On May 22, APGA filed comments in response to a Federal Energy Regulatory Commission (FERC) Notice of Inquiry (NOI) regarding the impact of the Tax Cuts and Jobs Act on interstate pipeline rates. APGA’s comments focus on Accumulated Deferred Income Tax (ADIT), which represents the accumulation of amounts collected through rates for income taxes but not yet needed to pay income taxes. The Tax Cuts and Jobs Act lowered the corporate tax rate from 35 percent to 21percent; however pipelines have, and in most if not all cases continue to, collected rates from their customers based on a 35 percent tax rate. As a result, a portion of an ADIT liability that was collected from ratepayers will no longer be due from interstate natural gas pipelines and is considered excess ADIT.
In its comments, APGA expresses support for requiring “interstate natural gas pipelines to provide to the Commission, on a one-time basis, additional information, such as supporting worksheets, to show the computation of excess or deficient ADIT and the corresponding flow-back of excess ADIT to ratepayers or recovery of deficient ADIT from ratepayers.” The comments also state that “because ratepayers contributed the ADIT sums, they should be returned because of the tax law change.”
APGA’s comments were accompanied by a white paper on ADIT that was developed by Ken Sosnick, a former FERC staffer now with Concentric Energy Advisors, Inc. A webinar on the whitepaper has been scheduled for 2:00 p.m., EST on May 31. Information on registering for the webinar is available
www.apga.org/webinars.
APGA previously submitted comments to FERC in response to a Notice of Proposed Rulemaking (NOPR) concerning the impact on interstate pipeline rates of the Tax Cuts and Job Act. The NOPR, which was approved at the Commission’s March meeting, is intended to allow FERC to determine which pipelines under the Natural Gas Act may be collecting unjust and unreasonable rates in light of the corporate tax reduction. A copy of the comments APGA filed are available on the APGA website. For questions on this article, please contact Dave Schryver of APGA staff by phone at 202-464-2742 or by email at
dschryver@apga.org.