2005

The Legislature enacted two bills to encourage in-state production and use of renewable energy systems: one lowered the costs to consumers, and the other lowered the costs ofmanufacturing systems.  The bill that lowered the costs to consumers is the focus of this review.

The Legislature created this credit for utilities and provided a cap on the amount of the credit equal to 0.25 percent of the amount a utility owes in public utility taxes (PUT) or $25,000, whichever is greater. The Legislature also limited the amount utilities could pay each customer to $2,000 per year.

The credit is intended to offset payments the utility makes to customers who generate their own renewable energy.  To qualify for the payments, customers must receive certification from the Department of Revenue (DOR).  The certification indicates that their systems meet specified requirements and identifies if they contain parts made in Washington.

The bill also included a provision requiring DOR to report back to the Legislature by 2009 on the number of solar energy system manufacturing companies in the state, any change in the number of companies in the state, and the effect on job creation and the number of jobs created for Washington residents.  The Legislature did not include targets for how many renewable energy systems, businesses or jobs it intended to create with the credit.

The tax credit to utilities included a 2016 expiration date,

The other bill passed by the Legislature provided a reduced B&O tax rate for businesses manufacturing solar energy systems.  JLARC staff is reviewing this tax preference in 2016.

2009

The Legislature made significant changes including:

Raising the maximum allowable annual payment to customers who generate their own renewable energy from $2,000 to $5,000;

Increasing the cap for the public utility tax credit from the greater of 0.25 percent of the utility’s power or $25,000 to the greater of 1 percent of the firm’s power sales or $100,000; and

Extending the expiration date of the program from 2016 to 2021.

The preference was also expanded to includecommunity solar projects.  Community solar projects were granted the highest base rate of $0.30 per kilowatt hour (kWh), and could constitute up to 25 percent of a utility’s total allowable credit.

The same year, DOR issued its report to the Legislature on the usage of the program, finding that both the number of participants in the program and the number of employees in the renewable energy sector had increased since the program’s inception.

2010

The Legislature expanded the preference to include additional community solar projects.  The expansion was for projects owned by certain kinds of companies.  Company-owned community solar projects could constitute up to 5 percent of a utility’s total allowable credit.

At the same time, the Legislature placed limitations on all types of community solar projects, specifying that only systems with a capacity up to 75kW could qualify.

The bill reduced the maximum allowable credit for each utility from 1 percent of the utility’s taxable power sales to 0.5 percent of the utility’s taxable power sales.