SENATE BILL REPORT

HB 1881

BYRepresentative Appelwick

Changing provisions relating to excise taxation of electrical energy.

House Committe on Ways & Means/Revenue

Senate Committee on Ways & Means

Senate Hearing Date(s):February 29, 1988

Majority Report:  Do pass as amended.

      Signed by Senators McDonald, Chairman; Craswell, Vice Chairman; Bauer, Deccio, Fleming, Gaspard, Johnson, Lee, Smith, Talmadge, Williams, Wojahn.

Senate Staff:William Bafus (786-7715)

                  February 29, 1988

AS REPORTED BY COMMITTEE ON WAYS & MEANS, FEBRUARY 29, 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 resold 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.

SUMMARY OF PROPOSED SENATE AMENDMENT:

Language is added which clarifies that energy sales by public utility districts to out-of-state utilities are not subject to the public utility district privilege tax.

Appropriation:    none

Revenue:    yes

Fiscal Note:      available

Effective Date:The bill contains an emergency clause and takes effect immediately.

Senate Committee - Testified: Van Youngquist, Cowlitz County Commissioner (for); Frank Bishop, Cowlitz County (for); Jim Boldt, Washington State Association of Public Utility Districts; Ron Gjerde, Weyerhaeuser Co. (against); Gary Healy, Weyerhaeuser Co. (against)