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		 Subject: Utilities, Electric: Deregulation: USA: U.S. electric utilities 
want new depreciation rules ...


 
[IMAGE]
USA: U.S. electric utilities want new depreciation rules. 
? 
09/26/2000 
Reuters English News Service 
(C) Reuters Limited 2000. 

WASHINGTON, Sept 26 (Reuters) - U.S. utilities want federal tax laws changed 
to allow electric generation facilities to be depreciated over seven years 
instead of the current 15-20, an industry trade group told a House 
subcommittee on Tuesday.

Officials from the Alliance of Energy Suppliers, the energy supply division 
of the Edison Electric Institute, said rapid deregulation and consolidation 
in the industry made the old depreciation rules obsolete, and hurt the 
sector's ability to attract investment for new plant construction. 

Under the old school, regulated market structure, dividend payments to 
utility investors were more or less predictable, but that was no longer the 
case in openly competitive markets.

"Previously applicable rules regarding the recovery of capital simply do not 
apply any longer," said Theodore Vogel, vice president and tax counsel for 
DTE Energy Co , a member of the industry alliance.

"Investors will demand a return of, and a higher return on, their investments 
in building and maintaining power plants over a much shorter period of time," 
he said.

Some 24 states and the District of Columbia have enacted laws to open their 
retail markets to competition. Wholesale markets have been gradually 
deregulated by the federal government.

Vogel said demand for power is great and growing, noting that 16 percent of 
U.S. energy consumption could be attributed to increases in information 
technology and telecommunications.

U.S. demand for power is expected to grow at a rate of more than 5 percent a 
year, he said.

New supply is lagging, however, notably in states where deregulation has seen 
consumers pay market rates for power for the first time, like in California, 
where price caps had to be introduced in San Diego this summer after electric 
bills tripled and caused a public outcry.

"Congress should legislate incentives to encourage the construction of new or 
more efficient electric generation facilities," Vogel said.

The Edison Electric Institute is the trade group for the nation's 
shareholder-owned electric utilities. 

Folder Name: Utilities, Electric: Deregulation 
Relevance Score on Scale of 100: 99

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