SENATE BILL 994
48th legislature - STATE OF NEW MEXICO - first session, 2007
INTRODUCED BY
Carlos R. Cisneros
AN ACT
RELATING TO TAXATION; ENCOURAGING THE DEVELOPMENT OF ELECTRICAL GENERATION BY ADVANCED COAL ELECTRIC GENERATING OR GASIFICATION FACILITIES OR SOLAR THERMAL ELECTRIC GENERATING FACILITIES; ENACTING A TAX CREDIT AGAINST THE GROSS RECEIPTS TAX, COMPENSATING TAX AND WITHHOLDING TAX LIABILITY OF A QUALIFIED TAXPAYER; PROVIDING FOR COST RECOVERY FOR CLEAN ENERGY UTILITY PROJECTS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. [NEW MATERIAL] ADVANCED ENERGY TAX CREDIT--GROSS RECEIPTS TAX--COMPENSATING TAX--WITHHOLDING TAX.--
A. A taxpayer that holds an interest in a qualified generating facility may claim a credit to be computed pursuant to the provisions of this section. The credit provided by this section may be referred to as the "advanced energy tax credit".
B. As used in this section:
(1) "department" means the taxation and revenue department;
(2) "eligible generation plant costs" means expenditures for the development and construction of a qualified generating facility, including permitting; site characterization and assessment; engineering; design; carbon dioxide capture, treatment, compression, transportation and sequestration; site and equipment acquisition; and fuel supply development used directly and exclusively in a qualified generating facility;
(3) "qualified generating facility" means a new solar thermal electric generating facility that begins construction no later than December 31, 2015 or a new or re-powered coal-based electric generating unit and an associated coal gasification facility that begins construction no later than December 31, 2015 that meets the following specifications:
(a) emits the lesser of: 1) what is achievable with the best available control technology; or 2) thirty-five thousandths pound per million British thermal units of sulfur dioxide, twenty-five thousandths pound per million British thermal units of oxides of nitrogen and one hundredth pound per million British thermal units of total particulates in the flue gas;
(b) removes the greater of: 1) what is achievable with the best available control technology; or 2) ninety percent of the mercury emitted from the input fuel;
(c) captures and sequesters or controls carbon dioxide emissions so that by the later of January 1, 2017 or eighteen months after the commercial operation date of the qualified generating facility, no more than one thousand one hundred pounds per megawatt-hour of carbon dioxide is emitted into the atmosphere; (d) all infrastructure required for sequestration is in place by the later of January 1, 2017, or eighteen months after the commercial operation date of the qualified generating facility;
(e) includes methods and procedures to monitor the fate of the carbon dioxide captured and sequestered from the facility; and
(f) does not exceed seven hundred net megawatts nameplate capacity; and
(4) "sequester" means to store, or chemically convert, carbon dioxide in a manner that prevents its release into the atmosphere and may include the use of geologic formations and enhanced oil or natural gas recovery techniques.
C. Subject to the limit imposed in Subsection H of this section, the advanced energy tax credit shall equal no more than six percent of the eligible generation plant costs of a qualified generating facility.
D. A taxpayer may apply for the advanced energy tax credit by submitting to the taxation and revenue department a certificate issued by the department of environment pursuant to Subsection I of this section, documentation showing the taxpayer's interest in the qualified generating facility identified in the certificate and other information the taxation and revenue department requests to determine the amount of tax credit due to the taxpayer.
E. A taxpayer having applied for and been granted approval for a credit by the department pursuant to this section may claim an amount of available credit against the taxpayer's gross receipts tax, compensating tax or withholding tax due to the state.
F. A taxpayer that is liable for the payment of gross receipts or compensating tax with respect to the ownership, development, construction, maintenance or operation of a coal-based electric generating facility that does not meet the criteria for a qualified generating facility after advanced energy tax credits become available shall not claim an advanced energy tax credit pursuant to this section or a gross receipts tax credit, a compensating tax credit or a withholding tax credit pursuant to any other state law.
G. If the amount of the tax credit claimed exceeds the taxpayer's liability, the excess may be carried forward for up to five years.
H. The aggregate amount of tax credit that may be claimed with respect to each qualified generating facility shall not exceed sixty million dollars ($60,000,000).
I. An entity that holds title to a qualified generating facility may request a certificate of eligibility from the department of environment to enable the requester to apply for the advanced energy tax credit. The department of environment:
(1) shall determine if the facility is a qualified generating facility;
(2) shall require that the requester provide the department of environment with the information necessary to assess whether the requester's facility meets the criteria to be a qualified generating facility;
(3) shall issue a certificate to the requester stating that the facility is or is not a qualified generating facility within one hundred eighty days after receiving all information necessary to make a determination; and
(4) shall issue rules governing the procedure for administering the provisions of this subsection and Subsection J of this section, including a schedule of fees in which no fee exceeds one hundred fifty thousand dollars ($150,000).
J. If the department of environment issues a certificate of eligibility to a taxpayer stating that the taxpayer is a qualified generating facility and the taxpayer does not sequester or control carbon dioxide emissions to the extent required by this section by the later of January 1, 2017 or eighteen months after the commercial operation date of the qualified generating facility, the taxpayer's certification as a qualified generating facility shall be revoked by the department of environment and the taxpayer shall refund to the state tax credits granted pursuant to this section; provided that if the taxpayer demonstrates to the department of environment that the taxpayer made every effort to sequester or control carbon dioxide emissions to the extent feasible and the facility's inability to meet the sequestration requirements of a qualified generating facility was beyond the facility's control, in which case the department of environment shall determine, after a public hearing, the amount of the tax credit that should be refunded. The department of environment, in its determination, shall consider the environmental performance of the facility and the extent to which the inability to meet the sequestration requirements of a qualified generating facility was in the control of the taxpayer. The refund as determined by the department of environment shall be paid within one hundred eighty days following a final order by the department of environment.
K. Expenditures for which a taxpayer claims a credit pursuant to this section are ineligible for credits pursuant to the provisions of the Investment Credit Act or any other credit against compensating tax, gross receipts tax or withholding tax.
L. A taxpayer shall apply for approval for a credit within one year following the end of the calendar year in which the eligible generation plant costs are incurred.
Section 2. Section 62-16-1 NMSA 1978 (being Laws 2004, Chapter 65, Section 1) is amended to read:
"62-16-1. SHORT TITLE.--[This act] Chapter 62, Article 16 NMSA 1978 may be cited as the "Renewable Energy Act"."
Section 3. A new section of the Renewable Energy Act is enacted to read:
"[NEW MATERIAL] CLEAN ENERGY INVESTMENTS--DEPARTMENT OF ENVIRONMENT CERTIFICATION.--
A. The commission shall adopt rules to allow public utilities an opportunity to recover commission-approved costs made by a public utility for the development and ongoing construction of a clean energy project. Such costs must not exceed the level authorized by the commission in a proceeding to establish a reasonable level of expenditure that the public utility may undertake to develop and construct a clean energy project. The public utility shall recover approved costs incurred as of the time it files a general rate case whether or not the project goes forward.
B. A public utility that incurs costs to reduce harmful air emissions at new or existing power plants may seek recovery of those costs in a general rate case, regardless of whether the technology or method used qualifies as a clean energy project or advanced coal technology. If a public utility seeks cost recovery for expenditures to reduce harmful air emissions beyond levels required by law or rule, the commission may find that such expenditures are reasonable.
C. The commission, upon petition or its own motion, shall open a docket to consider appropriate performance-based financial or other incentives to encourage public utilities to develop and construct clean energy projects. D. As used in this section:
(1) "advanced coal technology" means new coal-based generation, coal gasification or other technology using coal as a fuel source that is certified by the department of environment to meet the following specifications:
(a) emits the lesser of: 1) what is achievable with the best available control technology; or 2) thirty-five thousandths pound per million British thermal units of sulfur dioxide, twenty-five thousandths pound per million British thermal units of oxides of nitrogen and one hundredth pound per million British thermal units of total particulates in the flue gas;
(b) removes the greater of: 1) what is achievable with the best available control technology; or 2) ninety percent or more of the mercury emitted from the input fuel;
(c) captures and sequesters or controls carbon dioxide emissions such that by the later of January 1, 2017, or eighteen months after the commercial operation date, no more than one thousand one hundred pounds per megawatt-hour of carbon dioxide is emitted into the atmosphere;
(d) all infrastructure required for sequestration is in place by the later of January 1, 2017, or eighteen months after the commercial operation date of the qualified generating facility;
(e) includes methods and procedures to monitor the fate of the carbon dioxide captured and sequestered from the facility; and
(f) does not exceed seven hundred net megawatts nameplate capacity;
(2) "clean energy project" means the construction or modification of a new or existing electric generation facility in a manner that employs a technology that has additional financial risk because it is not commercially established or because it employs an established technology that is not commercially proven under the altitude, geographic or resource availability conditions under which it is proposed to operate and may include advanced coal technology, recycled energy or other technology as determined by the commission; a "clean energy project" shall achieve emission levels no greater than those specified for advanced coal technology and shall not include nuclear power;
(3) "development" means the study, plan, design, site, permit, engineering, assessment and determination of the economic and operational feasibility at one or more locations and may include small-scale demonstration projects, if approved by the commission, as a reasonable expenditure;
4) "recycled energy" means energy produced by a generation unit with a name-plate capacity of not more than fifteen megawatts that converts the otherwise lost energy from exhaust stacks or pipes to electricity and does not combust additional fossil fuel; and
(5) "sequester" means to store, or chemically convert, carbon dioxide in a manner that prevents its release into the atmosphere and may include the use of geologic formations and enhanced oil or natural gas recovery techniques.
E. The department of environment may issue rules governing the procedure for administering the certification provisions of this section."
Section 4. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2007.
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