NOW: electric utilities;
valuation
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Committee on Ways and Means (Information hearing only) |
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As Passed the Senate |
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HB 2063, as amended in the Senate, freezes the property values for existing electric generation properties for tax year 2003 and clarifies the allocation method to distribute the values to taxing jurisdictions.
Prior to deregulation, the electric utilities provided customers with a total package of all electric services. Under traditional monopoly regulation, the generation, transmission and distribution of power are all provided by one utility company. Under deregulation, customers cal select providers of electricity, while transmission and distribution services will continue to be provided by utilities in a regulated environment.
Electric and other utilities are considered “centrally valued properties”. This means that these properties are valued by the Department of Revenue rather than local county assessors. DOR allocates the value of centrally valued properties among the various taxing jurisdictions. This bill clarifies the allocation of electric distribution properties.
In 2000, the Legislature passed HB 2324 that provided a different methodology for valuing electrical generation facilities. Businesses that strictly provide wholesale activities were not included under the utility classification for property tax purposes, but are still valued by DOR. The new method is similar to other commercial property valued by the local county assessors.
As a transition to the new values, the 2000 legislation provided that voluntary contributions (in lieu of property taxes) would be paid by generation plants to any county that had a drop of more than 10% of their assessed valuation as a result of the new values. These voluntary contributions are required for tax years 2001 through 2004. For 2001 and 2002, the voluntary contributions are based on actual value lost in those years. The voluntary contributions for 2003 and 2004 are made based on tax year 2002 values. Last year, Apache County was the only county that received “backfill” voluntary contributions. This bill modifies voluntary contributions for 2003 and 2004 so that the contributions offset any loss of assessed value that would result in a tax rate increase.
· Requires existing electrical generation plants or units valued by DOR in tax year 2002 to be valued at the final tax year 2002 full cash value for tax year 2003. Specifies that plants placed in service between December 31, 2000 and December 31, 2001 shall be valued pursuant to the statutory valuation procedure for electric generation properties.
· Provides a method for allocation among the various taxing jurisdictions of the generation, transmission and distribution properties of the electric utilities. Specifies that generation values will be combined with distribution values for purposes of allocation.
· Changes the method of determining voluntary contribution payments for tax year 2003 and 2004. Provides that payments shall be made to prevent any loss of assessed valuation that would result in an increase in tax rates attributable to the decrease in electric generation property values.
· Directs all companies owning electric generation property to provide, under oath by July 1, 2002, the information required by this measure to DOR. Assesses a fine of $1000 per day for noncompliance and allows the director to extend the deadline at the director’s discretion and to abate the penalty for reasonable cause.
· Repeals, on December 31, 2004, the new formula for valuations of existing electrical generation property for the tax year 2003 and the related reporting requirements to DOR.
· Contains a retroactivity clause of January 1, 2002.
· Makes technical and conforming changes.
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45th Legislature
Second Regular Session 2 May
7, 2002
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