State and local electric utility taxes:: Evolutionary taxation of a deregulating monopoly

Competitive forces emerging nationally across the electric utility sector as a result of actual and anticipated deregulatory activity have forced die industry, various governmental units, and the general public to consider a number of important issues. One major concern is the extent to which state and local taxes imposed on the major investor-owned firms, traditionally embedded in regulated races, will affect their competitive position relative to challenges from nonregulated competitors offering intrastate or interstate electricity sales. The most likely trend is tax revenue reduction accompanied by some efforts at revenue neutrality, as investor-owned firms lose their monopoly status in a more market-oriented environment and compete with smaller firms with relatively lon er cost structures. The trend will also include customer-based taxation shifting the burden from the providers of electricity to the customers, with the providers remaining as tax collectors.