Contact: Tina Kreisher or Joe Brenckle
Senate Committee on Energy and Natural Resources
(202) 224-4971

For Immediate Release:
March 24, 2000


WASHINGTON, D.C.­ Senators Frank H. Murkowski, R-Alaska, and Slade Gorton, R-Wash, today wrote to representatives of both private power companies and public power companies to urge them to come together behind a single proposal to address the problems with federal tax law growing out of electric industry restructuring.

"We urge you to sit down and work out your differences and present us with a negotiated package that both sides can support," wrote the senators.

Murkowski, Chairman of the Senate Energy and Natural Resources Committee, has introduced S.2098 a bill to promote competition in the electric power industry. When he introduced the measure he explained, "Under the U.S. tax code, municipally owned utilities can issue tax-exempt bonds to build new generation, transmission and distribution facilities. Investor-owned utilities cannot issue tax-exempt bonds for these purposes. This gives municipally owned utilities a taxpayer provided competitive advantage to the extent they are able to use facilities built with tax-exempt bonds to compete against private power­who cannot use tax-exempt bonds.

"But on the flip-side­under the tax code, municipal tax-exempt bonds are subject to a private use limitation. That means that if municipal utilities go too far in competing against private utilities‹if they exceed their private use limitation allowed by the Internal Revenue Service regulation­ then their bonds are subject to retroactive taxation. This limits the ability of municipal utilities to compete in the market. The bottom line is that we have a tax code that is not consistent with todayıs competitive environment," Murkowski said.

The letter was addressed to T. Graham Edwards, Chairman Large Public Power Council, Benjamin Montoya, Chairman, Edison Electric Institute, and Roy Thilly, President, American Public Power Association.

It refers to efforts by members of Congress to change federal tax law to accommodate the restructuring of the electric power industry. "We have given careful attention to these proposals. However, it is difficult to accommodate major policy changes in Congress when there is not a consensus among the affected parties on the solutions."

The letter concludes, "You are aware that this is likely to be an abbreviated legislative year because of the November elections. Therefore, it behooves you to press forward to develop this consensus within your industry as soon as possible if you wish to have these problems successfully addressed this year."