APGA Board Approves Policy Resolution on Impact of Lowered Corporate Tax Rate on Pipeline Rates

By Dave Schryver posted 05-10-2018 11:19

On May 7, the APGA Board of Directors unanimously approved a policy resolution at their quarterly meeting held in Alexandria, Va., that addresses the benefits to ratepayers from Federal Income Tax Reform. The Tax Cuts and Jobs Act of 2017, which was signed into law in December, lowered the corporate tax rate from 35 percent to 21 percent. However, all pipeline rates continue to recover from ratepayers an income tax allowance assuming a 35 percent rate.

The resolution states that because the Federal Energy Regulatory Commission (FERC) lacks the authority under the Natural Gas Act to establish a suspension or refund date for rate reductions caused by the new tax law and policy, lower rates will become effective only prospectively, most likely more than a year after the change in law, resulting in overcharges as much as hundreds of millions of dollars. The resolution calls on interstate natural gas pipelines “to file immediately to reduce their recourse rates to account for their lower federal income tax rate and the FERC’s revised policy on pass-through entities.” The resolution also calls on “FERC to expedite its review of pipeline rates and commence proceedings under Section 5 of the Natural Gas Act to lower rates where necessary.” In addition to this resolution, the APGA Board approved several revisions to existing resolutions.

With the APGA Board’s approval, the resolutions will now go before membership for a final vote at the Annual Meeting scheduled for July 25 in Portland, Ore. APGA’s policy resolutions direct and guide the association’s advocacy efforts.

For questions on this article, please contact Dave Schryver of APGA staff by phone at 202-464-0836 or by email at dschryver@apga.org.