88R8840 CJD-F
 
  By: Shine H.B. No. 3894
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to an exemption from sales and use taxes for battery energy
  storage systems.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 151.318, Tax Code, is amended by
  amending Subsection (a) and adding Subsection (g) to read as
  follows:
         (a)  The following items are exempted from the taxes imposed
  by this chapter if sold, leased, or rented to, or stored, used, or
  consumed by a manufacturer:
               (1)  tangible personal property that will become an
  ingredient or component part of tangible personal property
  manufactured, processed, or fabricated for ultimate sale;
               (2)  tangible personal property directly used or
  consumed in or during the actual manufacturing, processing, or
  fabrication of tangible personal property for ultimate sale if the
  use or consumption of the property is necessary or essential to the
  manufacturing, processing, or fabrication operation and directly
  makes or causes a chemical or physical change to:
                     (A)  the product being manufactured, processed,
  or fabricated for ultimate sale; or
                     (B)  any intermediate or preliminary product that
  will become an ingredient or component part of the product being
  manufactured, processed, or fabricated for ultimate sale;
               (3)  services performed directly on the product being
  manufactured prior to its distribution for sale and for the purpose
  of making the product more marketable;
               (4)  actuators, steam production equipment and its
  fuel, in-process flow through tanks, cooling towers, generators,
  heat exchangers, transformers and the switches, breakers,
  capacitor banks, regulators, relays, reclosers, fuses,
  interruptors, reactors, arrestors, resistors, insulators,
  instrument transformers, and telemetry units that are related to
  the transformers, electronic control room equipment, computerized
  control units, pumps, compressors, and hydraulic units, that are
  used to power, supply, support, or control equipment that qualifies
  for exemption under Subdivision (2) or (5) or to generate
  electricity, chilled water, or steam for ultimate sale; battery
  energy storage systems used to generate, process, or store
  electricity for distribution and sale, regardless of the origin of
  the electricity used to charge the battery energy storage system;
  transformers located at an electric generating facility that
  increase the voltage of electricity generated for ultimate sale,
  the electrical cable that carries the electricity from the electric
  generating equipment to the step-up transformers, and the switches,
  breakers, capacitor banks, regulators, relays, reclosers, fuses,
  interruptors, reactors, arrestors, resistors, insulators,
  instrument transformers, and telemetry units that are related to
  the step-up transformers; and transformers that decrease the
  voltage of electricity generated for ultimate sale and the
  switches, breakers, capacitor banks, regulators, relays,
  reclosers, fuses, interruptors, reactors, arrestors, resistors,
  insulators, instrument transformers, and telemetry units that are
  related to the step-down transformers;
               (5)  tangible personal property used or consumed in the
  actual manufacturing, processing, or fabrication of tangible
  personal property for ultimate sale if the use or consumption of the
  property is necessary and essential to a pollution control process;
               (6)  lubricants, chemicals, chemical compounds, gases,
  or liquids that are used or consumed during the actual
  manufacturing, processing, or fabrication of tangible personal
  property for ultimate sale if their use or consumption is necessary
  and essential to prevent the decline, failure, lapse, or
  deterioration of equipment exempted by this section;
               (7)  gases used on the premises of a manufacturing
  plant to prevent contamination of raw material or product, or to
  prevent a fire, explosion, or other hazardous or environmentally
  damaging situation at any stage in the manufacturing process or in
  loading or storage of the product or raw material on premises;
               (8)  tangible personal property used or consumed during
  the actual manufacturing, processing, or fabrication of tangible
  personal property for ultimate sale if the use or consumption of the
  property is necessary and essential to a quality control process
  that tests tangible personal property that is being manufactured,
  processed, or fabricated for ultimate sale;
               (9)  safety apparel or work clothing that is used
  during the actual manufacturing, processing, or fabrication of
  tangible personal property for ultimate sale if:
                     (A)  the manufacturing process would not be
  possible without the use of the apparel or clothing; and
                     (B)  the apparel or clothing is not resold to the
  employee;
               (10)  tangible personal property used or consumed in
  the actual manufacturing, processing, or fabrication of tangible
  personal property for ultimate sale if the use or consumption of the
  property is necessary and essential to comply with federal, state,
  or local laws or rules that establish requirements related to
  public health; and
               (11)  tangible personal property specifically
  installed to:
                     (A)  reduce water use and wastewater flow volumes
  from the manufacturing, processing, fabrication, or repair
  operation;
                     (B)  reuse and recycle wastewater streams
  generated within the manufacturing, processing, fabrication, or
  repair operation; or
                     (C)  treat wastewater from another industrial or
  municipal source for the purpose of replacing existing freshwater
  sources in the manufacturing, processing, fabrication, or repair
  operation.
         (g)  In this section, "battery energy storage system" means
  an electrochemical device that processes, stores, and transforms
  electrical energy into chemical energy and processes and transforms
  chemical energy back into electrical energy for distribution and
  sale. The term includes cells, battery modules, racks, battery
  management systems, invertors or power conversion systems,
  controllers, ventilation and cooling systems, fire suppression
  systems, containers or enclosures, and ancillary equipment
  including breakers, cabling, junction boxes, and lighting.
         SECTION 2.  The change in law made by this Act does not
  affect tax liability accruing before the effective date of this
  Act.  That liability continues in effect as if this Act had not been
  enacted, and the former law is continued in effect for the
  collection of taxes due and for civil and criminal enforcement of
  the liability for those taxes.
         SECTION 3.  This Act takes effect September 1, 2023.