PG&E hopes to avoid property tax : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

Posted at 7:39 a.m. PST Friday, Nov. 24, 2000

PG&E hopes to avoid property tax SACRAMENTO (AP) -- California's biggest utility, Pacific Gas and Electric Co., is trying to avoid paying property taxes of at least $3 million a year on five plants that generate electricity for PG&E but aren't owned by the company.

At issue are five hydroelectric projects in the Sierra Nevadas in which public water agencies actually own the dams and powerhouses but PG&E holds contracts to regulate the projects and sell the electricity.

The company's petition, to be heard by the state Board of Equalization on Tuesday, infuriates officials in the counties that stand to lose the tax revenue. If PG&E wins, $160 million worth of property will be removed from the tax rolls in Sierra, Placer, Nevada, Yuba, Butte, Plumas, El Dorado and Mariposa counties.

``You shift the taxes to someone else or you cut the services,'' said Bill Copren, assessor in Sierra County, home to fewer than 4,000 people. A loss of $88,000 a year in taxes from PG&E, he said, would increase everyone else's property taxes to pay for a hospital, schools and fire equipment.

PG&E argues that its workers must occupy the power plant sites, or have the right to be there, to meet the requirement of what is called ``possessory interest,'' and thus be held liable for property taxes. PG&E attorneys say they lack authority to keep workers at the plants, an argument the water districts and counties dispute. PG&E has paid the taxes since 1984.

County assessors say that PG&E's interpretation of a 1998 rule change conflicts with tax law and the California Constitution. They accuse the utility of being disingenuous by arguing that it has no ``use'' of powerhouses, when PG&E workers monitor the plants electronically from distant cities and control the turbines.

What especially irritates the counties is that the tax cut PG&E seeks would come in addition to a $4.5-million loss in taxes delivered by the Board of Equalization in August, when it voted to reduce the value of PG&E's overall property -- put at nearly $14 billion in May -- by $455 million.

The staff of the Board of Equalization has recommended rejection of PG&E's request, but it's not clear how the board will vote.

The board includes former Assembly members Johan Klehs and Dean Andal, property manager Claude Parrish, and John Chiang, a former Internal Revenue Service tax specialist. State Controller Kathleen Connell, who is running for mayor of Los Angeles, is also a board member.

From 1998 through the first half of this year, Andal, Chiang, Connell and Parrish have accepted a total of $110,000 from a group called Taxpayers Political Action Committee. Major donors to ``TaxPac'' include PG&E and other big utilities.

-- Martin Thompson (, November 24, 2000

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