(1) The department of commerce shall award grants for thermal energy network pilot projects.

(2) Subject to the availability of amounts appropriated for this specific purpose, the department of commerce must provide grant funding to any gas company developing a thermal energy network pilot project in accordance with this section.

(3) Grant funding from the appropriation authorized in this section for thermal energy network pilot projects is only available for gas companies as defined in RCW 80.04.010.

(4) A gas company may receive grant funding from the department of commerce to offset the costs necessary to build and operate the project. The grant amount for a pilot project may not exceed the difference between the gas company's lowest reasonable cost resources under its current business practices and the costs of building and operating the thermal energy network pilot project. The utilities and transportation commission must determine this cost difference and provide the dollar amount to the department of commerce for the purposes of making the grant.

(5) When determining whether to award a grant and the grant amount for a thermal energy network pilot project, the department of commerce must consider the information submitted by the gas company in compliance with RCW 80.28.460 (3) and (4) and any finding or conclusions of the utilities and transportation commission regarding the pilot project. The department of commerce may also allocate available funds to prioritize projects based on their cost-effectiveness and geographic diversity.

(6) Each gas company receiving a grant from the department of commerce for a thermal energy network pilot project must coordinate with other grant awardees, the utilities and transportation commission, the department of commerce, and consultants with expertise on successful thermal energy networks to ensure that the pilot projects are diverse and designed to inform the utilities and transportation commission's decisions in the proceeding on the various ownership, market, and rate structures for thermal energy networks.