Calif. Revenue and Taxation Code §7284.5
Added by A.B. 792
Effective date: January 1, 2014
Until January 1, 2020, consumption of electricity from a clean energy source located on a property and used solely by the property owner or their tenants is exempt from any utility user tax (UUT) imposed by a local government.
To be eligible for the exemption, the clean energy source is to be either:
- a renewable electrical generation device that uses renewable fuel, such as biomass, solar thermal energy, photovoltaics, wind, geothermal energy, fuel cells using renewable fuels, hydroelectric generation of 30 megawatts or less, digester gas, municipal solid waste conversion, landfill gas, ocean wave, ocean thermal energy and tidal current; or
- technology which:
– meets the emissions standards adopted by the State Air Resources Board;
– produces only small emissions of sulfur oxides and nitrogen oxides;
– meets the greenhouse gases emission performance standard established by the Public Utilities Commission;
– has a total electrical efficiency of at least 45%;
– is sized to meet the onsite generator’s electrical demand;
– has parallel operation to the electrical distribution grid;
– uses renewable and nonrenewable fuel; and
– pays the applicable utility user tax for nonrenewable fuels used.
The exemption does not apply to electricity or gas provided by a(n):
- electrical corporation;
- publicly owned utility; or
- irrigation district.
Editor’s note — Many renewable energy firms provide renewable energy systems, such as solar panels, to property owners at no up-front cost. Instead of putting money down on the system, property owners enter into a power purchase agreement with the energy provider. The power purchase agreement requires the property owner to pay for their energy usage, but may subject them to a local UUT. Exempting this energy usage from a UUT encourages property owners to install and use renewable energy systems.
