Ruling 90-2

Utility Sales Tax

X Company is a joint venture of A, a wholly-owned subsidiary of B and C. X Company owns and operates the X Cogeneration Facility ["Facility"] located on B's property in Connecticut. The Facility consists of a combustion turbine- generator, two pressure heat recovery steam generators ["HRSG"], an extraction/condensing steam turbine generator and three natural gas supplementary fired package boilers. The steam from the HRSGs and the extracted steam are used in the absorption chillers for heating and cooling loads at B and the Capitol District Heating and Cooling System of Energy Network Inc. ["ENI"]. The net electric power production capacity of the Facility is 56 MW of which 45 MW is sold to a Power Company and up to 11 MW is for B's use. Power Company delivers the electricity to consumers via its transmission and distribution system. The Facility's primary energy source is natural gas.

Section 12-412 of the Connecticut General Statutes, as modified by section 12 of Public Act No. 89-251, exempts from the sales tax:

The sale, furnishing or service of gas, water, steam or electricity for use directly in the furnishing of gas, water, steam or electricity delivered to consumers through mains, lines or pipes.

In making our determination, we have been guided by the legislative history pertaining to section 12(E) of Public Act No. 89-251. Of critical importance are the remarks of Representative David Lavine regarding the above statutory amendment. (See Minutes of the House of Representatives, May 26, 1989 pp. 618, 634-36.)

It is hereby ruled that X Company's purchase of gas to be used directly in the furnishing of steam and/or electricity delivered to consumers through mains, lines or pipes is exempt from Connecticut sales and use tax pursuant to section 12-412(3)(E) of the Connecticut General Statutes; as amended by Public Act No. 89-251.


January 9, 1990