Honorable Jim Keffer, Chair, House Committee on Energy Resources
Ursula Parks, Director, Legislative Budget Board
HB2446 by Crownover ( Relating to the definitions of advanced clean energy projects and clean energy projects and to franchise tax credits for certain of those projects.), Committee Report 1st House, Substituted
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Foundation School Fund
The bill would prohibit the issuance of any franchise tax credits before September 1, 2018 or while a project is under a cap agreement under Chapter 313. This would appear to apply to the clean coal project mentioned above since under current law the application for the franchise tax credit must be complete by September 2, 2013, when that provision is set to expire.
Through the expansion of the definition of "advanced clean energy project" (ACEP), this bill would allow combined-cycle natural-gas-fueled power plants, capturing carbon dioxide for enhanced oil recovery to become eligible for Chapter 313 of the Tax Code.
Presently, there is one announced natural-gas-fueled power plant-valued at $450 million-meeting the requirements of the bill. It is scheduled to be operational in mid-2015 in Point Comfort. Another plant of this type is assumed. The second natural-gas-fueled power plant would not be eligible for the franchise tax credits. A third plant-valued at over $1 billion- of the clean coal category is close to breaking ground and would represent the second of three plants allowable under the statute governing the franchise tax credits. This plant is currently qualified for a Chapter 313 limitation; the analysis above reflects the other two plants with respect to those limitations. A third project eligible for the franchise tax credit is currently unknown and it its potential fiscal impact cannot be estimated.
The franchise tax credit, to be received after the end of the Chapter 313 limitation period, capped at 10 percent of initial capital costs, would be $45 million the first natural-gas-fueled power plant.
The estimated fiscal impact on the school district levy is based on two natural-gas-fueled projects, one being completed in 2015 and one in 2016. The state would incur cost under the Foundation School Program corresponding to local M&O revenue losses associated with expansion of projects eligible for value limitation under Chapter 313 of the Tax Code. Additional state cost of $4.0 million is estimated beginning in FY17, increasing to approximately $9.0 million by FY19 and continuing at similar levels through FY23.
304 Comptroller of Public Accounts, 305 General Land Office and Veterans' Land Board, 455 Railroad Commission, 582 Commission on Environmental Quality, 720 The University of Texas System Administration
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