors, should the federal government identify any national interest corridors in our state; and
• Creates a limited definition of "modification" that does not include minor improvements, relocation, or conversion of existing transmission facilities.

[C 325 L 07; Effective Date: July 22, 2007]

Scrap Metal Theft (ESSB 5312)

Cities, utilities, and many other interest groups worked hard to get this legislation passed in a condition that would have a meaningful impact on the scrap metal theft problem. The bill as it passed the legislature does the following:

• Prohibits cash payments for sales of scrap metal above $30.
• Requires scrap metal recycling businesses to keep records and take identification.
• Requires sellers to sign a declaration that the property is not stolen.
• Requires scrap metal recycling businesses to report metal property they believe to be stolen, and to hold property intact if asked by law enforcement.
• Imposes new penalties.

[C 377 L 07; Effective Date: July 22, 2007]

Mitigating the Impacts of Climate Change (ESSB 6001) – Partial Veto

This bill will establish state goals to reduce greenhouse gases emissions as well as a greenhouse gases emissions performance standard for electric utilities operating in the state. Various reports are required by state agencies and the Governor.

There were a number of floor amendments adopted which include:

• Prohibiting electric companies and consumer-owned electric utilities from entering into a long-term financial commitment for base-load electric generation that does not comply with the greenhouse gases emissions performance standard.
• Authorizing the Washington Utilities and Transportation Commission (WUTC) to adopt policies allowing for an additional return on investment to encourage meeting energy requirements through distributed generation and increased efficiency of energy delivery.
• Permitting the WUTC to add an increment of 2% to the rate of return on common equity permitted on an electric company's other investments for prudently incurred investments in distributed generation and other measures.
• Requiring the WUTC to make a determination regarding an electric company's proposed decision to acquire electric generation for electricity that complies with the greenhouse gases emissions performance standard.
• Authorizing consumer-owned electric utilities to collect a surcharge for costs in excess of individual rate categories to meet the greenhouse gases emissions performance standard.

[C 307 L 07 Partial Veto; Effective Date: July 22, 2007]

Partial Veto: The Governor vetoed Section 6 of this bill because she deemed it unnecessary. In her veto letter, the Governor noted that this section related to modifications to the Energy Facility Site Evaluation Council's permit process that were ultimately removed from the bill.

Authorizing Utilities to Engage in Environmental Mitigation Efforts (SHB 1929)

This bill authorizes cities and public utility districts to mitigate the environmental impacts of their energy operation and power purchases as well as operation from the following utilities: water, sewerage, storm water, surface water, or solid waste handling. Authorized mitigation activities would include offsetting the impact of greenhouse gas emissions. In addition, the bill authorizes counties to mitigate the environmental impacts from their utilities or other ratepayer funded activities. The bill is in response to a recent court case, Okeson v. City of Seattle, where the court ruled the city electric utility did not have the authority to engage in this activity.

[C 349 L 07; Effective Date: July 22, 2007]

Crane Safety (ESHB 2171)

The bill calls for the Department of Labor & Industries (L&I) to establish certification, experience, educational, and training requirements for crane inspectors and operators. The bill is specifically directed at construction cranes and only cranes above a certain tonnage. The bill exempts powerhouse cranes, tree trimming and removal equipment, utility equipment, and forklifts. Cities will participate in the L&I rulemaking process to ensure that city utility equipment that is only used occasionally will not be impacted by the stringent standards that will be applied to large construction cranes.

[C 27 L 07; Effective Date: January 1, 2010]

Water Power License Fees (SSB 5881)

The bill will raise the Department of Ecology’s annual license fees imposed upon water used for power development. It has been many decades since the fees were increased. Any city generating hydropower will be impacted by the change in fees.

[C 286 L 07; Effective Date: July 22, 2007]

Water Conservation Audits (SSB 5481)

Current law, RCW 39.35A, allows state and local governments to enter into performance contacts to help identify energy savings and help defray the cost of energy-saving projects by paying for projects from the energy savings. The Department of General Administration helps facilitate performance-based contracts for public facilities, including cities. This bill will expand the options for performance-based contacting to include water savings and solid waste reduction.

[C 39 L 07; Effective Date: July 22, 2007]

Net Metered Aggregation (SHB 1140)

Under this provision, electric utilities will be required to provide meter aggregation for net metering customer-generators within their service territory upon request by the customer-generator. Meter aggregation means the administrative combination of readings from and billing for all meters, regardless of the rate class, on premises owned or leased by a customer-generator located within the service territory of a single electric utility.

There was a concern that by adding up all usage, customer-generators could potentially qualify for a different rate class with no real economies of scale. The language in the bill does not address what happens when there are different rate classes involved – for instance, when the net metered electricity is produced on a residential rate and may be applied to a commercial rate.

The final version of the bill passed with new language that narrows the bill in size and scope. Language was included that clarifies that the aggregated meters do not change the underlying rate class of the meters and that no more than 100 kilowatts may be aggregated among all customer-generators. These amendments greatly improved the bill for the public utilities.

[C 323 L 07; Effective Date: July 22, 2007]

Developing Regional Compacts for Siting Electrical Transmission Lines (HB 1038)

The bill calls for a task force to create a regional process for siting new cross border transmission lines. The task force will consist of legislators, local governments, and resource agencies with an interest in the issue. A report, with recommendations, is due to the legislature by September 1, 2008.

[C 326 L 07; Effective Date: July 22, 2007]

Competitive Classification of Telecommunications Services (SHB 2103)

Under this proposal, the WUTC may consider the number and size of alternative providers of telecommunications services not subject to WUTC's jurisdiction in addition to those that are regulated by the WUTC, when determining whether a competitive telecommunications service is subject to effective competition.

A noncompetitive telecommunications company may petition the WUTC to have packages or bundles of telecommunications services subject to minimal regulation. The WUTC must grant the petition if:

• each noncompetitive service in the packages or bundle is readily and separately available to customers at fair, just, and reasonable prices;
• the price of the package or bundle is equal to or greater than the cost for tariffed services plus the cost of any competitive services as determined by the WUTC; and
• the availability and price of the stand-alone noncompetitive services are displayed in the company's tariff and on its website, consistent with WUTC rules.

The WUTC may waive any regulatory requirement with respect to packages or bundles of telecommunications services if it finds those requirements are no longer necessary to protect public interest.

[C 26 L07; Effective Date: July 22, 2007]

Pipeline Safety (SSB 5225)

This WUTC request legislation will:

• Extend the WUTC jurisdiction to all publicly-owned "master meters" and to all "gas" pipelines, consistent with federal definitions;
• Allow the WUTC to match federal pipeline safety penalty limits by rule; and
• Consolidate definitions applying to gas and hazardous liquid pipelines into one chapter.

[C 142 L 07; Effective Date: July 22, 2007]

Bills that Failed

Radio Frequency ID Systems (HB 1031)

This bill would have addressed the uses for information obtained through RFID systems (radio frequency identification). Specifically, the bill would have:

• Required that a person selling or issuing an electronic communication device that has not been disabled, deactivated, or removed at the point of sale or issuance, provided notice to the consumer and label the device.
• Required that a person selling or issuing an electronic communication device must use industry accepted best standards to secure the device.
• Prohibited a person from remotely scanning or reading an electronic communication device to identify a consumer without obtaining consent from the consumer, and
• Created civil penalties.

Sustainable Energy Trust (SHB 1032)

This bill would have allowed all electric and natural gas utilities to impose a monthly system benefits charge of up to $1.90 a month. Utilities could have used the funds to develop sustainable energy resources or smart energy technology. City utilities would have been required to submit to the governing board for approval a proposal for how the funds would be used, and each utility must establish a separate account for these funds. In addition, each utility was required to submit to the Department of Community, Trade & Economic Development a copy of their proposal for use in the state’s biennial energy report.

Electronic Utility Bill Payment (SHB 1034)

The original bill proposed that when a utility (serving electricity, natural gas, water or sewer) with more than 5,000 customers upgrades, changes or purchases new equipment relating to billing or service, the new equipment must be capable of accepting electronic payment of bills for service provided by the utility. A substitute version of the bill removed the customer threshold and required that when utilities "substantially" upgrade or replace their billing system, the resulting system must be capable of accepting electronic payment. "Substantial" was defined as being at least a 25% change in the billing system.

Anaerobic Digestion Power (E2SHB 1035)

This bill would have created a grant program for anaerobic digester projects, to help lessen the capital costs of generating power produced from biogas (typically produced from feedstocks such as sewage sludge, livestock manure, or wet organic material).

Purchasing Renewable Energy by Public Entities (HB 1036)

This bill would have required that if a state agency is served by a public or private utility, they must purchase 20% of their total electricity in the form of qualified alternative energy resources from their local electric utility.

Alternative Energy Facilities (HB 1060)

This bill would have prohibited applicants of alternative energy facilities from seeking a site certificate at EFSEC for a similar alternative energy resource project in a similar geographic area for two years if the project is first denied by a local government. This issue is also referred to as “forum shopping”; where applicants will shop for a venue until they get the site certificate they seek. The bill came to the legislature in response to a wind energy project in Kittitas Valley that was originally rejected by the county.

Eliminating the Threshold for Projects Eligible for EFSEC Certification (HB 1061)

The current threshold for energy generation projects required to get EFSEC approval is 350MW; any project smaller than that would need local government certification. This bill would have eliminated the threshold, so that any size of energy generation facility would be required to get EFSEC certification. In addition, the bill would have allowed developers of multiple energy facilities to certify more than one project under the same application, regardless of the size of the generation facilities.

Regarding the Authority of the WUTC (HB 1478)

HB 1478 would have required the WUTC to provide first responders, state agencies, and local government’s data that the Commission develops or gathers for the maps that are consolidated into their geographic information system. This includes pump stations and valves, etc.

Under this proposal, the WUTC would have also provide or make available for inspection by any other entity, including the public, maps or map images that illustrate line pipe location as long as the map or map images are of no greater detail than a scale of one to twenty-four thousand.

Pole Attachment Fees (SHB 1857)

The bill would have required public utility districts to use a specified pole attachment rate structure and would have moved hearing disputes into an arbitration process.

Responsibility for hearing disputes over pole attachments was given to the American Arbitration Association. In addition, it would have removed the requirement that the rate be determined on a per pole basis rather than per attachment basis. It specifies that rates, terms, and conditions charged by a locally-regulated utility must be:

• Based on the utility's actual cost of providing the allocated space on the pole that is being used by the licensee; and
• Sufficient to cover the utility's actual capital and operating expenses attributable to the portion of the pole used by the licensee.

Although this bill would not have affected cities, there was concern that if it passed it could have set a precedent for future city pole attachment fees. There will be interim discussions on this issue.

Injury Caused by Metal Theft (HB 1987)

The bill would have declared that public or private landowners are not liable for unintentional injuries to any person when the injury is caused by the theft of copper, aluminum, steel, or other metal material from property owned by the landowner.

Requiring a Survey of Broadband Deployment (SB 5120)

This Governor request legislation would have required the Department of Community, Trade, and Economic Development to commission a survey on the deployment of broadband technologies among households in the state. The purpose of the survey was to identify any broadband deployment disparities in the state.

Methane Energy Credit (SB 5238)

This bill would have created a tax credit against the state portion of the public utility tax for electric utilities that purchase the electricity generated from methane gas derived from dairy cows.

Encouraging the Use of Cleaner Energy (2SSB 5586)

This bill would have added a public utility tax credit for consumer-owned utilities that invest in energy efficiency measures. A study to examine the potential benefits of such a tax credit was included in SSB 6001.

Community-Based Solar Incentives (SB 5614)

This bill would have amended the law passed in 2005 that created a cost recovery incentive program for customer or local government-owned renewable energy systems. Community-based solar energy projects (which cities could participate in) would have been added to the list of energy projects eligible for cost recovery incentive payments.

Local Franchise Authority (SB 6003)

This bill would have replaced local franchise authority for video services (cable television) with a state franchise authority at the Washington Utilities & Transportation Commission. The bill also prohibits build-out requirements, and calls for a more restrictive definition of gross revenue than many cities use today.

Telecommunication Regulation Reform (SSB 5592)

This bill would have created a task force to study the reform of telecommunications regulations.

PUD Retail Telecom Authority (SB 6102)

This bill was a pilot project that would have affected only the Pend Oreille Public Utility District (PUD) in eastern Washington. Pend Oreille is already operating a wholesale fiber optic backbone, and is located in a county considered to be very rural and without many telecommunications choices. The pilot project would have expired at the end of seven years and the PUD would have been required to submit annual progress reports to the legislature.