Energy Replacement Generation Tax Exemption

Summary

Iowa imposes a replacement generation tax of $0.0006 per kilowatt-hour (kWh) on various forms of electricity generated within the state. This tax is imposed in lieu of a property tax on generation facilities.

Under the Energy Replacement Generation Tax Exemption, the following facilities are exempt from the replacement tax:

• All energy generated by methane gas conversion property to the extent the property is used in connection or conjunction with a publicly-owned sanitary landfill or used to collect waste that would otherwise be collected by or deposited with a publicly-owned sanitary landfill,
• Wind energy conversion property that is eligible for a tax credit or that is subject to the special valuation of wind energy conversion property, and
• Facilities owned by or leased to a state university or university of science and technology, to the extent electricity generated by such facilities is consumed exclusively by such state university or university of science and technology,
  
• Self-generators with on-site facilities. In order to qualify for the exemption, self-generators must wholly own or lease the facility in question and produce electricity solely for their own consumption, except for inadvertent unscheduled deliveries to their electric utility. However, facilities that do not consume all energy on-site are not required to pay the replacement tax on energy that is used to operate the facility.

In addition, large hydroelectric generators (100 megawatts or more) pay a reduced generation tax equivalent to $0.000001847 per kWh.