2005 Committee Substitute for SB0334COS

SENATE CONSERVATION COMMITTEE SUBSTITUTE FOR

SENATE BILL 334

47th legislature - STATE OF NEW MEXICO - first session, 2005

AN ACT

RELATING TO TAXATION; PROVIDING FOR AND CHANGING REQUIREMENTS FOR CERTAIN TAX CREDITS PERTAINING TO SOLAR ENERGY USE; MAKING AN APPROPRIATION.

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

Section 1. Section 7-2A-19 NMSA 1978 (being Laws 2002, Chapter 59, Section 1, as amended) is amended to read:

"7-2A-19. RENEWABLE ENERGY PRODUCTION TAX CREDIT--LIMITATIONS--DEFINITIONS--CLAIMING THE CREDIT.--

A. A taxpayer that owns a qualified energy generator certified by the energy, minerals and natural resources department is eligible for a tax credit in an amount equal to one cen t ($.01) per kilowatt-hour for the first four hundred thousand megawatt-hours of electricity produced by the qualified energy generator using a wind- or biomass-derived qualified energy resource in the taxable year. A taxpayer that owns a qualified energy generator certified by the energy, minerals and natural resources department is eligible for a tax credit in an amount equal to two cents ($.02) per kilowatt-hour for the first two hundred thousand megawatt-hours of electricity produced by the qualified energy generator using a solar-light- or solar-heat-derived qualified energy resource in the taxable year. A taxpayer shall be eligible for the tax credit for ten consecutive years, beginning on the date the qualified energy generator begins producing electricity. The tax [credit] credits provided in this section may be referred to as the "renewable energy production tax [credit] credits".

B. As used in this section:

(1) "biomass" means agricultural or animal waste; thinnings from trees less than fifteen inches in diameter, slash and brush; lumbermill or sawmill residues; and salt cedar and other phreatophytes removed from watersheds or river basins;

(2) "qualified energy generator" means a facility with at least [ten megawatts] one megawatt generating capacity located in New Mexico that produces electricity using a qualified energy resource and that sells that electricity to an unrelated person; and

(3) "qualified energy resource" means a resource that generates electrical energy by means of a fluidized bed technology or similar low-emissions technology or a zero-emissions generation technology that has substantial long-term production potential and that uses only the following energy sources:

(a) solar light;

(b) solar heat;

(d) biomass.

C. A taxpayer may request certification of eligibility for [the] a renewable energy production tax credit from the energy, minerals and natural resources department, which shall determine if the applicant is a qualified energy generator; provided that the department may certify the eligibility of an energy generator only if the total amount of electricity that may be produced annually by all qualified energy generators that are certified will not exceed [two million] one million six hundred thousand megawatt-hours. Applications shall be considered in the order received. The energy, minerals and natural resources department may estimate the annual power-generating potential of a generating facility for the purposes of this section. The energy, minerals and natural resources department shall issue a certificate to the applicant stating whether the applicant is an eligible qualified energy generator and the estimated annual production potential of the generating facility, which shall be the limit of that facility's energy production eligible for the tax credit for the taxable year. The energy, minerals and natural resources department may issue rules governing the procedure for administering the provisions of this subsection.

D. To claim a renewable energy production tax credit, a taxpayer that has been certified as eligible pursuant to Subsection C of this section shall submit to the taxation and revenue department the certificate issued by the energy, minerals and natural resources department, documentation of the amount of electricity produced by the taxpayer's facility in the taxable year and any other information the taxation and revenue department may require to determine the amount of the tax credit due the taxpayer.

E. Once a taxpayer has been granted a renewable energy production tax credit for a given facility, that taxpayer shall be allowed to retain its original date of application for tax credits for that facility until either the facility goes out of production for more than six consecutive months in a year or until the facility's ten-year eligibility has expired.

F. [The] For a qualified energy generator placed in commercial operation after January 1, 2007, a renewable energy production tax credit may be deducted from the taxpayer's New Mexico corporate income tax liability for the taxable year. If the amount of the tax credit claimed exceeds the taxpayer's corporate income tax liability, the excess [may be carried forward for up to five consecutive taxable years] shall be refunded to the taxpayer."

Section 2. [NEW MATERIAL] SHORT TITLE.--Sections 2 through 7 of this act may be cited as the "Solar Thermal and Photovoltaic Systems Tax Credit Act".

Section 3. [NEW MATERIAL] DEFINITIONS.--As used in the Solar Thermal and Photovoltaic Systems Tax Credit Act:

A. "department" means the taxation and revenue department;

B. "photovoltaic system" means a stand-alone or a grid-connected energy system that collects or absorbs sunlight for conversion into electricity; and

C. "solar thermal system" means an energy system that collects or absorbs solar energy for conversion into heat for the purposes of space heating and water heating.

Section 4. [NEW MATERIAL] INCOME TAX--CORPORATE INCOME TAX--CREDIT FOR SOLAR THERMAL SYSTEM INSTALLATION.--

A. Except as otherwise provided by Subsection C of this section, a person who files an individual New Mexico income tax return and who, during any taxable year beginning on or after January 1, 2006 and ending on or before December 31, 2015, installs a solar thermal system at a residence in New Mexico owned by that person may apply for, and the department may allow, a tax credit in an amount equal to fifteen percent of the installation costs, provided that the maximum tax credit that may be claimed by the taxpayer pursuant to this subsection shall not exceed one thousand five hundred dollars ($1,500).

B. Except as otherwise provided by Subsection C of this section, a person that files a corporate income tax return and that, during any taxable year beginning on or after January 1, 2006 and ending on or before December 31, 2015, installs a solar thermal system at a commercial facility in New Mexico owned by that person may apply for, and the department may allow, a credit in an amount equal to fifteen percent of the installation costs, provided that the maximum tax credit that may be claimed by the taxpayer pursuant to this subsection shall not exceed one thousand five hundred dollars ($1,500).

C. The department shall not allow a tax credit pursuant to this section if allowing that tax credit would cause the aggregate amount of tax credits allowed pursuant to this subsection to exceed one million dollars ($1,000,000).

D. The tax credit allowed pursuant to Subsection A of this section may only be deducted from a taxpayer's New Mexico income tax liability for the taxable year. Any portion of the maximum credit provided by this section that remains unused at the end of the taxpayer's taxable year may be carried forward for seven taxable years; provided that the total credits shall not exceed the maximum allowable credit pursuant to Subsection A of this section. If a person claiming a tax credit pursuant to Subsection A of this section does not have any New Mexico income tax liability, the tax credit may be refunded to that person.

E. A husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the credit allowed pursuant to Subsection A of this section that would have been allowed on a joint return.

F. The tax credit allowed pursuant to Subsection B of this section may only be deducted from a taxpayer's corporate income tax liability for the taxable year. Any portion of the maximum credit provided by this section that remains unused at the end of the taxpayer's taxable year may be carried forward for seven consecutive taxable years; provided that the total credits claimed under this section shall not exceed the maximum allowable pursuant to Subsection B of this section. If a person claiming a tax credit pursuant to Subsection B of this section does not have any corporate income tax liability, the tax credit may be refunded to that person.

Section 5. [NEW MATERIAL] INCOME TAX--CORPORATE INCOME TAX--CREDIT FOR PHOTOVOLTAIC SYSTEM INSTALLATION.--

A. A person who files an individual New Mexico income tax return and who, during any taxable year beginning on or after January 1, 2006 and ending on or before December 31, 2015, installs a photovoltaic system in a residence in New Mexico owned by that person may apply for, and the department may allow, a credit in an amount equal to three dollars fifty cents ($3.50) per nameplate direct current wattage of that photovoltaic system, provided that:

(1) the maximum tax credit that may be claimed by the taxpayer pursuant to this subsection shall not exceed ten thousand dollars ($10,000); and

(2) the department shall not allow a tax credit pursuant to this subsection if allowing that tax credit would cause the aggregate amount of tax credits allowed pursuant to this subsection to exceed two million dollars ($2,000,000).

B. A person that files a corporate income tax return and that, during any taxable year beginning on or after January 1, 2006 and ending on or before December 31, 2015, installs a photovoltaic system in a facility in New Mexico that is owned by that person may apply for, and the department may allow, a credit in an amount equal to one dollar fifty cents ($1.50) per nameplate direct current wattage of that photovoltaic system, provided that:

(1) the maximum tax credit that may be claimed by the taxpayer pursuant to this subsection shall not exceed seventy-five thousand dollars ($75,000); and

C. The tax credit allowed pursuant to Subsection A of this section shall be deducted from a taxpayer's New Mexico income tax liability for the taxable year. Any portion of the maximum credit provided by Subsection A of this section that remains unused at the end of the taxpayer's taxable year may be carried forward for seven consecutive taxable years; provided that the total credits claimed under this section shall not exceed the maximum allowable pursuant to Subsection A of this section. If a person claiming a tax credit pursuant to Subsection A of this section does not have any New Mexico income tax liability, the tax credit may be refunded to that person.

D. A husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the credit allowed pursuant to Subsection A of this section that would have been allowed on a joint return.

E. The tax credit allowed pursuant to Subsection B of this section shall be deducted from the taxpayer's corporate income tax liability for the taxable year. Any portion of the maximum credit provided by Subsection B of this section that remains unused at the end of the taxpayer's taxable year may be carried forward for seven consecutive taxable years; provided that the total credits claimed under this section shall not exceed the maximum allowable pursuant to Subsection B of this section. If a person claiming a tax credit pursuant to Subsection B of this section does not have any corporate income tax liability, the tax credit may be refunded to that person.

Section 6. [NEW MATERIAL] ADMINISTRATION.--

A. The energy, minerals and natural resources department shall adopt rules for administration of the provisions of the Solar Thermal and Photovoltaic System Tax Act no later than September 30, 2005.

B. A solar thermal system or a photovoltaic system for which a tax credit is allowed under the Solar Thermal and Photovoltaic System Tax Act must be certified by the energy, minerals and natural resources department to meet technical requirements established by the energy, minerals and natural resources department. The energy, minerals and natural resources department shall adopt and publish on its web site an initial description of technical requirements no later than August 1, 2005. The energy, minerals and natural resources department may modify those requirements as needed to ensure a high level of system quality and performance.

C. The taxation and revenue department shall prescribe application forms for the tax credits allowed pursuant to the Solar Thermal and Photovoltaic System Tax Act no later than December 31, 2006.

Section 7. [NEW MATERIAL] REPORT TO APPROPRIATE INTERIM COMMITTEE.--Beginning in 2008, the energy, minerals and natural resources department shall report to the appropriate interim committee of the legislature every two years and provide an update of the status of the Solar Thermal and Photovoltaic Systems Tax Act and recommendations for modifications of that act.

Section 8. APPROPRIATION.--One hundred fifty thousand dollars ($150,000) is appropriated from the general fund to the energy, minerals and natural resources department for expenditure in fiscal year 2006 to provide training to installers, inspectors and the public on the tax credits allowed pursuant to the Solar Thermal and Photovoltaic System Tax Act and on installation and operation of solar thermal systems and photovoltaic systems. Any unexpended or unencumbered balance remaining at the end of fiscal year 2006 shall revert to the general fund.

Section 9. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2006.

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