SB1323 - 472R - House Bill Summary

House of Representatives

SB 1323

postsecondary education reforms

Sponsors: Senators Bee, Aguirre, Bennett, et al.

W/D	Committee on Universities, Community Colleges and Technology
W/D	Committee on Appropriations (B)
DPA S/E	Committee on Appropriations (P)
X	Caucus and COW
	As Engrossed and As Passed the House

SB 1363 appropriates $15.1 million in FY 2006 – 2007 from the state General Fund to the Arizona Commission for various pilot programs.

Summary of the proposed strike-everything amendment to SB 1323:

This proposed strike-everything amendment to SB 1323 creates new income tax credits for a taxpayer who generates electricity produced by combined heat and power.

History

Combined Heat and Power (CHP), also known as cogeneration, is an efficient, clean, and reliable approach to generating power and thermal energy from a single fuel source. By installing a CHP system designed to meet the thermal and electrical base loads of a facility, CHP can increase operational efficiency and decrease energy costs, while reducing emissions of greenhouse gases that contribute to the risks of climate change.

CHP is not a specific technology but an application of technologies to meet an energy user's needs. CHP systems achieve typical effective electric efficiencies of 50% to 70% — a dramatic improvement over the average efficiency of separate heat and power. Since CHP is highly efficient, it reduces traditional air pollutants and carbon dioxide, the leading greenhouse gas associated with climate change. The CHP system can produce the same electrical and thermal output at 75% fuel conversion efficiency as compared to 49% for separate heat and power. This is a 50% gain in overall efficiency, resulting in a 35% fuel savings.

Provisions

· Establishes a new individual and corporate income tax credit for 2008 and 2009 for a taxpayer who produces and sells electricity from a qualified energy resource. The credit is equal to one and a half cents multiplied by the total kilowatt hours of electricity or one and one tenths cents multiplied by the total horsepower hours of power.

· Defines qualified energy sources as combined heat and power (CHP).

· Limits the corporate and individual credit to $2 M annually and adds provisions for a pre-approval process to be administered by the Department of Revenue (DOR).

· Allows any unallocated credit capacity to be used in the following year.

· Stipulates that a credit cannot exceed $500,000 for any single installation.

· If the tax credit exceeds taxes due or if no taxes are due, the claimed credit amount may be carried forward not more than five consecutive taxable years as a credit against subsequent years’ income tax liability.

· Co-owners of a business including partnerships, corporate partners and shareholders can only claim their proportionate tax credit based on their ownership interest.

· Specifies that the total tax credit allowed all owners may not exceed the amount allowed a sole owner.

· For CHP equipment installed and operated for the sole benefit of the taxpayer, the taxpayer is required to provide relevant documentation showing compliance with all applicable laws and regulations.

· For CHP equipment that is built for the purpose of selling excess electricity to a utility, the taxpayer is required to provide DOR with a copy of the contract, for a term of 10 years or more, for selling the power and that the equipment meets current industry standards, along with compliance of the utility’s standards, rules and regulations.

· Adds the tax credit for electricity production from qualified energy resources to the income tax review schedule for 2009.

· Contains a purpose statement.

· Makes technical and conforming changes.

Amendments

Appropriations (P):

· The strike-everything amendment was adopted and further amended to clarify that the Joint Income Tax Credit Review Committee will review the credits in 2009 instead of 2011.

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Forty-seventh Legislature