On March 13 and March 15, 2018, FERC took actions to address tax law changes resulting from the Tax Cuts and Jobs Act of 2017 for electricity, natural gas, and oil companies. In addition, on March 15, 2018, in response to a federal court remand, FERC stated that master limited partnership (“MLP”) interstate natural gas and oil pipelines will no longer be allowed to receive an income tax allowance in cost of service rates.
The Tax Cuts and Jobs Act of 2017, among other things, lowered the federal corporate income tax rate from 35 percent to 21 percent, effective January 1, 2018. FERC addressed this tax rate change by issuing separate orders for electricity, natural gas, and oil companies. First, the Commission issued two show-cause orders, pursuant to section 206 of the Federal Power Act, for 48 electricity companies whose current transmission tariffs include fixed rates that may have been based on the outdated tax rate. Both orders direct the electric companies to propose tariff revisions to adjust their transmission rates in accordance with the new tax rate or otherwise, show why they should not be required to do so.