North Texans Spend Millions On Non-Existent Federal Taxes

NORTH TEXAS (CBS 11) -- No one enjoys paying taxes. But everybody has to do it... or do they?

CBS 11's I-Team has obtained a study that says Oncor, the giant electric utility company in North Texas, is collecting hundreds of millions of dollars from customers for federal taxes that don't exist.

"Since 2008, they have collected $500 million for the purpose of paying taxes on their income," said Randy Moravec, executive director of the Texas Coalition for Affordable Power, a coalition of member cities – including Arlington, Plano and Frisco – that works toward finding the lowest rates for residents.

Asked how much of that money has actually reached the Internal Revenue Services, Moravec said: "None ... not a penny."

"Those taxes that are collected from the consumer never end up getting paid to the federal government," he said, adding, "It's an unfair levy on consumers."

The coalition, also known as TCAP, took a look at the part of your monthly electric bill – the part where Oncor collects money for federal taxes. For the average family, it amounts to only a few dollars a month, or about $30 a year, and is not itemized on your bill.

Although Oncor collects for federal taxes, it actually does not owe the IRS anything because its majority owner, Dallas-based Energy Future Holdings, has been operating in the red for years.

"In the state of Texas, it's perfectly legal for Oncor to do what they're doing right now," said state Sen. Wendy Davis, D-Fort Worth, who is a critic of the utility company's collection for federal taxes.

Oncor spokesman Chris Schein said the money not used for federal taxes is, instead, used to lower operating expenses that ultimately keeps rates down.

"Customers are getting all of the benefits out of this, to lower customer bills," Schein said.

So why say the money is for taxes in the first place?

Schein said Oncor is required to collect money for federal taxes to stay "consistent both with federal tax law and public utility accounting practices."

"It's all very visible, very transparent," he said.

It was, however, news to Keith Bailey, a truck driver who lives in Arlington with his wife and daughter. And he was not happy when the I-Team told him.

"I don't believe anybody should have to pay anything on a bill, unless it's going for what it says it's going for," Bailey said. "It doesn't really matter how little it is. It wouldn't be any more fair than me and you doing something like that to make a profit," he said.

Sen. Davis said there should be a law against charging consumers for taxes that are never levied.

"Unfortunately, rather than moving in that direction, the state is actually trying to move in the opposite direction," she said, referring to a bill that has already passed the senate and is still pending in the Texas House.

If the bill becomes law, the senator said, "It would remove the Public Utility Commission's authority to regulate utility companies in this particular arena."

If you want to reach CBS 11′s Senior Investigative Producer Jack Douglas Jr., you can email him at jdouglas@cbs.com. If you want to reach CBS 11′s Investigative reporter Ginger Allen, you can email her at gingera@ktvt.com.