Senate File 371 - Introduced
SENATE FILE
BY COMMITTEE ON NATURAL RESOURCES
AND ENVIRONMENT
(SUCCESSOR TO SSB 1187)
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to the generation and purchase of renewable
2 energy including establishing a renewable energy tax credit
3 program administered by the utilities division of the
4 department of commerce and the department of revenue, and
5 providing an effective date.
6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN
1 1 Section 1. Section 422.11J, Code 2005, is amended to read
1 2 as follows:
1 3 422.11J WIND ENERGY PRODUCTION RENEWABLE ENERGY TAX
1 4 CREDIT.
1 5 The taxes imposed under this division, less the credits
1 6 allowed under sections 422.12 and 422.12B, shall be reduced by
1 7 a wind energy production renewable energy tax credit allowed
1 8 under chapter 476B 476C.
1 9 Sec. 2. Section 422.33, subsection 16, Code 2005, is
1 10 amended to read as follows:
1 11 16. The taxes imposed under this division shall be reduced
1 12 by a wind energy production renewable energy tax credit
1 13 allowed under chapter 476B 476C.
1 14 Sec. 3. Section 422.60, subsection 8, Code 2005, is
1 15 amended to read as follows:
1 16 8. The taxes imposed under this division shall be reduced
1 17 by a wind energy production renewable energy tax credit
1 18 allowed under chapter 476B 476C.
1 19 Sec. 4. Section 423.4, Code 2005, is amended by adding the
1 20 following new subsection:
1 21 NEW SUBSECTION. 4. A purchaser of renewable energy may
1 22 apply to the director for refund of the amount of sales or use
1 23 tax imposed and paid upon sales to the purchaser of any goods,
1 24 wares, merchandise, or services, in an amount for which the
1 25 purchaser has received renewable energy tax credit
1 26 certificates issued pursuant to chapter 476C.
1 27 a. The refunds may be obtained only in the following
1 28 manner and under the following conditions:
1 29 (1) On forms furnished by the department, and filed within
1 30 the time as the director shall provide by rule, the purchaser
1 31 of renewable energy shall report to the department the total
1 32 amount or amounts, valued in money, expended directly or
1 33 indirectly for goods, wares, merchandise, or services by the
1 34 purchaser.
1 35 (2) On these forms, the purchaser of renewable energy
2 1 shall separately list the persons making the sales to the
2 2 purchaser, together with the dates of the sales, and the total
2 3 amount so expended by the purchaser.
2 4 (3) The purchaser of renewable energy must prove to the
2 5 satisfaction of the director that the person making the sales
2 6 has included the amount thereof in the computation of the
2 7 sales price of such person and that such person has paid the
2 8 tax levied by this subchapter or subchapter III, based upon
2 9 such computation of the sales price.
2 10 (4) The purchaser of renewable energy must provide the tax
2 11 credit certificates issued to the purchaser pursuant to
2 12 chapter 476C to the department with the forms required by this
2 13 paragraph "a".
2 14 b. If satisfied that the foregoing conditions and
2 15 requirements have been complied with, the director shall
2 16 refund the amount claimed by the purchaser of renewable energy
2 17 for an amount not greater than the amount of tax credits
2 18 issued in tax credit certificates pursuant to chapter 476C.
2 19 Sec. 5. Section 432.12E, Code 2005, is amended to read as
2 20 follows:
2 21 432.12E WIND ENERGY PRODUCTION RENEWABLE ENERGY TAX
2 22 CREDIT.
2 23 The taxes imposed under this chapter shall be reduced by a
2 24 wind energy production renewable energy tax credit allowed
2 25 under chapter 476B 476C.
2 26 Sec. 6. Section 437A.6, subsection 1, paragraph c, Code
2 27 2005, is amended to read as follows:
2 28 c. Wind energy conversion property subject to section
2 29 427B.26 or eligible for a tax credit under chapter 476B.
2 30 Sec. 7. NEW SECTION. 437A.17B REIMBURSEMENT FOR
2 31 RENEWABLE ENERGY.
2 32 A person may apply to the director for a reimbursement of
2 33 the amount of taxes imposed and paid by the person pursuant to
2 34 this chapter in an amount not more than the person received in
2 35 renewable energy tax credit certificates pursuant to chapter
3 1 476C. To obtain the reimbursement, the person shall attach to
3 2 the return required under section 437A.8 the renewable energy
3 3 tax credit certificates issued to the person pursuant to
3 4 chapter 476C, and provide any other information the director
3 5 may require. The director shall direct a warrant to be issued
3 6 to the person for an amount equal to the tax imposed and paid
3 7 by the person pursuant to this chapter but for not more than
3 8 the amount of the renewable energy tax credit certificates
3 9 attached to the return.
3 10 Sec. 8. NEW SECTION. 476C.1 DEFINITIONS.
3 11 For purposes of this chapter, unless the context otherwise
3 12 requires:
3 13 1. "Anaerobic digester system" means a system of
3 14 components that processes plant or animal materials based on
3 15 the absence of oxygen and produces methane or other biogas
3 16 used to generate electricity, hydrogen fuel, or heat for a
3 17 commercial purpose.
3 18 2. "Biogas recovery facility" means an anaerobic digester
3 19 system that is located in this state.
3 20 3. "Biomass conversion facility" means a facility in this
3 21 state that converts plant=derived organic matter including,
3 22 but not limited to, agricultural food and feed crops, crop
3 23 wastes and residues, wood wastes and residues, or aquatic
3 24 plants to generate electricity, hydrogen fuel, or heat for a
3 25 commercial purpose.
3 26 4. "Board" means the utilities board within the utilities
3 27 division of the department of commerce.
3 28 5. "Department" means the department of revenue.
3 29 6. "Eligible renewable energy facility" means a wind
3 30 energy conversion facility, a biogas recovery facility, a
3 31 biomass conversion facility, a methane gas recovery facility,
3 32 or a solar energy conversion facility that meets all of the
3 33 following requirements:
3 34 a. Is located in this state.
3 35 b. Is at least fifty=one percent owned by one or more of
4 1 any combination of the following:
4 2 (1) A resident of this state.
4 3 (2) Any of the following as defined in section 9H.1:
4 4 (a) An authorized farm corporation.
4 5 (b) An authorized limited liability company.
4 6 (c) An authorized trust.
4 7 (d) A family farm corporation.
4 8 (e) A family farm limited liability company.
4 9 (f) A family trust.
4 10 (g) A revocable trust.
4 11 (h) A testamentary trust.
4 12 (3) A small business as defined in section 15.102.
4 13 (4) An electric cooperative association organized pursuant
4 14 to chapter 499 that sells electricity to end users located in
4 15 this state.
4 16 (5) An electric cooperative association that has one or
4 17 more members organized pursuant to chapter 499.
4 18 (6) A cooperative corporation organized pursuant to
4 19 chapter 497 or a limited liability corporation organized
4 20 pursuant to chapter 490A whose shares and membership are held
4 21 by an entity that is not prohibited from owning agricultural
4 22 land under chapter 9H.
4 23 (7) A school district located in this state.
4 24 c. Has at least one owner that meets the requirements of
4 25 paragraph "b" for each five megawatts of nameplate generating
4 26 capacity or the energy production capacity equivalent for
4 27 hydrogen fuel or heat for a commercial purpose of the
4 28 otherwise eligible renewable energy facility.
4 29 d. Was initially placed into service on or after July 1,
4 30 2005, and before January 1, 2011.
4 31 7. "Energy production capacity equivalent" means the
4 32 amount of energy in a standard cubic foot of hydrogen gas or
4 33 the number of British thermal units that are equal to the
4 34 energy in a kilowatt=hour of electricity. For the purposes of
4 35 this chapter, one kilowatt=hour shall be deemed equivalent to
5 1 three thousand three hundred thirty=three British thermal
5 2 units of heat for commercial purposes or ten and forty=five
5 3 one hundredths of standard cubic feet of hydrogen gas.
5 4 8. "Heat for a commercial purpose" means the heat in
5 5 British thermal unit equivalents from methane or other biogas
5 6 produced in this state sold to a purchaser of renewable energy
5 7 for use for a commercial purpose.
5 8 9. "Hydrogen fuel" means hydrogen produced in this state
5 9 from a renewable source that is used in a fuel cell or
5 10 hydrogen=powered internal combustion engine.
5 11 10. "Methane gas recovery facility" means a facility in
5 12 this state which is used in connection with a sanitary
5 13 landfill or which uses wastes that would otherwise be
5 14 deposited in a sanitary landfill, that collects methane gas or
5 15 other gases and converts the gas into energy to generate
5 16 electricity, hydrogen fuel, or heat for a commercial purpose.
5 17 11. "Producer of renewable energy" means a person who owns
5 18 an eligible renewable energy facility.
5 19 12. "Purchaser of renewable energy" means a person who
5 20 buys electric energy, hydrogen fuel, or heat for a commercial
5 21 purpose from an eligible renewable energy facility.
5 22 13. "Solar energy conversion facility" means a solar
5 23 energy facility in this state that collects and converts
5 24 incident solar radiation into energy to generate electricity.
5 25 14. "Wind energy conversion facility" means a wind energy
5 26 conversion system in this state that collects and converts
5 27 wind into energy to generate electricity.
5 28 Sec. 9. NEW SECTION. 476C.2 TAX CREDIT AMOUNT ==
5 29 LIMITATIONS.
5 30 1. A purchaser of renewable energy may receive renewable
5 31 energy tax credits under this chapter in an amount equal to
5 32 one and one=half cents per kilowatt=hour of electricity, or
5 33 four dollars and fifty cents per million British thermal units
5 34 of heat for a commercial purpose, or one dollar and forty=four
5 35 cents per one thousand standard cubic feet of hydrogen fuel
6 1 generated by and purchased from an eligible renewable energy
6 2 facility.
6 3 2. The renewable energy purchase tax credit shall not be
6 4 allowed for any kilowatt=hour of electricity, British thermal
6 5 unit of heat for a commercial purpose, or standard cubic foot
6 6 of hydrogen fuel that is purchased from an eligible renewable
6 7 energy facility by a related person. For purposes of this
6 8 subsection, persons shall be treated as related to each other
6 9 if either person owns an eighty percent or more equity
6 10 interest in the other person.
6 11 Sec. 10. NEW SECTION. 476C.3 DETERMINATION OF
6 12 ELIGIBILITY.
6 13 1. A producer or purchaser of renewable energy may apply
6 14 to the board for a written determination regarding whether a
6 15 facility is an eligible renewable energy facility by
6 16 submitting to the board a written application containing all
6 17 of the following:
6 18 a. Information regarding the ownership of the facility
6 19 including the percentage of equity interest held by each
6 20 owner.
6 21 b. The nameplate generating capacity of the facility or
6 22 energy production capacity equivalent.
6 23 c. Information regarding the facility's initial placement
6 24 in service.
6 25 d. Information regarding the type of facility and what
6 26 type of renewable energy the facility will produce.
6 27 e. A copy of the power purchase agreement or other
6 28 agreement to purchase electricity, hydrogen fuel, or heat for
6 29 a commercial purpose.
6 30 f. Any other information the board may require.
6 31 2. The board shall review the application and supporting
6 32 information and shall make a preliminary determination
6 33 regarding whether the facility is an eligible renewable energy
6 34 facility. The board shall notify the applicant of the
6 35 approval or denial of the application within fifteen working
7 1 days of receipt of the application and information required.
7 2 If the board fails to notify the applicant of the approval or
7 3 denial within fifteen working days, the application shall be
7 4 deemed denied. An applicant who receives a determination
7 5 denying an application may file an appeal with the board
7 6 within fifteen working days from the date of the denial
7 7 pursuant to the provisions of chapter 17A. In the absence of
7 8 a timely appeal, the preliminary determination shall be final.
7 9 3. A facility that is not operational within eighteen
7 10 months after issuance of an approval for the facility by the
7 11 board shall cease to be an eligible renewable energy facility.
7 12 A facility that is granted and thereafter loses approval may
7 13 reapply to the board for a new determination.
7 14 4. The maximum amount of nameplate generating capacity of
7 15 all wind energy conversion facilities the board may find
7 16 eligible under this chapter shall not exceed ninety megawatts
7 17 of nameplate generating capacity. The maximum amount of
7 18 energy production capacity equivalent of all other facilities
7 19 the board may find eligible under this chapter shall not
7 20 exceed a combined output of ten megawatts of nameplate
7 21 generating capacity.
7 22 Sec. 11. NEW SECTION. 476C.4 TAX CREDIT CERTIFICATE
7 23 PROCEDURE.
7 24 1. A purchaser of renewable energy may apply to the
7 25 department for the renewable energy purchase tax credit by
7 26 submitting to the department all of the following:
7 27 a. A completed application in a form prescribed by the
7 28 department.
7 29 b. A copy of the determination granting approval of the
7 30 facility as an eligible renewable energy facility by the
7 31 board.
7 32 c. A copy of a signed power purchase agreement or other
7 33 agreement to purchase electricity, hydrogen fuel, or heat for
7 34 a commercial purpose from an eligible renewable energy
7 35 facility.
8 1 d. Sufficient documentation that the energy has been
8 2 generated by the eligible renewable energy facility and sold
8 3 to the purchaser who is applying for the renewable energy tax
8 4 credit.
8 5 e. Any other information the department deems necessary.
8 6 2. The department shall determine the amount of the tax
8 7 credit for which the applicant is eligible and shall issue the
8 8 tax credit certificate for that amount or notify the applicant
8 9 in writing of its refusal to do so within fifteen working days
8 10 of receipt of the information required by this section. If
8 11 the department fails to notify the applicant of an approval or
8 12 denial within fifteen working days, the application shall be
8 13 deemed denied. An applicant whose application is denied may
8 14 file an appeal with the department within fifteen working days
8 15 from the date of the denial pursuant to the provisions of
8 16 chapter 17A.
8 17 3. Each tax credit certificate shall contain the
8 18 purchaser's name, address, and tax identification number, the
8 19 amount of tax credits, the first taxable year the certificate
8 20 may be used, and the expiration date of the tax credit
8 21 certificate which shall be seven years from its date of
8 22 issuance, and any other information required by the
8 23 department. Once issued by the department, the tax credit
8 24 certificate shall not be terminated or rescinded.
8 25 4. If the tax credit application is filed by a
8 26 partnership, limited liability company, S corporation, estate,
8 27 trust, or other reporting entity all of the income of which is
8 28 taxed directly to its equity holders or beneficiaries, the tax
8 29 credit certificate may, at the election of the purchaser, be
8 30 issued directly to equity holders or beneficiaries of the
8 31 purchaser in proportion to their pro rata share of the income
8 32 of such entity. If the purchaser elects to have the tax
8 33 credit certificate issued directly to its equity holders or
8 34 beneficiaries, the purchaser must, in the application made
8 35 under this section, identify its equity holders or
9 1 beneficiaries, and the percentage of such entity's income that
9 2 is allocable to each equity holder or beneficiary.
9 3 5. The department shall not issue a tax credit certificate
9 4 if the facility approved by the board as an eligible renewable
9 5 energy facility is not operational within eighteen months
9 6 after the approval is issued.
9 7 Sec. 12. NEW SECTION. 476C.5 CERTIFICATE ISSUANCE
9 8 PERIOD.
9 9 A purchaser of renewable energy may receive renewable
9 10 energy tax credit certificates for a ten=year period for each
9 11 eligible renewable energy facility under this chapter. The
9 12 ten=year period for issuance of the tax credit certificates to
9 13 a purchaser begins with the date the purchaser of renewable
9 14 energy first purchases electricity, hydrogen fuel, or heat for
9 15 commercial purposes from the eligible renewable energy
9 16 facility for which the purchaser receives a tax credit under
9 17 this chapter. Renewable energy tax credit certificates shall
9 18 not be issued for renewable energy purchased after December
9 19 31, 2020.
9 20 Sec. 13. NEW SECTION. 476C.6 TRANSFERABILITY AND USE OF
9 21 TAX CREDIT CERTIFICATES == REGISTRATION.
9 22 1. Renewable energy purchase tax credit certificates
9 23 issued under this chapter may be transferred to any person. A
9 24 tax credit certificate shall only be transferred once.
9 25 However, for purposes of this restriction, a transfer of one
9 26 or more certificates by a purchaser of renewable energy to the
9 27 producer of renewable energy from which the purchaser
9 28 purchased the renewable energy to receive the tax credit shall
9 29 not be deemed a transfer. Within thirty days of transfer, the
9 30 transferee must submit the transferred tax credit certificate
9 31 to the department along with a statement containing the
9 32 transferee's name, tax identification number, and address, and
9 33 the denomination that each new certificate is to carry and any
9 34 other information required by the department. Within thirty
9 35 days of receiving the transferred tax credit certificate and
10 1 the transferee's statement, the department shall issue one or
10 2 more replacement tax credit certificates to the transferee.
10 3 Each replacement tax credit certificate must contain the
10 4 information required under section 476C.4, subsection 3, and
10 5 must have the same effective taxable year and the same
10 6 expiration date that appeared in the transferred tax credit
10 7 certificate. Tax credit certificate amounts of less than the
10 8 minimum amount established by rule shall not be transferable.
10 9 A tax credit shall not be claimed by a transferee under this
10 10 chapter until a replacement tax credit certificate identifying
10 11 the transferee as the proper holder has been issued.
10 12 The transferee may use the amount of the tax credit
10 13 transferred against taxes imposed under chapter 422, divisions
10 14 II, III, and V, chapter 423, chapter 432, and chapter 437A for
10 15 any tax year the original transferor could have claimed the
10 16 tax credit. Any consideration received for the transfer of
10 17 the tax credit shall not be included as income under chapter
10 18 422, divisions II, III, and V. Any consideration paid for the
10 19 transfer of the tax credit shall not be deducted from income
10 20 under chapter 422, divisions II, III, and V.
10 21 2. To claim a renewable energy purchase tax credit under
10 22 this chapter, a taxpayer must attach one or more tax credit
10 23 certificates to the taxpayer's tax return, or if used against
10 24 taxes imposed under chapter 423, the taxpayer shall comply
10 25 with section 423.4, subsection 4. A tax credit certificate
10 26 shall not be used or attached to a return filed for a taxable
10 27 year beginning prior to July 1, 2006. The tax credit
10 28 certificate or certificates attached to the taxpayer's tax
10 29 return shall be issued in the taxpayer's name, expire on or
10 30 after the last day of the taxable year for which the taxpayer
10 31 is claiming the tax credit, and show a tax credit amount equal
10 32 to or greater than the tax credit claimed on the taxpayer's
10 33 tax return. Any tax credit in excess of the taxpayer's tax
10 34 liability for the taxable year may be credited to the
10 35 taxpayer's tax liability for future years; however, the
11 1 certificate shall not be used to reduce tax liability for a
11 2 tax period ending after the expiration date of the
11 3 certificate.
11 4 3. The department shall develop a system for the
11 5 registration of the renewable energy tax credit certificates
11 6 issued or transferred under this chapter and a system that
11 7 permits verification that any tax credit claimed on a tax
11 8 return is valid and that transfers of the tax credit
11 9 certificates are made in accordance with the requirements of
11 10 this chapter. The tax credit certificates issued under this
11 11 chapter shall not be classified as a security pursuant to
11 12 chapter 502.
11 13 Sec. 14. NEW SECTION. 476C.7 RULES.
11 14 The department and the board may adopt rules pursuant to
11 15 chapter 17A for the administration and enforcement of this
11 16 chapter.
11 17 Sec. 15. Chapter 476B, Code 2005, is repealed.
11 18 Sec. 16. EFFECTIVE DATE. This Act, being deemed of
11 19 immediate importance, takes effect upon enactment.
11 20 EXPLANATION
11 21 This bill establishes a renewable energy purchase tax
11 22 credit program. The utilities board of the department of
11 23 commerce and the department of revenue shall administer the
11 24 program. Tax credit certificates for credits against personal
11 25 and corporate income taxes, franchise taxes, insurance company
11 26 taxes, sales tax, and replacement tax for natural gas and
11 27 electricity are provided to purchasers of renewable energy
11 28 from eligible renewable energy facilities.
11 29 An eligible renewable energy facility includes a wind
11 30 energy conversion facility, a biogas recovery facility, a
11 31 biomass conversion facility, a methane gas recovery facility,
11 32 and a solar energy conversion facility that is located in this
11 33 state and at least 51 percent owned by any of the following: a
11 34 resident of this state; certain corporate or partnership
11 35 farming entities; a small business; a school district; certain
12 1 electric cooperative associations; or a cooperative
12 2 corporation or a limited liability corporation organized whose
12 3 shares and membership are held by an entity that is not
12 4 prohibited from owning agricultural land. An eligible
12 5 renewable energy facility must also have at least one owner
12 6 for each five megawatts of nameplate generating capacity or
12 7 the energy production equivalent for hydrogen fuel or heat for
12 8 a commercial purpose, and be placed into service after July 1,
12 9 2005, but before January 1, 2011.
12 10 A wind energy conversion facility is a facility that
12 11 collects and converts wind into energy to generate
12 12 electricity. A biogas recovery facility is an anaerobic
12 13 digester system located in this state. A biomass conversion
12 14 facility is a facility that converts plant=derived organic
12 15 matter into energy. A methane gas recovery facility is a
12 16 facility which uses waste that would otherwise be deposited in
12 17 a sanitary landfill that collects and converts methane gas
12 18 into energy. A solar energy conversion facility is a facility
12 19 that collects and converts solar radiation into energy.
12 20 A purchaser of renewable energy may receive tax credits for
12 21 the number of kilowatt=hours of electricity at the rate of one
12 22 and one=half cents per kilowatt=hour, or $4.50 per million
12 23 British thermal units of heat for a commercial purpose, or
12 24 $1.44 per 1,000 standard cubic feet of hydrogen fuel purchased
12 25 from an eligible renewable energy facility that is not owned
12 26 by a person who also has an equity interest in the purchaser.
12 27 Applications for a determination of whether a facility is
12 28 an eligible renewable energy facility must be submitted to the
12 29 utilities board along with information regarding the capacity
12 30 of the facility, the facility's initial placement into
12 31 service, the type of facility, the type of renewable energy
12 32 the facility will produce, and a copy of an agreement to
12 33 purchase energy from an eligible renewable energy facility.
12 34 The board must give notice of approval or denial within 15
12 35 working days. The capacity of all wind energy conversion
13 1 facilities the board may find eligible shall not exceed 90
13 2 megawatts of nameplate generating capacity, and the capacity
13 3 of all other energy production facilities the board may find
13 4 eligible shall not exceed 10 megawatts of nameplate generating
13 5 capacity.
13 6 A purchaser of renewable energy may apply to the department
13 7 for the renewable energy purchase tax credit by submitting to
13 8 the department a completed application, a copy of the approval
13 9 from the board of the facility's eligibility, a copy of an
13 10 agreement to purchase energy, and documentation that the
13 11 energy has been generated and sold by the purchaser. The
13 12 department must issue the tax credit certificates or give
13 13 notice of refusal within 15 working days. The department
13 14 shall not issue a tax credit certificate if the facility
13 15 approved by the board is not operational within 18 months
13 16 after the approval is issued.
13 17 A purchaser of renewable energy may receive tax credit
13 18 certificates for 10 years after the date of purchase but tax
13 19 credit certificates shall not be issued for energy purchased
13 20 after December 31, 2020. The tax credit certificates may be
13 21 transferred to the producer of the renewable energy or may be
13 22 transferred no more than once to any other person. The
13 23 department shall develop a system of registration of renewable
13 24 energy purchase tax credit certificates issued. The
13 25 department and board may adopt rules to administer and enforce
13 26 new Code chapter 476C.
13 27 The bill is effective upon enactment. The bill repeals
13 28 Code chapter 476B relating to a wind energy production tax
13 29 credit.
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