SB0241

SENATE BILL 241

50th legislature - STATE OF NEW MEXICO - second session, 2012

INTRODUCED BY

George K. Munoz and Nate Gentry

AN ACT

RELATING TO TAXATION; ENACTING A NEW SECTION OF THE GROSS RECEIPTS AND COMPENSATING TAX ACT TO ALLOW A DEDUCTION FOR THE SALE OF NATURAL GAS TO POWER PLANTS; ENACTING A NEW SECTION OF THE CORPORATE INCOME AND FRANCHISE TAX ACT; CREATING THE NATURAL GAS-FIRED POWER PLANT TAX CREDIT.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. A new section of the Gross Receipts and Compensating Tax Act is enacted to read:

"[NEW MATERIAL] DEDUCTION--GROSS RECEIPTS TAX--SALES OF NATURAL GAS TO POWER PLANTS.--

A. Receipts from the sale of natural gas may be deducted from gross receipts if the sale is made to an owner or operator of a power plant or other electric generation facility that uses the natural gas as fuel to generate electric power for resale and that delivers a nontaxable transaction certificate to the seller.

B. The purposes of the deduction provided in this section are to:

(1) reduce the impact of fluctuating natural gas prices on taxpayers that own or operate an electric generation facility that uses natural gas as fuel to generate electric power;

(2) reduce the cost of operating a natural gas-fired power plant or other electric generation facility that uses natural gas to generate electric power so that it is more competitive with coal-fired electric generation facilities; and

(3) stimulate electric generation facilities to use more natural gas and develop more electric generation facilities in areas of New Mexico that produce natural gas.

C. The department shall annually report to the interim revenue stabilization and tax policy committee and the legislative finance committee the aggregate amounts of deductions taken pursuant to this section, the number of taxpayers claiming the deduction and any other information that is necessary to determine that the deduction is performing the purpose for which it is enacted.

D. A taxpayer deducting gross receipts pursuant to this section shall report the amount deducted separately and attribute the deduction to the authorization provided in this section in a manner required by the department."

SECTION 2. A new section of the Corporate Income and Franchise Tax Act is enacted to read:

"[NEW MATERIAL] NATURAL GAS-FIRED POWER PLANT TAX CREDIT.--

A. The owner or operator of a power plant or other electric generation facility that uses natural gas as fuel to generate electric power for resale is eligible for a credit against the taxpayer's tax liability imposed pursuant to the Corporate Income and Franchise Tax Act in an amount equal to the taxpayer's investment in constructing a new natural gas-fired power plant or other electric generation facility that uses natural gas as fuel to generate electric power for resale or retrofitting an existing power plant or other electric generation facility to use natural gas as fuel to generate electric power for resale. The tax credit provided by this section may be referred to as the "natural gas-fired power plant tax credit".

B. The purposes of the natural gas-fired power plant tax credit are to:

(1) reduce the impact of fluctuating natural gas prices on taxpayers that own or operate an electric generation facility that uses natural gas as fuel to generate electric power;

(3) stimulate electric generation facilities to use more natural gas and develop more electrical generation facilities in areas of New Mexico that produce natural gas.

C. A taxpayer may claim the natural gas-fired power plant tax credit provided in this section for each taxable year in which the taxpayer invests in constructing a new natural gas-fired power plant or other electric generation facility that uses natural gas as fuel to generate electric power for resale or retrofitting an existing power plant or other electric generation facility to use natural gas as fuel to generate electric power for resale.

D. That portion of a natural gas-fired power plant tax credit approved by the department that exceeds a taxpayer's corporate income tax liability in the taxable year in which the credit is claimed shall not be refunded to the taxpayer but may be carried forward for up to five years; provided that the total amount of credits claimed pursuant to this section shall not exceed the maximum allowable pursuant to Subsection F of this section. The natural gas-fired power plant tax credit shall not be transferred to another taxpayer.

E. The department shall adopt rules establishing procedures to determine the eligibility of a taxpayer to claim a natural gas-fired power plant tax credit for the purposes of this section.

F. The department may allow a maximum aggregate of five hundred million dollars ($500,000,000) in natural gas-fired power plant tax credits. Applications for the natural gas-fired power plant tax credit shall be considered in the order received by the department.

G. The department shall compile an annual report for the interim revenue stabilization and tax policy committee and the legislative finance committee that sets forth the number of taxpayers approved to receive the natural gas-fired power plant tax credit, the aggregate amount of credits approved and the average and median amounts of credits approved. The department shall advise the committees at least every four years beginning in 2016 whether the natural gas-fired power plant tax credit is performing the purposes for which it was enacted.

H. Acceptance of the natural gas-fired power plant tax credit is authorization to the department to reveal the amount of the tax credit claimed by the taxpayer and other information from the taxpayer's tax reports as needed to report to the interim revenue stabilization and tax policy committee and the legislative finance committee as required by this section."

SECTION 3. APPLICABILITY.--The provisions of Section 2 of this act apply to taxable years beginning on or after January 1, 2012.

SECTION 4. EFFECTIVE DATE.--The effective date of the provisions of Section 1 of this act is July 1, 2012.

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