Ruling: N.C. must return $7M to electricity co-op

The state Department of Revenue must refund more than $7 million in taxes to Cape Hatteras Electric Cooperative after a ruling in Dare County Superior Court.

The power provider to Hatteras Island has been paying sales and franchise taxes to the state under protest since about 2000, according to a news release issued last week by the cooperative.

In the November judg ment by Superior Court Judge Jerry Tillett, the release said, the court found that the cooperative and its members did not owe the taxes, and he ordered that more than $3.6 million in sales taxes and nearly $3.7 million in franchise taxes be refunded, along with accrued interest.

The c ollection of the sales tax for electric billings will discontinue immediately, the statement said.

There are 7,451 active accounts served by the power company, said Jim Kinghorn, the co-op's executive vice president and general manager. Of those, there are about 5,400 customers, some with more than one account.

When a sales tax refund is sent, the cooperative will refund it back to the customers, he said, although the details on how have not been determined.

Ending the franchise tax as well as that refund will reduce the cost of doing business.

"We're a nonprofit business, so both of these things end up being to the benefit of our customers, because we don't have shareholders," he said. "Our customers are our shareholders. They own the business."

I t is not known whether the state intends to appeal the ruling, Kinghorn said.

Catherine Kozak, (252) 441-1711, cate.kozak@pilotonline.com