Senate Bill 1364, which eventually will lead to higher electric rates and more unfair tax collections on utility bills, is heading to Texas Governor Rick Perry for his signature.

A top priority for the state’s transmission and distribution utilities, the legislation was opposed by groups opposed to unfair taxation. SB 1364 also was the subject of a Snapshot Report by the Texas Coalition for Affordable Power, which documented more than $500 million in tax collections by the North Texas utility for a non-existent tax liability. You can read the report here.

The Texas House of Representatives gave its final approval to the legislation on May 20th. Under the bill, the Public Utility Commission will lose the ability to adjust utility rates downward to reflect tax advantages enjoyed by electric utilities. As a result, utilities will gain the ability to charge customers an additional amount for federal income taxes — even in the absence of a greater tax liability by the utility.

TCAP’s report on these phantom tax collections by utilities drew statewide headlines, and was the subject of numerous television reports. Besides documenting $500 million in tax collections by the Oncor utility for a non-existent tax liability, the report also referenced New York Times findings that CenterPoint had collected $150 million for federal taxes during a time period in which it enjoyed a sizable IRS tax refund.

The phantom tax issue has drawn the attention of organizations on both sides of the political spectrum, including some Tea Party groups and those who have raised separate concerns regarding the installation of smart meters by the state’s transmission and distribution utilities. You can read more about the smart meter controversy here. For more about the phantom tax collections by utilities and SB 1364, check out the news reports found here.


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