By Danburg H.B. No. 2845 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the creation of an initiative to promote the 1-3 commercialization of fuel cell technologies, including tax 1-4 exemptions and reductions for certain corporations. 1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-6 SECTION 1. DEFINITION. In this Act, "energy office" means 1-7 the State Energy Conservation Office. 1-8 SECTION 2. FUEL CELL COMMERCIALIZATION INITIATIVE. (a) The 1-9 energy office shall develop a statewide plan for the coordinated 1-10 acceleration of the commercialization of fuel cell generation in 1-11 this state. The plan must explore and draw conclusions about the 1-12 availability and efficacy of alternative mechanisms that might be 1-13 created in cooperation with the private sector, utilities, and 1-14 other agencies to accelerate the commercial availability and 1-15 economic viability of fuel cells for use in this state. The plan 1-16 must consider, at a minimum, the use of: 1-17 (1) funds available to the energy office or additional 1-18 funding from other state, federal, or private sources for programs 1-19 of research and development, particularly incentives for commercial 1-20 installation of cells by residential, commercial, or industrial 1-21 utility customers; 1-22 (2) utility-administered incentive funds, consistent 1-23 with programs established under Chapter 39, Utilities Code; 1-24 (3) market mechanisms that might be created to assure 2-1 that clean emerging technologies may be compensated for their 2-2 contribution to the reduction of harmful emissions; and 2-3 (4) tax or other economic incentives. 2-4 (b) In developing the plan and proposed rules, guidelines, 2-5 and operating procedures, the energy office shall seek the 2-6 assistance and support of, as appropriate, the Texas Natural 2-7 Resource Conservation Commission, the Public Utility Commission of 2-8 Texas, and other state or local agencies. The plan must consider 2-9 the impact of the use of fuel cell technologies in areas of the 2-10 state that the energy office determines: 2-11 (1) are designated as nonattainment areas under 2-12 Section 107(d) of the federal Clean Air Act (42 U.S.C. Section 2-13 7407); or 2-14 (2) have a high probability of being so designated in 2-15 the near future. 2-16 (c) Not later than September 15, 2002, the energy office 2-17 shall issue to the House Energy Resources Committee and the Senate 2-18 Business and Commerce Committee a report of its findings and 2-19 recommendations for development of the fuel cell commercialization 2-20 initiative, including: 2-21 (1) the state of the industry or of specific 2-22 components of the industry; 2-23 (2) alternative programs to accelerate the commercial 2-24 availability of fuel cells, including similar efforts by other 2-25 states; 2-26 (3) programs considered to encourage the industry to 2-27 locate manufacturing, system integration, or related component 3-1 parts or services in this state; and 3-2 (4) program recommendations, including how proposed 3-3 programs would work, the impact anticipated on industry 3-4 development, program costs and sources of funding, and proposed 3-5 measures of performance. 3-6 (d) The energy office shall appoint a fuel cell initiative 3-7 advisory committee to advise the energy office regarding 3-8 development of the plan and to assist the energy office in meeting 3-9 the goals of this Act. The energy office shall appoint to the 3-10 advisory committee representatives of: 3-11 (1) the fuel cell industry; 3-12 (2) energy services providers; 3-13 (3) electric transmission and distribution utilities; 3-14 (4) retail providers of electric energy; and 3-15 (5) small electric energy consumers. 3-16 SECTION 3. Subchapter B, Chapter 171, Tax Code, is amended by 3-17 adding Section 171.090 to read as follows: 3-18 Sec. 171.090. EXEMPTION--CORPORATION WITH BUSINESS INTEREST 3-19 IN FUEL CELL DEVICES. (a) In this section, "fuel cell device" 3-20 means an electrochemical cell in which the energy of a reaction 3-21 between a fuel, such as liquid hydrogen, and an oxidant, such as 3-22 liquid oxygen, is converted directly and continuously into 3-23 electrical energy. The term includes a mechanical or chemical 3-24 device that has the ability to store fuel cell-generated energy for 3-25 use in heating or cooling or in the production of power. 3-26 (b) A corporation engaged solely in the business of 3-27 manufacturing, selling, or installing fuel cell devices is exempted 4-1 from the franchise tax. 4-2 SECTION 4. Subchapter C, Chapter 171, Tax Code, is amended by 4-3 adding Section 171.1071 to read as follows: 4-4 Sec. 171.1071. DEDUCTION OF COST OF FUEL CELL DEVICE FROM 4-5 TAXABLE CAPITAL OR TAXABLE EARNED SURPLUS APPORTIONED TO THIS 4-6 STATE. (a) In this section, "fuel cell device" has the meaning 4-7 assigned to it in Section 171.090 of this code. 4-8 (b) A corporation may deduct from its apportioned taxable 4-9 capital the amortized cost of a fuel cell device or from its 4-10 apportioned taxable earned surplus 10 percent of the amortized cost 4-11 of a fuel cell device if: 4-12 (1) the device is acquired by the corporation for 4-13 heating or cooling or for the production of power; 4-14 (2) the device is used in this state by the 4-15 corporation; and 4-16 (3) the cost of the device is amortized in accordance 4-17 with Subsection (c) of this section. 4-18 (c) The amortization of the cost of a fuel cell device must: 4-19 (1) be for a period of at least 60 months; 4-20 (2) provide for equal monthly amounts; 4-21 (3) begin on the month in which the device is placed 4-22 in service in this state; and 4-23 (4) cover only a period in which the device is in use 4-24 in this state. 4-25 (d) A corporation that makes a deduction under this section 4-26 shall file with the comptroller an amortization schedule showing 4-27 the period in which a deduction is to be made. On the request of 5-1 the comptroller, the corporation shall file with the comptroller 5-2 proof of the cost of the fuel cell device or proof of the device's 5-3 operation in this state. 5-4 (e) A corporation may elect to make the deduction authorized 5-5 by this section either from apportioned taxable capital or 5-6 apportioned taxable earned surplus for each separate regular annual 5-7 period. An election for an initial period applies to the second 5-8 tax period and to the first regular annual period. 5-9 SECTION 5. EFFECTIVE DATE. This Act takes effect September 5-10 1, 2001.