Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2017
Sales and Use Tax Annotations
275.0000 GAS, ELECTRICITY AND WATER
(a) DELIVERY THROUGH MAINS, LINES OR PIPES
275.0171 Geothermal Energy. A natural resource development company owns geothermal resources. The company drills the wells and supplies the geothermal fluid to the power plant operator. This is accomplished in the following manner.
The fluid in the ground is brought to the surface through pipes and is delivered by the resource company to the power plant operator. The fluid, in the form of hot brine, remains in liquid form ("binary technology") and flows through a heat exchanger to heat and vaporize a "working fluid," typically hydrocarbon. The vaporized working fluid then turns the turbine generator which produces electricity.
The geothermal fluid that is used to vaporize the working fluid is passed to the resource company which injects it into the reservoir through another well.
The piping and pumps on the land of the resource company are owned by the resource company, and piping and pumps on the land of the power plant operator are owned by the power plant operator.
Under these circumstances, sales tax does not apply to charges made by the resource company to the power plant operator pursuant to provisions of section 6353. 2/10/81.