20180604Report - Resort Water Company.pdf

KARL T. KLEIN
DEPUTY ATTORNEY GENERAL
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 5156
Street Address for Express Mail
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Staff of the
Idaho Public Utilities Commission
IN THE MATTER OF THE INVESTIGATION
INTO THE IMPACT OF FEDERAL TAX CODE
REVISIONS ON UTILITY COSTS AND
RATEMAKING
RECTIVED
20lBJUH -h pH ?t t6
,rtl?ioliffifl5lggo*
BEFORE THB IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. GNR.U.18-01
)
)
)
)
)
)
)
)
REPORT OF THE
COMMISSION STAFF RE:
RESORT WATER COMPANY,
INC.
The Staff of the Idaho Public Utilities Commission submits this report about the impact
of the federal Tax Cuts and Jobs Act of 2017 (the "TCJA") on Resort Water Company, Inc. (the
"Company"), as directed by Order No. 33965.
BACKGROUND
On December 22,2017, the President signed the TCJA into law. Effective January 1,
2018, the TCJA decreased the federal corporate tax rate from 35o/o to 2lo/o. In response, the
Commission opened this multi-utility case to investigate whether to adjust the rates of certain
utilities that benefit from the reduced tax rate. See Order No. 33965. The Commission directed
all rate-regulated utilities-except for small water companies with less than 200 customers, and
the small electric utility, Atlanta Power-to immediately account for the tax benefits as a
regulatory liability, and to report on how the tax changes affected them, and how resulting
benefits could be passed on to customers. See id. at l-2.
ISTAFF COMMENTS JI-INE 4,2018
The Company filed a response on March 30,2018, estimating a $400 reduction in income
tax expense associated with the new tax rates under the TCJA.
STAFF ANALYSIS
Staff has reviewed the Company's response and its 2017 Annual Report filed on April
16,2018. Based upon its review, Staff believes the Company will not benefit from the TCJA.
Prior to the TCJA, the corporate income tax rate was blended based on the tax brackets
shown in Table I below. With the passage of the TCJA, the corporate tax rate changed to a flat
rute of 2lYu
Table 1: Marginal Corporate Income Tax Rates (2005-2017)
Income Tax
$0 - $50,000 15%
$50,001 - $75,000 $7,500 + 25o/o of any amount
over $50,000
$75,001 - $100,000 $13,750 + 34o/o of any amount
over $75,000
$100,001 - $335,000 $22,250 + 39Yo of any amount
over $100,000
$335,001 - $10,000,000 $113,900 + 34Yo of any amount
over $335,000
s10,000,001 - $15,000,000 $3,400,000 + 35o of any
amount over $ 1 0,000,000
$15,000,001 - $l 8,333,333 $5,150,000 + 380h of any
amount over $ I 5,000,000
$ 18,333,334+35Yo flat rate
In its Annual Report, the Company reported net income of $42,499 for 2017 that qualifies
for l5%o tax rate under the2017 tax brackets. The same level of income in20l8 would be taxed
at2lo/o, thus increasing the Company's income tax expense.
STAFF RECOMMENDATION
Staff recommends that the Commission acknowledge that the Company will not benefit
from the TCJA, and close this case as it relates to Resort Water Company, Inc.
2STAFF COMMENTS JI_]NE 4,2078
/r/,Respectfully submitted this
Technical Staff: John Nobbs
day ofJune 2018
('
Karl T. Klein
Deputy Attorney General
JSTAFF COMMENTS JUNE 4,2018
a
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 4TH DAY OF JUNE 2018, SERVED
THE FOREGOING REPORT OF THE COMMISSION STAFF RE: RESORT
WATER COMPANY, N CASE NO. GNR-U-l8-OI, BY MAILING A COPY
THEREOF, POSTAGE PREPAID, TO THE FOLLOWING:
TIM ELSEA PE DIRECTOR
RESORT WATER CO INC
I65 VILLAGE LANE
SANDPOINT ID 83864
S /"b,r-
SECRETARY
CERTIFICATE OF SERVICE