By its first assignment of error Duke contends that the Property Tax Commission committed reversible error by failing to shift the burden of proof to Guilford County after Duke introduced competent, material and substantial evidence of an inequitable difference between the level of assessment of Duke’s system property and the level of assessment of the property of other Guilford County taxpayers. We agree.
*496At the first hearing before the Property Tax Commission in April, 1984, Duke presented evidence through its expert witness, Dr. Manson, and his real property sales/assessment ratio study to the effect that Guilford County had assessed real property at 80.12 percent of fair market value on 1 January 1983. Duke then made a motion that the Commission shift the burden of proof to Guilford County with regard to both real and personal property. Duke contended that its showing of an inequitable difference with respect to real property rebutted any presumption of correctness afforded to the county’s appraisal and tax procedures. The Commission denied the motion and Duke proceeded to introduce additional evidence that Guilford County had assessed both real and personal property at less than 85 percent.
It is a well settled principle of law in this State that ad valo-rem tax assessments are presumed correct. In re Appeal of Amp, Inc., 287 N.C. 547, 215 S.E. 2d 752 (1975). However, this presumption of correctness is only one of fact and therefore, it is rebutta-ble. Id.
In this State all tangible property (both real and personal) subject to ad valorem taxation must be appraised and assessed at its true value (market value) in money. G.S. 105-283 and 105-284. The property of “public service companies” (defined in G.S. 105-333(14) to include electric power companies) is centrally assessed for ad valorem tax purposes by the North Carolina Department of Revenue. G.S. 105-288. The department annually values the public service companies’ system property in accordance with G.S. 105-335(b)(1) and allocates the valuations of that property among the ad valorem taxing jurisdictions in this State. G.S. 105-338 and 105-341. All real and personal property subject to ad valorem taxation other than public service company property is appraised and assessed locally by each county. Locally assessed real property is reappraised for assessment purposes every eight years, while locally assessed personal property is reappraised annually. G.S. 105-285 through -287. As a result of this statutory scheme and the effects of inflation and appreciation, the ratio of assessed value of locally assessed real property to its true market value diminishes during each eight-year period until at reappraisal the ratio is restored to 100 percent. In contrast, public service companies’ system property (both real and personal) is maintained through annual reappraisal at 100 percent every year.
*497In order to ameliorate this statutorily created inequity as to the appraisal of real property, our legislature enacted G.S. 105-342(c) which provides in pertinent part that:
(1) In the year in which a general reappraisal of real property is required to be conducted in a county under the provisions of G.S. 105-286(a), and in the third and seventh years following the effective date of a county’s last general reappraisal of real property, any public service company whose property is subject to appraisal under this Article may petition the board of county commissioners in writing for a reduction in the assessment of the public service company’s property by the county on the ground that there exists an inequitable difference between the level of assessment of locally appraised property and that of the public service company’s property by the Department of Revenue. The request for reduction shall be filed with the board of commissioners not later than April 1 of the year for which it is made. The request shall set forth with particularity the alleged inequitable difference in levels of appraisal and shall include any sales/assessment ratio studies or other appraisal information which the public service company desires to be considered by the board of commissioners. . . .
The quoted language, part of G.S. 105-342(c), was repealed by Session Laws 1985, c. 601, ss. 4 and 5 effective 1 January 1987 but applies here.
An “inequitable difference” is defined as a difference in the level of appraisals of fifteen percent or more. G.S. 105-342(c)(4). The parties here stipulated that in 1983 Duke’s system property was assessed at 100 percent of fair market value. Duke contends that by introducing evidence that locally assessed real property in Guilford County was appraised, as of 1 January 1983, at 80.12 percent of fair market value, the burden of proof should shift to Guilford County to establish the level at which Guilford appraises both locally assessed real and personal property. We agree.
Duke relies primarily on Clinchfield Railroad Company v. Lynch, 700 F. 2d 126 (4th Cir. 1983) (Clinchfield I) and Clinchfield Railroad Company v. Lynch, 784 F. 2d 545 (4th Cir. 1986) (Clinch-field II). We believe that the logic of these cases should control here. In Clinchfield I railroads operating in North Carolina *498brought suit against various state officials and counties alleging discriminatory taxation of real and personal property in violation of Section 306 of the Railroad Revitalization and Regulatory Reform Act of 1976 (“the 4-R Act”), 49 U.S.C. Section 11503. The 4-R Act was enacted to eliminate property tax discrimination by the states against the railroads. Section 306 is directed at both real and personal property taxation and prescribes certain remedies to correct inequities in both categories. Section 306 requires that assessments imposed on railroad property be compared with assessments imposed on other commercial or industrial property.
In answering the questions before it, the court in Clinchfield I considered where the burden of proof should fall once the taxpayer demonstrates by a sales/assessment ratio study that discriminatory treatment existed with respect to real property.
We are satisfied that once North Carolina was shown to have practiced discrimination with regard to real property under its statute which applies a single undifferentiated assessment to both real property and personal property. [G.S. 105-333 through -341] the state assumed the burden of establishing facts sufficient both to warrant a different conclusion with respect to personal property and to enable the district court to fashion a decree that would not frustrate efforts to alleviate the discrimination already proven as to real property.
. . . Under North Carolina law, the Property Tax Commission is obligated to order a reduction in the assessment of a railroad’s property once the railroad establishes an “inequitable difference” between its assessment and that of taxpayers whose property is assessed locally by county authorities. N.C. Gen. Stat. Section 105-342(c)(5). Proof of that “inequitable difference” (defined, for state equalization purposes, as a difference of 15 percent, Section 105-342(c)(4)), rebuts the presumption of correctness which an appraisal enjoys, e.g., In re Appeal of Amp, Inc., 287 N.C. 547, 215 S.E. 2d 752 (1975), and can be supplied, under Section 105-342(c)(5), by the selfsame sales-assessment ratio study favored by Section 306(2)(e).
700 F. 2d at 131.
In Clinchfield II, the court considered the narrow issue of whether the named counties discriminated in the assessment and *499taxation of railroad personalty and if so, to what extent. In so doing, the court explained its holding in Clinchfield I:
First, [in Clinchfield I] we held that a sales-assessment ratio study alone was insufficient under Section 306 to prove discrimination with respect to both real and personal property. ... We held, however, that a railroad can make out a prima facie case of discrimination for all property through a sales-assessment ratio study. The burden then shifts to the State and counties to establish facts sufficient to show both higher ratios of assessment for personal property and the breakdown by percentage of the respective worths of the railroads’ real and personal property.
784 F. 2d at 548. Further, the court in Clinchfield II rejected the counties’ argument that the burden of proof should not have shifted since North Carolina law provides that ad valorem tax assessments are presumed to be correct; a presumption that is rebutted only by evidence of arbitrary or illegal acts by tax officials and substantial overassessment or underassessment. Id. at 549. See In re Appeal of Amp, Inc., supra. The counties in Clinchfield II argued that once they presented evidence of regularity, North Carolina law presumes 100 percent assessment and requires the taxpayer to come forward with evidence of arbitrary or illegal acts and substantial disparity in assessment levels. The Fourth Circuit answered the counties’ contentions by reiterating its earlier holding in Clinchfield I, that once North Carolina was shown to have discriminated with respect to real property assessment the burden shifted to the State and counties to establish facts sufficient to warrant a different conclusion with respect to personal property. 784 F. 2d at 549 (quoting Clinchfield I, 700 F. 2d at 131).
G.S. 105-345.2 is the controlling judicial review statute for appeals from the Property Tax Commission. In re McElwee, 304 N.C. 68, 283 S.E. 2d 115 (1981). Subsection (b) of the statute provides in pertinent part that:
(b) The court may affirm or reverse the decision of the Commission, declare the same null and void, or remand the case for further proceedings; or it may reverse or modify the decision if the substantial rights of the appellants have been prejudiced because the Commission’s findings, inferences, conclusions or decisions are:
*500(1) In violation of constitutional provisions; or
(2) In excess of statutory authority or jurisdiction of the Commission; or
(3) Made upon unlawful proceedings; or
(4) Affected by other errors of law; or
(5) Unsupported by competent, material and substantial evidence in view of the entire record as submitted; or
(6) Arbitrary or capricious.
(c) In making the foregoing determinations, the court shall review the whole record or such portions thereof as may be cited by any party and due account shall be taken of the rule of prejudicial error. . . .
Duke introduced competent, material and substantial evidence by its sales/assessment ratio study that Guilford County appraised locally assessed real property at 80.12 percent of true market value. Under the logic of Clinchfield I and II, this established a prima facie case of an “inequitable difference” sufficient to shift the burden to the county to rebut Duke’s evidence as to real property and to come forward with evidence as to the assessment levels for personal property. In denying Duke’s motion, the Commission refused to shift the burden and based its conclusion of law, that the overall assessment of property in Guilford County as of 1 January 1983 was 85.19 percent, on its opinion that Duke’s evidence was insufficient to carry the burden of showing that the county failed to assess personal property at market value. We believe that the denial of Duke’s motion to shift the burden of proof and the Commission’s opinion that Duke carried the burden with respect to personal property constitutes an error of law as set forth in G.S. 105-345.2(b)(4).
Guilford’s argument that the Clinchfield cases do not apply because they concern a federal statute (the 4-R Act) must be rejected. As explained in Clinchfield I, the federal statute, specifically Section 306(2)(d), provides that the burden of proof with respect to determining assessed value and true market value “shall be that declared by the applicable State law.” 700 F. 2d at 131. In determining the burden of proof under Section 306 the *501Fourth Circuit Court was required to interpret and apply North Carolina law as to the burden of proof and did so under the provisions of G.S. 105-342(c). Their interpretation was correct.
Additionally, in opposing the application of the Clinchfield cases, Guilford County argues three reasons that the sales/assessment ratio study is not the “clear and exclusive” means for a public service company to establish an “inequitable difference.” First, they note that the federal district court in Clinchfield Railroad Company v. Lynch, 527 F. Supp. 784 (E.D.N.C. 1981) approved of their argument that a study which excludes personal property is incomplete. However, the district court was bound by the provisions of Section 306 which clearly expressed Congress’ preference for proof of discrimination by sales/assessment ratio studies. Second, the provisions of G.S. 105-342(c)(l) require the inclusion of “sales/assessment ratio studies or other appraisal information. . . .” [Emphasis added.] Third, G.S. 105-342(d) provides that at a hearing under this Section the Commission shall hear all of the evidence offered by the taxpayers. In light of these factors, we are not persuaded by Guilford’s argument here.
First, as we have stated in relying on the Clinchfield cases, by introducing a sales/assessment ratio study showing real property assessment at 80.12 percent of true market value, Duke made out a prima facie case of an “inequitable difference.” As Clinchfield II points out, a sales/assessment ratio study alone is insufficient to prove discrimination. It is only sufficient to make out a prima facie case and shift the burden of proof from the taxpayer to the State and counties. 784 F. 2d at 548. Second, G.S. 105-342(c) was enacted to alleviate the inequity created by our statutory scheme of appraising locally assessed real property every eighth year and appraising centrally assessed public service companies’ system property (real and personal) every year. The inequity lies with real property appraisal and assessment. By showing an “inequitable difference” with respect to real property, the public service company has demonstrated the inequity which the statute seeks to correct. Therefore, we believe our decision is consistent with the legislative purpose of enacting G.S. 105-342(c).
Accordingly, we reverse the Commission’s final decision and remand the case for further proceedings consistent with this opinion. Since we have disposed of this case on the basis of appellants’ *502first assignment of error we need not reach appellants’ second and third assignments.
Reversed and remanded.
Judges Arnold and Parker concur.