Utah issued a private letter ruling stating that some future sales of electricity by a power company to a taxpayer would be exempt as sales of electricity produced from a new alternative energy source built after January 1, 2016. The taxpayer planned to construct a facility powered exclusively by electricity generated from alternative, renewable energy resources. The taxpayer entered into a renewable energy contract with the power company. Per Utah law, sales of electricity are exempt if they are made under a retail tariff adopted by the Public Service Commission only for purchase of electricity produced from a new alternative energy source built after January 1, 2016. The taxpayer’s proposed purchases would be made under such a tariff, and the agreement between the power company and taxpayer stated that the parties intend to fully satisfy the electricity needs of the taxpayer’s facility as soon as practicable using only new alternative energy sources built after January 1, 2016.
The private letter ruling stated that sales of electricity produced from future renewable resources that are “new alternative energy sources built after January 1, 2016” would be exempt, but sales of electricity produced from other sources would be taxable. In the case of bundled transactions where the power company is selling some electricity that qualifies for the exemption and some that does not, if the power company does not separately state the exempt portion on an invoice or similar document and is unable to identify the exempt portion from its books and records, the entire transaction would be subject to tax. (Private Letter Ruling, Opinion No. 18-001, Utah State Tax Commission, July 18, 2018, released October 2018)