Amends existing law to revise provisions regarding certain rate-regulated electric companies and gas companies.

LEGISLATURE OF THE STATE OF IDAHO Sixty-eighth Legislature Second Regular Session - 2026 IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 722 BY REVENUE AND TAXATION COMMITTEE AN ACT1 RELATING TO TAXATION; AMENDING SECTION 63-405, IDAHO CODE, TO REVISE PRO-2 VISIONS REGARDING THE ASSESSMENT OF OPERATING PROPERTY; AMENDING SEC-3 TION 63-3502B, IDAHO CODE, TO REVISE A PROVISION REGARDING THE LEVY OF4 TAX ON CERTAIN ELECTRICAL PRODUCTION AND RATE-REGULATED ELECTRIC UTIL-5 ITY COMPANIES, RATE-REGULATED AFFILIATED GAS COMPANIES, AND RATE-REGU-6 LATED GAS COMPANIES; AMENDING SECTION 63-3503C, IDAHO CODE, TO REVISE7 PROVISIONS REGARDING THE CALCULATION, COLLECTION, ALLOTMENT, AND AP-8 PORTIONMENT OF TAX DUE FROM RATE-REGULATED ELECTRIC UTILITY COMPANIES,9 RATE-REGULATED AFFILIATED GAS COMPANIES, AND RATE-REGULATED GAS COM-10 PANIES BY THE STATE TAX COMMISSION AND TO ESTABLISH THE RATE-REGULATED11 TAX FUND; AND DECLARING AN EMERGENCY AND PROVIDING RETROACTIVE APPLICA-12 TION.13

Be It Enacted by the Legislature of the State of Idaho:14

SECTION 1. That Section 63-405, Idaho Code, be, and the same is hereby15 amended to read as follows:16 63-405. ASSESSMENT OF OPERATING PROPERTY. (1) The state tax commis-17 sion must assess taxable operating property at a meeting of the commission18 convening on the second Monday of August in each year and must complete the19 assessment of such property on the fourth Monday in August.20 (2) The state tax commission shall determine the system value and cal-21 culate the allocation and apportionment of the system value for taxable op-22 erating property and specifically determine:23 (a) The number of miles and the value per mile of each railroad in the24 state and for each taxing district in which such railroad may exist.25 (b) The number of miles and the value per mile of each telephone corpo-26 ration in the state and for each taxing district in which such telephone27 corporation may exist.28 (c) The number of miles and the value per mile of each pipeline in the29 state and for each taxing district in which such pipeline may exist.30 (d) The number of miles and the value per mile of each water company31 under the jurisdiction of the public utilities commission in the state32 and for each taxing district in which such water company may exist. The33 value per mile of any line included in this subsection, except rail-34 roads, shall be determined by dividing the total value of such line35 within the state by the number of miles of such line within the state.36 The value per mile of railroad line shall be determined by apportionment37 of the total value of line within the state. The apportionment shall38 be based twenty percent (20%) on the ratio of line miles in the state to39 line miles in the county; forty percent (40%) on the ratio of net ton40 miles in the state to net ton miles in the county; and forty percent41 (40%) on the ratio of station revenues in the state to station revenues42

2 in the county. All operating property of railroads shall be apportioned1 to the counties as part of the railroad line in the county. The appor-2 tionment for taxing districts shall be the same as the apportionment3 among counties.4 (e) The system value of private railcar fleets entering or standing in5 Idaho in the year preceding the constituted lien as provided in section6 63-411(3), Idaho Code.7 (f) The system value and calculate the allocation and apportionment of8 the system value for all other taxable operating property.9 (3) For rate-regulated electric utility companies, rate-regulated10 affiliated gas companies, and rate-regulated gas companies subject to tax-11 ation as provided in section 63-3502B(3) or (4), Idaho Code, the state tax12 commission shall determine the amount of such tax to be apportioned to each13 county separately in proportion to the property tax levied by all eligi-14 ble taxing districts and units and amounts allocated to each urban renewal15 agency statewide in tax year 2025 on the operating property of rate-regu-16 lated electric utility companies, rate-regulated affiliated gas companies,17 and rate-regulated gas companies. The 2025 property tax amounts levied18 or allocated shall be certified by each county auditor to the state tax19 commission no later than January 12, 2026. The state tax commission shall20 calculate proportions by dividing the total amount so reported for each21 county by the sum of all such amounts for all eligible taxing districts and22 units and urban renewal agencies statewide. Taxing districts, units, and23 urban renewal agencies are eligible for a proportion of this tax and are24 included in the calculation of these proportions, provided they levied prop-25 erty tax against the operating property of rate-regulated electric utility26 companies, rate-regulated affiliated gas companies, and rate-regulated gas27 companies or received an allocation of property tax paid by such companies28 for tax year 2025. In the event that a taxing district or unit or urban re-29 newal revenue allocation area dissolves or is no longer present in a county,30 or a voter approved bond expires, the proportions for each taxing district in31 each affected county shall be changed as follows:32 (a) The state tax commission shall reapportion the kilowatt-hour and33 thermal energy tax revenue that would have accrued to the dissolving34 district or revenue allocation area or expiring voter approved bond.35 The reapportioned tax shall be distributed to each otherwise eligible36 taxing district and revenue allocation area in the county with bound-37 aries that overlapped the dissolved district or revenue allocation area38 or expired voter approved bond. The proportionate share for each taxing39 district and revenue allocation area shall be determined by dividing40 the current distribution to that district and revenue allocation area41 by the total distribution to all districts and revenue allocation areas42 that overlap the dissolving district or revenue allocation area.43 (b) Such reapportionment shall be made in the year immediately follow-44 ing the year of the dissolution or expiration and the county auditor45 shall be notified of the changed proportions no later than the first46 Monday in March of that year.47 (c) The proportions used to determine the amount of kilowatt-hour tax48 and thermal energy tax to be billed to rate-regulated electric utility49 companies, rate-regulated affiliated gas companies, and rate-reg-50

3 ulated gas companies and payable to each county pursuant to section1 63-3503C(2), Idaho Code, shall not change.2 (4) At least once Once every five (5) years, commencing with the five3 (5) year period beginning January 1, 2026, the state tax commission shall4 examine and verify the investment of each rate-regulated electric utility5 company, rate-regulated affiliated gas company, and rate-regulated gas com-6 pany in each county and shall submit a report to the legislature that details7 each county's investment in relation to the total statewide investment. On8 or before January 31 of the year in which the state tax commission requires9 such report for the applicable five (5) year period, the state tax commission10 shall notify each rate-regulated electric utility company, rate-regulated11 gas company, and rate-regulated affiliated gas company of the requirement to12 submit the report by April 15 of that year for the investment in each county13 as of the end of the preceding calendar year.14 (5) If the value of property of any company assessable under this sec-15 tion is of such a nature that it cannot reasonably be apportioned on the basis16 of rail, wire, and pipeline mileage, such as microwave and radio relay sta-17 tions, the tax commission may adopt such other method or basis of apportion-18 ment to the county and taxing districts in which the property is situate as19 may be feasible and proper.20 (6) Any departure from market value in an assessment of operating prop-21 erty made to ensure compliance with federal law or precedent shall be consid-22 ered an exemption. The state tax commission shall identify such departures23 from market value in their appraisals and no application need be made by a24 taxpayer to receive such exemption.25

SECTION 2. That Section 63-3502B, Idaho Code, be, and the same is hereby26 amended to read as follows:27 63-3502B. LEVY OF TAX ON WIND ENERGY PRODUCTION, SOLAR ENERGY PRO-28 DUCTION, GEOTHERMAL ENERGY ELECTRICAL PRODUCTION, RATE-REGULATED ELECTRIC29 UTILITY COMPANIES, RATE-REGULATED AFFILIATED GAS COMPANIES, AND RATE-REGU-30 LATED GAS COMPANIES. (1) A wind energy tax or a geothermal energy tax shall31 be levied against every producer of electricity by means of wind energy or32 geothermal energy in the amount of three percent (3%) of such producer's33 gross wind energy earnings or geothermal energy earnings.34 (2) A solar energy tax shall be levied against every producer of elec-35 tricity by means of solar energy in the amount of three and one-half percent36 (3.5%) of the producer's gross solar energy earnings.37 (3) A kilowatt-hour tax shall be levied against every rate-regulated38 electric utility company operating in Idaho on all such electricity and39 electrical energy sold to retail customers in Idaho, as reported by such40 company to the Idaho public utilities commission; however, if such a report41 contains kilowatt-hour sales data for another state, the kilowatt-hour tax42 established under this section shall not be applied to those out-of-state43 sales. The kilowatt-hour tax shall be nine hundred twenty-three millionths44 of a dollar ($0.000923) per kilowatt-hour sold.45 (4)(a) A thermal energy tax shall be levied against every rate-regu-46 lated affiliated gas company on all natural gas sold to retail customers47 in Idaho at a rate of ten thousand eight hundred two millionths of a dol-48 lar ($0.010802) per therm of natural gas sold.49

4 (b) A thermal energy tax shall be levied against every rate-regulated1 gas company on all natural gas sold to retail customers in Idaho at2 a rate of three hundred twenty-nine hundred-thousandths of a dollar3 ($0.00329) per therm of natural gas sold. A separate thermal energy tax4 shall be levied against every rate-regulated gas company on all nat-5 ural gas delivered to a transport gas customer at a rate of forty-one6 hundred-thousandths of a dollar ($0.00041) per therm of natural gas7 delivered to a transport gas customer by a rate-regulated gas company.8 For the purposes of this subsection, "transport gas customer" means an9 entity that purchases gas from a supplier other than a rate-regulated10 gas company but that contracts with a rate-regulated gas company to de-11 liver gas to its meter.12 (5) The wind energy tax, solar energy tax, geothermal energy tax, kilo-13 watt-hour tax, and thermal energy tax provided in this section shall be in14 lieu of all other taxes on the property of such wind energy producer, solar15 energy producer, geothermal energy producer, rate-regulated electric util-16 ity company, rate-regulated affiliated gas company, or rate-regulated gas17 company exempted pursuant to section 63-602JJ, Idaho Code.18 (6) For purposes of the certification required by section 63-803, Idaho19 Code, and the limitations provided by section 63-802, Idaho Code, the taxes20 levied pursuant to subsection (2) of this section shall reduce the property21 tax to be levied to finance an annual budget and shall not be included in the22 amount of property tax revenues to finance an annual budget for purposes of23 limitations on increases in the annual budget as provided in section 63-802,24 Idaho Code. Kilowatt-hour Estimated kilowatt-hour taxes and estimated25 thermal energy taxes apportioned to each taxing district pursuant to section26 63-3503C, Idaho Code, shall be treated as property tax revenue for the pur-27 poses of the limitations provided in section 63-802, Idaho Code.28 (7) By January 1, 2027, rate-regulated electric utility companies,29 rate-regulated affiliated gas companies, and rate-regulated gas companies30 shall include the kilowatt-hour and thermal energy tax on the billings to31 its Idaho customers. The public utilities commission shall adjust the base32 tariff rates for customers to the extent those rates included a recovery of33 property taxes on operating property or the kilowatt-hour taxes or thermal34 energy taxes assessed pursuant to this section.35

SECTION 3. That Section 63-3503C, Idaho Code, be, and the same is hereby36 amended to read as follows:37 63-3503C. CALCULATION, COLLECTION, ALLOTMENT, AND APPORTIONMENT OF38 TAX FROM RATE-REGULATED ELECTRIC UTILITY COMPANIES, RATE-REGULATED AFFILI-39 ATED GAS COMPANIES, AND RATE-REGULATED GAS COMPANIES BY STATE TAX COMMISSION40 -- RATE-REGULATED TAX FUND.41 (1)(a) On or before April 15 of each year beginning in 2026, every rate-42 regulated electric utility, rate-regulated affiliated gas company, and43 rate-regulated gas company in this state shall file with the state tax44 commission a statement of the amount of its kilowatt-hours and therms45 sold as described in section 63-3502B(3) and (4), Idaho Code, for the46 preceding year, and for rate-regulated electric utilities, the amount47 of kilowatt-hours sold during the preceding year for furnishing power48

5 for pumping water for irrigation or drainage purposes, as provided by1 section 63-3502C, Idaho Code.2 (b) Beginning on January 1, 2027, and on On or before April 15 September3 15 of each year thereafter beginning in 2026, every rate-regulated4 electric utility, rate-regulated affiliated gas company, and rate-reg-5 ulated gas company in this state shall file with the state tax com-6 mission a statement of the amount of its kilowatt-hours and therms7 sold in Idaho for the preceding calendar year as described in section8 63-3502B(3) and (4), Idaho Code, for the six (6) months of January9 through June of the current year, and for rate-regulated electric util-10 ities, the amount of kilowatt-hours sold the preceding year during such11 six (6) month period for furnishing power for pumping water for irriga-12 tion or drainage purposes, as provided by section 63-3502C, Idaho Code.13 The rate-regulated electric utilities, rate-regulated affiliated gas14 company, and rate-regulated gas companies shall also provide such15 information as shall be necessary for the state tax commission to re-16 determine the allocations of the tax as required in section 63-405(4),17 Idaho Code. Upon examining and verifying such statement, the state tax18 commission shall compute the amount of the tax due for the period Jan-19 uary through June of the current year using the rates found in section20 63-3502B(3) and (4), Idaho Code, and reduced as provided in section21 63-3502C, Idaho Code, for rate-regulated electric utilities eligible22 for such exemption. Such tax shall be billed by the state tax commission23 to each rate-regulated electric utility, rate-regulated affiliated gas24 company, and rate-regulated gas company no later than the first Monday25 of November and shall be due and payable to the state tax commission no26 later than December 20. Upon receipt of such tax payments, the state tax27 commission shall promptly pay to each county treasurer the proportion-28 ate share of such taxes due to the county as provided in this section,29 and the county treasurer shall pay such amounts to eligible taxing30 districts, units, and urban renewal agencies as also provided in this31 section.32 (c) On or before April 15 of each year beginning in 2027, every33 rate-regulated electric utility, rate-regulated affiliated gas com-34 pany, and rate-regulated gas company in this state shall file with the35 state tax commission a statement of the amount of its kilowatt-hours and36 therms sold as described in section 63-3502B(3) and (4), Idaho Code,37 for the six (6) months of July through December of the preceding cal-38 endar year, and for rate-regulated electric utilities, the amount of39 kilowatt-hours sold for the six (6) months of July through December of40 the preceding year for furnishing power for pumping water for irriga-41 tion or drainage purposes, as provided by section 63-3502C, Idaho Code.42 The rate-regulated electric utilities, rate-regulated affiliated gas43 companies, and rate-regulated gas companies shall also provide such44 information as shall be necessary for the state tax commission to comply45 with the requirements of section 63-405(4), Idaho Code, for any year in46 the applicable five (5) year period in which the filing of such infor-47 mation is required by that section. Upon examining and verifying such48 statement, the state tax commission shall compute the amount of the tax49 due for the period July through December of the preceding year, commenc-50

6 ing with 2026, using the rates provided in section 63-3502B(3) and (4),1 Idaho Code, and reduced as provided in section 63-3502C, Idaho Code, for2 rate-regulated electric utilities eligible for such exemption. Such3 tax shall be billed by the state tax commission to each rate-regulated4 electric utility, rate-regulated affiliated gas company, and rate-reg-5 ulated gas company no later than the first Monday of June and shall be6 due and payable to the state tax commission no later than June 20. Upon7 receipt of such tax payments, the state tax commission shall promptly8 pay to each county treasurer the proportionate share of such taxes due9 to the county as provided in this section, and the county treasurer10 shall pay such amounts to eligible taxing districts, units, and urban11 renewal agencies as also provided in this section.12 (2) Upon the calculation of taxes determined in this section, and By13 no later than the third first Monday of May July of each year, the state tax14 commission shall estimate the taxes that will be payable for the current15 calendar year by taxpayers subject to this section, using the information16 from the preceding year provided by the taxpayers in the April 15 state-17 ments required pursuant to subsection (1)(a) of this section, or by other18 information available to the state tax commission. The state tax commission19 shall then notify each county treasurer and county auditor of the amount of20 estimated taxes due to the county and each taxing district, unit, and urban21 renewal agency located within the county based on the proportions calculated22 pursuant to section 63-405(3) and (4), Idaho Code. Such tax shall be billed23 by the state tax commission to each rate-regulated electric utility company,24 rate-regulated affiliated gas company, and rate-regulated gas company no25 later than the fourth Monday of May and due and payable to the state tax com-26 mission no later than June 30. Upon receipt of such tax payments, the state27 tax commission shall promptly pay to each county treasurer the proportionate28 share of such taxes due to the county as provided in this section.29 (3) By no later than the fourth first Monday of July August each year,30 each county auditor shall notify each taxing district, unit, and urban re-31 newal agency of the estimated amount they will receive. By the fourth Monday32 of August, such amounts will be paid based on the calculations provided in33 subsection (2) of this section. Such estimated amount shall be treated as34 property tax revenue for the purposes of the certification required by sec-35 tion 63-803, Idaho Code, and the limitations provided by section 63-802,36 Idaho Code. Amounts received by each county will be distributed by the37 county auditor to each eligible taxing district, unit, and urban renewal38 agency in the same manner as property tax.39 (4) A new taxing district or revenue allocation area formed after Jan-40 uary 1, 2025, shall not be eligible for a tax distribution pursuant to this41 section.42 (5) If any taxing districts consolidate, the resulting district is en-43 titled to a tax distribution pursuant to this section equal to the sum of the44 tax distributions that would have been made to each district prior to consol-45 idation.46 (6) Any taxes levied pursuant to this section and not paid by June 30 the47 due dates provided in subsection (1) of this section shall become delinquent48 and a penalty of five percent (5%) thereof shall be imposed, together with49

7 interest at the rate of one percent (1%) per month from June 30 those dates1 until paid.2 (7) All taxes due and payable under this section shall be a lien on all3 property, real and personal, of the rate-regulated electric utility com-4 pany, rate-regulated affiliated gas company, or rate-regulated gas company5 as of June 30 of each year the due dates provided in subsection (1) of this6 section and shall be discharged only by the payment thereof. In any action to7 enforce payment of any delinquent taxes due under this section, the county8 pursuing such action shall be entitled to a judgment for the reasonable costs9 of prosecuting such action, as well as for the delinquent taxes, penalty, and10 interest.11 (8) If a rate-regulated electric utility, rate-regulated affiliated12 gas company, or rate-regulated gas company fails to file the statement of13 kilowatt-hours or therms sold in Idaho required pursuant to subsection (1)14 of this section, the state tax commission shall use the best available infor-15 mation to determine the kilowatt-hours or therms sold in Idaho.16 (9) There is hereby created in the state treasury the rate-regulated17 tax fund. The fund shall consist of all moneys received by the state tax com-18 mission pursuant to this section, which shall be deposited into the fund, and19 such other moneys that may be provided by legislative appropriation. Moneys20 in the fund are hereby continuously appropriated for disbursement to the ap-21 propriate county treasurer as provided in this section.22

SECTION 4. An emergency existing therefor, which emergency is hereby23 declared to exist, this act shall be in full force and effect on and after its24 passage and approval, and retroactively to January 1, 2026.25