Public Utilities: Disposition of Excess Deferred Taxes

Pursuant to a congressional request, GAO provided information on the treatment of privately owned public utilities' excess deferred tax reserves created by the Tax Reform Act of 1986, focusing on: (1) the origin of excess deferred taxes and how utilities may and may not use them; (2) how fast excess deferred tax balances can be passed on to utility customers under normalization; (3) policy issues involving normalization treatment for deferred and excess deferred taxes; and (4) the benefits and costs of the normalization requirement for utilities and utility customers.