Death by Taxes: Gas Utilities Face a Crippling Disadvantage in Energy Marketing

Fortnightly Magazine - August 1995
This full article is only accessible by current license holders. Please login to view the full content.
Don't have a license yet? Click here to sign up for Public Utilities Fortnightly, and gain access to the entire Fortnightly article database online.

Genuine competition - with greater efficiency and bona fide service improvements - is not unwelcome at most utilities. But spurious competition, with inconsistencies among players in the rules of the game, is a cause of frustration for utilities and customers alike.

Regulation in the natural gas industry is evolving rapidly. And on the electric side, the current flurry of activity is likely to draw on recent gas industry experience and move even faster. Whether you call it deregulation or re-regulation, the trend is obvious. However, state and local tax

authorities may be unaccumstomed to the pace of regulatory change, or unfamiliar with the many inconsistencies that exist between existing tax policies and utility re-regulation intitiatives.

Among the many inconsistencies in public utility taxation policy, of chief concern are those taxes that can be labeled loosely as "sales taxes." Utility sales taxes are levied at the state, county, and city levels, and come in many forms: gross receipts taxes, sales taxes, franchise fees, regulatory fees, energy taxes, business and operating taxes, and various tax surcharges. Let's narrow the focus to three particular classes: 1) "external" taxes levied directly on utility revenues, such as a typical sales tax; 2) "internal" taxes embedded within rate design, such as a gross receipts tax; and 3) direct assessments based upon revenues and allocated on the basis of revenues in the rate design. Many utility customers are unaware of most of these taxes and how they are incorporated into the bills they pay. Not so with unregulated energy marketers. They are acutely aware of the many taxes associated with utility bills.

This full article is only accessible by current license holders. Please login to view the full content.
Don't have a license yet? Click here to sign up for Public Utilities Fortnightly, and gain access to the entire Fortnightly article database online.