Legislature(2005 - 2006)HOUSE FINANCE 519
04/26/2006 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB237 | |
| HB29 | |
| HB375 | |
| SB305 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 375 | TELECONFERENCED | |
| + | HB 306 | TELECONFERENCED | |
| + | SB 305 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 29 | TELECONFERENCED | |
| += | SB 237 | TELECONFERENCED | |
CS FOR SENATE BILL NO. 305(FIN) am
An Act repealing the oil production tax and the gas
production tax and providing for a production tax on
oil and gas; relating to the calculation of the gross
value at the point of production of oil and gas and to
the determination of the value of oil and gas for
purposes of the production tax on oil and gas;
providing for tax credits against the production tax on
oil and gas; relating to the relationship of the
production tax on oil and gas to other taxes, to the
dates those tax payments and surcharges are due, to
interest on overpayments of the tax, and to the
treatment of the tax in a producer's settlement with
the royalty owners; relating to flared gas, and to oil
and gas used in the operation of a lease or property
under the production tax; relating to the prevailing
value of oil and gas under the production tax; relating
to surcharges on oil; relating to statements or other
information required to be filed with or furnished to
the Department of Revenue, to the penalty for failure
to file certain reports for the tax, to the powers of
the Department of Revenue, and to the disclosure of
certain information required to be furnished to the
Department of Revenue as applicable to the
administration of the tax; relating to criminal
penalties for violating conditions governing access to
and use of confidential information relating to the
tax, and to the deposit of tax money collected by the
Department of Revenue; amending the definitions of
'gas,' 'oil,' and certain other terms for purposes of
the production tax, and as the definition of the term
'gas' applies in the Alaska Stranded Gas Development
Act, and adding further definitions; making conforming
amendments; and providing for an effective date.
2:47:05 PM
WILLIAM CORBUS, COMMISSIONER, DEPARTMENT OF REVENUE, stated
that HB 488/SB 305 is historic legislation. It will:
· Replace a broken Economic Limit Factor (ELF) based
production tax system
· Provide incentives for badly needed investment
· Provide special incentives for small sized companies to
explore Alaska
· Provide higher State revenues, particularly at higher
prices
Commissioner Corbus pointed out that the Governor strongly
supports the Petroleum Profit Tax (PPT) as originally
proposed as it provides a:
· 20% tax/20% investment tax credit
· Includes no add-on progressivity factor
Commissioner Corbus noted that the House Resource Committee
(HRC) version includes the Governor's proposed 20% tax rate
combined with a progressive factor. The Department of
Revenue does not support the progressive factor. He
commented that high taxes discourage investment. Alaska
should not be mesmerized by the current high prices of oil,
as it is important to encourage oil production that has
dropped, overtime.
Commissioner Corbus pointed out that the Trans-Alaska
Pipeline System (TAPS) is now operating at less than 50%
capacity. He stated that recent investment in development
and production has been inadequate and that higher tax rates
would further discourage new investments. The State should
not emphasize short-term revenues, but instead maximize
wealth over the long run. He urged that:
· The 20/20 is the appropriate tax and tax credit rate
to arrest the trend It is important to keep an eye
on the prize, the gas pipeline
Although PPT includes investment incentives, a stronger link
for effecting investment would be the tax rate. As tax
rates go up, investment goes down.
Commissioner Corbus stated that the Senate version (SFC)
made several changes from the Governor's proposal. He
recommended that any alternative be carefully scrutinized.
· 22.5% tax rate
· 25% tax credit rate
· Progressivity factor
· The effective date
2:52:02 PM
Commissioner Corbus addressed the 25% tax credit noting that
the SFC version includes a 25% tax credit rate. The higher
a tax credit rate, the more risk for the State. Most of the
new oil development on the North Slope relates to heavy oil,
which can involve an investment of billions for new
facilities and wells and take many years to plan and
execute.
Commissioner Corbus continued, considerable investment in
heavy oil development during years of low oil prices can
result in low Petroleum Production Tax (PPT) for the State
during such years until the tax credits are absorbed. The
State must be careful with high tax credits, as they are
high-risk strategy; adopting high tax credit rates of 25% to
justify high tax rates of 22.5%, is the wrong strategy. It
is a strategy that gambles too much on oil prices being high
for too many years into the future. It could be a great
detriment to the State, which is why the Governor limited in
his proposal to a 20% maximum incentive, which the State
could safely provide.
2:53:03 PM
The Administration strongly supports the original HB 488/SB
305. He commended the House for all their hard work on such
a complex issue; however, the Administration does not
support the 22.5% tax/25% credit as passed by the Senate.
The Administration believes that the 20/20 recommendation,
not including the progressive factor, is an appropriate
level to:
· Attract investment,
· Bring the gas line on, and
· Maximize the State's wealth over the long term.
2:54:57 PM
ROBYNN WILSON, DIRECTOR, DIVISION OF TAX, DEPARTMENT OF
REVENUE, provided a handout to Committee members: "Comparing
CS HB 488(RES) to SB 305 (CSSB 305 (FIN) am)". (Copy on
File).
2:57:28 PM
Ms. Wilson referenced Page 2, noting that the bottom line
for the State, the cumulative severance tax ($B) 2006-2030
low volume scenario. She pointed out that the Governor's
bill is highlighted in red and indicates "a middle of the
road" approach and provides a balanced package that brings
in adequate new revenues but does not place the State at
risk with credits too high.
The green line indicates the House Resource Committee (HRC)
version; the graphed black line indicates the Senate Finance
Committee (SFC) version. The chart highlights the different
oil prices and default scenarios. A crossover happens at
about $60 dollars per barrel.
3:00:31 PM
Representative Hawker asked the parameters in the low volume
scenario database used. Ms. Wilson responded that low
volume does not assume a gas line.
3:00:59 PM
DAN DICKINSON, CONSULTANT, TAX DIVISION, DEPARTMENT OF
REVENUE, added, that the low volume does not include the
development of Pt. Thompson. He emphasized that the low
volume scenario is based on a rate of decline and assumes a
significant amount of reinvesting. The assumptions are that
there is sufficient investment being made to generate the
volumes. They are volumes based on a historic rate of
decline. Representative Hawker asked if the low volume
scenario excluded the differentiation of adding an alpine
size field every few years. Mr. Dickinson affirmed.
3:02:53 PM
Ms. Wilson referenced Page 3, the tax rate. Under the SFC
version, the general rate offered was 22.5% compared to the
HRC version at 20%, the same as the Governor's original
bill. That rate was based on net value production.
The private royalty lease rates under the SFC version offer
the rates, 5% for oil and 1.67% for gas. In the HRC
version, the private royalty rate is 5% on oil & gas. The
amount of magnitude on the private royalty leases is less
than 1% of the total production.
Under the SFC version, there is a separate rate for Cook
Inlet oil @ 5%, based on the net value. In the HRC version,
there is no special provision for Cook Inlet.
The SFC version treats gas differently. There has been
discussion for a lower rate for gas. When dealing with tax
on the net, questions on allocation costs arise. There is
no special gas treatment in the HRC version of the bill.
3:05:41 PM
Ms. Wilson referenced Page 4, gas revenue (value) exclusion
(GRE) found in the SFC version on Page 19. The gross value
excludes 2/3 of the value of gas:
· Yields an effective rate (before deductions) of 7.5%
· On a net value basis, yields an effective tax rate of
nearly 5%
· Obviates the need to allocate expenses
3:07:46 PM
Ms. Wilson referenced Page 5, indicating the effect of the
tax rate, the cumulative severance tax revenues under SB 305
with a 20%, 22.5% and 25% tax rate. She pointed out the
large differences.
Co-Chair Chenault inquired why no 20/20 rate had been
indicated. Ms. Wilson explained it indicates a change to
the tax rate based on the SFC version.
Representative Weyhrauch questioned if the representation of
the bar was correct. Ms. Wilson apologized that it had been
mislabeled.
3:11:17 PM
Ms. Wilson referenced Page 6, which provides the same
information offered on Page 5, on year-by-year bases. The
graph indicates the effect of the tax rate and the annual
severance tax under the SFC version, using various
percentages into 2030.
In response to a query by Representative Kelly, Ms. Wilson
explained that the graph isolates only the tax effect.
3:13:31 PM
Ms. Wilson addressed the progressivity listed on Page 7.
The chart shows a separate progressivity for oil and gas.
For oil, it is triggered at $50 West Texas Intermediate
(WTI) with a slope factor of .3%. In the HRC version, the
rate is triggered to 37.5% at $110 dollars.
Ms. Wilson compared the SFC version, referencing Page 8, oil
only, triggered at $50 dollars Alaska North Slope (ANS) West
Coast with a slope factor of .00155. She viewed WTI as a
better marker; it is used as the standard.
3:16:21 PM
Ms. Wilson referenced Page 9, providing the SFC version
progressivity formula. She explained the three combined
standard numbers. She suggested that if the SFC version
were adopted, the formula would be condensed tp .00155,
which is actually the same result.
Representative Holm asked what "wh" meant. Ms. Wilson
replied that would be the wellhead price. Mr. Dickinson
added that in statute, it is defined that the wellhead is
the prevailing value; in regulations, the prevailing value
is that which prevails when the oil is sold.
3:18:37 PM
Ms. Wilson referenced Page 10, which graphs the effects of
progressivity. The HRC version moves at a steeper slope
than the SFC version and jumps up at $110 dollars.
3:19:48 PM
Ms. Wilson referenced Page 11, the capital investment credit
rate of 20% (HRC) versus 25% (SFC).
3:20:15 PM
Ms. Wilson continued Page 12, highlights the effect of the
credit rate, cumulative severance tax revenues under SB 305
with the various proposed credit rates. The inherent risk
is not reflected. The Administration opposes the 25% credit
rate as it poses too much risk to the State.
Representative Joule inquired who would benefit the most.
Mr. Dickinson replied that generally, it would be the
investors. Presently, on the North Slope, the three largest
companies are making about 80% of the investment, which
gives them 80% of the benefit.
Representative Joule said there would be no difference for
credits for new exploration. Mr. Dickinson responded that
in the base credit, there would be no difference. There are
other provisions, which would be different, and would be
addressed later during testimony.
3:22:24 PM
Ms. Wilson continued, Page 13, the capital investment credit
under both versions, applies to the PPT general tax only and
not against the progressivity tax or spill surcharges.
Under both bills, the credits are transferable.
3:23:36 PM
Ms. Wilson referenced Page 14, refundable credits. Under
the HRC version, up to $10 million credit dollars could be
refundable depending on the current investments; there is no
such provision in the Senate version.
3:24:17 PM
Ms. Wilson referenced Page 15, the carry forward of loss.
In the event of net calculation, with a producer loss, that
loss could be carried forward to the next month. At the end
of that calendar year, any remaining loss is converted to
credit at that rate of tax. In the HRC version, the
conversion rate is 20%; in the SFC version, 22.5% of the
loss is carried forward into the credit.
Co-Chair Chenault asked about the exploration graph credits
and if there were models for exploration versus development
versus credit. Mr. Dickinson responded that there has been
modeling provided: an investment credit in the exploration
stage provides more leveraging as it covers dry holes. The
bill does extend the credit for rank exploration. There is
no modeling regarding the change of rates, changing
behaviors.
3:26:48 PM
Ms. Wilson referenced Page 16, the handling of the
progressivity tax. In the HRC version, the tax is
deductible like lease expenditures; in the SFC version, the
progressivity tax is not deductible. The progressivity is
calculated on the gross in both versions.
Mr. Dickinson observed the complexity of the formula.
Ms. Wilson pointed out that the Governor's bill does not
have a progressivity element in it. If the House Finance
Committee chooses to include that element, the language in
the HRC version is "cleaner".
Representative Hawker remembered that the Senate's first
draft version provided a very different option than the end
product. He concluded that there were more benefits to a
net structure versus a gross structure. Ms. Wilson observed
that there are both advantages and disadvantages to both
approaches. In the net, progressivity does recognize costs,
which is beneficial. On the other hand, looking at the
progressivity on gas, making it on net could be problematic.
She thought that the SFC version was the equivalent.
Mr. Dickinson added, the SFC version returned to the gross
as it reflects the math of combining the oil and the gas.
To do it on the net creates problems, as there should be a
constructing to make the impact of the oil and gas the same.
Six to one is a figure used because of BCU equivalents. The
danger is the unexpected effects for producers that have oil
and gas and that combination.
Representative Hawker believed such complexity could be
handled.
3:33:28 PM
Ms. Wilson referenced Page 17, the transition provisions.
In the Governor's bill, there is a 5-year look back and the
expenses are allowed over a 6-year period. Under the HRC
version, the 5-year look back was changed to a 3-month
period. Under the Governor's version, the only expenses
dealt with are capital investments, but the HRC version
looks at capital and operating expenditures, deductible over
9 months. Under the HRC version, there is no sunset.
3:35:15 PM
Ms. Wilson referenced Page 18 of the Senate version, where
the look back is 5 years and applied to capitalized
investments only. It could be a benefit up to 7 years,
st
moving forward. There was a sunset of March 31, 2013,
pointing out the credit of 20%.
3:36:07 PM
Ms. Wilson referenced Page 19, which provides two recouping
scenarios for 5 years and 7 years. The graph indicates the
total possible credits that could be recouped and that must
be recouped with the 7-year limit. Mr. Dickinson added that
if a producer was investing at the same level they did
during the look back period, they would not be able to claim
the full amount of the transition investments. To claim the
full amount, they would have to increase the amount of the
investment during the recouping period.
3:39:37 PM
Ms. Wilson referenced Page 20, which illustrates the effect
of the transition.
Representative Hawker discussed the rate of recovery for the
individual beneficiary that would depend on their own
investment. He asked if it would all be in the assumptions.
Mr. Dickinson acknowledged it is in the assumptions and is
shown the differences between the two bills. Under the
Governor's bill, the Industry would be able to recoup if
they had expenditures and revenue. Ms. Wilson added, that
under the Governor's bill, there is a provision that it
could be taken only if oil was over $40 dollars a barrel;
that provision was not included in either of the other two
versions.
3:43:41 PM
Ms. Wilson referenced Page 21, the base allowance in the two
proposed versions from the House and Senate. The credit of
$12 million dollars per year per company, sunsetting
3/31/2016.
3:44:47 PM
Ms. Wilson referenced Page 22, the base allowance. Under
the Governor's bill, there is a $73 million dollar
deduction; the HRC version changed that from a deduction to
a credit and the effective amount was pared down. A $12
million dollar credit per company would be worth about $60
million dollars compared to that proposed in the Governor's.
Ms. Wilson explained how the base allowance works on Page
23. If it were less than 5000 barrel per day (bpd), the
credit would be equal to 100% of the tax being offset. If
production were over 5000 bpd, there would be a percentage
of tax offset, provided by formula. All producers will have
some amount of tax offset. Mr. Dickinson added that
everyone receives the 5000 bpd exclusion at average value.
3:46:23 PM
Ms. Wilson referenced the new Page 24, which indicates the
allowance difference from 2006 to 2030, highlighting three
different price scenarios from the three bill versions.
Mr. Dickinson observed that the Governor's version did not
sunset. Both the HRC and the SFC elected to have a sunset.
The Department believes that if the State is attempting to
affect investment behavior, there should be no sunset. When
prices are low, the price allowance does not account for
much but as prices rise, the effect of the allowance
increases under the SFC version. In the HRC and Governor's
version, the effect is small.
3:49:10 PM
Ms. Wilson referenced Page 25, the safe harbor provisions.
Those provisions were brought forward with the idea that
many of the calculations would be done using estimates of
annual expenditures. In the spirit of fairness, there was a
provision established that determined as along as 90% of the
due tax was paid each month, there would be no interest.
The annual "true-up" would be due in March of the following
year, at which time, the remainder of the tax would be
collected. That is called the "safe harbor". Under the HRC
version, the safe harbor is 90% and if it is not met on
time, there is an interest & a penalty charge of 5%. The
penalty was not in the Governor's version. In the SFC
version, the safe harbor amount was increased to 95% &
requires more accurate estimating on the part of the
producer; if not met, there would be interest placed on the
amount up to 95%.
Representative Joule asked if there was a similar function
under the current Economic Limit Factor (ELF). Ms. Wilson
explained that under the ELF, 100% of the tax is due monthly
and if it is not paid, there is a charge of 5% per month.
Mr. Dickinson interjected that falls within the general
interest provision @ 11% interest annually. The penalty
provision under current law is not automatic.
3:52:06 PM
Ms. Wilson referenced Page 26 - safe harbors, pointing out
the differences in drafting language. In the HRC version,
the language indicates what is due would be 100% with a safe
harbor of 90%. In the SFC version, the amount is due at the
95% level. The difference in the language indicates a
change between the SFC and HRC version.
3:53:11 PM
Ms. Wilson referenced Page 27, the effective date. In the
st
Governor's version that date is July 1, 2006; in both the
SFC and the HRC versions, it would be retroactive to April
st
1, 2006. Ms. Wilson advised it is not a good policy to
make taxes retroactive.
Both bills provide for a transition rule that payments could
be made under the old ELF system for 6 months with pay-up in
th
the 7 month.
Representative Hawker asked for assurance that the
Department would have time during the six months to
promulgate all the regulations necessary to implement the
tax with adequate time for the Industry to respond and
prepare their accounting system. Ms. Wilson said she could
not guarantee that. There is an accompanying fiscal note to
cover costs for contracting for additional legal help to
draft regulations during those six months. She added, it is
not an unreasonable time to do that but is a consideration.
Mr. Dickinson pointed out that the proposed versions have
not made the task simpler; they are very complex & the
fiscal note reflects that complexity.
In response to Representative Kelly, Mr. Dickinson commented
that it is not a common practice to charge taxes
retroactively. Representative Kelly thought that harm could
be mitigated by not addressing the penalties. Mr. Dickinson
advised that the current bill gives 6 months from the date
it was enacted. The general principles are understanding
what the obligations are for tax planning.
Ms. Wilson was not looking forward to the first audit,
including the seven-month tax return.
3:58:29 PM
Ms. Wilson referenced Page 28, addressing the spill
surcharges (split nickel). Currently, there is a 5 cents
surcharge. The amount suspended is based on the balance of
the spill fund. In the HRC version, there is no change to
the surcharge @ 5 cents but the amount collected increases
from 3 cents to 4 cents with no credit & no deduction for
that tax. In the SFC version, the total was increased 1
cent for a total of 6 cents; the amount collected increased
2 cents from 3 cents to 5 cents; there is no credit or
deduction for that tax.
Representative Hawker asked for more information about the
proposed surcharge. Mr. Dickinson observed that the SFC
version offered intent language on Page 2, Section 1, item
#B. Representative Hawker noted that the intent language
was what raised his question.
4:01:05 PM
Ms. Wilson referred to Page 29, the use of Department of
Natural Resources (DNR) royalty values. In the Governor's
bill, it was thought that some of the royalty values could
be used in calculating real value. They thought it could
simplify the tax and audit process. The SFC version removed
that provision by an amendment.
Mr. Dickinson related that Page 30 depicts the use of the
Department's values in the SFC version.
Representative Holm did not understand the Department of
Revenue's position regarding the applications.
4:05:47 PM
Mr. Dickinson replied that the Commissioner would be
balancing the efficiency of the Tax Division, determining if
the calculations reflect value and reasonable costs of
transportation in an unbiased way.
Representative Hawker pointed out that is a "large issue".
He opined that some of the House Finance Committee (HFC)
members do not agree with the allowance. He mentioned the
RSA agreements submitted by the three large oil companies.
The RSA's from ConocoPhillips and BP contain small
differences; however, the Exxon RSA agreement has a huge
difference. Mr. Dickinson said given the data, it would be
inappropriate to identify the information. Representative
Hawker advised that he had taken his information from the
Department of Revenue's web site, which is public
information.
In response to a query by Representative Hawker, Mr.
Dickinson said the Department's analysis indicates that
there are different values between the tax and royalty.
Representative Hawker suggested that the Department should
provide a convincing argument regarding that, as it is vital
it become public discussion.
4:11:08 PM
Ms. Wilson pointed to a couple of differences indicated on
Page 31 regarding abandonment. The HRC version has no
credit for abandonment; in the SFC version, there is no
credit or deduction for abandonment of old production. It
requires the allocation of expense based on production be
allowed.
Co-Chair Chenault asked if abandonment refers only to wells.
Mr. Dickinson referenced a list including well, unit, right
of way and/or platform, listed on Page 22, Line 17, SFC
version.
4:13:53 PM
Ms. Wilson addressed other provisions included in SFC
version listed on Page 32, not included in the HRC version.
For any credits taken under that provision, the exploration
date must be provided to the Department of Natural Resources
if claimed. That language mimics current language in
statute. Co-Chair Chenault asked if language applied only
to existing fields or new exploration. Mr. Dickinson stated
that it is automatic on State land and that new drilling on
a private lease would not meet the requirement.
Ms. Wilson continued, Page 32 addresses transfer of goods
and services from a foreign to a domestic market. She noted
discussion in the Senate about having tools for the future,
pointing out that IRC Sec. 482 for transfer pricing in the
federal arena between a domestic company and a foreign-
sister company. There has been discussion regarding the
need for that provision. The Department does not believe it
is necessary and that "ordinary & necessary" is standard to
the bill; she heard discussion it could be useful in the
future.
4:18:10 PM
Representative Hawker asked about the permissiveness of the
IRC 482 language. He questioned if the Department felt
"mandated" to incorporate those provisions. Mr. Dickinson
referred to language elsewhere in the bill, which clarifies
transactions such as an internal transfer, not allowed. The
Department's concern rests with such internal transfers.
Ms. Wilson pointed out, that language was taken from the SFC
version and was not included in the HRC version. She noted
that the Department would like to see it included in the
final bill.
4:20:49 PM
Ms. Wilson noted clarifying language added in 160©(1)(B).
Mr. Dickinson said that language develops cost standards and
places the ranks in order. A balance could be sought. The
SFC version amended support of credit for any preferred
facility. He urged support for the Governor's version.
Co-Chair Chenault asked about credits on anything regulated
or dealing with tariffs. Mr. Dickinson stated that the
types of facilities listed in the bill are not currently
being regulated; if they were, the credits would be taken
into account.
4:23:43 PM
Ms. Wilson referenced Page 33, the catastrophic oil spill
expenditures for clean-up are not deductible. In the SFC
version, they would not be deductible; in the SFC version,
they could be deductible if leased, but not specifically
addressed.
Ms. Wilson advised that catastrophic oil spills have
specific meaning in Alaska's history to the environment in
spills in excess of 100,000 barrels. The most recent oil
spill was approximately 6,000 barrels and clearly, not
within the meaning of "catastrophic oil spill".
Co-Chair Chenault asked if there had ever been an oil spill
in Alaska, where fault was not determined. Mr. Dickinson
said that he would look to see if that was standard practice
or not. Co-Chair Chenault believed most likely, it would
never come into effect, as fault is always found.
Representative Joule pointed out that with that language, a
spill ½ the size of the Exxon Valdez would not be considered
catastrophic. Ms. Wilson acknowledged that the Valdez spill
was "a lot of oil". Representative Joule stressed that it
was much less than 5 million gallons and that the damage was
"horrific". Mr. Dickinson interjected that "catastrophic"
should be considered a quantum qualification that presents a
grave and economic threat to the environment and economy. A
smaller spill, in a sensitive area, could qualify under that
language.
Representative Hawker questioned an oil discharge in excess
of 100,000 barrels. He asked how that could be interpreted
from wells producing that much water & oil mixture. Ms.
Wilson stated that given the limited statutory site, it
would meet the second criteria, which is "any other
discharge, which the Governor determines presents a grave
and substantial threat to the economy or environment".
Co-Chair Chenault asked about a situation for a gas station
crack and if clean-up expenses would be deductible on any
tax the State issues. Mr. Dickinson advised that there are
diesel filling stations on the North Slope and in those
facilities, catastrophic would be deductible.
4:32:52 PM
Ms. Wilson referenced the language in the HRC version
regarding catastrophic oil discharge into marine or inland
waters of the State. That language is specific to water and
also covers incremental expenses of transportation. It
focuses on oil spills affecting water. Mr. Dickinson added
that the language appears in statute and deals with the
downstream, reference tankers. The language was moved and
crafted to deal with tankers and lease expenditures.
Vice Chair Stoltze asked if the delivery system was part of
Trans-Alaska Pipeline System (TAPS). Mr. Dickinson
explained that the end of TAPS is where the tankers
responsibility begins. There is nothing between TAPS and
the ship.
4:35:33 PM
Ms. Wilson referenced Page 34, the effective severance tax
rate compared to the wellhead (less royalty), low volume
scenario. She urged the Committee to consider a moderate
approach.
4:36:59 PM
Representative Kelly asked about the credit listed on Page
12. Ms. Wilson explained the comparison difference between
the three credit rates, noting that the $20 dollar level
moves and could have a net increase of 100%. The intent was
to isolate the credit rate. Mr. Dickinson voiced concern
when prices are high, with large investments and then a
severe price correction occurs. That could make a large
difference, creating a situation of long recovery time.
SB 305 was HELD in Committee for further consideration.
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