THE SOURCE - Summer 2018 - 20

feature

APGA Leads Charge to
Lower Pipeline Rates to
Match Lower Tax Rates

T

By John P. Gregg, APGA General Counsel

is a reduction in the top corporate tax rate to 21 percent
from 35 percent. APGA began the year with a letter to new
Federal Energy Regulatory Commission (FERC) Chairman
Kevin McIntyre asking FERC to take action to reduce
interstate pipeline rates because of that lower tax rate,

thereby putting more money in ratepayer pockets.
All regulated utilities receive in their
rates an allowance to pay federal income
taxes that are owed on the utility's return
(profit). FERC-regulated pipelines are
no different, and collectively they are
retaining hundreds of millions more
than they need to pay those taxes for
2018. Unlike retail utilities regulated by
states, pipelines are not lowering rates
voluntarily.1
A Lot of Money
Economists at the University of
Pennsylvania estimated that the new law
will reduce the electric utility industry's
federal tax bill by $1 billion this year.2
No similar estimate exists for the natural
gas sector because of the complexity of
interstate pipeline rates.
In its letter to McIntyre, APGA
estimated that pipelines could reduce

rates by 5 percent to 9 percent. At
its first open meeting of 2018, FERC
Commissioner Robert Powelson said that
utility customers "are looking at between
$80 and $90 per year in potential rate
reductions." He then called on FERC to
act promptly and saluted APGA for its
effort to lead the way.
I applaud the American Public Gas
Association, along with numerous
state PUCs and consumer
advocates for expressing concerns
on the timeliness of these tax
flowbacks to ratepayers. In my
view, consumers should not be
penalized by slow regulatory
review processes that could put
direct savings into their pockets
and provide them with safe and
affordable utility service.
- FERC Commissioner Powelson

20 THE SOURCE | THE VOICE AND CHOICE OF PUBLIC GAS

Ratepayers should also benefit when
utilities revalue the deferred tax liability
on their books to the lower corporate
rate. Pipeline Accumulated Deferred
Income Tax balances (Account Nos.
190, 282 and 283) must be recalculated,
creating a regulatory liability value that
should be flowed back to customers.
That benefit is offset somewhat by
the elimination of bonus depreciation
under the Tax Act.
In pending certificate applications
requesting an initial rate for new project
facilities, FERC has required those rates
to be recalculated for the impact of
the lower tax rate. 3 A review of those
compliance filings shows that APGA's
estimate of rate reduction of 5 to 9
percent was spot on.4
FERC to Add New
Regulation for Pipelines
On January 31, 2018, an ad hoc
coalition of pipeline shippers including
APGA filed an "Industry Petition for
Initiation of Show Cause Proceedings
Directed to Interstate Natural Gas
Pipelines and Storage Companies."
Petitioners asked FERC to require most
pipelines to file cost and revenue
studies reflecting the impacts of the
Tax Act, then examine the justness
and reasonableness of their rates
and require rate reductions, where
appropriate.

LIGHT AND DARK STUDIO/SHUTTERSTOCK.COM

he signature change in the Tax Cuts and Jobs Act of 2017



Table of Contents for the Digital Edition of THE SOURCE - Summer 2018

APGA Events
First Person
2018 Starts off with Gas Records
Energy Regulatory Update
The Result of Not Addressing Increasing Cybersecurity Risk
Conversation with an APGA Member
APGA Leads Charge to Lower Pipeline Rates to Match Lower Tax Rates
Legislative Outlook
Enhancing Resilience of Critical Infrastructure with Combined Heat and Power
The Pipeline
The Importance of Getting Involved with State and Local Building Code Developments
At Last
Advertisers’ Index/Advertiser.com
THE SOURCE - Summer 2018 - Intro
THE SOURCE - Summer 2018 - bellyband1
THE SOURCE - Summer 2018 - bellyband2
THE SOURCE - Summer 2018 - cover1
THE SOURCE - Summer 2018 - cover2
THE SOURCE - Summer 2018 - 3
THE SOURCE - Summer 2018 - 4
THE SOURCE - Summer 2018 - 5
THE SOURCE - Summer 2018 - 6
THE SOURCE - Summer 2018 - APGA Events
THE SOURCE - Summer 2018 - First Person
THE SOURCE - Summer 2018 - 9
THE SOURCE - Summer 2018 - 2018 Starts off with Gas Records
THE SOURCE - Summer 2018 - 11
THE SOURCE - Summer 2018 - Energy Regulatory Update
THE SOURCE - Summer 2018 - 13
THE SOURCE - Summer 2018 - The Result of Not Addressing Increasing Cybersecurity Risk
THE SOURCE - Summer 2018 - 15
THE SOURCE - Summer 2018 - 16
THE SOURCE - Summer 2018 - 17
THE SOURCE - Summer 2018 - Conversation with an APGA Member
THE SOURCE - Summer 2018 - 19
THE SOURCE - Summer 2018 - APGA Leads Charge to Lower Pipeline Rates to Match Lower Tax Rates
THE SOURCE - Summer 2018 - 21
THE SOURCE - Summer 2018 - Legislative Outlook
THE SOURCE - Summer 2018 - Enhancing Resilience of Critical Infrastructure with Combined Heat and Power
THE SOURCE - Summer 2018 - 24
THE SOURCE - Summer 2018 - 25
THE SOURCE - Summer 2018 - The Pipeline
THE SOURCE - Summer 2018 - The Importance of Getting Involved with State and Local Building Code Developments
THE SOURCE - Summer 2018 - 28
THE SOURCE - Summer 2018 - At Last
THE SOURCE - Summer 2018 - Advertisers’ Index/Advertiser.com
THE SOURCE - Summer 2018 - cover3
THE SOURCE - Summer 2018 - cover4
THE SOURCE - Summer 2018 - divider1
THE SOURCE - Summer 2018 - divider2
THE SOURCE - Summer 2018 - 35
THE SOURCE - Summer 2018 - 36
THE SOURCE - Summer 2018 - 40
THE SOURCE - Summer 2018 - 41
THE SOURCE - Summer 2018 - 42
THE SOURCE - Summer 2018 - 43
THE SOURCE - Summer 2018 - 44
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THE SOURCE - Summer 2018 - 46
THE SOURCE - Summer 2018 - 47
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