Lykes Energy, Inc. and Subsidiaries - Page 8

                                        - 8 -                                         

          the acquirer which must assume People's obligation to make FEECA            
               The amounts billed to People's customers for the FEECA                 
          programs are not payments for the goods and services a customer             
          consumes.  In designing the rates that People's may charge its              
          customers, the PSC does not consider FEECA receipts as part of              
          People's revenue from goods and services.  It does not consider             
          FEECA expenses as part of People's "prudently incurred" expenses            
          of providing goods and services.  It does not include excess                
          FEECA receipts as part of People's capital investment on which it           
          is entitled to earn a return.                                               
               The State of Florida and its citizens are the intended                 
          beneficiaries of the FEECA statute and the FEECA programs.  No              
          direct benefit to People's is intended.  People's customer base,            
          rate base, and natural gas sales have increased as a result of              
          FEECA expenditures.                                                         
               Petitioners, relying on Seven-Up Co. v. Commissioner, 14               
          T.C. 965 (1950), and its progeny, contend that the FEECA receipts           
          are excludable from People's gross income.  Petitioners argue               
          that People's was a conduit for the receipts in that it received            
          them subject to an obligation to account for them separately and            
          to expend them for a set purpose under the control and                      
          supervision of the PSC.  Petitioners contend that People's                  

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  Next

Last modified: May 25, 2011