House Bill 92 aims to incentivize geothermal electricity generation in New Mexico through the establishment of tax credits and deductions. The bill introduces a geothermal electricity generation income tax credit and a corporate income tax credit, allowing taxpayers who hold an interest in geothermal generation facilities to claim credits based on electricity generated. Specifically, the credit amounts to $0.015 per kilowatt-hour for electricity produced, applicable for facilities that either commence construction after January 1, 2025, or significantly increase their output. The total credits available each year are capped at $5 million, promoting fiscal responsibility while encouraging renewable energy expansion.
Additionally, the bill includes provisions for deductions related to the construction and operation of geothermal facilities. Taxpayers can deduct certain costs associated with building and equipping facilities from their gross receipts and compensating taxes until July 1, 2032. This aims to lower the initial financial burden of establishing geothermal facilities, thereby fostering local economic development and participation in the growing clean energy sector.
The impact of HB 92 on state laws focuses on enabling local governments to benefit from the geothermal industry while balancing compliance with economic and environmental standards. The bill stipulates that local governments will receive distributions from the deductions claimed, ensuring that they do not lose out on necessary tax revenues as geothermal operations come into play. Such revenue sharing is intended to mitigate concerns around local taxation and budgetary constraints triggered by the new tax incentives.
However, there are notable discussions regarding the implications of these credits and deductions. While proponents argue that the bill represents a significant stride toward energy independence and sustainable development, concerns have been raised about the effectiveness of these incentives in achieving broader environmental goals and whether they may divert funds from other essential public services. The interplay between promoting renewable energy and ensuring fiscal stability for local governments is central to the ongoing debates surrounding HB 92.