A CALIFORNIA COALITION WANTS CONGRESS TO DENY SECTION 45 TAX CREDITS on electricity sold to utilities under power purchase agreements that were signed before 1987. It also supports
Only new power projects placed in service after June 1999 would be affected. However, there would be an exception. Credits could still be claimed if the power purchase agreement is amended to reset prices for both energy and capacity to a level no higher than avoided cost at time of delivery. The coalition seeking these changes includes the California Public Utilities Commission, Pacific Gas & Electric, Southern California Edison, the Independent Energy Producers, Enron Wind, and FPL Energy. PG&E and SoCal Edison said they still have a significant amount of megawatts under contract that have not been built out. The utilities and the CPUC worry about adding to stranded costs that would have to be recovered eventually from ratepayers.
The group claims California is the only state potentially affected by its proposal.
INDIANA EXPLAINS HOW TO APPORTION JOINT VENTURE INCOME BETWEEN INDIANA AND OTHER STATES.
Most states figure the income a company has from doing business in the state by applying a three-factor formula. They look at the percentages of the company’s total sales, property and payroll that are in the state. It is this income that is then subject to state income tax.
However, when the income comes from a partnership in which a company doing business in the state is a partner, does one look at the sales, property and payroll of the partnership or the company that is a partner when deciding how to apportion income? The Indiana tax court addressed the issue in Hunt Corp. v. Department of State Revenue on April 20. It said to look at the three factors at the partner level. That’s because the state treats partnerships as transparent.
However, the court said the rule was different before 1984. Before then, the state allocated income to Indiana by looking at the three factors at the level of the partnership because partnerships were treated as taxable entities.
NEW YORK POSTPONED COLLECTING SALES TAXES ON UNBUNDLED ELECTRICITY TRANSMISSION AND DISTRIBUTIONS SERVICES until June 1.
The tax was to have applied from April 1. However, the state legislature has not yet enacted a “transition tax credit” that was supposed to ease the burden.
Meanwhile, a coalition of energy groups, including the Independent Power Producers of New York, called on New York state legislators on April 27 to enact a package of state tax reforms. The group said energy taxes are too high and need updating for a deregulated market. Among the changes the group wants is repeal of a 4.25% natural gas import tax.