LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                               May 10, 2001
  
  
          TO:  Honorable David Sibley, Chair, Senate Committee on
               Business & Commerce
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  HB2107  by Turner, Sylvester (Relating to the recovery of
               stranded costs and the crediting of negative stranded
               costs.), As Engrossed
  
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*  Estimated Two-year Net Impact to General Revenue Related Funds If     *
*  50 percent of the entire $4.9 billion in negative stranded costs      *
*  were ordered refunded to customers in September 2001, the total       *
*  estimated revenue loss to the state's General Revenue Fund 0001       *
*  could potentially be $105.1 million.                                  *
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The bill's fiscal implications are based on the following illustrative
example provided by the Comptroller's office.  According to the Public
Utility Commission (PUC), negative stranded costs were estimated to be
$4.9 billion as of March 26, 2001. If PUC required utilities to refund 50
percent of this amount during September 2001, electric utility revenues
could be reduced and there would be a corresponding revenue loss in state
and local sales taxes, the franchise tax, the gas, electric, and water
utility tax, the public utility assessment, and municipal franchise fees
in fiscal 2002.

Assuming that 50 percent of the $4.9 billion would be returned to
customers in the form of a credit, the following revenue losses to the
state are anticipated:

1) Sales tax revenue from commercial electricity sales would decrease
$45.3 million.
2) Franchise tax data would decrease $22.5 million.
3) Gas, Electric and Water Utilitiy tax revenue loss would be $33.2
million.
4) The public utility assessment would decrease $4.1 million.
  
Local Government Impact
  
Electric utilities pay municipal franchise fees to cities based on their
revenues.  The amount of fees, however, cannot be determined because PUC
does not collect data on the fees. This impact would only affect cities.
The total estimated annual revenue loss to certain units of local
government from sales taxes only (franchise fee effects cannot be
estimated) could be as high as $24 million, if 50 percent of the $4.9
billion were to be refunded.
  
  
Source Agencies:   304   Comptroller of Public Accounts, 473   Public
                   Utility Commission of Texas
LBB Staff:         JK, JO, KM