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(unprotected excess deferred taxes). Examples of other timing
differences, which created unprotected excess deferred taxes,
include deductible State and local tax, certain pension costs,
and research and development costs. These costs were deducted
for Federal income tax purposes and capitalized for rate-making
purposes.
For 1987, the FPSC ordered Florida Power, pursuant to Fla.
Admin. Code Ann. r. 25-14.05 (1982) (Fla. Rule 14.05), to return
one-fifth of its total excess deferred income tax to its retail
customers. Fla. Rule 14.05 generally provided that excess
deferred income tax be returned to customers over a period of 5
years. The return amounted to a refund of $2,186,000 of
unprotected excess deferred tax and $874,000 of protected excess
deferred tax. The refund was made to retail customers in the
form of 12 monthly credits on customers’ electric bills under the
heading “1987 Monthly Rate Reduction”.
Florida Power also entered into a settlement agreement with
its wholesale customers for a return of excess deferred income
tax in 1987. Under the terms of settlement and pursuant to FERC
regulation, Florida Power agreed to refund $157,000 to its
wholesale customers from its unprotected excess deferred tax and
$63,000 from its protected excess deferred tax. The settlement
agreement was made effective as of January 1, 1987, but, because
the agreement was not finalized until October 9, 1987, credits
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