109.01 Sales of qualified materials for use
in the manufacture, installation, construction, repair, or replacement of
qualified community-based energy development (C-BED) projects are exempt from
sales and use tax provided the purchaser files the appropriate documentation as
required under this regulation.
109.02 The following definitions will be used
for this regulation.
109.02A C-BED project
means a new wind energy project:
109.02A(1)
That meets the eligible ownership structure and other requirements as set forth
in Neb. Rev. Stat. §
77-2704.57
and §§
70-1901
to
70-1909,
and in this regulation;
109.02A(2)
Which is supported by a resolution adopted by the county or counties in which
the C-BED project is to be located or by the tribal council for a C-BED project
located within the boundaries of an Indian Reservation located in Nebraska;
and
109.02A(3) Where at least 33%
of the gross power purchase agreement payments over the life of the power
purchase agreement must flow to the qualified owners or local community. Equity
partners, if any, may receive the remaining payments.
109.02B C-BED project developer means both
the person arranging and organizing the C-BED project, and any person who is
operationally responsible for the C-BED project.
109.02C Debt financing payments mean
principal, interest, and other typical financing costs paid by the C-BED
project developer to one or more third-party financial institutions for the
financing or refinancing of the construction of the C-BED project. Debt
financing payments do not include the repayment of principal at the time of a
refinancing.
109.02D Electric
supplier means any legal entity supplying, producing, or distributing
electricity within the state for sale at wholesale or retail.
109.02E Electric utility means an electric
supplier that:
109.02E(1) Owns more than 100
miles of 115 kilovolt or larger transmission lines in Nebraska;
109.02E(2) Owns more than 200 megawatts of
electric generating facilities; and
109.02E(3) Has the obligation to directly
serve more than 200 megawatts of wholesale or retail electric load in Nebraska.
109.02F Eligible
ownership structure means:
109.02F(1) For a
C-BED project that consists of more than two wind turbines:
109.02F(1)(a) The C-BED project must be
developed by one or more qualified owners and may also include equity
partners;
109.02F(1)(b) No single
individual qualified owner may own, directly or indirectly, more than 15% of
the C-BED project; and
109.02F(1)(c) No single electric supplier may
own, directly or indirectly, more than 15% of the C-BED project, and the
combined ownership of all electric suppliers cannot exceed 25% of the C-BED
project.
109.02F(2) For
a C-BED project that consists of one or two wind turbines:
109.02F(2)(a) The C-BED project must be
developed by one or more qualified owners and may also include equity partners;
and
109.02F(2)(b) No single
electric supplier may own, directly or indirectly, more that 15% of the C-BED
project, and the combined ownership of all electric suppliers cannot exceed 25%
of the C-BED project.
109.02G Equity partner means a person who is
not a qualified owner and who has received an ownership interest in exchange
for an investment in the C-BED project.
109.02H Gross power purchase agreement
payments mean the total amount of payments received from the purchaser of the
power during the life of the agreement. For power purchase agreements entered
into after August 29, 2009 and on or before December 31, 2011, if the qualified
owners have a combined total of at least 33% of the equity ownership in the
C-BED project, gross power purchase agreement payments will be reduced by the
debt financing payments. For the purposes of determining eligibility of the
project, an estimate of the payments and their recipients will be
used.
109.02I New wind energy
project means the manufacture, installation, construction, repair, or
replacement of a device, such as a wind charger, windmill, or wind turbine,
that is used to convert wind energy to electrical energy, or for the
transmission of this electricity to the purchaser.
109.02J Payments to the local community mean
payments that are made to local residents, property owners, or governments.
109.02J(1) Payments to the local community
include, but are not limited to, lease payments to property owners on whose
property a wind turbine is located, wind energy easement payments, real and
personal property tax receipts from the C-BED project, and loan payments
received or processed by a local financial institution that is actually
financing construction of the project.
109.02J(2) Payments to the local community do
not include construction costs, purchases of qualified or nonqualified property
prior to the initial delivery of power payments or deposits received or
processed by local financial institutions, and loan payments received or
processed by a local financial institution on behalf of a non-local financial
institution that is actually financing construction of the project.
109.02K Qualified property means
any property used to manufacture, install, construct, repair, or replace a
device used in a C-BED project such as a wind charger, windmill, or wind
turbine including the substation, power lines connecting these devices together
and power lines connecting the project to the electrical grid system, and
property used to construct the pads that support the wind chargers, windmills,
wind turbines, windmill towers, and substations.
109.02K(1) Nonqualified property means all
property other than qualified property.
109.02K(2) Nonqualified property includes,
but is not limited to: motor vehicles; maintenance equipment and tools;
communication systems (i.e., meteorological towers and data recorders-computer
systems that are not an integral part of the wind turbine); information centers
and related security systems (i.e., cameras and recorders); erosion control
systems (i.e., landscaping, grass seed, sod, and irrigation systems); office
and maintenance buildings; computer equipment that is not an integral part of
the wind turbine; office equipment; signage of any kind; furnishings; roads;
bridges; gates; fencing; site lighting; and any materials for the electrical
grid system. The purchase and use of property that is not qualified property is
taxable.
109.02L
Qualified owner means a person or organization with an equity ownership stake
in the project who is:
109.02L(1) A Nebraska
resident;
109.02L(2) A limited
liability company that is organized under the Limited Liability Company Act and
which has only Nebraska residents as members.
109.02L(3) A Nebraska nonprofit corporation
organized under the Nebraska Nonprofit Corporation Act;
109.02L(4) An electric supplier; or
109.02L(5) A tribal council of a federally
recognized American Indian Tribe with a reservation located in
Nebraska.
109.03 To receive the sales and use tax
exemption, the C-BED project developer must submit a Community-Based Energy
Development Project Application and the following supporting documentation to
the Nebraska Department of Revenue (Department):
109.03A The organization of the C-BED
project;
109.03B The proposed
distribution structure of the payments made under the power purchase
agreement;
109.03C A copy of the
power purchase agreement;
109.03D
The C-BED project financial pro forma; articles of incorporation; operating
agreements;
109.03E A copy of the
resolution in support adopted by the county board or tribal council where the
project is located; and
109.03F
Written documentation demonstrating that a written offer to become a qualified
owner has been made to each owner on whose property a turbine will be located
to the extent feasible.
109.04 If the Department approves the C-BED
Project Application, the Department will subsequently issue a Certificate of
Exemption that may be used by the project developer and contractors to purchase
qualified property tax-free.
109.04A To
purchase qualified property tax-free, the C-BED project developer and any
contractors must complete and issue to each vendor a Nebraska Resale or Exempt
Sale Certificate, Form 13, and attach a copy of the Certificate of Exemption.
The basis for the exemption must be entered on the Form 13.
109.04B A C-BED project developer or
contractor may claim and receive a refund of any sales or use tax paid for
purchases of qualified property made after the Department has received the
application for the Certificate of Exemption, and before the Department has
issued the Certificate of Exemption if the project met all the requirements of
a C-BED project at the time of the purchase.
109.05 The Department may examine the actual
payments to qualified owners and the local community and the distribution of
the power purchase agreement payments to determine if the projected
distributions were met. If the power purchase agreement payments to qualified
owners and the local community do not meet the requirements of this regulation
or Neb. Rev. Stat. §
77-2704.57,
the Department may recover the amount of the sales or use tax that should have
been paid on property used at the project from the C-BED project developer, at
any time up to and including three years after the end of the power purchase
agreement.
109.05A The amount due under this
section includes the sales and use taxes that would have been paid if no
Certificate of Exemption had been granted, and interest at the rate specified
in Neb. Rev. Stat. §
45-104.02,
from the date the tax was due until the date the sales and use tax is
paid.
109.05B At any time prior to
the end of the power purchase agreement, the C-BED project developer may
voluntarily surrender the Certificate of Exemption granted by the Tax
Commissioner and pay the Department the amount of sales and use tax that should
have been paid, plus interest.
109.06 To meet the requirements of the
exemption, at least 33% of the gross power purchase agreement payments must be
distributed to the qualified owners or the local community. Only payments made
after the receipt of the first power purchase agreement payments will be
considered when determining the percentage received by the qualified owners or
the local community. Distribution of a tax attribute, a noncash benefit, loan
proceeds, or some other payment that does not come out of the power purchase
agreement payments will not be considered.
109.06A Payments to the local community are
those payments that are defined above as payments to the local community in
section
109.02J of this
regulation.
109.06B For power
purchase agreements entered into after August 29, 2009 and on or before
December 31, 2011, if the qualified owners have a combined total of at least
33% of the equity ownership in the C-BED project, the gross power purchase
agreement payments will be reduced by the debt financing payments.
109.06C To prevent the same payment from
being counted both as a distribution to the owner and as a local payment or
debt financing payment, the distributions to the qualified owners for any
purpose will be considered prior to all expenses other than expenses that are
considered to be local payments, or any debt financing that reduces the gross
power purchase agreement payments. Any expenses that are allocated to the
owners must be allocated in the same proportion as the distributions of the
power purchase agreement payments for the same year.
109.06D In determining if debt financing may
be excluded under section
1-109.06B, the
percentage of ownership that is considered is the percentage of ownership for
the same year that the debt financing payment is to be excluded.
109.07 Changes in Ownership
Structure. If there is any change in the ownership structure after the
application is submitted or approved, including a change of an equity partner,
a new application must be submitted to the Department. If the new ownership
structure does not meet the statutory requirements and the new application is
not approved by the Department, all purchases of qualifying property after the
effective date of the change in ownership structure are taxable.
109.07A A C-BED project developer must notify
the electric utility that has a power purchase agreement with a C-BED project
if there is a change in the ownership structure which makes the project no
longer eligible as a C-BED project.
109.07B The Tax Commissioner must notify an
electric utility that has a power purchase agreement with a C-BED project if
there is a change in the ownership structure which makes the project no longer
eligible as a C-BED project.
109.07C Acquisition of a C-BED project by an
electric utility prior to the end of the power purchase agreement disqualifies
the C-BED project for the sales and use tax exemption for all purchases of
qualifying property made after the date of the acquisition by the electric
utility, and may require payment of any sales and use taxes not previously paid
if the payments to the qualified owners and the local community no longer meet
the required criteria for the period the agreement was in effect.
109.08 Changes in the Power
Purchase Agreement. The C-BED project developer must notify the Tax
Commissioner of any changes in the power purchase agreement or of the
termination of the agreement. If the power purchase agreement is amended, a new
application must be submitted. If the distribution of the gross power purchase
agreement payments no longer meets the statutory requirements and the new
application is not approved by the Department, the Department may recover the
amount of the sales or use tax that should have been paid on materials used at
the project from the C-BED project developer, at any time up to and including
three years after the end of the power purchase agreement, and interest at the
rate specified in Neb. Rev. Stat. §
45-104.02,
from the date the tax was due until the date the sales or use tax is
paid.
109.09 Changes in Documents
Supporting the Application. The C-BED project developer must notify the Tax
Commissioner of any changes in any of the other documents supporting the
application during the life of the power purchase agreement. The Tax
Commissioner will determine if a new application must be submitted based on the
changes made.
