Windfall Profits Tax

The House Ways and Means Committee will consider the tax portions of the
"energy" bill after the July 4 recess. We have learned that the Democrats on
the Committee may offer a windfall profits tax on energy to pay for other
aspects of the tax bill. The price of the tax bill has grown from the
Administration's anticipated level of $10 billion to over $50 billion and
under the pay-go rules additional tax cuts must be paid for from other
sources. A similar amendment by Senator Rockefeller (D-WV) was overwhelming
rejected by the Senate Finance Committee. We do not want to take anything
for granted as this could be continuously raised during the energy debate.

Per my request, Mike Pate is going to hold a meeting next week with EPSA,
API, EEI and other related associations to decide how to combat this and
future efforts on the windfall profits tax. He will also invite company
representatives from El Paso, Duke, Williams and others. However, we think
this effort is best pursued by our associations to avoid unwanted attention
to earnings.

I will update as this develops.