New York’s utilities, independent power producers, marketers andlarge energy consumers have banded together for the first time toshow their support for Governor George Pataki’s plan to restructurethe state’s energy tax system and give back about $150 million/yearin gas and electricity tax revenue.
In a joint statement, the Energy Association of New York State,which represents the utilities; the Independent Power Producers ofNew York (IPPNY), which represents independent power producers andmarketers; and the Industrial Energy Consumers Coalition,representing major industrial and commercial energy consumers;called on the legislature to approve the governor’s proposal toreduce and restructure the state’s energy taxes, which are thehighest in the country.
“New York is famous for taxation,” said Carol Murphy, executivedirector of IPPNY. “Every time we needed revenue, we would go andtax an additional piece of energy. Now with deregulation, we’refinding it’s difficult for companies to compete in New York becausethere’s all these additional taxes. The utilities make great taxcollectors.”
Pataki’s tax restructuring proposal is included in the state’sbudget, which was expected to be passed in April but has beendelayed while legislators argue over what to do with a $2 billionrevenue surplus. The budget probably won’t be passed untilmid-summer. The energy tax portion of the budget would be phased inover five years, but some components would be retroactive to thefirst of the year.
Among many other changes, the plan proposes phasing out gas andelectric gross receipts taxes by 2003, dropping energytransportation and distribution taxes to 2.5% by Jan. 1, 2000 andrepealing the gas import tax 30 days after the bill becomes law.The bill also would retroactively reduce the gas import tax by asmall percentage.
“IPPNY supports Governor Pataki’s energy tax cut package,particularly the repeal of the 4.25% natural gas import tax,” saidMurphy. “This tax is an unintended consequence of the changesresulting from deregulation… Lowering generating cost lowerscustomers costs. It’s that simple.” Murphy said about $30 millionof the $150 million/year in energy tax revenue comes from the gasimport tax. The gross receipts tax on energy sales represents thelargest portion of the state’s energy tax revenue. Doing away withthese energy taxes “will put everyone on the same footing,” saidMurphy.
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