Bill Text: OH HB218 | 2009-2010 | 128th General Assembly | Introduced

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Bill Title: To modify the tax valuation of public utility tangible personal property used to generate electricity from renewable resources.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2009-06-10 - To Ways & Means [HB218 Detail]

Download: Ohio-2009-HB218-Introduced.html

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As Introduced

128th General Assembly Regular Session 2009-2010

H. B. No. 218

Representative Winburn 

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A BILL

To amend sections 5727.01, 5727.11, and 5727.111 of

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the Revised Code to modify the tax valuation of

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public utility tangible personal property used to

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generate electricity from renewable resources.

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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 5727.01, 5727.11, and 5727.111 of	5
the Revised Code be amended to read as follows:	6

Sec. 5727.01.  As used in this chapter:

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(A) "Public utility" means each person referred to as a	8
telephone company, telegraph company, electric company, natural	9
gas company, pipe-line company, water-works company, water	10
transportation company, heating company, rural electric company,	11
railroad company, or combined company.	12

(B) "Gross receipts" means the entire receipts for business	13
done by any person from operations as a public utility, or	14
incidental thereto, or in connection therewith, including any	15
receipts received under Chapter 4928. of the Revised Code. The	16
gross receipts for business done by an incorporated company	17
engaged in operation as a public utility includes the entire	18
receipts for business done by such company under the exercise of	19
its corporate powers, whether from the operation as a public	20
utility or from any other business.	21

(C) "Rural electric company" means any nonprofit corporation,	22
organization, association, or cooperative engaged in the business	23
of supplying electricity to its members or persons owning an	24
interest therein in an area the major portion of which is rural.	25

(D) Any person:

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(1) Is a telegraph company when engaged in the business of	27
transmitting telegraphic messages to, from, through, or in this	28
state;	29

(2) Is a telephone company when primarily engaged in the	30
business of providing local exchange telephone service, excluding	31
cellular radio service, in this state;	32

(3) Is an electric company when engaged in the business of	33
generating, transmitting, or distributing electricity within this	34
state for use by others, but excludes a rural electric company;	35

(4) Is a natural gas company when engaged in the business of	36
supplying or distributing natural gas for lighting, power, or	37
heating purposes to consumers within this state, excluding a	38
person that is a governmental aggregator or retail natural gas	39
supplier as defined in section 4929.01 of the Revised Code;	40

(5) Is a pipe-line company when engaged in the business of	41
transporting natural gas, oil, or coal or its derivatives through	42
pipes or tubing, either wholly or partially within this state;	43

(6) Is a water-works company when engaged in the business of	44
supplying water through pipes or tubing, or in a similar manner,	45
to consumers within this state;	46

(7) Is a water transportation company when engaged in the	47
transportation of passengers or property, by boat or other	48
watercraft, over any waterway, whether natural or artificial, from	49
one point within this state to another point within this state, or	50
between points within this state and points without this state;	51

(8) Is a heating company when engaged in the business of	52
supplying water, steam, or air through pipes or tubing to	53
consumers within this state for heating purposes;	54

(9) Is a railroad company when engaged in the business of	55
owning or operating a railroad either wholly or partially within	56
this state on rights-of-way acquired and held exclusively by such	57
company, or otherwise, and includes a passenger, street, suburban,	58
or interurban railroad company.	59

As used in division (D)(2) of this section, "local exchange	60
telephone service" means making available or furnishing access and	61
a dial tone to all persons within a local calling area for use in	62
originating and receiving voice grade communications over a	63
switched network operated by the provider of the service within	64
the area and for gaining access to other telecommunication	65
services.	66

(E) "Taxable property" means the property required by section	67
5727.06 of the Revised Code to be assessed by the tax	68
commissioner, but does not include either of the following:	69

(1) An item of tangible personal property that for the period	70
subsequent to the effective date of an air, water, or noise	71
pollution control certificate and continuing so long as the	72
certificate is in force, has been certified as part of the	73
pollution control facility with respect to which the certificate	74
has been issued;	75

(2) An item of tangible personal property that during the	76
construction of a plant or facility and until the item is first	77
capable of operation, whether actually used in operation or not,	78
is incorporated in or being held exclusively for incorporation in	79
that plant or facility.	80

Notwithstanding section 5701.03 of the Revised Code, for tax	81
year 2006 and thereafter, "taxable property" includes patterns,	82
jigs, dies, and drawings of an electric company or a combined	83
company for use in the activity of an electric company.	84

(F) "Taxing district" means a municipal corporation ofor	85
township, or part thereof, in which the aggregate rate of taxation	86
is uniform.	87

(G) "Telecommunications service" has the same meaning as in	88
division (AA) of section 5739.01 of the Revised Code.	89

(H) "Interexchange telecommunications company" means a person	90
that is engaged in the business of transmitting telephonic	91
messages to, from, through, or in this state, but that is not a	92
telephone company.	93

(I) "Sale and leaseback transaction" means a transaction in	94
which a public utility or interexchange telecommunications company	95
sells any tangible personal property to a person other than a	96
public utility or interexchange telecommunications company and	97
leases that property back from the buyer.	98

(J) "Production equipment" means all taxable steam, nuclear,	99
hydraulic, and other production plant equipment used to generate	100
electricity. For tax years prior to 2001, "production equipment"	101
includes taxable station equipment that is located at a production	102
plant.	103

(K) "Tax year" means the year for which property or gross	104
receipts are subject to assessment under this chapter. This	105
division does not limit the tax commissioner's ability to assess	106
and value property or gross receipts outside the tax year.	107

(L) "Combined company" means any person engaged in the	108
activity of an electric company or rural electric company that is	109
also engaged in the activity of a heating company or a natural gas	110
company, or any combination thereof.	111

(M) "Public utility property lessor" means any person, other	112
than a public utility or an interexchange telecommunications	113
company, that leases personal property, other than in a sale and	114
leaseback transaction, to a public utility, other than a railroad,	115
water transportation, telephone, or telegraph company if the	116
property would be taxable property if owned by the public utility.	117
A public utility property lessor is subject to this chapter only	118
for the purposes of reporting and paying tax on taxable property	119
it leases to a public utility other than a telephone or telegraph	120
company. A public utility property lessor that leases property to	121
a public utility other than a telephone or telegraph company is	122
not a public utility, but it shall report its property and be	123
assessed in the same manner as the utility to which it leases the	124
property.	125

(N) "Renewable resource" means solar photovaltaic or solar	126
thermal energy or wind energy.	127

Sec. 5727.11.  (A) Except as otherwise provided in this	128
section, the true value of all taxable property, except property	129
of a railroad company, required by section 5727.06 of the Revised	130
Code to be assessed by the tax commissioner shall be determined by	131
a method of valuation using cost as capitalized on the public	132
utility's books and records less composite annual allowances as	133
prescribed by the commissioner. If the commissioner finds that	134
application of this method will not result in the determination of	135
true value of the public utility's taxable property, the	136
commissioner may use another method of valuation.	137

(B)(1) Except as provided in division (B)(2) of this section,	138
the true value of current gas stored underground is the cost of	139
that gas shown on the books and records of the public utility on	140
the thirty-first day of December of the preceding year.	141

(2) For tax year 2001 and thereafter, the true value of	142
current gas stored underground is the quotient obtained by	143
dividing (a) the average value of the current gas stored	144
underground, which shall be determined by adding the value of the	145
gas on hand at the end of each calendar month in the calendar year	146
preceding the tax year, or, if applicable, the last day of	147
business of each month for a partial month, divided by (b) the	148
total number of months the natural gas company was in business	149
during the calendar year prior to the beginning of the tax year.	150
with the approval of the tax commissioner, a natural gas company	151
may use a date other than the end of a calendar month to value its	152
current gas stored underground.	153

(C) The true value of noncurrent gas stored underground is	154
thirty-five per cent of the cost of that gas shown on the books	155
and records of the public utility on the thirty-first day of	156
December of the preceding year.	157

(D)(1) Except as provided in divisiondivisions (D)(2) and	158
(3) of this section, the true value of the production equipment of	159
an electric company and the true value of all taxable property of	160
a rural electric company is the equipment's or property's cost as	161
capitalized on the company's books and records less fifty per cent	162
of that cost as an allowance for depreciation and obsolescence.	163

(2) The true value of the production equipment of an electric	164
company or rural electric company purchased, transferred, or	165
placed into service after the effective date of this amendment	166
July 6, 1999, is the purchase price of the equipment as	167
capitalized on the company's books and records less composite	168
annual allowances as prescribed by the tax commissioner.	169

(3) For tax year 2010 and each tax year thereafter, the true	170
value of the taxable property of an electric company that is used	171
to produce electricity from a renewable resource is the purchase	172
price of the equipment as capitalized on the company's books and	173
records without deduction of composite annual allowances.	174

(E) The true value of taxable property, except property of a	175
railroad company, required by section 5727.06 of the Revised Code	176
to be assessed by the tax commissioner shall not include the	177
allowance for funds used during construction or interest during	178
construction that has been capitalized on the public utility's	179
books and records as part of the total cost of the taxable	180
property. This division shall not apply to the taxable property of	181
an electric company or a rural electric company, excluding	182
transmission and distribution property, first placed into service	183
after December 31, 2000, or to the taxable property a person	184
purchases, which includes transfers, if that property was used in	185
business by the seller prior to the purchase.	186

(F) The true value of watercraft owned or operated by a water	187
transportation company shall be determined by multiplying the true	188
value of the watercraft as determined under division (A) of this	189
section by a fraction, the numerator of which is the number of	190
revenue-earning miles traveled by the watercraft in the waters of	191
this state and the denominator of which is the number of	192
revenue-earning miles traveled by the watercraft in all waters.	193

(G) The cost of property subject to a sale and leaseback	194
transaction is the cost of the property as capitalized on the	195
books and records of the public utility owning the property	196
immediately prior to the sale and leaseback transaction.	197

(H) The cost as capitalized on the books and records of a	198
public utility includes amounts capitalized that represent	199
regulatory assets, if such amounts previously were included on the	200
company's books and records as capitalized costs of taxable	201
personal property.	202

(I) Any change in the composite annual allowances as	203
prescribed by the commissioner on a prospective basis shall not be	204
admissible in any judicial or administrative action or proceeding	205
as evidence of value with regard to prior years' taxes.	206
Information about the business, property, or transactions of any	207
taxpayer obtained by the commissioner for the purpose of adopting	208
or modifying the composite annual allowances shall not be subject	209
to discovery or disclosure.	210

Sec. 5727.111.  The taxable property of each public utility,	211
except a railroad company, and of each interexchange	212
telecommunications company shall be assessed at the following	213
percentages of true value:	214

(A) Fifty per cent in the case of the taxable transmission	215
and distribution property of a rural electric company, and	216
twenty-five per cent for all its other taxable property;	217

(B) In the case of a telephone or telegraph company,	218
twenty-five per cent for taxable property first subject to	219
taxation in this state for tax year 1995 or thereafter for tax	220
years before tax year 2007, and pursuant to division (H) of	221
section 5711.22 of the Revised Code for tax year 2007 and	222
thereafter, and the following for all other taxable property:	223

(1) For tax years prior to 2005, eighty-eight per cent;

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(2) For tax year 2005, sixty-seven per cent;

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(3) For tax year 2006, forty-six per cent;

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(4) For tax year 2007 and thereafter, pursuant to division	227
(H) of section 5711.22 of the Revised Code.	228

(C) Twenty-five per cent in the case of a natural gas	229
company.	230

(D) Eighty-eight per cent in the case of a pipe-line,	231
water-works, or heating company;	232

(E)(1) For tax year 2005, eighty-eight per cent in the case	233
of the taxable transmission and distribution property of an	234
electric company, and twenty-five per cent for all its other	235
taxable property;	236

(2) For tax yearyears 2006 and each tax year thereafter,	237
2007, 2008, and 2009, eighty-five per cent in the case of the	238
taxable transmission and distribution property of an electric	239
company, and twenty-four per cent for all its other taxable	240
property;	241

(3) For tax year 2010 and each tax year thereafter, of the	242
taxable property of an electric company:	243

(a) Eighty-five per cent in the case of the taxable	244
transmission and distribution property;	245

(b) Twelve per cent in the case of taxable property used to	246
produce electricity from renewable resources;	247

(c) Twenty-four per cent for all its other taxable property.

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(F)(1) Twenty-five per cent in the case of an interexchange	249
telecommunications company for tax years before tax year 2007;	250

(2) Pursuant to division (H) of section 5711.22 of the	251
Revised Code for tax year 2007 and thereafter.	252

(G) Twenty-five per cent in the case of a water	253
transportation company.	254

Section 2. That existing sections 5727.01, 5727.11, and	255
5727.111 of the Revised Code are hereby repealed.	256