Senator warns of major impact from Edison rebate

Tuesday, Feb. 7, 2006 | 8:26 a.m.

CARSON CITY - Nevada residents stand to save money on electric bills - and state and local governments would lose revenue - under a decision by the state Tax Commission, a state senator said Monday.

If the decision to give Southern California Edison a $40 million refund stands, it will "have a very big impact," said state Sen. Randolph Townsend, R-Reno. Other utilities would be able to argue for refunds.

"This has wide implications," said Townsend, adding that state and local governments must be prepared to deal with the loss of revenue if the decision is upheld.

Last year the commission gave Edison a rebate on sales and use taxes the utility paid on coal brought into the state to fuel its power plant near Laughlin between 2001 and 2003. It's not clear what the utility's argument was or what the commission's decision was based on because the commission met behind closed doors.

The state attorney general's office sued the commission, arguing the decision should be nullified because the commission violated the open meeting law. That case is pending.

Townsend said the commission's decision, which was deemed legal by the Legislature's legal counsel, would hit government budgets and help ratepayers, who would see that tax left off their bills.

"It's important to realize this is a sales tax they have paid as a consumer of electric services and then distributed it among the state and local governments," said Townsend, a member of the Senate Taxation Committee. Of the tax collected, 47 percent goes to the state and 53 percent to local governments, Townsend said.

The $40 million was tax collected on one plant over three years, so the amount of taxes collected from the state's three other coal plants could be considerable. The amount of tax paid on coal for power plants was not immediately available.

Nevada Power Co. owns one coal-fired plant in northern Clark County. Its sister company in Northern Nevada, Sierra Pacific, has a coal-fired plant near Battle Mountain, and companies are planning to build two more coal-fired plants near Ely in the next five years.

Townsend has asked legislative staff to study the effects of the refund and requested that the commission turn over material it used to reach its decision. The Tax Commission Monday voted to honor Townsend's request.

During discussion before the vote Monday, Tax Commission Chairman Thomas Sheets said the commission wants the information to be confidential. But he said, "I don't know what we can do" when the Legislature asks.

"This is a sensitive issue," he said. "This may change as a result of litigation."

The commission's vote was conditional on Gov. Kenny Guinn's approval. Keith Munro, Guinn's chief of staff, who said he would sign the order today, said it was "clear" that the Legislature had the authority to ask for the files.

District Judge Mike Griffin on Thursday granted a request from Senior Deputy Attorney General Neil Rombardo to have access to the confidential records of the Tax Commission so he could pursue the open meeting suit filed last July. But the judge issued a protective order, saying Rombardo cannot disclose the content of the records to anyone.

The attorney general's lawsuit asks that the commission be required to vote again in public.

Cy Ryan can be reached at (775) 687-5032 or at cy@lasvegassun.com.