X. Tax Deductibility of CPT Premiums
1. Parties' Positions
Several parties, including DRA and TURN, propose that PG&E explore whether customers buying the CPT may deduct the premiums they pay as charitable contributions on their federal or state tax returns. DRA and TURN furnish many examples of green energy programs that allow deductibility. Because charitable contributions must be made via a tax exempt, 501(c)(3) organization, they also note that PG&E has experience partnering with such organizations, and that it should do so here to facilitate tax deductibility. DRA and TURN note that if PG&E is concerned about maintaining low CPT premiums, it makes sense to try to reduce to real price paid by customers by offering tax deductibility to those who itemize deductions.
PG&E agrees that "tax deductibility, if instituted for residential ratepayers, would reduce the net cost to participants, assuming they itemize their income taxes."37 PG&E is also willing to partner with other organizations to facilitate deductibility, noting that it partners with existing long-established entities such as the Salvation Army to promote low-income programs and with municipalities to promote energy efficiency programs.38
PG&E's concern is that exploring deductibility will delay implementation of its program. Nonetheless, it is willing to investigate tax deductibility for residential customers "once actual customers have enrolled in the program in order to determine the value of tax deducibility to actual customers."39
2. Discussion
Since PG&E does not object to partnering with a 501(c)(3) organization or to investigating tax deductibility, we adopt a requirement that it investigate the feasibility of both for residential customers. We believe PG&E should commence the investigation immediately, rather than waiting until it has customers and can survey them. At a minimum, it should immediately 1) ask for guidance from the Internal Revenue Service and California Franchise Tax Board, 2) analyze whether it can accommodate deductibility through an existing charitable foundation within PG&E, and 3) if it prefers an outside partnership, discuss such a partnership with a number of third party charitable organizations. PG&E shall report to the Commission on the results of its efforts no later than March 1, 2007 by making a compliance advice letter filing. The Commission delegates to the Energy Division authority to issue a resolution requiring PG&E to implement a tax deductible program if such program is feasible and consistent with the goal of the CPT.
37 PG&E reply brief at 57.
38 Id. at 25-26.
39 Id. at 27.
