A penny here, a penny there. You don't even notice, but the utilities end up with a really big pile of pennies!
Taking some blame in Newsweek's article is "a little-known electric market regulator, PJM." If you're reading my blog, you probably think this is as funny as I do, but reality is that most of the folks donating their pennies for PIGS really have never heard of PJM.
This article's description of the capacity market is not exactly accurate, but it does a better job of describing the FERC tax scam:
Pipelines are monopolies regulated by a little-known agency, the Federal Energy Regulatory Commission, which is financed not with tax dollars, but with fees paid by the regulated companies. In 2007 the commission authorized pipelines to collect the corporate income tax in the rates charged to customers. But instead of just charging the 35 percent federal tax on profits, the commission let companies charge what is known as the “grossed up” tax of 54 percent.
But since 1987 pipelines have been exempt from paying the corporate income tax as long as they are organized not as corporations, but as Master Limited Partnerships.
Forcing customers to pay a tax that never gets to government sounds like an issue someone might want to get before a judge. This issue was taken before three federal judges on the District Court of Appeals in Washington. Judge David B. Sentelle, a conservative, wrote that while he was troubled that taxes were even considered in setting pipeline rates, the court had no authority to interfere.