H. B. 3128
(By Delegates Craig, Webster and Morgan)
[Introduced March 13, 2009; referred to the
Committee on the Judiciary then Finance.]
A BILL to amend and reenact §24-2-3 of the Code of West Virginia,
1931, as amended, relating to the use of reported income tax
expenses in setting the rates of certain public utilities.
Be it enacted by the Legislature of West Virginia:
That §24-2-3 of the Code of West Virginia, 1931, as amended,
be amended and reenacted to read as follows:
ARTICLE 2. POWERS AND DUTIES OF PUBLIC SERVICE COMMISSION.
§24-2-3. General power of commission with respect to rates.
The commission shall have power to enforce, originate,
establish, change and promulgate tariffs, rates, joint rates, tolls
and schedules for all public utilities:
Provided, That the
commission may exercise such rate authority over municipal
utilities only under the circumstances set forth in section four-b
of this article. And whenever the commission shall, after hearing,
find any existing rates, tolls, tariffs, joint rates or schedules unjust, unreasonable, insufficient or unjustly discriminatory or
otherwise in violation of any of the provisions of this chapter,
the commission shall by an order fix reasonable rates, joint rates,
tariffs, tolls or schedules to be followed in the future in lieu of
those found to be unjust, unreasonable, insufficient or unjustly
discriminatory or otherwise in violation of any provisions of law,
and the said commission, in fixing the rate of any railroad
company, may fix a fair, reasonable and just rate to be charged on
any branch line thereof, independent of the rate charged on the
main line of such railroad.
In determining just and reasonable rates, the commission may
audit and investigate management practices and policies, or have
performed an audit and investigation of such practices and
policies, in order to determine whether the utility is operating
with efficiency and is utilizing sound management practices. The
commission shall adopt rules and regulations setting forth the
scope, frequency and application of such audits and investigations
to the various utilities subject to its jurisdiction. The
commission may include the cost of conducting the management audit
in the cost of service of the utility.
In determining just and reasonable rates, the commission shall
investigate and review transactions between utilities and
affiliates. The commission shall limit the total return of the
utility to a level which, when considered with the level of profit or return the affiliate earns on transactions with the utility, is
just and reasonable.
Also in determining just and reasonable rates, the Commission
shall determine the federal and state income tax costs for
investor-owned water, gas, or electric utility that is part of a
publicly traded, consolidated group as follows: (i) Such utility's
apportioned state income tax costs shall be calculated according to
the applicable statutory rate, as if the utility had not filed a
consolidated return with its affiliates, and (ii) such utility's
federal income tax costs shall be calculated according to the
applicable federal income tax rate and shall exclude any
consolidated tax liability or benefit adjustments originating from
any taxable income or loss of its affiliates.
NOTE: This bill shall allow the Commission to determine just
and reasonable rates by considering the federal and state income
tax costs for investor-owned water, gas, or electric utility that
is part of a publicly traded, consolidated group as follows: (i)
Such utility's apportioned state income tax costs shall be
calculated according to the applicable statutory rate, as if the
utility had not filed a consolidated return with its affiliates,
and (ii) such utility's federal income tax costs shall be
calculated according to the applicable federal income tax rate and
shall exclude any consolidated tax liability or benefit adjustments
originating from any taxable income or loss of its affiliates.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
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