In his article, "Why Taxes Don't Distort Emissions Trading" (Dec. 1, 1994, p. 37), Michael Thomas suggests that utilities should flow through the proceeds of emission allowance sales to ratepayers...
fact, the public record reveals an episodic pattern of allowance sales.
Virtually all Phase 1 compliance activities are now complete. Nevertheless, any tax anomaly in allowance trading should be corrected so that Phase 2 compliance planning can proceed on a rational basis. If our proposal is implemented, the tax code will no longer penalize utilities that pursue an overcontrol strategy. Owners of affected facilities will then turn increasingly to the allowance market to comply with the Clean Air Act.
The author has been an active participant in Clean Air Act legislative and regulatory issues. He is the chief financial officer of Allegheny Power System, Inc., whose subsidiaries (Monongahela Power Company, The Potomac Edison Company and West Penn Power Company) are among the utilities most affected by the Clean Air Act Amendments of 1990. He also serves as chairman of the Allowance Pooling Group, comprised of the utilities who held the 3.5 million extension and bonus allowances enacted by the Act.
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