SENATE BILL REPORT

SB 6031

BYSenator McDermott

Requiring the public utility privilege tax to be paid on sales to entities acquiring electric energy for resale which are not utilities.

Senate Committee on Ways & Means

Senate Hearing Date(s):March 3, 1987

Majority Report:  Do pass.

      Signed by Senators McDermott, Chairman; Gaspard, Vice Chairman; Bauer, Cantu, Craswell, Deccio, Fleming, Hayner, Lee, Moore, Owen, Rasmussen, Saling, Talmadge, Vognild, Warnke, Williams, Wojahn, Zimmerman.

Senate Staff:William Bafus (786-7437)

                  March 4, 1987

AS REPORTED BY COMMITTEE ON WAYS & MEANS, MARCH 3, 1987

BACKGROUND:

Public utility districts which produce electric energy are subject to a "privilege tax" under RCW 54.28 in lieu of regular property taxes.  Public utility districts are not subject to the property tax by virtue of their being public bodies.  This tax is generally levied upon the value of energy generated and delivered to consumers, but does not include the value of energy delivered to an entity for the purpose of redistribution to final consumers.

Under this exemption (RCW 54.28.010(3)) it is possible for the public utility privilege tax to be avoided on the sale of energy to a non-utility customer for the purpose of distribution to its own subsidiaries or to others.

SUMMARY:

The sale of energy by a public utility to another entity for distribution to ultimate consumers is subject to the public utility privilege tax if the entity initially receiving the electric energy is not itself subject to the public utility tax under RCW 82.16.

Revenue:    yes

Fiscal Note:      requested

Senate Committee - Testified: Jim Metcalf, Washington Association of Counties