4.2. ERMUSR 09-10-2019 - Laserfiche WebLink

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Methods Used to Determine Payments in Lieu of Taxes Payments in lieu of taxes are generally thought of as payments The category"assessment of electric utility and city budgets" to local government. However,some utilities make payments includes utilities whose payments are set by the city council, in lieu of taxes to the state government. the mayor,or a utility commission,and utilities that make payments on an as-needed basis.The most common Of the 171 utilities defined earlier,over 79 percent(136 responses in the"other"category are utilities whose payments utilities)made payments in lieu of taxes,also called transfers are based on more than one criterion. to the general fund.The median transfer as a percent of electric operating revenue was 4.1 percent. Tennessee Valley Authority distribution utilities are not included in the data above.State law determines the The most common method used to determine the amount payments in lieu of taxes for utilities in the state of Tennessee. of payments in lieu of taxes was percent of gross electric The calculation is composed of two parts percentage of operating revenue,as shown in Table 6. three-year average operating revenue less power cost,and Table 6 property tax rate applied to net utility plant. Methods Used to Calculate Payments in Lieu of Taxes Percentage Number of Utilities of Utilities Percent of Gross Electric Operating Revenue 26% 35 Assessment of Electric Utility and City Budgets 18% 25 Flat Amount Paid Annually 13% 18 Property Tax Equivalent 10% 13 Charge per Kilowatt-hour Sold 10% 13 Percent of Net Utility Plant in Service 2% 3 Percent of Income,(Net,Operating or Total) 2% 3 Other/Did not Indicate 19% 26 Public Power Pays Back 9 164