Pennsylvania Consolidated Statutes

66 Pa. Cons. Stat. § 1301.1 (2026)

Computation of income tax expense for ratemaking purposes.

✓ current as of May 2026

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§ 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.

Notes of Decisions

Cited in 6 cases (3 in the last 5 years), 2019–2021 · leading case: McCloskey, T. v. PUC; Metro Edison Co, Aplts (Pa. 2021).

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McCloskey, T. v. PUC; Metro Edison Co, Aplts (Pa. 2021). · cites it 10× “1(a) of the Public Utility Code, 66 Pa.C.S. § 1301.1.” McCloskey-FirstEnergy, 219 A.”

McCloskey, T. v. PUC, Aplt. (Pa. 2021). · cites it 10× “1(a) of the Public Utility Code, 66 Pa.C.S. § 1301.1.” McCloskey-FirstEnergy, 219 A.”

T.J. McCloskey, Acting Consum. Advocate v. PA PUC (Pa. Commw. Ct. 2020). · cites it 8× “66 Pa. C.S. § 1301.1(a). However, recognizing that a differential could result between the ratemaking procedures used prior to the effective date of subsection (a) (applying the CTA), and the computation now in effect (excluding the CTA), the General Assembly mandated in…”

T.J. McCloskey, Acting Consum. Advocate v. PA PUC (Pa. Commw. Ct. 2019). · cites it 6× “1 of the Code, 66 Pa.C.S. § 1301.1. 2 This matter was argued seriately with McCloskey v.”

T.J. McCloskey, Acting Consum. Advocate v. PA PUC (Pa. Commw. Ct. 2019). · cites it 5× “1 of the Code, 66 Pa.C.S. § 1301.1. apply to Distribution System Improvement Charge (DSIC) calculations.”

— 66 Pa. Cons. Stat. § 1301.1(a) — 6 cases

McCloskey, T. v. PUC; Metro Edison Co, Aplts (Pa. 2021). “1(a) of the Public Utility Code, 66 Pa.C.S. § 1301.1.” McCloskey-FirstEnergy, 219 A.”

McCloskey, T. v. PUC, Aplt. (Pa. 2021). “1(a) of the Public Utility Code, 66 Pa.C.S. § 1301.1.” McCloskey-FirstEnergy, 219 A.”

T.J. McCloskey, Acting Consum. Advocate v. PA PUC (Pa. Commw. Ct. 2020). “66 Pa. C.S. § 1301.1(a). However, recognizing that a differential could result between the ratemaking procedures used prior to the effective date of subsection (a) (applying the CTA), and the computation now in effect (excluding the CTA), the General Assembly mandated in…”

T.J. McCloskey, Acting Consum. Advocate v. PA PUC (Pa. Commw. Ct. 2019). “1 of the Code, 66 Pa.C.S. § 1301.1. 2 This matter was argued seriately with McCloskey v.”

— 66 Pa. Cons. Stat. § 1301.1(b) — 4 cases

McCloskey, T. v. PUC; Metro Edison Co, Aplts (Pa. 2021). “1(a) of the Public Utility Code, 66 Pa.C.S. § 1301.1.” McCloskey-FirstEnergy, 219 A.”

McCloskey, T. v. PUC, Aplt. (Pa. 2021). “1(a) of the Public Utility Code, 66 Pa.C.S. § 1301.1.” McCloskey-FirstEnergy, 219 A.”

— 66 Pa. Cons. Stat. § 1301.1(c)(1) — 1 case

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