Government Affairs Albany UpdateJune 30, 2000
GRT Tax Reductions/Corporate Income Tax Imposition To Be Reflected in Energy Rate-Setting On Company By Company Basis
Chapter 63 of the Laws of 2000 dramatically altered the landscape of energy utility taxation. The array of energy rates for each utility that are set by the Public Service Commission are unique to that individual utility (that is, energy rate cases are done on a company-by-company basis). Likewise, PSC-authorized changes to energy rates necessary to reflect tax changes on energy utilities will be accomplished on a company-by-company basis.
Entering January 1, 2000, an energy utility's gross receipts were subject to a 3.25% gross receipts tax and an energy utility's corporate income was not subject to the State's Corporation Franchise Tax (Article 9-A). Chapter 63 subjected an energy utility's corporate income to Article 9-A taxation effective January 1, 2000, reduced some of an energy utility's gross receipts (those on the commodity portion of the cost) to 2.1% effective 1/1/0, and reduced some of an energy utility's gross receipts (those on the Transportation, Transmission, and Distribution (TTD) of energy) to 2.5% effective 1/1/0. In subsequent rate cases for each individual energy utility, the rate-making basis will include adjustments to reflect the fact that the GRT tax rate has been variously reduced and that the corporate income tax rate has been increased from 0% (i.e., non-existent) to 8.5%.
Since corporate net income varies among energy utilities and gross receipts vary among energy utilities, reductions in energy rates (to reflect the tax changes), as a general rule, will appear earlier for a less profitable utility than for a more profitable utility.
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