SENATE FINANCE COMMITTEE SUBSTITUTE FOR

SENATE BILL 387

51st legislature - STATE OF NEW MEXICO - first session, 2013

AN ACT

RELATING TO TAXATION; ENACTING A NEW SECTION OF CHAPTER 7, ARTICLE 36 NMSA 1978 TO PROVIDE FOR VALUATION OF BIOMASS AND GEOTHERMAL GENERATION EQUIPMENT THAT IS SUBJECT TO PROPERTY TAXATION AND THAT IS USED FOR GENERATION, TRANSMISSION OR DISTRIBUTION OF ELECTRIC POWER OR ENERGY.

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

     SECTION 1. A new section of Chapter 7, Article 36 NMSA 1978 is enacted to read:

     "[NEW MATERIAL] METHOD OF VALUATION--BIOMASS AND GEOTHERMAL GENERATION EQUIPMENT--PROPERTY USED FOR GENERATION, TRANSMISSION OR DISTRIBUTION OF ELECTRIC POWER OR ENERGY.--

          A. Property that is biomass or geothermal generation equipment used for generation, transmission or distribution of electric power or energy subject to valuation for property taxation purposes shall be valued in taxable years beginning on or after January 1, 2014 through December 31, 2028 as follows:

                (1) the department shall determine the actual

cost of construction of the biomass or geothermal generation equipment;

                (2) the actual cost of construction shall then

be reduced by the amount of the federal investment tax credit

claimed, if any, associated with purchase of the biomass or geothermal equipment;

                (3) the amount determined in Paragraph (2) of

this subsection shall be reduced by depreciation using a twenty-year useful life and for any other justifiable factors; and

                (4) the value for property taxation purposes shall not be less than twenty percent of the amount determined in Paragraph (2) of this subsection.

          B. The department shall adopt rules to implement the provisions of this section.

          C. As used in this section:

                (1) "biomass generation equipment" means cultivation and harvesting equipment or other feedstock harvesting equipment and conversion equipment and systems and related equipment used to generate electricity or energy out of biomass; and

                (2) "geothermal generation equipment" means heat exchangers, turbines and associated electrical generating equipment and related equipment used to generate electricity from geothermal energy, cooling towers, wells, pumps, gathering systems and related tangible and intangible drilling costs incurred to produce, distribute or use energy derived from a geothermal deposit.

          D. The department shall compile an annual report for the revenue stabilization and tax policy committee that sets forth the number of taxpayers approved to receive the biomass or geothermal generation equipment valuations provided in this section. The department shall advise the committee at least every three years beginning in 2015 whether this valuation provision is performing the purpose for which it was created.

          E. Acceptance of the biomass or geothermal generation equipment valuation for property tax purposes is authorization to the department to reveal the amount of the valuation claimed by the taxpayer and other information from the taxpayer's tax reports as needed to report fully as required by this section to the revenue stabilization and tax policy committee of the legislature."

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