GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1995

H	1 

HOUSE BILL 1020

Short Title:  Joint Municipal Electric Amend.	(Public)

─────────────────────────────────────── 
Sponsors: Representatives Eddins, Creech, Ramsey; Barbee, Beall, J. Brown, Capps, Clary, Cocklereece, Culp, Davis, Dockham, Ives, Lee, McMahan, K. Miller, Morgan, Nichols, Pate, Pulley, Tallent, Tolson, Watson, and Wood.

─────────────────────────────────────── 
Referred to:  Business & Labor.

─────────────────────────────────────── 

May 4, 1995

A BILL TO BE ENTITLED
AN ACT TO CLASSIFY CERTAIN JOINT MUNICIPAL POWER AGENCIES AS ELECTRIC SUPPLIERS AND TO APPLY THE FRANCHISE TAX TO CERTAIN JOINT MUNICIPAL POWER AGENCIES.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 62-110.2(a) reads as rewritten:
"(a)	As used in this section, unless the context otherwise requires, the term:
(1)	'Premises' means the building, structure, or facility to which electricity is being or is to be furnished; provided, that two or more buildings, structures, or facilities which are located on one tract or contiguous tracts of land and are utilized by one electric consumer for commercial, industrial, institutional, or governmental purposes, shall together constitute one 'premises,' except that any such building, structure, or facility shall not, together with any other building, structure, or facility, constitute one 'premises' if the electric service to it is separately metered and the charges for such service are calculated independently of charges for service to any other building, structure, or facility; and
(2)	'Line' means any conductor for the distribution or transmission of electricity, other than
a.	In the case of overhead construction, a conductor from the pole nearest the premises of a consumer to such premises, or a conductor from a line tap to such premises, and
b.	In the case of underground construction, a conductor from the transformer (or junction point, if there be one) nearest the premises of a consumer to such premises.
(3)	'Electric supplier' means any public utility furnishing electric service, any electric membership corporation, any joint agency or joint municipal assistance agency created pursuant to Chapter 159B of the General Statutes, or any municipality that on January 1, 1995, was a member of a joint agency or joint municipal assistance agency organized under Chapter 159B of the General Statutes, so long as any debt issued by that joint agency or joint municipal assistance agency which was outstanding on January 1, 1995, or any reissues or refinancings of that debt, remains outstanding."
Sec. 2.  G.S. 62-110.2(e) reads as rewritten:
	"(e)  The furnishing of electric service in any area which becomes a part of any municipality after April 20, 1965, either by annexation or incorporation, (whether or not such area, or any portion thereof, shall have been assigned pursuant to subsection (c) of this section) shall be subject to the provisions of Part 2, Article 16 of Chapter 160A of the General Statutes, and any provisions of this section inconsistent with said Article shall not be applicable within such area after the effective date of such annexation or incorporation.  However, the furnishing of electric service in any area which becomes a part of any municipality that, on January 1, 1995, was a member of a joint agency or joint municipal assistance agency organized under Chapter 159B of the General Statutes, either by annexation or incorporation, (whether or not such area, or any portion thereof, shall have been assigned pursuant to subsection (c) of this section) shall remain subject to the other provisions of this section so long as any debt issued by that joint agency or joint municipal assistance agency which was outstanding on January 1, 1995, or any reissues or refinancings of that debt, remains outstanding."
Sec. 3.  G.S. 62-140(c) reads as rewritten:
"(c)	No public utility shall offer or pay any compensation or consideration or furnish any equipment to secure the installation or adoption of the use of such utility service except upon filing of a schedule of such compensation or consideration or equipment to be furnished and approved thereof by the Commission, and offering such compensation, consideration or equipment to all persons within the same classification using or applying for such public utility service; provided, in considering the reasonableness of any such schedule filed by a public utility the Commission shall consider, among other things, evidence of consideration or compensation paid by any competitor, regulated or nonregulated, of the public utility to secure the installation or adoption of the use of such competitor's service.  Provided, further, that nothing herein shall prohibit a public utility from carrying out any contractual commitment in existence at the time of the enactment hereof, so long as such program does not extend beyond December 31, 1963.  For the purpose of this subsection, 'public  utility' shall include any electric membership corporation operating within this State, and the terms 'utility service' and 'public utility service' shall include the service rendered by any such electric membership corporation.  For purposes of this subsection, the term 'public utility' shall include any municipality that on January 1, 1995, was a member of a joint agency or joint municipal assistance agency organized under Chapter 159B of the General Statutes, and the terms 'utility service' and 'public utility service' shall include the service rendered by any such municipality."
Sec. 4.  G.S. 105-116 reads as rewritten:
"§ 105-116.  Franchise or privilege tax on electric power, natural gas, water, and sewerage companies.
(a)	Tax. – An annual franchise or privilege tax is imposed on a person, firm, or corporation, including any municipal corporation described in subsection (a1) of this section, that is:
(1)	An electric power company engaged in the business of furnishing electricity, electric lights, current, or power.
(2)	A natural gas company engaged in the business of furnishing piped natural gas.
(3)	A water company engaged in owning or operating a water system subject to regulation by the North Carolina Utilities Commission.
(4)	A public sewerage company engaged in owning or operating a public sewerage system.
The tax on an electric power company is three and twenty-two hundredths percent (3.22%) of the company's taxable gross receipts from the business of furnishing electricity, electric lights, current, or power.  The tax on a natural gas company is three and twenty-two hundredths percent (3.22%) of the company's taxable gross receipts from the business of furnishing piped natural gas.  The tax on a water company is four percent (4%) of the company's taxable gross receipts from owning or operating a water system subject to regulation by the North Carolina Utilities Commission.  The tax on a public sewerage company is six percent (6%) of the company's taxable gross receipts from owning or operating a public sewerage company.  A company's taxable gross receipts are its gross receipts from business inside the State less the amount of gross receipts from sales reported under subdivision (b)(2).  A company that engages in more than one business taxed under this section shall pay tax on each business.  A company is allowed a credit against the tax imposed by this section for the company's investments in certain entities in accordance with Division V of Article 4 of this Chapter.
(a1)	Any municipality that, on January 1, 1995, was a member of a joint agency or joint municipal assistance agency organized under Chapter 159B of the General Statutes, shall be taxed as an electric power company under subsection (a) of this section on its gross receipts from the business of furnishing electricity, electric lights, current, or power outside of its corporate limits so long as any debt issued by that joint agency or joint municipal assistance agency which was outstanding on January 1, 1995, or any reissues or refinancings of that debt, remains outstanding.
(b)	Report and Payment. – The tax imposed by this section is payable monthly or quarterly as specified in this subsection.  A report is due quarterly.  An electric power company or a natural gas company shall pay tax monthly.  A monthly tax payment is due by the last day of the month that follows the month in which the tax accrues, except the payment for tax that accrues in May.  The payment for tax that accrues in May is due by June 25.  An electric power company or a natural gas company is not subject to interest on or penalties for an underpayment of a monthly amount due if the company timely pays at least ninety-five percent (95%) of the amount due and includes the underpayment with the next report the company files.  A water company or a public sewerage company shall pay tax quarterly when filing a report.
A quarterly report covers a calendar quarter and is due by the last day of the month that follows the quarter covered by the report.  A company shall submit a report on a form provided by the Secretary.  The report shall include the company's gross receipts from all property it owned or operated during the reporting period in connection with its business taxed under this section and shall contain the following information:
(1)	The company's gross receipts for the reporting period from business inside and outside this State, stated separately.
(2)	The company's gross receipts from commodities or services described in subsection (a) that are sold to a vendee subject to the tax levied by this section or to a joint agency established under G.S. Chapter 159B or a municipality having an ownership share in a project established under that Chapter.
(3)	The amount of and price paid by the company for commodities or services described in subsection (a) that are purchased from others engaged in business in this State and the name of each vendor.
(4)	For an electric power company or a natural gas company, the company's gross receipts from the sale within each municipality of the commodities and services described in subsection (a).
A company shall report its gross receipts on an accrual basis.
(c)	Gas Special Charges. – Gross receipts of a natural gas company do not include the following:
(1)	Special charges collected within this State by the company pursuant to drilling and exploration surcharges approved by the North Carolina Utilities Commission, if the surcharges are segregated from the other receipts of the company and are devoted to drilling, exploration, and other means to acquire additional supplies of natural gas for the account of natural gas customers in North Carolina and the beneficial interest in the surcharge collections is preserved for the natural gas customers paying the surcharges under rules established by the Commission.
(2)	Natural gas expansion surcharges imposed under G.S. 62-158.
(d)	Distribution. – For the purpose of this subsection, the term 'distribution amount' means three and nine hundredths percent (3.09%) of the taxable gross receipts derived during a period by an electric power company and a natural gas company from sales within a municipality of the commodities and services described in subsection (a) of this section.  The Secretary shall distribute to each municipality the distribution amount for that municipality for the preceding calendar quarter less an amount equal to one-fourth of the excess of the distribution amount for that municipality for the period April 1, 1994, to March 31, 1995, over the distribution amount for that municipality for the period April 1, 1990, to March 31, 1991, as certified by the Secretary.  The Secretary shall distribute the revenue within 75 days after the end of each quarter.  If a company's report does not state the company's taxable gross receipts derived within a municipality, the Secretary shall determine a practical method of allocating part of the company's taxable gross receipts to the municipality.
The distribution amount received by any municipality that was a member, on January 1, 1995, of a joint agency or joint municipal assistance agency organized under Chapter 159B of the General Statutes, from sales within that municipality of the commodities and services described in subsection (a)(1) of this section, shall be appropriated only for the purpose of making payments to that joint agency or joint municipal assistance agency, and may not be transferred for use to the General Fund of that municipality, so long as any debt issued by that joint agency or joint municipal assistance agency which was outstanding on January 1, 1995, or any reissues or refinancings of that debt, remains outstanding.
As used in this subsection, the term 'municipality' includes an urban service district defined by the governing board of a consolidated city-county.  The amount due an urban service district shall be distributed to the governing board of the consolidated city-county.
(e)	Local Tax. – So long as there is a distribution to municipalities of the amount herein provided from the tax imposed by this section, no municipality shall impose or collect any greater franchise, privilege or license taxes, in the aggregate, on the businesses taxed under this section, than was imposed and collected on or before January 1, 1947.  If any municipality shall have collected any privilege, license or franchise tax between January 1, 1947, and April 1, 1949, in excess of the tax collected by it prior to January 1, 1947, then upon distribution of the taxes imposed by this section to municipalities, the amount distributable to any municipality shall be credited with such excess payment."
Sec. 5.  G.S. 160A-312(a) reads as rewritten:
	"(a)	A city shall have authority to acquire, construct, establish, enlarge, improve, maintain, own, operate, and contract for the operation of any or all of the public enterprises as defined in this Article to furnish services to the city and its citizens.  Subject to Part 2 of this Article and Article 6 of Chapter 62 of the General Statutes, a city may acquire, construct, establish, enlarge, improve, maintain, own, and operate any public enterprise outside its corporate limits, within reasonable limitations, but in no case shall a city be held liable for damages to those outside the corporate limits for failure to furnish any public enterprise service.  However, a city which on January 1, 1995, was a member of a joint agency or joint municipal assistance agency organized under Chapter 159B of the General Statutes, may not expand its existing electric distribution system to provide any service outside its corporate limits which was not being rendered on July 1, 1995, so long as any debt issued by that joint agency or joint municipal assistance agency which was outstanding on January 1, 1995, or any reissues or refinancings of that debt, remains outstanding.  No municipality shall make as a condition of the provision or extension of any public enterprise to any person or entity the acceptance by that person or entity of other public enterprises provided by that municipality or any municipality, or joint agency or joint municipal assistance agency organized under Chapter 159B of the General Statutes."
Sec. 6.  G.S. 160A-314(a) reads as rewritten:
"(a)	A city may establish and revise from time to time schedules of rents, rates, fees, charges, and penalties for the use of or the services furnished by any public enterprise. Schedules of rents, rates, fees, charges, and penalties may vary according to classes of service, and different schedules may be adopted for services provided outside the corporate limits of the city.  However, different schedules for providing electric services may not be adopted for services provided outside the corporate limits of any municipality that, on January 1, 1995, was a member of a joint agency or joint municipal assistance agency organized under Chapter 159B of the General Statutes."
Sec. 7.  This act becomes effective July 1, 1995, and  Section 4 of this act applies to gross receipts that accrue on or after that date.