Letter to Brad Race — Business Council advocates Power For Jobs
to Governor
January 26, 2000
Mr. Bradford Race
Secretary to the Governor
Executive Chamber
State Capitol, Room 207
Albany, New York 12224
Dear Brad:
RE: Power for Jobs
This letter is written relative to the expansion of the Power for Jobs program and the gross receipts tax credit within the Governor's 2000-2001 Executive Budget. As you know, Governor Pataki has proposed wide-sweeping reforms on energy that will impact economic development, commerce and the taxation of energy companies for years to come. These are bold, fresh steps and we appreciate this opportunity to offer our input on the Governor's plan.
The Business Council was perhaps the strongest proponent of the original Power for Jobs legislation in 1997. Power for Jobs was created through a collaborative effort with input from the manufacturing community, small businesses, not-for-profits and all of the New York based utilities. We laud the Governor's proposal to expand this highly successful program for upstate New York.
Power for Jobs is carefully balanced on the clear understanding that investor owned utilities delivering electricity to qualifying customers do not incur any losses themselves. This issue was debated between the Assembly and the Senate during the conference committee that produced the Power for Jobs legislation later signed into law. Power for Jobs correctly assures that utilities, while having a certain portion of their customer load displaced by the program, do not face a state mandated loss of revenue. Utilities forgo selling electricity to their customers but recover this loss through a credit against gross receipts taxes. We are concerned that a fifty percent credit, as the executive budget recommends, translates into more "stranded costs" that our investor owned utilities - and their shareholders - would be forced to absorb.
To change the credit provision under Power for Jobs now would mean disrupting an equitable program that has retained or created over 250,000 jobs across New York. Some energy utilities have absorbed billions of dollars in stranded costs to facilitate the move to a competitive marketplace. Estimates of additional costs under a Power for Jobs "half credit" scenario are extremely high. We cannot afford to place our New York based utilities at a disadvantage as they begin to compete in an open marketplace with other energy companies from across the country and around the globe.
While energy prices are still above the national average, we have seen rates decline steadily across New York during the past three years. This is attributable to the leadership and sound policies of the Governor, former PSC Chairman John O'Mara and current PSC Chairman Maureen Helmer. Additional power under Power for Jobs is an integral step in the continued recovery of the upstate economy and in the further transition to competitive energy markets. However, relief for energy customers should not come at the expense of New York's utilities or their shareholders.
Sincerely,
Daniel B. Walsh
