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OLR Bill Analysis
sHB 6106
AN ACT CONCERNING THE PROPERTY TAX EXEMPTION FOR
CERTAIN RENEWABLE ENERGY SOURCES AND
NONRESIDENTIAL HYDROPOWER FACILITIES.
SUMMARY
This bill expands the availability of the property tax exemption for
certain renewable energy facilities.
For renewable energy facilities installed for commercial and
industrial uses, the bill (1) extends the tax exemption to facilities
installed for all nonresidential purposes and (2) increases the size or
number of facilities eligible to be installed at each location.
For renewable energy facilities on farms or for private residential
use, the bill prohibits the disqualification of a facility from the
exemption because it (1) uses or participates in net metering, a tariff
policy, or another state program or (2) is owned by someone other
than the property owner (e.g., leased solar panels). It also limits the
size or number of installed facilities that are eligible for this exemption
to those whose estimated annual production does not exceed the
estimated annual load where the facility is located.
To claim either exemption, existing law requires taxpayers to file an
application with the assessor or board of assessors. The bill requires
the application form to include a statement of the facility’s estimated
annual load (presumably, the load of the property where the facility is
located) and production as of its installation date.
The bill also allows someone owning multiple facilities in the same
municipality to file a single application identifying each one. Under
current law, the assessors provide the application form. The bill
instead requires the Office of Policy and Management (OPM) secretary
to prepare the form and make it publicly available on the OPM 2021HB-06106-R000069-BA.DOCX
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website.
EFFECTIVE DATE: October 1, 2021, and applicable to assessment
years on or after that date.
FACILITIES FOR NONRESIDENTIAL PURPOSES
Current law generally exempts from property tax the following
facilities installed on or after January 1, 2014, for commercial or
industrial purposes: (1) Class I renewable energy sources (e.g., wind
and solar) and (2) solar thermal or geothermal renewable energy
sources. The bill broadens the exemption by applying it to facilities
installed for nonresidential purposes, rather than just commercial or
industrial purposes.
Current law provides this exemption only for facilities with a
nameplate capacity less than or equal to their location’s load.
Nameplate capacity is generally the maximum potential output of the
energy source under ideal conditions. The bill instead makes these
renewable energy sources eligible for the exemption if their estimated
annual production does not exceed the estimated annual load for the
location where they are installed. Because annual production estimates
would presumably account for performance under actual conditions
rather than ideal conditions, the bill effectively expands the number or
size of facilities eligible for the tax exemption (i.e., more or larger
facilities could be installed without exceeding the location’s estimated
annual load because estimated annual production would be lower
than nameplate capacity).
FACILITIES ON RESIDENTIAL PROPERTY AND FARMS
Current law exempts from property tax Class I renewable energy
sources (e.g., wind and solar) installed on or after October 1, 2007, for
private residential use or for use on a farm. The bill prohibits these
facilities from being disqualified from the exemption because they (1)
participate in net metering, tariff policies, or other state programs or
(2) are owned by a party other than the owner of the property where
the facility is installed (e.g., leased solar panels). In practice, the
application of current law to leased facilities varies across 2021HB-06106-R000069-BA.DOCX
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municipalities.
Current law does not cap or limit the size or number of installed
facilities eligible for this tax exemption. The bill limits the exemption to
those facilities whose estimated annual production does not exceed the
estimated annual load where the facility is located.
COMMITTEE ACTION
Planning and Development Committee
Joint Favorable
Yea 26 Nay 0 (03/02/2021)