20180117notice_of_investigation_order_no_33965.pdf

Office of the Secretary
Service Date
January 17,2018
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE INVESTIGATION )CASE NO.GNR-U-18-01
INTO THE IMPACT OF FEDERAL TAX )
CODE REVISIONS ON UTILITY COSTS )NOTICE OF INVESTIGATION
AND RATEMAKING )
)ORDER NO.33965
NOTICE OF INVESTIGATION
YOU ARE HEREBY NOTIFIED that,on December 22,2017,the President signed the
Tax Cuts and Jobs Act of 2017 the "2017 Tax Act")into law.See Pub.L.No.115-97,131 Stat
2054.A main feature of the Act is to reduce the federal corporate tax rate from 35%to 21%,
effective January 1,2018.This significant tax rate reduction will materially decrease many
utilities'current tax expenses.
YOU ARE FURTHER NOTIFIED that,because a utility's tax expenses are included in
its revenue requirement,and the Commission uses the revenue requirement to set fair,just,and
reasonable rates,the Commission is opening this case to investigate whether the Commission
should adjust utilities'rates and charges to reflect corporate income tax and revenue requirement
reductions caused by the 2017 Tax Act.Idaho Code §61-503.If the lower federal corporate
income tax lowers a utility's tax expense,then the Commission would recalculate the utility's
revenue requirement,make customer rates subject to refund,and allow benefits from the tax rate
decrease to flow to the utility's customers.
YOU ARE FURTHER NOTIFIED that,to protect utility customers against paying
unreasonably high rates,the Commission finds it reasonable to direct every rate-regulated utility
to account for the financial benefits from the tax rate reduction to 21%as a deferred regulatory
liability.To determine if rates should be changed,with current rates subject to refund and
adjustment,the followingprocess shall be used:
(1)Each rate-regulated utility (besides small water companies with less than 200
customers,and the small electric utility,Atlanta Power)must:
(a)Immediately account for the financial benefits from the January 1,2018 tax
rate reduction to 21%as a deferred regulatory liability;and
(b)By Friday,March 30,2018,file a report with the Commission identifyingand
quantifyingall tax changes individually.The report must disclose the federal income tax
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ORDER NO.33965 1
components for the year 2017,and the federal income tax components if the utility had
been subject to 2017 Tax Act's revisions to the tax code,including the 21%tax rate.
Each utility's report must include proposed tariff schedules that show the revenue
requirement impacts from the 2017 Tax Act,with the differences between the law in
effect on December 31,2017 and the law in effect on and after January 1,2018.Utilities
may supplementtheir reports with further estimates or explanation of taxes under the new
and old tax codes under normalized conditions if those utilities'rates are ordinarily set
under normalized conditions.I Utilities that operate in Idaho and in other states must
separately calculate system-wide and Idaho-specific figures to show how the 2017 Tax
Act impacts total operations and Idaho operations.
(2)After a utility files its report,Commission Staff must use reasonable efforts to,within
60 days,audit the utility and report to the Commission on the audit results and whether Staff
agrees or disagrees with the utility's proposed tariffs.
(3)If Staff disagrees with the utility's proposed tariffs and recommends changes to them,
then the Commission plans to issue an Order directing the utility to show cause why Staff's
recommended rate changes should not be made.
YOU ARE FURTHER NOTIFIED that the documentation related to this case will be
filed with the Commission and available for public inspection during regular business hours at
the Commission office.The documentation may also be viewed on the Commission's website at
www.puc.idaho.gov by clicking on "File Room"and then "Multi-Utility Cases."
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held pursuant
to the Commission's jurisdiction under Title 61 of the Idaho Code and that the Commission may
enter any final Order consistent with its authority under Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be conducted
according to the Commission's Rules of Procedure,IDAPA 31.01.01.000,et seq.
O RD ER
IT IS HEREBY ORDERED that all rate-regulated utilities (besides small water
companies with less than 200 customers,and the small electric utility,Atlanta Power)
immediately:(1)account for the financial benefits from the January 1,2018 tax rate reduction to
i Thus,whilethe Commission is requiring a utility to provideinformationbased on 2017 results,the Commission isallowingautilitytoproposealternativeresultsiftheutilitybelievesusingthe2017resultswouldbeinappropriate.If the utility proposes using alternative results,the utility must still report the 2017 results.
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ORDER NO.33965 2
21%as a deferred regulatory liability;(2)file the reports required by this Order by March 30,
2018.
IT IS FURTHER ORDERED that the Commission's Staff audit the utility and report to
the Commission as discussed above.
IT IS FURTHER ORDERED that,effective immediately,each utility's rates shall be
subject to refund based on the outcome of this case.
THIS IS AN INTERLOCUTORY ORDER.Any person interested in this Order may file
a petition for review within twenty-one (21)days of the service date of this Order with regard to
any matter decided in this Order.A petition to review may request that the Commission:(1)
rescind,clarify,alter,amend;(2)stay;or (3)finalize this InterlocutoryOrder.After any person
has petitioned for review,any other person may file a cross-petition within seven (7)days.See
Rules 321,322,323.03,324,325 (IDAPA 31.01.01.321-325).
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of January 2018.
PAU JELLAND R,P&E DÈl
ERIC ANDERSON,COMMISSIONER
ATTEST:
Diane Hanian
Commission Secretary
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