RE: Accumulated Deferred inc taxes

We're still refining the post-Red Rock regulatory rate base and won't know the offset until sometime tomorrow pm. The same theory would apply to TW - if you don't collect a tax component, you would not have a rate base reduction for deferred taxes. We should know by Friday morning what the net impact of eliminating the tax component and deferred taxes has on TW's rates. I'm still not sure the tax component should be eliminated - Hope to understand more after Monday's meeting with tax.

-----Original Message-----
From: Howard, Kevin A.
Sent: Wednesday, March 13, 2002 8:55 AM
To: Lokey, Teb
Subject: Accumulated Deferred inc taxes

Teb:
I was talking to Drew and Janet Place last night about some of the Lakehead tax issues. Janet indicated that as part of Border's argument on including a tax component in its rates, it demonstrated that if they did not collect taxes in their rates, they should add back the accumulated deferred income tax balance to the rate base (some $300 million) which caused their rates to increase. If TW were to do the same thing, would its rate also increase? I seem to recall that excluding the reserve for uncollectible accounts that was set up as part of the Enron bankruptcy, TW's accumulated FIT balance was close to $300 million. Any thoughts on this?
Kevin