APGA Challenges FERC’s Revised Policy Statement on the Treatment of Income Taxes

By Dave Schryver posted 06-07-2018 12:05

On June 6, APGA filed a Motion to Intervene (MTI) with the United States Court of Appeals for the D.C. Circuit in a proceeding initiated by an oil pipeline, (SFPP, L.P.). Specifically, SFPP has filed a Request for Rehearing of the Federal Energy Regulatory Commission’s (FERC) March 15, 2018 Revised Policy Statement on Treatment of Income Taxes. In its filing, SFPP is arguing that the Commission’s Revised Policy Statement is flawed in several areas. First, they argue that the Commission failed to adequately address the economic principles presented by SFPP that demonstrate no double recovery exists “because a discounted cash flow return on equity based on a proxy group composed entirely of Master Limited Partnerships (MLPs) does not assume a second level of income taxation.” SFPP’s filing also states that “even if the Commission persists in relying on faulty analysis to conclude that a double recovery exists, the Commission’s mandate under Hope to ensure just and reasonable rates nonetheless requires the Commission to account for the income tax liability of an MLP’s corporate parent owner. The Commission’s current universal removal of an income tax allowance for all MLPs without regard to corporate parent ownership denies such MLPs the opportunity to recover a legitimate cost of providing service, thereby resulting in unjust and unreasonable rates.”

In its MTI, APGA communicates that a number of its members receive FERC-jurisdictional service from natural gas pipelines that are organized as MLPs and that APGA has an interest in ensuring that the rates, terms and conditions of FERC-jurisdictional pipeline services are just and reasonable and otherwise in accordance with the law. APGA also stated that it previously filed comments in the FERC proceeding in which the Revised Policy Statement was subsequently issued.

A copy of APGA’s MTI, as well as the comments it previously filed related to FERC’s efforts to address the impact the lowering of the corporate tax rate will have on pipeline rates, 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.