Breaking: FERC Meeting Includes Tax Matters, Possible Rate Investigations, and Certificates
The FERC's open meeting this Thursday may prove to be very important for issues related to taxes and tariff rates for electric utilities, natural gas pipelines and oil pipelines. The agenda for this meeting is chock full of matters that will impact rates charged by all types of entities subject to FERC's regulation, including possible gas pipeline rate investigations, liquids pipeline tariff matters, and rulings on gas pipeline certificates. Given the significance of these issues to the industry and to our customers, we will attend this meeting and provide our analysis of FERC's action shortly thereafter.
Based on its agenda, it appears that FERC will be resolving, or at least addressing, the following tax-related issues:
- Are pass-through entities such as master limited partnerships (MLP) allowed to include a tax allowance in their rate calculations?
- How will the tax cuts passed last year be passed through to customers of electric utilities and natural gas pipelines?
In addition to tax cut-related matters, it appears that the Commission will: (1) initiate two new matters involving gas pipelines (Dominion Energy Overthrust Pipeline LLC and Midwestern Gas Transmission Company ); (2) rule on two project certificates related to DTE Energy and National Fuel Gas Supply Corporation; and (3) rule on the Blue Racer Midstream's Petition for Declaratory Order (PDO), which impacts NGL shippers in the Marcellus and Utica basins, including those involved with Energy Transfer Partners' Mariner East 2 project.
Open meeting issues that we will be following:
| Matter/Issue | Impact On | What we expect |
|---|---|---|
|
Inquiry Regarding the Effect of the Tax Cuts and Jobs Act on Commission Jurisdictional Rates (RM18-12) |
Electric Utilities | Preliminary request for information on how best to address issue of passing through tax cut benefit to customers of electric utilities |
| Interstate and Intrastate Natural Gas Pipelines; Rate Changes Relating to Federal Income Tax Rate (RM18-11) | Natural Gas Pipelines | Proposal for how to pass through tax cut benefit to customers of natural gas pipelines and a request for comment in anticipation of issuing a final rule later this year |
| Inquiry Regarding the Commission's Policy for Recovery of Income Tax Costs (PL17-1-000) | All pass-through entities, such as MLPs that own electric transmission, natural gas pipelines or oil pipelines that currently are including a tax allowance in their tariff rates | A decision on the FERC's inquiry issued in late 2016 seeking industry input on how to address the DC Circuit's decision finding deficient FERC's prior justification for providing a tax allowance to such entities |
| Dominion Energy Overthrust Pipeline, LLC (RP18-442) and ONEOK's Midwestern Gas Transmission Company (RP18-441) | If these are Natural Gas Act, Section 5 rate investigations, then each specific pipeline and its shippers | Given the Commission's pattern of initiating two Sec. 5 rate investigations this time of year (typically late January) and for pipes with a higher percentage of recourse rates, these matters could be orders initiating investigations |
| Pending Certificates for DTE's 14-mile Birdsboro Pipeline lateral (CP17-409) and National Fuel Gas's modernization project (CP17-74) | DTE and Birdsboro Power, a 450 MW plant in PA, and NFG's project to enhance the reliability and safety of its system | As is customary for smaller, non-controversial projects, FERC is likely to issue certificates for the projects |
| Pending PDO for the Blue Racer Pipeline, designed to to add transport to Energy Transfer Mariner East 2 or Enterprise TE Products Pipeline (OR18-8) | NGL Shippers, such as Chesapeake Energy, which protested this PDO, primarily because it will allegedly reduce the ability to move propane | Approval of the PDO, perhaps with a rejection of Chesapeake's arguments because it is not, and has never been, a shipper on Blue Racer |