SB2X 1 Would Force Power Companies to Refund Billions to Taxpayers
Sacramento — Consumer advocates are calling on lawmakers to pass energy reform legislation dubbed the “Windfall Profits Tax.” Calling it California’s best opportunity to require power generators and energy traders to refund billions of dollars in electricity overcharges during the energy crisis, consumer advocates will testify in support of SB 2X 1(Soto) before the Assembly Revenue and Taxation Committee today.
“For the last year, a band of power company marauders have gouged California. They used the dysfunctional deregulated market to reap windfall profits at the expense of consumers, businesses and the state’s general fund,” said consumer advocate Doug Heller with the Foundation for Taxpayer and Consumer Rights. “The federal government appears unwilling to take the power companies to task for their profiteering, so California lawmakers must step in and do the job.”
The proposal would require the state Public Utilities Commission (PUC) to determine a reasonable price — including a fair profit for generators — for electricity generated at in-state power plants. Any amount above that reasonable price, which would vary depending on the actual cost of operating individual plants, would be subject to a one hundred percent (100%) “windfall profits” tax. Like any tax law, the bill would apply retroactively beginning January 1, 2001, thereby allowing the state to reclaim billions of dollars in overcharges.
“The devastating impact of the energy companies gouging is felt both by the consumers and businesses facing the largest rate increases in California history as well as by a variety of state programs, such as community colleges, that have been hit by budget cuts. Either we stick around and fight this rip-off of epic proportions, or we write-off our treasury and wait for the power companies to strike again,” said Heller.
1980 Federal Windfall Profits Tax Netted $44 Billion From Oil Companies
The federal government imposed a windfall profits tax on oil companies in 1980, which stayed in effect for eight years, netting $44 billion from oil companies that were charging more than reasonable prices. The bill was repealed when companies’ prices fell below the federally-determined reasonable price.
“While California suffered blackouts and soaring energy prices, electricity companies’ garnered unprecedented and massive profits. When oil companies threatened our economy, they faced a windfall profits tax and Amercians got their money back. Californians need that same protection today,” said Heller.