Wholesale power purchases

AN ACT Relating to wholesale power purchases by electric 1
utilities under the Washington clean energy transformation act; and 2
amending RCW 19.405.020 and 19.405.030. 3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
Sec. 1. RCW 19.405.020 and 2024 c 83 s 2 are each amended to 5
read as follows: 6
The definitions in this section apply throughout this chapter 7
unless the context clearly requires otherwise. 8
(1) "Allocation of electricity" means, for the purposes of 9
setting electricity rates, the costs and benefits associated with the 10
resources used to provide electricity to an electric utility's retail 11
electricity consumers that are located in this state.12
(2) "Alternative compliance payment" means the payment 13
established in RCW 19.405.090(2). 14
(3) "Attorney general" means the Washington state office of the 15
attorney general. 16
(4) "Auditor" means: (a) The Washington state auditor's office or 17
its designee for utilities under its jurisdiction under this chapter 18
that are consumer-owned utilities; or (b) an independent auditor 19
selected by a utility that is not under the jurisdiction of the state 20
auditor and is not an investor-owned utility. 21
S-0652.1
SENATE BILL 5401
State of Washington 69th Legislature 2025 Regular Session
By Senators Slatter, Boehnke, and Nobles
Read first time 01/21/25. Referred to Committee on Environment,
Energy & Technology.
p. 1 SB 5401
(5)(a) "Biomass energy" includes: (i) Organic by-products of 1
pulping and the wood manufacturing process; (ii) animal manure; (iii) 2
solid organic fuels from wood; (iv) forest or field residues; (v) 3
untreated wooden demolition or construction debris; (vi) food waste 4
and food processing residuals; (vii) liquors derived from algae; 5
(viii) dedicated energy crops; and (ix) yard waste.6
(b) "Biomass energy" does not include: (i) Wood pieces that have 7
been treated with chemical preservatives such as creosote, 8
pentachlorophenol, or copper-chrome-arsenic; (ii) wood from old 9
growth forests; or (iii) municipal solid waste. 10
(6) "Carbon dioxide equivalent" has the same meaning as defined 11
in RCW 70A.45.010. 12
(7)(a) "Coal-fired resource" means a facility that uses coal-13
fired generating units, or that uses units fired in whole or in part 14
by coal as feedstock, to generate electricity. 15
(b)(i) "Coal-fired resource" does not include an electric 16
generating facility that is included as part of a limited duration 17
wholesale power purchase ((, not to exceed one month, )) made by an 18
electric utility for delivery to retail electric customers that are 19
located in this state for which the source of the power is not known 20
at the time of entry into the transaction to procure the electricity , 21
where the purchase is either: (A) For a contract duration not to 22
exceed three months; or (B) a purchase of system sales for a contract 23
duration not to exceed six months, provided that the purchase is 24
necessary to meet the electric utility's seasonal resource adequacy 25
requirements under a regional resource adequacy program.26
(ii) "Coal-fired resource" does not include an electric 27
generating facility that is subject to an obligation to meet the 28
standards contained in RCW 80.80.040(3)(c). 29
(iii) "Coal-fired resource" does not include electricity 30
purchased from the Bonneville power administration under a long-term 31
power purchase agreement or exchange agreement, except for any 32
portion of the federal system supplied by a transaction to procure 33
electricity where, at the time the Bonneville power administration 34
entered into the transaction, the source of the electricity was known 35
to be from a coal-fired generating unit.36
(8) "Commission" means the Washington utilities and 37
transportation commission. 38
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(9) "Conservation and efficiency resources" means any reduction 1
in electric power consumption that results from increases in the 2
efficiency of energy use, production, transmission, or distribution.3
(10) "Consumer-owned utility" means a municipal electric utility 4
formed under Title 35 RCW, a public utility district formed under 5
Title 54 RCW, an irrigation district formed under chapter 87.03 RCW, 6
a cooperative formed under chapter 23.86 RCW, or a mutual corporation 7
or association formed under chapter 24.06 RCW, that is engaged in the 8
business of distributing electricity to more than one retail electric 9
customer in the state. 10
(11) "Demand response" means changes in electric usage by demand-11
side resources from their normal consumption patterns in response to 12
changes in the price of electricity, or to incentive payments 13
designed to induce lower electricity use, at times of high wholesale 14
market prices or when system reliability is jeopardized. "Demand 15
response" may include measures to increase or decrease electricity 16
production on the customer's side of the meter in response to 17
incentive payments. 18
(12) "Department" means the department of commerce.19
(13) "Distributed energy resource" means a nonemitting electric 20
generation or renewable resource or program that reduces electric 21
demand, manages the level or timing of electricity consumption, or 22
provides storage, electric energy, capacity, or ancillary services to 23
an electric utility and that is located on the distribution system, 24
any subsystem of the distribution system, or behind the customer 25
meter, including conservation and energy efficiency.26
(14) "Electric utility" or "utility" means a consumer-owned 27
utility or an investor-owned utility. 28
(15) "Energy assistance" means a program undertaken by a utility 29
to reduce the household energy burden of its customers.30
(a) Energy assistance includes, but is not limited to, 31
weatherization, conservation and efficiency services, and monetary 32
assistance, such as a grant program or discounts for lower income 33
households, intended to lower a household's energy burden.34
(b) Energy assistance may include direct customer ownership in 35
distributed energy resources or other strategies if such strategies 36
achieve a reduction in energy burden for the customer above other 37
available conservation and demand-side measures. 38
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(16) "Energy assistance need" means the amount of assistance 1
necessary to achieve a level of household energy burden established 2
by the department or commission. 3
(17) "Energy burden" means the share of annual household income 4
used to pay annual home energy bills. 5
(18)(a) "Energy transformation project" means a project or 6
program that: Provides energy-related goods or services, other than 7
the generation of electricity; results in a reduction of fossil fuel 8
consumption and in a reduction of the emission of greenhouse gases 9
attributable to that consumption; and provides benefits to the 10
customers of an electric utility. 11
(b) "Energy transformation project" may include but is not 12
limited to: 13
(i) Home weatherization or other energy efficiency measures, 14
including market transformation for energy efficiency products, in 15
excess of: The target established under RCW 19.285.040(1), if 16
applicable; other state obligations; or other obligations in effect 17
on May 7, 2019; 18
(ii) Support for electrification of the transportation sector 19
including, but not limited to: 20
(A) Equipment on an electric utility's transmission and 21
distribution system to accommodate electric vehicle connections, as 22
well as smart grid systems that enable electronic interaction between 23
the electric utility and charging systems, and facilitate the 24
utilization of vehicle batteries for system needs;25
(B) Incentives for the sale or purchase of electric vehicles, 26
both battery and fuel cell powered, as authorized under state or 27
federal law; 28
(C) Incentives for the installation of charging equipment for 29
electric vehicles; 30
(D) Incentives for the electrification of vehicle fleets 31
utilizing a battery or fuel cell for electric supply;32
(E) Incentives to install and operate equipment to produce or 33
distribute renewable hydrogen; and 34
(F) Incentives for renewable hydrogen fueling stations;35
(iii) Investment in distributed energy resources and grid 36
modernization to facilitate distributed energy resources and improved 37
grid resilience; 38
(iv) Investments in equipment for renewable natural gas 39
processing, conditioning, and production, or equipment or 40
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infrastructure used solely for the purpose of delivering renewable 1
natural gas for consumption or distribution; 2
(v) Contributions to self-directed investments in the following 3
measures to serve the sites of large industrial gas and electrical 4
customers: (A) Conservation; (B) new renewable resources; (C) behind-5
the-meter technology that facilitates demand response cooperation to 6
reduce peak loads; (D) infrastructure to support electrification of 7
transportation needs, including battery and fuel cell 8
electrification; or (E) renewable natural gas processing, 9
conditioning, or production; and 10
(vi) Projects and programs that achieve energy efficiency and 11
emission reductions in the agricultural sector, including bioenergy 12
and renewable natural gas projects. 13
(19) "Fossil fuel" means natural gas, petroleum, coal, or any 14
form of solid, liquid, or gaseous fuel derived from such a material.15
(20) "Governing body" means: The council of a city or town; the 16
commissioners of an irrigation district, municipal electric utility, 17
or public utility district; or the board of directors of an electric 18
cooperative or mutual association that has the authority to set and 19
approve rates. 20
(21) "Greenhouse gas" includes carbon dioxide, methane, nitrous 21
oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and 22
any other gas or gases designated by the department of ecology by 23
rule under RCW 70A.45.010. 24
(22) "Highly impacted community" means a community designated by 25
the department of health based on cumulative impact analyses in RCW 26
19.405.140 or a community located in census tracts that are fully or 27
partially on "Indian country" as defined in 18 U.S.C. Sec. 1151.28
(23) "Investor-owned utility" means a company owned by investors 29
that meets the definition of "corporation" in RCW 80.04.010 and is 30
engaged in distributing electricity to more than one retail electric 31
customer in the state. 32
(24) "Low-income" means household incomes as defined by the 33
department or commission, provided that the definition may not exceed 34
the higher of eighty percent of area median household income or two 35
hundred percent of the federal poverty level, adjusted for household 36
size. 37
(25)(a) "Market customer" means a nonresidential customer of an 38
electric utility that: (i) Purchases electricity from an entity or 39
entities other than the utility with which it is directly 40
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interconnected; or (ii) generates electricity to meet one hundred 1
percent of its own needs. 2
(b) An "affected market customer" is a customer of a utility who 3
becomes a market customer after May 7, 2019. 4
(26)(a) "Natural gas" means naturally occurring mixtures of 5
hydrocarbon gases and vapors consisting principally of methane, 6
whether in gaseous or liquid form, including methane clathrate.7
(b) "Natural gas" does not include renewable natural gas or the 8
portion of renewable natural gas when blended into other fuels.9
(27)(a) "Nonemitting electric generation" means electricity from 10
a generating facility or a resource that provides electric energy, 11
capacity, or ancillary services to an electric utility and that does 12
not emit greenhouse gases as a by-product of energy generation.13
(b) "Nonemitting electric generation" does not include renewable 14
resources. 15
(28)(a) "Nonpower attributes" means all environmentally related 16
characteristics, exclusive of energy, capacity reliability, and other 17
electrical power service attributes, that are associated with the 18
generation of electricity, including but not limited to the 19
facility's fuel type, geographic location, vintage, qualification as 20
a renewable resource, and avoided emissions of pollutants to the air, 21
soil, or water, and avoided emissions of carbon dioxide and other 22
greenhouse gases. 23
(b) "Nonpower attributes" does not include any aspects, claims, 24
characteristics, and benefits associated with the on-site capture and 25
destruction of methane or other greenhouse gases at a facility 26
through a digester system, landfill gas collection system, or other 27
mechanism, which may be separately marketable as greenhouse gas 28
emission reduction credits, offsets, or similar tradable commodities. 29
However, these separate avoided emissions may not result in or 30
otherwise have the effect of attributing greenhouse gas emissions to 31
the electricity. 32
(29) "Qualified transmission line" means an overhead transmission 33
line that is: (a) Designed to carry a voltage in excess of one 34
hundred thousand volts; (b) owned in whole or in part by an investor-35
owned utility; and (c) primarily or exclusively used by such an 36
investor-owned utility as of May 7, 2019, to transmit electricity 37
generated by a coal-fired resource. 38
(30) "Renewable energy credit" means a tradable certificate of 39
proof of one megawatt-hour of a renewable resource. The certificate 40
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includes all of the nonpower attributes associated with that one 1
megawatt-hour of electricity and the certificate is verified by a 2
renewable energy credit tracking system selected by the department.3
(31) "Renewable hydrogen" means hydrogen produced using renewable 4
resources both as the source for the hydrogen and the source for the 5
energy input into the production process. 6
(32) "Renewable natural gas" means a gas consisting largely of 7
methane and other hydrocarbons derived from the decomposition of 8
organic material in landfills, wastewater treatment facilities, and 9
anaerobic digesters. 10
(33) "Renewable resource" means: (a) Water; (b) wind; (c) solar 11
energy; (d) geothermal energy; (e) renewable natural gas; (f) 12
renewable hydrogen; (g) wave, ocean, or tidal power; (h) biodiesel 13
fuel that is not derived from crops raised on land cleared from old 14
growth or first growth forests; or (i) biomass energy.15
(34)(a) "Retail electric customer" means a person or entity that 16
purchases electricity from any electric utility for ultimate 17
consumption and not for resale. 18
(b) "Retail electric customer" does not include, in the case of 19
any electric utility, any person or entity that purchases electricity 20
exclusively from carbon-free and eligible renewable resources, as 21
defined in RCW 19.285.030 as of January 1, 2019, pursuant to a 22
special contract with an investor-owned utility approved by an order 23
of the commission prior to May 7, 2019. 24
(35) "Retail electric load" means the amount of megawatt-hours of 25
electricity delivered in a given calendar year by an electric utility 26
to its Washington retail electric customers. "Retail electric load" 27
does not include: 28
(a) Megawatt-hours delivered from qualifying facilities under the 29
federal public utility regulatory policies act of 1978, P.L. 95-617, 30
in operation prior to May 7, 2019, provided that no entity other than 31
the electric utility can make a claim on delivery of the megawatt-32
hours from those resources; or 33
(b) Megawatt-hours delivered to an electric utility's system from 34
a renewable resource through a voluntary renewable energy purchase by 35
a retail electric customer of the utility in which the renewable 36
energy credits associated with the megawatt-hours delivered are 37
retired on behalf of the retail electric customer.38
(36) "Thermal renewable energy credit" means, with respect to a 39
facility that generates electricity using biomass energy that also 40
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generates thermal energy for a secondary purpose, a renewable energy 1
credit that is equivalent to three million four hundred twelve 2
thousand British thermal units of energy used for such secondary 3
purpose. 4
(37) "Unbundled renewable energy credit" means a renewable energy 5
credit that is sold, delivered, or purchased separately from 6
electricity. All thermal renewable energy credits are considered 7
unbundled renewable energy credits. 8
(38) "Unspecified electricity" means an electricity source for 9
which the fuel attribute is unknown or has been separated from the 10
energy delivered to retail electric customers. 11
(39) "Vulnerable populations" means communities that experience a 12
disproportionate cumulative risk from environmental burdens due to:13
(a) Adverse socioeconomic factors, including unemployment, high 14
housing and transportation costs relative to income, access to food 15
and health care, and linguistic isolation; and 16
(b) Sensitivity factors, such as low birth weight and higher 17
rates of hospitalization. 18
Sec. 2. RCW 19.405.030 and 2019 c 288 s 3 are each amended to 19
read as follows: 20
(1)(a) On or before December 31, 2025, each electric utility must 21
eliminate coal-fired resources from its allocation of electricity. 22
This does not include costs associated with decommissioning and 23
remediation of these facilities. 24
(b) The commission shall allow in electric rates all 25
decommissioning and remediation costs prudently incurred by an 26
investor-owned utility for a coal-fired resource. 27
(2) The commission must accelerate depreciation schedules for any 28
coal-fired resource to a date no later than December 31, 2025. The 29
commission may accelerate the depreciation schedule for any qualified 30
transmission line owned by an investor-owned utility when the 31
commission finds the qualified transmission line is no longer used 32
and useful and there is no reasonable likelihood that the qualified 33
transmission line will be utilized in the future. The adjusted 34
depreciation schedule must require such a qualified transmission line 35
to be fully depreciated on or before December 31, 2025.36
(3) The commission must allow in rates, directly or indirectly, 37
amounts on an investor-owned utility's books of account that the 38
commission finds represent prudently incurred undepreciated 39
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investment in a fossil fuel generating resource that has been retired 1
from service when: 2
(a) The retirement is due to ordinary wear and tear, casualties, 3
acts of God, acts of governmental authority, inability to procure or 4
use fuel, termination or expiration of any ownership, or a operation 5
agreement affecting such a fossil fuel generating resource; or6
(b) The commission finds that the retirement is in the public 7
interest. 8
(4) An electric utility that fails to comply with the 9
requirements of subsection (1) of this section must pay the 10
administrative penalty established under RCW 19.405.090(1), except as 11
otherwise provided in this chapter. 12
(5) Nothing in this section prohibits an electric utility from 13
purchasing or exchanging power from the Bonneville power 14
administration.15
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