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Electric tax may cost city residents

December 09, 1999|By DAN KULIN /Staff Writer

Changes to Maryland electricity taxes could cost the average Hagerstown City Light customer about 44 cents a month beginning in July, Light Department Manager Terry Weaver said Wednesday.

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City officials plan to lobby the state for an exemption to the new charge.

The additional charge would be the result of the state ending the "gross receipts tax," which had been included in base electric rates, and implementing a "franchise tax," which will appear as a separate line item on customer bills, Weaver said.

The changes were prompted by deregulation of the electric industry and passed by the state legislature this year.

Allegheny Energy customers in Washington County will see the new tax on their bills as a separate line item beginning in January. The new tax will be offset by a reduction in the base rate. The reduction is the result of the termination of the gross receipts tax.

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Allegheny Energy customers should see little to no difference in their total bill, company spokesman Guy Fletcher said Wednesday.

However, unless City Light customers are exempted from the franchise tax, their total bills will increase.

City Light purchases electricity wholesale from Allegheny Energy, and then distributes the electricity to its customers. The base rate is negotiated and set in a contract that will expire in 2003. The base rate for City Light customers will not decrease with the termination of the gross receipts tax.

Although the new franchise tax will be effective next month, a majority of City Council members on Tuesday instructed Weaver to pay for the new tax out of the Light Fund until July. This is expected to cost $100,000, Weaver said.

Council members Lewis C. Metzner, William M. Breichner and Susan Saum-Wicklein said City Light should pay the new tax until July, which would give them time to lobby state officials for an exemption.

If an exemption is not granted, the tax will appear on customer bills beginning in July.

The average residential City Light customer using 700 kilowatt hours a month would pay about 44 cents more a month, Weaver said.

Council members said they will discuss the situation with the Washington County delegation to the General Assembly when they meet Dec. 20.

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