Washington Senate Bill 5649

Increasingly, states are taking it upon themselves to make America more energy efficient.  On May 7, 2009, Washington became the latest state to step up as a leader on this front by passing SB 5649 (“the Act”).  The Act puts Washington on the path to weatherize, and otherwise make more energy efficient, 100,000 buildings over the next five years.  This will reduce energy costs, create thousands of quality new jobs, and obviate any potential need for new electricity-generating facilities.  The Act also guarantees access to these jobs for veterans, members of the National Guard, and low-income and disadvantaged populations.

SB 5649 invests $14.5 million of the state’s federal energy efficiency stimulus funding in creating new mechanisms that will help thousands of moderate-income homeowners, small businesses, and non-profits retrofit their properties to become more energy efficient.  The legislation is exemplary because it emphasizes achieving economies of scale.  It looks to weatherize the state's buildings community-by-community, rather than property by property.   This will provide business opportunities for small contractors and reduce annual carbon emissions by 20,000 tons within two years.

The Act's champions say that it sets a national standard by linking job-training programs that serve dislocated workers and historically marginalized communities with the new jobs created through the federal American Recovery and Reinvestment Act of 2009.

The Act sets ambitious but achievable goals:  weatherizing 20,000 homes and businesses in the state in each of the next five years, for a total of 100,000 homes and businesses.  To do this, the Act: (a) creates an Energy Efficiency Improvement Program; (b) creates an Energy Efficiency Financing Program; (c) creates an Energy Efficiency in Publicly-Funded Housing Program; and (d) expands the state’s Low-Income Weatherization Program.

(a)  Energy Efficiency Improvement Program

The new Washington State University (WSU) Extension Energy Program will provide grants and technical assistance to neighborhood energy-efficiency projects throughout the state.  The program will award these grants on a competitive basis to “sponsors” for conducting direct outreach and conduct energy efficiency services. Eligible sponsors may include non-profit organizations, community action agencies, tribal nations, community service agencies, public service companies, counties, municipalities, and publicly- or privately-owned electric or natural gas companies.

The pilot programs will:

• Provide assistance for energy audits and energy efficiency-related improvements;
• Utilize volunteer support to engage in community outreach;
• Employ qualified energy auditors;
• Select, and provide oversight of, contractors to perform energy efficiency upgrades;
• Work with citizens to secure financing for their portion of the project.

Sponsors shall require contractors performing the audits to participate in quality control and efficiency training.  Contractors must hire available workers trained from workforce training and apprenticeship programs, must pay prevailing wages, and must hire from the community in which the program is located.  Contractors must also create employment opportunities for veterans, members of the National Guard, and low-income and disadvantaged populations are fairly represented among workers.

Sponsors must also work with customers to secure financing for their portion of the project and apply for and administer utility, public, and charitable funding provided for energy audits and retrofits.  WSU will prioritize sponsors that can secure equal matches to the state funding.   Sponsors may meet their match requirements in whole or in part by providing capital, labor, materials, or other in-kind expenditures.

Pilot programs receiving funding must provide semi-annual reports to the WSU Extension Energy Program showing their compliance to the performance metrics.  The performance metrics include:

• the monetary and energy savings achieved;
• the savings-to-investment ratio achieved for customers;
• the wage levels of jobs created;
• the utilization of pre-apprentice and apprenticeship programs; and
• the efficiency and speed of delivery of services.

At the end of the year, the WSU Extension Energy Program shall report the following to the legislature:

• the number of grants awarded;
• the number of jobs created or maintained;
• the number and type of people trained through workforce trainings and apprenticeship programs;
• the number of veterans, National Guard, and low income and disadvantaged populations employed by pilot programs; and
• the amount of funding provided through the grants.

This report will help legislators evaluate how effectively the program meets the Act's green jobs goals and make any necessary improvements to the program.

Farm Energy Assessments

The Act’s Energy Efficiency Improvement Program also calls on the WSU Extension Energy Program to form an agency to work with the state Department of Agriculture to develop and offer new methods to help agricultural producers assess their opportunities to increase energy efficiency in all aspects of their operations.   The agency will offer self-assessment software tools to farmers; provide energy auditing training; build an infrastructure of trained auditors to assist farmers; and design and convey metrics for cost and energy savings.

(b)  Energy Efficiency Financing Program

The Act also encourages financial institutions to provide financing for energy efficiency projects.

Pursuant to the Act, the Department of Community, Trade, and Economic Development (CTED) will create an appliance energy rebate program with available funds from the energy efficient appliances rebate program authorized under the federal energy policy act of 2005. CTED must develop a program that will award grants to financial institutions, such as private banks and credit unions, to stimulate and leverage private capital towards energy efficiency activities. CTED will solicit proposals from financial institutions and award grant funds to them on a competitive basis.  The grants will create credit enhancements, including interest rate subsidies and loan loss reserve funds, so that Washington citizens can borrow money to invest in energy efficiency for their homes and businesses at below-market rates.  This program serves the dual purpose of unfreezing private capital while also increasing the purchase and construction of energy efficiency improvements.  The Act prioritizes the financial institutions that directly reach out to potential customers and inform them of these reduced-cost financial products and services.

The Act also authorizes local municipalities that have received federal stimulus money through the Energy Efficiency and Conservation Block Grant (EECBG) Program to establish similar financial services and award capital grants to energy users.  The Act encourages state-chartered bond authorities to finance energy efficiency projects, authorizing them to accept and administer portions of the state’s federal energy efficiency funding for designing energy efficiency finance loan products and for developing and operating efficiency financing programs.  Finally, the Washington State Housing Finance Commission may issue bonds for the purposes of financing loans for energy efficiency and renewable energy improvement projects for low-income recipients.

(c)  Energy Efficiency in Publicly-Funded Housing

CTED must review all properties in the Housing Trust Fund real estate portfolio for opportunities to increase their energy efficiency. CTED must prioritize projects based on achieving the greatest expected monetary and energy savings.  This project will also promote health and safety improvement and leverage sustainable technologies and designs.

(d)  Low-Income Weatherization Programs

The Act updates the state’s current low-income weatherization programs and requires CTED to solicit proposals for low-income weatherization programs from potential sponsors.  Sponsor’s proposals shall specify the amount to be pledged by the sponsor, the amount requested, the name of the weatherizing agent, and any other information that CTED requests.  CTED will allocate funds to select proposals by drawing from the low-income weatherization assistance account in order to:

• Achieve monetary and energy savings for low-income households;
• Identify and correct health and safety problems;
• Create family-wage jobs that may lead to careers in the construction trades or in the energy efficiency sectors; and
• leverage sustainable technologies, practices, and designs.

This program also requires sponsors to employ workers trained in previously established workforce training and pre-apprentice programs, if these workers are available.  Sponsors must pay prevailing wages, hire from the community in which the program is located, and create targeted employment opportunities for veterans, members of the National Guard, and low-income and disadvantaged populations.  Apprenticeship programs will aim to place their trainees in these new jobs, or, alternatively, place their trainees in unions that have been selected to complete the weatherization.

Programs receiving funding under this section must report to the department every six months following the receipt of a grant regarding the number of dwelling units weatherized, the number of jobs created or maintained, and the number of individuals trained through workforce training and apprentice programs.

Conclusion

This landmark legislation contains innovative programs based on sound principles. It provides a model for other states to collaborate with non-governmental or quasi-governmental actors in implementing energy efficiency and weatherization programs.  The Washington Act is especially noteworthy for its efforts to create jobs for residents who most need the work. Key components of Washington’s legislation include:

• the creation of new, good jobs at prevailing wages;
• a direct job pipeline that will create opportunities for disadvantaged populations;
• credit enhancements that benefit customers and allow for deep retrofits within the relevant structures; and
• utilizing community-based organizations and volunteers for comprehensive outreach (including door-to-door work) in the communities.

SB 5649 will help the Washington State reach the climate change objectives laid out in the Western Climate Initiative.  Green for All hopes that other states use this model to develop legislation and initiatives that also further the goal of achieving a sustainable economy that is good for people and good for the planet.