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Energy Committee Update
March 11, 2013

Staff Contact: Darren Suarez

The Assembly and the Senate have outlined their responses to the Governor’s budget, through the submittal of their own one-house budgets. The budgets reflect the position of the majority conference. After each house passes their proposed budget (appropriations and budget language (Article VII) or budget resolution), the Senate and Assembly will this week publicly and privately meet to reconcile the differences in their budgets.

The budget documents are voluminous, but the majority of the documents tend to be unchanged. Below are number of items that have been amended in the energy budget. This is not a comprehensive list.

Assembly One House Budget

18-A

The Assembly budget (A.3008A) proposal would extend the Temporary State Energy and Utility Service Conservation Assessment (often referred to as 18-a). In 2009, when this temporary fee was imposed, there was an explicit promise to the people of the state that this assessment would not be permanent.

The provision (Part N) would extend the 2 percent assessment, which was scheduled to be reduced to 1 percent this year. Extending the fee will cost all energy consumers (businesses, governments, schools, non-profits and residences) in the state $236 million in 2014 and $472 million each year for the next four years.

The Business Council in collaboration with other organizations and groups has put pressure on the legislature to oppose this provision. The last information on these actions is on fixny.org
Members that are concerned about the effects of 18-a that would feel comfortable quantifying the cost of 18-a to their operations please share that information with the Business Council. The Business Council can keep your business or operations name quiet, but would like to have real world examples of the cost.

PSC Powers

The Assembly budget (A.3008A Part O) proposal provided many substantive amends to this section.  The proposal requires violations of PSL section 24 are “knowingly” committed. Additionally, the management audit provisions are significantly amended. The Assembly removed section 5, that would allowed for the revocation of a corporation’s service territory. The Assembly has proposed to amend the provisions of this section related to the safety of 300 psi natural gas gathering lines.

Senate One House Budget

18-A and PSC Powers

The Senate has removed from their proposed budget S.2608-C. (Part N and Part O) sections 18-a taxes and the increase in the PSC powers.

Although, these provisions have been removed from one houses proposal it behooves all those that care about these provision to continue to express their concerns with the other legislative houses.

New Provisions

The Senate budget includes numerous new provision related to energy matters contained in S.2608-C.

    6. In addition to any existing authority for the regulation of greenhouse gas emissions, the department shall, in cooperation with the department of public service and the New York state energy research and development authority, amend part 242 of title 6 of the New York codes,rules and regulations, in a manner that is consistent with all applicable federal laws, to regulate electricity imported into the state from any state or province not participating in the multi-state program, in which New York state is a member, that was established to provide for the reduction of emissions from electric generating facilities, as provided in such part 242. These regulations shall impose equivalent assessments and credits upon electric generators based on matching the carbon intensity of electricity generated in New York state upon the importation of electric power into New York state for use within New York state. Treatment of imported sources of electricity will be designed to maintain the environmental integrity and economic goals of the multi-state program in which New York state participates that was established as a means of reducing emissions from electric generating facilities as provided in such part 242. Amendments to part 242 of title 6 of the New York codes, rules and regulations covering the importation of electric generated power shall be consistent with, but shall not exceed, the overall reduction in allocations established according to the most current model rule guiding the members of the multi-state program in which New York state is a participant.  § 2. This act shall take effect immediately.

Section 1. The state finance law is amended by adding a new section 92-gg to read as follows:

§ 92-gg. Repowering and local mitigation fund. 1. There is hereby established in the joint custody of the state comptroller and the commissioner of taxation and finance a special fund to be known as the "repowering and local mitigation fund".
    2. Such fund shall consist of moneys credited or transferred without appropriation thereto over and above a base level pursuant to the standards controlling chapter eleven of title twenty-one of the New York state codes, rules and regulations related to any moneys garnered from assessments or auctions raised pursuant to subdivision six of section 19-0301 of the environmental conservation law.
    3. (a) Moneys of the repowering and local mitigation fund shall be available, before any other use of such funds, for the partial reimbursement for a period of no more than four consecutive taxing years, for a municipal government fiscally distressed from the loss of property tax receipts, including, for the purposes of this paragraph, payments in lieu of taxes, resulting in whole or in part from the consequences of a facility primarily functioning as a power generating facility losing substantial relative market competitive viability, and consequently, loss in the properly ascertained assessed value determined for such facility, through meeting the requirements of a reduction of compliance accounts emissions pursuant to guidelines in part two hundred forty-two of chapter three of title six of the New York state codes, rules and regulations. These moneys shall only be available for the mitigation of the loss of ad valorem revenues of a municipality if the entity generating compliance account emissions of such taxpayer's electric generating property, was, at any time in the last four taxable years, assessed at a level at least ten percent of the total assessed value of taxable property for such municipal government for that given year; provided further, that no reimbursement shall be made if, in a municipal tax year, the aggregate amount paid to a municipal government by the owner of an electric generating facility station including, but not limited to, payments in lieu of taxes and property taxes, exceed the aggregate amount paid to that municipality by that owner in the year on or before such compliance account emissions results in a substantial assessed value. If a municipality qualifies for the receipt of mitigation funds under this section, then such funds can be transferred to a municipality necessary to reach an amount of no more than eighty percent of the previous year's ad valorem payment due to such municipality.
    (b) If moneys available in the repowering and local mitigation fund exceed the payments authorized in paragraph (a) of this subdivision, any remaining fund receipts shall be used to encourage the development of energy generating systems meeting the definition of "alternate energy production facility" pursuant to subdivision two-b of section two of the public service law, or that are related to an application consistent with the requirements of paragraph (b) of subdivision four of section one hundred sixty-five of the public service law. In lieu of the requirements for a three year average comparison in subparagraph (ii) of paragraph (b) of subdivision four of section one hundred sixty-five of the public service law, such proposed facility connected to an application otherwise pursuant to sections one hundred sixty-four and one hundred sixty-five of the public service law proposing a repowering project at the site of an existing major electric generating facility that has run primarily in the market as a capacity payment generator for the previous two or more years shall be deemed as meeting the requirements of paragraph (b) of subdivision four of section one hundred sixty-five of the public service law if the proposed facility's future potential to emit for each contaminant will operate under twenty percent of the existing generator or generators assuming such proposed and existing generator or generators were running at an annual rate of at least seven thousand hours per year and at a nameplate capacity of at least four hundred fifty megawatts.
    4. Moneys in the fund shall be kept separately from and shall not be commingled with any other moneys in the custody of the state comptroller.
    5. All payments of moneys from the fund shall be made on the audit and the warrant of the comptroller. § 2. This act shall take effect immediately.

PART II

Section 1. Legislative intent. The legislature finds that it is fundamental to the overall state general interest and its economy to guarantee sources of power generated near existing or future high-load manufacturers in every region of the state to allow competitive power markets to best meet the needs of rate payers, support local and state tax revenue stability, promote economic opportunity, and enhance the state's overall environmental future.

    The legislature further finds that changing power generation markets, reacting to both competitive and public policy pressures, have threatened the viability of existing crucial base-load facilities.

    The legislature further finds that the elimination of any base-load electric generating capability in a region of the state jeopardizes the affected region's ability to provide adequate municipal services and quality education opportunities for its residents.

    The legislature intends that it is in the overriding interest of the citizens of the state that the most advanced, cleanest and most efficient power technologies be encouraged to be constructed and operated in the state.

    The legislature further intends that it is in the interest of the state that these technologies be placed on existing power facility sites to foster the goal of sustainability and reduce the chance of former power facilities creating major abandoned or underutilized blemishes with resulting environmental threats, abandonment and major impediments to economic development.

    The legislature further intends that it is in the interest of the state to enhance the ability of capital markets to encourage the foregoing findings and intentions to maintain private sector, competitively procured base-load capability through the utilization of best available technologies.

    § 2. Section 1010 of the public authorities law is amended by adding a new subdivision 12 to read as follows:
    12. (a) The power authority of the state of New York shall be authorized to conduct an analysis of current and future regional power needs, with special consideration of future economic development prospects of such regions, and a further analysis of the economic viability of the current or future owners and operators of load producing electric generating facilities who have submitted an application to the public service commission pursuant to paragraph (b) of subdivision four of section one hundred sixty-five of the public service law. In lieu of the requirements for a three year average comparison in subparagraph (ii) of paragraph (b) of subdivision four of section one hundred sixty-five of the public service law, such proposed facility connected to an application otherwise pursuant to sections one hundred sixty-four and one hundred sixty-five of the public service law proposing a repowering project at the site of an existing major electric generating facility that has run primarily in the market as a capacity payment generator for the previous two or more years shall be deemed as meeting the requirements of paragraph (b) of subdivision four of section one hundred sixty-five of the public service law if the proposed facility's future potential to emit for each contaminant will operate under twenty percent of the existing generator or generators assuming such proposed and existing generator or generators were running at an annual rate of at least 7,000 hours per year and at a nameplate capacity of at least 450 megawatts. Upon the timely completion of such analyses, and as deemed feasible and advisable by the board of trustees of the authority, taking full consideration of the requirements and viability of the entire power generating system needs of the various regions of the state of New York, and the state of New York in entirety, with special consideration given to the ratepayers and taxpayers of the state, the authority shall be authorized to issue negotiable bonds, and to the fullest extent permitted by law, private activity bonds, or other instruments exempt from federal, state and local taxation, for qualifying projects and as enumerated by this subdivision, backed by the purchase of power generated from such facilities per paragraph (e) of this subdivision only to the extent necessary to repay all interest and principal due the holders of such bonds, and all associated administrative costs and fees attaching to such bonds, if such owners and operators of a proposed facility meet and agree upon all the applicable conditions of this subdivision and sections one thousand five and one thousand seven of the public authorities law.
    (b) The provisions of paragraph (a) of this subdivision shall only apply to proposed power generating units that will meet or exceed the minimum standards established in the final rule of the proposed National Emission Standards for Hazardous Air Pollutants. In addition, such owner or operator of a generating unit otherwise eligible for benefits under this section must agree to take all steps necessary to repower such facility and construct new generators to ensure that such facility, generators and appertaining sites:
    1. are designed and intended to operate at an electricity production efficiency level of at least fifty-two percent;
    2. will have a nameplate capacity of at least 450 megawatts of electric generating capacity running at least 7,000 hours per year;
    3. will be able to achieve a 2 parts per million limits for nitrous oxide emissions using Lowest Achievable Emission Rate technologies;
    4. will utilize Lowest Achievable Emission Rate technologies if feasible, or, at a minimum, Best Available Control Technologies for carbon monoxide and sulfur dioxide emission levels;
    5. have existing generators at the site safely decommissioned and demolished;
    6. undergo environmental remediation under the guidelines established under part 375 of title 6 of the New York state codes, rules and regulations, and;
    7. will be able to have the new electric generating facilities placed in service no later than March 31, 2018.
    (c) Upon the awarding of the certificate offered by the New York state board on electric generation siting and the environment as stipulated in sections one hundred sixty, one hundred sixty-eight and one hundred seventy of the public service law, funds received from the issuance of bonds pursuant to this section may be offered to the owner or owners of a qualifying project certified under the conditions of subdivision four of section one hundred sixty-five of the public service law in an amount not to exceed eighty percent of the total project costs as estimated through the most current and best available projections for the sources and uses of funds for the facility. Upon the revocation of such certificate and exhaustion of all judicial reviews related to such revocation, the authority shall immediately move to recapture any funds offered to the owner or operators, or their successors, of a previously qualifying project, along with all related administrative fees or other costs related to such funding and recapture proceedings.
    (d) As deemed feasible and advisable by the board of the trustees of the authority, the authority shall have the ability, as a condition for the granting of bond proceeds, and as a source of additional surety for a qualifying project, to require the owner of such project to cede the title to the plot of land, and land only, on which a qualifying project is to be located as determined by the tax plat of the locality in which the project will be located, to the authority for a period not to extend beyond the original term of the bonds associated with such proceeds. The authority will grant the owner or operator of the project a beneficial ownership lease, transferable to any successive owner or operator, at no cost beyond the ad valorem taxes, or associated payment in lieu of taxes, levied on such land the authority may remit to the relevant municipality for the life of the debt instrument tied to the bond proceeds. Any such tax or payment in lieu of tax remitted by the authority shall be repaid by the owner or operator of the facility to the authority at the earliest possible convenience. Failure to repay the authority in full for any payment of tax or payment in lieu of tax shall authorize the authority to immediately move to recapture any funds from bond proceeds transferred to the current owner or operator of the facility. Any ad valorem assessments or payment in lieu of tax shall be determined through agreement with relevant local officials in a manner regardless of which entity is responsible for the remittance of such assessment or payment; and, if such facility is bound by an agreement for a payment in lieu of tax, such agreement shall last for the duration of the life of the bonds referenced in paragraph (a) of this subdivision. Upon the end of the original term of such bonds, or upon expiration of the bonds if such instrument is retired before the end of the original term, title to the land will immediately remit to the owner or successor of the project, if all outstanding obligations of such owner, operator and successor, adhering to the project due to the authority have been satisfied.
    (e) The authority is authorized, as deemed feasible and advisable by the board of trustees of the authority, to recommend entering into a partial power purchase agreement with the owner or operator, transferable to their successors, of a qualifying project upon the owner or operator receiving the certificate referenced in paragraph (c) of this subdivision. The authority will purchase power from such project for the life of the original terms of the negotiable bonds issued for this purpose to the extent necessary so that the owner or operator receiving the proceeds of such agreement shall remit funds to the authority sufficient to cover the debt service and administrative fees of the relevant debt instrument. Failure of the owner or operator of a project receiving bond proceeds authorized by this subdivision to remit funds received from such power purchases shall authorize the authority to immediately move to recapture any funds from bond proceeds transferred to the current owner or operator of the facility following all allowable judicial remedies. The authority's purchase of such power shall occur before the sale or resale of any power generated from the project to any other potential customer. The project owner or operator cannot use the proceeds from such power purchase agreement, without the expressed consent of the authority, for any other purpose than the remittance to the authority to cover the obligations of the bonds or other instruments issued on behalf of the project.
    (f) Failure of an owner or operator of a qualifying project to meet any or all financial obligations connected to such electric generating facility shall authorize the authority, after all pertinent judicial reviews, and as deemed feasible and advisable by the board of trustees of the authority, to take fee simple title of the real property attached to the entire facility and grounds in perpetuity.
    (g) Any power purchased by the authority pursuant to this subdivision shall be considered Recharge New York power, and shall be utilized, to the maximum extent advisable and feasible in order of priority, first, to provide enhanced economic development power benefits, as determined by the authority, for present or future high-load manufacturers located within the geographic area of a qualified project regardless of whether such high-load manufacturers are currently beneficiaries of a Recharge New York power allocation; second, notwithstanding any limitations or conditions contained in paragraph eight of subdivision (a) and paragraph seven of subdivision (c) of section one hundred eighty-eight-a of the economic development law, to augment Recharge New York power allocations for eligible businesses as defined in paragraph five or paragraph seven of subdivision (a) of section one hundred eighty-eight-a of the economic development law that are recommended for a Recharge New York power allocation pursuant to part CC of chapter 60 of the laws of 2011; and third, any allowable purpose of the authority authorized by law.
    (h) Each contract entered into by the owner, operator or successor of a facility qualifying under this subdivision shall indemnify and hold the state of New York, and the power authority of the state of New York, harmless from any and all claims for loss or liability alleged to have been caused or resulting from any work involving such project or actions taken pursuant to this subdivision. In addition, the provisions of section seventeen of the public officers law shall apply to members of the board and agents or other persons acting on its behalf, in connection with any and all claims, demands, suits, actions or proceedings which may be made or brought against any of them arising out of any determination made or actions taken or omitted to be taken in compliance with any obligations under or pursuant to the terms of this subdivision or otherwise in this title.
    (i) If any clause, sentence, or paragraph of this subdivision shall be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the remainder thereof, but shall be confined in its operation to the clause, sentence, or paragraph thereof directly involved in the controversy in which such judgment shall have been rendered. It is hereby declared to be the intent of the legislature that this subdivision would have been enacted even if such invalid provisions had not been included herein.
    § 3. This act shall take effect immediately and shall apply to eligible electric generating facilities placed in service on or before March 31, 2018.

PART GG
Section 1. Short title. This act shall be known and may be cited as the "northern New York power proceeds allocation act."

    § 2. The economic development law is amended by adding a new article 6-B to read as follows:
    ARTICLE 6-B
    NORTHERN NEW YORK POWER PROCEEDS ALLOCATION ACT Section 189-e. Definitions.
    189-f. The northern New York power proceeds allocation board.
    189-g. General powers and duties of the board.
    189-h. Rules and regulations.
    § 189-e. Definitions. For the purposes of this article, the following terms shall have the following meanings:
    1. "Authority" is the power authority of the state of New York.
    2. "Board" is the northern New York power proceeds allocation board created by this article.
    3. "Benefits" or "fund benefits" are payments to eligible applicants selected by the authority for the purpose of funding eligible projects with monies derived from net earnings that have been deposited into the northern New York economic development fund.
    4. "Eligible applicant" means a private business, including a not-for-profit corporation.
    5. "Eligible projects" are economic development projects by eligible applicants that are physically located within the state of New York within a forty mile radius of the Saint Lawrence FDR power project located in Massena, New York that will support the growth of business in the state and thereby lead to the creation or maintenance of jobs and tax revenues for the state and local governments. Eligible projects may include capital investments in buildings, equipment, and associated infrastructure (collectively, "infrastructure") owned by an eligible applicant for fund benefits; transportation projects under state or federally approved plans; the acquisition of land needed for infrastructure; research and development where the results of such research and development will directly benefit New York state; support for tourism and marketing and advertising efforts for northern New York state tourism and business; and energy-related projects. Eligible projects do not include, and fund benefits may not be used for, public interest advertising or advocacy; lobbying; the support or opposition of any candidate for public office; the support or opposition to any public issue; legal fees related to litigation of any kind; expenses related to administrative proceedings before state or local agencies; or retail businesses as defined by the board, including without limitation, sports venues, gaming and gambling or entertainment-related establishments, residential properties, or places of overnight accommodation.
    6. "Energy-related projects, programs and services" shall have the same meaning as such term is defined in subparagraph two of paragraph (b) of subdivision seventeen of section one thousand five of the public authorities law.
    7. "Preservation power" is the four hundred ninety megawatts of firm Saint Lawrence FDR project hydroelectric power as such term is defined in subdivision thirteen of section one thousand five of the public authorities law. For purposes of this article, "preservation power"means the energy associated with such power.
    8. "Net earnings" is the aggregate excess of revenues received by the power authority of the state of New York from the sale of preservation power and energy produced at the Saint Lawrence FDR project that was sold in the wholesale energy market over what revenues would have been received had such energy been sold on a firm basis to an eligible preservation power customer under the applicable tariff or contract.
    9. "Northern New York economic development fund" or "fund" is a fund of the authority into which all net earnings are deposited by the authority in accordance with subdivision twenty-five of section one thousand five of the public authorities law and from which allocations of fund benefits to eligible projects may be made.
    § 189-f. The northern New York power proceeds allocation board. 1. There is hereby created the northern New York power proceeds allocation board, which shall possess the powers and duties herein specified. The board shall consist of five members who shall be appointed by the governor as follows: one of whom shall be appointed upon the recommendation of the temporary president of the senate and shall reside within the forty mile radius of the Saint Lawrence FDR power project, one of whom shall be appointed upon the recommendation of the speaker of the assembly and shall reside within the forty mile radius of the Saint Lawrence FDR power project, and at least one additional member who shall also reside within the forty mile radius of the Saint Lawrence FDR power project. The governor shall designate a chair from amongst the board's members.
    2. Each member shall serve a term of five years or until a successor shall have been named and qualified. Members may be reappointed to successive terms.
    3. Notwithstanding any other provision of law to the contrary, three members shall constitute a quorum for the purposes of organizing the board and conducting the business thereof. No action of the board may be taken except upon an affirmative vote of at least three-fifths of the full board membership at any meeting at which at least three members are present or participating by videoconferencing. Videoconferencing may be used for attendance and participation by members of the board. If videoconferencing is used, the board shall provide an opportunity for the public to attend, listen and observe at any site at which a member participates. The public notice for the meeting shall identify, if practicable, all locations where a member will participate in the meeting by video conference and shall state that the public has the right to attend the meeting at any such location.
    4. Members of the board, except those that are employees or officers of the state, its authorities or agencies, shall not receive a salary or other compensation, but shall be allowed the necessary and actual expenses incurred in the performance of duties under this article.
    § 189-g. General powers and duties of the board. 1. The board shall establish procedures and guidelines relating to the activities of the board.
    2. The board shall establish procedures through written policies or standards for reviewing applications for an allocation of fund benefits that shall include a review of applications no less frequently than twice each year. The board, or a member designated by the board, shall receive all applications from, or on behalf of, eligible applicants for fund benefits. Applications shall be in a form and contain such information, data and exhibits as the board, in consultation with the authority, may prescribe.
    3. The board may request from the authority an analysis of any application along with any recommendations. In addition, the authority shall supply any such additional information as is reasonably necessary for the board to perform its duties.
    4. In reviewing applications for fund benefits, the board shall use the criteria for eligibility for expansion, replacement and preservation power and for revitalization of industry as provided in section one thousand five of the public authorities law. The board shall issue a written statement of its findings and recommendations for each application reviewed.
    5. The board shall recommend to the authority the allocation of fund benefits to eligible projects that the board finds are consistent with the applicable criteria in subdivision four of this section. The board may include within its recommendations such recommended terms and conditions as it deems appropriate, including, but not limited to, reasonable provision for the allocation of fund benefits over time as the eligible applicant achieves milestones towards project completion, the partial or complete withdrawal or return of fund benefits where the recipient has failed to achieve or maintain mutually agreed upon commitments, or such other terms and conditions as the board deems advisable. The board shall not recommend an allocation of fund benefits prior to establishing procedures for reviewing applications pursuant to subdivision two of this section.
    6. A recommendation by the board that an eligible applicant receive an allocation of fund benefits shall be a prerequisite to an award of fund benefits by the authority. The authority shall award fund benefits to an applicant upon a recommendation of the board; provided, however, that upon a showing of good cause, the authority shall have discretion as to whether to adopt the board's recommendation, or to award benefits in a different amount or on different terms and conditions than those contained in the recommendation of the board. Allocations of fund benefits shall only be made on the basis of net earnings that have been deposited in the northern New York economic development fund. No award of fund benefits shall encumber future net earnings or net earnings that have been received but not deposited in the northern New York economic development fund.
    7. Upon making an allocation of fund benefits, the authority shall include within the agreement providing for the terms and conditions applicable to such allocation all terms and conditions the authority deems appropriate, taking into account the recommendations made by the board.
    § 189-h. Rules and regulations. The authority is hereby authorized to promulgate such rules and regulations as it deems necessary to fulfill the purposes of this article.
    § 3. Section 1005 of the public authorities law is amended by adding five new subdivisions 24, 25, 26, 27 and 28 to read as follows:
    24. To cooperate with the northern New York power proceeds allocation board and provide the board with such information and assistance as the board reasonably requests, including reasonable staff services, accounting, clerical and secretarial assistance, office space, and equipment reasonably requested by the northern New York power proceeds allocation board to fulfill its duties.
    25. To establish an account to be known as the northern New York economic development fund, which shall consist of "net earnings" as defined in article six-b of the economic development law, deposited in such amounts as determined to be feasible and advisable by the trustees.Such earnings shall be deposited no less frequently than quarterly. The first deposit into the fund shall be made ninety days after the effective date of this subdivision, and shall include all such net earnings accrued since the effective date of chapter four hundred thirty-six of the laws of two thousand ten. At least fifteen percent of such funds shall be dedicated towards eligible projects which are energy-related projects, programs and services as such term is defined in subparagraph two of paragraph (b) of subdivision seventeen of this section. In addition to funding eligible projects, as defined in article six-b of the economic development law, the authority may use northern New York economic development fund monies to cover reasonable costs and expenses of the authority related to the management and administration of the northern New York power proceeds allocation program created by article six-b of the economic development law.
    26. The authority may, in its discretion, consult with the northern New York power proceeds allocation board in the application process relating to the allocation of preservation power.
    27. The authority shall establish processes for application review and allocation of fund benefits provided for in article six-b of the economic development law.
    28. The authority shall include in the annual report prepared pursuant to subdivision eighteen of this section, an accounting for the subject year that provides (a) the amount of preservation power sold into the wholesale market by the authority, and (b) the net earnings, as such term is defined in section one hundred eighty-nine-e of the economic development law, paid into the northern New York economic development fund. § 4. This act shall take effect immediately.

Section 1. The public service law is amended by adding a new section 73 to read as follows:

    § 73. Coordination with certain provisions of the tax law. The department may request from the department of taxation and finance a list of electric generating facilities that have been granted a clean fuel and job creation tax credit as such credit is described in section thirty-eight of the tax law. The list shall include the location of the facility receiving the credit, a description of the project to which the credit relates, the amount of the credit, and the tax year for which the credit was granted.

    § 2. The tax law is amended by adding a new section 38 to read as follows:

    § 38. Clean fuel and job creation tax credit. (a) Allowance of credit. A taxpayer subject to tax under article nine, nine-A or twenty-two of this chapter, which is an electric generating facility, shall be allowed a credit against such tax, pursuant to the provisions referenced in subdivision (c) of this section. The credit shall be allowed for certain investments made by any major electric generating facility in the state such as repowering projects, qualified energy infrastructure investments, and qualified new construction projects as described in this section. The credit shall be as follows:

    (1) twelve and one-half percent of the first one hundred million dollars in investment;

    (2) fifteen percent of the next one hundred million dollars in investment or portion thereof; and

    (3) twenty percent of the investment over two hundred million dollars.

    (b) Definitions. As used in this section, the following terms shall have the following meanings:

    (1) "Repowering project" shall mean improvements to an existing major electric generating facility that will allow the facility, or a new unit or units at the facility, or the combination of the new unit or units and the facility to meet the relevant environmental requirements contained in subparagraphs (i), (ii), (iii) and (iv) of paragraph (b) of subdivision four of section one hundred sixty-five of the public service law.

    (2) "Qualified energy infrastructure investment" shall mean any investment needed to deliver a new fuel source to an existing electric generating facility, replace or retrofit a burner or turbine, utilize on-site renewable energy generation, or any other substantial investment that will have a direct impact on the facility's ability to meet the environmental requirements contained in subparagraphs (i), (ii), (iii) and (iv) of paragraph (b) of subdivision four of section one hundred sixty-five of the public service law.

    (3) "Qualified new construction project" shall mean constructing a new major electric generating facility in the same location as an existing facility or on property directly adjacent or contiguous to said property, where the new facility by itself or in combination with the existing facility will allow the site as a whole to meet the environmental requirements contained in subparagraphs (i), (ii), (iii) and (iv) of paragraph (b) of subdivision four of section one hundred sixty-five of the public service law.

    (4) "Major electric generating facility" shall mean a major electric generating facility as defined in section one hundred sixty of the public service law.

    (c) A major electric generating facility which undertakes a repowering project, a qualified energy infrastructure investment, a qualified new construction project, or other investment in pollution control equipment or additional energy infrastructure with the goal of meeting relevant environmental requirements shall be allowed to claim a credit under this section.

    § 3. The tax law is amended by adding a new section 187-s to read as follows:

    § 187-s. Clean fuel and job creation tax credit. (a) Allowance of credit. A taxpayer shall be allowed a credit, to be computed as provided in section thirty-eight of this chapter, against the tax imposed by sections one hundred eighty-three and one hundred eighty-four of this article.

    (b) Application of credit. In no event shall the credit under this section be allowed in an amount which will reduce the tax payable to less than the applicable minimum tax fixed by section one hundred eighty-three or one hundred eighty-four of this article. If, however, the amount of credit allowable under this section for any taxable year reduces the tax to such amount, any amount of credit not deductible in such taxable year may be carried over to the following year or years and may be deducted from the taxpayer's tax for such year or years.

    § 4. Section 210 of the tax law is amended by adding a new subdivision 46 to read as follows:

    46. Clean fuel and job creation tax credit. (a) Allowance of credit. A taxpayer shall be allowed a credit, to be computed as provided in section thirty-eight of this chapter, against the tax imposed by this article.

    (b) Application of credit. The credit allowed under this subdivision for any taxable year may not reduce the tax due for such year to less than the amount prescribed in paragraph (d) of subdivision one of this section. However, if the amount of credit allowed under this subdivision for any taxable year reduces the tax to such amount, any amount of credit thus not deductible in such taxable year will be treated as an overpayment of tax to be credited or refunded in accordance with the provisions of section one thousand eighty-six of this chapter. Provided, however, the provisions of subsection (c) of section one thousand eighty-eight of this chapter notwithstanding, no interest will be paid thereon.

    § 5. Section 606 of the tax law is amended by adding a new subsection (vv) to read as follows:

    (vv) Clean fuel and job creation tax credit. (1) Allowance of credit. A taxpayer shall be allowed a credit, to be computed as provided in section thirty-eight of this chapter, against the tax imposed by this article.

    (2) Application of credit. If the amount of the credit allowed under this subsection for any taxable year exceeds the taxpayer's tax for such year, the excess will be treated as an overpayment of tax to be credited or refunded in accordance with the provisions of section six hundred eighty-six of this article, provided, however, that no interest will be paid thereon.

    § 6. Subparagraph (B) of paragraph 1 of subsection (i) of section 606 of the tax law is amended by adding a new clause (xxxv) to read as follows: (xxxv) Clean fuel and job creation Amount of clean fuel and credit under subsection (vv) job creation credit under subdivision forty-six of section two hundred ten

    § 7. This act shall take effect on the ninetieth day after it shall have become a law.

PART WW

Section 1. The public service law is amended by adding a new section 66-n to read as follows:

    § 66-n. Solar incentive program. 1. As used in this section:

    (a) "Electric distribution company" means an investor-owned electric corporation that distributes and delivers electricity within this state and has annual revenues in excess of two hundred million dollars; and

    (b) "Qualified solar photovoltaic generating system" means a system of components owned or developed by an entity other than a public authority or an electric distribution company and that generates electricity from sunlight by means of the photovoltaic effect, whether or not the device is coupled with a device capable of storing the energy produced for later use that is (i) installed and operated in New York state within one of the service territories of an electric distribution company as defined in this section, and (ii) installed after January first, two thousand fourteen.

    2. Within forty-five days of the effective date of this section, the commission shall commence the consideration of modifications to its existing programs that encourage the development of qualified solar photovoltaic generating systems and, no later than January first, two thousand fourteen, the commission shall make a determination establishing modifications to its existing programs that encourage the development of qualified solar photovoltaic generating systems in conformance with this section. The department shall consult with the New York state energy research and development authority in the preparation of its recommendations to the commission for such determination. The program modifications shall require:

    (a) administration by the New York state energy research and development authority;

    (b) planned annual expenditures including all costs of a minimum of one hundred eight million dollars commencing in calendar year two thousand fourteen and sustained each year through calendar year two thousand twenty-three;

    (c) a diversity of project sizes, geographic distribution, and participation among customer classes, subject to cost-effectiveness considerations;

    (d) incentive structures that maximize cost-effectiveness and practicality through competitive procurements, standing-offers, production incentives or capacity incentives at the wholesale or retail level as in the judgment of the commission, in consultation with the New York independent system operator, provide for the most effective program;

    (e) incentive structures that take into consideration the economic benefits to the state of New York;

    (f) program designs that take into consideration the avoidance of long-term costs to the transmission and distribution system and minimization of peak load in constrained areas;

    (g) annual reports on the achievements and effectiveness of the program; and

    (h) such other issues deemed appropriate by the commission.

    § 2. Sections 1020-ii, 1020-jj and 1020-kk of the public authorities law, as renumbered by chapter 388 of the laws of 2011, are renumbered sections 1020-jj, 1020-kk and 1020-ll and a new section 1020-ii is added to read as follows:

    § 1020-ii. Establishment of solar incentive program. 1. As used in this section the term "qualified solar photovoltaic generating system" means a system of components owned or developed by an entity other than a public authority or an electric distribution company and that generates electricity from sunlight by means of the photovoltaic effect, whether or not the device is coupled with a device capable of storing the energy produced for later use, that is installed in the authority's service territory after January first, two thousand twelve.

    2. The authority shall continue to encourage the development of qualified solar photovoltaic generating systems in its service territory through implementation of the solar incentive program. The program shall require:

    (a) planned annual expenditures including all costs of at minimum thirty-eight million dollars commencing in calendar year two thousand fourteen and sustained each year through calendar year two thousand twenty-three;

    (b) a diversity of project types;

    (c) program administration and delivery;

    (d) incentive structures that take into consideration the economic benefits to the state of New York;

    (e) program designs that take into consideration the avoidance of long-term costs to the transmission and distribution system and minimization of peak load in constrained areas and that maximizes cost-effectiveness through competitive procurements;

    (f) annual reports on the achievements and effectiveness of the program; and

    (g) any other objectives the authority may establish.

    § 3. Section 210 of the tax law is amended by adding a new subdivision 12-H to read as follows:

    12-H. Qualified solar and energy storage manufacturer facilities and operations credit. (a) A taxpayer that is whole or part of an entity that serves as the principal operator of a facility primarily functioning to fabricate solar energy equipment or energy storage equipment and that meets the eligibility requirements in paragraph (b) of this subdivision, shall be allowed a credit against the tax imposed by this article. The amount of credit shall be equal to the sum of the amounts specified in paragraphs (c) and (d) of this subdivision attributable to the taxpayer subject to the limitations in paragraph (e) of this subdivision. For the purposes of this subdivision solar energy equipment shall mean the manufacturing of material components in New York state designed to produce electricity utilizing solar radiation as the energy source for such electricity; and energy storage equipment shall mean materials and devices intended to store some form of energy related to new energy technologies as described in subdivision one of section eighteen hundred fifty-four of the public authorities law. Such equipment may employ electrical, electrochemical, supercapacitor, compressed gas, mechanical, thermal or other demonstrable means singly or in combination. The determination of whether solar energy equipment or energy storage equipment qualifies for eligible costs under this subdivision shall be determined by the commissioner and, if requested by the commissioner, the president of the New York state energy research and development authority.

    (b) An eligible taxpayer shall (i) have more than one hundred full-time employees employed in New York state, and (ii) have a ratio of research and development funds to net sales, as referred to in section thirty-one hundred two-e of the public authorities law, which equals or exceeds three percent during its taxable year.

    (c) An eligible taxpayer shall be allowed a credit for twenty per centum of the attributable cost or similar basis for federal income tax purposes of research and development and manufacturing property as defined in paragraph (b) of subdivision twelve of this section that is acquired by the taxpayer by purchase as defined in section 179(d) of the internal revenue code and placed in service during the taxable year. Provided, however, for the purposes of this paragraph only, an eligible taxpayer shall be allowed a credit for such percentage of the (i) attributable cost or similar basis for federal income tax purposes for property used in the testing or inspection of materials and products,

    (ii) the attributable costs or expenses associated with quality control of the research and development or manufacturing operations,

    (iii) attributable fees for use of sophisticated technology facilities and processes,

    (iv) attributable fees for the production or eventual commercial distribution of materials and products resulting from the qualified manufacturing activities of an eligible taxpayer.

    (v) The costs, expenses and other amounts for which a credit is allowed and claimed under this paragraph shall not be used in the calculation of any other credit allowed under this article.

    (d) An eligible taxpayer shall be allowed a credit for ten per centum of "qualified research and manufacturing expenses" paid or incurred by the taxpayer in the taxable year. For the purposes of this section, the term "qualified research and manufacturing expenses" shall mean attributable expenses associated with in-house research and manufacturing processes, and attributable costs associated with the dissemination of the results of the products that directly result from such research and development and/or manufacturing activities; provided, however, that such costs shall not include advertising or promotion through paid media. In addition, costs associated with the preparation of patent applications, patent application filing fees, patent research fees, patent examinations fees, patent post allowance fees, patent maintenance fees, and grant application expenses and fees shall be eligible for such credit. In no case shall the credit allowed under this paragraph apply to expenses for litigation or the challenge of another entity's intellectual property rights, or for contract expenses involving outside paid consultants. The costs, expenses and other amounts for which a credit is allowed and claimed under this paragraph shall not be used in the calculation of any other credit allowed under this article.

    (e) An eligible taxpayer may claim credits under this subdivision for four consecutive taxable years. In no case shall the credit allowed by this subdivision to a taxpayer exceed twenty-five million dollars per year.

    (f) The credit allowed under this subdivision for any taxable year shall not reduce the tax due for such year to less than the higher of the amounts prescribed in paragraphs (c) and (d) of subdivision one of this section. However, if the amount of credit allowed under this subdivision for any taxable year reduces the tax to such amount, any amount of credit not deductible in such taxable year shall be treated as an overpayment of tax to be credited or refunded in accordance with the provisions of section one thousand eighty-six of this chapter. Provided, however, the provisions of subsection (c) of section one thousand eighty-eight of this chapter notwithstanding, no interest shall be paid thereon.

    § 4. Section 606 of the tax law is amended by adding a new subsection (vv) to read as follows:

    (vv) Qualified solar and energy storage manufacturer facilities and operations credit. (1) A taxpayer who is a member of an entity consisting of one or more taxpayers that serves as the principal operator of a facility primarily functioning to fabricate solar energy equipment or energy storage equipment and that meets the eligibility requirements in paragraph two of this subsection, shall be allowed a credit against the tax imposed by this article. The amount of credit shall be equal to the sum (or pro rata share of the sum in the case of a partnership) of the amounts specified in paragraphs three and four of this subsection subject to the limitations in paragraph five of this subsection. For the purposes of this subsection solar energy equipment shall mean the manufacturing of material components in New York state designed to produce electricity utilizing solar radiation as the energy source for such electricity; and energy storage equipment shall mean materials and devices intended to store some form of energy related to new energy technologies as described in subdivision one of section eighteen hundred fifty-four of the public authorities law. Such equipment may employ electrical, electrochemical, supercapacitor, compressed gas, mechanical, thermal or other means singly or in combination. The determination of whether solar energy equipment or energy storage equipment qualifies for eligible costs under this subsection shall be determined by the commissioner, and, if requested by the commissioner, the president of the New York state energy research and development authority.

    (2) An eligible entity shall (i) have more than one hundred full-time employees employed in New York state, and (ii) have a ratio of research and development funds to net sales, as referred to in section thirty-one hundred two-e of the public authorities law, which equals or exceeds three percent during its taxable year.

    (3) An eligible taxpayer shall be allowed a credit for twenty per centum of the cost or similar basis for federal income tax purposes incurred by the entity for research and development and manufacturing property as defined in paragraph (b) of subdivision twelve of section two hundred ten of this chapter that is acquired by purchase as defined in section 179(d) of the internal revenue code and placed in service during the taxable year. Provided, however, for the purposes of this paragraph only, an eligible taxpayer shall be allowed a credit for such percentage of the (i) cost or similar basis for federal income tax purposes for property used in the testing or inspection of materials and products,

    (ii) the costs or expenses associated with quality control of the research and development or manufacturing operations,

    (iii) fees for use of sophisticated technology facilities and processes,

    (iv) fees for the production or eventual commercial distribution of materials and products resulting from the activities of an eligible taxpayer as long as such activities fall under the activities listed in paragraph (b) of subdivision one of section thirty-one hundred two-e of the public authorities law.

    (v) The costs, expenses and other amounts for which a credit is allowed and claimed under this paragraph shall not be used in the calculation of any other credit allowed under this article.

    (4) An eligible taxpayer shall be allowed a credit for ten per centum of "qualified research and manufacturing expenses" paid or incurred by the entity in the taxable year. For the purposes of this section, the term "qualified research and manufacturing expenses" shall mean expenses associated with in-house research and manufacturing processes, and costs associated with the dissemination of the results of the products that directly result from such research and development and/or manufacturing activities; provided, however, that such costs shall not include advertising or promotion through paid media. In addition, costs associated with the preparation of patent applications, patent application filing fees, patent research fees, patent examinations fees, patent post allowance fees, patent maintenance fees, and grant application expenses and fees shall be eligible for such credit. In no case shall the credit allowed under this paragraph apply to expenses for litigation or the challenge of another entity's intellectual property rights, or for contract expenses involving outside paid consultants. The costs, expenses and other amounts for which a credit is allowed and claimed under this paragraph shall not be used in the calculation of any other credit allowed under this article.

    (5) An eligible taxpayer may claim credits under this subsection for four consecutive taxable years. In no case shall the credit allowed by this subdivision to a taxpayer exceed twenty-five million dollars per year. If the taxpayer is a partner in a partnership or shareholder of a New York S corporation, then the cap imposed by this paragraph shall be applied at the entity level, so that the aggregate credit allowed to all the partners, shareholders, or other members of each such entity in the taxable year does not exceed twenty-five million dollars per year for up to four consecutive taxable years.

    (6) If the amount of credit allowed under this subsection for any taxable year shall exceed the taxpayer's tax for such year, the excess shall be treated as an overpayment of tax to be credited or refunded in accordance with the provisions of section six hundred eighty-six of this article, provided, however, that no interest shall be paid thereon.

    § 5. Subparagraph (B) of paragraph 1 of subsection (i) of section 606 of the tax law is amended by adding a new clause (xxxv) to read as follows: (xxxv) Credit for Amount of credit under qualified solar and energy storage subdivision twelve-H of manufacturer facilities section two hundred ten and operations credit under subsection (vv)

    § 6. If any provision of this act is, for any reason, declared unconstitutional or invalid, in whole or in part, by any court of competent jurisdiction, such portion shall be deemed severable, and such unconstitutionality or invalidity shall not affect the validity of the remaining provisions of this act, which remaining provisions shall continue in full force and effect.

    § 7. This act shall take effect immediately and sections three, four and five of this act shall apply to taxable years commencing on or after January 1, 2014.