West Virginia Code of State Rules
Agency 110 - Tax
Title 110 - LEGISLATIVE RULE STATE TAX DEPARTMENT
Series 110-01M - Valuation Of Public Utility Property For Ad Valorem Property Tax Purposes
Section 110-1M-4 - Valuation of Operating Public Utility Property (excluding interstate commercial motor vehicle property)
Universal Citation: 110 WV Code of State Rules 110-1M-4
Current through Register Vol. XLI, No. 38, September 20, 2024
4.1. Unit method. -- The Tax Commissioner provides tentative assessments based on fair market value of operating property of public service corporations to be used as a guide by the Board of Public Works in establishing final assessed values for property tax purposes. In this regard the Tax Commissioner shall use the "Unit Rule" where applicable in furnishing tentative valuation estimates for the Board's consideration.
4.2. Generally accepted appraisal methods. -- In determining tentative assessments the Tax Commissioner shall consider, and use where applicable, three (3) generally accepted approaches to value:
(A) cost,
(B) income, and
(C) market data. Application of these
approaches shall recognize the impact of regulation on the value of utility
operating property where applicable.
4.2.1. Cost approach. B Recognizing that
public service corporations are predominantly cost regulated, when the cost
approach is used in the valuation process, original cost less applicable
depreciation shall be employed. In applying the cost approach, the Tax
Commissioner shall consider three (3) types of depreciation (a) physical
deterioration, (b) functional obsolescence, and (c) economic
obsolescence.
4.2.2. Income
approach. -- In developing income approach valuations, the Tax Commissioner
shall estimate capitalization rates considering the interrelationships of the
income to be capitalized and the capitalization rate. In this regard, net
operating income after taxes, but before interest on long-term debt shall be
given primary consideration as the point on the income stream to be
capitalized. The bands of investment technique shall be employed in estimating
appropriate capitalization rates.
4.2.3. Market data approach. -- Recognizing
that a sufficient number of sales of public service corporations do not occur
to enable application of the market data technique, the Tax Commissioner shall
consider the substitute stock and debt technique. The stock and debt technique
shall be used in instances where a utility class possesses actively traded
stocks and bonds that enable reasonable valuation estimates to be
made.
4.2.4. Correlations. -- Once
generated, the various estimates of value shall be correlated into a final
value estimate. The income approach value shall generally be given primary
consideration in the correlation process.
4.3. Classification of public utility and certain common carrier operating properties.
4.3.1. Electric utilities. -- Operating
property for electric utilities shall primarily include properties that are
considered by the Federal Energy Regulatory Commission (FERC) as part of the
rate base for rate making purposes. In determining which properties are
properly included as operating public utility property, the most recent FERC
Uniform System of Accounts prescribed for Electric Utilities shall be
used.
4.3.2. Gas utilities. --
Operating property for natural gas utilities shall primarily include properties
that are considered by the Federal Energy Regulatory Commission (FERC) as part
of the rate base for rate making purposes. In determining which properties are
properly included as operating public utility property, the most recent FERC
Uniform System of Accounts prescribed for Natural Gas Utilities shall be
used.
4.3.3. Gas pipeline
utilities. -- Operating property for natural gas utilities shall primarily
include properties that are considered by the Federal Energy Regulatory
Commission (FERC) as part of the rate base for rate making purposes. In
determining which properties are properly included as operating public utility
property, the most recent FERC Uniform System of Accounts prescribed for Gas
Pipeline Utilities shall be used.
4.3.4. Telephone companies. -- Operating
property for telephone carriers shall primarily include properties that are
considered by the Federal Communications Commission (FCC) as part of the rate
base for rate making purposes. In determining which properties are properly
included as operating public utility property, the most recent FCC Uniform
System of Accounts prescribed for Telephone Utilities shall be used.
4.3.5. Telegraph carriers. -- Operating
property for telegraph carriers shall primarily include properties that are
considered by the Federal Communications Commission (FCC) as part of the rate
base for rate making purposes. In determining which properties are properly
included as operating public utility property, the most recent FCC Uniform
System of Accounts prescribed for Wire-Telegraph and Ocean-Cable Carriers shall
be used.
4.3.6. Airline companies.
-- Operating property for air carriers shall primarily include properties that
are considered as operating property by the Department of Transportation. In
determining which properties are properly included as operating property, the
most recent Uniform System of Accounts and Reports for Certified Air Carriers
shall be used.
4.3.7. Interstate
railroads. -- Operating property for interstate railroads shall primarily
include properties that are considered as operating property by the Surface
Transportation Board. In determining which properties are properly included as
operating property, the most recent Uniform System of Accounts for Railroad
Companies shall be used.
4.3.8.
Intrastate railroads. -- Operating property for intrastate railroads shall
primarily include properties that are considered by the West Virginia Public
Service Commission as operating property. In determining which properties are
properly included as operating property, the most recent Uniform System of
Accounts for Railroad Companies as prescribed by the Surface Transportation
Board shall be used.
4.3.9. Water
utilities. -- Operating property for water utilities shall primarily include
properties that are considered by the Public Service Commission as part of the
rate base for rate making purposes. In determining which properties are
properly included as operating public utility property, water utilities shall
use the most recent Uniform System of Accounts of the National Association of
Regulatory Utility Commissioners for Class A and B, and Class C and D water
utilities.
4.3.10. Sewer utilities.
-- Operating property for sewer utilities shall primarily include properties
that are considered by the Public Service Commission as part of the rate base
for rate making purposes. In determining which properties are properly included
as operating public utility property, sewer utilities shall use the most recent
Uniform System of Accounts of the National Association of Regulatory Utility
Commissioners for Class A and B, and Class C and D sewer utilities.
4.3.11. Carline companies. -- Operating
property for carline companies shall include consideration of Rolling Stock
used in transportation of freight or passengers.
4.3.12. Underground gas storage companies. B
For public service corporations with underground gas storage and no other West
Virginia property, operating property shall consist of only the gas stored
underground.
4.3.13. Reorganization
of regulatory bodies. -- In the event that there should be a reorganization of
federal or state regulatory bodies, and any of the public service corporations
described herein would be required to report to an agency other than that
listed in the applicable subdivision or in the event that there should be any
other utilities considered taxable by the Board of Public Works, operating
property for the public service corporations shall include properties that
would be considered as operating by the appropriate state or federal regulatory
body in the prescribed Uniform System of Accounts.
4.3.14. Exceptions. -- Circumstances may
arise where properties may be considered operating by the appropriate
regulatory body but a portion of the property may be devoted to non-utility
use. The Tax Commissioner may in these instances where deemed appropriate
classify a portion of the property as non-operating and require that the
non-operating portion so determined be assessed by the county assessor. In
these instances adjustment to the public utility appraisal will be made to
remove from the West Virginia unit values a proportionate value for such
non-operating property.
Disclaimer: These regulations may not be the most recent version. West Virginia may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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