COMMITTEE SUBSTITUTE
FOR
H. B. 2267
(By Mr. Speaker, Mr. Chambers, and Delegates Ashley, Staton,
Kiss, Browning, Wallace and Ryan)
(Originating in the House Committee on Finance)
[February 17, 1995]
A BILL to amend and reenact sections two, two-d, two-m and two-n,
article thirteen, chapter eleven of the code of West
Virginia, one thousand nine hundred thirty-one, as amended;
and to further amend said article by adding thereto a new
section, designated section two-o, all relating to changing
the business and occupation tax on the business of
generating or producing electricity on and after the first
day of June, one thousand nine hundred ninety-five, by
replacing the kilowatt hour generating tax with a capacity
utilization tax; providing transition rules for taxpayers
subject to gross receipts tax during the year one thousand
nine hundred ninety-four; providing definitions of terms;
establishing rate of tax imposed upon taxable generating
capacity of each generating unit; providing certain exceptions for large users; providing for the taxation of
electricity not generated or produced in this state but sold
in this state; providing rules relating to retirement of
units, transfer of units, placing units in inactive reserve,
new units and peaking units; requiring rules pertaining to
proration and allocation issues; confirming related
provisions in business and occupation tax and industrial
expansion and revitalization credit and business and
occupation tax credit against business franchise tax; and
providing effective date.
Be it enacted by the Legislature of West Virginia:
That sections two, two-d, two-m and two-n, article thirteen,
chapter eleven of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, be amended and reenacted; and
that said article be further amended by adding thereto a new
section, designated section two-o, all to read as follows:
ARTICLE 13. BUSINESS AND OCCUPATION TAX.
§11-13-2. Imposition of privilege tax.
(a)
Periods before July 1, 1987. -- For taxable years or
months thereof ending prior to the first day of July, one
thousand nine hundred eighty-seven, there is hereby levied and
shall be collected annual privilege taxes against the persons, on
account of the business and other activities, and in the amounts to be determined by the application of rates against values or
gross income as set forth in sections two-a to two-m, both
inclusive, of this article and the application of the surtax rate
against gross income as set forth in section two-k:
Provided,
That on the first day of July, one thousand nine hundred
eighty-five, the taxes imposed by this section, at the rates set
forth in sections two-b through two-m, both inclusive, of this
article, and in effect on the first day of January, one thousand
nine hundred eighty-five, exclusive of any surtaxes, shall be
reduced by five percent for taxable months beginning on and after
said first day of July:
Provided, however, That on and after the
first day of July, one thousand nine hundred eighty-five, the
rate of tax under section two-b of this article shall not be less
than eight tenths of one percent:
Provided further, That there
shall be no such reduction of the rates set forth in section
two-a or two-l of this article.
(b)
Periods after June 30, 1987. -- For taxable years or
months beginning after the thirtieth day of June, one thousand
nine hundred eighty-seven, there is hereby levied and shall be
collected annual privilege taxes against the persons, on account
of the business and other activities, and in the amount to be
determined by the application of rates against values or gross
income as set forth in sections two-d and two-m of this article:
Provided, That on and after the first day of July, one thousand
nine hundred eighty-seven, the rates applicable to the privileges
exercised in sections two-d and two-m of this article shall be
restored and returned to those which were in effect as to such
privileges on the first day of January, one thousand nine hundred
eighty-five:
Provided, however, That for taxable months or
taxable years beginning after the twenty-eighth day of February,
one thousand nine hundred eighty-nine, there is hereby levied and
shall be collected annual privilege taxes against the persons, on
account of the business and other activities, and in the amount
to be determined by the application of rates against the measure
of the tax as set forth in sections two-d, two-e, two-m and two-n
of this article:
Provided further, That for taxable months or
taxable years beginning after the thirty-first day of May, one
thousand nine hundred ninety-five, there is hereby levied and
shall be collected annual privilege taxes against the persons, on
account of the business and other activities, and in the amount
to be determined by the application of rates against the measure
of the tax as set forth in sections two-d, two-e, two-m, two-n
and two-o of this article.
(c) If any person liable for any tax under section two-m
shall ship or transport his products or any part thereof out of
the state without making sale of such products, the value of the products in the condition or form in which they exist immediately
before transportation out of the state shall be the basis for the
assessment of the tax imposed in such section, except in those
instances in which another measure of the tax is expressly
provided. The tax commissioner shall prescribe equitable and
uniform rules for ascertaining such value.
(d) In determining value, however, as regards sales from one
to another of affiliated companies or persons, or under other
circumstances where the relation between the buyer and seller is
such that the gross proceeds from the sale are not indicative of
the true value of the subject matter of the sale, the tax
commissioner shall prescribe uniform and equitable rules for
determining the value upon which such privilege tax shall be
levied, corresponding as nearly as possible to the gross proceeds
from the sale of similar products of like quality or character
where no common interest exists between the buyer and seller but
the circumstances and conditions are otherwise similar.
§11-13-2d. Public service or utility business.
(a) Upon any person engaging or continuing within this state
in any public service or utility business, except railroad,
railroad car, express, pipeline, telephone and telegraph
companies, water carriers by steamboat or steamship and motor
carriers, the tax imposed by section two of this article shall be equal to the gross income of the business derived from such
activity or activities multiplied by the respective rates as
follows:
(1) Street and interurban and electric railways, one and
four-tenths percent;
(2) Water companies, four and four-tenths percent, except as
to income received by municipally owned water plants;
(3) Electric light and power companies, four percent on
sales and demand charges for domestic purposes and commercial
lighting and four percent on sales and demand charges for all
other purposes, and except as to income received by municipally
owned plants producing or purchasing electricity and distributing
same:
Provided, That electric light and power companies which
engage in the supplying of public service but which do not
generate or produce in this state the electric power they supply
shall be taxed on the gross income derived from sales of power
which they do not generate in this state at the rate of three
percent on sales and demand charges for domestic purposes and
commercial lighting and three percent on sales and demand charges
for all other purposes, except as to income received by
municipally owned plants:
Provided, however, That the sale of
electric power under this section shall be taxed at the rate of
two percent on that portion of the gross proceeds derived from the sale of electric power to a plant location of a customer
engaged in a manufacturing activity, if the contract demand at
such plant location exceeds two hundred thousand kilowatts per
hour per year, or if the usage of such plant location exceeds two
hundred thousand kilowatts per hour in a year:
Provided further,
That the sale of electric power under this section shall be
exempt from the tax imposed by this section and section two of
this article if it is separately metered and consumed in an
electrolytic process for the manufacture of chlorine in this
state, or is separately metered and consumed in the manufacture
of ferroalloy in this state, and the rate reduction herein
provided to the taxpayer shall be passed on to the manufacturer
of the chlorine or ferroalloy. As used in this section, the term
"ferroalloy" means any of various alloys of iron and one or more
other elements used as a raw material in the production of steel:
And provided further, That the term does not include the final
production of steel;
(4) Natural gas companies, four and twenty-nine hundredths
percent on the gross income:
Provided, That the sale of natural
gas under this section shall be exempt from the tax imposed by
this section and section two of this article to the extent that
the natural gas is separately metered and is gas from which the
purchaser derives hydrogen and carbon monoxide for use in the manufacture of chemicals in this state, and the full economic
benefit of the exception herein provided to the taxpayer shall
be passed on to such purchaser of the natural gas:
Provided,
however, That there shall be no exemption for the sale of any
natural gas from which the purchaser derives carbon monoxide or
hydrogen for the purpose of resale;
(5) Toll bridge companies, four and twenty-nine hundredths
percent; and
(6) Upon all other public service or utility business, two
and eighty-six hundredths percent.
(b) The measure of this tax shall not include gross income
derived from commerce between this state and other states of the
United States or between this state and foreign countries. The
measure of the tax under this section shall include only gross
income received from the supplying of public service. The gross
income of the taxpayer from any other activity shall be included
in the measure of the tax imposed upon such other activity by the
appropriate section or sections of this article.
(c) 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-m and two-n 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
paragraph
subdivision (3), subsection (a) of this section 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
paragraph
subdivision (3), subsection (a) of this section and section two-m
of this article. If tax liability under section two-n is less,
then tax shall be paid under
paragraph subdivision (3),
subsection (a) of this section and section two-m of this article
and the tax due under section two-n shall not be paid. The
provisions of
paragraph subdivision (3), subsection (a) of this
section 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.
(d) Notwithstanding the provisions of subsection (c) of
this section, beginning the first day of June, one thousand nine
hundred ninety-five, electric light and power companies that
actually paid tax based on the provisions of subdivision (3),
subsection (a) of this section or section two-m of this article
for every taxable month in one-thousand nine hundred ninety-four
shall determine their liability for payment of tax under this
article in accordance with subdivision (1) of this subsection. All other electric light and power companies shall determine
their liability for payment of tax under this article exclusively
under section two-o of this article.
(1) If for taxable months beginning on or after the first
day of June, one thousand nine hundred ninety-five, liability for
tax under section two-o 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) of this section and section
two-m of this article, then the company shall pay the tax due
under section two-o of this article and not the tax due under
subdivision (3) subsection (a) of this section and section two-m
of this article. If tax liability under section two-o is less,
then the tax shall be paid under subdivision (3), subsection (a)
of this section and section two-m of this article and the tax due
under section two-o shall not be paid.
(2) The provisions of subdivision (3), subsection (a) of
this section 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.
§11-13-2m. Business of generating or producing electric
power
exception; rates.
(a) Upon every person engaging or continuing within this
state in the business of generating or producing electric power for sale, profit or commercial use, either directly or through
the activity of others, in whole or in part, when the sale
thereof is not subject to tax under section two-d of this
article, the amount of the tax to be equal to the value of the
electric power, as shown by the gross proceeds derived from the
sale thereof by the generator or producer of the same multiplied
by a rate of four percent, except that the rate shall be two
percent on that portion of the gross proceeds derived from the
sale of electric power to a plant location of a customer engaged
in a manufacturing activity, if the contract demand at such plant
location exceeds two hundred thousand kilowatts per hour per
year, or if the usage at such plant location exceeds two hundred
thousand kilowatts per hour in a year.
(b) The measure of this tax shall be the value of all
electric power generated or produced in this state for sale,
profit or commercial use, regardless of the place of sale or the
fact that transmission may be to points outside this state:
Provided, That the gross income received by municipally owned
plants generating or producing electricity shall not be subject
to tax under this article.
(c) Beginning the first day of March, one thousand nine
hundred eighty-nine, every person taxable under this section
shall determine their liability for payment of tax under this section and under
paragraph subdivision (3), subsection (a),
section two-d of this article and section two-n of this article.
If for taxable months beginning on or after the first day of
March, one thousand nine hundred eighty-nine such person's
liability for payment of tax under this section and
paragraph
subdivision (3), subsection (a), section two-d of this article is
less than the amount of such person's liability for payment of
tax under section two-n of this article, then such person shall
pay the tax due under section two-n and not the sum of the amount
of tax due under this section and under
paragraph subdivision
(3), subsection (a), section two-d of this article. If the tax
due under section two-n of this article is less, then the amount
of tax due under this section and
paragraph subdivision (3),
subsection (a), section two-d of this article shall be paid. The
provisions of this section 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.
(d) Beginning the first day of June, one thousand nine
hundred ninety-five, electric light and power companies that
actually paid tax based on the provisions of subdivision (3),
subsection (a), section two-d of this article or this section for
every taxable month in one-thousand nine hundred ninety-four
shall determine their liability for payment of tax under this article in accordance with subdivision (1) of this subsection.
All other electric light and power companies shall determine
their liability for payment of tax under this article exclusively
under section two-o of this article.
(1) If for taxable months beginning on or after the first
day of June, one thousand nine hundred ninety-five, liability for
tax under section two-o 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 of this
article and this section, then the company shall pay the tax due
under section two-o of this article and not the tax due under
subdivision (3), subsection (a), section two-d of this article
and this section. If tax liability under section two-o is less,
than the tax shall be paid under subdivision (3), subsection (a),
section two-d of this article and this section and the tax due
under section two-o shall not be paid.
(2) The provisions of this section 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.
Notwithstanding this subsection or any other provision of this
chapter to the contrary, an electric light and power company that
generates and produces power in this state shall continue to be
deemed to be an "industrial taxpayer" for purposes of subdivision (8), subsection (b), section two, article thirteen-d of this
chapter, and gross income of an electric light and power company
from the generation and production of power in this state and
sales and demand charges for electric power sold in this state
shall continue to be deemed "gross income of the business subject
to tax under article thirteen of this chapter" for purposes of
subsection (b), section seventeen, article twenty-three of this
chapter all to the extent of and in accordance with the law in
effect immediately preceding the effective date of this section
as amended in one thousand nine hundred ninety-five.
§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 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 plant location exceeds two hundred
thousand kilowatts per hour per year or if the usage at such
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 plant location exceeds two hundred thousand
kilowatts per hour per year or if the usage at such 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
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
paragraphs 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
paragraph
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
not exceed the tax liability arising under
paragraph 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
paragraph 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
paragraph 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 not determine their tax liability under this
section.
§11-13-2o. Business of generating or producing or selling
electricity on and after the first day of June,
one thousand nine hundred ninety-five;
definitions; rate of tax; exemptions; effective
date.
(a)
Definitions. -- As used in this section:
(1) "Average four-year generation" is computed by dividing by
four the sum of a generating unit's net generation, expressed in
kilowatt hours, for calendar years one thousand nine hundred
ninety-one, one thousand nine hundred ninety-two, one thousand
nine hundred ninety-three, and one thousand nine hundred ninety-
four. For any generating unit which was newly installed and
placed into commercial operation after the first day of January,
one thousand nine hundred ninety-one and prior to the effective
date of this section, "average four-year generation" is computed by dividing such unit's net generation for the period beginning
with the month in which the unit was placed into commercial
operation and ending with the month proceeding the effective date
of this section by the number of months in such period and
multiplying the resulting amount by twelve with the result being
a representative twelve-month average of the unit's net
generation while in an operational status.
(2) "Capacity factor" means a fraction, the numerator of
which is average four-year generation and the denominator of
which is the maximum possible annual generation.
(3) "Generating unit" means a mechanical apparatus or
structure which through the operation of its component parts is
capable of generating or producing electricity and is regularly
used for this purpose.
(4) "Inactive reserve" means the removal of a generating unit
from commercial service for a period of not less than twelve
consecutive months as a result of lack of need for generation
from the generating unit or as a result of the requirements of
state or federal law or the removal of a generating unit from
commercial service for any period as a result of any physical
exigency which is beyond the reasonable control of the taxpayer.
(5) "Maximum possible annual generation" means the product,
expressed in kilowatt hours, of official capability times eight thousand seven hundred sixty hours.
(6) "Official capability" means the nameplate capacity rating
of a generating unit expressed in kilowatts.
(7) "Peaking unit" means a generating unit designed for the
limited purpose of meeting peak demands for electricity or
filling emergency electricity requirements.
(8) "retired from service" means the removal of a generating
unit from commercial service for a period of at least twelve
consecutive months with the intent that the unit will not
thereafter be returned to active service.
(9) "Taxable generating capacity" means the product,
expressed in kilowatts, of the capacity factor times the official
capability of a generating unit, subject to the modifications set
forth in subdivisions (2) and (3), subsection (c) of this
section.
(9) "Net generation" for a period means the kilowatt hours of
net generation available for sale generated or produced by the
generating unit in this state during such period less the
following:
(A) Twenty-one twenty-sixths of the kilowatt hours of
electricity generated at the generating unit and sold during such
period to a plant location of a customer engaged in manufacturing
activity if the contract demand at such plant location exceeds two hundred thousand kilowatts per hour in a year or where the
usage at such plant location exceeds two hundred thousand
kilowatts per hour in a year;
(B) Twenty-one twenty-sixths of the kilowatt hours of
electricity produced or generated at the generating unit during
such period by any person producing electric power and an
alternative form of energy at a facility located in this state
substantially from gob or other mine refuse;
(C) The total kilowatt hours of electricity generated at the
generating unit exempted from tax during such period by
subsection (b), section two-n of this article.
(b)
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) For taxpayers who generate or produce electricity for
sale, profit or commercial use, the product of twenty-two dollars
and seventy-eight cents multiplied by the taxable generating
capacity of each generating unit in this state owned or leased by
the taxpayer, subject to the modifications set forth in subsection (c) of this section:
Provided, That, with respect to
kilowatt hours sold to or used by a plant location engaged in
manufacturing activity in which the demand at such plant location
exceeds two hundred thousand kilowatts per hour per year or if
the usage at such plant location exceeds two hundred thousand
kilowatts per hour in a year, in no event shall the tax imposed
by this article with respect to the sale or use of such
electricity exceed five hundredths of one cent times the kilowatt
hours sold to or used by a plant engaged in such a manufacturing
activity; and,
(2) For taxpayers who sell electricity to consumers in this
state that is not generated or produced in this state by the
taxpayer, 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 plant location exceeds two hundred
thousand kilowatts per hour per year or if the usage at such
plant location exceeds two hundred thousand kilowatts per hour in
a year. The measure of tax under this subdivision (2) shall be equal to the total kilowatt hours of electricity sold to
consumers in the 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 provisions of this subdivision (2)
shall not apply to those kilowatt hours exempt under subsection
(b), section two-n of this article. Any person taxable under
this subdivision (2) shall be allowed a credit against the amount
of tax due under this subdivision (2) for any electric power
generation taxes or a tax similar to the tax imposed by
subdivision (1) of this subsection (b) 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
not exceed the tax liability arising under this subdivision (2)
with respect to the sale of such power.
(c) The following provisions are applicable to taxpayers
subject to tax under subdivision (1), subsection (b) of this
section:
(1)
Retired units; inactive reserve. -- If a generating unit
is retired from service or placed in inactive reserve, a taxpayer
shall not be liable for tax computed with respect to the taxable generating capacity of the unit for the period that the unit is
inactive or retired. The taxpayer shall provide written notice
to the joint committee on government and finance, as well as to
any other entity as may be otherwise provided by law, eighteen
months prior to retiring any generating unit from service in this
state.
(2)
New generating units. -- If a new generating unit, other
than a peaking unit, is placed in initial service on or after the
effective date of this section, the generating unit's taxable
generating capacity shall equal forty percent of the official
capability of the unit.
(3)
Peaking units. -- If a peaking unit is placed in initial
service on or after the effective date of this section, the
generating unit's taxable generating capacity shall equal five
percent of the official capability of the unit.
(4)
Transfers of interests in generating units. -- If a
taxpayer acquires an interest in a generating unit, the taxpayer
shall include the computation of taxable generating capacity of
said unit in the determination of the taxpayer's tax liability as
of the date of the acquisition. Conversely, if a taxpayer
transfers an interest in a generating unit, the taxpayer shall
not for periods thereafter be liable for tax computed with
respect to the taxable generating capacity of such transferred unit.
(5)
Proration, allocation. -- The tax commissioner shall
promulgate rules in conformity with the provisions of article
three, chapter twenty-nine-a of this code to provide for the
administration of this section and to equitably prorate taxes for
a taxable year in which a generating unit is first placed in
service, retired or placed in inactive reserve, or in which a
taxpayer acquires or transfers an interest in a generating unit,
to equitably allocate and reallocate adjustments to net
generation, and to equitably allocate taxes among multiple
taxpayers with interests in a single generating unit, it being
the intent of the Legislature to prohibit multiple taxation of
the same taxable generating capacity.
So as to provide for an orderly transition with respect to
the rate making effect of this section, those electric light and
power companies which, as of the effective date of this section,
are permitted by the West Virginia public service commission to
utilize deferred accounting for purposes of recovery from
ratepayers of any portion of business and occupation tax expense
under this article shall be permitted, until such time that
action pursuant to a rate application or order of the commission
provides for appropriate alternative rate making treatment for
such expense, to recover the tax expense imposed by this section by means of deferred accounting to the extent that the tax
expense imposed by this section exceeds the level of business and
occupation tax under this article currently allowed in rates.
(6)
Electricity generated by manufacturer or affiliate for
use in manufacturing activity.-- When electricity used in a
manufacturing activity is generated in this state by the person
who owns the manufacturing facility in which the electricity is
used and the electricity generating unit or units producing the
electricity so used are owned by such manufacturer, or by a
member of the manufacturer's controlled group, as defined in
section 267 of the Internal Revenue Code of 1986, as amended, the
generation of the electricity shall not be taxable under this
article:
Provided, That any electricity generated or produced
at the generating unit or units which is sold or used for
purposes other than in the manufacturing activity shall be taxed
under this section and the amount of tax payable shall be
adjusted to be equal to an amount which is proportional to the
electricity sold for purposes other than the manufacturing
activity. The department of tax and revenue shall promulgate
rules in accordance with article three, chapter twenty-nine-a of
the code:
Provided, That the rules shall be promulgated as
emergency rules.
(d) Beginning the first day of June, one thousand nine hundred ninety-five, electric light and power companies that
actually paid tax based on the provisions of subdivision (3),
subsection (a), section two-d of this article or section two-m of
this article for every taxable month in one-thousand nine hundred
ninety-four shall determine their liability for payment of tax
under this article in accordance with subdivisions (1) and (2) of
this subsection. All other electric light and power companies
shall determine their liability for payment of tax under this
article exclusively under this section beginning the first day of
June, one thousand nine hundred ninety-five and thereafter.
(1) If for taxable months beginning on or after the first
day of june, one thousand nine hundred ninety-five, liability for
tax under section two-o 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 of this
article and this section, then the company shall pay the tax due
under section two-o of this article and not the tax due under
subdivision (3) subsection (a), section two-d of this article and
section two-m of this article. If tax liability under this
section is less, then the tax shall be paid under subdivision
(3), subsection (a), section two-d of this article and section
two-m and the tax due under this section shall not be paid.
(2) Notwithstanding subdivision (1) of this subsection, for taxable years beginning on or after the first day of January one
thousand nine hundred ninety-eight, all electric light and power
companies shall determine their liability for payment of tax
under this article exclusively under this section.
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