Details for: PGE AL 4056-G_5458-E.pdf


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Erik Jacobson
Director
Regulatory Relations

Pacific Gas and Electric Company
77 Beale St., Mail Code B13U
P.O. Box 770000
San Francisco, CA 94177
Fax: 415-973-3582

December 28, 2018

Advice 4056-G/5458-E
(Pacific Gas and Electric Company ID U 39 M)

Public Utilities Commission of the State of California
Subject:

Revision of the Income Tax Component of Contribution Pursuant to
H.R. 1, Tax Cuts and Jobs Act of 2017.

Pacific Gas and Electric Company (PG&E) hereby submits revisions to its Gas and
Electric Preliminary Statements Parts P and J respectively, -- Income Tax Component
of Contributions Provision, to reflect changes to the tax factors used in computing the
Income Tax Component of Contribution (ITCC) associated with Contributions in Aid of
Construction for contributions received in 2019 and beyond.
Purpose
In this advice letter, PG&E is notifying the California Public Utilities Commission (CPUC
or Commission) that the ITCC tax factor for customers who make contributions on or
after January 1, 2019 will continue to be subject to a 0.24 (24 percent) tax factor. Prior
to this update, PG&E’s Gas and Electric Preliminary Statements P and J respectively,
reflected an ITCC factor of 0.27 (27 percent) for contributions received on or after
January 1, 2019 and through December 31, 2019 and a 0.35 (35 percent) tax factor for
gas contributions and 0.34 (34 percent) tax factor for electric contributions received on
or after January 1, 2020. Due to changes enacted by H.R. 1, the Tax Cuts and Jobs
Act (Act)1, the ITCC tax factor for contributions received on or after January 1, 2018 will
be a constant 0.24 (24 percent). As such, no increase or decrease in the ITCC tax
factor will take place beginning on January 1, 2019 as previously reflected in PG&E’s
tariffs.
Background
All contributions in Aid of Construction (Contributions, or CIAC) made to PG&E shall
include a charge to cover PG&E’s resulting estimated liability for Federal and State
Income Tax (ITCC). The ITCC is calculated by multiplying the Balance of Contribution
by the tax factor in effect at the time the contributions are received by PG&E. The tax
1

A copy of the relevant section of the Act is included as Attachment 2 to this submittal.





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Advice 4056-G/5458-E -2- December 28, 2018 factor (or ITCC tax factor) is established by using Method 5 as set forth in Decisions 8709-027 and 87-012-028 in OII 86-11-019. Since February of 2008, the Federal Government has enacted, each time on a temporary basis, a series of income tax revisions intended to promote investment in capital projects. These revisions take the form of changes to the Federal Depreciation Provisions of the Internal Revenue Code, which in turn impact the ITCC tax factor. On December 28, 2015, PG&E filed Advice 3669-G/4766-E to reflect changes to the ITCC rates from the enactment of the Protecting Americans from Tax Hikes Act of 2015 (PATH Act of 2015). The PATH Act of 2015 resulted with the following ITCC rates: Period 01/01/2015 through 12/31/2015 01/01/2018 through 12/31/2018 01/01/2019 through 12/31/2019 Tax Factor 22% 24% 27% In December 2017, the ITCC factors changed because of the enactment of The Tax Cuts and Jobs Act of 2017 (Act). The Act reduced the Federal corporate income tax rate to 0.21 (21 percent) from 0.35 (35 percent) beginning January 1, 2018. As a result of the corporate tax rate reduction, the ITCC tax Factor became 0.24 (24 percent) beginning January 1, 2018, consistent with PG&E’s Gas and Electric Preliminary Statements Part P and J, respectively, as outlined in Advice 3669-G/4766-E.2 The Act made the reduction in the corporate tax rate to 0.21 (21 percent) permanent. As such, the ITCC factor will continue to be 0.24 (24 percent) for contributions received after December 31, 2018 and beyond. Period Beginning 01/01/2019, and thereafter Tax Factor 24% To support the above ITCC Tax Factors, PG&E has attached the calculation set forth in Method 5, as described in Decision D.87-09-026 and D.87-12-028 in Order Instituting Investigation (OII) 86-11-109 (Attachment 1). Tariff Revisions PG&E is updating its tariffs to reflect the change in ITCC for contributions received on and after January 1, 2019. 2 Advice 3669-G/4766-E reflected a 2018 ITCC rate of 0.24 (24 percent) through a combination of a 0.35 (35 percent) corporation tax rate and bonus depreciation provisions enacted by the Path Act of 2015.
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Advice 4056-G/5458-E -3- December 28, 2018 Protests Anyone wishing to protest this submittal may do so by letter sent via U.S. mail, facsimile or E-mail, no later than January 17, 2019, which is 20 days after the date of this submittal. Protests must be submitted to: CPUC Energy Division ED Tariff Unit 505 Van Ness Avenue, 4th Floor San Francisco, California 94102 Facsimile: (415) 703-2200 E-mail: EDTariffUnit@cpuc.ca.gov Copies of protests also should be mailed to the attention of the Director, Energy Division, Room 4004, at the address shown above. The protest shall also be sent to PG&E either via E-mail or U.S. mail (and by facsimile, if possible) at the address shown below on the same date it is mailed or delivered to the Commission: Erik Jacobson Director, Regulatory Relations c/o Megan Lawson Pacific Gas and Electric Company 77 Beale Street, Mail Code B13U P.O. Box 770000 San Francisco, California 94177 Facsimile: (415) 973-3582 E-mail: PGETariffs@pge.com Any person (including individuals, groups, or organizations) may protest or respond to an advice letter (General Order 96-B, Section 7.4). The protest shall contain the following information: specification of the advice letter protested; grounds for the protest; supporting factual information or legal argument; name, telephone number, postal address, and (where appropriate) e-mail address of the protestant; and statement that the protest was sent to the utility no later than the day on which the protest was submitted to the reviewing Industry Division (General Order 96-B, Section 3.11). Effective Date PG&E requests that this Tier 1 advice submittal become effective upon submittal.
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Advice 4056-G/5458-E -4- December 28, 2018 Notice In accordance with General Order 96-B, Section IV, a copy of this advice letter is being sent electronically and via U.S. mail to parties shown on the attached list. Address changes to the General Order 96-B service list should be directed to PG&E at email address PGETariffs@pge.com. For changes to any other service list, please contact the Commission’s Process Office at (415) 703-2021 or at Process_Office@cpuc.ca.gov. Send all electronic approvals to PGETariffs@pge.com. Advice letter submittals can also be accessed electronically at: http://www.pge.com/tariffs/. /S/ Erik Jacobson Director – Regulatory Relations Attachments
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ADVICE LETTER S UM M A RY ENERGY UTILITY MUST BE COMPLETED BY UTILITY (Attach additional pages as needed) Company name/CPUC Utility No.: Pacific Gas and Electric Company (ID U39 M) Utility type: ELC GAS PLC HEAT ELC = Electric PLC = Pipeline WATER Contact Person: Annie Ho Phone #: (415) 973-8794 E-mail: PGETariffs@pge.com E-mail Disposition Notice to: AMHP@pge.com EXPLANATION OF UTILITY TYPE GAS = Gas WATER = Water HEAT = Heat (Date Submitted / Received Stamp by CPUC) Advice Letter (AL) #: 4056-G/5458-E Tier Designation: 1 Subject of AL: Revision of the Income Tax Component of Contribution Pursuant to H.R. 1, Tax Cuts and Jobs Act of 2017. Keywords (choose from CPUC listing): Taxes AL Type: Monthly Quarterly Annual One-Time Other: If AL submitted in compliance with a Commission order, indicate relevant Decision/Resolution #: Does AL replace a withdrawn or rejected AL? If so, identify the prior AL: No Summarize differences between the AL and the prior withdrawn or rejected AL: Yes Yes No No 12/28/18 No. of tariff sheets: 8 Estimated system annual revenue effect (%): N/A Estimated system average rate effect (%): N/A When rates are affected by AL, include attachment in AL showing average rate effects on customer classes (residential, small commercial, large C/I, agricultural, lighting). Tariff schedules affected: Gas Preliminary Statement Part P, Electric Preliminary Statement Part J Service affected and changes proposed 1: Income Tax Component of Contributions (ITCC) tax factor revisions Pending advice letters that revise the same tariff sheets: N/A Discuss in AL if more space is needed. 1 Clear Form
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Protests and all other correspondence regarding this AL are due no later than 20 days after the date of this submittal, unless otherwise authorized by the Commission, and shall be sent to: CPUC, Energy Division Attention: Tariff Unit 505 Van Ness Avenue San Francisco, CA 94102 Email: EDTariffUnit@cpuc.ca.gov Name: Erik Jacobson, c/o Megan Lawson Title: Director, Regulatory Relations Utility Name: Pacific Gas and Electric Company Address: 77 Beale Street, Mail Code B13U City: San Francisco, CA 94177 Zip: 94177 State: California Telephone (xxx) xxx-xxxx: (415)973-2093 Facsimile (xxx) xxx-xxxx: (415)973-3582 Email: PGETariffs@pge.com Name: Title: Utility Name: Address: City: State: District of Columbia Telephone (xxx) xxx-xxxx: Facsimile (xxx) xxx-xxxx: Email: Zip: Clear Form
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Advice 4056-G/5458-E December 28, 2018 Attachment 1 Calculation to ITCC Tax Factors
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CIAC GROSS-UP COMPUTATION INCLUDING CALIFORNIA TAXES USING FORMULAS AS ORIGINALLY FILED FOR ELECTRIC AND GAS CONTRIBUTIONS RECEIVED ON AND AFTER 01/01/2019 (A) (B) (C) TAX PMT/(BEN) REFLECTING CIAC TAX YEAR OF $1,000 BASIS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 298.4 -18.564 1,000 (D) CALIFORNIA DEPRECIATION RATES 3.334% 6.445% 6.016% 5.615% 5.241% 4.892% 4.566% 4.261% 3.977% 3.712% 3.465% 3.234% 3.018% 2.817% 2.630% 2.455% 2.367% 2.367% 2.367% 2.367% 2.367% 2.367% 2.367% 2.367% 2.367% 2.367% 2.367% 2.367% 2.367% 2.367% 1.184% 100.000% (E) CALIFORNIA RATES 8.840% (F) (G) (H) (I) STATE TAX BENEFIT MODIFIED MACRS RATES FEDERAL TAX RATE FEDERAL TAX BENEFIT REMAINING CIAC PAYABLE WTD. AVG. UNRECOVERED TAX PMT. (L) PRE-TAX RATE OF RETURN 17.000% 2.9473 5.6974 5.3181 4.9637 4.6330 4.3245 4.0363 3.7667 3.5157 3.2814 3.0631 2.8589 2.6679 2.4902 2.3249 2.1702 2.0924 2.0924 2.0924 2.0924 2.0924 2.0924 2.0924 2.0924 2.0924 2.0924 2.0924 2.0924 2.0924 2.0924 1.0471 0.0000 3.750% 7.219% 6.677% 6.177% 5.713% 5.285% 4.888% 4.522% 4.462% 4.461% 4.462% 4.461% 4.462% 4.461% 4.462% 4.461% 4.462% 4.461% 4.462% 4.461% 2.231% 21.00% 7.8750 14.5410 12.8252 11.8549 10.9549 10.1256 9.3567 8.6486 8.5792 8.6298 8.6811 8.7248 8.7698 8.8078 8.8473 8.8799 8.9145 8.9287 8.9308 8.9287 4.2457 (0.4394) (0.4394) (0.4394) (0.4394) (0.4394) (0.4394) (0.4394) (0.4394) (0.4394) (0.4394) (0.2199) 287.5777 248.7753 230.6320 213.8134 198.2255 183.7754 170.3824 157.9671 145.8722 133.9610 122.2168 110.6331 99.1954 87.8974 76.7252 65.6751 54.6682 43.6471 32.6239 21.6028 15.2647 13.6117 11.9587 10.3057 8.6527 6.9997 5.3467 3.6937 2.0407 0.3877 (0.2200) (0.0001) 292.9889 268.1765 239.7037 222.2227 206.0195 191.0005 177.0789 164.1748 151.9197 139.9166 128.0889 116.4250 104.9143 93.5464 82.3113 71.2002 60.1717 49.1577 38.1355 27.1134 18.4338 14.4382 12.7852 11.1322 9.4792 7.8262 6.1732 4.5202 2.8672 1.2142 0.0838 (0.1101) 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 17.000% 88.4000 100.0% 191.4361 (J) (K) (M) (N) REVENUE REQUIREMENT ON REMAINING INVESTMENT DISCOUNT FACTOR 0.12 (O) DISCOUNTED REVENUE REQUIREMENT ON REMAINING INVESTMENT 49.8081 45.5900 40.7496 37.7779 35.0233 32.4701 30.1034 27.9097 25.8263 23.7858 21.7751 19.7922 17.8354 15.9029 13.9929 12.1040 10.2292 8.3568 6.4830 4.6093 3.1337 2.4545 2.1735 1.8925 1.6115 1.3305 1.0494 0.7684 0.4874 0.2064 0.0143 (0.0187) 0.8929 0.7972 0.7118 0.6355 0.5674 0.5066 0.4523 0.4039 0.3606 0.3220 0.2875 0.2567 0.2292 0.2046 0.1827 0.1631 0.1456 0.1300 0.1161 0.1037 0.0926 0.0826 0.0738 0.0659 0.0588 0.0525 0.0469 0.0419 0.0374 0.0334 0.0298 0.0266 44.4715 36.3441 29.0048 24.0085 19.8732 16.4504 13.6172 11.2723 9.3132 7.6584 6.2598 5.0802 4.0874 3.2540 2.5565 1.9744 1.4898 1.0867 0.7527 0.4778 0.2901 0.2028 0.1604 0.1247 0.0948 0.0699 0.0492 0.0322 0.0182 0.0069 0.0000 0.0000 / 1000 24.0100% 495.2284 240.0821 279.836 240.0821 279.8361 ITCC Tax Factor Prepared by Jim Higham 24.0000% 12/28/2018 10:29 AM
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Advice 4056-G/5458-E December 28, 2018 Attachment 2 Relevant Section Of The Act
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lam of [I12 ‘lblniml ,§%mtw ml‘ AT THE FIRST‘ SESSION Begun and In-M A/re Cily of Washi)|g1uIL on llle lhirll day [ma uml suveilleert Sm Zia rm punzusnl. tn Lines Hand clthe ammumul rm ulullrm on the budget far fisull you 20 I R. Be it «mauled by the Senate aml Hausa of of the United States 0/America in Congress rtssenibled, TITL 4‘. I untm. snoxvr TITLE, ETC. (ul All/l.[]NDMEN'1' or’ 1956 (‘,rmn.—l3'xcepL as otherwise expressly pmvided, in this t.i.e an amemlmenl. or repeal is expressed in Le1'J.\1s uf an amendment. or repeal of, ll section or nthel tuvisitm, Lhe reference shall he mnsidered to be made to a sauna“ or uflner pwviskm of the Revenue Code of 1985. Tu pjovide my mL'uuz Subtitle A—Individua1 Tax Reform PART ]'—TAX RATE REFORM SEC. OF RATES. (ax) IN GF.NERAL.~Sech'nn ‘l is amended by adding at the and the following new “(D FOR AXA.Bl.,14:Vl«‘,ARS 2018 Tunoucu 2025.— “(ll IN GENEF.AL.—In the case of‘ a taxable year begiumng after 31, 2017, and before January 1, 2026- subsection (i) shall not apply, and this section (other khan subsection shall be :1 plied as provided in ]\arap,'rapl1s (2) through 2) RATE ’l‘AELES‘— MARRIED JOINT RETURNS AND su11v1v1Nu SPOUSES-.—The fallowing tahle shall be applied in ofthe table contained in subsentinn "If taxalylc income is: The tax is: Not over 319,050 over $19,060 but net uvur $7 /Ann Over $71400 but um. uv $155,000 Over s1u5,aun hull mm mm $315,000 over 3mu'.,nnu but nut am $400,000 L096 nf taxable income $1805 lus 1272 at we nxu uvvr 19, $0 907, ylus 2294 of the uxu §77.4on. $29,179, pm 24% ur Ll» wmess over $1as,uun $54,179, 32% of the excess om- 5.006 .m=.r
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