Can we talk about this and a number of other issues tomorrow?  I'll try and get Linda Noske to arrange a time.

Jim

 -----Original Message-----
From: 	Adzgery, Ronald  
Sent:	Friday, September 28, 2001 3:22 PM
To:	Ryall, Jean; Steffes, James D.
Cc:	Hetrick, Nancy; Fischer, Jeffrey K.; Coats, Edward; Apke, Beth
Subject:	Letter to PUC Regarding Texas Taxes on T&D Services

Jean/Jim:

Jeff Fischer and I in EES Tax have been working with Nancy Hetrick regarding the question of whether REPs will be responsible for administering Texas taxes on T&D services.

As you may have heard, at the request of a number of investor owned utilities, the Texas Comptroller of Public Accounts has initially ruled that REPs will be responsible for administering the taxes.  This conclusion was based upon the assumption that the REPs are purchasing the T&D Services from the TDU and then reselling the services to their customers.

After a number of REPs objected to that ruling, the Comptroller's office agreed to reconsider.  We believe the Comptroller is worried about doing something that will have a serious impact on deregulation in Texas, so she is passing the question off to the Texas PUC by requesting that the PUC determine whether REPs purchase and resell T&D Services.

The New Power Company raised this issue with the PUC recently and at last count TXU and Entergy had filed responses of their own.  A number of tax representatives from several REPs thought it might be good to show the PUC this is a significant issue for all independent REPs.

Attached for your review and comment is a draft of a proposed letter to the PUC regarding this matter.  Nancy suggested we send the letter to you for your comments and to get clearance for EESI to sign the letter.  Thank you for your assistance with this.

Ron