Section 441 of the Tax Reform Act of 1969 does not deprive the
Federal Power Commission of the authority to permit a utility that
is subject to its jurisdiction under the Natural Gas Act to change
the depreciation method that it uses for purposes of ratemaking
from accelerated depreciation with "flow through" of the utility's
tax savings to customers to accelerated depreciation with
normalization (where the income tax expense allowed in the cost of
service is computed on a straight-line depreciation basis) with
respect to pre-1970 property as well as replacement property. Pp.
411 U. S.
465-474.
149 U.S.App.D.C. 238, 462 F.2d 853, reversed and remanded.
DOUGLAS, J., delivered the opinion for a unanimous Court.
Page 411 U. S. 459
MR. JUSTICE DOUGLAS delivered the opinion of the Court.
We granted certiorari in these cases to determine whether § 441
of the Tax Reform Act of 1969, 26 U.S.C. § 167(
l),
circumscribes the authority of the Federal Power Commission under
the Natural Gas Act, 52 Stat. 821, as amended, 15 U.S.C. § 717
et seq., to permit a regulated utility to change its
method of computing depreciation for ratemaking purposes from
"flow-through" to "normalization" with respect to property acquired
prior to 1970 as well as "replacement" property.
Since the resolution of this issue depends largely on the
background and history of § 441 and the Commission's regulatory
powers, a brief review is in order at the outset. Section 167 of
the Internal Revenue Code authorized taxpayers, including regulated
utilities, to use accelerated or liberalized depreciation in
calculating their federal income taxes. [
Footnote 1] The Commission retained
Page 411 U. S. 460
jurisdiction to prescribe the depreciation method to be used by
regulated utilities in calculating their federal income tax expense
for ratemaking purposes. [
Footnote
2] Initially, the Commission required utilities to compute
their cost of service, which includes federal income taxes, as if
they were using straight-line depreciation. This method, referred
to as "normalization," was designed to avoid giving the present
customers of a utility the benefits of tax deferral attributable to
accelerated depreciation. If a utility used accelerated
depreciation in determining its actual tax liability, the
difference between the taxes actually paid and the higher taxes
reflected as a cost of service for ratemaking purposes was required
to be placed in a deferred tax reserve account.
See Amere Gas
Utilities Co., 15 F.P.C. 760.
It soon became apparent that accelerated depreciation, in
practice, resulted in permanent tax savings. Because most utilities
had growing or at least stable plant investments, the depreciation
allowances from additional and replacement equipment offset the
declining depreciation allowance on existing property. Accordingly,
the Commission required utilities using accelerated depreciation
for tax purposes to use the same method for calculating their cost
of service, and, thus, to "flow through" any tax savings to their
customers.
Alabama-Tennessee Natural Gas Co., 31 F.P.C.
208,
aff'd sub nom. Alabama-Tennessee Natural Gas Co. v.
FPC, 359 F.2d 318 (CA5). Subsequently, the Commission decided
that it would impute the use of accelerated depreciation for
ratemaking purposes regardless of the method used for computing
actual taxes.
Midwestern Gas Transmission Co., 36
Page 411 U. S. 461
F.P.C. 61,
aff'd sub nom. Midwestern Gas Transmission Co. v.
FPC, 388 F.2d 444 (CA7).
When the House and Senate considered tax reform legislation in
1969, both were concerned with the loss of tax revenues that
stemmed from the combined effect of accelerated depreciation for
computing federal taxes (leading to higher deductions) and
flow-through for fixing rates (leading to lower rates and thus
lower gross revenues). [
Footnote
3] Section 441 of the Tax Reform Act, which added §
167(
l) to the Internal Revenue Code, was designed in
general to "freeze" existing depreciation practices. [
Footnote 4] As passed by the House, § 441
would have established three rules with respect to existing
depreciable property: [
Footnote
5]
"(1) If straight line depreciation is presently being taken,
then no faster depreciation is to be permitted as to that
property."
"(2) If the taxpayer is taking accelerated depreciation and is
'normalizing' its deferred taxes, then it must go to the straight
line method unless it continues to normalize as to that
property."
"(3) If the taxpayer is taking accelerated depreciation and
flowing through to its customers the benefits of the deferred
taxes, then the taxpayer must continue to do so, unless the
appropriate regulatory agency permits a change as to that
property."
The Senate bill, as passed, was similar to that of the House,
except that utilities on flow-through were given the right to elect
within 180 days
"to shift from the flow-through to the straight-line method,
with or without the permission of the appropriate regulatory
agency, or . . .
Page 411 U. S. 462
with the permission of the regulatory agency, to shift to the
normalization method. . . . [
Footnote 6]"
This election was to apply both to new and existing property. In
conference, however, it was agreed that this right of election
would apply only to property acquired by the utility after 1969 to
expand its facilities. [
Footnote
7]
Thus, as added to the Internal Revenue Code in 1969, §
167(
l) distinguishes between two basic types of "public
utility property": [
Footnote 8]
"pre-1970 property," which is property acquired by the taxpayer
before January 1, 1970 (§ 167(
l)(3)(B)), and all other
property, referred to as "post-1969 property" (§
167(
l)(3)(C)). A further distinction is drawn between
post-1969 property "which increases the productive or operational
capacity of the taxpayer" (expansion property) and post-1969
property which merely replaces existing property (§
167(
l)(4)(A)). With respect to pre-1970 property, a
utility may use (1) straight-line depreciation, (2) the method used
prior to August, 1969, if it also employs normalization, or (3)
accelerated depreciation with flow-through, but only if that method
was used prior to August, 1969
Page 411 U. S. 463
(§ 167(
l)(1)). With respect to post-1969 property, a
utility may use (1) straight-line depreciation, (2) accelerated
depreciation with normalization, or (3) accelerated depreciation
with flow-through if the utility used flow-through prior to August,
1969 (§ 167(
l)(2)). In addition, under §
167(
l)(4)(A), a utility may elect to abandon accelerated
depreciation with flow-through with respect to post-1969 expansion
property.
The proceedings in issue here involve Texas Gas Transmission
Corp., the operator of a major interstate pipeline system
certificated by the federal Power Commission. Although Texas Gas
utilized accelerated depreciation with flow-through prior to the
adoption of the Tax Reform Act, it filed a proposed rate increase
with the Commission on June 27, 1969, based upon "the proposed
discontinuance of the use of liberalized depreciation and the
reversion to a straight-line method of tax depreciation." After §
167(
l) was enacted, Texas Gas advised the Commission that
it intended to exercise the election provided in §
167(
l)(4)(A), and sought permission to use accelerated
depreciation with normalization with respect to its post-1969
expansion property. [
Footnote
9] It also sought assurance, before it made the election, that
it would be able to change from flow-through to straight-line or,
preferably, accelerated depreciation with normalization with
respect to its pre-1970 property and post-1969 replacement
property.
The Commission, holding that its authority "to determine whether
a company may effect such a change is not
Page 411 U. S. 464
diminished" under the Tax Reform Act, permitted Texas Gas to
change from flow-through to normalization for ratemaking purposes.
Opinion No. 578, 43 F.P.C. 824, 828,
rehearing denied, 44
F.P.C. 140. [
Footnote 10]
The Commission reasoned that the basis of its decisions in
Alabama-Tennessee and
Midwestern would no longer
be applicable if Texas Gas were to switch to normalization with
respect to post-1969 expansion property. In that event, the tax
savings resulting from the deferral attributable to accelerated
depreciation would not be permanent. Rather, if Texas Gas were
required to continue flow-through for all but its new expansion
property, it would be faced with a steadily increasing cost of
service which would necessitate repeated rate increases. Under
these circumstances, the Commission concluded:
"Texas Gas is correct in contending that normalization in
computing the tax allowance for rate purposes with respect to its
pre-1970 facilities offers more hope for stability of rates for its
customers and more assurance that the company can earn its fair
rate of return without future rate increases. Further benefits of
normalization are that it will improve the company's before tax
coverage of interest, thereby
Page 411 U. S. 465
enhancing the quality of its securities, and that it will help
alleviate present day cash shortages."
Id. at 829-830.
The Court of Appeals, on petitions for review, reversed the
Commission's order. [
Footnote
11] 149 U.S.App.D.C. 238, 462 F.2d 853,
rehearing denied,
id. at 250, 462 F.2d at 865. Although the Court recognized
that the version of the Tax Reform Act passed by the House would
have supported the Commission's order, it held that the limited
nature of the election provision as finally passed deprived the
Commission of authority to permit regulated utilities to abandon
flow-through with respect to their existing and replacement
property. We reverse and remand to the Court of Appeals for further
proceedings consistent with this opinion.
The present cases concern solely the depreciation methods used
by utilities in calculating their federal income tax expenses for
ratemaking purposes.
In § 441 of the Tax Reform Act of 1969, Congress dealt primarily
with a revenue measure under the tax laws, and only indirectly with
the regulatory power of the Commission under the Natural Gas Act.
We have had before us on numerous occasions cases arising under the
Natural Gas Act. In the early case of
FPC v. Hope Natural Gas
Co., 320 U. S. 591, we
emphasized two aspects of the power of the Commission to fix "just
and reasonable" rates under 15 U.S.C. § 717. First was the desire
"to protect consumers against exploitation," 320 U.S. at
320 U. S.
610,
Page 411 U. S. 466
and second was the aim to promote the "financial integrity" of
the natural gas companies as measured not only by revenues
sufficient to recover operating expenses and capital costs,
id. at
320 U. S. 603,
but also by revenues "sufficient to assure confidence in the
financial integrity of the enterprise, so as to maintain its credit
and to attract capital."
Ibid. We mention those matters
because (1) the treatment of depreciation bears on rates, and (2)
there is no indication in the legislative history of this tax
measure that Congress desired to modify, as respects the precise
issue involved here, the broad discretion of the Commission
delineated in
Hope Natural Gas and in other rate
cases.
Under § 4(a) of the Natural Gas Act, 15 U.S.C. § 717c(a), all
rates and charges made by a natural gas company subject to the
Commission's jurisdiction must be "just and reasonable." Section
4(e), 15 U.S.C. § 717c(e), sets forth the procedures whereby the
Commission can determine whether a proposed rate schedule is
lawful, and § 5, 15 U.S.C. § 717d, gives the Commission certain
powers to fix rates and charges. Finally, under § (a), 15 U.S.C. §
717h(a), the Commission may
"require natural gas companies to carry proper and adequate
depreciation and amortization accounts in accordance with such
rules, regulations, and forms of account as the Commission may
prescribe."
In
FPC v. United Gas Pipe Line Co., 386 U.
S. 237,
386 U. S. 243,
the Court stated:
"One of [the Commission's] statutory duties is to determine just
and reasonable rates which will be sufficient to permit the company
to recover its costs of service and a reasonable return on its
investment. Cost of service is therefore a major focus of inquiry.
Normally included as a cost of service is a proper allowance for
taxes, including federal income taxes. The determination of this
allowance, as a general
Page 411 U. S. 467
proposition, is obviously within the jurisdiction of the
Commission."
The lower courts have allowed the Commission broad discretion in
determining proper depreciation methods for ratemaking purposes.
See, e.g., Alabama-Tennessee Natural Gas Co. v. FPC, 359
F.2d 318;
Midwestern Gas Transmission Co. v. FPC, 388 F.2d
444.
Section 167(
l), to be sure, does not leave this
discretion untouched. For example, a utility using straight-line
depreciation with respect to its pre-1970 property could not switch
to accelerated depreciation, nor could a utility be required to
switch to flow-through with respect to pre-1970 property.
See § 167(
l)(1). But § 167(
l), on its
face, does not preclude the Commission from exercising its
statutory powers to permit a utility to abandon flow-through.
Section 167(
l)(1)(B) provides that,
"[i]n the case of any pre-1970 public utility property, the
taxpayer
may use the applicable 1968 method for such
property if -- (i) the taxpayer used a flow-through method of
accounting"
prior to August 1969. (Emphasis added.)
The Court of Appeals, however, found error in the Commission's
action based on its detailed and considered analysis of the
legislative history of § 167(
l). It concluded that
"
the final version of the bill limits the applicability of the
right of election to post-1969 expansion (non-replacement) property
alone." 149 U.S.App.D.C. at 246, 462 F.2d at 861 (emphasis in
original). It reasoned as follows. At the House stage, the action
of the Commission would have been justified to switch to
normalization because, as already noted, the House Report stated:
[
Footnote 12]
"Your committee's bill provides that, in the case of
existing property, the following rules are to apply: "
Page 411 U. S. 468
"(1) If straight line depreciation is presently being taken,
then no faster depreciation is to be permitted as to that
property."
"(2) If the taxpayer is taking accelerated depreciation and is
'normalizing' its deferred taxes, then it must go to the straight
line method unless it continues to normalize as to that
property."
"(3) If the taxpayer is taking accelerated depreciation and
flowing through to its customers the benefits of the deferred
taxes, then the taxpayer must continue to do so,
unless the
appropriate regulatory agency permits a change as to that
property."
(Emphasis added.)
The word "existing" property, as used in that Report, included
"replacement" property in the mind of the Court of Appeals.
The Senate version of the bill [
Footnote 13] would have permitted Texas Gas to shift from
liberalized depreciation with flow-through either to straight-line
depreciation or, with the Commission's approval, to liberalized
depreciation with normalization. 149 U.S.App.D.C. at 247 462 F.2d
at 862.
Page 411 U. S. 469
The Court of Appeals, however, concluded that, because the right
of election was restricted while the bill was in conference to
apply only to post-1969 expansion property, the Commission could
not permit a utility to change its method with respect to existing
or replacement property.
Ibid. It relied on the following
four paragraphs from the Conference Report. [
Footnote 14]
"The House bill provides that, in the case of certain listed
regulated industries (the furnishing or sale of . . . gas through a
local distribution system, . . . and transportation of gas by
pipeline), a taxpayer is
not permitted to use accelerated
depreciation unless it '
normalizes' the current income tax
reduction resulting from the use of such accelerated
depreciation."
"
This rule is not to apply in the case of a taxpayer that is
at present flowing through the tax reduction to earnings for
purposes of computing its allowable expenses on its regulated books
of account. Also, if the taxpayer is now using straight line
depreciation as to any public utility property, it may not change
to accelerated depreciation as to that property."
"The Senate amendment makes the following changes in the House
bill: . . . (d)
an election is permitted to be made within 180
days after the date of enactment by a company at present on
flow-through to come under the rules of the bill. . . ."
"
The conference substitute (sec. 1 of the substitute and
sec. 167(l
) of the code) follows the Senate amendment
except that the special provision referred to in (e) above is
stricken, and the 180-day election (item (d), above) is modified to
apply to new property and not to replacement property.
Page 411 U. S. 470
Even in the case of new property, however, the right to
change over from the flow-through method is to be available only to
the extent the new property increases the productive or operational
capacity of the company."
(Emphasis added.)
From these four paragraphs, the Court of Appeals concluded that
the second paragraph of the Conference Report prohibits Texas Gas
from abandoning liberalized depreciation with flow-through, and
that the right of election was restricted to post-1969, expansion
property only.
The second paragraph, however, as we read it, when it uses the
words "This rule", refers not to the final bill, but to the initial
House bill. That initial bill, as summarized in the House Report as
already noted, [
Footnote 15]
had somewhat different provisions for depreciation. The first
paragraph of the quotation from the Conference Report, in our view,
summarized the House's proposed second rule. The words "This rule"
in the second paragraph, therefore, refer to the House's proposed
second rule. [
Footnote 16]
Only the third paragraph of the excerpt reached the changes made by
the Senate. Only the fourth paragraph resolved the differences
between the two bills. There is nothing in either the third or the
fourth paragraph to indicate that the election authorized by the
Conference Report was to limit or replace the three general rules
proposed by the House, the third House-proposed rule [
Footnote 17]
Page 411 U. S. 471
authorizing precisely what the Commission allowed in this case.
The second paragraph, read in the context of the Conference Report,
does not state that the Commission lacks authority to permit a
company on flow-through to abandon it with respect to existing
property. It only states that a company on flow-through may remain
on flow-through. Thus, it is solely a limitation on the requirement
that a company must normalize if it wants to continue accelerated
depreciation with respect to pre-1970 property. This is entirely
consistent with the structure of § 167(
l)(1).
Nor is the extension of the 180-day election to post-1969
expansion property a limiting factor. The "reasonable" allowance
for depreciation of post-1969 property, as used in §
167(
l)(2), includes in subparagraph (C)
"the applicable 1968 method, if, with respect to its pre-1970
public utility property of the same (or similar) kind most recently
placed in service, the taxpayer used a flow-through method of
accounting for its July, 1969, accounting period."
But § 167(
l)(4)(A) provides that, where the taxpayer
makes an election within the 180-day period, paragraph (2)(C) shall
not apply with respect to any post-1969 public utility property "to
the extent that such property constitutes property which increases
the productive or operational capacity of the taxpayer" and does
not represent "the replacement of existing capacity."
Thus, the Act recognizes ways for a utility to abandon
flow-through with respect to existing property. A utility cannot do
so on its own; the overriding authority is in the Federal Power
Commission. The staff of the Joint Committee on Internal Revenue
Taxation prepared a General Explanation of this tax measure
[
Footnote 18] in which it
stated:
"If the taxpayer was taking accelerated depreciation
Page 411 U. S. 472
and flowing through to its customers the benefits of the
deferred taxes as of August 1, 1969, then the taxpayer would
continue to do so (except for a special election procedure
discussed below), unless the appropriate regulatory agency permits
a change as to that property."
This document goes on to state [
Footnote 19] that, as respects new property, a utility on
flow-through must remain on flow-through "unless the regulatory
agency permits it to change (or unless the election below
applies)."
This document provides a compelling contemporary indication that
the Federal Power Commission was not deprived of its authority to
permit abandonment of flow-through, even though utilities had the
right not to have flow-through apply to their expansion
property.
The Court of Appeals relied on comments both in the House
[
Footnote 20] and in the
Senate [
Footnote 21] Reports
of the desire of Congress to "freeze" the current practices
relating to depreciation especially as respects "the more
flourishing utility industries." [
Footnote 22]
As we read the Reports, the purpose was to forestall switches to
faster methods of depreciation, to guard against widespread rate
increases, and to avoid putting some utilities at a competitive
disadvantage. But the "freeze" was not put in absolute terms.
Shifts from straight-line to accelerated depreciation were
outlawed, as were shifts from normalization to flow-through on
existing property. We find no trace of a suggestion that the
Federal Power Commission was denied authority to determine whether,
on particular facts, the abandonment of flow-through by a utility
within the parameter of the
Page 411 U. S. 473
Tax Reform Act of 1969 would be in the public interest as
envisaged by the Natural Gas Act, even though it might increase
rates. The "freeze" certainly was designed to cover changes to
faster methods of tax depreciation, but not changes to slower
methods of tax depreciation that the Commission might permit.
The Court of Appeals sustained the Commission as respects the
post-1969 expansion property of Texas Gas, and reversed it as
respects the pre-1970 and post-1969 nonexpansion property. The
Court of Appeals did not reach the validity of the Commission's
order, assuming the Commission was correct in its reading of the
Tax Reform Act of 1969, as we think it was. The Court of Appeals
did, however, state that § 167(
l) "should not be construed
to prevent" the Commission from finding in "extraordinary
circumstances" that consumer interests "would be furthered by
permitting the abandonment of flow-through." But it added:
"It is clear, however, that such consumer interests would not be
furthered by permitting Texas Gas to abandon flow-through in the
circumstances presented by the case at bar."
149 U.S.App.D.C. at 250, 462 F.2d at 865. The Commission, in its
petition for certiorari, states that in connection with the main
question raised, it would argue, if the petition were granted, that
its decision on the merits was correct in all respects. And, in its
brief on the merits, it urges us to decide the merits. But, by
statute, [
Footnote 23] the
Court of
Page 411 U. S. 474
Appeals is the tribunal where review must be sought; and we
remand the cases to it for proceedings consistent with this
opinion. We note in closing, however, that the judgment of the
Court of Appeals is reversed
in toto. Its holding that the
consumer interests were not furthered by the Commission's action is
short of the application of the appropriate standard for review. As
already noted, under
Hope Natural, as rates are "just and
reasonable" only if consumer interests are protected and if the
financial health of the pipeline in our economic system remains
strong.
Reversed and remanded.
* Together with No. 72-488,
Texas Gas Transmission Corp. v.
Memphis Light, Gas & Water Division et al., also on
certiorari to the same court,@
[
Footnote 1]
Section 167(a) provides that
"[t]here shall be allowed as a depreciation deduction a
reasonable allowance for the exhaustion, wear and tear (including a
reasonable allowance for obsolescence)"
of qualified property. Section 167(b) defines "reasonable
allowance" to include an allowance computed under the declining
balance method and the "sum of the years digits" method, as well as
the straight-line method. Under the declining balance and "sum of
the years digits" method, both commonly referred to as accelerated
or liberalized depreciation methods, depreciation allowances in the
early years are higher than under the straight-line method, but
steadily decrease over the useful life of the asset. Under the
straight-line method, the depreciation allowance for an asset
remains equal over its useful life.
[
Footnote 2]
Federal income taxes are properly included as an expense under
the cost of service ratemaking utilized by the Commission in the
regulation of rates for sales of natural gas subject to its
jurisdiction under the Natural Gas Act, 15 U.S.C. § 717
et
seq. See FPC v. United Gas Pipe Line Co.,
386 U. S. 237,
386 U. S.
243.
[
Footnote 3]
See H.R.Rep. No. 9113, pt. 1, pp. 131-132; S.Rep. No.
91-552, p. 172.
[
Footnote 4]
See H.R.Rep. No. 91-413, pt. 1, pp. 132-133; S.Rep. No.
91-552, p. 172.
[
Footnote 5]
H.R.Rep. No. 91-413, pt. 1, p. 133.
[
Footnote 6]
S Rep No. 91-552, p. 173.
[
Footnote 7]
See H.R.Conf.Rep. No. 91-782, p. 313.
[
Footnote 8]
Section 167(
l)(3)(A) provides:
"The term 'public utility property' means property used
predominantly in the trade or business of the furnishing or sale of
-- "
"(i) electrical energy, water, or sewage disposal services,"
"(ii) gas or steam through a local distribution system,"
"(iii) telephone services, or other communication services if
furnished or sold by the Communications Satellite Corporation for
purposes authorized by the Communications Satellite Act of 1962 (47
U.S.C. [§] 701), or"
"(iv) transportation of gas or steam by pipeline,"
"if the rates for such furnishing or sale, as the case may be,
have been established or approved by a State or political
subdivision thereof, by any agency or instrumentality of the United
States, or by a public service or public utility commission or
other similar body of any State or political subdivision
thereof."
[
Footnote 9]
In Order No. 404, 43 F.P.C. 740,
rehearing denied, 44
F.P.C. 16, the Commission announced that, as a general policy, it
would permit utilities making the election under §
167(
l)(4)(A) to use accelerated depreciation with
normalization with respect to their expansion property. The Court
of Appeals, in the same decision under review here, affirmed this
order. 149 U.S.App.D.C. 238, 250, 462 F.2d 853, 865. That part of
the court's decision is not before us.
[
Footnote 10]
The Commission's order reads:
"(A) In the computation of its Federal Income Tax allowance for
ratemaking purposes as well as for accounting purposes, Texas Gas
is permitted to use liberalized depreciation with normalization
with respect to its property other than that subject to election
under Section 167(
l)(4)(A) of the Internal Revenue Code as
amended by Section 441 of the Tax Reform Act of 1969. Such election
applies to property constructed or acquired on or after January 1,
1970, to the extent it increases the productive or operational
capacity of the company and does not represent the replacement of
existing capacity. Texas Gas may reflect any such change in its
rates, as well as any change in costs arising from its proposed
election. In computing its cost of service for ratemaking purposes,
balances in Account 282 [deferred tax reserve account] should
continue to be deducted from the rate base."
43 F.P.C. 824, 831.
[
Footnote 11]
Memphis Light, Gas & Water Division, a municipally owned
distributor of natural gas and a city-gate customer of Texas Gas,
and the Public Service Commission of the State of New York
petitioned the Court of Appeals for review of the Commission's
Opinion No. 578. Each had filed an application for rehearing before
the Commission which was denied in Opinion No. 578-A. Both the
Federal Power Commission (in No. 72-486) and Texas Gas (in No.
72-488) petitioned this Court for a writ of certiorari.
[
Footnote 12]
H.R.Rep. No. 91-413, pt. 1, p. 133.
[
Footnote 13]
S Rep No. 91-552, pp. 173-174:
"The [Senate] committee amendments, while in most respects the
same as the House provisions, differ in one principal area. The
amendments permit an election to be made within 180 days after the
date of enactment of the bill for a utility covered by this
provision to shift from the flow-through to the straight-line
method,
with or without the permission of the appropriate
regulatory agency, or permit it with the permission of the
regulatory agency to shift to the normalization method (that
is, to come under general rules of the bill)."
"
This election applies both as to new and existing
property. . . . Since the company would no longer be permitted
to use accelerated depreciation (unless the agency later permits it
to normalize), the agency would not be able to impute the use of
accelerated depreciation with flow-through."
(Emphasis added.)
[
Footnote 14]
H.R.Conf.Rep. No. 91-782, pp. 312-313.
[
Footnote 15]
H.R.Rep. No. 91-413, pt. 1, p. 133.
[
Footnote 16]
The second rule, as noted, provided,
"If the taxpayer is taking accelerated depreciation and is
'normalizing' its deferred taxes, then it must go to the straight
line method unless it continues to normalize as to that
property."
Ibid.
[
Footnote 17]
The third rule, as noted, provided,
"If the taxpayer is taking accelerated depreciation and flowing
through to its customers the benefits of the deferred taxes, then
the taxpayer must continue to do so unless the appropriate
regulatory agency permits a change as to that property."
Ibid.
[
Footnote 18]
General Explanation of the Tax Reform Act of 1969, H.R. 13270,
91st Cong., p. 151.
[
Footnote 19]
Ibid.
[
Footnote 20]
H.R.Rep. No. 91-413, pt. 1, pp. 132-133.
[
Footnote 21]
S Rep. No. 91-552, p. 172
[
Footnote 22]
Ibid.
[
Footnote 23]
Section 19(b) of the Natural Gas Act, 15 U.S.C. § 717r(b),
provides:
"Any party to a proceeding under this chapter aggrieved by an
order issued by the Commission in such proceeding may obtain a
review of such order in the court of appeals of the United States
for any circuit wherein the natural gas company to which the order
relates is located or has its principal place of business, or in
the United States Court of Appeals for the District of Columbia
[Circuit]. . . ."