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Energy Newsletter

March 31, 2000

Schimminger's Bill to Eliminate GRT
42 Co-sponsors sign on

Assemblyman Robin Schimminger, (D-Erie County) Chairman of the Committee on Economic Development, Job Creation, Commerce and Industry, has proposed legislation (A.10364) that will eliminate the Gross Receipts Tax on electricity and natural gas in two years. The bill would cut the GRT in half starting in 2001 and completely eliminate the GRT in 2002.

The specifics of the bill include the phase out of the two components of the GRT. The GRT is currently at 3.25%. This is the combination of 186 of .75% and 186-a of 2.5% for a total of 3.25. The bill calls for the reduction of 186-a to .875% as of 1/1/01 and its complete elimination on 1/1/02. 186 currently at .75% will be reduced to 0% effective 1/1/02. This reduces the GRT (combined 186 and 186-a) to 1.625 on 1/1/01 and eliminates it completely on 1/1/02. The elimination of 186 on 1/1/02 switches the tax structure of utilities form Article 9 to Article 9-A (corporate franchise tax).

The Gas Import Privilege Tax would also be eliminated under the bill. 189, currently 4.25%, would be reduced to 3.25% on 7/1/00, further reduced to 1.625% on 1/1/01, and eliminated completely on 1/1/02.

The bill also provides for a fully refundable Article 9-A tax credit for industrial and manufacturing businesses equal to the amount of GRT and/or GIPT paid retroactive to 1/1/00.

U.S. Senator Schumer Supports Pataki's GRT Tax Cut

On March 29th US Senator Charles Schumer said he would solicit the fellow Democrats in the Legislature in an effort to generate support for Governor Pataki's tax cut on the Gross Receipts Tax. Schumer stated that Pataki had enlisted his support.

Pataki's proposal eliminates the GRT over five years. The Governor's plan also includes a tax credit for manufacturers retro to January 1, 2000 in the amount of tax paid under the GRT. When fully implemented the GRT repeal will save taxpayers $500 million per year.

New York Power Authority Sells Off its Nuclear Plants

Entergy wins over Dominion NYPA's board of trustees approved the sale of the James A. FitzPatrick and Indian Point 3 nuclear power plants at its March 28th meeting in New York City. The wining bidder was Entergy Corp. of New Orleans at a cost of $967 million. Entergy will make an initial payment of $50 million for the plants and seven annual installments of $83.7 million. Other provisions of the purchase include:

Also, Entergy agrees to continue the employment of the 1,700 staff members at the plants, open a regional office in New York State, and continue to supply NYPA with all of the output from Indian Point 3 until 2004.

Entergy also agrees to provide NYPA with shares of FitzPatrick output starting this year at 46% and declining to 31% in 2004.

The sale is still subject to approval by several regulatory agencies including the federal Nuclear Regulatory Commission.

Last Round of Allocations Under "Power for Jobs" Approved

On March 28th the trustees of the New York Power Authority approved of the final allocations of power under the original "Power for Jobs"program. The program was designed to provide low cost power to businesses and not-for-profits who will either create and/or retain jobs in New York State.

The latest power allocation totals 20,405 kilowatts. It was awarded to 19 employers. This allocation exhausts the 450 Megawatts allocated under the program.

Business Council's E-Advocacy for GRT Repeal - Up and Running
40 local chambers join Council's E-Advocacy effort on GRT repeal

Forty chambers of commerce across the state are joining The Business Council's electronic-advocacy effort designed to encourage repeal of the state's gross receipts tax on energy.

These chambers are urging their members to participate in the campaign, and they are being urged to put links to the e-advocacy web site on their own home pages, said Ken Pokalsky, who is coordinating the effort for The Business Council.

In the first few days of operation, some 1500 letters have been generated, Pokalsky noted. Governor Pataki, Senate Majority Leader Joseph Bruno, Assemblyman Robin Schimminger (D-Erie), Assembly Minority Leader John Faso, and others have urged repeal of the energy GRT this year.

Assembly Passes bill Prohibiting Con Ed from Recovering Costs over Indian Point 3

Without recourse to investigations being conducted by the Nuclear Regulatory Commission (NRC) and the Public Service Commission (PSC), the bill (A.10096) prohibits Consolidated Edison from passing on to its ratepayers the cost incurred in its operations due to the recent leak at Indian Point 3 nuclear power plant. The Assembly passed the bill by a vote of 137 - 10 on March 27th.

The Business Council issued a memo against the bill for an obvious reason - the legislation usurps the authority of the Public Service Commission in regards to utility rates and makes a conclusion regarding any plant problems at Indian Point 3 without the facts as ascertained by the Nuclear Regulatory Commission.

The bill was sent to the Senate Energy Committee on March 27th. Senator Vellela is the sponsor of the companion bill in the State Senate (S.7094).

On Thursday, March 30th, the Chair of the Public Service Commission, Maureen Helmer wrote to the State Legislature informing them that the PSC has been looking into the Indian Point 3 power outage. She stressed that the PSC has determined that there is sufficient reason for them to proceed with a prudence investigation. She also stated that she doubts the legality of the Con Ed bill or its ability to stand up in court if challenged by the utility. In the past such pieces of legislation have been successfully challenged by utilities. The proper venue for rate making is with the PSC not the Legislature, indicated Helmer.

Public Service Commission

The Public Service Commission met in New York City on Wednesday, March 15th. A number of topics were discussed and reports made public including: