1-1     By:  Danburg (Senate Sponsor - Cain)                  H.B. No. 2845
 1-2           (In the Senate - Received from the House May 7, 2001;
 1-3     May 7, 2001, read first time and referred to Committee on Finance;
 1-4     May 11, 2001, reported favorably by the following vote:  Yeas 8,
 1-5     Nays 0; May 11, 2001, sent to printer.)
 1-6                            A BILL TO BE ENTITLED
 1-7                                   AN ACT
 1-8     relating to the creation of an initiative to promote the
 1-9     commercialization of fuel cell technologies, including tax
1-10     exemptions and reductions for certain corporations.
1-12           SECTION 1.  DEFINITION. In this Act, "energy office" means
1-13     the State Energy Conservation Office.
1-15     energy office shall develop a statewide plan for the coordinated
1-16     acceleration of the commercialization of fuel cell generation in
1-17     this state.  The plan must explore and draw conclusions about the
1-18     availability and efficacy of alternative mechanisms that might be
1-19     created in cooperation with the private sector, utilities, and
1-20     other agencies to accelerate the commercial availability and
1-21     economic viability of fuel cells for use in this state.  The plan
1-22     must consider, at a minimum, the use of:
1-23                 (1)  funds available to the energy office or additional
1-24     funding from other state, federal, or private sources for programs
1-25     of research and development, particularly incentives for commercial
1-26     installation of cells by residential, commercial, or industrial
1-27     utility customers;
1-28                 (2)  utility-administered incentive funds, consistent
1-29     with programs established under Chapter 39, Utilities Code;
1-30                 (3)  market mechanisms that might be created to assure
1-31     that clean emerging technologies may be compensated for their
1-32     contribution to the reduction of harmful emissions; and
1-33                 (4)  tax or other economic incentives.
1-34           (b)  In developing the plan and proposed rules, guidelines,
1-35     and operating procedures, the energy office shall seek the
1-36     assistance and support of, as appropriate, the Texas Natural
1-37     Resource Conservation Commission, the Public Utility Commission of
1-38     Texas, and other state or local agencies. The plan must consider
1-39     the impact of the use of fuel cell technologies in areas of the
1-40     state that the energy office determines:
1-41                 (1)  are designated as nonattainment areas under
1-42     Section 107(d) of the federal Clean Air Act (42 U.S.C. Section
1-43     7407); or
1-44                 (2)  have a high probability of being so designated in
1-45     the near future.
1-46           (c)  Not later than September 15, 2002, the energy office
1-47     shall issue to the House Energy Resources Committee and the Senate
1-48     Business and Commerce Committee a report of its findings and
1-49     recommendations for development of the fuel cell commercialization
1-50     initiative, including:
1-51                 (1)  the state of the industry or of specific
1-52     components of the industry;
1-53                 (2)  alternative programs to accelerate the commercial
1-54     availability of fuel cells, including similar efforts by other
1-55     states;
1-56                 (3)  programs considered to encourage the industry to
1-57     locate manufacturing, system integration, or related component
1-58     parts or services in this state; and
1-59                 (4)  program recommendations, including how proposed
1-60     programs would work, the impact anticipated on industry
1-61     development, program costs and sources of funding, and proposed
1-62     measures of performance.
1-63           (d)  The energy office shall appoint a fuel cell initiative
1-64     advisory committee to advise the energy office regarding
 2-1     development of the plan and to assist the energy office in meeting
 2-2     the goals of this Act.  The energy office shall appoint to the
 2-3     advisory committee representatives of:
 2-4                 (1)  the fuel cell industry;
 2-5                 (2)  energy services providers;
 2-6                 (3)  electric transmission and distribution utilities;
 2-7                 (4)  retail providers of electric energy; and
 2-8                 (5)  small electric energy consumers.
 2-9           SECTION 3. Subchapter B, Chapter 171, Tax Code, is amended by
2-10     adding Section 171.090 to read as follows:
2-12     IN FUEL CELL DEVICES. (a)  In this section, "fuel cell device"
2-13     means an electrochemical cell in which the energy of a reaction
2-14     between a fuel, such as liquid hydrogen, and an oxidant, such as
2-15     liquid oxygen, is converted directly and continuously into
2-16     electrical energy. The term includes a mechanical or chemical
2-17     device that has the ability to store fuel cell-generated energy for
2-18     use in heating or cooling or in the production of power.
2-19           (b)  A corporation engaged solely in the business of
2-20     manufacturing, selling, or installing fuel cell devices is exempted
2-21     from the franchise tax.
2-22           SECTION 4. Subchapter C, Chapter 171, Tax Code, is amended by
2-23     adding Section 171.1071 to read as follows:
2-24           Sec. 171.1071.  DEDUCTION OF COST OF FUEL CELL DEVICE FROM
2-26     STATE. (a)  In this section, "fuel cell device" has the meaning
2-27     assigned to it in Section 171.090 of this code.
2-28           (b)  A corporation may deduct from its apportioned taxable
2-29     capital the amortized cost of a fuel cell device or from its
2-30     apportioned taxable earned surplus 10 percent of the amortized cost
2-31     of a fuel cell device if:
2-32                 (1)  the device is acquired by the corporation for
2-33     heating or cooling or for the production of power;
2-34                 (2)  the device is used in this state by the
2-35     corporation; and
2-36                 (3)  the cost of the device is amortized in accordance
2-37     with Subsection (c) of this section.
2-38           (c)  The amortization of the cost of a fuel cell device must:
2-39                 (1)  be for a period of at least 60 months;
2-40                 (2)  provide for equal monthly amounts;
2-41                 (3)  begin on the month in which the device is placed
2-42     in service in this state; and
2-43                 (4)  cover only a period in which the device is in use
2-44     in this state.
2-45           (d)  A corporation that makes a deduction under this section
2-46     shall file with the comptroller an amortization schedule showing
2-47     the period in which a deduction is to be made.  On the request of
2-48     the comptroller, the corporation shall file with the comptroller
2-49     proof of the cost of the fuel cell device or proof of the device's
2-50     operation in this state.
2-51           (e)  A corporation may elect to make the deduction authorized
2-52     by this section either from apportioned taxable capital or
2-53     apportioned taxable earned surplus for each separate regular annual
2-54     period.  An election for an initial period applies to the second
2-55     tax period and to the first regular annual period.
2-56           SECTION 5.  EFFECTIVE DATE.  This Act takes effect September
2-57     1, 2001.
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