The Arizona Supreme Court recently ruled in favor of San Diego Gas & Electric, clarifying that the law allows negative valuations when determining the cost of electric transmission property. However, the Court also emphasized that this negative valuation cannot cancel out the value of other property components, according to the Administrative Office of the Courts.
San Diego Gas & Electric reported a cash value of just over a million dollars for its Arizona property, far less than the Arizona Department of Revenue's valuation of over twenty-two million, due to negative depreciation. The Supreme Court agreed with San Diego Gas & Electric’s approach, allowing the negative valuation to reduce the property’s value. However, the Court ruled that this negative value cannot be used as a tax credit or offset other property valuations. The decision stated, "There is no language in the applicable statute, unlike in other provisions addressing centrally assessed property by ADOR, that would preclude a negative valuation," as stated by the Administrative Office of the Courts.
The Arizona Supreme Court ruled on San Diego Gas & Electric's 2020 property valuation of $1,019,474, which was disputed by the Arizona Department of Revenue due to unique depreciation. The decision offers important guidance on property tax assessments in the state, potentially affecting all companies subject to centrally assessed property taxes. Stakeholders in the energy sector and tax law are analyzing the ruling's impact on future valuations, as reported by the Administrative Office of the Courts.
