ratemaking purposes. It claimed that tax adjustment would inappropriately calculate state OCA’s income tax expense on an incremental rather than overall basis and would fail to reflect other changes in state income taxes that have occurred since the last base rate case. PPL contended, as it had with respect to the ADIT adjustment, that the only fair approach would be to undertake a full tax calculation looking at all plant in service, but this is contrary to legislative intent that the DSIC remain uncomplicated. PPL M.B., pp. 25-26. PPL reiterated that rejection of the state income tax proposal would not result OCA’s in unjust and unreasonable rates. It argued, as it had with respect to ADIT, that it is the rate as a whole which must be considered in the just and reasonable rate analysis and not the individual expense adjustments. supra. Also, as mentioned previously, the impact of tax Duquesne, deductions, including those associated with the state income tax, are already factored into the DSIC through the calculation of the earnings cap. Thus, ratepayers are already protected from unjust and unreasonable rates, according to PPL. PPL M.B., pp. 23, 27-29. Regarding the taxes doctrine in supra, PPL made the Penn Power, “actual paid” same argument that it had in regard to the ADIT proposal, which is that the OCA adjustment could not result in reflection of taxes paid to the government, according to PPL, are “actual paid.” Taxes calculated on a total Company basis and not upon individual items of plant or revenue. In addition, PPL observed that the taxes doctrine had only been applied in base rate proceedings, “actual paid” and would complicate a DSIC mechanism which is intended to be simple and straightforward. PPL M.B., pp. 29-31. This, PPL concluded that its provision for inclusion of state income taxes in its DSIC mechanism should be approved and the OCA position should be rejected. In its Reply Brief, PPL reiterated its positions that the state income tax OCA’s proposal is inconsistent with legislative intent, would require an unfair, piecemeal approach which is inconsistent with the taxes doctrine, and is unnecessary as the flow-through “actual paid” advocated by OCA is already reflected in calculation of the earnings cap. PPL R.B., pp. 10-20.
ratemaking purposes. It claimed that OCA’s tax adjustment would inappropriately calculate state income tax expense on an incremental rather than overall basis and would fail to reflect other changes in state income taxes that have occurred since the last base rate case. PPL contended, as it had with respect to the ADIT adjustment, that the only fair approach would be to undertake a full tax calculation looking at all plant in service, but this is contrary to legislative intent that the DSIC remain uncomplicated. PPL M.B., pp. 25-26. PPL reiterated that rejection of the OCA’s state income tax proposal would not result in unjust and unreasonable rates. It argued, as it had with respect to ADIT, that it is the rate as a whole which must be considered in the just and reasonable rate analysis and not the individual expense adjustments. Duquesne, supra. Also, as mentioned previously, the impact of tax deductions, including those associated with the state income tax, are already factored into the DSIC through the calculation of the earnings cap. Thus, ratepayers are already protected from unjust and unreasonable rates, according to PPL. PPL M.B., pp. 23, 27-29. Regarding the “actual taxes paid” doctrine in Penn Power, supra, PPL made the same argument that it had in regard to the ADIT proposal, which is that the OCA adjustment could not result in reflection of “actual taxes paid.” Taxes paid to the government, according to PPL, are calculated on a total Company basis and not upon individual items of plant or revenue. In addition, PPL observed that the “actual taxes paid” doctrine had only been applied in base rate proceedings, and would complicate a DSIC mechanism which is intended to be simple and straightforward. PPL M.B., pp. 29-31. This, PPL concluded that its provision for inclusion of state income taxes in its DSIC mechanism should be approved and the OCA position should be rejected. In its Reply Brief, PPL reiterated its positions that the OCA’s state income tax proposal is inconsistent with legislative intent, would require an unfair, piecemeal approach which is inconsistent with the “actual taxes paid” doctrine, and is unnecessary as the flow-through advocated by OCA is already reflected in calculation of the earnings cap. PPL R.B., pp. 10-20.
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