You asked for a summary of Energy and Technology bills favorably reported to the Finance, Revenue and Bonding Committee.

sB 209—AAC ALTERNATIVE FUEL AND ENERGY

This bill creates a 40-cent-per-gallon credit against five business taxes for alternative fuel processed by a taxpayer. Under the bill, “alternative fuel” is ethanol, biodiesel, or other fuel derived from agricultural produce, food waste, waste vegetable oil, or municipal solid waste. The taxes are the corporation business tax, air carriers tax, railroad company tax, cable TV tax, and utility company tax.

The bill also establishes a credit of 10 cents per kilowatt-hour against the corporation business tax for power generated from a waste heat source that the taxpayer uses in the state. A waste heat source is a system that is installed on or after July 1, 2006 that recovers waste heat from power plants, boilers, incinerators, geothermal energy sources, machinery, cogeneration systems, or other man-made sources.

The bill establishes a credit against the corporation business tax equal to . 003 cents per British thermal unit (BTU) of energy captured from a waste heat source that the taxpayer uses to process an alternative fuel. A gallon of heating oil contains approximately 139,000 BTUs.

The total amount of credits a taxpayer can take under these measures is $ 1. 5 million. Credits above this amount can be carried forward three income years. A taxpayer can transfer credits to buyers of alternative fuels and power generated from waste heat. The transferor and transferee must notify the Department of Revenue Services of the transfer. The $ 1. 5 million cap applies to companies that transfer credits.

The bill exempts from the petroleum products gross earnings tax commercial heating oil that contains at least 10% biodiesel or other alternative fuels derived from agricultural produce, food waste, waste vegetable oil, or municipal solid waste. Finally, it exempts diesel fuel containing at least 10% biodiesel from the motor vehicles fuel (gas) tax.

EFFECTIVE DATE: July 1, 2006 and is applicable to income years starting on or after January 1, 2006.

sB 571—AA AUTHORIZING BONDS OF THE STATE FOR ALTERNATIVE ENERGY SOURCES

This bill authorizes $ 100 million in bonds for the Clean Energy Fund to fund the on-site renewable distributed generation program. Connecticut Innovations, Inc. administers this program, which provides financial assistance for technologies such as fuel cells.

The bill also authorizes $ 1 million in bonding to provide additional funds for the Energy Conservation and Load Management Fund to expand the scope of the Connecticut Small Business Advantage program

EFFECTIVE DATE: July 1, 2006

HB 5688—AAC ELECTRIC DEREGULATION AND THE GROSS RECEIPTS TAX

The bill modifies how the gross earnings tax is calculated for municipal electric utilities. Currently, these utilities pay a tax of 4% of their gross receipts from their residential customers and 5% on their nonresidential customers. The bill instead requires the utilities to pay a tax of 6. 8% of their revenues from transmitting power to residential customers and 8. 5% on their nonresidential transmission revenues. The latter rates currently apply to electric companies. The bill also requires the Connecticut Municipal Electric Energy Cooperative (CMEEC) to adopt standards regarding the promotion of renewable energy and file a report with the Clean Energy Fund Advisory Committee

EFFECTIVE DATES: The tax rate change is effective July 1, 2007. A conforming change and the CMEEC provisions is effective July 1, 2006.

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