SENATE BILL NO. 512
INTRODUCED BY M. HALLIGAN, BECK
A BILL FOR AN ACT ENTITLED: "AN ACT REVISING THE LAWS RELATED TO ELECTRICAL ENERGY;
IMPOSING AN ELECTRICAL ENERGY EXCISE EXCESS REVENUE TAX; PROVIDING EXEMPTIONS;
CREATING AN ELECTRICAL ENERGY ASSISTANCE AND BUSINESS RECRUITMENT STATE SPECIAL
REVENUE ACCOUNT; PROVIDING FOR AFFORDABLE AND STABLE ELECTRICAL ENERGY PRICES BY
PROVIDING AN OFFSET TO HIGHER ELECTRICAL ENERGY PRICES FOR CUSTOMERS; ALLOWING THE
PUBLIC SERVICE COMMISSION TO RECRUIT ASSIST IN THE RECRUITMENT OF LARGE EMPLOYERS AND
TO EXPAND IN THE EXPANSION OF EMPLOYMENT BASED ON STABLE ENERGY PRICES; ALLOWING A
PORTION OF THE ELECTRICAL ENERGY EXCISE EXCESS REVENUE TAX TO BE USED FOR LOW-INCOME
ENERGY ASSISTANCE; ALLOWING THE PUBLIC SERVICE COMMISSION TO PROVIDE LOW-INTEREST
LOANS FOR ELECTRICAL GENERATION AND TRANSMISSION FACILITIES; PROVIDING A STATUTORY
APPROPRIATION; AMENDING SECTION 17-7-502, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE
DATE, AN APPLICABILITY DATE, AND A TERMINATION DATE."
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
NEW SECTION. Section 1. Electrical energy excise EXCESS REVENUE tax -- rates of tax. (1) There is an excise
EXCESS REVENUE tax imposed on THE EXCESS REVENUE DERIVED FROM the sale of electrical energy by a
person engaged in the generation, manufacture, or production of electrical energy in the state GENERATED IN
MONTANA.
(2) The tax is imposed on the EXCESS gross revenue derived from the sale of electrical energy and is determined by
multiplying the contract NET SALES price by megawatts THE MEGAWATT HOURS sold at the contract NET SALES
price according to the following schedule:
Contract SALES price of megawatts sold Rate of tax
$0 and less than $35 $50 0%
$35 but less than $40 10%
$40 $50 but less than $45 $60 20%
$45 $60 but less than $55 $70 40%
$55 $70 but less than $75 $80 60%
$75 $80 but less than $150 $90 80%
$150 but less than $250 $90 AND HIGHER 90%
$250 and higher 95%
NET SALES PRICE OF MEGAWATT HOURS SOLD RATE OF TAX
ON THE FIRST $15 OF NET SALES PRICE OR ANY PART OF THAT PRICE 20%
ON THE NEXT $10 OF NET SALES PRICE OR ANY PART OF THAT PRICE 40%
ON THE NEXT $10 OF NET SALES PRICE OR ANY PART OF THAT PRICE 60%
ON THE NEXT $10 OF NET SALES PRICE OR ANY PART OF THAT PRICE 80%
IN EXCESS OF $45 OF NET SALES PRICE OR ANY PART OF THAT PRICE 90%
(3) FOR THE PURPOSES OF THIS SECTION, "NET SALES PRICE" MEANS THE SALES PRICE OF MEGAWATT HOURS SOLD LESS $45 FROM THAT SALES PRICE.
(3)(4) The proceeds of the tax imposed under [sections 1 through 10] must be deposited in the state special revenue
account provided for in [section 11].
(4)(5) The department may request assistance from the public service commission in analyzing data necessary to
calculate the electrical energy excise EXCESS REVENUE tax.
NEW SECTION. Section 2. Exemptions. The following are exempt from the tax imposed by [section 1]:
(1) electrical energy sold from an electrical generation facility that is placed in service after [the effective date of this act];
(2) electrical energy produced from an electrical generation facility owned or leased by a person if at least 50% of the electrical energy generated is used by the person in the person's business even if the person sells a portion of the electrical energy produced to another entity;
(3) electrical energy sold from an electrical generation facility that has a generation capacity of less than 60 30
megawatts;
(4) A QUALIFYING SMALL POWER PRODUCTION FACILITY, AS THAT TERM IS DEFINED IN 16 U.S.C. 796(17), THAT IS OWNED AND OPERATED BY A PERSON NOT PRIMARILY ENGAGED IN THE GENERATION OR SALE OF ELECTRICITY OTHER THAN ELECTRIC POWER FROM A SMALL POWER PRODUCTION FACILITY;
(5) ELECTRICAL ENERGY GENERATED IN MONTANA BY A FULLY INTEGRATED, REGULATED PUBLIC UTILITY AND SOLD TO CUSTOMERS WITHIN THE AUTHORIZED SERVICE TERRITORY OF THE PUBLIC UTILITY;
(4)(6) electrical energy sold from an electrical generation facility owned by an agency of the United
States government; and
(5)(7) electrical energy sold from an electrical generation facility that is owned by a rural electric
cooperative organized under the provisions of Title 35, chapter 18.
NEW SECTION. Section 3. Returns -- payment -- authority of department. (1) On or before the 30th day of the month following the end of the month in which the tax imposed by [sections 1 through 10] is payable, a return, on a form provided by the department, and payment of the tax for the preceding month must be filed with the department.
(2) Each person engaged in the generation, manufacture, or production of electrical energy in this state that is subject to the tax under [sections 1 through 10] shall file a return.
(3) (a) A person required to pay to the department the tax imposed by [sections 1 through 10] shall keep records, render statements, make returns, and comply with the provisions of [sections 1 through 10] and the rules prescribed by the department. Each return or statement must include the information required by the rules of the department.
(b) For the purpose of determining compliance with the provisions of [sections 1 through 10], the department is authorized to examine or cause to be examined any books, papers, records, or memoranda relevant to making a determination of the amount of tax due, whether the books, papers, records, or memoranda are the property of or in the possession of the person filing the return or another person. In determining compliance, the department may use statistical sampling and other sampling techniques consistent with generally accepted auditing standards. The department may also:
(i) require the attendance of a person having knowledge or information relevant to a return;
(ii) compel the production of books, papers, records, or memoranda by the person required to attend;
(iii) implement the provisions of 15-1-703 if the department determines that the collection of the tax is or may be jeopardized because of delay;
(iv) take testimony on matters material to the determination; and
(v) administer oaths or affirmations.
(4) Pursuant to rules established by the department, returns may be computer-generated and electronically filed.
NEW SECTION. Section 4. Examination of return -- adjustments -- delivery of notices and demands. (1) If the department determines that the amount of tax due is different from the amount reported, the amount of tax computed on the basis of the examination conducted pursuant to [section 3] constitutes the tax to be paid.
(2) If the tax due exceeds the amount of tax reported as due on the taxpayer's return, the excess must be paid to the department within 30 days after notice of the amount and demand for payment is mailed or delivered to the person making the return unless the taxpayer files a timely objection as provided in 15-1-211. If the amount of the tax found due by the department is less than that reported as due on the return and if the tax has been paid, the excess must be credited or, if no tax liability exists or is likely to exist, refunded to the person making the return.
(3) The notice and demand provided for in this section must contain a statement of the computation of the tax and interest and must be:
(a) sent by mail to the taxpayer at the address given in the taxpayer's return, if any, or to the taxpayer's last-known address; or
(b) served personally upon the taxpayer.
(4) A taxpayer filing an objection to the demand for payment is subject to and governed by the uniform tax review procedure provided in 15-1-211.
NEW SECTION. Section 5. Penalties and interest for violation. (1) (a) A person who fails to file a return as required by [section 3] must be assessed a penalty as provided in 15-1-216. The department may waive the penalty as provided in 15-1-206.
(b) A person who fails to file the return required by [section 3] and to pay the tax before the due date must be assessed a penalty and interest as provided in 15-1-216. The department may waive any penalty pursuant to 15-1-206.
(2) A person who purposely fails to pay the tax when due must be assessed an additional penalty as provided in 15-1-216.
NEW SECTION. Section 6. Authority to collect delinquent taxes. (1) (a) The department shall collect taxes that are delinquent as determined under [sections 1 through 10].
(b) If a tax imposed by [sections 1 through 10] or any portion of the tax is not paid when due, the department may issue a warrant for distraint as provided in Title 15, chapter 1, part 7.
(2) In addition to any other remedy, in order to collect delinquent taxes after the time for appeal has expired, the department may direct the offset of tax refunds or other funds that are due to the taxpayer from the state, except wages subject to the provisions of 25-13-614 and retirement benefits.
(3) As provided in 15-1-705, the taxpayer has the right to a review on the tax liability prior to any offset by the department.
(4) The department may file a claim for state funds on behalf of the taxpayer if a claim is required before funds are available for offset.
NEW SECTION. Section 7. Interest on deficiency -- penalty. (1) Interest accrues on unpaid or delinquent taxes as provided in 15-1-216. The interest must be computed from the date on which the return and tax were originally due.
(2) If the payment of a tax deficiency is not made within 60 days after it is due and payable and if the deficiency is due to negligence on the part of the taxpayer but without fraud, the penalty imposed by 15-1-216(1)(c) must be added to the amount of the deficiency.
NEW SECTION. Section 8. Limitations. (1) Except in the case of a person who purposely or knowingly, as those terms are defined in 45-2-101, files a false or fraudulent return violating the provisions of [sections 1 through 10], a deficiency may not be assessed or collected with respect to a month for which a return is filed unless the notice of additional tax proposed to be assessed is mailed to or personally served upon the taxpayer within 5 years from the date on which the return was filed. For purposes of this section, a return filed before the last day prescribed for filing is considered to be filed on the last day.
(2) If, before the expiration of the 5-year period prescribed in subsection (1) for assessment of the tax, the taxpayer consents in writing to an assessment after expiration of the 5-year period, a deficiency may be assessed at any time prior to the expiration of the period consented to.
NEW SECTION. Section 9. Refunds -- interest -- limitations. (1) A claim for a refund or credit as a result of overpayment of taxes collected under [sections 1 through 10] must be filed within 5 years of the date on which the return was due, without regard to any extension of time for filing.
(2) (a) Interest on an overpayment must be paid or credited at the same rate as the interest rate charged on unpaid taxes as provided in 15-1-216.
(b) Except as provided in subsection (2)(c), interest must be paid from the date on which the return was due or the date of overpayment, whichever is later. Interest does not accrue during any period in which the processing of a claim is delayed more than 30 days because the taxpayer has not furnished necessary information.
(c) The department is not required to pay interest if:
(i) the overpayment is refunded or credited within 6 months of the date on which a claim was filed; or
(ii) the amount of overpayment and interest does not exceed $1.
NEW SECTION. Section 10. Administration -- rules. The department shall:
(1) administer and enforce the provisions of [sections 1 through 10];
(2) cause to be prepared and distributed forms and information that may be necessary to administer the provisions of [sections 1 through 10]; and
(3) adopt rules that may be necessary or appropriate to administer and enforce the provisions of [sections 1 through 10].
NEW SECTION. Section 11. Electrical energy assistance and business recruitment state special revenue account -- revenue allocated -- rules. (1) There is an electrical energy assistance and business recruitment state special revenue account within the state special revenue fund established in 17-2-102.
(2) Revenue derived from the electrical energy excise EXCESS REVENUE tax imposed by [sections 1
through 10] must be deposited into the account.
(3) Pursuant to rules adopted by the commission under [section 12], at least 80% of the revenue received under this section must be used to promote price stability of the supply of electrical energy in Montana:
(a) for default customers of a public utility that has submitted a transition plan pursuant to parts 1 through 5 of this chapter on or before [the effective date of this act]; and
(b) for customers that chose an electrical energy supplier as provided in Title 69, chapter 8, part 2.
(4) Pursuant to rules adopted by the commission under [section 12], the amount remaining in the account after promoting price stability of the supply of electrical energy under subsection (3) of this section may be used for the following purposes:
(a) recruiting ASSISTING IN THE RECRUITMENT OF new employers with 100 employees or more and
promoting IN THE PROMOTION OF the expansion of employment by a 100 employees or more by existing
employers who need a reasonable and stable supply of electrical energy;
(b) funding low-income energy assistance UNIVERSAL SYSTEM BENEFITS PROGRAMS provided for in
69-8-412 THIS CHAPTER;
(c) providing low-interest loans for new transmission facilities or for improvements to existing transmission facilities;
(d) providing low-interest loans for the construction of new, temporary or permanent electrical generation facilities and for the expansion of net generation capacity of existing electrical generation facilities. The electrical generation facilities referred to in this subsection must have an electrical generation capacity of 60 megawatts or less.
(5) The funds deposited in the account under this section but not expended for the purposes established in
this section must be transferred to the general fund after [the termination date of this act].
(6) The money in the state special revenue account must be IS STATUTORILY appropriated, by the
legislature AS PROVIDED IN 17-7-502, for the purposes of this section.
NEW SECTION. Section 12. Rules. (1) (a) The commission shall promulgate rules for determining the appropriate mechanism that, to the extent possible, provides for stable and reasonable electrical energy prices. The implementation of stable electrical energy prices may include offsets to high electrical energy prices.
(b) The commission's rules must include the determination of a price range for electrical energy prices that are stable and reasonable.
(c) The commission shall devise the least costly method for maintaining stable and reasonable
electrical energy prices for customers that may include a buydown of a contract for electrical energy
purchased by a default supplier OR CUSTOMER.
(2) (a) The commission's rules must provide for an offset for customers, within the constraints of available revenue, that is reasonable as determined by the commission.
(b) The offset must be calculated based on the cost of service of electrical energy supply TAKE INTO
ACCOUNT THE COST CHARACTERISTICS OF DIFFERENT CLASSIFICATIONS OF SERVICE AS PROVIDED IN
69-3-306 and must be reflected on each customer's monthly bill.
(3) The commission shall promulgate rules for the purposes of [section 11(4)]. The commission's rules must take into account the following:
(a) the feasibility of recruiting a large employer to Montana or significantly expanding the employment of an existing employer;
(b) the effectiveness of low-interest loans in enhancing the generation and distribution of electrical energy in Montana;
(c) the need for additional financial assistance for low-income households; and
(d) the importance of an affordable supply of electrical energy to promote economic development and stability in Montana.
SECTION 13. SECTION 17-7-502, MCA, IS AMENDED TO READ:
"17-7-502. Statutory appropriations -- definition -- requisites for validity. (1) A statutory appropriation is an appropriation made by permanent law that authorizes spending by a state agency without the need for a biennial legislative appropriation or budget amendment.
(2) Except as provided in subsection (4), to be effective, a statutory appropriation must comply with both of the following provisions:
(a) The law containing the statutory authority must be listed in subsection (3).
(b) The law or portion of the law making a statutory appropriation must specifically state that a statutory appropriation is made as provided in this section.
(3) The following laws are the only laws containing statutory appropriations: 2-17-105; 3-5-901; 5-13-403; 10-3-203; 10-3-310; 10-3-312; 10-3-314; 10-4-301; 15-1-111; 15-23-706; 15-31-702; 15-34-115; 15-35-108; 15-36-324; 15-37-117; 15-38-202; 15-65-121; 15-70-101; 16-1-404; 16-1-406; 16-1-411; 17-3-106; 17-3-212; 17-3-222; 17-6-101; 17-7-304; 18-11-112; 19-3-319; 19-6-709; 19-9-702; 19-13-604; 19-17-301; 19-18-512; 19-19-305; 19-19-506; 19-20-604; 20-8-107; 20-26-1503; 22-3-1004; 23-5-136; 23-5-306; 23-5-409; 23-5-610; 23-5-612; 23-5-631; 23-7-301; 23-7-402; 37-43-204; 37-51-501; 39-71-503; 42-2-105; 44-12-206; 44-13-102; 50-4-623; 53-6-703; 53-24-206; 67-3-205; [section 11]; 75-1-1101; 75-5-1108; 75-6-214; 75-11-313; 77-1-505; 80-2-222; 80-4-416; 80-11-518; 81-5-111; 82-11-161; 87-1-513; 90-3-1003; 90-6-710; and 90-9-306.
(4) There is a statutory appropriation to pay the principal, interest, premiums, and costs of issuing, paying, and securing all bonds, notes, or other obligations, as due, that have been authorized and issued pursuant to the laws of Montana. Agencies that have entered into agreements authorized by the laws of Montana to pay the state treasurer, for deposit in accordance with 17-2-101 through 17-2-107, as determined by the state treasurer, an amount sufficient to pay the principal and interest as due on the bonds or notes have statutory appropriation authority for the payments. (In subsection (3): pursuant to sec. 7, Ch. 567, L. 1991, the inclusion of 19-6-709 terminates upon death of last recipient eligible for supplemental benefit; pursuant to Ch. 422, L. 1997, the inclusion of 15-1-111 terminates on July 1, 2008, which is the date that section is repealed; pursuant to sec. 10, Ch. 360, L. 1999, the inclusion of 19-20-604 terminates when the amortization period for the teachers' retirement system's unfunded liability is 10 years or less; pursuant to sec. 4, Ch. 497, L. 1999, the inclusion of 15-38-202 terminates July 1, 2014; and pursuant to sec. 10(2), Ch. 10, Sp. L. May 2000, the inclusion of 15-35-108 and 90-6-710 terminates June 30, 2005.)"
NEW SECTION. Section 14. Codification instruction. (1) [Sections 1 through 10] are intended to be codified as an integral part of Title 15, chapter 72, and the provisions of Title 15, chapter 72, apply to [sections 1 through 10].
(2) [Sections 11 and 12] are intended to be codified as an integral part of Title 69, chapter 8, part 4, and the provisions of Title 69, chapter 8, part 4, apply to [sections 11 and 12].
NEW SECTION. Section 15. Effective date. [This act] is effective on passage and approval.
NEW SECTION. Section 16. Applicability. [This act] applies to electrical energy produced and sold after May 31, 2001.
NEW SECTION. Section 17. Termination -- contingency. [This act] terminates on the earlier of December 31, 2004, or the date that the public service commission certifies to the secretary of state that the market prices of electrical energy are stable and reasonable. The secretary of state shall notify the department of administration, the department of revenue, the code commissioner, and the legislative fiscal division of this certification.
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