Texas House Bill HB3115

Texas 2009 - 81st Regular

Caption

Relating to the computation of income tax expense for electric utilities.

Impact

If passed, HB3115 would establish more stringent guidelines for how electric utilities can incorporate tax deductions into their rate calculations. This could lead to a more consistent and fair approach to how electric rates are determined, as utilities would be limited in their ability to reduce rates through tax savings that are not justified by their actual regulated costs. The legislation is intended to safeguard against potential abuses in the computation of tax expenses.

Summary

House Bill 3115 aims to amend the way electric utilities compute their income tax expenses. The bill specifies that the computation must be done on a stand-alone basis, which means that only the regulated utility cost of service used to establish the utility’s rates will be considered. This change focuses on providing a clearer method for determining tax expenses and preventing any deductions that are not aligned with the utility's cost of service or rate base from influencing the tax computation.

Contention

Notably, the bill may face pushback from utilities that benefit from the current system of computation. There may be concerns about the implications for profitability and competitiveness, particularly if the changes result in higher computed rates that are passed on to consumers. Stakeholders may argue that this legislation could constrain their financial flexibility. Additionally, the regulatory authority's role in approving the tax computations may become a point of contention, as utilities may seek to negotiate their tax reporting practices.