December 19, 2000

You request a letter ruling on behalf of *************** (the "Company") that for Massachusetts corporate tax purposes, the Company is a "utility corporation" and therefore not subject to any other corporate excise imposed under G.L. c. 63 other than the excise imposed by G.L. c. 63, § 52A.

Facts

The following is your representation of the facts upon which we base this letter ruling. The Company is a Delaware corporation with its principal place of business in *************** [outside of Massachusetts]. The Company is empowered under the laws of its state of incorporation to generate, transmit, distribute or sell electricity for ultimate use by fifty or more persons.

The Company's business operations in Massachusetts consist of the ownership and operation of *************** (the "electric generating facility") located in *************** Massachusetts and the sale of the electricity produced by this facility. The Company began doing business in Massachusetts on ***************, when it purchased the electric generating facility from ***************, a Massachusetts utility corporation that had previously operated the facility. The Company is a member of the New England Power Pool, governed by the provisions of G.L. c. 164A.

The Company is a wholly-owned subsidiary of *************** ("Holding Company I), which is itself a first-tier subsidiary of *************** ("Parent Corporation"). [1] *************** ("Holding Company II), another first-tier subsidiary of Parent Corporation, manages and oversees the Company's activities, along with all of Parent Corporation's other merchant generation and related activities. The Company's books and records are maintained at the Parent Corporation's headquarters in *************** [outside of Massachusetts], and all actions by its board take place there. The Company's overall management, including financial management, cash management and procurement, including the procurement of *************** fuel for the electric generating facility, takes place at its principal place of business outside of Massachusetts, together with similar activities for other electric generating facilities owned by the Parent Corporation. The Company employs approximately 700 persons at its Massachusetts electric generating facility. Except for an Officer responsible for onsite management all of the Company's officers and directors are located in *************** or at other Parent Corporation locations in *************** [outside of Massachusetts].

As a merchant generator of electricity, the Company is subject to regulation by the Federal Energy Regulatory Commission. The Company is also licensed by the Nuclear Regulatory Commission ("NRC") as a nuclear power plant operator, and its plant operations are required to comply with extensive NRC regulations. Since it operates an electric generating facility in Massachusetts, the Company is required to be licensed as a "generating company" by the Massachusetts Department of Telecommunications and Energy ("DTE") and must comply with DTE rules and regulations governing such entities.

Ruling

The Company is a utility corporation for purposes of the excise imposed by G.L. c. 63, § 52A. Therefore, the Company is not subject to any excise imposed under G.L. c. 63 other than that imposed by G.L. c. 63, § 52A.

Discussion of Law

General Laws Chapter 63, section 52A, imposes a tax on every utility corporation doing business in Massachusetts. This tax is in lieu of any other corporate excise imposed under G.L. c. 63. G.L. c. 63, § 52A(4).

A "utility corporation" includes every incorporated electric company subject to G.L. c. 164. G.L. c. 63, § 52A(1)(a). In general, Chapter 164 deals with the manufacture and sale of gas and electricity. Under section one of these provisions, an "electric company" is defined as

a corporation organized under the laws of the commonwealth for the purpose of making by means of water power, steam power or otherwise and selling, or distributing and selling, electricity, within the commonwealth, or authorized by special act so to do, even though subsequently authorized to make or sell gas; provided, however, than electric company shall not mean an alternative energy producer.

According to the above definition, it would appear that for purposes of G.L. c. 63, § 52A, an electric company could only be a domestic corporation. However, G.L. c. 164A, which provides rules governing the New England Power Pool, of which the Company is a member, conforms the Massachusetts tax treatment of a foreign electric company to that of domestic electric companies. G.L. c. 164A, § 7(a) requires that a "foreign electric utility" be taxed "in the same manner and to the same extent as is provided by law with respect to a corporation defined as an 'electric company'" in G.L. c. 164, § 1. The term "foreign electric utility" is defined as any electric utility other than a domestic electric utility. G.L. c. 164, § 1. An "electric utility" is, in turn, defined as "any individual or entity or subdivision thereof . . . primarily engaged in the generation and sale or the purchase and sale of electricity." Id. Further, G.L. c. 164A, § 7(b) mandates that a foreign electric company that "owns or operates any electric power facilities" in Massachusetts be considered a utility corporation as defined in G.L. c. 63, § 52A and subject to tax under that section.

Based on the above, we rule that the Company is a utility corporation for purposes of the excise imposed by G.L. c. 63, § 52A. Consequently, the Company is not subject to any other corporate excise imposed under G.L. c. 63 other than the excise imposed by G.L. c. 63, § 52A.

Very truly yours,

/s/Frederick A. Laskey

Frederick A. Laskey
Commissioner of Revenue

FAL:DMS:rmh

LR 00-16



[1] Parent Corporation, through its subsidiaries, engages in power production and distribution operations, both domestically and internationally, and provides related, diversified services.