Energy bills, with tax exemption, in conference committee

An energy bill passed by the Senate in April and by the House in June includes language that would exempt solar and wind electricity generation equipment from local taxation.

Under current law, municipalities have the discretion to tax the equipment or to negotiate a payment-in-lieu-of-taxes (PILOT) agreement with the utility.

The bill passed by each branch would set a fixed PILOT rate for the municipality in which the equipment is located.

The original language in the House bill would set the PILOT rate at 5 percent of annual gross electricity sales – the same as the Senate bill – but an amendment filed by Rep. Stephen Kulik, adopted by the House, would increase the figure to 6 percent. The amendment would allow the value of the PILOT to be included under the community’s levy limit and includes a sunset provision, under which the exemption would expire in five years.

Both the Senate and House bills call for the Division of Local Services to study the impact of the tax exemption on municipalities.

In a letter to the House prior to the vote, the MMA argued that “the current system is working.”

“Massachusetts ranks second in the nation in the development of solar facilities,” the MMA testified, “and cities and towns are full partners in this success. There is no good reason to undermine local taxing authority.”

The Senate and House versions of the energy bill were sent to a six-member conference committee, chaired by Sen. Ben Downing and Rep. John Keenan, to reconcile differences in the legislation.

The MMA is working with the conference committee to promote a final bill that protects the interests of municipalities.

Both bills would expand the Energy Efficiency Advisory Council to include a representative from a municipality and increase the net metering cap from 2 percent to 3 percent for municipalities. Both of these provisions are supported by the MMA.

The legislation is intended to reduce the cost of electricity in Massachusetts and promote the energy goals of the 2008 Green Communities Act.