President Reagan's proposed overhaul of the tax code would give investor-owned electric utilities a big tax cut, raise taxes on coal producers and have little effect on oil and gas producers, according to an administration report made public yesterday.
The study, done by the Energy Information Administration at the request of House Energy and Commerce Committee Chairman John D. Dingell (D-Mich.), looked at the 10 major provisions affecting energy in the tax plan.
It comes as the House Ways and Means Committee is preparing to begin consideration of the Reagan proposal, which would lower personal and corporate tax rates while eliminating or limiting numerous deductions and credits.
Utilities have been one of the few industries to express strong enthusiasm for the Reagan plan.
Last June, for example, William W. Berry, chairman of Dominion Resources, which owns Virginia Power, told the Senate Finance Committee that his company and his customers would benefit if it were enacted.
The EIA study predicted that the Reagan plan would cut the taxes of investor-owned utilities, such as Virginia Power, almost in half, from $66.3 billion to $33.9 billion over the period from 1986 to 1995.
The plan's proposed cut in the corporate tax rate from 46 percent to 33 percent was the main factor accounting for the decline.
At least some of those gains would be passed along to ratepayers; the study predicted that electricity prices would fall by about 4 percent on the average.
Some of that decline, however, would be offset by higher coal prices that also would result from enactment of the tax plan.
The study said that taxes on both underground and surface mines would go up. By far the largest increase would be on underground mines, which are located principally in the eastern part of the country, the study said.
By 1995, the price of coal delivered to utilities would be 4 percent higher than it would have been otherwise, the study said. That offsetting effect would make the decline in utility rates 3 percent instead of 4 percent.
The oil and gas industry, by contrast, would be little affected by the tax plan, the report said.
The Treasury Department's first tax-overhaul proposal, released last November, cracked down hard on many of the tax advantages enjoyed by oil and gas producers; the subsequent Reagan plan retained some of those preferences.
The plan would phase out percentage depletion, the provision that permits oil and gas producers (as well as coal producers) to deduct a flat percentage of gross income to cover the using-up of natural resources.
That would raise the taxes of smaller independent producers. But it would not affect the taxes of the major oil companies, which are not allowed to take percentage depletion.
The report said taxes paid by the 24 largest energy companies would rise by about 3 percent during the first years the tax plan was in effect.
But in later years, those companies would pay lower taxes than they would under the current tax system as features of the plan that reduced their taxes more than offset elements of the plan that raised their taxes.
In a press release accompanying the report, Dingell expressed concern about both the increase in taxes on coal producers and the cut in taxes for utilities.
Coal companies would have to raise taxes on consumers, Dingell suggested, while utilities might not pass their lower taxes along to ratepayers.