House Panel Rejects Faster Refunds for Utility Customers

The House Ways and Means Committee on Wednesday refused to prod the nation’s utility companies into paying customers about $19 billion in refunds over the next few years.

Consumers are owed an average of more than $200 each, but will have to wait up to 30 years for refunds from gas, electric and telephone companies.

“This shows how powerful the utilities are in Congress,” said Rep. Robert T. Matsui (D-Sacramento), referring to the bill that would have given state utility commissions the power to order faster refunds. Matsui co-sponsored the defeated bill, along with Rep. Byron L. Dorgan (D-N.D.).

The dispute revolves around $19 billion in excess funds that utilities collected from customers to pay future corporate taxes to the federal government. When Congress enacted the 1986 tax overhaul, it cut the top corporate rate from 46% to 34%, providing the utilities with the windfall.

Matsui originally sponsored a provision in the 1986 law giving the utilities up to 30 years to refund the excess charges. He now says that was a mistake, and sponsored the bill to allow stepped up payment as a remedy.

“This is a simple matter of the public good versus special interests,” Matsui said. “But I couldn’t overcome the lobbying of this very influential industry.”

Utility companies mounted a determined offensive to preserve the 30-year timetable. Telephone, power and gas utilities, through political action committees, increased their political contributions to House members to a total of $5 million in 1987 and 1988. About $510,000 went to members of the House tax-writing committee.

The bill lost on a 22-13 vote, with 12 Democrats and one Republican on the tax-writing panel supporting it.

Matsui said the defeat in committee probably dooms his effort to eliminate the special deal for utilities. Sen. Pete Wilson (R-Calif.) has offered a similar proposal, but he carries little weight in tax issues.

Opponents of the measure, led by Reps. Ronnie Flippo (D-Ala.) and Ed Jenkins (D-Ga.), argued that if utilities are required to pay refunds over the next few years, they might have to borrow to make up for the lost funds and thus be forced to boost rates.

California ratepayers, topping those in all other states, have paid $1.9 billion extra to utilities to offset the expected taxes. Pacific Bell led all utilities with $816 million in excess deferred taxes, with Pacific Gas & Electric owing $429 million and Southern California Edison owing $368 million, according to tax analysts.