In late April, the Ohio General Assembly completed its work on a far-reaching utility reform measure, Sub. H.B. No. 15 (Klopfenstein). While this measure made broad changes affecting Ohio’s electrical utility statutes, it also made some significant changes with regards to Ohio’s utility tangible personal property tax (uTPP). The bill was sent to the Governor for signature on May 7, 2025.
The bill permits counties, cities, or townships to petition the Director of the Ohio Department of Development to designate a brownfield or former coal mine site as a priority investment area (PIA). Once authorized, any utility tangible personal property in the PIA dedicated to transporting natural gas or transmitting electricity will be exempt from uTPP taxation for five years. The exemption begins for the tax year after the uTPP is placed into service in an approved PIA, and applies for five years.
Though Ohio began to phase out its tangible personal property taxes on most businesses in 2005, the utility tangible personal property tax was not included in that set of tax reforms. Similar to real property in Ohio, uTPP is assessed on only a percentage of its true value. The bill lowers certain assessment percentages for new uTPP. (“New” is defined as being first subject to tax in or after 2027.) HB 15 makes the following changes to assessment percentages:
Electric Companies’ “new” TPP –
- Transmission and distribution TPP assessment percentages go from 85% on existing TPP to 25% on new TPP
- Energy conversion TPP assessment percentages go from 85% (existing) to 7% (new)
- New generation TPP and repowered or converted existing generation TPP: 7%
- Other TPP (including generation) assessment percentages remain at 24%
Rural Electric Companies’ “new” TPP –
- Transmission and distribution TPP assessment percentages go from 50% (existing) to 25% (new)
- Energy conversion TPP assessment percentages go from 50% (existing) to 7% (new)
- New generation TPP and repowered or converted existing generation TPP: 7%
- Other TPP (including generation) assessment percentages remain at 25%
Pipe-line Companies’ “new” TPP –
- All existing TPP remains at 88% assessment percentages while all new go to 25%
Energy Companies’ “new” TPP –
- Transmission and distribution TPP assessment percentages go from 85% (existing) to 25% (new)
- New generation TPP and repowered or converted existing generation TPP: 7%
- Energy conversion TPP assessment percentages go from 85% (existing) to 7% (new)
- Other existing generation TPP remains at a 24% assessment percentage
- Other nongeneration TPP remains at 85% assessment percentage
HB 15 reclassifies a subset of electric TPP, specifically energy storage systems (defined as TPP “that permits the storage of energy for future use as electricity”), as production equipment and qualifies such TPP, if new, for the reduced assessment percentages indicated above. This category of TPP has particular significance for energy companies, given that the bill includes it as a type of energy resource along with wind, solar, clean coal, or cogeneration.
The bill also repeals an obsolete statute regarding an Ohio coal tax credit for the public utility excise tax.
The supporters of this legislation state that these changes will result in improved affordability for consumers, increased electrical energy generation, and a more reliable grid. In addition, the bill is intended to help Ohio meet the growing electricity demand created by economic development and business growth within the state.
If you would like to further discuss the contents of this post, please reach out to Brian Perera, Robert Maier or any of our ZHF professionals.