Cogeneration Facilities Bill to Governor

SF 2373, the Cogeneration Facilities bill, is on its way to the Governor.  The bill was written to implement the recommendations of the Utility Replacement Tax Task Force. The Task Force’s role is to study issues related to the taxation of electrical power utilities and provide recommendations. The Task Force developed a method of fairly taxing an Archer Daniels Midland (ADM) cogeneration facility in the city of Clinton.  Under current law, a self-generating facility is subject to local property taxes if the facility generates electricity solely for its own purpose. The Clinton ADM facility, however, also provides power to an adjacent plant, changing its status from a self-generating facility to a cogeneration facility, and subjecting it to the state’s replacement tax. SF 2373 re-defines a cogeneration facility, allowing the Clinton ADM plant to be locally assessed and avoid double taxation. City officials had estimated that Clinton would receive $4.4 million less in tax revenues within 10 years if the law remained unchanged. The bill takes effect upon enactment and applies retroactively to tax years beginning on or after January 1, 2010.