THE SENATE

S.B. NO.

12

TWENTY-SEVENTH LEGISLATURE, 2013

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to renewable energy.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


PART I

     SECTION 1.  Section 235-12.5, Hawaii Revised Statutes, is amended to read as follows:

     "§235-12.5  Renewable energy technologies; income tax credit.  (a)  When the requirements of subsection [(d)] (c) are met, each individual or corporate taxpayer that files an individual or corporate net income tax return for a taxable year may claim a tax credit under this section against the Hawaii state individual or corporate net income tax.  The tax credit may be claimed for [every] eligible [renewable] energy [technology system] property that is installed and placed in service in the State by a taxpayer during the taxable year.  The tax credit may be claimed as follows:

     (1)  For [each] solar energy [system:  thirty-five per cent of the actual cost or the cap amount determined in subsection (b), whichever is less; or

     (2)  For each wind-powered energy system:  twenty per cent of the actual cost or the cap amount determined in subsection (b), whichever is less;] property that produces electricity for residential use:

         (A)  One tax credit may be taken for each dwelling at thirty per cent of the basis of the solar energy property installed and placed in service after December 31, 2012, but prior to January 1, 2014, with a cap of $12,500; or

         (B)  One tax credit may be taken for each dwelling at twenty-five per cent of the basis of the solar energy property installed and placed in service after December 31, 2013, but prior to January 1, 2015, with a cap of $12,500; or

         (C)  One tax credit may be taken for each dwelling at twenty per cent of the basis of the solar energy property installed and placed in service on or after January 1, 2015, with a cap of $12,500;

     (2)  For solar energy property that heats water for residential use:  one tax credit may be taken for each dwelling at thirty-five per cent of the basis of the solar energy property, with a cap of $2,500;

     (3)  For solar energy property that produces electricity for commercial non-utility scale:

         (A)  The tax credit may be taken as thirty per cent of the basis of the solar energy property installed and placed in service after December 31, 2012, but prior to January 1, 2014, with a cap of $500,000; or

         (B)  The tax credit may be taken as twenty-five per cent of the basis of the solar energy property installed and placed in service after December 31, 2013, but prior to January 1, 2015, with a cap of $500,000; or

         (C)  The tax credit may be taken as twenty per cent of the basis of the solar energy property installed and placed in service on or after January 1, 2015, with a cap of $500,000;

     (4)  For solar energy property that heats water for commercial non-utility scale:  the tax credit may be taken as thirty-five per cent of the basis of the energy property, with a cap of $250,000;

     (5)  For utility scale solar energy property installed and placed into service after December 31, 2012:  8 cents per kilowatt hour produced and sold during the first one hundred twenty months of the property's operation;

     (6)  For wind energy property that produces electricity for use in the primary residence of the taxpayer claiming the credit:  twenty per cent of the basis of wind energy property installed and placed in service;

     (7)  For other non-utility scale wind energy property that produces electricity:  twenty per cent of the basis of the wind energy property installed and placed into service; or

     (8)  For utility scale wind energy property installed and placed into service after December 31, 2012:  1.5 cents per kilowatt hour produced and sold during the first one hundred twenty months of the property's operation;

provided that multiple owners of [a single system] energy property shall be entitled to a single tax credit; and provided further that the tax credit shall be apportioned between the owners in proportion to their contribution to the [cost of the system.] basis of the energy property.

     In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for [every] eligible [renewable] energy [technology system] property that is installed and placed in service in the State by the entity.  The [cost] basis upon which the tax credit is computed shall be determined at the entity level.  Distribution and share of credit shall be determined pursuant to section [235-110.7(a).] 235-110.7.

     [(b)  The amount of credit allowed for each eligible renewable energy technology system shall not exceed the applicable cap amount, which is determined as follows:

     (1)  If the primary purpose of the solar energy system is to use energy from the sun to heat water for household use, then the cap amounts shall be:

         (A)  $2,250 per system for single-family residential property;

         (B)  $350 per unit per system for multi-family residential property; and

         (C)  $250,000 per system for commercial property;

     (2)  For all other solar energy systems, the cap amounts shall be:

         (A)  $5,000 per system for single-family residential property; provided that if all or a portion of the system is used to fulfill the substitute renewable energy technology requirement pursuant to section 196-6.5(a)(3), the credit shall be reduced by thirty-five per cent of the actual system cost or $2,250, whichever is less;

         (B)  $350 per unit per system for multi-family residential property; and

         (C)  $500,000 per system for commercial property; and

     (3)  For all wind-powered energy systems, the cap amounts shall be:

         (A)  $1,500 per system for single-family residential property; provided that if all or a portion of the system is used to fulfill the substitute renewable energy technology requirement pursuant to section 196-6.5(a)(3), the credit shall be reduced by twenty per cent of the actual system cost or $1,500, whichever is less;

         (B)  $200 per unit per system for multi-family residential property; and

         (C)  $500,000 per system for commercial property.

     (c)] (b)  For the purposes of this section:

     ["Actual cost"] "Basis" means costs related to the [renewable] energy [technology systems] property under subsection (a), including accessories and installation, but [not including] does not include the cost of consumer incentive premiums unrelated to the operation of the [system] energy property or offered with the sale of the [system] energy property and costs for which another credit is claimed under this chapter.  Any cost incurred and paid for the repair, construction, or reconstruction of a structure in conjunction with the installation and placing in service of solar or wind energy property shall not constitute a part of the basis for the purpose of this section.

     "Commercial non-utility scale" means energy produced for a business, which does not include residences that are leased or rented, and which is not interconnected to a utility grid at sub-transmission or transmission voltage.

     ["Household use" means any use to which heated water is commonly put in a residential setting, including commercial application of those uses.

     "Renewable energy technology system"] "Energy property" means [a] new [system] tangible property that captures and converts a renewable source of energy[, such as solar or wind energy,] into:

     (1)  A usable source of thermal or mechanical energy;

     (2)  Electricity; or

     (3)  Fuel.

     ["Solar or wind energy system" means] Energy property includes solar energy property or wind energy property, which includes any identifiable facility, equipment, apparatus, or the like that converts solar or wind energy to useful thermal or electrical energy for heating, cooling, or reducing the use of other types of energy that are dependent upon fossil fuel for their generation.

     "Residential use" means energy produced for a dwelling and shall include primary residences, rentals, and leased property so long as the property is used for a home or dwelling.

     "Utility scale" means solar or wind energy property that is:

     (1)  Designed, installed, and placed into service to produce electricity;

     (2)  Interconnected to a utility grid at sub-transmission or transmission voltage; and

     (3)  Subject to a feed-in tariff or power purchase agreement approved by the public utilities commission.

     [(d)] (c)  For taxable years beginning after December 31, 2005, the dollar amount of any utility rebate shall be deducted from the cost of the qualifying [system] energy property and its installation before applying the state tax credit.

     [(e)] (d)  The director of taxation shall prepare any forms that may be necessary to claim a tax credit under this section, including forms identifying the technology type of each tax credit claimed under this section, whether for solar or wind.  The director may also require the taxpayer to furnish reasonable information to ascertain the validity of the claim for credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

     [(f)] (e)  If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of the credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted, unless otherwise elected by the taxpayer pursuant to subsection (f), (g), or (h).  All claims for the tax credit under this section, including amended claims, shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed.  Failure to comply with this subsection shall constitute a waiver of the right to claim the credit.  An election once made is irrevocable.

     [(g)] (f)  For residential and non-utility scale solar energy [systems,] property, a taxpayer may elect to reduce the eligible credit amount by thirty per cent and if this reduced amount exceeds the amount of income tax payment due from the taxpayer, the excess of the credit amount over payments due shall be refunded to the taxpayer; provided that tax credit amounts properly claimed by a taxpayer who has no income tax liability shall be paid to the taxpayer; and provided further that no refund on account of the tax credit allowed by this section shall be made for amounts less than $1.

     The election required by this subsection shall be made in a manner prescribed by the director on the taxpayer's return for the taxable year in which the [system] solar energy property is installed and placed in service.  [A separate election may be made for each separate system that generates a credit.]  An election once made is irrevocable.

     [(h)] (g)  Notwithstanding subsection [(g),] (f), for any [renewable] energy [technology system,] property, an individual taxpayer may elect to have any excess of the credit over payments due refunded to the taxpayer, if:

     (1)  All of the taxpayer's income is exempt from taxation under section 235-7(a)(2) or (3); or

     (2)  The taxpayer's adjusted gross income is $20,000 or less (or $40,000 or less if filing a tax return as married filing jointly);

provided that tax credits properly claimed by a taxpayer who has no income tax liability shall be paid to the taxpayer; and provided further that no refund on account of the tax credit allowed by this section shall be made for amounts less than $1.

     A husband and wife who do not file a joint tax return shall only be entitled to make this election to the extent that they would have been entitled to make the election had they filed a joint tax return.

     The election required by this subsection shall be made in a manner prescribed by the director on the taxpayer's return for the taxable year in which the [system] energy property is installed and placed in service.  [A separate election may be made for each separate system that generates a credit.]  An election once made is irrevocable.

     (h)  For utility scale solar energy and wind energy property, a taxpayer may elect to have any excess of the credit over payments due refunded to the taxpayer.

     (i)  No taxpayer shall be allowed a credit under this section for the portion of the [renewable] energy [technology system] property required by section 196-6.5 that is installed and placed in service on any newly constructed single-family residential property authorized by a building permit issued on or after January 1, 2010.

     (j)  [To the extent feasible, using existing resources to] To assist the energy-efficiency policy review and evaluation, the department shall assist with data collection on the following for each taxable year:

     (1)  The number of [renewable] energy [technology systems] properties that have qualified for a tax credit during the calendar year by:

         (A)  Technology type; and

         (B)  Taxpayer type (corporate and individual); and

     (2)  The total cost of the tax credit to the State during the taxable year by:

         (A)  Technology type; and

         (B)  Taxpayer type.

     (k)  For all energy property to which subsection (a)(3) or (a)(6) apply, each taxpayer, for each solar energy property or wind energy property, shall apply for and receive tax credit certification from the department of business, economic development, and tourism prior to claiming the credit.

     To qualify for certification:

     (1)  A taxpayer under a feed-in tariff shall provide the department of business, economic development, and tourism with a dated copy of utility interconnection costs and requirements estimate from the applicable electric utility company; and

     (2)  A taxpayer under a power purchase agreement shall provide the department of business, economic development, and tourism with documentation from the public utilities commission demonstrating the commission's approval of the power purchase agreement.

     Upon receiving and reviewing the information required under paragraphs (1) and (2), the department of business, economic development, and tourism shall determine if the taxpayer qualifies for certification for the credit.  In no case shall the department of business, economic development, and tourism qualify any taxpayer for certification after December 31, 2018.

     (l)  The department of business, economic development, and tourism shall:

     (1)  Verify the number of kilowatt hours produced and sold by each taxpayer during each calendar year;

     (2)  Total all tax credits that the department of business, economic development, and tourism certifies pursuant to this section;

     (3)  Certify the total amount of the tax credit for each taxable year and the cumulative amount of the tax credit during the credit period; and

     (4)  Carry forward any certified tax credits in excess of the applicable aggregate cap amount for each calendar year.

     In January of each year, the department of business, economic development, and tourism shall determine the order that credits shall be certified by contacting taxpayers qualified under subsection (k) in the order of the date the taxpayers received qualified status.  A taxpayer that elects to claim a credit under subsection (a)(3) or (a)(6) shall provide the department of business, economic development, and tourism with reports from the electric utility company demonstrating the number of kilowatt hours produced and sold by the taxpayer during the calendar year.  A taxpayer shall not cease to be qualified under subsection (k) solely for electing not to claim a credit under subsection (a)(3) or (a)(6).

     Upon each certification, the department of business, economic development, and tourism shall issue a certificate to the taxpayer.  The taxpayer shall file the certificate with the taxpayer's tax return with the department of taxation in order to claim the tax credit.

     Notwithstanding the department of business, economic development, and tourism's certification authority under this section, the director of taxation may audit and adjust the certification to conform to the facts.

     If in any year, the annual amount of certified credits for solar energy properties reaches the applicable aggregate cap amount, the department of business, economic development, and tourism shall notify the department of taxation and carry forward all certified tax credits in excess of the applicable aggregate cap amount to the following year.  The aggregate cap amount for solar energy property shall be determined as follows:

     Calendar Year               Aggregate Cap Amount

          2013                        $6,000,000

          2014                        $9,000,000

          2015                       $12,000,000

          2016 and thereafter        $13,500,000

In no instance shall the total amount of certified credits that are claimed for solar energy property in any taxable year exceed the applicable aggregate cap amount.  Notwithstanding any other law to the contrary, this information shall be available for public inspection and dissemination under chapter 92F.

     If in any year, the annual amount of certified credits for wind energy properties reaches the applicable aggregate cap amount, the department of business, economic development, and tourism shall notify the department of taxation and carry forward all certified tax credits in excess of the applicable aggregate cap amount to the following year.  The aggregate cap amount for wind energy property shall be determined as follows:

     Calendar Year               Aggregate Cap Amount

          2013                        $2,000,000

          2014                        $4,000,000

          2015                        $6,000,000

          2016 and thereafter        $10,000,000

In no instance shall the total amount of certified credits that are claimed for wind energy property in any taxable year exceed the applicable aggregate cap amount.  Notwithstanding any other law to the contrary, this information shall be available for public inspection and dissemination under chapter 92F.

     (m)  The director of business, economic development, and tourism may adopt rules as may be necessary or appropriate to carry out the purposes of subsection (l).

     (n)  The basis of eligible energy property for the purpose of depreciation and disposition of the energy property shall be reduced by fifty per cent of the amount of credit allowable and claimed under this section.

     [(k)] (o)  This section shall apply to eligible [renewable] energy [technology systems] properties that are installed and placed in service [on or] after [July 1, 2009.] December 31, 2012, and before January 1, 2019."

PART II

     SECTION 2.  Independent power producers not currently regulated by the public utilities commission that have submitted an agreement with an electric utility company for approval by the public utilities commission by March 31, 2013, shall be allowed tax credits as authorized in the 2012 calendar year for energy properties placed into service after December 31, 2012, as part of the agreement.

PART III

     SECTION 3.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 4.  This Act, upon its approval, shall apply to taxable years beginning after December 31, 2012.

 

INTRODUCED BY:

_____________________________

 

 


 


 

Report Title:

Renewable Energy Technology; Tax Credit

 

Description:

Amends the renewable energy technologies income tax credit to improve consistency with the Internal Revenue Code, require tax credits to be certified by DBEDT, establish an aggregate tax cap, and specify that the tax credit applies to energy properties placed in service from 1/1/2013 through 12/31/2018.  Authorizes independent power producers not currently regulated by the public utilities commission that have submitted an agreement with an electric utility company for approval by the public utilities commission by 3/31/2013 to receive tax credits authorized in calendar year 2012 for energy properties placed into service after 12/31/2012, as part of the agreement.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.