Bill Text: AZ HB2346 | 2013 | Fifty-first Legislature 1st Regular | Engrossed

NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Valuation; rural electric cooperatives

Spectrum: Moderate Partisan Bill (Republican 7-2)

Status: (Passed) 2013-06-19 - Governor Signed [HB2346 Detail]

Download: Arizona-2013-HB2346-Engrossed.html

 

 

 

House Engrossed

 

 

 

State of Arizona

House of Representatives

Fifty-first Legislature

First Regular Session

2013

 

 

HOUSE BILL 2346

 

 

 

AN ACT

 

amending sections 42-14154 and 42-14157, Arizona Revised Statutes; Amending title 42, chapter 14, article 4, Arizona Revised Statutes, by adding section 42-14159; relating to valuation of centrally assessed property.

 

 

 (TEXT OF BILL BEGINS ON NEXT PAGE)

 



Be it enacted by the Legislature of the State of Arizona:

Section 1.  Section 42-14154, Arizona Revised Statutes, is amended to read:

START_STATUTE42-14154.  Computing valuation of electric transmission, electric distribution, gas distribution, combination gas and electric transmission and distribution, and transmission and distribution cooperative property; definitions

A.  The valuation of all electric transmission, electric distribution, gas distribution, combination gas and electric transmission and distribution, and transmission and distribution cooperative property that is subject to valuation for tax purposes shall be determined in the manner prescribed by this section except for:

1.  The property of member‑owned nonprofit electric distribution cooperatives.

2.  Renewable energy equipment that is valued pursuant to section 42‑14155.

B.  Electric transmission, electric distribution, gas distribution, combination gas and electric transmission and distribution, and transmission and distribution cooperative property shall be valued as follows:

1.  The department shall determine the original plant in service cost.

2.  The original plant in service cost shall then be reduced by:

(a)  The related accumulated provision for depreciation.

(b)  The reduction in value caused by a state or federal governmental order prohibiting total or partial physical use of electric transmission, electric distribution, gas distribution, combination gas and electric transmission and distribution, and transmission and distribution cooperative property for periods of more than six months.  Any reductions in value caused by a total or partial prohibition of the physical use of the property shall not exceed the cost of the restricted property less accumulated depreciation.

3.  The department shall not value contributions in aid of construction.

C.  The value of construction work in progress is fifty per cent of the amount spent and entered on the taxpayer's accounting records as of December 31 of the preceding calendar year as construction work in progress.

D.  The value of materials and supplies is the total cost of such property as of December 31 of the preceding calendar year.

E.  The value of environmental protection facilities that are required by law is fifty per cent of the depreciated cost of the facilities.

F.  All terms and applications of terms shall be interpreted according to the federal energy regulatory commission uniform system of accounts for electric and gas utilities in effect on January 1, 1989.

G.  For the purposes of this section, unless the context otherwise requires:

1.  "Construction work in progress" means the total of the balances of work orders for an electric transmission, electric distribution, gas distribution, combination gas and electric transmission and distribution, and transmission and distribution cooperative plant in process of construction on December 31 of the preceding calendar year, exclusive of land rights and licensed vehicles.

2.  "Depreciation" means straight line depreciation over the useful life of the item of property.

3.  "Distribution cooperative" means a member‑owned nonprofit electric distribution cooperative corporation that is organized under or becomes subject to title 10, chapter 19, article 2 or title 10, chapters 24 through 40.

4.  "Electric transmission, electric distribution, gas distribution, combination gas and electric transmission and distribution, and transmission and distribution cooperative property" means plant, construction work in progress, materials and supplies and environmental protection facilities.

5.  "Environmental protection facilities" means the acquisition or construction cost of any building, structure, equipment, facility or improvement that is designed and constructed solely to control, reduce, prevent or abate:

(a)  Discharges or releases into the environment of gaseous, liquid or solid substances, heat or noise.

(b)  Any other adverse impact of an activity on the environment.

6.  "Materials and supplies" means the cost, including sales, use and excise taxes, and transportation costs to point of delivery in this state, less purchases and trade discounts, of all unapplied material and supplies on hand in this state as of December 31 of the preceding calendar year.

7.  "Original plant in service cost" means the actual cost of acquiring or constructing property including additions, retirements, adjustments and transfers, but without deducting related accumulated provision for depreciation, amortization or other purposes.

8.  "Plant" means all property that is situated in this state and that is used or useful for the transmission or distribution of electric power or distribution of natural gas.  Plant does not include land rights, materials and supplies and licensed vehicles.

9.  "Transmission cooperative" means a member‑owned nonprofit electric transmission cooperative corporation that is organized under or becomes subject to title 10, chapter 19, article 4. END_STATUTE

Sec. 2.  Section 42-14157, Arizona Revised Statutes, is amended to read:

START_STATUTE42-14157.  Allocation of electric transmission, distribution and generation values among taxing jurisdictions; definition

A.  The value of property computed under sections 42‑14154 and, 42‑14156 and 42-14159 shall be allocated among the various taxing jurisdictions as follows:

1.  Combine the values for plant in service and materials and supplies pursuant to section 42‑14154 or 42-14159 with the value of electric generation facilities pursuant to section 42‑14156 for the owner or the combined group.

2.  Combine the original plant in service costs and materials and supplies pursuant to section 42‑14154 or 42-14159 with the original cost of generation plant facilities pursuant to section 42‑14156 for the owner or the combined group.

3.  Allocate the value determined under paragraph 1 of this subsection among the respective taxing jurisdictions in proportion to the original cost determined under paragraph 2 of this subsection.

B.  The unit value of environmental protection facilities under section 42‑14154 or 42-14159 shall be allocated among the various taxing jurisdictions in proportion to the original cost of the environmental protection facilities of the owner or the combined group in the respective taxing jurisdiction.

C.  Construction work in progress determined under sections 42‑14154 and, 42‑14156 and 42-14159 shall be allocated among the various taxing jurisdictions on a situs basis separately from the unit value of environmental protection facilities.

D.  The unit value of renewable energy equipment determined under section 42‑14155 shall be allocated among the various taxing jurisdictions in proportion to the original cost of the renewable energy equipment of the owner or the combined group in the respective taxing jurisdiction.

E.  For the purposes of this section, "combined group" means all corporations and other entities that are at least eighty per cent owned or controlled by a common parent entity, determined by reference to voting shares. END_STATUTE

Sec. 3.  Title 42, chapter 14, article 4, Arizona Revised Statutes, is amended by adding section 42-14159, to read:

START_STATUTE42-14159.  Computing valuation of distribution cooperatives; standard market value factor; definition

A.  the department shall determine the valuation of the electric distribution and transmission property of a distribution cooperative as defined in section 42-14154 THAT is OPERATING IN THIS STATE as follows:

1.  compute THE VALUE of the property PURSUANT TO SECTION 42-14154, subsection B.

2.  multiply THE value computed under paragraph 1 of this subsection BY THE STANDARD MARKET VALUE FACTOR determined under subsection E of this section.

b.  The value of construction work in progress is fifty per cent of the amount spent and entered on the taxpayer's accounting records as of December 31 of the preceding calendar year as construction work in progress.

C.  The value of materials and supplies is the total cost of this property as of December 31 of the preceding calendar year.

D.  The value of environmental protection facilities that are required by law is fifty per cent of the depreciated cost of the facilities.

E.  the standard market value factor shall be determined as follows:

1.  using the most recent publicly available data obtained from annual reports produced by the federal energy regulatory commission for each investor-owned electric utility operating in this state, calculate the following standard factors for each investor-owned electric utility:

(a)  megawatt hours sold to ultimate customers per ultimate customer.

(b)  megawatt hours sold to ultimate customers per net dollar invested in distribution plant.

(c)  megawatt hours sold to ultimate customers per dollar of operating and maintenance expense.

(d)  megawatt hours sold to ultimate customers per dollar of distribution operating and maintenance expense.

(e)  The number of ultimate customers per net dollar invested in distribution plant.

(f)  The number of ultimate customers per mile of distribution line.

2.  Determine the average of each of the six standard factors under paragraph 1 of this subsection for the investor-owned electric utilities operating in this state as follows:

(a)  For each factor, add the values obtained for that factor for all investor-owned electric utilities operating in this state.

(b)  divide the sum obtained under subdivision (a) of this paragraph for each factor by the number of investor-owned electric utilities operating in this state that were included in the calculation under subdivision (a) of this paragraph for that factor.

3.  Using information obtained from the most recent report filed with the department under section 42-14152, calculate each of the standard factors under paragraph 1 of this subsection for the distribution cooperative.

4.  Divide each of the six standard factors for the distribution cooperative calculated under paragraph 3 of this subsection by the corresponding average standard factors calculated under paragraph 2 of this subsection.

5.  Add the six ratios calculated pursuant to paragraph 4 of this subsection, and divide that sum by six.  The quotient is the standard market value factor.

F.  For the purposes of this section:

1.  "Distribution line" means a line that is capable of transporting voltage of 69,000 volts or less and that is employed between the primary source of power supply and delivery to a customer.

2.  "Distribution plant" means all property that is situated in this state and that is used or useful for the distribution of electric power except land rights, materials and supplies, and licensed vehicles.

3.  "Investor-owned electric utility" means a business organization that provides electric power production and distribution, is regarded as a utility and is managed as a private enterprise rather than a function of a government or as a utility cooperative. END_STATUTE

Sec. 4.  Applicability

Sections 42‑14154 and 42‑14157, Arizona Revised Statutes, as amended by this act and section 42‑14159, Arizona Revised Statutes, as added by this act, apply to valuation years beginning from and after December 31, 2013.

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