HOUSE BILL REPORT

HB 1881

BYRepresentative Appelwick

Changing provisions relating to excise taxation of electrical energy.

House Committe on Ways & Means/Revenue

Majority Report:  Do pass.  (9)

      Signed by Representatives Appelwick, Chair; Basich, Dellwo, Holland, Rust, Schoon, Taylor, Valle and Winsley.

House Staff:Rick Wickman (786-7136)

AS PASSED HOUSE FEBRUARY 15, 1988

BACKGROUND:

The public utility district privilege tax (RCW 54.28) is levied on public utility districts in-lieu of the property tax.  The privilege tax applies only to power sold to final consumers, not to power wholesalers or retailers.

The sale of power from a PUD to a private company which distributes the power to another company is not now subject to the privilege tax.  Such sales are subject to business and occupation taxation.  This was confirmed in a recent Department of Revenue ruling regarding the sale of power from the Cowlitz County PUD to Weyerhaeuser who in turn re- sold the power to its subsidiary NORPAC.

SUMMARY:

Sales of power from a PUD to a non-utility company are considered final sales to the consumer for PUD privilege tax purposes.  Sales of power for resale are exempt from business and occupation tax, if the sale has been subject to the privilege tax.

Revenue:    The bill has a revenue impact.

Fiscal Note:      Available.

Effective Date:This act is necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institution, and shall take effect immediately.

House Committee ‑ Testified For:    None Presented.

House Committee - Testified Against:      Jerry Santman, Weyerhaeuser.

House Committee - Testimony For:    The PUD privilege tax should apply to all nonutility company purchases of power regardless of whether the company resells said power to a subsidiary.  The business and occupation tax on the power resale should not apply because of double taxation.

House Committee - Testimony Against:      Companies purchasing power for resale to a subsidiary should not be assessed PUD privilege tax.