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H. B. No. 218 As IntroducedAs Introduced
128th General Assembly | Regular Session | 2009-2010 |
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A BILL
To amend sections 5727.01, 5727.11, and 5727.111 of
the Revised Code to modify the tax valuation of
public utility tangible personal property used to
generate electricity from renewable resources.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 5727.01, 5727.11, and 5727.111 of
the Revised Code be amended to read as follows:
Sec. 5727.01. As used in this chapter:
(A)
"Public utility" means each person referred to as a
telephone company, telegraph company, electric company, natural
gas company, pipe-line company, water-works company, water
transportation company, heating company, rural electric company,
railroad company, or combined company.
(B)
"Gross receipts" means the entire receipts for
business
done by any person from operations as a public utility,
or
incidental thereto, or in connection therewith, including any
receipts received under Chapter 4928. of the Revised Code. The
gross
receipts for business done by an incorporated company
engaged in
operation as a public utility includes the entire
receipts for
business done by such company under the exercise of
its corporate
powers, whether from the operation as a public
utility or from
any other business.
(C)
"Rural electric company" means any nonprofit
corporation,
organization, association, or cooperative engaged in
the business
of supplying electricity to its members or persons
owning an
interest therein in an area the major portion of which
is rural.
(1) Is a telegraph company when engaged in the business of
transmitting telegraphic messages to, from, through, or in this
state;
(2) Is a telephone company when primarily engaged in the
business of providing local exchange telephone service, excluding
cellular radio service, in this state;
(3) Is an electric company when engaged in the business of
generating, transmitting, or distributing electricity within this
state for use by others, but excludes a rural electric company;
(4) Is a natural gas company when engaged in the business
of
supplying
or distributing natural gas for lighting, power, or
heating purposes
to consumers within this state, excluding a
person that is a governmental aggregator or retail natural gas
supplier as defined in section 4929.01 of the Revised Code;
(5) Is a pipe-line company when engaged in the business of
transporting natural gas, oil, or coal or its derivatives through
pipes or tubing, either wholly or partially within this state;
(6) Is a water-works company when engaged in the business
of
supplying water through pipes or tubing, or in a similar
manner,
to consumers within this state;
(7) Is a water transportation company when engaged in the
transportation of passengers or property, by boat or other
watercraft, over any waterway, whether natural or artificial,
from
one point within this state to another point within this
state, or
between points within this state and points without
this state;
(8) Is a heating company when engaged in the business of
supplying water, steam, or air through pipes or tubing to
consumers within this state for heating purposes;
(9) Is a railroad company when engaged in the business of
owning or operating a railroad either wholly or partially within
this state on rights-of-way acquired and held exclusively by
such
company, or otherwise, and includes a passenger, street,
suburban,
or interurban railroad company.
As used in division (D)(2) of this section,
"local exchange
telephone service" means making available or furnishing access
and
a dial tone to all persons within a local calling area for
use in
originating and receiving voice grade communications over
a
switched network operated by the provider of the service within
the area and for gaining access to other telecommunication
services.
(E)
"Taxable property" means the property required by
section
5727.06 of the Revised Code to be assessed by the tax
commissioner, but does not include either of the following:
(1) An item of tangible personal property that for the
period
subsequent to the effective date of an air, water, or
noise
pollution control certificate and continuing so long as the
certificate is in force, has been certified as part of the
pollution control facility with respect to which the certificate
has been issued;
(2) An item of tangible personal property that during the
construction of a plant or facility and until the item is first
capable of operation, whether actually used in operation or not,
is incorporated in or being held exclusively for incorporation in
that plant or facility.
Notwithstanding section 5701.03 of the Revised Code, for tax
year 2006 and thereafter, "taxable property" includes patterns,
jigs, dies, and drawings of an electric company or a combined
company for use in the activity of an electric company.
(F)
"Taxing district" means a municipal corporation of or
township, or part thereof, in which the aggregate rate of
taxation
is uniform.
(G)
"Telecommunications service" has the same meaning as
in
division (AA) of section 5739.01 of the Revised Code.
(H)
"Interexchange telecommunications company" means a
person
that is engaged in the business of transmitting telephonic
messages to, from, through, or in this state, but that is not a
telephone company.
(I)
"Sale and leaseback transaction" means a transaction
in
which a public utility or interexchange telecommunications
company
sells any tangible personal property to a person other
than a
public utility or interexchange telecommunications company
and
leases that property back from the buyer.
(J)
"Production equipment" means all taxable steam, nuclear,
hydraulic, and other production plant equipment used to generate
electricity.
For tax years prior to 2001,
"production equipment"
includes
taxable station equipment that is located at a production
plant.
(K)
"Tax year" means the year for which property or gross
receipts are subject to assessment under this chapter. This
division does not
limit the tax commissioner's ability to assess
and value property or gross
receipts outside the tax year.
(L)
"Combined company" means any person engaged in the
activity
of an electric company or rural electric company that is
also engaged in the
activity of a heating company or a natural gas
company, or any combination
thereof.
(M) "Public utility property lessor" means any person, other
than a public utility or an interexchange telecommunications
company, that leases personal property, other than in a sale and
leaseback transaction, to a public utility, other than a railroad,
water transportation, telephone, or telegraph company if the
property would be taxable property if owned by the public utility.
A public utility property lessor is subject to this chapter only
for the purposes of reporting and paying tax on taxable property
it leases to a public utility other than a telephone or telegraph
company. A public utility property lessor that leases property to
a public utility other than a telephone or telegraph company is
not a public utility, but it shall report its property and be
assessed in the same manner as the utility to which it leases the
property.
(N) "Renewable resource" means solar photovaltaic or solar
thermal energy or wind energy.
Sec. 5727.11. (A) Except as otherwise provided in this
section, the true
value of all taxable property, except property
of a railroad company, required
by
section 5727.06 of the Revised
Code to
be
assessed by the tax commissioner shall be determined by
a
method
of valuation using cost as capitalized on the public
utility's
books and records less composite annual allowances as
prescribed
by the commissioner. If the commissioner finds that
application
of this method will not result in the determination of
true value
of the public utility's taxable property, the
commissioner
may use another method of valuation.
(B)(1) Except as provided in division
(B)(2)
of this
section,
the true value of current gas stored underground is
the
cost of
that gas shown on the books and records of the public
utility on
the thirty-first day of December of the preceding
year.
(2) For tax year 2001 and thereafter, the true value of
current
gas stored
underground is the
quotient
obtained by
dividing (a) the average value of the
current gas
stored
underground, which shall be determined by adding the value of the
gas
on hand at the end of
each calendar month in the calendar year
preceding the tax year, or, if
applicable, the last day of
business of each month for a partial
month, divided by (b) the
total number of months the natural
gas
company was in business
during the calendar year prior to the beginning of the
tax
year.
with the approval of the tax commissioner, a natural gas company
may
use a date
other than the end of a calendar month to value its
current gas
stored underground.
(C) The true value of noncurrent gas stored underground is
thirty-five per cent of the cost of that gas shown on the books
and records of the public utility on the thirty-first day of
December of the preceding year.
(D)(1) Except as provided in division divisions
(D)(2) and
(3) of this
section, the true value of the production
equipment of
an
electric
company and the true value of all taxable property of
a
rural
electric company is the equipment's or property's cost as
capitalized on the company's books and records less fifty per
cent
of that cost as an allowance for depreciation and
obsolescence.
(2) The true value of the production equipment of an
electric
company or rural electric company purchased, transferred,
or
placed
into service
after the effective date of this
amendment
July 6, 1999,
is the purchase price of the equipment as
capitalized on
the
company's books and records less composite
annual allowances
as
prescribed by the tax commissioner.
(3) For tax year 2010 and each tax year thereafter, the true
value of the taxable property of an electric company that is used
to produce electricity from a renewable resource is the purchase
price of the equipment as capitalized on the company's books and
records without deduction of composite annual allowances.
(E) The true value of taxable property, except property of a
railroad company, required by section 5727.06 of the Revised Code
to be assessed by the tax commissioner shall not
include the
allowance for funds used during construction or
interest during
construction that has been capitalized on
the
public utility's
books and records as part of the total cost of
the taxable
property. This division shall not apply to the
taxable
property of
an electric company or a rural electric
company, excluding
transmission and distribution property, first
placed into service
after
December 31, 2000, or to the taxable
property a person
purchases,
which includes transfers, if that
property was used in
business by the seller
prior to the purchase.
(F) The true value of watercraft owned or operated by a
water
transportation
company shall be determined by multiplying
the true
value of the watercraft as
determined under division (A)
of this
section by a
fraction, the numerator of
which is the
number of
revenue-earning miles traveled by the watercraft in the
waters of
this state and the denominator of which is the number of
revenue-earning miles traveled by the watercraft in all waters.
(G) The cost of property subject to a sale and leaseback
transaction is the cost of the property as capitalized on the
books and
records of the public utility owning the
property
immediately prior to the sale and leaseback transaction.
(H) The cost as capitalized on the books and records of a
public
utility includes amounts capitalized that represent
regulatory assets, if such
amounts previously were included on the
company's books and records as
capitalized costs of taxable
personal property.
(I) Any change in the composite annual allowances as
prescribed
by the commissioner on a prospective basis shall not be
admissible in any
judicial or administrative action or proceeding
as evidence of value with
regard to prior years' taxes.
Information about the business, property, or
transactions of any
taxpayer obtained by the commissioner for the purpose of
adopting
or modifying the composite annual allowances shall not be subject
to
discovery or disclosure.
Sec. 5727.111. The taxable property of each public
utility,
except a railroad company, and of each interexchange
telecommunications company shall be assessed at the following
percentages of true value:
(A) Fifty per cent in the
case of
the taxable transmission
and
distribution property of a
rural electric
company, and
twenty-five per cent for all its other
taxable
property;
(B) In the case of a telephone or telegraph company,
twenty-five
per cent for taxable property first subject to
taxation in this state for tax
year 1995 or thereafter for tax
years before tax year 2007, and pursuant to division (H) of
section 5711.22 of the Revised Code for tax year 2007 and
thereafter, and
the following for all other taxable
property:
(1) For tax years prior to 2005, eighty-eight per cent;
(2) For tax year 2005, sixty-seven per cent;
(3) For tax year 2006, forty-six per cent;
(4) For tax year 2007 and thereafter, pursuant to division
(H) of section 5711.22 of the Revised Code.
(C) Twenty-five per cent
in the
case of a natural gas
company.
(D) Eighty-eight per cent in the case of a pipe-line,
water-works, or heating company;
(E)(1) For tax year 2005, eighty-eight per cent
in
the
case
of
the taxable transmission and distribution property
of an
electric company, and twenty-five per cent for all its
other
taxable
property;
(2) For tax year years 2006 and each tax year thereafter,
2007, 2008, and 2009, eighty-five per cent in the case of the
taxable transmission and distribution property of an electric
company, and twenty-four per cent for all
its other taxable
property;
(3) For tax year 2010 and each tax year thereafter, of the
taxable property of an electric company:
(a) Eighty-five per cent in the case of the taxable
transmission and distribution property;
(b) Twelve per cent in the case of taxable property used to
produce electricity from renewable resources;
(c) Twenty-four per cent for all its other taxable property.
(F)(1) Twenty-five per cent in the case of an
interexchange
telecommunications company for tax years before tax year 2007;
(2) Pursuant to division (H) of section 5711.22 of the
Revised Code for tax year 2007 and thereafter.
(G) Twenty-five per cent in the case of a water
transportation company.
Section 2. That existing sections 5727.01, 5727.11, and
5727.111 of the Revised Code are hereby repealed.
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