In May 2007, Nebraska established an exemption from the sales and use tax imposed on the gross receipts from the sale, lease, or rental of personal property for use in a community-based energy development (C-BED) project. The Tax Commissioner is required to establish filing requirements to claim the exemption. In April 2008 L.B. 916 made several amendments to this incentive, including: (1) clarified C-BED ownership criteria to recognize ownership by partnerships, cooperatives and other pass-through entities; (2) clarified that the restriction on power purchase agreement payments should be calculated according to gross* and not net receipts; (3) added language detailing the review authority of the Tax Commissioner and recovery of exempted taxes; and (4) defined local payments to include lease payments, easement payments, and real and personal property tax receipts from a C-BED project.
A C-BED project is defined as a new wind energy project that meets one of the following ownership conditions:
- For a C-BED project that consists of more than two turbines, the project is owned by qualified owners with no single qualified owner owning more than 15% of the project and with at least 33% of the power purchase agreement payments flowing to the qualified owner or owners or local community; or
- For a C-BED project that consists of one or two turbines, the project is owned by one or more qualified owners with at least 33% of the power purchase agreement payments flowing to a qualified owner or local community.
In addition, a resolution of support for the project must be adopted by the county board of each county 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.
A qualified C-BED project owner means:
- a Nebraska resident;
- a limited liability company that is organized under the Limited Liability Company Act and that is entirely made up of members who are Nebraska residents;
- a Nebraska nonprofit corporation;
- an electric supplier(s), subject to certain limitations for a single C-BED project; or
- a tribal council.
In separate legislation (LB 629), also enacted in May 2007, Nebraska established the Rural Community-Based Energy Development Act to authorize and encourage electric utilities to enter into power purchase agreements with C-BED project developers.
* LB 561 of 2009 established that gross power purchase agreement payments do not include debt financing if the agreement is entered into on or before December 31, 2011, and the qualified owners have a combined total of at least 33% of the equity ownership in the C-BED project.
