The Nevada Tax Commission on Tuesday rejected NV Energy's request that the state refund sales and use taxes paid on the coal that fuels two Nevada power plants.
The utility, formerly Sierra Pacific Power and Nevada Power, is expected to sue in district court to overturn the 5-2 decision.
The request seeks $14.4 million for coal used at the Reid Gardner Power Plant outside Las Vegas and $11.5 million for taxes paid on coal used at Valmy along Interstate 80 in Humboldt County - a total of $25.9 million from 2002-2006. All the coal is imported to Nevada.
Southern California Edison filed a similar request several years ago. That request, which sought $36 million in tax refunds for coal imported from Arizona, was also finally denied by the Tax Commission and was appealed to Carson District Court.
John Bartlett, representing NV Energy, argued the tax violates the Nevada Constitution, which exempts mineral and other mining production from the sales and use tax. He also argued that taxing imported coal violates the Commerce Clause of the U.S. Constitution because it treats material produced in Nevada differently than material from other states. The utility also said the majority of any refund would go to benefit ratepayers in Nevada.
Chief Deputy Attorney General Gina Sessions said the use tax is properly applied to imported coal. She said the exemption was designed to prevent double-taxing minerals extracted within the state that are subject to the net proceeds tax.
Commissioners Hank Vogler of Ely and John Marvel of Elko voted against the motion to deny a refund - as they did in the Southern California Edison case.