Tax Leaders Need to Prepare for the Impact of Tax Reform on Rate Cases
For Current Reform as well as Tax Reform 2.0
ATLANTA – (September 13, 2018) – Tax leaders at rate regulated companies need to quickly address the impact of the recent changes caused by the Tax Cuts and Jobs Act passed in late 2017. One major decision is if they will pass on the tax savings to their ratepayers.
The TCJA reduced the federal corporate income tax rate from 35% to 21%. For regulated companies with large capital assets, this rate reduction has created excess deferred taxes.
Regulators are requiring organizations to address the impact of tax reductions to revenue requirements. Regulated entities will need to show reasoning behind their decision to either reduce rates or maintain their current rates. Specifically, interstate pipelines regulated by FERC are required to fill out a Form 501-G beginning this October. To make their recommendations, tax leaders need to understand how ARAM amortization changes in the future, their projected ADIT balances, and the impact to future capital additions.
“Consideration of excess-deferred income taxes has become more complicated,” said Nick Alexander, Senior Product Manager at PowerPlan. “This is why now, more than ever, it’s important for tax leaders to have an integrated system to help forecast and document the changes related to reform.”
PowerPlan recently hosted a webinar reviewing the regulatory impacts of tax reform and providing guidance to regulated organizations. To access a free recording of the webinar, please visit: https://info.powerplan.com/l/107062/2018-08-22/32s2pj