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Washington would allow energy P3s to meet climate targets under bill

The state of Washington would allow local governments, school districts and the state to enter into long-term public-private partnerships to provide energy services for buildings under legislation passed by the House last week.

House Bill 1777 comes as the state gears up for its first-of-its-kind climate legislation that requires all large buildings to reduce their greenhouse gas emissions by 2026.

The state’s Clean Buildings Act, enacted in 2019, requires public buildings larger than 220,000-square feet to meet strict energy compliance standards by 2026, noted Democratic state Rep. Beth Doglio during a Feb. 20 House Capital Committee hearing on the bill.

“As capital budget writers, you are recognizing that’s no easy task,” Doglio told the committee. “We need every single tool available to us to help buildings comply – and I think this is one of them.”

Public buildings are considered the second-biggest carbon polluter in Washington behind transportation, accounting for 27% of statewide emissions, according to the Washington Department of Commerce.

The expanded P3 authority also comes in the wake of the failure of several local bond measures, said Rep. Joel McEntire, a Republican co-sponsor of the bill, during the hearing. “The taxpayers are feeling the pressure,” McEntire said.

The bill would allow school districts and others to upgrade their energy services without having to borrow or spend cash, he said.

Local and state agencies can now finance energy conservation projects through the state’s certificates of participation program, which is a pooled fund, or by floating bonds, said Brian Solan, an energy services company owner who testified during a separate budget hearing.

“The amount of deferred maintenance is greater than the existing program’s ability to finance,” Solan said. “Add to that a massive financial undertaking to decarbonize,” and more tools are needed, he said. “The existing programs are good but insufficient to address the needs.”

A fiscal analysis notes that the language of the bill is “permissive,” and that it’s unknown how many state or local agencies would take advantage of the new P3 authority.

“It is possible this financing mechanism may encourage agencies to shift payment for facility energy system projects to the operating budget from the capital budget,” because the debt payments would be going to a third-party instead of on bonds, the fiscal note says. “Otherwise, there may be little difference in cost if agencies purchased the systems through existing mechanisms or through a contract-based contract.”

The bill heads to the Senate Committee on Environment, Energy & Technology for a hearing this week.

If approved, it would take effect 90 days after passage.

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