PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON

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1 PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON At a session of the PUBLIC SERVICE COMMISSION OF WEST VIRGINIA in the City of Charleston on the lgth day of July GENERAL ORDER NO In the Matter of the Effects on Utilities of the Tax Cuts and Jobs Act. COMMISSION ORDER Subject to any objections filed before 12:00 p.m. on July 20, 2018, as described herein, the Commission grants the motion of Bluefield Gas Company (Bluefield) to excuse witness John D. Jessee, the motion of the City Of Charleston (City) to excuse Mayor Danny Jones, the motion of the Huntington Business Unit of Allied Waste Services of North America, LLC, d/b/a, Republic Services of West Virginia (Huntington) to be excused, the motion of Allied Waste Services of North America, LLC, d/b/a Republic Services of West Virginia (Republic) to testifji on July 25, 2018, and the motion of the Kanawha County Commission (KCC) to testify on July 25, BACKGROUND On January 3, 20 18, the Commission initiated this proceeding to investigate the impact of the 2017 Tax Cuts and Jobs Act (2017 Federal Tax Act) on the revenue requirements of certain utilities. As a part of that Order, the Commission mandated the utilities to track the tax savings resulting from the 2017 Federal Tax Act on a monthly basis beginning with the effective date of January 1, The Order also required the utilities, on or before May 30, 20 18, to pre-file testimony explaining the impact the Federal Tax Act has on their federal income tax expense, as described in that Order. On January 26, 2018, the Commission entered an order requiring the utilities, effective January 1, 20 18, to establish a regulatory liability on their accounting records to track any impacts of the 2017 Federal Tax Act, including current and deferred tax impacts. In that Order, the Commission stated that regulatory liability recognition on the financial statements of the utilities of any cost of service savings would serve to protect the interests of ratepayers until any federal tax benefits can appropriately be reflected in rates. Commission Order dated January 26, 2018 at 2. On June 22, 2018, the Commission entered an Order scheduling a hearing to commence on July 24, 201 8, and continuing on July 25 and July 26,20 18, if necessary. On July 13, 2018, Huntington filed a Motion to be Excused From Hearing (Huntington Motion).

2 2018. On July 13, 2018, Republic filed a Motion (Republic Motion) to testify on July 25. On July 16, 2018, the City filed a Motion to Excuse Mayor Danny Jones (City Motion). On July 16, 2018, the KCC filed a Motion (KCC Motion) For Witness Kent Carper to Testify on July 25, On July 17, 2018, Bluefield filed a Motion to Excuse Witness John D. Jessie (Bluefield Motion). DISCUSSION Huntington states that it operates under P.S.C. M.C. Certificate Numbers F-7335, F-7336, F-7418, F-7550 and parts of F Huntington states that it sustained a loss and the Federal Tax Act does not affect Huntington. The attendance of its witness Bill Wheaton, would impose substantial hardship without prospect of any public benefit. Huntington Motion at 1-2. The Commission notes that in pre-filed testimony, Mr. Wheaton states that Allied Waste Sycamore Landfill, LLC (Sycamore) is one of the entities operated by Huntington. Pre-filed Direct Testimony of Republic at 1-2. Mr. Wheaton also states that the other entities that are part of the Huntington Unit are not affected by the Federal Tax Act. a. at 3. The Cornmission has received numerous requests for witnesses to appear on certain days of the hearing and is attempting to accommodate the witnesses' schedules. Republic states that its witness, Molly McWilliams is unable to travel from Wheeling, West Virginia on July 24 and 26, 2018, due to previously scheduled matters. Republic Motion at 2. Ms. McWilliams is currently scheduled to appear as the twelfth witness and the Commission anticipates that she would appear on July 25,2018, the second day of the hearing. The Commission will accommodate Ms. McWilliams provided that her appearance does not disrupt the appearance of witnesses who have already been granted specific dates to appear. The City states that it has no reason to believe any party will object to waiver of cross-examination of Mayor Jones and asked that his pre-filed testimony be admitted into the record. City Motion. In its Order entered on July 13, 2018, the Commission established a witness list that provided for Commissioner Carper to testify at 1 :00 p.m. on July 25, 201 8, consistent with the uninterrupted testimony of another witness. 2

3 Bluefield states that it has already accounted for reduced current federal tax expense in its last rate case and will not be able to provide further information regarding accumulated deferred income taxes beyond the estimates already filed with the Commission. Commission Staff and the Consumer Advocate Division indicated that they do not intend to examine Mr. Jessee at the hearing and no other intervenor has raised any concerns about Bluefield s position in this matter. Bluefield Motion. The Commission appreciates the argument made by Bluefield for the excuse of Mr. Jessee. Bluefield should file responses to the questions posed by the Commission in its June 22, 2018, Order, to the extent it has not already done so, including quantifying the amount of unprotected excess deferred federal income tax liability, no later than September 15, As the Commission previously addressed in its January 26, 2018, Order establishing regulatory accounting for the impacts of the 2017 Federal Tax Act, no utility subject to the provisions of the 2017 Federal Tax Act should write-off any excess deferred federal income tax liability without further order of the Commission. Because BIuefield has not supplied this information in its previous filings and will not provide testimony at the hearing, Bluefield shall not write-off the balance of any excess deferred federal income tax liability, once that amount has been established, until further order of the Commission. Any objections to the motions granted by this Order should be filed by 12:OO p.m. on July 20, FINDINGS OF FACT 1. Huntington states that the Federal Tax Act does not affect Huntington. Huntington. Motion at 1-2, Pre-filed Direct Testimony of Republic at Sycamore was excused from the hearing by the Commission s Order entered on July 12, Republic witness Molly McWiliams is unable to travel from Wheeling, West Virginia on July 24 and 26, Republic Motion at Bluefield accounted for reduced tax expense in its last rate case and is unable to provide fkrther information regarding accumulated deferred income taxes beyond the estimates already filed with the Commission. Bluefield Motion. CONCLUSIONS OF LAW 1. Because the entities that are part of the Huntington Unit have represented that they are not affected by the Federal Tax Act, the Huntington Motion should be 3

4 granted, subject to the conditions set forth by the Commission in the Order of July 12, Because Republic witness McWilliams is unable to travel on July 24 and 26, 2018, the Republic Motion to Testify on July 25, 2018, should be granted, provided there are no objections by other parties. 3. The City Motion to excuse Mayor Jones should be granted and his pre-filed testimony admitted into the record provided there is no objection. 4. Because the Commission provided for Commissioner Carper to testify at 1:OO p.m. on July 25, 2018, the KCC motion to testify on July 25, 2018 at 1:00 pm., consistent with the uninterrupted testimony of another witness, should be granted. 5. Because Bluefield accounted for reduced tax expense in its last rate case and is unable to provide further information regarding accumulated deferred income taxes beyond the estimates already filed with the Commission, the Bluefield motion to excuse its witness John Jessee should be granted with the conditions set forth in this order. 6. Any objections to the motions granted by this Order should be filed by 12:OO p.m., July 20, ORDER IT IS THEEFORE ORDERED that the motion of the Huntington Business Unit of Allied Waste Services of North America, LLC, d/b/a, Republic Services of West Virginia to be excused is granted. IT IS FURTHER ORDERED that the motion of Allied Waste Services of North America, LLC, d/b/a Republic Services of West Virginia (Republic) for its witness Molly McWilliams to testify on July 25, 2018, is granted, provided there are no objections by other parties. IT IS FURTHER ORDERED that the motion of the City of Charleston to excuse Mayor Jones is granted. IT IS FURTHER ORDERED that motion of the Kanawha County Commission for its witness, Commissioner Kent Carper, to testify on July 25, 2018 at 1:00 p.m., consistent with the uninterrupted testimony of another witness, is granted. IT IS FURTHER ORDERED that the motion of Bluefield Gas Company to excuse its witness, John Jessee, should be granted with the conditions set forth in this order. 4

5 IT IS FURTHER ORDERED that no utility subject to the provisions of the 2017 Federal Tax Act write-off any excess deferred federal income tax liability until further order of the Commission. IT IS FURTHER ORDERED that any objections to the motions granted by this Order should be filed no later than 12:OO p.m. on July 20, IT IS FURTHER ORDERED that the Executive Secretary of the Commission serve a copy of this Order by electronic service on all parties and on all the utilities listed on Attachment A of the January 3, 2018 and January 26, 2018 Orders who have filed an e-service agreement, and by United States First Class Mail on all who have not filed an e-service agreement, and on Commission Staff by hand delivery. A True Copy, Teste, Ingrid Ferrell Executive Secretary Ici RMA 5

GENERAL ORDER NO In the Matter of the Effects on Utilities of the 2017 Tax Cuts and Jobs Act.

GENERAL ORDER NO In the Matter of the Effects on Utilities of the 2017 Tax Cuts and Jobs Act. PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON At a session of the PUBLIC SERVICE COMMISSION OF WEST VIRGINIA in the City of Charleston on the 22"d day of June 20 18. GENERAL ORDER NO. 236.1 In