H-0121.2 _______________________________________________
HOUSE BILL 1007
_______________________________________________
State of Washington 57th Legislature 2001 Regular Session
By Representative Morris
Read first time 01/08/2001. Referred to Committee on Technology, Telecommunications & Energy.
AN ACT Relating to the taxation of electricity; amending RCW 82.16.010, 82.16.020, 82.16.050, 82.16.090, 35.21.860, 35.21.865, 35.21.870, 52.18.020, and 82.02.030; adding a new section to chapter 82.04 RCW; adding a new section to chapter 84.36 RCW; adding a new section to chapter 84.55 RCW; adding a new chapter to Title 82 RCW; creating new sections; repealing RCW 82.16.0491, 82.16.053, 54.28.010, 54.28.011, 54.28.020, 54.28.025, 54.28.030, 54.28.040, 54.28.050, 54.28.055, 54.28.060, 54.28.070, 54.28.080, 54.28.090, 54.28.100, 54.28.110, and 54.28.120; and providing an effective date.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 1. DEFINITIONS. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
(1) "Customer" or "purchaser" means a person who acquires for consideration electricity for use or consumption and not for resale.
(2) "Distribution services provider" means a person controlling or operating distribution facilities for distribution of electricity to the public. A distribution services provider includes a purchaser who takes electricity directly from a transmission line and a purchaser who generates electricity for the purchaser's own use but does not include electricity generated by the purchaser for noncommercial use or for agricultural use.
(3) "Person" is defined as provided in RCW 82.04.030.
(4) "Transmission services provider" means a person controlling or operating transmission facilities.
(5) "Transmission facilities" means any facilities that are used to provide transmission services as determined by the utilities and transportation commission.
NEW SECTION. Sec. 2. WHOLESALE ENERGY TRANSACTION TAX‑-RATE OF TAX‑-EXEMPTIONS‑-COST RECOVERY. (1)(a) Except as provided in subsection (3) of this section, a wholesale energy transaction tax is imposed upon electricity transmitted within the state as provided in this section. The tax is imposed at a rate of . . . . cents per kilowatt hour of electricity transmitted by a transmission services provider in the state.
(b) For electricity produced in the state for delivery outside of the state, the taxpayer is the person making a sale of electricity for delivery outside the state. The transmission services provider shall collect the tax from the taxpayer based upon the kilowatt hours introduced onto transmission lines from the electrical generation facility. The amount of kilowatt hours subject to tax must be reduced by five percent to compensate for transmission line losses.
(c) For electricity produced in the state for delivery within the state, the taxpayer is the distribution services provider. The transmission services provider shall collect the tax based upon the amount of kilowatt hours of electricity delivered to the distribution services provider.
(d) For electricity produced outside the state for delivery inside the state, the taxpayer is the distribution services provider. The transmission services provider shall collect the tax based upon the amount of kilowatt hours of electricity delivered to the distribution services provider.
(2)(a) If more than one transmission services provider transmits electricity, the last transmission services provider transmitting or delivering the electricity shall collect the tax.
(b) If the transmission services provider is an agency of the United States government, the distribution services provider receiving the electricity shall self-assess the tax subject to the provisions of this chapter.
(c) If an electrical generation facility located within the state produces electricity for sale inside and outside the state, sales within the state are considered to have come from electricity produced within the state for purposes of the tax imposed by this section.
(3)(a) Electricity transmitted through the state that is not produced or delivered in the state is exempt from the tax imposed by this section.
(b) Electricity produced in the state by an agency of the United States government for delivery outside of the state is exempt from the tax imposed by this section.
(c) Electricity delivered to a purchaser that receives its power directly from a transmission or distribution facility owned by an entity of the United States government, or electricity that is transmitted exclusively on transmission or distribution facilities owned by an entity of the United States government, is exempt from the tax imposed by this section.
(4) A distribution services provider is allowed to recover the tax imposed by this section and the administrative costs to comply with this chapter in its rates.
NEW SECTION. Sec. 3. MULTISTATE EXEMPTION. A person, upon proof that the person has paid a tax in another state on the transmission of electricity, is allowed a credit against the tax imposed by this chapter if the tax has been paid in another state.
NEW SECTION. Sec. 4. COLLECTION OF WHOLESALE ENERGY TRANSACTION TAX‑-DISPOSITION OF REVENUE. (1) A transmission services provider shall collect the tax imposed under section 2 of this act from the taxpayer and pay the tax collected to the department. If the transmission services provider collects a tax in excess of the tax imposed by section 2 of this act, both the tax and the excess must be remitted to the department.
(2) Tax collected under this chapter shall be deposited in the wholesale energy transaction account created in section 6 of this act.
NEW SECTION. Sec. 5. ADMINISTRATION. Chapter 82.32 RCW applies to the taxes imposed in this chapter. The tax due dates, reporting periods, and return requirements applicable to chapter 82.04 RCW apply equally to the taxes imposed in this chapter.
NEW SECTION. Sec. 6. WHOLESALE ENERGY TRANSACTION ACCOUNT‑-CREATION AND USE. (1) The wholesale energy transaction account is created in the state treasury. Moneys in the account may be spent only after appropriation for the purposes of distributions under this section and for activities of the office of financial management and the department of revenue related to administration of this chapter.
(2) Under a distribution formula and method provided by the office of financial management, money in the account shall be distributed, as nearly as is practical, in a manner that replaces the fiscal year 2001 revenues generated by the taxation of light and power businesses, as defined in subsection (3) of this section, or of electrical energy businesses, as described in chapter 35.21 RCW, under the state and local public utility taxes, the business and occupation tax, the public utility district privilege tax, and the state and local property taxes.
(3) "Light and power business" means the business of operating a plant or system for the generation, production, or distribution of electrical energy for hire or sale and/or for the wheeling of electricity for others.
Sec. 7. RCW 82.16.010 and 1996 c 150 s 1 are each amended to read as follows:
For the purposes of this chapter, unless otherwise required by the context:
(1) "Railroad business" means the business of operating any railroad, by whatever power operated, for public use in the conveyance of persons or property for hire. It shall not, however, include any business herein defined as an urban transportation business.
(2) "Express business" means the business of carrying property for public hire on the line of any common carrier operated in this state, when such common carrier is not owned or leased by the person engaging in such business.
(3) "Railroad car business" means the business of operating stock cars, furniture cars, refrigerator cars, fruit cars, poultry cars, tank cars, sleeping cars, parlor cars, buffet cars, tourist cars, or any other kinds of cars used for transportation of property or persons upon the line of any railroad operated in this state when such railroad is not owned or leased by the person engaging in such business.
(4) "Water distribution business" means the business of operating a plant or system for the distribution of water for hire or sale.
(5) (("Light
and power business" means the business of operating a plant or system for
the generation, production or distribution of electrical energy for hire or
sale and/or for the wheeling of electricity for others.
(6))) "Telegraph business" means the
business of affording telegraphic communication for hire.
(((7))) (6)
"Gas distribution business" means the business of operating a plant
or system for the production or distribution for hire or sale of gas, whether
manufactured or natural.
(((8))) (7)
"Motor transportation business" means the business (except urban
transportation business) of operating any motor propelled vehicle by which
persons or property of others are conveyed for hire, and includes, but is not
limited to, the operation of any motor propelled vehicle as an auto
transportation company (except urban transportation business), common carrier
or contract carrier as defined by RCW 81.68.010 and 81.80.010: PROVIDED, That
"motor transportation business" shall not mean or include the transportation
of logs or other forest products exclusively upon private roads or private
highways.
(((9))) (8)
"Urban transportation business" means the business of operating any
vehicle for public use in the conveyance of persons or property for hire,
insofar as (a) operating entirely within the corporate limits of any city or
town, or within five miles of the corporate limits thereof, or (b) operating
entirely within and between cities and towns whose corporate limits are not
more than five miles apart or within five miles of the corporate limits of
either thereof. Included herein, but without limiting the scope hereof, is the
business of operating passenger vehicles of every type and also the business of
operating cartage, pickup, or delivery services, including in such services the
collection and distribution of property arriving from or destined to a point
within or without the state, whether or not such collection or distribution be
made by the person performing a local or interstate line-haul of such property.
(((10))) (9)
"Public service business" means any of the businesses defined in
subdivisions (1), (2), (3), (4), (5), (6), (7), and (8)((, and (9)))
or any business subject to control by the state, or having the powers of
eminent domain and the duties incident thereto, or any business hereafter
declared by the legislature to be of a public service nature, except telephone
business as defined in RCW 82.04.065 and low-level radioactive waste site
operating companies as redefined in RCW 81.04.010. It includes, among others,
without limiting the scope hereof: Airplane transportation, boom, dock, ferry,
pipe line, toll bridge, toll logging road, water transportation and wharf
businesses.
(((11))) (10)
"Tugboat business" means the business of operating tugboats,
towboats, wharf boats or similar vessels in the towing or pushing of vessels,
barges or rafts for hire.
(((12))) (11)
"Gross income" means the value proceeding or accruing from the
performance of the particular public service or transportation business
involved, including operations incidental thereto, but without any deduction on
account of the cost of the commodity furnished or sold, the cost of materials
used, labor costs, interest, discount, delivery costs, taxes, or any other
expense whatsoever paid or accrued and without any deduction on account of
losses.
(((13))) (12)
The meaning attributed, in chapter 82.04 RCW, to the term "tax year,"
"person," "value proceeding or accruing,"
"business," "engaging in business," "in this
state," "within this state," "cash discount" and
"successor" shall apply equally in the provisions of this chapter.
Sec. 8. RCW 82.16.020 and 1996 c 150 s 2 are each amended to read as follows:
(1) There is levied and there shall be collected from every person a tax for the act or privilege of engaging within this state in any one or more of the businesses herein mentioned. The tax shall be equal to the gross income of the business, multiplied by the rate set out after the business, as follows:
(a) Express, sewerage collection, and telegraph businesses: Three and six-tenths percent;
(b) ((Light and
power business: Three and sixty-two one-hundredths percent;
(c))) Gas distribution business: Three and
six-tenths percent;
(((d))) (c)
Urban transportation business: Six-tenths of one percent;
(((e))) (d)
Vessels under sixty-five feet in length, except tugboats, operating upon the
waters within the state: Six-tenths of one percent;
(((f))) (e)
Motor transportation, railroad, railroad car, and tugboat businesses, and all
public service businesses other than ones mentioned above: One and
eight-tenths of one percent;
(((g))) (f)
Water distribution business: Four and seven-tenths percent.
(2) An additional tax is imposed equal to the rate specified in RCW 82.02.030 multiplied by the tax payable under subsection (1) of this section.
(3) Twenty percent of the moneys collected under subsection (1) of this section on water distribution businesses and sixty percent of the moneys collected under subsection (1) of this section on sewerage collection businesses shall be deposited in the public works assistance account created in RCW 43.155.050.
Sec. 9. RCW 82.16.050 and 2000 c 245 s 1 are each amended to read as follows:
In computing tax there may be deducted from the gross income the following items:
(1) Amounts derived by municipally owned or operated public service businesses, directly from taxes levied for the support or maintenance thereof: PROVIDED, That this section shall not be construed to exempt service charges which are spread on the property tax rolls and collected as taxes;
(2) Amounts derived from the sale of commodities to persons in the same public service business as the seller, for resale as such within this state. This deduction is allowed only with respect to water distribution, gas distribution or other public service businesses which furnish water, gas or any other commodity in the performance of public service businesses;
(3) Amounts actually paid by a taxpayer to another person taxable under this chapter as the latter's portion of the consideration due for services furnished jointly by both, if the total amount has been credited to and appears in the gross income reported for tax by the former;
(4) The amount of cash discount actually taken by the purchaser or customer;
(5) The amount of credit losses actually sustained by taxpayers whose regular books of accounts are kept upon an accrual basis;
(6) Amounts derived from business which the state is prohibited from taxing under the Constitution of this state or the Constitution or laws of the United States;
(7) Amounts derived from the distribution of water through an irrigation system, for irrigation purposes;
(8) Amounts derived from the transportation of commodities from points of origin in this state to final destination outside this state, or from points of origin outside this state to final destination in this state, with respect to which the carrier grants to the shipper the privilege of stopping the shipment in transit at some point in this state for the purpose of storing, manufacturing, milling, or other processing, and thereafter forwards the same commodity, or its equivalent, in the same or converted form, under a through freight rate from point of origin to final destination; and amounts derived from the transportation of commodities from points of origin in the state to an export elevator, wharf, dock or ship side on tidewater or navigable tributaries thereto from which such commodities are forwarded, without intervening transportation, by vessel, in their original form, to interstate or foreign destinations: PROVIDED, That no deduction will be allowed when the point of origin and the point of delivery to such an export elevator, wharf, dock, or ship side are located within the corporate limits of the same city or town;
(9) ((Amounts
derived from the production, sale, or transfer of electrical energy for resale
within or outside the state or for consumption outside the state;
(10))) Amounts derived from the distribution of water
by a nonprofit water association and used for capital improvements by that
nonprofit water association;
(((11))) (10)
Amounts paid by a sewerage collection business taxable under RCW
82.16.020(1)(a) to a person taxable under chapter 82.04 RCW for the treatment
or disposal of sewage.
Sec. 10. RCW 82.16.090 and 1988 c 228 s 1 are each amended to read as follows:
Any customer billing
issued by a ((light or power business or)) gas distribution business
that serves a total of more than twenty thousand customers and operates within
the state shall include the following information:
(1) The rates and
amounts of taxes paid directly by the customer upon products or services
rendered by the ((light and power business or)) gas distribution
business; and
(2) The rate, origin
and approximate amount of each tax levied upon the revenue of the ((light
and power business or)) gas distribution business and added as a component
of the amount charged to the customer. Taxes based upon revenue of the ((light
and power business or)) gas distribution business to be listed on the
customer billing need not include taxes levied by the federal government or
taxes levied under chapter((s 54.28,)) 80.24((,)) or 82.04 RCW.
NEW SECTION. Sec. 11. A new section is added to chapter 82.04 RCW to read as follows:
EXEMPTIONS‑-ELECTRICAL ENERGY. This chapter shall not apply to any person with respect to the business of operating a plant or system for the generation, production, or distribution of electrical energy for hire or sale and/or for the wheeling of electricity for others.
NEW SECTION. Sec. 12. A new section is added to chapter 84.36 RCW to read as follows:
Property owned or used by a person for the business of operating a plant or system for the generation, production, or distribution of electrical energy for hire or sale and/or for the wheeling of electricity for others, is exempt from taxation.
NEW SECTION. Sec. 13. A new section is added to chapter 84.55 RCW to read as follows:
The levy for a taxing district in any year shall be reduced as necessary to prevent exemptions under section 12 of this act from resulting in a higher tax rate than would have occurred without the exemptions.
Sec. 14. RCW 35.21.860 and 2000 c 83 s 8 are each amended to read as follows:
(1) No city or town may
impose a franchise fee or any other fee or charge of whatever nature or
description upon the ((light and power, or)) gas distribution ((businesses))
business, as defined in RCW 82.16.010, or telephone business, as defined
in RCW 82.04.065, or service provider for use of the right of way, except:
(a) A tax authorized by RCW 35.21.865 may be imposed;
(b) A fee may be charged to such businesses or service providers that recovers actual administrative expenses incurred by a city or town that are directly related to receiving and approving a permit, license, and franchise, to inspecting plans and construction, or to the preparation of a detailed statement pursuant to chapter 43.21C RCW;
(c) Taxes permitted by state law on service providers;
(d) Franchise requirements and fees for cable television services as allowed by federal law; and
(e) A site-specific charge pursuant to an agreement between the city or town and a service provider of personal wireless services acceptable to the parties for:
(i) The placement of new structures in the right of way regardless of height, unless the new structure is the result of a mandated relocation in which case no charge will be imposed if the previous location was not charged;
(ii) The placement of replacement structures when the replacement is necessary for the installation or attachment of wireless facilities, and the overall height of the replacement structure and the wireless facility is more than sixty feet; or
(iii) The placement of personal wireless facilities on structures owned by the city or town located in the right of way. However, a site-specific charge shall not apply to the placement of personal wireless facilities on existing structures, unless the structure is owned by the city or town.
A city or town is not required to approve the use permit for the placement of a facility for personal wireless services that meets one of the criteria in this subsection absent such an agreement. If the parties are unable to agree on the amount of the charge, the service provider may submit the amount of the charge to binding arbitration by serving notice on the city or town. Within thirty days of receipt of the initial notice, each party shall furnish a list of acceptable arbitrators. The parties shall select an arbitrator; failing to agree on an arbitrator, each party shall select one arbitrator and the two arbitrators shall select a third arbitrator for an arbitration panel. The arbitrator or arbitrators shall determine the charge based on comparable siting agreements involving public land and rights of way. The arbitrator or arbitrators shall not decide any other disputed issues, including but not limited to size, location, and zoning requirements. Costs of the arbitration, including compensation for the arbitrator's services, must be borne equally by the parties participating in the arbitration and each party shall bear its own costs and expenses, including legal fees and witness expenses, in connection with the arbitration proceeding.
(2) No city or town may impose a franchise fee or any other fee or charge of whatever nature or description upon the business of operating a plant or system for the generation, production, or distribution of electrical energy for hire or sale and/or for the wheeling of electricity for others or upon a person for amounts received for the sale of electrical energy for resale within or outside the state.
(3) Subsection (1) of this section does not prohibit franchise fees imposed on an electrical energy, natural gas, or telephone business, by contract existing on April 20, 1982, with a city or town, for the duration of the contract, but the franchise fees shall be considered taxes for the purposes of the limitations established in RCW 35.21.865 and 35.21.870 to the extent the fees exceed the costs allowable under subsection (1) of this section.
Sec. 15. RCW 35.21.865 and 1983 c 99 s 4 are each amended to read as follows:
No city or town may
change the rate of tax it imposes on the privilege of conducting ((an
electrical energy,)) a natural gas((,)) or telephone business
which change applies to business activities occurring before the effective date
of the change, and no rate change may take effect before the expiration of
sixty days following the enactment of the ordinance establishing the change
except as provided in RCW 35.21.870.
Sec. 16. RCW 35.21.870 and 1984 c 225 s 6 are each amended to read as follows:
(1) No city or town may
impose a tax on the privilege of conducting ((an electrical energy,)) a
natural gas, steam energy, or telephone business at a rate which exceeds six
percent unless the rate is first approved by a majority of the voters of the
city or town voting on such a proposition.
(2) If a city or town is imposing a rate of tax under subsection (1) of this section in excess of six percent on April 20, 1982, the city or town shall decrease the rate to a rate of six percent or less by reducing the rate each year on or before November 1st by ordinances to be effective on January 1st of the succeeding year, by an amount equal to one-tenth the difference between the tax rate on April 20, 1982, and six percent.
Nothing in this subsection prohibits a city or town from reducing its rates by amounts greater than the amounts required in this subsection.
Voter approved rate increases under subsection (1) of this section shall not be included in the computations under this subsection.
Sec. 17. RCW 52.18.020 and 1990 c 294 s 2 are each amended to read as follows:
The term "personal
property" for the purposes of this chapter shall include every form of
tangible personal property, including but not limited to, all goods, chattels,
stock in trade, estates, or crops: PROVIDED, That all personal property not
assessed and subjected to ad valorem taxation under Title 84 RCW, all property
under contract or for which the district is receiving payment for as authorized
by RCW 52.30.020 ((and all property subject to the provisions of chapter
54.28 RCW)), or all property that is subject to a contract for services
with a fire protection district, shall be exempt from the benefit charge
imposed under this chapter: PROVIDED FURTHER, That the term "personal
property" shall not include any personal property used for farming, field crops,
farm equipment or livestock: AND PROVIDED FURTHER, That the term
"improvements to real property" shall not include permanent growing
crops, field improvements installed for the purpose of aiding the growth of
permanent crops, or other field improvements normally not subject to damage by
fire.
Sec. 18. RCW 82.02.030 and 1993 sp.s. c 25 s 107 are each amended to read as follows:
The rate of the
additional taxes under RCW ((54.28.020(2), 54.28.025(2),)) 66.24.210(2),
82.16.020(2), 82.27.020(5), and 82.29A.030(2) shall be seven percent.
NEW SECTION. Sec. 19. The following acts or parts of acts are each repealed:
(1) RCW 82.16.0491 (Credit--Contributions to an electric utility rural economic development revolving fund) and 1999 c 311 s 402;
(2) RCW 82.16.053 (Deductions in computing tax--Light and power businesses) and 1996 c 145 s 1 & 1994 c 236 s 1;
(3) RCW 54.28.010 (Definitions) and 1977 ex.s. c 366 s 1, 1967 ex.s. c 26 s 22, 1959 c 274 s 1, & 1957 c 278 s 7;
(4) RCW 54.28.011 ("Gross revenue" defined) and 1957 c 278 s 12;
(5) RCW 54.28.020 (Tax imposed--Rates--Additional tax imposed) and 1983 2nd ex.s. c 3 s 8, 1982 1st ex.s. c 35 s 18, 1977 ex.s. c 366 s 2, 1959 c 274 s 2, & 1957 c 278 s 2;
(6) RCW 54.28.025 (Tax imposed with respect to thermal electric generating facilities--Rate--Additional tax imposed) and 1983 2nd ex.s. c 3 s 9, 1982 1st ex.s. c 35 s 19, & 1977 ex.s. c 366 s 6;
(7) RCW 54.28.030 (Districts' report to department of revenue) and 1977 ex.s. c 366 s 3, 1975 1st ex.s. c 278 s 30, 1959 c 274 s 3, & 1957 c 278 s 3;
(8) RCW 54.28.040 (Tax computed--Payment--Penalties--Disposition) and 1996 c 149 s 16, 1982 1st ex.s. c 35 s 20, 1975 1st ex.s. c 278 s 31, & 1957 c 278 s 4;
(9) RCW 54.28.050 (Distribution of tax) and 1982 1st ex.s. c 35 s 21, 1980 c 154 s 8, 1977 ex.s. c 366 s 4, 1975 1st ex.s. c 278 s 32, 1959 c 274 s 4, & 1957 c 278 s 5;
(10) RCW 54.28.055 (Distribution of tax proceeds from thermal electric generating facilities) and 1986 c 189 s 1, 1982 1st ex.s. c 35 s 22, 1979 c 151 s 165, & 1977 ex.s. c 366 s 7;
(11) RCW 54.28.060 (Interest) and 1996 c 149 s 12 & 1957 c 278 s 6;
(12) RCW 54.28.070 (Municipal taxes--May be passed on) and 1941 c 245 s 3;
(13) RCW 54.28.080 (Additional tax for payment on bonded indebtedness of school districts) and 1957 c 278 s 8;
(14) RCW 54.28.090 (Deposit of funds to credit of certain taxing districts) and 1980 c 154 s 9, 1977 ex.s. c 366 s 5, & 1957 c 278 s 10;
(15) RCW 54.28.100 (Use of moneys received by taxing district) and 1957 c 278 s 11;
(16) RCW 54.28.110 (Voluntary payments by district to taxing entity for removal of property from tax rolls) and 1957 c 278 s 13; and
(17) RCW 54.28.120 (Amount of tax if district acquires electric utility property from public service company) and 1957 c 278 s 14.
NEW SECTION. Sec. 20. Sections 1 through 6 of this act constitute a new chapter in Title 82 RCW.
NEW SECTION. Sec. 21. Section 12 of this act applies to taxes levied for collection in 2002 and thereafter.
NEW SECTION. Sec. 22. Captions used in sections 1 through 6 and 11 of this act are not any part of the law.
NEW SECTION. Sec. 23. This act takes effect January 1, 2002.
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