POINT CLEAR, Ala. -- Taxation may be the most important
to be answered in the current nationwide push to deregulate electric
It will impact the kinds and amounts of taxes utilities pay, as
well as tax revenues of state and local governments. In some states,
like Oklahoma, the entire question of deregulation may swing on
finding an equitable tax solution.
The importance of the issue was stressed by two speakers at a
conference on state trends in energy held last week by The Energy
Council in Point Clear.
The council is a legislative organization comprised of 10 member
states from major energy producing regions. Sen. Larry Dickerson, D-
Poteau, is chairman of the organization. Other Oklahoma legislators
on the council's executive committee include: House Speaker Loyd
Benson, D-Frederick; Sen. Kevin Easley, D-Broken Arrow; and Rep.
Larry Rice, D-Pryor. Much of the conference program was devoted to
electric and natural gas deregulation.
John Neumann, vice president of the Edison Electric Institute,
told the meeting the "electric utility industry is in the midst of
dramatic change and uncertainty from a myriad of restructuring
proposals." He expects significant tax and financial issues will
arise as a result.
Bob Uehling, senior manager of Deloitte & Touche, emphasized the
two main issues:
* Possible revenue loss to state and local governments.
* Different tax treatments for competing providers.
The significance of the tax issues was further emphasized by Rice.
Discussing Oklahoma's new law, he said the tax question is so
important, the law requires the state's tax commission study how to
change the taxing structure to not only ensure a level playing field
for all electric providers, but also prevent loss of revenue to
In the Sooner State, there is a general consensus some form of
consumer tax is the best way to equalize the tax burden.
There are constitutional questions about whether the property tax
may be eliminated. Under another provision of Oklahoma's
constitution, other changes in tax laws would require a three-
majority vote in the Legislature, or approval by a vote of the
Regardless of these potential problems, the new law prevents
implementation of deregulation by the year 2002 unless the tax
Jim Wilson, manager of government affairs for Oklahoma Gas and
Electric Services, raised another question that must be decided --
allocating revenues to the various recipients when converting from
multiple tax sources to a single source.
This also will require legislative decisions as well as possible
According to Neumann, financial and tax matters arising from
deregulation will include depreciation, investment tax credits,
stranded investments, certain preferred stock dividends and contract
termination payments. It will necessitate re-evaluation of the tax
treatment of all electric utilities -- municipal, cooperatives and
investor owned utilities alike -- to provide a level playing field. …