Pennsylvania Consolidated & Unconsolidated Statutes
Chapter 13 - Rates and Distribution Systems
Section 1301.1 - Computation of income tax expense for ratemaking purposes

(a) Computation.--If an expense or investment is allowed to be included in a public utility's rates for ratemaking purposes, the related income tax deductions and credits shall also be included in the computation of current or deferred income tax expense to reduce rates. If an expense or investment is not allowed to be included in a public utility's rates, the related income tax deductions and credits, including tax losses of the public utility's parent or affiliated companies, shall not be included in the computation of income tax expense to reduce rates. The deferred income taxes used to determine the rate base of a public utility for ratemaking purposes shall be based solely on the tax deductions and credits received by the public utility and shall not include any deductions or credits generated by the expenses or investments of a public utility's parent or any affiliated entity. The income tax expense shall be computed using the applicable statutory income tax rates.
(b) Revenue use.--If a differential accrues to a public utility resulting from applying the ratemaking methods employed by the commission prior to the effective date of subsection (a) for ratemaking purposes, the differential shall be used as follows:
(1) fifty percent to support reliability or infrastructure related to the rate-base eligible capital investment as determined by the commission; and
(2) fifty percent for general corporate purposes.
(b.1) Taxable contributions.--A water or wastewater public utility shall be solely responsible for funding the income taxes on taxable contributions in aid of construction and customer advances for construction and shall record the income taxes the water or wastewater public utility pays in accumulated deferred income taxes for accounting and ratemaking purposes.
(c) Application.--The following shall apply:
(1) Subsection (b) shall no longer apply after December 31, 2025.
(2) This section shall apply to all cases where the final order is entered after the effective date of this section.
(June 12, 2016, P.L.332, No.40, eff. 60 days; July 2, 2019, P.L.357, No.53, eff. 60 days)

2019 Amendment. Act 53 added subsec. (b.1).
2016 Amendment. Act 40 added section 1301.1.

Structure Pennsylvania Consolidated & Unconsolidated Statutes