Energy Newsletter - May 10, 2000
- BUDGET PASSED - GRT Phase Down Included
- Other Energy Taxes in the Budget
- Power For Jobs - Phase Four
- E-Advocacy Final Report
- SO2 Bill passes Senate
Gross Receipts Tax Breakdown
- Repeal of Section 186 (0.75% Utility Gross Receipts Tax on energy) effective 1/1/0; thus resulting in;
- Imposition of Article 9-A Corporation Franchise Tax (income-based) on energy utilities retroactive to 1/1/0;
- Phase-out of Section 186-a (2.5% Utility Gross Receipts Tax on energy) on the transmission, transportation, and delivery (TTD) of electricity and gas for commercial customers beginning 2.45% on 1/1/1, 1.8% on 1/1/2, 1.125 on 1/1/3, 0.53125% on 1/1/4, and reaching 0% on 1/1/5;
- Phase down of Section 186-a (2.5% Utility Gross Receipts Tax on energy) on the transmission, transportation and delivery (TTD) of electricity and gas for residential customers beginning 2.45 % on 1/1/1, 2.4% on 1/1/2, 2.25% on 1/1/3, 2.125 on 1/1/4, and reaching and holding at 2% on 1/1/5;
- Phase out of Section 186-a (2.5% Utility Gross Receipts Tax on energy) other than TTD (essentially the commodity) of electricity and gas as follows: 2.1% on 1/1/0, 2.0% on 1/1/1, 1.9% on 1/1/2, 0.85% on 1/1/3, 0.4% on 1/1/4 and 0% on 1/1/5.
- Phase out of Section 189 (Gas Importation Privilege Tax on the presumed well-head price of natural gas purchased out of State and imported for use within New York State) as follows: 2.1% on 1/1/0, 2.0% on 1/1/1, 1.9% on 1/1/2, 0.85% on 1/1/3, 0.4% on 1/1/4, and 0% on 1/1/5. This essentially matches the phase out on section 186-a for the commodity.
- Creation of an Article 9-A (and Article 22) refundable credit for any Section 186, 186-a, and 189 taxes contained within gas and electricity purchase prices paid (and to be paid) by industrial and manufacturing businesses since 1/1/0.
The implementation of a sales tax on the transmission, transportation, and distribution (TTD) of unbundled energy (electricity and natural gas) as of 4/1/0 by administrative interpretation is phased out legislatively along the following schedule;
- 25% on 9/1/0
- 50% on 9/1/1
- 75% on 9/1/2
- 100% on 9/1/3
Also, a Compensating Use Tax (aka "use" tax) is created on out-of-state purchased energy (natural gas and electricity) for use in New York State as of 6/1/0. This would impose a use tax equal to the State sales tax (4%) and the prevailing local tax rate (2% to 4.5%) on such energy purchases equal to their local sales tax.
In budget bill A.11006, Part KK (pages 160-167) to amend the Public Authorities Law (as amended in chapter 316 of the laws of 1997 and chapter 386 of the laws of 1998), the new "Power for Jobs" program is explained.
The budget provides an outline for funding three hundred megawatts of power. Half of the power is to be supplied by the Fitzpatrick nuclear project. The other half of the power will be secured for the program through "a competitive procurement process" from other providers of electricity.
Up to 75 megawatts of this power will be dedicated to small businesses and not-for-profits.
The power will be allocated in three phases in increments of 100 megawatts. Allocations will take place prior to October 1, 2000, February 1, 2001 and July 1, 2001.
The funding for the program is equally split between the New York Power Authority (NYPA) and the recovery of the cost of power through 186-a (Gross Receipts Tax). This is also explained as a "reduction of general fund revenues" because it is GRT tax that is not realized by the State.
The program insures "written notification to each recipient of power allocated during the first phase of the program".
Also, "The board may prescribe a simplified form and content for applications submitted by recipients of power allocated during the first phase of the program who apply for allocations available during the fourth phase of the program.
The Business Council's e-advocacy effort was concluded on Wednesday, May 3rd. The effort produced 24,736 letters from 1,359 participants advocating the repeal of the gross receipts tax. The tax cut was included in the budget that was passed by the Senate and Assembly on May 5th .
Restrictions on SO2 Allowance Trades - The State Senate gave final approval this week to legislation that would restrict the ability of utilities to sell SO2 allowances under Title IV of the federal Clean Air Act. The bill passed the Assembly on March 13th. It will now go to Governor Pataki, who is expected to approve it.
Specifically, the bill (S.4917-C (Marcellino)/A.9090 (Brodsky) requires the Public Service Commission to penalize a utility an amount equal to any proceeds from SO2 allowance sales to utilities in twelve specified states - New Jersey, Pennsylvania, Maryland, Delaware, Virginia, North Carolina, Tennessee, West Virginia, Ohio, Michigan, Illinois and Wisconsin.
The Business Council opposes this legislation, and will be recommending a gubernatorial veto.