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04/17/2013

New study critical of tax collections by Oncor Electric Delivery

A Texas group of cities and municipalities that has been critical of Texas' deregulated electricity market says in a new report that Oncor Electric Delivery, the utility operating most of the power grid in North Texas, has collected more than $500 million from ratepayers to cover federal income taxes that were never paid. The Texas Coalition for Affordable Power, which released the study, negotiates power purchases for about 160 member cities, including Arlington and several other Tarrant municipalities. The group acknowledges that Oncor's practice is legal, but is worried about two bills before the Texas Legislature that would restrict state regulators' power to limit utilities' ability to include such "phantom" taxes in their rate base. TCAP proposes not allowing utilities to collect money from ratepayers that is not used to pay taxes, or at least keeping the Public Utility Commission's power to consider unpaid taxes when it sets regulated rates. Although wholesale power generation and retail sales of electricity are deregulated in Texas, the utilities that distribute power to users remain under PUC regulation. Oncor's tax collections have not been passed along to the federal government because its parent, Energy Future Holdings, has had no federal income tax liability. EFH has been losing money since the former TXU was acquired in a $44 billion buyout in 2007.

-- Jim Fuquay

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