COMMONWEALTH ENERGY is arguing that improvements it made in the late 1980’s to a 1960-era power plant qualified for investment tax credits on grounds that it had to make the improvements to perform under four long-term power supply agreements it had with neighboring utilities. The investment tax credit was repealed at the end of 1985. However, it could still be claimed as late as 1990 on new investment to perform a “service or supply contract” signed before 1986. Commonwealth won the case in federal district court. The case is on appeal to the first circuit court of appeals.
Delmarva Power & Light has a similar case pending in federal district court in Delaware. Delmarva argues that its franchise to serve local ratepayers qualifies as a “service or supply contract.” The case involves about $25 million in tax liability.
