[rate], represents excess deferred federal income taxes.” OCA M.B. at 42; UGI St. 9-R at 3-4. The OCA averred that UGI transferred EADIT to a regulatory liability account and then excluded the funds from rate base. OCA St. 1 at 11. The exclusion results in an increase in the rate base of approximately $11 million. OCA St. 1 at 13; OCA St. 1, Schedule LKM-5. The OCA stated that its witness Morgan explained why it is appropriate to include the regulatory liability in rate base, as follows: [E]ven as they are now considered to be excess deferred taxes and transferred to a regulatory liability account, these funds are still restricted by the tax provision that now requires that they be flowed back to ratepayers using the ARAM. ARAM essentially restricts the flow back of the excess deferred taxes (the regulatory liability) before the tax benefits turn around. Consequently, even though they are now placed in an account by another name, they are still treated as protected ADIT and have not been fully returned to ratepayers. OCA St. 1 at 11. The OCA averred that UGI witness McKinney claimed that, although precedent requires that amounts recorded as ADIT be deducted from rate “Commission base, excess deferred income taxes are not ADIT but are deferred taxes.” OCA ‘excess’ M.B. at 43; UGI St. 9-R at 9. The OCA also averred that UGI witness McKinney suggested regulated liability should be flowed through to customers through an “the amortization allowance without a return to customer on the unamortized balance.” OCA M.B. at 43; UGI St. 9-R at 5. The OCA disagreed with UGI on these points, noting that its witness Morgan explained, based on Federal tax policy, because the name of the “just account in which these funds are held has changed, ratepayers should not be penalized by not including the funds in the rate base given the funds are still restricted as if they were
[rate], represents excess deferred federal income taxes.” OCA M.B. at 42; UGI St. 9-R at 3-4. The OCA averred that UGI transferred EADIT to a regulatory liability account and then excluded the funds from rate base. OCA St. 1 at 11. The exclusion results in an increase in the rate base of approximately $11 million. OCA St. 1 at 13; OCA St. 1, Schedule LKM-5. The OCA stated that its witness Morgan explained why it is appropriate to include the regulatory liability in rate base, as follows: [E]ven as they are now considered to be excess deferred taxes and transferred to a regulatory liability account, these funds are still restricted by the tax provision that now requires that they be flowed back to ratepayers using the ARAM. ARAM essentially restricts the flow back of the excess deferred taxes (the regulatory liability) before the tax benefits turn around. Consequently, even though they are now placed in an account by another name, they are still treated as protected ADIT and have not been fully returned to ratepayers. OCA St. 1 at 11. The OCA averred that UGI witness McKinney claimed that, although “Commission precedent requires that amounts recorded as ADIT be deducted from rate base, excess deferred income taxes are not ADIT but are ‘excess’ deferred taxes.” OCA M.B. at 43; UGI St. 9-R at 9. The OCA also averred that UGI witness McKinney suggested “the regulated liability should be flowed through to customers through an amortization allowance without a return to customer on the unamortized balance.” OCA M.B. at 43; UGI St. 9-R at 5. The OCA disagreed with UGI on these points, noting that its witness Morgan explained, based on Federal tax policy, “just because the name of the account in which these funds are held has changed, ratepayers should not be penalized by not including the funds in the rate base given the funds are still restricted as if they were