FERC addresses changes in income tax rates for electricity, natural gas, and oil companies
The Federal Energy Regulatory Commission (FERC) recently took action regarding changes in the income tax rates due to the Tax Cuts and Jobs Act of 2017 for the electric transmission and natural gas and oil pipeline companies that it regulates.
Among the actions FERC took was the issuance of a Notice of Inquiry seeking information on whether and how the Commission should address accumulated deferred income taxes and bonus depreciation for electric companies and gas and oil pipelines.
FERC noted that most of the electric transmission companies it regulates have transmission rates that adjust automatically to changes in tax rates.
FERC did, however, Issues two Federal Power Act show-cause orders affecting 48 companies whose transmission tariffs specifically reference tax rates of 35 percent. According to the orders, the companies must propose revisions to their transmission rates or demonstrate why they should not do so.
The Commission also issued two waivers that allow the Public Service Company of Colorado and certain transmission owners within the Midcontinent Independent Service Operator (MISO) to allow for mid-year rate adjustments to reflect the tax rate changes.
For natural gas pipeline companies, FERC issued a Notice of Proposed Rulemaking that would enable the Commission to determine whether pipelines under the Natural Gas Act may be collecting unjust and unreasonable rates.
The proposal directs interstate pipelines to file a one-time report regarding the rate effect of the new tax law and changes to FERC’s income tax allowance policies. In addition to filing the report, each pipeline could decide to make a limited section 4 filing to reduce its rates according to the filing, commit to file either a prepackaged uncontested rate settlement or a general NGA section 4 rate case, submit a statement explaining why it believes it should not change its rates or file the form without taking any other action.
The Commission also began two investigations under section 5 of the Natural Gas Act to determine if the rates that Dominion Energy Overthrust Pipeline LLC and Midwestern Gas Transmission Company currently charge are just and reasonable.
FERC also said that it will address tax changes for the oil pipelines it regulates in the 2020 five-year review of the oil pipeline index level.
