Wyoming court to utility: Pay tax on power plant chemicals

Legal News

Wyoming generally favors low taxes and coal-fired electricity but one of its largest utilities will need to pay sales tax on pollution-control chemicals at four power plants in the state, the Wyoming Supreme Court ruled Thursday.

The justices sided with the state Board of Equalization — the panel that oversees state tax disputes — and against Portland, Oregon-based PacifiCorp.

The case with ties to a previous high court ruling on chemicals used in newspaper printing will likely apply to other power plants in Wyoming but not boost electricity rates for PacifiCorp customers.

"There is no impact to generation costs. The company has been paying the sales tax on these items, so the ruling means simply no change," said PacifiCorp spokesman David Eskelsen.

Board of Equalization officials didn't return messages Thursday seeking comment.

PacifiCorp uses chemicals to remove sulfur dioxide from flue gas at four coal-fired power plants in Wyoming. Wyoming exempts sales tax on ingredients used in manufacturing products.

PacifiCorp claimed the utility shouldn't have to pay sales tax on the chemicals or others used to purify water in the plants' boiler system because it manufactures electricity.

Attorneys for PacifiCorp pointed to a 1980 Wyoming Supreme Court ruling that chemicals used in newspaper printing besides ink were tax-exempt.

The justices on Thursday agreed the utility manufactures electricity — and disagreed with the Board of Equalization on that point. But they pointed out that the Legislature has changed the sales-tax law since 1980.

Under current law, the chemicals used in power plants can't be construed as tax-exempt ingredients used to make electricity, the justices ruled.