MPSC sets deadlines for utilities to calculate federal tax law savings for ratepayers

February 22, 2018

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MPSC sets deadlines for utilities to calculate federal tax law savings for ratepayers​

 

LANSING, Mich. – The Michigan Public Service Commission (MPSC) today set a schedule for utilities to pass on corporate income tax savings to ratepayers statewide.

The Commission ordered 13 utilities in December to estimate the amount of tax savings they are to receive and to propose how the savings should be passed along to customers under the Tax Cuts and Jobs Act, which cuts the corporate tax rate from 35 percent to 21 percent. After reviewing utility responses and stakeholder replies, the MPSC today adopted (Case No. U-18494) a three-step process for utilities to calculate the savings to be returned to ratepayers.

The Commission said its plan will lead to timely and deliberate decisions, and ratepayers will benefit from tax savings realized by the companies from the Jan. 1 enactment of the TCJA.

“The Commission appreciates the input that helped to craft this approach to provide rate relief to customers in an accelerated manner without sacrificing accuracy or opportunity for stakeholder participation,” MPSC Commissioner Rachael Eubanks said. “We are expediting the simplest calculations so that customers will see the benefit from the tax reduction as quickly as prudently possible.”

By March 30, nine of the utilities must calculate a rate reduction, known as “Credit A,” that would begin in July and last until a utility’s next rate case. The Commission anticipates ruling on Credit A filings by June 30. This credit is estimated to account for the majority the refunds ratepayers can expect to receive.

The utilities that must submit their filings by March 30 are Detroit Thermal, LLC; DTE Gas Co.; Northern States Power Co.; Upper Peninsula Power Co.; Upper Michigan Energy Resources Corp.; Wisconsin Electric Power Co.; Presque Isle Electric and Gas Co-Op; Michigan Gas Utilities Corp.; and SEMCO Energy Gas Co.

Consumers Energy Co., DTE Electric Co., and Indiana Michigan Power Co. have rate cases pending before the Commission, so their “Credit A” calculations will be due 30 days after their rate cases are decided by the MPSC. Alpena Power Co., which recently was approved for a rate increase, will file separately.

By Aug. 30, all 13 utilities must file a “Credit B” calculation, which would determine the tax savings due ratepayers from Jan. 1 through June 30, the deadline the Commission has set to rule on Credit A filings.

Finally, by Oct. 1, each utility must file an application with the MPSC to calculate the impact of other items, such as excess deferred taxes or bonus depreciation not accounted for under Credits A or B, and the Commission will decide how those benefits will be disbursed to ratepayers.

The tax law change will reduce current and future long-term deferred tax payments for 10 of the 13 utilities by a total of nearly $3.7 billion. Detroit Thermal, WEPCo and Presque Isle did not offer impact estimates.

For an issue brief on the tax law update and its impact on utilities, click here.

For more information about the MPSC, please visit www.michigan.gov/mpsc or sign up for one of its listservs to keep up to date on MPSC matters.

DISCLAIMER: This document was prepared to aid the public’s understanding of certain matters before the Commission and is not intended to modify, supplement, or be a substitute for the Commission’s orders. The Commission’s orders are the official action of the Commission.

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