US House OKs bill with bond, tax provisions for Katrina recovery

Washington (Platts)--8Dec2005

The US House has overwhelmingly approved a bill that would provide
tax-exempt bonds and other tax relief to help Gulf Coast utilities rebuild
transmission lines damaged by Hurricane Katrina. 

      The legislation (HR 4440) would establish tax-exempt bond authority of
about $15-bil to rebuild devastated infrastructure in the so-called "Gulf
Opportunity Zones." These "GO Zone Bonds" would be issued by the states and
municipalities for rebuilding, renovating and acquiring property including
utility transmission lines. The bond authority expires at the end of 2010.

      With amounts based on each state's 2004 population in the zone,
Louisiana would have tax-exempt bond authority of about $7.9-bil,
Mississippi would have $4.8-bil and Alabama, $2.1-bil, according to
the House Ways and Means Committee.  

     The bill, approved Wednesday in a 415-4 vote, also would allow
investor-owned utilities five years to carry back net operating losses for
investments in the hurricane-damaged region before 2009. Another provision
would allow utilities to carry back Katrina-related casualty losses 10 years.

     Similar provisions cleared the Senate last month in its tax relief
package (S 2020). That bill, however, limits "GO Zone Bonds" to about $2,500
per person in the effected regions of Alabama, Louisiana and Mississippi and
is expected to cost $440-mil over five years. The Senate estimated its net
operating loss carry back provision would cost $923-mil over five years and
its public utility casualty loss carry back would cost $235-mil for that
period.

                                        ---Cathy Cash, cathy_cash@platts.com

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