HB 587 -- UTILITY TAXATION

SPONSOR:  Mays (50)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Utilities
Regulation by a vote of 16 to 1.

This bill requires any seller of energy services to become
certified by the Public Service Commission and to file an
agreement to collect and remit all applicable state and local
sales and use taxes.  Distributors are prohibited from providing
energy services obtained from a seller who has not been
certified and filed its tax agreement.  Distributors are
required to file tariffs to enforce this provision.

The tax agreement states that the seller waives its right to
challenge the validity of the agreement and its right to a
refund of taxes paid.  Failure to meet any material obligation
of the agreement results in a nullification of the agreement.  A
political subdivision will notify the commission if a seller
does not pay any amount required by the agreement; the
commission will notify the seller, which must cease to provide
energy services unless it requests a hearing with the commission
within 15 days of the date the notice is filed with the
commission.  If a seller requests a hearing, the commission will
request a hearing to determine whether all material obligations
under the agreement have been met.

Legal action challenging the validity of an agreement will
suspend the agreement until a final and nonappealable judgment
is reached or the action has been finally resolved.  No seller
will provide energy services under a suspended agreement.

If the provisions of the bill are declared void or invalid by
the court, energy services will be provided only upon a finding
of public convenience and necessity.  No tax or fee will be
refunded to a seller that signed an agreement.

The bill also clarifies the definition of the term "seller" as
it pertains to the provision of energy services, adds a
provision requiring distributors to file a tariff with the
commission if a seller provides energy services without
certification by the commission or without filing an agreement
to pay applicable business license taxes, and specifies the rate
at which the business license tax will be computed.

The bill has an emergency clause.

FISCAL NOTE:  No impact on state funds.

PROPONENTS:  Supporters say that with the prospect of electric
industry restructuring, it is important to address these tax
issues ahead of time.

Testifying for the bill were Representative Mays (50); and
American Association of Retired Persons.

OPPONENTS:  There was no opposition voiced to the committee.

Donna Schlosser, Legislative Analyst

HB 587 -- Utility Taxation

Sponsor:  Mays (50)

This bill requires any seller of energy services to become
certified by the Public Service Commission and to file an
agreement to collect and remit all applicable state and local
sales and use taxes.  Distributors are prohibited from providing
energy services obtained from a seller who has not been
certified and filed its tax agreement.  Distributors are
required to file tariffs to enforce this provision.

The tax agreement states that the seller waives its right to
challenge the validity of the agreement and its right to a
refund of taxes paid.  Failure to meet any material obligation
of the agreement results in a nullification of the agreement.  A
political subdivision will notify the commission if a seller
does not pay any amount required by the agreement; the
commission will notify the seller which must cease to provide
energy services unless it requests a hearing with the commission
within 15 days of the date the notice is filed with the
commission.  If a seller requests a hearing, the commission will
request a hearing to determine whether all material obligations
under the agreement have been met.

Legal action challenging the validity of an agreement will
suspend the agreement until a final and nonappealable judgment
is reached or the action has been finally resolved.  No seller
will provide energy services under a suspended agreement.

If the provisions of the bill are declared void or invalid by
the court, energy services will be provided only upon a finding
of public convenience and necessity.  No tax or fee will be
refunded to a seller that signed an agreement.

This bill also clarifies the definition of the term "seller" as
it pertains to the provision of energy services, adds a
provision requiring distributors to file a tariff with the
commission if a seller provides energy services without
certification by the commission or without filing an agreement
to pay applicable business license taxes, and specifies the rate
at which the business license tax will be computed.

This bill has an emergency clause.