Senate Bill No. 644
(By Senator Bowman, By Request)
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[Introduced February 18, 2002; referred to the Committee
on Finance.]
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A BILL to amend and reenact section two-n, article thirteen,
chapter eleven of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, relating to increasing the
business and occupation tax on the business of generating or
producing or selling electric power.
Be it enacted by the Legislature of West Virginia:
That section two-n, article thirteen, chapter eleven of the
code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted to read as follows:
ARTICLE 13. BUSINESS AND OCCUPATION TAX.
§11-13-2n. Business of generating or producing or selling electric
power; exemptions; rates.
(a) Rate of tax. -- Upon every person engaging or continuing
within this state in the business of generating or producing
electricity for sale, profit or commercial use, either directly or indirectly through the activity of others, in whole or in part, or
in the business of selling electricity to consumers, or in both
businesses, the tax imposed by section two of this article shall be
equal to:
(1) Twenty-six hundredths Twenty-seven hundredths of one cent
times the kilowatt hours of net generation available for sale that
was generated or produced in this state by the taxpayer during the
taxable year, except that this rate shall be five hundredths of one
cent times the kilowatt hours of net generation available for sale
that was generated or produced in this state by the taxpayer and
sold to a plant location of a customer engaged in manufacturing
activity if the contract demand at such the plant location exceeds
two hundred thousand kilowatts per hour per year or if the usage at
such the plant location exceeds two hundred thousand kilowatts per
hour in a year: Provided, That in order to encourage the
development of industry to improve the environment of this state,
the tax imposed by this section on any person generating or
producing electric power and an alternative form of energy at a
facility located within this state substantially from gob or other
mine refuse shall be equal to five hundredths of one cent times the
kilowatt hours of net generation or production available for sale.
The measure of tax under this paragraph shall be equal to the total
kilowatt hours of net generation available for sale that was
generated or produced in this state by the taxpayer during the taxable year, regardless of the place of sale or use, or the fact
that transmission may be made to points outside this state.
(2) Nineteen hundredths of one cent times the kilowatt hours
of electricity sold to consumers in this state that were not
generated or produced in this state by the taxpayer, except that
the rate shall be five hundredths of one cent times the kilowatt
hours of electricity not generated or produced in this state by the
taxpayer which is sold to a plant location in this state of a
customer engaged in manufacturing activity if the contract demand
at such the plant location exceeds two hundred thousand kilowatts
per hour per year or if the usage at such the plant location
exceeds two hundred thousand kilowatts per hour in a year. The
measure of tax under this paragraph shall be equal to the total
kilowatt hours of electricity sold to consumers in this state
during the taxable year, that were not generated or produced in
this state by the taxpayer, to be determined by subtracting from
the total kilowatt hours of electricity sold to consumers in the
state the net kilowatt hours of electricity generated or produced
in the state by the taxpayer during the taxable year.
The West Virginia public service commission shall, upon
application of a public utility, allow an immediate pass-through to
the utility's customers in this state in the form of a rate
surcharge the increase enacted by the Legislature during its third
extraordinary session, one thousand nine hundred ninety, in the tax imposed by this article upon electricity generated or produced in
this state and sold to consumers in this state and upon electricity
not generated or produced in this state that is sold to consumers
in this state.
(b) Exemptions. -- The provisions of this section shall do
not apply to:
(1) Kilowatt hours of electricity generated and sold, or
purchased and resold, by a municipally owned plant.
(2) Kilowatt hours of electric power that are separately
metered and consumed in an electrolytic process for the manufacture
of chlorine.
(3) Kilowatt hours of electric power that are separately
metered and consumed in the manufacture of ferroalloy. As used in
this paragraph, the term "ferroalloy" means any of the various
alloys of iron and one or more other elements used as a raw
material in the production of steel but shall not include electric
power used in the production of steel.
(4) The full economic benefits provided to the taxpayer by
subdivisions (2) and (3) of this subsection shall be passed on to
the manufacturer of the chlorine or ferroalloy.
(c) Credit. -- Any person taxable under subdivision (2),
subsection (a) of this section shall be allowed a credit against
the amount of tax due under that paragraph for any electric power
generation taxes paid by the taxpayer with respect to such electric power to the state in which such power was generated or produced.
The amount of credit allowed shall may not exceed the tax liability
arising under subdivision (2), subsection (a) of this section with
respect to the sale of such power.
(d) Transition rule. -- Beginning the first day of March, one
thousand nine hundred eighty-nine, electric light and power
companies shall determine their liability for payment of tax under
this section and sections two-d and two-m of this article. If for
taxable months beginning on or after the first day of March, one
thousand nine hundred eighty-nine, liability for tax under section
two-n of this article is equal to or greater than the sum of the
power company's liability for payment of tax under subdivision (3),
subsection (a), section two-d and section two-m of this article,
then the company shall pay the tax due under section two-n of this
article and not the tax due under subdivision (3), subsection (a)
of section two-d and section two-m of this article. If tax
liability under section two-n is less, then tax shall be paid under
paragraph (3), subsection (a), section two-d and section two-m of
this article and the tax due under section two-n shall not be paid.
The provisions of this subsection (d) shall expire and become null
and void for taxable years beginning on or after the first day of
January, one thousand nine hundred ninety-eight.
(e) Effective date. -- The amendments to this section made
in the year one thousand nine hundred ninety shall take effect on the first day of October, one thousand nine hundred ninety:
Provided, That as to calendar months ending before such date, the
tax rates specified in this section, as then in effect shall be
fully and completely preserved.
(f) Beginning the first day of June, one thousand nine hundred
ninety-five and thereafter, electric light and power companies
shall may not determine their tax liability under this section.
NOTE: The purpose of this bill is to
increase the business
and occupation tax on the business of generating or producing or
selling electric power by one mill per kilowatt hours on net
generation for sale.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
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