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SELECTED 2009 ARKANSAS ENERGY AND UTILITY LEGISLATION
7/30/2009
This article provides brief summaries of selected energy and utility regulatory enactments of the 2009 General Assembly that are of special interest to manufacturing and industrial utility customers.
MANUFACTURING TAX BREAK: The sales and use tax rate on natural gas and electricity used by manufacturers was lowered to 3.125%. Statewide refund claims for all taxpayers are limited to $27 million, so taxpayers should submit claims as quickly as possible. (Act 691 of 2009; Ark. Code Ann. §§ 25-52-319 and 26-53-148.)
MANUFACTURING EQUIPMENT SALES AND USE TAX EXEMPTION: The definition of machinery and equipment that is “used directly” in the manufacturing process and therefore exempt from sales and use tax was clarified. The definition now includes specifically frames, cavities and forms that determine the physical characteristics of the finished product or its packaging material at any stage of the manufacturing process. The definition also now includes specifically dies, tools and devices attached to or part of a unit of machinery that determine the physical characteristics of the finished product or its packaging material at any stage of the manufacturing process. Finally, the definition also now includes specifically testing equipment to measure the quality of the finished product at any stage of the manufacturing process. (Act 1208 of 2009;Ark. Code Ann. §§ 26-52-402 and 26-53-114.)
STORM RECOVERY SECURITIZATION ACT: Electric utilities may now issue bonds secured by future payments of Public Service Commission-approved storm recovery costs by ratepayers. (Act 729 of 2009; Ark. Code Ann. §§ 23-20-101 et seq.)
STORM COST RESERVE ACCOUNTING: The Public Service Commission is now required to permit electric utilities to use reserve accounting for storm costs. (Act 434 of 2009; Ark. Code Ann. § 23-4-112.)
STREAMLINED CO-OP RATE CASE PROCEDURE: Wholesale (generation and transmission) and retail electric cooperatives may now implement rate increases on an expedited basis and without filing a cost of service study. At least three-fourths of the cooperatives board must approve the rate change, the rate increase cannot exceed 5% in a twelve month period or 8% in a twenty-four month period. The Public Service Commission must rule on the proposed increase within 90 days. The generation and transmission cooperative’s retail distribution cooperatives can pass the increase through to their retail customers. (Act 676 of 2009; Ark. Code Ann. § 23-4-1101.)
MUNICIPAL ELECTRIC EMINENT DOMAIN POWER: Municipal electric utilities may exercise eminent domain power outside the city limits as long as the power is not being used to serve customers in territory allocated to an investor-owned or cooperative electric utility. The municipal utility must notify affected investor-owned or cooperative utilities. The municipal utility must obtain a certificate of convenience and necessity from the Public Service Commission if the investor-owned or cooperative utilities object. (Act 418 of 2009; Ark. Code Ann. § 18-15-301, et seq.)
PIPELINE SAFETY ACT CHANGES: The Oil and Gas Commission’s authority to administer the Natural Gas Pipeline Safety Act was amended to include specifically natural gas pipelines and associated facilities whose owner is not affiliated with an Arkansas natural gas public utility and whose majority owner is either a production company or production company affiliate. In addition, the exclusion of gas gathering lines in certain rural settings from the definition of “transportation of gas” was repealed. (Act 452 of 2009; Ark. Code Ann. §§ 15-71-110 and 23-15-203.)
UNIVERSAL TELEPHONE SERVICE TECHNOLOGY: The permissible technologies for meeting universal service obligations was expanded from commercial mobile services to now include any technological equivalent of commercial mobile services or voice over internet protocol. (Act 191 of 2009; Ark. Code Ann. § 23-17-405.)
DAMAGE TO UTILITY FACILITIES: Intentional damage to certain enumerated public utility property is now a Class D felony. In addition, changes were made regarding the records that scrap metal dealers must maintain on their purchases. (Act 390 of 2009; Ark. Code Ann. §§ 5-38-206 and 17-44-102.)
If you have any questions regarding the issues addressed in this article or if you would like to set up a meeting with us regarding these developments, please feel free to contact your regular contact at Rose Law Firm or Steve Joiner, (501) 377-0329 or sjoiner@roselawfirm.com.
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