“Oncor Fights Tax Savings Ruling Before Texas Justices”
Energy Future Holdings Corp.’s power distributor Oncor on Tuesday asked the Texas Supreme Court to reinstate a Public Utility Commission decision allowing it to charge ratepayers to cover its federal income taxes, while electricity buyers said Oncor was trying to game the system.
Arguing for the Texas Industrial Energy Consumers, Debora Alsup of Thompson & Knight LLP said the key flaw in Oncor’s argument is that though it contends it’s a partnership for tax purposes, the company is structured as an LLC. She said under Texas rules, a utility like Oncor is considered a member of an affiliated group that is eligible to file a consolidated federal tax return and that its election of a particular tax status doesn’t change that.
“You can’t unilaterally allow a utility to determine its eligibility for tax savings,” Alsup said. “It was always a member of an affiliated group that was always eligible to file a consolidated return. Its choice to be taxed as a partnership did not eject it from the group of affiliated corporations.”
Alsup said the public policy behind PURA is that tax savings are supposed to be passed on to consumers and that the tax rules were written to prevent the gaming of the system.
Texas Industrial Energy Consumers is represented by Debora Alsup, Phillip Oldham and Joseph Younger of Thompson & Knight LLP.