NV Energy has sued in district court challenging the Nevada Tax Commission ruling that coal imported to generate electricity is subject to the state's sales tax.
The utility's primary subsidiaries, Nevada Power and Sierra Pacific Power, import tons of coal weekly to generate power at the Reid Gardner plant in the south and at Valmy in north-central Nevada. That coal has been taxed for years by the state as an imported product.
But NV Energy filed a petition in 2006 with the Tax Commission seeking a nearly $26 million refund in use taxes paid between April 2002 and October 2006.
NV Energy argued the coal is exempt because coal is a mineral and, under Nevada law, minerals are exempt from the sales and use tax because they are subject to a state mining tax.
An administrative law judge rejected the claim, saying the utilities weren't entitled to a refund. The tax commission upheld the decision in September.
The tax commission reasoned that, since the coal is generated outside the state of Nevada, it isn't subject to the net proceeds of mines tax and, therefore, isn't exempted from the sales and use tax.
In their appeal, NV Energy lawyers argue it is unconstitutional to treat minerals produced outside of Nevada differently than those produced in the state.
The utility asks an order directing the state to pay NV Energy back $29.5 million in taxes paid plus interest.
The state has not yet filed its response to the utility's suit.