GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2005

S                                                                                                                                                     2

SENATE BILL 2051

Agriculture/Environment/Natural Resources Committee Substitute Adopted 6/28/06

 

 

 

Short Title:     Energy Independence Act.

(Public)

Sponsors:

 

Referred to:

 

May 26, 2006

A BILL TO BE ENTITLED

AN ACT to increase energy independence in north carolina through: (1) promotion of the conservation of energy, water, and other Utilities in public facilities; (2) promotion of the use of alternative fuels and advanced technology vehicles in state FLEETs; (3) provision of energy assistance to low-income persons; (4) creation of various energy-related tax incentives; (5) development of a strategic plan for development of a biofuels industry in north carolina; and (6) appropriation of funds.

The General Assembly of North Carolina enacts:

 

PART I. ENERGY CONSERVATION IN STATE AND LOCAL GOVERNMENT FACILITIES

 

CLARIFY THAT GUARANTEED ENERGY SAVINGS CONTRACTS INCLUDE CONSERVATION MEASURES FOR WATER AND OTHER UTILITIES, RAISE THE CAP FOR, AND EXTEND THE TERM OF, GUARANTEED ENERGY SAVINGS CONTRACTS

 

SECTION 1.1.  The title of Article 3B of Chapter 143 of the General Statutes reads as rewritten:

"Energy Conservation of Energy, Water, and Other Utilities in Public Government Facilities."

SECTION 1.2.  G.S. 143-64.17 reads as rewritten:

"§ 143-64.17.  Definitions.

As used in this Part:

(1)       "Energy conservation measure" means a facility or meter alteration, training, or services related to the operation of the facility,facility or meter, when the alteration, training, or services provide anticipated energy savings.savings or capture lost revenue. Energy conservation measure includes any of the following:

a.         Insulation of the building structure and systems within the building.

b.         Storm windows or doors, caulking, weatherstripping, multiglazed windows or doors, heat-absorbing or heat-reflective glazed or coated window or door systems, additional glazing, reductions in glass area, or other window or door system modifications that reduce energy consumption.

c.         Automatic energy control systems.

d.         Heating, ventilating, or air-conditioning system modifications or replacements.

e.         Replacement or modification of lighting fixtures to increase the energy efficiency of a lighting system without increasing the overall illumination of a facility, unless an increase in illumination is necessary to conform to the applicable State or local building code or is required by the light system after the proposed modifications are made.

f.          Energy recovery systems.

g.         Cogeneration systems that produce steam or forms of energy such as heat, as well as electricity, for use primarily within a building or complex of buildings.

h.         Other energy conservation measures.

i.          Faucets with automatic or metered shut-off valves, leak detection equipment, water meters, water recycling equipment, and wastewater recovery systems.

j.          Other conservation measures that conserve energy, water, or other utilities.

(2)       "Energy savings" means a measured reduction in fuel costs, energy costs, water costs, stormwater fees, other utility costs, or operating costs costs, including environmental discharge fees, water and sewer maintenance fees, and increased meter accuracy, created from the implementation of one or more energy conservation measures when compared with an established baseline of previous fuel costs, energy costs, or operating costs costs, including captured lost revenue developed by the governmental unit.

(2a)     "Governmental unit" means either a local governmental unit or a State governmental unit.

(3)       "Guaranteed energy savings contract" means a contract for the evaluation, recommendation, or implementation of energy conservation measures, including the design and installation of equipment or the repair or replacement of existing equipment,equipment or meters, in which all payments, except obligations on termination of the contract before its expiration, are to be made over time, and in which energy savings are guaranteed to exceed costs.

(4)       "Local governmental unit" means any board or governing body of a political subdivision of the State, including any board of a community college, any school board, or an agency, commission, or authority of a political subdivision of the State.

(5)       "Qualified provider" means a person or business experienced in the design, implementation, and installation of energy conservation measures.

(6)       "Request for proposals" means a negotiated procurement initiated by a governmental unit by way of a published notice that includes the following:

a.         The name and address of the governmental unit.

b.         The name, address, title, and telephone number of a contact person in the governmental unit.

c.         Notice indicating that the governmental unit is requesting qualified providers to propose energy conservation measures through a guaranteed energy savings contract.

d.         The date, time, and place where proposals must be received.

e.         The evaluation criteria for assessing the proposals.

f.          A statement reserving the right of the governmental unit to reject any or all the proposals.

g.         Any other stipulations and clarifications the governmental unit may require.

(7)       "State governmental unit" means the State or a department, an agency, a board, or a commission of the State, including the Board of Governors of The University of North Carolina and its constituent institutions."

SECTION 1.3.  G.S. 143-64.17B(a) reads as rewritten:

"(a)      A governmental unit may enter into a guaranteed energy savings contract with a qualified provider if all of the following apply:

(1)       The term of the contract does not exceed 12 20 years from the date of the installation and acceptance by the governmental unit of the energy conservation measures provided for under the contract.

(2)       The governmental unit finds that the energy savings resulting from the performance of the contract will equal or exceed the total cost of the contract.

(3)       The energy conservation measures to be installed under the contract are for an existing building.building or utility system."

SECTION 1.4.  The catch line of G.S. 143-64.17G reads as rewritten:

"§ 143-64.17G.  Report on guaranteed energy savings contracts.contracts entered into by local governmental units."

SECTION 1.5.  The catch line of G.S. 143-64.17H reads as rewritten:

"§ 143-64.17H.  Guaranteed Report on guaranteed energy savings contract reporting requirements.contracts entered into by State governmental units."

SECTION 1.6.  G.S. 142-63 reads as rewritten:

"§ 142-63.  Authorization of financing contract.

Subject to the terms and conditions set forth in this Article, a State governmental unit that has solicited a guaranteed energy conservation measure pursuant to G.S. 143-64.17A or G.S. 143-64.17B or the State Treasurer, as designated by the Council of State, is authorized to execute and deliver, for and on behalf of the State of North Carolina, a financing contract to finance the costs of the energy conservation measure. The aggregate principal amount payable by the State under financing contracts entered pursuant to this Article shall not exceed fifty million dollars ($50,000,000) one hundred million dollars ($100,000,000) at any one time."

SECTION 1.7.  G.S. 142-64(b)(2) reads as rewritten:

"(2)      The Council of State has approved the execution and delivery of the financing contract by resolution that sets forth all of the following:

a.         The not-to-exceed term or final maturity of the financing contract, which shall be no later than 12 years from the date the financing contract is entered.20 years from the date of acceptance of the project.

b.         The not-to-exceed interest rate or rates (or the equivalent thereof), which may be fixed or vary over a period of time, with respect to the financing contract.

c.         The appropriate officers of the State to execute and deliver the financing contract and all other documentation relating to it."

SECTION 1.8.  G.S. 143-64.10 reads as rewritten:

"§ 143-64.10.  Findings; policy.

(a)       The General Assembly hereby finds:finds all of the following:

(1)       That the State shall take a leadership role in aggressively undertaking energy the conservation of energy, water, and other utilities in North Carolina;Carolina.

(2)       That State facilities have a significant impact on the State's consumption of energy;energy, water, and other utilities.

(3)       That energy conservation practices to conserve energy, water, and other utilities that are adopted for the design, construction, operation, maintenance, and renovation of these facilities and for the purchase, operation, and maintenance of equipment for these facilities will have a beneficial effect on the State's overall supply of energy;energy, water, and other utilities.

(4)       That the cost of the energy energy, water, and other utilities consumed by these facilities and the equipment for these facilities over the life of the facilities shall be considered, in addition to the initial cost;cost.

(5)       That the cost of energy energy, water, and other utilities is significant and facility designs shall take into consideration the total life-cycle cost, including the initial construction cost, and the cost, over the economic life of the facility, of the energy energy, water, and other utilities consumed, and of operation and maintenance of the facility as it affects energy consumption; and  the consumption of energy, water, or other utilities.

(6)       That State government shall undertake a program to reduce energy the use of energy, water, and other utilities in State facilities and equipment in those facilities in order to provide its citizens with an example of energy-use efficiency.the efficient use of energy, water, and other utilities.

(b)       It is the policy of the State of North Carolina to ensure that energy conservation practices to conserve energy, water, and other utilities are employed in the design, construction, operation, maintenance, and renovation of State facilities and in the purchase, operation, and maintenance of equipment for State facilities."

SECTION 1.9.  G.S. 143-64.11(2) reads as rewritten:

"(2)      "Energy-consumption analysis" means the evaluation of all energy- consuming systemssystems, including systems that consume water or other utilities, and components of these systems by demand and type of energy,energy or other utility use, including the internal energy load imposed on a facility by its occupants, equipment and components, and the external energy load imposed on the facility by climatic conditions."

SECTION 1.10.  G.S. 143-64.11(2b) reads as rewritten:

"(2b)    "Energy-consuming system" includes but is not limited to any of the following equipment or measures:

a.         Equipment used to heat, cool, or ventilate the facility;

b.         Equipment used to heat water in the facility;

c.         Lighting systems;

d.         On-site equipment used to generate electricity for the facility;

e.         On-site equipment that uses the sun, wind, oil, natural gas, liquid propane gas, coal, or electricity as a power source; and

f.          Energy conservation measures measures, as defined in G.S. 143-64.17, in the facility design and construction that decrease the energy energy, water, or other utility requirements of the facility."

SECTION 1.11.  G.S. 143-64.11(3) reads as rewritten:  

"(3)      "Facility" means a building or a group of buildings served by a central energy distribution system for energy, water, or other utility or components of a central energy distribution system."

SECTION 1.12.  G.S. 143-64.12 reads as rewritten:

"§ 143-64.12.  Authority and duties of State agencies.

(a)       The General Assembly authorizes and directs that State agencies shall carry out the construction and renovation of State facilities, under their jurisdiction in such a manner as to further the policy declared herein, ensuring the use of life-cycle cost analyses and energy-conservation practices.practices to conserve energy, water, and other utilities.

(b)       The Department of Administration shall develop and implement policies, procedures, and standards to ensure that State purchasing practices improve energy  efficiency regarding energy, water, and other utility use and take the cost of the product over the economic life of the product into consideration. The Department of Administration shall adopt and implement Building Energy Design Guidelines. These guidelines shall include energy-use goals and standards, economic assumptions for life-cycle cost analysis, and other criteria on building systems and technologies. The Department of Administration shall modify the design criteria for construction and renovation of facilities to require that a life-cycle cost analysis be conducted pursuant to G.S. 143-64.15. The Department of Administration, as part of the Facilities Condition and Assessment Program, shall identify and recommend energy conservation maintenance and operating procedures that are designed to reduce energy consumption within the facility and that require no significant expenditure of funds. State departments, institutions, or agencies shall implement these recommendations. Where energy management equipment is proposed for State facilities, the maximum interchangeability and compatibility of equipment components shall be required.

The Department of Administration shall develop a comprehensive energy management program to manage energy, water, and other utility use for State government. Each State agency shall develop and implement an energy a management plan that is consistent with the State's comprehensive energy management program.program to manage energy, water, and other utility use.

(c)       through (g) Repealed by Session Laws 1993, c. 334, s. 4."

 

EXPAND THE STATE'S ENERGY POLICY AND LIFE-CYCLE COST         ANALYSIS TO INCLUDE THE CONSERVATION OF WATER AND OTHER UTILITIES

 

SECTION 1.13.  G.S. 143-64.15 reads as rewritten:

"§ 143-64.15.  Life-cycle cost analysis.

(a)       A life-cycle cost analysis shall include, but not be limited to, all of the following elements:

(1)       The coordination, orientation, and positioning of the facility on its physical site;site.

(2)       The amount and type of fenestration employed in the facility;facility.

(3)       Thermal characteristics of materials and the amount of insulation incorporated into the facility design;design.

(4)       The variable occupancy and operating conditions of the facility, including illumination levels; andlevels.

(5)       Architectural features which that affect energy consumption.the consumption of energy, water, and other utilities.

(b)       The life-cycle cost analysis performed for any State facility shall, in addition to the requirements set forth in subsection (a) of this section, include, but not be limited to, all of the following:

(1)       An energy-consumption analysis of the facility's energy-consuming systems in accordance with the provisions of subsection (g) of this section;section.

(2)       The initial estimated cost of each energy-consuming system being compared and evaluated;evaluated.

(3)       The estimated annual operating cost of all utility requirements;requirements.

(4)       The estimated annual cost of maintaining each energy-consuming system; andsystem.

(5)       The average estimated replacement cost for each system expressed in annual terms for the economic life of the facility.

(c)       The General Assembly requires eachEach entity to shall conduct a life-cycle cost analysis pursuant to this section for the construction or the renovation of any State facility or State-assisted facility of 20,000 or more gross square feet. For the replacement of heating, ventilation, and air conditioning equipment in any State facility or State-assisted facility of 20,000 or more gross square feet, the entity shall conduct a life-cycle cost analysis of the replacement equipment pursuant to this section when the replacement is financed under a guaranteed energy savings contract or financed using repair and renovation funds.

(d)       The life-cycle cost analysis shall be certified by a registered professional engineer or bear the seal of a North Carolina registered architect, or both. The engineer or architect shall be particularly qualified by training and experience for the type of work involved, but shall not be employed directly or indirectly by a fuel provider, utility company, or group supported by fuel providers or utility funds. Plans and specifications for facilities involving public funds shall be designed in conformance with the provisions of G.S. 133-1.1.

(e)       In order to protect the integrity of historic buildings, no provision of this Article shall be interpreted to require the implementation of energy-cost measures to conserve energy, water, or other utility use that conflict with respect to any property eligible for, nominated to, or entered on the National Register of Historic Places, pursuant to the National Historic Preservation Act of 1966, P.L. 89-665; any historic building located within an historic district as provided in Chapters 160A or 153A of the General Statutes; any historic building listed, owned, or under the jurisdiction of an historic properties commission as provided in Chapter 160A or 153A; nor any historic property owned by the State or assisted by the State.

(f)        Each State agency shall use the life-cycle cost analysis over the economic life of the facility in selecting the optimum system or combination of systems to be incorporated into the design of the facility.

(g)       The energy-consumption analysis of the operation of energy-consuming systems utilities in a facility shall include, but not be limited to:to, all of the following:

(1)       The comparison of two or more system alternatives;alternatives.

(2)       The simulation or engineering evaluation of each system over the entire range of operation of the facility for a year's operating period; andperiod.

(3)       The engineering evaluation of the energy consumption of energy, water, and other utilities of component equipment in each system considering the operation of such components at other than full or rated outputs."

 

establish an energy and water use reduction goal for STATE BUILDINGS AND ANY OTHER BUILDINGS THAT RECEIVE FUNDING IN THE STATE CAPITAL Improvement BUDGET

 

SECTION 1.14.  Article 8 of Chapter 143 of the General Statutes is amended by adding a new section to read:

"§ 143-128.5. Energy and water use reduction goal.

(a)       For the purposes of this section, a 'major facility project' means any new building construction, addition, or renovation that: (i) increases the square footage of the facility size by 20,000 square feet or greater; (ii) costs two hundred fifty thousand dollars ($250,000) or more; or (iii) costs fifty percent (50%) or more of the current facility value.

(b)       Any State department, agency, or institution and any entity that receives funding in the State capital improvement appropriations act for a major facility project at an existing facility shall reduce energy and water use by twenty percent (20%) through cost-effective measures at the facility. The State Energy Office of the Department of Administration shall determine the baseline year for the energy and water use reduction goal. Each agency shall develop and implement a comprehensive energy and water management program to support this goal. Public school buildings are encouraged but not required to reduce energy and water use by twenty percent (20%) through cost-effective measures.

(c)       Any new facility or addition that receives funding in the State capital improvement appropriations act shall reduce energy use by a minimum of twenty percent (20%) benchmarked from the American Society for Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) Standard 90.1-2004 (Energy Standard for Buildings Except Low-Rise Residential Buildings).

(d)       Any new facility or addition that receives funding in the State capital improvement appropriations act that is projected to use 500,000 gallons or more of potable water on an annual basis shall reduce potable water consumption by twenty percent (20%) through cost­effective water collection, distribution, and reuse strategies using a benchmark that reflects climatic conditions and water use characteristics of similar building types. The State Energy Office of the Department of Administration shall determine the benchmark for the water use reduction goal.

(e)       The Department of Administration shall review and modify design criteria for construction and renovation of facilities, set measurement and evaluation standards, and receive data and reports from State departments, agencies, and institutions."

SECTION 1.15.  G.S. 143-64.12(b) reads as rewritten:

"(b)      The Department of Administration shall develop and implement policies, procedures, and standards to ensure that State purchasing practices improve energy efficiency and take the cost of the product over the economic life of the product into consideration. The Department of Administration shall adopt and implement Building Energy Design Guidelines. These guidelines shall include energy-use goals and standards, economic assumptions for life-cycle cost analysis, and other criteria on building systems and technologies. The Department of Administration shall modify the design criteria for construction and renovation of facilities to require that a life-cycle cost analysis be conducted pursuant to G.S. 143-64.15. The Department of Administration, as part of the Facilities Condition and Assessment Program, shall identify and recommend energy conservation maintenance and operating procedures that are designed to reduce energy consumption within the facility and that require no significant expenditure of funds. State departments, institutions, or agencies shall implement these recommendations. Where energy management equipment is proposed for State facilities, the maximum interchangeability and compatibility of equipment components shall be required.

(b1)     The Department of Administration shall develop a comprehensive energy management program for State government.government that will achieve a twenty percent (20%) reduction in annual energy and utility consumption from a baseline year to be determined by the State Energy Office. Each State agency shall develop and implement an energy management plan that is consistent with the State's comprehensive energy management program."

SECTION 1.16.  G.S. 143-128.5(b), as enacted by Section 1.14 of this act, becomes effective July 1, 2006, and applies to major facility projects that receive funding in a capital improvement appropriations act on or after that date. State departments, agencies, or institutions and other entities that are required to meet the energy and water use reduction goal shall meet the goal no later than July 1, 2015.  G.S. 143-128.5(c) and G.S. 143-128.5(d), as enacted by Section 1.14 of this act, become effective when this act becomes law and apply to major facility projects that have not begun the design phase at that time.  The State Energy Office of the Department of Administration shall review and update the benchmark for the utility and energy use reduction goal at least every four years to reflect modifications in ASHRAE standards and modernization of efficiency technologies.  Section 1.15 and this section become effective when this act becomes law.  Each State agency will implement the energy management plan in order to achieve the twenty percent (20%) reduction goal established in Section 1.15 of this act no later than January 1, 2015.

 

PART II.  USE OF ALTERNATIVE FUELS and advanced technology vehicles IN STATE MOTOR FLEETS

 

ESTABLISH GOALS FOR THE USE OF ALTERNATIVE FUELS AND ADVANCED TECHNOLOGY VEHICLES FOR STATE-OWNED VEHICLES

 

SECTION 2.1.  Article 3 of Chapter 143 of the General Statutes is amended by adding a new section to read:

"§ 143-58.6.  Alternative fuel use credits program.

(a)       Definitions. - As used in this section:

(1)       'Alternative fuel' means biodiesel, ethanol, compressed natural gas, propane, or hydrogen used directly as a transportation fuel.

(2)       'Advanced technology vehicle' means:

a.         A hybrid electric vehicle that derives its transportation energy from gasoline and electricity.

b.         A vehicle that has an emissions certification level of Ultra Low Emission Vehicle (ULEV) or greater, pursuant to the vehicle exhaust emission standards for passenger cars, light-duty trucks, and medium-duty vehicles codified in Title 13 of the California Code of Regulations (13 May 2005 Edition), and that derives its transportation energy in whole or in part from an alternative fuel.

c.         A low-speed electric vehicle that replaces a gasoline-powered vehicle and that is authorized to be operated on streets and highways pursuant to G.S. 20-121.

(3)       'State Energy Office' means the State Energy Office of the Department of Administration.

(4)       'State fleet' means those motor vehicles that are operated by a State department, institution, or agency that purchases fuel for these vehicles under a State purchasing contract.

(b)       Goal. - The State fleet shall accrue a total of 1,500,000 alternative fuel use credits during each calendar year 2006 and 2007. The State fleet shall accrue a total of 3,000,000 alternative fuel use credits during each calendar year 2008 and 2009. The State fleet shall accrue a total of 6,000,000 alternative fuel use credits during the calendar year 2010 and each calendar year thereafter.

(c)       Formulas for Calculating Credits. - Alternative fuel use credits are calculated as follows:

(1)       Subject to subdivision (2) of this subsection, one alternative fuel credit accrues for each one gallon of one hundred percent (100%) alternative fuel utilized by a State fleet vehicle. When alternative fuel is blended with petroleum-based fuel, the alternative fuel credit accrues for each one gallon of alternative fuel utilized by a State vehicle at a rate that is based on the percentage of alternative fuel that is utilized by a State fleet vehicle.

(2)       One and one-half alternative fuel credits accrue for each one gallon of alternative fuel produced in North Carolina that is utilized by a State fleet vehicle.

(3)       Six thousand alternative fuel credits accrue for each advanced technology vehicle that is purchased for a State fleet.

(d)       Planning. - The State Energy Office, the Division of Motor Fleet Management of the Department of Administration, the Department of Transportation, and representatives of each State department, institution, and agency that has a State fleet shall meet annually to develop a plan for achieving the alternative fuel use credit requirements under subsection (b) of this section. These plans consider and incorporate the petroleum displacement plans required in G.S. 143-64.18. The State Energy Office shall set the dates of these annual meetings.

(e)       Report. - No later than November 1 of each year, the State Energy Office shall submit a status report to the Joint Legislative Commission on Governmental Operations summarizing participation in and compliance with the goals and plans established by this section by each State department, institution, and agency.

(f)        Monitoring. - If the Secretary of Administration determines that the prices of alternative fuels exceed the cost of gasoline and diesel fuel to a degree that renders the program established by this section impracticable and unreasonable, the requirements of this section shall be suspended until such time that the Secretary of Administration determines that the prices of alternative fuels no longer render the program impracticable and unreasonable.

(g)       Rules. - The Department of Administration may adopt rules necessary to implement this section."

SECTION 2.2.  Article 2 of Chapter 136 of the General Statutes is amended by adding a new section to read:

"§ 136-28.143.  Participation in alternative fuel use credits program.

The Department of Transportation shall participate in the alternative fuel use credits program under G.S. 143-58.6. The Department of Transportation may adopt rules to implement this section."

SECTION 2.3.  G.S. 143-341(8)i. reads as rewritten:

"i.         To establish and operate a central motor pool and such subsidiary related facilities as the Secretary may deem necessary, and to that end:

2b.       To participate in the alternative fuel use credits program under G.S. 143-58.6.

…"

 

REDUCE AND DISPLACE PETROLEUM PRODUCTS IN STATE-OWNED VEHICLE FLEETS

 

SECTION 2.4.  Article 3B of Chapter 143 of the General Statutes is amended by adding a new Part to read:

"Part 3. Reduction and Displacement of Petroleum Product Dependence.

"§ 143-64.18. State Motor Fleet to reduce dependence on petroleum products.

(a)       All State agencies, universities, and community colleges that have State-owned vehicle fleets shall develop and implement plans to improve the State's use of alternative fuels, synthetic lubricants, and efficient vehicles. The plans shall achieve a twenty percent (20%) reduction or displacement of the current petroleum products consumed by January 1, 2010. Before implementation of any plan, all affected agencies shall report their plan to the Department of Administration. The Department of Administration shall compile a report on the plans submitted and report to the Joint Legislative Commission on Governmental Operations. Agencies shall implement their plans by January 1, 2007. Reductions may be met by petroleum or oils displaced through the use of biodiesel, ethanol, synthetic oils or lubricants, other alternative fuels, the use of hybrid electric vehicles, other fuel-efficient or low-emission vehicles, or additional methods as may be approved by the State Energy Office. The plan shall not impede mission fulfillment of the agency and shall specifically address a long-term cost-benefit analysis, allowances for changes in vehicle usage, total miles driven, and exceptions due to technology, budgetary limitations, and emergencies.

(b)       For the purposes of this section, a State-owned vehicle fleet consists of more than 10 motor vehicles, as defined by G.S. 20-4.01, that are designed for highway use and titled to a State department, institution, or agency that purchases fuel for these vehicles under a State purchasing contract. Specialty vehicles, as defined by G.S. 20-4.01, that are used for educational purposes and vehicles exempted under U.S. Executive Order 13149 are subject to ten percent (10%) reductions.

(c)       Each agency shall submit an annual report no later than September 1 of each year to the Department of Administration on the efforts undertaken to achieve the reductions. The Department of Administration shall compile and forward a report to the Joint Legislative Commission on Governmental Operations no later than November 1 of each year on the agencies' progress in meeting their plans."

 

PART III. PROVIDE ENERGY ASSISTANCE FOR LOW-INCOME PERSONS

 

SECTION 3.  Article 3 of Chapter 143B of the General Statutes is amended by adding a new Part to read:

"Part 34A. North Carolina Energy Assistance Act for Low-Income Persons.

"§ 143B-216.72A. Legislative findings and purpose.

(a)       The General Assembly finds that:

(1)       Maintaining the general health, welfare, and prosperity of the people of this State requires that all citizens receive essential levels of heat and electric service regardless of their economic circumstances.

(2)       Serving the State's most vulnerable citizens, its low-income elderly, persons with disabilities, families with children, high residential energy users, and households with a high-energy burden, is a priority.

(3)       Conserving energy benefits all citizens and the environment.

(4)       Ensuring proper payment to public utilities and other entities providing energy services actually rendered is a responsibility of this State.

(5)       Declining federal low-income energy assistance funding necessitates a State response to ensure the continuity and further development of energy assistance and related policies and programs in this State.

(6)       Current energy assistance policies and programs have benefited North Carolina citizens and should be continued with the modifications provided in this Part.

(b)       The General Assembly declares that it is the policy of the State that weatherization, replacement of heating and cooling systems, and other energy-related assistance programs be utilized to increase the energy efficiency of dwellings owned or occupied by low-income persons, reduce their total residential expenditures, and improve their health and safety. The State shall utilize all appropriate and available means to fund the Weatherization Assistance Program for Low-Income Families and the Heating/Air Repair and Replacement Program under G.S. 108A-70.30, and any other energy-related assistance program for low-income persons while, to the extent possible, identifying and utilizing sources of funding to achieve the objectives of this Part.

"§ 143B-216.72B.  Definitions.

The following definitions apply to this Part:

(1)       Applicant. - A member of the family residing in the dwelling unit, the owner, or designated agent of the owner of a dwelling unit applying for program services.

(2)       Department. - The Department of Health and Human Services.

(3)       Secretary. - The Secretary of Health and Human Services.

(4)       Subgrantee. - An entity managing a weatherization project that receives a federal grant of funds awarded pursuant to 10 C.F.R. § 440 from the State or other entity named in the Notification of Grant Award and otherwise referred to as the grantee.

(5)       Weatherization. - The modification of homes and home heating and cooling systems to improve heating and cooling efficiency by caulking and weather stripping, as well as insulating ceilings, attics, walls, and floors.

"§ 143B-216.72C.  The Office of Economic Opportunity designated agency; powers and duties.

(a)       The Office of Economic Opportunity of the Department shall administer the Weatherization Assistance Program for Low-Income Families established by 42 U.S.C. § 6861, et seq., and 42 U.S.C. § 7101, et seq.; the Heating/Air Repair and Replacement Program established by the Secretary under G.S. 108A-70.30; and any other energy-related assistance program for the benefit of low-income persons in existing housing. The Office of Economic Opportunity shall exercise the following powers and duties:

(1)       Establish standards and criteria to carry out the provisions and purposes of this Part.

(2)       Develop policy, criteria, and standards for receiving and processing applications for weatherization assistance.

(3)       Make decisions and pursue appeals from decisions to accept or deny applications for weatherization, replacement of heating and cooling systems, and other energy-related assistance programs or otherwise participate in the State plan as a subgrantee or contractor.

(4)       Adopt rules, consistent with the laws of this State, that may be required by the federal government for grants-in-aid for the Weatherization Assistance Program for Low-Income Families, the Heating/Air Repair and Replacement Program, or other energy-related assistance programs for the benefit of low-income residents in existing housing. This section shall be liberally construed in order that the State and its citizens may benefit from such grants-in-aid.

(5)       Establish procedures for the submission of periodic reports by any community action agency or other agency or entity authorized to manage a weatherization project, replacement of heating and cooling system, or other energy-related assistance project.

(6)       Implement criteria for periodic review of weatherization, replacement of heating and cooling systems, or other energy-related programs in existing housing for low-income households.

(7)       Solicit, accept, hold, and administer on behalf of the State any grants or bequests of money, securities, or property for the benefit of low-income residents in existing housing for use by the Department or other agencies in the administration of this Part.

(8)       Create a Policy Advisory Council within the Office of Economic Opportunity that shall advise the Office of Economic Opportunity with respect to the development and implementation of a Weatherization Program for Low-Income Families, the Heating/Air Repair and Replacement Program, and any other energy-related assistance program for the benefit of low-income persons in existing housing.

(b)       The Secretary shall have final decision-making authority with regard to all functions described in this Part."

 

PART IV. ENERGY TAX INCENTIVES

 

INCOME TAX CREDIT FOR ENERGY-EFFICIENT HOMES

 

SECTION 4.1.  Part 1 of Article 4 of Chapter 105 of the General Statutes is amended by adding a new section to read:

"§ 105-130.48.  Construction or improvement of energy-efficient home.

(a)       Definitions. - The following definitions apply in this section:

(1)       Energy-efficient home. - A one- or two-family home that is a federally qualified energy-efficient home or a State-certified energy-efficient home.

(2)       Federally qualified energy-efficient home. - A residence qualified under the ENERGY STAR Program administered by the United States Environmental Protection Agency.

(3)       State-certified energy-efficient home. - A residence certified under the NC HealthyBuilt Homes Program administered by the North Carolina Solar Center, the State Energy Office, and the North Carolina Department of Administration.

(b)       Credit. - A taxpayer that builds or manufactures an energy-efficient home or that improves an existing structure so that it becomes an energy-efficient home is allowed a credit against the taxes imposed by this Part. In order to claim a credit under this section, the taxpayer must include with the tax return documentation that the property with respect to which a credit is claimed is an energy-efficient home. The amount of the credit is as follows:

(1)       For a taxpayer that builds or manufactures a new federally qualified energy-efficient home, the credit is one thousand dollars ($1,000).

(2)       For a taxpayer that improves an existing structure so that it becomes a federally qualified energy-efficient home, the credit is equal to the cost of improvements not to exceed one thousand dollars ($1,000).

(3)       For a taxpayer that builds or manufactures a new State-certified energy-efficient home, the credit is one thousand five hundred dollars ($1,500).

(4)       For a taxpayer that improves an existing structure so that it becomes a State-certified energy-efficient home, the credit is equal to the cost of improvements not to exceed two thousand dollars ($2,000).

(c)       Cap. - The credit allowed under this section may not exceed the amount of tax imposed by this Part for the taxable year reduced by the sum of all credits allowable, except tax payments made by or on behalf of the taxpayer. Any unused portion of a credit under this section may be carried forward for the succeeding five years.

(d)       Sunset. - This section is repealed effective for taxable years beginning on or after January 1, 2011."

SECTION 4.2.  Part 2 of Article 4 of Chapter 105 of the General Statutes is amended by adding a new section to read:

"§ 105-151.30.  Construction or improvement of energy-efficient home.

(a)       Definitions. - The following definitions apply in this section:

(1)       Energy-efficient home. - A one- or two-family home that is a federally qualified energy-efficient home or a State-certified energy-efficient home.

(2)       Federally qualified energy-efficient home. - A residence qualified under the ENERGY STAR Program administered by the United States Environmental Protection Agency.

(3)       State-certified energy-efficient home. - A residence certified under the NC HealthyBuilt Homes Program administered by the North Carolina Solar Center, the State Energy Office, and the North Carolina Department of Administration.

(b)       Credit. - A taxpayer that builds or manufactures an energy-efficient home or that improves an existing structure so that it becomes an energy-efficient home is allowed a credit against the taxes imposed by this Part. In order to claim a credit under this section, the taxpayer must include with the tax return documentation that the property with respect to which a credit is claimed is an energy-efficient home. The amount of the credit is as follows:

(1)       For a taxpayer that builds or manufactures a new federally qualified energy-efficient home, the credit is one thousand dollars ($1,000).

(2)       For a taxpayer that improves an existing structure so that it becomes a federally qualified energy-efficient home, the credit is equal to the cost of improvements not to exceed one thousand dollars ($1,000).

(3)       For a taxpayer that builds or manufactures a new State-certified energy-efficient home, the credit is one thousand five hundred dollars ($1,500).

(4)       For a taxpayer that improves an existing structure so that it becomes a State-certified energy-efficient home, the credit is equal to the cost of improvements not to exceed two thousand dollars ($2,000).

(c)       Cap. - The credit allowed under this section may not exceed the amount of tax imposed by this Part for the taxable year reduced by the sum of all credits allowable, except tax payments made by or on behalf of the taxpayer. Any unused portion of a credit under this section may be carried forward for the succeeding five years.

(d)       Sunset. - This section is repealed effective for taxable years beginning on or after January 1, 2011."

SECTION 4.3.  Part 2 of Article 4 of Chapter 105 of the General Statutes is amended by adding a new section to read:

"§ 105-151.31.  Purchase of energy-efficient home.

(a)       Definitions. - The following definitions apply in this section:

(1)       Energy-efficient home. - A one- or two-family home that is a federally qualified energy-efficient home or a State-certified energy-efficient home.

(2)       Federally qualified energy-efficient home. - A residence qualified under the ENERGY STAR Program administered by the United States Environmental Protection Agency.

(3)       State-certified energy-efficient home. - A residence certified under the NC HealthyBuilt Homes Program administered by the North Carolina Solar Center, the State Energy Office, and the North Carolina Department of Administration.

(b)       Credit. - A taxpayer that purchases an energy-efficient home is allowed a credit against the taxes imposed by this Part in the amount of five hundred dollars ($500.00).

(c)       Cap. - The credit allowed under this section may not exceed the amount of tax imposed by this Part for the taxable year reduced by the sum of all credits allowable, except tax payments made by or on behalf of the taxpayer. Any unused portion of a credit under this section may be carried forward for the succeeding five years.

(d)       No Double Benefit. - A taxpayer that claims a credit under this section may not also claim a credit under G.S. 105-151.30 with respect to the same property.

(e)       Sunset. - This section is repealed effective for taxable years beginning on or after January 1, 2011."

SECTION 4.4.  Section 4.1 through Section 4.3 of this act become effective for taxable years beginning on or after January 1, 2007, and apply to homes that receive the qualification or certification on or after that date. This section is effective when it becomes law.

 

BIODIESEL PROVIDERS TAX CREDIT

 

SECTION 4.5.(a)  Part 4 of Article 36C of Chapter 105 of the General Statutes is amended by adding a new section to read:

"§ 105-449.103.  Credit for biodiesel providers.

(a)       Credit. - A biodiesel provider or refiner who imports or produces biodiesel is allowed a credit against the tax imposed by this Article on that portion of the biodiesel that is derived in whole from agricultural products or animal fats or wastes from these products or fats. The credit is equal to the amount of taxes paid under this Article on the applicable portion. In order to be eligible for the credit allowed by this section, the taxpayer shall be licensed as required by G.S. 105-446.65 and shall file a return reporting fuel movement information as required by G.S. 105-449.96.

(b)       Transfer from General Fund. - The Secretary shall withhold from the net collections under Article 5 of this Chapter on a monthly basis an amount equal to the total amount of credits claimed under this section. The Secretary shall allocate the funds withheld under this subsection in the same manner as under G.S. 105-449.125.

(c)       Sunset. - The section is repealed January 1, 2011."

SECTION 4.5.(b)  This section becomes effective January 1, 2007.

 

ALTERNATIVE FUEL VEHICLE TAX CREDIT

 

SECTION 4.6.(a)  Chapter 105 of the General Statutes is amended by adding a new Article to read:

"Article 3H.

"Alternative Fuel Vehicle Tax Credit.

"§ 105-129.70.  Definitions.

The following definitions apply in this Article:

(1)       Alternative fuel vehicle. - An original equipment manufactured motor vehicle that operates on compressed natural gas, propane, or electricity or a hybrid electric vehicle.

(2)       Hybrid electric vehicle. - A motor vehicle with a hybrid propulsion system that operates on both electricity and a petroleum-based motor fuel.

(3)       Long-term lease. - Defined in G.S. 105-187.1.

(4)       Motor vehicle. - Defined in G.S. 105-164.3.

"§ 105-129.71.  Credit for purchasing or leasing an alternative fuel vehicle.

A taxpayer that purchases or leases, pursuant to a long-term lease, a new alternative fuel vehicle is allowed a credit in the amount of two thousand dollars ($2,000). In order to be eligible for the credit allowed by this section, the vehicle shall have a gross vehicle weight of less than 10,000 pounds and shall be registered in this State. A taxpayer may claim a credit under this section for each qualified purchase or lease. The credit allowed under this section is allowed only to the first taxpayer to take title to the motor vehicle other than for resale. A taxpayer may not take the credit allowed in this section for an alternative fuel vehicle the taxpayer leases from another unless the taxpayer obtains the lessor's written certification that the lessor will not claim a credit under this Article with respect to the alternative fuel vehicle.

"§ 105-129.72.  Tax credited; limitations.

(a)       Tax Credited. - The credit allowed in this Article is allowed against the franchise tax levied in Article 3 of this Chapter or the income taxes levied in Article 4 of this Chapter. The taxpayer shall elect the tax against which a credit will be claimed when filing the return on which the credit is first claimed. This election is binding. Any carryforwards of a credit shall be claimed against the same tax.

(b)       Limitations. - A credit shall be taken for the taxable year in which the property is purchased or leased. A credit allowed under this Article may not exceed the amount of the tax against which it is claimed for the taxable year reduced by the sum of all credits allowed. Any unused portion of the credit may be carried forward for the succeeding five years.

"§ 105-129.73.  Substantiation.

To claim a credit allowed by this Article, the taxpayer shall provide any information required by the Secretary of Revenue. The burden of proving eligibility for a credit and the amount of the credit rests upon the taxpayer, and no credit may be allowed to a taxpayer that fails to maintain adequate records or to make them available for inspection.

"§ 105-129.74.  Reports.

The Department of Revenue shall report to the Revenue Laws Study Committee and to the Fiscal Research Division of the General Assembly by May 1 of each year the following information for the 12-month period ending the preceding December 31:

(1)       The number of vehicles for which taxpayers claimed the credit allowed in this Article, by taxpayer type.

(2)       The total cost to the General Fund of the credits claimed.

"§ 105-129.75.  Sunset.

This Article is repealed effective for alternative fuel vehicles purchased or leased on or after January 1, 2011."

SECTION 4.6.(b)  This section is effective for taxable years beginning on or after January 1, 2006.

 

PART V. Biofuels industry strategic plan

 

SECTION 5.1.  The College of Agriculture and Life Sciences at North Carolina State University, the North Carolina Biotechnology Center, and the Rural Economic Development Center, Inc., shall jointly develop a strategic plan for developing biofuels as an industry in North Carolina, thereby creating new economic opportunities for North Carolina farmers and moving our State in the direction of energy independence.  In developing this strategic plan, the College of Agriculture and Life Sciences at North Carolina State University, the North Carolina Biotechnology Center, and the Rural Economic Development Center, Inc., shall delineate the increasing role of biotechnology in the development of biofuels and shall consult with all of the following:

(1)       The Department of Administration.

(2)       The Department of Agriculture and Consumer Services.

(3)       The Department of Commerce.

(4)       The Department of Environment and Natural Resources.

(5)       The University of North Carolina System.

(6)       The Community College System.

(7)       The North Carolina Solar Center at North Carolina State University.

(8)       North Carolina Farm Bureau Federation.

(9)       North Carolina State Grange.

(10)     North Carolina Agribusiness Council.

(11)     A representative of private industry jointly selected by the College of Agriculture and Life Sciences at North Carolina State University, the North Carolina Biotechnology Center, and the Rural Economic Development Center, Inc.

(12)     Any other entity that the College of Agriculture and Life Sciences at North Carolina State University, the North Carolina Biotechnology Center, and the Rural Economic Development Center, Inc., deem appropriate, particularly entities that are engaged in biotechnology.

SECTION 5.2.  No later than February 1, 2007, the College of Agriculture and Life Sciences at North Carolina State University, the North Carolina Biotechnology Center, and the Rural Economic Development Center, Inc., shall submit the strategic plan, including any legislative proposals, to the 2007 General Assembly.

SECTION 5.3.  The College of Agriculture and Life Sciences at North Carolina State University, the North Carolina Biotechnology Center, and the Rural Economic Development Center, Inc., shall use available funds to implement this section.

 

PART VI. APPROPRIATION

 

SECTION 6.1.  There is appropriated from the General Fund to the Department of Administration the sum of five hundred thousand dollars ($500,000) for the 2006-2007 fiscal year for the State Energy Office to implement and administer sections of this act as indicated.

SECTION 6.2.  Section 6.1 of this act becomes effective July 1, 2006. This section becomes effective when it becomes law.

 

PART VII. EFFECTIVE DATE

 

SECTION 7.  Except as otherwise provided, this act becomes effective when it becomes law.