REVENUE AND TAXATION
DEFINITIONS — GENERAL PROVISIONS
63-205B. Assessment OF OPERATING PROPERTY OF RATE-REGULATED ELECTRIC UTILITY COMPANIES. (1) In the assessment of the operating property of rate-regulated electric utility companies, the market value shall be determined by the state tax commission by applying applicable law, statutes, property tax administrative rules and the following criteria:
(a) Depending on the weighting placed on the income approach, as described in paragraph (d) of this subsection, no more than twenty percent (20%) weight shall be placed on the cost indicator when utilizing the historic cost less depreciation (HCLD) method in the system value correlation.
(b) In the income approach, income to be capitalized will be normalized, utilizing the gross domestic product implicit price deflator from the United States department of commerce, bureau of economic analysis, by using an average of at least the previous four (4) years’ net operating incomes and by adjusting each year’s net operating income for unusual nonrecurring items.
(c) In the income approach, a market discount rate will be determined, and to that rate a flotation cost component of twenty hundredths of one percent (0.20%) will be added.
(d) A weighting between eighty percent (80%) and one hundred percent (100%) will be placed on the income approach in the system value correlation.
(e) Within the market approach, a sales comparison approach may be used if reliable data is available and appropriate comparison adjustments can be made. No weight will be placed on a stock and debt approach in the system value correlation.
(f) For rate-regulated electric utility companies, the weightings prescribed in this section shall control the weightings used in the system correlation or reconciliation.
(2) Subsection (1)(a) of this section shall be construed to mean that the use of no more than twenty percent (20%) weight placed on the cost indicator, when utilizing the HCLD method to calculate the cost approach, accounts for any and all forms of depreciation, including any and all forms of obsolescence, and the appraiser shall not consider any further obsolescence.
(3) The state tax commission is hereby authorized to promulgate rules to implement the provisions of this section.
[63-205B, added 2014, ch. 76, sec. 1, p. 201; am. 2017, ch. 15, sec. 1, p. 26.]