Federal Tax Cuts

The Michigan Public Service Commission (PSC) has asked the Federal Energy Regulatory Commission (FERC) to order interstate natural gas pipeline operators to adjust their rates downward in response to lower corporate income tax rates resulting from recently promulgated changes in the federal tax code.

Pursuant to the Tax Cuts and Jobs Act of 2017, the effective corporate tax rate dropped from 35% to 21%, as of January 1. The request from the Michigan commission follows an earlier PSC decision requiring all 13 rateregulated utilities in Michigan to report to the PSC how their savings from the new tax law will benefit ratepayers.

In a letter sent January 11 to FERC, the Michigan PSC petioned the agency in charge of wholesale energy rates to “take immediate action directing all interstate natural gas pipelines” to either voluntarily adjust their rates effective January 1 or be subject to federal laws that allow for an investigation into whether their rates are just and reasonable. According to the PSC, savings realized by interstate pipeline operators could be passed on to ratepayers in the form of a reduced gas cost recovery charge.

Separately, Michigan joined two other entities, the Organization of MISO States and the Organization of PJM States, in seeking FERC action in studying how changes in the tax law could affect electric transmission costs that consumers pay.