Power for electrolytic processing - public utility tax exemption
Who qualifies for this exemption?
You can qualify for a public utility tax exemption if you are a light and power business that provides electricity to qualifying electrolytic processing businesses. This exemption expires July 1, 2029. You can only use the exemption for electricity sales you make on or before December 31, 2028.
What is a qualifying electrolytic processing business?
A qualifying electrolytic processing business is a business that uses more than 10 average megawatts of electricity per month to split the chemical bonds of sodium chloride and water in one of the following ways:
- using the chlor-alkali electrolytic process to make chlorine and sodium hydroxide; or
- using the sodium chlorate electrolytic process to make sodium chlorate and hydrogen.
As of June 10, 2004, sales of electricity to electrolytic processing businesses that contract for power from the Bonneville power administration, do not qualify for this exemption.
How to qualify for an exemption:
As a light and power business, you can qualify for a public utility tax exemption on your sales of electricity made to a qualifying chlor-alkali electrolytic processing business or a sodium chlorate electrolytic processing business for the electrolytic process if the contract for the sale contains all the following terms:
- The electricity that the business uses in the electrolytic process must be metered separately from the electricity the business uses for general operations;
- You reduce the price for the electricity used in the electrolytic process by an amount equal to the tax exemption available to you; and
- If you disallow all or part of the exemption, that is a breach of contract and the damages the electrolytic processing business pays are the amount of the tax exemption you disallowed.
You cannot use this exemption for amounts you receive from the remarketing or resale of electricity that an electrolytic processor originally obtained by contract.
How to report:
- Both the buyer and the seller must complete a Public Utility Tax Exemption Certificate for Persons Supplying Power to Electrolytic Processor.
- The buyer must file the Annual Tax Performance Report by May 31 of the following year.
- You must file all documents electronically.
For questions about the program, call (800) 647-7706.