HB 92 GEOTHERMAL ELECTRICITY GENERATION TAX CREDITS

Rep Patricia Roybal Caballero

Actions: HPREF [2] HENRC/HTRC-HENRC [3] DP-HTRC

Scheduled: Not Scheduled

 House Bill 92 (HB 92) creates Geothermal Electricity Generation tax credits and deductions for facility construction costs. HB 92 distributes loss of local government tax revenue to deductions to local governments. 

 House Bill 92 (HB 92) creates a Geothermal Electricity Generation income tax credit (IT credit) and companion corporate tax credit (CT credit), Gross Receipts Tax (GRT) and Compensating Tax (CT) deductions (deductions).

Qualifying geothermal electricity generation facility (facility) generates electricity from geothermal resources. New facilities begin construction after January 1, 2025. Existing facilities (prior to 2025) must increase the amount of electricity generated by a minimum of 100%. Geothermal resources mean the natural heat of the earth over 250 degrees. Oil, hydrocarbon gas, and heating or cooling methods such as an on-site geoexchange heat pump are excluded.

The IT credit and CT credit are in the amount of $0.015 (one and one-half cents) per kilowatt-hour of electricity generated in the state against tax liability.  Any amount remaining is not refundable rather, it may be carried forward up to three consecutive years provided the carryforwards do not exceed the annual cap of $5 million each IT credit and CT credit. Once the cap is met, applications will not be approved, but may be certified the following calendar year. 

The value of property or services connected to the construction, equipping, installation of a geothermal electricity generation facility can be deducted from GRT and CT. Selling or leasing property or selling services associated with construction plant costs to another with interest in a facility also qualifies for a deduction.

Energy, Minerals, and Natural Resources Department (EMNRD) is charged with certifying eligibility for the credit and compiling an annual report in concert with Taxation and Revenue Department (TRD) on the deductions claimed and other information necessary to evaluate the credit. TRD must compile an annual report with data necessary to evaluate the credit and the cost of deductions. An analysis will be presented to relevant interim committees.

HB 92 creates a distribution to local governments to offset the loss of tax revenue because of the GRT and CT deductions. The amount is calculated based on a per month basis total of deductions and the local tax rate on the revenue loss.

HB 92 applies to tax year beginning in 2025 and provides a delayed repeal date of January 1, 2032. GRT and CT deduction applies to receipts prior to July 1, 2032.

The effective date of HB 92 is January 1, 2025.
 

 HB 92 is a duplicate of SB 226779.