Tax Team Scores Major Victory for APS, Arizona's Largest Utility

Arizona Public Service Co. (APS)
February 21, 2006

Steptoe's Tax Group scored a major victory for Arizona's largest utility, Arizona Public Service Co. (APS), when the Arizona Court of Appeals issued a published opinion holding that utility customers' contributions in aid of construction (CIAC) cannot be included in the utility's original plant in service cost, which is the basis for calculating the utility's state tax liability.  Ariz. Dep't of Revenue v. Salt River Project Agric. Improvement & Power Dist., 2006 WL 133471, --- P.3d ---- (Ariz. App. Jan 19, 2006). 

In reversing the Arizona Tax Court, the Court of Appeals held that Arizona law required the state to follow the Federal Energy Regulatory Commission's uniform system of accounts, which requires exclusion of CIAC.   The ruling will save APS millions of dollars each year. 

APS is an electricity supplier to millions in the Southwest.