4. Disposition Based on our consideration of the record in this proceeding and the positions of the Parties on this issue, we adopt the position that treatment ALJs’ Peoples’ of the gross-up of state taxes is consistent with the treatment of this item by water companies as well as the and does not Final Implementation Order, supra, Commission’s violate any specific language in Act 11. We arrive at this determination consistent with our recently decided as well as our decision in the Columbia DSIC Opinion and Order, We note that the recommendation in the instant LWWC DSIC Opinion and Order. ALJs’ proceeding is consistent with the wherein we Columbia DSIC Opinion and Order, rejected the proposed state income tax adjustment, as follows: OCA’s Based on our consideration of the record and the positions of the Parties on this issue, we decline to adopt the OCA’s proposal to eliminate the state tax gross-up included in DSIC calculation. While we agree that Columbia’s rates should reflect the state taxes that the Columbia’s Company actually pays, we are not convinced that eliminating the state tax gross-up included in the DSIC calculation would properly achieve that result. As Columbia points out, its base rates currently reflect deductions for the repairs allowance and accelerated depreciation that may no longer apply, because such deductions have been reduced or eliminated after the test year considered in the Company’s last base rate proceeding. Therefore, to reflect these same types of deductions in relation to DSIC eligible plant in the DSIC calculation may result in overall rates that are further out of alignment with actual tax position. As Columbia’s Columbia argues and the ALJs concluded, the only way to determine actual taxes paid for state income tax Columbia’s purposes would be to conduct a full rate case analysis, which could subject the DSIC calculation to litigation regarding the proper determination of the state tax liability. Company’s Columbia R. Exc. at 14; R.D. at 63. However, as we stated with regard to the ADIT issue, we believe that the DSIC is intended to be a straightforward mechanism that is easy to
4. Disposition Based on our consideration of the record in this proceeding and the positions of the Parties on this issue, we adopt the ALJs’ position that Peoples’ treatment of the gross-up of state taxes is consistent with the treatment of this item by water companies as well as the Commission’s Final Implementation Order, supra, and does not violate any specific language in Act 11. We arrive at this determination consistent with our recently decided Columbia DSIC Opinion and Order, as well as our decision in the LWWC DSIC Opinion and Order. We note that the ALJs’ recommendation in the instant proceeding is consistent with the Columbia DSIC Opinion and Order, wherein we rejected the OCA’s proposed state income tax adjustment, as follows: Based on our consideration of the record and the positions of the Parties on this issue, we decline to adopt the OCA’s proposal to eliminate the state tax gross-up included in Columbia’s DSIC calculation. While we agree that Columbia’s rates should reflect the state taxes that the Company actually pays, we are not convinced that eliminating the state tax gross-up included in the DSIC calculation would properly achieve that result. As Columbia points out, its base rates currently reflect deductions for the repairs allowance and accelerated depreciation that may no longer apply, because such deductions have been reduced or eliminated after the test year considered in the Company’s last base rate proceeding. Therefore, to reflect these same types of deductions in relation to DSIC eligible plant in the DSIC calculation may result in overall rates that are further out of alignment with Columbia’s actual tax position. As Columbia argues and the ALJs concluded, the only way to determine Columbia’s actual taxes paid for state income tax purposes would be to conduct a full rate case analysis, which could subject the DSIC calculation to litigation regarding the proper determination of the Company’s state tax liability. Columbia R. Exc. at 14; R.D. at 63. However, as we stated with regard to the ADIT issue, we believe that the DSIC is intended to be a straightforward mechanism that is easy to