If you're a typical U.S. consumer, your utilities are now holding $223 in refunds for you, thanks to the tax-reform bill Congress passed last year. That's the good news. The bad news is that you may have to wait another 30 years to get all your money back.
In the D.C. metropolitan area, our local electric, gas and telephone utilities have collected millions of dollars from ratepayers for income taxes that they will never have to pay to the federal Treasury. These overcharges are now rightfully owed to their customers. Most of us could use those refunds now; some will not live long enough to see their money returned.
How much money are we talking about? According to the National Association of Regulatory Utility Commissioners, area utilities owe ratepayers more than $500 million. Here is how it breaks down:
C&P Telephone -- D.C.: $42.7 million; C&P Telephone -- Virginia: $118.9 mil-
lion; C&P telephone -- Maryland: $112.1 mil-
lion; PEPCO: $105.6 million; Virginia Power: $191.4 million.
This tax loophole was made legal by an obscure provision in the 879-page tax bill of 1986. When Congress dropped the corporate tax rate, $19 billion in future utility tax liabilities, called "excess deferred taxes," was forgiven. But at the same time language was slipped into the bill that orders state utility regulators to delay these refunds for decades. It was inserted -- without hearings or debate -- at the insistence of utility lobbyists. Since then, however, the special deal has caught the ire of state officials and consumer groups.
In order to correct this injustice in the tax code, Rep. Byron Dorgan (D-N.D.), a member of the House tax panel and a former state tax commissioner, has introduced the "Utility Ratepayer Refund Act." His bill would give back to state utility commissioners the right to determine how quickly these refunds should be included in our monthly electric and telephone bills.
Utility executives argue that ratepayers will be "better off" the longer a utility holds on to the refunds. Baloney! While a few electric companies are in financial shambles because of their nuclear investments, most have been declared "cash cows" by Wall Street. Sluggish demand for electricity has cut the need for new power plants. Coupled with their strong cash positions, utilities are busy diversifying into nonutility businesses, such as insurance companies and real estate. One utility holding company has even bought the Tampa, Fla., minor league baseball team.
Tomorrow the House Ways and Means Committee is to hold a hearing on Rep. Dorgan's bill. Ratepayers should hope Congress will be able to see through the blizzard of opposition that well-heeled utility lobbyists have stirred up on Capitol Hill. Along with those post-Christmas bills from Hecht's and Woodies, wouldn't it be nice if we could also count on our utility refund checks' being in the mail?