Electric utilities asked the Senate Finance Committee yesterday to reject President Carter's proposed tax on their use of oil or gas on grounds it would raise consumer bills and make it difficult to find capital to convert to coal.
The tax, which would take effect for industries in 1979 and for utilities in 1983, would be coupled to a rebate to help pay costs of conversion from scarce oil and gas to abundant coal for boiler use. The tax-rebate program, which the House has approved, is described as an "incentive" to switch.
Hans G. Tanzler, mayor of Jacksonville, Fla., which owns its own electric utility, said his community needs no incentive to convert. Residents got all the incentive they needed in 1973 when the Arab embargo increased the price of oil four-fold. Jacksonville is in the process of building a coal-fired power plant. But if the oil-fired plant is to be taxed until replaced, that will be no incentive but rather "an almost insurmountable roadblock by making hard-to-find dollars just that much harder to find," Tanzler said.
W. Reid Thompson, president of Potomac Electric Power Co. and spokesman for the industry urged defeat of both the oil-gas user tax and the oil equalization tax, which would tax the price of domestic crude oil up to world levels as a conservation measure.
There is no need for a tax to provide an incentive because the economics of the situation are pushing utilities back to coal, which most used until they were ordered recently to switch to cleaner oil or gas for environmental reasons, Thompson said.
The United States will face some power shortages by 1981 even though the industry is building new generating plants as fast as it can, Thompson said. Useful plants should not be forced to closed because they can't burn coal, he said.
F. W. Lewis, president of Middle South Utilities with companies in Louisiana and parts of the Southwest, said the oil-gas user tax will cost his companies $1.6 billion between 1983 and 1980 and the oil equalization tax will cost $500 million. This will mean adding $200 a year to the average residential customer's electricity bill. That is more than half the present average, he said.
Committee Chairman Russell B. Long (D-La.) expressed sympathy for the utilities' situation, is which they are taxed for using the only fuel their boilers can burn and while they are building coal-fired boilers.
"There's no point penalizing you for not doing something you can't do," said Long. "If they try to make you retire plants with useful life, that's a loss of capital" that should be spent drilling for more oil and gas.
The utilities were the second industry in two days to ask the Finance Committee for relief from a tax in the House-passed energy bill. The auto industry was before the committee Wednesday, saying a proposed tax on gas-guzzling cars should be voted down or reduced.