42-14156

42-14156. Computing valuation of electric
generation facilities; definitions

A. The valuation of electric generation facilities referred to in section 42-14151,
subsection A, paragraph 4 shall be determined as follows:

1. The value of land used in operating the facility shall be the cost to the
current owner as of December 31 of the preceding calendar year.

2. The valuation of real property improvements used in operating the facility is
the cost multiplied by valuation factors prescribed by tables adopted by the department.

3. The valuation of personal property used in operating the facility is the cost
multiplied by the valuation factors as prescribed by tables adopted by the department,
adjusted as follows:

(a) For the first year of assessment, the department shall use thirty-five per cent
of the scheduled depreciated value.

(b) For the second year of assessment, the department shall use fifty-one per cent
of the scheduled depreciated value.

(d) For the fourth year of assessment, the department shall use eighty-three per
cent of the scheduled depreciated value.

(e) For the fifth and subsequent years of assessment, the department shall use the
scheduled depreciated value as prescribed in the department's guidelines.

4. In addition to the computation prescribed in paragraphs 2 and 3 of this
subsection, the taxpayer may submit documentation showing the need for, and the
department shall consider, an additional adjustment to recognize obsolescence using
standard appraisal methods and techniques.

5. The valuation prescribed in paragraph 2 of this subsection shall not reduce the
valuation below ten per cent of the cost of the real property improvements. The valuation
prescribed in paragraph 3 of this subsection shall not reduce the valuation below ten per
cent of the cost of the personal property.

6. The following apply in determining cost for the purposes of this subsection:

(a) "Cost" means the cost of constructing the property or acquiring the property in
an arm's length transaction.

(b) The cost of personal property is the invoice cost of the personal property, the
cost of transporting the property to the facility site and the cost of labor to install
the property, plus any transaction privilege or use taxes paid.

(c) The cost of leased property is the lessor's cost of the property, except that
in the case of a lease financing transaction, the cost is the actual cost of construction
based on the invoice cost similar to any other type of financing.

(d) In the case of a facility that is acquired from another taxpayer:

(i) If, after the acquisition, the buyer has possession of the cost information,
the valuation of the facility shall continue based on the seller's cost as if there were
no change in ownership, except for land as provided in subsection A, paragraph 1.

(ii) If, after the acquisition, the buyer does not possess the cost information,
the acquisition cost in an arm's length transaction shall be used.

(e) For generation facilities that were in service before January 1, 2001, costs
incurred before January 1, 2002 shall be computed in accordance with section 42-14158.
For these facilities, all costs incurred on or after January 1, 2002 shall be reported in
accordance with subdivisions (a) through (d) of this paragraph.

7. The department shall not value personal property construction work in progress
until the property is first placed in commercial service. For the purposes of this
paragraph, "commercial service" means:

(a) For machinery and equipment used in the generation of electricity being valued
and placed on the tax roll for the first time, the official assumption of operation and
ownership of the machinery and equipment from the contractor by the plant operator.

(b) For machinery and equipment added to existing electric generation facilities,
that the construction work has progressed to a sufficient degree for the machinery and
equipment to be useful for the purpose for which it is being constructed.

(c) For machinery and equipment related to self-constructed facilities, that the
construction work has progressed to a sufficient degree for the machinery and equipment
to be useful for the purpose for which it is being constructed.

B. For the purposes of this section:

1. "Electric generation facility" means all land, buildings and personal property
that is situated in this state and that is used or useful for the generation of electric
power.

2. "Personal property" means all tangible property except for land and real
property improvements as defined in this section. Personal property includes foundations
or supports for the machinery or apparatus for which they are provided, including water
cooling towers.

3. "Real property improvements" means buildings, including administration
buildings, maintenance warehouses and guard shacks, water retention ponds, sewage
treatment ponds, reservoirs, sidewalks, drives, curbs, parking lots, tunnels, duct banks,
canals, fencing and landscaping.