On December 15, 2016, FERC issued a Notice of Inquiry (“NOI”) requesting comments regarding how FERC can ensure that partnerships that own and operate jurisdictional pipelines or public utilities, or similar pass-through entities (collectively, “Partnerships”), are not receiving “a double recovery of [income] taxes” based on FERC’s current income tax allowance (“ITA”) and return on equity (“ROE”) policies. FERC’s NOI comes in response to United Airlines, Inc. v. FERC, 827 F.3d 122 (2016), where the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) held that FERC had not “adequately justified” its current policy of granting such Partnerships an ITA – that is, the authority to recover from their ratepayers as a “cost” the income taxes paid by partner-investors on their shares of partnership income.
Continue Reading FERC Questions Recovery of Income Tax Costs by Partnerships and Other Pass-Through Entities