(a) Each electric utility that is subject to the commission's
rate setting jurisdiction, pays state franchise taxes, and has not had a rate
proceeding under the Public Utility Regulatory Act §36.103 and §36.151,
in which the effects of House Bill 11 were considered when setting the rates,
shall be subject to this subsection. Except as provided in the following sentence,
on or before December 1 of each year, each electric utility subject to this
subsection shall file with the commission a tariff sheet, or tariff sheets,
applicable to each rate class setting forth an interim House Bill 11 tax adjustment
factor. If an electric utility chooses not to request an increase under this
subsection or if the electric utility has otherwise limited itself by agreement
to recovering tax changes that are the subject of this subsection by a method
different from that prescribed in this subsection, the electric utility need
not file tariff sheets but shall make an informational filing showing its
calculations, including an explanation and all underlying supporting documentation
showing the effect of House Bill 11 on its taxes. If the adjustment is a decrease
that amounts to less than $1.00 per customer for electric utilities on an
annual basis, the tariff shall not include a factor, but shall state that
the reduction will be applied against the adjustment for future years. In
all other tariffs, the factors set forth in the tariff sheets shall be calculated
as set forth in the following paragraphs. Electric utilities that are required
to file tariff sheets shall include an explanation of how the interim factor
was calculated and showing all the calculations.
(b) If the adjustment is a decrease requiring a factor, or
the electric utility affirmatively requests that an adjustment be made to
its billings to account for the effect of House Bill 11 on its state taxes,
the tariff filing will be docketed and will automatically go into effect on
January 1 of the year following the filing. If the adjustment is a decrease
being carried forward to future years, the filing will be treated as a tariff
filing except that it shall take effect on January 1 of the year following
the filing. An electric utility may amend a tariff filed under this subsection
to make mid-course corrections as necessary. For all amended filings, all
tariffs will take effect on the date specified by the electric utility, but
in no event earlier than ten days after the filing.
(c) The interim House Bill 11 tax adjustment factor shall be
calculated by allocating the effect on the electric utility's state taxes
for the next calendar year of House Bill 11 as provided in subsection (f)
of this section. The effect on the electric utility's state taxes for the
coming calendar year shall be calculated by subtracting the estimated state
taxes attributable to the calendar year if the law prior to House Bill 11
were still in effect, from the estimated state taxes due or attributable to
the calendar year under House Bill 11. In calculating the state taxes that
would be due during the calendar year if the law prior to House Bill 11 were
still in effect, four-twelfths of the franchise tax paid or that would have
been paid in the previous year and eight-twelfths of the franchise tax that
would have been paid in the calendar year in question will be considered attributable
to the calendar year in question. In performing the calculation, the various
fees imposed by House Bill 11 will not be considered taxes. In calculating
the taxes that are estimated to be paid, changes resulting from audits or
amended returns for previous periods that were covered by this rule shall
be considered. The state franchise tax imposed by House Bill 11 will be considered
to be a franchise tax and not an income tax regardless of the method of calculation.
(d) If an interim factor goes into effect, it shall be subject
to surcharge or refund to the extent it differs from the factor finally set
by the commission. If a surcharge or refund is necessary, a credit or surcharge
will be made to the existing customers' bills. If the refund or surcharge
amount is less than either $10,000 in total or $1.00 per customer, calculated
by dividing the total refund or surcharge by the total number of customers,
the electric utility may make the refund or surcharge by carrying it forward
until a year when the cumulative total refund or surcharge is not less than
either $10,000 or $1.00 per customer. Simple interest will be added to the
amount due at the rate set by the commission for overbillings and underbillings
starting at the beginning of the month in which the obligation accrued and
ending on the last day of the month preceding the refund or surcharge. The
month, or months, in which the obligation accrues will be determined by comparing
the collections each month under the tariff filed by the electric utility
with the amount that should have been collected had the electric utility been
able to precisely predict its tax bill and its sales. The number of days in
each month shall be considered for purposes of the interest calculation. Interest
will be added to decreases that are carried to future years and will be calculated
by the same method.
(e) The electric utility shall file, on or before the first
business day after March 1 of the year following the year when a particular
factor was in effect, testimony supporting the final adjustment factor that
it is requesting to account for the effect of House Bill 11 on its state taxes
for that year. The electric utility's filing will include a copy of the Franchise
Tax Return filed with the Comptroller's Office and the details of their computation
of the tax that would have been due had House Bill 11 not been enacted. The
hearing on the merits for purposes of setting the final factor, if necessary,
shall be convened no earlier than 45 days after the filing of the electric
utility's testimony and shall be strictly limited to issues under this subsection.
For purposes of administrative efficiency, the presiding officer assigned
to a case may grant an electric utility's request that the final hearing on
a particular year's factor be delayed for up to three years; however, if
such a request is granted, any interest to be paid by the electric utility
shall be at the utility's cost of capital as determined in the electric utility's
last rate case. Requests to delay the final hearing on a particular year's
factor shall be filed with the testimony supporting the final adjustment factor.
(f) The billing adjustment should apply over the entire year;
however, if the adjustment necessary to account for the effect of House Bill
11 is so small that it would be difficult to apply on a monthly basis, the
electric utility may make the billing adjustment during a single month. Cost
allocation and rate design are as follows.
(1) If the adjustment factor results in a lower cost to the
ratepayers, the revenue decrease shall be allocated to the customers on the
same basis as the franchise taxes were allocated in the electric utility's
last rate case.
(2) If the adjustment factor results in a greater cost
to the ratepayers, the revenue increase will be allocated to the customers
in the same manner as were federal income taxes in the electric utility's
last rate case.
(3) The factor for each customer within a class will then
be calculated based on expected kilowatt-hour (kwh) sales and charged on a
per kwh basis, except that the factor for each customer within an industrial
class served at transmission-level voltage will be calculated as a percentage
of the base revenues (excluding fuel, any applicable power cost recovery
factor (PCRF) charges, and add-on revenue taxes) received from that class
during the most recent 12-month period.
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