Consumer-owned utilities

AN ACT Relating to updating provisions for consumer-owned 1
utilities, including port districts, and affected market customers 2
under the clean energy transformation act; amending RCW 19.405.020 3
and 19.405.100; and adding a new section to chapter 19.405 RCW.4
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:5
Sec. 1. RCW 19.405.020 and 2025 c 221 s 1 are each amended to 6
read as follows: 7
The definitions in this section apply throughout this chapter 8
unless the context clearly requires otherwise. 9
(1) "Allocation of electricity" means, for the purposes of 10
setting electricity rates, the costs and benefits associated with the 11
resources used to provide electricity to an electric utility's retail 12
electricity consumers that are located in this state.13
(2) "Alternative compliance payment" means the payment 14
established in RCW 19.405.090(2). 15
(3) "Attorney general" means the Washington state office of the 16
attorney general. 17
(4) "Auditor" means: (a) The Washington state auditor's office or 18
its designee for utilities under its jurisdiction under this chapter 19
that are consumer-owned utilities; or (b) an independent auditor 20
H-2683.1
HOUSE BILL 2245
State of Washington 69th Legislature 2026 Regular Session
By Representatives Doglio, Ramel, Berry, Fitzgibbon, Parshley,
Callan, Duerr, and Kloba
Prefiled 01/05/26. Read first time 01/12/26. Referred to Committee
on Environment & Energy.
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selected by a utility that is not under the jurisdiction of the state 1
auditor and is not an investor-owned utility. 2
(5)(a) "Biomass energy" includes: (i) Organic by-products of 3
pulping and the wood manufacturing process; (ii) animal manure; (iii) 4
solid organic fuels from wood; (iv) forest or field residues; (v) 5
untreated wooden demolition or construction debris; (vi) food waste 6
and food processing residuals; (vii) liquors derived from algae; 7
(viii) dedicated energy crops; and (ix) yard waste.8
(b) "Biomass energy" does not include: (i) Wood pieces that have 9
been treated with chemical preservatives such as creosote, 10
pentachlorophenol, or copper-chrome-arsenic; (ii) wood from old 11
growth forests; or (iii) municipal solid waste. 12
(6) "Carbon dioxide equivalent" has the same meaning as defined 13
in RCW 70A.45.010. 14
(7)(a) "Coal-fired resource" means a facility that uses coal-15
fired generating units, or that uses units fired in whole or in part 16
by coal as feedstock, to generate electricity. 17
(b)(i) "Coal-fired resource" does not include unspecified 18
electricity that is included as part of a limited duration wholesale 19
power purchase made by an electric utility for delivery to retail 20
electric customers that are located in this state, where the purchase 21
is: 22
(A)(I) For a contract duration not to exceed three months; or23
(II) A purchase of system sales for a contract duration not to 24
exceed six months, provided that the purchase is used to demonstrate 25
compliance with the electric utility's seasonal resource adequacy 26
requirements under a regional resource adequacy program; and27
(B) Not used for the purpose of avoiding the restrictions on 28
coal-fired resources under RCW 19.405.030. 29
(ii) "Coal-fired resource" does not include an electric 30
generating facility that is subject to an obligation to meet the 31
standards contained in RCW 80.80.040(3)(c). 32
(8) "Commission" means the Washington utilities and 33
transportation commission. 34
(9) "Conservation and efficiency resources" means any reduction 35
in electric power consumption that results from increases in the 36
efficiency of energy use, production, transmission, or distribution.37
(10) "Consumer-owned utility" means a municipal electric utility 38
formed under Title 35 RCW, a public utility district formed under 39
Title 54 RCW, an irrigation district formed under chapter 87.03 RCW, 40
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a cooperative formed under chapter 23.86 RCW, ((or)) a mutual 1
corporation or association formed under chapter 24.06 RCW, or a port 2
district formed under Title 53 RCW, that is engaged in the business 3
of distributing electricity to ((more than )) at least one retail 4
electric customer in the state. 5
(11) "Demand response" means changes in electric usage by demand-6
side resources from their normal consumption patterns in response to 7
changes in the price of electricity, or to incentive payments 8
designed to induce lower electricity use, at times of high wholesale 9
market prices or when system reliability is jeopardized. "Demand 10
response" may include measures to increase or decrease electricity 11
production on the customer's side of the meter in response to 12
incentive payments. 13
(12) "Department" means the department of commerce.14
(13) "Distributed energy resource" means a nonemitting electric 15
generation or renewable resource or program that reduces electric 16
demand, manages the level or timing of electricity consumption, or 17
provides storage, electric energy, capacity, or ancillary services to 18
an electric utility and that is located on the distribution system, 19
any subsystem of the distribution system, or behind the customer 20
meter, including conservation and energy efficiency.21
(14) "Electric utility" or "utility" means a consumer-owned 22
utility or an investor-owned utility. 23
(15) "Energy assistance" means a program undertaken by a utility 24
to reduce the household energy burden of its customers.25
(a) Energy assistance includes, but is not limited to, 26
weatherization, conservation and efficiency services, and monetary 27
assistance, such as a grant program or discounts for lower income 28
households, intended to lower a household's energy burden.29
(b) Energy assistance may include direct customer ownership in 30
distributed energy resources or other strategies if such strategies 31
achieve a reduction in energy burden for the customer above other 32
available conservation and demand-side measures. 33
(16) "Energy assistance need" means the amount of assistance 34
necessary to achieve a level of household energy burden established 35
by the department or commission. 36
(17) "Energy burden" means the share of annual household income 37
used to pay annual home energy bills. 38
(18)(a) "Energy transformation project" means a project or 39
program that: Provides energy-related goods or services, other than 40
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the generation of electricity; results in a reduction of fossil fuel 1
consumption and in a reduction of the emission of greenhouse gases 2
attributable to that consumption; and provides benefits to the 3
customers of an electric utility. 4
(b) "Energy transformation project" may include but is not 5
limited to: 6
(i) Home weatherization or other energy efficiency measures, 7
including market transformation for energy efficiency products, in 8
excess of: The target established under RCW 19.285.040(1), if 9
applicable; other state obligations; or other obligations in effect 10
on May 7, 2019; 11
(ii) Support for electrification of the transportation sector 12
including, but not limited to: 13
(A) Equipment on an electric utility's transmission and 14
distribution system to accommodate electric vehicle connections, as 15
well as smart grid systems that enable electronic interaction between 16
the electric utility and charging systems, and facilitate the 17
utilization of vehicle batteries for system needs;18
(B) Incentives for the sale or purchase of electric vehicles, 19
both battery and fuel cell powered, as authorized under state or 20
federal law; 21
(C) Incentives for the installation of charging equipment for 22
electric vehicles; 23
(D) Incentives for the electrification of vehicle fleets 24
utilizing a battery or fuel cell for electric supply;25
(E) Incentives to install and operate equipment to produce or 26
distribute renewable hydrogen; and 27
(F) Incentives for renewable hydrogen fueling stations;28
(iii) Investment in distributed energy resources and grid 29
modernization to facilitate distributed energy resources and improved 30
grid resilience; 31
(iv) Investments in equipment for renewable natural gas 32
processing, conditioning, and production, or equipment or 33
infrastructure used solely for the purpose of delivering renewable 34
natural gas for consumption or distribution; 35
(v) Contributions to self-directed investments in the following 36
measures to serve the sites of large industrial gas and electrical 37
customers: (A) Conservation; (B) new renewable resources; (C) behind-38
the-meter technology that facilitates demand response cooperation to 39
reduce peak loads; (D) infrastructure to support electrification of 40
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transportation needs, including battery and fuel cell 1
electrification; or (E) renewable natural gas processing, 2
conditioning, or production; and 3
(vi) Projects and programs that achieve energy efficiency and 4
emission reductions in the agricultural sector, including bioenergy 5
and renewable natural gas projects. 6
(19) "Fossil fuel" means natural gas, petroleum, coal, or any 7
form of solid, liquid, or gaseous fuel derived from such a material.8
(20) "Governing body" means: The council of a city or town; the 9
commissioners of an irrigation district, municipal electric utility, 10
or public utility district; or the board of directors of an electric 11
cooperative or mutual association that has the authority to set and 12
approve rates. 13
(21) "Greenhouse gas" includes carbon dioxide, methane, nitrous 14
oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and 15
any other gas or gases designated by the department of ecology by 16
rule under RCW 70A.45.010. 17
(22) "Highly impacted community" means a community designated by 18
the department of health based on cumulative impact analyses in RCW 19
19.405.140 or a community located in census tracts that are fully or 20
partially on "Indian country" as defined in 18 U.S.C. Sec. 1151.21
(23) "Investor-owned utility" means a company owned by investors 22
that meets the definition of "corporation" in RCW 80.04.010 and is 23
engaged in distributing electricity to more than one retail electric 24
customer in the state. 25
(24) "Low-income" means household incomes as defined by the 26
department or commission, provided that the definition may not exceed 27
the higher of eighty percent of area median household income or two 28
hundred percent of the federal poverty level, adjusted for household 29
size. 30
(25)(a) "Market customer" means a nonresidential ((customer of an 31
electric utility )) consumer of electricity that: (i) Purchases 32
electricity from an entity ((or entities other than the utility with 33
which it is directly interconnected )) that is not a utility subject 34
to this chapter ; or (ii) generates electricity ((to meet one hundred 35
percent of its own needs )) for its own consumption or its lessee's 36
consumption, or both. 37
(b) An "affected market customer" is ((a customer of a utility )) 38
an electricity consumer who becomes a market customer after May 7, 39
2019. 40
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(26)(a) "Natural gas" means naturally occurring mixtures of 1
hydrocarbon gases and vapors consisting principally of methane, 2
whether in gaseous or liquid form, including methane clathrate.3
(b) "Natural gas" does not include renewable natural gas or the 4
portion of renewable natural gas when blended into other fuels.5
(27)(a) "Nonemitting electric generation" means electricity from 6
a generating facility or a resource that provides electric energy, 7
capacity, or ancillary services to an electric utility and that does 8
not emit greenhouse gases as a by-product of energy generation.9
(b) "Nonemitting electric generation" does not include renewable 10
resources. 11
(28)(a) "Nonpower attributes" means all environmentally related 12
characteristics, exclusive of energy, capacity reliability, and other 13
electrical power service attributes, that are associated with the 14
generation of electricity, including but not limited to the 15
facility's fuel type, geographic location, vintage, qualification as 16
a renewable resource, and avoided emissions of pollutants to the air, 17
soil, or water, and avoided emissions of carbon dioxide and other 18
greenhouse gases. 19
(b) "Nonpower attributes" does not include any aspects, claims, 20
characteristics, and benefits associated with the on-site capture and 21
destruction of methane or other greenhouse gases at a facility 22
through a digester system, landfill gas collection system, or other 23
mechanism, which may be separately marketable as greenhouse gas 24
emission reduction credits, offsets, or similar tradable commodities. 25
However, these separate avoided emissions may not result in or 26
otherwise have the effect of attributing greenhouse gas emissions to 27
the electricity. 28
(29) "Qualified transmission line" means an overhead transmission 29
line that is: (a) Designed to carry a voltage in excess of one 30
hundred thousand volts; (b) owned in whole or in part by an investor-31
owned utility; and (c) primarily or exclusively used by such an 32
investor-owned utility as of May 7, 2019, to transmit electricity 33
generated by a coal-fired resource. 34
(30) "Renewable energy credit" means a tradable certificate of 35
proof of one megawatt-hour of a renewable resource. The certificate 36
includes all of the nonpower attributes associated with that one 37
megawatt-hour of electricity and the certificate is verified by a 38
renewable energy credit tracking system selected by the department.39
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(31) "Renewable hydrogen" means hydrogen produced using renewable 1
resources both as the source for the hydrogen and the source for the 2
energy input into the production process. 3
(32) "Renewable natural gas" means a gas consisting largely of 4
methane and other hydrocarbons derived from the decomposition of 5
organic material in landfills, wastewater treatment facilities, and 6
anaerobic digesters. 7
(33) "Renewable resource" means: (a) Water; (b) wind; (c) solar 8
energy; (d) geothermal energy; (e) renewable natural gas; (f) 9
renewable hydrogen; (g) wave, ocean, or tidal power; (h) biodiesel 10
fuel that is not derived from crops raised on land cleared from old 11
growth or first growth forests; or (i) biomass energy.12
(34)(a) "Retail electric customer" means a person or entity that 13
purchases electricity from any electric utility for ultimate 14
consumption and not for resale. 15
(b) "Retail electric customer" does not include, in the case of 16
any electric utility, any person or entity that purchases electricity 17
exclusively from carbon-free and eligible renewable resources, as 18
defined in RCW 19.285.030 as of January 1, 2019, pursuant to a 19
special contract with an investor-owned utility approved by an order 20
of the commission prior to May 7, 2019. 21
(35) "Retail electric load" means:22
(a) With respect to an electric utility, the amount of megawatt-23
hours of electricity delivered in a given calendar year by an 24
electric utility to its Washington retail electric customers. "Retail 25
electric load" does not include: 26
(((a))) (i) Megawatt-hours delivered from qualifying facilities 27
under the federal public utility regulatory policies act of 1978, 28
P.L. 95-617, in operation prior to May 7, 2019, provided that no 29
entity other than the electric utility can make a claim on delivery 30
of the megawatt-hours from those resources; or 31
(((b))) (ii) Megawatt-hours delivered to an electric utility's 32
system from a renewable resource through a voluntary renewable energy 33
purchase by a retail electric customer of the utility in which the 34
renewable energy credits associated with the megawatt-hours delivered 35
are retired on behalf of the retail electric customer;36
(b) With respect to an affected market customer, the amount of 37
megawatt-hours of electricity purchased from an entity that is not a 38
utility subject to this chapter or generated by the affected market 39
customer for its own consumption. 40
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(36) "Thermal renewable energy credit" means, with respect to a 1
facility that generates electricity using biomass energy that also 2
generates thermal energy for a secondary purpose, a renewable energy 3
credit that is equivalent to three million four hundred twelve 4
thousand British thermal units of energy used for such secondary 5
purpose. 6
(37) "Unbundled renewable energy credit" means a renewable energy 7
credit that is sold, delivered, or purchased separately from 8
electricity. All thermal renewable energy credits are considered 9
unbundled renewable energy credits. 10
(38) "Unspecified electricity" means an electricity source for 11
which the fuel attribute is unknown or has been separated from the 12
energy delivered to retail electric customers. 13
(39) "Vulnerable populations" means communities that experience a 14
disproportionate cumulative risk from environmental burdens due to:15
(a) Adverse socioeconomic factors, including unemployment, high 16
housing and transportation costs relative to income, access to food 17
and health care, and linguistic isolation; and 18
(b) Sensitivity factors, such as low birth weight and higher 19
rates of hospitalization. 20
Sec. 2. RCW 19.405.100 and 2025 c 221 s 3 are each amended to 21
read as follows: 22
(1) It is the intent of this chapter that the commission and 23
department adopt rules to streamline the implementation of chapter 24
288, Laws of 2019 with chapter 19.285 RCW to simplify compliance and 25
avoid duplicative processes. It is the intent of the legislature that 26
the commission and the department coordinate in developing rules 27
related to process, timelines, and documentation that are necessary 28
for the implementation of this chapter. 29
(2) The commission may adopt rules to ensure the proper 30
implementation and enforcement of this chapter as it applies to 31
investor-owned utilities. 32
(3) The department may adopt rules to ensure the proper 33
implementation and enforcement of this chapter as it applies to 34
consumer-owned utilities. Nothing in this subsection may be construed 35
to restrict the rate-making authority of the governing body of a 36
consumer-owned utility as otherwise provided by law.37
(4)(a) The department must adopt rules establishing reporting 38
requirements for electric utilities to demonstrate compliance with 39
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this chapter. The requirements must, to the extent practicable, be 1
consistent with the disclosures required under chapter 19.29A RCW.2
(b) The commission must adopt rules establishing reporting 3
requirements for affected market customers to demonstrate compliance 4
with this chapter. The requirements must, to the extent practicable, 5
be consistent with the disclosures required under chapter 19.29A RCW. 6
The commission may waive reporting requirements for affected market 7
customers that only procure power from nonemitting electric 8
generation or renewable resources and for affected market customers 9
that generate electricity using de minimis amounts of fossil fuels 10
exclusively for purposes of emergency backup requirements.11
(c) Beginning with the interim performance report due July 1, 12
2026, consumer-owned electric utilities must include in each interim 13
performance or compliance report the number of unspecified 14
electricity contracts with terms greater than 31 days used to serve 15
Washington retail customers. The report will include information 16
regarding the duration and purpose of the unspecified contracts and 17
the months contracted. 18
(5) An investor-owned utility must also report all information 19
required in subsection (4)(a) of this section to the commission.20
(6) An electric utility must also make reports required in this 21
section available to its retail electric customers.22
(7) The department of ecology must adopt rules, in consultation 23
with the commission and the department of commerce, to establish 24
requirements for energy transformation project investments including, 25
but not limited to, verification procedures, reporting standards, and 26
other logistical issues as necessary. 27
(8) The department must adopt rules providing for the measuring 28
and tracking of thermal renewable energy credits that may be used for 29
compliance under RCW 19.405.040. 30
(9) Pursuant to the administrative procedure act, chapter 34.05 31
RCW, rules needed for the implementation of this chapter must be 32
adopted by January 1, 2021, unless specified otherwise elsewhere in 33
this chapter. These rules may be revised as needed to carry out the 34
intent and purposes of this chapter. 35
NEW SECTION. Sec. 3. A new section is added to chapter 19.405 36
RCW to read as follows: 37
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For affected market customers, the commission must, on its own 1
motion or if requested, enforce compliance with the requirements of 2
this chapter. 3
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