§ 480. Utility services.

(a)

The tax rate shall be at an amount equal to one and seven and one-half tenths percent (1.75%) of the gross income from the business activity upon every person engaging or continuing in the business of producing, providing, or furnishing utility services, including electricity, electric lights, current, power, gas (natural or artificial), or water to:

(1)

Consumers or ratepayers who reside within the City.

(2)

(Reserved)

(b)

Exclusion of certain sales of natural gas to a public utility. Notwithstanding the provisions of subsection (a) above, the gross income derived from the sale of natural gas to a public utility for the purpose of generation of power to be transferred by the utility to its ratepayers shall be considered a retail sale of tangible personal property subject to sections 460 and 465, and not considered gross income taxable under this section.

(c)

Resale utility services. Sales of utility services to another provider of the same utility services for the purpose of providing such utility services either to another properly licensed utility provider or directly to such purchaser's customers or ratepayers shall be exempt and deductible from the gross income subject to the tax imposed by this section, provided that the purchaser is properly licensed by all applicable taxing jurisdictions to engage or continue in the business of providing utility services, and further provided that the seller maintains proper documentation, in a manner similar to that for sales for resale, of such transactions.

(d)

Tax credit offset for franchise fees. There shall be allowed as an offset any franchise fees paid to the City pursuant to the terms of a franchise agreement. However, such offset shall not be allowed against taxes imposed by any other section of this chapter. Such offsets shall not be deemed in conflict with or violation of subsection 400(b).

(e)

The tax imposed by this section shall not apply to sales of utility services to a qualifying hospital, qualifying community health center or a qualifying health care organization, except when sold for use in activities resulting in gross income from unrelated business income as that term is defined in 26 U.S.C. section 512.

(f)

The tax imposed by this section shall not apply to sales of natural gas or liquefied petroleum gas used to propel a motor vehicle.

(g)

The tax imposed by this section shall not apply to:

(1)

Revenues received by a municipally owned utility in the form of fees charged to persons constructing residential, commercial or industrial developments or connecting residential, commercial or industrial developments to a municipal utility system or systems if the fees are segregated and used only for capital expansion, system enlargement or debt service of the utility system or systems.

(2)

Revenues received by any person or persons owning a utility system in the form of reimbursement or contribution compensation for property and equipment installed to provide utility access to, on or across the land of an actual utility consumer if the property and equipment become the property of the utility. This exclusion shall not exceed the value of such property and equipment.

(h)

The tax imposed by this section shall not apply to sales of alternative fuel as defined in A.R.S. § 1-215, to a used oil fuel burner who has received a Department of Environmental Quality permit to burn used oil or used oil fuel under A.R.S. § 49-426 or § 49-480.

(i)

The tax imposed by this section shall not apply to sales or other transfers of renewable energy credits or any other unit created to track energy derived from renewable energy resources. For the purposes of this paragraph, "renewable energy credit" means a unit created administratively by the corporation commission or governing body of a public power utility to track kilowatt hours of electricity derived from a renewable energy resource or the kilowatt hour equivalent of conventional energy resources displaced by distributed renewable energy resources.

(j)

The tax imposed by this section shall not apply to the portion of gross proceeds of sales or gross income attributable to transfers of electricity by any retail electric customer owning a solar photovoltaic energy generating system to an electric distribution system, if the electricity transferred is generated by the customer's system.

(Ord. No. 2272, § 16, 11-27-89; Ord. No. 2728, § 16, 12-19-94; Ord. No. 2789, § 18, 6-5-95; Ord. No. 2967, § 8, 11-18-96; Ord. No. 3140, § 1(10), 5-18-98; Ord. No. 3569, § 18, 5-26-04; Ord. No. 4103, § 5, 7-1-13; Ord. No. 4374, § 19, 11-26-18, eff. 2-1-19)

Editor's note

Section 9 of Ord. No. 4103 provides that the amendment contained in Section 5 is retroactively effective to January 1, 2007.
Ord. No. 3569, § 21(14), adopted May 26, 2004, provided that with respect to utility services, Section 480, Appendix C the increased tax rate shall apply, in the case of a single utility payment to gross income received from all utility contracts executed on or after July 1, 2004, but in the case of periodic or multiple payments, the increased tax rate shall apply to gross income received on or after July 1, 2004, regardless of when the utility contract was executed.