2. HB 1106 / SB5707 – Net metering changes, including third party ownership HB 1977 – Allow utilities to participate in Renewable Cost Recovery Program HB 1301 – Replacement of Renewable Cost Recovery Program HB 1634 – Allows the value of solar energy systems to increase property assessment HB 1105 – Allow Non-Profits and Tribes to host Community Solar Projects HB 1138 – Extend Renewable Cost Recovery Program to 2023 HB 1705 – Extend Sales & Use Tax Waivers for SHW to 2018 SB 5896 – Extend Sales & Use Tax Waivers for PV to 2017 2013 Legislative Session SB 5802 – Created the Climate Legislative and Executive Workgroup SB 5882 – Extend Sales & Use Tax Waivers for PV and SHW to 2018

3. The Utilities and Transportation Commission conducted an 18-month-long rulemaking to streamline interconnection of distributed electric generation. By the time it concluded in June there were already about 100 TPO net metered systems in the state. Utilities’ concern was that the TPO’s should be considered resellers of electricity and regulated as public service companies. 2013 UTC Rulemaking UTC ruled that: Exterior disconnect switches are not required for tier 1 inverters (single phase, less than 25 kW, etc) Third party ownership of net metered systems is permitted UTC punted on TPO regulation and will issue ‘interpretive statement’

4. The Governor convened the CLEW, comprised of – Gov. Inslee Senator Doug Ericksen (R) Senator Kevin Ranker (D) Representative Joe Fitzgibbon (D) Representative Shelly Short (R) The CLEW conducted a series of meetings throughout the year and public hearings in Spokane and Seattle in October, with a final hearing in Olympia on December 13. By that time a vast gulf had opened along party lines as evidenced by these opening remarks (paraphrased): Senator Ericksen – ‘We need carbon emissions; plants use it’ Senator Ranker – ‘We need to act now to reduce carbon emissions’ Too bad, because the policies outlined in their final report looked promising… 2013 Climate Legislative and Executive Workgroup

6. The Department of Revenue proposed some changes to WAC 458-20-273 including the payment of incentives to third party owners of PV systems that are leased to customers. On Nov 12 there was a hearing that was well attended. On Nov 21 st we heard that DOR was considering dropping the lease idea. 2013 DOR Rulemaking On Jan 7 th DOR confirmed that they will remove leasing from the changes. Final draft of rulemaking is expected on Jan 15 th.

10. Equitable allocation of costs among customers o Utilities must have the discretion to develop rate design consistent with cost causation o Utilities maintain the discretion to acquire distributed generation consistent with need and avoided cost o Recognition of the value of utility grid o Clear communication with customers about cost, value, role, responsibility and obligations Local decision making o Recognition of the different value and impacts of distributed generation based on utility-specific conditions o Implementation through utility-specific programs and/or participation System reliability and safety o Provide for appropriate regulation to assure clarity about the responsibilities and obligations of third- party owners o Ensure safety of utility workers and customers while providing a robust and reliable distribution system o Ensure consistency with federal, state, and local requirements and responsibilities Clearly stated objectives and analysis for legislative actions o Robust economic analysis of the costs and alternatives to achieve objectives (e.g. GHG reductions, economic development) o Decisions are informed by a comprehensive understanding of West Coast market impacts

11. Is Solar a Problem? The net metering cap in Seattle is 20 MW of PV capacity (SMC 21.49.082). 20 MW of PV in Seattle will produce roughly 20,000 MWh of electricity / year. When we reach that cap, SCL revenues would be reduced by roughly $1.6M, or 0.24% of 2012 retail power revenues (at today’s rates). In return, SCL would get 20,000 MWh of clean electricity, distributed without transmission losses, and with no generator maintenance costs. As many utilities around the country try to quash NEM, a few have honestly tried to calculate what a site-generated MWh is worth; Austin Energy pegs it at $128. To a Nissan Leaf it is $307 (if gasoline is $3.46 / gal.) As we work with stakeholders to craft a new state incentive program, net metering remains as a crucial mechanism for keeping program costs palatable and providing a way for our utilities to fairly compensate solar customer-generators. 2014 could be the year that we come to grips with the real Value of Solar energy.

13. HB 2176– Also known as Mr. Toad’s Wild Ride, would allow utilities and TPOs to lease or finance solar, mandate storage for net metered systems, among other things HB 2185 – Includes $3M appropriation for solar energy research at UW 2SHB 1301? – Replacement of Renewable Cost Recovery Program HB 2183 – Agenda for Joint Committee on Energy Supply and Conservation HB 1634 – Adds the value of solar energy systems to new construction that can increase assessed property value HB 2059 – Allows voluntary procurement of 500kW renewable energy systems by utility customers 2014 Legislative Session