Company gets early win in battle that could cost state $145 million

By Cy Ryan

Thursday, May 26, 2011 | 1:54 p.m.

CARSON CITY – Southern California Edison has won a preliminary round in its legal battle to collect more than $35 million from Nevada for refunds paid on the sales and use tax assessed on coal.

If Edison wins, the state may face $145 million in refunds since other power companies are pursuing the same claims from the state.

That could leave a bigger hole in the already strained Nevada budget.

The Nevada Supreme Court ruled Thursday that Southern California Edison has the right to present new evidence in its district court suit rather than be restricted to the administrative record before the Nevada Tax Commission. The case now returns to district court.

Chris Nielsen, interim director of the tax commission, said the total refund the state would have to pay would be $145 million if it loses. That includes other power companies that are seeking the same refund as Southern California Edison, as well as 6 percent interest.

Southern California Edison initially filed refund claims for $36 million in the sales and use tax it paid on the coal slurry piped into Nevada from Arizona to be used at its plant in Southern Nevada.

The tax commission initially granted the refund, but the Supreme Court voided that decision on grounds the commission met in an illegal closed door meeting to make its ruling.

The case went back to the commission, which then voted to deny the petition for the refund. Edison filed suit, but the issue became whether the district court could only accept the administrative record developed before the Tax Commission or if Edison could present new evidence to the court.

The court said the Nevada Tax Department changed its position when advising those seeking refunds from the sales and use tax.

Attorney Josh Hicks said the Legislature created a special $30 million fund to pay Edison if the state lost, but he said that money was spent in the 2008 special legislative session to plug holes in the state’s budget.