Income Tax Footnote (Parts of It)
As a result of the change in the corporate income tax rate, Great Plains Energy and KCP&L revalued and restated their deferred income tax assets and liabilities in December 2017. Great Plains Energy decreased its net deferred income tax liabilities by $814.5 million, primarily consisting of a $645.5 million adjustment for the revaluation and restatement of deferred income tax assets and liabilities included in rate base and a $222.8 million tax gross-up adjustment for ratemaking purposes. KCP&L decreased its net deferred income tax liabilities by $682.8 million, primarily consisting of a $471.8 million adjustment for the revaluation and restatement of deferred income tax assets and liabilities included in rate base and a $163.6 million tax gross-up adjustment for ratemaking purposes. The decreases to Great Plains Energy's and KCP&L's net deferred income tax liabilities included in rate base were offset by a corresponding increase in regulatory liabilities. The net regulatory liabilities will be refunded to customers in future rates by amortizing the amounts related to plant assets over the remaining useful life of the assets, and amortizing the amounts related to other items over a period to be determined in a future rate case.
KCP&L and GMO currently recover the cost of income taxes in rates from their customers based on the 35% federal corporate income tax rate. Both KCP&L and GMO have announced their intentions to pass the income tax savings generated by the tax rate change, currently estimated at approximately $100 millionannually, through to customers as part of upcoming general rate cases, including applications filed by KCP&L and GMO in Missouri in January 2018. However, both the MPSC and KCC have also initiated investigatory dockets regarding the impact of the Tax Act on customer rates and the actual rate treatment of tax reform will not be known until orders specifying that treatment are received from the MPSC and KCC. In January 2018, KCC issued an order requiring certain regulated public utilities, including KCP&L, to begin recording a regulatory liability for the difference between the new corporate tax rate and amounts currently collected in rates. The treatment of the regulatory liability will be addressed by KCC in future orders.
