Bill Text: OR HB2208 | 2011 | Regular Session | Engrossed

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Bill Title: Relating to energy; prescribing an effective date.

Spectrum: Unknown

Status: (Failed) 2011-06-30 - In committee upon adjournment. [HB2208 Detail]

Download: Oregon-2011-HB2208-Engrossed.html

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     76th OREGON LEGISLATIVE ASSEMBLY--2011 Regular Session

NOTE:  Matter within  { +  braces and plus signs + } in an
amended section is new. Matter within  { -  braces and minus
signs - } is existing law to be omitted. New sections are within
 { +  braces and plus signs + } .

LC 2193

                           A-Engrossed

                         House Bill 2208
                  Ordered by the House April 26
            Including House Amendments dated April 26

Introduced and printed pursuant to House Rule 12.00. Presession
  filed (at the request of House Interim Committee on
  Sustainability and Economic Development)

                             SUMMARY

The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure.

    { - Modifies provisions related to single energy facilities.
Requires review of certain applications by Energy Facility Siting
Council. - }
    { - Declares emergency, effective on passage. - }
   { +  Creates income and corporate excise tax credit for
renewable energy production systems, defined as systems using
biomass, solar, geothermal, hydroelectric or wave, tidal or ocean
thermal energy technology to produce energy. Bases amount of tax
credit on projected first year energy yield of system. Restricts
availability of tax credits to projects with total system cost
not in excess of $20 million. Limits total tax credits available
to all taxpayers to $150 million for 12-month period beginning
July 1, 2012. Reserves up to $15 million of total tax credits for
projects recommended by Oregon Innovation Council. Provides for
certification of eligible systems by State Department of Energy.
Directs department to establish eligibility standards and
standards for allocating available credit amounts.
  Applies to applications for preliminary certification submitted
after July 1, 2012, and to tax years beginning on or after
January 1, 2012.
  Takes effect on 91st day following adjournment sine die. + }

                        A BILL FOR AN ACT
Relating to energy; creating new provisions; amending ORS
  284.711; and prescribing an effective date.
Be It Enacted by the People of the State of Oregon:
  SECTION 1.  { + Sections 2 to 4 of this 2011 Act are added to
and made a part of ORS chapter 315. + }
  SECTION 2.  { + (1) A credit is allowed against the taxes
otherwise due under ORS chapter 316 (or, if the taxpayer is a
corporation, under ORS chapter 317 or 318) for a renewable energy
production system that is certified under sections 6 to 17 of
this 2011 Act. The credit allowed under this section in each of
five succeeding tax years shall be 20 percent of the total
allowable credit, but may not exceed the tax liability of the
taxpayer.
  (2) In order for a tax credit to be allowable under this
section:
  (a) The system must be located in Oregon.
  (b) The system must have received final certification from the
Director of the State Department of Energy under sections 6 to 17
of this 2011 Act.
  (c) The taxpayer must be an eligible applicant under section 10
(1)(b) of this 2011 Act.
  (d) The total system cost may not exceed $20 million.
  (3)(a) The total amount of credit allowable shall be based upon
the projected first year energy yield of the system and shall
equal $___ per kilowatt-hour.
  (b) Notwithstanding paragraph (a) of this subsection, if the
system is an alternative fuel vehicle, the credit shall be
___ percent of the certified cost.
  (4) The State Department of Energy shall reduce the amount of
credit allowable to a taxpayer if, when combined with other
government incentives, loans or grants available to the taxpayer,
the amount calculated under subsection (3) of this section
exceeds 75 percent of the total system cost certified under
section 12 of this 2011 Act.
  (5)(a) The credit allowed in each of four succeeding tax years,
beginning with the tax year that the system is placed in service,
shall be 20 percent of the amount provided under subsection (4)
of this section, but may not exceed the tax liability of the
taxpayer.
  (b) If the taxpayer receives an additional certification under
section 12 (5) of this 2011 Act, the taxpayer may claim an
additional credit of not more than 20 percent in the fifth
succeeding tax year.
  (6)(a) Upon any sale, termination of the lease or contract,
exchange or other disposition of the system, notice thereof shall
be given to the director, who shall revoke the certificate
covering the system as of the date of such disposition.
  (b) A new owner, or upon re-leasing of the system, a new
lessor, may apply for a new certificate under section 12 of this
2011 Act. The new lessor or owner must meet the requirements of
sections 6 to 17 of this 2011 Act and may claim a tax credit
under this section only if all moneys owed to the State of Oregon
have been paid, if the system continues to operate, unless
continued operation is waived by the department, and if all
conditions in the final certification are met. The tax credit
available to the new owner shall be limited to the amount of
credit not claimed by the former owner or, for a new lessor, the
amount of credit not claimed by the lessor under all previous
leases.
  (7) Any tax credit otherwise allowable under this section that
is not used by the taxpayer in a particular year may be carried
forward and offset against the taxpayer's tax liability for the
next succeeding tax year. Any credit remaining unused in that
next succeeding tax year may be carried forward and used in the
second succeeding tax year, and likewise, any credit not used in
that second succeeding tax year may be carried forward and used
in the third succeeding tax year, and likewise, any credit not
used in that third succeeding tax year may be carried forward and
used in the fourth succeeding tax year, and likewise, any credit
not used in that fourth succeeding tax year may be carried
forward and used in the fifth succeeding tax year, but may not be
carried forward for any tax year thereafter. Credits may be
carried forward to and used in a tax year beyond the years
specified in subsection (1) of this section only as provided in
this subsection.
  (8) The credit allowed under this section is not in lieu of any
depreciation or amortization deduction for the system to which
the taxpayer otherwise may be entitled for purposes of ORS
chapter 316, 317 or 318 for such year.
  (9) The taxpayer's adjusted basis for determining gain or loss
may not be decreased by any tax credits allowed under this
section.
  (10) The definitions in section 6 of this 2011 Act apply to
this section. + }
  SECTION 3.  { + The credit allowed under section 2 of this 2011
Act may not be transferred or sold. An applicant may apply with a
tax partner that is directly connected to the renewable energy
production system. + }
  SECTION 4.  { + A taxpayer may not be allowed a credit under
section 2 of this 2011 Act if the first tax year for which the
credit would otherwise be allowed, with respect to a renewable
energy production system certified under section 12 of this 2011
Act, begins on or after January 1, 2018. + }
  SECTION 5.  { + Sections 6 to 17 of this 2011 Act are added to
and made a part of ORS chapter 469. + }
  SECTION 6.  { + As used in sections 6 to 17 of this 2011 Act:
  (1) 'Alternative fuel vehicle' means a vehicle as defined by
the Director of the State Department of Energy by rule that is:
  (a) Used primarily in connection with the conduct of a trade or
business;
  (b) Registered under ORS chapter 803 as a commercial motor
vehicle; and
  (c) Manufactured or modified to use an alternative fuel,
including but not limited to electricity, ethanol, methanol,
gasohol and propane or natural gas, regardless of energy
consumption savings.
  (2) 'Biomass' has the meaning given that term in ORS 315.141.
  (3)(a) 'Cost' means the actual cost of the acquisition,
construction and installation of the renewable energy production
system paid by the taxpayer for the system.
  (b) For an alternative fuel vehicle, 'cost' means the
difference between the cost of the alternative fuel vehicle and
the same vehicle or functionally similar vehicle manufactured to
use conventional gasoline or diesel fuel or, in the case of
modification of an existing vehicle, the cost of the
modification.  ' Cost' does not include any amounts paid for
remodification of the same vehicle.
  (4) 'First year energy yield' of an renewable energy production
system is the usable energy produced under average environmental
conditions in one year.
  (5) 'Placed in service' means:
  (a) The date an renewable energy production system is ready and
available to produce usable energy.
  (b) For an alternative fuel vehicle:
  (A) In the case of purchase, the date that the alternative fuel
vehicle is first purchased as an alternative fuel vehicle ready
and available for use.
  (B) In the case of modification, the date that the modification
is completed and the vehicle is ready and available for use as an
alternative fuel vehicle.
  (c) For a fueling station necessary to operate an alternative
fuel vehicle, the date that the fueling station is first
operational.
  (d) For related equipment, the date that the equipment is first
operational.
  (6) 'Related equipment' means equipment necessary to convert a
vehicle to use an alternative fuel.
  (7) 'Renewable energy production system' means a system that
uses biomass, solar, geothermal, hydroelectric or wave, tidal or
ocean thermal energy technology to produce energy.
  (8) 'Solar technology' means any system, mechanism or series of
mechanisms, including photovoltaic systems, that uses solar
radiation to generate electrical energy. + }
  SECTION 7.  { + (1) In determining the eligibility of any
renewable energy production system for tax credits, preference
shall be given to those systems that provide long-term energy
savings from the use of renewable energy resources.
  (2) The Director of the State Department of Energy shall
establish by rule a tiered priority system to be used in
evaluating applicants for certification of systems. The tier
system shall be based upon the certified system cost of systems
and shall require consideration of diverse technologies as well
as net-metered systems. The State Department of Energy shall rely
on the criteria established under section 8 of this 2011 Act in
determining the eligibility for tax credits and in allocating the
available certified cost pursuant to section 16 of this 2011 Act
among systems. The department shall limit the number of
certifications allowed for systems that are alternative fuel
vehicles. + }
  SECTION 8.  { + The State Department of Energy shall by rule
establish the following standards relating to renewable energy
production systems:
  (1) Minimum performance and efficiency standards.
  (2) Standards for the determination of total system cost, as
required by sections 10 (2) and 12 (6) of this 2011 Act. + }
  SECTION 9.  { + For a renewable energy production system, the
total amount of credit that receives a preliminary certification
from the Director of the State Department of Energy may not
exceed $2 million. + }
  SECTION 10.  { + (1) Prior to the installation or construction
of a renewable energy production system, any person may apply to
the State Department of Energy for preliminary certification
under section 11 of this 2011 Act if:
  (a) The system complies with the standards or rules adopted by
the Director of the State Department of Energy; and
  (b) The applicant will be the owner, contract purchaser or
lessee of the system at the time of installation or construction
of the proposed system.
  (2) An application for preliminary certification shall be made
in writing on a form prepared by the department and shall
contain:
  (a) A statement that the applicant plans to acquire, construct
or install a system that substantially reduces the consumption of
purchased energy.
  (b) A detailed description of the system and its operation and
information showing that the system will operate as represented
in the application and remain in operation for at least five
years, unless the director by rule specifies a shorter period of
operation.
  (c) The anticipated total system cost.
  (d) Information on the number and type of jobs that will be
created by the system, the number of jobs sustained throughout
the construction, installation and operation of the system and
the benefits of the system with regard to overall economic
activity in this state.
  (e) Information demonstrating that the system will comply with
applicable state and local laws and regulations and obtain
required licenses and permits.
  (f) Information relating to the standards described in section
8 of this 2011 Act.
  (g) A recommendation for a system that demonstrates innovation,
if applicable, that has been made by the Oregon Innovation
Council.
  (h) Any other information the director considers necessary to
determine whether the system is in accordance with the provisions
of sections 6 to 17 of this 2011 Act, and any applicable rules or
standards adopted by the director.
  (3) An application for preliminary certification shall be
accompanied by a fee established under section 13 of this 2011
Act. The director may refund all or a portion of the fee if the
application for certification is rejected.
  (4) The director may allow an applicant to file the application
for preliminary certification after the start of installation or
construction of the system if the director finds that:
  (a) Filing the application before the start of installation or
construction is inappropriate because special circumstances
render filing earlier unreasonable; and
  (b) The system would otherwise qualify for certification under
sections 6 to 17 of this 2011 Act.
  (5) A preliminary certification shall remain valid for a period
of five calendar years after the date on which the preliminary
certification is issued by the director. + }
  SECTION 11.  { + (1) The Director of the State Department of
Energy may require an applicant for certification of a renewable
energy production system to submit plans, specifications and
contract terms, and after examination of the plans,
specifications and terms, may request corrections and revisions.
  (2) If the director determines that the system is technically
feasible and should operate in accordance with the
representations made by the applicant, and is in accordance with
the provisions of sections 6 to 17 of this 2011 Act and any
applicable rules or standards adopted by the director, the
director shall issue a preliminary certificate approving the
installation or construction of the system. The certificate shall
indicate the potential amount of tax credit allowable and shall
list any conditions for claiming the credit.
  (3) The director may issue an order altering, conditioning,
suspending or denying preliminary certification if the director
determines that:
  (a) The system does not comply with the provisions of sections
6 to 17 of this 2011 Act and applicable rules and standards;
  (b) The applicant has previously received preliminary or final
certification for the system;
  (c) The applicant is unable to demonstrate that the system
would be economically viable without the allowance of a credit
under section 2 of this 2011 Act;
  (d) The applicant was directly involved in an act for which the
director has levied civil penalties or revoked, canceled or
suspended any certification under sections 6 to 17 of this 2011
Act; or
  (e) The applicant or the principal, director, officer, owner,
majority shareholder or member of the applicant, or the manager
of the applicant if the applicant is a limited liability company,
is in arrears for payments owed to any government agency while in
any capacity with direct or indirect control over a business. + }
  SECTION 12.  { + (1) A final certification for a renewable
energy production system may not be issued by the Director of the
State Department of Energy under this section unless:
  (a) The system was installed or constructed under a preliminary
certificate of approval issued under section 11 of this 2011 Act;
  (b) The applicant demonstrates the ability to provide the
information required by section 10 (2) of this 2011 Act and does
not violate any condition that may be imposed as described in
subsection (3) of this section; and
  (c) The system was installed or constructed in accordance with
the applicable provisions of sections 6 to 17 of this 2011 Act
and any applicable rules or standards adopted by the director.
  (2) Any person may apply to the State Department of Energy for
final certification of a system:
  (a) If the person received preliminary certification for the
system under section 11 of this 2011 Act; and
  (b) After completion of the installation or construction of the
system.
  (3) An application for final certification shall be made in
writing on a form prepared by the department and shall contain:
  (a) A statement that the conditions of the preliminary
certification have been complied with;
  (b) The actual cost of the system certified to by a certified
public accountant who is not an employee of the applicant or, if
the actual cost of the system is less than $50,000, copies of
receipts for purchase and installation of the system;
  (c) The amount of the credit under section 2 of this 2011 Act
that is to be claimed;
  (d) The number and type of jobs created by the operation and
maintenance of the system over the five-year period beginning
with the year of preliminary certification under section 11 of
this 2011 Act and information on the benefits of the system with
regard to overall economic activity in this state;
  (e) Information sufficient to demonstrate that the system will
remain in operation for at least five years, unless the director
by rule specifies a shorter period of operation;
  (f) Documentation of compliance with applicable state and local
laws and regulations and licensing and permitting requirements as
defined by the director;
  (g) Information, if applicable, pertaining to prior
recommendation of the system by the Oregon Innovation Council;
and
  (h) Any other information determined by the director to be
necessary prior to issuance of a final certificate, including
inspection of the system by the department.
  (4) The director shall act on an application for final
certification before the 60th day after the filing of the
application under this section. The director may issue the
certificate together with such conditions as the director
determines are appropriate to promote the purposes of sections 2
and 6 to 17 of this 2011 Act. If the applicant is an entity
subject to regulation by the Public Utility Commission, the
director may consult with the commission prior to issuance of the
certificate. The action of the director shall include
certification of the actual cost of the system. However, the
director may not certify an amount for tax credit purposes that
is more than the amount approved in the preliminary certificate
issued for the system.
  (5)(a) The certificate initially granted under this section
shall be for a maximum of 80 percent of the allowable credit
under section 2 of this 2011 Act.
  (b) During the fourth succeeding tax year following the tax
year in which the system is placed in service, a taxpayer may
apply for, and be granted, a certificate allowing additional tax
credit for the fifth and final consecutive tax year, of no more
than 20 percent of the total allowable credit. The department
shall grant this final certificate only if the taxpayer has met
all of the requirements of sections 2 and 6 to 17 of this 2011
Act.
  (6) If the director rejects an application for final
certification, or certifies a lesser amount of credit than was
claimed in the application, the director shall send to the
applicant written notice of the action, together with a statement
of the findings and reasons for the action, by certified mail,
before the 60th day after the filing of the application. Failure
of the director to act constitutes rejection of the application.
  (7) Upon approval of an application for final certification of
a system, the director shall certify the system. The final
certification shall indicate the amount of projected energy
savings attributable to the system and the total system cost.
  (8) The director may establish by rule timelines and
intermediate deadlines for submission of application
materials. + }
  SECTION 13.  { + By rule and after hearing, the Director of the
State Department of Energy may adopt a schedule of reasonable
fees that the State Department of Energy may require of
applicants for preliminary or final certification of a renewable
energy production system under sections 6 to 17 of this 2011 Act.
Before the adoption or revision of the fees, the department shall
estimate the total cost of the program to the department. The
fees shall be used to recover the anticipated cost of filing,
investigating, granting and rejecting applications for
certification and shall be designed not to exceed the total cost
estimated by the department. Any excess fees shall be held by the
department and shall be used by the department to reduce any
future fee increases. The fee may vary according to the size and
complexity of the system. The fee is not considered part of the
cost of the system to be certified. + }
  SECTION 14.  { + A certificate issued under section 12 of this
2011 Act is required for purposes of obtaining tax credits in
accordance with section 2 of this 2011 Act. Such certification
shall be granted for a period not to exceed five years. The
five-year period shall begin with the tax year of the applicant
during which the completed application for final certification of
the system under section 12 of this 2011 Act is received by the
State Department of Energy. + }
  SECTION 15.  { + (1) Under the procedures for a contested case
under ORS chapter 183, the Director of the State Department of
Energy may order the suspension or revocation of a certificate
issued under section 12 of this 2011 Act if the director finds
that:
  (a) The certification was obtained by fraud or
misrepresentation;
  (b) The holder of the certificate or the operator of the system
has failed to construct or operate the system in compliance with
the plans, specifications and procedures in the certificate; or
  (c) The system is no longer in operation.
  (2) As soon as an order of revocation under this section
becomes final, the director shall notify the Department of
Revenue and the system owner, contract purchaser or lessee of the
order of revocation. Upon notification, the Department of Revenue
immediately shall proceed to collect those taxes not paid by the
certificate holder as a result of the tax credits provided to the
certificate holder under section 2 of this 2011 Act, from the
certificate holder or a successor in interest to the business
interests of the certificate holder. All prior tax credits
provided to the holder of the certificate by virtue of the
certificate shall be forfeited.
  (3)(a) The Department of Revenue shall have the benefit of all
laws of this state pertaining to the collection of income and
excise taxes and may proceed to collect the amounts described in
subsection (2) of this section from the person that obtained
certification from the State Department of Energy, or any
successor in interest to the business interests of that person.
An assessment of tax is not necessary and a statute of limitation
does not preclude the collection of taxes described in this
subsection.
  (b) For purposes of this subsection, a lender, bankruptcy
trustee or other person that acquires an interest through
bankruptcy or through foreclosure of a security interest is not
considered to be a successor in interest to the business
interests of the person that obtained certification. + }
  SECTION 16.  { + (1) The total amount of potential tax credits
for all renewable energy production systems in this state may
not, at the time of preliminary certification under section 11 of
this 2011 Act, exceed $150 million for the 12 months beginning
July 1, 2012, and ending July 1, 2013.
  (2) Of the amount available under subsection (1) of this
section, the State Department of Energy may dedicate up to $15
million for systems that have a prior recommendation as
demonstrative of innovation, as provided in ORS 284.711 (3).
  (3) In the event that the Director of the State Department of
Energy receives applications for preliminary certification with a
total amount of potential tax credits in excess of the
limitations in subsections (1) and (2) of this section, the
director shall allocate the issuance of preliminary
certifications according to the standards required by section 8
of this 2011 Act.
  (4) The director shall review applications and make
determinations whether to issue preliminary certifications for
proposed systems:
  (a) Within 90 days of the date on which the application is
received, in the case of an application for certification of a
system with a projected cost of less than $200,000.
  (b) Within six months of the date on which the application is
received, in the case of an application for certification of a
system with a cost of $200,000 or more. + }
  SECTION 17.  { + Not later than February 1 of each odd-numbered
year, the State Department of Energy shall report to the
Legislative Assembly on utilization of the credit allowed under
sections 2 and 6 to 17 of this 2011 Act of this 2011 Act. The
report required under this section shall include data about the
following:
  (1) Applications for certification received.
  (2) Total amounts of tax credits certified and claimed by tax
year.
  (3) Total energy produced by systems for which credits are
allowed.
  (4) Number of jobs created or retained by taxpayers in
connection with systems receiving credits. + }
  SECTION 18.  { + The State Department of Energy shall by rule
establish procedures for the administration of sections 2 to 4
and 6 to 17 of this 2011 Act. + }
  SECTION 19. ORS 284.711 is amended to read:
  284.711. (1) The Oregon Innovation Council shall provide advice
to the Governor, the Legislative Assembly, public and private
post-secondary educational institutions, public agencies that
provide economic development and the private sector on issues
related to:
  (a) Promoting agreements between public and private
post-secondary educational institutions and private industry that
increase technology transfer and the commercialization of
research;
  (b) Promoting investment in specialized research facilities and
signature research centers where Oregon has a distinct or
emerging advantage for creating new products and businesses;
  (c) Stimulating seed and start-up capital investment and
entrepreneurial capacity that will promote economic growth in
Oregon traded sector industries;
  (d) Developing the entrepreneurial and management capacity
critical to the competitiveness of Oregon traded sector
industries and rapidly growing global markets;
  (e) Enhancing the international competitiveness of Oregon
traded sector industries; and
  (f) Identifying workforce issues for occupations critical to
the competitiveness of Oregon traded sector industries, including
but not limited to scientific, engineering, information
technology and business management occupations.
  (2) The Oregon Innovation Council shall advise the Engineering
and Technology Industry Council established in ORS 351.663 on how
to coordinate the Engineering and Technology Industry Council's
goals and policies with the state plan developed under ORS
284.715.
   { +  (3) The council shall recommend to the State Department
of Energy, for the purpose of certification by the department of
tax credits under sections 2 to 4 and 6 to 17 of this 2011 Act,
renewable energy production systems that demonstrate innovation.
These projects may not include research and development
projects. + }

    { - (3) - }  { +  (4)  + }The council, the Oregon Business
Development Commission, the State Board of Higher Education and
the office of the State Treasurer shall coordinate policies and
programs related to the duties of the council.
    { - (4) - }  { +  (5)  + }Based on the state plan developed
under ORS 284.715, the council may distribute moneys in the
Oregon Innovation Fund by grant or pursuant to contracts with
public and private post-secondary institutions, state agencies
and private sector entities.
  SECTION 20.  { + Sections 2 to 4 and 6 to 17 of this 2011 Act
apply to applications for preliminary certification submitted
under section 10 of this 2011 Act after July 1, 2012, and to tax
years beginning on or after January 1, 2012. + }
  SECTION 21.  { + This 2011 Act takes effect on the 91st day
after the date on which the 2011 regular session of the
Seventy-sixth Legislative Assembly adjourns sine die. + }
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