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.
 1-6           SECTION 1.  DEFINITION. In this Act, "energy office" means
 1-7     the State Energy Conservation Office.
 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:
3-19     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
 4-6     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.