BILL REQ. #:  H-3891.1 



_____________________________________________ 

HOUSE BILL 2609
_____________________________________________
State of Washington59th Legislature2006 Regular Session

By Representatives Morris, B. Sullivan and Linville

Read first time 01/11/2006.   Referred to Committee on Technology, Energy & Communications.



     AN ACT Relating to utility taxation; amending RCW 82.16.010, 82.16.020, 82.16.050, 82.16.090, 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; adding new chapters to Title 82 RCW; creating new sections; recodifying RCW 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 effective dates.

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) "Amount of electricity sold at retail" means the amount of kilowatt hours of electricity reported as retail sales to ultimate consumers to the federal energy information administration on form EIA-861 or its successor.
     (2) "Amount of electricity sold at wholesale" means the amount of kilowatt hours of electricity reported as sales of electricity for resale to:
     (a) The federal energy information administration on form EIA-412 or its successor;
     (b) The federal energy regulatory commission on form 1 or its successor; or
     (c) To the department on an affidavit in a form and manner as prescribed by the department, if the taxpayer is not required to report sales of electricity for resale under (a) or (b) of this subsection.
     (3) "Customer" or "purchaser" means a person who acquires for consideration electricity for use or consumption and not for resale.
     (4) "Department" means the department of revenue.
     (5) "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.
     (6) "Net amount of electricity generated" means the amount of kilowatt hours of electricity reported as net generation to the federal energy information administration on form EIA-906 or its successor.
     (7) "Person" is defined as provided in RCW 82.04.030.

NEW SECTION.  Sec. 2   WHOLESALE ENERGY TRANSACTION TAX--RATE OF TAX--EXEMPTIONS--COST RECOVERY. (1)(a) Except as provided in subsection (2) 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 two-tenths of one cent per kilowatt hour of electricity.
     (b)(i) For electricity produced in the state for delivery outside of the state, the taxpayer is the person that introduces the electricity onto transmission lines. The amount of electricity subject to tax under this subsection shall be determined by an apportionment formula under (b)(ii) of this subsection. The taxpayer shall remit the tax annually to the department under the provisions of chapter 82.32 RCW.
     (ii) The amount of electricity subject to tax under this subsection (1)(b)(ii) is, for the previous calendar year, the greater of the following:
     (A) Ninety-five percent of the net amount of electricity generated by the taxpayer within the state, less the sum of the amount of electricity sold at retail within the state and the amount of electricity sold at wholesale to distribution services providers located within the state; or
     (B) Zero.
     (c) For electricity produced for delivery within the state, the taxpayer is the distribution services provider. The tax base is the amount of kilowatt hours of electricity delivered to the distribution services provider.
     (2)(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) An agency of the United States government that produces electricity within the state is exempt from the provisions in subsection (1)(b) of 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 is exempt from the tax imposed by this section.
     (3) 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   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 to the taxes imposed in this chapter.

NEW SECTION.  Sec. 5   (1) The following definitions apply to this section:
     (a) "Qualifying project" means a project designed to achieve job creation or business retention, to add or upgrade nonelectrical infrastructure, to add or upgrade health and safety facilities, to accomplish energy and water use efficiency improvements, including renewable energy development, or to add or upgrade emergency services in any designated qualifying rural area.
     (b) "Qualifying rural area" means:
     (i) A rural county, which is a county with a population density of less than one hundred persons per square mile as determined by the office of financial management and published each year by the department for the period July 1st to June 30th; or
     (ii) Any geographic area in the state that receives electricity from a taxpayer with twelve thousand or fewer customers and with fewer than twenty-six meters per mile of distribution line as determined and published by the department effective July 1st of each year. The department shall use current data provided by the electricity industry.
     (c) "Electric utility rural economic development revolving fund" means a fund devoted exclusively to funding qualifying projects in qualifying rural areas.
     (d) "Local board" is a board of directors with at least, but not limited to, three members representing local businesses and community groups who have been appointed by the sponsoring electric utility to oversee and direct the activities of the electric utility rural economic development revolving fund.
     (2) A taxpayer with fewer than twenty-six active meters per mile of distribution line in any geographic area in the state shall be allowed a credit against taxes due under this chapter in an amount equal to fifty percent of contributions made in any calendar year directly to an electric utility rural economic development revolving fund. The credit shall be taken in a form and manner as required by the department. The credit under this section shall not exceed twenty-five thousand dollars per calendar year per taxpayer. The credit may not exceed the tax that would otherwise be due under this chapter. Refunds shall not be granted in the place of credits. Expenditures not used to earn a credit in one calendar year may not be used to earn a credit in subsequent years.
     (3) The right to earn tax credits under this section expires December 31, 2010.
     (4) To qualify for the credit in subsection (2) of this section, the taxpayer shall establish an electric utility rural economic development revolving fund which is governed by a local board whose members shall reside in the qualifying rural area served by the taxpayer. The local board shall have authority to determine all criteria and conditions for the expenditure of funds from the electric utility rural economic development revolving fund, and for the terms and conditions of repayment.
     (5) Any funds repaid to the electric utility rural economic development revolving fund by recipients shall be made available for additional qualifying projects.
     (6) If at any time the electric utility rural economic development revolving fund is dissolved, any money claimed as a tax credit under this section shall either be granted to a qualifying project or refunded to the state within two years of termination.
     (7) The total amount of credits that may be used in any fiscal year shall not exceed three hundred fifty thousand dollars in any fiscal year. The department shall allow the use of earned credits on a first-come, first-served basis. Unused earned credits may be carried over to subsequent years.

NEW SECTION.  Sec. 6   (1) Unless the context clearly requires otherwise, the definitions in this subsection apply throughout this section.
     (a) "Direct service industrial customer" means a person who is an industrial customer that contracts for the purchase of power from the Bonneville Power Administration for direct consumption as of July 1, 2006. "Direct service industrial customer" includes a person who is a subsidiary that is more than fifty percent owned by a direct service industrial customer and who receives power from the Bonneville Power Administration pursuant to the parent's contract for power.
     (b) "Facility" means a gas turbine electrical generation facility that does not exist on July 1, 2006.
     (c) "Average annual employment" means the total employment in this state for a calendar year at the direct service industrial customer's location where electricity from the facility will be consumed.
     (2) Effective January 1, 2007, a credit is allowed against the tax due under this chapter on sales of electricity made from a facility to a direct service industrial customer if the contract for sale of electricity to a direct service industrial customer contains the following terms:
     (a) Sales of electricity from the facility to the direct service industrial customer will be made for ten consecutive years or more;
     (b) The price charged for the electricity will be reduced by an amount equal to the tax credit; and
     (c) Disallowance of all or part of the credit under subsection (5) of this section is a breach of contract and the damages to be paid by the direct service industrial customer to the facility are the amount of tax credit disallowed.
     (3) The credit is equal to the gross proceeds from the sale of the electricity to a direct service industrial customer multiplied by the rate in effect at the time of the sale for the taxpayer under section 2 of this act. The credit may be used each reporting period for sixty months following the first month electricity is sold from a facility to a direct service industrial customer. Credit under this section is limited to the amount of tax imposed under this chapter. Refunds shall not be given in place of credits and credits may not be carried over to subsequent calendar years.
     (4) Application for credit shall be made before the first sale of electricity from a facility to a direct service industrial customer. The application shall be in a form and manner prescribed by the department and shall include, but is not limited to, information regarding the location of the facility, identification of the direct service industrial customer who will receive electricity from the facility, the projected date of the first sale of electricity to a direct service industrial customer, the date construction is projected to begin or did begin, and the average annual employment in the state of the direct service industrial customer who will receive electricity from the facility for the six calendar years immediately preceding the year in which the application is made. A copy of the contract for sale of electricity must be attached to the application. The department shall rule on the application within thirty days of receipt.
     (5) All or part of the credit shall be disallowed and must be paid if the average of the direct service industrial customer's average annual employment for the five calendar years subsequent to the calendar year containing the first month of sale of electricity from a facility to a direct service industrial customer is less than the six- year average annual employment stated on the application for credit under this section. The direct service industrial customer shall certify to the department and to the facility by June 1st of the sixth calendar year following the calendar year in which the month of first sale occurs the average annual employment for each of the five prior calendar years. All or part of the credit that shall be disallowed and must be paid is commensurate with the decrease in the five-year average of average annual employment as follows:

Decrease in Average Annual
Employment Over
Five-Year Period
% of Credit to be Paid
Less than 10%10%
10% or more but less than 25%25%
25% or more but less than 50%50%
50% or more but less than 75%75%
75% or more100%

     (6)(a) Payments on credit that is disallowed shall begin in the sixth calendar year following the calendar year in which the month following the first month of sale of electricity from a facility to a direct service industrial customer occurs. The first payment will be due on or before December 31st with subsequent annual payments due on or before December 31st of the following four years according to the schedule in this subsection.

Payment Year% of Credit to be Paid
110%
215%
320%
425%
530%

     (b) The department may authorize an accelerated payment schedule upon request of the taxpayer.
     (c) Interest shall not be charged on the credit that is disallowed for the sixty-month period the credit may be taken, although all other penalties and interest applicable to delinquent excise taxes may be assessed and imposed. The debt for credit that is disallowed and must be paid will not be extinguished by insolvency or other failure of the taxpayer. Transfer of ownership of the facility does not affect eligibility for this credit. However, the credit is available to the successor only if the eligibility conditions of this section are met.
     (7) The employment security department shall make, and certify to the department, all determinations of employment under this section as requested by the department.

NEW SECTION.  Sec. 7   (1) Unless the context clearly requires otherwise, the definitions in this subsection apply throughout this section.
     (a) "Base credit" means the maximum amount of credit against the tax imposed by this chapter that each taxpayer may take each fiscal year as calculated by the department. The base credit is equal to the proportionate share that the total grants received by each taxpayer in the prior fiscal year bears to the total grants received by all taxpayers and gas distribution businesses under RCW 82.16.0497 in the prior fiscal year multiplied by two million five hundred thousand dollars.
     (b) "Billing discount" means a reduction in the amount charged for providing service to qualifying persons in Washington made by a taxpayer. Billing discount does not include grants received by the taxpayer.
     (c) "Grant" means funds provided to a taxpayer by the department of community, trade, and economic development or by a qualifying organization.
     (d) "Low-income home energy assistance program" means energy assistance programs for low-income households as defined on December 31, 2005, in the low-income home energy assistance act of 1981 as amended August 1, 1999, 42 U.S.C. Sec. 8623 et seq.
     (e) "Qualifying person" means a Washington resident who applies for assistance and qualifies for a grant regardless of whether that person receives a grant.
     (f) "Qualifying contribution" means money given by a taxpayer to a qualifying organization, exclusive of money received in the prior fiscal year from its customers for the purpose of assisting other customers.
     (g) "Qualifying organization" means an entity that has a contractual agreement with the department of community, trade, and economic development to administer in a specified service area low-income home energy assistance funds received from the federal government and other funds that may be received by the entity.
     (2) Subject to the limitations in this section, a taxpayer may take a credit each fiscal year against the tax imposed under this chapter.
     (a)(i) A credit may be taken for qualifying contributions if the dollar amount of qualifying contributions for the fiscal year in which the tax credit is taken is greater than one hundred twenty-five percent of the dollar amount of qualifying contributions given in fiscal year 2006.
     (ii) If no qualifying contributions were given in fiscal year 2006, a credit shall be allowed for the first fiscal year that qualifying contributions are given. Thereafter, credit shall be allowed if the qualifying contributions given exceed one hundred twenty-five percent of qualifying contributions given in the first fiscal year.
     (iii) The amount of credit shall be fifty percent of the dollar amount of qualifying contributions given in the fiscal year in which the tax credit is taken.
     (b)(i) A credit may be taken for billing discounts if the dollar amount of billing discounts for the fiscal year in which the tax credit is taken is greater than one hundred twenty-five percent of the dollar amount of billing discounts given in fiscal year 2006.
     (ii) If no billing discounts were given in fiscal year 2006, a credit shall be allowed in the first fiscal year that billing discounts are given. Thereafter, credit shall be allowed if the dollar amount of billing discounts given exceeds one hundred twenty-five percent of billing discounts given in the first fiscal year.
     (iii) The amount of credit shall be fifty percent of the dollar amount of the billing discounts given in the fiscal year in which the tax credit is taken.
     (c) The total amount of credit that may be taken for qualifying contributions and billing discounts in a fiscal year is limited to the base credit for the same fiscal year.
     (3) The total amount of credit, statewide, that may be taken in any fiscal year shall not exceed two million five hundred thousand dollars.
     (4)(a) Not later than June 1st of each year beginning in 2007, the department shall publish the base credit for each taxpayer for the next fiscal year.
     (b) Not later than July 1st of each year beginning in 2007, application for credit must by made to the department including but not limited to the following information: Billing discounts given by the applicant in fiscal year 2006; qualifying contributions given by the applicant in the prior fiscal year; the amount of money received in the prior fiscal year from customers for the purpose of assisting other customers; the base credit for the next fiscal year for the applicant; the qualifying contributions anticipated to be given in the next fiscal year; and billing discounts anticipated to be given in the next fiscal year. No credit under this section will be allowed to a taxpayer that does not file the application by July 1st.
     (c) Not later than August 1st of each year beginning in 2007, the department shall notify each applicant of the amount of credit that may be taken in that fiscal year.
     (d) The balance of base credits not used by other taxpayers and gas distribution businesses shall be ratably distributed to applicants under the formula in subsection (1)(a) of this section. The total amount of credit that may be taken by an applicant is the base credit plus any ratable portion of unused base credit.
     (5) The credit taken under this section is limited to the amount of tax imposed under this chapter for the fiscal year. The credit must be claimed in the fiscal year in which the billing reduction is made. Any unused credit expires. Refunds shall not be given in place of credits.
     (6) No credit may be taken for billing discounts made before July 1, 2006. Within two weeks of July 1, 2007, the department of community, trade, and economic development shall notify the department in writing of the grants received in fiscal year 2006 by each taxpayer and gas distribution business. Within four weeks of July 1, 2007, the department shall publish the base credit for each taxpayer and gas distribution business for fiscal year 2006. Within eight weeks of July 1, 2007, application to the department must be made showing the information required in subsection (4)(b) of this section. Within twelve weeks of July 1, 2007, the department shall notify each applicant of the amount of credit that may be taken in fiscal year 2007.

NEW SECTION.  Sec. 8   (1) In computing tax under this chapter, a taxpayer may deduct from gross income the lesser of the amounts determined under subsections (2) through (4) of this section.
     (2)(a) Fifty percent of wholesale power cost paid during the reporting period, if the taxpayer has fewer than five and one-half customers per mile of line.
     (b) Forty percent of wholesale power cost paid during the reporting period, if the taxpayer has more than five and one-half but less than eleven customers per mile.
     (c) Thirty percent of the wholesale power cost paid during the reporting period, if the taxpayer has more than eleven but less than seventeen customers per mile of line.
     (d) Zero if the taxpayer has more than seventeen customers per mile of line.
     (3) Wholesale power cost multiplied by the percentage by which the average retail electric power rates for the taxpayer exceed the state average electric power rate. If more than fifty percent of the kilowatt hours sold by a taxpayer are sold to irrigators, then only sales to nonirrigators shall be used to calculate the average electric power rate for that taxpayer. For purposes of this subsection, the department shall determine state average electric power rate each year based on the most recent available data and shall inform taxpayers of its determination.
     (4) Four hundred thousand dollars per month.

Sec. 9   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. 10   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. 11   RCW 82.16.050 and 2004 c 153 s 308 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 bad debts, as that term is used in 26 U.S.C. Sec. 166, as amended or renumbered as of January 1, 2003, on which tax was previously paid under this chapter;
     (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. 12   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.

Sec. 13   RCW 54.28.010 and 1977 ex.s. c 366 s 1 are each amended to read as follows:
     As used in this chapter:
     (1) "Operating property" means all of the property utilized by a ((public utility district)) publicly owned utility in the operation of a plant or system for the generation, transmission, or distribution of electric energy for sale;
     (2) "Taxing districts" means counties, cities, towns, school districts, and road districts;
     (3) "Distributes to consumers" means the sale of electric energy to ultimate consumers thereof, and does not include sales of electric energy for resale by the purchaser;
     (4) "Wholesale value" means all costs of a ((public utility district)) publicly owned utility associated with the generation and transmission of energy from its own generation and transmission system to the point or points of inter-connection with a distribution system owned and used by a ((district)) publicly owned utility to distribute ((such)) energy to consumers, or in the event a distribution system owned by a ((district)) publicly owned utility is not used to distribute ((such)) energy, then the term means the gross revenues derived by a ((district)) publicly owned utility from the sale of ((such)) energy to consumers;
     (5) "Thermal electric generating facility" means a steam-powered electrical energy producing facility utilizing nuclear or fossil fuels;
     (6) "Placed in operation" means delivery of energy into a transmission or distribution system for use or sale in ((such)) a manner as to establish a value accruing to the power plant operator, except operation incidental to testing or startup adjustments;
     (7) "Impacted area" for a thermal electric generating facility on a federal reservation means that area in the state lying within thirty-five statute miles of the most commonly used entrance of the federal reservation and which is south of the southern boundary of township fifteen north;
     (8) "Publicly owned utility" means a public utility district, city, or town operating a plant or system for the generation, transmission, or distribution of electric energy for sale;
     (9) "Telecommunications," "telecommunications facilities," and "wholesale telecommunications services" have the same meaning as under chapter 54.16 RCW
.

Sec. 14   RCW 54.28.011 and 1957 c 278 s 12 are each amended to read as follows:
     "Gross revenue" ((shall)) means the amount received from the sale of electric energy excluding any tax levied by a ((municipal corporation)) city or town upon the public utility district pursuant to RCW 54.28.070 (as recodified by this act).

Sec. 15   RCW 54.28.020 and 1983 2nd ex.s. c 3 s 8 are each amended to read as follows:
     (1) There is ((hereby)) levied and there shall be collected from every ((district)) publicly owned utility a tax for the act or privilege of engaging within this state in the business of operating works, plants or facilities for the generation, distribution and sale of electric energy. With respect to each ((such district)) publicly owned utility, except with respect to thermal electric generating facilities taxed under RCW 54.28.025 (as recodified by this act), ((such)) the tax shall be the sum of the following amounts: (a) Two and twenty-eight one-hundredths percent of the gross revenues derived by the ((district)) publicly owned utility from the sale of all electric energy which it distributes to consumers who are served by a distribution system owned by the ((district)) publicly owned utility; (b) ((five)) twenty-one and fifteen one-hundredths percent of the first four mills per kilowatt-hour of wholesale value of self-generated energy distributed to consumers by a ((district)) publicly owned utility; (c) ((five)) twenty-one and fifteen one-hundredths percent of the first four mills per kilowatt-hour of revenue obtained by the ((district)) publicly owned utility from the sale of self-generated energy for resale.
     (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.

NEW SECTION.  Sec. 16   (1) There is levied and there shall be collected from every publicly owned utility a tax for the act or privilege of engaging within this state in the business of operating works, plants, or facilities for the purposes of selling wholesale telecommunications services. With respect to each such utility, such tax shall be . . . percent of the wholesale value of the services sold.
     (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.

Sec. 17   RCW 54.28.025 and 1983 2nd ex.s. c 3 s 9 are each amended to read as follows:
     (1) There is ((hereby)) levied and there shall be collected from every ((district)) publicly owned utility operating a thermal electric generating facility, as defined in RCW 54.28.010 ((as now or hereafter amended)) (as recodified by this act), having a design capacity of two hundred fifty thousand kilowatts or more, located on a federal reservation, which is placed in operation after September 21, 1977, a tax for the act or privilege of engaging within the state in the business of generating electricity for use or sale, equal to one and one-half percent of wholesale value of energy produced for use or sale, except energy used in the operation of component parts of the power plant and associated transmission facilities under control of the person operating the power plant.
     (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.

Sec. 18   RCW 54.28.030 and 1977 ex.s. c 366 s 3 are each amended to read as follows:
     On or before the fifteenth day of March of each year, each ((district)) publicly owned utility subject to this tax shall file with the department of revenue a report verified by the affidavit of its manager or secretary on forms prescribed by the department of revenue. ((Such)) The report shall state (1) the gross revenues derived by the ((district)) publicly owned utility from the sale of all distributed energy to consumers and the respective amounts derived from ((such)) sales within each county; (2) the gross revenues derived by the ((district)) publicly owned utility from the sale of self-generated energy for resale; (3) all revenue derived by the publicly owned utility from the sale of wholesale telecommunications services; (4) the amount of all generated energy distributed from each of the facilities subject to taxation by a ((district)) publicly owned utility from its own generating facilities, the wholesale value ((thereof)), and the basis on which the value is computed; (((4))) (5) the total cost of all generating facilities and the cost of acquisition of land and land rights for ((such)) facilities or for reservoir purposes in each county; (6) the total cost to build and maintain all wholesale telecommunications facilities; and (((5) such)) (7) other and further information as the department of revenue reasonably may require in order to administer the provisions of this chapter. In case of failure by a ((district)) publicly owned utility to file ((such)) a report, the department may proceed to determine the information, which determination shall be contestable by the ((district)) publicly owned utility only for actual fraud.

Sec. 19   RCW 54.28.040 and 1996 c 149 s 16 are each amended to read as follows:
     (1) Before May 1st, the department of revenue shall compute the tax imposed by this chapter for the last preceding calendar year and notify the ((district)) publicly owned utility of the amount ((thereof)), which shall be payable on or before the following June 1st.
     (2) If payment of any tax is not received by the department on or before the due date, there shall be assessed a penalty of five percent of the amount of the tax; if the tax is not received within one month of the due date, there shall be assessed a total penalty of ten percent of the amount of the tax; and if the tax is not received within two months of the due date, there shall be assessed a total penalty of twenty percent of the amount of the tax.
     (3) Upon receipt of the amount of each tax imposed the department of revenue shall deposit the same with the state treasurer, who shall deposit four percent of the revenues received under RCW 54.28.020(1) ((and)), 54.28.025(1) (as recodified by this act), and section 16(1) of this act, and all revenues received under RCW 54.28.020(2) ((and)), 54.28.025(2) (as recodified by this act), and section 16(2) of this act in the general fund of the state and shall distribute the remainder ((in the manner hereinafter)) as set forth in RCW 54.28.050 and 54.28.055 (as recodified by this act). The state treasurer shall send a duplicate copy of each transmittal to the department of revenue.

Sec. 20   RCW 54.28.050 and 1982 1st ex.s. c 35 s 21 are each amended to read as follows:
     (1) After computing the tax imposed by RCW 54.28.020(1) (as recodified by this act) and section 16(1) of this act and making the distribution under RCW 54.28.040 (as recodified by this act), the department of revenue shall instruct the state treasurer, after placing thirty-seven and six-tenths percent in the state general fund to be dedicated for the benefit of the public schools, to distribute the balance as follows:
     (a) For amounts
collected under RCW 54.28.020(1)(a) (as recodified by this act), the balance shall be distributed to each county in proportion to the gross revenue from sales made within each county; ((and to distribute the balance))
     (b) For amounts collected under section 16(1) of this act, if the telecommunications facilities are located in only one county, the balance shall be distributed to the county in which the wholesale telecommunications facilities are located. If the telecommunications facilities are located in more than one county, the balance shall be distributed in a pro rata manner to each applicable county based on the cost of the telecommunications facilities; and
     (c) For amounts
collected under RCW 54.28.020(1) (b) and (c) (as recodified by this act), the balance shall be distributed as follows: If the entire generating facility, including reservoir, if any, is in a single county then all of the balance to the county where ((such)) the generating facility is located. If any reservoir is in more than one county, then to each county in which the reservoir or any portion ((thereof)) is located, a percentage equal to the percentage determined by dividing the total cost of the generating facilities, including adjacent switching facilities, into twice the cost of land and land rights acquired for any reservoir within each county, land and land rights to be defined the same as used by the federal power commission. If the powerhouse and dam, if any, in connection with ((such)) the reservoir are in more than one county, the balance shall be divided sixty percent to the county in which the owning ((district)) publicly owned utility is located and forty percent to the other county or counties or if ((said)) the powerhouse and dam, if any, are owned by a joint operating agency organized under chapter 43.52 RCW, or by more than one ((district)) publicly owned utility or are outside the county of the owning ((district)) publicly owned utility, then to be divided equally between the counties in which ((such)) the facilities are located. If all of the powerhouse and dam, if any, are in one county, then the balance shall be distributed to the county in which the facilities are located.
     (2) The provisions of this section shall not apply to the distribution of taxes collected under RCW 54.28.025 (as recodified by this act).

Sec. 21   RCW 54.28.055 and 1986 c 189 s 1 are each amended to read as follows:
     (1) After computing the tax imposed by RCW 54.28.025(1) (as recodified by this act) and after making the distribution specified in RCW 54.28.040 (as recodified by this act), the department of revenue shall instruct the state treasurer to distribute the amount collected as follows:
     (a) Fifty percent to the state general fund for the support of schools; and
     (b) Twenty-two percent to the counties, twenty-three percent to the cities, three percent to the fire protection districts, and two percent to the library districts.
     (2) Each county, city, fire protection district and library district shall receive a percentage of the amount for distribution to counties, cities, fire protection districts and library districts, respectively, in the proportion that the population of ((such)) the ((district)) publicly owned utility residing within the impacted area bears to the total population of all ((such districts)) publicly owned utilities residing within the impacted area. For the purposes of this chapter, the term "library district" includes only regional libraries as defined in RCW 27.12.010(4), rural county library districts as defined in RCW 27.12.010(5), intercounty rural library districts as defined in RCW 27.12.010(6), and island library districts as defined in RCW 27.12.010(7). The population of a library district, for purposes of ((such)) a distribution, shall not include any population within the library district and the impact area that also is located within a city or town.
     (3) If any distribution pursuant to subsection (1)(b) of this section cannot be made, then that share shall be prorated among the state and remaining local districts.
     (4) All distributions directed by this section to be made on the basis of population shall be calculated in accordance with data to be provided by the office of financial management.

Sec. 22   RCW 54.28.060 and 1996 c 149 s 12 are each amended to read as follows:
     Interest at the rate as computed under RCW 82.32.050(2) shall be added to the tax ((hereby)) imposed from the due date until the date of payment. The tax ((shall)) constitutes a debt to the state and may be collected as such.

Sec. 23   RCW 54.28.070 and 1941 c 245 s 3 are each amended to read as follows:
     Any city or town in which a public utility district operates works, plants, or facilities for the distribution and sale of electricity, or for the sale of wholesale telecommunications services, shall have the power to levy and collect from ((such)) the district a tax under this section. With respect to the distribution and sale of electricity, a tax may be imposed on the gross revenues derived by ((such)) the district from the sale of electricity within the city or town, exclusive of the revenues derived from the sale of electricity for purposes of resale. ((Such)) With respect to the sale of wholesale telecommunications services, a tax may be imposed under the applicable authority in chapter 35.21 RCW. The tax when levied shall be a debt of the district, and may be collected as such. Any ((such)) district shall have the power to add the amount of ((such)) tax to the rates or charges it makes for electricity ((so)) or wholesale telecommunications services sold within the limits of ((such)) the city or town.

Sec. 24   RCW 54.28.080 and 1957 c 278 s 8 are each amended to read as follows:
     Whenever any public utility district acquires an operating property from any private person, firm, or corporation and a portion of the operating property is situated within the boundaries of any school district and at the time of ((such)) acquisition there is an outstanding bonded indebtedness of the school district, then the public utility district shall, in addition to the tax imposed by this chapter, pay directly to the school district a proportion of all subsequent payments by the school district of principal and interest on ((said)) the bonded indebtedness, ((said)) the additional payments to be computed and paid as follows: The amount of principal and interest required to be paid ((by)) to the school district shall be multiplied by the percentage which the assessed value of the property acquired bore to the assessed value of the total property in the school district at the time of ((such)) the acquisition. ((Such)) The additional amounts shall be paid by the public utility district to the school district not less than fifteen days prior to the date that ((such)) the principal and interest payments are required to be paid by the school district. In addition, any public utility district which acquires from any private person, firm, or corporation an operating property situated within a school district, is authorized to make voluntary payments to ((such)) the school district for the use and benefit of the school district.

Sec. 25   RCW 54.28.090 and 1980 c 154 s 9 are each amended to read as follows:
     The county legislative authority of each county shall direct the county treasurer to deposit funds to the credit of each taxing district in the county, other than school districts, according to the manner they deem most equitable; except not less than an amount equal to three-fourths of one percent of the gross revenues obtained by a district from the sale of electric energy within any incorporated city or town shall be remitted to ((such)) the city or town. Information furnished by the district to the county legislative authority shall be the basis for the determination of the amount to be paid to ((such)) cities or towns.
     The provisions of this section shall not apply to the distribution of taxes collected under RCW 54.28.025 (as recodified by this act).

Sec. 26   RCW 54.28.100 and 1957 c 278 s 11 are each amended to read as follows:
     All money((s)) received by any taxing district shall be used for purposes for which state taxes may be used under the provisions of the state Constitution.

Sec. 27   RCW 54.28.110 and 1957 c 278 s 13 are each amended to read as follows:
     Whenever((, hereafter,)) property is removed from the tax rolls as a result of the acquisition of operating property or the construction of a generating plant by a public utility district, ((such)) the public utility district may make voluntary payments to any municipal corporation or other entity authorized to levy and collect taxes in an amount not to exceed the amount of tax revenues being received by ((such)) the municipal corporation or other entity at the time of ((said)) the acquisition or ((said)) construction and which are lost by ((such)) the municipal corporation or other entity as a result of the acquisition of operating property or the construction of a generating plant by the public utility district((: PROVIDED, That)). However, this section shall not apply to taxing districts as defined in RCW 54.28.010((, and: PROVIDED FURTHER, That)) (as recodified by this act) and in the event any operating property ((so)) removed from the tax rolls is dismantled or partially dismantled the payment which may be paid ((hereunder)) shall be correspondingly reduced.

Sec. 28   RCW 54.28.120 and 1957 c 278 s 14 are each amended to read as follows:
     In the event any ((district hereafter)) publicly owned utility purchases or otherwise acquires electric utility properties comprising all or a portion of an electric generation ((and/or)) or distribution system, or telecommunications properties for the purposes of providing wholesale telecommunications services, from a public service company, as defined in RCW 80.04.010, the total amount of privilege taxes imposed under this chapter ((278, Laws of 1957)) to be paid by the ((district)) publicly owned utility annually on the combined operating property within each county where ((such)) the utility property is located, irrespective of any other basis of levy contained in this chapter, will be not less than the combined total of the ad valorem taxes, based on regular levies, last levied against the electric utility property constituting the system so purchased or acquired, or the telecommunications properties purchased or acquired, plus the taxes paid by the ((district)) publicly owned utility for the same year on the revenues of other operating property in the same county under terms of this chapter. If all or any portion of the property so acquired is subsequently sold, or if rates charged to purchasers of electric energy or wholesale telecommunications services are reduced, the amount of privilege tax required under this section shall be proportionately reduced.

NEW SECTION.  Sec. 29   RCW 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 are each recodified as a new chapter in Title 82 RCW.

NEW SECTION.  Sec. 30   Section 16 of this act is added to the new chapter created in section 29 of this act.

NEW SECTION.  Sec. 31   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 32   Sections 13 through 30 of this act take effect July 1, 2006.

NEW SECTION.  Sec. 33   Sections 1 through 8 of this act constitute a new chapter in Title 82 RCW.

NEW SECTION.  Sec. 34   Captions used in sections 1 through 4 of this act are not any part of the law.

NEW SECTION.  Sec. 35   Sections 1 through 12, 33, and 34 of this act take effect January 1, 2007.

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