• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 6 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 5 days Does Toyota Know Something That We Don’t?
  • 4 days World could get rid of Putin and Russia but nobody is bold enough
  • 16 hours America should go after China but it should be done in a wise way.
  • 6 days China is using Chinese Names of Cities on their Border with Russia.
  • 8 days Russian Officials Voice Concerns About Chinese-Funded Rail Line
  • 8 days OPINION: Putin’s Genocidal Myth A scholarly treatise on the thousands of years of Ukrainian history. RCW
  • 8 days CHINA Economy IMPLODING - Fastest Price Fall in 14 Years & Stock Market Crashes to 5 Year Low
  • 7 days CHINA Economy Disaster - Employee Shortages, Retirement Age, Birth Rate & Ageing Population
  • 8 days Putin and Xi Bet on the Global South
  • 8 days "(Another) Putin Critic 'Falls' Out Of Window, Dies"
  • 9 days United States LNG Exports Reach Third Place
  • 9 days Biden's $2 trillion Plan for Insfrastructure and Jobs
Iron Ore Prices Rise as China Ramps Up Imports

Iron Ore Prices Rise as China Ramps Up Imports

Despite challenges like the Evergrande…

U.S. Aluminum Market Roiled by Closure of Major Smelter

U.S. Aluminum Market Roiled by Closure of Major Smelter

Aluminum prices experience a slight…

FERC To Address Tax Reform Effect On Oil, Gas, Utilities

The Federal Energy Regulatory Commission has outlined the steps it would take to make sure that the clients of utilities and oil and gas pipeline operators don’t bear any financial burden from the sweeping tax reform that President Trump signed into law in December.

The reform, among other things, envisaged a cut of the maximum federal corporate tax from 35 percent to a flat rate of 21 percent. Platts explains that the income tax allowance in the cost-of-service rates charged by power utilities and oil and gas pipeline operators was cut as part of the reform. This prompted states and other stakeholders to approach FERC, which regulates these utilities, in a bid to prevent users of these services from having to pay more for them.

For starters, FERC will seek comments from the utilities and pipeline operators regarding the effects of the tax reform on their rates. Among the top priority topics for FERC are accumulated deferred income taxes and bonus depreciation – a tax incentive aimed at encouraging companies to invest more.

In addition to the comments, the watchdog has asked 48 power utilities to suggest revisions to their rate formation mechanism following the tax reform, or come up with reasons why they don’t need to revise them. These are utilities that set their rates using a 35-percent value for the federal income tax component.

Interstate gas pipeline operators will need to submit to FERC a one-time informational filing to help the regulator in its review of rates and whether any of them are unjust and unreasonable, Platts notes.

Related: 44 Things You Didn’t Know About Oil

Separately, FERC revised its policy on the recovery of tax allowance costs. Under the revised policy, oil and gas pipeline operators incorporated as master limited partnerships will no longer have the right to recover income tax allowances in cost-of-service rates.

For oil pipeline operators, FERC will continue to use the index rate-setting methodology it has used so far in adjusting their rates in accordance with the new tax regime.

ADVERTISEMENT

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage



Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News