CA State Legislature is at it again-
I love CPN but I am not sure they can escape from this even though they are good guys.
FULL DISCLOSURE: I sold my entire CPN porfolio immediately after reading the following:
LOS ANGELES (Dow Jones)--California State Sen. Nell Soto, D-Ontario, is
expected to introduce legislation Wednesday afternoon that would place a
windfall profits tax on revenue out-of-state generators receive from electricity
sales in the state.
The bill, SB1X, will likely be introduced at 2:30 p.m. PDT (2130 GMT) at the
Senate Revenue and Taxation Committee, an aide in Soto's office confirmed.
State Sen. John Burton, D-San Francisco, is the lawmaker backing the
legislation, the aide said. Burton's office would neither confirm nor deny that.
The majority-vote bill will be part of an existing piece of legislation on
solar electricity issues introduced by state Sen. Jim Brulte, R-Rancho
Cucamonga, the aide said.
The legislation is still in "skeletal form" and doesn't include a percentage
or dollar amount of profits wholesale power suppliers will be limited to at this
point. In addition, the bill calls for distributing anything over the profits
generators receive to taxpayers as a credit, the aide said.
According to a draft copy of the legislation obtained by Dow Jones Newswires,
"the aggregate amount collected from the tax imposed...shall be returned to
income taxpayers in the form of a flat income tax credit for individuals. It is
the intent of this Legislature that this credit shall partially offset increases
in electric bills incurred by the California consumer."
In addition, the bill states that the windfall profits tax could be
retroactive and would be imposed after Jan. 1, 2001.
"The state Franchise Tax Board will collect an additional corporate franchise
tax from corporations in the electric generation industry...equal to" an
unspecified amount "of net income reported for the tax year, to the extent that
the income for the tax year exceeds the amount of income reported in 1999" by an
undetermined amount.
But most of the language in the legislation is vague, the aide said.
"It's being worked on as we speak," the aide added.
The Soto bill would replace Brulte's SBX17, which would have given a tax
credit to residents and businesses who buy solar panels as an alternative to
their normal electricity usage. The Brulte bill will now become part of SB1X,
and will only take effect if the Soto bill passes through both houses of the
Legislature, the aide in Soto's office said.
Gov. Gray Davis has repeatedly referred to out-of-state generators as "greedy
profiteers."
Energy companies, such as Calpine Corp. (CPN), recently announced that their
earnings statements would exceed Wall Street expectations, due in part to high
wholesale electricity prices in California and throughout the West.
-By Jason Leopold; Dow Jones Newswires; 323-658-3874;
jason.leopold@dowjones.com |
