LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 74th Regular Session April 26, 1995 TO: Honorable Ken Armbrister, Chair IN RE: House Bill No. 176, Committee on State Affairs as engrossed Senate By: Stiles Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on House Bill No. 176 (Relating to components of net income used in establishing rates of a gas utility.) this office has determined the following: The bill would redefine a gas utility's "net income" and would include only income related to gas utility service determined by the regulatory authority to be reasonable and necessary. The bill would also require that only income tax benefits or deductions corresponding to investments or expenses that have been allowed for rate-setting purposes be included in the computation of the gas utility's income tax expense. Certain provisions relating to the treatment of income by affiliated groups and investment tax credits would be eliminated. To the extent that changes altered a gas utility's gross receipts and thereby its rate base, gross receipts tax revenue could be affected. However, because changes would occur in future rate hearings, it is not possible to estimate the fiscal implication. The fiscal implication to the State cannot be determined. No fiscal implication to units of local government is anticipated. Source: LBB Staff: JK, BR, DF Railroad Commission