File No. 36548

This rule was published in the August 15, 2012, issue (Vol. 2012, No. 16) of the Utah State Bulletin.


Governor, Energy Development (Office of)

Rule R362-1

Qualification for the Alternative Energy Development Tax Credit

Notice of Proposed Rule

(New Rule)

DAR File No.: 36548
Filed: 07/27/2012 12:20:27 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

New legislation passed in S.B. 65 (2012 General Session) instructs the Office of Energy Development to create this rule. Please see Subsection 63M-4-503(1)(a) for explicit instruction to create this rule.

Summary of the rule or change:

The rule is meant to establish the viability of each applicant's alternative energy development project. The goal of adding to those fundamental requirements already outlined in the statute is to ensure that applicants do not submit applications for projects that are either premature or lack merit. The rule does not create processes or create significant impacts, fiscal or otherwise; it simply establishes criteria with respect to when companies are eligible to apply for the tax credits.

State statutory or constitutional authorization for this rule:

  • Subsection 63M-4-503(1)(a)

Anticipated cost or savings to:

the state budget:

Whereas the statute to which this rule speaks may have some unfavorable fiscal impacts to the state budget, the rule itself is expected to have, if anything, a favorable fiscal impact on the state budget. The rule is meant to keep less viable applicants from applying for tax credits, and therefore the division anticipates that the rule will protect the Office of Energy Development from frivolous applications that would otherwise tend to waste valuable staff time.

local governments:

This rule will have no impact on local government, as it is simply a qualification standard for energy development projects being undertaken by private companies. Though one of the rule's requirements entails the acquisition of a permit which may be granted by a local government, there is no foreseeable additional burden, as any permits would be necessary regardless of this rule.

small businesses:

Those small businesses that could potentially apply for an Alternative Energy Development Tax Credit are the only businesses that could be affected by the rule. However, the rule will not impose any costs on those businesses, as it does not compel them to go through any process that they would not already have had to undertake. As an example, while there certainly are costs associated with attaining site control, those costs must necessarily be borne in the course of project development regardless of the application of this rule. While there is a potential cost associated with third-party financial review, the rule allows for a series of options, so that undergoing financial review is not a requirement, but rather just one potential choice of an applicant.

persons other than small businesses, businesses, or local governmental entities:

As indicated in earlier responses, although the statute with which this rule is associated may conceivably be shown to have cost impacts on various groups, this rule does not. It is a simple screening tool meant to limit the applicant pool, and as such it would have no cost impact to these groups.

Compliance costs for affected persons:

As noted above, while there is a potential cost associated with third-party financial review, the rule allows for a series of options, so that undergoing financial review is not a requirement, but rather a potential choice of the applicant.

Comments by the department head on the fiscal impact the rule may have on businesses:

The Division does not expect this rule to have any fiscal impact on business. The rule establishes criteria applicants must meet in order to apply for the tax credit. Although in order to meet those criteria applicants must certainly have expended some amount of capital on predevelopment expenses, the rule itself will not require any expenditure that would not have been necessary in the absence of the rule. The rule simply ensures that applicants have a viable project and are at a point in the development process that warrants an application.

Samantha Mary Julian, Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Governor
Energy Development (Office of)
60 E SOUTH TEMPLE 3RD FLR
Salt Lake City, UT 84111

Direct questions regarding this rule to:

  • Jeffrey Barrett at the above address, by phone at 801-739-5191, by FAX at , or by Internet E-mail at jhbarrett@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

09/15/2012

This rule may become effective on:

09/22/2012

Authorized by:

Jeffrey Barrett, Infrastructure and Incentives Manager

RULE TEXT

R362. Governor, Energy Development.

R362-1. Qualification for the Alternative Energy Development Tax Credit.

R362-1-1. Purpose and Authority.

(1) Purpose. Pursuant to the Alternative Energy Development Tax Credit Act, this rule establishes standards an alternative energy entity shall meet to qualify for a tax credit.

(2) Authority. This rule is authorized by Subsection 63M-4-503(1)(a), Utah Code.

 

R362-1-2. Definitions.

(1) Terms used in this rule are defined in Section 63M-4-502.

(2) In addition:

(a) "site control" means an enforceable right to use a parcel of land for an alternative energy project; and

(b) "project development activities" means those actions described under Subsections 63M-4-502(3)(a) and 63M-4-502(3)(b).

 

R362-1-3. Conditions.

(1) In order to qualify for a tax credit, an alternative energy entity must meet those requirements outlined in Subsection 63M-4-503(1)(b), and must be prepared to:

(a) follow the procedures and expectations outlined in Sections 59-7-614.7, 59-10-1029, and 63M-4-504; and

(b) bear any costs associated with meeting the requirements outlined below in Subsection R362-1-4(2)(b)(ii)(A).

(2) In addition, the alternative energy entity must demonstrate the viability of its alternative energy project by submitting evidence it has secured:

(a) one or more land leases or other form of site control; and

(b) one or more of the following:

(i) permits from a local, state or federal regulatory agency, not to include conditional use permits;

(ii) financing sufficient to initiate project development activities, as may be:

(A) assessed, at the office's request, by third party financial review; or

(B) affirmed by the existence of one or more:

(I) power purchase agreements; or

(II) off-take agreements.

(iii) a position in the generation interconnection queue that has advanced beyond the Feasibility Study phase.

 

KEY: alternative energy development tax credit

Date of Enactment or Last Substantive Amendment: 2012

Authorizing, and Implemented or Interpreted Law: 63M-4-503(1)(a)

 


Additional Information

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For questions regarding the content or application of this rule, please contact Jeffrey Barrett at the above address, by phone at 801-739-5191, by FAX at , or by Internet E-mail at jhbarrett@utah.gov.