SB0242

SENATE BILL 242

52nd legislature - STATE OF NEW MEXICO - first session, 2015

INTRODUCED BY

Phil A. Griego

AN ACT

RELATING TO UTILITIES; INCREASING THE AMOUNT OF ELECTRICITY THAT MAY BE PRODUCED BY QUALIFIED ENERGY GENERATORS THAT WILL BE ELIGIBLE FOR THE RENEWABLE ENERGY PRODUCTION TAX CREDIT; EXTENDING THE DATE THAT A QUALIFIED ENERGY GENERATOR MUST FIRST PRODUCE ELECTRICITY TO QUALIFY FOR THE RENEWABLE ENERGY PRODUCTION TAX CREDIT; DECREASING THE AMOUNT OF CREDIT PER KILOWATT-HOUR FOR CERTAIN TAXABLE YEARS; LIMITING THE PERIOD FOR WHICH A TAXPAYER MAY CLAIM THE RENEWABLE ENERGY PRODUCTION TAX CREDIT; MAKING GEOTHERMAL ENERGY A QUALIFIED ENERGY SOURCE.

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

SECTION 1. Section 7-2-18.18 NMSA 1978 (being Laws 2007, Chapter 204, Section 2) is amended to read:

"7-2-18.18. RENEWABLE ENERGY PRODUCTION TAX CREDIT.--

A. Prior to January 1, 2032, a taxpayer who is not a dependent of another individual and who holds title to a qualified energy generator or leases property upon which a qualified energy generator operates from a county or municipality under authority of an industrial revenue bond may claim a tax credit against the taxpayer's tax liability imposed pursuant to the Income Tax Act. The tax credit provided in this section may be referred to as the "renewable energy production tax credit". The tax credit provided in this section may not be claimed with respect to the same electricity production for which a tax credit pursuant to Section 7-2A-19 NMSA 1978 has been claimed.

[B. A taxpayer who files an individual New Mexico income tax return and who is not a dependent of another taxpayer is eligible for the renewable energy production tax credit if the taxpayer:

(1) holds title to a qualified energy generator that first produced electricity on or before January 1, 2018; or

(2) leases property upon which a qualified energy generator operates from a county or municipality under authority of an industrial revenue bond and if the qualified energy generator first produced electricity on or before January 1, 2018.

C.] B. The amount of the tax credit shall equal one cent ($.01) per kilowatt-hour of the first four hundred thousand megawatt-hours of electricity produced by the qualified energy generator in the taxable year using a wind-, geothermal- or biomass-derived qualified energy resource; provided that the total amount of tax credits claimed by all taxpayers for a single qualified energy generator in a taxable year using a wind-, geothermal- or biomass-derived qualified energy resource shall not exceed one cent ($.01) per kilowatt-hour of the first four hundred thousand megawatt-hours of electricity produced by the qualified energy generator.

[D.] C. The amount of the tax credit for electricity produced by a qualified energy generator [in the taxable year] using a solar-light-derived or solar-heat-derived qualified energy resource shall [be at] equal the following amounts [specified in Paragraphs (1) through (10) of this subsection] in the following taxable years for which the tax credit is claimed and in which the qualified energy generator produces electricity using a solar-light-derived or solar-heat-derived qualified energy resource; provided that the total amount of tax credits claimed for a taxable year by all taxpayers for a single qualified energy generator using a solar-light-derived or solar-heat-derived qualified energy resource shall be limited to the first two hundred thousand megawatt-hours of electricity produced by the qualified energy generator in the taxable year:

(1) for a taxpayer that receives a certificate of eligibility pursuant to Subsection F of this section prior to January 1, 2015:

(a) one and one-half cents ($.015) per kilowatt-hour in the first taxable year; [in which the qualified energy generator produces electricity using a solar-light-derived or solar-heat-derived qualified energy resource;

(2)] (b) two cents ($.02) per kilowatt-hour in the second taxable year; [in which the qualified energy generator produces electricity using a solar-light-derived or solar-heat-derived qualified energy resource;

(3)] (c) two and one-half cents ($.025) per kilowatt-hour in the third taxable year; [in which the qualified energy generator produces electricity using a solar-light-derived or solar-heat-derived qualified energy resource;

(4)] (d) three cents ($.03) per kilowatt-hour in the fourth taxable year; [in which the qualified energy generator produces electricity using a solar-light-derived or solar-heat- derived qualified energy resource;

(5)] (e) three and one-half cents ($.035) per kilowatt-hour in the fifth taxable year; [in which the qualified energy generator produces electricity using a solar- light-derived or solar-heat-derived qualified energy resource;

(6)] (f) four cents ($.04) per kilowatt-hour in the sixth taxable year; [in which the qualified energy generator produces electricity using a solar-light-derived or solar-heat-derived qualified energy resource;

(7)] (g) three and one-half cents ($.035) per kilowatt-hour in the seventh taxable year; [in which the qualified energy generator produces electricity using a solar-light-derived or solar-heat-derived qualified energy resource;

(8)] (h) three cents ($.03) per kilowatt-hour in the eighth taxable year; [in which the qualified energy generator produces electricity using a solar-light-derived or solar-heat-derived qualified energy resource;

(9)] (i) two and one-half cents ($.025) per kilowatt-hour in the ninth taxable year [in which the qualified energy generator produces electricity using a solar-light- derived or solar-heat-derived qualified energy resource]; and

[(10)] (j) two cents ($.02) per kilowatt-hour in the tenth taxable year [in which the qualified energy generator produces electricity using a solar-light-derived or solar-heat- derived qualified energy resource.

E. A taxpayer eligible for a renewable energy production tax credit pursuant to Subsection B of this section shall be eligible for the renewable energy production tax credit for ten consecutive years, beginning on the date the qualified energy generator begins producing electricity.

F. As used in this section:

(1) "biomass" means organic material that is available on a renewable or recurring basis, including:

(a) forest-related materials, including mill residues, logging residues, forest thinnings, slash, brush, low-commercial-value materials or undesirable species, salt cedar and other phreatophyte or woody vegetation removed from river basins or watersheds and woody material harvested for the purpose of forest fire fuel reduction or forest health and watershed improvement;

(b) agricultural-related materials, including orchard trees, vineyard, grain or crop residues, including straws and stover, aquatic plants and agricultural processed co-products and waste products, including fats, oils, greases, whey and lactose;

(d) solid woody waste materials, including landscape or right-of-way tree trimmings, rangeland maintenance residues, waste pallets, crates and manufacturing, construction and demolition wood wastes, excluding pressure-treated, chemically treated or painted wood wastes and wood contaminated with plastic;

(e) crops and trees planted for the purpose of being used to produce energy;

(f) landfill gas, wastewater treatment gas and biosolids, including organic waste byproducts generated during the wastewater treatment process; and

(g) segregated municipal solid waste, excluding tires and medical and hazardous waste;

(2) "qualified energy generator" means a facility with at least 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]; and

(2) for a taxpayer that receives a certificate of eligibility pursuant to Subsection F of this section on or after January 1, 2015:

(a) one and one-half cents ($.015) per kilowatt-hour produced in the first taxable year; and

(b) two cents ($.02) per kilowatt-hour produced in the second through tenth taxable years.

D. A taxpayer may claim a renewable energy production tax credit for ten consecutive taxable years beginning in the first taxable year that the taxpayer claims the tax credit; provided that no taxpayer may claim the tax credit for electricity produced on or after January 1, 2032. A taxpayer shall claim a renewable energy production tax credit within one year following the end of the calendar year in which the taxpayer received a certificate of eligibility pursuant to Subsection F of this section.

E. Once a taxpayer has received a certificate of eligibility pursuant to Subsection F of this section for a given facility, that taxpayer shall be allowed to retain the facility's original date of certification for tax credits for that facility until either the generator goes out of production for more than six consecutive months in a year or until the facility's ten-year eligibility has expired.

[G.] F. A [person that holds title to a facility generating electricity from a qualified energy resource or a person that leases such a facility from a county or municipality pursuant to an industrial revenue bond may request certification of eligibility for the renewable energy production tax credit] taxpayer may apply for a certificate of eligibility for a qualified energy generator from the energy, minerals and natural resources department [which shall determine if the facility is a qualified energy generator]. The energy, minerals and natural resources department may [certify the] issue a certificate of eligibility [of an] for a qualified energy generator only if the total amount of electricity that may be produced annually by all qualified energy generators using a wind-, geothermal- or biomass-derived qualified energy resource that are certified pursuant to this section and pursuant to Section 7-2A-19 NMSA 1978 will not exceed a total of [two million] three million megawatt-hours plus an additional [five hundred thousand] one million megawatt-hours produced by qualified energy generators using a solar-light-derived or solar-heat-derived qualified energy resource. Completed 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] of eligibility shall state that the facility is [an eligible] a qualified energy generator and shall include 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 and shall report annually to the appropriate interim legislative committee information that will allow the legislative committee to analyze the effectiveness of the renewable energy production tax credit, including the identity of qualified energy generators, the energy production means used, the amount of energy produced by those qualified energy generators and whether any applications could not be approved due to program limits.

[H.] G. A taxpayer may be allocated all or a portion of the right to claim a renewable energy production tax credit without regard to proportional ownership interest if:

(1) the taxpayer owns an interest in a business entity that is taxed for federal income tax purposes as a partnership;

(2) the business entity:

(a) would qualify for the renewable energy production tax credit pursuant to [Paragraph (1) or (2) of Subsection B of] this section;

(b) owns an interest in a business entity that is also taxed for federal income tax purposes as a partnership and that would qualify for the renewable energy production tax credit pursuant to [Paragraph (1) or (2) of Subsection B of] this section; or

(c) owns, through one or more intermediate business entities that are each taxed for federal income tax purposes as a partnership, an interest in the business entity described in Subparagraph (b) of this paragraph;

(3) the taxpayer and all other taxpayers allocated a right to claim the renewable energy production tax credit pursuant to this subsection own collectively at least a five percent interest in a qualified energy generator;

(4) the business entity provides notice of the allocation and the taxpayer's interest to the energy, minerals and natural resources department on forms prescribed by that department; and

(5) the energy, minerals and natural resources department certifies the allocation in writing to the taxpayer.

[I.] H. Upon receipt of notice of an allocation of the right to claim all or a portion of the renewable energy production tax credit, the energy, minerals and natural resources department shall promptly certify the allocation in writing to the recipient of the allocation.

[J. A husband and wife who file] I. Married individuals filing separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the credit that would have been allowed on a joint return.

[K.] J. A taxpayer may claim the renewable energy production tax credit by submitting to the taxation and revenue department the certificate of eligibility issued by the energy, minerals and natural resources department, pursuant to Subsection [G or H] F of this section, documentation showing the taxpayer's interest in the facility, documentation of the amount of electricity produced by the 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.

[L.] K. If the requirements of this section have been complied with, the department shall approve the renewable energy production tax credit. The credit may be deducted from a taxpayer's New Mexico income tax liability for the taxable year for which the credit is claimed. If the amount of tax credit exceeds the taxpayer's income tax liability for the taxable year:

(1) the excess may be carried forward for a period of five consecutive taxable years; or

(2) if the tax credit was issued with respect to a qualified energy generator that first produced electricity using a qualified energy resource on or after October 1, 2007, the excess shall be refunded to the taxpayer.

[M. Once a taxpayer has been granted a renewable energy production tax credit for a given facility, that taxpayer shall be allowed to retain the facility's 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.]

L. As used in this section:

(1) "biomass" means organic material that is available on a renewable or recurring basis, including:

(d) solid woody waste materials, including landscape or right-of-way tree trimmings, rangeland maintenance residues, waste pallets, crates and manufacturing, construction and demolition wood wastes, excluding pressure- treated, chemically treated or painted wood wastes and wood contaminated with plastic;

(e) crops and trees planted for the purpose of being used to produce energy;

(f) landfill gas, wastewater treatment gas and biosolids, including organic waste byproducts generated during the wastewater treatment process; and

(g) segregated municipal solid waste, excluding tires and medical and hazardous waste;

(2) "qualified energy generator" means a facility with at least one megawatt generating capacity located in New Mexico that:

(a) produces electricity using a qualified energy resource;

(b) sells that electricity to an unrelated person; and

(a) solar light;

(b) solar heat;

(d) geothermal; or

(e) biomass."

SECTION 2. 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. Prior to January 1, 2032, a taxpayer that holds title to a qualified energy generator or leases property upon which a qualified energy generator operates from a county or municipality under authority of an industrial revenue bond may claim a tax credit against the taxpayer's tax liability imposed pursuant to the Corporate Income and Franchise Tax Act. The tax credit provided in this section may be referred to as the "renewable energy production tax credit". The tax credit provided in this section may not be claimed with respect to the same electricity production for which [the renewable energy production] a tax credit [provided in the Income Tax Act] pursuant to Section 7-2-18.18 NMSA 1978 has been claimed.

[B. A person is eligible for the renewable energy production tax credit if the person:

(1) holds title to a qualified energy generator that first produced electricity on or before January 1, 2018; or

(1) for a taxpayer that receives a certificate of eligibility pursuant to Subsection F of this section on or after January 1, 2015:

(5)] (e) three and one-half cents ($.035) per kilowatt-hour in the fifth taxable year; [in which the qualified energy generator produces electricity using a solar-light-derived or solar-heat-derived qualified energy resource;

(9)] (i) two and one-half cents ($.025) per kilowatt-hour in the ninth taxable year [in which the qualified energy generator produces electricity using a solar-light-derived or solar-heat-derived qualified energy resource]; and

F. As used in this section:

(1) "biomass" means organic material that is available on a renewable or recurring basis, including:

(a) forest-related materials, including mill residues, logging residues, forest thinnings, slash, brush, low-commercial value materials or undesirable species, salt cedar and other phreatophyte or woody vegetation removed from river basins or watersheds and woody material harvested for the purpose of forest fire fuel reduction or forest health and watershed improvement;

treated, chemically treated or painted wood wastes and wood contaminated with plastic;

(e) crops and trees planted for the purpose of being used to produce energy;

(f) landfill gas, wastewater treatment gas and biosolids, including organic waste byproducts generated during the wastewater treatment process; and

(g) segregated municipal solid waste, excluding tires and medical and hazardous waste;

(a) solar light;

(b) solar heat;

(d) biomass]; and

(2) for a taxpayer that receives a certificate of eligibility pursuant to Subsection F of this section on or after January 1, 2015:

(a) one and one-half cents ($.015) per kilowatt-hour produced in the first taxable year; and

(b) two cents ($.02) per kilowatt-hour produced in the second through tenth taxable years.

[G.] F. A [person that holds title to a facility generating electricity from a qualified energy resource or a person that leases such a facility from a county or municipality pursuant to an industrial revenue bond may request certification of eligibility for the renewable energy production tax credit] taxpayer may apply for a certificate of eligibility for a qualified energy generator from the energy, minerals and natural resources department [which shall determine if the facility is a qualified energy generator]. The energy, minerals and natural resources department may [certify the] issue a certificate of eligibility [of an] for a qualified energy generator only if the total amount of electricity that may be produced annually by all qualified energy generators using a wind-, geothermal- or biomass-derived qualified energy resource that are certified pursuant to this section and pursuant to [the Income Tax Act] Section 7-2-18.18 NMSA 1978 will not exceed a total of [two million] three million megawatt-hours plus an additional [five hundred thousand] one million megawatt-hours produced by qualified energy generators using a solar-light-derived or solar-heat-derived qualified energy resource. Completed 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] of eligibility shall state that the facility is [an eligible] a qualified energy generator and shall include 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 and shall report annually to the appropriate interim legislative committee information that will allow the legislative committee to analyze the effectiveness of the renewable energy production tax credit, including the identity of qualified energy generators, the energy production means used, the amount of energy produced by those qualified energy generators and whether any applications could not be approved due to program limits.

[H.] G. A taxpayer may be allocated all or a portion of the right to claim a renewable energy production tax credit without regard to proportional ownership interest if:

(1) the taxpayer owns an interest in a business entity that is taxed for federal income tax purposes as a partnership;

(2) the business entity:

(a) would qualify for the renewable energy production tax credit pursuant to [Paragraph (1) or (2) of Subsection B of] this section;

(4) the business entity provides notice of the allocation and the taxpayer's interest to the energy, minerals and natural resources department on forms prescribed by that department; and

(5) the energy, minerals and natural resources department certifies the allocation in writing to the taxpayer.

[J.] I. A taxpayer may claim the renewable energy production tax credit by submitting to the taxation and revenue department the certificate of eligibility issued by the energy, minerals and natural resources department, pursuant to Subsection [G or H] F of this section, documentation showing the taxpayer's interest in the facility, documentation of the amount of electricity produced by the 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.

[K.] J. If the requirements of this section have been complied with, the department shall approve the renewable energy production tax credit. The credit may be deducted from a taxpayer's New Mexico corporate income tax liability for the taxable year for which the credit is claimed. If the amount of tax credit exceeds the taxpayer's corporate income tax liability for the taxable year:

(1) the excess may be carried forward for a period of five consecutive taxable years; or

[L. Once a taxpayer has been granted a renewable energy production tax credit for a given facility, that taxpayer shall be allowed to retain the facility's 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.]

K. As used in this section:

(1) "biomass" means organic material that is available on a renewable or recurring basis, including:

(d) solid woody waste materials, including landscape or right-of-way tree trimmings, rangeland maintenance residues, waste pallets, crates and manufacturing, construction and demolition wood wastes, excluding pressure- treated, chemically treated or painted wood wastes and wood contaminated with plastic;

(e) crops and trees planted for the purpose of being used to produce energy;

(f) landfill gas, wastewater treatment gas and biosolids, including organic waste byproducts generated during the wastewater treatment process; and

(g) segregated municipal solid waste, excluding tires and medical and hazardous waste;

(2) "qualified energy generator" means a facility with at least one megawatt generating capacity located in New Mexico that:

(a) produces electricity using a qualified energy resource;

(b) sells that electricity to an unrelated person; and

(a) solar light;

(b) solar heat;

(d) geothermal; or

(e) biomass."

SECTION 3. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2015.

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