The Federal Energy Regulatory Commission (FERC, the Commission) took a number of actions in November to deal with impacts from the Tax Cuts and Jobs Act (the Tax Act). FERC had beforehand issued a Notice of Inquiry searching for feedback on the best way to handle the impression of the Tax Act’s discount within the company federal revenue tax (FIT) price from 35% to 21%1. FERC’s latest actions are meant to make sure that the good thing about the tax reductions is handed on to customers.

First, the Commission issued a Policy Statement addressing accounting and ratemaking therapy of Accumulated Deferred Income Taxes (ADIT)2. Public utilities, pure fuel pipelines, and oil pipelines accumulate ADIT from customers in anticipation of paying federal taxes to the Internal Revenue Service (IRS).

Rich Bonnifield

As a results of the discount within the company FIT, a portion of the ADIT legal responsibility that was collected from customers will now not should be paid to the IRS and is now thought of extra ADIT. The Commission offered accounting and ratemaking steering on how public utilities, pure fuel pipelines, and oil pipelines ought to document amortization of extra and poor ADIT. The Policy Statement additional instructs public utilities, pure fuel pipelines, and oil pipelines to amortize extra or poor ADIT related to an asset that’s retired or offered after December 31, 2017.

Jessica Bayles

Second, the Commission issued a Notice of Proposed Rulemaking to revise charges for public utility transmission suppliers to account for the tax adjustmentsthree. The proposed rulemaking would apply in a different way to public utilities with transmission system charges and transmission acknowledged (or mounted) charges. For public utilities with system charges, the proposed rulemaking has three necessities: 1) to protect price base neutrality, they need to deduct extra ADIT from or add poor ADIT to their price bases, 2) to make sure ratepayers obtain the advantages of the Tax Act, they need to lower or improve their revenue tax allowances by any amortized extra or poor ADIT, and three) they need to incorporate a brand new everlasting worksheet into their transmission system price to trace extra or poor ADIT on an annual foundation. For utilities with transmission acknowledged charges, the proposed rulemaking would require them to find out extra or poor ADIT brought on by the Tax Act after which return or get well this quantity from prospects. Comments on the proposed rulemaking can be due 30 days from publication within the Federal Register.

Third, the Commission acted on a number of different Tax Act impact-related gadgets. It accepted a number of interstate pure fuel pipeline price discount filings made in response to Order No. 849 (which addressed the Tax Act and up to date adjustments to FERC’s revenue tax allowance coverage)four. It accepted an accounting reclassification request from Edison Electric Institute for sure public utilities and centralized service corporations that skilled stranded tax results as a result of change within the company FIT5. And it issued orders in 46 show-cause actions directed at public utilities whose transmission tariffs beforehand referenced the upper tax price. The Commission accepted price revisions from lots of these utilities6.

The Commission additionally accepted the reasons offered by a number of public utilities relating to how the diminished FIT price can be addressed in one other continuing pending earlier than the Commissionor how permitting the utility’s present charges to stay in impact will present prospects with decrease transmission chargeseight.

Since the Tax Act took impact on January 1, 2018, the Commission has moved expeditiously to evaluate its impacts on FERC-jurisdictional charges and to implement the adjustments wanted to make sure that ratepayers obtain the advantages of the diminished company FIT on a well timed foundation. The Commission’s actions in November have superior that trigger. The Commission’s actions display…

Read more at Source link


Please enter your comment!
Please enter your name here