CHAPTER 294
HB 1758 – FINAL VERSION
07Mar2006… 1009h
05/04/06 1892s
05/04/06 2196s
24May2006… 2267cofc
2006 SESSION
03/09
HOUSE BILL 1758
AN ACT classifying bio-oil, bio synthetic gas, and biodiesel as renewable energy sources and relative to taxation of renewable generation facilities.
SPONSORS: Rep. Cataldo, Straf 3; Rep. Essex, Hills 1; Rep. Ober, Hills 27; Sen. Flanders, Dist 7; Sen. Estabrook, Dist 21; Sen. Letourneau, Dist 19
COMMITTEE: Science, Technology and Energy
This bill specifies that bio-oil, bio synthetic gas, and biodiesel are renewable energy sources for certain purposes.
This bill also authorizes the governing body of a municipality to enter into a payment in lieu of taxes agreement with the owner or lessee of a renewable generation facility.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
07Mar2006… 1009h
05/04/06 1892s
05/04/06 2196s
24May2006… 2267cofc
06-3024
03/09
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Six
AN ACT classifying bio-oil, bio synthetic gas, and biodiesel as renewable energy sources and relative to taxation of renewable generation facilities.
Be it Enacted by the Senate and House of Representatives in General Court convened:
294:1 Limited Electrical Energy Producers; Definitions; Bio-Oil, Bio Synthetic Gas, and Biodiesel Added. Amend RSA 362-A:1-a, I to read as follows:
I. “Bio-oil” means a liquid renewable fuel derived from vegetable oils, animal fats, wood, straw, forestry byproducts, or agricultural byproducts using noncombustion thermal, chemical, or biological processes, including, but not limited to, distillation, gasification, hydrolysis, or pyrolysis, but not including anaerobic digestion, composting, or incineration.
I-a. “Bio synthetic gas” means a gaseous renewable fuel derived from vegetable oils, animal fats, wood, straw, forestry byproducts, or agricultural byproducts using noncombustion thermal, chemical, or biological processes, including, but not limited to, distillation, gasification, hydrolysis, or pyrolysis, but not including anaerobic digestion, composting, or incineration.
I-b. “Biodiesel” means a renewable diesel fuel substitute that is composed of mono-alkyl esters of long chain fatty acids, is derived from vegetable oils or animal fats, and meets the requirements of the American Society for Testing and Materials (ASTM) specification D6751.
I-c. “Cogeneration facility” means a facility which produces electric energy and other forms of useful energy, such as steam or heat, which are used for industrial, commercial, heating, or cooling purposes.
294:2 Limited Electrical Energy Producers; Definitions; Small Power Production Facility; Bio-Oil, Bio Synthetic Gas, and Biodiesel Added. Amend RSA 362-A:1-a, X to read as follows:
X. “Small power production facility” means a facility which produces electric energy solely by the use, as a primary energy source, of biomass, waste, renewable resources, bio-oil, bio synthetic gas, biodiesel, or any combination thereof and which has a power production capacity which, together with any other facility located at the same site, as determined by the commission, is not greater than 30 megawatts.
294:3 Renewable Energy; Bio-Oil, Bio Synthetic Gas, and Biodiesel Added. Amend RSA 374-F:3, V(f)((3) to read as follows:
(3) For purposes of subparagraph (f), “renewable energy” means geothermal energy, tidal or wave energy, wind energy, solar thermal energy, photovoltaic energy, landfill gas energy, hydro energy, biomass energy, energy generated from bio-oil, bio synthetic gas, and biodiesel as defined in RSA 362-A:1-a, I, I-a, and I-b, or combusted municipal waste energy where mercury emissions are reduced to an emission rate of 0.028 milligrams per dry standard cubic meter or less corrected to 7 percent oxygen by volume on a dry basis, or at least 85 percent control efficiency.
294:4 Land Use Planning; Utility Structures; Reference Changed. Amend RSA 674:30, IV to read as follows:
IV. Except for small power production facilities, as defined in RSA 362-A:1-a, X, and cogeneration facilities, as defined in RSA 362-A:1-a, [I] I-c, owned and operated by a New Hampshire franchised utility, small power production facilities and cogeneration facilities shall not be considered to be public utilities under this section and may not petition the public utilities commission for an exemption from the operation of any regulation under this subdivision.
294:5 Purpose. High energy demand and tight supply are pushing energy prices, including the prices of oil, natural gas, coal, and electricity, to new records and increasing price volatility. The 2002 New Hampshire Energy Plan recognizes “energy’s central role in fulfilling our priorities of economic growth, environmental quality, and a diverse energy supply” and recommends consideration of energy policies and programs that include encouraging the development of cleaner, affordable alternative energy sources; utilizing our plentiful renewable natural resources; and reducing our dependence on foreign oil. (New Hampshire Energy Plan at 1-1.) Such policies are supported by HJR 2 (1981), a resolution to establish a state policy on energy, and by the state’s Energy Policy set forth in RSA 378:37 “to meet the energy needs of the citizens and businesses of the state at the lowest reasonable cost while providing for the reliability and diversity of energy sources; the protection of the safety and health of the citizens, the physical environment of the state, and the future supplies of nonrenewable resources; and consideration of the financial stability of the state's utilities.” In order to promote the state’s energy policies as well as the public interest, the general court believes that impediments to preserving, expanding, and improving existing renewable generation facilities in the state, and to developing new renewable generation facilities in the state, should be reduced. Furthermore, the general court believes that practices, procedures, and methodologies related to property assessment for the purposes of taxation can be such an impediment. Therefore, the general court finds that it is desirable to reauthorize each municipality to enter into voluntary agreements with the owners of renewable generation facilities located in the municipality to make payments in lieu of taxes. Such tax policy is appropriate because renewable generation facilities differ from other utility property and traditional generation facilities, such as fossil fuel and nuclear plants. Specifically, many renewable generation facilities are very small and some renewable technologies like wind and hydroelectric facilities are weather-dependent and not able to operate at full output throughout the year. Furthermore, unlike other manufacturing operations, renewable generation facilities are considered utility property and are required to include all generation production equipment as taxable property. Unlike regulated utilities, renewable generation facilities are unable to recover their tax-related expenses through regulated rates.
294:6 New Subdivision; Exemption for Renewable Generation Facilities. Amend RSA 72 by inserting after section 72 the following new subdivision:
Payment in Lieu of Taxes for Renewable Generation Facilities
72:73 Definition of Renewable Generation Facility. In this subdivision, “renewable generation facility” means a facility which produces electric energy for resale solely by the use, as a primary energy source, of renewable energy as defined in RSA 374-F:3, V(f)(3), including the land, all rights, easements, and other interests thereto, and all dams, buildings, structures, and other improvements situated thereon which are necessary or incidental to the production of power at the facility.
72:74 Payment in Lieu of Taxes.
I. The owner of a renewable generation facility and the governing body of the municipality in which the facility is located may, after a duly noticed public hearing, enter into a voluntary agreement to make a payment in lieu of taxes. A lessee of a renewable generation facility which is responsible for the payment of taxes on the facility may also enter into a voluntary agreement with the municipality in which the facility is located to make a payment in lieu of taxes, provided the lessee shall send by certified mail to the lessor written notice which shall state that the property of the lessor may be subject to RSA 80 should the lessee fail to make the payments required by the agreement. A copy of such notice shall be provided to the municipality in which the facility is located.
II. A renewable generation facility subject to a voluntary agreement to make a payment in lieu of taxes under this section shall be subject to the laws governing the utility property tax under RSA 83-F. Payments made pursuant to such agreement shall satisfy any tax liability relative to the renewable generation facility that otherwise exists under RSA 72. In the absence of a payment in lieu of taxes agreement, the renewable generation facility shall be subject to taxation under RSA 72.
III. If a municipality that contains more than one school district receives a payment in lieu of taxes under this section, the proceeds shall be prorated to the districts in the same manner as local taxes are prorated to the districts, or in the case of a cooperative school district between the city or town and pre-existing school district.
IV. The collection procedures in RSA 80 shall be used to enforce a voluntary agreement to make a payment in lieu of taxes authorized by this section.
V. If a municipality enters into a voluntary payment in lieu of taxes agreement with an owner, or a lessee responsible for payment of taxes, of a renewable generation facility, the municipality, upon the request of the owner, or a lessee responsible for payment of taxes, of any other renewable generation facility located within the municipality, shall offer a comparable agreement to the owner or lessee of such facility.
VI. No voluntary agreement entered into under this section shall be valid for more than 5 years; however, any such agreement may be renewed or amended and restated for any number of consecutive periods of 5 years or less.
294:7 New Section; Limited Electrical Energy Producers; Payment in Lieu of Tax Agreements for Renewable Generation Facilities. Amend RSA 362-A by inserting after section 6 the following new section:
362-A:6-a Payment in Lieu of Tax Agreements for Renewable Generation Facilities. The owner, or a lessee responsible for payment of taxes, of a renewable generation facility and the municipality in which the facility is located may enter into a voluntary agreement to make a payment in lieu of taxes, pursuant to RSA 72:74.
294:8 Revenue Administration; Duties of Commissioner; Reference Added. Amend RSA 21-J:3, XIII to read as follows:
XIII. Equalize annually by May 1 the valuation of the property as assessed in the several towns, cities, and unincorporated places in the state including the value of property exempt pursuant to RSA 72:37, 72:37-b, 72:39-a, 72:62, 72:66, and 72:70, and property which is the subject of a payment in lieu of taxes under RSA 72:74 by adding to or deducting from the aggregate valuation of the property in towns, cities, and unincorporated places such sums as will bring such valuations to the true and market value of the property, and by making such adjustments in the value of other property from which the towns, cities, and unincorporated places receive taxes or payments in lieu of taxes as may be equitable and just, so that any public taxes that may be apportioned among them shall be equal and just. In carrying out the duty to equalize the valuation of property, the commissioner shall follow the procedures set forth in RSA 21-J:9-a.
294:9 Applicability. Nothing in sections 5-9 of this act shall affect any existing agreement entered into under the prior RSA 362-A:6 between a qualifying facility and a city, town, or village district for payment in lieu of taxes. Sections 5-9 of this act shall apply to tax years commencing on or after April 1, 2006.
294:10 Effective Date.
I. Sections 5-9 of this act shall take effect April 1, 2006.
II. The remainder of this act shall take effect 60 days after its passage.
Approved: June 15, 2006
Effective: I. Sections 5-9 shall take effect April 1, 2006
II. Remainder shall take effect August 14, 2006