In Austin, the three members of the Texas Public Utility Commission, (PUC), are considering a proposal that would allow big utility companies to do business in an entirely different way. The companies could set themselves up, not as regular corporations, but as a real estate investment trust or REIT. (CenterPoint Energy that maintains the wires and poles said it was studying such a tactic).
Attorneys working for state regulators said that would be a bad idea because it would allow the utilities to take advantage of tax laws, laws in the Texas electricity market could mean hundreds of millions of dollars would be collected from customers. But instead of going to pay the company’s income taxes, it would be transferred to investors in the REIT.
In addition to the PUC’s own staff recommending against approval, consumer groups said allowing utilities to become REITs would be an “unacceptable wealth transfer”.
Hunter Hunt, of the legendary Texas oil family, heads a company proposing such a REIT for Oncor, a utility company in North Texas.
“We’ve heard folks loud and clear,” Hunt told the PUC.
Hunt said he agreed with a compromise the commission has drafted: that instead of all those millions in tax savings going to investors, a share should go to customers. How much would be decided in the future when the utility has a rate case before the commission.
“I do think that that is a key component to finding this is in the public interest,” said Commissioner Brandy Marquez.
The PUC is expected to formally vote on the compromise when it meets again on Thursday.