Utility companies demand a taste

Ahh, isn't capitalism grand? Especially the public investment-private profit model which has worked so well for public utilities (my Peoples Energy gas/heating bill for February - $156 dollars, of which at least $19.92 is tax, not even including the $9.45 “Customer Charge”. Gotta love that, a special charge because I'm such a valued, special customer. Of course, PGL makes about 100 million a year in profits, based in part on these special charges. 20% of my fracking bill. Feh).

Many Utilities Collect for Taxes They Never Pay - New York Times
Many electric utility companies across the nation are collecting billions of dollars from their customers for corporate income taxes, then keeping the money rather than sending it to the government.
The practice is legal in most states. The companies say it is smart business.
But some representatives of utility customers say that the practice, which involves using losses from other subsidiaries to reduce taxes owed, is not fair. They say that money that utilities are required to collect for federal and state taxes — typically a nickel on each dollar paid for electricity — should go for just that, or not be included in electric bills.
Otherwise, they argue, these legal monopolies make more than they are authorized to, and other taxpayers have to make up the difference in higher taxes or reduced services.

But in recent years many utilities have expanded into unregulated businesses, like energy trading and aircraft leasing, while others have been acquired by companies that own other businesses. When those other businesses lose money or create artificial losses through tax planning, those losses can be used to offset income earned by the utilities.

...As a result, the parent companies owe less in taxes than their electric customers paid. Sometimes these companies owe nothing, or receive large tax refunds. By not remitting the taxes, the parent companies effectively have more money to invest in their operations or pay to shareholders in dividends.

The ability to intercept tax payments is not limited to electric utilities. Natural gas, water and telephone utilities can use the same techniques.

and we can't forget our friends at Enron:

The Minnesota attorney general, Mike Hatch, said, “Essentially, the utility ratepayers pay the tax twice, once through the utility bill and again through the lost revenue to government that means either higher taxes for them or less government services.” Mr. Hatch is trying to require that any taxes included in Xcel bills be paid to the government. Xcel opposes this.

The critics say that while many profitable businesses use losses to minimize their tax bills, utilities are unique because their taxes are built into the bills that customers pay.

Critics also say utility companies are enriched beyond the limits set by law if they pocket the tax money. “Utilities are entitled to a just and reasonable return,” said Myer Shark, a 93-year-old lawyer who sued unsuccessfully to recover $300 million in taxes paid by Minnesota customers of Xcel. “But when they keep the taxes, they are earning an unjust and unreasonable rate of return.”

Enron was a pioneer in turning taxes into profit. Since 1997 the company, now in bankruptcy, has collected nearly $900 million from customers of a utility it acquired, Portland General Electric, to cover income taxes. But none of that money reached the federal government from Enron, and only a quirk in the law forced Portland G.E. to pay about $800,000 in income taxes, of which $20 went to the state of Oregon.

Enron could keep the tax money because it created 881 subsidiaries in the Cayman Islands, Bermuda and other tax havens, tax shelters that on paper generated losses for the parent.

Tags: Chicago, /corruption, /Energy