Archive for the ‘Utility Taxes’ category

Puget Sound Energy v. City of Bellingham – Utility Taxes

September 7, 2011

In Puget Sound Energy v. City of Bellingham, Division I of the Court of Appeals affirmed the City’s tax assessment and penalties against PSE for unpaid utility tax.  Prior to the assessment, PSE paid city B&O tax on revenue generated by “non-utility” activities, such as billing initiation charges, connection and reconnection charges, disconnection visit charges, and late payment fees.   PSE paid city utility taxes only on the revenue it received from both the “per kilowatt hour energy charges” and the “basic or customer charges” paid by its Bellingham customers.  Reasoning that that “the business” of selling or furnishing light and power is not limited to the actual provision of electricity under Bellingham’s utility tax ordinance, the Court upheld the assessment.

The full opinion is available here.


Making Ends Meet in Difficult Economic Times – Evaluate Utility Rates

March 1, 2010

Many small cities (and towns) are struggling economically and finding it difficult to operate in our current economic climate.  Cities, both big and small, are suffering from reduced sales tax revenues.  The slowdown in the real estate market has led to reduced revenues from real estate excise taxes.  How can a city or town survive? 

One answer may be found by re-examining the current rates and charges imposed by the city utilities, particularly water and sewer.  The provision of water and sewer services by a city is a classic municipal function.  After the city has explored all other methods of reducing costs, including fully evaluating whether staffing level changes are necessary, the city should examine what it truly costs to operate its water or sewer system and make sure it is recouping all of its costs through the rates and charges to customers located both inside, and to the extent they exist, outside of the city.  It may be that it is time to re-evaluate what the rates and charges should be for those receiving these city utility services.  Similar statutes for setting water and sewer rates provide that, in classifying city utility customers, among other reasonable grounds for distinction, the city may examine the following factors: 

            •           The difference in cost of providing the service to the customers.

            •           Whether the customers are located within or outside of the city.

            •           The difference in maintenance, operation, and repair associated with the parts of the system serving the class of customer.

Other specific factors are identified for water and sewer systems in RCW 35.92.010 and RCW 35.67.190, respectively.  (more…)

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