1 1999 TNT 204-24 PECO Energy's Testimony at Finance Hearing on Tax Issues of Electric Power Industry. (Hereinafter, "PECO Energy Testimony.")
2 Treas. Reg. 1.468A (c)(2). For a more detailed explanation, see Nuclear Energy Institute Policy Briefs, "Why Tax Treatment of Decommissioning Trust Funds Must Be Updated to Reflect New Business Conditions," http://www.nei.org/doc.asp?catnum=3&catid=221.
3 1999 TNT 204-21 Public Power Group's Testimony at Finance Panel Hearing on Tax Issues related to Electric Power Industry, Oct. 19, 1999. (Hereinafter "Public Power Testimony.")
4 Some taxpayers in fact may have set aside funds for decommissioning and claimed a tax deduction before passage of section 468A. See, Joint Committee on Taxation, "Federal Tax Issues Relating to Restructuring of the Electric Power Industry," Oct. 15, 1999, No. JCX-72-99 (Hereinafter "Joint Committee Report.") For that reason, federal and state regulators may occasionally deem it necessary to require utilities to designate funds for decommissioning purposes in excess of the deductible amounts allowed specifically under section 468A. Such funds are referred to as nonqualified funds, and are not eligible for the special rules that apply to qualified funds as per sec. 468A.
5 Treas. Reg. sec. 1.468A-2(b)
6 Treas. Reg. sec. 1.468A-3.
7 The concept of level funding is based upon the amount a plant owner is permitted to contribute for projected decommissioning costs yet to be collected, and the estimated remaining operating life of the plant. Also, the ruling determination may not exceed the amount necessary to fund a decommissioning cost percentage which is equal to the percentage of the useful life of the nuclear power plant for which the qualified fund is in effect. For example, in 1985, X Corporation places in service a nuclear power plant with an estimated useful life of 40 years. In 1995, when the estimated remaining useful life is 30 years, X Corporation establishes a qualified nuclear decommissioning fund. X Corporation's contribution to the fund is limited to the amount necessary to fund 75 percent (30/40) of the cost of decommissioning.
8 A separate qualified decommissioning fund is required for each taxpayer electing to be covered by section 468A and for each nuclear power plant in which an electing taxpayer possesses a qualifying interest. () The IRS issues a separate schedule of ruling amounts with respect to each decommissioning fund. Each fund must file a separate income tax return even if all funds-qualified and nonqualified-are established and maintained pursuant to the same single trust agreement and are pooled with the assets of the fund. See, Treas.Reg. section 1.468A(B)(ii).
9 Or, as otherwise required to be included in the taxpayer's income under IRC section 88.
10 Normally this interest is a qualifying interest. .
11 Treas. Reg. sec. 1.468A-6(2)(iii)
12 See Treas. Reg. sec. 1.468A-6(f). This determination is based upon whether or not the transferee files a request for a schedule of ruling amounts on or before the deemed payment deadline for the taxable year of the transferee in which the sale, exchange or other disposition occurred. If the transferee does not request a new schedule of ruling amounts, then the IRS will determine the transferee's ruling amount, with respect to the interest acquired, by prorating the transferor's schedule of ruling amounts over the taxable year, while making any required percentage adjustment if the transferor did not transfer its entire qualifying interest. See Treas. Reg. 1.468A-6(e)(2)(i)(B)(ii)(3) for an example of this section.
13 A liability determined for regulatory purposes will qualify as "fixed and quantifiable." See, Joint Committee Report, supra note 4.
14 Treas. Reg. sec. 1.461-4(d)(5).
15 Joint Committee Report, supra note 4.
16 Joint Committee Report, supra note 4.
17 Joint Committee Report, supra note 4.
18 Stranded Nuclear Waste - Implications of Electric Industry Deregulation for Nuclear Plant Retirements and Funding Decommissioning and Spent Fuel, Bruce Biewald and David White, Synapse Energy Economics, Inc., Jan. 15, 1999.
19 PECO Energy Testimony, supra, note 1.
20 Public Power Testimony, supra, note 3.
21 Energy Notes, Current Legal Issues in Energy and Public Utility Law; Thelen, Reid & Priest, Summer 1999.
22 PECO Energy Testimony, supra, note 1.
23 Treas. Reg. sec. 1.468A-2.