Two states recently took action to promote the development of energy resources. New York enacted a law to reduce siting approval times, and Louisiana created tax exemptions for merchant power plants.
New York’s Governor Pataki signed a bill into law on August 31, 2001 that provides for decreased siting times for plants that reduce emissions. The bill amends part of New York’s public service law which relates to siting and became effective immediately. The amended bill calls for a 6 month reduction in the maximum siting period from one year to 6 months, measured from the date that the chairman determines that the application satisfies the reduced emissions criteria to a final decision of the board.
The provision will apply in either of the following two circumstances. First, it will apply if an owner of an existing major electric generation facility applies for a modification which demonstrates that operation of the modified facility will result in a decrease of at least 75% of its emission rate. Second, it will apply if an owner of an existing facility applies to site a new major electric generating facility either adjacent or contiguous to its existing generating facility which demonstrates that the combined emissions reduction of at least 75% of their current emissions. The 75% reduction must be of the following emissions: 1) nitrous oxide; 2) sulfur dioxide; and 3) particulate matter. The percent reduction will be calculated using a comparison between the annualized potential of the facility to emit at the time of the application and the annualized potential after the modifications or additions have been completed.
Louisiana’s Board of Commerce and Industry approved a modification of a rule on August 22, 2001 and a resolution which combined, grants merchant power plants the same property tax exemption formerly only granted to manufacturing plants. To encourage the siting of new merchant plants, the proposed modification also permits a merchant plant developer to apply for the property tax exemption before actually beginning construction of the plant. The property tax exemption lasts up to 10 years and is calculated as .015% of new investments and annual capitalized additions. The exemption applies to all improvements in land, buildings, machinery and equipment.
The Board of Commerce and Industry also resolved to ask legislators to further encourage the development of new merchant plants by either eliminating or phasing-out the state sales tax on the fuel used in electric generation.
The rule modification was a result of Louisiana’s legislative efforts to promote the development of power generation sources. Both the Louisiana House and Senate passed resolutions "to urge and request" the Department of Economic Development to develop strategies and incentives to encourage merchant power development. This summer the legislature also approved a study request, which calls on the House Committee on Commerce and the Senate Committee on Commerce and Consumer Protection to act as a joint committee to study the construction of new generating, cogeneration and merchant power plants, the expansion and improvement of the transmission grid, and incentives to encourage new construction of power plants.