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 ATLANTA, April 22 /PRNewswire/ -- Georgia Power President and CEO Bill Dahlberg, speaking on behalf of the electric utility industry, is scheduled to testify today before the U.S. Senate Finance Committee on President Clinton's proposed energy tax.
 Following is the oral statement Dahlberg is set to give:
 Mr. Chairman, my name is Bill Dahlberg. I am President and CEO of Georgia Power Company. As the largest subsidiary of The Southern Company, Georgia Power serves approximately 1.6 million customers in one of the fastest growing states in the nation.
 I appreciate the opportunity to appear before the Committee today representing the Edison Electric Institute (EEI), the association of investor-owned utilities, to present our views on the Administration's proposed Btu energy tax.
 EEI supports the efforts of the President and the Congress to reduce the federal budget deficit and to promote further economic recovery. We believe that most of our customers, like most Americans, want to see the deficit tamed primarily through cuts in federal spending and, then if necessary, through fair increases in taxes. Thus, it was not surprising to learn that a recent Wall Street Journal/NBC News poll found that only thirty-five percent (35 percent) of Americans support the energy tax, while sixty-two percent (62 percent) oppose it.
 Over the last several months, EEI has analyzed the impact of the Administration's proposed Btu tax on our companies, on our customers, and on the national economy. As a result, we believe that if Congress 1) recognizes the direct impact this tax would have on low and moderate income families; and, 2) considers the effect of a Btu tax on the competitiveness of American industry, Congress, like EEI, will reject this new form of taxation.
 Low cost and reliable energy is a fundamental ingredient of economic well being. The proposed Btu tax will have an alarming ripple effect throughout the economy as the cost of all products and services increases. This ripple effect at home will create waves for American manufacturers seeking to do business overseas. Large industrial consumers of electricity will be significantly affected. In Georgia, for example, industrial customers will pay $166.9 million extra per year for energy. This represents a six to seven percent (6-7 percent) increase in energy costs for industrial customers.
 In some regions of the country, the increase in the cost of electricity will exceed ten percent (10 percent) for industrial customers. With the Administration's additional tax, some of our most vulnerable industries -- autos, airlines, primary metals, chemical manufacturing and agriculture -- would be less competitive at home and abroad.
 You have heard others assert that American energy costs are too low in comparison to other developed nations. Senators, I am here to tell you that that is not a problem. To the extent that our energy costs are lower, it is a competitive advantage that we should be striving to protect, not destroy.
 It is also interesting to note that our trading partners have largely rejected broad-based energy taxes and, in some instances, subsidize their energy sectors. And, ironically, the proposed Btu energy tax will act as a subsidy for foreign imports since these goods will be exempt from this tax.
 The importance of international competitiveness to the American economy cannot be overstated. In 1992, growth in U.S. exports accounted for one-third of the nation's 2.1 percent growth in GDP. Thus, it makes little sense to penalize a sector of the economy that could continue to lead us out of the economic doldrums.
 Beyond its obvious macroeconomic effect, the Btu tax would have a significant and direct impact on the average American family. Americans have been told the energy tax will add only a few dollars a month to their home utility bills, and a few dollars a month more at the gasoline pump. Presented that way, the energy tax doesn't sound too bad. And for those below the poverty level or marginally above it, we're assured that there will be tax rebates and income credits.
 What the public may not understand is that, in reality, they will be paying all of the energy tax. Everything that any American buys -- if it's made in America -- will carry a hidden price tag that includes the energy taxes paid by the manufacturer, a manufacturer's suppliers, and the distribution network -- including transportation and additional retail costs.
 Consumers are going to pay this tax whenever they buy food, clothing, shelter -- any product or service that has an embedded energy cost. In fact, the Treasury Department estimates that a family of four earning forty thousand dollars a year could see its cost-of-living rise four hundred and forty dollars ($440) per year because of the total burden of the Btu tax. This represents about a fifteen percent (15 percent) increase in the federal tax burden that such a family faces as the result of federal income taxes.
 As proposed, the Btu tax would be compounded by state and local "piggyback" taxes. An increase in fuel costs caused by a Btu tax will automatically increase state and local taxes on gross receipts, franchise fees, sales taxes, and other utility taxes. In some states, these "piggyback" taxes could increase the cost of the tax on the average family by as much as sixteen percent (16 percent).
 We hope the Committee will explore carefully whether an inherently regressive Btu tax will have the deficit fighting punch that its backers might hope. The Administration's budget contains billions of dollars in additional spending for the earned income tax credit, food stamps, and low-income energy assistance. To a large degree, this additional spending is required simply to reduce the regressive impact of the Btu tax itself. We believe the remaining possible benefits of the tax will be lost, for a Btu energy tax will reduce economic growth, cost the economy jobs, and increase inflation.
 A recent Data Resources analysis of the Administration's Btu tax plan shows that the Gross Domestic Product (GDP) will decline by twenty five billion dollars in 1997 when the tax is fully phased-in. This suggests that GDP decreases by more than a dollar for every new dollar of tax revenue. The National Association of Manufacturers confirmed the view that the nation's GDP will suffer, not benefit, from the imposition of a Btu energy tax.
 While we could spend much time analyzing the technical flaws of the Btu tax proposal detailed in our written comments, suffice it to say that we have found the Administration's outline of the Btu tax to be flawed from a technical standpoint. Among other things, the tax would:
 -- create additional costs due to state and local "piggyback" taxes;
 -- create competitive disparities between investor-owned utilities
 and PURPA-defined "qualifying facilities;"
 -- promote conflicts with some state rate regulators due to the
 "normalization" provisions included in the proposal;
 -- create potential price distortions by affecting the terms of
 existing fuel contracts;
 -- place an undue burden by retroactively taxing fuel inventories;
 -- fail to achieve its stated goals due to problems with passthrough
 and collection.
 Most of these problems illustrate a fundamental problem with the Btu tax -- if the Btu tax is imposed anywhere other than at the retail consumption level, it will increase consumer costs by more than the amount of tax revenue received by the federal government.
 The Btu tax is simply not the solution to our economic problems. On the contrary, it's a tax that will raise the price of everything we Americans make and try to sell. It will weaken American business in the competitive world marketplace and it will give foreign manufacturers an advantage in our domestic markets. American companies will lose sales and American workers will lose jobs. In contrast to a Btu energy tax, a broad-based consumption tax would not harm our international competitiveness because it could be removed from U.S. exports and imposed on foreign imports.
 The proposed Btu tax is inappropriate economic, environmental and energy policy. It would seriously damage the economic recovery and will hurt U.S. international competitiveness. Thus, we urge the Congress to reject this new form of taxation.
 Again, thank you for the opportunity to appear before the Committee.
 -0- 4/22/93
 /CONTACT: Tripp Cagle or Todd Terrell of Georgia Power, 404-526-7676 or 800-282-1696/

CO: Georgia Power Company ST: District of Columbia IN: UTI SU:

BN-BR -- AT005 -- 9284 04/22/93 10:13 EDT
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Date:Apr 22, 1993

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